Exhibit 10.1

 

SECOND AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT

This Second Amended and Restated Executive Employment Agreement (“Agreement”) is
entered into by and between Paycom Software, Inc. (the “Company”) and Chad
Richison (“Executive”).  This Agreement is entered on March 9, 2020 and is
effective as of January 1, 2014 except with respect to (i) Section 2 and Section
4.5, which shall be effective upon execution of this Agreement by each of the
parties hereto, and (ii) those sections amended and restated in the Amended and
Restated Executive Employment Agreement dated October 28, 2019 (other than
Section 2), which amended and restated sections shall be effective as of October
28, 2019 (in each case, as applicable, the “Effective Date”).

WHEREAS, the operations of the Company and its Affiliates (defined below) are a
complex matter requiring direction and leadership in a variety of arenas;

WHEREAS, Executive possesses certain experience and expertise that qualify him
to provide the direction and leadership required by the Company and its
Affiliates;

WHEREAS, the Company has provided Executive with highly confidential information
pertaining to the Company and its Affiliates and will continue to provide new
confidential information after the execution of this Agreement;

WHEREAS, the Executive has disclosed to the Company that, while continuing to
perform his duties as Chief Executive Officer and President of the Company,
Executive may also seek to engage in other certain outside business activities
unrelated to and not competitive with the Company’s business activities;

WHEREAS, the Company and Executive acknowledge and confirm that this Agreement
arises from and is integrally related to Executive’s sale of the goodwill of a
business to the Company; and,

WHEREAS, subject to the terms and conditions hereinafter set forth, the Company
therefore wishes to employ Executive as an officer of the Company in the role as
its Chief Executive Officer, and Executive wishes to accept such employment;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, terms, provisions, and conditions set forth in this Agreement, the
parties hereby agree:

 

1.

Definitions.The following capitalized terms shall have the meanings set forth
below.

1.1.“Affiliates” means, with respect to any particular Person, any other Person
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such particular Person.  As used
in this definition, the term “control” shall mean (i) the ownership (directly or
indirectly) of more than 50% of the ownership or voting interests of any
particular Person or (ii) the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such Person,
whether through ownership of voting securities, by contract or otherwise.

 

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1.2.“Board” shall mean the Board of Directors of the Company.

1.3.“Cause” shall mean, with respect to Executive, the occurrence of any one of
the following:  (a) the repeated failure of Executive to perform such duties as
are lawfully requested and communicated in writing to Executive by the Board or
the board of directors of any subsidiary of the Company (to the extent such
duties are consistent with Executive’s position with the Company or any of its
subsidiaries), (b) the failure by such Executive to observe all reasonable,
lawful material policies of the Company and its subsidiaries applicable to
Executive and communicated to Executive in writing, (c) any action or omission
constituting gross negligence or willful misconduct of such Person in the
performance of his or her duties, (d) the material breach by Executive of any
provision of Executive’s employment or the breach by Executive of any
non‑competition, non‑solicitation or similar restrictive agreement with the
Company or any of its subsidiaries, (e) any act or omission by Executive
constituting fraud, embezzlement, disloyalty or dishonesty with respect to the
Company or its subsidiaries, (f) the use by Executive of illegal drugs or
repetitive abuse of other drugs or repetitive excess consumption of alcohol
interfering with the performance of Executive’s duties, or (g) the commission by
Executive of any felony or of a misdemeanor involving dishonesty, disloyalty or
moral turpitude.    Notwithstanding the foregoing, in the case of subsections
(a), (b), (c), and (d) of this Section 1.3, Cause shall not be deemed to exist
unless (i) Company gives Executive prior written notice that the Company
believes Executive is in violation of subsections (a), (b), (c), or (d) of his
Section 1.3; and (ii) Company gives Executive a ten (10) day opportunity to
cure; and (iii) Executive fails to cure prior to the end of such ten (10) day
period.

1.4.“Code” shall mean the Internal Revenue Code of 1986, as amended.

1.5.“Compensation Committee” means the Compensation Committee of the Board.

1.6.“Confidential Information” shall mean trade secrets, confidential or
proprietary information, and all other information, documents or materials
owned, developed or possessed by the Company or its Affiliates that are not
generally known to the public or within the industry of the
Company.  Confidential Information includes, but is not limited to, customer
lists, preferences and contacts, financial information, business plans, product
cost or pricing, information regarding future development, locations or
acquisitions, personnel records (including records of the Company’s clients) and
software programs.  Confidential Information shall not include any information
that is or becomes generally publicly available (other than as a result of
violation of this Agreement by Executive).

1.7.“Incumbent Director” means each member of the Board on the Effective Date
and each other member of the Board whose nomination or election to the Board is
approved by a majority of the then Incumbent Directors.

