Executive Benefits Trust

EXHIBIT 10.18


ACUITY BRANDS, INC.


EXECUTIVE BENEFITS TRUST


(Formerly, the National Service Industries, Inc.
Executive Benefits Trust)


Effective As Of November 30, 2001


ACUITY BRANDS, INC.
EXECUTIVE BENEFITS TRUST AGREEMENT


TABLE OF CONTENTS


PAGE
---- ARTICLE 1: Definitions..........................................................................................3


ARTICLE 2: Creation of Trust....................................................................................6


ARTICLE 3: Trustee Expense Account..............................................................................8


ARTICLE 4: Benefit Account......................................................................................9


ARTICLE 5: Payments from the Trust.............................................................................12


ARTICLE 6: Management of Trust Assets..........................................................................14


ARTICLE 7: Administrative Powers...............................................................................17


ARTICLE 8: Insurance and Annuity Contracts.....................................................................18


ARTICLE 9: Trustee's Powers After a Change in Control:.........................................................21


ARTICLE 10: Taxes. Expenses and Compensation of Trustee........................................................22


ARTICLE 11: General Duties of Trustee..........................................................................23


ARTICLE 12: Indemnification....................................................................................23


ARTICLE 13: No Duty to Advance Funds...........................................................................24


ARTICLE 14: Accounts...........................................................................................25


ARTICLE 15: Administration of the Transferred Plans; Communications............................................27


ARTICLE 16: Resignation or Removal of Trustee..................................................................28


ARTICLE 17: Amendment of Agreement; Termination of Trust.......................................................30


ARTICLE 18: Prohibition of Diversion...........................................................................31


ARTICLE 19: Prohibition of Assignment of Interest..............................................................32


ARTICLE 20: Miscellaneous......................................................................................32


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ACUITY BRANDS, INC.


EXECUTIVE BENEFITS TRUST AGREEMENT


THIS ASSUMPTION AND AMENDMENT AGREEMENT, made as of the _____ day of November 2001, by and between Acuity Brands, Inc., a corporation organized and existing under the laws of the State of Delaware (the "Company"), and Wachovia Bank, N.A., a national banking association organized and existing under the laws of the United States of America (hereinafter referred to as the "Trustee").


WITNESSETH:


WHEREAS, effective as of July 5, 1990, National Service Industries, Inc. ("NSI") and the Trustee established the National Service Industries, Inc. Executive Benefits Trust ("Prior Trust") to ensure that upon a change in control of NSI eligible participants and their beneficiaries would receive the benefits that NSI and its affiliates were obligated to provide them pursuant to certain designated employee benefit plans; and


WHEREAS, in connection with the spin-off of the Company from NSI, effective November 30, 2001 and pursuant to an Employee Benefits Agreement, dated as of November 30, 2001, between the Company and NSI, the Prior Trust is being transferred to, and assumed by, the Company in the form of this Executive Benefits Trust (hereinafter referred to as this "Trust"); and


WHEREAS, the Company has also established the Acuity Brands, Inc. Benefits Protection Trust (hereinafter referred to as the "Benefits Protection Trust") in order to ensure that "Participants" (as hereinafter defined) and their beneficiaries will receive the benefits which the Company and its "Affiliates" (as hereinafter defined) are obligated to provide for


them or which they reasonably anticipate receiving pursuant to the "Plans" (as hereinafter defined);


WHEREAS, the Company has adopted and, in some instances, its Affiliates may, prior to a "Change in Control" (as hereinafter defined) adopt, the Plans and, prior to a Change in Control, the Company and its Affiliates may adopt or enter into other plans or agreements, amend, modify or terminate any Plan in accordance with its terms or to comply with any changes in the law and increase the number of Participants in any such Plan;


WHEREAS, this Trust is not intended to be nor should it be construed as a grantor trust;


WHEREAS, upon a Change in Control, the Plans (the "Transferred Plans") and assets attributable to the Plans held in the Benefit Account of the Benefits Protection Trust will be irrevocably transferred to this Trust (the "Transfer") to be held for the benefit of Participants and their beneficiaries;


WHEREAS, the Trustee is not a party to the Transferred Plans;


WHEREAS, prior to the Transfer the aforesaid obligations of the Company are not funded;


WHEREAS, the Company has agreed to take steps to assure that the future payment of amounts under the Transferred Plans will not be improperly withheld or otherwise not paid following a Change in Control; and


WHEREAS, for purposes of assuring that such payments will not be improperly withheld or otherwise not paid, the Company desires: (a) by means of the Transfer to deposit with the Trustee amounts of cash, marketable securities or other security for the payment of benefits to Participants and their beneficiaries which are or may become payable under the


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Transferred Plans and (b) to retain the right to deposit with the Trustee further amounts of cash, marketable securities or other security for the payment of amounts under such Transferred Plans as they may become due and payable.


