EXHIBIT 10(III)A(4)

 

ACUITY BRANDS, INC.

AMENDED AND RESTATED SEVERANCE AGREEMENT

 

THIS AMENDED AND RESTATED AGREEMENT (the “Agreement”), made and entered into as
of this 20th day of January, 2004, by and between ACUITY BRANDS, INC., a
Delaware corporation (the “Company”), and John K. Morgan (the “Executive”).

 

W I T N E S S E T H:

 

WHEREAS, Executive is a key employee of the Company and an integral part of the
Company’s management; and

 

WHEREAS, the Company desires to provide the Executive with certain benefits if
the Executive’s employment is terminated under certain circumstances; and

 

WHEREAS, the Company and the Executive have determined it is in their mutual
best interests to enter into this Agreement;

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1. TERM OF AGREEMENT.

 

Unless earlier terminated as hereinafter provided, this Agreement shall commence
on the date hereof and shall be for a rolling, two-year term (the “Term”) and
shall be deemed to extend automatically, without further action by either the
Company or Executive, each day for an additional day, such that the remaining
term of the Agreement shall continue to be two years; provided, however, that
either party may, by written notice to the other, cause this Agreement to cease
to extend automatically and, upon such notice, the “Term” of this Agreement
shall be the two-year period following the date of such notice and this
Agreement shall terminate upon the expiration of such Term. This Agreement shall
not be considered an employment agreement and in no way guarantees Executive the
right to continue in the employment of the Company or its affiliates.
Executive’s employment is considered employment at will, subject to Executive’s
right to receive payments and benefits upon certain terminations of employment
as provided below.

 

As of the date hereof, this Agreement is intended to, and shall, supersede and
replace in their entirety the severance benefits provided under Executive’s
Severance Agreement dated as of June 25, 2003.

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2. DEFINITIONS. For purposes of this Agreement, the following terms shall have
the meanings specified below:

 

2.1 “Board” or “Board of Directors” — The Board of Directors of Acuity Brands,
Inc., or its successor.

 

2.2 “Cause” — The involuntary termination of Executive by the Company for the
following reasons shall constitute a termination for Cause:

 

(a) If termination shall have been the result of an act or acts by the Executive
which have resulted in a conviction by an applicable court of law of a felony
(other than traffic-related offenses);

 

(b) If termination shall have been the result of an act or acts by the Executive
which are in the good faith judgment of the Board to be in violation of law or
of written policies of the Company and which result in material injury to the
Company;

 

(c) If termination shall have been the result of an act or acts of dishonesty by
the Executive resulting or intended to result directly or indirectly in gain or
personal enrichment to the Executive at the expense of the Company; or

 

(d) Upon the continued failure by the Executive substantially to perform the
duties reasonably assigned to Executive given Executive’s training and
experience (other than any such failure resulting from incapacity due to mental
or physical illness not constituting a Disability, as defined herein), after a
demand in writing for substantial performance of such duties is delivered by the
Board, which demand specifically identifies the manner in which the Company
believes that the Executive has not substantially performed his duties, and such
failure results in material injury to the Company.

 

If, in the reasonable good faith judgment of the Board, the events giving rise
to the termination for Cause are curable, Executive shall have a period of
thirty (30) days from delivery of notice by the Board of such act or acts within
which to cure.

 

2.3 “Company” — Acuity Brands, Inc., a Delaware corporation, or any successor to
its business and/or assets.

 

2.4 “Date of Termination” — The date specified in the Notice of Termination
(which may be immediate) as the date upon which the Executive’s employment with
the Company is to cease.

 

2.5 “Disability” — Disability shall have the meaning ascribed to such term in
the Company’s long-term disability plan or policy covering the Executive, or in
the absence of such plan or policy, a meaning consistent with Section 22(e)(3)
of the Internal Revenue Code of 1986, as amended.

