Document:

EX-10.21

EXHIBIT 10.21

SENIOR VICE PRESIDENT

INCENTIVE PROGRAM — FISCAL 2010

	 	 	 
	Participants:

	 	All Senior Vice Presidents (SVPs).
	 
	 	 
	Target Incentive:

	 	Incentive is equal to 75% of base salary at 100% achievement of performance
criteria. A maximum incentive of 120% of base salary can be achieved.
	 
	 	 
	Performance Criteria:

	 	Appendix A details the schedule of incentive
attainment and plan goals based on actual
performance versus plan performance. The plan
performance is based on the financial plan approved
by the Board of Directors at the July 2009 Board
Meeting.
	 
	 	 
	Payment:

	 	Incentive payment for fiscal year 2010 will be made
in July 2010 following approval by the Board of
Directors. The Senior Vice President must be active
in their role and a Paychex employee at the end of
the applicable fiscal year to be eligible for the
annual bonus, except as noted under the Partial Year
section below.
	 
	 	 
	Partial Year:

	 	Senior Vice Presidents appointed during the fiscal
year will be eligible for a bonus award based on a
partial year formula calculation. The calculated
amount is subject to adjustment by the Plan
Administrators and must be reviewed with the Board
of Directors to determine if the payment is fair.
	 
	 	 
	 

	 	Senior Vice Presidents who terminate employment with Paychex, or whose
employment is terminated by Paychex (except for death or long term disability)
at any time during the plan year will not be entitled to a bonus.
	 
	 	 
	 

	 	A Senior Vice President (or their beneficiaries or legal representatives) who
dies or is on long-term disability is eligible for a bonus award based on a
partial year formula calculation. The calculated amount is subject to
adjustment by the Plan Administrators and must be reviewed by the Board of
Directors to determine if the payment is fair.
	 
	 	 
	Plan Administration:

	 	The incentive plan will be administered and interpreted by the Governance and Compensation
Committee, as approved by the Board of Directors. There are no deviations from plan criteria
unless specifically agreed to in writing by the Board of Directors, as recommended by the Plan
Administrator. The plan may be amended, suspended or terminated at any time.
	 
	 	 
	 

	 	This does not constitute a contract of or for employment of any specific
duration. Paychex abides by the principle of employment-at-will, which permits
the company or the employee to terminate the employment relationship with or
without notice, with or without cause, at any time.EX-10.22

EXHIBIT 10.22

VICE PRESIDENT

INCENTIVE PROGRAM — FISCAL 2010

	 	 	 
	Participants:

	 	All Vice Presidents (VPs).
	 
	 	 
	Target Incentive:

	 	Incentive is equal to 50% of base salary at 100% achievement of performance
criteria. A maximum incentive of 80% of base salary can be achieved.
	 
	 	 
	Performance Criteria:

	 	Appendix A describes the schedule of incentive
attainment and plan goals based on actual
performance versus plan performance. The plan
performance is based on the financial plan approved
by the Board of Directors at the July 2009 Board
Meeting.
	 
	 	 
	Payment:

	 	Incentive payments for fiscal year 2010 will be made
in July 2010 following approval by the Board of
Directors. The Vice President must be active in the
role and a Paychex employee at the end of the
applicable fiscal year to be eligible for the annual
bonus, except as noted under the Partial Year
section below.
	 
	 	 
	Partial Year:

	 	Vice Presidents appointed during the fiscal year
will be eligible for a bonus award based on a
partial year formula calculation. The calculated
amount is subject to adjustment by the Plan
Administrators and must be reviewed with the Board
of Directors to determine if the payment is fair.
	 
	 	 
	 

	 	Vice Presidents who terminate employment with Paychex, or whose employment is
terminated by Paychex (except for death or long term disability) at any time
during the plan year will not be entitled to a bonus.
	 
	 	 
	 

	 	A Vice President (or their beneficiaries or legal representatives) who dies or
is on long-term disability is eligible for a bonus award based on a partial
year formula calculation. The calculated amount is subject to adjustment by
the Plan Administrators and must be reviewed by the Board of Directors to
determine if the payment is fair.
	 
	 	 
	Plan Administration:

	 	The incentive plan will be administered and interpreted by the Governance and Compensation
Committee, as approved by the Board of Directors. There are no deviations from plan criteria
unless specifically agreed to in writing by Board of Directors, as recommended by the Plan
Administrator. The plan may be amended, suspended or terminated at any time.
	 
	 	 
	 

	 	This does not constitute a contract of or for employment of any specific
duration. Paychex abides by the principle of employment-at-will, which permits
the company or the employee to terminate the employment relationship with or
without notice, with or without cause, at any time.EX-10.29

EXHIBIT
10.29

PAYCHEX, INC.

BOARD DEFERRED COMPENSATION PLAN

As Amended and Restated Effective July 8, 2009

Article 1

Purpose & Effective Date

     1.01 Purpose. The purpose of the Plan is to provide non-employee directors of the
Company with an opportunity to elect to defer the receipt of a portion of their Eligible
Compensation.

