Exhibit 10.1 Form of Indemnification Agrmt



 



Exhibit 10.1 Form of Indemnification Agreement for Directors and Officers



INDEMNITY AGREEMENT



     This Indemnification Agreement (“Agreement”) is made as of
                         , by and between PAYCHEX, INC., a Delaware corporation (the
“Company”), and                          (“Indemnitee”).


RECITALS



     WHEREAS, highly competent persons have become more reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of
their service to and activities on behalf of the corporation.


     WHEREAS, the Board of Directors of the Company (the “Board”) has
determined that, in order to attract and retain qualified individuals, the
Company will attempt to maintain on an ongoing basis, at its sole expense,
liability insurance to protect persons serving the Company and its subsidiaries
from certain liabilities. Although the furnishing of such insurance has been a
customary and widespread practice among United States based corporations and
other business enterprises, the Company believes that, given current market
conditions and trends, such insurance may be available to it in the future only
at higher premiums and with more exclusions. At the same time, directors,
officers, and other persons in service to corporations or business enterprises
are being increasingly subjected to expensive and time-consuming litigation
relating to, among other things, matters that traditionally would have been
brought only against the Company or business enterprise itself. The Certificate
of Incorporation of the Company requires indemnification of the officers and
directors of the Company. Indemnitee may also be entitled to indemnification
pursuant to the Delaware General Corporation Law (“DGCL”). The Certificate of
Incorporation and the DGCL expressly provide that the indemnification
provisions set forth therein are not exclusive, and thereby contemplate that
contracts may be entered into between the Company and members of the board of
directors, officers and other persons with respect to indemnification.


     WHEREAS, the uncertainties relating to such insurance and to
indemnification have increased the difficulty of attracting and retaining such
persons.


     WHEREAS, the Board has determined that the increased difficulty in
attracting and retaining such persons is detrimental to the best interests of
the Company’s stockholders and that the Company should act to assure such
persons that there will be increased certainty of such protection in the
future.


     WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnity, and to advance expenses on
behalf of, such persons to the fullest extent permitted by applicable law so
that they will serve or continue to serve the Company free from undue concern
that they will not be so indemnified.









 


     WHEREAS, this Agreement is a supplement to and in furtherance of the
Certificate of Incorporation of the Company and any resolutions adopted
pursuant thereto, and shall not be deemed a substitute therefore, nor to
diminish or abrogate any rights of Indemnitee thereunder.


     WHEREAS, Indemnitee does not regard the protection available under the
Company’s Certificate of Incorporation and insurance as adequate in the present
circumstances, and may not be willing to serve as an officer or director
without adequate protection, and the Company desires Indemnitee to serve in
such capacity. Indemnitee is willing to serve, continue to serve and to take
on additional service for or on behalf of the Company on the condition that he
be so indemnified;


     NOW, THEREFORE, in consideration of the promises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:



		
	 	     1. Services to the Company. Indemnitee will serve or continue to
serve, at the will of the Company, as an officer, director or key employee
of the Company for so long as Indemnitee is duly elected or appointed or
until Indemnitee tenders his or her resignation.
	 
	 	     2. Definitions. As used in this Agreement:



                      (a) A “Change in Control” shall be deemed to occur upon the earliest
to occur after the date of this Agreement of any of the following events:


                                                (i) Acquisition of Stock by Third Party. Any Person (as defined below) is
or becomes the Beneficial Owner (as defined below), directly or indirectly, of
securities of the Company representing fifteen percent (15%) or more of the
combined voting power of the Company’s then outstanding securities;


                                                (ii) Change in Board of Directors. During any period of two (2)
consecutive years (not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period constitute the
Board, and any new director (other than a director designated by a person who
has entered into an agreement with the Company to effect a transaction
described in Sections 2(a)(i), 2(a)(iii) or 2(a)(iv)) whose election by the
Board or nomination for election by the Company’s stockholders was approved by
a vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute at
least a majority of the members of the Board;


                                                (iii) Corporate Transactions. The effective date of a merger or
consolidation of the Company with any other entity, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted


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into voting securities of the surviving entity) more than 51% of the combined
voting power of the voting securities of the surviving entity outstanding
immediately after such merger or consolidation and with the power to elect at
least a majority of the board of directors or other governing body of such
surviving entity;


                                    (iv) Liquidation. The approval by the stockholders of the Company of a
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company’s assets; and


                                    (v) Other Events. There occurs any other event of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A (or a response to any similar item on any similar schedule or form)
promulgated under the Exchange Act (as defined below), whether or not the
Company is then subject to such reporting requirement.


