EXHIBIT 10(q)
PAYCHEX, INC.
2002 STOCK INCENTIVE PLAN
(as amended and restated effective October 12, 2005)
FORM OF NON-QUALIFIED STOCK OPTION AWARD AGREEMENT
     1. Grant of Option. This Award Agreement, made as of [grant date], serves
to notify you that the Governance and Compensation Committee (the “Committee”)
of the Board of Directors of Paychex, Inc. (the “Company”) hereby grants to you,
under the Company’s 2002 Stock Incentive Plan, as amended and restated effective
October 12, 2005 (the “Plan”), a Non-Qualified Stock Option (the “Option”) to
purchase, on the terms and conditions set forth in this Award Agreement and the
Plan, [the number of] shares of the Company’s common stock (the “Common Stock”)
at the price of [exercise price] per share, the closing price on [date of grant]
(the “Date of Grant”). The Plan is incorporated herein by reference and made a
part of this Award Agreement. You may obtain a copy of the Plan from the Office
of the Corporate Secretary. You should review the terms of this Award Agreement
and the Plan carefully. The capitalized terms used in this Award Agreement are
defined in the Plan.
     2. Term. Unless the Option is previously terminated pursuant to the terms
of this Award Agreement or the Plan, the Option will expire at the close of
business on [expiration date] (the “Expiration Date”).
     3. Vesting. Subject to the terms set forth in this Award Agreement and the
Plan, the Option will vest and become exercisable pro rata with respect to
one-third of the shares subject to such Option on the first, second and third
anniversaries of the Date of Grant, with any fractional share resulting from
such pro-ration vesting on the third anniversary. Vesting is contingent on your
continued Board service through the vesting dates.
     4. Exercise.
          (a) Method of Exercise. To the extent exercisable under Section 3 of
this Award Agreement, the Option may be exercised in whole or in part, provided
that the Option may not be exercised for less than one share of Common Stock in
any single transaction. The Option may be exercised using a method specified by
the Company.
          (b) Payment of Exercise Price. The exercise of the Option is
conditioned upon your payment to the Company of the Exercise Price for the
number of shares of Common Stock that you elect to purchase. The Exercise Price
may be paid in cash or by check or by way of a broker-assisted stock option
exercise program, if such a program is made available by the Company at the time
of the exercise of the Option.
          (c) Withholding. The exercise of the Option is conditioned upon your
making arrangements satisfactory to the Company for the payment to the Company
of the amount of all taxes required by any governmental authority to be withheld
and paid over by the Company or any Affiliate to the governmental authority on
account of the exercise. The payment of such withholding taxes to the Company
may be made (i) by you in cash or by check, or (ii) by the Company or any
Affiliate withholding such taxes from any other compensation owed to you by the

 

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Company or any Affiliate. Withholding of shares of Common Stock for payment of
tax withholdings is not permitted for any reason.
          (d) Issuance of Shares. Upon determining that compliance with this
Award Agreement has occurred, including compliance with such reasonable
requirements as the Company may impose pursuant to the Plan or Section 12 of
this Award Agreement, the Company shall issue to you a certificate for the
shares of Common Stock purchased on the earliest practicable date (as determined
by the Company) thereafter.
     5. Effect of Death and Disability. In the event of your death or Disability
prior to the complete exercise of the Option, any unvested portion of the Option
will vest in full immediately and the remaining portion of the Option may be
exercised in whole or in part, subject to all of the conditions on exercise
imposed by the Plan and this Award Agreement, within three years after the date
of your death or Disability, but only (i) by you, or in the event of your death,
by your estate or the person or persons to whom the Option passes under your
will or the laws of descent and distribution, and (ii) prior to the close of
business on the Expiration Date of the Option. The term “Disability” means a
condition whereby you are unable to perform the essential functions of your
position with reasonable accommodations by reason of any medically determinable
physical or mental impairment which can be expected to result in death or which
has lasted for a continuous period of not less than six months, all as verified
by a physician acceptable to, or selected by, the Company.
     6. Effect of Retirement. Upon your Retirement prior to the complete
exercise of the Option, the unvested portion of the Option will be canceled as
of your last day of service, and the remaining portion of the Option may be
exercised in whole or in part, subject to all of the conditions on exercise
imposed by the Plan and this Award Agreement, within three years after the date
of such termination, but only (i) to the extent that the Option was vested and
exercisable on the date such termination, and (ii) prior to the close of
business on the Expiration Date of the Option. The term “Retirement” means
retirement from the Company at age 55 or later with ten or more years of service
with the Company.
     7. Effect of Other Termination. Upon your termination of Board service for
a reason other than death, Disability or Retirement prior to the complete
exercise of the Option, the unvested portion of the Option will be canceled as
of your last day of Board service, and the remaining portion of the Option may
be exercised in whole or in part, subject to all of the conditions on exercise
imposed by the Plan and this Award Agreement, within one year after the date of
such termination, but only (i) to the extent that the Option was vested and
exercisable on the date of such termination, and (ii) prior to the close of
business on the Expiration Date of the Option. Notwithstanding the foregoing, if
your service is terminated by reason of conduct that is determined by the
Committee to have been knowingly fraudulent, deliberately dishonest, disloyal or
willful misconduct, or if you engage in such conduct after termination of your
board service, you will forfeit all rights under the Option, both unvested and
vested.
     8. Transfer of Option. Except as otherwise determined by the Committee, the
Option may not be transferred, assigned or pledged (except by will or the laws
of descent and distribution, or pursuant to a domestic relations order) and the
Option is only exercisable by you during your lifetime.

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     9. Limitation of Rights. You will not have any rights as a stockholder with
respect to the shares of Common Stock covered by the Option until you become the
holder of record of such shares by exercising the Option. Neither the Plan, the
granting of the Option nor this Award Agreement gives you any right to remain in
the service of the Company or any Affiliate.
     10. Rights of Company and Affiliates. This Award Agreement does not affect
the right of the Company or any Affiliate to take any corporate action
whatsoever, including without limitation its right to recapitalize, reorganize
or make other changes in its capital structure or business, merge or
consolidate, issue bonds, notes, shares of Common Stock or other securities,
including preferred stock, or options therefor, dissolve or liquidate, or sell
or transfer any part of its assets or business.
     11. Restrictions on Issuance of Shares. If at any time the Company
determines that the listing, registration or qualification of the shares covered
by the Option upon any securities exchange or under any state or federal law, or
the approval of any governmental agency, is necessary or advisable as a
condition to the exercise of the Option, the Option may not be exercised in
whole or in part unless and until such listing, registration, qualification or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company.
     12. Plan Controls. The Option is subject to all of the provisions of the
Plan, which is hereby incorporated by reference, and is further subject to all
the interpretations, amendments, rules and regulations that may from time to
time be promulgated and adopted by the Committee pursuant to the Plan. In the
event of any conflict among the provisions of the Plan and this Award Agreement,
the provisions of the Plan will be controlling and determinative.
     13. Amendment. Except as otherwise provided by the Plan, the Company may
only alter, amend or terminate the Option with your consent.
     14. Governing Law. This Award Agreement shall be governed by and construed
in accordance with the laws of the State of New York, except as superseded by
applicable federal law, without giving effect to its conflicts of law
provisions.

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