10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

Commission File Number 1-6003

FEDERAL SIGNAL CORPORATION

(Exact name of the Company as specified in its charter)

Delaware	36-1063330
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1415 West 22nd Street, Oak Brook, Illinois	60523 (Zip Code)
(Address of principal executive offices)

The Company’s telephone number, including area code

(630) 954-2000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, par value $1.00 per share, with preferred share purchase rights	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o     No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes o     No þ

Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the Company’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark if the registrant is a shell company, in Rule 12b-2 of the Exchange Act.  Yes o     No þ

State the aggregate market value of voting stock held by nonaffiliates of the Company as of June 30, 2007: Common stock, $1.00 par value — $748,992,370

Indicate the number of shares outstanding of each of the Company’s classes of common stock, as of January 31, 2008: Common stock, $1.00 par value — 47,787,969 shares

Documents Incorporated By Reference

Portions of the definitive proxy statement for the Annual Meeting of Shareholders to be held on April 22, 2008 are incorporated by reference in Part III.

FEDERAL SIGNAL CORPORATION
Index to Form 10-K

		Page
PART I
Item 1.	Business		1
Item 1A.	Risk Factors		5
Item 1B.	Unresolved Staff Comments		7
Item 2.	Properties		7
Item 3.	Legal Proceedings		7
Item 4.	Submission of Matters to a Vote of Security Holders		8
Item 4A.	Executive Officers		8
PART II
Item 5.	Market for Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		9
Item 6.	Selected Financial Data		11
Item 7.	Management’s Discussion and Analysis of Financial Conditions and Results of Operations		12
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		24
Item 8.	Financial Statements and Supplementary Data		24
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		63
Item 9A.	Controls and Procedures		63
Item 9B.	Other Information		63
PART III
Item 10.	Directors and Executive Officers of the Registrant		63
Item 11.	Executive Compensation		64
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		64
Item 13.	Certain Relationships and Related Transactions		64
Item 14.	Principal Accounting Fees and Services		64
PART IV
Item 15.	Exhibits and Financial Statement Schedules		64
Signatures			65
Exhibit Index			67
By-laws of the Company
Supplemental Agreement to the Second Amended and Restated Credit Agreement
Loan Agreement
Release and Severance Agreement
Subsidiaries of the Company
Consent of Independent Registered Public Accounting Firm
CEO Certification
CFO Certification
Section 906 CEO Certification
Section 906 CFO Certification
Press Release

This Form 10-K and other reports filed by Federal Signal Corporation and subsidiaries (“the Company”) with the Securities and Exchange Commission and comments made by management may contain the words such as “may,” “will,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “project,” “estimate” and “objective” or the negative thereof or similar terminology concerning the Company’s future financial performance, business strategy, plans, goals and objectives. These expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning the Company’s possible or assumed future performance or results of operations and are not guarantees. While these statements are based on assumptions and judgments that management has made in light of industry experience as well as perceptions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances, they are subject to risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different.

These risks and uncertainties, some of which are beyond the Company’s control, include the cyclical nature of the Company’s industrial, municipal government and airport markets, technological advances by competitors, increased warranty and product liability expenses, risks associated with supplier, dealer and other partner alliances, changes in cost competitiveness including those resulting from foreign currency movements, disruptions in the supply of parts or components from sole source suppliers and subcontractors, retention of key employees and general changes in the competitive environment. These risks and uncertainties include, but are not limited to, the risk factors described under Item 1A, “Risk Factors,” in this Form 10-K. These factors may not constitute all factors that could cause actual results to differ materially from those discussed in any forward-looking statement. The Company operates in a continually changing business environment and new factors emerge from time to time. The Company cannot predict such factors nor can it assess the impact, if any, of such factors on its financial position or results of operations. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results. The Company disclaims any responsibility to update any forward-looking statement provided in this Form 10-K.

PART I

Item 1.   Business.

Federal Signal Corporation, founded in 1901, was reincorporated as a Delaware Corporation in 1969. The Company designs and manufactures a suite of products and integrated solutions for municipal, governmental, industrial and airport customers. Federal Signal’s portfolio of products includes safety and security systems, fire apparatus, aerial devices, street sweepers, industrial vacuums, waterblasters, sewer cleaners and consumable industrial tooling. Federal Signal Corporation and its subsidiaries (referred to collectively as “the Company” or “Company” herein, unless context otherwise indicates) operates manufacturing facilities in 38 plants in 14 countries around the world serving customers in approximately 100 countries in all regions of the world. The Company also provides customer and dealer financing to support the sale of its vehicles.

Narrative Description of Business

Products manufactured and services rendered by the Company are divided into four major operating groups: Safety and Security Systems, Fire Rescue, Environmental Solutions and Tool. The individual operating companies are organized as such because they share certain characteristics, including technology, marketing, distribution and product application, which create long-term synergies.

Financial information (net sales, operating income, capital expenditures and identifiable assets) concerning the Company’s four operating segments as of, and for each of the three years in the period ended, December 31, 2007 included in Note 16 of the financial statements contained under Item 8 of this Form 10-K is incorporated herein by reference.

Safety and Security Systems Group

Federal Signal Corporation’s Safety and Security Systems Group designs, manufactures and deploys comprehensive safety and security systems that help law enforcement, fire/rescue and EMS, emergency operations and industrial plant/facility first responders protect people, property and the environment.

Solutions include systems for automated license plate recognition, campus and community alerting, emergency vehicles, first responder interoperable communications, industrial communications and command, municipal networked security and parking revenue and access control for municipal, governmental and industrial applications. Specific products include access control devices, lightbars and sirens, public warning sirens, public safety software and automated license plate recognition cameras.

Products are sold under the Federal Signal, Federal Signal VAMA, Federal APD, Pauluhn, PIPS, Target Tech and Victor brand names. The group operates manufacturing facilities in North America, Europe and South Africa. Many of the group’s products are designed in accordance with various regulatory codes and standards and meet agency approvals such as Underwriters Laboratory (UL), International Electrotechnical Commission (IEC) and American Bureau of Shipping (ABS).

Fire Rescue Group

The Fire Rescue Group manufactures a broad range of fire rescue apparatus and mission critical vehicles in its facilities located in North America and Europe. The group sells vehicles and equipment under the E-One and Bronto Skylift brand names.

E-ONE is a leading brand of aluminum and stainless steel, custom-made vehicles including pumpers, tankers aerial ladders, aerial platforms, rescues, quick attack units, command centers and airport rescue vehicles. Under the Bronto Skylift brand name, the Company manufactures vehicle-mounted aerial access platforms in Finland for fire and industrial uses globally.

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Environmental Solutions Group

The Environmental Solutions Group manufactures and markets worldwide a full range of street cleaning and vacuum loader vehicles and high-performance water blasting equipment. Products are also manufactured for the newer markets of hydro-excavation, glycol recovery and surface cleaning. Products are sold under the Elgin, RAVO, Vactor, Guzzler, Shanghai Federal Signal and Jetstream brand names. The group’s vehicles and equipment are manufactured in North America, Europe and Asia.

Under the Elgin brand name, the Company sells the leading US brand of street sweepers primarily designed for large-scale cleaning of curbed streets, parking lots and other paved surfaces utilizing mechanical sweeping, vacuum and recirculating air technology for cleaning. RAVO is a market leader in Europe for high-quality, compact and self-propelled sweepers that utilize vacuum technology for pick-up.

Vactor is a leading manufacturer of municipal combination catch basin/sewer cleaning vacuum trucks. Guzzler is a leader in industrial vacuum loaders that clean up industrial waste or recover and recycle valuable raw materials. Shanghai Federal Signal is a China-based joint venture manufacturer of refuse truck bodies for waste collection and disposal for Asian markets. Jetstream manufactures high pressure waterblast equipment and accessories for commercial and industrial cleaning and maintenance operations. In addition to equipment sales, the group is increasingly engaged in the sale of parts and tooling, service and repair, equipment rentals and training as part of a complete offering to its customer base.

Segment results have been restated for all periods presented to exclude losses from the North American refuse business, which was reclassified as a discontinued operation in 2005. The Company substantially disposed of the assets of this business during 2006.

Tool Group

The Tool Group manufactures, and in some cases is a reseller of, a broad range of precision tooling, ejector pins, core pins, sleeves and accessories for the plastic injection mold industry; and precision tooling and die components for the metal stamping industry. Tooling products are marketed under the Dayton Progress and PCS brand names and manufactured in North America, Europe and Asia.

Segment results have been restated for all periods presented to exclude the impact from Manchester Tool Company, On Time Machining and ClappDico Corporation or “Cutting Tool Operations”; which was reclassified as a discontinued operation in 2006. The Company completed the sale of the Ohio based Cutting Tool Operations on January 31, 2007.

Financial Services

The Company offers a variety of short- and long-term financing primarily to its Fire Rescue and Environmental Solutions independent dealers and customers. The Company provides financing, principally through sales-type leases, to (i) municipal customers to purchase vehicles and (ii) independent dealers to finance the purchase of vehicle inventory. Financings are secured by vehicles and in the case of the independent dealers, the dealer’s personal guarantee. In 2001, the Company decided to curtail new leasing to industrial customers, who generally have a higher credit risk; this portfolio continues to diminish over time as outstanding leases have been collected. By December 31, 2007, the Company’s investment in leases to industrial customers had declined to 3% of its lease financing and other receivables.

Marketing and Distribution

The Safety and Security Systems Group companies sell to industrial customers through approximately 2,000 wholesalers/distributors who are supported by Company sales personnel and/or independent manufacturer’s representatives. Products are also sold to municipal and governmental customers through more than 900 active independent distributors as well as through original equipment manufacturers and direct sales. International sales are made through the group’s independent foreign distributors or on a direct basis. The Company also sells comprehensive integrated warning, interoperable communications and parking systems through a combination of a direct sales force and distributors.

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Fire Rescue and Environmental Solutions use dealer networks and direct sales to service customers generally depending on the type and location of the customer. The Environmental Solutions direct sales channel concentrates on the industrial, utility and construction market segments while the dealer networks focus primarily on the municipal markets. The Company believes its national and global dealer networks for vehicles distinguishes it from its competitors. Dealer representatives are on-hand to demonstrate the vehicles’ functionality and capability to customers and to service the vehicles on a timely basis.

The Tool Group sells to die and mold builders, plastic molders, metal stampers and metal fabricators through distributors and a direct sales organization. Because of the consumable nature of most of the Tool Group’s products, volume depends mainly on repeat orders from thousands of customers and end users, driven primarily by their production levels and to a lesser extent by the volumes of new dies and molds being ordered for new products. Many of the Tool Group’s customers have some ability to produce certain products themselves, but at a cost disadvantage. Major market emphasis is placed on quality of product, delivery, level of service and price. Inventories for certain products are maintained to assure prompt service to the customer, while other products are made to order. The average order for standard tools is filled in less than one week for domestic shipments and within two weeks for international shipments.

Customers and Backlog

Approximately 36%, 25% and 39% of the Company’s total 2007 orders were to US municipal and government customers, US commercial and industrial customers, and non-US customers, respectively. No single customer accounted for a material part of the Company’s business. The Company believes its mix of customers provides some measure of counter cyclicality during economic cycles as the three customer bases are impacted differently during the course of a cycle. The growing share of non-US customers reduces the direct correlation to the US economy.

The Company’s US municipal and government customers depend on tax revenues to support spending. A sluggish industrial economy, therefore, will eventually impact a municipality’s revenue base as tax receipts decline due to lost jobs and declining profits. Historically, municipal slowdowns have lagged behind industrial slowdowns such that the industrial economy is growing again by the time municipalities reduce their spending. During 2007, the Company saw municipal and governmental orders decrease 1% from 2006, compared to a 3% increase in these orders in 2006 compared to 2005.

The Company’s backlog totaled $479 million and $403 million as of December 31, 2007 and 2006, respectively. The 19% increase is primarily attributed to strong orders for vacuum trucks, sewer cleaners and truck mounted aerial access platforms, partially offset by lower orders for other fire rescue vehicles and street sweepers. A substantial majority of the orders in backlog at December 31, 2007 are expected to be filled during 2008.

Suppliers

The Company purchases a wide variety of raw materials from around the world for use in the manufacture of its products, although the majority of current purchases are from North American sources. To minimize availability, price and quality risk, the Company is party to numerous strategic supplier arrangements. Although certain materials are obtained from either a single-source supplier or a limited number of suppliers, the Company has identified alternative sources to minimize the interruption to its business in the event of supply problems.

Components critical in the production of the Company’s vehicles (such as engines, transmissions, drivetrains, axles and tires) are purchased from a select number of suppliers and may be specified by the customer. The Company also purchases raw and fabricated aluminum and steel as well as commercial chassis with certain specifications from a few sources.

The Company believes it has adequate supplies or sources of availability of the raw material and components necessary to meet its needs. However, there are risks and uncertainties with respect to the supply of certain of these raw materials that could impact their price, quality and availability in sufficient quantities.

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Competition

Within specific product categories and domestic markets, the Safety and Security Systems Group companies are among the leaders with three to four strong competitors and several additional ancillary market participants. The group’s international market position varies from leader to ancillary participant depending on the geographic region and product line. Generally, competition is intense with all of the group’s products and purchase decisions are made based on competitive bidding, price, reputation, performance and servicing.

E-ONE is a leading, single-source manufacturer of custom-built, aluminum and stainless steel bodied fire apparatus and chassis in a market served by approximately ten key manufacturers and approximately 70 small, regional manufacturers. E-ONE occupies the number one or two position of the North American pumper and aerial market based on units. E-ONE is a leading command vehicle provider to the city, state and federal agencies for natural and man-made disaster response. In addition, E-ONE is a global provider of industrial pumpers and aerials serving the petrochemical and pharmaceutical industries. E-ONE also competes with six manufacturers worldwide in the production of airport rescue and firefighting vehicles. Bronto Skylift is established as the articulated aerial leader in the global fire fighting, rescue and industrial platform markets; the Company manufactures and distributes vehicle-mounted aerial access platforms globally.

Within the Environmental Solutions Group, Elgin is recognized as the market leader among several domestic sweeper competitors and differentiates itself primarily on product performance. RAVO, the Company’s Dutch compact sweeper manufacturer, also competes on product performance through its vacuum technology and successfully leads in market share for mid-sized sweepers among several regional European manufacturers. Vactor and Guzzler both maintain the leading domestic position in their respective marketplaces by enhancing product performance with leading technology and application flexibility. Jetstream is a market leader in the in-plant cleaning segment of the US waterblast industry competing on product performance and rapid delivery.

The Tool Group companies compete with several hundred competitors worldwide. In North America, the Company holds a share position ranging from number one to number three depending on the product offering.

Research and Development

The information concerning the Company’s research and development activities included in Note 16 of the financial statements contained under Item 8 of this Form 10-K is incorporated herein by reference.

Patents and Trademarks

The Company owns a number of patents and possesses rights under others to which it attaches importance, but does not believe that its business as a whole is materially dependent upon any such patents or rights. The Company also owns a number of trademarks that it believes are important in connection with the identification of its products and associated goodwill with customers, but no material part of the Company’s business is dependent on such trademarks.

Employees

The Company employed over 5,500 people in ongoing businesses at the close of 2007. Approximately 17% of the Company’s domestic hourly workers were unionized at December 31, 2007. The Company believes relations with its employees continue to be good.

Governmental Regulation of the Environment

The Company believes it substantially complies with federal, state and local provisions that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment. Capital expenditures in 2007 attributable to compliance with such laws were not material. The Company believes that the overall impact of compliance with environmental regulations will not have a material effect on its future operations.

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Seasonality

Certain of the Company’s businesses are susceptible to the influences of seasonal buying or delivery patterns. The Company’s businesses which tend to have lower sales in the first calendar quarter compared to other quarters as a result of these influences are street sweeping, fire rescue products, outdoor warning, emergency signaling products and parking systems.

Additional Information

The Company makes its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, other reports and information filed with the SEC and amendments to those reports available, free of charge, through its Internet website (http://www.federalsignal.com) as soon as reasonably practical after it electronically files or furnishes such materials to the SEC. Additionally, the Company makes its proxy statement and its Annual Report to stockholders available at the same internet website (http://www.federalsignal.com), free of charge, when sent to stockholders through the meeting date. All of the Company’s filings may be read or copied at the SEC’s Public Reference Room at 100 F. Street, N.E., Room 1580, Washington, DC 20549. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-202-551-8090. The SEC maintains an Internet website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically.

Item 1A.   Risk Factors.

The following are some of the risks that we face in our business. The list of risk factors is not exhaustive. There can be no assurance that we have correctly identified and appropriately assessed all factors affecting our business or that publicly available and other information with respect to these matters is complete and correct. Additional risks not presently known to us or that we currently believe to be immaterial also may adversely impact us. Should any risks and uncertainties develop into actual events, these developments could have material adverse effects on our business, financial condition and results of operations.

Our financial results are subject to considerable cyclicality.

Our ability to be profitable depends heavily on varying conditions in the United States government and municipal markets and the overall United States economy. The industrial markets in which we compete are subject to considerable cyclicality, and move in response to cycles in the overall business environment. Many of our customers are municipal governmental agencies, and as such, we are dependent on municipal government spending. Spending by our municipal customers can be affected by local political circumstances, budgetary constraints, and other factors. The United States government and municipalities depend heavily on tax revenues as a source of their spending and, accordingly, there is a historical correlation, of a one or two year lag between the overall strength of the United States economy and our sales to the United States government and municipalities. Therefore, downturns in the United States economy are likely to result in decreases in demand for our products. During previous economic downturns, we experienced decreases in sales and profitability, and we expect our business to remain subject to similar economic fluctuations in the future.

The inability to obtain raw materials, component parts, and/or finished goods in a timely and cost-effective manner from suppliers would adversely affect our ability to manufacture and market our products.

We purchase raw materials and component parts from suppliers to be used in the manufacturing of our products. In addition, we purchase certain finished goods from suppliers. Changes in our relationships with suppliers or increases in the costs of purchased raw materials, component parts or finished goods could result in manufacturing interruptions, delays, inefficiencies or our inability to market products. In addition, our profit margins would decrease if prices of purchased raw materials, component parts or finished goods increase and we are unable to pass on those increases to our customers.

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We operate in highly competitive markets.

The markets in which we operate are highly competitive. The intensity of this competition, which is expected to continue, can result in price discounting and margin pressures throughout the industry and adversely affects our ability to increase or maintain prices for our products. In addition, certain of our competitors may have lower overall labor or material costs.

Failure to keep pace with technological developments may adversely affect our operations.

We are engaged in an industry which will be affected by future technological developments. The introduction of products or processes utilizing new technologies could render our existing products or processes obsolete or unmarketable. Our success will depend upon our ability to develop and introduce on a timely and cost-effective basis new products, processes and applications that keep pace with technological developments and address increasingly sophisticated customer requirements. We may not be successful in identifying, developing and marketing new products, applications and processes and product or process enhancements. We may experience difficulties that could delay or prevent the successful development, introduction and marketing of product or process enhancements or new products, applications or processes. Our products, applications or processes may not adequately meet the requirements of the marketplace and achieve market acceptance. Our business, operating results and financial condition could be materially and adversely affected if we were to incur delays in developing new products, applications or processes or product or process enhancements or if our products do not gain market acceptance.

Our ability to operate our Company effectively could be impaired if we fail to attract and retain key personnel.

Our ability to operate our businesses and implement our strategies depends, in part, on the efforts of our executive officers and other key employees. In addition, our future success will depend on, among other factors, our ability to attract and retain qualified personnel, including finance personnel, research professionals, technical sales professionals and engineers. The loss of the services of any key employee or the failure to attract or retain other qualified personnel could have a material adverse effect on our business or business prospects.

We have international operations that are subject to foreign economic and political uncertainties.

Our business is subject to fluctuations in demand and changing international economic and political conditions which are beyond our control. During 2007, approximately 37% of our sales were to customers outside the United States; with approximately 24% of sales being supplied from our overseas operations. We expect a significant and increasing portion of our revenues and profits to come from international sales for the foreseeable future. Operating in the international marketplace exposes us to a number of risks, including abrupt changes in foreign government policies and regulations and, in some cases, international hostilities. To the extent that our international operations are affected by unexpected and adverse foreign economic and political conditions, we may experience project disruptions and losses which could significantly reduce our revenues and profits.

Some of our contracts are denominated in foreign currencies, which result in additional risk of fluctuating currency values and exchange rates, hard currency shortages and controls on currency exchange. Although currency exposure is hedged in the short term, over the longer term changes in the value of foreign currencies could increase our US dollar costs for, or reduce our US dollar revenues from, our foreign operations. Any increased costs or reduced revenues as a result of foreign currency fluctuations could affect our profits.

We may incur material losses and costs as a result of product liability, warranty, recall claims or other lawsuits or claims that may be brought against us.

We are exposed to product liability and warranty claims in the normal course of business in the event that our products actually or allegedly fail to perform as expected or the use of our products results, or is alleged to result, in bodily injury and/or property damage. Accordingly, we could experience material warranty or product liability costs in the future and incur significant costs to defend against these claims. We carry insurance and maintain reserves for product liability claims. However, we cannot be assured that our insurance coverage will be adequate if

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such claims do arise, and any liability not covered by insurance could have a material adverse impact on our results of operations and financial position. A future claim could involve the imposition of punitive damages, the award of which, pursuant to state laws, may not be covered by insurance. In addition, warranty or other claims are not typically covered by insurance coverage. Any product liability or warranty issues may adversely impact our reputation as a manufacturer of high quality, safe products and may have a material adverse effect on our business.

The costs associated with complying with environmental and safety regulations could lower our margins.

We, like other manufacturers, continue to face heavy governmental regulation of our products, especially in the areas of the environment and employee health and safety. Complying with environmental and safety requirements has added and will continue to add to the cost of our products, and could increase the capital required. While we believe that we are in compliance in all material respects with these laws and regulations, we may be adversely impacted by costs, liabilities or claims with respect to our operations under existing laws or those that may be adopted. These requirements are complex, change frequently and have tended to become more stringent over time. Therefore, we could incur substantial costs, including cleanup costs, fines and civil or criminal sanctions as a result of violations, or liabilities under, environmental laws and safety regulations.

We are subject to a number of restrictive debt covenants.

Our credit facility and other debt instruments contain certain restrictive debt covenants that may hinder our ability to take advantage of attractive business opportunities. Our ability to meet these covenants may be affected by factors outside our control. Failure to meet one or more of these covenants may result in an event of default. Upon an event of default, some of our lenders may be entitled to declare all amounts outstanding as due and payable.

Item 1B.   Unresolved Staff Comments.

None.

Item 2.   Properties.

As of December 31, 2007, the Company utilized 20 principal manufacturing plants located throughout North America, as well as 14 in Europe, 1 in South Africa and 3 in the Far East.

In total, the Company devoted approximately 1.3 million square feet to manufacturing and 1.0 million square feet to service, warehousing and office space as of December 31, 2007. Of the total square footage, approximately 38% is devoted to the Safety and Security Systems Group, 14% to the Tool Group, 22% to the Fire Rescue Group and 26% to the Environmental Solutions Group. Approximately 62% of the total square footage is owned by the Company with the remaining 38% being leased.

All of the Company’s properties, as well as the related machinery and equipment, are considered to be well-maintained, suitable and adequate for their intended purposes. In the aggregate, these facilities are of sufficient capacity for the Company’s current business needs.

Item 3.   Legal Proceedings.

The information concerning the Company’s legal proceedings included in Note 15 of the financial statements contained under Item 8 of this Form 10-K is incorporated herein by reference.

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Item 4.   Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of security holders through the solicitation of proxies or otherwise during the three months ended December 31, 2007.

Item 4A.   Executive Officers.

The following is a list of the Company’s executive officers, their ages, business experience and positions and offices as of February 1, 2008:

Paul Brown, age 44, was appointed Vice President and Controller in March 2005. He served as Vice President-Internal Audit from April 2004. Previously, Mr. Brown was Vice President Finance-Flame Retardants, for Great Lakes Chemical Corporation from 2000 to April 2004.

Kimberly L. Dickens, age 46, was elected as Vice President Human Resources in April 2004. Previously, Ms. Dickens was Vice President Human Resources for BorgWarner, Inc. from 2002 to March 2004, and Vice President Human Resources for BorgWarner Transmission Systems from 1999 to 2002.

James E. Goodwin, age 63, was appointed interim President and interim Chief Executive Officer on December 11, 2007. Mr. Goodwin was elected to the Company’s Board of Directors in October 2005. Mr. Goodwin has been an independent business consultant since 2001 and served as Chairman and Chief Executive Officer of United Airlines from 1998 to 2001.

Peter R. Guile, age 42, was elected as President of E-One, Inc. in July 2007. Mr. Guile was division president of the industrial systems business within the Safety and Security Systems Group from 2001 to 2007.

David E. Janek, age 44, was appointed Vice President and Treasurer in September 2006. Mr. Janek was Vice President Finance, Safety and Security Systems Group from June 2002.

Stephanie K. Kushner, age 52, was elected as Senior Vice President and Chief Financial Officer in April 2007. Ms. Kushner was Vice President and Chief Financial Officer from 2002 to 2007.

Fred H. Lietz, age 52, was appointed as Vice President and Chief Procurement Officer in May 2007. Mr. Lietz was Vice President of Global Procurement and Logistics at Andrew Corporation from 2001 to 2006.

David R. McConnaughey, age 51, was appointed President of Federal Signal’s Safety and Security Systems Group in March 2006. Previously, Mr. McConnaughey was President Maytag All Brand Service from 2005 to March 2006 and Vice President Maytag All Brand Service from 2004 to 2005. Previously, Mr. McConnaughey held several roles with Maytag Corporation including Vice President and G.M. Amana Brand 2003 to 2004 and Vice President Supply Chain 2002 to 2003.

Esa Peltola, age 56 was elected as President of Bronto Skylift OyAb in July 2007. Mr. Peltola was Managing Director of Bronto Skylift from 1998 to 2007.

Jennifer L. Sherman, age 43, was appointed Vice President, General Counsel and Secretary effective March 2004. Ms. Sherman was previously Deputy General Counsel and Assistant Secretary from 1998 to 2004.

Mark D. Weber, age 50, was appointed President of the Environmental Solutions Group in April 2003. Mr. Weber was Vice President Sweeper Products for the Environmental Solutions Group from 2002 to 2003 and General Manager of Elgin Sweeper Company from 2001 to 2002.

Michael K. Wons, age 43, was appointed Vice President and Chief Information Officer in November 2006. Previously, Mr. Wons was Senior Technology Strategy Director at Microsoft Corporation from 2002 to 2006.

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These officers hold office until the next annual meeting of the Board of Directors following their election and until their successors have been elected and qualified.

There are no family relationships among any of the foregoing executive officers.

PART II

Item 5. Market for Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

(a)   Market Information

The Company’s common stock is listed and traded on the New York Stock Exchange (“NYSE”) under the symbol FSS. At December 31, 2007, there were no material restrictions on the Company’s ability to pay dividends. The information concerning the Company’s market price range data included in Note 19 of the financial statements contained under Item 8 of this Form 10-K is incorporated herein by reference.

As of January 31, 2008, there were 2,859 holders of record of the Company’s common stock.

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The following graph compares the cumulative 5-year total return to shareholders on the Company’s common stock relative to the cumulative total returns of the Russell 2000 index, the S&P Industrials index, and the S&P Midcap 400 index. An investment of $100 (with reinvestment of all dividends) is assumed to have been made in the company’s common stock and in each index on December 31, 2002 and its relative performance is tracked through December 31, 2007.

Comparison of 5 Year Cumulative Total Return*

Among Federal Signal Corporation, The Russell 2000 Index,

The S & P Midcap 400 Index And The S & P Industrials Index

*$100 invested on 12/31/02 in stock or index-including reinvestment of dividends. Fiscal year ending December 31.

Copyright ^© 2007, Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. All rights reserved. www.researchdatagroup.com/S&P.htm

	12/02		12/03		12/04		12/05		12/06		12/07
Federal Signal Corporation ­ ­		100.00		94.00		96.87		83.56		90.65		64.51
Russell 2000 . . . . . .		100.00		147.25		174.24		182.18		215.64		212.26
S&P Midcap 400 — — –		100.00		135.62		157.97		177.81		196.16		211.81
S&P Industrials ­ ­		100.00		132.19		156.03		159.66		180.88		202.64

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

The information concerning the Company’s quarterly dividend per share data included in Note 19 of the financial statements contained under Item 8 of this Form 10-K is incorporated herein by reference.

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Item 6. Selected Financial Data.

The following table presents the selected financial information of the Company as of, and for each of the five years in the period ended December 31, 2007:

	2007			2006			2005			2004			2003
Operating Results (dollars in millions):
Net sales(a)	$	1,268.1		$	1,211.6		$	1,119.0		$	1,024.5		$	1,023.1
Income (loss) before income taxes(a)	$	34.0		$	42.7		$	40.8		$	(0.5	)	$	41.4
Income from continuing operations(a)	$	29.8		$	34.4		$	43.9		$	6.1		$	34.7
Operating margin(a)		5.1	%		5.8	%		5.7	%		2.2	%		5.9	%
Return on average common shareholders’ equity		13.2	%		6.0	%		(1.2	)%		(0.6	)%		9.1	%
Common Stock Data (per share):
Income from continuing operations — diluted	$	0.62		$	0.72		$	0.91		$	0.13		$	0.72
Cash dividends	$	0.24		$	0.24		$	0.24		$	0.40		$	0.70
Market price range:
High	$	17.00		$	19.75		$	17.95		$	20.56		$	20.79
Low	$	10.82		$	12.69		$	13.80		$	15.75		$	13.60
Average common shares outstanding (in millions)		47.9			48.0			48.2			48.1			48.0
Financial Position at Year-End (dollars in millions):
Working capital(a)(b)	$	187.7		$	156.3		$	160.6		$	157.1		$	99.2
Current ratio(a)(b)		1.7			1.6			1.6			1.7			1.4
Total assets	$	1,177.1		$	1,049.4		$	1,119.5		$	1,132.4		$	1,177.5
Long-term debt, net of current portion	$	240.7		$	160.3		$	203.7		$	215.7		$	194.1
Shareholders’ equity	$	445.3		$	386.4		$	376.3		$	412.7		$	422.5
Debt-to-capitalization ratio(c)		39.8	%		37.4	%		43.0	%		37.3	%		40.0	%
Net debt-to-capitalization ratio(e)		38.5	%		35.3	%		33.5	%		35.8	%		39.1	%
Other (dollars in millions):
Orders(a)	$	1,342.5		$	1,230.1		$	1,100.5		$	1,083.7		$	972.7
Backlog(a)	$	479.0		$	403.3		$	386.2		$	411.9		$	330.3
Net cash provided by operating activities	$	65.4		$	29.7		$	70.6		$	52.5		$	70.3
Net cash provided by (used for) investing activities	$	(106.6	)	$	(19.3	)	$	(0.7	)	$	34.1		$	(10.1	)
Net cash provided by (used for) financing activities	$	36.8		$	(83.0	)	$	7.1		$	(81.7	)	$	(59.9	)
Capital expenditures(a)	$	23.5		$	18.2		$	16.6		$	19.4		$	16.8
Depreciation and amortization(a)	$	21.2		$	17.9		$	18.2		$	16.2		$	15.1
Employees(a)		5,544			5,469			5,367			5,382			5,666

(a)	continuing operations only, prior year amounts have been reclassified for discontinued operations as discussed in Note 13 to the financial statements
(b)	working capital: current manufacturing assets less current manufacturing liabilities; current ratio: current manufacturing assets divided by current manufacturing liabilities
(c)	manufacturing operations: total manufacturing debt divided by the sum of total manufacturing debt plus manufacturing equity(d)
(d)	manufacturing equity: total equity less financial services assets plus financial services borrowings

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(e) net debt to capitalization ratio: manufacturing debt less cash and cash equivalents divided by manufacturing equity less cash and cash equivalents

The 2005 and 2004 income (loss) before income taxes includes restructuring costs of $0.7 million and $7.0 million, respectively. The 2005 income before income taxes was impacted by a $6.7 million gain on the sale of two industrial lighting product lines. The 2004 loss before income taxes was impacted by a $10.6 million loss incurred on a large contract for fire apparatus in the Netherlands.

The selected financial data set forth above should be read in conjunction with the Company’s consolidated financial statements, including the notes thereto, and Item 7 of this Form 10-K.

The information concerning the Company’s selected quarterly data included in Note 19 of the financial statements contained under Item 8 of this Form 10-K is incorporated herein by reference.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The Company designs and manufactures a suite of products and integrated solutions for municipal, governmental, industrial and airport customers. Federal Signal’s portfolio of products include aerial devices, street sweepers, fire apparatus, safety and security systems, industrial vacuums, waterblasters, sewer cleaners and consumable industrial tooling. Due to technology, marketing, distribution and product application synergies, the Company’s business units are organized and managed in four operating segments: Safety and Security Systems, Fire Rescue, Environmental Solutions and Tool. The Company also provides customer and dealer financing to support the sale of its vehicles. The information concerning the Company’s manufacturing businesses included in Item 1 of this Form 10-K and Note 16 of the financial statements contained under Item 8 of this Form 10-K are incorporated herein by reference.

Results of Operations

Operating results have been restated to exclude the results of the Cutting Tools Operations, formerly a component of the Tool Group which was presented as discontinued operations in 2006 and also to reflect the exclusion of the Refuse business which was classified as a discontinued operation in 2005. The Company completed the sale of the Cutting Tool Operations on January 31, 2007. The assets of the Refuse business were substantially sold in 2006.

Orders and backlog

	2007			2006			2005
Analysis of orders:
Total orders ($ in millions):	$	1,342.5		$	1,230.1		$	1,100.5
Change in orders year over year		9.1	%		12.0	%
Change in US municipal and government orders year over year		(1.2	)%		3.0	%
Change in US industrial and commercial orders year over year		7.5	%		14.0	%
Change in non-US orders year over year		22.3	%		23.0	%

US municipal and government orders decreased in 2007 as a result of lower demand for fire trucks and sewer cleaners than the previous year. US industrial and commercial orders increased 8% on continued high demand for industrial vacuum trucks and an increase in orders for hazardous area lighting and industrial signal and communications equipment. Non-US orders increased 22% and included a 31% increase in sales of products manufactured outside of the US, and increases in US exports in Safety and Security Systems and Environmental Solutions. The growth in non-US orders also reflects favorable currency effects due to a weaker US dollar.

US municipal and government orders increased 3% in 2006 as a result of high demand for sweepers and sewer cleaners. US industrial and commercial orders increased on continued strength in industrial vacuum trucks and waterblasters. The substantial increase in non-US orders includes a large fire truck order for Montreal, Canada. Demand also increased for US exports in the Fire Rescue, Safety and Security Systems, and Environmental

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Solutions segments, and for products manufactured in Europe. Favorable currency movements also improved 2007 compared to 2006.

Consolidated results of operations

The following table summarizes the Company’s results of operations and operating metrics for each of the three years in the period ended December 31, 2007 ($ in millions, except per share amounts):

	2007			2006			2005
Net sales	$	1,268.1		$	1,211.6		$	1,119.0
Cost of sales		(971.2	)		(927.2	)		(867.5	)
Gross profit		296.9			284.4			251.5
Operating expenses		(232.8	)		(214.5	)		(187.1	)
Restructuring charges		—			—			(0.7	)
Operating income		64.1			69.9			63.7
Interest expense		(25.9	)		(25.0	)		(23.1	)
Other (expense) income		(4.2	)		(2.2	)		0.2
Income tax (expense) benefit		(4.2	)		(8.3	)		3.1
Income from continuing operations		29.8			34.4			43.9
Discontinued operations		25.1			(11.7	)		(48.5	)
Net income (loss)	$	54.9		$	22.7		$	(4.6	)
Other data:
Operating margin		5.1	%		5.8	%		5.7	%
Earnings per share — continuing operations	$	0.62		$	0.72		$	0.91

Year Ended December 31, 2007 vs. December 31, 2006

Net sales increased 5% over 2006 as the higher volume of Safety and Security Systems together with Environmental Solutions shipments more than offset the decrease in sales of U.S. Fire Rescue apparatus. Gross profit was in line with the prior year, however operating income decreased 8% and operating margins contracted nearly one percent on higher operating expenses. The addition of three new businesses through acquisition in 2007, including the additional amortization of intangible assets acquired, accounted for 41%, or $7.7 million of the increase in operating expenses. Higher commissions and marketing expenses including dealer incentives and increases in costs associated with new product development accounted for $10.1 million of incremental costs.

Interest expense increased 4% from 2006, primarily due to an increase in borrowings in order to fund acquisitions in the year.

Other expenses include the Company’s share of losses relating to the joint venture in China of $3.3 million.

The 2007 effective tax rate relating to income from continuing operations decreased to 12.5% from 19.4% in the prior year. The 2007 rate benefited from a higher mix of profits in lower taxed countries, and the Company’s foreign tax planning strategies including dividend repatriation, foreign entity financing, legal entity restructuring in Canada and the effect of tax-exempt municipal income. The 2006 rate also benefited from the effect of tax-exempt municipal income and the completion of other favorable tax reduction strategies.

Income from continuing operations was 13% lower than the prior year on lower operating income despite incremental benefits over the prior year from a more favorable tax rate.

Net income more than doubled to $54.9 million for the year ended December 31, 2007 versus $22.7 million in 2006. For 2007, after completion of the sale of the Cutting Tool Operations in the first quarter, and substantial completion of the wind-down of the Refuse business, the Company realized a net after-tax gain on the sale of previously discontinued operations of $25.1 million, compared to a loss of $11.7 in prior year.

13

Year Ended December 31, 2006 vs. December 31, 2005

Net sales increased 8% over 2005 attributable to a higher volume of Safety and Security Systems and Environmental Solutions shipments and increased pricing across all segments. Operating income increased 10% and operating margins increased year over year, on a 13% gross profit increase. Pricing and volume gains overcame higher material and component costs to flow through to earnings. Offsetting the increase in gross profit, was an increase in operating expenses relating to higher sales commissions and selling-related expenses, an increase in stock-based compensation expense of $3.7 million and incentive bonuses, at various levels throughout the Company, of $2.1 million. Additionally, a gain of $6.7 million from the sale of an industrial lighting product line reduced operating expenses in 2005.

Interest expense increased 8% from 2005, primarily as a result of higher interest rates and a greater mix of floating rate debt.

Other expenses included the Company’s share of losses relating to the start-up of the joint venture in China of $1.9 million.

The 2006 effective tax rate relating to income from continuing operations increased to 19.4% from a tax benefit rate of 7.6%. The effective tax rate in 2005 reflected benefits associated with a reduction of reserves associated with the completion of a multi-year audit of the Company’s US tax returns in the amount of $6.0 million, a benefit associated with the reconciliation of deferred tax liabilities, the effect of tax-exempt municipal income, benefits associated with the repatriation of foreign earnings enabled under the American Jobs Creation Act, as well as the completion of other favorable tax reduction strategies. Income from continuing operations decreased as a result of the less favorable tax rate in 2006.

Net income improved sixfold over the comparable 2005 period. Net income in 2006 included an $11.7 million loss from discontinued operations versus a $48.5 million loss in 2005. Discontinued operations in 2006 included the profitable Cutting Tool Operations of the Tool reporting segment, which were sold in January 2007. Also included in discontinued operations are the 2006 operations of the North American Refuse truck body business operating under the Leach brand name. Substantially all of the assets of the Leach business were sold during the second half of 2006.

Safety and Security Systems Operations

The following table presents the Safety and Security Systems Group’s results of operations for each of the three years in the period ended December 31, 2007 ($ in millions):

	2007			2006			2005
Total orders	$	367.5		$	305.5		$	259.5
US orders		216.3			184.9			164.8
Non-US orders		151.2			120.6			94.7
Net sales		367.2			304.5			276.5
Operating income		49.6			41.2			45.0
Operating margin		13.5	%		13.5	%		16.3	%

Orders increased 20% over 2006 with strength across most market segments. US orders rose 17% due to strength in light bars and sirens for both police and fire customers. During 2007, the Company introduced a next generation and more reliable LED lightbar technology which drove significantly higher orders. Non-US orders increased 25% over the prior year on strength in vehicular warning and police products, and the addition of PIPS Technologies.

Net sales increased 21% with broad-based improvement across the business, particularly for energy-related markets. The mid-year addition of PIPS Technologies automated license plate recognition (“ALPR”) cameras added 3% to sales for the year. Operating income increased 20% over the comparable period. The operating margin remained at 13.5% as higher income from the flow-through of higher sales volume that includes the addition of PIPS Technologies, improved pricing, and favorable foreign currency movement were offset by increased costs

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associated with expanding the product portfolio and market reach. Results were also adversely impacted by higher implementation costs associated with profitable large airport parking systems.

Orders improved 18% in 2006 over the comparable period in 2005 with strength across all major product lines, including industrial signaling and communications, hazardous area lighting, police products, warning systems, and parking systems. Net sales increased 10% over 2005, on increased volumes across all product lines, with the exception of airport parking systems, and despite the absence of $8 million of revenue from two industrial lighting product lines which were divested in the third quarter of 2005.

Operating income decreased 9% in 2006 and a lower reported operating margin resulted from the inclusion of a $6.7 million gain on the sale of the industrial lighting product lines in 2005. Excluding the gain and the operations of the disposed product lines, the operating margin increased slightly, on higher sales volume and improved pricing, offset by higher compensation-related charges.

Fire Rescue Operations

The following table presents the Fire Rescue Group’s results of operations for each of the three years in the period ended December 31, 2007 ($ in millions):

	2007			2006			2005
Total orders	$	397.5		$	365.0		$	354.7
US orders		175.4			199.3			234.7
Non-US orders		222.1			165.7			120.0
Net sales		330.8			384.8			371.2
Operating income (loss)		(11.0	)		6.8			2.3
Operating margin		(3.3	)%		1.8	%		0.6	%

Orders in 2007 were up 9% over the prior year on continued strong demand and a richer mix of Bronto articulated aerial devices. Orders for E-One products declined in the first 9 months of the year due to disruptions in the North American dealer channel and changes in leadership. During the second half of the year, transitions to several new dealers to expand coverage over these territories took place. US export orders were down slightly, compared to the prior year, due to a large order for Montreal, Canada in 2006.

Net sales in the year declined 14% from the prior year as lower E-One fire apparatus volumes more than offset the growth in international sales of Bronto aerial units. The operating loss incurred in 2007 is related to the lower sales volume and lower manufacturing absorption experienced at E-One. Bronto’s higher production volume and favorable currency movement were not sufficient to overcome E-One’s shortfall. The deterioration in the operating margin from the prior year reflects the lower volume of fire trucks produced and sold in 2007.

Orders in 2006 improved 3% over 2005, on strong aerial product demand in the Bronto articulated aerial apparatus business, particularly in the European and Asian markets as these platforms increasingly displace traditional ladders. The decline in US orders reflects effects of continuing changes in the Company’s dealer channel structure and policies. Sales increased 4% over the same period in 2005, on higher realized pricing across all product lines mainly due to pricing actions taken in 2005 to recover escalating material costs, and due to currency translation on non-US dollar denominated orders. Partially offsetting these increases was the adverse impact of lower shipments from the Ocala production facility.

The operating income increase in 2006 included a $1.6 million benefit from the recovery of costs from certain suppliers relating to a large contract substantially completed in 2004. The benefit was partially offset by $1.0 million of costs incurred for the closure of a production facility in Red Deer, Alberta. The facility was sold in December, 2006. Excluding the effect of these events, operating income increased 170%, and operating margins improved to 1.6%.

15

Environmental Solutions Operations

The following table presents the Environmental Solutions Group’s results of operations for each of the three years in the period ended December 31, 2007 ($ in millions):

	2007			2006			2005
Total orders	$	458.2		$	437.2		$	361.9
US orders		349.2			333.6			268.1
Non-US orders		109.0			103.6			93.8
Net sales		450.8			399.4			347.7
Operating income		40.2			37.1			28.9
Operating margin		8.9	%		9.3	%		8.3	%

Orders of $458.2 million in 2007 were 5% ahead of the prior year. US orders increased 5% over the prior year due to solid demand for industrial vacuum trucks and the impact of higher priced chassis associated with new 2007 EPA standards. Non-US orders increased 5% driven by stronger US exports of sewer cleaners and industrial vacuum trucks primarily to the Middle East. Net sales compared to 2006 grew 13% on higher unit volumes of primarily vacuum trucks and overall higher pricing due in part to higher priced chassis.

Operating income improved modestly over the comparable period however, the operating margin in 2007 declined as the favorable benefits of higher pricing and sales volume were more than offset by increased chassis costs, temporarily high material costs, new product development, ERP implementation, product launches and initiatives to increase manufacturing efficiency.

In 2006, orders increased 21% over 2005, showing strength and improvement across all product lines, most notably in street sweepers and vacuum trucks. Sales increased 15% over the prior year on volume strength, higher pricing to offset increases in material and component costs and favorable currency movement.

Operating income increased 28% over 2005. The operating margin benefited from the flow through of increased product demand and pricing and an improvement in production cost absorption, offset by elevated operating costs incurred from executing growth initiatives, including advancing the ERP system implementation, global expansion, and new product development.

Tool Operations

The following table presents the Tool Group’s results of operations for each of the three years in the period ended December 31, 2007 ($ in millions):

	2007			2006			2005
Total orders	$	119.3		$	122.4		$	124.4
US orders		76.0			82.6			82.5
Non-US orders		43.3			39.8			41.9
Net sales		119.3			122.9			123.6
Operating income		6.6			8.2			11.3
Operating margin		5.5	%		6.7	%		9.1	%

Orders and net sales in 2007 declined 2.5% and 2.9%, respectively, from the comparable period in 2006, with weaker die and mold sales impacted by the weak domestic automotive and housing markets. Operating margins decreased from the prior year principally as a result of the lower volume. Contributing to the revenue and operating margin decline were UAW negotiations that disrupted customer project completions, as well as automotive production shutdowns and layoffs. Favorably, strength in the Japanese and European market continues, operational productivity has increased and operating expenses have declined.

Tool segment results were restated in 2006, to exclude the results of the Cutting Tools Operations, which were presented as discontinued operations. The Company completed the sale of the Cutting Tool operations on January 31, 2007 resulting in a gain of $24.6 million.

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US orders remained flat in 2006, and non-US orders contracted marginally. Sales were similarly impacted. All businesses continue to feel the impact of a weak automotive market and softness in the US housing market. Operating income declined 27% partially as a result of approximately $0.9 million of costs associated with a voluntary workforce reduction at the Dayton, Ohio plant in 2006. In addition, a business system conversion implementation error identified in 2006 resulted in approximately $1.5 million of incremental costs associated with lost productivity during the first half of 2006. These events affected the operating margin by 2.4 percentage points, and have since been satisfactorily resolved.

Corporate Expense

Corporate expenses totaled $21.3 million in 2007, $23.4 million in 2006 and $23.8 million in 2005. The 9% reduction in 2007 expense was benefited by the receipt of $3.7 million in reimbursements from one of the Company’s insurers for certain out of pocket expenses related to the Company’s ongoing firefighter hearing loss litigation. The reimbursement essentially offset the legal expenses in 2007 associated with this litigation.

The 2% decrease in 2006 over 2005 reflects lower expenses associated with firefighter hearing loss litigation and lower bad debt expenses relating to leasing activities, offset by higher compensation-related costs, particularly stock option expense of $1.3 million, as the Company began expensing stock options in 2006 as required under FASB Statement No. 123(R).

Legal Matters

The Company has been sued by over 2,500 firefighters in numerous separate cases alleging that exposure to the Company’s sirens impaired their hearing. The Company has successfully concluded over 40 similar cases and contests the allegations. The Company continues to aggressively defend the matter. For further details regarding this and other legal matters, refer to Note 15 in the financial statements included in Item 8 of this Form 10-K.

Financial Services Activities

The Company maintained an investment of $146.8 million and $158.9 million at December 31, 2007 and 2006, respectively in lease financing and other receivables that are generated primarily by its Fire Rescue and Environmental Solutions customers. The decrease in leasing assets primarily resulted from lower new bookings, early loan payoffs, and the continued runoff of the industrial leasing portfolio resulting from the Company’s decision in 2001 to no longer extend new leases to industrial customers. Financial services assets generally have repayment terms ranging from one to fifteen years. These assets are 94% leveraged as of December 31, 2007 and 2006, consistent with their overall quality; financial services debt was $137.4 million and $149.0 million at December 31, 2007 and 2006, respectively.

Financial service revenues totaled $7.4 million, $8.2 million and $9.6 million in 2007, 2006 and 2005, respectively. The decline in 2007 and 2006 reflects the continued runoff of the Company’s industrial leasing portfolio and lower financings of municipal product sales.

Financial Condition, Liquidity and Capital Resources

During each of the three years in the period ended December 31, 2007, the Company used its cash flows from operations to pay cash dividends to shareholders and to fund sustaining and cost reduction capital needs of its operations. Beyond these uses, remaining cash was used to fund acquisitions, pay down debt, to repurchase shares of common stock and make voluntary pension contributions.

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The Company’s cash and cash equivalents totaled $16.0 million, $19.3 million and $91.9 million as of December 31, 2007, 2006 and 2005, respectively. The following table summarizes the Company’s cash flows for each of the three years in the period ended December 31, 2007 ($ in millions):

	2007			2006			2005
Operating cash flow	$	65.4		$	29.7		$	70.6
Capital expenditures		(23.5	)		(18.2	)		(16.6	)
Payments for acquisitions, net of cash acquired		(147.5	)		—			—
Proceeds from sale of discontinued businesses		65.4			—			—
Borrowing activity, net		47.9			(60.5	)		24.9
Dividends		(11.5	)		(11.5	)		(13.5	)
Purchases of treasury stock		—			(12.1	)		(5.0	)
All other, net		0.5			—			16.6
(Decrease) increase in cash	$	(3.3	)	$	(72.6	)	$	77.0

Operating cash flow increased by $35.7 million in 2007 compared to 2006. Primary working capital, composed of accounts receivable, inventory, accounts payable, and customer deposits provided $2.5 million of cash flow in 2007, compared with a use of $33.5 million in the prior year. The improvement in working capital was mainly due to lower December sales and better collection of receivables compared to 2006. Pension contributions to the Company’s defined benefit plans in the US and the UK were $6.7 million in 2007, compared to $11.3 million in 2006.

In 2006, cash flow from operations decreased by $40.9 million from 2005. The lower cash flow was driven by increases in working capital requirements to support high year-end sales; additional outsourcing to support higher sewer cleaner and aerial device production levels; and inventory pre-buying ahead of 2007 changes in US engine emission regulations; and an $11.3 million contribution to the Company’s pension plans compared to $7.7 million in 2005.

The Company’s investment in capital projects increased in 2007 compared to 2006 as the Company’s ERP system design and implementation gained momentum during the year. In 2006, the Company disposed of the production facility in Red Deer, Alberta for proceeds of $2.5 million. In 2005, the Company sold four former production facilities and two industrial lighting product lines for total cash proceeds of $22.0 million. Proceeds from the disposals of property and product lines are included in All other, net in 2006 and 2005.

In 2007, the Company acquired three businesses, Codespear LLC in January for $17.4 million in cash, Riverchase Technologies in July for $6.7 million in cash, and PIPS Technologies in August for $126.3 million in cash. See Note 11 of the notes to the consolidated financial statements for additional information on these acquisitions. The Company funded the acquisitions through cash provided by operations, additional bank borrowings, and from proceeds received from the sale of the Cutting Tool operations, included in discontinued operations in 2006, and sold in January, 2007 for $65.4 million in cash. See Note 13 of the notes to the consolidated financial statements for additional information on the sale of the Cutting Tool operations.

On April 25, 2007, the Company amended its Revolving Credit Agreement. This Second Amended and Restated Credit Agreement (“Credit Agreement”) provides for borrowings of $250.0 million and matures April, 2012. It also allows the Company to borrow up to $35 million in an alternative currency under the swing line provision. As of December 31, 2007 €22.5 million, or $32.6 million, was drawn as alternative currency and $66.0 million was drawn on the Credit Agreement for a total of $98.6 million drawn under the Credit Agreement. The Company was in compliance with all debt covenants throughout 2007.

In December, 2007, the Company amended the Loan Agreement between E-One and Banc of America Leasing & Capital, LLC to allow borrowings against the leases of E-One Inc., E-One New York, Inc., Elgin Sweeper Company and Vactor Manufacturing, Inc. The outstanding balance on this agreement was $96.6 million as of December 31, 2007.

18

At December 31, 2006, $21.8 million was drawn against the Company’s $125 million Amended Credit Agreement revolving credit line. This Amended Credit Agreement was increased from $75 million to $125 million during 2006. The Company borrowed $23.6 million in September, 2006 through the Banc of America Loan Agreement, the balance on this facility as of December 31, 2006 was $90.7 million. Also in 2006, a $65 million private placement note matured and was repaid using a combination of cash flow from operations and borrowings under the Amended Credit Agreement revolving credit line.

In March 2005, the Company entered into the loan agreement with Banc of America secured by certain leases of the E-One business. For more detail on this loan agreement refer to Note 5, contained in this Form 10-K. As of December 31, 2005 the balance on this facility was $91.4 million and there was no balance drawn under the Company’s revolving credit facility.

During 2006, the Company repurchased $12.1 million of stock under a 750,000 stock buy-back program approved by the Board of Directors. Treasury stock purchases reflect the Company’s policy to purchase shares to offset the dilutive effects of stock based compensation.

Cash dividends paid to shareholders in 2007 were $11.5 million. Cash dividends decreased to $11.5 million in 2006 from $13.5 million in 2005. The Company declared dividends of $0.24 per share in 2007, 2006 and 2005.

Total manufacturing debt, net of cash, totaled $272.7 million at December 31, 2007, or 40% of total capitalization, up from 35% in 2006. At December 31, 2006, total manufacturing debt, net of cash, was $205.7 million. The Company believes that its municipal financial services assets, due to their high overall quality, are capable of sustaining a high leverage ratio. The Company’s debt-to-capitalization ratio for its financial services activities was 94% at both December 31, 2007 and 2006. In 2007, the Company’s aggregate borrowing capacity was maintained.

The Company anticipates that capital expenditures for 2008 will approximate $37 million and that its financial resources and major sources of liquidity, including cash flow from operations and borrowing capacity, will be adequate to meet its operating and capital needs in addition to its financial commitments.

Contractual Obligations and Commercial Commitments

The following table presents a summary of the Company’s contractual obligations and payments due by period as of December 31, 2007 ($ in millions):

	Payments Due by Period
			Less than						More than
	Total		1 Year		2-3 Years		4-5 Years		5 Years
Short-term obligations	$	2.6	$	2.6	$	—	$	—	$	—
Long-term debt		423.8		79.2		105.0		213.8		25.8
Operating lease obligations		42.9		10.4		14.7		9.5		8.3
Fair value of interest rate swaps		2.2		0.4		0.2		1.6		—
Interest payments on long term debt		38.0		11.9		16.7		9.4		—
Total contractual obligations	$	509.5	$	104.5	$	136.6	$	234.3	$	34.1

The Company is party to various interest rate swap agreements in conjunction with the management of borrowing costs. As of December 31, 2007, the fair value of the Company’s net position would result in cash payments of $2.2 million. Future changes in the US interest rate environment would correspondingly affect the fair value and ultimate settlement of the contracts.

The Company also enters into foreign currency forward contracts to protect against the variability in exchange rates on cash flows of its foreign subsidiaries. As of December 31, 2007, there is no unrealized gain or loss on the Company’s foreign exchange contracts. Volatility in the future exchange rates between the US dollar and Euro and Canadian dollar will impact the final settlement.

19

The following table presents a summary of the Company’s commercial commitments and the notional amount by expiration period ($ in millions):

	Notional Amount by Expiration Period
			Less than		2-3		4-5
	Total		1 Year		Years		Years
Financial standby letters of credit	$	33.9	$	33.6	$	—	$	0.3
Performance standby letters of credit		0.6		0.4		0.2		—
Purchase obligations		2.9		2.9		—		—
Guaranteed residual value obligations		2.4		2.3		0.1		—
Funding to support China Joint Venture		7.0		3.6		3.4		—
Total commercial commitments	$	46.8	$	42.8	$	3.7	$	0.3

Financial standby letters of credit largely relate to casualty insurance policies for the Company’s workers’ compensation, automobile, general liability and product liability policies. Performance standby letters of credit represent guarantees of performance by foreign subsidiaries that engage in cross-border transactions with foreign customers.