For purposes of this Section 2(a), the following terms shall have the following
meanings:



		
	 	     (A) “Exchange Act” shall mean the
Securities Exchange Act of 1934, as
amended.
	 
	 	     (B) “Person” shall have the meaning as
set forth in Sections 13(d) and 14(d) of
the Exchange Act; provided, however, that
Person shall exclude (i) the Company,
(ii) any trustee or other fiduciary
holding securities under an employee
benefit plan of the Company, and (iii)
any corporation owned, directly or
indirectly, by the stockholders of the
Company in substantially the same
proportions as their ownership of stock
of the Company.
	 
	 	     (C) “Beneficial Owner” shall have the
meaning given to such term in Rule 13d-3
under the Exchange Act; provided,
however, that Beneficial Owner shall
exclude any Person otherwise becoming a
Beneficial Owner by reason of the
stockholders of the Company approving a
merger of the Company with another
entity.



     (b)  “Company” shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors,
officers, employees or agents, so that if Indemnitee is or was a director,
officer, employee

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or agent of such constituent corporation, or is or was serving at the request
of such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
Indemnitee shall stand in the same position under the provisions of this
Agreement with respect to the resulting or surviving corporation as Indemnitee
would have with respect to such constituent corporation of its separate
existence had continued.


     (c)  “Corporate Status” describes the status of a person who is or was a
director, officer, employee or agent of the Company or of any other
corporation, partnership or joint venture, trust, employee benefit plan or
other enterprise which such person is or was serving at the request of the
Company.


     (d)  “Disinterested Director” means a director of the Company who is not
and was not a party to the Proceeding in respect of which indemnification is
sought by lndemnitee.


     (e)  “Enterprise” shall mean the Company and any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise of
which Indemnitee is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary.


     (f)  “Expenses” shall include all reasonable attorneys’ fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, being or preparing to be a witness in, or
otherwise participating in, a Proceeding. Expenses also shall include Expenses
incurred in connection with any appeal resulting from any Proceeding, including
without limitation the premium, security for, and other costs relating to any
cost bond, supersedes bond, or other appeal bond or its equivalent. Expenses,
however, shall not include amounts paid in settlement by Indemnitee or the
amount of judgments or fines against lndemnitee.


     (g)  Reference to “other enterprise” shall include employee benefit plans;
references to “fines” shall include any excise tax assessed with respect to any
employee benefit plan; references to “serving at the request of the Company”
shall include any service as a director, officer, employee or agent of the
Company which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the best interests of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in
a manner “not opposed to the best interests of the Company” as referred to in
this Agreement.


     (h)  The term “Proceeding” shall include any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, including any and all appeals, whether brought in the
right of the Company or otherwise and whether of a civil, criminal,
administrative or

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investigative nature, in which Indemnitee was, or will be involved as a party
or otherwise by reason of the fact that Indemnitee is or was a director or
officer of the Company, by reason of any action taken by him or of any action
on his part while acting as director or officer of the Company, or by reason of
the fact that he is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, in each case whether or not serving in such capacity
at the time any liability or expense is incurred for which indemnification,
reimbursement, or advancement of expenses can be provided under this Agreement;
except one initiated by a Indemnitee to enforce his rights under this
Agreement.