     1.02 Effective Date. The Plan was adopted by the Board effective as of January 1,
2005 (the “Effective Date”), and was amended and restated by the Board effective as of July 8,
2009.

Article 2

Definitions

     For purposes of the Plan, unless otherwise clearly apparent from the context, the following
terms shall have the meanings indicated in this Article 2:

     2.01 “Account Balance” means, with respect to the Account of a Participant as of a
given date, the balance of the Participant’s Account as of such date, as adjusted through the most
recent valuation date practicable before such given date to reflect all applicable Investment
Adjustments and all prior withdrawals and distributions from such Account, in accordance with
Article 5 and the Plan.

     2.02 “Affiliate” means any person other than Paychex with whom Paychex would be
considered a single employer under Section 414(b) or 414(c) of the Code; provided, however, that
for determining whether a Separation from Service has occurred, the language “at least 50 percent”
shall be used instead of “at least 80 percent” each place it appears in such Code Sections.

     2.03 “Amended Distribution Election Form” means the written form required by the
Committee to be submitted by a Participant to effect a permitted change in the Distribution
Election previously made by the Participant with respect to his or her Account.

     2.04 “Annual Deferral Account” means a notional, bookkeeping account established under
the Plan to reflect the Participant’s Annual Participant Deferral for a Plan Year, as adjusted to
reflect all applicable Investment Adjustments and all prior withdrawals and distributions from such
account, in accordance with Article 5, the provisions of the applicable Annual Enrollment Materials
and the Plan.

     2.05 “Annual Election Form” means the written form required by the Committee to be
submitted by a Participant in connection with the Participant’s Deferral Election and Distribution
Election with respect to a given Plan Year.

 

 

     2.06 “Annual Enrollment Materials” means, for a given Plan Year, the Annual Election
Form and any other written forms, documents or materials concerning the terms of Participant
Deferral Elections for such Plan Year.

     2.07 “Annual Participant Deferral” means the aggregate amount of Eligible Compensation
deferred by a Participant with respect to a particular Plan Year under Section 4.01.

     2.08 “Annual Retainer” means the compensation paid by the Company to a Director as an
annual retainer for services to be rendered by the Director as a member of the Board during any
Plan Year.

     2.09 “Beneficiary” means, with respect to a Participant, the person or persons
designated in accordance with the provisions of Article 7 as a beneficiary of such Participant
hereunder.

     2.10 “Board” means the board of directors of Paychex.

     2.11 “Change in Control” means: (a) one or more changes in the ownership of stock of
Paychex if after the change or changes, at least 50 percent of the total combined voting power of
all classes of stock of Paychex is actually or constructively owned by one person, corporate or
otherwise; or (b) the transfer by Paychex, in one or more transactions, of all or substantially all
of its assets to another person, corporate or otherwise, or group of related persons, whether by
sale, merger, consolidation, or other arrangement. The Board shall make the final determination of
whether a Change in Control has occurred.

     2.12 “Code” means the Internal Revenue Code of 1986, as it may be amended from time to
time.

     2.13 “Committee” means the Deferred Compensation Plan Committee of Paychex or such
other committee designated by the Board to administer the Plan. Any reference herein to the
Committee shall be deemed to include any person to whom any duty of the Committee has been
delegated pursuant to Section 9.02.

     2.14 “Company” means Paychex and its Affiliates, collectively.

     2.15 “Deferral Election” means a deferral election made in accordance with Section
4.01.

     2.16 “Deferred Compensation Account” or “Account” means, with respect to a
Participant, the Annual Deferral Accounts and the Pre-2010 Deferral Account established for such
Participant pursuant to Section 4.01(a).

     2.17 “Designated Fund” means a hypothetical investment made available under the Plan
from time to time by the Committee for purposes of valuing Accounts. In the event that a
Designated Fund ceases to exist or is no longer to be a Designated Fund, the Committee may
designate a substitute Designated Fund for the discontinued hypothetical investment.

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     2.18 “Designation Date” means the date or dates as of which a designation of
investment directions by a Participant pursuant to Article 5, or any change in a prior designation
of investment directions by a Participant pursuant to Article 5, shall become effective. The
Designation Date in any Plan Year shall be determined by the Committee; provided, however, that
each trading day of the New York Stock Exchange shall be available as a Designation Date unless the
Committee selects different Designation Dates.

     2.19 “Director” means any non-employee member of the Board.

     2.20 “Disability” means any medically determinable physical or mental impairment,
certified by a physician selected by or satisfactory to the Employer, resulting in the
Participant’s inability to perform the duties of his or her position or any substantially similar
position, where such impairment can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months.

     2.21 “Distribution Election” means an election made in accordance with Section 6.01.

     2.22 “Effective Date” has the meaning set forth in Section 1.02.

     2.23 “Eligible Compensation” means, for any Plan Year, (a) the Annual Retainer for
such Plan Year, (b) the Meeting Fees for meetings during such Plan Year, and (c) any other items of
compensation designated by the Committee in the Annual Enrollment Materials for such Plan Year as
eligible for deferral under the Plan for that Plan Year, subject to any maximum or minimum deferral
amounts or percentages imposed by the Committee for that Plan Year pursuant to Section 4.01(b).