1.8.“Person” has the meaning given in Section 7701(a)(1) of the Code.  Person
shall include more than one Person acting as a group as defined by the Final
Treasury Regulations issued under Section 409A of the Code.

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1.9.“Public Offering” shall mean an underwritten sale to the public of the
Company’s equity securities (or its successor’s equity securities) pursuant to
an effective registration statement filed with the SEC on Form S-1 (or any
successor form adopted by the SEC) and after which the Company’s (or its
successor’s) equity securities are listed on the New York Stock Exchange, the
NYSE MKT or The NASDAQ Stock Market; provided, that a Public Offering shall not
include any issuance of equity securities in any merger or other business
combination, and shall not include any registration of the issuance of equity
securities to existing securityholders or employees of the Company and its
subsidiaries on Form S-4 or Form S-8 (or any successor form adopted by the SEC).

1.10.“Restricted Period” shall mean:  (a) if the Termination Date is before the
initial Public Offering, twelve (12) months following the Termination Date; or
(b) if the Termination Date is after the initial Public Offering, thirty-six
(36) months following the consummation of the initial Public Offering and twelve
(12) months following the Termination Date (such twelve (12) month period to run
concurrently with the aforementioned thirty-six (36) month period if both
periods are applicable).

 

2.

Term.  This Agreement shall commence on January 1, 2014 and shall continue until
three (3) years following the consummation of the initial Public Offering (which
was on April 21, 2014), subject to earlier termination as set forth in Section 5
below (“Initial Term”).  The Agreement has been renewed on April 22, 2017, April
22, 2018, April 22, 2019 and January 1, 2020, and will automatically renew,
subject to earlier termination as herein provided, for successive one (1) year
periods (the “Additional Terms”), unless either Executive or the Company
provides written notice of non-renewal at least forty-five (45) days prior to
the expiration of the Initial Term or the then Additional Term, whichever is
applicable.  The Initial Term and any Additional Term(s) shall be referred to
collectively as the “Term.”  Notwithstanding the foregoing, and subject to
earlier termination as herein provided, the presently-effective Additional Term
of this Agreement shall continue through December 31, 2020, at which time it
will be subject to expiration or renewal for successive one (1) year Additional
Terms from such date, as provided for in this section.

 

3.

Capacity and Performance.

3.1.Capacity.  During the Term, Executive shall serve the Company as its Chief
Executive Officer and President and shall report directly to the Board.  During
the Term, Executive shall be employed by the Company and shall perform such
duties and responsibilities, consistent and customary with the positions of
Chief Executive Officer and President, on behalf of the Company and its
Affiliates as may reasonably be designated from time to time by the Board.

3.2.Capacity and Performance.

(a) During his employment with the Company, Executive shall devote his
commercially reasonable efforts, business judgment, skill, and knowledge to the
advancement of the business and interests of the Company and its Affiliates and
to the discharge of his duties and responsibilities hereunder.

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(b) It is acknowledged and agreed between the Company and Executive that
Executive shall have the right and option to pursue other outside business and
non-business activities and interests while employed by the Company pursuant to
this Agreement, and may perform services and engage in activities for such other
business entities so long as such activities and interests are not in violation
of Executive’s obligations to the Company pursuant to this Agreement.  Such
outside business and non-business activities and interest may include, but shall
not be limited to, Executive performing services as a manager, managing member,
officer, or director on behalf of other outside business or non-business
entities not affiliated with the Company or its Affiliates.

(c) Notwithstanding the provisions of this Section 3.2, Executive shall not
engage in any outside business activities that either: (i) are competitive with
the products or services of the Company or its Affiliates (whether then-current
or in development), or (ii) interfere with Executive’s duties and
responsibilities to the Company.

 

4.

Compensation and Benefits. As compensation for all services performed by
Executive during the Term, Executive shall receive the following:

4.1.Base Salary.  During the Term, the Company shall pay Executive a base salary
at a rate not less than Seven Hundred Eleven Thousand Three Hundred Sixty
Dollars and Fifty Two Cents ($711,360.52) per year, less any and all lawful
withholdings or deductions, payable in accordance with the payroll practices of
the Company for its executives, and subject to increases from time to time as
may be approved by the Board (“Base Salary”).

4.2.Bonus.  Subject to the provisions of this Section 4.2, Executive shall be
eligible to earn an annual bonus of 100% of his Base Salary (or such larger
amount approved by the Compensation Committee) (the “Target Bonus”) in
accordance with the Company’s bonus plan applicable to executive officers of the
Company.  The actual amount of the bonus payable with respect to a fiscal year
(the “Bonus”) shall be determined by the Compensation Committee, in its sole
discretion, and shall be paid in accordance with the plans, policies and
procedures adopted by the Compensation Committee from time to time.

