EMPLOYMENT AGREEMENT

Exhibit 10.1

This Employment Agreement (the “Agreement”) is entered into between Michael J.
Lavington (the “Executive”) and Gevity HR, Inc., a Florida Corporation (the
“Company”), and shall become effective as of the date upon which Executive
receives final approval of his application for authorization to work in the
United States (the “Effective Date”).

W I T N E S S E T H

WHEREAS, the Company wishes to employ the Executive to provide services to the
Company for the period provided in this Agreement and Executive wishes to become
employed by the Company to provide services to the Company for such period, on
the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set
forth, and intending to be legally bound hereby, the parties hereto agree as
follows:

1.        Employment. The Company hereby agrees to employ the Executive, and
Executive hereby agrees to become employed by and remain in the employ of the
Company, subject to the terms and conditions of this Agreement, during the
period (the “Employment Period”) commencing on the Effective Date and ending on
the second anniversary thereof (the “Anniversary Date”) or, if earlier, the Date
of Termination (as defined in Section 4 below). Commencing on the Anniversary
Date, the Employment Period shall be extended for successive one-year periods
(each, a “Renewal Period”), unless a notice not to extend the Employment Period
shall have been given by either party hereto to the other not later than 90 days
preceding the commencement of a Renewal Period or unless the Date of Termination
shall have previously occurred. Unless the context requires otherwise, the
Employment Period shall for all purposes of this Agreement be deemed to include
any Renewal Period.

 

2.

Duties and Responsibilities.

(a)       During the Employment Period, Executive shall devote substantially all
of his business time, attention and best efforts to the business of the Company,
and shall use Executive's reasonable best efforts to perform faithfully and
efficiently Executive's duties and responsibilities as set forth below.

(b)       Executive hereby agrees to serve, upon the terms and conditions herein
contained, as Chairman of the Board of Directors and Chief Executive Officer of
the Company. Executive shall report directly to the Board of Directors of the
Company (the “Board”). The Company shall use its best efforts to cause Executive
to remain a member of the Board during the entire Employment Period and to such
end shall include the Executive in the management slate for nomination for
election of directors at each annual meeting of shareholders at which the
Executive's term as a member of the Board would otherwise expire. Executive
shall have those powers and perform such services and duties for the Company
consistent with his position as Chairman of the Board of Directors and Chief
Executive Officer, which shall include, without limitation, the power of
supervision and control over and responsibility for the general management and
operation of the Company. Executive's duties hereunder shall be performed at the
principal offices of the Company in the Bradenton/Sarasota, Florida metropolitan
area.

 

 

 

3.

Compensation During the Employment Period.

(a)       Base Salary. During the Employment Period, Executive shall be paid an
initial annual base salary (“Base Salary”), in cash, of not less than $710,000.
Executive’s Base Salary shall be reviewed at least annually and shall be subject
to upward adjustments at the sole discretion of the Board. The Base Salary shall
be payable in accordance with the Company's regular payroll practice, which at
this time is a biweekly payroll cycle, and shall be prorated for any portion of
the Employment Period which is less than a calendar year.

(b)       Bonus. For each fiscal year during the Employment Period, the Board,
in its sole discretion, will determine whether Executive will be eligible for an
annual bonus under the terms of the Company’s annual bonus program for
executives (“Annual Bonus”). The Annual Bonus may consist of cash, Company stock
(restricted or otherwise) or a combination thereof. The determination of
Executive’s eligibility for an Annual Bonus award and the amount, if any, shall
be based upon satisfaction of certain criteria prescribed by the Compensation
Committee of the Board (the “Compensation Committee”). The Annual Bonus, if any,
for any fiscal year shall be payable after the end of the fiscal year at such
time and in such manner as determined by the Compensation Committee but in no
event shall any payment for a fiscal year be made later than March 15 of the
following fiscal year.

(c)       Stock Options. In consideration of Executive's entering into and
agreeing to be bound by the provisions of this Agreement, including, without
limitation, the terms and conditions of Section 6, the Company shall recommend
that the Compensation Committee grant Executive on the first day of Executive's
employment hereunder, pursuant to the Company's 2005 Equity Incentive Plan (the
“2005 Plan”), a non-qualified option (the “Initial Option”) to purchase 125,000
shares of common stock of the Company (the “Shares”). The Initial Option will
have an exercise price per Share equal to the closing price per share for the
common stock on the NASDAQ National Market System on the date of grant and the
Shares underlying the Initial Option will vest over a four year period, with 25%
of such Shares vesting on each anniversary of the date of grant. The Initial
Option will be subject to the provisions of the 2005 Plan and the Stock Option
Agreement, in customary form, entered into between Executive and the Company
evidencing such grant. The Initial Option shall be exercisable for a period of
10 years from the date of grant. The grant of any stock options other than the
Initial Option shall be at the sole discretion of the Board or a duly authorized
committee thereof.