     2.24 “ERISA” means the Employee Retirement Income Security Act of 1974, as it may be
amended from time to time.

     2.25 “Investment Adjustment” means an adjustment made to the balance of any Account in
accordance with Section 5.03 to reflect the performance of a Designated Fund pursuant to which the
value of the Account or portion thereof is measured.

     2.26 “Investment Agent” means the person appointed by the Committee to invest the
Accounts of Participants, or if no person is so designated, the Committee.

     2.27 “Meeting Fees” means the compensation paid by the Company to Directors for
attendance at Board and committee meetings, as well as fees paid for a telephonic Board or
committee meeting.

     2.28 “Newly Eligible Director” means a Director who becomes eligible to participate in
the Plan during a Plan Year and who has not previously participated in the Plan or an elective
account-balance deferred compensation arrangement (as defined for purposes of Section 409A) of the
Company, as determined by the Committee and to the extent permissible under Section 409A.

     2.29 “Participant” means any Director (a) who elects to participate in the Plan and
(b) who commences participation in the Plan. Once a person is a Participant in the Plan, he or

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she shall remain a Participant for Plan purposes until his or her entire Account Balance has been
paid.

     2.30 “Paychex” means Paychex, Inc., a Delaware corporation.

     2.31 “Plan” means the Paychex, Inc. Board Deferred Compensation Plan, which shall be
evidenced by this document and by the applicable Annual Enrollment Materials, as they may be
amended from time to time.

     2.32 “Plan Year” means the 12-month period beginning on January 1 of each calendar
year and ending on December 31 of such calendar year. The first Plan Year shall be the 2005
calendar year.

     2.33 “Pre-2010 Deferral Account” means a notional, bookkeeping account established
under the Plan to reflect the Participant’s Annual Participant Deferral for all Plan Years prior to
the 2010 Plan Year, as adjusted to reflect all applicable Investment Adjustments and all prior
withdrawals and distributions from such account, in accordance with Article 5 and the provisions of
the Plan.

     2.34 “Section 409A” means Section 409A of the Code, the treasury regulations
promulgated thereunder and other applicable guidance issued by the Treasury Department or the
Internal Revenue Service with respect thereto.

     2.35 “Separation from Service” means the good-faith and complete termination of the
arrangements under which the Participant performs services for the Company within the meaning of
Section 409A.

     2.36 “Unforeseeable Emergency” means, with respect to a Participant, a severe
financial hardship to the Participant resulting from an illness or accident of the Participant, the
Participant’s spouse, or a dependent (as defined in Section 152(a) of the Code) of the Participant,
loss of the Participant’s property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of the Participant.

Article 3

Eligibility, Selection and Enrollment

     3.01 Selection by Committee. For each Plan Year, the Committee may select, in its
sole discretion, the Directors who shall be eligible to make a Deferral Election with respect to
that Plan Year. The Committee’s selection of a Director to make a Deferral Election with respect
to a particular Plan Year will not entitle that Director to make a Deferral Election with respect
to any subsequent Plan Year, unless the Director is again selected by the Committee to make a
Deferral Election with respect to such subsequent Plan Year.

     3.02 Enrollment Requirements. As a condition to being eligible to make a Deferral
Election with respect to a Plan Year, each selected Director shall complete and return to the
Committee an Annual Election Form at the time, and in accordance with the terms and conditions,
that the Committee may establish from time to time, and in accordance with the requirements of
Section 409A. The Committee may in its discretion permit a Newly Eligible

4

 

Director to complete and return to the Committee an Annual Election Form no later than 30 days
following the date on which such Director first becomes eligible to participate in the Plan, or
such earlier date as the Committee may establish from time to time.

     3.03 Commencement of Participation. Provided a Director selected to make a Deferral
Election with respect to a particular Plan Year has met all enrollment requirements set forth in
the Plan and any other requirements imposed by the Committee, including submitting an Annual
Election Form within the specified time period, the Director’s designated deferrals shall commence
as of the first day of the particular Plan Year. In the case of a Newly Eligible Director, the
Newly Eligible Director’s designated deferrals shall commence as of the date such Newly Eligible
Director’s Annual Election Form is received by the Committee, but no later than 30 days following
the date on which such Director first became eligible to participate in the Plan, and such Deferral
Election shall apply only with respect to the Eligible Compensation earned for services performed
subsequent to the time such Annual Election Form is received by the Committee. If a Director fails
to meet all such requirements within the specified time period with respect to any Plan Year, the
Director shall not be eligible to make a Deferral Election for that Plan Year.

     3.04 Subsequent Plan Year Elections. The Annual Election Form submitted by a
Participant in respect of a particular Plan Year will remain effective with respect to and apply to
each subsequent Plan Year unless: (a) the Participant is not a Director selected to participate in
the Plan for such subsequent Plan Year; (b) the Participant files a new Annual Election Form for
such subsequent Plan Year; (c) the Participant revokes his or her prior Annual Election Form in
accordance with the procedures established by the Committee for such action; or (d) the Director’s
Deferral Election is suspended pursuant to Section 4.01(d) in the immediately preceding Plan Year.