4.3.Vacation.  During the Term, Executive shall receive and be entitled to take
vacation in accordance with the policies of the Company as in effect from time
to time, and subject to the reasonable business needs of the Company.  Executive
shall not be entitled to payment for any accrued but unused vacation pay if the
Company terminates Executive for Cause.  However, if Executive’s employment is
terminated for any other reason, Executive shall be entitled to receive payment
for all accrued but unused vacation pay.

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4.4.Aircraft.  During the Term, the Company shall either: (i) contract with
NetJets or a similar private business jet charter company to provide 24
hour-per-day, 365 day-per-year access to a Medium Cabin private aircraft for
Executive’s business or personal travel; or (ii) purchase, lease or charter, and
provide 24 hour-per-day, 365 day-per-year access to, a Medium Cabin private
aircraft for Executive’s business or personal travel.  Executive shall be
entitled to up to seventy-five (75) hours of flight time for Executive’s
designated non-Company use per calendar year pursuant to this Section, for which
Executive shall not be required to reimburse the Company.  To the extent
Executive exceeds seventy-five (75) hours of non-Company flight time use in a
calendar year, Executive shall reimburse the Company for any excess.  The
Company will withhold any required taxes or withholding with respect to the
benefits described in this Section 4.4 from Executive’s Base Salary.

4.5.Company Automobile.  During the Term, the Company shall provide Executive
use of a Company automobile with a lease value of up to Two Thousand Dollars
($2,000.00) per month (subject to increases from time to time as may be approved
by the Board or an appropriate committee thereof) for Executive’s business or
personal use, less any required taxes or withholdings.

4.6.Personal Security.  During the Term, the Company shall pay the reasonable
expenses for Executive’s personal and home security.

4.7.Country Club.  During the Term, the Company shall provide Executive with a
Country Club membership in any country club or recreational sports club of
Executive’s choosing at a cost of up to Seven Hundred Fifty Dollars ($750.00)
per month, less any required taxes or withholdings.

4.8.Administrative Assistant.  During the Term, the Company shall provide
Executive with one (1) full-time administrative assistant mutually agreed upon
by the Company and Executive.  As Executive directs from time to time, the
administrative assistant may assist the Executive with all manner of Executive’s
business dealings and personal dealings, including Executive’s business dealings
on behalf of the Company, personal and family matters, and/or Executive’s
outside business and non-business activities. It is additionally agreed between
the Company and Executive that, from time to time and on an as-needed basis,
Executive may additionally use other Company administrative staff to assist
Executive in all manner of Executive’s other non-Company activities.

4.9.Other Benefits. Executive shall be entitled to participate in or receive
benefits under the Company’s Executive Benefit Plan and any plan or arrangement
made available from time to time by the Company to its employees generally
(including any health, dental, vision, disability, life insurance, 401k, or
other retirement programs) (“Benefits”).  Any such plan or arrangement shall be
revocable and subject to termination or amendment at any time only in accordance
with the terms and conditions of such plans or arrangements, without recourse by
Executive, provided that no such termination or amendment shall disadvantage
Executive or his wife or dependents disproportionately to any other participants
therein (except as may be required by laws or regulations, such as those related
to “top-heavy” or “top hat” plans).

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4.10.Business Expenses.  The Company shall pay or reimburse Executive for all
reasonable, customary and necessary business expenses incurred or paid by
Executive in the performance of his duties and responsibilities hereunder,
subject to any maximum annual limit and other restrictions on such expenses set
by the Board and to such reasonable substantiation and documentation as may be
specified by the Company from time to time.

4.11.Clawback. Executive acknowledges and agrees that any compensation or
benefits paid to Executive by the Company, pursuant to this Agreement or
otherwise, shall be subject to recovery by the Company in accordance with
Section 304 of the Sarbanes-Oxley Act of 2002 or any other clawback law or
regulation applicable to executives of the Company, if any, as amended from time
to time.

 

5.

Termination of Employment and Severance Benefits During the Term.
Notwithstanding the provision of Section 2 hereof and subject to the provisions
of Section 20 below, Executive’s employment may terminate prior to or at the
expiration of the Term under the following circumstances (each, a “Termination
Date”):

5.1.Death.  In the event of Executive’s death during the Term, Executive’s
employment hereunder shall immediately and automatically terminate. In such
event, the Company, shall pay to Executive’s designated beneficiaries or, if no
beneficiaries have been designated by Executive, to his estate, (i) the Base
Salary earned but not paid through the Termination Date; (ii) the amount of any
accrued but unused vacation calculated as of the Termination Date; and (iii) any
business expenses incurred by Executive but un-reimbursed on the Termination
Date, provided that such expenses and required substantiation and documentation
are submitted within ninety (90) days of termination and that such expenses are
reimbursable under Company policy (all of the foregoing, “Final
Compensation”).  The Final Compensation shall be paid by the Company on the next
regular payroll period following his death (or, if later, on the next regular
payroll period after the Company receives notice of Executive’s death).