(d)       Retirement, Savings, Welfare and Fringe Benefit Plans; Annual
Allowance. During the Employment Period, Executive shall be eligible to
participate in such retirement, savings, welfare, fringe and other employee
benefit plans, practices, policies and programs, applicable generally to
employees and/or senior executives of the Company, as the Company may establish
and maintain from time to time (including, without limitation, medical, dental,
life, accident and disability insurance coverages). During the Employment
Period, Executive shall be paid an annual allowance of $20,000 per calendar
year, subject to required withholdings, (“Annual Allowance”) payable in 12 equal
monthly installments, and prorated for partial calendar years, to cover
Executive's cost of supplemental life insurance and disability insurance and
automobile expense.

 

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(e)       Vacation. During the Employment Period Executive shall be entitled to
take twenty-seven (27) days of vacation per calendar year (prorated for any
partial calendar year) in accordance with Company policies as in effect from
time to time.

(f)        Reimbursement of Expenses. During the Employment Period, the Company
shall reimburse Executive in accordance with any then current Company policies
for all expenses reasonably and actually incurred by Executive in the
performance of Executive's duties hereunder; provided, however, to the extent
required by Code Section 409A, the expenses paid by the Company during any
calendar year shall not affect the expenses paid by the Company in another
taxable year and this right to reimbursement is not subject to liquidation or
exchange for another benefit.

 

4.

Termination of Employment During the Employment Period.

(a)       Death or Disability. Executive's employment shall terminate
automatically upon Executive's death. The Company may terminate Executive's
employment for Disability. For purposes of this Agreement, “Disability” shall
mean the failure of Executive due to mental or physical illness to substantially
perform his duties on a full-time basis for a period of more than six (6)
consecutive months, or for shorter non-consecutive periods aggregating more than
six (6) months in any consecutive twelve (12) month period.

(b)       Cause. The Company may terminate Executive's employment for Cause. For
purposes of this Agreement, “Cause” shall mean:

(i)        the willful and continued failure by Executive to perform
substantially Executive's duties with the Company (other than any such failure
resulting from Executive's incapacity due to physical or mental illness); or

(ii)       gross negligence or willful misconduct by Executive in the execution
of Executive's professional duties; or

(iii)      conviction of Executive of, or a plea by Executive of nolo contendere
to, a felony; or

(iv)      a material breach by Executive of any provision of this Agreement; or

(v)       any misuse, misappropriation or embezzlement by Executive of funds or
property belonging to the Company or any of its affiliates; or

(vi)      use of alcohol or drugs which either interferes with the performance
of Executive's duties hereunder.

(c)       Other than for Cause. The Company may terminate Executive's employment
for reasons other than for Cause or due to Disability.

(d)       Notice of Termination by the Company. Any termination of the
Executive's employment by the Company (other than due to Executive's death)
shall be

 

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communicated by Notice of Termination given in accordance with this Agreement.
For purposes of this Agreement, a “Notice of Termination” means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's employment under the provision
so indicated, and (iii) specifies the intended termination date. The failure by
the Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Cause or Disability shall not waive any right
of the Company to assert such fact or circumstance in enforcing the Company's
rights hereunder. Executive agrees, in the event of any dispute as to whether a
Disability exists, and if requested by the Company, to submit to a physical
examination by a licensed physician selected by the Company, the cost of such
examination to be paid by the Company. The written medical opinion of such
physician shall be conclusive and binding upon each of the parties hereto as to
whether a Disability exists and the date on which such Disability arose. This
section shall be interpreted and applied so as to comply with the provisions of
the Americans with Disabilities Act and any applicable state or local laws.

(e)       Notice of Termination by Executive. Executive may terminate his
employment under this Agreement by delivering written notice (“Executive’s
Notice of Termination”) of such termination at least sixty (60) days in advance
of the intended termination date. If Executive terminates for “good reason”,
Executive’s Notice of Termination must (i) indicate the specific termination
provision in this Agreement relied upon, (ii) set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated, and (iii) specify the
intended termination date to the Company. The termination shall be treated as a
termination for “good reason” if Executive satisfies these requirements for the
Executive’s Notice of Termination and the termination occurs within ninety (90)
days following the occurrence of any of the following:

 

(i)

the Company, without the consent of the Executive, assigns to the Executive
duties inconsistent with or reduces the powers and functions associated with,
Executive’s position, duties, responsibilities and status with the Company or
the Company other than that associated with the failure of Executive to be
reelected to the Board; or

 

(ii)

the Company materially breaches any provision of this Agreement, which is not
cured by the Company within the period specified in Executive’s Notice of
Termination.