NOW, THEREFORE, in consideration of the respective agreements of the Company and the Trustee contained herein, it is agreed as follows:


ARTICLE 1: DEFINITIONS.


1.1. "Affiliate" shall mean any corporation, partnership or other entity, the majority interest in which is held by the Company directly or through one or more intermediaries, which has been designated by the Company as participating in the Trust. The Affiliates are listed on Schedule 2.


1.2 The "Board" shall mean the Board of Directors of the Company.


1.3 "Change in Control" shall mean any of the following events:


(a) The acquisition (other than from the Company) by any "Person" (as the term person is used for purposes of Sections 13(d) or 14 (d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of twenty percent (20%) or more of the combined voting power of the Company's then outstanding voting securities; or


(b) The individuals who, as of December 1, 2001, are members of the Board (the "Incumbent Board") cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for election by the Company's stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Agreement, be considered as a member of the Incumbent Board; or


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(c) A merger or consolidation involving the Company if the stockholders of the Company, immediately before such merger or consolidation do not, as a result of such merger or consolidation, own, directly or indirectly, more than seventy percent (70%) of the combined voting power of the then outstanding voting securities of the corporation resulting from such merger or consolidation in substantially the same proportion as their ownership of the combined voting power of the voting securities of the Company outstanding immediately before such merger or consolidation; or


(d) A complete liquidation or dissolution of the Company or an agreement for the sale or other disposition of all or substantially all of the assets of the Company.


Notwithstanding the foregoing, a change in Control shall not be deemed to occur pursuant to Section 1.3(a) of this Article 1, solely because twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities is acquired by (i) a trustee or other fiduciary holding securities under one or more employee benefit plans maintained by the Company or any of its subsidiaries or (ii) any corporation which, immediately prior to such acquisition, is owned directly or indirectly by the stockholders of the Company in the same proportion as their ownership of stock in the Company immediately prior to such acquisition (hereinafter referred to individually as a "Related Person" and collectively as "Related Persons").


1.4 "Company" shall mean Acuity Brands, Inc., its successors and assigns.


1.5 "Participants" shall mean active and former employees of the Company and/or of its Affiliates who are participants in, or who have a claim to receive benefits under, any of the Plans.


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1.6 "Plans" shall mean the Executives' Deferred Compensation Plan, Supplemental Deferred Savings Plan, Supplemental Retirement Plan for Executives, Senior Management Benefit Plan, Severance Protection Agreements with senior corporate officers and division presidents, and any other plans or agreements that are adopted by the Company or its Affiliates prior to a Change in Control, in all cases as listed on Schedule 1 as may be amended from time to time prior to a Change in Control.


1.7 "Related Person" shall have the meaning set forth in the last paragraph of Section 1.3.


1.8 "Threatened Change in Control" shall mean the occurrence of any of the following events:


(a) when the Company is aware of or is contemplating, a proposal (a "Proposal") for any Person other than a Related Person (1) to acquire five percent (5%) or more of the voting power of the Company's outstanding securities, or (2) to merge or consolidate with another entity, transfer or sell assets of the Company, or liquidate or dissolve the Company, in each case described in this clause (2) in a transaction that would constitute a Change in Control; or


(b) any Person other than a Related Person,


(1) acquires five percent (5%) or more of the voting power of the Company's outstanding securities, other than as a holder whose investment in the Company is eligible to be reported on Schedule 13G pursuant to Rule 13d-1(b)(1) promulgated under the 1934 Act, or


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(2) initiates a tender or exchange offer to acquire such number of securities as would result in such person holding twenty percent (20%) or more of the voting power of the Company's outstanding securities, or


(3) solicits proxies for votes to elect members of the Board at a. shareholders' meeting of the Company.