5.2.Disability.

(a)If, as a result of Executive’s incapacity due to physical or mental illness,
Executive shall have been unable to perform the essential functions of the
Executive’s duties with the Company for one hundred eighty (180) consecutive
calendar days or two hundred seventy (270) non-consecutive days in any eighteen
(18) month period, and within thirty (30) days after written notice of
termination Executive shall not have returned to the performance of the
essential functions of his duties, with or without reasonable accommodations,
the Company may thereafter notify Executive of termination.  In the event of
such termination, the Company shall pay to Executive the Final Compensation on
the next regular payroll period following his Termination Date.

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(b)The Board may designate another employee to act in Executive’s place during
any period of Executive’s disability which shall not constitute Good Reason
hereunder.  Notwithstanding any such designation, Executive shall continue to
receive his compensation and benefits in accordance with Section 4, to the
extent permitted by the then-current terms of the applicable benefit plans,
until Executive becomes eligible for disability income benefits under the
Company’s disability income plan or until the termination of his employment,
whichever shall first occur.

5.3.By the Company for Cause.  During the Term, the Company may terminate
Executive’s employment for Cause as defined in Section 1.3 above, after the
Company provides Executive with written notice identifying the reasons
constituting such Cause (and subject to any applicable cure period as may be
specifically provided in Section 1.3).  If Executive’s employment is terminated
for Cause as defined in Section 1.3 above, then the Company shall have no
further obligation to Executive other than to pay his Final Compensation on the
next regular payroll period following his Termination Date.

5.4.By the Company Without Cause.  During the Term, the Company may terminate
Executive’s employment without Cause at any time.  If Executive’s employment is
terminated by the Company without Cause following the initial Public Offering
then, in addition to paying Executive the Final Compensation and subject to
Executive’s compliance with Article 7 in all material respects, the Company
shall:  (a) continue to pay Executive the Base Salary at the rate in effect on
the Termination Date during the Restricted Period, with the first payment being
on the Company’s next regular payroll period which is at least eight (8)
business days following the effective date of the Release (defined below)
(provided that if the 60-day time period for the Release begins in one taxable
year and ends in a subsequent taxable year, the first payment shall be paid in
the subsequent taxable year (for example, if Executive terminates on December 1,
then the first payment shall not be paid until on or after January 1 of the next
year, regardless of when the Release is returned)); (b) continue Executive’s
health insurance benefits for the Restricted Period (at a cost no less favorable
than that paid by Executive immediately prior to the Termination Date) or the
economic equivalent thereto if such continuation is not permissible under the
terms of the Company’s health insurance plan or would otherwise expose the
Company to tax or other penalties; (c) continue to pay the reasonable expenses
for Executive’s security for a period of two years after termination of this
Agreement and consistent with the Company’s provision of such security pursuant
to Section 4.6 during the Term; and (d) pay Executive an amount equal to the pro
rata amount of the Bonus Executive would have earned for the year in which the
termination occurred, based on the Company’s performance for the entire fiscal
year in which the termination occurred relative to the performance measurements
that were pending at the time of termination and to be used to determine
Executive’s bonus for such year.  Any such prorated Bonus shall be payable at
such time or times as bonuses are payable to the other executives of the Company
(the benefits, which the parties acknowledge are not required by law, outlined
in Section(s) 5.4(a), (b) (c) and (d) are collectively referenced as the
“Severance”).  Any obligation of the Company to provide Executive the Severance
is conditioned on Executive signing, delivering to the Company and not revoking
a release, in a form acceptable to the Company (the “Release”), within sixty
(60) days of his Termination Date, which Release in any event will require
Executive to reaffirm his obligations and commitments to the Company under
Section 7 of this Agreement.

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5.5.By Executive for Good Reason.  During the Term, Executive may terminate his
employment for Good Reason in accordance with this Section 5.5.  The following
shall constitute “Good Reason” for termination by Executive:

(a)any material reduction by the Company in Executive’s Base Salary without
Executive’s prior consent;

(b)any change, made by the Company and without Executive’s written consent in
his individual capacity, in Executive’s status, reporting, duties or position
that represents a demotion or diminution from Executive’s status, reporting,
duties or position as President, Chief Executive Officer, and Chairperson of the
Board as such positions were in effect at the time this Agreement was entered
into; and/or

(c)any material breach of this Agreement by the Company.