(f)        Date of Termination. “Date of Termination” means (i) if Executive's
employment is terminated by the Company, the date specified in the Notice of
Termination, (ii) if Executive's employment is terminated by reason of death,
the Date of Termination shall be the date of Executive's death, (iii) if
Executive’s employment is terminated by Executive pursuant to Section 4(e), the
date that is specified in Executive’s Notice of Termination, and (iv) if
Executive's employment is terminated as a result of the Company's or Executive's
decision not to extend the Employment Period, the Date of Termination shall be
the last day of the Employment Period.

 

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5.         Obligations of the Company Upon Termination. 

               (a) Following any termination of Executive's employment
hereunder, in addition to any applicable benefits described in Section 5(b), the
Company shall pay Executive his Base Salary through the Date of Termination and
any amounts owed to Executive pursuant to the terms and conditions of the
employee benefit plans and programs of the Company at the time such payments are
due. Except as set forth in Section 5(b) below, Executive’s eligibility for,
coverage under and participation in all retirement, savings, welfare and fringe
benefit plans including, without limitation, the Annual Allowance, shall
terminate on the Date of Termination, subject to the rights of Executive and his
eligible dependents to continue coverage under the provisions of COBRA.

(b)       Other than for Cause or by Executive for Good Reason. If Executive's
employment is terminated by the Executive for “good reason” or by the Company
for reasons other than for Cause (including Executive's resignation at the
request of the Board), then, subject to and contingent on Executive's execution
and delivery to the Company of a general release of all claims against the
Company in form and substance satisfactory to it, the Company shall (in addition
to amounts provided under Section 5(a)) continue to pay or provide to Executive
(or the Executive's legal representative or estate, as applicable) after the
Date of Termination an amount equal to two (2) years of the Executive’s Base
Salary payable over the two year period beginning on the date the Executive has
a Separation from Service (within the meaning of Code Section 409A) (“Separation
from Service”); provided, however, to the extent required to avoid the
imposition of an additional tax under Code Section 409A, the commencement of
such payments shall be delayed until the Company’s first regular pay date that
comes on or after the date which is six months and one day after the Executive
has a Separation from Service (“409A Payment Date”) and any payments otherwise
due to be made before the 409A Payment Date shall be paid in a single lump sum
payment on the 409A Payment Date.

Notwithstanding the foregoing, the amount under this Section 5(b) shall be
payable or provided to Executive only so long as Executive is not in default
under Section 6 hereof.

(c)       Cause; Non-Renewal; Voluntary Termination; Death; Disability. If,
during the Employment Period, Executive’s employment with the Company is
terminated by the Company for Cause or due to Executive’s Disability, by the
Executive due to death or for reasons other than “good reason” or the Agreement
is not renewed, the Company shall have no further obligation to Executive under
this Agreement as of the Date of Termination except as provided in Section 5(a).

(d)       Death After Termination. In the event of Executive's death during the
period Executive is receiving payments pursuant to Section 5(b) hereof,
Executive's designated beneficiary shall be entitled to receive the balance of
the payments under this Agreement; or in the event there is no designated
beneficiary, the remaining payments shall be made to Executive's estate.

 

6.

Confidential Information; Restrictive Covenants.

(a)       In the course of involvement in the Company's activities or otherwise,
Executive has obtained and may obtain confidential information concerning, by
way of illustration and without limitation, the Company's businesses,
operations, financial affairs,

 

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organizational and personnel matters, policies, procedures, client lists,
business plans and other non-public matters, as well as those of third parties
(“Confidential Information”). All such Confidential Information has been and
will be provided subject to Executive's continuing obligation to use and protect
the Confidential Information. In order to induce, and in consideration of, the
provision to Executive of Confidential Information, as a condition to its
continued receipt by Executive, and without prejudice to or limitation on any
other confidentiality obligations imposed by agreement or by law, Executive
undertakes to keep the Confidential Information strictly confidential. Without
limiting the foregoing, except as authorized by the Company in writing or as
required by law, Executive may disclose or allow disclosure of any Confidential
Information, or of any information derived therefrom, in whatever form, only to
a person who is then a director, officer, employee, attorney, agent or other
representative of the Company and who, in Executive's reasonable good faith
judgment, has a need to know the Confidential Information or information derived
therefrom in furtherance of the business the Company. The foregoing obligations
will survive, and remain binding and enforceable for a one (1) year period
following the expiration of the Employment Period or any Renewal Period(s), any
termination of Executive's employment for any reason or any settlement of the
financial rights and obligations arising from Executive's employment.