 

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2.6 “Good Reason”. A “Good Reason” for termination by Executive of Executive’s
employment with the Company shall mean the occurrence during the Term (without
Executive’s express consent) of any of the following acts by the Company, or
failures by the Company to act, and such act or failure to act has not been
corrected within thirty (30) days after written notice of such act, or failure
to act, is given by Executive to the Company:

 

(a) a change in Executive’s title of President and Chief Development Officer or
a material adverse change in Executive’s duties and responsibilities;

 

(b) the relocation of the principal office where Executive is required to work
to a location more than fifty (50) miles from the City of Atlanta, Georgia (i)
for more than six (6) months, or (ii) if for less than six (6) months, without
providing for Executive to travel to and from Atlanta, Georgia on a periodic
basis at the Company’s expense;

 

(c) a reduction in base salary and target bonus opportunity (not the bonus
actually earned) below the level in effect on the date of this Agreement, unless
such reduction is consistent with reductions being made at the same time for
other executive officers of the Company;

 

(d) a material reduction in the aggregate benefits provided to Executive by the
Company under its “employee benefits plans”, as defined in Section 3(3) of ERISA
(“Company Employee Benefit Plans”), on the date of this Agreement, except in
connection with a reduction in such benefits which is consistent with reductions
being made at the same time for other executive officers of the Company;

 

(e) an insolvency or bankruptcy filing by the Company; or

 

(f) a material breach by the Company of this Agreement.

 

2.7 “Notice of Termination” — A written notice from one party to the other party
specifying the Date of Termination and which sets forth in reasonable detail the
facts and circumstances relating to the basis for termination of Executive’s
employment.

 

2.8 “Severance Period” — A period equal to the lesser of (i) twenty-four (24)
months from the Executive’s Date of Termination or (ii) the number of months
(rounded to the nearest month) from the Executive’s Date of Termination until
the date he attains age 65; provided, however, that the Severance Period shall
in no event be less than six (6) months..

 

2.9 “Severance Protection Agreement” — An agreement between Executive and the
Company providing for the payment of compensation and benefits to Executive in
the event of Executive’s termination of employment under certain circumstances
following a “change in control” of the Company (as defined in such agreement).

 

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3. SCOPE OF AGREEMENT.

 

This Agreement provides for the payment of compensation and benefits to
Executive in the event his employment (i) is involuntarily terminated by the
Company without Cause, or (ii) is terminated by Executive for Good Reason. If
Executive is terminated by the Company for Cause, dies, incurs a Disability or
voluntarily terminates employment (other than for Good Reason), this Agreement
shall terminate, and Executive shall be entitled to no payments of compensation
or benefits pursuant to the terms of this Agreement; provided, that in such
events, Executive shall be subject to the restrictive covenants set forth in the
letter agreement, dated June 24, 2004, between the Company and Executive and not
the Restrictive Covenants set forth in Section 5 below; provided, further, that
in such events, Executive will be entitled to whatever benefits are payable
pursuant to the terms of any health, life insurance, disability, welfare (except
for a severance plan or program), retirement, deferred compensation, or other
plan or program maintained by the Company.

 

If, as a result of Executive’s termination of employment, Executive becomes
entitled to compensation and benefits under this Agreement and under a Severance
Protection Agreement, Executive shall be entitled to receive benefits under
whichever agreement provides Executive the greater aggregate compensation and
benefits (and not under the other agreement) and there shall be no duplication
of benefits.

 

4. BENEFITS UPON INVOLUNTARY TERMINATION WITHOUT CAUSE OR FOR GOOD REASON

 

If Executive’s employment is involuntarily terminated by the Company during the
term of this Agreement without Cause (and such termination does not arise as a
result of Executive’s death or Disability) or if Executive terminates his
employment for Good Reason, Executive shall be entitled to the compensation and
benefits provided for below, provided that Executive, as provided for in Section
4.10, executes a release of claims substantially in the form attached hereto as
Exhibit A. In the event Executive is terminated without Cause or Executive
terminates his employment for Good Reason, the Compensation Committee of the
Board of Directors may, in its discretion and to provide equitable treatment,
grant benefits to Executive in addition to those provided below in circumstances
where Executive suffers a diminution of projected benefits as a result of
Executive’s termination prior to attainment of age 65, including without
limitation, additional retirement benefits and acceleration of long-term
incentive awards.

 

4.1 Base Salary. Executive shall continue to receive his Base Salary (subject to
withholding of all applicable taxes) for the entire Severance Period (as defined
in Section 2.8 above), payable in the same manner as it was being paid on his
Date of Termination. In the event of Executive’s death prior to the end of the
Severance Period, the payments of Base Salary shall cease.

