Exhibit 10.11

 

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.

 

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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

 

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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

 

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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 Regulations as of the date of Executive’s separation
from service, no amount that constitutes a deferral of compensation which is
payable on account of Executive’s separation from service shall be paid to
Executive before the date (the “Delayed Payment Date”) which is first day of the
seventh month after the date of Executive’s separation from service or, if
earlier, the date of Executive’s death following such separation from service. 
All such amounts that would, but for this Section, become payable prior to the
Delayed Payment Date will be accumulated and paid on the Delayed Payment Date.

 

(b)                              Company intends that income provided to
Executive pursuant to this Agreement will not be subject to taxation under
Section 409A of the Code.  The provisions of this Agreement shall be interpreted
and construed in favor of satisfying any applicable requirements of Section 409A
of the Code.  However, Company does not guarantee any particular tax effect for
income provided to Executive pursuant to this Agreement.  In any event, except
for Company’s responsibility to withhold applicable income and employment taxes
from compensation paid or provided to Executive, Company shall not be
responsible for the

 

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payment of any applicable taxes on compensation paid or provided to Executive
pursuant to this Agreement.

 

(c)                               Notwithstanding anything herein to the
contrary, the reimbursement of expenses or in-kind benefits provided pursuant to
this Agreement shall be subject to the following conditions: (1) the expenses
eligible for reimbursement or in-kind benefits in one taxable year shall not
affect the expenses eligible for reimbursement or in-kind benefits in any other
taxable year; (2) the reimbursement of eligible expenses or in-kind benefits
shall be made promptly, subject to Company’s applicable policies, but in no
event later than the end of the year after the year in which such expense was
incurred; and (3) the right to reimbursement or in-kind benefits shall not be
subject to liquidation or exchange for another benefit.

 

(d)                             For purposes of Section 409A of the Code, the
right to a series of installment payments under this Agreement shall be treated
as a right to a series of separate payments.

 

10.                            No Conflict of Interest.  During the term of
Executive’s employment with Company, Executive must not engage in any work, paid
or unpaid, or other activities that create a conflict of interest.  Such work
and/or activities shall include, but is not limited to, directly or indirectly
competing with Company in any way, or acting as an officer, director, employee,
consultant, stockholder, volunteer, lender, or agent of any business enterprise
of the same nature as, or which is in direct competition with, the business in
which Company is now engaged or in which Company becomes engaged during the term
of Executive’s employment with Company, as may be determined by Company in its
sole discretion.  If Company believes such a conflict exists during the term of
this Agreement, Company may ask Executive to choose to discontinue the other
work and/or activities or resign employment with Company.

 

11.                            Non-Competition.  Executive agrees that during
Executive’s employment with Company and for a period of twelve (12) months
immediately following termination of such employment for any reason (the
“Non-competition Period”), Executive shall not in any manner, directly or
indirectly, through any person, firm or corporation, alone or as a member of a
partnership or as an officer, director, stockholder, investor or employee of or
consultant to any other corporation or enterprise or otherwise, engage or be
engaged, or assist any other person, firm, corporation or enterprise in engaging
or being engaged, in any business, in which Executive was involved or had
knowledge, being conducted by, or contemplated by, Company or any of its
subsidiaries as of the termination of Executive’s employment in any geographic
area in which Company or any of its subsidiaries is then conducting such
business.

 

12.                            Non-Solicitation.  Executive acknowledges that
Company’s relationship with its clients, employees, vendors, suppliers and other
persons with whom Company has a business relationship (hereinafter referred to
as “Prohibited Persons”), are special and unique, and that Company’s
relationship with the Prohibited Persons may not be able to be replaced by
Company.  Executive further acknowledges that the protection of Company’s
Prohibited Persons is essential.  Therefore, Executive expressly covenants and
agrees that during Executive’s employment with Company and for a period of
twelve (12) months immediately following termination of Executive’s employment
for any reason (the “Non-solicitation Period”), Executive will not at

 

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any time for himself or on behalf of any other person, firm, partnership or
corporation:  (1) induce, or attempt to induce, any Prohibited Persons either to
refrain, or to cease doing business with Company; or (2) directly or indirectly
solicit, hire, induce or otherwise engage a Prohibited Person in any competitive
business.

