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Exhibit 99.4
CHANGE IN CONTROL SEVERANCE
AGREEMENT
THIS AGREEMENT is entered into as of this
29th day of August 2007, by and between Gevity HR, Inc., a
Florida corporation (the "Company"), and Garry Welsh
("Executive").
W I T N E S S E T H
WHEREAS, the Company considers the establishment
and maintenance of a sound and vital management to be essential
to protecting and enhancing the best interests of the Company
and its stockholders; and
WHEREAS, the Company recognizes that, as is the
case with many publicly held corporations, the possibility of a
change in control may arise and that such possibility may result
in the departure or distraction of management personnel to the
detriment of the Company and its stockholders; and
WHEREAS, the Board (as defined in Section 1) has
determined that it is in the best interests of the Company and
its stockholders to secure Executive's continued services and to
ensure Executive's continued dedication to his duties in the
event of any threat or occurrence of a Change in Control (as
defined in Section 1) of the Company; and
WHEREAS, the Board has authorized the Company to
enter into this Agreement.
NOW, THEREFORE, for and in consideration of the
premises and the mutual covenants and agreements herein
contained, the Company and Executive hereby agree as
follows:
1. Definitions. As used in this
Agreement, the following terms shall have the respective meanings
set forth below:
(a) "Board" means the Board of Directors of the
Company.
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(b)
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"Bonus
Amount" means the greater of (i) the average annual incentive bonus
earned by Executive from the Company (or its affiliates) during the
last three (3) completed fiscal years of the Company immediately
preceding Executive's Date of Termination (annualized in the event
Executive was not employed by the Company (or its affiliates) for
the whole of any such fiscal year), and (ii) the Executive's target
annual incentive bonus for the year in which the Date of
Termination occurs. |
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(c)
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"Cause"
means (i) the willful and continued failure of Executive to
perform substantially his duties with the Company (other than any
such failure resulting from Executive's incapacity due to physical
or mental illness or any such failure subsequent to Executive being
delivered a Notice of Termination without Cause by the Company or
delivering a Notice of Termination for Good Reason to the Company)
after a written demand for substantial performance is delivered to
Executive by the Board which specifically identifies the manner in
which the Board believes that Executive has not substantially
performed Executive's duties, or (ii) the willful engaging by
Executive in illegal conduct or gross misconduct which is
demonstrably and materially injurious to the Company or its
affiliates. For purpose of this paragraph (c), no act or
failure to act by Executive shall be considered "willful", unless
done or omitted to be done by Executive in bad faith and without
reasonable belief that Executive's action or omission was in the
best interests of the Company or its affiliates. Any act, or
failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board, based upon the advice of counsel for the
Company or upon the instructions of the Company's chief executive
officer or another senior officer of the Company shall be
conclusively presumed to be done, or omitted to be done, by
Executive in good faith and in the best interests of the Company.