Purchase obligations relate to commercial chassis and aerial turntables.

In limited circumstances, the Company guarantees the residual value on vehicles in order to facilitate a sale. The Company believes its risk of loss is low; no losses have been incurred to date. The inability of the Company to enter into these types of arrangements in the future due to unforeseen circumstances is not expected to have a material impact on its financial position, results of operations or cash flows.

As of December 31, 2007, the Company’s expected payment for significant contractual obligations includes approximately $9.9 million of liability for unrecognized tax benefits associated with the adoption of Financial Accounting Standards Board Interpretation No. 48. The Company cannot make a reasonably reliable estimate of the period of cash settlement for this liability.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company considers the following policies to be the most critical in understanding the judgments that are involved in the preparation of the Company’s consolidated financial statements and the uncertainties that could impact the Company’s financial condition, results of operations and cash flows.

Allowances for Doubtful Accounts

The Company performs ongoing credit evaluations of its customers. The Company’s policy is to establish, on a quarterly basis, allowances for doubtful accounts based on factors such as historical loss trends, credit quality of the present portfolio, collateral value and general economic conditions. If the historical loss trend increased or decreased 10% in 2007, the Company’s operating income would have decreased or increased by $0.1 million, respectively. Though management considers the valuation of the allowances proper and adequate, changes in the economy and/or deterioration of the financial condition of the Company’s customers could affect the reserve balances required.

Inventory Reserve

The Company performs ongoing evaluations to ensure that reserves for excess and obsolete inventory are properly identified and recorded. The reserve balance includes both specific and general reserves. Specific reserves at 100% are established based on the identification of separately identifiable obsolete products and materials. General reserves for materials are established based upon formulas which are established by reference to, among

20

other things, the level of current inventory relative to recent usage, estimated scrap value and the level of estimated future usage. Historically, this reserve policy has given a close approximation of the Company’s experience with excess and obsolete inventory. The Company does not foresee a need to revise its reserve policy in the future. However, from time to time unusual buying patterns or shifts in demand may cause large movements in the reserve balance.

Warranty Reserve

The Company’s products generally carry express warranties that provide repairs at no cost to the customer or the issuance of credit. The length of the warranty term depends on the product sold, but generally extends from six months to five years based on the terms that are generally accepted in the Company’s marketplaces. Certain components necessary to manufacture the Company’s vehicles (including chassis, engines and transmissions) are covered under an original manufacturers’ warranty. Such manufacturers’ warranties are extended directly to end customers.

The Company accrues its estimated exposure to warranty claims at the time of sale based upon historical warranty claim costs as a percentage of sales. Management reviews these estimates on a quarterly basis and adjusts the warranty provisions as actual experience differs from historical estimates. Infrequently, a material warranty issue can arise which is outside the norm of the Company’s historical experience; costs related to such issues, if any, are provided for when they become probable and estimable.

The Company’s warranty costs as a percentage of net sales totaled 1.2% in 2007, 1.0% in 2006 and 1.1% in 2005. The increase in the rate in 2007 is primarily due to increased costs in the Fire Rescue business. Management believes the reserve recorded at December 31, 2007 is appropriate. A 10% increase or decrease in the estimated warranty costs in 2007 would have decreased or increased operating income by $1.5 million, respectively.

Workers’ Compensation and Product Liability Reserves

Due to the nature of the products manufactured, the Company is subject to product liability claims in the ordinary course of business. The Company is partially self-funded for workers’ compensation and product liability claims with various retention and excess coverage thresholds. After the claim is filed, an initial liability is estimated, if any is expected, to resolve the claim. This liability is periodically updated as more claim facts become known. The establishment and update of liabilities for unpaid claims, including claims incurred but not reported, is based on the assessment by the Company’s claim administrator of each claim, an independent actuarial valuation of the nature and severity of total claims and management’s estimate. The Company utilizes a third-party claims administrator to pay claims, track and evaluate actual claims experience and ensure consistency in the data used in the actuarial valuation. Management believes that the reserve established at December 31, 2007 appropriately reflects the Company’s risk exposure. The Company has not established a reserve for potential losses resulting from hearing loss litigation (see Note 15 contained in Item 8 of this Form 10-K); if the Company is not successful in its defense after exhausting all appellate options, it will record a charge for such claims, to the extent they exceed insurance recoveries, at the appropriate time.

Goodwill Impairment

In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”, the Company ceased amortization of goodwill and indefinite-lived intangible assets effective January 1, 2002. SFAS No. 142 also requires the Company to test these assets annually for impairment; the Company performs this test in the fourth quarter unless impairment indicators arise earlier. The Company continues to amortize definite-lived intangible assets over their useful life.

A review for impairment requires judgment in estimated cash flows based upon estimates of future sales, operating income, working capital improvements and capital expenditures. Management utilizes a discounted cash flow approach to determine the fair value of the Company’s reporting units. If the sum of the expected discounted cash flows of the reporting unit is less than its carrying value, an impairment loss is required against the unit’s goodwill.

21

The annual testing conducted in 2007, 2006 and 2005 did not result in any impairment.

Although management believes that the assumptions and estimates used were reasonable, a sensitivity analysis for each reporting unit is performed along with the impairment test. The analysis indicated that a 5% change in the operating margin assumption would not have resulted in a goodwill impairment in any group.

Postretirement Benefits

The Company sponsors domestic and foreign defined benefit pension and other postretirement plans. Major assumptions used in the accounting for these employee benefit plans include the discount rate, expected return on plan assets and rate of increase in employee compensation levels. A change in any of these assumptions would have an effect on net periodic pension and postretirement benefit costs.

The following table summarizes the impact that a change in these assumptions would have on the Company’s operating income. ($ in millions):

	Assumption Change:
	25 Basis			25 Basis
	Point Increase			Point Decrease
Discount rate		0.5			(0.5	)
Return on assets		0.2			(0.2	)
Increase in employee compensation levels		(0.3	)		0.3

The weighted-average discount rate used to measure pension liabilities and costs is set by reference to published high-quality bond indices. However, these indices give only an indication of the appropriate discount rate because the cash flows of the bonds comprising the indices do not match the projected benefit payment stream of the plan precisely. For this reason, we also consider the individual characteristics of the plan, such as projected cash flow patterns and payment durations, when setting the discount rate. The weighted-average discount rate used to measure US pension liabilities decreased from 6.13% in 2006 to 6.0% in 2007. See Note 7 to the Consolidated Financial Statements for further discussion.

Stock-Based Compensation Expense

Effective January 1, 2006, the Company adopted the provisions of SFAS No. 123(R). SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options and restricted stock, to be recognized in the financial statements based on their respective grant date fair values. We use the Black-Scholes option pricing model to estimate the fair value of the stock option awards. The Black-Scholes model requires the use of highly subjective and complex assumptions, including the Company’s stock price, expected volatility, expected term, risk-free interest rate and expected dividend yield. For expected volatility, we base the assumption on the historical volatility of the Company’s common stock. The expected term of the awards is based on historical data regarding employees’ option exercise behaviors. The risk-free interest rate assumption is based on observed interest rates appropriate for the terms of the awards. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts. In addition to the requirement for fair value estimates, SFAS No. 123(R) also requires the recording of expense that is net of an anticipated forfeiture rate. Therefore, only expenses associated with awards that are ultimately expected to vest are included in our financial statements. Our forfeiture rate is determined based on our historical option cancellation experience.

We evaluate the Black-Scholes assumptions that we use to value our awards on a quarterly basis. With respect to the forfeiture rate, we revise the rate if actual forfeitures differ from our estimates. If factors change and we employ different assumptions, stock-based compensation expense related to future stock-based payments may differ significantly from estimates recorded in prior periods.

Financial Market Risk Management

The Company is subject to market risk associated with changes in interest rates and foreign exchange rates. To mitigate this risk, the Company utilizes interest rate swaps and foreign currency options and forward contracts. The

22

Company does not hold or issue derivative financial instruments for trading or speculative purposes and is not party to leveraged derivatives contracts.

Interest Rate Risk

The Company manages its exposure to interest rate movements by targeting a proportionate relationship between fixed-rate debt to total debt generally within established percentages of between 40% and 60%. The Company uses funded fixed-rate borrowings as well as interest rate swap agreements to balance its overall fixed/floating interest rate mix.

Of the Company’s debt at December 31, 2007, 32% was used to support financial services assets; the weighted average remaining life of those assets is typically under three years and the debt is substantially match-funded to the financing assets.

The following table presents the principal cash flows and weighted average interest rates by year of maturity for the Company’s total debt obligations held at December 31, 2007 ($ in millions):

	Expected Maturity Date																					Fair
	2008			2009			2010			2011			2012			Thereafter			Total			Value
Fixed rate	$	59.3		$	44.3		$	40.7		$	37.3		$	77.9		$	15.6		$	275.1		$	278.9
Average interest rate		5.9	%		5.8	%		5.7	%		5.6	%		5.4	%		6.0	%		5.7	%		—
Variable rate	$	22.6		$	0.0		$	20.0		$	0.0		$	98.6		$	10.0		$	151.2		$	151.1
Average interest rate		6.6	%		—			6.7	%		—			6.9	%		6.1	%		6.7	%		—

The following table presents notional amounts and weighted average interest rates by expected (contractual) maturity date for the Company’s interest rate swap contracts held at December 31, 2007 ($ in millions). Notional amounts are used to calculate the contractual payments to be exchanged under the contract. Weighted average variable rates are based on implied forward rates in the yield curve at the reporting date.

	Expected Maturity Date																				Fair
	2008			2009			2010			2011			2012			Thereafter			Total		Value
Pay fixed, receive variable	$	65.0		$	5.0		$	25.0		$	—		$	—		$	—		$	95.0	$	(0.5	)
Average pay rate		5.1	%		3.8	%		4.8	%		—			—			—			—		—
Average receive rate		4.7	%		4.8	%		4.7	%		—			—			—			—		—
Receive fixed, pay variable	$	13.6		$	3.6		$	3.6		$	3.6		$	34.3		$	40.0		$	98.7	$	(0.4	)
Average pay rate		7.7	%		7.4	%		7.4	%		7.5	%		7.4	%		6.5	%		—		—
Average receive rate		6.4	%		6.6	%		6.6	%		6.6	%		7.6	%		5.2	%		—		—

See Note 8 to the consolidated financial statements in this Form 10-K for a description of these agreements. A 100 basis point increase or decrease in variable interest rates in 2007 would have increased or decreased interest expense by $1.5 million, respectively.

Foreign Exchange Rate Risk

The Company has foreign currency exposures related to buying and selling in currencies other than the local currency in which it operates. The Company utilizes foreign currency options and forward contracts to manage these risks.

23

The following table summarizes the Company’s foreign currency derivative instruments as of December 31, 2007. All are expected to settle in 2008 ($ in millions):

	Expected
	Settlement Date
	2008
			Average
	Notional		Contract		Fair
	Amount		Rate		Value
Forward contracts:
Buy Euros, sell US dollars	$	15.1		1.5	$	(0.1	)
Buy US dollars, sell Euros		20.0				(1.0	)
Buy US dollars, sell CAD		13.9				(1.8	)
Other currencies		6.9				(0.3	)
Total forward contracts		55.9				(3.2	)
Options:
Buy US dollars, sell Euros		10.3		1.3		—
Total foreign currency derivatives	$	66.2			$	(3.2	)

See Note 8 to the consolidated financial statements in this Form 10-K for a description of these agreements.

Forward exchange contracts are recorded as a natural hedge when the hedged item is a recorded asset or liability that is revalued each accounting period, in accordance with SFAS No. 52, “Foreign Currency Translation”. For derivatives designated as natural hedges, changes in fair values are reported in the “Other income (expense)” line of the Consolidated Statements of Operations.

Other Matters

The Company has a business conduct policy applicable to all employees and regularly monitors compliance with that policy. The Company has determined that it had no significant related party transactions in each of the three years in the period ended December 31, 2007.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The information contained under the caption Financial Market Risk Management included in Item 7 of this Form 10-K is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data.

24

FEDERAL SIGNAL CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm		26
Consolidated Balance Sheets as of December 31, 2007 and 2006		28
Consolidated Statements of Operations for the Years Ended December 31, 2007, 2006 and 2005		29
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2007, 2006 and 2005		30
Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006, and 2005		31
Notes to Consolidated Financial Statements		32

25

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

of Federal Signal Corporation

We have audited the accompanying consolidated balance sheets of Federal Signal Corporation as of December 31, 2007 and 2006, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2007. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Federal Signal Corporation at December 31, 2007 and 2006, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2007, in accordance with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Notes 1 and 6 to the consolidated financial statements, on January 1, 2007, Federal Signal Corporation changed its method of accounting for uncertain tax positions to conform with Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.” On January 1, 2006, Federal Signal Corporation changed its method of accounting for share-based awards to conform with Statement of Financial Accounting Standards (SFAS) No. 123(R), “Share-Based Payment.” Additionally, on December 31, 2006, Federal Signal Corporation changed its method of accounting for defined benefit pension and other postretirement benefit plans to conform with SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106 and 132(R).”

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Federal Signal Corporation’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2008, expressed an unqualified opinion thereon.

Ernst & Young LLP

Chicago, IL

February 26, 2008

26

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

of Federal Signal Corporation

We have audited Federal Signal Corporation’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Federal Signal Corporation’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in Management’s Annual Report on Internal Control over Financial Reporting and Attestation Report of the Registered Public Accounting Firm. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Federal Signal Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets as of December 31, 2007 and 2006, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2007 of Federal Signal Corporation and our report dated February 26, 2008 expressed an unqualified opinion thereon.

Ernst & Young LLP

Chicago, IL

February 26, 2008

27

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,
	2007			2006
	($ in millions)
ASSETS
Manufacturing activities:
Current assets
Cash and cash equivalents	$	16.0		$	19.3
Accounts receivable, net of allowances for doubtful accounts of $5.0 million and $3.0 million, respectively		176.1			192.1
Inventories — Note 2		205.5			174.2
Other current assets		49.1			33.2
Total current assets		446.7			418.8
Properties and equipment — Note 3		97.6			85.7
Other assets
Goodwill — Note 12		406.7			310.6
Intangible assets, net — Note 12		66.0			8.2
Deferred charges and other assets		8.8			9.4
Total manufacturing assets		1,025.8			832.7
Assets of discontinued operations — Note 13		4.5			57.8
Financial services activities — Lease financing and other receivables, net of allowances for doubtful accounts of $3.6 million and $4.0 million, respectively, and net of unearned finance revenue — Note 4		146.8			158.9
Total assets	$	1,177.1		$	1,049.4
LIABILITIES AND SHAREHOLDERS’ EQUITY
Manufacturing activities:
Current liabilities Short-term borrowings — Note 5	$	2.6		$	30.3
Current portion of long-term borrowings — Note 5		45.4			34.4
Accounts payable		82.7			90.0
Accrued liabilities
Compensation and withholding taxes		33.7			35.9
Customer deposits		34.8			23.0
Other		59.8			48.9
Total current liabilities		259.0			262.5
Long-term borrowings — Note 5		240.7			160.3
Long-term pension and other liabilities		32.3			39.3
Deferred income taxes — Note 6		45.5			20.7
Total manufacturing liabilities		577.5			482.8
Liabilities of discontinued operations — Note 13		16.9			31.2
Financial services activities — Borrowings — Note 5		137.4			149.0
Total liabilities		731.8			663.0
Shareholders’ equity — Notes 9 and 10
Common stock, $1 par value per share, 90.0 million shares authorized, 49.4 million and 49.1 million shares issued, respectively		49.4			49.1
Capital in excess of par value		103.2			99.8
Retained earnings		333.8			290.7
Treasury stock, 1.5 million and 1.5 million shares, respectively, at cost		(30.1	)		(30.1	)
Accumulated other comprehensive (loss) income
Foreign currency translation, net		15.9			4.2
Net derivative loss, cash flow hedges, net		(2.0	)		—
Unrecognized pension and postretirement losses, net		(24.9	)		(27.3	)
Total		(11.0	)		(23.1	)
Total shareholders’ equity		445.3			386.4
Total liabilities and shareholders’ equity	$	1,177.1		$	1,049.4

See notes to consolidated financial statements.

28

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Years Ended December 31,
	2007			2006			2005
	($ in millions, except per share data)
Net sales	$	1,268.1		$	1,211.6		$	1,119.0
Costs and expenses
Cost of sales		971.2			927.2			867.5
Selling, engineering, general and administrative		232.8			214.5			193.8
Gain on sale of product line		—			—			(6.7	)
Restructuring charges		—			—			0.7
Operating income		64.1			69.9			63.7
Interest expense		25.9			25.0			23.1
Other income (expense)		(4.2	)		(2.2	)		0.2
Income before income taxes		34.0			42.7			40.8
Income tax benefit (charge) — Note 6		(4.2	)		(8.3	)		3.1
Income from continuing operations		29.8			34.4			43.9
Discontinued operations — Note 13:
Gain (loss) from discontinued operations and disposal, net of tax (benefit) charge of $5.6 million, $(2.0) million and $(11.5) million, respectively		25.1			(11.7	)		(48.5	)
Net income (loss)	$	54.9		$	22.7		$	(4.6	)
Basic and diluted earnings (loss) per share Earnings from continuing operations	$	0.62		$	0.72		$	0.91
Gain (loss) from discontinued operations and disposal, net of taxes		0.53			(0.25	)		(1.01	)
Net earnings (loss) per share	$	1.15		$	0.47		$	(0.10	)

See notes to consolidated financial statements.

29

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

	Common		Capital in												Accumulated
	Stock		Excess of									Deferred			Other
	Par		Par			Retained			Treasury			Stock			Comprehensive
	Value		Value			Earnings			Stock			Awards			Loss			Total
	($ in millions)
Balance at December 31, 2004		48.6		94.4			295.8			(13.6	)		(3.1	)		(9.4	)		412.7
Comprehensive income:
Net loss							(4.6	)											(4.6	)
Foreign currency translation																(8.9	)		(8.9	)
Unrealized gains on derivatives, net of $0.3 million tax expense																0.5			0.5
Minimum pension liability, net of $5.3 million tax benefit																(8.9	)		(8.9	)
Comprehensive loss																			(21.9	)
Cash dividends declared							(11.6	)											(11.6	)
Share based payments:
Exercise of stock options				0.3															0.3
Stock awards granted		0.2		4.7						(0.1	)		(4.8	)					—
Amortization of deferred stock awards													2.1						2.1
Treasury stock:
Purchases										(5.0	)								(5.0	)
Other				(1.2	)		(0.7	)		0.6			1.0						(0.3	)
Balance at December 31, 2005		48.8		98.2			278.9			(18.1	)		(4.8	)		(26.7	)		376.3
Comprehensive loss:
Net income							22.7												22.7
Foreign currency translation																10.0			10.0
Unrealized losses on derivatives, net of $1.3 million tax benefit																(2.2	)		(2.2	)
Minimum pension liability, net of $2.3 million tax expense																4.0			4.0
Comprehensive income:																			34.5
Adjustments to adopt SFAS 158, net of $4.8 million tax benefit																(8.2	)		(8.2	)
Cash dividends declared							(11.5	)											(11.5	)
Reclassification of deferred stock awards				(4.8	)								4.8						—
Share based payments:
Exercise of stock options				0.5															0.5
Excess tax benefits on share based payments				0.3															0.3
Awards and options		0.3		5.5															5.8
Treasury stock:
Purchases										(12.1	)								(12.1	)
Other				0.1			0.6			0.1									0.8
Balance at December 31, 2006	$	49.1	$	99.8		$	290.7		$	(30.1	)	$	—		$	(23.1	)	$	386.4
Comprehensive loss:
Net income							54.9												54.9
Foreign currency translation																11.7			11.7
Unrealized losses on derivatives, net of $1.2 million tax benefit																(2.0	)		(2.0	)
Amortization of pension and postretirement losses, net of $1.8 million tax expense																1.9			1.9
Comprehensive income:																			66.5
Adjustments to adopt FIN 48							(0.7	)											(0.7	)
Adjustments to adopt SFAS 158, net of $0.0 million tax expense							0.4									0.5			0.9
Cash dividends declared							(11.5	)											(11.5	)
Share based payments:
Stock awards and options		0.3		3.2															3.5
Excess tax benefits on share based payments				0.2															0.2
Balance at December 31, 2007	$	49.4	$	103.2		$	333.8		$	(30.1	)	$	—		$	(11.0	)	$	445.3

See notes to consolidated financial statements.

30

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years Ended
	December 31,
	2007			2006			2005
	($ in millions)
Operating activities
Net income (loss)	$	54.9		$	22.7		$	(4.6	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
(Gain) loss on discontinued operations and disposal		(25.1	)		11.7			48.5
Non-cash restructuring charges		—			—			0.3
Gain on sale of product line		—			—			(6.7	)
Loss on joint venture		0.8			1.9			—
Gain on sale of properties and equipment		—			(1.4	)		(2.3	)
Depreciation and amortization		21.2			17.9			18.2
Stock option and award compensation expense		3.5			5.8			2.1
Provision for doubtful accounts		1.4			(1.4	)		(2.3	)
Deferred income taxes		18.3			(2.7	)		(39.7	)
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions of companies
Accounts receivable		27.9			(21.2	)		15.1
Inventories		(25.3	)		(15.8	)		4.3
Other current assets		0.5			(1.3	)		(3.4	)
Lease financing and other receivables		12.1			10.4			27.2
Accounts payable		(10.7	)		14.3			4.6
Customer deposits		10.6			(10.8	)		9.2
Accrued liabilities		(1.0	)		(2.1	)		(0.1	)
Income taxes		(15.1	)		2.3			0.5
Pension contributions		(6.7	)		(11.3	)		(7.7	)
Other		(1.8	)		6.0			6.7
Net cash provided by continuing operating activities		65.5			25.0			69.9
Net cash (used for) provided by discontinued operating activities		(0.1	)		4.7			0.7
Net cash provided by operating activities		65.4			29.7			70.6
Investing activities
Purchases of properties and equipment		(23.5	)		(18.2	)		(16.6	)
Proceeds from sales of properties and equipment		0.7			2.5			10.1
Proceeds from sale of product line		—			—			11.9
Investment in joint venture		—			(2.0	)		(0.7	)
Payments for acquisitions, net of cash acquired		(147.5	)		—			—
Other, net		(1.7	)		(0.9	)		(1.2	)
Net cash (used for) provided by continuing investing activities		(172.0	)		(18.6	)		3.5
Net cash provided by (used for) discontinued investing activities		65.4			(0.7	)		(4.2	)
Net cash used for investing activities		(106.6	)		(19.3	)		(0.7	)
Financing activities
(Reduction) increase in short-term borrowings, net		(28.3	)		23.7			53.8
Proceeds from issuance of long-term borrowings		230.1			23.6			104.2
Repayment of long-term borrowings		(153.9	)		(107.8	)		(133.1	)
Purchases of treasury stock		—			(12.1	)		(5.0	)
Cash dividends paid to shareholders		(11.5	)		(11.5	)		(13.5	)
Other, net		0.4			1.1			0.7
Net cash provided by (used for) continuing financing activities		36.8			(83.0	)		7.1
Net cash used for discontinued financing activities		—			—			—
Net cash provided by (used for) financing activities		36.8			(83.0	)		7.1
Effects of foreign exchange rate changes on cash		1.1			—			—
(Decrease) increase in cash and cash equivalents		(3.3	)		(72.6	)		77.0
Cash and cash equivalents at beginning of year		19.3			91.9			14.9
Cash and cash equivalents at end of year	$	16.0		$	19.3		$	91.9

See notes to consolidated financial statements.

31

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation:  The consolidated financial statements include the accounts of Federal Signal Corporation and all of its significant subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Assets and liabilities of foreign subsidiaries, other than those whose functional currency is the US dollar, are translated at current exchange rates with the related translation adjustments reported in stockholders’ equity as a component of accumulated other comprehensive income (loss). Income statement accounts are translated at the average exchange rate during the period. Where the US dollar is considered the functional currency, monetary assets and liabilities are translated at current exchange rates with the related adjustment included in net income. Non-monetary assets and liabilities are translated at historical exchange rates. The Company incurs foreign currency transaction gains/losses relating to assets and liabilities that are denominated in a currency other than the functional currency. For 2007, 2006 and 2005, the Company incurred foreign currency transaction losses, included in other expenses in the Statement of Operations, of $1.2 million, $0.7 million and $0.6 million, respectively.

Principles of consolidation:  The consolidated financial statements include the accounts of Federal Signal Corporation and all of its subsidiaries. All significant intercompany balances and transactions have been eliminated.

Changes in presentation:  Certain balances in 2006 have been reclassified to conform to the 2007 presentation. The effect of this has been to reclassify $11.4 million from current liabilities to long-term pension and other liabilities in 2006.

Cash equivalents:  The Company considers all highly liquid investments with a maturity of three-months or less, when purchased, to be cash equivalents.

Accounts receivable, lease financing and other receivables and allowances for doubtful accounts: A receivable is considered past due if payments have not been received within agreed upon invoice terms. The Company’s policy is generally to not charge interest on trade receivables after the invoice becomes past due, but to charge interest on lease receivables. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments on the outstanding accounts receivable and outstanding lease financing and other receivables. The allowances are each maintained at a level considered appropriate based on historical and other factors that affect collectibility. These factors include historical trends of write-offs, recoveries and credit losses; portfolio credit quality; and current and projected economic and market conditions. If the financial condition of the Company’s customers were to deteriorate, resulting in a reduced ability to make payments, additional allowances may be required.

Inventories:  The Company’s inventories are stated at the lower of cost or market. At December 31, 2007 and 2006, approximately 58% and 43% of the Company’s inventories were costed using the FIFO method, respectively. The remaining portion of the Company’s inventories is costed using the LIFO (last-in, first-out) method. Included in the cost of inventories are raw materials, direct wages and associated production costs.

Properties and depreciation:  Properties and equipment are stated at cost. Depreciation, for financial reporting purposes, is computed principally on the straight-line method over the estimated useful lives of the assets. Depreciation ranges from 8 to 40 years for buildings and 3 to 15 years for machinery and equipment. Leasehold improvements are depreciated over the shorter of the remaining life of the lease or the useful life of the improvement. Property, plant and equipment and other long-term assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets. Such analyses necessarily involve significant judgment.

32

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

Intangible assets: Intangible assets principally consist of costs in excess of fair values of net assets acquired in purchase transactions. These assets are assessed yearly for impairment in the fourth quarter and also between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Definite lived intangible assets are amortized using the straight-line method.

Stock-based compensation plans:  The Company has various stock-based compensation plans, described more fully in Note 9. Prior to January 1, 2006, as permitted by Statement 123, the Company accounted for these plans using the intrinsic value method of APB Opinion No. 25. Stock compensation expense reflected in net income prior to January 1, 2006 related to restricted stock awards which vested over four years through 2004 and three years beginning in 2005. With regard to stock options granted, no stock-based employee compensation expense was reflected in net income (loss) prior to January 1, 2006, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock at the date of grant which was the measurement date.

The Company adopted Statement 123(R) on January 1, 2006 using the modified prospective method in which compensation cost is recognized (a) based on the requirements of Statement 123(R) for all share-based payments granted after January 1, 2006 and (b) based on the requirements of Statement 123(R) for all awards granted to employees prior to January 1, 2006 that remained unvested on January 1, 2006. The fair value of options is estimated using a Black-Scholes option pricing model. Results for prior periods have not been restated.

Accordingly, the adoption of Statement 123(R)’s fair value method reduced the Company’s income before taxes by $2.3 million in the year ended December 31, 2006. Had we adopted Statement 123(R) in prior periods, the impact of that standard would have approximated the impact of Statement 123 as described in the disclosure of pro forma net income and earnings per share in Note 9.

Statement 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow. This requirement decreased net operating cash flows and increased net financing cash flows by $0.2 million and $0.3 million in the years ended December 31, 2007 and 2006, respectively. The amount included in operating cash flows recognized for such excess tax deductions was $0.3 million in the year ended December 31, 2005.

Use of estimates:  The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Warranty:  Sales of many of the Company’s products carry express warranties based on the terms that are generally accepted in the Company’s marketplaces. The Company records provisions for estimated warranty at the time of sale based on historical experience and periodically adjusts these provisions to reflect actual experience. Infrequently, a material warranty issue can arise which is beyond the scope of the Company’s historical experience. The Company provides for these issues as they become probable and estimable.

Product liability and workers’ compensation liability: Due to the nature of the Company’s products, the Company is subject to claims for product liability and workers’ compensation in the normal course of business. The Company is self-funded for a portion of these claims. The Company establishes a reserve using a third-party actuary for any known outstanding matters, including a reserve for claims incurred but not yet reported.

Financial instruments:  The Company enters into agreements (derivative financial instruments) to manage the risks associated with interest rates and foreign exchange rates. The Company does not actively trade such instruments nor enter into such agreements for speculative purposes. The Company principally utilizes two types of derivative financial instruments: 1) interest rate swaps to manage its interest rate risk, and 2) foreign currency

33

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

forward exchange and option contracts to manage risks associated with sales and expenses (forecast or committed) denominated in foreign currencies.

On the date a derivative contract is entered into, the Company designates the derivative as one of the following types of hedging instruments and accounts for the derivative as follows:

Fair value hedge:  A hedge of a recognized asset or liability or an unrecognized firm commitment is declared as a fair value hedge. For fair value hedges, both the effective and ineffective portions of the changes in the fair value of the derivative, along with the gain or loss on the hedged item that is attributable to the hedged risk, are recorded in earnings and reported in the consolidated statements of operations on the same line as the hedged item.

Cash flow hedge:  A hedge of a forecast transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability is declared as a cash flow hedge. The effective portion of the change in the fair value of a derivative that is declared as a cash flow hedge is recorded in accumulated other comprehensive income. When the hedged item impacts the statement of operations, the gain or loss previously included in accumulated other comprehensive income is reported on the same line in the consolidated statements of operations as the hedged item. In addition, both the fair value of changes excluded from the Company’s effectiveness assessments and the ineffective portion of the changes in the fair value of derivatives used as cash flow hedges are reported in selling, general and administrative expenses in the consolidated statements of operations.

The Company formally documents its hedge relationships, including identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction. Derivatives are recorded in the consolidated balance sheets at fair value in other deferred charges and assets and other accrued liabilities. This process includes linking derivatives that are designated as hedges of specific forecast transactions. The Company also formally assesses, both at inception and at least quarterly thereafter, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in either the fair value or cash flows of the hedged item. If it is determined that a derivative ceases to be a highly effective hedge, or if the anticipated transaction is no longer likely to occur, the Company discontinues hedge accounting, and any deferred gains or losses are recorded in selling, general and administrative expenses. Amounts related to terminated interest rate swaps are deferred and amortized as an adjustment to interest expense over the original period of interest exposure, provided the designated liability continues to exist or is probable of occurring.

Earnings (loss) per share:  Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average common shares outstanding, which totaled 47.9 million, 48.0 million and 48.2 million for 2007, 2006 and 2005, respectively. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average common shares outstanding plus additional common shares that would have been outstanding assuming the exercise of stock options that are dilutive. The Company uses the treasury stock method to calculate dilutive shares. In 2005, 0.1 million employee stock options were considered potential dilutive common shares, but were required to be excluded from the denominator of the calculation as anti-dilutive, due to the net loss for the year ended December 31, 2005. The weighted average number of shares outstanding for diluted earnings (loss) per share were 47.9 million, 48.0 million and 48.2 million for 2007, 2006 and 2005, respectively. In 2007, 2006 and 2005, options to purchase 2.4 million, 2.6 million and 2.7 million shares of common stock were outstanding, respectively.

Revenue recognition:  The Company recognizes revenue when all of the following are satisfied: persuasive evidence of an arrangement exists, the price is fixed or determinable, collectibility is reasonably assured and title has passed or services have been rendered. Typically, title passes at time of shipment, however occasionally title passes later or earlier than shipment due to customer contracts or letter of credit terms. Infrequently, a sales contract qualifies for percentage of completion or for multiple-element accounting. For percentage of completion revenues, the Company utilizes the cost-to-cost method and the contract payments are received as progress payments as costs are incurred or based on installation and performance milestones. At the inception of a sales-type lease, the Company records the product sales price and related costs and expenses of the sale. Financing revenues are included

34

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

in income over the life of the lease. Management believes that all relevant criteria and conditions are considered when recognizing revenues.

Net sales:  Net sales are net of returns and allowances. Returns and allowances are calculated and recorded as a percentage of revenue based upon historical returns. Gross sales includes sale of products, lease financing revenues and billed freight related to product sales. Freight and lease financing revenues have not historically comprised a material component of gross sales.

Product shipping costs:  Product shipping costs are expensed as incurred and are included in cost of sales.

Postretirement benefits: In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132R (’SFAS 158’). Companies were required to adopt certain provisions of SFAS 158 for the fiscal year ended December 31, 2006. Under SFAS 158, the funded status of each pension and other postretirement benefit plan at the year-end measurement date is required to be reported as an asset (for overfunded plans) or a liability (for underfunded plans), replacing the accrued or prepaid asset currently recorded and reversing any amounts previously recorded with respect to any additional minimum liability.

SFAS 158 requires disclosure of the incremental effect of adopting the standard on individual line items of the balance sheet. Adopting SFAS 158 at December 31, 2006 had the following effect on retirement benefit-related amounts reported in the balance sheet:

Incremental Effect of Adopting SFAS 158

December 31, 2006

	Before Adoption of			Adjustments to			After Adoption of
	SFAS 158*			Adopt SFAS 158			SFAS 158
	Increase/(decrease)
Assets:
Noncurrent benefit asset	$	12.3		$	(12.3	)	$	—
Intangible asset		0.4			(0.4	)		—
Deferred tax asset **		11.5			4.8			16.3
Liabilities:
Noncurrent benefit liability	$	21.7		$	(0.7	)	$	21.0
Shareholders’ Equity:
Accumulated Other Comprehensive Income	$	(19.1	)	$	(8.2	)	$	(27.3	)

*	Includes effects of additional minimum liability, if any, that would have been recognized at December 31, 2007.
**	Assumes a 37% tax rate.

35

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

Shareholders’ Equity and Accumulated Other Comprehensive Income changed due to the change in the additional minimum liability that would have been recognized at December 31, 2006, and the incremental effect of adopting SFAS 158 as follows:

Changes in Shareholders’ Equity
Year ended December 31, 2006

						Accumulated Other
				Comprehensive		Comprehensive
	Total			Income		Income
Balance at December 31, 2005						$	(23.1	)
Decrease in Additional Minimum Liability included in Other Comprehensive Income, net of tax		4.0			4.0		4.0
Adjustments to adopt SFAS 158, net of tax		(8.2	)				(8.2	)
Balance at December 31, 2006						$	(27.3	)

The Company also adopted the measured date provisions of SFAS 158 as of December 31, 2007. Previously, the Company’s non-US defined benefit plan had a September 30 measurement date. The effect of this adoption increased pension assets and retained earnings by $0.4 million.

Investments: In 2005, the Company entered into an agreement with the Shanghai Environmental Sanitary Vehicle and Equipment Factory (SHW) and United Motor Works (UMW) to form a joint venture to manufacture specialty vehicles in the Peoples Republic of China. The joint venture is initially intended to provide a platform for our Environmental Solutions Group’s (ESG) expansion into Asia and globally. Our investment in the joint venture is accounted for under the equity method in accordance with APB No. 18. The Company’s 50% interest in the venture does not represent a controlling interest. The investment is carried at cost or less, adjusted to reflect our proportionate share of income or loss. The Company would recognize a loss on this investment should there be an other-than-temporary loss in value of the investment. Losses related to the joint venture are included in other expenses in the Statements of Operations and amounted to $3.3 million, $1.9 million, and $0.0 million in each of the three years ended December 31, 2007, 2006, and 2005, respectively. Our investment in the China joint venture is included together with “Other deferred charges and assets” in the Consolidated Balance Sheet. The carrying amount of this investment was $0.0 million and $0.8 million at December 31, 2007 and 2006, respectively.

NOTE 2 — INVENTORIES

Inventories at December 31 are summarized as follows:

	2007		2006
Raw materials	$	79.4	$	73.9
Work in process		49.8		40.8
Finished goods		76.3		59.5
Total inventories	$	205.5	$	174.2

If the Company had used the first-in, first-out cost method exclusively, which approximates replacement cost, inventories would have aggregated $220.1 million and $187.9 million at December 31, 2007 and 2006, respectively.

36

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

NOTE 3 — PROPERTIES AND EQUIPMENT

Properties and equipment at December 31 are summarized as follows:

	2007			2006
Land	$	8.1		$	7.6
Buildings and improvements		54.1			49.3
Machinery and equipment		227.6			205.7
Accumulated depreciation		(192.2	)		(176.9	)
Total properties and equipment	$	97.6		$	85.7

NOTE 4 — LEASE FINANCING AND OTHER RECEIVABLES

As an added service to its customers, the Company is engaged in financial services activities. These activities primarily consist of providing long-term financing for certain US customers purchasing vehicle-based products from the Company’s Fire Rescue and Environmental Solutions groups. A substantial portion of these receivables is due from municipalities and volunteer fire departments. Financing is provided through sales-type lease contracts with terms that generally range from one to fifteen years. The amounts recorded as lease financing receivables represent amounts equivalent to normal selling prices less subsequent customer payments.

Leases past due more than 90 days are evaluated and a determination made whether or not to place the lease in a non-accrual status based upon customer payment history and other relevant information at the time of the evaluation.

Financial service revenues totaled $7.4 million, $8.2 million and $9.6 million in 2007, 2006 and 2005 respectively. The decline in 2007 and 2006 reflects the continued runoff of the Company’s industrial leasing portfolio and lower financings of municipal product sales.

Lease financing and other receivables will become due as follows: $67.3 million in 2008, $21.3 million in 2009, $17.1 million in 2010, $13.6 million in 2011, $11.3 million in 2012 and $19.8 million thereafter. At December 31, 2007 and 2006, unearned finance revenue on these leases aggregated $15.2 million and $19.2 million, respectively.

NOTE 5 — DEBT

Short-term borrowings at December 31 consisted of the following:

	2007		2006
Capital lease obligations	$	1.8	$	—
Revolving Credit Facility		—		21.8
Other foreign lines of credit		0.8		8.5
Total short-term borrowings	$	2.6	$	30.3

37

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

Long-Term Borrowings at December 31 consisted of the following:

	2007			2006
6.79% Unsecured Private Placement note with annual installments of $10.0 million due 2007-2011	$	40.0		$	50.0
6.37% Unsecured Private Placement note with annual installments of $10.0 million due 2005-2008		10.0			20.0
6.60% Unsecured Private Placement note with annual installments of $7.1 million due 2005-2011		28.6			35.7
4.93% Unsecured Private Placement note with annual installments of $8.0 million due 2008-2012		40.0			40.0
5.24% Unsecured Private Placement note due 2012		60.0			60.0
Unsecured Private Placement note, floating rate (5.87% and 6.41% at December 31, 2007 and 2006, respectively) due 2008-2013		50.0			50.0
Second Amended Loan Agreement (described below), due 2007-2017		96.6			90.7
Alternative Currency Facility (within Revolving Credit Facility)		32.6			—
Revolving Credit Facility		66.0			—
Other		—			0.7
		423.8			347.1
Fair value of interest rate swaps		(1.0	)		(4.6	)
Unamortized balance of terminated fair value interest rate swaps		0.7			1.2
		423.5			343.7
Less current maturities, excluding financial services activities		(45.4	)		(34.4	)
Less financial services activities — borrowings		(137.4	)		(149.0	)
Total long-term borrowings, net	$	240.7		$	160.3

On April 25, 2007, the Company entered into the Second Amended and Restated Credit Agreement (“Second Amended Credit Agreement”) thereby replacing its previous Revolving Credit Facility. The Second Amended Credit Agreement provided for borrowings up to $250.0 million and matures April 25, 2012. Borrowings under the Second Amended Credit Agreement bear interest, at the Company’s options, at either the Base Rate or LIBOR, plus an applicable margin. The applicable margin ranges from 0.00% to 0.75% for Base Rate borrowings and 1.00% to 2.00% for LIBOR borrowings depending on the Company’s total indebtedness to capital ratio.

On September 6, 2007 Federal Signal of Europe B.V. y CIA, SC a subsidiary of the Company, entered into a Supplemental Agreement to the Company’s Second Amended and Restated Credit Agreement (“Alternative Currency Facility”) whereby Federal Signal of Europe B.V. y CIA, SC, became a Designated Alternative Currency Borrower for the purpose of making swing loans denominated in Euros.

The Second Amended Credit Agreement contains certain financial covenants for each fiscal quarter ending on or after March 31, 2007 that includes maintaining an interest coverage ratio of not less than 3.0 to 1.0.

As of December 31, 2007, €22.5 million, or $32.6 million, was drawn on the Alternative Currency Facility and $66.0 million was drawn on the Second Amended Credit Agreement for a total of $98.6 million drawn under the Second Amended Credit Agreement leaving available borrowings of $151.4 million.

Weighted average interest rates on short-term borrowings were 6.95% and 7.60% at December 31, 2007 and 2006, respectively.

38

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

On March 24, 2005, E-One, Inc. (“E-One”), a wholly-owned subsidiary of Federal Signal Corporation, entered into a loan agreement with Banc of America Leasing & Capital, LLC (the “Loan Agreement”) under a nonrecourse loan facility (the “Facility”). E-One’s indebtedness and other obligations under the Loan Agreement are payable out of certain customer leases of emergency equipment and other collateral as described in the Loan Agreement. Under the Loan Agreement, E-One may borrow additional amounts under the Facility, at the discretion of the lender, in an amount equal to 95% of the net present value of any additional customer leases included under the Facility.

In December 2007, the Loan Agreement was amended to include customer leases of E-One Inc., E-One New York, Inc., Elgin Sweeper Company and Vactor Manufacturing, Inc. under the Facility (“Amended Loan Agreement”).

The Amended Loan Agreement contains covenants and events of default that are ordinary and customary for similar credit facilities. At the election of the Company, upon each new draw down to increase the loan, the Amended Loan Agreement bears interest at a fixed rate or a floating LIBOR rate. The $96.6 million outstanding at December 31, 2007 bore interest at an average fixed rate of 5.95% as of December 31, 2007. The obligations under the Amended Loan Agreement are nonrecourse to the Company, except with respect to certain representations and warranties.

Aggregate maturities of total borrowings amount to approximately $81.8 million in 2008, $44.3 million in 2009, $60.7 million in 2010, $37.3 million in 2011, $176.5 million in 2012 and $25.8 million thereafter. The fair values of these borrowings aggregated $430.1 million and $381.8 million at December 31, 2007 and 2006, respectively. Included in 2008 maturities of $81.8 million are $33.8 million attributable to financial services borrowings and $2.6 million of short-term revolving debt.

For each of the above Private Placement notes, significant covenants consist of a maximum debt-to-capitalization ratio and minimum net worth. At December 31, 2007, all of the Company’s retained earnings were free of any restrictions and the Company was in compliance with the financial covenants and agreements.

At December 31, 2007 and 2006, deferred financing fees totaled $1.5 million and $1.0 million, respectively, and are included in other deferred charges and assets on the balance sheet.

The Company paid interest of $26.2 million in 2007, $24.4 million in 2006 and $24.8 million in 2005. See Note 8 regarding the Company’s utilization of derivative financial instruments relating to outstanding debt.

39

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

NOTE 6 — INCOME TAXES

The provision/(benefit) for income taxes for each of the three years in the period ended December 31, 2007 consisted of the following:

	2007			2006			2005
Current:
Federal	$	(20.8	)	$	5.9		$	28.4
Foreign		6.8			4.9			7.1
State and local		(0.1	)		0.2			1.1
		(14.1	)		11.0			36.6
Deferred:
Federal		17.9			(3.4	)		(38.9	)
Foreign		(0.1	)		0.2			(0.4	)
State and local		0.5			0.5			(0.4	)
		18.3			(2.7	)		(39.7	)
Total income taxes	$	4.2		$	8.3		$	(3.1	)

Differences between the statutory federal income tax rate and the effective income tax rate for each of the three years in the period ended December 31, 2007 are summarized below:

	2007			2006			2005
Statutory federal income tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal tax benefit		1.2			1.5			1.6
Tax-exempt interest		(5.8	)		(5.1	)		(6.1	)
Dividend repatriation		(5.8	)		—			(6.2	)
Strategy relating to sale of U.K. lighting business		—			—			(4.6	)
Exports benefit		—			(2.3	)		(1.9	)
Tax reserves		2.9			(4.4	)		(19.5	)
R&D tax credits		(2.8	)		(1.9	)		(1.5	)
Foreign tax effects		(5.2	)		(1.5	)		(4.5	)
Valuation allowances		0.3			(0.7	)		1.2
Foreign financing strategies		(2.8	)		—			—
Capital loss — Canadian legal entity restructuring		(4.2	)		—			—
Other, net		(0.3	)		(1.2	)		(1.1	)
Effective income tax rate		12.5	%		19.4	%		(7.6	)%

The Company’s 2005 effective tax rate of (7.6)% reflected a benefit of $6.0 million primarily due to a reduction in reserves in the 2005 second quarter associated with the completion of an audit of the Company’s US tax returns which encompassed the years 1999 through 2003.

On October 22, 2004, the American Jobs Creation Act was signed into law. One provision of the legislation allowed certain repatriated foreign earnings to be taxed at 5.25%, provided certain provisions are met. During 2005, the Company recognized a tax benefit of approximately $2.5 million related to the repatriation of foreign earnings under the Act.

40

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

Deferred income tax assets and liabilities at December 31 are summarized as follows:

	2007			2006			2005
Deferred tax assets:
Accrued expenses	$	20.3		$	14.6		$	11.8
Net operating loss, capital loss, alternative minimum tax, research and development, and foreign tax credit carry forwards		42.7			33.9			20.8
Other		(3.2	)		9.3			9.1
Gross deferred tax assets		59.8			57.8			41.7
Valuation allowance		(17.8	)		(5.4	)		(3.4	)
Total deferred tax assets		42.0			52.4			38.3
Deferred tax liabilities:
Depreciation and amortization		(65.5	)		(48.6	)		(36.3	)
Revenue recognition		(0.8	)		(0.3	)		(2.7	)
Pension liabilities		(6.4	)		(4.9	)		(3.5	)
Undistributed earnings of non-US subsidiary		(0.7	)		(0.4	)		(0.2	)
Gross deferred tax liabilities		(73.4	)		(54.2	)		(42.7	)
Net deferred tax liability	$	(31.4	)	$	(1.8	)	$	(4.4	)

Federal and state income taxes have not been provided on accumulated undistributed earnings of certain foreign subsidiaries aggregating approximately $76.9 million at December 31, 2007, as such earnings have been reinvested in the business. The determination of the amount of the unrecognized deferred tax liability related to the undistributed earnings is not practicable.

The deferred tax asset for tax loss carryforwards includes state net operating loss carryforwards of $1.5 million, which will begin to expire in 2019; foreign net operating loss carryforwards of $4.0 million of which $2.3 million has an indefinite life; $12.6 million for capital loss carryforwards that will expire in 2012. The deferred tax asset for tax credit carryforwards includes US research tax credit carryforwards of $5.6 million, which will begin to expire in 2022, US foreign tax credits of $14.5 million, which will begin to expire in 2013 and US alternative minimum tax credit carryforwards of $4.5 million with no expiration.

Valuation allowances totaling $17.8 million have been established and include $1.4 million related to state net operating loss carryforwards and $3.8 million related to the foreign net operating loss carryforwards and $12.6 million related to capital loss carryforwards.

The net deferred tax liability at December 31 is classified in the balance sheet as follows:

	2007			2006			2005
Current net deferred tax assets (included in Other current assets in the Consolidated Balance Sheets)	$	14.1		$	18.9		$	11.9
Long-term net deferred tax liability		(45.5	)		(20.7	)		(16.3	)
	$	(31.4	)	$	(1.8	)	$	(4.4	)

The Company paid income taxes of $7.0 million in 2007, $6.9 million in 2006 and $9.8 million in 2005.

41

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

Income from continuing operations before taxes for each of the three years in the period ended December 31, 2007 consisted of the following:

	2007		2006		2005
United States	$	9.1	$	27.3	$	14.9
Non-US		24.9		15.4		25.9
	$	34.0	$	42.7	$	40.8

On January 1, 2007, the Company adopted the provisions of FIN 48. As a result, an increase of $0.7 million in the liability for unrecognized tax benefits and a $0.7 million reduction in retained earnings were booked in 2007.

The following table summarizes the activity related to the Company’s unrecognized tax benefits:

Balance at January 1, 2007	$	6.2
Increases related to current year tax positions		1.8
Increases from prior period positions		0.6
Decreases due to lapse of statute of limitations		(0.2	)
Decreases from prior periods		(0.1	)
Balance at December 31, 2007	$	8.3

Included in the unrecognized tax benefits of $8.3 million at December 31, 2007 was $5.8 million of tax benefits that if recognized, would reduce our annual effective tax rate. The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. Interest and penalties amounting to $1.5 million and $0.2 million respectively are included in the consolidated balance sheet but are not included in the table above. We do not expect our unrecognized tax benefits to change significantly over the next 12 months.

We file US, state and foreign income tax returns in jurisdictions with varying statutes of limitations. The 2004 through 2007 tax years generally remain subject to examination by federal and most state tax authorities. In significant foreign jurisdictions, the 2002 through 2007 tax years generally remain subject to examination by their respective tax authorities.

NOTE 7 — POSTRETIREMENT BENEFITS

The Company and its subsidiaries sponsor a number of defined benefit retirement plans in the US covering certain of its salaried and hourly employees. Benefits under these plans are primarily based on final average compensation and years of service as defined within the provisions of the individual plans. The Company also participates in several retirement plans that provide defined benefits to employees under certain collective bargaining agreements.

The Company uses a December 31 measurement date for its US and non-US benefit plans in accordance with SFAS 158.

42

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

The components of net periodic pension expense for each of the three years in the period ended December 31, 2007 are summarized as follows:

	US Benefit Plans									Non-US Benefit Plan
	2007			2006			2005			2007			2006			2005
Company-sponsored plans
Service cost	$	1.8		$	4.3		$	4.8		$	0.2		$	0.2		$	0.2
Interest cost		8.8			8.6			8.2			3.1			2.7			2.8
Expected return on plan assets		(10.9	)		(9.9	)		(8.8	)		(4.2	)		(3.8	)		(3.6	)
Amortization of actuarial loss		1.6			1.4			1.8			0.6			0.6			0.7
Amortization of prior service cost		—			0.1			0.1			—			—			—
Curtailment charge		—			1.3			—			—			—			—
Other		—			—			(0.3	)		—			—			—
		1.3			5.8			5.8			(0.3	)		(0.3	)		0.1
Multiemployer plans		0.2			0.3			0.3			—			—			—
Net periodic pension expense (income)	$	1.5		$	6.1		$	6.1		$	(0.3	)	$	(0.3	)	$	0.1

On July 17, 2006, an amendment to the Company’s US defined benefit plans for all of the Company’s employees, except for Tool segment employees and University Park, Illinois IBEW employees within the Safety and Security Systems Group, was approved by the Company’s Board of Directors. The amendment freezes service accruals for these employees as of December 31, 2006. The participants will, however, continue to accrue benefits resulting from future salary increases through 2016. As a result of the amendment, the Company was required to recognize a curtailment charge under SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Plans and for Termination Benefits” due to the recognition of prior service costs. The Company recognized a curtailment charge of $1.3 million measured at July 1, 2006, which was recorded during the quarter ended September 30, 2006 and is recognized in the table above, reflecting the unamortized portion of prior benefit changes.

The following table summarizes the weighted-average assumptions used in determining pension costs in each of the three years in the period ended December 31, 2007:

	US Benefit Plans									Non-US Benefit Plan
	2007			2006			2005			2007			2006			2005
Discount rate		6.0	%		6.1	%		6.0	%		5.8	%		5.2	%		5.8	%
Rate of increase in compensation levels		3.5	%		3.5	%		3.5	%		N/A*			NA*			NA*
Expected long term rate of return on plan assets		8.5	%		8.5	%		9.0	%		6.9	%		7.0	%		8.3	%

*  Non-US plan benefits are not adjusted for compensation level changes

43

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

The following summarizes the changes in the projected benefit obligation and plan assets, the funded status of the Company-sponsored plans and the major assumptions used to determine these amounts at December 31:

	US Benefit Plans						Non-US Benefit Plan
	2007			2006			2007			2006
Change in Benefit Obligation
Benefit obligation, beginning of year	$	143.2		$	153.2		$	59.0		$	52.2
Service cost		1.8			4.3			0.2			0.2
Interest cost		8.8			8.6			3.1			2.7
Plan amendments		—			(4.4	)		—			—
Actuarial (gain)/loss		(6.4	)		(9.3	)		2.1			0.6
Benefits paid		(4.9	)		(9.2	)		(3.9	)		(2.5	)
Other		—			—			0.8			5.8
Benefit obligation, end of year	$	142.5		$	143.2		$	61.3		$	59.0
Accumulated benefit obligation, end of year	$	129.8		$	131.2		$	61.3		$	59.0

The following table summarizes the weighted-average assumptions used in determining benefit obligations as of December 31, 2007 and 2006:

	US Benefit Plans						Non-US Benefit Plan
	2007			2006			2007			2006
Discount rate		6.5	%		6.0	%		5.8	%		5.2	%
Rate of increase in compensation levels		3.5	%		3.5	%		N/A			N/A
Change in Plan Assets

	US Benefit Plans						Non-US Benefit Plan
	2007			2006			2007			2006
Fair value of plan assets, beginning of year	$	125.0		$	107.8		$	58.7		$	48.8
Actual return on plan assets		7.8			16.4			5.7			5.4
Company contribution		5.0			10.0			1.7			1.3
Benefits and expenses paid		(4.9	)		(9.2	)		(3.9	)		(2.5	)
Other		—			—			1.1			5.7
Fair value of plan assets, end of year	$	132.9		$	125.0		$	63.3		$	58.7

The amounts included in Other in the preceding tables reflect the impact of the change in measurement date from September 30 to December 31 and foreign exchange translation for the non-US benefit plan.

44

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

The following table summarizes the Company’s asset allocations for its benefits plans as of December 31, 2007 and 2006 and the target allocation for 2008 by asset category:

	US Benefit Plans									Non-US Benefit Plan
	Target			Percentage of						Target			Percentage of
	Percent			Plan Assets as of December 31						Percent			Plan Assets as of December 31,
	2008			2007			2006			2008			2007			2006
Equity securities		60-85	%		74	%		81	%		50-70	%		60	%		67	%
Fixed income securities		10-30	%		16	%		19	%		30-50	%		30	%		31	%
Alternative investments		0-15	%		10	%		—			—			—			—
Cash		—			—			—			—			10	%		2	%
Total					100	%		100	%					100	%		100	%

The investment strategy for the US benefit plans is to 1) maintain a diversified portfolio that can provide a weighted-average target return of 8.5% or more, 2) maintain liquidity to meet obligations and 3) prudently manage administrative and management costs. The plan invests in equity, alternative and fixed income instruments. The asset allocation is reviewed regularly and portfolio investments are rebalanced periodically when considered appropriate. The use of derivatives is allowed in limited circumstances. The plan held no derivatives during the years ended December 31, 2007 and 2006.

Plan assets for the non-US benefit plan consist principally of a diversified portfolio of equity securities, U.K. government obligations and fixed interest securities.

As of December 31, 2007 and 2006, equity securities included 0.2 million shares of the Company’s common stock valued at $2.7 million and $3.8 million, respectively. Dividends paid on the Company’s common stock to the pension trusts aggregated $0.1 million in each of the years ended December 31, 2007 and 2006.