 

13.                            Nondisclosure of Confidential Information.

 

13.1                    Executive recognizes that the knowledge and information
about, and relationships with business associates, customers, clients and agents
of Company and its affiliated companies, and the business methods, systems,
plans, and policies of Company and of its affiliated companies, which Executive
may receive, obtain, or establish as an employee of Company are valuable and
unique assets of Company or its affiliates.  Executive agrees that, during any
Employment Period and thereafter, Executive shall not disclose or remove,
without the written consent of Company, (i) any material or substantial,
confidential, or proprietary know-how, data, or information, including, but not
limited to software, data, information relating to customers, pricing, safety
manuals, training manuals, Quality Assurance/Quality Control manuals, mandatory
processes and means or techniques pertaining to Company or its affiliates, and
(ii) any business plans, strategies, targets, or directives, to any person,
firm, corporation, or any other entity, for any reason or purpose whatsoever. 
Executive acknowledges and agrees that all memoranda, notes, records, clients
lists, client information and other documents, computer software, data or
material in any form made or compiled by Executive or made available to
Executive concerning Company’s business is and shall be Company’s exclusive
property and shall be delivered by Executive to Company upon termination of
Executive’s employment or at any other time upon the request of Company.

 

13.2                    The restrictions in the above paragraph shall not apply
to:  (1) information that at the time of disclosure is in the public domain
through no fault of Executive’s; (2) information received from a third party
outside of Company that was disclosed without a breach of any confidentiality
obligation; (3) information approved for release by written authorization of
Company; or (4) information that may be required by law or an order of any
court, agency or proceeding to be disclosed.  Executive shall provide Company
notice of any such required disclosure once Executive has knowledge of it and
will help Company to the extent reasonable to obtain an appropriate protective
order.

 

13.3                    Company acknowledges that Executive has had significant
prior work experience in the industry in which Company is engaged, and that
Executive enters into this Agreement with significant prior knowledge,
information and relationships in such industry.

 

14.                            Enforcement:  Remedies, Construction.

 

14.1                    Executive covenants, agrees, and recognizes the breach
or threatened breach of the covenants, or any of them, contained in Sections 11,
12 and 13 will result in immediate and irreparable injury to Company and that
Company shall be entitled to an injunction restraining Executive or any of his
affiliates from any violation of Sections 11, 12 and 13 to the fullest extent
allowed by law.  Executive further covenants and agrees that in the event of a
violation of any of his respective covenants and agreements contained in
Sections 11, 12 and 13 hereof, Company shall be entitled to an accounting of all
profits, compensation, commissions,

 

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remunerations or benefits which Executive directly or indirectly has realized
and/or may realize as a result of, growing out of or in connection with any such
violation and shall be entitled to receive all such amounts to which Company
would be entitled as damages under law or at equity.  Nothing herein shall be
construed as prohibiting Company from pursuing any other legal or equitable
remedies that may be available to it for any such breach or threatened breach.

 

14.2                    Executive agrees that in the event he breaches the
covenants, or any of them, contained in Sections 11 and 12, then the
Non-competition Period or Non-solicitation Period, as applicable, shall be
automatically extended by the length of time any such breach remains continuing.

 

14.3                    Executive hereby expressly acknowledges and agrees as
follows:

 

(a)                               that he has read the covenants set forth above
in Sections 11, 12 and 13, has had an opportunity to discuss them with an
attorney and that such covenants are reasonable in all respects and are
necessary to protect the legitimate business and competitive interests of
Company; and

 

(b)                              that each of the covenants set forth in
Sections 11, 12 and 13 and the subdivisions thereof are separately and
independently given, and each such covenant is intended to be enforceable
separately and independently of the other such covenants, including, without
limitation, enforcement by injunction without the necessity of proving actual
damages or posting any bond or other security; provided, however, that the
invalidity or unenforceability of this Agreement in any respect shall not affect
the validity or enforceability of this Agreement in any other respect.  In the
event that any provision of this Agreement shall be held invalid or
unenforceable by a court of competent jurisdiction by reason of the geographic
or business scope or the duration thereof or for any other reason, such
invalidity or unenforceability shall attach only to the particular aspect of
such provision found invalid or unenforceable as applied and shall not affect or
render invalid or unenforceable any other provision of this Agreement or the
enforcement of such provision in other circumstances, and, to the fullest extent
permitted by law, this Agreement shall be construed as if the geographic or
business scope or the duration of such provision or other basis on which such
provision has been challenged had been more narrowly drafted so as not to be
invalid or unenforceable.