1.9 "Threatened Change in Control Period" shall mean the period commencing on the date that a Threatened Change in Control has occurred and ending upon:


(a) the date the Proposal referred to in Section 1.8(a) of this Article 1 is abandoned;


(b) the acquisition of five percent (5%) of the voting power of the Company's outstanding securities by the Person referred to in Section 1.8(a)(1) if such acquisition does not constitute a Threatened Change in Control under Section 1.8(b)(1);


(c) the date when any person described in Section 1.8(b) of this Article, (1) shall own less than five percent (5%) of the voting power of the Company's outstanding securities, (2) shall have abandoned the tender or exchange offer, or (3) shall not have elected a member of the Board as the case may be; or


(d) the date a Change in Control occurs.


ARTICLE 2: CREATION OF TRUST.


2.1 The Company hereby adopts and assumes the Prior Trust and agrees to continue such trust as amended by this Agreement. The Trustee hereby agrees to continue as Trustee of the Trust. The Trust shall consist of two accounts, established by the Trustee, for purposes of accounting for funds delivered to the Trustee by the Company. One such account shall be known as the "Trustee Expense Account," and shall be used exclusively to pay the fees, expenses and indemnities due or incurred by the Trustee in accordance with the terms of this Agreement. The


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other such account shall be known as the "Benefit Account," which is to be funded by the Company in accordance with Article 4, and shall be used to make payments under the Transferred Plans. Unless the Company directs otherwise, a separate Trustee Expense Account and Benefit Account shall be established for each Affiliate. The Benefit Account shall be divided into (i) separate sub-accounts for each Participant and beneficiary (the "Sub-Accounts") and (ii) a suspense account (the "Suspense Account"). The Sub-Accounts established hereunder are intended to comply with the separate accounts requirement of Section 404(a)(5) of the Internal Revenue Code of 1986, as amended (the "Code"), and Treasury Regulations promulgated thereunder. Funds in the Benefit Account will be allocated to the Suspense Account when they are not, or cannot be, credited to any Sub-Account, as the Trustee, in its discretion, determines. The Trustee, in its discretion, may at any time allocate or reallocate any funds held in the Benefit Account among any or all of the Sub-Accounts and the Suspense Account to the extent consistent with Section 404 (a) (5) of the Code.


The Trustee, for investment purposes only, may commingle all Trust assets and treat them as a single fund, but the records of the Trustee at all times shall show the percentages or assets of this Trust allocable to the Trustee Expense Account and the Benefit Account, including the percentages or assets allocable to the Sub-Accounts and Suspense Account.


2.2 The Company and the Trustee agree that this Trust created herein shall be revocable by the Company at any time prior to or subsequent to a Threatened Change in Control Period and prior to a Change in Control. This Trust shall not be revocable by the Company during a Threatened Change in Control Period or after the occurrence of a Change in Control. None of the assets and/or income of this Trust shall be subject to any claims by creditors of the


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Company or any of its Affiliates. This Trust is not intended to be nor should it be construed as a grantor trust within the meaning of Section 671 of the Code.


2.3 Prior to a Change in Control, the Company and its Affiliates may add Transferred Plans to, and Participants in the Transferred Plans under which benefits are payable from, this Trust by amending Schedule 1 to the Benefits Trust and notifying the Trustee in writing. If the Company or its Affiliates amends any of the Transferred Plans, it shall send to the Trustee a copy of any such amendments and no consent of the Trustee to such amendments is required.


2.4 Notwithstanding anything contained in this Agreement to the contrary, upon a Change in Control cash and/or marketable securities, and all rights under any Letters of Credit, from the Benefits Protection Trust with respect to all Participants and their beneficiaries under the Transferred Plans shall promptly and irrevocably be transferred from the Benefits Protection Trust and delivered to this Trust. Upon the Transfer, the Trustee will have possession and control of the assets so transferred (together with any other assets) of this Trust and all of the income therefrom to hold, administer and dispose of the same on the terms and conditions set forth herein on behalf of Participants and their beneficiaries.


ARTICLE 3: TRUSTEE EXPENSE ACCOUNT.


3.1 At any time, the Company shall have the unlimited right to deliver cash and/or marketable securities reasonably acceptable to the Trustee to be credited to the Trustee Expense Account. Any amount (together with the income attributable thereto) which is credited to the Trustee Expense Account may be withdrawn by the Company by written notice to the Trustee at any time prior to or subsequent to a Threatened Change in Control Period and prior to a Change in Control. Notwithstanding anything contained in this Agreement to the contrary, the Company shall not have the right to make any withdrawal from this Trust during a Threatened Change in Control Period or after the occurrence of a Change in Control.


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ARTICLE 4: BENEFIT ACCOUNT.