	US Benefit Plans						Non-US Benefit Plan
	2007			2006			2007		2006
Funded status, end of year
Fair value of plan assets	$	132.9		$	125.0		$	63.3	$	58.7
Benefit obligations		142.5			143.2			61.3		59.0
Funded status	$	(9.6	)	$	(18.2	)	$	2.0	$	(0.3	)

Amounts recognized in the Balance Sheet consist of:

	US Benefit Plans						Non-US Benefit Plan
	2007			2006			2007		2006
Noncurrent liability	$	(9.6	)	$	(18.2	)	$	N/A	$	(0.3	)
Prepaid benefit cost		N/A			N/A			2.0		N/A
Accrued benefit liability		N/A			N/A			N/A		N/A
Intangible asset		N/A			N/A			N/A		N/A
Accumulated other comprehensive loss, pre-tax		26.1			31.0			13.2		12.6
Net amount recognized	$	16.5		$	12.8		$	15.2	$	12.3

45

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

Amounts recognized in Accumulated Other Comprehensive Income consist of:

	US Benefit Plans				Non-US Benefit Plan
	2007		2006		2007		2006
Net actuarial loss	$	25.7	$	30.6	$	13.2	$	12.6
Prior service cost		0.4		0.4		—		—
Net amount recognized, pre-tax	$	26.1	$	31.0	$	13.2	$	12.6

The Company expects $1.4 million relating to amortization of the actuarial loss to be amortized from Accumulated Other Comprehensive Income into Net Periodic Benefit Cost in 2008.

The Company expects to contribute up to $10.0 million to the US benefit plans in 2008 and approximately $1.5 million to the non-US plan. Future contributions to the plans will be based on such factors as annual service cost as well as impacts to plan asset values, interest rate movements and benefit payments.

The following table presents the benefits expected to be paid under the Company’s defined benefit plans in each of the next five years, and in aggregate for the five years thereafter:

	US Benefit		Non-US
	Plans		Benefit Plan
2008	$	4.9	$	3.0
2009		5.2		3.1
2010		5.6		3.4
2011		6.1		3.6
2012		6.8		3.7
2013-2017		43.3		21.2

The Company also sponsors a number of defined contribution pension plans covering a majority of its employees. Through 2006 participation in the plans was at each employee’s election and Company contributions to these plans were based on a percentage of employee contributions. Effective January 1, 2007, participation is via automatic enrollment; employees may elect to opt out of the plan. Company contributions to the plan are now based on employees’ age and service as well as a percentage of employee contributions.

The cost of these plans during each of the three years in the period ended December 31, 2007, was $9.9 million in 2007, $5.6 million in 2006 and $5.7 million in 2005.

Prior to September 30, 2003, the Company also provided medical benefits to certain eligible retired employees. These benefits were funded when the claims were incurred. Participants generally became eligible for these benefits at age 60 after completing at least fifteen years of service. The plan provided for the payment of specified percentages of medical expenses reduced by any deductible and payments made by other primary group coverage and government programs. Effective September 30, 2003, the Company amended the retiree medical plan and effectively canceled coverage for all eligible active employees except for retirees and a limited group that qualified under a formula based on age and years of service. Accumulated postretirement benefit liabilities of $2.3 million and $2.5 million at December 31, 2007 and 2006, respectively, were fully accrued. The net periodic postretirement benefit costs have not been significant during the three-year period ended December 31, 2007.

NOTE 8 — DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments are reported on the balance sheet at their respective fair values. Changes in fair value are recognized either in earnings or equity, depending on the nature of the underlying exposure being hedged and how effective a derivative is at offsetting price movements in the underlying exposure. The Company’s derivative positions existing at December 31, 2007 qualified for hedge accounting under SFAS No. 133, except as described below. Derivatives documentation policies comply with the requirements of SFAS No. 133.

46

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

To manage interest costs, the Company utilizes interest rate swaps in combination with its funded debt. Interest rate swaps executed in conjunction with long-term private placements effectively convert fixed rate debt to variable rate debt. At December 31, 2007, the Company’s receive fixed, pay variable swap agreements with financial institutions terminate in varying amounts between 2008 and 2012. These agreements are designated as fair value hedges. In the second quarter of 2005, the Company de-designated a fair value hedge. The derivative does not qualify for hedge accounting under SFAS No. 133 and is marked-to-market with the offsetting adjustment recorded to income.

At December 31, 2007, the Company was also party to interest rate swap agreements with financial institutions in which the Company pays interest at a fixed rate and receives interest at variable LIBOR rates. These derivative instruments terminate in varying amounts between 2008 and 2010. These interest rate swap agreements are designated as cash flow hedges. In the second quarter of 2005, the Company entered into an interest rate swap which was not designated as a hedge and is marked-to-market with the offsetting adjustment recorded to income.

The fair values of interest rate swaps are based on quotes from financial institutions. The following table summarizes the Company’s interest rate swaps at December 31, 2007 and 2006:

	Fair Value Swaps						Cash Flow Swaps
	2007			2006			2007			2006
Notional amount	$	138.7		$	147.9		$	135.0		$	85.0
Fair value		(1.3	)		(7.2	)		(0.9	)		1.6	%
Average pay rate		7.7	%		8.0	%		6.0	%		6.9	%
Average receive rate		6.8	%		6.0	%		6.1	%		7.6	%

In 2007 and 2006, the Company cancelled various interest rate swaps associated with its debt portfolio in response to movements in the interest rate market. These transactions resulted in net cash payments of $0.3 million and $1.9 million in 2007 and 2006, respectively. The associated losses on the interest rate swaps are being amortized to interest expense over the life of the underlying debt. As of December 31, 2007 and 2006, the Company had unamortized gains of $0.8 million and $1.2 million, respectively.

The Company manages the volatility of cash flows caused by fluctuations in currency rates by entering into foreign exchange forward contracts and options. These derivative instruments may be designated as cash flow hedges that hedge portions of the Company’s anticipated third-party purchases and forecast sales denominated in foreign currencies. The Company also enters into foreign exchange contracts that are not intended to qualify for hedge accounting in accordance with SFAS 133, but are intended to offset the effect on earnings of foreign currency movements on short and long term intercompany transactions. Gains and losses on these derivative instruments are recorded through earnings.

The following table summarizes the Company’s foreign exchange contracts at December 31, 2007 and 2006:

	2007					2006
	Notional		Fair			Notional		Fair
	Amount		Value			Amount		Value
Foreign exchange forwards	$	55.9	$	(3.2	)	$	7.2	$	(0.2	)
Options		10.3		—			8.4		—
Total	$	66.2	$	(3.2	)	$	15.6	$	(0.2	)

The Company expects $2.9 million of net losses on cash flow hedges that are reported in accumulated other comprehensive income as of December 31, 2007 to be reclassified into earnings in 2008 as the respective hedged transactions affect earnings.

47

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

NOTE 9 — STOCK-BASED COMPENSATION

The Company’s stock benefit plans, approved by the Company’s shareholders, and administered by the Compensation and Benefits Committee of the Board of Directors of the Company, provides for the grant of incentive and non-incentive stock options, restricted stock and other stock-based awards or units to key employees and directors. The plans, as amended, authorize the grant of up to 4.0 million benefit shares or units through April 2015. These share or unit amounts exclude amounts that were issued under predecessor plans. Benefit shares or units include incentive and non-incentive stock options, restricted stock awards and other stock awards or units.

Stock options are granted at the fair market value of the shares on the date of grant. Through 2004, they normally became exercisable one year after grant at a rate of one-half annually and were exercisable in full on the second anniversary date. Beginning in 2005, stock options normally become exercisable at a rate of one-third annually and in full on the third anniversary date. All options and rights must be exercised within ten years from date of grant. At the Company’s discretion, vested stock option holders are permitted to elect an alternative settlement method in lieu of purchasing common stock at the option price. The alternative settlement method permits the employee to receive, without payment to the Company, cash, shares of common stock or a combination thereof equal to the excess of market value of common stock over the option purchase price. The Company intends to settle all such options in common stock.

The weighted average fair value of options granted during 2007, 2006 and 2005 was $5.68, $6.21 and $4.93, respectively. The fair value of each option grant was estimated using the Black-Scholes option pricing model with the following assumptions:

	2007			2006			2005
Dividend yield		1.7	%		1.3	%		1.7	%
Expected volatility		31	%		30	%		27	%
Risk free interest rate		4.4	%		4.6	%		4.2	%
Weighted average expected option life in years		7			7			8

The expected life of options represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and the Company’s historical exercise patterns. The risk-free interest rate is based on the US Treasury yield curve in effect at the time of the grant for periods corresponding with the expected life of the options. Expected volatility is based on historical volatilities of the Company’s common stock. Dividend yields are based on historical dividend payments.

Stock option activity for the three years ended December 31, 2007 was as follows:

	Option Shares									Weighted Average Exercise Price
	2007			2006			2005			2007		2006		2005
	(In millions)
Outstanding at beginning of year		2.6			2.7			2.6		$	18.15	$	19.15	$	19.84
Granted		0.5			0.6			0.6			15.69		16.93		15.69
Cancelled or expired		(0.6	)		(0.7	)		(0.5	)		19.67		21.26		19.09
Exercised		(0.1	)		(0.0	)		(0.0	)		15.06		16.23		15.26
Outstanding at end of year		2.4			2.6			2.7		$	17.47	$	18.15	$	19.15
Exercisable at end of year		1.5			1.7			1.8		$	18.28	$	18.84	$	20.19

48

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

The following table summarizes information concerning stock options outstanding as of December 31, 2007 under all plans:

	Options Outstanding						Options Exercisable
					Weighted				Weighted
			Weighted		Average				Average
			Average		Exercise				Exercise
Range of Exercise Prices	Shares		Remaining Life		Price		Shares		Price
	(In millions)		(In years)				(In millions)
$12.00 - $16.00		0.3		6.7	$	14.46		0.2	$	15.03
16.01 - 18.00		1.3		7.5		16.37		0.6		16.32
18.01 - 20.00		0.4		4.5		18.84		0.3		18.83
20.01 - 22.00		0.3		2.0		21.38		0.3		21.38
22.01 - 26.40		0.1		2.9		23.55		0.1		23.55
		2.4		6.1	$	17.47		1.5	$	18.28

The exercise price of stock options outstanding and exercisable at December 31, 2007 exceeded the market value and therefore, the aggregate intrinsic value was zero. The closing price on December 31, 2007 was $11.22.

The following table illustrates the effect on net income and earnings per share for the year ended December 31, 2005 if the Company had applied fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation”, to all stock-based employee compensation. For purposes of pro forma disclosure, the estimated fair value of the options using a Black-Scholes option pricing model is amortized to expense over the option’s vesting period.

	2005
Reported net loss	$	(4.6	)
Add: Stock-based employee compensation expense included in reported net loss, net of related tax effects		1.3
Deduct: Total stock-based employee compensation expense determined under the fair-value method for all awards, net of related tax effects		(2.6	)
Pro forma net loss	$	(5.9	)
Basic and diluted loss per common share:
Reported loss per share	$	(0.10	)
Pro forma loss per share	$	(0.12	)

Restricted stock awards are granted to employees at no cost. Through 2004, these awards primarily vested at the rate of 25% annually commencing one year from the date of award, provided the recipient was still employed by the Company on the vesting date. Beginning in 2005, awards primarily cliff vest at the third anniversary from the date of award, provided the recipient is still employed by the Company on the vesting date. The cost of restricted stock awards, based on the fair market value at the date of grant, is being charged to expense over the respective

49

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

vesting periods. The following table summarizes restricted stock grants for the twelve month period ended December 31, 2007:

	Number of			Weighted Average
(Shares in millions)	Restricted Shares			Price per Share
Outstanding and non-vested at December 31, 2006		0.6		$	16.70
Granted		0.4			15.43
Vested		(0.1	)		14.23
Cancelled		(0.1	)		16.65
Outstanding and non-vested at December 31, 2007		0.8		$	16.28

The total compensation expense related to all share-based compensation plans was $3.5 million, $5.8 million, and $2.1 million for the years ended December 31, 2007, 2006 and 2005, respectively. Also, as of December 31, 2007, the total remaining unrecognized compensation cost related to awards of stock options amounted to $3.3 million, which will be amortized over the weighted-average period of approximately 1.4 years.

NOTE 10 — SHAREHOLDERS’ EQUITY

The Company’s board of directors has the authority to issue 90.0 million shares of common stock at a par value of $1 per share. The holders of common stock (i) may receive dividends subject to all of the rights of the holders of preference stock, (ii) shall be entitled to share ratably upon any liquidation of the Company in the assets of the Company, if any, remaining after payment in full to the holders of preference stock and (iii) receive one vote for each common share held and shall vote together share for share with the holders of voting shares of preference stock as one class for the election of directors and for all other purposes. The Company has 49.4 million and 49.1 million common shares issued as of December 31, 2007 and 2006, respectively. Of those amounts 47.9 million and 47.6 million common shares were outstanding as of December 31, 2007 and 2006, respectively.

The Company’s board of directors is also authorized to provide for the issuance of 0.8 million shares of preference stock at a par value of $1 per share. The authority of the board of directors includes, but is not limited to, the determination of the dividend rate, voting rights, conversion and redemption features and liquidation preferences. The Company has not issued any preference stock as of December 31, 2007.

In July 1998, the Company declared a dividend distribution of one preferred share purchase right on each share of common stock outstanding on and after August 18, 1998. The rights are not exercisable until the rights distribution date, defined as the earlier of: 1) the tenth day following a public announcement that a person or group of affiliated or associated persons acquired or obtained the right to acquire beneficial ownership of 20% or more of the outstanding common stock or 2) the tenth day following the commencement or announcement of an intention to make a tender offer or exchange offer, the consummation of which would result in the beneficial ownership by a person or group of 30% or more of such outstanding common shares. Each right, when exercisable, entitles the holder to purchase from the Company one one-hundredth of a share of Series A Preferred Stock of the Company at a price of $100 per one one-hundredth of a preferred share, subject to adjustment. The Company is entitled to redeem the rights at $.10 per right, payable in cash or common shares, at any time prior to the expiration of twenty days following the public announcement that a 20% position has been acquired. In the event that the Company is acquired in a merger or other business combination transaction or 50% or more of its consolidated assets or earning power is sold, proper provision will be made so that each holder of a right will thereafter have the right to receive, upon the exercise thereof at the then current exercise price of a right, that number of shares of common stock of the acquiring company which at the time of such transaction would have a market value of two times the exercise price of the right. The rights expire on August 18, 2008 unless earlier redeemed by the Company. Until exercised, the holder of a right, as such, will have no rights as a shareholder, including, without limitation, the right to vote or to receive dividends.

50

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

NOTE 11 — ACQUISITIONS

On January 15, 2007, the Company acquired the net assets of Codespear LLC, a Birmingham, Michigan based, privately held developer of specialized software used in emergency management situations, for $16.6 million in cash plus an additional $0.8 million payment based on working capital and contingent consideration adjustments which were finalized in the third quarter. In addition, there are potential additional earnout payments for up to three years following the transaction, if specific performance targets are met. Any additional payments related to this contingency will be accounted for as additional goodwill. As of December 31, 2007 as a result of the acquisition, the Company recorded the addition of $12.2 million of goodwill, none of which is deductible for tax purposes, and $5.2 million of acquired developed software. The results since the date of acquisition have been included in the Safety and Security Systems segment.

On July 25, 2007, the Company acquired the net assets of Riverchase Technologies, a software development firm that specializes in serving the municipal safety market and includes a suite of products for small to medium size municipalities that includes CAD, RMS, mobile data, mobile video and mobile handheld solutions which enable emergency response agencies to manage and communicate remotely with their fleets. The purchase price was $6.7 million in cash plus additional payments for working capital adjustments, as well as potential earnout payments for up to two years following the transaction, if specific performance targets are met. As of December 31, 2007 as a result of the acquisition, the Company recorded the addition of $2.9 million of goodwill, none of which is deductible for tax purposes, $3.6 million of acquired developed software and $0.2 million of net assets. The results since the date of acquisition have been included in the Safety and Security Systems segment.

On August 6, 2007, the Company acquired 100% of the voting interests in PIPS Technology Limited, a private company limited by shares incorporated in England and Wales, (the UK Company), and PIPS Technology, Inc., a Tennessee corporation (the US Company), together referred to as PIPS Technology companies (“PIPS Technologies”). PIPS Technologies is a global leader in the design and manufacture of automated license plate recognition (“ALPR”) technology and optical character recognition software. ALPR solutions are used in control and surveillance applications in markets such as traffic and tolling, law enforcement, public safety and access control. ALPR-enabled cameras are used on emergency vehicles and mounted on stationary support structures at access entry and tolling points to capture license plate details for tolling, congestion zone charging and law enforcement purposes. The results since the date of acquisition have been included in the Safety and Security Systems segment.

PIPS Technologies was acquired for approximately $123.4 million in cash plus acquisition related costs of approximately $2.9 million. The purchase price is subject to potential additional earnout payments through 2010, if specific performance targets are met. Additional payments related to this contingency, if any, will be accounted for as goodwill. The acquisition was funded through available cash balances and borrowings under the Company’s credit facility.

The allocation of the purchase price is shown in the table below.

	($’s in million)
Goodwill	$	75.4
Intangible assets:
Customer relationships		20.5
Technology		6.0
Trade name		26.1
Plant, property & equipment		0.8
Deferred tax asset		5.7
Deferred tax liability		(15.1	)
Other assets acquired and liabilities assumed		6.9
Total acquisition cost	$	126.3

51

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

Goodwill and trade name intangible assets have indefinite lives and therefore will not be subject to amortization, but will instead be subject to an annual impairment test. The Company is still evaluating whether any of the goodwill is deductible for tax purposes. Technology will be amortized over a 10-year life and customer relationships will be amortized over a 10-year life in the U.K and a 5-year life in the U.S. The Company engaged KPMG LLP to perform the evaluation to allocate the purchase price.

The unaudited financial information in the table below summarizes the combined results of operations of the Company and PIPS Technologies, on a pro forma basis, as though PIPS Technologies had been acquired as of January 1, 2006. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the period or of results that may occur in the future. Proforma financial information for the acquisition of Codespear and Riverchase has not been presented due to immateriality.

	Year Ended December 31
	2007		2006
	($ in millions)
Proforma net revenue	$	1,282.0	$	1,238.0
Proforma income from continuing operations		29.5		36.1
Proforma net income		54.6		24.4
Proforma earnings per share from continuing operations — basic and diluted	$	0.61	$	0.75

NOTE 12 — GOODWILL AND OTHER INTANGIBLE ASSETS

In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”, goodwill and other intangible assets deemed to have indefinite lives are no longer amortized but are subject to annual impairment tests. Other intangible assets continue to be amortized over their useful lives.

Changes in the carrying amount of goodwill for the years ended December 31, 2007 and 2006, by operating segment, were as follows:

	Environmental		Fire		Safety
	Solutions		Rescue		Security		Tool		Total
December 31, 2005	$	125.8	$	37.0	$	88.7	$	55.8	$	307.3
Translation		0.4		1.6		1.3		—		3.3
December 31, 2006		126.2		38.6		90.0		55.8		310.6
Acquisitions		—		—		90.5		—		90.5
Translation		0.5		3.1		2.0		—		5.6
December 31, 2007	$	126.7	$	41.7	$	182.5	$	55.8	$	406.7

Under SFAS No. 142, the Company is required to test its goodwill annually for impairment; the Company performs this test in the fourth quarter. The Company performed this test in 2007 and determined that there was no impairment. The Company determined the fair value of each reporting unit by calculating the present value of expected future cash flows. See Note 11 for a discussion of goodwill additions, as a result of acquisitions in the year ended December 31, 2007.

52

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

The components of the Company’s other intangible assets are as follows:

	Weighted-		December 31, 2007							December 31, 2006
	Average		Gross					Net		Gross					Net
	Useful Life		Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
	(Years)		Value		Amortization			Value		Value		Amortization			Value
Definite lived (amortizable):
Developed software		6	$	24.2	$	(10.9	)	$	13.3	$	15.3	$	(8.3	)	$	7.0
Patents		5-10		0.6		(0.4	)		0.2		0.5		(0.4	)		0.1
Customer relationships		5-10		20.1		(0.9	)		19.2		—		—			—
Technology		10		5.9		(0.3	)		5.6		—		—			—
Other		3		2.8		(0.7	)		2.1		1.2		(0.1	)		1.1
				53.6		(13.2	)		40.4		17.0		(8.8	)		8.2
Indefinite lived :
Trade name				25.6		—			25.6		—		—			—
Total			$	79.2	$	(13.2	)	$	66.0	$	17.0	$	(8.8	)	$	8.2

See Note 11 for a discussion of intangible additions as a result of acquisitions in the year ended December 31, 2007. Amortization expense for the year ended December 31, 2007, 2006 and 2005 totaled $4.6 million, $2.2 million and $1.7 million, respectively. The Company estimates that the aggregate amortization expense will be $6.3 million in 2008, $6.2 million in 2009, $5.7 million in 2010, $5.5 million in 2011, $4.4 million in 2012 and $12.3 million thereafter.

NOTE 13 — DISCONTINUED OPERATIONS

The following table shows an analysis of assets and liabilities of discontinued operations as of December 31:

	2007		2006
	($ in millions)
Current assets	$	4.5	$	18.2
Properties and equipment		—		12.9
Long-term assets		—		26.7
Total assets	$	4.5	$	57.8
Current liabilities		0.2		7.2
Long-term liabilities		16.7		24.0
Total liabilities	$	16.9	$	31.2

Included in long-term liabilities is $13.7 million relating to estimated product liability obligations of the North American refuse truck body business.

53

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

The following table presents the operating results of the Company’s discontinued operations for the three-year period ended December 31, 2007:

	2007			2006			2005
Net sales	$	3.1		$	83.8		$	101.7
Costs and expenses		(2.9	)		(97.5	)		(161.7	)
Income (loss) before income taxes		0.2			(13.7	)		(60.0	)
Income tax benefit		0.3			2.0			11.5
Income (loss) from discontinued operations	$	0.5		$	(11.7	)	$	(48.5	)

On January 31, 2007, the Company completed the sale of Manchester Tool Company, On Time Machining Company and Clapp Dico, referred to collectively as the “Cutting Tool Operations” which were part of the Tool Group for $65.4 million. There was a net gain on disposal of discontinued operations of $24.6 million for the year ended December 31, 2007. These operations produced industrial cutting tools, engineered components and advanced materials consumed in production processes. Included in long-term assets of discontinued operations at December 31, 2006 was $26.1 million of goodwill. No asset impairment charges were recorded in conjunction with the disposal. Revenues relating to Cutting Tool Operations amounted to $3.0 million, $37.8 million and $37.9 million for the years ended December 31, 2007, 2006 and 2005, respectively. Income from Cutting Tool operations, net of tax, were $0.2 million, $4.1 million and $3.4 million for the years ended December 31, 2007, 2006 and 2005, respectively.

In December 2005, the Company determined that its investment in the North American refuse truck body business, operating under the Leach brand name, was no longer strategic. The assets of this business were held for sale as of December 31, 2005 and 2006. In August 2006, the Company completed the sale of certain Leach refuse truck body business assets. The transaction included specified inventories and equipment and responsibility of the Wisconsin office and associated employees. The transaction did not include the Company’s Alberta manufacturing facility which has subsequently been sold. The loss from discontinued operations included $9.7 million and $34.1 million of after tax impairment charges related to the disposal of refuse assets for the years ended December 31, 2006 and 2005, respectively. Losses from the operations of the business, net of tax, were $6.1 million and $15.7 million for the years ended December 31, 2006 and 2005, respectively.

In December 2005, the Company completed the closure of operations at Federal APD do Brasil, LTDA. The loss on disposal was $1.6 million after tax due to asset impairments and closure costs; this included $0.9 million of goodwill attributable to this business. This business produced parking systems for the local market primarily in Brazil. Revenues amounted to $0.9 million for the year ended December 31, 2005. Losses from operations, net of tax, totaled $0.5 million for the year ended December 31, 2005.

NOTE 14 — ASSET DISPOSITIONS

In December 2006, the Company disposed of the land and buildings of the fire truck plant in Red Deer, Alberta for proceeds of $2.5 million and recorded a pre-tax gain of $1.4 million.

In 2005, the Company completed two significant asset dispositions. In May 2005, the Company sold the land and buildings of the refuse truck body plant in Oshkosh, Wisconsin for proceeds of $5.8 million and recorded a pre-tax gain of $1.0 million. In July 2005, the Company sold two product lines in Newcastle, England for proceeds of $11.9 million and recorded a pre-tax gain of $6.7 million. The Company also sold three other properties for total proceeds of $4.3 million and total pre-tax gains of $1.3 million.

54

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

NOTE 15 — LEGAL PROCEEDINGS

The Company is subject to various claims, other pending and possible legal actions for product liability and other damages and other matters arising out of the conduct of the Company’s business. The Company believes, based on current knowledge and after consultation with counsel, that the outcome of such claims and actions will not have a material adverse effect on the Company’s consolidated financial position or the results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of such matters, if unfavorable, could have a material adverse effect on the Company’s results of operations.

The Company has been sued in Chicago, Illinois by firefighters seeking damages claiming that exposure to the Company’s sirens has impaired their hearing and that the sirens are therefore defective. There are presently 33 cases filed during the period 1999-2004, involving a total of 2,498 plaintiffs pending in the Circuit Court of Cook County, Illinois. The plaintiffs’ attorneys have threatened to bring more suits in the future. The Company is aggressively defending the matters and believes that these product liability suits have no merit and that sirens are necessary in emergency situations and save lives. The court ordered that the trial of the first 28 plaintiffs will begin on March 18, 2008. The Company has retained the experienced Chicago trial law firm of Bartlit Beck Herman Palenchar & Scott to try the first case. A second trial has been ordered of an as yet unspecified number of plaintiffs in June 2008. Thereafter, trials involving other Chicago fire fighters are scheduled to take place every four months. On December 13, 2007 the trial judge denied a second motion filed by plaintiffs seeking to add a claim for punitive damages against Federal Signal. The Company successfully defeated Plaintiffs’ earlier motion in February 2006.

Federal Signal has been sued outside of the Cook County venue by a relatively small number of plaintiffs. To date, 24 plaintiffs have filed 15 lawsuits in 10 jurisdictions in four states. With the exception of the four plaintiffs who have filed suit in New Jersey, all plaintiffs have stipulated to or claimed less than $75,000 in damages. Four cases in the Supreme Court of Kings County, New York were dismissed on January 25, 2008 after the court granted Federal Signal’s motion to dismiss which eliminated all claims pending in New York. The four states in which plaintiffs currently have filings include the following: Missouri (Circuit Courts of Clay and Jackson Counties); Maryland (Circuit Courts for Baltimore City, Montgomery County and Prince George’s County); New Jersey (Bergen, Essex, Hudson and Passaic Counties); and, Pennsylvania (Court of Common Pleas of Philadelphia County). The Company intends to vigorously defend all of these lawsuits. The Company successfully defended approximately 41 similar cases in Philadelphia, Pennsylvania in 1999 resulting in a series of unanimous jury verdicts in favor of the Company.

Federal Signal’s ongoing negotiations with CNA over insurance coverage resulted in an agreement under which CNA reimbursed $3.7 million to the Company in 2007 representing a percentage of past defense costs and agreed to cover a percentage of defense costs going forward.

NOTE 16 — SEGMENT AND RELATED INFORMATION

The Company has four continuing operating segments as defined under SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.” Business units are organized under each segment because they share certain characteristics, such as technology, marketing, distribution and product application, which create long-term synergies. The principal activities of the Company’s operating segments are as follows:

Information regarding the Company’s discontinued operations is included in Note 13 — Discontinued Operations. The segment information included herein has been reclassified to reflect such discontinued operations.

Safety and Security Systems — Safety and Security Systems Group companies produce a variety of systems for automated license plate recognition, campus and community alerting, emergency vehicles, first responder interoperable communications, industrial communications and command, municipal networked security and parking revenue and access control for municipal, governmental and industrial applications. Specific products include access control devices, lightbars and sirens, public warning sirens, public safety software and automated

55

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

license plate recognition cameras. The group’s products are sold primarily to industrial, municipal and governmental customers.

Fire Rescue — Fire Rescue manufactures chassis; fire trucks, including Class A pumpers, mini-pumpers and tankers; airport and other rescue vehicles, aerial access platforms and aerial ladder devices. This group sells primarily to municipal and government customers, volunteer fire departments and industry.

Environmental Solutions — Environmental Solutions manufactures a variety of self-propelled street cleaning vehicles, vacuum loader vehicles, municipal catch basin/sewer cleaning vacuum trucks and water blasting equipment. Environmental Solutions sells primarily to municipal and government customers and industrial contractors.

Tool — Tool manufactures a variety of consumable tools which include die components for the metal stamping industry and a large selection of precision metal products for plastic molding needs. The group’s products are sold almost entirely to industrial customers.

Net sales by operating segment reflect sales of products and services and financial revenues to external customers, as reported in the Company’s consolidated statements of operations. Intersegment sales are insignificant. The Company evaluates performance based on operating income of the respective segment. Operating income includes all revenues, costs and expenses directly related to the segment involved. In determining operating segment income, neither corporate nor interest expenses are included. Operating segment depreciation expense, identifiable assets and capital expenditures relate to those assets that are utilized by the respective operating segment. Corporate assets consist principally of cash and cash equivalents, notes and other receivables and fixed assets. The accounting policies of each operating segment are the same as those described in the summary of significant accounting policies.

Revenues attributed to customers located outside of the US aggregated $467.1 million in 2007, $420.9 million in 2006 and $329.5 million in 2005. Of that, sales exported from the US aggregated $163.7 million in 2007, $151.4 million in 2006 and $100.8 million in 2005.

The Company invests in research to support development of new products and the enhancement of existing products and services. The Company believes this investment is important to maintain and/or enhance its leadership position in key markets. Expenditures for research and development by the Company were approximately $30.9 million in 2007, $23.1 million in 2006 and $19.7 million in 2005.

56

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

A summary of the Company’s continuing operations by segment for each of the three years in the period ended December 31, 2007 is as follows:

	2007			2006			2005
Net sales
Safety and Security Systems	$	367.2		$	304.5		$	276.5
Fire Rescue		330.8			384.8			371.2
Environmental Solutions		450.8			399.4			347.7
Tool		119.3			122.9			123.6
Total net sales	$	1,268.1		$	1,211.6		$	1,119.0
Operating income (loss)
Safety and Security Systems	$	49.6		$	41.2		$	45.0
Fire Rescue		(11.0	)		6.8			2.3
Environmental Solutions		40.2			37.1			28.9
Tool		6.6			8.2			11.3
Corporate expense		(21.3	)		(23.4	)		(23.8	)
Total operating income		64.1			69.9			63.7
Interest expense		(25.9	)		(25.0	)		(23.1	)
Other income (expense)		(4.2	)		(2.2	)		0.2
Income (loss) before income taxes	$	34.0		$	42.7		$	40.8
Depreciation and amortization
Safety and Security Systems	$	8.0		$	5.5		$	4.5
Fire Rescue		4.2			3.8			4.8
Environmental Solutions		3.6			3.6			3.2
Tool		4.9			4.8			4.8
Corporate		0.5			0.2			0.9
Total depreciation and amortization	$	21.2		$	17.9		$	18.2

57

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

	2007		2006		2005
Identifiable assets
Manufacturing activities
Safety and Security Systems	$	419.1	$	197.5	$	181.5
Fire Rescue		229.4		219.4		216.6
Environmental Solutions		212.5		229.4		245.0
Tool		117.6		116.8		120.2
Corporate		47.2		69.6		99.3
Total manufacturing activities		1,025.8		832.7		862.6
Assets of discontinued operations		4.5		57.8		87.7
Financial services activities
Fire Rescue		98.8		116.3		138.7
Environmental Solutions		14.2		27.5		30.5
Corporate		33.8		15.1		—
Total financial services activities		146.8		158.9		169.2
Total identifiable assets	$	1,177.1	$	1,049.4	$	1,119.5

	2007		2006		2005
Capital expenditures
Safety and Security Systems	$	4.5	$	4.2	$	2.3
Fire Rescue		4.7		3.1		3.7
Environmental Solutions		10.6		5.4		4.6
Tool		3.1		4.2		5.8
Corporate		0.6		1.3		0.2
Total capital expenditures	$	23.5	$	18.2	$	16.6

The following table presents financial revenues (included in net sales) by segment in each of the three years in the period ended December 31, 2007 as follows:

	2007		2006		2005
Financial revenues
Fire Rescue	$	5.8	$	6.3	$	7.4
Environmental Solutions		1.6		1.9		2.2
Total financial revenues	$	7.4	$	8.2	$	9.6

Due to the nature of the Company’s customers, the majority of the Fire Rescue and Environmental Solutions financial revenues is exempt from federal income tax.

58

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

The segment information provided below is classified based on geographic location of the Company’s subsidiaries:

	2007		2006		2005
Net sales
United States	$	793.6	$	782.5	$	780.0
Europe		397.5		318.9		269.8
Canada		69.6		102.0		59.6
Other		7.4		8.2		9.6
	$	1,268.1	$	1,211.6	$	1,119.0
Long-lived assets
United States	$	393.9	$	323.9	$	298.5
Europe		172.6		75.7		68.8
Canada		7.6		9.3		59.6
Other		5.0		5.0		1.1
	$	579.1	$	413.9	$	428.0

NOTE 17 — COMMITMENTS, GUARANTEES AND FAIR VALUES OF FINANCIAL INSTRUMENTS

The Company leases certain facilities and equipment under operating leases, some of which contain options to renew. Total rental expense on all operating leases was $8.3 million in 2007, $7.4 million in 2006 and $7.5 million in 2005. Sublease income and contingent rentals relating to operating leases were insignificant. At December 31, 2007, minimum future rental commitments under operating leases having noncancelable lease terms in excess of one year aggregated $42.9 million payable as follows: $10.4 million in 2008, $8.3 million in 2009, $6.4 million in 2010, $5.1 million in 2011, $4.4 million in 2012 and $8.3 million thereafter.

At December 31, 2007 and 2006, the Company had outstanding standby letters of credit aggregating $34.5 million and $37.4 million, respectively, principally to act as security for retention levels related to casualty insurance policies and to guarantee the performance of subsidiaries that engage in export transactions to foreign governments and municipalities.

The Company issues product performance warranties to customers with the sale of its products. The specific terms and conditions of these warranties vary depending upon the product sold and country in which the Company does business with warranty periods generally ranging from six months to five years. The Company estimates the costs that may be incurred under its basic limited warranty and records a liability in the amount of such costs at the time the sale of the related product is recognized. Factors that affect the Company’s warranty liability include the number of units under warranty from time to time, historical and anticipated rates of warranty claims and costs per claim. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

59

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

Changes in the Company’s warranty liabilities for the years ended December 31, 2007 and 2006 were as follows:

	2007			2006
Balance at January 1	$	8.2		$	9.2
Provisions to expense		15.5			11.7
Actual costs incurred		(13.8	)		(12.7	)
Balance at December 31	$	9.9		$	8.2

Through the third quarter of 2007 the Company guaranteed the debt of a third-party dealer that sells the Company’s vehicles. The notional amounts of the guaranteed debt as of December 31, 2007 and 2006 totaled $0.0 million and $0.7 million, respectively. No losses were incurred.

The Company also provides residual value guarantees on vehicles sold to certain customers. Proceeds received in excess of the fair value of the guarantee are deferred and amortized into income ratably over the life of the guarantee. These transactions have been recorded as operating leases and liabilities equal to the fair value of the guarantees were recognized. The notional amounts of the residual value guarantees were $2.4 million and $2.5 million as of December 31, 2007 and 2006, respectively. No losses have been incurred as of December 31, 2007. The guarantees expire between 2008 and 2010.

The following table summarizes the carrying amounts and fair values of the Company’s financial instruments at December 31, 2007:

	2007					2006
	Notional		Fair			Notional		Fair
	Amount		Value			Amount		Value
Short-term debt (Note 5)	$	2.6	$	2.6		$	30.3	$	30.3
Long-term debt (Note 5)		423.8		427.5			347.1		351.5
Fair value swaps (Note 8)		138.7		(1.3	)		147.9		(7.2	)
Cash flow swaps (Note 8)		135.0		(0.9	)		85.0		1.6
Foreign exchange contracts (Note 8)		55.9		(3.2	)		7.2		—

The Dallas Fort Worth (“DFW”) airport has given Federal APD notices of non-performance and default most recently in April 2007, regarding the $18.0 million contract for installation of a new parking and revenue control system at the airport, and demanded that Federal APD cure its alleged non-performance. DFW also provided a copy of the non-performance and default letter to the Company’s surety carrier. The non-performance and default claim related principally to certain disagreements as to the content and flexibility of the revenue reporting features of the system. In June 2007, DFW provided a written “Limited Notice of Cure” of the deficiencies alleged in its most recent default notice involving: (1) inability to protect revenue and demonstrate revenue integrity, (2) ensure performance reliability, and (3) accurate and reliable reporting. Federal APD disputes that there was any basis under the contract for the non-performance or default as alleged by DFW. The parties have been working together to implement the next phase of contract performance; DFW has recognized that Federal APD has passed a number of recent installation performance tests and some parking lanes are now live and collecting revenue. We are continuing to move forward to implement the system and are confident that we will be able to resolve the outstanding issues without a material adverse financial impact.

NOTE 18 — NEW ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands

60

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years for financial assets and financial liabilities. Delayed application of this Statement is permitted for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. This Statement is required to be adopted by the Company in the first quarter of its fiscal year 2008. The Company does not expect SFAS No. 157 to have a material impact on the results of operations or financial position

In September 2006, the EITF issued EITF 06-04, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Split-Dollar Life Insurance Arrangements”. EITF 06-04 concludes that an employer should recognize a liability for post-employment benefits promised to an employee. This guidance is effective for fiscal years beginning after December 15, 2007. The Company has one arrangement that meets these criteria and will record a liability of approximately $1.0 million in 2008.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115” (“SFAS 159”). SFAS 159 expands the use of fair value accounting but does not affect existing standards which require assets or liabilities to be carried at fair value. Under SFAS 159, a company may elect to use fair value to measure accounts and loans receivable, available-for-sale and held-to-maturity securities, equity method investments, accounts payable, guarantees and issued debt. Other eligible items include firm commitments for financial instruments that otherwise would not be recognized at inception and non-cash warranty obligations where a warrantor is permitted to pay a third party to provide the warranty goods or services. If the use of fair value is elected, any upfront costs and fees related to the item must be recognized in earnings and cannot be deferred, e.g., debt issue costs. The fair value election is irrevocable and generally made on an instrument-by-instrument basis, even if a company has similar instruments that it elects not to measure based on fair value. At the adoption date, unrealized gains and losses on existing items for which fair value has been elected are reported as a cumulative adjustment to beginning retained earnings. Subsequent to the adoption of SFAS 159, changes in fair value are recognized in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007 and is required to be adopted by the Company in the first quarter of 2008. The Company currently does not expect SFAS 159 to have a material impact on the results of operations or financial position.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”), which expands the definition of a business and a business combination, requires the fair value of the purchase price of an acquisition including the issuance of equity securities to be determined on the acquisition date, requires that all assets, liabilities, contingent consideration, contingencies and in-process research and development costs of an acquired business be recorded at fair value at the acquisition date, requires that acquisition costs generally be expensed as incurred, requires that restructuring costs generally be expensed in periods subsequent to the acquisition date, and requires changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period to impact income tax expense. The Company will be required to adopt SFAS 141(R) on January 1, 2009. The Company is currently evaluating what impact, if any, SFAS 141(R) will have on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51” (“SFAS 160”), which changes the accounting and reporting for minority interests such that minority interests will be recharacterized as noncontrolling interests and will be required to be reported as a component of equity, and requires that purchases or sales of equity interests that do not result in a change in control be accounted for as equity transactions and, upon a loss of control, requires the interest

61

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data) — (Continued)

sold, as well as any interest retained, to be recorded at fair value with any gain or loss recognized in earnings. The Company will be required to adopt SFAS 160 on January 1, 2009. The Company does not expect SFAS 160 to have a material impact to its results of operations or financial position.

NOTE 19 — SELECTED QUARTERLY DATA (UNAUDITED)

Effective January 1, 2004, the Company began reporting its interim quarterly periods on a 13-week basis ending on a Saturday with the fiscal year ending on December 31. For convenience purposes, the Company uses “March 31”, “June 30”, “September 30” and “December 31” to refer to its results of operations for the quarterly periods ended. In 2007, the Company’s interim quarterly periods ended March 31, June 30, September 29 and December 31 and in 2006, the Company’s interim quarterly periods ended April 1, July 1, September 30 and December 31, respectively.

The following is a summary of the quarterly results of operations, including income per share, for the Company for the quarterly periods of fiscal 2007 and 2006.

	For the Quarterly Period Ended
	2007									2006
	March 31		June 30		September 29			December 31		April 1			July 1			September 30			December 31
Net sales	$	292.1	$	317.3	$	307.3		$	351.4	$	273.6		$	309.5		$	289.4		$	339.1
Gross margin*		67.9		79.6		72.2			77.2		61.4			72.5			70.7			79.8
Gross margin pre-reclassification*		N/A		N/A		N/A			N/A		67.8			79.3			76.7			86.8
Income from continuing operations		6.1		11.0		4.8			7.9		1.3			10.6			9.4			13.1
Gain (loss) from discontinued operations		0.1		—		(0.1	)		0.5		(1.2	)		(2.0	)		0.2			1.0
Gain (loss) on disposition		24.5		0.1		(0.2	)		0.2		—			(10.5	)		(0.4	)		1.2
Net income (loss)		30.7		11.1		4.5			8.6		0.1			(1.9	)		9.2			15.3
Per share data — diluted: Income from continuing operations	$	0.13	$	0.23	$	0.10		$	0.17	$	0.03		$	0.22		$	0.20		$	0.27
Income (loss) from discontinued operations		0.51		—		(0.01	)		0.01		(0.03	)		(0.26	)		(0.01	)		0.05
Net income (loss)		0.64		0.23		0.09			0.18		—			(0.04	)		0.19			0.32
Dividends paid per share		0.06		0.06		0.06			0.06		0.06			0.06			0.06			0.06
Market price range per share
High		17.00		16.78		16.48			17.00		19.06			19.75			16.54			16.71
Low		14.29		15.19		12.71			10.82		14.75			14.26			12.69			14.65

* In 2006, the Company began classifying certain selling, engineering, general and administrative expenses in cost of sales. This reclassification is reflected in all periods presented.

The Company recorded $9.7 million of after-tax impairment charges in the year ended December 31, 2006 in order to state the assets of the Leach business, which is classified as a discontinued operation, at fair value.

62

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

(a)   Evaluation of Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of its management, including the interim Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in the Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective.

(b)   Management’s Annual Report on Internal Control over Financial Reporting and Attestation Report of the Registered Public Accounting Firm

The Company’s management is responsible for establishing and maintaining an adequate system of internal control over financial reporting, as defined in the Exchange Act Rule 13a-15(f). Management conducted an assessment of the Company’s internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework. Based on the assessment, management concluded that, as of December 31, 2007, the Company’s internal control over financial reporting is effective.

Ernst & Young LLP, an independent registered public accounting firm, has audited the Consolidated Financial Statements included in this Annual Report on Form 10-K and, as part of their audit, has issued its report, included herein, on the effectiveness of the Company’s internal control over financial reporting. See “Report of Independent Registered Public Accounting Firm” on page 26.

(c)   Changes in Internal Control over Financial Reporting

There was no significant change in the Company’s internal control over financial reporting that occurred during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information.

None.

PART III

Item 10. Directors and Executive Officers of the Registrant.

Information regarding directors and nominees for directors is set forth in the Company’s Proxy Statement and is incorporated herein by reference. For information concerning the Company’s executive officers, see “Executive Officers of the Registrant” set forth in Part I hereof. Information regarding Compliance with Section 16(a) of the Exchange Act is set forth in the Company’s Proxy Statement under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” and is incorporated herein by reference. Information regarding the Company’s Audit Committee, Corporate Governance Committee, Nominating Committee and Compensation and Benefits Committee are set forth in the Company’s Proxy Statement under the caption “Corporate Governance” and is incorporated herein by reference.

The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer and principal accounting officer. This code of ethics and the Company’s corporate governance policies are posted on the Company’s website at http://www.federalsignal.com. The Company intends to satisfy its disclosure requirements regarding amendments to or waivers from its code of ethics by posting such information on this website. The charters of the Audit Committee, Corporate Governance Committee, Nominating Committee and

63

Compensation and Benefits Committee of the Company’s Board of Directors are available on the Company’s website and are also available in print free of charge.

Item 11. Executive Compensation.

The information contained under the captions “Director Compensation” and “Executive Compensation” of the Company’s Proxy Statement for the Annual Meeting of Shareholders to be held April 22, 2008 is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Information regarding security ownership of certain beneficial owners, of all directors and nominees, of the named executive officers, and of directors and executive officers as a group, is set forth in the Company’s Proxy Statement under the captions “Security Ownership of Directors and Executive Officers” and “Security Ownership of Certain Beneficial Owners” and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions.

Information regarding certain relationships is hereby incorporated by reference from the Company’s Proxy Statement under the heading “Corporate Governance Guidelines,” and under the headings “Security Ownership of Directors and Executive Officers” and “Security Ownership of Certain Beneficial Owners.” Information regarding director independence is hereby incorporated by reference from the Company’s Proxy Statement under the heading “Meetings and Committees of the Board.”

Item 14. Principal Accountant Fees and Services.

Information regarding principal accountant fees and services is incorporated by reference from the Company’s Proxy Statement under the heading “Service Fees Paid to the Independent Registered Public Accounting Firm.”

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) 1. Financial Statements

The following consolidated financial statements of Federal Signal Corporation and Subsidiaries contained under Item 8 of this Form 10-K are incorporated herein by reference:

Consolidated Balance Sheets as of December 31, 2007 and 2006

Consolidated Statements of Operations for the Years Ended December 31, 2007, 2006 and 2005

Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2007, 2006 and 2005

Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005

Notes to Consolidated Financial Statements

2. Financial Statement Schedules

The following consolidated financial statement schedule of Federal Signal Corporation and Subsidiaries, for the three years ended December 31, 2007 is filed as a part of this report in response to Item 15(a)(2):

Schedule II — Valuation and Qualifying Accounts

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore, have been omitted.

3. Exhibits

See Exhibit Index.

64

Signatures

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FEDERAL SIGNAL CORPORATION

By:  /s/  James E. Goodwin

James E. Goodwin

Interim President, Interim Chief Executive

Officer and Director

(Principal Executive Officer)

February 27, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below, as of February 27, 2008, by the following persons on behalf of the Company and in the capacities indicated.

/s/  James E. Goodwin James E. Goodwin	Interim President, Interim Chief Executive Officer and Director (Principal Executive Officer)
/s/  Stephanie K. Kushner Stephanie K. Kushner	Senior Vice President and Chief Financial Officer (Principal Financial Officer)
/s/  Paul Brown Paul Brown	Vice President and Controller (Principal Accounting Officer)
/s/  James C. Janning James C. Janning	Chairman and Director
/s/  Charles R. Campbell Charles R. Campbell	Director
/s/  Robert M. Gerrity Robert M. Gerrity	Director
/s/  Robert S. Hamada Robert S. Hamada	Director
/s/  Paul W. Jones Paul W. Jones	Director
/s/  John F. McCartney John F. McCartney	Director
/s/  Brenda L. Reichelderfer Brenda L. Reichelderfer	Director

65

SCHEDULE II

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

Valuation and Qualifying Accounts

For the Years Ended December 31, 2007, 2006 and 2005

					Deductions
			Additions		Accounts
	Balance at		Charged to		Written off			Balance
	Beginning		Costs and		Net of			at End
Description	of Year		Expenses		Recoveries			of Year
	($ in millions)
Allowance for doubtful accounts
Year ended December 31, 2007:
Manufacturing activities	$	3.0						$	5.0
Financial service activities		4.0							3.6
Total	$	7.0	$	1.6	$	0.0		$	8.6
Year ended December 31, 2006:
Manufacturing activities	$	2.6						$	3.0
Financial service activities		3.9							4.0
Total	$	6.5	$	2.1	$	(1.6	)	$	7.0
Year ended December 31, 2005:
Manufacturing activities	$	2.1						$	2.6
Financial service activities		3.9							3.9
Total	$	6.0	$	2.9	$	(2.4	)	$	6.5
Inventory obsolescence
Year ended December 31, 2007:
Manufacturing activities	$	5.7	$	2.7	$	(2.3	)	$	6.1
Year ended December 31, 2006:
Manufacturing activities	$	5.6	$	3.6	$	(3.5	)	$	5.7
Year ended December 31, 2005:
Manufacturing activities	$	6.0	$	2.2	$	(2.6	)	$	5.6
Product liability and workers’ compensation
Year ended December 31, 2007:
Manufacturing activities	$	8.4	$	4.2	$	(5.8	)	$	6.8
Year ended December 31, 2006:
Manufacturing activities	$	9.1	$	6.1	$	(6.8	)	$	8.4
Year ended December 31, 2005:
Manufacturing activities	$	7.9	$	7.4	$	(6.2	)	$	9.1
Warranty liability:

The changes in the Company’s warranty liabilities are analyzed in Note 17 — Commitments, Guarantees and Fair Values of Financial Instruments.

66

EXHIBIT INDEX

The following exhibits, other than those incorporated by reference, have been included in the Company’s Form 10-K filed with the Securities and Exchange Commission. The Company shall furnish copies of these exhibits upon written request to the Corporate Secretary at the address given on the cover page. (* denotes exhibit filed in this Form 10-K)

3	.	a.	Restated Certificate of Incorporation of the Company. Incorporated by reference to Exhibit(3)(a) to the Company’s Form 10-K for the year ended December 31, 1991.
		b.	By-laws of the Company, as amended December 10, 2007.*
4	.	a.	Rights Agreement dated July 9, 1998, as amended. Incorporated by reference to Exhibit 4 to the Company’s Form 10-Q for the quarter ended June 30, 2007.
		b.	Second Amended and Restated Credit Agreement dated April 25, 2007 among the Company, Bank of Montreal and other third party lenders named therein. Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended September 30, 2007.
		c.	Supplemental Agreement to the Second Amended and Restated Credit Agreement among Federal Signal Corporation, Federal Signal of Europe B.V. y CIA , SC, and Bank of Montreal, Ireland and other third party lenders named therein dated September 6, 2007.*
		d.	Loan agreement among E-One, Inc. and Banc of America Leasing & Capital, LLC dated March 24, 2005; Amended and Restated Loan and Credit Agreement among E-One Inc., Elgin Sweeper Company, Vactor Manufacturing Inc., E-One New York Inc., and Banc of America Leasing & Capital, LLC, dated December 20, 2007.*
10	.	a.	The 1996 Stock Benefit Plan, as amended. Incorporated by reference to Exhibit 10.A to the Company’s Form 10-K for the year ended December 31, 2003.(1)
		b.	Management Incentive Plan. Incorporated by reference to Exhibit 10.B to the Company’s Form 10-K for the year ended December 31, 2006.(1)
		c.	Supplemental Pension Plan. Incorporated by reference to Exhibit 10.C to the Company’s Form 10-K for the year ended December 31, 1995.(1)
		d.	Executive Disability, Survivor and Retirement Plan. Incorporated by reference to Exhibit 10.D to the Company’s Form 10-K for the year ended December 31, 1995.(1)
		e.	Savings Restoration Plan, as amended. Incorporated by reference to Exhibit 10.E to the Company’s Form 10-K for the year ended December 31, 2006.(1)
		f.	Employment Agreement with Robert D. Welding. Incorporated by reference to Exhibit 10.F to the Company’s Form 10-K for the year ended December 31, 2003.(1)
		g.	Pension Agreement with Stephanie K. Kushner. Incorporated by reference to Exhibit 10.G to the Company’s Form 10-K for the year ended December 31, 2002.(1)
		h.	Severance Policy for Executive Employees, as amended. Incorporated by reference to Exhibit 10.H to the Company’s Form 10-K for the year ended December 31, 2006.(1)
		i.	Change of Control Agreement with Stephanie K. Kushner. Incorporated by reference to Exhibit 10.I to the Company’s Form 10-K 405 for the year ended December 31, 2001.(1)
		j.	Form of Executive Change-In-Control Severance Agreement for each of Robert D. Welding, Stephanie K. Kushner, David R. McConnaughey, Marc F. Gustafson, Mark D. Weber and certain other executive officers. Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended October 2, 2004.(1)
		k.	Form of Executive Change-In-Control Severance Agreement with certain executive officers. Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended October 2, 2004.(1)
		l.	Director Deferred Compensation Plan. Incorporated by reference to Exhibit 10.H to the Company’s Form 10-K for the year ended December 31, 1997.(1)
		m.	2005 Executive Incentive Compensation Plan. Incorporated by reference to Appendix B to the Company’s Proxy Statement dated March 22, 2005 filed on Schedule 14A.(1)
		n.	Executive Incentive Performance Plan. Incorporated by reference to Appendix C to the Company’s Proxy Statement dated March 22, 2005 filed on Schedule 14A.(1)

67

		o.	General Release and Separation Agreement between the Company and Stephen C. Buck, dated March 24, 2006. Incorporated by reference to Exhibit 10.O to the Company’s Form 10-K for the year ended December 31, 2006.(1)
		p.	General Release and Separation Agreement between the Company and Karen N. Latham, dated August 31, 2006. Incorporated by reference to Exhibit 10.P to the Company’s Form 10-K for the year ended December 31, 2006.(1)
		q.	Stock Purchase Agreement between the Company and Kennametal Inc., dated December 29, 2006. Incorporated by reference to Exhibit 10.Q to the Company’s Form 10-K for the year ended December 31, 2006.
		r.	Release and Severance Agreement between the Company and Marc F. Gustafson, effective July 17, 2007. Incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q for the quarter ended September 30, 2007.(1)
		s.	Consulting Letter Agreement between the Company and Marc F. Gustafson, effective July 17, 2007. Incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q for the quarter ended September 30, 2007.(1)
		t.	Stock Purchase Agreement between the Company and Alan K. Sefton dated August 6, 2007. Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended September 30, 2007.
		u.	Purchase Agreement between Alan Keith Sefton and Federal Signal of Europe B.V. y CIA, SC and the other parties named therein. Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended September 30, 2007.
		v.	Release and Severance Agreement between the Company and Robert D. Welding, dated January 21, 2008.*(1)
14	.		Code of Ethics for Chief Executive Officer and Senior Financial Officers, as amended. Incorporated by reference to Exhibit 14 to the Company’s Form 10-K for the year ended December 31, 2003.
21	.		Subsidiaries of the Company.*
23	.		Consent of Independent Registered Public Accounting Firm.*
31	.1		CEO Certification under Section 302 of the Sarbanes-Oxley Act.*
31	.2		CFO Certification under Section 302 of the Sarbanes-Oxley Act.*
32	.1		CEO Certification of Periodic Report under Section 906 of the Sarbanes-Oxley Act.*
32	.2		CFO Certification of Periodic Report under Section 906 of the Sarbanes-Oxley Act.*
99	.1		Press Release*

*	Filed herewith
(1)	Management contract or compensatory plan or arrangement.

68

Federal Signal Corporation

Corporate and Stockholder Information

Management

Board of Directors

Kimberly L. Dickens Vice President, Human Resources James E. Goodwin Interim President and Interim Chief Executive Officer Peter R. Guile President, E-One, Inc. Stephanie K. Kushner Senior Vice President and Chief Financial Officer Fred H. Lietz Vice President and Chief Procurement Officer David R. McConnaughey President, Safety and Security Systems Group Esa Peltola President, Bronto Skylift Oy Ab Jennifer L. Sherman Vice President, General Counsel and Secretary Mark D. Weber President, Environmental Solutions Group Michael K. Wons Vice President and Chief Information Officer and General Manager, Public Safety Systems Division Paul Brown Vice President and Controller John A. DeLeonardis Vice President, Taxes John A. Gruber Vice President, Corporate Development David E. Janek Vice President and Treasurer Alan L. Shaffer President, Tool Group Form 10-K and Other Reports and Information Our Annual Report and Form 10-K, Quarterly Reports on Form 10-Q, Proxy Statement and other reports that we file with the SEC are available on our website at federalsignal.com. In addition, copies of these reports may be obtained without charge by contacting: Investor Relations Federal Signal Corporation 1415 W. 22nd St., Suite 1100 Oak Brook, IL 60523 630-954-2000 http://www.federalsignal.com

James C. Janning, 60 Chairman of the Board Group President Harbour Group, Ltd. Charles R. Campbell, 68 Retired, Consultant The Everest Group Robert M. Gerrity, 70 Retired, Vice Chairman New Holland N.V. James E. Goodwin, 63 Interim President and Interim Chief Executive Officer Federal Signal Corporation Robert S. Hamada, 70 Edward Eagle Brown Distinguished Service Professor of Finance, Emeritus Graduate School of Business, University of Chicago Paul W. Jones, 59 Chairman and Chief Executive Officer A. O. Smith Corporation John F. McCartney, 55 Chairman, Westcon Group, Inc. and A. M. Castle & Co. Brenda L. Reichelderfer, 49 Seinor Vice President and Chief Technology Officer, ITT Corporation Corporate Information Transfer Agent and Registrar National City Bank Shareholder Services Operations Locator 5352 P.O. Box 92301 Cleveland, OH 44101-4301 800-622-6757 2008 Annual Meeting of Stockholders Tuesday, April 22, 2008, 3:30 pm Regency Towers Conference Center 1515 W. 22nd Street Oak Brook, IL 60523 Independent Registered Public Accounting Firm Ernst & Young, LLP Stock Trading Information New York Stock Exchange Symbol: FSS

EX-3.B

Exhibit 3B

BY-LAWS

OF

FEDERAL SIGNAL CORPORATION

(a Delaware Corporation)

December 10, 2007

BY-LAWS

OF

FEDERAL SIGNAL CORPORATION

(a Delaware Corporation)

ARTICLE I
Offices. Books and Records.