 

14.4                    Nothing in Sections 10 and 11 shall prohibit Executive
from being (i) a stockholder in a mutual fund or a diversified investment
company or (ii) an owner of not more than two percent of the outstanding stock
of any class of a corporation, any securities of which are publicly traded, so
long as Executive has no active participation in the business of such
corporation.

 

15.                            General Provisions.

 

15.1                    Successors and Assigns.  The rights and obligations of
Company under this Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of Company.  Executive shall not be entitled to
assign any of Executive’s rights or obligations under this Agreement.

 

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15.2                    Waiver.  Either party’s failure to enforce any provision
of this Agreement shall not in any way be construed as a waiver of any such
provision, or prevent that party thereafter from enforcing each and every other
provision of this Agreement.

 

15.3                    Attorneys’ Fees.  Each side will bear its own attorneys’
fees in any dispute unless a statutory section at issue, if any, authorizes the
award of attorneys’ fees to the prevailing party.

 

15.4                    Severability.  In the event any provision of this
Agreement is found to be unenforceable by a court of competent jurisdiction,
such provision shall be deemed modified to the extent necessary to allow
enforceability of the provision as so limited, it being intended that the
parties shall receive the benefit contemplated herein to the fullest extent
permitted by law.  If a deemed modification is not satisfactory in the judgment
of such court, the unenforceable provision shall be deemed deleted, and the
validity and enforceability of the remaining provisions shall not be affected
thereby.

 

15.5                    Interpretation; Construction.  The headings set forth in
this Agreement are for convenience only and shall not be used in interpreting
this Agreement.  This Agreement has been drafted by legal counsel representing
Company, but Executive has participated in the negotiation of its terms. 
Furthermore, Executive acknowledges that Executive has had an opportunity to
review and revise the Agreement and have it reviewed by legal counsel, if
desired, and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement.

 

15.6                    Governing Law.  This Agreement will be governed by and
construed in accordance with the laws of the United States and the State of
Illinois.  Each party consents to the jurisdiction and venue of the state or
federal courts in Chicago, Illinois, if applicable, in any action, suit, or
proceeding arising out of or relating to this Agreement.

 

15.7                    Notices.  Any notice required or permitted by this
Agreement shall be in writing and shall be delivered as follows with notice
deemed given as indicated:  (a) by personal delivery when delivered personally;
(b) by overnight courier upon written verification of receipt; (c) by telecopy
or facsimile transmission upon acknowledgment of receipt of electronic
transmission; or (d) by certified or registered mail, return receipt requested,
upon verification of receipt.  All notices shall be addressed as follows:

 

EXECUTIVE:

 

Mark Kinsey
[****]

[****]

 

COMPANY:

 

Paylocity Corporation
3850 N. Wilke Rd.
Arlington Heights, IL 60004
Attention: Steven R. Beauchamp, President and Chief Executive Officer

 

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with a copy to:
DLA Piper LLP

401 Congress Avenue, Suite 2500

Austin, TX 78701

Facsimile: (512) 721- 2290

Attention: John J. Gilluly III, P.C.

 

or at such changed addresses as the parties may designate in writing.

 

15.8                    Survival.  Sections 10 (“No Conflict of Interest”), 11
(“Non-Competition”), 12 (“Non-Solicitation”), 13 (“Nondisclosure of Confidential
Information”) 14 (“Enforcement, Remedies and Construction”), 15 (“General
Provisions”) and 16 (“Entire Agreement”) of this Agreement shall survive
Executive’s employment by Company.

 

16.                            Entire Agreement.  This Agreement constitutes the
entire agreement between the parties relating to this subject matter and
supersedes all prior or simultaneous representations, discussions, negotiations,
and agreements, whether written or oral.  This Agreement may be amended or
modified only with the written consent of Executive and the Board of Directors
of Company.  No oral waiver, amendment or modification will be effective under
any circumstances whatsoever.

 

[Signatures appear on following page]

 

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THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY
UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES
HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.

 

 

 

 

 

 

Mark Kinsey

 

 

 

Dated:

3/18/2015

 

 

/s/ Mark Kinsey

 

 

 

 

 

 

 

 

 

 

 

Paylocity Corporation

 

 

 

Dated:

3/19/2015

 

 

By:

/s/ Steven R. Beauchamp

 

 

Name: Steven R. Beauchamp

 

 

Title: President and Chief Executive Officer

 

 

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