Article 4

Participant Deferrals, Taxes and Vesting

     4.01 Participant Deferrals.

          (a) Deferral Election. The Committee shall have sole discretion to determine in respect of
each Plan Year: (i) whether a Director shall be allowed to participate in the Plan with respect to
such Plan Year; (ii) the items of Eligible Compensation which may be deferred with respect to that
Plan Year; and (iii) any other terms and conditions applicable to the Deferral Elections for that
Plan Year. A Participant’s Deferral Election shall be evidenced by an Annual Election Form
completed and submitted to the Committee in accordance with the procedures and time frames as may
be established by the Committee in its sole discretion. The amounts deferred by a Participant in
respect of services rendered during a Plan Year shall be referred to collectively as an Annual
Participant Deferral and shall be credited to an Annual Deferral Account established in the name of
the Participant for such Plan Year. A separate Annual Deferral Account shall be established and
maintained for each Annual Participant Deferral for the 2010 Plan Year and each Plan Year
thereafter. A Pre-2010 Deferral Account shall be established and maintained for the Annual
Participant Deferrals for Plan Years prior to the 2010 Plan Year.

5

 

          (b) Minimum and Maximum Deferrals. The Committee may from time to time designate in the
Annual Enrollment Materials for a given Plan Year a minimum or maximum deferral amount or
percentage, either in the aggregate or per item of Eligible Compensation, applicable with respect
to that Plan Year.

          (c) Deferral Designations. A Participant may designate the amount of the Annual Participant
Deferral to be deducted from his or her Eligible Compensation as specified in the applicable Annual
Enrollment Materials for a given Plan Year, which may provide for deferrals to be expressed as
either a percentage or a fixed dollar amount of a specified item of Eligible Compensation expected
by the Participant, as determined by the Committee. If a Participant designates the Annual
Participant Deferral to be deducted from any item of Eligible Compensation as a fixed dollar amount
and such fixed dollar amount exceeds the amount of such item of Eligible Compensation actually
payable to the Participant, the entire amount of such item of Eligible Compensation shall be
withheld.

          (d) Deferral Deductions. Unless the Annual Enrollment Materials provide otherwise, Annual
Participant Deferral shall be deducted from the items of Eligible Compensation as follows: (i) for
Annual Participant Deferral designated as a percentage of any type of Eligible Compensation (e.g.,
Annual Retainers and Meeting Fees), in the specified percentage at the time the Eligible
Compensation would otherwise have been paid to the Participant; (ii) for substantially equivalent
periodic payments (e.g., Meeting Fees) designated as a fixed dollar amount, in substantially
equivalent amounts from each periodic payment during the Plan Year; and (iii) for one-time payments
(e.g., Annual Retainers) designated as a fixed dollar amount, 100 percent of the Eligible
Compensation shall be deducted from each payment until the fixed dollar amount of Annual
Participant Deferral has been deferred.

          (e) Suspension of Deferral Elections. Except as otherwise provided by Section 3.04, this
Section 4.01(e) or elsewhere in the Plan, once made, a Deferral Election with respect to a
particular Plan Year shall become irrevocable with respect to that Plan Year as of the deadline for
Deferral Elections for that Plan Year, as set forth in the applicable Annual Enrollment Materials.

               (i) From and after the date that a Participant is deemed to have suffered a Disability, any
standing Deferral Election of the Participant shall automatically be cancelled and no further
deferrals shall be made with respect to the Participant.

               (ii) If a Participant experiences an Unforeseeable Emergency, the Participant may petition the
Committee to cancel his or her Deferral Election. A petition shall be made on the written form
required by the Committee to be used for such request and shall include all information requested
by the Committee in order to make a determination on such petition, as determined by the Committee
in its sole discretion. The Committee shall determine, in its sole discretion, whether to approve
the Participant’s petition. If the petition for a cancellation is approved, cancellation shall
take effect upon the date of approval, and such Deferral Election must be cancelled and not merely
postponed or delayed. Notwithstanding the foregoing, the Committee shall not have any right to
approve a request for cancellation of a Deferral Election if such approval (or right to approve)
would cause the Plan to fail to comply with, or cause a Participant to be subject to a tax under,
Section 409A.

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               (iii) If a Participant’s Deferral Election has been cancelled during a Plan Year pursuant to
this Section 4.01(e), the Participant will not be eligible to make any further deferrals in respect
of that Plan Year. The Participant may be eligible to make deferrals for a subsequent Plan Year
provided the Participant is a Director selected to make deferrals for such subsequent Plan Year and
the Participant complies with the election requirements under the Plan for such subsequent Plan
Year.

     4.02 Vesting. A Participant shall be vested in all amounts credited to his or her
Account as of the date such amounts are credited to such Participant’s Account.

Article 5

Designated Funds and Investment Adjustments

     5.01 Designated Funds. The Committee shall establish from time to time the Designated
Funds that will be available under the Plan. At any time, the Committee may, in its discretion,
add one or more additional Designated Funds under the Plan, and in connection with any such
addition, may permit Participants to select from among the then-available Designated Funds under
the Plan to measure the value of such Participants’ Accounts. In addition, the Committee, in its
sole discretion, may discontinue any Designated Fund at any time, and provide for the portions of
Participants’ Accounts and future deferrals designated to the discontinued Designated Fund to be
reallocated to another Designated Fund.