     (i)  “Independent Counsel” means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither presently is, nor
in the past five years has been, retained to represent: (i) the Company or
lndemnitee in any matter material to either such party (other than with respect
to matters concerning the Indemnitee under this Agreement, or of other
indemnities under similar indemnification agreements), or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term “Independent Counsel” shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the
Company or Indemnitee in an action to determine Indemnitee’s rights under this
Agreement. The Company agrees to pay the reasonable fees and expenses of the
Independent Counsel referred to above and to fully indemnify such counsel
against any and all Expenses, claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto.


     3.     Indemnity in Third-Party Proceedings. The Company shall indemnify
Indemnitee in accordance with the provisions of this Section 3 if lndemnitee
is, or is threatened to be made, a party to or a participant in any Proceeding,
other than a Proceeding by or in the right of the Company to procure a judgment
in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified
against all Expenses, judgments, fines and amounts paid in settlement actually
and reasonably incurred by Indemnitee or on his behalf in connection with such
Proceeding or any claim, issue or matter therein, if Indemnitee acted in good
faith and in a manner Indemnitee reasonably believed to be in or not opposed to
the best interests of the Company and, in the case of a criminal proceeding had
no reasonable cause to believe that such conduct was unlawful.


     4.     Indemnity in Proceedings by or in the Right of the Company. The Company
shall indemnify Indemnitee in accordance with the provisions of this Section 4
if Indemnitee is, or is threatened to be made, a party to or a participant in
any Proceeding by or in the right of the Company to procure a judgment in its
favor. Pursuant to this Section 4, Indemnitee shall be indemnified against all
Expenses actually and reasonably incurred by him or on his behalf in connection
with such Proceeding or any claim, issue or matter therein, if Indemnitee acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company. No indemnification for Expenses shall be
made under this Section 4 in respect of any claim, issue or matter as to which
Indemnitee shall have been finally adjudged by a court to be


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liable to the Company, unless and only to the extent that the Delaware Court of
Chancery or any court in which the Proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnification.


     5.     Indemnification for Expenses of a Party Who is Wholly or Partly
Successful. Notwithstanding any other provisions of this Agreement, to the
extent that Indemnitee is a party to (or a participant in) and is successful,
on the merits or otherwise, in any Proceeding or in defense of any claim, issue
or matter therein, in whole or in part, the Company shall indemnify Indemnitee
against all Expenses actually and reasonably incurred by him in connection
therewith. If Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to one or more but less than all
claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or on
his behalf in connection with each successfully resolved claim, issue or
matter. If the Indemnitee is not wholly successful in such Proceeding, the
Company also shall indemnify Indemnitee against all Expenses reasonably
incurred in connection with a claim, issue or matter related to any claim,
issue, or matter on which the Indemnitee was successful. For purposes of this
Section and without limitation, the termination of any claim, issue or matter
in such a Proceeding by dismissal, with or without prejudice, shall be deemed
to be a successful result as to such claim, issue or matter.


     6.     Indemnification For Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of his
Corporate Status, a witness in any Proceeding to which Indemnitee is not a
party, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith.


     7.     Additional Indemnification.


     (a)  Notwithstanding any limitation in Sections 3, 4, or 5, the Company
shall indemnify lndemnitee to the fullest extent permitted by law if Indemnitee
is a party to or threatened to be made a party to any Proceeding (including a
Proceeding by or in the right of the Company to procure a judgment in its
favor) against all Expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by Indemnitee in connection with the
Proceeding. No indemnity shall be made under this Section 7(a) on account of
Indemnitee’s conduct which constitutes a breach of Indemnitee’s duty of loyalty
to the Company or its stockholders or is an act or omission not in good faith
or which involves intentional misconduct or a knowing violation of the law.


     (b) Notwithstanding any limitation in Sections 3, 4, 5 or 7(a), the
Company shall indemnify Indemnitee to the fullest extent permitted by law if
Indemnitee is a party to or threatened to be made a party to any Proceeding
(including a Proceeding by or in the right of the Company to procure a judgment
in its favor) against all Expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee in connection with
the Proceeding.