 

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4.2 Annual Bonus. Executive shall be paid a bonus in an amount equal to the
greater of (i) the annual incentive bonus that would be paid or payable to
Executive for the fiscal year of the Company during which Executive’s Date of
Termination occurs under the Company’s annual incentive plan (“Incentive Plan”),
assuming the target level(s) of performance had been met for such fiscal year,
multiplied by a fraction (the “Pro Rata Fraction”), the numerator of which is
the number of days that have elapsed in the then current fiscal year through
Executive’s Date of Termination and the denominator of which is 365, or (ii) the
annual incentive bonus that would be paid or payable to Executive for the fiscal
year of the Company during which Executive’s Date of Termination occurs under
the Incentive Plan based upon the Company’s actual performance for such fiscal
year, multiplied by the Pro Rata Factor. The bonus amount determined pursuant to
Section 4.2(i) shall be paid to Executive within ten (10) days of Executive’s
Date of Termination and any additional amount payable pursuant to Section
4.2(ii) shall be payable at the same time as bonuses are payable to other
executive under the Incentive Plan.

 

4.3 Stock Options. Unvested Stock Options granted to Executive under the Acuity
Brands, Inc. Long-Term Incentive Plan (“LTIP”) shall continue to vest during the
Severance Period, provided, that if Executive dies during the Severance Period,
the continued vesting of such Stock Options shall cease. Stock Options vested as
of Executive’s Date of Termination and Stock Options that vest during the
Severance Period shall remain exercisable for the shorter of the remaining
exercise term or the length of the Severance Period. Subject to the proviso at
the end of this sentence, all Stock Options outstanding at the end of the
Severance Period shall be immediately forfeited; provided, that if the Stock
Option Agreement granting the Stock Option to Executive provides for more
favorable continued vesting or exercisability after Executive’s Date of
Termination, the provisions of such Stock Option Agreement shall apply to the
vesting and exercisability of Executive’s Stock Options after Executive’s
termination.

 

4.4 Restricted Stock. Any performance-based Restricted Stock granted to
Executive under the Acuity Brands, Inc. Long-Term Incentive Plan (“LTIP”) for
which the specific performance targets have been achieved and a Vesting Start
Date (as defined in the agreement granting the Restricted Stock to Executive,
the “Restricted Stock Award Agreement”) has been established as of Executive’s
Date of Termination, shall become fully vested and nonforfeitable as of
Executive’s Date of Termination. Performance-based Restricted Stock for which
the specific performance targets are achieved and a Vesting Start Date is
established during the Severance Period shall continue to vest during the
Severance Period. If Executive dies during the Severance Period, any
performance-based Restricted Stock for which a Vesting Start Date has been
established during the Severance Period shall become fully vested and
nonforfeitable and the Restricted Stock for which a Vesting State Date has not
been established shall be forfeited. The Vested Value (as defined in the
performance-based Restricted Stock Award Agreement) of the shares of Restricted
Stock vesting pursuant to this Section 4.4 shall be delivered to Executive in
the manner provided in the Restricted Stock Award Agreement within ten (10) days
of the vesting date, using the vesting date as the date for determining the
Vested Value.

 

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Any Restricted Stock granted to Executive under the LTIP that is not
performance-based shall be subject to accelerated vesting and shall vest each
month during the Severance Period on a monthly pro rata basis calculated from
the date of grant to the end of the Severance Period, provided, that if
Executive dies during the Severance Period, the continued vesting shall cease
and any such unvested Restricted Stock shall be forfeited.

 

Subject to the proviso at the end of this sentence, all Restricted Stock that
has not vested at the Termination Date or during the Severance Period shall be
immediately forfeited at the end of the Severance Period; provided, that if the
Restricted Stock Award Agreement granting the Restricted Stock to Executive
provides for more favorable continued vesting after Executive’s Date of
Termination than provided in this section, the provisions of such Restricted
Stock Award Agreement shall apply to the vesting of Executive’s Restricted Stock
after Executive’s termination.

 

4.5 Supplemental Executive Retirement Plan. Executive shall continue to accrue
credited service under the 2002 Supplemental Executive Retirement Plan during
the Severance Period.

 

4.6 Supplemental Deferred Savings Plan. Company contributions credited to
Executive’s Matching and Supplemental Subaccounts under the Supplemental
Deferred Savings Plan (“SDSP”) shall become 100% vested and nonforfeitable as of
Executive’s Date of Termination and shall be distributed from the SDSP at the
end of the Severance Period.