     5.02 Investment Directions.

          (a) Subject to such limitations, operating rules and procedures as may from time to time be
required by law, imposed by the Committee, contained elsewhere in the Plan or set forth in any
Annual Enrollment Materials, each Participant may communicate to the Investment Agent a direction
(in accordance with this Article 5) as to how his or her Account should be deemed to be invested
among the Designated Funds made available by the Committee. The Participant’s investment
directions shall designate the percentage (in any whole percent multiples, which must total 100%)
of the portion of the subsequent contributions to the Participant’s Account which is requested to
be deemed to be invested in such Designated Funds, and shall be subject to the rules set forth
below. The Investment Agent shall invest the assets of the Participant’s Account in accordance
with the directions of the Participant except to the extent that the Committee directs it to the
contrary. The Committee has the authority, but not the requirement, in its sole and absolute
discretion, to direct that a Participant’s Account be invested among such investments as it deems
appropriate and advisable, which investments need not be the same for each Participant.

          (b) Any initial or subsequent investment direction shall be in writing to the Investment Agent
on a form supplied by the Investment Agent, or, as permitted by the Investment Agent, may be by
oral designation or electronic transmission designation to the Investment Agent. A designation
shall be effective as of the Designation Date next following the date the direction is received and
accepted by the Investment Agent, or as soon thereafter as administratively practicable, subject to
the Committee’s right to override such direction. The Participant may, if permitted by the
Committee, make an investment direction to the Investment Agent for his or her existing Account
balance as of a Designation Date and a separate investment

7

 

direction to the Investment Agent for contribution credits to his or her Account occurring
after the Designation Date.

          (c) All amounts credited to a Participant’s Account shall be deemed invested in accordance
with the then effective investment direction, unless the Committee directs otherwise. Unless
otherwise changed by the Committee, an investment direction shall remain in effect until the
Participant’s Account is distributed or until a subsequent investment direction is received and
accepted by the Investment Agent.

          (d) If a Participant files an investment direction with the Investment Agent for his or her
existing Account as of a Designation Date which is received and accepted by the Investment Agent
and not overridden by the Committee, then the Participant’s existing Account shall be deemed to be
reallocated as of the next Designation Date (or as soon thereafter as administratively practicable)
among the designated investment funds according to the percentages specified in such investment
direction. Unless otherwise changed by the Committee, an investment direction shall remain in
effect until the Participant’s Account is distributed or until a subsequent investment direction is
received and accepted by the Investment Agent.

          (e) The Committee, in its sole discretion, may place limits on a Participant’s ability to make
changes with respect to any Designated Funds.

          (f) If the Investment Agent receives an initial or subsequent investment direction with
respect to an Account which it deems to be incomplete, unclear or improper, or which is
unacceptable for some other reason (determined in the sole and absolute discretion of the
Investment Agent), the Participant’s investment direction for such Account then in effect shall
remain in effect (or, in the case of a deficiency in an initial investment direction, the
Participant shall be deemed to have filed no investment direction) until the Participant files an
investment direction for such Account acceptable to the Investment Agent.

          (g) If the Investment Agent does not possess valid investment directions covering the full
balance of a Participant’s Account or subsequent contributions thereto (including, without
limitation, situations in which no investment direction has been filed, situations in which the
investment direction is not acceptable to the Investment Agent under Section 5.02(f), or situations
in which some or all of the Participant’s designated investments are no longer permissible
Designated Funds), the Participant shall be deemed to have directed that the undesignated portion
of the Account be invested in a money-market fund or similar short-term investment fund;
provided, however, the Committee may provide for the undesignated portion to be
allocated to or among the Designated Fund(s) that the Participant did designate in the same
proportion as the designated portion, or may provide for any other allocation method it deems
appropriate, in its discretion.

     5.03 Adjustment of Accounts. While a Participant’s Account does not represent the
Participant’s ownership of, or any ownership interest in, any particular assets, the Participant’s
Account shall be adjusted in accordance with the Designated Fund(s), subject to the conditions and
procedures set forth herein or established by the Committee from time to time. Any notional cash
earnings generated under a Designated Fund (such as interest and cash dividends and distributions)
shall, at the Committee’s sole discretion, either be deemed to be reinvested in that

8

 

Designated Fund or reinvested in one or more other Designated Fund(s) designated by the
Committee. All notional acquisitions and dispositions of Designated Funds under a Participant’s
Account shall be deemed to occur at such times as the Committee shall determine to be
administratively feasible in its sole discretion and the Participant’s Account shall be adjusted
accordingly. In addition, a Participant’s Account may be adjusted from time to time, in accordance
with procedures and practices established by the Committee, in its sole discretion, to reflect any
notional transactional costs and other fees and expenses relating to the deemed investment,
disposition or carrying of any Designated Fund for the Participant’s Account. Adjustments made in
accordance herewith shall be referred to as Investment Adjustments.