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     (c)  For purposes of Sections 7(a) and 7(b), the meaning of the
phrase “to the fullest extent
permitted by law” shall include, but not be limited to:


            i. to the fullest extent permitted by the provision of the DGCL that
authorizes or contemplates additional indemnification by agreement, or the
corresponding provision of any amendment to or replacement of the DGCL, and


            ii. to the fullest extent authorized or permitted by any amendments to
or replacements of the DGCL adopted after the date of this Agreement that
increase the extent to which a corporation may indemnify its officers and
directors.


     8.     Exclusions. Notwithstanding any provision in this Agreement, the
Company shall not be obligated under this Agreement to make any indemnity in
connection with any claim made against lndemnitee:


     (a)  for which payment has actually been made to or on behalf of
Indemnitee under any insurance policy or other indemnity provision, except with
respect to any excess beyond the amount paid under any insurance policy or
other indemnity provision; or


     (b)  for an accounting of profits made from the purchase and sale (or
sale and purchase) by Indemnitee of securities of the Company within the
meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or
similar provisions of state statutory law or common law; or


     (c)  in connection with any Proceeding (or any part of any Proceeding)
initiated or brought voluntarily by Indemnitee, including any Proceeding (or
any part of any Proceeding) initiated by Indemnitee against the Company or its
directors, officers, employees or other indemnitees, unless (i) the Board of
Directors of the Company authorized the Proceeding (or any part of any
Proceeding) prior to its initiation or (ii) the Company provides the
indemnification, in its sole discretion, pursuant to the powers vested in the
Company under applicable law.


     9.     Advances of Expenses. Notwithstanding any provision of this
Agreement to the contrary, the Company shall advance the expenses incurred by
Indemnitee in connection with any Proceeding within 20 days after the receipt
by the Company of a statement or statements requesting such advances from time
to time, whether prior to or after final disposition of any Proceeding.
Advances shall be unsecured and interest free. Advances shall be made without
regard to Indemnitee’s ability to repay the expenses and without regard to
Indemnitee’s ultimate entitlement to indemnification under the other provisions
of this Agreement. Advances shall include any and all reasonable Expenses
incurred pursuing an action to enforce this right of advancement, including
Expenses incurred preparing and forwarding statements to the Company to support
the advances claimed. The Indemnitee shall qualify for advances solely upon the
execution and delivery to the Company of an undertaking providing that the
Indemnitee undertakes to repay the advance to the

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extent that it is ultimately determined that Indemnitee is not entitled to be
indemnified by the Company. This Section 9 shall not apply to any claim made by
Indemnitee for which indemnity is excluded pursuant to Section 8.


     10.     Selection of Counsel. In the event the Company shall be obligated
under Section 9 hereof to pay the expenses of any Proceeding against
Indemnitee, the Company, if appropriate, shall be entitled to assume the
defense of such Proceeding, with counsel approved by Indemnitee, which approval
shall not be unreasonably withheld, upon the delivery to Indemnitee of written
notice of its election to do so. After delivery of such notice, approval of
such counsel by Indemnitee and the retention of such counsel by the Company,
the Company will not be liable to Indemnitee under this Agreement for any fees
of counsel subsequently incurred by Indemnitee with respect to the same
Proceeding, provided that (i) Indemnitee shall have the right to employ his
counsel in any such Proceeding at Indemnitee’s expense; and (ii) if (A) the
employment of counsel by Indemnitee has been previously authorized by the
Company, (B) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct of any
such defense, or (C) the Company shall not, in fact, have employed counsel to
assume the defense of such Proceeding, then the fees and expenses of
Indemnitee’s counsel shall be at the expense of the Company.



     11.     Procedure for Notification and Defense of Claim.


     (a)  Indemnitee shall, as a condition precedent to his right to be
indemnified under this Agreement, give the Company notice in writing as soon as
practicable of any claim made against Indemnitee for which indemnification will
or could be sought under this Agreement, provided however, that a delay in
giving such notice shall not deprive Indemnitee of any right to be indemnified
under this Agreement unless, and then only to the extent that, such delay is
materially prejudicial to the defense of such claim. The omission to notify the
Company will not relieve the Company from any liability for indemnification
which it may have to Indemnitee otherwise than under this Agreement. The
Secretary of the Company shall, promptly upon receipt of such a request for
indemnification, advise the Board in writing that Indemnitee has requested
indemnification.