     Section 1.1. Offices. The registered office of FEDERAL SIGNAL CORPORATION (herein called the “Corporation”) within the State of Delaware shall be in the City of Wilmington, County of New Castle. The Corporation may also have such other offices at such other places both within or without the State of Delaware as the Board of Directors of the Corporation (herein called the “Board”) may from time to time determine or the business of the Corporation may require.

     Section 1.2. Books and Records. The books and records of the Corporation shall be kept at the principal business office of the Corporation, or at such other place or places as the Board shall from time to time determine.

ARTICLE II
Meetings of Stockholders.

     Section 2.1. Place of Meetings. Meetings of stockholders shall be held at such place, within or without the State of Delaware, as may be fixed from time to time by the Board and specified in the respective notices or waivers of notice thereof, provided that if the Board shall not so fix the place of any meeting of stockholders or if any special meeting of stockholders is called by a person or persons other than the Board, such meeting shall be held at the principal business office of the Corporation.

     Section 2.2. Annual Meetings. An annual meeting of stockholders for the purpose of electing directors and the transaction of such other business as may properly be brought before the meeting shall be held each year at such time as may from time to time be determined by the Board. In the absence of such a determination by the Board prior to twenty (20) days before the fourth Friday in April of each year, such annual meeting shall be held on the fourth Friday in April at the hour of 11:00 A.M., unless a legal holiday, and if a legal holiday, then on the next succeeding business day which is not a legal holiday. If, for any reason, the annual meeting shall not be held at the time herein provided, the same may be held at any time thereafter upon notice as hereinafter provided or the business thereof may be transacted at any special meeting of stockholders called for that purpose.

     Section 2.3. Special Meetings of Stockholders. Special meetings of stockholders for any purpose or purposes, unless otherwise prescribed by law, may be called at any time by the Board of Directors. The business transacted at any special meeting of stockholders shall be limited to the purpose or purposes stated in the call thereof.

     Section 2.4. Notice of Meetings. Written notice of every meeting of stockholders stating the place, day and hour of the meeting, unless otherwise prescribed by law or the Certificate of Incorporation (meaning always herein the Certificate of Incorporation of the Corporation as the same may be amended from time to time), shall be given, personally or by mail, not less than ten nor more than sixty days before the date of the meeting, to each stockholder of record entitled to vote at such meeting. The notice of a special meeting shall state the purpose for which the meeting is called and shall also indicate that it is being issued by or at the direction of the person or persons calling the meeting.

     Section 2.5. List of Stockholders. The Secretary of the Corporation shall make, at least ten days before each meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, showing the address of and the number of shares of each class of stock of the Corporation registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place in the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. Such list shall be produced at the time and place of the meeting and kept during the whole time thereof for inspection by any stockholder who is present.

     Section 2.6. Quorum and Adjournments. For the purpose of any action to be taken by stockholders at any meeting, the presence in person or by proxy of the holders of those of the shares of stock of the Corporation issued and outstanding and entitled to vote thereat as shall have a majority of the voting power of all such shares shall be necessary and sufficient to constitute a quorum for the transaction of business, except as otherwise expressly provided by law or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat present in person or represented by proxy shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The absence from any meeting of the number required by law, or by the Certificate of Incorporation or these by-laws, for action upon any given matter shall not prevent action at such meeting upon any other matter or matters which may properly come before the meeting and subject was on the agenda of the meeting, if the number required in respect of such other matter or matters shall be present. Nothing in these by-laws shall affect the right to adjourn any meeting from time to time where a quorum is present.

     Section 2.7. Organization. At any meeting of stockholders, the Chair or in his/her absence, the President or Chief Executive Officer, a Vice President, or in the absence of all of the

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foregoing, a person chosen by a majority of the votes entitled to be cast by the stockholders of the Corporation present in person or by proxy and entitled to vote thereat shall act as Chair; and the Secretary, or in his absence an Assistant Secretary; or in the absence of the Secretary and all Assistant Secretaries, a person whom the Chair of the meeting shall appoint shall act as secretary of the meeting. The Board, in advance of any meeting of stockholders, may appoint one or more inspectors of election to act at such meeting or any adjournment thereof. If inspectors are not so appointed, the Chair of such meeting may, and on the request of any stockholder entitled to vote thereat shall, appoint one or more inspectors. In case any person appointed fails to appear or to act, the vacancy may be filled by the Chair of the meeting. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his/her ability. The duties of the inspectors shall be to ascertain and report the number of shares represented at the meeting, to determine the validity and effect of all proxies, to count all votes and report the results thereof, and to do such other acts as are proper to conduct elections and voting with impartiality and fairness to the stockholders. If no inspector is appointed as herein provided, such duties shall be performed by the secretary of the meeting. The Chair of the meeting shall have the right to decide, without appeal, the order of business for such meeting and all procedural motions, questions and other matters (including the right to limit discussion as being unreasonably cumulative or prolonged or irrelevant to a pending question) pending before the meeting. The Corporation shall keep minutes of the proceedings of its stockholders.

     Section 2.8. Voting by Stockholders. Except as otherwise expressly provided by law or by the Certificate of Incorporation or these by-laws, each stockholder present in person or by proxy at any meeting shall have, on each matter on which such stockholder is entitled to vote, one vote with respect to each share of stock registered in his name on the books of the Corporation:

          (a) On the date fixed pursuant to Section 8.5 hereof as the record date for the determination of stockholders entitled to notice of and to vote at such meeting, or

          (b) If no record date is so fixed, then at the close of business on the day next preceding the day on which notice of such meeting is given, or, if no notice is given and notice is waived, at the close of business on the day next preceding the day on which such meeting is held.

     Any stockholder entitled to vote at any meeting may vote either in person or by proxy appointed by an instrument in writing, signed by such stockholder (or by his attorney-in-fact thereunto authorized in writing) and delivered to the secretary of the meeting; provided, however, that no proxy shall be valid after eleven months from the date of its execution unless otherwise provided in the proxy.

     Every matter other than the election of Directors to be decided by stockholders at any meeting (except as otherwise expressly provided by law or by the Certificate of Incorporation) shall be decided, if a quorum be present, by the vote of the majority of the shares voting with respect to the issue to be decided. In the election of directors, these persons shall be elected who receive the highest number of votes cast in the election.

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     Unless directed by the Chair of the meeting or demanded by the holders of a majority of the shares of stock of the Corporation present in person or by proxy at any meeting and entitled to vote thereon, the vote on any matter need not be by ballot. Upon any such direction or demand for a vote by ballot upon any matter, such vote shall be so taken. On a vote by ballot, each ballot shall be signed by the stockholder voting or by his proxy, if there be such proxy, and shall state the number of shares voted by him or her.

     Section 2.9 Procedures for Submission of Stockholder Proposals at the Annual Meeting. At the annual meeting of the stockholders of the Corporation, only such business shall be conducted as shall have been brought before the meeting (a) by or at the direction of the Board; or (b) by any stockholder of the Corporation entitled to vote for the election of directors at such meeting who complies with the procedures set forth in this Section 2.9. For business to be properly brought before the annual meeting by a stockholder, the stockholder must give timely notice thereof in proper written form to the Secretary of the Corporation and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder notice must be delivered to or mailed and received at the principal executive offices of the Corporation not later than the close of business on the 60^th day nor earlier than the close of business on the 90^th day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 90^th day prior to such annual meeting and not later than the close of business on the later of the 60^th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of the annual meeting commence a new time period for the giving of stockholder notice as described above. For purposes of this Section 2.9, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, the Associated Press, Reuters or a comparable national or international new service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended. To be in proper written form, a stockholder notice shall set forth in writing as to each matter the stockholder proposes to bring before the meeting: (w) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (x) the name and address, as they appear on the Corporation’s book, of the stockholder proposing such business and the beneficial owner, if any, on whose behalf the proposal is being made; (y) the class and number of shares of the Corporation which are owned beneficially and of record by the stockholder and the beneficial owner; and (z) any material interest of the stockholder or the beneficial owner in such business. In the event that a stockholder seeks to propose business at the annual meeting, the Secretary shall appoint two inspectors who are not affiliated with the Corporation to determine if the stockholder has complied with this Section 2.9. If the inspectors determine that a stockholder has not complied with this Section 2.9, the inspectors shall direct the chairman of the meeting to declare to the meeting that the business was not properly brought before the meeting and that any such business shall not be transacted at the meeting. Notwithstanding the foregoing provisions of this Section 2.9, a stockholder shall also comply

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with all the applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 2.9. Nothing in this Section 2.9 shall be deemed to affect any rights of any stockholder to request inclusion of a proposal or proposals in the Corporation’s proxy statement pursuant to the rules and regulations promulgated under the Securities Exchange Act of 1934, as amended.

ARTICLE III
Board of Directors

     Section 3.1. General Powers. The business and affairs of the Corporation shall be managed by the Board as from time to time constituted. The Board may exercise all powers, rights and privileges of the Corporation (whether expressed or implied in the Certificate of Incorporation or conferred by law) and do all acts and things which may be done by the Corporation, as are not by law, the Certificate of Incorporation or these by-laws directed or required to be exercised or done by the stockholders.

     Section 3.2. Number, Qualifications and Term of Office. The entire Board shall consist of the number of directors determined by resolution of the Board of Directors from time to time, provided such number of directors shall not be less than six (6) nor more than ten (10). The directors shall be divided into three classes; Class I, Class II and Class III. The number of directors in each class shall be as nearly equal as possible. The term of office of each of the initial Class I directors shall expire at the annual meeting of stockholders in 1970, the term of office of each of the initial Class II directors shall expire at the annual meeting of stockholders in 1971 and the term of office of each of the initial Class III directors shall expire at the annual meeting of stockholders in 1972. Subsequent term of office of directors of each class shall expire at the third annual meeting succeeding the annual meeting at which the preceding term of office of directors of that class expire. Notwithstanding the foregoing, the term of office of a director shall continue after the annual meeting at which it is to expire until the successor to such director shall be elected and qualified unless the directorship is eliminated in which case the term of office shall expire at the appropriate annual meeting, or at any earlier time when such office, being lawfully vacant, is eliminated. Directors shall be at least twenty-one years of age. A person elected as a director shall be deemed to have qualified as a director if he shall have met the qualifications of directors prescribed by law, the Certificate of Incorporation and these by-laws and if he shall have indicated, in any form whatever, his willingness to serve as a director of the Corporation.

     Section 3.3. Election of Directors. Directors of the class whose terms then expire shall be elected, as provided in these by-laws, at each annual meeting of the stockholders, or if for any reason the election shall not have been held at an annual meeting, at any special meeting called for that purpose after proper notice. Directors shall be elected solely from a list of persons nominated for directors at the meeting. Nominations of candidates for election as directors of the Corporation at any meeting of stockholders to elect director(s) (an “Election Meeting”) may be made by the Board of Directors at a meeting of the Board, or by written consent of directors in lieu of a meeting, not less than 30 days prior to the date of the Election Meeting. At the request

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of the Secretary of the Corporation each proposed nominee shall provide the corporation with such information concerning him or herself as is required under the proxy solicitation rules of the Securities and Exchange Commission. Any stockholder eligible to vote at the Election Meeting who intends to make a nomination at the meeting may do so by first delivering notice, at least 30 days prior to the date of the Election Meeting, to the Secretary of the Corporation setting forth: the name, age, business and residence addresses, the principal occupation or employment, the number of Corporation shares beneficially owned and a consent to serve as a director if elected for each such nominee that would be required for a nominee under the Securities and Exchange Commission rules for solicitation of proxies on behalf of the Corporation. In the event that a person is validly designated as a nominee in accordance with this Section 3.3 and shall thereafter become unable or unwilling to stand for election to the Board of Directors, such person’s nominator may designate a substitute nominee. If the Chair of the Election Meeting determines that a nomination was not made in accordance with foregoing procedures, such nomination shall be void and not allowed.

     Section 3.4. Removal of Directors. A director may be removed from office during the term of such office but only upon a showing of good cause, such removal to be by affirmative vote of a majority of the outstanding shares entitled to vote for the election of such director and which removal may only be taken at a special meeting of stockholders called for that purpose.

     A special meeting of the stockholders as herein referred to may only be held after a hearing on the matter of cause claimed to exist has been held by the full Board of Directors of the Company at which hearing the director or directors proposed for removal shall be given an adequate opportunity for preparation and attendance in person (together with representation by counsel); provided, however, that such hearing shall be held only after written notice has been given to said director or directors proposed for removal specifying the matters of cause claimed to exist. The conclusions of said hearing shall be reported by the Board of Directors in writing accompanying the notice of the special stockholders’ meeting sent to each stockholder eligible to vote at said special meeting.

     Section 3.5. Newly Created Directorships and Vacancies. Newly created directorships resulting from an increase in the number of directors and vacancies occurring in the Board for any reason may be filled by the affirmative vote of a majority of the remaining directors then in office, although less than a quorum of the Board exists. A director elected to fill a vacancy shall be elected for the unexpired portion of the term of his predecessor in office. A director elected to fill a newly created directorship shall serve for the term provided herein for the class of directors for which such director was elected.

     Section 3.6. Place of Meetings. The Board may hold its meetings at any place within or without the State of Delaware.

     Section 3.7. Annual Meeting. A meeting of the Board for the purposes of organization, election of officers and transaction of other business shall be held, if practicable, on the day of each annual meeting of stockholders for election of directors and at the place of the holding of said annual meeting. No notice of any such meeting held at such time and place need be given.

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Such meeting may be held at any other time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board.

     Section 3.8. Regular Meetings. Regular meetings of the Board may be held without notice, or with such notice thereof given by the Secretary as may be prescribed from time to time, at such time and place as may from time to time be specified in a resolution or resolutions adopted by the Board.

     Section 3.9. Special Meetings. Special meetings of the Board may be called at any time by the Board, the Chair, the Chief Executive Officer, or any three directors. Notice of such meetings shall be given by the Secretary, either personally or by telephone or by mail or by telegram or by cable-gram, to each director not less than 48 hours before the time of such meeting, which shall be fixed by the person or persons calling such meeting, but need not state the purposes thereof except as otherwise required by law or these by-laws.

     Section 3.10. Quorum and Manner of Acting. At each meeting of the Board, the presence of a majority of the entire Board shall be necessary to constitute a quorum for the transaction of business. Any vote of a majority of the directors present at the time of taking such vote, if a quorum shall be present at such time, shall be the act of the Board, except as may be otherwise specifically provided by law, the Certificate of Incorporation or these by-laws. Any meeting of the Board may be adjourned from time to time by a majority vote of the directors present at such meeting. In the absence of a quorum at such a meeting, a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present thereat. Notice of any adjourned meeting need not be given.

     Section 3.11. Presence at Meetings. Directors may participate in any meeting of the Board, or any meeting of the Executive Committee or any other committee of the Board of which they are members, by means of conference telephone or similar communications equipment by means of which all persons participating in such meeting (whether participating by virtue of this provision or otherwise) can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.

     Section 3.12. Organization and Procedure. At each meeting of the Board, the Chair, or in the absence of the Chair, the Chair of the Nominating and Governance Committee or a director chosen by the Board, shall act as Chair of the meeting. The Secretary of the Board (if one shall be appointed pursuant to Section 3.16 of these by-laws), or in his/her absence (or if one shall not be so appointed) the Secretary of the Corporation, or in his absence an Assistant Secretary of the Corporation, or in the absence of all of the foregoing a person appointed by the Chair of the meeting, shall act as Secretary of the meeting. The Chair of the meeting shall, without relinquishing the Chairship of the meeting, have full power of discussion and voting power in respect of any matter before the meeting.

     Section 3.13. Minutes of Meetings. The Board shall have minutes kept of its proceedings.

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     Section 3.14. Informal Action by Unanimous Consent. Unless otherwise restricted by statute, the provisions of the Certificate of Incorporation or these by-laws, any action required or permitted to be taken at any meeting of the Board or the Executive Committee or any other committee of the Board may be taken without a meeting if all members of the Board or Executive Committee or other committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board, Executive Committee or other committee.

     Section 3.15. Compensation. Directors shall be entitled to receive such fees and expenses, if any, for attendance at meetings of the Board, and in addition such fixed compensation for services as directors, as may be fixed from time to time by resolution of the Board; provided that no such fee or compensation shall be paid to any director who is at the time a regularly salaried officer or employee of the Corporation. Directors shall also be entitled to receive such compensation for services rendered to the Corporation as officers, members of committees, or in any other capacity, other than as directors, as may be provided from time to time by resolution of the Board, and shall also be entitled to reimbursement for expenses incurred in the performance of any such services.

ARTICLE IV
Committees of the Board.

     Section 4.1. Committees of the Board. The committees of the Board shall consist of an Executive Committee, an Audit Committee, a Compensation and Benefits Committee, a Nominating and Governance Committee and such other committees of the Board as may from time to time be established by a resolution of the Board. Except as otherwise provided in these by-laws, each committee of the Board shall consist of not less than two members of the Board.

     Section 4.2. Appointment and Term of Office of Committee Members; Designation of Alternates and Chairmen. The members of each committee of the Board shall be appointed by the Board as the Board in its discretion may determine, subject however, to any specific requirements of law, the Certificate of Incorporation or these by-laws regarding membership on such committees. The Board may designate one or more other directors to serve as alternates for the members of any committee of the Board in such order and manner as may be fixed by the Board. Unless otherwise provided by these by-laws or by the resolution of the Board designating or establishing any such committee, the members of each such committee shall serve thereon for a term of office beginning with the date of appointment thereto and until the next annual meeting of the Board and until their respective successors shall be appointed; provided, however, that any member of any such committee may be removed or his office declared vacant at any time by the Board without assigning (and without there existing) any reason or cause as the basis thereof. A Chair of each committee of the Board may be designated by the Board from among the members of each such committee subject to any limitations imposed by these by-laws, but in the absence of any such designation, or in the absence of a designated Chair at any meeting of any such committee, the members of such committee may designate one of its members as Chair of such committee or the meeting, as the case may be.

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     Section 4.3. Procedure, Meetings, Voting and Records. Each committee of the Board may prescribe for the conduct of its business such rules and regulations, not inconsistent with these by-laws or with such resolutions for the guidance and control of such committee as may from time to time be passed by the Board, as it shall deem necessary or desirable, including, without limitation, rules fixing the time and place of meetings and the notice to be given thereof, if any. A majority of the members of a committee of the Board shall constitute a quorum. The adoption of any resolution or the taking of any other action by any committee of the Board shall require the affirmative vote of a majority of the members of such committee as from time to time constituted. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. The Executive Committee shall keep minutes of its proceedings, but, unless required by resolution of the Board, other committees of the Board need not keep minutes of their proceedings but shall maintain such written records of actions taken by such committees as may be necessary or appropriate to evidence such actions. All actions taken by committees of the Board shall be reported to the Board at the meeting thereof held next after the taking of such action.

     Section 4.4. General Power and Authority and Limitations. The committees of the Board shall have and may exercise such power and authority as are expressly provided by these by-laws or from time to time conferred by resolution of the Board, and such other power and authority implicit in or incidental thereto, subject in all instances to all specific limitation imposed by law or by the Certificate of Incorporation. No committee of the Board, however, shall have the power or authority of the Board with reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution or amending the by-laws of the Corporation. In addition, and unless such power and authority shall be conferred in whole or in part by resolution of the Board, no committee of the Board shall have the power or authority of the Board to establish any other committee of the Board, to confer or withdraw the power or authority of any other committee of the Board, or to appoint or remove any member of any other committee of the Board. Any power or authority of any committee of the Board conferred by resolution of the Board may at any time and from time to time thereafter be altered or withdrawn by resolution of the Board, provided, however, that any such alteration or withdrawal shall not impair or invalidate any exercise of such power or authority prior thereto.

     Section 4.5. Executive Committee. The Executive Committee shall consist of not less than three members of the Board, as from time to time appointed by resolution of the Board, one of whom shall be the Chair or the Chief Executive Officer. The Board shall also designate a member of the Executive Committee to be the Chair of the Executive Committee. The Executive Committee shall have, to the fullest extent permitted by law, but subject to any specific limitation imposed by the Certificate of Incorporation, these by-laws or a resolution of the Board, all of the power and authority vested in or retained by the Board (whether or not the Executive Committee is specifically mentioned in the statute, the provision of the Certificate of

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Incorporation or these by-laws, the resolution or other instrument vesting or retaining any such power or authority); and the Executive Committee may exercise such power and authority in such manner as it shall deem for the best interests of the Corporation in all cases in which specific directions shall not have been given by the Board.

     Section 4.6. Audit Committee. The Audit Committee shall consist of not less than three members of the Board as from time to time appointed by resolution of the Board. No member of the Board who is also an employee of the Corporation shall be eligible to serve on the Audit Committee. The Audit Committee shall review and, as it shall deem appropriate, recommend to the Board internal accounting and financial controls of the Corporation and accounting principles and auditing practices and procedures employed in the preparation of financial statements of the Corporation and the review thereof of independent public accountants for the Corporation. The Audit Committee shall make recommendations to the Board concerning the engagement of independent public accountants to audit the annual financial statements of the Corporation and the scope of the audit to be undertaken by such accountants and perform such other duties as the Board may direct by resolution.

     Section 4.7. Compensation and Benefits Committee. The Compensation and Benefits Committee shall consist of not less than three members of the Board as from time to time appointed by resolution of the Board. No member of the Board who is also an employee of the Corporation shall be eligible to serve on the Compensation and Benefits Committee. The Compensation and Benefits Committee shall review and, as it deems appropriate, recommend to the Chair, the Chief Executive Officer and the Board policies, practices and procedures relating to compensation of managerial employees and the establishment, investment of funds and administration of employee benefit plans, shall have and exercise all authority under employee stock option plans as the committee therein designated to administer such plans, and shall otherwise advise and consult with the Chair or Chief Executive Officer as may be requested regarding managerial personnel policies and perform such other duties as the Board may direct by resolution.

     Section 4.8. Nominating and Governance Committee. The Nominating and Governance Committee shall consist of not less than three members of the Board as from time to time appointed by resolution of the Board. No member of the Board who is also an employee of the Corporation shall be eligible to serve on the Nominating and Governance Committee. The Nominating and Governance Committee shall identify and recommend individuals to become directors of the Corporation, recommend to the Board governance guidelines for the Corporation and compensation for directors and perform such other duties as the Board may direct by resolution.

     Section 4.9. Other Committees of the Board. Other committees of the Board shall have such power and authority, and such functions, duties and compensation as the Board may designate.

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ARTICLE V
Officers

     Section 5.1. Designation. The principal officers of the Corporation shall be a Chief Executive Officer, a President, a Chief Operating Officer, one or more Vice Presidents, a Chief Financial Officer, a Secretary, a Treasurer, and a Controller; and there may be such other officers, and such agents and employees, as shall be appointed in accordance with the provisions of Section 5.5 of these by-laws. Any two or more offices may be held by the same person and all offices do not need to be filled except the Chief Executive Officer, President, Secretary and Treasurer.

     Section 5.2. Election and Qualifications. The principal officers of the Corporation shall be elected annually by the Board at a meeting on the day of the annual meeting of stockholders. The Chair shall be chosen from among the Directors.

     Section 5.3. Term of Office. Each principal officer of the corporation shall hold office until the next annual meeting of the Board following his election and until his successor shall have been elected and qualified, or until his death, or until he shall resign, or until he shall have been removed at any time by the Board with or without cause. The removal of an officer without cause shall be without prejudice to his contract rights, if any. The election of an officer shall not of itself create contract rights.

     Section 5.4. Vacancies. A vacancy in the office of a principal officer shall be filled for the unexpired portion of the term in a manner prescribed in these by-laws for regular election to such office. In the interim between the occurrence of any such vacancy and a meeting of the Board, the Chair or the Chief Executive Officer may by appointment fill such vacancy for a term which shall expire at the next meeting of the Board unless such appointment shall be confirmed at such meeting.

     Section 5.5. Appointive Officers and Agents. The Board or the Chief Executive Officer may appoint such officers, other than principal officers, including one or more Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers, Assistant Controllers, and Divisional Vice Presidents and other divisional officers, and such agents and employees, as the Board or the Chief Executive Officer may deem necessary or advisable, each of whom shall hold his/her office or his/her position, as the case may be, for such period, have such authority, and perform such duties as may be provided in these by-laws or as the Board may from time to time determine. The Chief Executive Officer may prescribe additional duties to be performed by such officers, agents and employees, and the Chief Executive Officer may at any time suspend the duties, of whatever nature, of any such officer, agent or employee.

     Section 5.6. Compensation. The compensation of the Chair and the compensation of the Chief Executive Officer shall be fixed from time to time by the Board. The Chief Executive Officer shall recommend and the Board or a Board committee shall fix and determine, the compensation of all other principal officers, agents and employees of the Corporation, unless the Board shall by resolution otherwise direct.

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     Section 5.7. Bonds. The Treasurer and any Assistant Treasurer, and such other officers and agents of the Corporation as the Board or the Chair or the Chief Executive Officer shall prescribe, may be required each to give bond to the Corporation in such form and amount and with such surety as the Board or the Chair or the Chief Executive Officer may determine, conditioned upon the faithful performance of the duties of his office, and upon the restoration to the Corporation in the case of his/her death, resignation, retirement or removal, of all books, vouchers, moneys or other papers or things in his/her possession or under his/her control belonging to the Corporation. The Corporation shall pay the premium cost of such bonds.

     Section 5.8. Employment Contracts. Every employment for personal services to be rendered to the Corporation shall be at the pleasure of the Corporation unless under a contract in writing which has been duly executed on behalf of the Corporation and has been approved, authorized or ratified by the Board or executed or approved by the Chair or the Chief Executive Officer.

     Section 5.9. Chair of the Board. The Chair of the Board shall not be considered an officer of the Corporation unless the Board shall by resolution otherwise direct. The Chair of the Board shall be a director chosen by the Board. The Chair shall preside, if present, at Board of Director meetings and shareholder meetings and shall perform such other duties as the Board shall direct by resolution from time to time.

     Section 5.10. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation and shall preside at meetings of the shareholders and the Board of Directors if the Chair is not present and the Nominating and Governance Chair is not present. Subject to the Board of Directors, he shall be in general and active charge of the entire business and all the affairs of the company and shall be its chief policy-making officer. He shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or provided in the By-Laws. Whenever the President is unable to serve, by reason of sickness, absence or otherwise, the Chief Executive Officer shall perform all the duties and functions and exercise all the powers of the President.

     Section 5.11. President. Under the direction of the Chief Executive Officer, and subject to the Board of Directors, the President shall have general charge of the business operations. Whenever the Chief Executive Officer is unable to serve, by reason of sickness, absence or otherwise, the President shall have the powers and perform the duties of the Chief Executive Officer. He/she shall have such other powers and perform such other duties as may be prescribed by the Chief Executive Officer or the Board of Directors or as may be provided in the by-laws.

     Section 5.12. Vice Presidents. Each Vice President shall have such power and perform such duties as the Board may from time to time prescribe or as the Chief Executive Officer may from time to time delegate to him or her. At the request of the Chair, the President or the Chief Executive Officer, the Vice President may, in the case of the absence or inability to act of the Chair, President or Chief Executive Officer, temporarily act in their place. In the case of the death of the Chair, President or Chief Executive Officer, or in the case of their absence or

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inability to act without having designated a Vice President to act temporarily in their place, the Vice President or Vice Presidents so to perform the duties, or any particular duty, of the President or Chief Executive Officer shall be designated by the Board.

     Section 5.13. Chief Financial Officer. The Chief Financial Officer of the Corporation shall, under the direction of the Chief Executive Officer, be responsible for all financial and accounting matters and for the direction of the offices of Treasurer and Controller. Such officer shall have such other powers and shall perform such other duties as the Board may from time to time prescribe or the Chief Executive Officer may from time to time delegate to him or her.

     Section 5.14. Secretary. The Secretary of the Corporation shall attend all meetings of the stockholders and shall be and act as the secretary of such meetings. Except where the Board has appointed a person to act as Secretary of the Board, he/she shall attend all meetings of the Board and Executive Committee and shall be and act as the secretary of such meetings. He/she shall give, or cause to be given, all notices provided for in these by-laws or required by the Certificate of Incorporation or by law; he/she shall be custodian of the records an of the seal of the Corporation and see that the seal is affixed to all documents the execution of which on behalf of the Corporation under its seal is duly authorized in accordance with these by-laws; he/she shall have charge of the stock certificate books of the Corporation, and keep or cause to be kept the stock certificate books, stock transfer books and stock ledgers in such manner as to show, at all times, the amount of the capital stock issued and outstanding, the classes and series thereof, if any, the names alphabetically arranged, the places of residence of the holders of record thereof, the number of shares held by each and the time when each became a holder of record; he shall have charge of all books, records and papers of the Corporation relating to its organization as a Corporation, and shall see that all reports, statements and other documents required by law are properly kept or filed, except to the extent that the same are to be kept or filed by the Controller or any appointive officer, agent or employee; he/she may sign with the Chair or the Chief Executive Officer or any Vice President any of all certificates of stock of the Corporation; and in general shall exercise all powers and perform all duties incident to the office of Secretary and such other powers and duties as may from time to time be assigned to him or her by the Board or the Chief Executive Officer or be prescribed by these by-laws.

     Section 5.15. Assistant Secretaries. The Assistant Secretaries shall assist at all times in the performance of the duties of the Secretary, subject to his/her control and direction, and, in the absence of the Secretary, the Assistant Secretary designated therefor by the Board or Chief Executive Officer, or in the absence of such designation, any Assistant Secretary, shall exercise the powers and perform the duties of the Secretary. The Assistant Secretaries shall exercise such other powers and perform such other duties as may from time to time be assigned to them by the Board, the Chief Executive Officer or the Secretary, or be prescribed by these by-laws.

     Section 5.16. Treasurer. The Treasurer shall have charge of and be responsible for the collection, receipt, custody and disbursements of the corporate funds and securities; he/she shall be responsible for the deposit of all moneys, and other valuable effects, in the name and to the credit of the Corporation in such depositories as may be designated by the Board (or by an officer of the corporation pursuant to any delegation of such authority by the Board); he/she shall

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disburse the funds of the Corporation as may be ordered by the Board or as may be pursuant to authorizations of the Board or these by-laws, taking proper vouchers for such disbursements; he shall, subject to the supervision and direction of the Chief Financial Officer, be responsible for carrying out policies of the Corporation with respect to the approving, granting or extending of credit by the Corporation; he shall, subject to the supervision and direction of the Chief Financial Officer, have the custody of such books, receipted vouchers and other books and papers as in the practical business operations of the Corporation shall naturally belong to the office or custody of the Treasurer, or as shall be placed in his custody by the Board, by the Executive Committee, by the Chief Executive Officer or the Chief Financial Officer, and the Treasurer shall give to the Board or any committee thereof, whenever they may require it, an account of all his/her transactions as Treasurer; and in general he/she shall exercise all powers and perform all duties incident to the office of Treasurer and such other powers and duties as may from time to time be assigned to him or her by the Board or Chief Executive Officer or Chief Financial Officer or be prescribed by these by-laws.

     Section 5.17. Assistant Treasurers. The Assistant Treasurers shall assist at all times in the performance of the duties of the Treasurer, subject to his control and direction, and, in the absence of the Treasurer, the Assistant Treasurer designated therefor by the Board, the Chief Executive Officer, or in the absence of such designation, any Assistant Treasurer shall exercise the powers and perform the duties of the Treasurer. The Assistant Treasurers shall exercise such other powers and perform such other duties as may from time to time be assigned to them by the Board, the Chief Executive Officer, the Chief Financial Officer, or the Treasurer, or be prescribed by these by-laws.

     Section 5.18. Controller. The Controller shall be the Chief Accounting Officer of the Corporation and shall have charge of the Corporation’s books of accounts, and, subject to the provisions of this Section 5.17, shall be under the direction of the Chief Financial Officer. He/she shall maintain full and accurate records of all assets, liabilities, commitments and financial transactions of the Corporation; he/she shall see that an adequate system of internal control is maintained and that all reasonable measures are taken to protect the Corporation’s assets; he/she shall supervise the approval of all expenditures; he/she shall compile costs of production and distribution; he/she shall prepare and interpret all statistical records and reports of the Corporation; he/she shall render such financial statements and other information as may be directed by the Board; and, in general, he/she shall perform all the duties ordinarily connected with the office of Controller and such other duties as from time to time may be assigned to him or her by the Board or any committee thereof or the Chair or the Chief Executive Officer or the Chief Financial Officer. His/her duties shall extend to all subsidiary corporations and, so far as the Board or the Chair or the Chief Executive Officer or the Chief Financial Officer may deem practicable, to all affiliated corporations. The Controller shall report to the Chair or the Chief Executive Officer and the Chief Financial Officer from time to time all matters affecting the financial affairs of the Corporation. He/she may also consult with the Chair or Chief Executive Officer from time to time in respect of matters affecting the financial affairs of the Corporation; he/she shall furnish the Chief Executive Officer with such information as the Chief Executive Officer may from time to time request; and he/she shall report to the Chair or the Chief Executive Officer all matters which in his opinion should be brought to the attention of the

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Board; and in the event such matters are not reasonably brought to the attention of the Board, he may present the same to the Board in writing. When requested by the Board or a committee thereof, he/she shall report directly to the Board or such committee in reference to any and all matters pertaining to his duties and falling within the function of his/her office.

     Section 5.19. Assistant Controllers. The Assistant Controllers shall assist at all times in the performance of and duties of the Controller, subject to his/her control and direction, and, in the absence of the Controller, the Assistant Controller designated therefor by the Board, the Chief Executive Officer, or the Chief Financial Officer, or in the absence of such designation, any Assistant Controller, shall exercise the powers and perform the duties of the Controller. The Assistant Controllers shall exercise such other powers and perform such other duties as may from time to time be assigned to them by the Board, the Chair or the Chief Executive Officer, the Chief Financial Officer, or the Controller, or be prescribed by these by-laws.

ARTICLE VI
Indemnification.

     Section 6.1. Indemnification of Directors and Officers. The Corporation shall, to the fullest extent to which it is empowered to do so by the general Corporation Law of Delaware, or any other applicable laws, as from time to time in effect, indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he/she is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding. Any director, officer or employee of the Corporation who is or was serving as a director or officer of a subsidiary of the Corporation or of any entity in which the Corporation holds an equity interest shall be deemed to serve in such capacity at the request of the Corporation.

     Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of the director or officer to repay such amount unless it shall ultimately be determined that he or she is entitled to be indemnified by the Corporation as authorized in this Article VI.

     Section 6.2. Contract With the Corporation. The provisions of this Article VI shall be deemed to be a contract between the Corporation and each director or officer who serves in any such capacity at any time while this Article and the relevant provisions of the General Corporation Laws of Delaware or other applicable law, if any, are in effect, and any repeal or modification of this Article VI or any such law shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought or threatened based in whole or in part upon any such state of facts.

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     Section 6.3. Indemnification of Employees and Agents. Persons who are not covered by the foregoing provisions of this Article VI and who are or were employees or agents of the Corporation, or are or were serving at the request of the Corporation as employees or agents of another corporation, partnership, joint venture, trust or other enterprise, may be indemnified to the extent authorized at any time or from time to time by the Board.

     Section 6.4. Other Rights of Indemnification. The indemnification provided or permitted by this Article VI shall not be deemed exclusive of any other rights to which those indemnified may be entitled by law or otherwise, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

ARTICLE VII
Checks, Contracts, Loans and Bank Accounts.

     Section 7.1. Checks, Drafts, Etc. All checks, drafts, bills of exchange or other orders for the payment of money, obligations, notes, or other evidences indebtedness, bills of lading, warehouse receipts and insurance certificates of the corporation, shall be signed or endorsed as the Board may direct.

     Section 7.2. Contracts. The Board may authorize one or more officers, agents or employees of the Corporation to enter into any contract or execute and deliver any contract or other instruments in the name and on behalf of the Corporation, and such authority may be general or confined to specific instances.

     Section 7.3. Loans. No loans shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the Board. Such authority may be general or confined to specific instances.

     Section 7.4. Deposits. All funds of the Corporation shall be deposited from time to time to the credit of the Corporation in such general or special bank account or accounts in such banks, trust companies or other depositories as the Board, the President, Chief Executive Officer, or the Treasurer may from time to time designate; and the Board may make such general or special rules and regulations with respect thereto, not inconsistent with the provisions of these by-laws, as it may deem expedient.

ARTICLE VIII
Shares and Their Transfer.

     Section 8.1. Certificates of Stock. The shares of stock of the Corporation shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board,

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every holder of stock represented by certificates shall be entitled to have a certificate representing the number of shares registered in certificate form, in such form, consistent with all applicable provisions of law, as shall be approved by the Board. Certificates of stock of the Corporation shall be signed by the President or the Chief Executive Officer or a Vice President and by the Secretary or an Assistant Secretary, which signatures may be by engraved or imprinted facsimile on any certificate countersigned by a transfer agent or registered by a registrar. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he/she were such officer at the date of issue.

     Section 8.2. Transfer of stock. Transfers of shares of stock of the Corporation shall be made on payment of all taxes thereon and, if represented by certificates, presentment to the Corporation or its transfer agent for cancellation of the certificate or certificates for such shares (except as hereinafter provided in the case of loss, destruction, theft or mutilation of certificates) properly endorsed by the registered holder thereof or accompanied by proper evidence of succession, assignment or authority to transfer, together with such reasonable assurance as the Corporation or its transfer agent may require that the said endorsement is genuine and effective. A person in whose name shares of stock are registered on the books of the Corporation shall be deemed the owner thereof by the Corporation, and, upon any transfer of shares, the person or persons into whose name or names such shares shall be transferred shall be substituted for the person or persons out of whose name or names such shares shall have been transferred, with respect to all rights, privileges and obligations of holders of stock of the Corporation as against the Corporation or any other person or persons.

     Section 8.3. Lost, Destroyed, Stolen, and Mutilated Certificates. The holder of any stock of the Corporation represented by certificates shall immediately notify the Corporation of any loss, destruction, theft or mutilation of the certificates for any such stock, and the Board may, in its discretion, cause to be issued to him or her a new certificate or certificates of stock, upon the surrender of the mutilated certificate, or in case of loss, destruction or theft, upon satisfactory proof of such loss, destruction or theft; and, the Board may, in its discretion, require the owner of the lost, destroyed or stolen certificate, or his legal representative, to give the Corporation a bond in such sum and in such form and with such surety or sureties as it may direct, to indemnify the Corporation against any claim that may be made against it with respect to the certificate or certificates alleged to have been lost, destroyed or stolen. The powers hereinabove vested in the Board may be delegated by it to any officer or officers of the Corporation.

     Section 8.4. Transfer Agent and Registrar and Regulations. The Corporation shall, if and whenever the Board shall so determine, maintain one or more transfer offices or agencies, each in the charge of a transfer agent designated by the Board, where the shares of the stock of the Corporation shall be directly transferable, and also one or more registry offices, each in the charge of a registrar designated by the Board, where such shares of stock shall be registered, and no certificate for shares of stock of the Corporation in respect of which a transfer agent and registrar shall have been designated shall be valid unless countersigned by such transfer agent and registered by such registrar. The Board may also make such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration of shares of the stock of

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the Corporation and, if any, certificates therefor. The Corporation may itself, at the discretion of the Board, act as transfer agent in such a manner as the Board shall direct.

     Section 8.5. Record Date. For the purpose of determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to or dissent from any proposal without a meeting, or for the purpose of determining the stockholders entitled to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action, the Board may fix, in advance, a date as the record date for any such determination of stockholders. Such date shall not be more than sixty nor less than ten days before the date of any meeting nor more than sixty days prior to any such action. When a determination of stockholders of record entitled to notice of or to vote at any meeting of stockholders has been made as provided herein, such determination shall apply to any adjournment thereof, unless the Board fixes a new record date for the adjourned meeting.

ARTICLE IX
Miscellaneous Provisions.

     Section 9.1. Seal. The seal of the Corporation shall be in circular form, with the name of the Corporation on the circumference, and the words “Incorporated under the laws of the State of Delaware” in the center. Said seal may be used by causing it or a facsimile or equivalent thereof to be impressed or affixed or reproduced.

     Section 9.2. Fiscal Year. The Fiscal year of the Corporation shall end on December 31 of each year.

     Section 9.3. Notices. Any notice required by these by-laws or otherwise, to be given shall be deemed to have been given in person if delivered in person to the person to whom such notice is addressed, and shall be deemed to have been deposited in the United States mail, enclosed in a postage prepaid envelope, and shall be deemed to have been given by wireless, telegraph or cable when the same shall have been delivered for prepaid transmission into the custody of a company ordinarily engaged in the transmission of such messages; such postage prepaid envelope or such wireless, telegraph or cable message being addressed to such person at his/her address as it appears on such books and records of the Corporation, or if no address appears on such book and records, then at such address as shall be otherwise known to the Secretary, or if no such address appears on such books and records or is otherwise known to the Secretary, then in care of the registered agent of the Corporation in the State of Delaware. Whenever, by any provisions of the Certificate of Incorporation or these by-laws, or otherwise, any notice is required to be given any specified number of days before any meeting or event, the day on which such notice was given shall be counted, but the day of such meeting or other event shall not be counted, in determining whether or not notice has been given in proper time in a particular case.

     Section 9.4. Waiver of Notice. Whenever any notice is required to be given under the provisions of the laws of the State of Delaware, the Certificate of Incorporation or these by-laws, a waiver thereof in writing, signed by the person entitled to such notice, or his proxy in the case of a stockholder, whether before or after the time stated therein, shall be deemed equivalent

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thereto. Except as may be otherwise specifically provided by law, any waiver by mail, telegraph, cable or wireless, bearing the name of the person entitled to notice shall be deemed a waiver in writing duly signed. The presence of any stockholder at any meeting, either in person or by proxy, without protesting prior to the conclusion of the meeting the lack of notice of such meeting, shall constitute a waiver of notice by him or her; and attendance by a director at any meeting of the Board, without protesting prior to such meeting, or at its commencement the lack of notice to him or her, shall constitute a waiver of notice by him or her of such meeting.

     Section 9.5. Resignations. Any officer or director may resign at any time by giving written notice to the Chair or the Chief Executive Officer or the Secretary. Such resignation shall take effect at the time specified in the notice, or if no time is specified, at the time such notice shall be given. Unless otherwise specified in any notice of resignation, the acceptance of such resignation shall not be necessary to make it effective. No such resignation shall serve to release the person submitting it from any liability or duty to the Corporation, whether created by law, the Certificate of Incorporation, these by-laws, a resolution or directive of the Board or under any contract between such person and the Corporation, unless the Board shall expressly and specifically release such person from any such liability or duty.

     Section 9.6. Emergency By-Laws. The Board may adopt emergency by-laws, as permitted by law to be operative during any emergency resulting from an attack on the United States or on a locality in which the Corporation conducts its business or customarily holds meetings of the Board or its stockholders, or during any nuclear or atomic disaster, or during the existence of any catastrophe, or other similar emergency condition as a result of which a quorum of the Board or of the Executive Committee cannot readily be convened for action. The provisions of such Emergency by-laws shall, while operative, supersede all contrary provisions of law, the Certificate of Incorporation, or these by-laws.

ARTICLE X
Severability; Amendments.

     Section 10.1. Severability. If any provision of these by-laws, or its application thereof to any person or circumstance is held invalid, the remainder of these by-laws and the application of such provision to other persons or circumstances shall not be affected thereby.

     Section 10.2. Amendments. These by-laws may be amended or repealed by the Board at any annual, regular or special meeting thereof by an affirmative vote of 2/3’s of the directors.

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EX-4.C

Exhibit 4C

Federal Signal Corporation
Supplemental Agreement

     This Supplemental Agreement (herein, the “Agreement”) is entered into as of September 6, 2007, by and among Federal Signal Corporation, a Delaware corporation (the “Borrower”), Federal Signal Europe B.V. y CIA, S.C., a Spanish company “sociedad colectiva” incorporated under the laws of Spain and domiciled in Calle Doctor Ferran 7, Vilassar de Dalt (Barcelona) Postal Code 08339 and registered with the Barcelona Commercial Registry under Volume 39272 Folio 109 Page B-343809, First Entry, with Tax ID Number C-64402126 and duly represented by its legal Representative Mr. Jose Maria Paso Luna (the “Alternative Currency Borrower”), Bank of Montreal Ireland p.l.c. (the “Alternative Currency Lender”), BMO Capital Markets Financing, Inc., a Delaware corporation, as Swing Line Lender under the Credit Agreement hereinafter identified and defined, and Bank of Montreal, acting as administrative agent hereunder for the Lenders hereinafter identified and defined (Bank of Montreal, acting as such administrative agent and any successor or successors to Bank of Montreal acting in such capacity being hereinafter referred to as the “Agent”).

Preliminary Statements

     A. The Borrower is a party to a Second Amended and Restated Credit Agreement dated as of April 25, 2007, among the Borrower, the several Guarantors from time to time party hereto, the several financial institutions from time to time party thereto, as Banks, the Swing Line Lender and the Agent (such Credit Agreement, as the same may be amended, modified or supplemented from time to time, is referred to herein as the “Credit Agreement”).

     B. Concurrently herewith the Borrower, the Agent, the Alternative Currency Borrower and the Swing Line Lender are entering into a Designation of Alternative Currency Borrower of even date herewith (such Designation of Alternative Currency Borrower, as the same may be amended, modified or supplemented from time to time, is referred to herein as the “Designation Agreement”) pursuant to which, among other things, the Alternative Currency Borrower has become a party to the Credit Agreement for the purpose of obtaining Swing Loans under the Swing Line.

     C. The parties hereto are entering into this Agreement to provide for the Alternative Currency Lender to become a Designated Alternative Currency Lender under the Credit Agreement for the purpose of making Swing Loans denominated in Euros to the Alternative Currency Borrower under the Credit Agreement.

      Now, Therefore , for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and subject to the satisfaction of the conditions precedent set forth in Section 4 below, the parties hereto agree as follows:

Section 1. Agreements.

     Section 1.1. Swing Loans. The parties hereto agree that from and after the effective date of this Agreement the Alternative Currency Lender shall be a Designated Alternative Currency Lender under the Credit Agreement for the purpose of making Swing Loans denominated in Euros to the Alternative Currency Borrower under the Credit Agreement. The Alternative Currency Lender shall have all of the rights and obligations of a Designated Alternative Currency Lender under the Credit Documents. The Alternative Currency Lender agrees to make Swing Loans denominated in Euros to the Alternative Currency Borrower, subject to the terms and conditions set forth in the Credit Agreement and this Agreement.

     Section 1.2. Applicable Interest Rate. Each Swing Loan made or maintained by the Alternative Currency Lender shall bear interest during each Interest Period it is outstanding (computed on the basis of a year of 360 days and actual days elapsed) on the unpaid principal amount thereof from the date such Swing Loan is advanced or continued until maturity (whether by acceleration or otherwise) at a rate per annum equal to the sum of the Applicable Margin plus EURIBOR applicable for such Interest Period, payable on the last day of the Interest Period and at maturity (whether by acceleration or otherwise), and, if the applicable Interest Period is longer than three months, on each day occurring every three months after the commencement of such Interest Period. The Alternative Currency Lender shall determine each interest rate applicable to the Swing Loans made by it hereunder, and a reasonable determination thereof by the Alternative Currency Lender shall be conclusive and binding except in the case of manifest error or willful misconduct.

     Section 1.3. Minimum Borrowing Amount. Each Swing Loan made hereunder shall be in an amount not less than €500,000 and in integral multiples of €250,000.

     Section 1.4. Manner of Borrowing and Designating Interest Rates. (a) Notice to the Agent. The Alternative Currency Borrower shall give notice to the Agent by no later than 11:00 a.m. (Chicago time) (i) at least four (4) Business Days before the date on which the Alternative Currency Borrower requests the Alternative Currency Lender to advance a Swing Loan. After a Swing Loan is made hereunder, the Alternative Currency Borrower may from time to time elect, on the last day of the Interest Period applicable thereto, to continue part or all of such Swing Loan for an Interest Period or Interest Periods specified by the Alternative Currency Borrower. The Alternative Currency Borrower shall give all such notices requesting the advance or continuation of a Swing Loan hereunder to the Agent by telephone or telecopy (which notice shall be irrevocable once given and, if by telephone, shall be promptly confirmed in writing). Notices of the continuation of a Swing Loan for an additional Interest Period must be given by no later than 11:00 a.m. (Chicago time) at least four (4) Business Days before the date of the requested continuation. All such notices concerning the advance or continuation of a Swing Loan shall specify the date of the requested advance or continuation (which shall be a Business Day), the amount of the requested Swing Loan to be advanced or continued and the Interest Period applicable thereto. The Alternative Currency Borrower agrees that the Agent may rely on any such telephonic or telecopy notice given by any person it in good faith believes is an Authorized Representative without the necessity of independent investigation, and in the event

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any such notice by telephone conflicts with any written confirmation, such telephonic notice shall govern if the Agent has acted in reliance thereon.

     (b) Notice to the Alternative Currency Lender. The Agent shall give telephonic or telecopy notice to the Alternative Currency Lender of any notice from the Alternative Currency Borrower received pursuant to Section 1.4(a) above within one Business Day of the Agent’s receipt of such notice from the Alternative Currency Borrower. The Alternative Currency Lender shall notify the Agent, and thereafter the Agent shall give notice to the Alternative Currency Borrower, by like means of the interest rate applicable to each Swing Loan made hereunder.

     (c) Alternative Currency Borrower’s Failure to Notify. Any outstanding Swing Loans made hereunder shall automatically be continued for an additional Interest Period of one month duration on the last day of its then current Interest Period unless the Alternative Currency Borrower notifies the Agent within the period required by Section 1.9(a) that it intends to prepay such Swing Loan.

     (d) Disbursement of Loans. Not later than 12:00 Noon (Dublin time) on the date of any requested advance of a new Swing Loan under this Agreement, subject to Section 7 of the Credit Agreement, the Alternative Currency Lender shall make available to the Alternative Currency Borrower the requested Swing Loan in funds immediately available at the principal office of the Alternative Currency Lender in Dublin, Ireland.

     Section 1.5. Default Rate Notwithstanding anything to the contrary contained in Section 1.2 hereof, at the direction of the Required Banks while any Event of Default exists or (unless and until rescinded by the Required Banks) after acceleration, the Alternative Currency Borrower shall pay interest (after as well as before entry of judgment thereon to the extent permitted by law) on the principal amount of all Swing Loans made under this Agreement (computed on the basis of a year of 360 days and actual days elapsed), at a rate per annum equal to the sum of two percent (2%) plus the rate of interest in effect thereon at the time of such default until the end of the Interest Period applicable thereto and, thereafter, at a rate per annum equal to the sum of two percent (2%) plus the Applicable Margin plus the EURIBOR from time to time in effect; provided, however, that in the absence of acceleration or any other Event of Default pursuant to Section 9.1(a) of the Credit Agreement, any adjustments pursuant to this Section 1.5 shall be made at the election of the Required Banks with written notice to the Alternative Currency Borrower. While any Event of Default exists or after acceleration, interest shall be paid on demand of the Agent at the request or with the consent of the Required Banks.

     Section 1.6. Note for Loans. (a) The Swing Loans made to the Alternative Currency Borrower by the Alternative Currency Lender shall be evidenced by a single promissory note of the Alternative Currency Borrower issued to the Alternative Currency Lender in the form of Exhibit A hereto. Such promissory note is hereinafter referred to as the “Swing Note.”

     (c) The Alternative Currency Lender shall record on its books and records or on a schedule to its Swing Note the amount of each Loan advanced or continued by it, all payments of principal and interest and the principal balance from time to time outstanding thereon, and the

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Interest Period and the interest rate applicable thereto. The record thereof, whether shown on such books and records of the Alternative Currency Lender or on a schedule to its Swing Note, shall be prima facie evidence as to all such matters; provided, however, that the failure of the Alternative Currency Lender to record any of the foregoing or any error in any such record shall not limit or otherwise affect the obligation of the Alternative Currency Borrower to repay all Swing Loans made to it hereunder together with accrued interest thereon. At the request of the Alternative Currency Lender and upon the Alternative Currency Lender tendering to the Alternative Currency Borrower the Swing Note to be replaced, the Alternative Currency Borrower shall furnish a new Swing Note to the Alternative Currency Lender to replace any outstanding Swing Note, and at such time the first notation appearing on a schedule on the reverse side of, or attached to, Swing Note shall set forth the aggregate unpaid principal amount of all Loans, if any, then outstanding thereon.

     Section 1.7. Interest Periods. As provided in Section 1.4(a) hereof, at the time of each request to advance or continue any Swing Loan, the Alternative Currency Borrower shall select an Interest Period applicable to such Loan from among the available options. The term “Interest Period” means the period commencing on the date a Swing Loan is advanced or continued and ending 1, 2, 3 or 6 months thereafter; provided, however, that:

     (a) the Alternative Currency Borrower may not select an Interest Period that extends beyond the Termination Date;

     (b) whenever the last day of any Interest Period would otherwise be a day that is not a Business Day, the last day of such Interest Period shall be extended to the next succeeding Business Day, provided that, if such extension would cause the last day of an Interest Period for a Swing Loan to occur in the following calendar month, the last day of such Interest Period shall be the immediately preceding Business Day; and

     (c) for purposes of determining an Interest Period for a Swing Loan, a month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month; provided, however, that if there is no numerically corresponding day in the month in which such an Interest Period is to end or if such an Interest Period begins on the last Business Day of a calendar month, then such Interest Period shall end on the last Business Day of the calendar month in which such Interest Period is to end.

     Section 1.8. Maturity of Loans. Each Swing Loan shall mature and become due and payable by the Alternative Currency Borrower on the Termination Date.

     Section 1.9. Prepayments. (a) Optional. The Alternative Currency Borrower may prepay without premium or penalty and in whole or in part (but, if in part, then: (i) in an amount not less than €250,000, and (ii) in an amount such that the minimum amount required for a Swing Loan pursuant to Section 1.3 hereof remains outstanding) any Swing Loans upon four (4) Business Days’ prior notice to the Agent, such prepayment to be made by the payment of the principal amount to be prepaid and accrued interest thereon to the date fixed for prepayment and

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any compensation required by Section 1.10 hereof. The Agent will promptly advise the Alternative Currency Lender of any such prepayment notice it receives from the Alternative Currency Borrower. Any amount paid or prepaid before the Termination Date may, subject to the terms and conditions of the Credit Agreement and this Agreement, be borrowed, repaid and borrowed again.

     (b) Mandatory. (i) If on the last day of any month or on any other date specified by the Agent the sum of the aggregate Original Dollar Amount of all Swing Loans then outstanding shall exceed $35,000,000, the Alternative Currency Borrower shall within two Business Days prepay the Swing Loans outstanding hereunder by the amount, if any, necessary to eliminate such excess.

     (ii) The Swing Loans made hereunder are subject to mandatory prepayment on the terms set forth in Section 2.3 of the Credit Agreement.