Cause shall not exist unless and until the Company has delivered to
Executive a copy of a resolution duly adopted by three-quarters
(3/4) of the entire Board (excluding Executive if Executive is a
Board member) at a meeting of the Board called and held for such
purpose (after reasonable notice to Executive and an opportunity
for Executive, together with counsel, to be heard before the
Board), finding that in the good faith opinion of the Board an
event set forth in clauses (i) or (ii) has occurred and
specifying the particulars thereof in detail. |
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(d)
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"Change
in Control" means the occurrence of any one of the following
events: |
(i) individuals who, on the date hereof, constitute
the Board (the "Incumbent Directors") cease for any reason to
constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof, whose
election or nomination for election was approved by a vote of at
least two-thirds of the Incumbent Directors then on the Board
(either by a specific vote or by approval of the proxy statement of
the Company in which such person is named as a nominee for
director, without written objection to such nomination) shall be an
Incumbent Director; provided, however, that no individual initially
elected or nominated as a director of the Company as a result of an
actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than the
Board shall be deemed to be an Incumbent Director;
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(ii)
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any
"person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act") and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or
becomes a "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of
the Company's then outstanding securities eligible to vote for the
election of the Board (the "Company Voting Securities"); provided,
however, that the event described in this paragraph (ii) shall
not be deemed to be a Change in Control by virtue of any of the
following acquisitions: (A) by the Company or any Subsidiary,
(B) by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any Subsidiary, (C) by any
underwriter temporarily holding securities pursuant to an offering
of such securities, (D) pursuant to a Non-Qualifying
Transaction (as defined in paragraph (iii)), or
(E) unless otherwise approved by the Board, pursuant to any
acquisition by Executive or any group of persons including
Executive (or any entity controlled by Executive or any group of
persons including Executive); |
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(iii)
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the
consummation of a merger, consolidation, statutory share exchange
or similar form of corporate transaction involving the Company or
any of its Subsidiaries that requires the approval of the Company's
stockholders, whether for such transaction or the issuance of
securities in the transaction (a "Business Combination"), unless
immediately following such Business Combination: (A) more than 50%
of the total voting power of (x) the corporation resulting
from such Business Combination (the "Surviving Corporation"), or
(y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of 100% of the
voting securities eligible to elect directors of the Surviving
Corporation (the "Parent Corporation"), is represented by Company
Voting Securities that were outstanding immediately prior to such
Business Combination (or, if applicable, is represented by shares
into which such Company Voting Securities were converted pursuant
to such Business Combination), and such voting power among the
holders thereof is in substantially the same proportion as the
voting power of such Company Voting Securities among the holders
thereof immediately prior to the Business Combination, (B) no
person (other than any employee benefit plan (or related trust)
sponsored or maintained by the Surviving Corporation or the Parent
Corporation), is or becomes the beneficial owner, directly or
indirectly, of 25% or more of the total voting power of the
outstanding voting securities eligible to elect directors of the
Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or, if
there is no Parent Corporation, the Surviving Corporation)
following the consummation of the Business Combination were
Incumbent Directors at the time of the Board's approval of the
execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the
criteria specified in (A), (B) and (C) above shall be deemed to be
a "Non-Qualifying Transaction"); or |
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(iv)
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the
stockholders of the Company approve a plan of complete liquidation
or dissolution of the Company or a sale of all or substantially all
of the Company's assets. |
Notwithstanding the
foregoing, a Change in Control of the Company shall not be
deemed to occur solely because any person acquires beneficial
ownership of more than 25% of the Company Voting Securities as a
result of the acquisition of Company Voting Securities by the
Company which reduces the number of Company Voting Securities
outstanding; provided that, if after such acquisition by the
Company such person becomes the beneficial owner of additional
Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such
person, a Change in Control of the Company shall then occur.
(e) "Date of Termination" means (1) the
effective date on which Executive's employment by the Company
terminates as specified in a prior written notice by the Company or
Executive, as the case may be, to the other, delivered pursuant to
Section 10 or (2) if Executive's employment by the
Company terminates by reason of death, the date of death of
Executive.