     (b)  The Company will be entitled to participate in the Proceeding at
its own expense.


     12.     Procedure Upon Application for Indemnification.




     (a)  Upon written request by Indemnitee for indemnification pursuant to
the first sentence of Section 11(a), a determination, if required by applicable
law, with respect to Indemnitee’s entitlement thereto shall be made in the
specific case: (i) if a Change in Control shall have occurred, by Independent
Counsel in a written opinion to the Board of Directors, a copy of which shall
be delivered to Indemnitee; or (ii) if a Change in Control shall not have
occurred, (A) by a majority vote of the Disinterested Directors, even though
less than a quorum of the Board, (B) by a committee of Disinterested Directors
designated by a majority vote of the Disinterested Directors,

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even though less than a quorum of the Board, (C) if there are no such
Disinterested Directors or, if such Disinterested Directors so direct, by
Independent Counsel in a written opinion to the Board, a copy of which shall be
delivered to Indemnitee or (D) if so directed by the Board, by the stockholders
of the Company, and, if it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten (10) days after
such determination. Indemnitee shall cooperate with the person, persons or
entity making such determination with respect to Indemnitee’s entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorneys’ fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity making such
determination shall be borne by the Company (irrespective of the determination
as to Indemnitee’s entitlement to indemnification) and the Company hereby
indemnifies and agrees to hold lndemnitee harmless therefrom.


     (b)  In the event the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to Section 12(a) hereof, the
Independent Counsel shall be selected as provided in this Section 12(b). If a
Change in Control shall not have occurred, the Independent Counsel shall be
selected by the Board of Directors, and the Company shall give written notice
to Indemnitee advising him of the identity of the Independent Counsel so
selected. If a Change in Control shall have occurred, the Independent Counsel
shall be selected by Indemnitee (unless Indemnitee shall request that such
selection be made by the Board of Directors, in which event the preceding
sentence shall apply), and Indemnitee shall give written notice to the Company
advising it of the identity of the Independent Counsel so selected. In either
event, Indemnitee or the Company, as the case may be, may, within 10 days after
such written notice of selection shall have been given, deliver to the Company
or to Indemnitee, as the case may be, a written objection to such selection;
provided, however, that such objection may be asserted only on the ground that
the Independent Counsel so selected does not meet the requirements of
“Independent Counsel” as defined in Section 2 of this Agreement, and the
objection shall set forth with particularity the factual basis of such
assertion. Absent a proper and timely objection, the person so selected shall
act as Independent Counsel. If such written objection is so made and
substantiated, the Independent Counsel so selected may not serve as Independent
Counsel unless and until such objection is withdrawn or a court has determined
that such objection is without merit. If, within 20 days after submission by
Indemnitee of a written request for indemnification pursuant to Section 11(a)
hereof, no Independent Counsel shall have been selected and not objected to,
either the Company or lndemnitee may petition a court of competent jurisdiction
for resolution of any objection which shall have been made by the Company or
Indemnitee to the other’s selection of Independent Counsel and/or for the
appointment as Independent Counsel of a person selected by the Court or by such
other person as the Court shall designate, and the person with respect to whom
all objections are so resolved or the person so appointed shall act as
Independent Counsel under Section 12(a) hereof. Upon the due commencement of
any judicial proceeding or arbitration pursuant to Section 14(a) of this
Agreement, Independent Counsel shall be discharged and relieved of any further 


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responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).


     13.     Presumptions and Effect of Certain Proceedings.


     (a)  In making a determination with respect to entitlement to
indemnification hereunder, the person or persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification
under this Agreement if Indemnitee has submitted a request for indemnification
in accordance with Section 11(a) of this Agreement, and the Company shall have
the burden of proof to overcome that presumption in connection with the making
by any person, persons or entity of any determination contrary to that
presumption. Neither the failure of the Company (including by its directors or
independent legal counsel) to have made a determination prior to the
commencement of any action pursuant to this Agreement that indemnification is
proper in the circumstances because Indemnitee has met the applicable standard
of conduct, nor an actual determination by the Company (including by its
directors or independent legal counsel) that Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that Indemnitee has not met the applicable standard of conduct.