     Section 1.10. Funding Indemnity. If the Alternative Currency Lender shall incur any loss, cost or expense (including, without limitation, any loss, cost or expense incurred by reason of the liquidation or re-employment of deposits or other funds acquired by the Alternative Currency Lender to fund or maintain any Swing Loan or the relending or reinvesting of such deposits or amounts paid or prepaid to the Alternative Currency Lender, but in any event excluding any loss of profit) as a result of:

     (a) any payment, prepayment or conversion of a Swing Loan on a date other than the last day of its Interest Period,

     (b) any failure (because of a failure to meet the conditions of Section 7 of the Credit Agreement or otherwise) by the Alternative Currency Borrower to borrow or continue a Swing Loan on the date specified in a notice given pursuant to Section 1.4(a) or established pursuant to Section 1.4(c) hereof,

     (c) any failure by the Alternative Currency Borrower to make any payment of principal on any Swing Loan when due (whether by acceleration or otherwise), or

     (d) any acceleration of the maturity of a Swing Loan as a result of the occurrence of any Event of Default under the Credit Agreement,

then, upon the demand of the Alternative Currency Lender, the Alternative Currency Borrower shall pay to the Alternative Currency Lender such amount as will reimburse the Alternative Currency Lender for such loss, cost or expense. If the Alternative Currency Lender makes such a claim for compensation, it shall provide to the Alternative Currency Borrower, with a copy to the Agent, a certificate executed by an officer of the Alternative Currency Lender setting forth the amount of such loss, cost or expense in reasonable detail (including an explanation of the basis for and the computation of such loss, cost or expense) and the amounts shown on such certificate if reasonably calculated shall be conclusive absent demonstrable error.

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     Section 1.11. Place and Application of Payments. All payments of principal of and interest on the Swing Loans and of all other amounts payable by the Alternative Currency Borrower under this Agreement and the Credit Agreement, shall be made by the Alternative Currency Borrower to the Alternative Currency Lender by no later than 1:00 p.m. (Dublin time) on the due date thereof at the principal office of the Alternative Currency Lender in Dublin, Ireland (or such other location in Dublin, Ireland as the Alternative Currency Lender may designate to the Alternative Currency Borrower). Any payments received after such time shall be deemed to have been received by the Alternative Currency Lender on the next Business Day. All such payments shall be made in Euros in such funds then customary for the settlement of international transactions in such currency, in each case without set-off or counterclaim.

     Section 1.12. Change of Law. Notwithstanding any other provisions of this Agreement or the Swing Note, if at any time after the date hereof any change in applicable law or regulation or in the interpretation thereof makes it unlawful for the Alternative Currency Lender to make or continue to maintain Swing Loans or to perform its obligations as contemplated hereby, the Alternative Currency Lender shall promptly give notice thereof to the Alternative Currency Borrower and the Alternative Currency Lender’s obligations to make or maintain Swing Loans under this Agreement shall terminate. To the extent required by such change, the Alternative Currency Borrower shall prepay on demand the outstanding principal amount of any such affected Swing Loans, together with all interest accrued thereon at a rate per annum equal to the interest rate applicable to such Swing Loan.

     Section 1.13. Increased Cost and Reduced Return (a) If, on or after the date hereof, the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Alternative Currency Lender with any request or directive (whether or not having the force of law but, if not having the force of law, compliance with which is customary in the relevant jurisdiction) of any such authority, central bank or comparable agency:

     (i) shall subject the Alternative Currency Lender to any tax, duty or other charge with respect to Swing Loans, Swing Notes or any thereof, or shall change the basis of taxation of payments to the Alternative Currency Lender of the principal of or interest on such Swing Loans or any other amounts due under this Agreement in respect of such Swing Loans or its obligation to make Swing Loans (except for changes in the rate of tax on the overall net income or profits of the Alternative Currency Lender imposed by the jurisdiction in which the Alternative Currency Lender is incorporated, or in which its principal executive office is located); or

     (ii) shall impose, modify or deem applicable any reserve (including any liquidity reserve), special deposit or similar requirement (including, without limitation, any such requirement imposed by any Regulatory Authority irrespective of whether or not such requirements have the force of law) against assets of, deposits with or for the account of, or credit extended by, the Alternative Currency Lender or shall impose on the Alternative Currency Lender or on the interbank market any other condition affecting Swing Loans, Swing Notes or its obligation to make Swing Loans;

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and the result of any of the foregoing is to increase the cost to the Alternative Currency Lender of making or maintaining any Swing Loan, or to reduce the amount of any sum received or receivable by the Alternative Currency Lender under this Agreement or under Swing Notes with respect thereto, by an amount deemed by the Alternative Currency Lender to be material, then, within fifteen (15) days after demand by the Alternative Currency Lender (with a copy to the Agent), the Alternative Currency Borrower shall be obligated to pay to the Alternative Currency Lender such additional amount or amounts as will compensate the Alternative Currency Lender for such increased cost or reduction; provided, however, that the Alternative Currency Lender shall promptly notify the Alternative Currency Borrower of an event which might cause it to seek compensation, and the Alternative Currency Borrower shall be obligated to pay only such compensation which is incurred or which arises after the date ninety (90) days prior to the date such notice is given. In the event any law, rule, regulation or interpretation described above is revoked, declared invalid or inapplicable or is otherwise rescinded, and as a result thereof the Alternative Currency Lender is determined to be entitled to a refund from the applicable authority for any amount or amounts which were paid or reimbursed by Alternative Currency Borrower to the Alternative Currency Lender hereunder, the Alternative Currency Lender shall refund such amount or amounts to Alternative Currency Borrower without interest.

     (b) If the Alternative Currency Lender shall have determined that the adoption, after the date hereof, of any applicable law, rule or regulation regarding capital adequacy, or any change therein (including, without limitation, any revision in the requirements of any Regulatory Authority, or in any other applicable capital rules heretofore adopted and issued by any governmental authority), or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Alternative Currency Lender with any request or directive regarding capital adequacy (whether or not having the force of law but, if not having the force of law, compliance with which is customary in the applicable jurisdiction) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the Alternative Currency Lender’s capital, or on the capital of any corporation controlling the Alternative Currency Lender, as a consequence of its obligations hereunder to a level below that which the Alternative Currency Lender could have achieved but for such adoption, change or compliance (taking into consideration the Alternative Currency Lender’s policies with respect to capital adequacy) by an amount deemed by the Alternative Currency Lender to be material, then from time to time, within fifteen (15) days after demand by the Alternative Currency Lender (with a copy to the Agent), the Alternative Currency Borrower shall pay to the Alternative Currency Lender such additional amount or amounts as will compensate the Alternative Currency Lender for such reduction; provided, however, that the Alternative Currency Lender shall promptly notify the Alternative Currency Borrower of an event which might cause it to seek compensation, and the Alternative Currency Borrower shall be obligated to pay only such compensation which is incurred or which arises after the date ninety (90) days prior to the date such notice is given.

     (c) If the Alternative Currency Lender determines to seek compensation under this Section 1.13 it shall notify the Alternative Currency Borrower and the Agent of the circumstances that entitle the Alternative Currency Lender to such compensation pursuant to this Section 1.13. A certificate of the Alternative Currency Lender claiming compensation under this

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Section 1.13 and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of demonstrable error. In determining such amount, the Alternative Currency Lender may use any reasonable averaging and attribution methods.

     Section 1.14. Discretion of Alternative Currency Lender as to Manner of Funding. Notwithstanding any other provision of this Agreement, the Alternative Currency Lender shall be entitled to fund and maintain its funding of all or any part of its Swing Loans in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if the Alternative Currency Lender had actually funded and maintained each Swing Loan through the purchase of deposits in the eurocurrency interbank market having a maturity corresponding to such Swing Loan’s Interest Period and bearing an interest rate equal to EURIBOR for such Interest Period.

     Section 1.15. Withholding Taxes Payments Free of Withholding. Except as otherwise required by law, each payment by the Alternative Currency Borrower and the Borrower under this Agreement or the other Credit Documents shall be made without withholding for or on account of any present or future taxes (other than overall net income taxes on the recipient) imposed by or within the jurisdiction in which the Borrower or the Alternative Currency Borrower is domiciled, any jurisdiction from which the Borrower or the Alternative Currency Borrower makes any payment, or (in each case) any political subdivision or taxing authority thereof or therein. If any such withholding is so required, the Borrower or the Alternative Currency Borrower shall make the withholding, pay the amount withheld to the appropriate governmental authority before penalties attach thereto or interest accrues thereon and forthwith pay such additional amount as may be necessary to ensure that the net amount actually received by the Alternative Currency Lender and the Agent free and clear of such taxes (including such taxes on such additional amount) is equal to the amount which the Alternative Currency Lender or the Agent (as the case may be) would have received had such withholding not been made. If the Agent, or the Alternative Currency Lender pays any amount in respect of any such taxes, penalties or interest the Borrower or the Alternative Currency Borrower shall reimburse the Agent, or the Alternative Currency Lender, as the case may be, for that payment on demand in the currency in which such payment was made. If the Borrower or the Alternative Currency Borrower pays any such taxes, penalties or interest, it shall deliver official tax receipts evidencing that payment or certified copies thereof to the Alternative Currency Lender or Agent on whose account such withholding was made (with a copy to the Agent if not the recipient of the original) on or before the thirtieth day after payment. If the Alternative Currency Lender or the Agent determines it has received or been granted a credit against or relief or remission for, or repayment of, any taxes paid or payable by it because of any taxes, penalties or interest paid by the Borrower or the Alternative Currency Borrower and evidenced by such a tax receipt, the Alternative Currency Lender or Agent shall, to the extent it can do so without prejudice to the retention of the amount of such credit, relief, remission or repayment, pay to the Borrower or the Alternative Currency Borrower as applicable, such amount as the Alternative Currency Lender or Agent determines is attributable to such deduction or withholding and which will leave the Alternative Currency Lender or Agent (after such payment) in no better or worse position than it would have been in if the Borrower or the Alternative Currency Borrower had not been required to make such deduction or withholding. Nothing in this Agreement shall interfere with the right of the Alternative Currency Lender and the Agent to arrange its tax affairs in whatever manner it

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thinks fit nor oblige the Alternative Currency Lender or the Agent to disclose any information relating to its tax affairs or any computations in connection with such taxes.

     Section 1.16. Appointment of Agent for Alternative Currency Borrower. The Alternative Currency Borrower hereby irrevocably appoints the Borrower as its agent (the “Alternative Currency Borrower’s Agent”) under the Credit Documents, to make requests on the Alternative Currency Borrower’s behalf for Swing Loans and to take any other action contemplated under the Credit Documents. The Alternative Currency Lender and the Agent shall be entitled to conclusively presume that any action by the Alternative Currency Borrower’s Agent under the Credit Documents is taken on behalf of the Alternative Currency Borrower whether or not the Alternative Currency Borrower’s Agent so indicates.

Section 2. Definitions.

     Section 2.1. Certain Defined Terms. The following terms when used herein have the following meanings:

     “Business Day” means any day other than a Saturday or Sunday on which the Alternative Currency Lender is not authorized or required to close in Dublin, Ireland, and, when used with respect to Swing Loans, a day on which the Alternative Currency Lender and foreign exchange markets are open for business in the city where disbursements of or payments on a Swing Loan are to be made.

     “EURIBOR” means, for any Interest Period, (i) the rate per annum (rounded upwards, if necessary, to the next higher one hundred-thousandth of a percentage point) for deposits in Euros for a period equal to such Interest Period, which appears on the Reuters Screen EURIBOR01 Page as of 11:00 a.m. (Brussels time) on the day that is two TARGET Settlement Days before the commencement of such Interest Period, and (ii) if EURIBOR cannot be determined, the arithmetic average of the rates of interest per annum (rounded upward, if necessary, to the nearest l/100th of 1%) at which deposits in Euros in immediately available funds are offered to the Alternative Currency Lender at 11:00 a.m. (Brussels time) two Business Days before the beginning of such Interest Period by 3 or more prime banks in the Euro-zone interbank market selected by the Alternative Currency Lender for a period equal to such Interest Period and in an amount equal or comparable to the applicable Swing Loan scheduled to be outstanding from the Alternative Currency Lender during such Interest Period.

     “Regulatory Authority” means and includes (whether having a distinct legal personality or not) any supra-national, national or local government authority, central bank, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant including, without limitation, the Irish Financial Services Regulatory Authority, the Irish Revenue Commissioners, the European Central Bank, the European Union or any federation, community, association or organisation of which Ireland shall be a member.

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     “TARGET Settlement Date” means any day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open.

     Section 2.1. Other Defined Terms. All capitalized terms used herein without definition shall have the same meanings herein as such terms are defined in the Credit Agreement.

Section 3. The Guarantee

     Section 3.1. The Guarantee. To induce the Alternative Currency Lender to provide the credits described herein and in consideration of benefits expected to accrue to the Borrower by reason of the Alternative Currency Lender’s agreements contained herein and for other good and valuable consideration, receipt of which is hereby acknowledged, the Borrower hereby unconditionally and irrevocably guarantees jointly and severally to the Agent, on behalf of and for the benefit of the Alternative Currency Lender, the due and punctual payment of all present and future indebtedness of the Alternative Currency Borrower evidenced by or arising out of this Agreement and the other Credit Documents, including, but not limited to, the due and punctual payment of principal of and interest on the Swing Note and the due and punctual payment of all other obligations now or hereafter owed by the Alternative Currency Borrower under the Credit Documents, as and when the same shall become due and payable, whether at stated maturity, by acceleration or otherwise, according to the terms hereof and thereof. In case of failure by the Alternative Currency Borrower punctually to pay any indebtedness or other obligations guaranteed hereby, the Borrower hereby unconditionally agrees to make such payment or to cause such payment to be made punctually as and when the same shall become due and payable, whether at stated maturity, by acceleration or otherwise, and as if such payment were made by the Alternative Currency Borrower.

     Section 3.2. Guarantee Unconditional. The obligations of the Borrower as a guarantor under this Section 3 shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by:

     (a) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Alternative Currency Borrower or of any other guarantor under this Agreement or any other Credit Document or by operation of law or otherwise;

     (b) any modification or amendment of or supplement to this Agreement or any other Credit Document;

     (c) any change in the corporate existence, structure or ownership of, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting, the Alternative Currency Borrower, the Borrower, any other Guarantor, or any of their respective assets, or any resulting release or discharge of any obligation of the Alternative Currency Borrower or of any other guarantor contained in any Credit Document;

     (d) the existence of any claim, set-off or other rights which the Borrower may have at any time against the Agent, any Bank, the Alternative Currency Lender or any other Person, whether or not arising in connection herewith;

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     (e) any failure to assert, or any assertion of, any claim or demand or any exercise of, or failure to exercise, any rights or remedies against the Alternative Currency Borrower, any other guarantor or any other Person or Property;

     (f) any application of any sums by whomsoever paid or howsoever realized to any obligation of the Alternative Currency Borrower, regardless of what obligations of the Alternative Currency Borrower remain unpaid;

     (g) any invalidity or unenforceability relating to or against the Alternative Currency Borrower, the Borrower or any other guarantor for any reason of this Agreement or of any other Credit Document or any provision of applicable law or regulation purporting to prohibit the payment by the Alternative Currency Borrower, the Borrower or any other guarantor of the principal of or interest on any Note or any other amount payable by it under the Credit Documents; or

     (h) any other act or omission to act or delay of any kind by the Agent, any Bank or any other Person or any other circumstance whatsoever that might, but for the provisions of this paragraph, constitute a legal or equitable discharge of the obligations of the Borrower under this Section 3.

     Section 3.3. Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances. The Borrower’s obligations under this Section 3 shall remain in full force and effect until the Commitments are terminated and the principal of and interest on the Notes and all other amounts payable by the Alternative Currency Borrower under this Agreement and all other Credit Documents shall have been paid in full. If at any time any payment of the principal of or interest on the Swing Note or any other amount payable by the Alternative Currency Borrower under the Credit Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Alternative Currency Borrower, the Borrower or of a Guarantor, or otherwise, the Borrower’s obligations under this Section 3 with respect to such payment shall be reinstated at such time as though such payment had become due but had not been made at such time.

     Section 3.4. Waivers (a) General. The Borrower irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by the Agent, the Alternative Currency Lender or any other Person against the Alternative Currency Borrower, the Borrower, another Guarantor or any other Person.

     (b) Subrogation and Contribution. Unless and until the Obligations and all of the Alternative Currency Borrower’s indebtedness, obligations and liabilities under the Credit Documents have been fully paid and satisfied and the Commitments have terminated, the Borrower hereby irrevocably waives any claim or other right it may now or hereafter acquire against the Alternative Currency Borrower or any other Guarantor that arises from the existence, payment, performance or enforcement of such Guarantor’s obligations under any other Credit Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, or any right to participate in any claim or remedy of the Agent,

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any Bank, the Alternative Currency Lender or any other holder of an Obligation or of the Alternative Currency Borrower’s indebtedness, obligations and liabilities under the Credit Documents against the Alternative Currency Borrower, the Borrower or any other Guarantor whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Alternative Currency Borrower or any other Guarantor directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other right.

     Section 3.5. Limit on Recovery. Notwithstanding any other provision hereof, the right to recovery of the holders of the Alternative Currency Borrower’s indebtedness, obligations and liabilities under the Credit Documents against the Borrower under this Section 3 shall not exceed $1.00 less than the amount which would render the Borrower’s obligations under this Section 3 void or voidable under applicable law, including without limitation fraudulent conveyance law.

     Section 3.6. Stay of Acceleration. If acceleration of the time for payment of any amount payable by Alternative Currency Borrower’s indebtedness, obligations and liabilities under the Credit Documents under this Agreement or any other Credit Document is stayed upon the insolvency, bankruptcy or reorganization of Alternative Currency Borrower, all such amounts otherwise subject to acceleration under the terms of this Agreement or the other Credit Documents shall nonetheless be payable by the Borrower hereunder forthwith on demand by the Agent made at the request of the Alternative Currency Lender.

     Section 3.7. Benefit to Guarantors. The Alternative Currency Borrower and the Borrower are engaged in related businesses and integrated to such an extent that the financial strength and flexibility of the Alternative Currency Borrower and the Borrower has a direct impact on the success of each other. The Borrower will derive substantial direct and indirect benefit from the extension of credit hereunder.

Section 4. Conditions Precedent.

     The effectiveness of this Agreement is subject to the satisfaction of all of the following conditions precedent:

     4.1. The Borrower, the Alternative Currency Borrower, the Alternative Currency Lender, the Swing Line Lender and the Agent shall have executed and delivered this Agreement.

     4.2. The Guarantors shall have executed and delivered the Acknowledgment and Consent set forth below.

     4.3. The Agent shall have received a duly executed Designation of Alternative Currency Borrower among the Alternative Currency Borrower, the Agent and the Swing Line Lender.

     4.4. The Agent shall have received for the Alternative Currency Lender a duly executed Swing Note of the Alternative Currency Borrower dated the date hereof and otherwise in compliance with the provisions of Section 1.6(a) hereof.

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     4.5. The Agent shall have received copies of the organizational documents, and all amendments thereto, of the Alternative Currency Borrower, certified as complete by an authorized representative of the Alternative Currency Borrower.

     4.6. The Agent shall have received good standing certificates (or the equivalent) for the Alternative Currency Borrower issued by the appropriate governmental agency in the jurisdiction of the Alternative Currency Borrower’s organization.

     4.7. The Agent shall have received good standing certificates (or the equivalent) for the Borrower.

     4.8. The Agent shall have received a certificate of an Authorized Officer of the Borrower certifying that since April 25, 2007, there have been no changes to its Articles of Incorporation or by-laws, such certificate to be in form and substance satisfactory to the Agent, the Alternative Currency Lender and their respective counsel.

     4.9. The Agent shall have received, addressed to the Alternative Currency Lender, one original of the favorable written opinion of Jennifer L. Sherman, in-house general counsel to the Borrower, covering the Borrower and in form and substance satisfactory to the Agent and the Alternative Currency Lender (copies of which will be provided by the Agent to the Alternative Currency Lender).

     4.10. The Agent shall have received, addressed to the Alternative Currency Lender, one original of the favorable written opinion of Baker & McKenzie, counsel to the Alternative Currency Borrower, covering the Alternative Currency Borrower and in form and substance satisfactory to the Agent and the Alternative Currency Lender (copies of which will be provided by the Agent to the Alternative Currency Lender).

     4.11. Legal matters incident to the execution and delivery of this Agreement and the other instruments and documents contemplated hereby shall be satisfactory to the Administrative Agent and its counsel and the Alternative Currency Lender and its counsel.

     4.12. The Agent shall have received a copy of a first amendment to the Credit Agreement duly executed by the Borrower, the Guarantors, the Required Banks and the Swing Line Lender.

     4.13. No Default or Event of Default shall have occurred and be continuing.

Section 5. Miscellaneous.

     Section 5.1. Non-Business Day. If any payment of principal or interest on any Swing Loan shall fall due on a day which is not a Business Day, interest or fees (as applicable) at the rate, if any, such Swing Loan for the period prior to maturity shall continue to accrue on such Swing Loan from the stated due date thereof to and including the next succeeding Business Day, on which the same shall be payable.

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     Section 5.2. Survival of Indemnities. All indemnities and all other provisions relative to reimbursement to the Banks of amounts sufficient to protect the yield of the Banks with respect to the Loans, including, but not limited to, Section 1.10 and Section 5.8 hereof, shall survive the termination of this Agreement and the other Credit Documents and the payment of the Loans and all other Obligations.

     Section 5.3. Notices. All notices under this Agreement shall be given in the manner specified in Section 13.8 of the Credit Agreement. Notices hereunder shall be addressed:

to the Alternative Currency Borrower at:		to the Alternative Currency Lender at:
Federal Signal Europe B.V. Y CIA, S.C.		Bank of Montreal Ireland p.l.c.
Calle Doctor Ferran 7		6th Floor, 2 Harbourmaster Place
08339 Vilassar de Dalt (Barcelona) Spain		IFSC, Dublin 1, Ireland
Attention:	Chief Financial Officer	Attention:	Finbarr Farrell
Telephone:		Telephone:	353 1 614 7800
Telecopy:		Telecopy:	353 1 614 7819

     Section 5.4. Counterparts. This Agreement may be executed in any number of counterpart signature pages, and by the different parties on different counterparts, each of which when executed shall be deemed an original but all such counterparts taken together shall constitute one and the same instrument.

     Section 5.5. Successors and Assigns. This Agreement shall be binding upon the Alternative Currency Borrower, the Borrower and their respective successors and assigns, and shall inure to the benefit of the Alternative Currency Lender and the benefit of its successors and assigns, including any subsequent holder of the Swing Note made by the Alternative Currency Borrower. Neither the Alternative Currency Borrower nor the Borrower may assign any of its rights or obligations under this Agreement without the written consent of the Alternative Currency Lender and all of the Banks.

     Section 5.6. Amendments. No amendment, modification, termination or waiver of any provision of this Agreement, nor consent to any departure by the Alternative Currency Borrower or the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Alternative Currency Lender and the Agent.

     Section 5.7. Headings. Section headings used in this Agreement are for reference only and shall not affect the construction of this Agreement.

     Section 5.8. Legal Fees, Other Costs and Indemnification. The Borrower agrees to pay all reasonable out-of-pocket costs and expenses of the Agent and the Alternative Currency Lender in connection with the preparation and negotiation of this Agreement and the other instruments and documents contemplated hereby, including without limitation, the reasonable fees and disbursements of Chapman and Cutler LLP, counsel to the Agent, and McCann Fitzgerald Solicitors, counsel to the Alternative Currency Lender, in connection with the preparation and execution of this Agreement, and any amendment, waiver or consent related

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hereto, whether or not the transactions contemplated herein are consummated. The Borrower further agrees to indemnify the Alternative Currency Lender and its directors, officers and employees (collectively, “Indemnified Parties”), against all losses, claims, damages, penalties, judgments, liabilities and related expenses (including, without limitation, all expenses of litigation or preparation therefor, whether or not the Indemnified Party is a party thereto) which any of them may incur or reasonably pay arising out of or relating to any Credit Document or any of the transactions contemplated thereby or the direct or indirect application or proposed application of the proceeds of any Loan or in connection with the enforcement by the Indemnified Parties of their rights under any Credit Document, other than those which arise from the gross negligence or willful misconduct of the party claiming indemnification. The Borrower, upon demand by the Alternative Currency Lender at any time, shall reimburse the Alternative Currency Lender for any reasonable legal or other expenses incurred in connection with investigating or defending against any of the foregoing except if the same is directly due to the gross negligence or willful misconduct of the party to be indemnified.

     Section 5.9. Entire Agreement. This Credit Documents constitute the entire understanding of the parties thereto with respect to the subject matter thereof and any prior or contemporaneous agreements, whether written or oral, with respect thereto are superseded thereby.

     Section 5.10. Governing Law. This Agreement and the other Credit Documents, and the rights and duties of the parties hereto, shall be construed and determined in accordance with the internal laws of the State of Illinois.

     Section 5.11. Submission to Jurisdiction; Waiver of Jury Trial. The Borrower, the Alternative Currency Borrower and the Alternative Currency Lender hereby submit to the nonexclusive jurisdiction of the United States District Court for the Northern District of Illinois and of any Illinois State court sitting in the City of Chicago for purposes of all legal proceedings arising out of or relating to this Agreement, the other Credit Documents or the transactions contemplated hereby or thereby. The Borrower and the Alternative Currency Borrower irrevocably waive, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. The Borrower, the Alternative Currency Borrower and the Alternative Currency Lender, and the Agent hereby irrevocably waive any and all right to trial by jury in any legal proceeding arising out of or relating to any Credit Document or the transactions contemplated thereby.

[SIGNATURE PAGE TO FOLLOW]

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     This Agreement is entered into as of the date and year first above written.

Federal Signal of Europe B.V. y CIA, S.C.
By	/s/ Jose Maria Paso Luna
	Name:	Jose Maria Paso Luna
	Title:	Legal Representative
Federal Signal Corporation
By
	Name:
	Title:
By
	Name:
	Title:
Bank of Montreal, as Agent
By
	Name
	Title
Bank of Montreal Ireland p.l.c.
By
	Name
	Title
BMO Capital Markets Financing, inc.,      as Swing Line Lender
By
	Name
	Title

Federal Signal of Europe B.V. y Cia, S.C.
Signature Page to Supplemental Agreement

     This Agreement is entered into as of the date and year first above written.

Federal Signal of Europe B.V. y CIA, S.C.
By
	Name:	Jose Maria Paso Luna
	Title:	Legal Representative
Federal Signal Corporation
By	/s/ DAVID JANEK
	Name:	DAVID JANEK
	Title:	VP & TREASURER
By	/s/ RONALD E. DOLATOWSKI
	Name:	RONALD E. DOLATOWSKI
	Title:	DIRECTOR OF TREASURY OPERATIONS
Bank of Montreal, as Agent
By
	Name
	Title
Bank of Montreal Ireland p.l.c.
By
	Name
	Title
BMO Capital Markets Financing, inc.,      as Swing Line Lender
By
	Name
	Title

Federal Signal of Europe B.V. y Cia, S.C.
Signature Page to Supplemental Agreement

     This Agreement is entered into as of the date and year first above written.

Federal Signal of Europe B.V. y CIA, S.C.
By
	Name:	Jose Maria Paso Luna
	Title:	Legal Representative
Federal Signal Corporation
By
	Name:
	Title:
By
	Name:
	Title:
Bank of Montreal, as Agent
By	/s/ Patrick J. McDonnell
	Name	Patrick J. McDonnell
	Title	Managing Director
Bank of Montreal Ireland p.l.c.
By
	Name
	Title
BMO Capital Markets Financing, inc.,      as Swing Line Lender
By	/s/ Patrick J. McDonnell
	Name	Patrick J. McDonnell
	Title	Managing Director

Federal Signal of Europe B.V. y Cia, S.C.
Signature Page to Supplemental Agreement

     This Agreement is entered into as of the date and year first above written.

Federal Signal of Europe B.V. y CIA, S.C.
By
	Name:	Jose Maria Paso Luna
	Title:	Legal Representative
Federal Signal Corporation
By
	Name:
	Title:
By
	Name:
	Title:
Bank of Montreal, as Agent
By
	Name
	Title
Bank of Montreal Ireland p.l.c.
By	/s/ FINBARR FARRELL
	Name	FINBARR FARRELL
	Title	RISK MANAGER
BMO Capital Markets Financing, inc.,      as Swing Line Lender
By
	Name
	Title

Federal Signal of Europe B.V. y Cia, S.C.
Signature Page to Supplemental Agreement

Acknowledgment and Consent

     Each of the undersigned hereby consents to the above Agreement, confirms that all of its obligations as a Guarantor under the Credit Agreement remain in full force and effect, agrees that all of the Borrower’s obligations under the above Agreement constitute Obligations that are guaranteed by the undersigned under the Credit Agreement, and agrees that the consent of the undersigned to any amendments to the above Agreement shall not be required as a result of this consent having been obtained.

E-One, Inc. (f/k/a emergency One, Inc.) Vactor Manufacturing, Inc. Elgin Sweeper Company Dayton Progress Corporation P.C.S. Company Federal APD Incorporated. FS Depot, Inc. E-One New York, Inc. Federal Sign and Signal, Inc. Dayton Progress International Corporation Guzzler Manufacturing, Inc. Emergency Vehicle Solutions of Southern California Federal Merger Corporation Federal Signal Credit Corporation FS Holding, Inc. Victor Products USA, Incorporated Jamestown Precision Tooling, Inc. Jetstream of Houston, Inc. Jetstream of Houston, LLP Pauluhn Electric Mfg. Co. Inc. Pauluhn Electric Manufacturing, LLP Athey Product, Inc. Federal Sign, Inc. Emergency One, Inc.
By	/s/ DAVID JANEK
	Name:	DAVID JANEK
	Title:	VP & TREASURER

Exhibit A

Swing Note

September 6, 2007

     For Value Received, the undersigned, Federal Signal Europe B.V. y CIA, S.C., a Spanish company “sociedad colectiva” incorporated under the laws of Spain and domiciled in Calle Doctor Ferran 7, Vilassar de Dalt (Barcelona) Postal Code 08339 and registered with the Barcelona Commercial Registry under Volume 39272 Folio 109 Page B-343809, First Entry, with Tax ID Number C-64402126 and duly represented by its legal Representative Mr. Jose Maria Paso Luna (the “Alternative Currency Borrower”), hereby promises to pay to Bank of Montreal Ireland p.l.c. (the “Bank”) on the Termination Date of the hereinafter defined Credit Agreement, at the principal office of Bank of Montreal Ireland p.l.c. in Dublin, Ireland, the aggregate unpaid principal amount of all Swing Loans made by the Bank to the Alternative Currency Borrower pursuant to the Credit Agreement (as defined in the Supplemental Agreement identified below) and the Supplemental Agreement, together with interest on the principal amount of each Swing Loan from time to time outstanding hereunder at the rates, and payable in the manner and on the dates, specified in the Supplemental Agreement.

     This Swing Note is specifically issued not-to-the-order (“no la orden”) and therefore no stamp tax is levied under Spanish law as this Swing Note cannot be endorsed.

     The Bank shall record on its books or records or on a schedule attached to this Swing Note, which is a part hereof, each Swing Loan made by it pursuant to the Credit Agreement and the Supplemental Agreement, together with all payments of principal and interest and the principal balances from time to time outstanding hereon, and the interest rate and Interest Period applicable thereto, provided that prior to the transfer of this Swing Note all such amounts shall be recorded on a schedule attached to this Swing Note. The record thereof, whether shown on such books or records or on a schedule to this Swing Note, shall be prima facie evidence of the same, provided, however, that the failure of the Bank to record any of the foregoing or any error in any such record shall not limit or otherwise affect the obligation of the Alternative Currency Borrower to repay all Swing Loans made to it pursuant to the Credit Agreement and the Supplemental Agreement together with accrued interest thereon.

     This Swing Note is the Swing Note referred to in the Supplemental Agreement dated as of September 6, 2007, among the Alternative Currency Borrower, Federal Signal Corporation, a Delaware corporation, Bank of Montreal, as Agent, and the Bank (the “Supplemental Agreement”), and this Swing Note and the holder hereof are entitled to all the benefits provided for thereby or referred to therein, to which Supplemental Agreement reference is hereby made for a statement thereof. All defined terms used in this Swing Note, except terms otherwise defined herein, shall have the same meaning as in the Credit Agreement. This Swing Note shall be governed by and construed in accordance with the internal laws of the State of Illinois.

     Prepayments may be made hereon and this Swing Note may be declared due prior to the expressed maturity hereof, all in the events, on the terms and in the manner as provided for in the Credit Agreement.

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     The Alternative Currency Borrower hereby promises to pay certain out-of-pocket costs and expenses (including certain attorneys’ fees) suffered or incurred by the holder hereof in collecting this Swing Note or enforcing any rights in any collateral therefor, all as more particularly provided in the Supplemental Agreement. The Alternative Currency Borrower hereby waives demand, presentment, protest or notice of any kind hereunder except as expressly provided in the Credit Agreement.

Federal Signal Of Europe B.V.y CIA, S.C.
By
	Name:	Jose Maria Paso Luna
	Title:	Legal Representative

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EX-4.D

Exhibit 4D

Amended and Restated
Loan and Security Agreement

dated as of December 20, 2007

among

E-One, Inc.,
Elgin Sweeper Company, Vactor Manufacturing Inc.
and E-One New York, Inc.,
Each as a Borrower,

and

Banc of America Leasing & Capital, LLC,
as Lender

TABLE OF CONTENTS

			Page
Article I		Loans		2
	Section 1.1	Uncommitted Loan Facility		2
	Section 1.2	Loan Account(s)		4
	Section 1.3	Interest		5
	Section 1.4	Designated Representative; Authorized Persons		6
	Section 1.5	Change of Circumstances		6
	Section 1.6	Taxes on Payments		7
	Section 1.7	Tax Characteristics of Leases		7
Article II		Payments And Collections		7
	Section 2.1	Repayment of Loans; Payment of Other Amounts		7
	Section 2.2	Establishment of Lock-Box and Lock-Box Account		8
	Section 2.3	Collections to be Directed to Lock-Box and Lock-Box Account		8
	Section 2.4	Application of Collections and Other Payments		9
	Section 2.5	Rate Compression Payments and Other Mandatory Prepayments		12
	Section 2.6	Optional Prepayments		12
	Section 2.7	Multiple Borrowers; Several and Not Joint Liability		12
Article III		Security		13
	Section 3.1	Collateral		13
	Section 3.2	Cash Collateral		13
	Section 3.3	Documentation; Fees		13
	Section 3.4	Verifications and Retitling		14
	Section 3.5	Cross Collateralization		14
	Section 3.6	Release of Lien		14
Article IV		Representations And Warranties		15
	Section 4.1	Representations and Warranties		15
Article V		Limitations on Recourse; Repurchase and Substitution of Leases		19
	Section 5.1	Limitations on Recourse		19
	Section 5.2	Substitutions		19
Article VI		Conditions Precedent		20
	Section 6.1	Conditions Precedent to Lender's Execution		21
	Section 6.2	Conditions Precedent to All Requests for Funding of an Advance or Substitution		21

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			Page
	Section 6.3	Conditions Subsequent to Lender's Execution		22
Article VII		Covenants		22
	Section 7.1	Affirmative Covenants		22
	Section 7.2	Negative Covenants		25
Article VIII		Administration And Collection		26
	Section 8.1	Designation of Servicer		26
Article IX		Events Of Default		27
	Section 9.1	Events of Default		27
	Section 9.2	Remedies		29
Article X		Indemnification		29
	Section 10.1	Indemnities		29
	Section 10.2	Excluded Amounts		31
Article XI		Assignments; Participations		32
	Section 11.1	Assignments		32
	Section 11.2	Participations		32
	Section 11.3	Disclosures		33
	Section 11.4	Pledges		33
Article XII		Miscellaneous		33
	Section 12.1	Waivers and Amendments		33
	Section 12.2	Notices		33
	Section 12.3	Revival of Voidable Transfers		33
	Section 12.4	Protection of Interests of Lender		34
	Section 12.5	Confidentiality		34
	Section 12.6	Set-off		35
	Section 12.7	Limitation of Liability; Knowledge of Lender		36
	Section 12.8	Choice of Law		36
	Section 12.9	Consent to Jurisdiction		36
	Section 12.10	Waiver Of Jury Trial		37
	Section 12.11	Integration; Binding Effect; Survival of Terms		37
	Section 12.12	Interpretive Provisions		37
	Section 12.13	Counterparts; Severability		38

ii

Exhibits And Schedules

Exhibit I	-	Definitions
Exhibit II	-	Form of Request for Approval of Leases and Terms
Exhibit III-A	-	Form of Request for Funding
Exhibit III-B	-	Form of Request for Substitution
Exhibit IV	-	[Intentionally Omitted]
Exhibit V	-	Form of Lock-Box Control Agreement
Exhibit VI	-	Form of Amended and Restated Servicing and Title Agency Agreement
Exhibit VII	-	Lease Form(s)
Exhibit VIII	-	Form of Amended and Restated FSS Guaranty
Exhibit IX	-	Form of Monthly Servicing Report
Schedule A-1	-	Documents to be Delivered to the Lender on or prior to the Closing Date
Schedule A-2		Documents to be Delivered to the Lender after the Closing Date
Schedule B	-	Legal Name; Jurisdiction of Organization; Places of Business of the Company Parties; Locations of Records; Federal Employer Identification Number(s)
Schedule C	-	Information Re: Lock-Box Account
Schedule D	-	Authorized Persons and Designated Representative

iii

Amended and Restated Loan And Security Agreement

     This Amended and Restated Loan and Security Agreement (“Agreement”) is dated as of December 20, 2007 and is entered into by E-One, Inc., a Delaware corporation (“E-One”), Elgin Sweeper Company, a Delaware corporation (“Elgin”), Vactor Manufacturing Inc., an Illinois corporation (“Vactor”), E-One New York, Inc. (formerly known as Saulsbury Fire Rescue, Inc.), a New York corporation (“EONY”; E-One, Elgin, Vactor and EONY shall be collectively referred to herein as the “Borrowers” and each individually as a “Borrower”), and Federal Signal Corporation, a Delaware corporation (“FSS”), as Designated Representative on behalf of each Borrower, Banc of America Leasing & Capital, LLC (“Lender”), as Lender. Unless otherwise specifically defined herein, any capitalized term used in this Agreement shall have the meaning assigned to such term in Exhibit I.

Preliminary Statements

     E-One and Lender are parties to that Loan and Security Agreement dated as of March 24, 2005 (the “Existing Loan and Security Agreement”). The obligations of E-One to Lender under the Existing Loan and Security Agreement are secured by a first priority security interest in the Collateral (as defined in the Existing Loan and Security Agreement). E-One and certain of its Affiliates have requested that Lender agree to amend and restate the Existing Loan and Security Agreement to provide, among other things, for uncommitted loan facilities to each of the Borrowers.

     Each Borrower has requested that Lender make a nonrecourse loan to such Borrower in connection with the funding of a pool of Leases (as defined herein) in which such Borrower has an interest. A Borrower may from time to time request that Lender make additional loans to that Borrower to fund additional Leases. As collateral for each Borrower’s indebtedness and other obligations hereunder, each Borrower, among other things, assigns and pledges to Lender all of its right, title and interest in, to and under the Leases and the other Collateral as described herein.

     The Borrowers and Lender are willing to enter into this Agreement to describe the terms and conditions of any loans or financial accommodations that are provided by Lender to the Borrowers, provided, however, that each Borrower acknowledges and agrees that Lender has no obligation to make any loans or provide other financial accommodations to any of the Borrowers under this Agreement and may, in its sole discretion, make or refuse to make any loans or provide other financial accommodations to any Borrower.

     Now, Therefore, in consideration of the mutual conditions and agreements set forth herein, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

Article I Loans

     Section 1.1 Uncommitted Loan Facility.

     (a) Term Loans. Subject to the terms and conditions of this Agreement, Lender hereby agrees to consider a Borrower’s request for Advances in the amounts designated by that Borrower and agreed to by Lender, which shall be made, if at all, on any Business Day as designated by the Borrower and agreed to by Lender.

     (b) Amount of Advances.

     (i) The principal amount of each Advance shall be equal to the product of the Advance Rate and the NPV of all Eligible Leases designated as Collateral on the Request for Funding and confirmed as approved by Lender on the Lease and Terms Approval. Such NPV shall be calculated as of the Cut-Off Date immediately prior to the date such Advance is made by Lender.

     (ii) In addition, at no time shall any Borrower request any Advance, nor shall any Advance be available, with respect to any Lease unless at the time of the Request for Funding and at the time of the Advance all of the following are true:

     (A) each Lease designated as Collateral therefor on the Request for Funding is an Eligible Lease and was the subject of a Lease and Terms Approval; and

     (B) all conditions set forth in Article VI have been and remain satisfied.

All of the foregoing shall be determined by Lender upon receipt and review of the related Request for Approval of Leases and Terms and the Request for Funding required hereunder and such other documents, collateral reports and servicing reports as Lender may from time to time require.

     (c) Uncommitted Facility. Notwithstanding any other provision in this Agreement or in any other Transaction Document, Lender shall have no obligation to make any Advance to any Borrower or to provide other financial accommodations to any Borrower or agree to any Substitution and may, in its sole discretion, make or refuse to make any Loans or provide or refuse to provide other financial accommodations requested hereunder or consent or refuse to consent to any Substitution.

     (d) Requests for Approval of Leases and Terms. A Borrower, through one of its Authorized Persons (including a Designated Representative), may from time to time in its discretion submit to Lender a written request in the form of Exhibit II attached hereto for approval of Leases to be pledged as collateral in connection with an Advance hereunder (each, a “Request for Approval of Leases and Terms”). Each such request shall

2

include the following information regarding the Leases proposed for inclusion as Collateral for that Advance:

     (i) an identification number for each Lease;

     (ii) information regarding the proposed Obligor(s), including legal name, address and such credit underwriting information in the Borrowers’ possession as Lender may reasonably request;

     (iii) a description of each Vehicle and any other goods constituting Related Equipment;

     (iv) for each Lease, the Original Equipment Cost, the start date, the current maturity date, the dollar amount, number and frequency of the remaining Scheduled Payments, and the aggregate gross balance of all remaining Scheduled Payments;

     (v) the proposed Cut-Off Date applicable to all Leases to be included as Collateral for such Advance;

     (vi) with respect to all Leases documented after the date of the Existing Loan and Security Agreement, identification of any proposed deviations from the standard lease forms attached hereto as Exhibit VII (or any superceding exhibit of standard lease forms proposed by the Borrowers and approved by Lender);

     (vii) identification of the applicable Borrower with respect to each Lease; and

     (viii) such additional information as Lender may reasonably request.

Upon receipt of a Request for Approval of Leases and Terms, Lender and the applicable Borrower shall agree on such further information and due diligence review for the proposed Leases identified therein, including such business, credit, legal and administrative review as Lender may request. Lender may in its sole discretion accept or decline all or any of the Leases proposed as Collateral for the Advance or the other terms proposed in the Request for Approval of Leases and Terms, for any reason and without stating any reason. In the event that Lender approves all or any portion of any Request for Approval of Leases and Terms, Lender will notify the Borrower requesting such Advance in writing of such approval (each, a “Lease and Terms Approval"). Each Lease and Terms Approval shall include the identification number and Obligor name for each of the approved Leases and the agreed upon Applicable Margin, estimated Discount Rate and estimated Advance amount, with respect to each approved Lease. Subject to there being no material adverse change with respect to any Company Party or any Obligor after such approval and prior to the Advance (but without limiting Lender’s discretion with respect to making or declining to make any Loan), each Lease and Terms Approval shall be valid for a period of thirty (30) days from its date of issuance by Lender.

3

     (e) Request for Funding of Advances. The applicable Borrower(s), through one of its respective Authorized Persons (which may be a Designated Representative), shall request an Advance or Conversion hereunder by giving Lender irrevocable written notice, in the form of Exhibit III-A attached hereto (each, a “Request for Funding”), which shall include, among other things:

     (i) the proposed date of the Advance or Conversion, which shall be a Business Day;

     (ii) a schedule of the Leases related to such Advance;

     (iii) the estimated principal amount of the requested Advance and the estimated NPV of each related Lease calculated as of the date of such Advance; and

     (iv) whether such Advance will be a LIBOR Loan or a Fixed Rate Loan and confirmation of the Applicable Margin.

Each Request for Funding must be received by Lender not later than 11:00 a.m. (Chicago time) at least five (5) Business Days prior to the date of the requested Advance. Any Request for Funding delivered after 11:00 a.m. shall be deemed received on the next Business Day.

     (f) Existing Loans. This Agreement amends and restates in its entirety the Existing Loan and Security Agreement, and all Loans outstanding under the Existing Loan and Security Agreement are, as of the Closing Date, deemed to be repaid and readvanced to E-One under this Agreement, without further action or documentation. Such repayment and readvance shall not be considered to be an optional prepayment for purposes of, and no premium shall be due with respect thereto under, Section 2.6 of the Existing Loan and Security Agreement or Section 2.6 of this Agreement. Nothing herein is intended to nor shall impair any of the grant, attachment, perfection or priority of Lender in or to any of the Collateral (as defined in the Existing Loan and Security Agreement). In addition, Section 12.11(b) of the Existing Loan and Security Agreement, and each of the obligations described in the proviso thereof, shall continue and survive as obligations of E-One, notwithstanding the execution and delivery of this Agreement or any of the other Transaction Documents.

     Section 1.2 Loan Account(s). Lender shall maintain an account on its books in the name of each Borrower (the “Loan Account”) on which the applicable Borrower will be charged with all Advances made by Lender to that Borrower or for such Borrower’s account and with all other Obligations hereunder or under the other Transaction Documents that by the terms hereof or thereof are for the account of or allocable to such Borrower, including, accrued interest, fees and Lender Expenses. In accordance with Section 2.3(c), each Loan Account will be credited with all payments received by Lender from or for the account of the applicable Borrower, including all amounts received in the Lender’s Account from the Lender’s Account Bank. Lender shall render statements regarding the Loan Accounts to the Borrowers, including

4

principal, interest, fees, and including an itemization of all charges and expenses constituting Lender Expenses owing, and such statements shall be conclusively presumed to be correct and accurate and constitute an account stated between the Borrowers and Lender unless, within sixty (60) days after receipt thereof by the applicable Borrower, such Borrower shall deliver to Lender written objection thereto describing the error or errors contained in any such statements. Any failure by Lender to record or any error in doing so shall not, however, limit or otherwise affect any obligation of any of the Borrowers hereunder or under any other Transaction Document.

     Section 1.3 Interest.

     (a) Rate of Accrual. Each Borrower may elect to have any Loan to such Borrower bear interest at the LIBOR Interest Rate or the Fixed Interest Rate (as such terms are defined below); provided, however, that on the date of any Advance to or Conversion by a Borrower, all outstanding Loans of that Type to such Borrower on such date shall be deemed to be repaid and readvanced and shall bear interest at either the LIBOR Interest Rate or the Fixed Interest Rate as designated by such Borrower with respect to such Advance or Conversion made on that date. For the avoidance of doubt, a Borrower may have one, but only one, Loan of each Type outstanding at any time. Any Conversion, and any Loan that is deemed repaid and readvanced as the same Type of Loan, shall not be considered an optional prepayment for purposes of, and no premium shall be due with respect thereto under, Section 2.6 of this Agreement. Any Fixed Rate Loan that is deemed repaid and readvanced as a LIBOR Loan shall be subject to Section 2.6 and the applicable Borrower shall pay to Lender the premium due thereunder upon demand.

     (i) LIBOR Loans. LIBOR Loans shall accrue interest at a rate per annum determined by Lender to be the LIBO Rate as in effect on the first day of each LIBOR Interest Period plus the Applicable Margin (the “LIBOR Interest Rate”).

     (ii) Fixed Rate Loans. Fixed Rate Loans shall accrue interest at a rate per annum determined by Lender to be the Fixed Rate as in effect as of the second Business Day immediately prior to the date of the Fixed Rate Loan plus the Applicable Margin (the “Fixed Interest Rate”).

     (b) Accrual Periods and Payment Dates. Interest on outstanding Loans and on other Obligations then due and owing under this Agreement shall accrue daily and be payable from Collections on each Business Day. Each Borrower hereby authorizes Lender, from time to time without prior notice to any of the Borrowers, to charge such interest and fees, all Lender Expenses (as and when incurred), and all other payments as and when due and payable under any Transaction Documents to such Borrower’s Loan Account. On any Business Day Lender may debit from the Lender’s Account all accrued interest on outstanding Loans that are unpaid on such date.

     (c) Computation. All interest and fees hereunder shall be computed on the basis of a three hundred sixty (360) day/twelve (12) month year and either actual days

5

elapsed during the accrual period, in the case of LIBOR Loans or if the accrual period is less than one (1) month, or thirty (30) day months in the case of Fixed Rate Loans.

     (d) Default Interest. At all times that an Event of Default shall exist, the outstanding Loans shall bear interest until Paid in Full at an increased rate per annum (computed on the basis of a three hundred sixty (360) day year, actual days elapsed) equal to two percent (2%) above the applicable Interest Rate.

     Section 1.4 Designated Representative; Authorized Persons.

     (a) Without limiting the several nature of the obligations of the Borrowers hereunder, each Borrower hereby designates FSS as its representative and agent on its behalf (the “Designated Representative”) for the purposes of submitting any Request for Approval of Leases and Terms, giving notice of any Request for Funding, giving instructions with respect to the disbursement of the proceeds of Advances, selecting interest rate options, delivering financial and other reporting, giving and receiving all other notices and consents hereunder or under any of the other Transaction Documents and taking all other actions on behalf of any Borrower or Borrowers under the Transaction Documents. The Designated Representative hereby accepts such appointment. Each of the Borrowers acknowledges that Lender is agreeing to accept from and deliver notices and other communications to, and to take direction from and transact with, the Designated Representative hereunder instead of each of the Borrowers separately for the convenience of the Borrowers. Lender may regard any notice or other communication pursuant to any Transaction Document from the Designated Representative as a notice or communication from any or all Borrowers, as the context shall require, unless such notice or communication expressly states to the contrary. Each Borrower agrees that the Designated Representative is and will be authorized to act on such Borrower’s behalf, and each warranty, covenant, agreement and undertaking purportedly made on its behalf by the Designated Representative shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower. Any reference in any provision of this Agreement or other Transaction Documents to a Borrower or other Company Party rather than to the Designated Representative shall not limit the applicability of this Section 1.4(a) to such provision.

     (b) Lender shall be entitled to rely conclusively on the authority of each Authorized Person (including any Authorized Person of the Designated Representative). Lender shall have no duty or obligation to the Borrowers to verify the authenticity of any signature appearing on any Request for Funding or any other written notice from an Authorized Person or to verify the authenticity of any Person purporting to be an Authorized Person giving any telephonic notice permitted hereby.

     Section 1.5 Change of Circumstances.

     (a) Inability to Determine Rate. If Lender at any time after the date of this Agreement shall determine that for any reason adequate and reasonable means do not

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exist for ascertaining the LIBO Rate, or that the making or maintaining of any Loan at the LIBOR Interest Rate shall be unlawful, then Lender shall give telephonic notice (promptly confirmed in writing) to the Designated Representative of such determination. If such notice is given and until such notice has been withdrawn in writing by Lender, Lender will not consider any request for a LIBOR Loan until Lender and the Designated Representative agree upon an alternate floating rate and an adjustment to the Applicable Margin, and Lender and the Designated Representative agree to negotiate in good faith to agree upon such alternate rate and adjustment. Unless and until Lender and the Designated Representative have agreed upon an alternate rate and an adjustment to the Applicable Margin, any LIBOR Loans outstanding on the date of such notice shall thereafter accrue interest at a per annum rate equal to the Interest Rate for such LIBOR Loans in effect as of the date of such notice plus two percent (2%).

     (b) Charges: Illegality. Upon the occurrence of any event described in Section 1.5(a) hereof, the applicable Borrower shall pay to Lender, as and when provided in Section 2.4(a), such amount or amounts as may be necessary to compensate Lender for any fines, fees, charges, penalties, increased costs or other amounts payable by Lender as a result thereof and which are attributable to LIBOR Loans outstanding during periods prior to the date of notice under Section 1.5(a). Lender shall provide the applicable Borrower written certification of the amounts claimed but shall have no obligation to demonstrate match funding with respect to such amounts.

     Section 1.6 Taxes on Payments. All payments made by the Borrowers under the Transaction Documents shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any governmental authority (except net income taxes imposed on Lender) (with all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and withholdings being hereinafter referred to herein as “Taxes”). The agreements in this Section 1.6 shall survive the termination of this Agreement.

     Section 1.7 Tax Characteristics of Leases. Each of Lender and the Borrowers, on their own behalf, expressly disclaim any representation or warranty with respect to the tax treatment to the Borrowers, Lender, any other holder of the Leases or any other Person with respect to the Receivables, the Collections, any other payment made under any Lease, the Loans or any transaction contemplated hereby. Lender and the Borrowers intend that the Borrowers will be treated as the owners of the Leases, respectively, for all tax purposes, and each of Lender and the Borrowers, on its own behalf, agrees that it will consistently treat the Borrowers as the owners for all tax filings and other tax purposes.

Article II Payments And Collections

     Section 2.1 Repayment of Loans; Payment of Other Amounts. Each Borrower shall cause all applicable Collections to be applied to pay outstanding Loans to such Borrower and accrued and unpaid interest thereon and any other Obligations of such Borrower then due hereunder. All such amounts shall be applied to the outstanding Loans and other Obligations as

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provided in Section 2.4. In addition, each Borrower shall pay to Lender when due from sources other than Collections (unless Lender otherwise elects) all Recourse Obligations owing by such Borrower. Notwithstanding the foregoing, no provision of this Agreement shall require the payment or permit the collection of any amounts hereunder in excess of the maximum permitted by applicable law.

     Section 2.2 Establishment of Lock-Box and Lock-Box Account. The Borrowers shall cooperate in the establishment of one or more Lock-Boxes and related deposit accounts, each opened in Lender’s name (each, a “Lock-Box Account”) with a Lock-Box Bank. No Company Party shall have any access to or right to give directions with respect to the Lock-Box or the Lock-Box Account or any funds held therein from time to time and all such accounts shall be held for and subject to the control of Lender. Lender shall provide, or shall require the Lock-Box Bank to provide, to the Servicer copies of all periodic Lock-Box detail promptly after it is available to Lender. Upon Payment in Full of all Obligations, each Lock-Box and Lock-Box Account in Lender’s name shall be transferred to the Servicer for distribution to the Company Parties entitled thereto. The Company Parties shall cooperate with Lender and each Lock-Box Bank by submitting to a Lock-Box Control Agreement in favor of Lender substantially in the form of Exhibit V. Such Lock-Box Control Agreement shall provide, among other things, that (A) no Company Party shall have any access to or right to give directions to the Lock-Box Bank with respect to the Lock-Box or the Lock-Box Account or any funds held therein and (B) the Lock-Box Bank has no rights of set-off or recoupment or any other claim against the Lock-Box Account other than for payment of its service fees and other charges directly related to the administration of such Lock-Box and Lock-Box Account and for returned checks or other items of payment. All Lock-Boxes, Lock-Box Accounts and Lock-Box Banks used to receive Collections on the Collateral shall be identified on Schedule C hereto. The Lock-Box Account shall be a cash collateral account, with all cash, checks and similar items of payment in such account securing payment of the Obligations, and in which each of the Borrowers, to the full extent of their respective interests therein (if any), hereby grants a Lien to Lender.

     Section 2.3 Collections to be Directed to Lock-Box and Lock-Box Account.

     (a) At all times prior to the date upon which the Obligations have been Paid in Full, the Company Parties shall cause all payments by or on behalf of Obligors to be directed to the Lock-Box and shall cause all Collections (including ACH Receipts, if any) to be deposited into the Lock-Box Account; and not later than forty-five (45) days prior to the next Scheduled Payment with respect to a Lease, the Borrowers shall (either themselves or through the Servicer ) notify and direct each Obligor to remit all payments under or with respect to such Obligor’s Lease and the Related Equipment directly to the Lock-Box or (with respect to ACH Receipts) the Lock-Box Account. Any Collections received directly by or processed by a Company Party (in its capacity as Servicer, Subservicer or otherwise) shall be deposited into the Lock-Box Account no later than (i) in the case of any ACH Receipts, immediately and (ii) in the case of all other Collections within five (5) Business Days. All Collections received directly by the Servicer or a Company Party, including early termination payments, shall be deposited into the Lock-Box Account in the form received. Until such deposit, the applicable party shall hold all such Collections in trust for the benefit of Lender.

