CHANGE IN CONTROL SEVERANCE AGREEMENT
Exhibit 10.2
THIS AGREEMENT is entered into as of
this 15th day of September 2008, by and between Gevity HR, Inc., a
Florida corporation (the "Company"), and Michael J. Lavington
("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.
|
(b) "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.
(c) "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.
|
|
(d)
|
"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;
(ii) 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);
(iii) 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
(iv) 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.
(f) "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.
(g) "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;
(ii) 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;
(iii) 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;
(iv) 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;
(v) 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
(vi) 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.
(i) "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.
(j) "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.
(k) "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.
3.
Term of Agreement. This
Agreement shall