(b)       In view of Executive's importance to the Company, the parties
represent and agree that the Company will suffer significant harm from Executive
competing with the Company during the Executive's employment and for some period
of time following Executive’s Date of Termination. Accordingly, Executive agrees
that Executive will not, during the Employment Period and for a period (the
“Applicable Period”) ending on the expiration of the second anniversary
following the Date of Termination: (x) form, or acquire a 5% or greater equity
ownership, voting or profit participation interest in, any Competitive
Enterprise, or (y) associate (including, but not limited to, association as an
officer, employee, partner, director, consultant, agent or advisor) with any
Competitive Enterprise and in connection with such association engage in, or
directly or indirectly manage or supervise personnel engaged in, any activity
(i) which is similar to any activity in which Executive was engaged, in whole or
in part, (ii) for which Executive had direct or indirect managerial or
supervisory responsibility at the Company or (iii) which calls for the
application of the same or similar specialized knowledge or skills as those
utilized by Executive in Executive's activities with the Company, at any time
during the one-year period immediately prior to Executive's Date of Termination,
and irrespective of whether the activity in either case was in furtherance of
advisory, agency, proprietary or fiduciary business of either the Company or the
Competitive Enterprise. For purposes of this Agreement, a “Competitive
Enterprise” is any business in any jurisdiction where the Company or any of its
affiliates carried on business at any time during the 12 months prior to the
Date of Termination and in which the Executive worked that engages in the
business of the Company or any of its affiliates.

(c)       Non-solicitation of Employees. During the Employment Period, and for
the Applicable Period thereafter, Executive agrees that Executive will not, in
any manner, directly or indirectly, solicit any person who is an employee of the
Company and is employed either (a) as a director or in a managerial or in any
skilled or technical capacity to apply for or accept employment with any
Competitive Enterprise. The term “Solicit” as used in this paragraph means any
communication of any kind whatsoever initiated by Executive either

 

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directly or indirectly through a third party, inviting, encouraging or
requesting any employee of the Company to take or refrain from taking any
action.

(d)       Non-solicitation of Clients. During the Employment Period and for the
Applicable Period thereafter, Executive agrees that Executive will not, in any
manner, directly or indirectly, (i) solicit in writing, by telephone, by
personal meeting or by any other means, either directly or indirectly, any
client of the Company to whom Executive provided services, or for whom Executive
transacted business, or whose identity became known to Executive in connection
with Executive's employment with the Company to transact business with a
Competitive Enterprise or reduce or refrain from doing any business with the
Company, or (ii) interfere with or damage (or attempt to interfere with or
damage) any relationship between the Company and any such client. The term
“Solicit” as used in this paragraph means any communication of any kind
whatsoever initiated by Executive either directly or indirectly through a third
party, inviting, encouraging or requesting any client of the Company to take or
refrain from taking any action; provided, however, that general advertisements
and solicitations shall not be included in the definition of “Solicit.”

 

7.

Injunctive Relief; Submission to Jurisdiction.

(a)       Executive acknowledges that a violation on Executive's part of any of
the covenants contained in Section 6 hereof would cause immeasurable and
irreparable damage to the Company in an amount that would be material but not
readily ascertainable, and that any remedy at law would be inadequate.
Accordingly, and notwithstanding the provisions of Section 7(b), Executive
agrees that the Company shall be entitled (without the necessity of showing
economic loss or other actual damage) to injunctive relief in any court of
competent jurisdiction for any actual or threatened violation of any such
covenant in addition to any other remedies it may have. Executive agrees that in
the event that any arbitrator or court of competent jurisdiction shall finally
hold that any provision of Section 6 shall hereof is void or constitutes an
unreasonable restriction against Executive, the provisions of such Section 6
shall not be rendered void but shall be deemed to be modified to the minimum
extent necessary to remain in force and effect for the greatest period and to
such extent as such arbitrator or court may determine constitutes a reasonable
restriction under the circumstances.