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     (b) Lender shall be authorized to direct the Lock-Box Bank to remit by daily sweep to a bank account in Lender’s name (a “Lender’s Account”) at the Lender’s Account Bank on each Business Day all available amounts on deposit in the Lock-Box Account. The Borrowers irrevocably authorize Lender to apply on a daily basis all collected funds held in the Lender’s Account to the Obligations in accordance with Section 2.4 hereof. The Company Parties each acknowledge that none of them has nor will have any interest in Lender’s Account or (except as provided in Section 2.3(d)) in any funds held therein from time to time unless and until paid over to the applicable Borrower after Payment in Full of all of its Obligations. To the extent that any of the Company Parties shall be deemed to have any interest in any amounts held from time to time in the Lender’s Account, it shall be a cash collateral account, with all cash, checks and similar items of payment in such account securing payment of the Obligations (but subject to release to the applicable Borrower as provided in Section 2.3(d)), and in which the Borrowers are hereby deemed to have granted a Lien to Lender.

     (c) The receipt of any payment item by Lender (whether from transfers to Lender by any Company Party, the Servicer or Subservicer, the Lock-Box Bank or otherwise) shall not be considered a payment on account unless such payment item is a wire transfer of immediately available federal funds made to the Lender’s Account or unless and until such payment item is honored when presented for payment. Should any payment item not be honored when presented for payment, then the applicable Borrower shall be deemed not to have made such payment and interest shall be calculated accordingly. Anything to the contrary contained herein notwithstanding, any payment item shall be deemed received by Lender only if it is received into the Lender’s Account on a Business Day on or before 11:00 a.m. (Chicago time). If any payment item is received into the Lender’s Account on a non-Business Day or after 11:00 a.m. (Chicago time) on a Business Day, it shall be deemed to have been received by Lender as of the opening of business on the immediately following Business Day.

     (d) In the event that Lender is presented with written evidence demonstrating to Lender’s reasonable satisfaction that any amounts credited to the Lockbox Account do not constitute Collections or other payments made or proceeds received on account of Obligations, Lender agrees promptly to transfer and return such funds to the applicable Borrower, or in accordance with the written direction of the Servicer to the Person designated by it as entitled to such funds, at such account or other place as the Servicer may so instruct.

     Section 2.4 Application of Collections and Other Payments.

     (a) Priority of Application. Until all of the respective Obligations of the Borrowers have been reduced to zero, all payments credited to the Lender’s Account and all Collections, Deemed Collections or other proceeds of Collateral received and credited by Lender on account of each Borrower (collectively, such Borrower’s “Payments”) shall be applied to the Obligations of such Borrower, or paid to the applicable Borrower as set forth below:

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     (i) So long as no Concentration Condition exists and no Event of Default exists with respect to the applicable Borrower (or its Lease Pool) or FSS, in each instance (except for payments made to the applicable Borrower as set forth in the second application below or to Lender in the first or seventh applications below) with respect to the Obligations arising under or related to each Loan or the related Leases for which Advances or Substitutions were made, as follows:

first, to Lender, to pay or reimburse all Third-Party Servicer Costs and Fees then due and payable by such Borrower;

second, to the applicable Borrower, any Over Collateralization amount due to that Borrower with respect to such Borrower’s Lease Pool without regard to the source of such payments;

third, to Lender, all accrued and unpaid interest then due hereunder in respect of the related Loan, until Paid in Full;

fourth, to Lender, to repay the principal balance outstanding on such related Loan until Paid in Full;

fifth, to Lender, to pay all accrued and unpaid interest then due hereunder in respect of any other outstanding Loan made to such Borrower, until Paid in Full (such application to interest in order of the Advance dates for such Loans, most remote first);

sixth, to Lender, to repay the principal balance outstanding on any other Loan made to such Borrower, until Paid in Full (such application to principal in order of the Advance dates for such Loans, most remote first);

seventh, to Lender, in satisfaction of any Recourse Obligations then due from such Borrower; and

eighth, to the applicable Borrower (to be credited or wired to the Borrower or such other Person entitled thereto under applicable law).

     (ii) If a Concentration Condition exists or an Event of Default exists with respect to the applicable Borrower (or its Lease Pool) or FSS, all Payments received by Lender with respect to a Borrower shall, until all Obligations owing by that Borrower have been reduced to zero, be applied,

first, to Lender, to pay or reimburse all Third-Party Servicer Costs and Fees then due from the applicable Borrower;

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second, upon Lender’s election, to Lender, to pay or to reimburse Lender for its costs of collection and enforcement of the Collateral with respect to the applicable Borrower, including any Servicer Transition Costs, until Paid in Full;

third, upon Lender’s election, to Lender, to pay or to reimburse Lender for any other Lender Expenses then due from such Borrower, until Paid in Full;

fourth, upon Lender’s election, to Lender, to pay accrued fees, if any, then due and payable to Lender by the applicable Borrower under the terms of this Agreement or any of the other Transaction Documents, until Paid in Full;

fifth, to Lender, to pay all accrued and unpaid interest then due hereunder in respect of any Loan made to such Borrower, until Paid in Full;

sixth, to Lender to repay any Loans made to such Borrower, to be applied to such Loans in Lender’s discretion, until Paid in Full;

seventh, to Lender for payment or reimbursement of any other Obligations then due from the applicable Borrower until Paid in Full; and

eighth, to the applicable Borrower (to be credited or wired to such Borrower or such other Person entitled thereto under applicable law).

     (b) Rules for Applying Application Priorities. In the event of a direct conflict between the priority provisions of this Section 2.4 and other provisions contained in any other Transaction Document, it is the intention of the parties hereto that such priority provisions in such documents shall be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved, the terms and provisions of this Section 2.4 shall control and govern.

     (c) [Omitted.]

     (d) Payment of Recourse Obligations. Except as may be otherwise provided in this Agreement, each Borrower shall pay or reimburse to Lender all Recourse Obligations owing by such Borrower then due not later than ten (10) Business Days after demand therefor. Such payment shall be made to Lender in immediately available funds. If any Event of Default with respect to such Borrower or FSS shall exist, Lender, in its sole discretion, may apply Collections and other amounts of such Borrower on deposit in the Lender’s Account with respect to the applicable Borrower on any Settlement Date to

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any of the Recourse Obligations of such Borrower as provided in Section 2.4(a)(ii), but any election not to apply such monies to Recourse Obligations shall not constitute a waiver of any right to collect any Recourse Obligations.

     Section 2.5 Rate Compression Payments and Other Mandatory Prepayments.

     (a) Rate Compression. At the close of each LIBOR Interest Period, Lender shall determine, with respect to each Borrower, (i) the amount of interest that accrued during such LIBOR Interest Period on each LIBOR Loan for such Borrower at the LIBOR Interest Rate and (ii) the amount of interest that would have accrued on such LIBOR Loans during that LIBOR Interest Period if the interest rate applicable thereto during such period was equal to the Discount Rate. If the aggregate interest under the foregoing clause (i) is greater than the amount calculated under the foregoing clause (ii) (such excess, the “Rate Compression Amount”), then the applicable Borrower shall pay or cause to be paid directly to Lender on the next LIBOR Reset Date an amount equal to such Rate Compression Amount and such amount shall be applied as provided by Section 2.4.

     (b) Payment of Deemed Collections. Each Borrower shall pay, or cause to be paid, to the Lender’s Account not later than one (1) Business Day immediately prior to each Settlement Date, all Deemed Collections applicable to such Borrower, if any, with respect to events that have occurred on or before the last day of the calendar month preceding such Settlement Date. All Deemed Collections shall be deposited into the Lender’s Account in immediately available funds. Until such deposit, the Borrowers shall hold all such Deemed Collections in trust for the benefit of Lender.

     (c) Payment of Release Price. If at any time any Borrower is required to pay or cause to be paid the Release Price with respect to any Lease, such Release Price shall be deposited into the Lender’s Account not later than one (1) Business Day immediately prior to the first Settlement Date occurring after such requirement arises.

     Section 2.6 Optional Prepayments. Any Borrower may prepay any related outstanding Loan in whole (but not in part) at any time upon prior notice to Lender (such notice if received subsequent to 11:00 a.m. (Chicago time) on a given day to be treated as though received at the opening of business on the next Business Day) by paying to Lender an amount equal to, in the case of an outstanding Fixed Rate Loan, one hundred four percent (104%) of such Fixed Rate Loan, and in the case of an outstanding LIBOR Loan, one hundred and five-tenths of one percent (100.5%) of such LIBOR Loan, together in each case with all accrued and unpaid interest thereon to the date of prepayment plus any related amounts due Lender under Section 2.1 hereof. Any notice of prepayment given to Lender under this Section shall be irrevocable.

     Section 2.7 Multiple Borrowers; Several and Not Joint Liability. Each of the Borrowers acknowledges and agrees that it has requested Lender to enter into this Agreement rather than multiple agreements with the several Borrowers as a matter of convenience for the Company Parties. Lender and each Borrower hereby unconditionally and irrevocably agrees that each Borrower is severally (and not jointly) liable to Lender for the payment and performance of

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the Recourse Obligations of that Borrower. Each Borrower acknowledges and agrees that its several liability on the Recourse Obligations owed by that Borrower under this Agreement is absolute and unconditional and shall not in any manner be affected or impaired by any acts or omissions whatsoever by Lender. Without limiting the generality of the foregoing, each Borrower’s liability on its Recourse Obligations shall not be impaired by any failure by, or any neglect or omission on Lender’s part to resort to, any one or all of the other Borrowers for payment of any of such other Borrower’s several Recourse Obligations or by the dissolution of or any other matters relating to any other Borrower or its Lease Pool. However, the parties hereto agree that, if any of the Borrowers shall owe any Recourse Obligations to Lender, such Recourse Obligations shall be the several obligations of the Borrowers obligated thereunder, and shall not be joint obligations. Each Borrower’s several liability on the Recourse Obligations shall not in any manner be impaired or affected by which Company Party receives or uses the proceeds of any Loan or for what purposes any Loan is used, because such matters are for the Company Parties to determine as among themselves. The foregoing shall not limit Lender’s rights, interest or recourse to any of the Collateral or any FSS Guaranty.

Article III Security

     Section 3.1 Collateral. Each Borrower grants to Lender, as security for all Loans to and other Obligations of that Borrower to Lender pursuant to this Agreement and the other Transaction Documents, but subject to Section 3.5, a Lien of first priority in all of such Borrower’s right, title and interest whether now existing or hereafter acquired or arising in, to and under all of the Leases, the Receivables, the Collections, the Related Equipment and the Related Security with respect to such Leases, the Lease Files, all of such Borrower’s right, title and interest in, to and under the Lock-Box (if any) and the Servicing Agreement and each other Transaction Document under which such Borrower has any rights or benefits, and any and all proceeds of any of the foregoing (collectively, together with any collateral granted to Lender pursuant to Section 3.2, the “Collateral”).

     Section 3.2 Cash Collateral. The Borrowers hereby each pledge to Lender a Lien on the Lock-Box Account (s) (and, to the extent that such Borrower is deemed to have any interest therein, on the Lender’s Account) and all funds from time to time held therein, as cash collateral for the payment of all of such Borrower’s Loans and the payment and performance of all of such Borrower’s Obligations under this Agreement and the other Transaction Documents, whether or not contingent or inchoate. The Borrowers shall be entitled to a release of that portion of funds held on deposit in the Lender’s Account as and when provided in Section 2.4.

     Section 3.3 Documentation; Fees. The Borrowers agree to cooperate fully with Lender and perform all additional acts reasonably requested by Lender to effect the purposes of this Article III. Without limiting the foregoing, the Borrowers shall execute and deliver and cause to be executed and delivered such further agreements, documents and instruments and shall take and cause to be taken such further actions in connection with any of the Collateral (including the cash Collateral) and the perfection and priority of Lender’s Lien thereon as Lender may reasonably request. The Borrowers shall reimburse Lender, immediately upon demand, for all costs and expenses incurred by Lender in connection with any of the foregoing security, including without limitation filing and recording fees.

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     Section 3.4 Verifications and Retitling. After an Event of Default or a Termination Event has occurred, Lender may at any time, in its own name, in the name of the applicable Borrower or in the name of any other Person, communicate with any Obligors in respect of Collateral to verify with such Obligors, to Lender’s sole satisfaction, the existence, amount and terms of any Leases or other Collateral and to update lien notations on the Certificates of Title to reflect the applicable Borrower, the Borrower as agent or Lender as lienholder, as Lender may request. In addition, with respect to any Lease identified on the schedule to the Request for Funding with respect to the Initial Leases, Lender may request, at any time after such Initial Lease becomes a Defaulted Lease (unless stayed as the result of the related Obligor’s Insolvency Proceeding), that the Certificate of Title reflect E-One, E-One as agent or Lender as lienholder on the Related Equipment under such Lease, as Lender may direct. Each Borrower agrees to cooperate with Lender in any retitling of any Related Equipment subject to a Certificate of Title requested by Lender in accordance with this Section 3.4.

     Section 3.5 Cross Collateralization. Notwithstanding any other provision of this Agreement or any other Transaction Document, all Collateral in which a Borrower has any interest shall secure all Loans and other Obligations, including Recourse Obligations, of that Borrower to Lender, but Loans and other Obligations of a Borrower shall not be secured by Collateral in which such Borrower has no interest; provided, however, that Collections with respect to Leases shall be released to the Borrowers on each Settlement Date as and to the extent provided under Section 2.4.

     Section 3.6 Release of Lien. Lender agrees that in the event that (a) any Lease is paid in full by the related Obligor and such payments (including any Deemed Collections) are not less than the Release Price with respect to such Lease, or (b) the Lender has received from a Borrower the Release Price in accordance with Section 2.5(c) with respect to any Lease for which a Borrower is entitled or required to obtain a release, or (c) any Lease shall cease to be a Lease hereunder as a result of a Substitution, Lender’s Lien arising under this Agreement in such Lease and the Related Security, including the Related Equipment, shall be released, and, upon Payment in Full of all of the Obligations, Lender’s Lien in the Collateral shall be released. Lender shall, at the applicable Borrower’s expense and request, promptly execute and deliver to such Borrower such instruments as are necessary to evidence such release. With respect to any Lease for which a Lien release is requested in a Monthly Servicing Report that is timely delivered pursuant to Section 7.1(a)(ii) to Lender, (1) the Borrowers shall be entitled to execute and deliver such documents and instruments in connection with a release of a Lien on any Related Security, including the Related Equipment, at any time after the Settlement Date immediately following delivery of such Monthly Servicing Report, unless the Designated Representative has received notice from Lender disapproving such release on or before such Settlement Date, and (2) Lender shall deliver to the Designated Representative by not later than the last day of the calendar month (or, if not a Business Day, the immediately following Business Day), after the receipt of such Monthly Servicing Report, each related Lease File then in Lender’s possession. Lender agrees to cooperate with the applicable Borrower, at the request of the Designated Representative, to expedite Lender’s delivery of instruments and documents to be delivered by it in connection with any Lien released under this Section if, in Lender’s reasonable discretion, it would not be burdensome on Lender to do so.

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Article IV Representations And Warranties

     Section 4.1 Representations and Warranties. Each of the Borrowers, on its own behalf except as otherwise expressly stated, hereby represents and warrants to Lender, as of the date hereof, as of the date of each Request for Funding given by such Borrower, as of the date of each Advance to such Borrower and as of the date of each Substitution made by such Borrower:

     (a) Existence; Authorization.

     (i) Corporate Existence and Power. Such Borrower is a corporation, duly organized, validly existing and in good standing under the laws of its state of organization, and is duly qualified to do business and is in good standing as a foreign corporation, and has and holds all corporate power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted, except where the failure to be so qualified or to so hold would not reasonably be expected to have a Material Adverse Effect.

     (ii) Power and Authority; Due Authorization, Execution and Delivery. The execution and delivery by such Borrower of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder and such Borrower’s use of the proceeds of Loans made hereunder, are within its corporate powers and authority and have been duly authorized by all necessary corporate action on its part. This Agreement and each other Transaction Document to which such Borrower is a party have been duly executed and delivered by such Borrower.

     (b) No Conflict. The execution and delivery by such Borrower of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not (i) violate any provision of federal, state, or local law, rule or regulation applicable to it, its Governing Documents, or any order, judgment, or decree of any court or other Governmental Authority binding on it, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of such Borrower, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any of the Collateral (except as created hereunder), or (iv) require any approval of any of such Borrower’s stockholders or the approval of any other Person under any material contractual obligation of such Borrower that has not already been obtained. No transaction contemplated hereby requires compliance by that Borrower with any bulk sales act or similar law.

     (c) Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority that has not been obtained is required for the due execution and delivery by such Borrower of this Agreement and each

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other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder.

     (d) Actions, Suits.

     (i) Except as described in the Forms 10-K, 10-Q and 8-K of FSS, there are no actions, suits or proceedings pending or, to its knowledge, threatened, against or affecting such Borrower, or any of its properties, in or before any court, arbitrator or other body that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. No Borrower is in default with respect to any order of any court, arbitrator or governmental body binding upon it or any of its properties.

     (ii) As of the date of any Advance or Substitution with respect to a Lease, no action, suit or proceeding that is described in the Forms 10-K, 10-Q or 8-K of FSS relates specifically to such Lease and the Related Equipment in the Collateral or the Obligors thereon.

     (e) Binding Effect. This Agreement and each other Transaction Document to which such Borrower is a party, constitute the legal, valid and binding obligations of such Borrower enforceable against it in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

     (f) Accuracy of Information. All written information furnished by such Borrower with respect to a Company Party to Lender under or in connection with this Agreement or any of the other Transaction Documents, including all information contained in the schedules hereto and thereto, is true and accurate in all material respects on the date such information is or is deemed to be stated or certified and does not contain any material misstatement of fact or omit to state any material fact necessary to make the statements contained therein not misleading in any material respect as of the date stated or certified or deemed stated or certified.

     (g) Use of Proceeds. The proceeds of any Loan made hereunder will be used solely for lawful corporate purposes.

     (h) Perfection in Lender. This Agreement, together with the filing of the financing statements in the appropriate UCC offices, is effective to grant to Lender (and Lender shall acquire from each of the Borrowers) a valid and perfected first priority security interest in all of the Collateral in which such Borrower has an interest, free and clear of any Adverse Claim, except (i) as created by the Transaction Documents and (ii) with respect to the Related Equipment, Permitted Liens.

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     (i) Legal Name; Jurisdiction of Organization; Places of Business. Such Borrower’s legal name and jurisdiction of organization are correctly set forth on Schedule B. The principal places of business and chief executive offices of each of the Borrowers and the offices where each keeps the Records are located at the address(es) listed on Schedule B or such other locations of which Lender has been notified in accordance with Section 7.2(a) and in jurisdictions where all action required by Section 12.4(a) have been taken and completed. Such Borrower’s Federal Employer Identification Number is correctly set forth on Schedule B.

     (j) Collections. The names and addresses of each Lock-Box Bank used to process Collections, together with the account numbers of the related Lock-Box Accounts and the post office box number of each related Lock-Box, are listed on Schedule C of this Agreement (as updated from time to time after the Closing Date with the consent of Lender). Each Lock-Box Account is the subject of a Lock-Box Control Agreement. No Borrower has granted to any Person the right to process collections with respect to the Leases or recoveries with respect to the Related Equipment, except as provided by or permitted under the Transaction Documents.

     (k) Material Adverse Effect. All financial statements of such Borrower that have been delivered to Lender have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments) and present fairly in all material respects such Borrower’s financial condition as of the date thereof and results of operations for the period then ended. Since September 30, 2007, no event has occurred that has had a Material Adverse Effect.

     (l) Names. In the past five (5) years, none of the Borrowers has used any corporate names, trade names or assumed names other than the name(s) in which such Borrower has executed this Agreement or as indicated on Schedule B.

     (m) Ownership of Borrower. FSS is the sole shareholder of such Borrower, and holds all of the issued and outstanding Stock of such Borrower free and clear of all Liens and Adverse Claims. There are no agreements to which any Company Party is a party to transfer or provide any Lien on any of the Stock of such Borrower, or to issue Stock of such Borrower, to any other Person at any time or upon the happening of any condition or event.

     (n) Not a Holding Company or an Investment Company. Such Borrower is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or any successor statute.

     (o) Compliance with Law.

     (A) Such Borrower has complied with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it

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may be subject, except where the failure to comply would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

     (B) No provision in or course of conduct with respect to a Lease or the Related Equipment contravenes any laws, rules or regulations applicable thereto (including laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy).

     (p) Compliance with Credit and Collection Practices. Such Borrower has complied in all material respects with its historic credit and collection practices with regard to each Lease and Related Equipment.

     (q) Eligible Leases. As of the date of the Advance or Substitution therefor, each Lease included in a schedule attached to a Request for Funding or a Request for Substitution, as the case may be, and each Receivable related thereto satisfied the requirements of eligibility set forth in the definition of “Eligible Lease.”

     (r) No Default Under Transaction Documents. No Default or Event of Default exists with respect to such Borrower or will result from the incurring of any obligations under any Transaction Document by such Borrower.

     (s) No Adverse Selection. Such Borrower has selected Leases for funding from among those Leases that could qualify as Eligible Leases randomly by lease numbers. With respect to any Lease that could qualify as an Eligible Lease but which has been or has not been designated for funding or substitution hereunder, such Borrower has not knowingly made such selection in any manner that adversely affects Lender or the likelihood of collectibility of any material portion of the Leases taken as a whole.

     (t) Solvency. Both before and immediately after giving effect to any of the transactions contemplated by this Agreement and the other Transaction Documents to which such Borrower is a party: (i) the present fair salable value of the assets of such Borrower is in excess of the amount that will be required to pay its probable liability on its existing debts as said debts become absolute and matured, (ii) the Transaction Documents to which a Borrower is a party provide such Borrower with reasonably equivalent value for the obligations incurred by such Borrower under such Transaction Documents, (iii) the property remaining in the hands of such Borrower is not an unreasonably small capital, and (iv) such Borrower is able to pay its debts as they mature.

     (u) Brokerage Fees. Such Borrower has not utilized the services of any broker or finder in connection with obtaining any financing from Lender under this Agreement and no brokerage commission or finders fee is payable by such Borrower in connection herewith.

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Article V Limitations on Recourse; Repurchase and Substitution of Leases

     Section 5.1 Limitations on Recourse. The Borrowers’ Obligations in respect of payment of accrued interest on and repayment of any Advance or any Loan made hereunder and, other than Recourse Obligations, all other Obligations of each of the Borrowers, shall not be a recourse obligation of any Borrower and shall be payable solely from Collections and the other Collateral. Without limiting the foregoing, except for those representations made by a Borrower as to a Lease being an Eligible Lease as of the date of any Advance (and the related Request for Funding) with respect to such Lease or any Substitution (and the related Request for Substitution) with respect to such Substituted Lease, none of the Borrowers guaranties, and Lender shall have no recourse against any Borrower with respect to, (i) the credit quality of any Obligor (ii) any Obligor’s financial ability to make timely payments of such Obligor’s obligations under any Lease or (iii) the failure at any time of any Obligor to budget and appropriate sufficient moneys to make any Scheduled Payment or other amounts due under such Lease, and, in the event of any shortfall in Collections as a consequence thereof, Lender’s recourse shall be limited to the other Collateral of such Borrower and the proceeds thereof. In addition, the Recourse Obligations are several liabilities of the Borrowers. The separate Recourse Obligations of any one Borrower shall not impose any guarantor or suretyship liability on any other Borrower with respect to such separate Recourse Obligations. In the event that more than one Borrower shall have Recourse Obligations in any instance, for example because such Recourse Obligations arise from the same nucleus of operative facts or conditions, and it is difficult or burdensome to determine which Borrower has liability for which portion thereof, the Borrowers hereby agree that Lender may employ any means of allocation that is reasonable under the circumstances, which may include pro rata allocations based on the Loans made to or then owing by such Borrowers. The several nature of liability for Recourse Obligations shall not in any way limit or impair Lender’s rights with respect to any FSS Guaranty.

     Section 5.2 Substitutions.

     (a) General Requirements. Subject to the conditions set forth in Section 5.2(b) and Section 6.2, a Borrower may request Lender to approve a Substitution, including, without limitation, a Substitution for any Lease for which a Deemed Collection has occurred, Lender may accept or reject any Substituted Lease in its absolute and sole discretion, and generally any Substituted Lease must have an NPV as of the date of Substitution equal to or greater than the NPV of the Lease to be removed. The Borrower requesting a Substitution is deemed to have represented that each Substituted Lease is an Eligible Lease as of the date of its Substitution. No Substitution shall be requested or made if: (i) such Substitution is made with any intent to hinder, delay, or defraud any Person to which any of the Borrowers is or will become indebted; (ii) there shall be any reason to believe that any of the Borrowers is insolvent or that such substitution or removal will render any of the Borrowers insolvent on the date thereof or as a result of such Substitution; (iii) at the time of such Substitution none of the Borrowers is engaged in business, or about to engage in business, for which the assets remaining with it after the Substitution will be an unreasonably small amount of capital; or (iv) any of the Borrowers intends or believes that it will incur debts beyond its ability to pay as such debts mature.

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     (b) Request for Approval of Leases and Terms. If a Borrower wishes to request a Substitution, such Borrower, through one of its Authorized Persons, shall submit to Lender a Request for Approval of Leases and Terms, which shall set forth information as required under Section 1.1(d) with respect to requested Advances, for each Lease proposed for removal and each Lease proposed for inclusion as Collateral with respect to that requested Substitution. Upon receipt of a Request for Approval of Leases and Terms, Lender and the applicable Borrower shall agree on such further information and due diligence review for the proposed Leases identified therein, including such business, credit, legal and administrative review as Lender may request. Lender may in its sole discretion accept or decline all or any of the Leases proposed as Collateral for the Substitution or the other terms proposed in the Request for Approval of Leases and Terms, for any reason and without stating any reason. In the event that Lender approves all or any portion of any such Request for Approval of Leases and Terms, Lender will provide the requesting Borrower with a Lease and Terms Approval, which shall include the identification number and Obligor name for each Lease approved for Substitution and for removal and their respective estimated NPV as of the date of Substitution. Subject to there being no material adverse change with respect to any Company Party or any Obligor with respect to any such Substituted Lease after the date of such approval and prior to the Substitution (but without limiting Lender’s discretion with respect to making or declining to make any Substitution), each Lease and Terms Approval shall be valid for a period of thirty (30) days from its date of issuance by Lender.

     (c) Request for Substitution. If during the effective period of any Lease and Terms Approval a Borrower wishes to effect a Substitution with respect to any Lease identified on such Lease and Terms Approval, such Borrower, through one of its Authorized Persons, shall request Substitution by giving Lender irrevocable written notice, in the form of Exhibit III-B attached hereto (each, a “Request for Substitution”), which shall include, among other things:

     (i) the proposed date of the Substitution, which shall be a Business Day;

     (ii) a schedule of the Leases to be included as Collateral by such Substitution, and each Lease related thereto to be removed as Collateral by such Substitution;

     (iii) the estimated NPV of each related Lease calculated as of the date of such Substitution.

So long as all of the conditions for a Substitution are satisfied as of the date of the proposed Substitution, such Substitution shall be effective on the Cut-Off Date with respect to that Substitution.

Article VI Conditions Precedent

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     Section 6.1 Conditions Precedent to Lender’s Execution. Lender shall not execute this Agreement unless the following conditions have been satisfied in a manner satisfactory to Lender:

     (a) Lender shall have received on or before the Closing Date all of the documents listed on Schedule A-1;

     (b) Lender shall have received all fees and been reimbursed for all expenses (including Lender Expenses) payable by the Borrowers on or before the Closing Date pursuant to the terms of this Agreement and the other Transaction Documents; and

     (c) all other due diligence required by Lender shall have been completed to its satisfaction and all legal matters incident to the initial extension of credit hereunder, including review of the documents required by this Section 6.1, shall be satisfactory to counsel for Lender.

     Section 6.2 Conditions Precedent to All Requests for Funding of an Advance or Substitution. A Borrower may not request an Advance or Substitution unless each of the following additional conditions is met as of the date of such request and the date of such Advance or Substitution:

     (a) no Default or Event of Default with respect to the applicable Borrower or FSS shall have occurred and be continuing;

     (b) Lender shall have received a Request for Approval of Leases and Terms executed by the applicable Borrower(s) relating to such Advance or Substitution and the Borrowers shall have received from Lender an Approval of Leases and Terms, and, in the case of an Advance, Lender shall have received a Request for Funding executed by the applicable Borrower(s), each in accordance with Section 1.1 or, in the case of a Substitution, Lender shall have received with respect to such Substitution, a Request for Substitution executed by the applicable Borrower(s) in accordance with Section 5.2(c);

     (c) Lender shall have received a certificate of a Responsible Officer of each of the applicable Borrowers that each such Lease designated as an Eligible Lease meets as of such date all of the requirements for eligibility set forth in the definition of “Eligible Leases” hereunder;

     (d) Lender shall have received such evidence of the termination of any existing Liens with respect to any of the Collateral of such Borrower (other than, with respect to any Related Equipment, Permitted Liens), including UCC termination statements or releases, all in form and substance satisfactory to Lender and its counsel; and

     (e) Lender shall have received such other approvals, opinions or documents as it may reasonably request.

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     Section 6.3 Conditions Subsequent to Lender’s Execution. Within sixty (60) days after the Closing Date Lender shall have received the items listed on Schedule A-2.

Article VII Covenants

     Section 7.1 Affirmative Covenants. Until the date on which the Obligations have been Paid in Full and this Agreement terminates in accordance with its terms, each Borrower hereby covenants, on its own behalf and with respect to itself except as otherwise expressly stated, as set forth below:

          (a) Financial and Other Reporting.

     (i) GAAP Accounting. The Borrowers will maintain a system of accounting established and administered in accordance with GAAP, and shall deliver to Lender financial information with respect to any of the Borrowers that Lender may reasonably request.

     (ii) Monthly Servicing Report. The Borrowers will deliver or cause to be delivered, by not later than the fourth (4^th) Business Day of each Accounting Month, with respect to the immediately preceding Accounting Month, a Monthly Servicing Report. Notwithstanding the foregoing or anything to the contrary in Section H(a) of the form of Monthly Servicing Report attached hereto as Exhibit IX, the Lenders and Borrowers agree that (1) Borrowers will deliver or cause to be delivered, by not later than 15th day of February, May, August and November, respectively (or, if such date is not a Business Day, then the next subsequent Business Day) the statement of projected cash flows for all Leases as of the last day of the immediately preceding Accounting Month and (2) Lender will calculate the items in Section H(a) of the Monthly Servicing Report and provide Borrowers with the results of its calculations as of the last Business Day of February, May, August, and November, respectively. Borrowers acknowledge and agree that Lender may, at any time in its sole discretion, require Borrowers to provide the statement of projected cash flows on a monthly basis with the Monthly Servicing Report.

     (iii) Schedule of Leases. Upon Lender’s request (which shall be no more frequently than once each calendar quarter unless an Event of Default exists) each Borrower will deliver or cause to be delivered, an updated schedule (the “Schedule of Leases”), which schedule shall include a list of all Leases in such Borrower’s Lease Pool and such other information as Lender shall request from time to time. Each Schedule of Leases shall be delivered to Lender via electronic mail formatted in Excel or such other software application as Lender may reasonably request from time to time.

     (iv) Change in Credit and Collection Practices. At least thirty (30) days prior to the effectiveness of any material change in its historic credit and collection practices, each Borrower will provide, or cause to be provided, to

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Lender written notice (A) indicating such change, and (B) if such proposed change would reasonably be expected to adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables, obtaining Lender’s prior written consent thereto.

     (v) Other Information. Each Borrower will provide, or cause to be provided, to Lender promptly, from time to time, such other information, documents, records or reports relating to the Receivables or any of the other Collateral or Servicing with respect thereto as Lender may from time to time reasonably request.

     (b) Notices. The Borrowers will notify Lender in writing of any of the following promptly upon knowledge of the occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto:

     (i) Events of Default or Defaults. The occurrence of each Event of Default and Default, in each instance accompanied by a statement with respect thereto of a Responsible Officer of the applicable Company Party.

     (ii) Material Adverse Effect. The occurrence of any Material Adverse Effect.

     (iii) Servicer Defaults. The occurrence of any default by the initial Servicer or Subservicer in the performance of their obligations under the Servicing Agreement.

     (iv) Lock-Boxes. Other than notices to Obligors required pursuant to Section 2.3(a), any change or modification to any remittance instruction to any Obligor under any Lease, such notice to be advance notice and consent.

     (c) Compliance with Laws and Preservation of Corporate Existence. Each of the Borrowers will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards imposed by all governmental authorities in respect of the conduct of its business and the ownership of its properties, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect. Each of the Borrowers will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify and remain qualified in good standing as a foreign organization in each jurisdiction where its business is conducted, except where the failure to so qualify or remain qualified would not reasonably be expected to have a Material Adverse Effect.

     (d) Audits. Each of the Borrowers will, from time to time during regular business hours as requested by Lender upon reasonable notice, permit Lender, or its agents or representatives, (i) to examine and make copies of and abstracts from all Records in the possession or under the control of any of the Borrowers or FSS relating to it or any of the Collateral, and (ii) to visit the offices and properties of each of the

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Borrowers or FSS for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to the Collateral or any Company Party’s performance under any of the Transaction Documents or any Person’s performance under the Leases, in each case, with any of the officers or employees of the Company Party having knowledge of such matters; provided, that prior to the occurrence of an Event of Default, such audit shall not be conducted more than twice in any calendar year.

     (e) Keeping and Marking of Records and Books.

     (i) Each of the Borrowers shall cause the Servicer (if a Company Party) to maintain and implement administrative and operating procedures (including an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including records adequate to permit the immediate identification of each new Receivable and all Collections of and adjustments to each existing Receivable).

     (ii) Each of the Borrowers will mark and will direct FSS to mark, within thirty (30) days after the date of any Loan or Substitution hereunder, its master data processing records and other books and records with a code or other identifying information acceptable to Lender, sufficient to identify Lender’s interests under this Agreement.

     (f) Compliance with Leases and Standard of Care. Each of the Borrowers will itself and through the Servicer (if a Company Party) timely and fully (i) perform and comply with all provisions, covenants and other promises required to be observed by it under the Leases, and (ii) except as otherwise permitted under the Servicing Agreement, comply in all respects with Standard of Care in regard to each Receivable subject to such Lease.

     (g) Delivery of Principal Lease Documents and Lease Files. Within thirty (30) days after the date of an Advance or a Substitution, the applicable Borrower will deliver to Lender (or its designated Custodian) each Principal Lease Document with respect to the Leases with respect to which such Advance or Substitution is made, together with the original, photocopy or electronic record of the remainder of the Lease File in existence on such date.

     (h) Security Interests. Subject to the last sentence of this subsection, each Borrower at its expense shall take all action necessary to establish and maintain, in favor of Lender, a valid and perfected first priority security interest in all of its Collateral free and clear of any Adverse Claims other than Permitted Liens and Liens in favor of Lender, including the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Lender’s interest in such Collateral and such other action to perfect, protect or more fully evidence the interest of Lender as Lender may reasonably request. Each

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Borrower at its expense shall take all action reasonably requested by Lender to ensure that with respect to each Lease in which it has any interest such Borrower obtains and maintains a perfected security interest, free and clear of any Adverse Claims (except Liens in favor of Lender and Permitted Liens), in all Related Equipment; provided, however, no Borrower shall have any obligation to retitle any of Certificates of Title related to any Related Equipment to reflect the interest of such Borrower or Lender therein unless requested to do so pursuant to Section 3.4 hereof.

     (i) Taxes. Each of the Borrowers shall file all tax returns and reports required by law to be filed by it. Each of the Borrowers shall promptly pay all taxes and governmental charges at any time owing by it and pay all taxes payable in connection with the Collateral, exclusive of taxes on or measured by income or gross receipts of Lender; provided, however, each of the Borrowers may in good faith and by appropriate proceedings challenge the validity or amount of any taxes, if such proceedings stay the execution of any such taxes and no Lien attaches to any of the Collateral as a consequence thereof; and, provided further, that each of the Borrowers shall set aside in its books in accordance with GAAP adequate reserves with respect thereto.

     (j) Collections. All Collections shall be directed to and deposited in the Lock-Box Account in accordance with Sections 2.2 and 2.3 hereof. Schedule C shall at all times contain current information regarding all lock-box arrangements applicable to the Collateral.

     (k) Insurance. Each of the Borrowers will maintain in effect, or cause to be maintained in effect, at its own expense, (i) casualty and liability insurance and (ii) business interruption, public liability, and product liability insurance, as well as insurance against larceny, embezzlement, and criminal misappropriation. All such insurance policies shall be in such amounts and with such insurance companies as are in each of the Borrowers’ best business judgment and in any event in amounts and with deductibles not less than that carried on the date of this Agreement and disclosed to Lender. At the request of Lender, each of the Borrowers shall deliver copies of all such policies to Lender with a satisfactory loss payable endorsement naming Lender as loss payee or additional insured, as appropriate, as its interests may appear. Each of the Borrowers will pay or cause to be paid, the premiums therefor. Evidence satisfactory to Lender of such insurance coverage (including payment of premiums) and copies of each policy shall be furnished to Lender in certificated form upon Lender’s request.

     (l) Payment of Lender Expenses. Each Borrower shall pay to Lender within ten (10) Business Days after demand any amounts necessary to pay or reimburse Lender Expenses payable by such Borrower, including any pro rata share thereof allocated to it pursuant to Section 5.1.

     Section 7.2 Negative Covenants. Until the date on which the Obligations have been Paid in Full and this Agreement terminates in accordance with its terms, each Borrower hereby covenants, as to itself, that:

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     (a) Name Change, Offices and Records. No Borrower will change its identity or corporate or other organizational structure or its name, (within the meaning of Section 9-507(c) of the UCC) or relocate its chief executive offices or any office where Records are kept or change its locations (within the meaning of Section 9-307 of the UCC) unless it shall have: (i) given Lender at least forty-five (45) days’ prior written notice thereof and (ii) delivered to Lender all financing statements, instruments and other documents reasonably requested by Lender in connection with such change or relocation.

     (b) Change in Payment Instructions to Obligors. No Borrower will add or terminate any bank as a Lock-Box Bank or make any change in the instructions to Obligors regarding payments to be made to any Lock-Box (or Lock-Box Account in the case of ACH Receipts) nor will it permit any other Person to do any of the foregoing without the prior written consent of Lender.

     (c) Modifications to Leases and Credit and Collection Policies. Such Borrower will not, and will not permit FSS to, (i) without Lender’s prior written consent, make any change to its historic credit and collection practices that would reasonably be expected to adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables and (ii) extend, amend or otherwise modify the terms of any Receivable or any Lease, except as provided in the Servicing Agreement.

     (d) Sales, Liens. Such Borrower shall not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including the filing of any financing statement) or with respect to, any of its Collateral, including any Lease, Related Equipment or other Related Security or Collections with respect thereto, or any Lock-Box, or the Lock-Box Account, or assign any right to receive income with respect thereto (other than the grant of Liens in favor of Lender provided for herein); provided, however, that solely with respect to Related Equipment, such Borrower may create and suffer to exist Permitted Liens. Each Borrower shall defend the right, title and interest of Lender in, to and under any of the foregoing property, against all Adverse Claims (other than Permitted Liens) of third parties claiming through or under the Company Parties.

     (e) Selection Procedures. Such Borrower shall not use selection procedures to identify any Lease that otherwise qualifies as an Eligible Lease to be included or removed from the Lien in favor of Lender under the Transaction Documents in any manner that would reasonably be expected adversely and materially to affect Lender’s interests in or the value of the Collateral or the likelihood of collectibility of any material portion of the Leases taken as a whole.

Article VIII Administration And Collection

     Section 8.1 Designation of Servicer.

     (a) The servicing, administration and collection of the Leases and other Collateral shall be initially conducted by FSS, acting as Servicer, in accordance with the

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terms of the Servicing Agreement and the other Transaction Documents. Each of the Borrowers, with respect to Leases in which it has an interest, hereby agrees to perform the duties and obligations of the Subservicer pursuant to the Servicing Agreement.

     (b) Upon the occurrence of an Event of Default hereunder (whether or not the Loans are declared immediately due and payable as a result thereof) or a Termination Event, Lender is hereby authorized to designate a Third-Party Servicer to act as Servicer or Subservicer or to perform some or all of their duties in such capacities, and upon designation of such a successor, the Borrowers acknowledge and agree that neither they nor FSS shall have the right to perform the designated activities with respect to the designated Collateral. The Borrowers further agree that upon such termination of FSS as Servicer or the Borrowers as Subservicers (i) the interest rate with respect to the related Loan(s) shall increase by five (5) basis points in order to offset the ongoing costs of servicing of the Leases, (ii) each Company Party shall assist, at its cost, with the transition of servicing to such Third-Party Servicer as provided in the Servicing Agreement, and (iii) the Borrowers shall pay or reimburse to Lender upon demand all Servicer Transition Costs. All Third-Party Servicer Costs and Fees shall be paid or reimbursed to Lender as provided in Section 2.4(a).

     (c) If at any time after FSS or the Borrowers have been terminated as Servicer or Subservicers, respectively, any of them shall receive directly any Collections or are deemed to receive any Deemed Collections, the Borrowers shall cause such Company Party immediately to notify the Third-Party Servicer and shall remit such Collections or Deemed Collections to the Lock-Box Account or as otherwise directed by the Third-Party Servicer for application in accordance with the terms and conditions of this Agreement and, at all times prior to such payment, such Collections or Deemed Collections shall be held in trust by the Borrowers or FSS, as the case may be, for the exclusive benefit of Lender.

Article IX Events Of Default

     Section 9.1 Events of Default. The occurrence of any one or more of the following events shall constitute an Event of Default:

     (a) The applicable Borrower or FSS shall:

     (i) fail to make any payment or deposit required hereunder or under any other Transaction Document when due, or

     (ii) fail to perform or observe any term, covenant or other agreement hereunder or under any other Transaction Document (other than as referred to in clause (i) of this paragraph (a)) and such failure shall continue without cure, if susceptible to cure, for thirty (30) days after the earlier to occur of (A) notice thereof given by Lender to the Designated Representative, or (B) the applicable Borrower or FSS having knowledge thereof.

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     (b) Any representation or warranty made by or on behalf of the applicable Borrower or FSS in this Agreement or any other Transaction Document, shall prove to have been incorrect when made or deemed made; or any written certification or written statement (other than a representation or warranty) made by or on behalf of such Company Party in this Agreement, any other Transaction Document or in any other certificate delivered pursuant hereto or thereto shall prove to have been materially incorrect when made or deemed made; provided, however, that a breach of the representation in Section 4.1(q) hereof shall not constitute an Event of Default under this Section 9.1(b) until thirty (30) days after the earlier to occur of (a) notice thereof given by Lender to the Designated Representative or (b) the applicable Borrower having knowledge thereof, and then only if the applicable Borrower fails prior to the lapse of such cure period, to (1) substitute in accordance with Section 5.2 hereof a Substituted Lease for the Lease for which such representation was made, (2) pay over the Deemed Collections with respect to such Lease, or (3) so long as Lender, its interests in any Collateral or the collectibility of any Receivables have not been and would not be adversely affected, cure (if susceptible to cure) to the satisfaction of Lender any condition or circumstance that caused the related Lease not be an Eligible Lease.

     (c) Any of the Transaction Documents shall cease for any reason to be in full force and effect, or any Company Party thereto shall purport to disavow any of its obligations thereunder, shall declare that it does not have any further obligation thereunder, or shall contest the validity or enforceability thereof.

     (d) (i) The applicable Borrower or FSS shall generally not pay its debts as such debts become due or shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors; or (ii) any Insolvency Proceeding shall be instituted by or against the applicable Borrower or FSS and, in the case of an Insolvency Proceeding instituted against such Company Party (but not by that Person) either such Company Party fails, within thirty (30) days of the commencement of such Insolvency Proceeding to move to have such Insolvency Proceeding dismissed or such Insolvency Proceeding shall remain undismissed or unstayed for a period of sixty (60) days, or (iii) such Company Party shall take any corporate action to authorize any of the actions set forth in clauses (i) or (ii) above in this subsection (d).

     (e) A Change of Ownership shall occur with respect to the applicable Borrower.

     (f) (i) Any Company Party shall directly or indirectly contest in any manner the effectiveness, validity, binding nature or enforceability of or first priority Lien of Lender with respect to any of the Collateral, or (ii) Lender shall cease to have a valid and perfected, first priority Lien on, the Collateral (other than the Related Equipment), or (iii) Lender’s Lien on any portion of the Collateral (other than with respect to the Related Equipment) shall become impaired or otherwise unenforceable, or any event or circumstance shall occur or exist that could reasonably result in any material impairment in the Lien of Lender on the Collateral (other than the Related Equipment) or the perfection or priority thereof, or (iv) Lender’s Lien on any material portion of the

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Related Equipment shall become impaired or otherwise unenforceable, or any event or circumstance shall occur or exist that could reasonably result in any material impairment in the Lien of Lender on any material portion of the Related Equipment or the perfection or priority thereof.

     (g) The NPV of the Leases not classified as Defaulted Leases, computed using the applicable Discount Rate, in any Lease Pool of the applicable Borrower is less than one hundred and two percent (102%) of the outstanding related Loan(s).

     Section 9.2 Remedies. Upon the occurrence of an Event of Default, Lender may take any or all of the following actions: (i) appoint a Third-Party Servicer for all or any one or more of the Borrowers in accordance with this Agreement and the Servicing Agreement, (ii) cease accepting requests from the Borrowers to make Loans or accept Substitutions hereunder, and declare all Loans and other Obligations of the applicable defaulting Borrower to Lender under the Transaction Documents to be immediately due and payable, without demand, protest or further notice of any kind, all of which are hereby expressly waived; provided, however, that upon the occurrence of an Event of Default described in Section 9.1(d), or of an actual or deemed entry of an order for relief with respect to any Company Party under the Bankruptcy Code, immediately and without notice, all indebtedness and other Obligations of the defaulting Borrower or, if such event occurs with respect to FSS, all of the Borrowers to Lender under the Transaction Documents shall automatically become immediately due and payable, without demand, protest or any notice of any kind, all of which are hereby expressly waived, (iii) notify Obligors of the defaulting Borrower or, if such event occurs with respect to FSS, all Obligors, of Lender’s interest in the Receivables and cause the lien notations on the Certificates of Title to be updated to reflect Lender’s security interest, and (iv) foreclose upon its security interests in and cause a sale or other disposition of all or any portion of, the defaulting Borrower’s Collateral or, if such event occurs with respect to FSS, all of the Collateral. The aforementioned rights and remedies shall be without limitation, and shall be in addition to all other rights, powers and remedies of Lender otherwise granted or available to it under any Transaction Document or permitted by law, either by suit in equity or by action at law, or both, including, without limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative; provided, however, that Lender’s recourse to assets of any of the Borrowers other than the Collateral shall be limited to the extent provided in Article V.

Article X Indemnification

     Section 10.1 Indemnities. Without limiting any other rights that Lender may have hereunder or under applicable law, each of the Borrowers hereby agrees to indemnify Lender and its assigns, officers, directors, agents and employees (each an “Indemnified Party”) from and against any and all damages, losses, claims, taxes, liabilities, costs, expenses and for all other amounts payable by any such Indemnified Party, including reasonable attorneys’ fees and disbursements (all of the foregoing being collectively referred to as “Indemnified Amounts”) awarded against or incurred by any of the Indemnified Parties arising out of or as a result of this Agreement or any other Transaction Document, any Loan made hereunder, including the use of any proceeds of any Loan, or any interest of Lender in, or the exercise or nonexercise of any rights with respect to, any of the Collateral; excluding, however, in all of the foregoing instances

29

the Excluded Amounts. Without limiting the generality of the foregoing indemnification, each Borrower shall indemnify Lender for Indemnified Amounts (including losses in respect of uncollectible receivables, regardless of whether reimbursement therefor would constitute recourse to any Borrower), but excluding the Excluded Amounts, to the extent arising out of or resulting from:

     (a) any written representation or warranty made by or on behalf of that Borrower (or any officers of any such Borrower), but not by any other Company Party, under or in connection with this Agreement, any other Transaction Document or any other written information or report delivered by any such Person pursuant hereto or thereto, which shall have been false or incorrect when made or deemed made;

     (b) the failure by that Borrower, but not by any other Company Party, to comply with any applicable law, rule or regulation with respect to any Lease or other Collateral, or the nonconformity of any Lease or other Collateral with any such applicable law, rule or regulation, or any failure of the applicable Borrower to keep or perform any of its obligations, express or implied, with respect to any Lease in such Borrower’s Lease Pool;

     (c) any failure of that Borrower, but not of any other Company Party, to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document;

     (d) any products liability, personal injury or damage suit, or other similar claim arising out of or in connection with any goods, merchandise, insurance or services that are the subject of any Lease in that Borrower’s Lease Pool;

     (e) with respect to such Borrower’s Lease Pool, any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor or failure to appropriate and budget by the Obligor) of the Obligor to the payment of any Receivable (including a defense based on such Receivable or Lease not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of the goods or merchandise or service related to such Receivable or the furnishing or failure to furnish such goods or merchandise or services;

     (f) the commingling of Collections by a Company Party at any time with other funds;

     (g) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document, the transactions contemplated hereby, the use of the proceeds of any Loan, the Lien of Lender on any of the Collateral or any other investigation, litigation or proceeding relating to such Borrower in which any Indemnified Party becomes involved as a result of any of the transactions contemplated hereby;

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     (h) any Event of Default described in Section 9.1(d) with respect to such Borrower or FSS, including any adversary proceeding or contested matter arising in any such Insolvency Proceeding, whether or not any Indemnified Person is a party thereto;

     (i) any failure of the applicable Borrower to acquire and maintain legal and equitable title to, and ownership of, or a perfected, first priority security interest in any Related Equipment, free and clear of any Adverse Claim (except as created pursuant to any Transaction Document and any Permitted Lien) or any attempt by any Person to void such security interest under statutory provisions or common law or equitable action; and any Indemnified Amounts under this clause (i) with respect to any item of Related Equipment shall be determined if, as a consequence of the foregoing, Lender (or the Subservicer on Lender’s behalf) is prevented or is or would be delayed for a period of six months or longer from exercising remedies available to a secured creditor with respect to such Related Equipment;

     (j) any failure to vest and maintain vested in Lender, a perfected, first priority Lien on the Leases (including the Collections thereon) in that Borrower’s Lease Pool free and clear of any Adverse Claim (except as created by the Transaction Documents);

     (k) the failure of any Obligor under a Lease in that Borrower’s Lease Pool to obtain and maintain property and liability insurance with respect to the Related Equipment under such Obligor’s Lease;

     (l) any attempt by any Person to void the Lien of Lender on any of the Collateral or void any payment made by or on account of the applicable Borrower with respect to any indebtedness arising under any of the Transaction Documents under statutory provisions or common law or equitable action; and

     (m) with respect to a Lease in that Borrower’s Lease Pool, the existence of any Permitted Lien on the Related Equipment of the type described in clause (c) of the definition of Permitted Liens; and

     (n) any notice or instruction given by or to the Designated Representative on behalf of such Borrower.

Lender or other Indemnified Party shall provide prompt written notice to the Designated Representative of any event or circumstance giving rise to an Indemnified Amount, but any delay or failure to do so shall not limit any Borrower’s obligations under this Section 10.1.

     Section 10.2 Excluded Amounts. Notwithstanding anything in Section 10.1 to the contrary, no Borrower shall have any obligation to indemnify an Indemnified Party with respect to any of the following (collectively, the “Excluded Amounts”):

     (a) Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted from gross

31

negligence or willful misconduct on the part of the Indemnified Party seeking indemnification;

     (b) Indemnified Amounts to the extent the same includes losses in respect of Receivables that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor or the failure at any time of the related Obligor to budget and appropriate sufficient moneys to make any Scheduled Payment or other amounts due under such Obligor’s Lease, other than Indemnified Amounts owing (i) under Section 10.1(a) arising as a result of representations and warranties regarding Eligible Leases made on the date of any Advance or Substitution with respect to such Lease or (ii) under Section 10.1(i); or

     (c) taxes imposed by any jurisdiction in which such Indemnified Party is subject to taxation, on or measured by the overall net income of such Indemnified Party;

provided, however, that nothing contained in this sentence shall limit the liability of any of the Borrowers or limit the recourse of Lender to any of the Borrowers for amounts otherwise specifically provided to be Recourse Obligations to be paid by a Borrower under the terms of this Agreement.

Article XI Assignments; Participations

     Section 11.1 Assignments. Without the prior written consent of FSS, which shall not be unreasonably withheld or delayed, Lender shall not assign all or any portion of its rights under, interest in, title to and obligations under this Agreement and any other Transaction Document to any other Person; provided, however, that no such consent of FSS shall be required in connection with the sale of a material portion of the assets of Lender to or the merger of Lender with another Person, or if an Event of Default shall have occurred and be continuing. So long as Lender remains the primary contact for all lenders hereunder, the Borrowers hereby agree to cause FSS to not unreasonably withhold or delay its consent to the complete or partial assignment by Lender of all or any portion of its rights under, interest in, title to and obligations under this Agreement and any other Transaction Document to any other Person. Upon such assignment, Lender shall be released from its obligations (other than its obligations under this Section 11.1) so assigned if the assignment documents so provide. Further, the Borrowers hereby agree that any such complete or partial assignee of Lender shall have all of the rights and benefits under this Agreement and such other Transaction Documents as if the term the “Lender” explicitly referred to such party, and no such assignment shall in any way impair the rights and benefits of Lender hereunder not so assigned. No Company Party shall have the right to assign its rights or obligations under this Agreement or any other Transaction Document.

     Section 11.2 Participations. Lender may at any time sell to one or more Persons (each a “Participant”) participating interests in any of the Loans or any other interest of Lender hereunder. Notwithstanding any such sale, the rights and obligations of Lender under this Agreement shall remain unchanged, Lender shall remain solely responsible for the performance of its obligations hereunder, and the Borrowers shall continue to deal solely and directly with Lender in connection with their rights and obligations under this Agreement.

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     Section 11.3 Disclosures. In connection with any assignment, participation or pledge or proposed assignment, participation or pledge pursuant to this Article XI, Lender may, subject to Section 12.5, disclose all documents and information which it now or hereafter may have relating to the Company Parties and their respective businesses.

     Section 11.4 Pledges. Any other provision in this Agreement notwithstanding, Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement and any other Transaction Document in favor of any Person, including the Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR §203.14, and such Person or Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law.

Article XII Miscellaneous

     Section 12.1 Waivers and Amendments.

     (a) No failure or delay on the part of Lender in exercising any power, right or remedy under this Agreement or any other Transaction Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy. Except as otherwise provided herein, the rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. Any waiver of this Agreement or any other Transaction Document shall be effective only in the specific instance and for the specific purpose for which given.

     (b) No provision of this Agreement may be amended, supplemented, modified or waived except in writing executed and delivered by each of the Borrowers and Lender.

     Section 12.2 Notices. Except as provided below, all communications and notices provided for hereunder shall be in writing (including bank wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other parties hereto at their respective addresses or fax numbers set forth on the signature pages hereof or at such other address or fax number as such Person may hereafter specify for the purpose of notice to each of the other parties hereto. Each such notice or other communication shall be effective (i) if given by telecopy or electronic facsimile transmission, upon receipt of electronic confirmation of receipt thereof, (ii) if given by mail, three (3) Business Days after the time such communication is deposited in the mail registered with return receipt requested, or (iii) if given by any other means, when received at the address specified in this Section. Any notice or other communication given by Lender hereunder to the Designated Representative in accordance with the terms hereof shall be deemed to be given simultaneously to all Company Parties, and each of the Borrowers agrees that it shall be the Designated Representative’s (or such Borrower’s) responsibility to provide such notices or other communications to each of the Company Parties.

     Section 12.3 Revival of Voidable Transfers. If the incurrence or payment of the Obligations by any Borrower or the transfer to Lender of any property or interest therein should for any reason subsequently be declared to be void or voidable under any state or federal law

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relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (collectively, a “Voidable Transfer”), and if Lender is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that Lender is required or elects to repay or restore, and as to all Lender Expenses related thereto, the liability of such Borrower automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.

     Section 12.4 Protection of Interests of Lender.