Executive shall not be deemed to have been terminated for Good Reason pursuant
to Section(s) 5.5(a), (b) or (c) above unless Executive delivers to the Company
a written notice identifying the reasons constituting Good Reason.  For purposes
of this Agreement, Good Reason shall not be deemed to exist unless (x) Executive
gives the Company written notice of his objection to such occurrence
constituting Good Reason within forty-five (45) days after Executive first
learns of such occurrence, (y) such occurrence is not corrected by the Company
within twenty (20) days of its receipt of such notice, and (z) Executive resigns
his employment with the Company for such Good Reason by written notice to the
Company not more than thirty (30) days following the expiration of the 20-day
cure period.

If Executive’s employment is terminated by Executive for Good Reason following
the initial Public Offering then, in addition to immediately paying Executive
the Final Compensation, Executive shall be paid the Severance at the same time
and subject to the same terms and conditions as described in Section 5.4
hereof.  Any obligation of the Company to provide Executive the Severance is
conditioned on Executive signing, delivering the Release to the Company and not
revoking the Release as provided therein within sixty (60) days of his
Termination Date.

5.6.By Executive Other than for Good Reason.  During the Term, Executive may
terminate his employment at any time upon sixty (60) days’ written notice to the
Company.  In the event of termination of Executive pursuant to this Section 5.6,
the Board may elect to waive the period of notice, or any portion thereof, and,
if the Board so elects, the Company shall pay Executive his Base Salary for the
notice period (or for any remaining portion of the period).  If Executive’s
employment is voluntarily terminated by him other than for Good Reason, then the
Company shall pay Executive the Final Compensation on the next regular payroll
period following his Termination Date.

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5.7.By Expiration of the Term.  Upon expiration of the Term, if Executive’s
employment with the Company terminates at the expiration of the Term, Executive
shall be paid the Final Compensation on the next regular payroll period
following his Termination Date.  If the expiration of the Term was the result of
the Company issuance of a notice of non-renewal to Executive pursuant to Section
2, then, in addition to paying Executive the Final Compensation, Executive shall
be paid the Severance at the same time and subject to the same terms as
described in Section 5.4 hereof.  Any obligation of the Company to provide
Executive the Severance is conditioned on Executive signing, delivering the
Release to the Company and not revoking the Release as provided therein within
sixty (60) days of his Termination Date.

 

6.

Effect of Termination.

6.1.Benefits.  Except as may apply pursuant to any Severance provided for in
this Agreement, benefits to Executive shall terminate pursuant to the terms of
the applicable benefit plans based on the date of the termination of Executive’s
employment without regard to any continuation of Base Salary or other payment to
Executive following such Termination Date.

6.2.Restricted Stock Grants.  The restricted stock grants made pursuant to those
certain Restricted Stock Award Agreements by and between the Company (or its
successor or affiliate) and Executive shall vest in accordance with the terms of
such agreements.

6.3.Survival of Obligations.  Provisions of this Agreement shall survive any
termination of Executive’s employment hereunder, including termination of this
Agreement upon the expiration of the Term, if so provided herein or if necessary
or desirable to accomplish the purposes of other surviving provisions, including
without limitation the obligations of Executive under Sections 7 and 8 hereof
and the obligations of the Company under Section 5.

 

7.

Confidential Information, Ownership of Information, Inventions, Work Product,
Restrictive Covenants and Defend Trade Secrets Act.

7.1.Confidential Information.  Executive acknowledges that the Company and its
Affiliates continually develop Confidential Information, that Executive may
develop Confidential Information for the Company or its Affiliates, and that the
Company has and will continue to provide Executive with Confidential Information
during the course of his employment.  Executive will comply with the policies
and procedures of the Company and its Affiliates for protecting Confidential
Information and shall not disclose to any person or entity or use, other than as
required by applicable law or for the proper performance of his duties and
responsibilities to the Company and its Affiliates, any Confidential Information
obtained by Executive incident to his employment by the Company or any of its
Affiliates.  Notwithstanding this Section 7.1 or any other provision of this
Agreement, (a) Executive may disclose Confidential Information when required to
do so by a court of competent jurisdiction, by any governmental agency having
authority over Executive or the business of the Company or its Affiliates or by
any administrative body or legislative body (including a committee thereof) with
jurisdiction to order Executive to divulge, disclose or make accessible such
information; and (b) nothing in this Agreement is intended to interfere with
Executive’s right to (i) report possible violations of state or federal law or
regulation to any governmental or law enforcement agency or entity; (ii) make
other disclosures that are protected under the whistleblower provisions of state
or federal law or regulation; (iii) file a claim or charge

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with the Equal Employment Opportunity Commission (“EEOC”), any state human
rights commission, or any other governmental agency or entity; or (iv) testify,
assist, or participate in an investigation, hearing, or proceeding conducted by
the EEOC, any state human rights commission, any other governmental or law
enforcement agency or entity, or any court.  For purposes of clarity, in making
or initiating any such reports or disclosures or engaging in any of the conduct
outlined in subsection (b) above, Executive may disclose Confidential
Information to the extent necessary to such governmental or law enforcement
agency or entity or such court, need not seek prior authorization from the
Company or its Affiliates, and is not required to notify the Company or its
Affiliates of any such reports, disclosures or conduct.