 

4.7 Health Care, Life Insurance and Long-Term Disability Coverages. The health
care (including dental and vision coverage, if applicable), term life insurance
and long-term disability coverages provided to Executive at his Date of
Termination shall be continued at the same level as for active executives and in
the same manner as if his employment had not terminated, beginning on the Date
of Termination and ending on the last day of the Severance Period. Any
additional coverages Executive had at termination, including dependent coverage,
will also be continued for such period on the same terms, to the extent
permitted by the applicable policies or contracts. Any costs Executive was
paying for such coverages at the time of termination shall be paid by Executive
by separate check payable to the Company each month in advance or, at
Executive’s election, may be deducted from his Base Salary payments under
Section 4.1. If the terms of any benefit plan referred to in this Section, or
the laws applicable to such plan do not permit continued participation by
Executive, then the Company will arrange for other coverage(s) satisfactory to
Executive at Company’s expense which provides substantially similar benefits or,
at Executive’s election, will pay Executive a lump sum amount equal to the
annual costs of such coverage(s) for the Severance Period. A benefit provided
under this Section 4.7 shall cease if Executive obtains other employment and, as
a result of such employment, health care, life insurance or long-term disability
benefits are available to Executive.

 

4.8 Outplacement Services. Executive will be provided with customary
outplacement services by an outplacement firm selected by the Company for the
Severance Period, provided that the Company’s total cost for such services shall
not exceed an amount equal to ten percent (10%) of Executive’s Base Salary.

 

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4.9 Other Benefits. Except as expressly provided herein, all other fringe
benefits provided to Executive as an active employee of the Company (e.g.,
401(k) plan, AD&D, car allowance, club dues, etc.), shall cease on his Date of
Termination, provided that any conversion or extension rights applicable to such
benefits shall be made available to Executive at his Date of Termination or when
such coverages otherwise cease at the end of the Severance Period. Except as
expressly provided herein, for all other plans sponsored by the Company, the
Executive’s employment shall be treated as terminated on his Date of Termination
and Executive’s right to benefits shall be determined under the terms of such
plans; provided, however, in no event will Executive be entitled to severance
payments or benefits under any other severance plan, policy, program or
agreement of the Company, except to the extent Executive is covered by a
Severance Protection Agreement related to a change in control of the Company.

 

4.10 Release of Claims. To be entitled to any of the compensation and benefits
described above in this Section 4, Executive shall sign a release of claims
substantially in the form attached hereto as Exhibit A. No payments shall be
made under this Section 4 until such release has been properly executed and
delivered to the Company and until the expiration of the revocation period, if
any, provided under the release. If the release is not properly executed by the
Executive and delivered to the Company within the reasonable time periods
specified in the release, the Company’s obligations under this Section 4 will
terminate.

 

5. CONFIDENTIALITY, NON-SOLICITATION AND NON-COMPETITION.

 

5.1 In consideration of the compensation and benefits paid or provided to
Executive pursuant to this Agreement, Executive agrees that for a period equal
to the Restricted Period (as defined in Section 1(c) of Exhibit B) following his
involuntary termination by the Company without Cause or Executive’s termination
of his employment for Good Reason, Executive shall comply with the
non-competition, non-recruitment and non-disclosure restrictions attached hereto
as Exhibits B, C, and D respectively (the “Restrictive Covenants”). The Company
and Executive recognize that Executive may experience periodic material changes
in his job title and/or to the duties, responsibilities or services that he is
called upon to perform on the behalf of the Company. If Executive experiences
such a material change, the parties shall, as soon as is practicable, enter into
a signed, written addendum to Exhibit B hereto reflecting such material change.
Moreover, in the event of any material change in corporate organization
(including, without limitation, spin-offs, split-offs, or public offerings of
subsidiaries’ stock) on the part of the Direct Competitors set forth in Exhibit
B hereto, the parties agree to amend Exhibit B, as necessary, at the Company’s
request, in order to reflect such change. Upon execution, any such written
modification to Exhibit B shall represent an enforceable amendment to this
Agreement and shall augment and supplant the definitions of the terms Executive
Services or Direct Competitor set forth in Exhibit B hereto, as applicable.

 

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5.2 Return of Property. Upon termination of employment with the Company,
Executive agrees to deliver promptly to the Company all Company files, customer
lists, management reports, memoranda, research, Company forms, financial data
and reports and other documents (including all such data and documents in
electronic form) supplied to or created by him in connection with his employment
hereunder (including all copies of the foregoing) in his possession or control,
and all of the Company’s equipment and other materials in his possession or
control. Executive’s obligations under this Section 5.2 shall survive any
expiration or termination of this Agreement.