     (a) Each Borrower agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that may be necessary, or that Lender may reasonably request, to perfect, protect or more fully evidence the rights and interest of Lender under this Agreement and the other Transaction Documents, or to enable Lender to exercise and enforce its rights and remedies hereunder and thereunder. Except with the consent of Lender in any instance, the Company Parties, Servicer or Subservicer (as applicable) shall withhold the identity of Lender in any notification to Obligors.

     (b) If a Borrower fails to perform any of its obligations hereunder, Lender shall use its reasonable efforts to notify the Designated Representative of such failure. Lender may (but shall not be required to) perform, or cause performance of, such obligation, and Lender Expenses related thereto shall be payable by such Borrower as provided in Section 2.1. The Borrowers irrevocably authorize Lender at any time and from time to time in the sole discretion of Lender, and appoints Lender as their attorney-in-fact, to act on behalf of a Borrower to file financing statements and take such other actions necessary or reasonably desirable by Lender to perfect and to maintain the perfection and priority of the interest of Lender in the Receivables and other Collateral; provided, however, that Lender shall not act as any Borrower’s attorney-in fact with respect to retitling of any Related Equipment except to the extent entitled to do so under Section 3.4.

     Section 12.5 Confidentiality. Each of the Company Parties agrees that Lender may disclose any information received by it in connection with this Agreement and the other Transaction Documents other than any confidential information (as defined below), and no Company Party shall disclose to any Person any information with respect to the Advance Rate, the Maximum Available Amount, the Applicable Margin or the Interest Rate applicable to any Loan except, with respect to any of the foregoing, disclosure: (a) to legal counsel and accountants for any Company Party or Lender; (b) to other professional advisors to any Company Party or Lender; (c) to any Company Party or Lender or any affiliate thereof; (d) if requested or required, to regulatory officials having jurisdiction over any Company Party or Lender; (e) to another financial or other institution in connection with a disposition or proposed disposition to that institution of all or part of Lender’s interests hereunder or a participation interest in any of the Loans that agrees to maintain such information in confidence; (f) as required by law or legal process or in connection with any legal proceeding to which Lender or

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any Company Party is a party; and (g) with respect to a Company Party, disclosures to Persons to the extent required in connection with consents of such Persons to the execution and delivery by a Company Party of any Transaction Document; provided, however, that, if any Event of Default shall occur and the Obligations of any Borrower hereunder have become immediately due and payable, Lender may disclose any information regarding a Company Party or any of their respective properties to any prospective purchaser of the Collateral or any other Person (including any prospective Third-Party Servicer) that agrees to maintain such information in confidence, and may disclose any information solely regarding the Collateral, in either case, as Lender reasonably deems necessary or desirable to enforce its rights and remedies under this Agreement and the other Transaction Documents. For purposes of the foregoing, “confidential information” means any information respecting either Company Party and their Affiliates or any of their respective assets or properties, designated by a Company Party or otherwise adequately identified in writing to the recipient thereof when received by it as confidential, other than: (i) information previously filed with any Governmental Authority and available to the public; (ii) information previously published in any public medium from a source other than, directly or indirectly, Lender; and (iii) information that is or becomes available on a nonconfidential basis from a source other than a Company Party, provided that such source is not bound by a confidentiality agreement known to Lender with or in favor of a Company Party. In addition, a Company Party may disclose to any Person information with respect to the Advance Rate, the Maximum Available Amount, the Applicable Margin or the Interest Rate applicable to any Loan if and to the extent that such information has become available to the public after disclosure of such information by a Company Party made in accordance with this Section 12.5. Nothing in this Section 12.5 shall be construed to create or give rise to any fiduciary duty on the part of Lender to any Company Party or any other Person or liability of Lender to either Company Party for any wrongful disclosure by any Person other than Lender. Notwithstanding anything herein to the contrary, confidential information shall not include, and Lender (and each employee, representative or other agent of Lender) may disclose to any and all Persons, without limitation of any kind, the “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are or have been provided to Lender relating to such tax treatment or tax structure; provided that with respect to any document or similar item that in either case contains information concerning such tax treatment or tax structure of the transactions contemplated hereby as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to such tax treatment or tax structure.

     Section 12.6 Set-off.

     (a) In addition to any rights and remedies of Lender provided by law, but subject to Section 12.6(b) Lender shall have the right, without prior notice to any Company Party, any such notice being expressly waived by each Company Party to the extent permitted by applicable law, upon the occurrence and during the continuance of an Event of Default, to set-off and apply against any Obligations, whether matured or unmatured, of any of the Borrowers to Lender, any amount owing from Lender to any Company Party, at or at any time after, the happening of any of the above mentioned events.

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     (b) Nothing in this Section 12.6 shall authorize or permit Lender to, and Lender shall not, set-off against any assets of any Borrower, other than Collections with respect to such Borrower’s Lease Pool and the proceeds thereof, with respect to any Obligations that are not Recourse Obligations of such Company Party or with respect to any Collateral or proceeds thereof of any Borrower on account of any Recourse Obligations owing by any other Borrower.

     (c) This right of set-off may be exercised by Lender against any Borrower or against any trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver or execution, judgment or attachment creditor of any Borrower or against anyone else claiming through or against any Borrower or such trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver, or execution, judgment or attachment creditor, notwithstanding the fact that such right of set-off shall not have been exercised by Lender prior to the occurrence of an Event of Default. Lender agrees promptly to notify the Designated Representative after any such set-off and application made by Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application.

     Section 12.7 Limitation of Liability; Knowledge of Lender. Except with respect to any claim arising out of or resulting from the willful misconduct or gross negligence of Lender, no claim may be made by any Company Party against Lender or its Affiliates, directors, officers, employees, attorneys or agents for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and each Company Party hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. The Borrowers further agree that knowledge of any facts by any Person employed by, or any agent of, Lender, that if true, would constitute a breach of representation of a Company Party or breach of a covenant or other agreement made by a Company Party under any Transaction Document, shall not be construed as a deemed waiver of compliance by such Company Party with any such provision.

     Section 12.8 Choice of Law. The validity of this Agreement and the other Transaction Documents (unless expressly provided to the contrary in another Transaction Document in respect of such other Transaction document), the construction, interpretation, and enforcement hereof and thereof, and the rights of the parties hereto and thereto with respect to all matters arising hereunder or thereunder or related hereto or thereto shall be determined under, governed by, and construed in accordance with the laws of the State of Illinois.

     Section 12.9 Consent to Jurisdiction. The parties agree that all actions or proceedings arising in connection with this Agreement and the other Transaction Documents shall be tried and litigated only in the state and federal courts located in the State of Illinois; provided, however, that any suit seeking enforcement against any Collateral or other property may be brought, at Lender’s option, in the courts of any jurisdiction where Lender elects to bring such action or where such

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Collateral or other property may be found. The Borrowers and Lender each waive, to the extent permitted under applicable law, any right each may have to assert the doctrine of forum non conveniens or to object to venue to the extent any proceeding is brought in accordance with this section. Each party also waives personal service of any and all process and agrees that all such service of process may be made upon such party by certified or registered mail, return receipt requested, addressed to such party at the address referred to in Section 12.2 and service so made shall be complete ten (10) days after the same has been posted.

     Section 12.10 Waiver Of Jury Trial. The Borrowers and Lender hereby waive their respective rights to a jury trial of any claim or cause of action based upon or arising out of any of the Transaction Documents or any of the transactions contemplated therein, including contract claims, tort claims, breach of duty claims, and all other common law or statutory claims. Each of the Borrowers and Lender represent that each has reviewed this waiver and each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. In the event of litigation, a copy of this Agreement may be filed as a written consent to a trial by the court.

     Section 12.11 Integration; Binding Effect; Survival of Terms.

     (a) This Agreement, together with each of the other Transaction Documents, contains the final and complete integration of all prior expressions by the parties hereto and thereto with respect to the subject matter hereof and thereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof superseding all prior oral or written understandings.

     (b) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns (including any trustee in bankruptcy). This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; provided, however, that (i) the indemnification and payment provisions of Sections 1.6 and 2.5 and Article X, (ii) the governing law and conflict resolution provisions of Sections 12.8, 12.9, and 12.10, to the extent applicable, and (iii) Sections 12.5 and 12.6, shall be continuing and shall survive any termination of this Agreement.

     Section 12.12 Interpretive Provisions.

     (a) Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. When used herein, the term “financial statements” shall include the notes and schedules thereto.

     (b) UCC. Any terms used in this Agreement that are defined in the Illinois UCC shall be construed and defined as set forth in the Illinois UCC unless otherwise defined herein.

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     (c) Construction. Unless the context of this Agreement or any other Transaction Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the term “including” is not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Transaction Document refer to this Agreement or such other Transaction Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Transaction Document, as the case may be. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. The captions and headings of this Agreement are for convenience of reference only and shall not affect the construction of this Agreement. Any reference in this Agreement or in the other Transaction Documents to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Any reference herein to any Person shall be construed to include such Person’s successors and assigns. Any requirement of a writing contained herein or in the other Transaction Documents shall be satisfied by the transmission of a record (as defined in the UCC) and any record transmitted by or on behalf of a Company Party shall constitute a representation and warranty as to the accuracy and completeness of the information contained therein. Any reference in this Agreement or any of the other Transaction Documents to the “knowledge of” or “known to” any Company Party (or similar phrases) means the actual knowledge of a Responsible Officer of such Company Party and such knowledge that such Person could have obtained with reasonable investigation or due diligence. This Agreement and the other Transactions Documents have been the subject of negotiations by the parties and shall not be construed against Lender merely because of Lender’s involvement in their preparation.

     Section 12.13 Counterparts; Severability. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

[Signature Page Follows]

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     In Witness Whereof, the parties hereto have caused this Amended and Restated Loan and Security Agreement to be executed and delivered by their duly authorized officers as of the date hereof.

Borrowers:
E-One, Inc.
By:
	Name:
	Title:
By:
	Name:
	Title:
Address:		1415 West 22nd Street, Suite 1100 Oak Brook, IL 60523
Attn.:		Treasurer
Fax No.:		630-954-2041

Elgin Sweeper Company
By:
	Name:
	Title:
By:
	Name:
	Title:
Address:		1415 West 22nd Street, Suite 1100 Oak Brook, IL 60523
Attn.:		Treasurer
Fax No.:		630-954-2041

[Signature Page to Amended and Restated Loan and Security Agreement]

Vactor Manufacturing Inc.
By:
	Name:
	Title:
By:
	Name:
	Title:
Address:		1415 West 22nd Street, Suite 1100 Oak Brook, IL 60523
Attn.:		Treasurer
Fax No.:		630-954-2041

E-One New York, Inc.
By:
	Name:
	Title:
By:
	Name:
	Title:
Address:		1415 West 22nd Street, Suite 1100 Oak Brook, IL 60523
Attn.:		Treasurer
Fax No.:		630-954-2041

[Signature Page to Amended and Restated Loan and Security Agreement]

Designated Representative as to each Borrower: Federal Signal Corporation
By:
	Name:
	Title:
By:
	Name:
	Title:
1415 West 22nd Street, Suite 1100 Oak Brook, IL 60523
Attn:		General Counsel
Fax No.:		630-954-2138

[Signature Page to Amended and Restated Loan and Security Agreement]

Lender: Banc of America Leasing & Capital, LLC
By:
	Name:
	Title:
Address:		231 S. LaSalle St. 8th Floor Chicago, IL 60604
Fax No.:		312-974-9052

[Signature Page to Amended and Restated Loan and Security Agreement]

Exhibit I

Definitions

     As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

     “Accounting Month” means an accounting month of the Borrowers determined in accordance with its system of accounting periods in use as of the Closing Date, as such system may be modified from time to time with Lender’s prior approval.

     “ACH Receipts” means funds received from an Obligor in respect of automated or other electronic funds transfers.

     “Advance” means each extension of credit pursuant to Section 1.1.

     “Advance Rate” means ninety-five percent (95%).

     “Adverse Claim” means a Lien, security interest, charge or encumbrance, or other right or claim in, of or on any Person’s assets or properties in favor of any other Person; provided, however, that an agreement to sell or exchange the Stock of any Person shall not constitute an Adverse Claim with respect to such Stock if and so long as the sale or exchange of that Stock under such agreement remains subject to the satisfaction of any conditions precedent (other than the passage of time or the receipt of consideration).

     “Affiliate” means, as applied to any Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of Stock, by contract, or otherwise.

     “Applicable Margin” means, with respect to any Loan, the percentage designated by Lender with respect to such Loan and accepted by the applicable Borrower.

     “Authorized Person” means, with respect to any Company Party, any officer or other employee of such Company Party or of the Designated Representative shown on the list of authorized officers set forth on Schedule D, or any updated list provided to Lender by the Borrowers, the Designated Representative or FSS with respect to its authorized officers.

     “Bankruptcy Code” means United States Bankruptcy Code of 1978, as amended, and any successor statute thereto.

     “Board of Directors” means the board of directors (or comparable managers) of any of the Company Parties or any committee thereof duly authorized to act on behalf of the board.

     “Borrowers” has the meaning set forth in the preamble to this Agreement.

Exhibit 1-1

     “Business Day” means any day that is not a Saturday, Sunday, or other day on which national banks are authorized or required to close in Chicago, Illinois, except that, if a determination of a Business Day shall relate to a LIBOR Loan, the term “Business Day” also shall exclude any day on which banks are closed for dealings in Dollar deposits in the London interbank market.

     “Change of Ownership” means, with respect to any of the Borrowers, that FSS ceases to own, free and clear of all Adverse Claims, all of the outstanding shares of Stock of such Borrower.

     “Certificate of Title” means the certificate of title or other document used to register with the applicable state authority ownership of and liens on a Vehicle located in that state.

     “Closing Date” means December 20, 2007.

     “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor law.

     “Collateral” has the meaning set forth in Section 3.1 of this Agreement.

     “Collections” means all cash collections and other cash proceeds received in respect of the Leases, the Receivables related thereto, all cash proceeds of the Related Equipment and other Related Security and including any proceeds of the sale or other disposition of such assets, all proceeds of any insurance policies with respect to such Lease or Related Equipment, all gross Recoveries, all early termination payments and any other full or partial repayments or payoffs, but excluding any amounts that the Person receiving such cash collections and other cash proceeds is required to pay under any sales or other similar surcharge tax imposed by any state, municipality or other taxing authority (other than taxes imposed and calculated upon the income of such receiving Person).

     “Company Parties” means the Borrowers and FSS and “Company Party” means any of the foregoing.

     “Concentration Condition” exists at any time, if as of the last day of any Accounting Month, the aggregate NPV of all Leases in all Lease Pools having the same Obligor is equal to or exceeds ten percent (10%) of the aggregate NPV of all Eligible Leases as of such date.

     “Convert” or “Conversion” means, with respect to any outstanding loan that is a LIBOR Loan, its designation by a Borrower as a Fixed Rate Loan.

     “Custodian” means, Lender or, at any time that Lender elects to have a Person other than Lender hold all or any portion of the originals of the Leases, a custodian named from time to time in the Custodial Agreement.

     “Custodial Agreement” means an agreement in form and substance acceptable to Lender pursuant to which the Custodian agrees, among other things, to hold originals of the Leases.

Ex. I-2

     “Cut-Off Date” means, unless another date is otherwise agreed upon in any instance by Lender and any Borrower, (a) with respect to any Advance, the first calendar day of the month in which such Advance occurs, and (b) with respect to any Substitution, the first calendar day of the month following the date on which such Substitution is permitted pursuant to Section 5.2.

     “Deemed Collections” means the aggregate of all amounts the applicable Borrower shall have been deemed, as provided in the following sentence, to have received as a Collections on the Collateral. If at any time (i) the NPV of a Lease in a Borrower’s Lease Pool is either (A) reduced as a result of any defective or rejected goods or services, any discount or any adjustment or otherwise by a Company Party, in any capacity, (other than cash Collections on account of such Lease) or (B) reduced or canceled as a result of a set-off in respect of any claim by any Person (whether such claim arises out of the same or a related transaction or an unrelated transaction), then the Borrower that is a party to such Lease shall be deemed to have received a Collections on the related Collateral in the amount of such reduction in NPV, and (ii) a Lease in a Borrower’s Lease Pool is determined not to have been an Eligible Lease as of the date of the related Advance for which it was pledged (or the date of Substitution with respect to a Substituted Lease), then the Borrower that is a party to such Lease shall be deemed to have received a Collection in full of the Release Price for such Lease. The amount of Deemed Collections with respect to any Lease or Related Equipment shall be net of any actual Collections received with respect to the event giving rise to Deemed Collections from the related Obligor and remitted to the Lock-Box Account and swept to the Lender’s Account.

     “Default” means an event which, with the passage of time or the giving of notice, or both, would constitute an Event of Default.

     “Defaulted Lease” means any Lease as to which (i) the Obligor thereof has taken any action, or suffered any event to occur, of the type described in Section 9.1(d) (as if references to Company Party therein refer to such Obligor); (ii) an event of abatement or nonappropriation has occurred, (iii) consistent with the Standard of Care, should be written off as uncollectible, (iv) any Company Party or Third-Party Servicer has identified as uncollectible, or (v) any Scheduled Payment, or part thereof, remains unpaid for ninety (90) days or more from the original due date for such payment.

     “Delinquent Lease” means any Lease as to which a Scheduled Payment, or part thereof, remains unpaid for at least thirty-one (31) days from the original due date (other than any Defaulted Lease).

     “Designated Obligor” means an Obligor designated by Lender to the Borrowers in writing as unacceptable to Lender.

     “Designated Representative” has the meaning set forth in Section 1.4(a) of this Agreement.

     “Discount Rate” means, as of any date of determination, a per annum rate equal to (a) with respect to any LIBOR Loan, the LIBOR Interest Rate applicable to such LIBOR Loan as of

Ex. I-3

the date of its Advance plus one percent (1%), and (b) with respect to any Fixed Rate Loan, the Fixed Interest Rate applicable to such Fixed Rate Loan.

     “Dollars” or “$” means United States dollars.

     “Eligible Lease” means any Lease identified on a schedule to a Request for Funding (or, with respect to a Substituted Lease, on a schedule to a Request for Substitution) that meets all of the following requirements:

     (a) such Lease was originated by a Borrower in the ordinary course of its business and in conformance with its historic credit and collection practices;

     (b) the Obligor with respect to such Lease is the user of the Related Equipment under such Lease in connection with the performance of public services and is located in the United States and all such Related Equipment is located in the United States;

     (c) with respect to any Lease other than (i) the Initial Leases and (ii) those Substituted Leases (as defined in the Existing Loan and Security Agreement documented prior to March 24, 2005, and substituted pursuant to the Existing Loan and Security Agreement) prior to the Closing Date, such Lease is in the form of one of the forms attached to this Agreement or otherwise made pursuant to standard legal documentation for which Lender has given its prior written consent;

     (d) such Lease is by its terms an absolute and unconditional obligation of the related Obligor, non-cancelable (other than on account of any non-appropriation provision under such Lease), and does not contain any option for prepayment or early termination by the Obligor unless (i) the enforceable payment required thereunder for prepayment or early termination is, as of any date of determination, equal to or greater than the applicable Borrower’s then net outstanding balance for such Lease, or (ii) such termination arises under a non-appropriation provision;

     (e) such Lease is net to the lessor of any maintenance, taxes, insurance or other expenses and contains provisions requiring the related Obligor to assume all risk of loss or malfunction of the Related Equipment;

     (f) such Lease is a Dollar-denominated Lease;

     (g) as of the applicable Cut-Off Date, as of the date of the Request for Funding or Request for Substitution (as applicable) and as of the date of the Advance or Substitution (as applicable), such Lease is not a Defaulted Lease or a Delinquent Lease;

     (h) the amount, term and frequency of Scheduled Payments due under each Eligible Lease are accurately reflected on the schedule attached to the related Request for Funding for such Lease or Request for Substitution for such Substituted Lease;

Ex. I-4

     (i) neither the applicable Borrower nor FSS has received notice of an Obligor’s intention not to appropriate funds with respect to obligations owing under its Lease, and to such Company Party’s knowledge, the Obligor under such Lease has not failed to appropriate such funds with respect to payments arising during such Obligor’s current or upcoming fiscal year;

     (j) the terms of such Lease have not been amended, waived or modified other than in accordance with the applicable Borrower’s historic credit and collection practices;

     (k) (A) no Scheduled Payments due under such Lease are subject to any right of rescission, set-off, claim, counterclaim or defense, including the defense of usury, (B) giving effect to the terms of such Lease or the exercise by the applicable Borrower or its assignee or the Obligor of any right under such Lease will not render such Lease unenforceable in whole or in part, nor subject such Scheduled Payments to any right of rescission, set-off, claim, counterclaim or defense, and (C) no such right of rescission, set-off, claim, counterclaim or defense, including a defense arising out of a breach of the Obligor’s right to quiet enjoyment of the Related Equipment, has been asserted with respect to such Lease;

     (l) the Related Equipment leased under such Lease existed as of the start date of such Lease, the applicable Borrower has received an executed acceptance certificate from the related Obligor in respect thereof, and to such Borrower’s knowledge, no event resulting in a destruction or loss of all or a material portion of such Related Equipment has occurred;

     (m) such Lease requires that the Obligor maintain the Related Equipment leased thereunder in good repair and working order;

     (n) there is only one original executed counterpart of such Lease or, in the case of a master lease agreement, such lease schedule or supplement, such counterpart constitutes “chattel paper” under Section 9-102(11) of the UCC, and such counterpart (together with a copy of any master lease agreement, if applicable) shall have been marked with a legend as shall be appropriate or desirable to evidence the fact that it is subject to the Lien of Lender under this Agreement, and shall have been delivered to Lender or its designated Custodian, in each case, within thirty (30) days after the date of the Advance with respect thereto;

     (o) there are no Insolvency Proceedings pending or to the applicable Borrower’s or FSS’s knowledge, threatened asserting the insolvency of any Obligor under such Lease, and, to such Borrower’s or FSS’s knowledge, each such Obligor is solvent;

     (p) such Lease was not originated in, nor is it subject to the laws of, any jurisdiction, the laws of which would make unlawful the sale, transfer or assignment of such Lease and the creation of a Lien in favor of Lender in any of the Collateral will not render such Lease unenforceable as to the related Obligor;

Ex. I-5

     (q) such Lease is in full force and effect in accordance with its terms and neither the applicable Borrower nor any other obligated party has suspended or reduced any payments or obligations due or to become due thereunder by reason of a default by the other party to such Lease;

     (r) such Lease is effective to create, and has created, a legal, valid and binding obligation of the related Obligor to pay the Scheduled Payments (subject to nonappropriation and any prepayment provisions stated therein) and perform its other obligations thereunder, and of the applicable Borrower, enforceable in accordance with its terms except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and by applicable sovereign immunity laws;

     (s) the applicable Borrower has good and marketable title to the Lease and the Related Security (other than Related Equipment), free and clear of any Adverse Claim except as created in favor of Lender pursuant to the Transaction Documents;

     (t) the applicable Borrower’s interest in such Lease and Related Security has not been sold, transferred, assigned or pledged by such Borrower to any Person other than Lender and, upon grant to Lender of the Lien provided for in this Agreement, Lender will have a valid and perfected first priority Lien on the Lease and on all Collections with respect thereto free and clear of all Adverse Claims;

     (u) the Vehicles (or other Related Security) that are the subject of the Lease are manufactured, distributed or sold by the applicable Borrower and have been delivered to the Obligor;

     (v) the Obligor with respect to such Lease is not a Designated Obligor; and

     (w) with respect to any Lease other than the Initial Leases, (i) such Lease requires the Obligor thereunder to obtain and maintain property and liability insurance with respect to the Related Equipment under Lease and such insurance is in full force and effect and (ii) the applicable Borrower holds either legal and equitable title to, and ownership of, or a perfected, first priority security interest in, the Related Equipment under such Lease, free and clear of any Adverse Claim (except as created pursuant to any Transaction Document and any Permitted Lien).

     “Event of Default” has the meaning specified in Article IX of this Agreement.

     “Exchange Act” means the Securities Exchange Act of 1934, as in effect from time to time.

     “Excluded Amounts” has the meaning specified in Section 10.2.

Ex. I-6

     “Excluded Scheduled Payments” means (a) all Scheduled Payments under any Lease that has been amended or modified by a Borrower unless such amendment or modification is permitted by this Agreement or the Servicing Agreement or has otherwise been accepted by Lender, (b) all Scheduled Payments in respect of any Defaulted Lease, and (c) all Scheduled Payments that as of the date of determination are due under the terms of a Lease but remain unpaid.

     “Existing Loan and Security Agreement” has the meaning specified in the Preliminary Statements.

     “Finance Charges” means, with respect to a Lease, any late payment charges or similar charges owing by an Obligor pursuant to such Lease or any fees and charges, including all not-sufficient funds fees and extension and modification fees related to such Lease.

     “Fixed Interest Rate” has the meaning set forth in Section 1.3(a).

     “Fixed Rate” means the fixed rate per annum determined by Lender to be the Treasury Rate corresponding to the weighted average life of the Leases designated on the related Request for Funding with respect to the related Advance.

     “Fixed Rate Loan” means a Loan that bears interest by reference to the Fixed Rate.

     “FSS” means Federal Signal Corporation, a Delaware corporation, and its successors and assigns by operation of law.

     “FSS Guaranty” means each Amended and Restated Continuing Guaranty, dated as of the date hereof, executed by FSS with respect to the respective Obligations of the Borrowers, in favor of Lender, in the form of Exhibit VIII hereto, as any of them may be amended or modified and in effect from time to time.

     “GAAP” means accounting principles as in effect from time to time generally accepted in the United States, applied by FSS and its Subsidiaries on a basis consistent with the preparation of the FSS’s consolidated financial statements.

     “Governing Documents” means, with respect to any Person, the certificate or articles of incorporation, by-laws, or other organizational documents of such Person.

     “Governmental Authority” means any federal, state, local, or other governmental or administrative body, instrumentality, department, or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body.

     “Indemnified Amounts” has the meaning set forth in Section 10.1.

     “Indemnified Party” has the meaning set forth in Section 10.1.

Ex. I-7

     “Initial Leases” means with respect to (a) E-One’s Lease Pool, the Leases identified on the schedule to the Request for Funding submitted under the initial Advance made under, and as such terms are defined in, the Existing Loan and Security Agreement, to the extent that any such Lease is outstanding on the Closing Date and (b) with respect to each other Borrower, the Leases identified on the schedule to the Request for Funding with respect to the initial Advance for such Borrower if such Lease was originated and documented prior to the Closing Date.

     “Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

     “Interest Rate” means the interest rate, as determined in Section 1.3(a), that is accruing on a Loan.

     “Lease” means any and all instruments, agreements, invoices or other writings constituting or related to a lease contract designated as Collateral on a Request for Funding or a Request for Substitution and confirmed as approved pursuant to the terms of this Agreement, and all rights with respect thereto, including all guaranties and other agreements or arrangements of whatever character from time to time supporting or securing payment of any lease contract and all rights with respect to any agreements or arrangements with the vendors, dealers or manufacturers of the equipment to the extent specifically related to any lease contract), whether or not any such transaction is at any time determined to create a lease or a security interest with respect to the Related Equipment; provided that, from and after the date, if any, on which such Lease is repurchased, or substituted in accordance with Section 5.2, such Lease shall no longer constitute a “Lease” for purposes of this Agreement.

     “Lease and Terms Approval” has the meaning set forth in Section 1.1(d) of this Agreement.

     “Lease File” means the following documents:

     (i) with respect to each Lease, the one and only executed original counterpart of the Lease that constitutes “chattel paper” for purposes of Sections 9-102(11) of the UCC;

     (ii) with respect to each Lease other than the Initial Leases, evidence of insurance and any other documents evidencing or related to any Insurance Policy, and with respect to each of the Initial Leases, evidence of insurance and any other documents evidencing or related to any Insurance Policy, if any;

     (iii) (a) with respect to each Lease of a Vehicle or other certificate of title goods other than the Initial Leases, originals of the Certificate of Title indicating a Borrower (or a Borrower as agent) as lienholder of record with respect to the related Vehicle at the applicable state department or agency in charge of vehicle titling and other

Ex. I-8

evidence that the applicable Borrower has a perfected security interest in the Related Equipment, and (b) with respect to each of the Initial Leases, to the extent available with respect to any such Lease, originals of the Certificate of Title, if available, or if unavailable, a copy of the manufacturer’s statement of origin (MSO) and such other documents as E-One may have on file in lieu of the original Certificate of Title, indicating that E-One has a perfected security interest in the Related Equipment;

     (iv) with respect to each Lease, the Acceptance Certificate; and

     (v) with respect to each Lease, an opinion of counsel to the Obligor relating to the lease transaction.

     “Lease Pool” means, with respect to each Borrower, the Leases designated as Collateral for Advances made to such Borrower.

     “Lender” means Banc of America Leasing & Capital, LLC, its successors and assignees.

     “Lender Expenses” means all (a) costs or expenses (including taxes, and insurance premiums) required to be paid by any Company Party under any of the Transaction Documents that are paid or incurred by Lender, (b) fees or charges paid or incurred by Lender in connection with Lender’s transactions with the Borrowers, including fees or charges for photocopying, notarization, couriers and messengers, telecommunication, public record searches (including tax lien, litigation, and UCC searches and including searches with the department of motor vehicles), filing, recording, publication, appraisal (including periodic collateral appraisals or business valuations to the extent of the fees and charges (and up to the amount of any limitation) contained in this Agreement), (c) costs and expenses incurred by Lender in the disbursement of funds to any Borrower (by wire transfer or otherwise), (d) charges paid or incurred by Lender resulting from the dishonor of checks, (e) reasonable costs and expenses paid or incurred by Lender to correct any Default or Event of Default hereunder or to enforce any provision of the Transaction Documents, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral or any portion thereof, irrespective of whether a sale is consummated, (f) audit fees and expenses of Lender related to audit examinations of the books or records of any Company Party permitted pursuant to Section 7.1(d) hereof, (g) solely with respect to Recourse Obligations, reasonable costs and expenses of third party claims or any other suit paid or incurred by Lender in enforcing or defending the Transaction Documents or in connection with the transactions contemplated by the Transaction Documents or Lender’s relationship with any Company Party, (h) Lender’s reasonable fees and expenses (including reasonable attorneys’ fees, subject to separately agreed upon limits) incurred in advising, structuring, drafting, reviewing or administering the Transaction Documents, and (i) solely with respect to Recourse Obligations, Lender’s reasonable fees and expenses (including reasonable attorneys’ fees) incurred in waiving, amending, terminating, enforcing (including reasonable attorneys’ fees and expenses incurred in connection with a “workout,” a “restructuring,” or an Insolvency Proceeding concerning any Company Party or in exercising rights or remedies under the Transaction Documents whether or not allowed as a claim in any Insolvency Proceeding), or defending the Transaction Documents, irrespective of whether suit is brought, or in taking any remedial or enforcement action concerning the Collateral.

Ex. I-9

     “Lender’s Account” has the meaning set forth in Section 2.3(b) of this Agreement.

     “Lender’s Account Bank” means the bank selected by Lender that holds the Lender’s Account.

     “LIBO Rate” means the rate per annum equal to the published rate for thirty (30) day reserve adjusted London Interbank Offered Rates (LIBOR) for Dollar deposits as published in the “Money Rates” Section of The Wall Street Journal, National Edition, or in such other publication as Lender may, from time to time hereafter, designate in writing. The LIBO Rate shall be adjusted as of each LIBOR Reset Date to reflect the most recently published rate (regardless of the stated effective date for such rate) and be applied to all Obligations making reference to the LIBO Rate until the subsequent adjustment.

     “LIBOR Interest Period” means the period from the date of the initial LIBOR Loan to the initial LIBOR Reset Date and thereafter, from and including such LIBOR Reset Date to the next succeeding LIBOR Reset Date with respect to any LIBOR Loans outstanding at any time during such period.

     “LIBOR Interest Rate” has the meaning set forth in Section 1.3(a).

     “LIBOR Loan” means any Loan that bears interest by reference to the LIBO Rate.

     “LIBOR Reset Date” means the fifteenth (15^th) day of each calendar month (including such date occurring immediately prior to the Closing Date), or if such date is not a Business Day, the immediately following Business Day.

     “Lien” or “Liens” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), any filing or agreement to file a financing statement as debtor under the UCC or any similar statute, or any subordination arrangement in favor of another Person.

     “Loan” or “Loans” means, as of any date of determination, the outstanding principal balance of an Advance or of all Advances to a Borrower, or to all Borrowers, as the context may require.

     “Loan Account” has the meaning set forth in Section 1.2 of this Agreement.

     “Lock-Box” means each locked postal box with respect to which a Lock-Box Bank has been granted exclusive access for the purpose of retrieving and processing payments made on the Leases and other proceeds of any Collateral.

     “Lock-Box Account” has the meaning set forth in Section 2.2 of this Agreement.

     “Lock-Box Bank” means any bank where a Lock-Box Account is established.

Ex. I-10

     “Lock-Box Control Agreement” means an agreement regarding access to and control over a Lock-Box and Lock-Box Account made in favor of Lender and substantially in the form attached to this Agreement as Exhibit V.

     “Material Adverse Effect” means a material adverse effect on (i) the ability of any Company Party to perform its obligations under this Agreement or any of the other Transaction Documents to which it is a party, (ii) the legality, validity or enforceability of this Agreement or any other Transaction Document, (iii) Lender’s interest in or Liens on (including Lender’s perfection and first priority with respect to) the Receivables generally or in any significant portion of the Collateral or the Collections with respect thereto, or (iv) the collectibility of the Receivables generally or of any material portion of the Receivables.

     “Monthly Servicing Report” means a monthly report furnished to Lender in form and substance acceptable to Lender and Borrowers, which initially shall be in the form attached hereto as Exhibit IX.

     “NPV” means, as of any date of determination with respect to any Lease, the discounted present value of the Scheduled Payments due or to become due under such Lease after the applicable Cut-Off Date (and assuming that all such Scheduled Payments are payable and paid on the 15th day of the month in which such Scheduled Payment is due, regardless of the actual due date), discounted back to such date using, except as provided for purposes of the Over Collateralization, the monthly equivalent of the Discount Rate.

     “Obligations” means all Advances, Loans, debts, principal, interest, premiums, liabilities, obligations, fees, charges, costs, expenses (including Lender Expenses), guaranties, covenants, and duties of any kind and description owing by any of the Borrowers to Lender pursuant to or evidenced by the Transaction Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including any interest, fees, expenses or other amounts that, but for the provisions of the Bankruptcy Code, would have accrued). Any reference in this Agreement or in the Transaction Documents to the Obligations shall include all amendments, changes, extensions, modifications, renewals replacements, substitutions, and supplements, thereto and thereof, as applicable, both prior and subsequent to any proceeding under the Bankruptcy Code or similar insolvency law.

     “Obligor” means any Person obligated to make payments pursuant to a Lease.

     “Original Equipment Cost” means, as of any date of determination, the purchase price of any Related Equipment as invoiced to the Obligor by a dealer.

     “Over Collateralization” means, as of the last Business Day of any Accounting Month, an amount, as calculated by the Lender, equal to the positive amount, if any, by which the NPV of Scheduled Payments other than Excluded Scheduled Payments of all Leases in a Lease Pool exceeds one hundred ten percent (110%) of the outstanding Loans to the applicable Borrower as of such date. For purposes of calculating Over Collateralization, the NPV of such Scheduled Payments shall be discounted back to the first (1st) day of such month using the monthly

Ex. I-11

equivalent of the Discount Rate (as determined by reference to LIBOR Loans) and further assuming that all such Scheduled Payments are payable on the fifteenth (15th) day of the calendar month in which such Scheduled Payment is due, regardless of the actual due date. Such calculation shall be made to reflect the amendments to Leases that a Borrower has documented in such prior Accounting Month as allowed under the Servicing Agreement and reported to Lender by the fourth (4th) day of the month such payment is due.

     “Paid in Full” means, with respect to the amounts in question, payment of all such amounts owing under the Transaction Documents according to the terms thereof, whether or not the same would be or is allowed or disallowed in whole or in part in, or would accrue after the commencement of, any Insolvency Proceeding. No payment of any of the Obligations shall be considered paid or applied hereunder to the extent that, at any time, all or any portion of such payment is declared a Voidable Transfer. An obligation shall be considered Paid in Full if the only obligation remaining is an inchoate obligation with respect to possible indemnity claims for events, circumstances or conditions not yet in existence, notwithstanding the survival of such indemnity.

     “Person” means an individual, partnership, limited liability company, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.

     “Permitted Liens” means Liens attaching to any Related Equipment that constitute (a) the rights and interests of the related Obligor under a Lease in such Related Equipment, (b) any statutory mechanic’s or landlord’s liens arising in the ordinary course of business to secure obligations arising with respect to the Related Equipment to which such liens attach, which obligations are either not yet due and payable or are not delinquent and are discharged in the ordinary course of business, and (c) with respect to Related Equipment that constitutes fire trucks or other emergency response vehicles, Liens that are subordinate to the Lien in favor of Lender held by the Pennsylvania Emergency Management Agency (PEMA) arising pursuant to its Volunteer Fire Company, Ambulance Services and Rescue Squad Assistance program and securing obligations that either are not yet due and payable or are not delinquent and are discharged in the ordinary course of business.

     “Principal Lease Documents” means:

     (i) with respect to any Lease, each original executed lease agreement (including any master lease agreement and any original executed supplement or amendment thereto) pursuant to which such Receivable arises or which evidence such Receivable;

     (ii) with respect to any Lease other than the Initial Leases, the original Certificate of Title indicating a Borrower (or a Borrower as agent) as lienholder of record with respect to the related Vehicle at the applicable state department or agency in charge of vehicle titling; and

Ex. I-12

     (iii) with respect to the Initial Leases, to the extent available with respect to any such Lease, the original Certificate of Title, if available, and if unavailable, a copy of the manufacturer’s statement of origin (MSO) or such other evidence that indicates the Borrowers as lienholder of record with respect to the related Vehicle at the applicable state department or agency in charge of vehicle titling.

     “Rate Compression Amount” has the meaning set forth in Section 2.5(a) of this Agreement.

     “Receivable” means all Scheduled Payments, all Finance Charges and any other indebtedness and obligations owed to a Borrower with respect to a Lease in such Borrower’s Lease Pool or the Related Equipment after the applicable Cut-Off Date, whether constituting an account, chattel paper, instrument or general intangible, arising in connection with the provision of financing by a Borrower to a purchaser or lessee of equipment. Indebtedness and other rights and obligations arising from any one transaction, including, without limitation, indebtedness and other rights and obligations represented by an individual invoice, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other rights and obligations arising from any other transaction; provided further, that any indebtedness, rights or obligations referred to in the immediately preceding sentence shall be a Receivable regardless of whether the account debtor or the Borrowers treat such indebtedness, rights or obligations as a separate payment obligation. A Receivable shall also include any such indebtedness and other obligations acquired by the Borrowers pursuant to any assignment from any entity which initially originated such Lease.

     “Records” means, with respect to any Receivable, all Leases, Lease Files and other documents, books, records and other information (including computer programs, tapes, disks, punch cards, data processing software and related property and rights) relating to such Receivable, any Related Security therefor and the related Obligor.

     “Recourse Obligations” means any and all of the following obligations of a Borrower: (i) all Rate Compression Amounts calculated, with respect to such Borrower, by reference to the Loans made to such Borrower; (ii) all amounts payable in respect of indemnifications under Article X, if any; (iii) all Servicer Transition Costs; (iv) all amounts payable under Sections 1.5 or 2.6; (v) all Deemed Collections on account of Leases in such Borrower’s Lease Pool; and (vi) all Lender Expenses.

     “Recoveries” means, with respect to any Defaulted Lease and for any period of determination occurring after the date on which the related Lease becomes a Defaulted Lease, all cash payments received by any Company Party, Servicer or Subservicer from or on behalf of an Obligor regarding such Defaulted Lease or from liquidation of the Related Equipment, including but not limited to Scheduled Payments and any payment made by any Person that is contractually obligated to a Borrower to make such payment and including payments made under any third party agreement in respect of a Defaulted Lease. As used herein, “net Recoveries” means Recoveries in any period, as reduced by any out-of-pocket expenses (including reasonable attorneys’ fees) incurred (whether or not paid in such period) by or on behalf of a Borrower in

Ex. I-13

enforcing such Lease in such Borrower’s Lease Pool or obtaining such Recovery, and “gross Recoveries” means Recoveries prior to any such reduction.

     “Related Equipment” means with respect to any Lease, the Vehicle and such other goods that are the subject of such Lease.

     “Related Security” means, with respect to any Lease and the related Receivable:

     (i) the Lock-Box Account(s),

     (ii) the Related Equipment or other inventory and goods (including returned or repossessed inventory or goods), if any, the sale, financing or lease of which by the Borrowers gave rise to such Receivable, and all insurance contracts with respect thereto,

     (iii) all other security interests or liens and property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Lease related to such Receivable or otherwise, together with all financing statements and security agreements describing any collateral securing such Receivable,

     (iv) all guaranties, letters of credit, insurance, security deposits and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable whether pursuant to the Lease related to such Receivable or otherwise,

     (v) all service contracts and other contracts and agreements associated with such Receivable,

     (vi) all Principal Lease Documents, the Lease File and Records related to such Receivable,

     (vii) all of the applicable Borrower’s right, title and interest in, to and under the Servicing Agreement and each other Transaction Document executed in favor of or otherwise for the benefit of the applicable Borrower, and

     (viii) all proceeds of any of the foregoing.

     “Release Price” means, with respect to a Lease that is determined to have not been an Eligible Lease as of the date of the related Advance, or is otherwise permitted to be released upon deposit of the “Release Price”, an amount equal to ninety-five percent (95%) of the NPV for such Lease at such time.

     “Request for Approval of Leases and Terms” has the meaning set forth in Section 1.1(d) of this Agreement.

     “Request for Funding” has the meaning set forth in Section 1.1(e) of this Agreement.

Ex. I-14

     “Request for Substitution” means a request in the form of Exhibit III-B hereto submitted to Lender in connection with a Substitution requested pursuant to Section 5.2 of this Agreement.

     “Responsible Officer” means, with respect to any Company Party, its chief financial officer or treasurer or Person acting in a similar capacity and who is authorized to sign on behalf of that Company Party.

     “Scheduled Payments” means all periodic payments that are due and payable or become due under any Lease for the use of the Related Equipment during the term thereof, but excluding any amounts that are due and payable or become due in respect of (i) advance payments, (ii) security deposits, (iii) any fair market value purchase options with respect to the Related Equipment, (iv) maintenance services with respect to the Related Equipment, and (v) property, sales or other similar taxes imposed by any state, municipality or other taxing authority (other than taxes imposed and calculated upon the income of such receiving Person).

     “Servicer” means initially, FSS and after a Termination Event, the Third-Party Servicer then authorized pursuant to Article VIII to service, administer and collect on the designated Collateral.

     “SEC” means the Securities and Exchange Commission.

     “Servicer Transition Costs” means any documented costs and expenses reasonably incurred by Lender or by any Third-Party Servicer (if other than Lender) in connection with a transfer of servicing from the initial Servicer (or Subservicer) to a Third-Party Servicer appointed pursuant to Section 9(a) of the Servicing Agreement, and including any such costs and expenses of retitling any Vehicles.

     “Servicing Agreement” initially means the Amended and Restated Servicing and Title Agency Agreement, substantially in the form of Exhibit VI to this Agreement, executed and delivered by FSS, the Borrowers, and Lender, and after the occurrence of a Termination Event thereunder and the appointment of a Third-Party Servicer, any other written agreement, if any, describing the responsibilities of any successor Servicer or Subservicer.

     “Settlement Date” means the fifteenth (15^th) day of each calendar month, or if such date is not a Business Day, then the next subsequent Business Day.

     “Standard of Care” has the meaning set forth in Section 6 of the Servicing Agreement.

     “Stock” means all shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in a Person, whether voting or nonvoting, including common stock, preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).

Ex. I-15

     “Subservicer” means each of the Borrowers with respect to Leases in its respective Lease Pools or such other Person as is designated by Lender to perform the duties of Subservicer under the Servicing Agreement and in accordance with Section 8.1.

     “Subsidiary” means, as to FSS, any corporation or other entity of which more than fifty percent (50%) of the outstanding Stock having ordinary voting power for the election of the board of directors of such corporation or similar governing body in the case of a non-corporation (irrespective of whether or not, at the time, Stock of any other class or classes of such corporation or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned by FSS or by one or more of its Subsidiaries.

     “Substituted Lease” means a Lease that as of the date of a Request for Substitution and the date of Substitution is an Eligible Lease, which is substituted for a Lease pursuant to Section 5.2.

     “Substitution” means the removal of a Lease from the Lien hereunder and its replacement with a Substituted Lease pursuant to Section 5.2 hereof.

     “Taxes” has the meaning set forth in Section 1.6.

     “Termination Event” has the meaning set forth in the Servicing Agreement.

     “Third-Party Servicer” means any Person, other than a Company Party or their Affiliates, that is appointed as a successor Servicer or Subservicer, including but not limited to Lender.

     “Third-Party Servicer Costs and Fees” means fees and reasonable out-of-pocket costs and expenses payable to any Person pursuant to a Servicing Agreement in connection with the performance of servicing (or subservicing), collection and/or remarketing of the Related Equipment and the Related Security, including the administration of certificates of title related thereto, but excluding any Servicer Transition Costs; provided, however, if a Company Party is the Servicer or Subservicer performing such duties, Third Party Servicer Costs and Fees shall be (a) limited to the reasonable out-of-pocket costs and expenses incurred directly in connection with such collection or enforcement of a Defaulted Lease or with remarketing of the Related Equipment under a Lease and (b) payable solely from Recoveries with respect to that specific Defaulted Lease or that specific Related Equipment and not from any other Collections.

     “Transaction Documents” means, collectively, this Agreement, each Request for Funding, each Request for Substitution (if any), the Servicing Agreement (so long as either FSS or the Borrowers have obligations thereunder), the Lock-Box Control Agreement(s), the Custodial Agreement (if any), the FSS Guaranties, the powers of attorney executed pursuant to Section 1(d) of the Servicing Agreement and all other instruments, documents and agreements executed and delivered in connection herewith or therewith.

     “Treasury Rate” means a per annum rate equal to the bond equivalent yield on actively traded U.S. government securities with the closest applicable maturity as set forth on page

Ex. I-16

“USD” of the Bloomberg Financial Markets Screen (or if not available, any other nationally recognized trading screen reporting on-line intra-day trading in United States government securities) at 11:00 a.m. (New York time) on such date of determination, or in the event no such nationally recognized trading screen is available, the arithmetic mean of the yields for the two columns under the heading “Week Ending” published in the Federal Reserve H.15 Statistical Release under the caption “Treasury Constant Maturities” for the closest applicable maturity.

     “Type” means, with respect to any Loan, either a Fixed Rate Loan or a LIBOR Loan, as the case may be.

     “UCC” means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction.

     “Vehicle” means the fire truck, emergency response vehicle or other motorized municipal vehicle that is the subject of a Lease.

     “Voidable Transfer” has the meaning set forth in Section 12.3.

Ex. I-17

Exhibit II
Form of Request For Approval of Leases and Terms

                    , 20___

To:	Banc of America Leasing & Capital, LLC
	231 S. LaSalle Street, 8th Floor
	Chicago, IL 60604
From:	Federal Signal Corporation, as the Designated Representative
	1415 West 22nd Street, 16th Floor
	Oak Brook, IL 60523
	[Use applicable Borrower, delete others]
	E-One, Inc.
	1415 West 22nd Street, Suite 1100
	Oak Brook, IL 60523
	Elgin Sweeper Company
	1415 West 22nd Street, Suite 1100
	Oak Brook, IL 60523
	Vactor Manufacturing Inc.
	1415 West 22nd Street, Suite 1100
	Oak Brook, IL 60523
	E-One New York, Inc.
	1415 West 22nd Street, Suite 1100
	Oak Brook, IL 60523

     Re: Request for Approval of Leases and Terms

     We refer to that Amended and Restated Loan and Security Agreement dated as of December 20, 2007 (the “Loan Agreement”) among E-One, Inc, a Delaware corporation (“E-One”), Elgin Sweeper Company, a Delaware corporation (“Elgin”), Vactor Manufacturing Inc., an Illinois corporation (“Vactor”), E-One New York, Inc. (formerly known as Saulsbury Fire Rescue, Inc.), a New York corporation (“EONY”; E-One, Elgin, Vactor, and EONY shall be collectively referred to herein as the “Borrowers” and each individually as a “Borrower”), and you. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Loan Agreement.

     Pursuant to Section 1.1(d) of the Loan Agreement, we hereby request your approval of the Leases described on Annex A hereto (each a “Proposed Lease”). The proposed Cut-Off Date applicable to all Proposed Leases described on Annex A is                     , 20___. Except as

Ex. II-1

described on Annex B hereto, each of the Proposed Leases has been documented without deviation from the applicable Borrower’s standard lease forms attached to the Loan Agreement as Exhibit VII.

     We request your response in the form of the Lease and Terms Approval attached hereto as Annex C.

     The undersigned hereby certifies that [she/he] is an Authorized Person of the undersigned Borrower or of the Designated Representative under the Loan Agreement and submits this Request for Approval of Leases and Terms on behalf of that Borrower.

[Signature Page Follows]

Ex. II-2

Borrower: [Use applicable Borrower; delete others] [E-One, Inc.
By:
	Name:
	Title:	]
[Elgin Sweeper Company
By:
	Name:
	Title:	]
[Vactor Manufacturing Inc.
By:
	Name:
	Title:	]
[E-One New York, Inc.
By:
	Name:
	Title:	]
[or
Designated Representative on behalf of [insert applicable Borrower]: Federal Signal Corporation
By:
	Name:
	Title:	]

Ex. II-3

Annex A
to Request for Approval of Leases and Terms

Description of Leases

[See attached Chart.]

Ex. II-4

								Scheduled	Number and	Aggregate Gross
				Description	Original			Payments	Frequency of	Balance of all
Lease ID		Obligor Name and		of Related	Equipment	Start	Maturity	(Dollar Amount of	Remaining Scheduled	Remaining Scheduled
Number	Borrower	Address	Vehicle VIN	Equipment	Cost	Date	Date	each)	Payments	Payments

Ex. II-5

Annex B
To Request for Approval of Leases and Terms

Lease ID No. Obligor Deviation

Ex. II-6

Annex C
to Request for Approval of Leases and Terms

Form of Lease and Terms Approval

                    , 20___

To:	Federal Signal Corporation, as the Designated Representative
	1415 West 22nd Street, 16th Floor
	Oak Brook, IL 60523
	[Use applicable Borrower, delete others]
	E-One, Inc.
	1415 West 22nd Street, Suite 1100
	Oak Brook, IL 60523
	Elgin Sweeper Company
	1415 West 22nd Street, Suite 1100
	Oak Brook, IL 60523
	Vactor Manufacturing Inc.
	1415 West 22nd Street, Suite 1100
	Oak Brook, IL 60523
	E-One New York, Inc.
	1415 West 22nd Street, Suite 1100
	Oak Brook, IL 60523
From:	Banc of America Leasing & Capital, LLC
	231 S. LaSalle Street, 8th Floor
	Chicago, IL 60604

     Re: Approval of Leases and Terms

Ladies and Gentlemen:

     We refer to that Amended and Restated Loan and Security Agreement dated as of December 20, 2007 (the “Loan Agreement”) among E-One, Inc, a Delaware corporation (“E-One”), Elgin Sweeper Company, a Delaware corporation (“Elgin”), Vactor Manufacturing Inc., an Illinois corporation (“Vactor”), E-One New York, Inc. (formerly known as Saulsbury Fire Rescue, Inc.), a New York corporation (“EONY”; E-One, Elgin, Vactor, and EONY shall be collectively referred to herein as the “Borrowers” and each individually as a “Borrower”), and us. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Loan Agreement.

Ex. II-7

     Pursuant to Section 1.1(d) of the Loan Agreement, and in connection with the Request for Approval of Leases and Terms dated as of                     , 20___from you to us, we hereby notify you of our approval of the Leases set forth on Schedule A hereto.

     The aggregate estimated Advance is [                                        ].

     The proposed Applicable Margin with respect to the requested Advance is ___%.

     The expected Discount Rate with respect to the requested Advance, if made as a LIBOR Loan is ___%, and if made as a Fixed Rate Loan is ___%.

     The Requested Advance would be made for the account of [ applicable Borrower ].

Banc of America Leasing & Capital, LLC
By:
	Name:
	Title:

Ex. II-8

Schedule A
to Lease and Terms Approval

				Aggregate of
Lease ID			Cut-Off	Remaining Scheduled	Estimated	Estimated
Number	Obligor	Borrower	Date	Payments	NPV	Advance Amount

Ex. II-9

Exhibit III-A
Form of Request for Funding of Advance or Conversion

                    , 20___

To:	Banc of America Leasing & Capital, LLC
	231 S. LaSalle Street, 8th Floor
	Chicago, IL 60604
From:	Federal Signal Corporation, as the Designated Representative
	1415 West 22nd Street, 16th Floor
	Oak Brook, IL 60523
	[Use applicable Borrower, delete others]
	E-One, Inc.
	1415 West 22nd Street, Suite 1100
	Oak Brook, IL 60523
	Elgin Sweeper Company
	1415 West 22nd Street, Suite 1100
	Oak Brook, IL 60523
	Vactor Manufacturing Inc.
	1415 West 22nd Street, Suite 1100
	Oak Brook, IL 60523
	E-One New York, Inc.
	1415 West 22nd Street, Suite 1100
	Oak Brook, IL 60523

Re: Request for Funding of Advance or Conversion

Ladies and Gentlemen:

     We refer to that Amended and Restated Loan and Security Agreement dated as of December 20, 2007 (the “Loan Agreement”) among E-One, Inc, a Delaware corporation (“E-One”), Elgin Sweeper Company, a Delaware corporation (“Elgin”), Vactor Manufacturing Inc., an Illinois corporation (“Vactor”), E-One New York, Inc. (formerly known as Saulsbury Fire Rescue, Inc.), a New York corporation (“EONY”; E-One, Elgin, Vactor, and EONY shall be collectively referred to herein as the “Borrowers” and each individually as a “Borrower”), and you. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Loan Agreement.

Ex. III-A-1

     [For an Advance: Pursuant to Section 1.1(e) of the Loan Agreement, we hereby request an Advance under the Loan Agreement as follows:

1.	The proposed date of the Advance (the “Advance Date”) is                     , 20___, which is a Business Day.
2.	The estimated principal amount of the Advance is $                    .
3.	The Advance is requested for the account of [insert applicable Borrower(s)]. Such Advance has been authorized by all necessary corporate action and will not cause the requesting Borrower to exceed the maximum principal amount that may be outstanding under the Loan Agreement pursuant to such Borrower’s corporate approvals.
4.	Each Lease to be included in the requesting Borrower’s Lease Pool and as Collateral for the Obligations of the requesting Borrower (but without limiting any prior designation of Leases as Collateral) is listed on the schedule set forth as Annex A hereto. Set forth opposite the identification number of each Lease is the estimated NPV of such Lease provided to us by you pursuant to the related Lease and Terms Approval, calculated as of the Advance Date.
5.	We request that such Advance be a [LIBOR Loan/Fixed Rate Loan].
6.	We confirm that [(a) If the Advance is to be a Fixed Rate Loan, the weighted average life of the Leases listed on Annex A, as of the date of the Advance is [                    ], and (b)] the Applicable Margin with respect to the requested Advance shall be ___%.
7.	Each Lease listed on Annex A hereto is as of the date hereof and will be as of the proposed Advance Date an Eligible Lease.]

     [For a Conversion: Pursuant to Section 1.1(e) of the Loan Agreement, we hereby instruct you to Convert the following LIBOR Loan(s) outstanding under the Loan Agreement to Fixed Rate Loan(s) as follows:

1.	The proposed date of the Conversion (the “Conversion Date”) is                     , 20___, which is a Business Day.
2.	The aggregate principal amount of the LIBOR Loan(s) to be Converted is $                    .
3.	The Conversion is for the account of [ applicable Borrower ].
4.	The weighted average life of the Leases relating to the LIBOR Loan(s) to be Converted, as of the date of the Conversion, is [                    ].

Ex. III-A-2

5.	We confirm that the Applicable Margin with respect to the Converted Loan(s) will be ___%.
6.	We confirm that all of the Collateral for the Loan(s) will continue to be security for the Converted Loan(s).]

[Signature page follows.]