7.2.Safeguard and Return of Documents.  All documents, records, tapes, and other
media of every kind and description relating to the business, present or
otherwise, of the Company or its Affiliates, and any copies, in whole or in
part, thereof (the “Documents”), whether or not prepared by Executive, shall be
the sole and exclusive property of the Company and its Affiliates.  Executive
shall safeguard all Documents and shall surrender to the Company at the time his
employment terminates all Documents then in Executive’s possession or control
with the exception of this Agreement or other documents related to Executive’s
compensation or benefits.

7.3.Ownership of Information, Inventions and Original Work.  Executive agrees
that, in connection with his employment with the Company, any creative works,
discoveries, developments, designs, software, computer programs, inventions,
improvements, modifications, enhancements, know-how, formulation, concept,
methods, processes, or idea which is made, conceived, created, developed or
reduced to practice by Executive, either alone or with others (collectively
referred to as “Work Product”) is the exclusive property of the Company if:

(a)Confidential Information of the Company was used in its conception or
development; or

(b)It (i) relates, at the time of conception or reduction to practice, to a
product or service of the Company, (ii) relates, at the time of conception or
reduction of practice, to a research or development project of the Company that
was demonstrably anticipated or existed prior to or at the time of the
termination of Executive’s employment with the Company and/or its subsidiaries,
or (iii) results from any work performed by Executive for the
Company.  Notwithstanding Section 7.3(b), if the foregoing intellectual property
described in Section 7.3(b) is conceived, developed or reduced to practice
entirely after the Executive is no longer an employee of the Company, then such
intellectual property shall not constitute Work Product.

Executive agrees to assist the Company in obtaining a patent or copyrights on
such Work Product and to provide such documentation and assistance as is
necessary for the Company to obtain such patent or copyright.  Executive shall
maintain adequate written records of such Work Product in such format as may be
specified by the Company.  Such records of such Work Product will be available
to and remain the sole property of the Company at all times.

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7.4.Restrictive Covenants.  Executive acknowledges that, in order to effectuate
the promise to hold Confidential Information in trust for the Company and in
order to protect the Company’s legitimate business interests (which include, but
are not limited to, continuation of contracts and relationships with its
customers, its reputation, its competitive advantage and its goodwill), it is
necessary to enter into the following restrictive covenants.  Without the prior
written consent of the Company, Executive shall not, during the Restricted
Period:

(a)directly or indirectly manage, operate, control, participate in, consult
with, render services for or in any manner engage in any business or enterprise
(including any division, group or franchise of a larger organization), whether
as a proprietor, owner, member, partner, stockholder, director, officer,
employee, consultant, joint venturer, investor, sales representative or other
participant, in which the Company or any of its subsidiaries engaged at any time
during the two year period immediately preceding the date Executive’s employment
with the Company and its subsidiaries terminates  (or the date of determination
if the date of determination is prior to the date Executive’s employment with
the Company and its subsidiaries terminated) or engages or proposes to engage as
of such termination date (or the date of determination if the date of
determination is prior to the date Executive’s employment with the Company and
its subsidiaries terminated), in each case, anywhere in any State where the
Company or one of its subsidiaries maintained an office immediately preceding
such termination date (or the date of determination if the date of determination
is prior to the date Executive’s employment with the Company and its
subsidiaries terminated);

(b)directly or indirectly induce or attempt to induce any employee of the
Company or any of its subsidiaries to leave the employ of such entity;

(c)subject to the restrictions of any applicable law, directly or indirectly
induce or attempt to induce any established customer of the Company or any of
its subsidiaries to cease doing business with, or materially alter its business
relationship with, such entity;

(d)directly or indirectly solicit the sale of goods or services, or a
combination thereof, to established customers of the Company or any of its
subsidiaries; or

(e)make or solicit or encourage others to make or solicit directly or indirectly
any derogatory or negative statement or communication about the Company, its
subsidiaries or any of their respective businesses, products, services or
activities; provided, however, that the restriction set forth in this clause (e)
will not prohibit truthful testimony compelled by valid legal process.