     5.04 No Investment Liability; Indemnification. None of the Company, its directors and
employees (including, without limitation, each member of the Committee), and their designated
agents and representatives, shall have any liability whatsoever for the investment of a
Participant’s Account, or for the investment performance of a Participant’s Account. Each
Participant hereunder, as a condition to his or her participation in the Plan, agrees to indemnify
and hold harmless the Company, its directors and employees (including, without limitation, each
member of the Committee), and their designated agents and representatives, from any losses or
damages of any kind (including, without limitation, lost opportunity costs) relating to the
investment of a Participant’s Account. The Investment Agent shall have no liability whatsoever for
the investment of a Participant’s Account, or for the investment performance of a Participant’s
Account, other than as a result of the failure to follow a valid and effective investment
direction. Each Participant hereunder, as a condition to his or her participation hereunder,
agrees to indemnify and hold harmless the Investment Agent, and its agents and representatives,
from any losses or damages of any kind (including, without limitation, lost opportunity costs)
relating to the investment of a Participant’s Account, other than as a result of the failure to
follow a valid and effective investment direction.

Article 6

Distribution of Accounts

     6.01 Distribution Elections.

          (a) Initial Election. With respect to the 2005 through 2009 Plan Years, a Participant’s
Distribution Election at the time he or she first made a Deferral Election under the Plan shall
apply to the Participant’s Pre-2010 Deferral Account, which shall be distributed in either a lump
sum, or two to ten substantially equivalent annual installments, in each case commencing, in
accordance with administrative guidelines determined by the Committee, (i) on a specified date; or
(ii) upon the Participant’s Separation from Service. With respect to the Annual Deferral Accounts,
a Participant shall make a Distribution Election at the time he or she completes his or her
Deferral Election with respect to a given Plan Year to have the Participant’s Annual Deferral
Account for that Plan Year distributed in either a lump sum, or two to ten substantially equivalent
annual installments, in each case commencing, in accordance with administrative guidelines
determined by the Committee, (i) on a specified date; or (ii) upon the Participant’s Separation
from Service. If a Participant elects to be paid in installments, then the amount of each
installment payment shall be equal to the value of the Participant’s Pre-2010 Deferral Account or
the Participant’s respective Annual Deferral Account for that Plan Year divided by the number of
installments remaining to be paid.

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          (b) Subsequent Election. Subject to any restrictions that may be imposed by the Committee, a
Participant may amend his or her Distribution Election with respect to his or her Pre-2010 Deferral
Account or any Annual Deferral Account once by completing and submitting to the Committee within
such time frame as the Committee may designate, an Amended Distribution Election Form;
provided, however, that such Amended Distribution Election Form election (i) is not
made less than 12 months prior to the date of the first scheduled payment (in the case of a
Distribution Election for payment on a specified date or pursuant to a fixed schedule), (ii) does
not take effect until 12 months after the date on which such election is made, and (iii) specifies
that the payment with respect to which such election is made be deferred for a period of not less
than five years from the date such payment would otherwise have been made (in the case of a
Distribution Election related to payment other than in the event of death, Disability or
Unforeseeable Emergency). For purposes of this Section 6.01(b), an election to receive the
distribution of a Pre-2010 Deferral Account or an Annual Deferral Account in a series of
installment payments commencing on the payment date shall be treated as an election to receive the
payment as a single lump-sum payment on the initial payment date.

     6.02 Payment on Specified Date. If a Participant made a Distribution Election with
respect to his or her Pre-2010 Deferral Account or any Annual Deferral Account to have such Account
paid on a specified date, then the Account Balance of the Participant’s Account will be paid out in
either a lump sum, or two to ten substantially equivalent annual installments, as specified by the
Participant in his or her Distribution Election, commencing, in accordance with administrative
guidelines determined by the Committee, on such specified date, or as soon thereafter as
administratively practicable, but in no event later than 90 days. If such a Participant dies or
there is a Change in Control of Paychex prior to the payment of all or a portion of his or her
Account Balance, any remaining portion of the Account Balance shall be paid in accordance with
Section 6.04 or Section 6.05, as applicable.

     6.03 Payment upon Separation from Service. If a Participant made a Distribution
Election with respect to his or her Pre-2010 Deferral Account or any Annual Deferral Account to
have such Account paid upon the Participant’s Separation from Service, then the Account Balance of
the Participant’s Account will be paid out in either a lump sum, or two to ten substantially
equivalent annual installments, as specified by the Participant in his or her Distribution
Election, commencing, in accordance with administrative guidelines determined by the Committee,
upon the Participant’s Separation from Service, or as soon thereafter as administratively
practicable, but in no event later than 90 days. If such a Participant dies or there is a Change
in Control of Paychex prior to the payment of all or a portion of his or her Account Balance, any
remaining portion of the Account Balance shall be paid in accordance with Section 6.04 or Section
6.05, as applicable.