Ex. III-A-3

     The undersigned hereby certifies that [she/he] is an Authorized Person of the undersigned Borrower or of the Designated Representative under the Loan Agreement and submits this Request for Funding on behalf of that Borrower.

Borrowers: [E-One, Inc.
By:
	Name:
	Title:	]
[Elgin Sweeper Company
By:
	Name:
	Title:	]
[Vactor Manufacturing Inc.
By:
	Name:
	Title:	]
[E-One New York, Inc.
By:
	Name:
	Title:	]
[or
Designated Representative on behalf of [insert applicable Borrower]: Federal Signal Corporation
By:
	Name:
	Title:	]

Ex. III-A-4

Annex A
to Request for Funding of Advance

Schedule of Leases Included as Collateral

Lease Identification			NPV As Of Advance
Number	Obligor	Borrower	Date

Ex. III-A-5

Exhibit III-B
Form of Request For Substitution

                    , 20___

To:	Banc of America Leasing & Capital, LLC
	231 S. LaSalle Street, 8th Floor
	Chicago, IL 60604
From:	Federal Signal Corporation, as the Designated Representative
	1415 West 22nd Street, 16th Floor
	Oak Brook, IL 60523
	[Use applicable Borrower, delete others]
	E-One, Inc.
	1415 West 22nd Street, Suite 1100
	Oak Brook, IL 60523
	Elgin Sweeper Company
	1415 West 22nd Street, Suite 1100
	Oak Brook, IL 60523
	Vactor Manufacturing Inc.
	1415 West 22nd Street, Suite 1100
	Oak Brook, IL 60523
	E-One New York, Inc.
	1415 West 22nd Street, Suite 1100
	Oak Brook, IL 60523
Re:	Request for Funding of Advance

Ladies and Gentlemen:

     We refer to that Amended and Restated Loan and Security Agreement dated as of December 20, 2007 (the “Loan Agreement”) among E-One, Inc, a Delaware corporation (“E-One”), Elgin Sweeper Company, a Delaware corporation (“Elgin”), Vactor Manufacturing Inc., an Illinois corporation (“Vactor”), E-One New York, Inc. (formerly known as Saulsbury Fire Rescue, Inc.), a New York corporation (“EONY”; E-One, Elgin, Vactor, and EONY shall be collectively referred to herein as the "Borrowers” and each individually as a “Borrower”), and you. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Loan Agreement.

Ex. III-B-1

     The undersigned Borrower or the Designated Representative has previously submitted to you its Request for Approval of Leases and Terms with respect to each of the Leases to be removed as Collateral as set forth on Annex A attached hereto (each a “Removed Lease”) and each of the Leases to be included as Collateral as set forth on Annex B attached hereto (each a “Substituted Lease”). The undersigned Borrower has received within the previous thirty (30) days’ Lender’s Approval of Leases and Terms, a copy of which is attached hereto, with respect to the proposed Substitution and each Substituted Lease.

     Pursuant to Section 5.2(c) of the Loan Agreement, the undersigned hereby irrevocably requests the removal from the Collateral of each Removed Lease and addition to the Collateral of each of the Substituted Leases. The effective date for the proposed Substitution is                     , 20___(the "Substitution Date”), which date is a Cut-Off Date.

     The wire instructions for the Borrower is as follows:

Bank:

Bank Address:

ABA #:

Account Name:

Account No.:

Reference:

     The undersigned hereby certifies that (a) the information set forth in the Annexes hereto is true and correct, (b) no material adverse change has occurred since the date of the Approval of Leases and Terms attached hereto with respect to the undersigned Borrower or FSS or with respect to any of the Obligors under any Substituted Lease, (c) all of the conditions set forth in Sections 5.2(b) and 6.2 of the Loan Agreement for the Substitution requested hereby have been and on the Substitution Date will remain fully satisfied, (d) the Borrower executing and delivering this request, and no other Borrowers have an interest in the Removed Leases and in the Substituted Leases, and (e) [she/he] is an Authorized Person of the undersigned Borrower or of the Designated Representative under the Loan Agreement entitled to request this Substitution on such Borrower’s behalf.

Borrower: [Use applicable Borrower and delete others] [E-One, Inc.
By:
	Name:
	Title:

Ex. III-B-2

[Elgin Sweeper Company
By:
	Name:
	Title:
[Vactor Manufacturing Inc.
By:
	Name:
	Title:
[E-One New York, Inc.
By:
	Name:
	Title:

[or Designated Representative on behalf of [insert applicable Borrower]: Federal Signal Corporation
By:
	Name:
	Title:

Ex. III-B-3

Annex A
to Request for Substitution

Schedule of Leases To Be Removed From Collateral By Substitution

		Lease	Estimated NPV
		Identification	As Of Substitution
Lessee	Borrower	Number	Date

Ex. III-B-4

Annex B
to Request for Substitution

Schedule of Leases To Be Included As Collateral By Substitution

		Lease	Estimated NPV
		Identification	As Of Substitution
Lessee	Borrower	Number	Date

Ex. III-B-5

Exhibit IV

[Intentionally Omitted]

Ex. IV

Exhibit V
Form of Lock-Box Control Agreement

[See Attached]

Ex. V

Exhibit VI
Form of Amended and Restated Servicing and Title Agency Agreement

[See Attached]

Ex. VI

Exhibit VII
Lease Form(s)

[See Attached]

[Note that EONY uses the same lease forms as E-One.]

Ex. VII

Exhibit VIII
Form of Amended and Restated FSS Guaranty

[See Attached]

Ex. VIII

Exhibit IX
Form of Monthly Servicing Report

[See Attached]

Ex. IX

Schedule A-1
Documents To Be Delivered To The Lender
On Or Prior To The Closing Date

Documents to Be Delivered in Connection with this Agreement:

1.	Fully completed and executed copies of each of the Transaction Documents.
2.	Copy of the Resolutions of the Board of Directors of each Company Party certified by its Secretary authorizing such Person’s execution, delivery and performance of the Transaction Documents and any other documents to be delivered by it thereunder.
3.	Articles or Certificate of Incorporation of each Company Party certified by the Secretary of State of its jurisdiction of incorporation on or within thirty (30) days prior to the Closing Date.
4.	Good Standing Certificate for each Company Party issued by the Secretaries of State of its state of incorporation and each jurisdiction where it has material operations, each of which is listed below:

(a)	E-One: Delaware, Illinois, Florida, California, Louisiana
(b)	Elgin Sweeper Company: Illinois, Delaware, Louisiana, Alabama
(c)	Vactor Manufacturing Inc.: Illinois
(d)	E-One New York, Inc.: New York
(e)	FSS: Delaware, Illinois

5.	A certificate of the Secretary of each Company Party certifying (i) the names and signatures of the officers authorized on its behalf to execute each of the Transaction Documents and any other documents to be delivered by it thereunder and (ii) a copy of such Person’s By-Laws.
6.	Pre-filing state and federal tax lien, judgment lien and UCC lien searches against each Company Party from the following jurisdictions:

(a)	E-One: Delaware
(b)	Elgin Sweeper Company: Delaware
(c)	Vactor Manufacturing Inc.: Illinois
(d)	E-One New York, Inc.: New York

Sched. A-1-1

(e) FSS: Delaware, Illinois

7.	Authorized UCC-1 financing statements in proper form for filing under the UCC on or before the date of the initial Advance in all jurisdictions as may be necessary or, in the opinion of Lender, desirable, under the UCC of all appropriate jurisdictions or any comparable law in order to perfect the security interests in the Collateral in favor of Lender, as contemplated by the Agreement.
8.	Authorized UCC-3 termination statements, if any, in proper form for filing necessary to release all security interests and other rights of any Person in the Collateral granted by any Borrower.
9.	Favorable opinion(s) of legal counsel for the Company Parties, reasonably acceptable to Lender which addresses the following matters and such other matters as Lender may reasonably request:

• Each Company Party is a corporation duly incorporated, validly existing, and in good standing under the laws of its state of incorporation.

• Each Company Party has all requisite authority to conduct its business in each jurisdiction where failure to be so qualified would have a material adverse effect on such Person’s business.

• The execution and delivery by each Company Party of this Agreement and by each Company Party of each other Transaction Document to which it is a party and its performance of its obligations thereunder have been duly authorized by all necessary corporate or partnership action and proceedings on the part of such Person and will not:

(a)	require any action by or in respect of, or filing with, any governmental body, agency or official (other than the filing of UCC financing statements);
(b)	contravene, or constitute a default under, any provision of applicable law or regulation or of its articles or certificate of incorporation or bylaws, partnership agreement, or of any material agreement, judgment, injunction, order, decree or other instrument binding upon such Person; or
(c)	result in the creation or imposition of any Adverse Claim on assets of such Person or any of its Subsidiaries (except as contemplated by this Agreement).

• This Agreement and each other Transaction Document to which any Company Party is a party has been duly executed and delivered by such Person and constitutes the legal, valid, and binding obligation of such Person, enforceable in accordance with its terms, except to the extent the enforcement thereof may be

Sched. A-1-2

	limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and subject also to the availability of equitable remedies if equitable remedies are sought.
•	The provisions of the Agreement are effective to create a valid security interest in favor of Lender in all Receivables and all other Collateral, and upon the filing of financing statements, Lender shall acquire a perfected security interest in such Receivables and other Collateral.
•	To the best of the opinion giver’s knowledge, there is no action, suit or other proceeding against any Company Party that would materially adversely affect the business or financial condition of such Person or that would materially adversely affect the ability of such Person to perform its obligations under any Transaction Document to which it is a party.

10. Executed copies of (i) all consents from and authorizations by any Persons and (ii) all waivers and amendments to existing credit facilities or other material agreements that are necessary in connection with entering into the Transaction Documents.

Sched. A-1-3

Schedule A-2
Documents To Be Delivered To The Lender
Within Sixty (60) Days After The Closing Date

The following documents shall be delivered to Lender by not later than February 18, 2008:

1. With respect to the Warrant ID #E-008027265-WOO2-5 (docket amount $2,128.97) (the “Warrant") for outstanding taxes (the “Outstanding Taxes") due in the State of New York, evidence satisfactory to Lender that EONY either (a) has paid the Outstanding Taxes and the Warrant has been satisfied or (b) is contesting the Outstanding Taxes in good faith by appropriate proceedings which prevent foreclosure or other realization upon any of the Collateral and preclude interference with the operation of EONY’s business in the ordinary course, and EONY has established adequate reserves therefore.

Lender and the Borrowers acknowledge and agree that, so long as the foregoing are timely delivered to Lender, any representations, warranties or covenants in this Agreement or any other Transaction Document that would be breached as a consequence of the Warrant or the Outstanding Taxes shall not constitute a Default or Event of Default.

Sched. A-2-1

Schedule B
Legal Name; Jurisdiction of Organization;
Places of Business of the Company Parties;
Locations of Records;
Federal Employer Identification Number(s)

Legal Name and Jurisdiction of Organization:

1.	Federal Signal Corporation, a Delaware corporation
2.	E-One, Inc., a Delaware corporation
3.	Elgin Sweeper Corporation, a Delaware corporation
4.	Vactor Manufacturing Inc., an Illinois corporation
5.	E-One New York, Inc., a New York corporation

Places of Business:

1.	Federal Signal Corporation 1415 West 22nd Street, Suite 1100 Oak Brook, IL 60523
	2645 Federal Signal Drive University Park, IL 60466
2.	E-One, Inc. 1601 SW 37th Avenue Ocala, FL 34474
3.	Elgin Sweeper Company 1300 W. Bartlett Road Elgin, IL 60120
4.	Vactor Manufacturing Inc. 1621 S. Illinois Street Streator, IL 61364
5.	E-One New York, Inc. 1601 SW 37th Avenue Ocala, FL 34474

Sched. B-1

Locations of Records:

1.	Federal Signal Corporation 1415 West 22nd Street, Suite 1100 Oak Brook, IL 60523
2.	E-One, Inc. 1415 West 22nd Street, Suite 1100 Oak Brook, IL 60523
3.	Elgin Sweeper Company 1415 West 22nd Street, Suite 1100 Oak Brook, IL 60523
4.	Vactor Manufacturing Inc. 1415 West 22nd Street, Suite 1100 Oak Brook, IL 60523
5.	E-One New York, Inc. 1415 West 22nd Street, Suite 1100 Oak Brook, IL 60523

Federal Employer Identification Numbers:

1.	Federal Signal Corporation 36-1063330
2.	E-One, Inc. 59-1515283
3.	Elgin Sweeper Company 36-2351764
4.	Vactor Manufacturing Inc. 36-3961939
5.	E-One New York, Inc. 16-0990705

Sched. B-2

Other Names

1.	Federal Signal Corporation — None.
2.	E-One, Inc. — None.
3.	Elgin Sweeper Company — None.
4.	Vactor Manufacturing Inc. — None.
5.	E-One New York, Inc. — Saulsbury Fire Rescue, Inc., a New York corporation (name changed to EONY 7/10/2003)

Sched. B-3

Schedule C
Information Re: Lock-Box Account

     Lock-Box Address; Lock-Box Account; Lock-Box Bank

     The Lock-Box address: Bank of America Lockbox Services, 13684 Collections Center Drive, Chicago, IL 60693, lock-box no. 13684, all proceeds of which are deposited into the Lock-Box Account in Lender’s name at Bank of America, N.A., bearing Account No. 2872457012, ABA No. 071000039.

Sched. C-1

Schedule D
Authorized Persons and Designated Representative

E-One, Inc.

1.	Treasurer
2.	Director — Treasury Operations

Elgin Sweeper Company

1.	Treasurer
2.	Director — Treasury Operations

Vactor Manufacturing Inc.

1.	Treasurer
2.	Director — Treasury Operations

E-One New York, Inc.

1.	Treasurer
2.	Director — Treasury Operations

Federal Signal Corporation:

1.	Chief Financial Officer
2.	Vice President — Taxes
3.	Treasurer
4.	Director — Treasury Operations

Designated Representative:

Sched. D-1

Federal Signal Corporation:

1.	Chief Financial Officer
2.	Vice President — Taxes
3.	Treasurer
4.	Director — Treasury Operations

Sched. D-2

EX-10.V

Exhibit 10V

RELEASE AND SEVERANCE AGREEMENT

This Release and Severance Agreement (the “Agreement”) will confirm the understanding of Federal Signal Corporation and Robert D. Welding (with his heirs, beneficiaries, executors, administrators, attorneys, successors and assigns, collectively referred to herein as “Employee”) in connection with Employee’s retirement from employment and resignation from all directorships and other positions with Federal Signal Corporation and any of its subsidiaries, benefit plans or trusts associated with such benefit plans (collectively referred to herein as the “Company”). The Company and Employee have reached agreement upon the following arrangements.

The effective date of Employee’s retirement from employment with the Company will be January 1, 2008 (the “Retirement Date”). As of the close of business on the Retirement Date, Employee retired from and ceased his employment with the Company. In addition, as of the close of business on December 11, 2007, Employee resigned from all of his officer, director or other positions (except as an employee) with the Company. The Company agrees to treat such retirement as a termination by the Company without “Cause” for purposes of the payment of cash severance benefits (the “Severance Benefits”) under the Company’s Executive General Severance Plan dated November 2006 (the “Severance Plan”).

As a termination by the Company without “Cause” under the Severance Plan, the Company agrees to pay Employee the following Severance Benefits pursuant to such plan: (1) the sum of $1,270,395, which is an amount equal to the sum of (i) the Employee’s current Base Salary for 2008 (i.e., $686,700), and (ii) the Employee’s target annual bonus for 2008 (i.e., 85% of Base Salary, or $583,695); and (2) the sum of $1,599, which is an amount equal to Employee’s unpaid prorated target annual bonus for 2008, prorated by computing a fraction, the numerator of which is the number of days during 2008 through the Retirement Date that Employee was employed by the Company and the denominator of which is 365; in each case, less any applicable taxes including federal, state or local employment withholding taxes that are payable in connection with this amount. In accordance with IRS Code provision 409A final regulations, this amount will be paid to Employee as follows: (y) a one-time initial payment of $636,000 (less applicable withholding taxes), payable on July 2, 2008, and (z) six monthly payments of $106,000 (less applicable withholding taxes) each on the Company’s last regular payroll date of each month commencing in July 2008 and continuing through December 2008.

Employee understands that as a condition of receiving these Severance Benefits under the Severance Plan, Employee is required to sign the general waiver and release in the form included in this Agreement. No Severance Benefits will be paid to Employee until the release contained herein becomes irrevocable in accordance with its terms. Employee further understands that any accrued but unused vacation pay or other earned but unpaid wages due to Employee will be paid separately with appropriate withholding taxes withheld and the receipt of such vacation pay or wages is in no way contingent upon Employee signing this Agreement. Nothing herein shall change or have an effect on any wages, pension, retirement or other employee benefits Employee may be entitled to under any Company retirement or benefit program. Any monies owed the Company by Employee may be deducted from the monies and the Severance Benefits, in accordance with applicable law. The Severance Benefits shall not be considered or counted as “compensation” for purposes of any of the Company’s welfare or pension benefit plans which provide benefits based, in any part, on compensation

As further Severance Benefits, the Company also agrees to continue any applicable welfare benefits of medical insurance, dental insurance and group term life insurance that Employee receives for 18 months following the Retirement Date, at the same premium cost and the same coverage level as were in effect for Employee as of the Retirement Date, pursuant to the terms of the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA). Employee must complete all necessary paperwork within the prescribed time period in order to receive this benefit. Employee shall make monthly COBRA premium

payments in advance and shall send them to the Federal Signal Corporation office in Oak Brook, Illinois. If Employee fails to make such COBRA payments, Employee’s COBRA coverage will be cancelled. However, during the eighteen (18) months the Company continues the welfare benefits, in the event the premium cost and/or level of coverage shall change for all employees of the Company, the cost and/or coverage level, likewise, shall change in a corresponding manner for Employee. In addition, these welfare benefits shall be discontinued prior to the end of the period described above if Employee becomes covered under another group health plan, Employee becomes entitled to Medicare benefits (under Part A, Part B, or both), or the Company ceases to provide any group health plan for its employees. Continuation may also be terminated for any reason that the terms of the plan providing such coverage would terminate coverage of a participant or an eligible dependent.

The Company makes this Agreement to avoid the cost of defending any possible lawsuit. Employee acknowledges that by making this Agreement the Company does not admit that it has done anything wrong. Because this Agreement contains a release of claims under the Age Discrimination in Employment Act (ADEA), Employee understands that he has a period of twenty-one (21) days to review and consider this Agreement before signing it. He may use as much of this 21-day period as he wishes in making his decision. Employee further acknowledges that he may revoke the signed Agreement within seven (7) days after its signing. Any such revocation must be in writing and received by the Company’s General Counsel in the legal department at the principal offices of Federal Signal Corporation in Oak Brook, Illinois within the seven (7) day period. Payment of the Severance Benefits described above will only begin after this Agreement becomes binding which takes place when the revocation period runs out seven days (7) after the date of Employee’s signature.

Employee is strongly encouraged to consult with an attorney before signing this Agreement; however, whether he does so or not is his decision. Employee acknowledges that he has been advised that he should be represented by an attorney throughout the negotiation of the terms of this Agreement.

     (1) General Release. Employee hereby waives, releases and forever discharges the Company and its subsidiaries, divisions and affiliates, whether direct or indirect, its and their joint ventures and joint venturers (including its and their respective directors, officers, employees, shareholders, partners and agents, past, present and future), and each of its and their respective successors and assigns (hereinafter collectively referred to as “Releasees”), from any and all known or unknown actions, causes of action, claims or liabilities of any kind which have been or could be asserted against the Releasees arising out of or related to Employee’s employment with and/or retirement from his employment with the Company and/or any of the other Releasees and/or any other occurrence up to and including the date of this Agreement, including but not limited to:

(a)

claims, actions, causes of action or liabilities arising under Title VII of the Civil Rights Act, as amended, the Civil Rights Act of 1871, the Civil Rights Act of 1991, the ADEA, the COBRA, the Employee Retirement Income Security Act, as amended, the Rehabilitation Act, as amended, the Americans with Disabilities Act, the Family and Medical Leave Act (to the extent permitted by law), the Vietnam Era Veterans Readjustment Assistance Act, the Sarbanes-Oxley Act of 2002 and/or any other federal, state, municipal or local employment discrimination statutes (including, but not limited to, claims based on age, sex, attainment of benefit plan rights, race, religion, national origin, marital status, sexual orientation, ancestry, harassment, parental status, handicap, disability, retaliation and veteran status); and/or

(b)

claims, actions, causes of action or liabilities arising under any other federal, state, municipal or local statute, law, ordinance or regulation; and/or

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(c) any other claim whatsoever including, but not limited to, claims for severance pay under any voluntary or involuntary severance/separation plan, policy or program maintained by the Releasees, claims for attorney’s fees, claims based upon breach of contract, wrongful termination, defamation, intentional infliction of emotional distress, tort, personal injury, invasion of privacy, violation of public policy, negligence and/or any other common law, statutory or other claim whatsoever arising out of or relating to Employee’s employment with and/or retirement from employment with the Company and/or any of the other Releasees;

but excluding claims which Employee may make under state workers’ compensation or unemployment laws, and/or any claims which by law Employee cannot waive. Specifically excluded from this General Release is Employee’s right to file a charge with an administrative agency or participate in any agency investigation. Employee is, however, waiving his right to recover money in connection with such a charge or investigation. Employee is also waiving his right to recover money in connection with a charge filed by any other individual or by the Equal Employment Opportunity Commission or any other federal or state agency.

     (2) Covenant Not To Sue. In addition to and apart from the General Release contained in paragraph (1) above, Employee also agrees never to sue any of the Releasees or become a party to a lawsuit on the basis of any claim of any type whatsoever arising on or prior to the date of this Agreement out of or related to Employee’s employment with and/or retirement from employment with the Company and/or any of the other Releasees, other than a lawsuit to challenge this Agreement under the ADEA or for indemnification as set forth in paragraph 8 of this Agreement.

     (3) Further Release And Acknowledgment. To the extent permitted by law, Employee further waives his right to any monetary recovery should any federal, state or local administrative agency pursue any claims on Employee’s behalf arising out of or related to his employment with and/or retirement from employment with the Company and/or any of the other Releasees. Employee also acknowledges that he has not suffered any on-the-job injury for which he has not already filed a claim. Employee acknowledges and agrees that the Company’s provision of the Severance Benefits to Employee and his signing of the Agreement does not in any way indicate that Employee has any viable claims against the Company or that the Company has or admits any liability to Employee whatsoever.

     (4) Reemployment/Consulting Arrangement.. To the extent permitted by law, Employee further waives, releases and discharges Releasees from any reinstatement rights which Employee has or could have. Employee further acknowledges and agrees that he will not seek employment with the Company and/or any other of the Releasees following the Retirement Date.

     (5) Non-Disparagement, Confidentiality, Cooperation, Non-Competition and Non-Solicitation. Employee agrees that he shall not at any time or in any way disparage, or take any actions or make any statements that reflect negatively on, the Company and/or any of the other Releasees to any person, corporation, entity or other third party whatsoever. Also, the Company and/or any of the other Releasees promise, individually and in the aggregate, that they shall not at any time disparage, or take any actions or make any statements that reflect negatively on, Employee to any person, corporation, entity or other third party whatsoever.

     Employee agrees from and after the Retirement Date to keep strictly confidential the existence and terms of this Agreement, and Employee further agree that he will not disclose them to any person or entity, other than to his immediate family, his attorney and his financial advisor, or except as may be required by law.

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     Employee acknowledges that after his Retirement Date he shall not represent himself to be an employee of the Company. After December 11, 2007, he shall not represent himself to be an officer or director of the Company nor take any action which may bind the Company with regard to any customer, supplier, vendor or any other party with whom Employee has had contact while performing his duties as an employee, officer or director of the Company.

     Employee further agrees that for a period of one (1) year following the Retirement Date, Employee will not, without the prior written consent of the Company, engage directly or indirectly (as an employee, consultant, independent contractor, officer, director or in any other capacity) in any business or enterprise which is in competition with the Company or its successors or assigns. A business or enterprise will be deemed to be in competition if it is engaged in any significant business activity of the Company or its subsidiaries any place in the world that the Company is currently conducting its business or selling its products. For a one (1) year period following the Retirement Date, Employee further agrees that he will not, directly or indirectly, hire away or participate or assist in the hiring away of any person employed by the Company or its affiliates on the Retirement Date and Employee will not solicit nor encourage any person employed by the Company or its affiliates on or after the Retirement Date to leave the employ of the Company or its affiliates.

     Employee further agrees from and after today to make himself available to the Company and its legal counsel to provide reasonable cooperation and assistance to the Company with respect to areas and matters in which Employee was involved during his employment, including any threatened or actual investigation, regulatory matter and/or litigation concerning the Company, and to provide to the Company, if requested, information and counsel relating to ongoing matters of interest to the Company. To the extent that the Company requests such cooperation and assistance of Employee, the Company will compensate Employee at the rate of $250 per hour for the time spent by Employee in rendering such cooperation and assistance. The Company will take into consideration Employee’s personal and business commitments, will give Employee as much advance notice as reasonably possible, and ask that Employee be available at such time or times as are reasonably convenient to Employee and the Company. The Company also agrees to reimburse Employee for the actual out-of-pocket expenses Employee incurs as a result of his complying with this provision. Any payments of consulting fees or expenses to be made by the Company to Employee pursuant to this provision are subject to Employee’s submission to the Company of documentation substantiating such time and/or expenses as the Company may require and consistent with the documentation necessary and required for reimbursement of business expenses by the Company.

     Proprietary information, confidential business information and trade secrets (hereinafter collectively “Confidential Information”) which became known to Employee as an employee or director of the Company remain the property of the Company. Such Confidential Information includes, but is not limited to, materials, records, books, products, business plans, business proposals, software, personnel information and data of the Company and its affiliates and its customers, but excludes information which is generally known to the public or becomes known except through Employee’s actions. Employee agrees from and after the Retirement Date that he will not at any time, directly or indirectly, disclose Confidential Information to any third party or otherwise use such Confidential Information for his own benefit or the benefit of others. Also, Employee acknowledges that he remains bound by the terms and conditions of the applicable provisions of the Company’s Code of Business Conduct.

     (6) Consequences of Breach of Covenant Not To Sue, Breach of Covenant Not To Seek Reinstatement or Reemployment or Breach of Non-Disparagement, Confidentiality, Cooperation, Non-Competition and Non-Solicitation Provisions. Employee acknowledges that the provisions of paragraph (5) are reasonable and not unduly restrictive of Employee’s rights as an individual and Employee warrants that as of the date Employee signs this Agreement Employee has not breached any of the

4

provisions of paragraph (5). Employee further acknowledges that in the event that Employee breaches any of the provisions of paragraph (5), such breach will result in immediate and irreparable harm to the business and goodwill of the Company and that damages, if any, and remedies at law for such breach would be inadequate. The Company shall, therefore, be entitled to apply without bond to any court of competent jurisdiction for an injunction to restrain any violation of paragraph (5) by Employee and for such further relief as the court may deem just and proper. In addition, the Company shall not be obligated to continue the availability or payment of Severance Benefits to Employee. The Company and Employee agree to the extent of a breach of any of the provisions in paragraph (5) above, as adjudicated by a court of competent jurisdiction or an award of the arbitrator in accordance with paragraph (14) below, the breaching party shall be obligated to pay to the non-breaching party its costs and expenses, including reasonable legal fees and disbursements incurred by the non-breaching party to enforce its rights under paragraph (5) above.

     Notwithstanding the foregoing, the Company’s determination that Employee breached the provisions of paragraphs (2), (4) or (5) above shall be communicated to Employee, by written Notice of Breach, at least six (6) business days prior to the date the Company suspends the payment of Severance Benefits under this paragraph (6). The written Notice of Breach shall indicate the specific provision(s) of paragraphs (2), (4) or (5) claimed to be breached and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for determination that a breach has occurred.

     (7) Company Property/Expenses. Employee agrees to promptly return to the Company (as soon as practicable following the Retirement Date) all Company property, including, but not limited to, Company car, cell phone, information technology equipment, documents and records and other physical or personal property of the Company in Employee’s possession or control, and agrees not to keep, transfer or use copies or excerpts of the foregoing items. Notwithstanding the immediately preceding sentence, the Company has agreed that Employee may retain and own the laptop computer and Blackberry voice and data communication device issued to him by the Company. Employee specifically acknowledges that the Company will not be responsible for any third party fees or charges associated with Employee’s use of such laptop or Blackberry communication device after the Retirement Date. Employee agrees that all business expenses for which Employee is entitled to reimbursement are documented and submitted for approval on a timely basis and any final expenses are submitted within ten (10) days after the Retirement Date.

     (8) Reservation of Rights to Indemnification and Director and Officer Liability Insurance for Actions Taken or Omitted while Director or Executive Officer. Employee’s right to indemnification to the fullest extent permitted by Delaware General Corporation Law and the Company’s Certificate of Incorporation and By-Laws for expenses (including attorney’s fees and disbursements), judgments, fines and amounts paid in settlement, actually and reasonably incurred by Employee in connection with any proceeding arising by reason of acts taken or omissions to act occurring while Employee was an executive officer or director of the Company or any of its subsidiaries, shall continue unabridged after the Retirement Date. In addition, Employee shall be entitled to make claim under any director and officer liability insurance coverage that the Company may have available for actions or omissions to act by Employee while Employee was an executive officer or director of the Company or any of its subsidiaries.

     (9) Time to Consider Agreement. Employee acknowledges that he has been given at least twenty-one (21) days to consider this Agreement thoroughly and Employee was encouraged to consult with his personal attorney at his own expense, if desired, before signing below, Employee further agrees that any changes made to this Agreement will not restart the running of the 21-day period referenced herein.

5

     (10) Time to Revoke Agreement. Employee understands that he may revoke this Agreement within seven (7) days after its signing and that any revocation must be made in writing and submitted within such seven (7) day period to the General Counsel,, Federal Signal Corporation, 1415 West 22^nd Avenue, Suite 1100, Oak Brook, IL 60523. Employee further understands that if he revokes this Agreement, he shall not receive the Severance Benefits.

     (11) Consideration. Employee also understands that the Severance Benefits which he will receive in exchange for signing and not later revoking this Agreement are in addition to anything of value to which Employee is already entitled, including treatment of Employee’s outstanding equity or other stock-based awards granted under the Company’s various equity incentive compensation after the Retirement Date in the manner set forth in the particular plan or award agreement for retirement from employment with the Company. In addition, Employee will be entitled to an cash incentive bonus for 2007 of at least $466,957, or 80% of his target bonus for 2007 of $583,696.

     (12) RELEASE INCLUDES UNKNOWN CLAIMS. EMPLOYEE FURTHER UNDERSTANDS THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS ARISING ON OR PRIOR TO THE DATE OF THIS AGREEMENT EXCEPT FOR CLAIMS FOR INDEMNIFICATION UNDER PARAGRAPH (8) OF THIS AGREEMENT. NOTHING CONTAINED HEREIN SHALL BE CONSTRUED AS A WAIVER, RELEASE, BAR TO, AND/OR PROHIBITION AGAINST ANY CLAIM BY EMPLOYEE TO ENFORCE THE TERMS OF THIS AGREEMENT.

     (13) Severability. Employee acknowledges and agrees that if any provision of this Agreement is found, held or deemed by a court of competent jurisdiction to be void, unlawful or unenforceable under any applicable statute or controlling law, the remainder of this Agreement shall continue in full force and effect.

     (14) Governing Law. This Agreement is deemed made and entered into in the State of Illinois, and in all respects shall be interpreted, enforced and governed under applicable federal law and in the event reference shall be made to State law the internal laws of the State of Delaware shall apply, without reference to its conflict of law provisions. Any dispute under this Agreement shall be adjudicated by a court of competent jurisdiction in the State of Illinois. Notwithstanding the foregoing, in accordance with Article 6.2 of the Severance Plan, the parties shall have the right and option (in lieu of litigation) to have any dispute or controversy arising under or in connection with the Severance Plan settled by arbitration, subject to the limitations set forth in Article 6.2.

     (15) Knowing And Voluntary Waiver and Release. Employee further acknowledges and agrees that he has carefully read and fully understand all of the provisions of this Agreement and that he voluntarily entered into this Agreement by signing below. Employee acknowledges that he was advised and encouraged by the Company to consult with an attorney of Employee’s choice at Employee’s own expense prior to signing this Agreement.

     (16) General Matters. Employee acknowledges and agrees that in signing this Agreement he does not rely and has not relied on any representation or statement by the Company or by its employees, agents, representatives, or attorneys with regard to the subject matter, basis or effect of this Agreement.

     The language of all parts of this Agreement shall be construed according to its fair meaning, and not strictly for or against either party. The provisions of this Agreement shall survive any termination of this Agreement when necessary to effect the intent and terms of this Agreement expressed herein.

6

     No modification of any provision of this Agreement shall be effective unless made in writing and signed by Employee and a duly authorized senior executive of the Company. This Agreement shall not be assignable by Employee.

/s/ Robert D. Welding
Robert D. Welding
1/21/2008
(Date)
FEDERAL SIGNAL CORPORATION
By:	/s/ Jennifer L. Sherman
	Name:	Jennifer L. Sherman
	Title:
21 Jan 2008
(Date)

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EX-21

Exhibit 21

NAME	JURISDICTION OF INCORPORATION
Bronto Skylift Holding OY	Finland
Bronto Skylift Oy Ab	Finland
Dayton Progress Canada, Ltd.	Ontario, Canada
Dayton Progress Corporation	Ohio
Dayton Progress GmbH	Germany
Dayton Progress International Corporation	Ohio
Dayton Progress — Perfuradores, LDA	Portugal
Dayton Progress, S.A.S.	France
Dayton Progress (U.K.), Ltd.	United Kingdom
Dayton Progress S.R.O.	Czech Republic
Elgin Sweeper Company	Delaware
E-ONE Canada Corp.	Nova Scotia, Canada
E-ONE, Inc.	Delaware
Federal APD Incorporated	Michigan
Federal Signal Credit Corporation	Delaware
Federal Signal Environmental Products China (HK) Ltd	Hong Kong
Federal Signal of Europe B.V.	Netherlands
Federal Signal Safety Products (Shanghai) Co. Ltd.	China
Federal Signal Tool (Asia Pacific) Ltd.	Hong Kong
Federal Signal Tool (Dongguan) Company Ltd.	China
Federal Signal U.K. Holdings, Ltd.	United Kingdom
Federal Signal VAMA, S.A.	Spain
Guzzler Manufacturing, Inc.	Alabama
FS Depot, Inc.	Wisconsin
FS Depot ULC.	Alberta, Canada
IEES B.V.	Netherlands
Jetstream of Houston, Inc.	Delaware
Jetstream of Houston, LLP	Texas
Nippon Dayton Progress K.K.	Japan
Pauluhn Electric Mfg. Co. Inc.	New York
Pauluhn Electric Manufacturing, LLP	Texas
Pauluhn Inc.	Alberta, Canada
P.C.S. Company	Michigan
PIPS Technology Inc.	Tennessee
PIPS Technology Limited	United Kingdom
Ravo BV	Netherlands
Ravo Italia SRL	Italy
Ravo Kommunalfahrzfuge GmbH	Germany
Vactor Manufacturing, Inc.	Illinois
Victor Industrial Equipment PTY Ltd.	South Africa
Victor Products Limited	United Kingdom
Victor Products USA Incorporated	Delaware

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 33-14251, 33-89509, 333-81798, 333-127234 and 333-104629) pertaining to the Stock Option Plan and Employee Savings and Investment Plans of Federal Signal Corporation and to the incorporation by reference in the Registration Statements (Form S-3 Nos. 333-71886, 333-76372 and 333-98993) of Federal Signal Corporation and in the related Prospectuses of our reports dated, February 26, 2008, with respect to the consolidated financial statements and schedule of Federal Signal Corporation and the effectiveness of internal control over financial reporting of Federal Signal Corporation included in this Annual Report (Form 10-K) for the year ended December 31, 2007.

Ernst & Young LLP
Chicago, Illinois
February 26, 2008

EX-31.1

Exhibit 31.1

CEO Certification Under Section 302 of the Sarbanes-Oxley Act

I, James E. Goodwin, certify that:

1.	I have reviewed this annual report Form 10-K of Federal Signal Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4.	The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the Company and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period in which this report is being prepared;
d.	Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors:

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: February 27, 2008

/s/ James E. Goodwin  

James E. Goodwin 

Interim President, Interim Chief Executive
Officer and Director 

EX-31.2

Exhibit 31.2

CFO Certification under Section 302 of the Sarbanes-Oxley Act

I, Stephanie K. Kushner, certify that:

1.	I have reviewed this annual report Form 10-K of Federal Signal Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4.	The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the Company and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period in which this report is being prepared;
d.	Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors:

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: February 27, 2008

/s/ Stephanie K. Kushner  

Stephanie K. Kushner 

Senior Vice President and Chief Financial
Officer 

EX-32.1

Exhibit 32.1

CEO Certification of Periodic Report under Section 906 of the Sarbanes-Oxley Act

I, James E. Goodwin, Interim President and Interim Chief Executive Officer and Director of Federal Signal Corporation (‘the Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 USC. Section 1350, that:

(1)	The Annual report of Form 10-K of the Company for the year ended December 31, 2007 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 USC. 78m or 78o(d)); and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 27, 2008

/s/ James E. Goodwin  

James E. Goodwin 

Interim President and Interim Chief Executive Officer and Director 

EX-32.2

Exhibit 32.2

CFO Certification of Periodic Report under Section 906 of the Sarbanes-Oxley Act

I, Stephanie K. Kushner, Senior Vice President and Chief Financial Officer of Federal Signal Corporation (‘the Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 USC. Section 1350, that:

(3)	The Annual report of Form 10-K of the Company for the year ended December 31, 2007 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 USC. 78m or 78o(d)); and
(4)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 27, 2008

/s/ Stephanie K. Kushner  

Stephanie K. Kushner 

Senior Vice President and Chief Financial Officer 

EX-99.1

Exhibit 99.1

	News From
	REGENCY TOWERS, 1415 W. 22ND ST., OAK BROOK, ILLINOIS 60523

FOR IMMEDIATE RELEASE

Federal Signal Corporation Announces Fourth Quarter Earnings of $.17 per Share and
Record Order Intake

—Highlights—

• Q4 record orders of $379 million, up 17% from prior year

• Q4 earnings of $.17 per share, FY earnings of $.62 per share

• Q4 cash flow from operations strong at $25 million

• Banker hired to evaluate strategic alternatives for E-ONE

Oak Brook, Ill., February 27, 2008 — Federal Signal Corporation (NYSE: FSS), a leader in advancing security and well-being, reported net income from continuing operations of $7.9 million, or $.17 per share, for the fourth quarter of 2007 on revenue of $351 million. For the same period of 2006, the Company earned $13.1 million from continuing operations, or $.27 per share, on revenue of $339 million. The year-over-year reduction in net income from continuing operations was largely due to operating losses incurred in the Fire Rescue segment, where the Company’s E-ONE operation was impacted by low production rates and unfavorable fixed cost absorption due to reduced order intake in the first half of 2007.

For the full year, the Company reported earnings per share from continuing operations of $.62 per share on net sales of $1.27 billion. In 2006, earnings per share from continuing operations totaled $.72 per share on net sales of $1.21 billion.

Jim Goodwin, interim president and chief executive officer, stated, “We are very excited about the strong order intake during the fourth quarter, where we experienced double-digit order growth in all our core businesses. The backlog is at record levels. The 2008 production slots for our Bronto aerial devices and Vactor sewer cleaners are sold out and we are focusing on expanding these operations.

“Under Peter Guile’s leadership, the E-ONE dealer organization has been expanded and energized, and after several difficult quarters, we are again building backlog. Domestic orders rose 5% in the fourth quarter at E-ONE, while our largest competitors have reported soft markets and significant reductions in their backlogs. While we are encouraged by this recent momentum, we are less confident the business will achieve acceptable performance within our timeframe. Consequently, we have hired a banker to evaluate strategic alternatives for E-ONE. We are currently in discussion with prospective buyers, as we work to determine the best of these strategic alternatives.

“As we enter 2008, we are watching the economy carefully, particularly our municipal customers. We take comfort from having successfully grown our non-US sales to nearly 40% of our business, and in knowing that our backlog is at a record level. Nevertheless, we are paring expenses and pulling back on some initiatives in order to weather a possible economic downturn. I am confident that the diversity of our businesses and these cost containment actions will position us well for earnings growth in 2008.”

The Company recorded fourth quarter net income including discontinued operations of $8.6 million, compared to $15.3 million in the prior year period.

Cash flow from operations totaled $25.0 million in the fourth quarter, bringing full year cash flow from operations to $65.4 million, more than double the $29.7 million generated during 2006. The increase was mainly due to improved working capital performance, particularly lower DSO, which averaged 35 days in the second half of 2007, down from 43 days in the same period of 2006.

GROUP RESULTS

Safety and Security Systems

Fourth Quarter:

• Orders rose 21% from the prior year period to $88 million. The increase reflected broad-based organic growth plus the impact of the PIPS Technologies acquisition in August.

• Net sales rose 19% to $98 million, with notable increases in global sales of light bars and sirens, sales into energy markets and growth from acquisitions.

• Operating income of $13.1 million was up 4% from the prior year. The benefit of higher sales was largely offset by increased investment in new product development and higher implementation costs associated with two large airport parking systems projects.

Full Year:

• Orders increased 20% over 2006 to $368 million with double digit increases across most markets. US orders rose 17% due to strength in light bars and sirens for both police and fire customers. During 2007, the Company introduced a next generation and more reliable LED lightbar technology which drove significantly higher orders. Non-US orders increased 25% over the prior year on strength in mobile systems and energy product lines and the addition of PIPS Technologies.

• Net sales increased 21% compared to 2006 with broad-based improvement across the business, particularly for mobile systems and energy-related markets. The third-quarter acquisition of PIPS Technologies added 3% to sales for the year.

• Operating income increased 20% to $49.6 million from the comparable period. The operating margin was unchanged at 13.5% as higher income from increased sales, higher pricing and favorable foreign currency impacts were offset by higher new product development and marketing expenses. Results were also adversely impacted by the higher implementation costs associated with large airport parking systems, as discussed above.

Fire Rescue

Fourth Quarter:

• Orders rose 20% from the prior year period to $124 million. US orders rose 4% and were up sequentially due to increased dealer representation for E-ONE. Non-US sales benefited from stronger demand for industrial aerial lifts and a shift towards taller, more complex Bronto aerial devices.

• Net sales were 10% below the prior year period due to lower production at E-ONE where orders have been weak during the past several quarters.

• The weaker volumes led to operating losses at the E-ONE facility, as production volumes were insufficient to absorb all fixed costs, and the business incurred $0.9 million of severance costs associated with headcount reductions. Partially offsetting the lower performance at E-One was strong Bronto performance.

Full Year:

• Orders in 2007 were up 9% over the prior year on continued strong demand and a richer mix of Bronto articulated aerial devices. Orders for E-ONE products declined in the first 9 months of the year due to disruptions in the North American dealer channel and changes in leadership.

• Net sales in the year declined 14% from the prior year due to the impact of the lower E-ONE orders, which more than offset the growth in international sales of Bronto aerial units.

• The full-year operating loss of $11.0 million is related to the lower sales volume and fixed cost absorption at E-ONE. The increased production of Bronto aerial devices and favorable currency effects only partly offset the loss at E-ONE.

Environmental Solutions

Fourth Quarter:

• Orders rose 14% from the prior year quarter due to strong demand for sewer cleaners from US municipalities and vacuum trucks from industrial customers and rental houses.

• Net sales totaled $112 million, up 9% from 2006 due to strong domestic shipments of sweepers, sewer cleaners and industrial vacuums, and an increase in the volume of company-supplied chassis.

• Operating income of $9.4 million was slightly below 2006 despite higher sales. The impact of the increased volume was more than offset by increased chassis costs, temporarily higher material costs associated with a new product launch and increased operating expenses.

Full Year:

• Orders of $458 million were 5% ahead of the prior year due to strong demand for industrial vacuum trucks and the impact of increased volume of company-supplied chassis. Non-US orders rose 5% driven by increased exports to the Middle East.

• Net sales grew 13% over 2006 on higher unit volumes of primarily vacuum trucks and overall higher pricing, as well as the impact of company-supplied chassis.

• Operating income improved modestly over the comparable period. However, the operating margin declined as the benefits of higher pricing and unit sales were more than offset by increased chassis costs as well as temporarily higher material costs associated with a new product launch.

Tool

Fourth Quarter:

• Net sales were unchanged at $30 million due to weaker domestic demand in the face of the automotive and housing industry downturns. This weakness was offset by successful efforts

	to increase the US customer base, strong demand in Japan and favorable currency translation.
•	Operating income declined to $2.0 million, negatively impacted by lower US sales and pricing pressures in the competitive environment.

Full Year:

• Net sales declined 3% from the comparable period in 2006, with weaker die and mold sales impacted by the weak domestic automotive and housing markets.

• Operating margins decreased from the prior year principally as a result of the lower volume.

OTHER

• Fourth quarter corporate expenses totaled $4.8 million, an improvement of $2.7 million from 2006 due primarily to lower bonus expense and partly to lower net costs associated with the Company’s ongoing firefighter hearing loss litigation.

• In the fourth quarter other expense of $2.7 million primarily reflects the Company’s share of losses at its China-based joint venture which began producing environmental vehicles in 2006.

• The effective tax rate reflected a benefit bringing the full year rate to 13%, down from 19% in the prior year. The reduction reflects the successful completion of certain foreign tax strategies and a higher research tax credit, partially offset by increased tax reserves.

CONFERENCE CALL

Federal Signal will host its fourth quarter conference call on Wednesday, February 27, 2007 at 11:00 a.m. Eastern Time to highlight results of the quarter. The call will last approximately one hour. You may listen to the conference call over the Internet through Federal Signal’s website at http://www.federalsignal.com. If you are unable to listen to the live broadcast, a replay accessible from the company website will be available shortly after the call.

About Federal Signal

Federal Signal Corporation (NYSE: FSS) is a leader in advancing security and well-being for communities and workplaces around the world. The company designs and manufactures a suite of products and integrated solutions for municipal, governmental, industrial and airport customers. Federal Signal’s portfolio of trusted, high-priority products include Bronto aerial devices, Elgin and Ravo street sweepers, E-ONE fire apparatus, Federal Signal safety and security systems, Guzzler industrial vacuums, Jetstream waterblasters and Vactor sewer cleaners. In addition, the company operates consumable industrial tooling businesses. Federal Signal was founded in 1901 and is based in Oak Brook, Illinois. http://www.federalsignal.com

This release contains unaudited financial information and various forward-looking statements as of the date hereof and we undertake no obligation to update these forward-looking statements regardless of new developments or otherwise. Statements in this release that are not historical are forward-looking statements. Such statements are subject to various risks and uncertainties that could cause actual results to vary materially from those stated. Such risks and uncertainties include but are not limited to: economic conditions in various regions, product and price competition,

supplier and raw material prices, foreign currency exchange rate changes, interest rate changes, increased legal expenses and litigation results, legal and regulatory developments such as the FIRE Act grant program and other risks and uncertainties described in filings with the Securities and Exchange Commission.

INVESTOR CONTACT: David Janek, +1.630.954.2000, djanek@federalsignal.com

# # # # #

FEDERAL SIGNAL CORPORATION (NYSE)
Consolidated Financial Data
For the Fourth Quarter and Full Year 2007 and 2006 (Unaudited)
(in millions except per share data)

	QTR			QTR			YTD			YTD
	Dec. 31			Dec. 31			Dec. 31			Dec. 31
	2007			2006			2007			2006
Quarter December 31:
Net Sales	$	351.4		$	339.1		$	1,268.1		$	1,211.6
Cost of sales		(274.2	)		(259.3	)		(971.2	)		(927.2	)
Operating expenses		(60.2	)		(58.1	)		(232.8	)		(214.5	)
Operating income		17.0			21.7			64.1			69.9
Interest expense		(7.9	)		(7.0	)		(25.9	)		(25.0	)
Other expense		(2.7	)		(1.0	)		(4.2	)		(2.2	)
Income before income taxes		6.4			13.7			34.0			42.7
Income tax (expense) benefit		1.5			(0.6	)		(4.2	)		(8.3	)
Income from continuing operations		7.9			13.1			29.8			34.4
Income (loss) from discontinued operations and disposal, net of tax		0.7			2.2			25.1			(11.7	)
Net income	$	8.6		$	15.3		$	54.9		$	22.7
Gross margin on revenues		22.0	%		23.5	%		23.4	%		23.5	%
Operating margin on revenues		4.8	%		6.4	%		5.1	%		5.8	%
Effective Tax Rate		(23.4	%)		4.4	%		12.5	%		19.4	%
Diluted earnings per share:
Income from continuing operations	$	0.17		$	0.27		$	0.62		$	0.72
Income (loss) from discontinued operations and disposal, net of tax		0.01			0.05			0.53			(0.25	)
Diluted earnings per share	$	0.18		$	0.32		$	1.15		$	0.47
Average common shares outstanding		47.8			48.0			47.9			48.0

	QTR			QTR			YTD			YTD
	Dec. 31			Dec. 31			Dec. 31			Dec. 31
	2007			2006			2007			2006
Group results:
Safety and Security Systems Group:
Orders	$	88.0		$	72.7		$	367.5		$	305.5
Net Sales		98.2			82.7			367.2			304.5
Operating Income		13.1			12.6			49.6			41.2
Operating Margin		13.3	%		15.3	%		13.5	%		13.5	%
Backlog							$	61.2		$	58.8
Fire Rescue Group:
Orders	$	124.0		$	103.6		$	397.5		$	365.0
Net Sales		111.5			124.0			330.8			384.8
Operating Income (Loss)		(2.7	)		4.2			(11.0	)		6.8
Operating Margin		(2.4	%)		3.5	%		(3.3	%)		1.8	%
Backlog							$	275.9		$	211.3
Environmental Solutions Group:
Orders	$	136.7		$	119.4		$	458.2		$	437.2
Net Sales		111.6			102.1			450.8			399.4
Operating Income		9.4			9.7			40.2			37.1
Operating Margin		8.5	%		9.5	%		8.9	%		9.3	%
Backlog							$	136.9		$	128.5
Tool Group:
Orders	$	30.1		$	29.3		$	119.3		$	122.4
Net Sales		30.1			29.9			119.3			122.9
Operating Income		2.0			2.8			6.6			8.2
Operating Margin		6.6	%		9.3	%		5.5	%		6.7	%
Backlog							$	5.0		$	4.7
Corporate operating expenses	$	(4.8	)	$	(7.5	)	$	(21.3	)	$	(23.4	)
Total Operating Income	$	17.0		$	21.8		$	64.1		$	69.9

	December 31			December 31
($ in millions)	2007			2006
ASSETS
Manufacturing activities:
Current assets
Cash and cash equivalents	$	16.0		$	19.3
Accounts receivable, net of allowances for doubtful accounts of $5.0 million and $3.0 million, respectively		176.1			192.1
Inventories		205.5			174.2
Other current assets		49.1			33.2
Total current assets		446.7			418.8
Properties and equipment, net		97.6			85.7
Other assets
Goodwill		406.7			310.6
Intangible assets, net		66.0			8.2
Deferred charges and other assets		8.8			9.4
Total manufacturing assets		1,025.8			832.7
Assets of discontinued operations		4.5			57.8
Financial services activities — Lease financing and other receivables, net of allowances for doubtful accounts of $3.6 million and $4.0 million, respectively		146.8			158.9
Total assets	$	1,177.1		$	1,049.4
LIABILITIES AND SHAREHOLDERS’ EQUITY
Manufacturing activities:
Current liabilities
Short-term borrowings	$	2.6		$	30.3
Current portion of long-term borrowings		45.4			34.4
Accounts payable		82.7			90.0
Accrued Liabilities
Compensation and withholding taxes		33.7			35.9
Customer deposits		34.8			23.0
Other		59.8			48.9
Total current liabilities		259.0			262.5
Long-term borrowings		240.7			160.3
Long-term pension and other liabilities		32.3			39.3
Deferred income taxes		45.5			20.7
Total manufacturing liabilities		577.5			482.8
Liabilities of discontinued operations		16.9			31.2
Financial services activities — Borrowings		137.4			149.0
Total liabilities		731.8			663.0
Shareholders’ equity
Common stock, $1 par value per share, 90.0 million shares authorized, 49.4 million and 49.1 million shares issued, respectively		49.4			49.1
Capital in excess of par value		103.2			99.8
Retained earnings		333.8			290.7
Treasury stock, 1.5 million shares, at cost		(30.1	)		(30.1	)
Accumulated Other Comprehensive (loss) income
Foreign currency translation, net		15.9			4.2
Net derivative loss, cash flow hedges, net		(2.0	)		—
Unrecognized pension and postretirement losses, net		(24.9	)		(27.3	)
Total		(11.0	)		(23.1	)
Total shareholders’ equity		445.3			386.4
Total liabilities and shareholders’ equity	$	1,177.1		$	1,049.4
Supplemental data:
Manufacturing debt	$	288.7		$	225.0
Debt-to-capitalization ratio:
Manufacturing		40	%		37	%
Financial services		94	%		94	%
Net Debt/Cap Ratio		39	%		35	%
Net Debt/Cap Ratio = manufacturing debt-to-capitalization ratio, net of cash

	For the Years Ended
	December 31,
	2007			2006			2005
	($ in millions)
Operating activities
Net income (loss)	$	54.9		$	22.7		$	(4.6	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
(Gain)/loss on discontinued operations and disposal		(25.1	)		11.7			48.5
Non-cash restructuring charges		—			—			0.3
Gain on sale of product line		—			—			(6.7	)
Loss on joint venture		0.8			1.9			—
Gain on sale of properties and equipment		—			(1.4	)		(2.3	)
Depreciation and amortization		21.2			17.9			18.2
Stock option and award compensation expense		3.5			5.8			2.1
Provision for doubtful accounts		1.4			(1.4	)		(2.3	)
Deferred income taxes		18.3			(2.7	)		(39.7	)
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions of companies
Accounts receivable		27.9			(21.2	)		15.1
Inventories		(25.3	)		(15.8	)		4.3
Other current assets		0.5			(1.3	)		(3.4	)
Lease financing and other receivables		12.1			10.4			27.2
Accounts payable		(10.7	)		14.3			4.6
Customer deposits		10.6			(10.8	)		9.2
Accrued liabilities		(1.0	)		(2.1	)		(0.1	)
Income taxes		(15.1	)		2.3			0.5
Pension contributions		(6.7	)		(11.3	)		(7.7	)
Other		(1.8	)		6.0			6.7
Net cash provided by continuing operating activities		65.5			25.0			69.9
Net cash (used for) provided by discontinued operating activities		(0.1	)		4.7			0.7
Net cash provided by operating activities		65.4			29.7			70.6
Investing activities
Purchases of properties and equipment		(23.5	)		(18.2	)		(16.6	)
Proceeds from sales of properties and equipment		0.7			2.5			10.1
Proceeds from sale of product line		—			—			11.9
Investment in joint venture		—			(2.0	)		(0.7	)
Payments for acquisitions, net of cash acquired		(147.5	)		—			—
Other, net		(1.7	)		(0.9	)		(1.2	)
Net cash (used for) provided by investing activities		(172.0	)		(18.6	)		3.5
Net cash provided by (used for) discontinued investing activities		65.4			(0.7	)		(4.2	)
Net cash used for investing activities		(106.6	)		(19.3	)		(0.7	)
Financing activities
(Reduction) increase in short-term borrowings, net		(28.3	)		23.7			53.8
Proceeds from issuance of long-term borrowings		230.1			23.6			104.2
Repayment of long-term borrowings		(153.9	)		(107.8	)		(133.1	)
Purchases of treasury stock		—			(12.1	)		(5.0	)
Cash dividends paid to shareholders		(11.5	)		(11.5	)		(13.5	)
Other, net		0.4			1.1			0.7
Net cash provided by (used for) continuing financing activities		36.8			(83.0	)		7.1
Net cash used for discontinued financing activities		—			—			—
Net cash provided by (used for) financing activities		36.8			(83.0	)		7.1
Effects of foreign exchange rate changes on cash		1.1			—			—
(Decrease) increase in cash and cash equivalents		(3.3	)		(72.6	)		77.0
Cash and cash equivalents at beginning of year		19.3			91.9			14.9
Cash and cash equivalents at end of year	$	16.0		$	19.3		$	91.9