Notwithstanding the foregoing, Executive shall not be prohibited from owning up
to one percent of the outstanding stock of a corporation which is publicly
traded and competes with the business of the Company, so long as Executive has
no active participation in the business of such corporation.

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7.5.Defend Trade Secrets Act.  Executive is hereby notified in accordance with
the Defend Trade Secrets Act of 2016 that Executive will not be held criminally
or civilly liable under any federal or state trade secret law for the disclosure
of a trade secret that is made in confidence to a federal, state, or local
government official, either directly or indirectly, or to an attorney solely for
the purpose of reporting or investigating a suspected violation of law, or is
made in a complaint or other document that is filed under seal in a lawsuit or
other proceeding.  If Executive files a lawsuit for retaliation against the
Company or its Affiliates for reporting a suspected violation of law, Executive
may disclose the Company’s or its Affiliates’ trade secrets to Executive’s
attorney and use the trade secret information in the court proceeding if
Executive files any document containing the trade secret under seal, and does
not disclose the trade secret, except pursuant to court order.

 

8.

Assignment of Rights to Work Product.  Executive hereby assigns and agrees to
assign to the Company (or as otherwise directed by the Company) Executive’s full
right, title and interest in and to all Work Product (as that term is defined in
Section 7.3 above).  Executive agrees to execute any and all applications for
domestic and foreign patents, copyrights, or other proprietary rights and to do
such other acts (including, without limitation, execute and delivery of
instruments of further assurance or confirmation) requested by the Company to
assign the Work Product to the Company and to permit the Company to enforce any
patents, copyrights, or other proprietary rights to the Work Product. All
copyrightable works that Executive creates in the course of his employment by
the Company shall be considered “work made for hire.”

 

9.

Enforcement of Covenants. Executive agrees that these restraints are necessary
for the reasonable and proper protection of the Company and its subsidiaries and
their trade secrets and Confidential Information and that each and every one of
the restraints is reasonable in respect to subject matter, length of time and
geographic area, and that these restraints, individually or in the aggregate,
will not prevent Executive from obtaining other suitable employment during the
period in which Executive is bound by the restraints.  Executive acknowledges
that each of these covenants has a unique, very substantial and immeasurable
value to the Company and its subsidiaries, that Executive has sufficient assets
and skills to provide a livelihood while such covenants remain in force and
that, as a result of the foregoing, in the event that Executive breaches such
covenants, monetary damages would be an insufficient remedy for the Company and
equitable enforcement of the covenant would be proper.  Executive therefore
agrees that the Company, in addition to any other remedies available to it, will
be entitled to preliminary and permanent injunctive relief against any breach by
Executive of any of those covenants, without the necessity of showing actual
monetary damages or the posting of a bond or other security.  Executive and the
Company further agree that, in the event that any provision of Article 7 is
determined by any court of competent jurisdiction to be unenforceable by reason
of its being extended over too great a time, too large a geographic area or too
great a range of activities, that provision will be deemed to be modified to
permit its enforcement to the maximum extent permitted by law.  It is also
agreed that each of the Company’s subsidiaries will have the right to enforce
all of Executive’s obligations to that subsidiary under this Agreement,
including without limitation pursuant to Article 7.

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10.

Assignment and Succession.

10.1.No Assignment by Executive.  This Agreement is personal to Executive and
shall not be assignable by Executive.

10.2.Succession.  This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.

 

11.

Notices.  All notices which are required or may be given pursuant to the terms
of this Agreement shall be in writing and shall be sufficient in all respects if
given in writing and (i) delivered personally, (ii) mailed by certified or
registered mail, return receipt requested and postage prepaid, (iii) sent via a
nationally recognized overnight courier or (iv) sent via facsimile confirmed in
writing as follows:

 

If to the Company:

 

 

 

Paycom Software, Inc.

7501 W. Memorial Road

Oklahoma City, OK 73142

Attention:  Board of Directors

If to Executive:

Mr. Chad Richison

XXXXXXXXXXXX

XXXXXXXXXXXX

 

or to such other address or addresses as either party shall have designated in
writing to the other party hereto, provided, however, that any notice sent by
certified or registered mail shall be deemed delivered on the date of delivery
as evidenced by the return receipt.

 

12.

Severability.  If any portion or provision of this Agreement shall, to any
extent, be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application or such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.

 

13.

Waiver.  No waiver of such provision hereof shall be effective unless made in
writing and signed by the waiving party.  The failure of either party to require
the performance of any term or obligation of this Agreement, or the waiver by
either party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.

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14.