     6.04 Payment upon Death of Participant. Notwithstanding anything to the contrary in a
Participant’s Distribution Election or otherwise, if a Participant dies before he or she has
received a complete distribution of his or her Account Balance, the Participant’s Account Balance
shall be payable in accordance with the terms of Section 7.01 in a lump sum within 90 days of the
date on which the Committee is notified in writing of the Participant’s death, or as soon as
administratively practicable thereafter, but no later than the December 31st of the year of death,
or if later, the 15th day of the third month following the date of death.

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     6.05 Payment upon Change in Control of Paychex. Notwithstanding anything to the
contrary in a Participant’s Distribution Election or otherwise, in the event of a Change in Control
of Paychex, if such Change of Control constitutes a change in the ownership or effective control of
Paychex, or a change in the ownership of a substantial portion of the assets of Paychex, each with
the meaning given such terms by Section 409A, then: (a) the Plan shall be terminated upon the
occurrence of the Change in Control, to the extent permissible under and in compliance with the
requirements of Section 409A; and (b) the Account Balance of each Participant’s Account will be
paid out in a lump sum upon the occurrence of the Change in Control, or as soon thereafter as
administratively practicable, but in no event later than 90 days.

     6.06 Six-Month Delay for Specified Employees. Notwithstanding the terms of Section
6.03 and Section 6.05, if a Participant experiences a Separation from Service and the Participant
is a Specified Employee at the time of Separation from Service, and the payment of the
Participant’s Account is required to be delayed by six months pursuant to Section 409A, then the
payment of the Participant’s Account Balance shall be made or commence no earlier than the
six-month anniversary of the Participant’s Separation from Service. “Specified Employee” as of a
given date means a “specified employee” as of such date for purposes of Section 409A.

     6.07 Withdrawal in the Event of an Unforeseeable Emergency. In the event that a
Participant experiences an Unforeseeable Emergency, the Participant may petition the Committee to
receive a partial or full payout of the Account Balance of the Participant’s Account. The
Committee shall determine, in its sole discretion, whether the requested payout shall be made, and
the amount of the payout; provided, however, that the payout shall not exceed the amount reasonably
needed to satisfy the Unforeseeable Emergency plus amounts necessary to pay taxes reasonably
anticipated as a result of the distribution. In making its determination under this Section 6.07,
the Committee shall be guided by the requirements of Section 409A, and the Committee shall take
into account the extent to which a Participant’s Unforeseeable Emergency is or may be relieved
through reimbursement or compensation by insurance or otherwise or by the liquidation by the
Participant of his or her assets (to the extent the liquidation of such assets would not itself
cause severe financial hardship). If, subject to the sole discretion of the Committee, the
petition for a payout is approved, the payout shall be made within 30 days of the date of approval,
or as soon thereafter as administratively practicable, but in no event later than 90 days.

     6.08 Form of Payment. Distributions under the Plan shall be paid in cash.

Article 7

Beneficiaries; Participant Data

     7.01 Designation of Beneficiaries.

          (a) Each Participant may designate from time to time any person or persons (who may be named
contingently or successively) to receive such benefits as may be payable under the Plan upon or
after the Participant’s death, and such designation may be changed from time to time by the
Participant by filing a new designation. Each designation will revoke all prior designations by
the same Participant under the Plan once filed with the Committee, shall be

11

 

made on a form provided by the Committee for such purpose, and will be effective only when
filed in writing with the Committee during the Participant’s lifetime.

          (b) In the absence of a valid Beneficiary designation, or if, at the time any benefit payment
is due to a Beneficiary, there is no living Beneficiary validly named by the Participant, the
Committee shall direct distribution of any such benefit payment to the Participant’s spouse, if
then living, but otherwise to the Participant’s then living descendants, if any, per stirpes, but,
if none, to the Participant’s estate. In determining the existence or identity of anyone entitled
to a benefit payment, the Committee may rely conclusively upon information supplied by the
Participant’s personal representative, executor or administrator. If a question arises as to the
existence or identity of anyone entitled to receive a benefit payment as aforesaid, or if a dispute
arises with respect to any such payment, then, notwithstanding the foregoing, the Committee, in its
sole and absolute discretion, may direct the distribution of such payment to the Participant’s
estate without liability for any tax or other consequences which might flow therefrom, or may take
such other action as it deems to be appropriate.

     7.02 Information to Be Furnished By Participants and Beneficiaries; Inability to Locate
Participants or Beneficiaries. Any communication, statement or notice addressed to a
Participant or to a Beneficiary at his or her last post office address as shown on the Company’s
records shall be binding on the Participant or Beneficiary for all purposes of the Plan. The
Committee shall not be obliged to search for any Participant or Beneficiary beyond the sending of a
registered letter to such last known address. If the Committee sends notice in this fashion to any
Participant or Beneficiary that he or she is entitled to an amount under the Plan and the
Participant or Beneficiary fails to claim such amount or make his or her location known to the
Committee within three years thereafter, then, except as otherwise required by law, the Committee
may, in complete satisfaction of any claim by or through such Participant or Beneficiary, direct
distribution as if the Participant or Beneficiary had died or, if the Committee cannot locate the
person or persons who is the proper payee in the event of the Participant’s or Beneficiary’s death,
may direct that the amount payable shall be deemed to be a forfeiture.