     (b) If the person, persons or entity empowered or selected under Section
12 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within sixty (60) days
after receipt by the Company of the request therefore, the requisite
determination of entitlement to indemnification shall be deemed to have been
made and Indemnitee shall be entitled to such indemnification, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material
fact necessary to make Indemnitee’s statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of such
indemnification under applicable law; provided, however, that such 60-day
period may be extended for a reasonable time, not to exceed an additional
thirty (30) days, if the person, persons or entity making the determination
with respect to entitlement to indemnification in good faith requires such
additional time for the obtaining or evaluating of documentation and/or
information relating thereto; and provided, further, that the foregoing
provisions of this Section 13(b) shall not apply (i) if the determination of
entitlement to indemnification is to be made by the stockholders pursuant to
Section 12(a) of this Agreement and if (A) within fifteen (15) days after
receipt by the Company of the request for such determination the Board of
Directors has resolved to submit such determination to the stockholders for
their consideration at an annual meeting thereof to be held within seventy five
(75) days after such receipt and such determination is made thereat, or (B) a
special meeting of stockholders is called within fifteen (15) days after such
receipt for the purpose of making such determination, such meeting is held for
such purpose within sixty (60) days after having been so called and such
determination is made thereat, or (ii) if the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 12(a)
of this Agreement.


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     (c)  The termination of any Proceeding or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not (except as otherwise expressly provided
in this Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.


     (d)  Reliance as Safe Harbor. For purposes of any determination of
good faith, Indemnitee shall be deemed to have acted in good faith if
Indemnitee’s action is based on the records or books of account of the
Enterprise, including financial statements, or on information supplied to
Indemnitee by the officers of the Enterprise in the course of their duties, or
on the advice of legal counsel for the Enterprise or on information or records
given or reports made to the Enterprise by an independent certified public
accountant or by an appraiser or other expert selected with the reasonable care
by the Enterprise. The provisions of this Section 13 (d) shall not be deemed
to be exclusive or to limit in any way the other circumstances in which the
Indemnitee may be deemed to have met the applicable standard of conduct set
forth in this Agreement.


     (e)  Actions of Others. The knowledge and/or actions, or failure to
act, of any director, officer, agent or employee of the Enterprise shall not be
imputed to Indemnitee for purposes of determining the right to indemnification
under this Agreement.


     14.     Remedies of Indemnitee.


     (a)  In the event that (i) a determination is made pursuant to Section
12 of this Agreement that Indemnitee is not entitled to indemnification under
this Agreement, (ii) advancement of Expenses is not timely made pursuant to
Section 9 of this Agreement, (iii) no determination of entitlement to
indemnification shall have been made pursuant to Section 12(a) of this
Agreement within 30 days after receipt by the Company of the request for
indemnification, (iv) payment of indemnification is not made pursuant to
Section 5 or 6 or the last sentence of Section 12(a) of this Agreement within
ten (10) days after receipt by the Company of a written request therefore, or
(v) payment of indemnification pursuant to Section 3, 4 or 7 of this Agreement
is not made within ten (10) days after a determination has been made that
Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an
adjudication by a court of his entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an
award in arbitration to be conducted by a single arbitrator pursuant to the
Commercial Arbitration Rules of the American Arbitration Association. The
Company shall not oppose Indemnitee’s right to seek any such adjudication or
award in arbitration.


     (b)  In the event that a determination shall have been made pursuant to
Section 12(a) of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 14 shall be conducted in all respects as a de novo trial, or

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arbitration, on the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination. In any judicial proceeding or arbitration commenced
pursuant to this Section 14 the Company shall have the burden of proving
Indemnitee is not entitled to indemnification or advancement of Expenses, as
the case may be.