Entire Agreement.  This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof, and supersedes all prior
communications, agreements and understandings, written or oral, with respect to
the terms and conditions of Executive’s employment, including Section 5(e) of
the Securities Purchase Agreement dated July 2, 2007 by and among WCAS Paycom
Holdings, Inc., Paycom Payroll, LLC, Ernest Group, Inc., The Ruby Group, Inc.,
Executive, Shannon Rowe, William Kerber and Henry J. Binkowski and excluding
only any agreements governing the rights and obligations of the Company and
Executive with respect to the securities of the Company, and any
Company-provided separate benefit or severance plans, all of which remain in
full force and effect in accordance with their terms.

 

15.

Amendment.  This Agreement may be amended or modified only by a written
instrument signed by Executive and by an expressly authorized representative of
the Board.

 

16.

Headings.  The headings and captions in this Agreement are for convenience only
and in no way define or describe the scope or content of any provision of this
Agreement.

 

17.

Counterparts.  This Agreement may be executed in two or more counterparts, each
of which shall be an original and all of which together shall constitute one and
the same instrument.

 

18.

Governing Law.  This Agreement shall be construed, and the legal relations
between the parties determined, in accordance with the laws of the State of
Delaware, without regard to its conflicts of law rules.  To the extent that a
court of competent jurisdiction concludes that application of Delaware law to
all or part of Section 7.4 is contrary to Oklahoma public policy or statutes,
Executive acknowledges that this Agreement relates to Executive’s sale of the
goodwill of the Company, as defined in 15 O.S. § 218, and agrees to comply with
Sections 7.4(a)-(d) to the fullest extent permitted by law.

 

19.

Attorney’s Fees.  The Company agrees to pay or reimburse Executive for the
reasonable attorney fees incurred by Executive in connection with the review of
this Agreement and any related documents, up to a maximum of Fifteen Thousand
Dollars and Zero Cents ($15,000.00).  Such payment will be made promptly
following the date Executive executes this Agreement with the Company, upon
receipt by the Company of an appropriate invoice from the attorney for the fees
with respect to such review.  

 

20.

Section 409A of the Code.

(a)To the extent (i) any payments to which Executive becomes entitled under this
Agreement, or any agreement or plan referenced herein, in connection with
Executive’s termination of employment with the Company constitute deferred
compensation subject to Section 409A of the Code; (ii) Executive is deemed at
the time of his separation from service to be a “specified employee” under
Section 409A of the Code; and (iii) at the time of Executive’s separation from
service the Company is publicly traded (as defined in Section 409A of Code),
then such payments (other than any payments permitted by Section 409A of the
Code to be paid within six (6) months of Executive’s separation from service)
shall not be made until the earlier of (x) the first day of the seventh month
following Executive’s separation from service or (y) the date of Executive’s
death following such

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separation from service.  During any period that payment or payments to
Executive are deferred pursuant to the foregoing, Executive shall be entitled to
interest on the deferred payment or payments at a per annum rate equal to
Federal-Funds rate as published in The Wall Street Journal on the date of
Executive’s termination of employment with the Company. Upon the expiration of
the applicable deferral period, any payments which would have otherwise been
made during that period (whether in a single sum or in installments) in the
absence of this Section 19 (together with accrued interest thereon) shall be
paid to Executive or Executive’s beneficiary in one lump sum.

(b)A termination of employment shall not be deemed to have occurred for purposes
of any provision of this Agreement providing for the payment of any amounts or
benefits upon or following a termination of employment unless such termination
is also a “separation from service” (within the meaning of Section 409A of the
Code).

(c)For purposes of Section 409A of the Code, each payment under Section 5 hereof
(and each other severance plan payment) will be treated as a separate payment.

(d)Any reimbursement of expenses made under this Agreement shall only be made
for eligible expenses incurred during the Term, and no reimbursement of any
expense shall be made by the Company after December 31st of the year following
the calendar year in which the expense was incurred.  Any amount eligible for
reimbursement under this Agreement during a taxable year may not affect expenses
eligible for reimbursement in any other taxable year, and any right to
reimbursement under this Agreement is not subject to liquidation or exchange for
another benefit.

(e)It is intended that this Agreement comply with the provisions of Section 409A
of the Code and the regulations and guidance of general applicability issued
thereunder so as to not subject Executive to the payment of additional interest
and taxes under Section 409A of the Code, and in furtherance of this intent,
this Agreement shall be interpreted, operated and administered in a manner
consistent with these intentions.

 

* * * * *

 

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IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated
Executive Employment Agreement as of the date first set forth above.

 

EXECUTIVE

 

PAYCOM SOFTWARE, INC.

 

 

 

 

/s/ Chad Richison

 

/s/ Frederick C. Peters, II

Chad Richison

 

By:

Frederick C. Peters, II

 

 

Title:

Lead Director of the Board of Directors, on behalf of the Board of Directors