4.1 Immediately upon the occurrence of a Change in Control, the Company shall contribute sufficient cash or marketable securities to the Benefit Account in an amount equal to the difference between the assets transferred to this Trust pursuant to the Transfer and the amount necessary (i) to pay all payments and benefits to which Participants would be entitled (whether payable currently or on a deferred basis) pursuant to the terms of the Transferred Plans as of the date of the Change in Control and (ii) to pay the additional payments and benefits that would be due Participants under the Transferred Plans assuming the Participants' employment were terminated involuntarily by the Company without cause immediately following the date on which the Change in Control occurred. The amount the Company shall contribute to the Trust pursuant to this Section 4.1 shall be determined by the Trustee in its discretion. If the Company fails to contribute the amount to the Trust required by this Section 4.1 within five (5) days of the occurrence of the Change in Control, the Trustee shall commence legal action as provided in Section 9.4. Upon a Change in Control, the Trustee will have possession and control of the assets transferred (together with any other assets) of this Trust and all of the income therefrom to hold, administer and dispose of the same on the terms and conditions set forth herein on behalf of the Participants and their beneficiaries.


4.2 At any time, the Company and any Affiliate shall have the unlimited right to deliver cash and/or marketable securities reasonably acceptable to the Trustee to be credited to the Benefit Account to be allocated to any or all of the Sub-Accounts and/or the Suspense Account as the Trustee, in its, discretion, determines. Any such delivery shall be accepted by the Trustee and shall be accompanied by a designation of (i) the Transferred Plan or Transferred Plans under the provisions of which such funds are to be disbursed and if more than one Transferred Plan is being funded, the amount being allocated in respect of each Transferred Plan


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and (ii) to which Participant or Participants or beneficiary or beneficiaries the funds are being allocated and if more than one Participant or beneficiary is designated, the amount being allocated to each Participant or beneficiary. Such delivery shall be credited to a separate Sub-Account for each Participant or beneficiary in respect of which funds are being provided and any amount not credited to a Sub-Account shall be credited to the Suspense Account. If no such designation is made by the Company and any Affiliate, the Trustee has discretion to determine how the funds are to be allocated. Any amount (together with the income attributable thereto) contributed by the Company and any Affiliate to the Benefit Account may be withdrawn by the Company and any Affiliate at any time prior or subsequent to a Threatened Change in Control Period and prior to a Change in Control.


4.3 After the occurrence of a Change in Control, if the Trustee determines that the funds in the Benefit Account (including any Sub-Account) are insufficient to fully pay all benefits under the Transferred Plans as described in Section 4.1 and any taxes imposed or levied with respect to the assets and/or income of this Trust, as provided under Section 10.1 of Article 10, the Trustee with respect to the Benefit Account shall, and with respect to any Sub-Account may, make a written demand on the Company to provide funds in an amount determined at least quarterly by the Trustee in its discretion. The Company shall transfer such funds within fifteen (15) days from the time the written demand is mailed. If the Trustee fails to deposit the amounts in the Trust required by this Section 4.3 within fifteen (15) days of the Trustee's written demand, the Trustee shall commence legal action as provided in Section 9.4.


4.4 (a) In addition to the cash and/or other property delivered to, and deposited with, the Trustee pursuant to Article 3 and Sections 4.1, 4.2 and 4.3, the Company may deliver to the Trustee one or more letters of credit (referred to hereinafter as the "Letter(s) of Credit") which


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shall (i) be irrevocable for a period of at least 364 days, (ii) be renewable by the Company on substantially the same terms and conditions at the end of such period unless the issuer provides to the Company and the Trustee not less than 90 calendar days' written notice prior to the expiration date that any Letter(s) of Credit will not be renewed, and (iii) name the Trustee as beneficiary. A Letter of Credit shall enable the Trustee to draw directly from the issuer of such Letter of Credit, immediately upon notice and without any other requirement, an amount equal to the excess of 100% of the amount the Trustee has demanded the Company contribute to the Trust pursuant to Article 3 and Sections 4.1, 4.2 and 4.3, as determined by the Trustee, over the value of all other assets of the Trust, subject, however, to the maximum amount of the Letters of Credit.


(b) The Trustee shall draw on each Letter of Credit held by it to the full extent thereof no later than three (3) business days following the failure by the Company to contribute to the Trust the amounts demanded by the Trustee pursuant to Article 3 and Sections 4.1, 4.2 and 4.3.


(c) If the Trustee receives written notice from an issuer referencing a Letter of Credit by number which is signed by an office ...