(b)       Subject to the provisions of Section 7(a), Executive and the Company
hereby irrevocably submit to the exclusive jurisdiction of the courts of Florida
over any suit, action or proceeding arising out of or relating to this
Agreement. Nothing herein shall preclude the Company from bringing any action or
proceeding in any other court for the purpose of enforcing the provisions of
this paragraph. The agreement of the parties to this forum is independent of the
law that may be applied in the action, and the parties agree to this forum even
if the forum may under applicable law choose to apply non-forum law. The parties
hereby waive, to the fullest extent permitted by applicable law, any objection
that they now or hereafter have to personal jurisdiction or to the laying of
venue of any such suit, action or proceeding brought in such court. Subject to
the provisions of Section 7(a), the parties undertake not to commence any action
arising out of or relating to this Agreement in a forum other than the forum
described in this Section 7(b). The parties agree that, to the fullest extent
permitted by applicable law, a final and non-appealable judgment in any such
suit, action, or proceeding brought in any such court shall be conclusive and
binding upon the parties.

 

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8.

Representations; Work Product.

(a)       Executive represents, warrants and covenants that: (i) Executive has
the full right, title and authority to enter into this Agreement and perform
Executive's obligations hereunder; and (ii) Executive shall not do any act, fail
to do any act or make any statement whatsoever which may or will impair, impugn,
denigrate, disparage or negatively reflect upon the name, reputation or business
interests of the Company.

(b)       The Company represents, warrants and covenants that it has the full
right, title and authority to enter into this Agreement and perform its
obligations hereunder and that the Company has duly authorized, executed and
delivered this Agreement.

(c)       Executive acknowledges and agrees that any and all plans, concepts,
ideas, materials and similar work product made or developed by Executive in
connection with the rendering of Executive's services while employed by the
Company (collectively, the “Material”) shall be disclosed to the Company and all
intellectual property rights in such designs or works shall rest absolutely in
the Company, which shall be entitled, as far as the law permits, to the
exclusive use thereof and shall, at all times, be and remain solely and
exclusively the property of such entity or entities for such entity's or
entities' exploitation in any manner or media as it may deem appropriate
throughout the world and in perpetuity. Notwithstanding the above, Executive
hereby assigns and shall at any time assign to the Company, all rights to the
Material, including without limitation, all copyrights and renewals and
extensions thereof. The Company and such assignees shall have the right in its
or their sole discretion to edit, delete from and/or rearrange the Material and
any recordings thereof and to exploit the Material at any time or times by any
means the Company or such assignees may deem desirable.

 

9.

Successors.

(a)       This Agreement is personal to Executive and without the prior written
consent of the Company shall not be assignable by Executive otherwise than by
will or the laws of descent and distribution, and any assignment in violation of
this Agreement shall be void. This Agreement shall inure to the benefit of and
be enforceable by Executive's legal representatives.

(b)       This Agreement shall inure to the benefit of and be binding upon the
Company, its successors and assigns.

(c)       The Company shall 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 any business of the Company for
which Executive's services are principally performed, to assume expressly 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. As used in this Agreement, “Company” shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

 

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10.       Withholding. All payments to be made to Executive hereunder will be
subject to all applicable required withholding of federal, state, local and
foreign income and employment taxes.

11.       Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or sent by facsimile transmission, personal or nationally recognized
overnight couriers, or certified U.S. mail with confirmation or return receipt,
addressed as follows: if to Executive, at Executive's last known address as
maintained in the records of the Company; if to the Company, at the Company's
principal executive offices, Attention: General Counsel.

12.       Waiver of Breach and Severability. The waiver by either party of a
breach of any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach by either party. In the
event any provision of this Agreement is found to be invalid or unenforceable,
it may be severed from the Agreement and the remaining provisions of the
Agreement shall continue to be binding and effective.

 

13.

Entire Agreement; Amendment.

(a)       This Agreement and the Change In Control Severance Agreement contain
the entire agreement of the parties with respect to the subject matter hereof,
and except as otherwise set forth herein, supersedes all prior agreements,
promises, covenants, arrangements, communications, representations and
warranties between them, whether written or oral, with respect to the subject
matter hereof.

(b)       No provisions of this Agreement may be modified, waived or discharged
unless such modification, waiver or discharge is agreed to in writing signed by
the parties hereto.

14.       Governing Law. THE INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO THE PRINCIPLE
OF CONFLICTS OF LAWS.

15.       Headings. The headings in this Agreement are for convenience only and
shall not be used to interpret or construe its provisions.

 

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16.       IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

 

GEVITY HR, INC.

 

(the “Company”)

 

 

 

By:

   /s/ Edwin E. Hightower, Jr.

 

Name: Edwin E. Hightower, Jr.

 

Title:

   Senior Vice President and Chief Legal

 

   Officer

 

 

 

“Executive”

 

 

 

/s/ Michael J. Lavington

 

MICHAEL J. LAVINGTON

 

 

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