Article 8

Amendment or Termination

     8.01 Amendment. The Company may, at any time, amend or modify the Plan in whole or in
part by the actions of the Committee; provided, however, that (a) no amendment or
modification shall be effective to decrease or restrict the value of a Participant’s Account
Balance in existence at the time the amendment or modification is made, calculated as if the
Participant had experienced a Separation from Service as of the effective date of the amendment or
modification, and (b) no amendment or modification may be made if such amendment or modification
would cause the Plan to fail to comply with, or cause a Participant to be subject to tax under, the
provisions of Section 409A.

     8.02 Termination. Although the Company may anticipate that it will continue the Plan
for an indefinite period of time, there is no guarantee that the Company will continue the Plan or
will not terminate the Plan at any time in the future. Accordingly, subject to the requirements of
Section 409A, the Board reserves the right to discontinue its sponsorship of the Plan and to

12

 

terminate the Plan. In addition, subject to the requirements of Section 409A, the Board may
at any time terminate an Affiliate’s participation in the Plan.

Article 9

Administration

     9.01 Committee Duties. This Plan shall be administered by the Committee. Members of
the Committee may be Participants under the Plan. The Committee shall also have the discretion and
authority to (a) make, amend, interpret, and enforce all appropriate rules and regulations for the
administration of the Plan and (b) decide or resolve any and all questions including
interpretations of the Plan, as may arise in connection with the Plan. Any individual serving on
the Committee who is a Participant shall not vote or act on any matter relating solely to himself
or herself. When making a determination or calculation, the Committee shall be entitled to rely on
information furnished by a Participant or the Company. The decision or action of the Committee
with respect to any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations promulgated hereunder
shall be final and conclusive and binding upon all persons having any interest in the Plan.

     9.02 Agents. In the administration of the Plan, the Committee may, from time to time,
employ agents and delegate to them such administrative duties as it sees fit (including acting
through a duly appointed representative) and may from time to time consult with counsel who may be
counsel to the Company.

Article 10

Miscellaneous

     10.01 Status of Plan. The Plan is intended to be (a) a plan that is not qualified
within the meaning of Section 401(a) of the Code and (b) a plan that “is unfunded and is maintained
by an employer primarily for the purpose of providing deferred compensation for a select group of
management or highly compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3)
and 401(a)(1). The Plan shall be administered and interpreted to the extent possible in a manner
consistent with that intent.

     10.02 Section 409A. It is intended that the Plan (including all amendments thereto)
comply with provisions of Section 409A, so as to prevent the inclusion in gross income of any
benefits accrued hereunder in a taxable year prior to the taxable year or years in which such
amount would otherwise be actually distributed or made available to the Participants. The Plan
shall be administered and interpreted to the extent possible in a manner consistent with that
intent.

     10.03 Unsecured General Creditor. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests or claims in any property
or assets of the Company. For purposes of the payment of benefits under the Plan, any and all of
the Company’s assets, shall be, and remain, the general, unpledged unrestricted assets of the
Company. The Company’s obligation under the Plan shall be merely that of an unfunded and unsecured
promise to pay money in the future.

13

 

     10.04 Nonassignability. Neither a Participant nor any other person shall have any
right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any,
payable hereunder, or any part thereof, which are, and all rights to which are expressly declared
to be, unassignable and non-transferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be
transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy
or insolvency or be transferable to a spouse as a result of a property settlement or otherwise.

     10.05 Not a Contract of Service. The terms and conditions of the Plan shall not be
deemed to constitute a contract with the Company for the Participant to serve on the Board.
Nothing in the Plan shall be deemed to give a Participant the right to be retained in the service
of the Company as a Director.

     10.06 Terms. Whenever any words are used herein in the masculine, they shall be
construed as though they were in the feminine in all cases where they would so apply; and whenever
any words are used herein in the singular or in the plural, they shall be construed as though they
were used in the plural or the singular, as the case may be, in all cases where they would so
apply.

     10.07 Captions. The captions of the articles, sections and paragraphs of the Plan are
for convenience only and shall not control or affect the meaning or construction of any of its
provisions.

     10.08 Governing Law. Subject to ERISA, the provisions of the Plan shall be construed
and interpreted according to the internal laws of the State of New York without regard to its
conflicts of laws principles.

     10.09 Notice. Any notice or filing required or permitted to be given to the Committee
under the Plan shall be sufficient if in writing and hand-delivered, or sent by registered or
certified mail, to the address below:

Paychex Corporate Human Resources

Attention: Retirement Benefits Manager

911 Panorama Trail

Rochester, NY 14625

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of
the date shown on the postmark or the receipt for registration or certification.

Any notice or filing required or permitted to be given to a Participant under the Plan shall be
sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the
Participant.

     10.10 Successors. The provisions of the Plan shall bind and inure to the benefit of
the Company and its successors and assigns.

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     10.11 Validity. In case any provision of the Plan shall be illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining parts hereof, but the Plan
shall be construed and enforced as if such illegal or invalid provision had never been inserted
herein.

* * * * *

15

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