Exhibit 10.3
AMENDMENT TO
AMENDED AND RESTATED SEVERANCE
AGREEMENT
AND NOTICE OF
TERMINATION
THIS AMENDMENT TO AMENDED AND
RESTATED SEVERANCE AGREEMENT (“Amendment”) is made and
entered into as of the 13th day of October, 2009, by and between
Acuity Specialty Products, Inc. and its parent, Zep Inc.
(collectively, the “Company”), and John K. Morgan
(“Executive”).
WHEREAS, Acuity Brands, Inc. and
Executive previously entered into that certain Amended and Restated
Severance Agreement, dated as August 1, 2005, as later amended
by the parties (“Severance Agreement”); and
WHEREAS, effective on or about
October 31, 2007, the Company became the successor to Acuity
Brands, Inc. and assumed the Severance Agreement; and
WHEREAS, the parties now wish to
amend the Severance Agreement in certain respects as set forth
herein; and
WHEREAS, pursuant to Section 1
of the Severance Agreement, the Company wishes to give notice of
termination of the Severance Agreement upon the expiration of the
two-year term ending on the second anniversary of this
Amendment.
AMENDMENT
NOW, THEREFORE, the Severance
Agreement is hereby amended as follows:
1. Succession of the Company
under the Severance Agreement . Effective as of
October 31, 2007, Zep Inc. (“Zep”), then a
wholly-owned subsidiary of Acuity Brands, Inc., was spun-off in a
transaction pursuant to which Acuity Brands, Inc. distributed to
its stockholders, all of the outstanding shares of the commons
stock of Zep. In connection with this spin-off, Acuity Specialty
Products, Inc., a wholly-owned subsidiary of Zep (“Acuity
Specialty Products”), became Executive’s employer and
the Company succeeded to all of the rights and obligations of
Acuity Brands, Inc. under, and assumed, the Severance Agreement.
For purposes of this Severance Agreement, the applicable entity
with respect to Executive’s employment status, and
employment-related issues, shall mean Acuity Specialty Products or
its successors.
2. Annual Bonus
Section 4.2 of the Severance Agreement is hereby deleted in
its entirety and replaced with the following language:
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“4.2
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Annual Bonus
. Executive shall be paid two
payments as described in this section. The first payment shall be
in an amount equal to the annual incentive bonus under the
Company’s annual incentive plan (“Annual Incentive
Plan”) that would be paid or payable to Executive for the
fiscal year of the Company during which Executive’s Date of
Termination occurs, assuming the target level(s) of performance had
been met for such fiscal year, multiplied by a fraction (the
“Pro
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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 (“Initial Annual
Bonus”). Such Initial Annual Bonus payment shall be made in a
single lump sum within ten (10) days following
Executive’s Date of Termination. Additionally, if and to the
extent that, based on the Company’s performance under the
terms of the Annual Incentive Plan, the Company’s performance
for the fiscal year during which Executive’s Date of
Termination occurs exceeds the target performance levels in the
Annual Incentive Plan used to calculate the Initial Annual Bonus,
Executive shall receive an additional payment equal to the payout
under the Annual Incentive Plan which Executive would have received
for the fiscal year during which his Date of Termination occurs,
multiplied by the Pro Rata Factor, less the Initial Annual Bonus.
Such additional payment shall be made in a single lump sum as soon
as reasonably practical following the end of the Company’s
fiscal year during which Executive’s Date of Termination
occurs, and in any event by the end of the calendar year during
which such fiscal year ends.”
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3. Supplemental Executive
Retirement Plan . Section 4.5 of the Severance Agreement
is hereby amended such that the reference to the
“Supplemental Executive Retirement Savings Plan” shall
mean the value of Executive’s Make-up Contribution Subaccount
and SERP Contribution Subaccount provided for in, and calculated in
accordance with, the provisions of, Appendix A and Appendix B,
respectively, of the Zep Inc. Supplemental Deferred Savings Plan
(the “SDSP”). Said Section 4.5 is also hereby
clarified to confirm and expressly provide that the SDSP benefits
attributable to additional servic
