This Executive Employment Agreement involves
Title: EXECUTIVE EMPLOYMENT AGREEMENT
Governing Law: Illinois Date: 8/12/2016
Industry: Software and Programming Law Firm: DLA Piper Sector: Technology
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (this “ Agreement ”) is made and entered into by Paylocity Corporation, an Illinois corporation (“ Company ”), and Mark Kinsey (“ Executive ”) effective as of May 1, 2015 (the “ Effective Date ”).
The parties agree as follows:
1. Employment . Company hereby employs Executive, and Executive hereby accepts such employment, upon the terms and conditions set forth herein.
2. Duties .
2.1 Position . Executive is employed as Senior Vice President of Operations and shall have the duties and responsibilities assigned by Company’s President and Chief Executive Officer (“ CEO ”). Executive shall perform faithfully and diligently all duties assigned to Executive. Company reserves the right to modify Executive’s position and duties at any time in its sole and absolute discretion.
2.2 Best Efforts/Full-time . Executive will expend Executive’s best efforts on behalf of Company, and will abide by all policies and decisions made by Company, as well as all applicable federal, state and local laws, regulations or ordinances. Executive will act in the best interest of Company at all times. Executive shall devote Executive’s full business time and efforts to the performance of Executive’s assigned duties for Company, unless Executive notifies the CEO in advance of Executive’s intent to engage in other paid work and receives the CEO’s express written consent to do so. Notwithstanding the foregoing, Executive will be permitted to serve as an outside director on the board of directors for nonprofit or charitable entities or managing Executive’s personal financial and legal affairs, so long as the foregoing activities, provided such entities are not competitive with Company and subject to the provisions of section 10 below.
2.3 Work Location . Executive’s principal place of work shall be located in Arlington Heights, Illinois, or such other location as Company may direct from time to time in connection with the performance of Executive’s duties.
3. At-Will Employment . Executive’s employment with Company is at-will and not for any specified period and may be terminated at any time, with or without cause (as defined below) or advance notice, by either Executive or Company. No representative of Company, other than the CEO, has the authority to alter the at-will employment relationship. Any change to the at-will employment relationship must be by specific, written agreement signed by Executive and the CEO. Nothing in this Agreement is intended to or should be construed to contradict, modify or alter this at-will relationship.
4. Compensation .
4.1 Base Salary . As compensation for Executive’s performance of Executive’s duties hereunder, for fiscal year 2015, Company shall pay to Executive an annualized base salary of $250,000, less required deductions for state and federal withholding tax, social security and all other employment taxes and payroll deductions, payable in accordance with the normal payroll practices of Company. Beginning in fiscal year 2016, the Compensation Committee of the Company’s Board of Directors (the “ Board ”) shall conduct an annual review of Executive’s base salary based on third party comparison data and internal management recommendations. The salary increase will be evaluated after each fiscal year and implemented in September of each year. In the event Executive’s employment under this Agreement is terminated by either party, for any reason, Executive will earn the base salary prorated to the date of termination.
4.2 Incentive Compensation . Executive will be eligible to earn an annual incentive bonus, the target amount of which is 50% of Executive’s base salary for fiscal 2015 and thereafter a percentage as determined by the Company’s Compensation Committee (“ Annual Bonus ”). The Annual Bonus will be based on Executive’s achievement of certain goals, which shall be established by Company’s Compensation Committee and the Board and communicated to Executive within 30 days of the beginning of each fiscal year. The Annual Bonus shall be less all required taxes and withholdings and will be paid out within 60 days following the end of the fiscal year in which it is earned. Executive’s Annual Bonus for fiscal 2015 shall be prorated to Executive’s start date.
4.3 Equity Incentive Grants . Subject to approval of the Board, Paylocity Holding Corporation, Company’s parent (“ Parent ”), shall grant to Executive restricted stock units (“ RSUs ”) representing the right to receive upon settlement a number of shares of the common stock of Parent equal to 25,000 shares. The RSUs shall vest annually in four equal installments beginning on the one year anniversary of Executive’s start date. Beginning in fiscal 2016, Executive shall be eligible to receive additional long-term equity incentives, as determined during the annual review conducted by the Compensation Committee and the Board. Immediately prior to the consummation of a Change in Control, the vesting of all unvested shares subject to outstanding equity awards with time-based vesting issued to Executive by Company and/or Parent shall be accelerated in full and, if applicable, such equity awards shall become exercisable or shall be settled in full immediately prior to such Change in Control provided that Executive’s employment with Company or Parent has not terminated prior to such Change in Control. For the purposes of this Agreement, “ Change in Control ” shall mean (i) the acquisition by any person, entity or “group” (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either the then outstanding equity interests in Parent or the combined voting power of Parent’s then outstanding voting securities; or (ii) the consummation of a reorganization, merger or consolidation of Parent or the sale of all or substantially all of the assets of Parent, in each case with respect to which persons who held equity interests in Parent immediately prior to such reorganization, merger, consolidation or sale do not immediately thereafter own, directly or indirectly, 50% or more of the combined voting power of the then outstanding securities of the surviving or resulting corporation or other entity; provided, however, that any such transaction consummated in connection with, or for the purpose of facilitating, an initial public offering shall not constitute a Change in Control hereunder; provided further, however, that a Change in Control shall not include a transaction undertaken for the principal purpose of restructuring the
capital of Parent, including, but not limited to, reincorporating Parent in a different jurisdiction, converting Parent to a limited liability company or creating a holding company. Notwithstanding the foregoing, a Change in Control shall not occur for purposes of this Agreement unless such Change in Control constitutes a “change in control event” under Section 409A of the Code and the regulations thereunder.