     (c)  If a determination shall have been made pursuant to Section 12(a)
of this Agreement that Indemnitee is entitled to indemnification, the Company
shall be bound by such determination in any judicial proceeding or arbitration
commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee
of a material fact, or an omission of a material fact necessary to make
Indemnitee’s statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification
under applicable law.


     (d)  The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 14 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement. The Company
shall indemnify Indemnitee against any and all Expenses and, if requested by
Indemnitee, shall (within ten (10) days after receipt by the Company of a
written request therefore) advance such expenses to Indemnitee, which are
incurred by Indemnitee in connection with any action brought by Indemnitee for
indemnification or advance of Expenses from the Company under this Agreement or
under any directors’ and officers’ liability insurance policies maintained by
the Company, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advancement of Expenses or insurance
recovery, as the case may be.


     15.     Non-exclusivity; Survival of Rights; Insurance; Subrogation.


     (a) The rights of indemnification and to receive advancement of Expenses
as provided by this Agreement shall not be deemed exclusive of any other rights
to which Indemnitee may at any time be entitled under applicable law, the
Company’s Certificate of Incorporation, the Company’s Bylaws, any agreement, a
vote of stockholders or a resolution of directors, or otherwise. No amendment,
alteration or repeal of this Agreement or of any provision hereof shall limit
or restrict any right of Indemnitee under this Agreement in respect of any
action taken or omitted by such Indemnitee in his Corporate Status prior to
such amendment, alteration or repeal. To the extent that a change in Delaware
law, whether by statute or judicial decision, permits greater indemnification
or advancement of Expenses than would be afforded currently under the Company’s
Certificate of Incorporation and this Agreement, it is the intent of the
parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change. No right or remedy herein conferred is
intended to be exclusive of any other right or remedy, and every other right
and remedy shall be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other right or
remedy.


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     (b)  The Company shall, from time to time, make the good faith
determination whether or not it is practicable for the Company to obtain and
maintain a policy or policies of insurance with reputable insurance companies
providing the directors, officers, employees, or agents of the Company with
coverage for losses from wrongful acts, or to ensure the Company’s performance
of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. To the extent that
the Company maintains an insurance policy or policies providing liability
insurance for directors, officers, employees or agents of the Company or of any
other corporation, partnership, joint venture, trust, employee benefits plan or
other enterprise which such person serves at the request of the Company,
Indemnitee shall be covered by such policy or policies in accordance with its
or their terms to the maximum extent of the coverage available for any such
director, officer, employee or agent under such policy or policies. If, at the
time of the receipt of a notice of a claim pursuant to the terms hereof, the
Company has director and officer liability insurance in effect, the Company
shall give prompt notice of the commencement of such proceeding to the insurers
in accordance with the procedures set forth in the respective policies. The
Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of the Indemnitee, all amounts payable as a result
of such proceeding in accordance with the terms of such policies.


     (c)  In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents
as are necessary to enable the Company to bring suit to enforce such rights.


     (d)  The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable (or for which advancement is
provided hereunder) hereunder if and to the extent that Indemnitee has
otherwise actually received such payment under any insurance policy, contract,
agreement or otherwise.


     (e)  The Company’s obligation to indemnify or advance Expenses
hereunder to Indemnitee who is or was serving at the request of the Company as
a director, officer, employee or agent of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise shall be
reduced by any amount Indemnitee has actually received as indemnification or
advancement of expenses from such other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise.


     16. Duration of Agreement. This Agreement shall continue until and
terminate upon the later of: (a) 10 years after the date that Indemnitee shall
have ceased to serve as a director or officer of the Company or as a director,
officer, employee or agent of any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise which Indemnitee
served at the request of the Company; or (b) one year after the final
termination of any Proceeding, including any and all appeals, then pending in
respect of which Indemnitee is granted rights of indemnification or advancement
of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to
Section 14 of this Agreement relating thereto.


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     17.     Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns and shall insure to the benefit of
Indemnitee and his heirs, executors and administrators.


     18.     Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby and shall remain
enforceable to the fullest extent permitted by law; (b) such provision or
provisions shall be deemed reformed to the extent necessary to conform to
applicable law and to give the maximum effect to the intent of the parties
hereto; and (c) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, each portion of any Section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested thereby.