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(f)
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"Disability" means termination of Executive's
employment by the Company due to Executive's absence from
Executive's duties with the Company on a full-time basis for at
least one hundred eighty (180) consecutive days as a result of
Executive's incapacity due to physical or mental
illness. |
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(g)
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"Good
Reason" means, without Executive's express written consent, the
occurrence of any of the following events after a Change in
Control: |
(i) (A) any change in the duties or
responsibilities (including reporting responsibilities) of
Executive that is inconsistent in any material and adverse respect
with Executive's position(s), duties, responsibilities or status
with the Company immediately prior to such Change in Control
(including any material and adverse diminution of such duties or
responsibilities) or (B) a material and adverse change in
Executive's titles or offices (including, if applicable, membership
on the Board) with the Company as in effect immediately prior to
such Change in Control;
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(ii)
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a
reduction by the Company in Executive's rate of annual base salary
or annual target bonus opportunity (including any material and
adverse change in the formula for such annual bonus target) as in
effect immediately prior to such Change in Control or as the same
may be increased from time to time thereafter; |
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(iii)
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any
requirement of the Company that Executive (A) be based
anywhere more than fifty (50) miles from the office where Executive
is located at the time of the Change in Control or (B) travel
on Company business to an extent substantially greater than the
travel obligations of Executive immediately prior to such Change in
Control; |
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(iv)
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the
failure of the Company to (A) continue in effect any employee
benefit plan, compensation plan, welfare benefit plan or material
fringe benefit plan in which Executive is participating immediately
prior to such Change in Control or the taking of any action by the
Company which would adversely affect Executive's participation in
or reduce Executive's benefits under any such plan, unless
Executive is permitted to participate in other plans providing
Executive with substantially equivalent benefits in the aggregate
(at substantially equivalent cost with respect to welfare benefit
plans), or (B) provide Executive with paid vacation in
accordance with the most favorable vacation policies of the Company
(and its affiliated companies) as in effect for Executive
immediately prior to such Change in Control, including the
crediting of all service for which Executive had been credited
under such vacation policies prior to the Change in
Control; |
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(v)
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any
purported termination of Executive's employment which is not
effectuated pursuant to Section 10(b) (and which will not
constitute a termination hereunder); or |
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(vi)
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the
failure of the Company to obtain the assumption agreement from any
successor as contemplated in Section 9(b). |
An isolated,
insubstantial and inadvertent action taken in good faith and
which is remedied by the Company within ten (10) days after
receipt of notice thereof given by Executive shall not
constitute Good Reason. Executive's right to terminate
employment for Good Reason shall not be affected by Executive's
incapacities due to mental or physical illness and Executive's
continued employment shall not constitute consent to, or a
waiver of rights with respect to, any event or condition
constituting Good Reason; provided, however, that Executive must
provide notice of termination of employment within ninety (90)
days following Executive's knowledge of an event constituting
Good Reason or such event shall not constitute Good Reason under
this Agreement.
(h) "Qualifying Termination" means a termination of
Executive's employment (i) by the Company other than for Cause or
(ii) by Executive for Good Reason. Termination of Executive's
employment on account of death, Disability or Retirement shall not
be treated as a Qualifying Termination.
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(i)
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"Retirement" means Executive's mandatory
retirement (not including any mandatory early retirement) in
accordance with the Company's retirement policy generally
applicable to its salaried employees, as in effect immediately
prior to the Change in Control, or in accordance with any
retirement arrangement established with respect to Executive with
Executive's written consent. |
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(j)
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"Subsidiary" means any corporation or other
entity in which the Company has a direct or indirect ownership
interest of 50% or more of the total combined voting power of the
then outstanding securities or interests of such corporation or
other entity entitled to vote generally in the election of
directors or in which the Company has the right to receive 50% or
more of the distribution of profits or 50% of the assets or
liquidation or dissolution. |
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(k)
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"Termination Period" means the period of time
beginning with a Change in Control and ending two (2) years
following such Change in Control. Notwithstanding anything in this
Agreement to the contrary, if (i) Executive's employment is
terminated prior to a Change in Control for reasons that would have
constituted a Qualifying Termination if they had occurred following
a Change in Control; (ii) Executive reasonably demonstrates
that such termination (or Good Reason event) was at the request of
a third party who had indicated an intention or taken steps
reasonably calculated to effect a Change in Control; and
(iii) a Change in Control involving such third party (or a
party competing with such third party to effectuate a Change in
Control) does occur, then for purposes of this Agreement, the date
immediately prior to the date of such termination of employment or
event constituting Good Reason shall be treated as a Change in
Control. For purposes of determining the timing of payments and
benefits to Executive under Section 4, the date of the actual
Change in Control shall be treated as Executive's Date of
Termination under Section 1(e). |
2. Obligation of Executive. In the event
of a tender or exchange offer, proxy contest, or the execution of
any agreement which, if consummated, would constitute a Change in
Control, Executive agrees not to voluntarily leave the employ of
the Company, other than as a result of Disability or an event which
would constitute Good Reason if a Change in Control had occurred,
until the Change in Control occurs or, if earlier, such tender or
exchange offer, proxy contest, or agreement is terminated or
abandoned.
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3.
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Term
of Agreement. This Agreement shall be effective on |
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