 

5.3 Inventions. The Executive does hereby assign to the Company the entire
right, title and interest in any Invention which is made, conceived, either
solely or jointly with others, during employment with the Company. The Executive
agrees to promptly disclose to the Company all such Inventions. The Executive
will, if requested, promptly execute and deliver to the Company a specific
assignment of title for an Invention and will at the expense of the Company,
take all reasonably required action by the Company to patent, copyright or
otherwise protect the Invention. For purposes of this Agreement, “Inventions”
means contributions, discoveries, improvements and ideas and works of
authorship, whether or not patentable or copyrightable, and (i) which relate
directly to the business of the Company or (ii) which result from any work
performed for the Company by Executive or by Executive’s fellow employees or
(iii) for which equipment, supplies, facility, Confidential Information or Trade
Secrets of the Company are used, or (iv) which is developed on the Company’s
time.

 

6. MISCELLANEOUS.

 

6.1 No Obligation to Mitigate. Executive shall not be required to mitigate the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by Executive as a result of
employment by another employer after the Date of Termination or otherwise,
except as provided in Section 4.7 with respect to benefits coverages.

 

6.2 Contract Non-Assignable. The parties acknowledge that this Agreement has
been entered into due to, among other things, the special skills and knowledge
of Executive, and agree that this Agreement may not be assigned or transferred
by Executive.

 

6.3 Successors; Binding Agreement.

 

(a) In addition to any obligations imposed by law upon any successor to the
Company, the Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, or who acquires the stock of the Company,
to expressly assume and agree to perform this Agreement, in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place.

 

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(b) This Agreement shall inure to the benefit of and be enforceable by
Executive’s personal or legal representative, executors, administrators,
successors, heirs, distributees, devisees and legatees.

 

6.4 Notices. All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given when delivered or seven days after mailing if mailed first class,
certified mail, postage prepaid, addressed as follows:

 

If to the Company:   Acuity Brands, Inc.     Attention: General Counsel     1170
Peachtree Street, Suite 2400     Atlanta, GA 30309 If to the Executive:   To his
last known address on file with the Company

 

Any party may change the address to which notices, requests, demands and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.

 

6.5 Provisions Severable. If any provision or covenant, or any part thereof, of
this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.

 

6.6 Waiver. Failure of either party to insist, in one or more instances, on
performance by the other in strict accordance with the terms and conditions of
this Agreement shall not be deemed a waiver or relinquishment of any right
granted in this Agreement or the future performance of any such term or
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by the party making the waiver.

 

6.7 Amendments and Modifications. This Agreement may be amended or modified only
by a writing signed by both parties hereto, which makes specific reference to
this Agreement.

 

6.8 Governing Law. The validity and effect of this Agreement shall be governed
by and be construed and enforced in accordance with the laws of the State of
Georgia.

 

6.9 Disputes; Legal Fees; Indemnification.

 

(a) Disputes - All claims by Executive for compensation and benefits under this
Agreement shall be in writing and shall be directed to and be determined by the
Compensation Committee of the Board. Any denial by the Compensation Committee of
a claim for benefits under this Agreement shall be provided in writing to
Executive within 30

 

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days of such decision and shall set forth the specific reasons for the denial
and the specific provisions of this Agreement relied upon. The Compensation
Committee shall afford a reasonable opportunity to Executive for a review of its
decision denying a claim and shall further allow Executive to appeal in writing
to the Compensation Committee a decision of the Compensation Committee within
sixty (60) days after notification by the Compensation Committee that
Executive’s claim has been denied. To the extent permitted by applicable law,
any further dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Fulton County, Georgia,
in accordance with the rules of the American Arbitration Association then in
effect for commercial arbitrations. Judgment may be entered on the arbitrator’s
award in any court having jurisdiction.

 

(b) Legal Fees – If the Company involuntarily terminates Executive without Cause
or Executive terminates his employment for Good Reason, then, in the event
Executive incurs legal fees and other expenses in seeking to obtain or to
enforce any rights or benefits provided by this Agreement and is successful to a
significant extent in obtaining or enforcing any such rights or benefits through
settlement, mediation, arbitration or otherwise, the Company shall promptly pay
Executive’s reasonable legal fees and expenses and related costs incurred in
enforcing this Agreement including, without limitation, attorneys fees and
expenses, experts fees and expenses, and investigative fees. Except to the
extent provided in the preceding sentence, each party shall pay its own legal
fees and other expenses associated with any dispute under this Agreement.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

EXECUTIVE:

/s/ John K. Morgan

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JOHN K. MORGAN

ACUITY BRANDS, INC.

By:  

/s/ James S. Balloun

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JAMES S. BALLOUN, Chairman and

Chief Executive Officer

 

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