     19.     Enforcement.


     (a)  The Company expressly confirms and agrees that it has entered into
this Agreement and assumed the obligations imposed on it hereby in order to
induce Indemnitee to serve as a director or officer of the Company, and the
Company acknowledges that Indemnitee is relying upon this Agreement in serving
as a director or officer of the Company.


     (b)  This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral, written and implied, between the
parties hereto with respect to the subject matter hereof.


     20.     Effectiveness of Agreement. This Agreement shall be effective as
of the date set forth on the first page and may apply to acts or omissions of
Indemnitee which occurred prior to such date if Indemnitee was an officer,
director, employee or other agent of the Company, or was serving at the request
of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, at the time
such act or omission occurred.


     21. Modification and Waiver. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by the parties
thereto. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provisions of this Agreement nor
shall any waiver constitute a continuing waiver.


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     22.     Notice by Indemnitee. Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder. The failure of Indemnitee to so notify the Company shall not
relieve the Company of any obligation which it may have to the Indemnitee under
this Agreement or otherwise.


     23.     Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given (a) if delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (b) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:


     (a)  If to Indemnitee, at the address indicated on the signature page of
this Agreement, or such other address as Indemnitee shall provide to the
Company.


     (b) If to the Company to




	 	Paychex, Inc.

Attn: Legal Department

911 Panorama Trail South

Rochester, NY 14625



or to any other address as may have been furnished to Indemnitee by the
Company.


     24.     Contribution. To the fullest extent permissible under applicable
law, if the indemnification provided for in this Agreement is unavailable to
Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying
Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for
judgments, fines, penalties, excise taxes, amounts paid or to be paid in
settlement and/or for Expenses, in connection with any claim relating to an
indemnifiable event under this Agreement, in such proportion as is deemed fair
and reasonable in light of all of the circumstances of such Proceeding in order
to reflect (i) the relative benefits received by the Company and Indemnitee as
a result of the event(s) and/or transaction(s) giving cause to such Proceeding;
and/or (ii) the relative fault of the Company (and its directors, officers,
employees and agents) and Indemnitee in connection with such event(s) and/or
transaction(s).

     25.     Applicable Law and Consent to Jurisdiction. This Agreement and the
legal relations among the parties shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware, without regard
to its conflict of laws rules. Except with respect to any arbitration commenced
by Indemnitee pursuant to Section 14(a) of this Agreement, the Company and
Indemnitee hereby irrevocably and unconditionally (i) agree that any action or
proceeding

15






 



arising out of or in connection with this Agreement shall be brought only in
the Chancery Court of the State of Delaware (the “Delaware Court”), and not in
any other state or federal court in the United States of America or any court
in any other country, (ii) consent to submit to the exclusive jurisdiction of
the Delaware Court for purposes of any action or proceeding arising out of or
in connection with this Agreement, (iii) appoint, to the extent such party is
not otherwise subject to service of process in the State of Delaware,
irrevocably CT Corporation System, 1209 Orange Street, Wilmington, Delaware
19801 as its agent in the State of Delaware as such party’s agent for
acceptance of legal process in connection with any such action or proceeding
against such party with the same legal force and validity as if served upon
such party personally within the State of Delaware, (iv) waive any objection to
the laying of venue of any such action or proceeding in the Delaware Court, and
(v) waive, and agree not to plead or to make, any claim that any such action or
proceeding brought in the Delaware Court has been brought in an improper or
inconvenient forum.


     26.     Identical Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.


     27.     Miscellaneous. Use of the masculine pronoun shall be deemed to
include usage of the feminine pronoun where appropriate. The headings of the
paragraphs of this Agreement are inserted for convenience only and shall not be
deemed to constitute part of this Agreement or to affect the construction
thereof.


IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of
the day and year first above written.



	 	 	 
	                                                                         INC.	 	
INDEMNITEE
	 
	By:                                                                          

Name:	 	

                                                                        
Name:
	 	 	
Address:




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