5. Customary Fringe Benefits . Executive will be eligible for all customary and usual fringe benefits generally available to Executives of Company subject to the terms and conditions of Company’s benefit plan documents. Company reserves the right to change or eliminate the fringe benefits on a prospective basis, at any time, effective upon notice to Executive.
6. Business Expenses . Executive will be reimbursed for all reasonable, out-of-pocket business expenses incurred in the performance of Executive’s duties on behalf of Company. To obtain reimbursement, expenses must be submitted promptly with appropriate supporting documentation and will be reimbursed in accordance with Company’s policies. Any reimbursement Executive is entitled to receive shall (a) be paid no later than the last day of Executive’s tax year following the tax year in which the expense was incurred, (b) not be affected by any other expenses that are eligible for reimbursement in any tax year and (c) not be subject to liquidation or exchange for another benefit.
7. Termination of Executive’s Employment .
7.1 Termination for Cause by Company . Company may terminate Executive’s employment immediately at any time for Cause. For purposes of this Agreement, “ Cause ” is defined as: (i) material dishonest or fraudulent behavior, or convictions of a felony; (ii) the material breach of any covenant contained or referred to in this Agreement; (iii) the failure of Executive to meet fair and reasonable performance standards established by Company from time to time; (iv) Executive’s failure or refusal to perform specific directives of Company’s Board or CEO, which directives are consistent with the scope and nature of Executive’s duties and responsibilities, and which are not remedied by Employee within thirty (30) days after written notice; (v) any violation of the covenant not to disclose confidential information regarding the business of Company and its products as set forth in Section 7 of this Agreement; or (vi) any act of material dishonesty by Executive which adversely affects the business of Company. In the event Executive’s employment is terminated in accordance with this subsection 7.1, Executive shall be entitled to receive only Executive’s base salary then in effect, prorated to the date of termination and all benefits accrued through the date of termination (“ Accrued Benefits ”). All other Company obligations to Executive pursuant to this Agreement will become automatically terminated and completely extinguished. Executive will not be entitled to receive the Severance Payment described in subsection 7.2 below.
7.2 Termination Without Cause by Company/Severance . Company may terminate Executive’s employment under this Agreement without Cause at any time on thirty (30) days’ advance written notice to Executive. In the event of such termination, Executive will receive Executive’s base salary then in effect, prorated to the date of termination, and Accrued Benefits. In addition, Executive will receive a “ Severance Payment ” equivalent to twelve (12) months of Executive’s base salary then in effect on the date of termination, payable as salary continuation in equal installments in accordance with Company’s regular payroll cycle
over a twelve (12) month period, beginning on the first regular payday occurring 60 days following the termination date. Executive will only receive the Severance Payment if Executive executes a full general release in a form acceptable to Company, releasing all claims, known or unknown, that Executive may have against Company arising out of or any way related to Executive’s employment or termination of employment with Company, and such release has become effective in accordance with its terms prior to the 60th day following the termination date. All other Company obligations to Executive will be automatically terminated and completely extinguished. If Executive’s employment with Company terminates due to Executive’s death or Executive’s inability to perform the essential functions of Executive’s position with or without reasonable accommodation, Executive shall not be entitled to the Severance Payment described above.
7.3 Voluntary Resignation by Executive . Executive may voluntarily resign Executive’s position with Company at any time on thirty (30) days’ advance written notice. In the event of Executive’s voluntary resignation, Executive will be entitled to receive only Accrued Benefits for the thirty-day notice period and no other amount. All other Company obligations to Executive pursuant to this Agreement will become automatically terminated and completely extinguished. In addition, Executive will not be entitled to receive the Severance Payment described in subsection 7.2 above.
8. Resignation of Board or Other Positions . Upon the termination of Executive’s employment for any reason, Executive agrees to immediately resign all other positions (including Board membership) Executive may hold on behalf of Company.
9. Application of Section 409A .
(a) Notwithstanding anything set forth in this Agreement to the contrary, no amount payable pursuant to this Agreement which constitutes a “deferral of compensation” within the meaning of the Treasury Regulations issued pursuant to Section 409A of the Code (the “ Section 409A Regulations ”) shall be paid unless and until Executive has incurred a “separation from service” within the meaning of the Section 409A Regulations. Furthermore, to the extent that Executive is a “specified employee” within the meaning of the Section 409A Regulation