Document:

exv10w19

EXHIBIT 10.19

PAYCHEX, INC.

2002 STOCK INCENTIVE PLAN

(as amended and restated effective October 12, 2005)

FORM OF NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (OFFICER)

     1. Grant of Option. This Non-qualified Stock Option Award Agreement (the “Award
Agreement”), made as of [grant date], serves to notify you that the Governance and Compensation
Committee (the “Committee”) of the Board of Directors of Paychex, Inc. (the “Company”) hereby
grants to you, under the Company’s 2002 Stock Incentive Plan, as amended and restated effective
October 12, 2005 (the “Plan”), a Non-Qualified Stock Option (the “Option”) to purchase, on the
terms and conditions set forth in this Award Agreement and the Plan, up to the number of shares of
the Company’s $.01 par value common stock (the “Common Stock”) set forth on the attached statement
at the price of [exercise price] per share. The Plan is incorporated herein by reference and made
a part of this Award Agreement. You may obtain a copy of the Plan from the Office of the Corporate
Secretary. You should review the terms of this Award Agreement and the Plan carefully. The
capitalized terms used in this Award Agreement are defined in the Plan.

     2. Term. Unless the Option is previously terminated pursuant to the terms of this
Award Agreement or the Plan, the Option will expire at the close of business on [expiration date]
(the “Expiration Date”).

     3. Vesting. Subject to the terms set forth in this Award Agreement and the Plan, the
Option will vest and become exercisable pro rata with respect to one-fourth of the shares subject
to such Option on the first, second, third and fourth anniversaries of the Date of Grant, with any
fractional share resulting from such pro-ration vesting on the fourth anniversary. Vesting is
contingent on your continued employment with the Company or one of its affiliates through the
vesting dates.

     4. Exercise.

          (a) Method of Exercise. To the extent exercisable under Section 3 of this Award Agreement,
the Option may be exercised in whole or in part, provided that the Option may not be exercised for
less than one share of Common Stock in any single transaction. The Option may be exercised using a
method specified by the Company.

          (b) Payment of Exercise Price. The exercise of the Option is conditioned upon your payment to
the Company of the Exercise Price for the number of shares of Common Stock that you elect to
purchase. The Exercise Price may be paid in cash or by check or by way of a broker-assisted stock
option exercise program, if such a program is made available by the Company at the time of the
exercise of the Option.

          (c) Withholding. The exercise of the Option is conditioned upon your making arrangements
satisfactory to the Company for the payment to the Company of the amount of all
taxes required by any governmental authority to be withheld and paid over by the Company or
any Affiliate to the governmental authority on account of the exercise. The payment of such

 

 

withholding taxes to the Company may be made (i) by you in cash or by check, or (ii) by the Company
or any Affiliate withholding such taxes from any other compensation owed to you by the Company or
any Affiliate. Withholding of shares of Common Stock for payment of tax withholdings is not
permitted for any reason.

          (d) Issuance of Shares. Upon determining that compliance with this Award Agreement has
occurred, including compliance with such reasonable requirements as the Company may impose pursuant
to the Plan, the Company shall issue to you a certificate for the shares of Common Stock purchased
on the earliest practicable date (as determined by the Company) thereafter.

     5. Effect of Death and Disability. In the event of your death or Disability prior to
the complete exercise of the Option, any unvested portion of the Option will vest in full
immediately and the remaining portion of the Option may be exercised in whole or in part, subject
to all of the conditions on exercise imposed by the Plan and this Award Agreement, within three
years after the date of your death or Disability, but only (i) by you, or in the event of your
death, by your estate or the person or persons to whom the Option passes under your will or the
laws of descent and distribution, and (ii) prior to the close of business on the Expiration Date of
the Option. The term “Disability” means a condition whereby you are unable to perform the
essential functions of your position with reasonable accommodations by reason of any medically
determinable physical or mental impairment which can be expected to result in death or which has
lasted for a continuous period of not less than six months, all as verified by a physician
acceptable to, or selected by, the Company.

     6. Effect of Retirement. Upon your Retirement prior to the complete exercise of the
Option, the unvested portion of the Option will be canceled as of your last day worked, and the
remaining portion of the Option may be exercised in whole or in part, subject to all of the
conditions on exercise imposed by the Plan and this Award Agreement, within three years after the
date of such termination, but only (i) to the extent that the Option was vested and exercisable on
the date such termination, and (ii) prior to the close of business on the Expiration Date of the
Option. The term “Retirement” means retirement from the Company at age 55 or later with ten or
more years of employment (full-time or part-time) with the Company.

     7. Effect of Other Termination. Upon your termination for a reason other than death,
Disability or Retirement prior to the complete exercise of the Option, the unvested portion of the
Option will be canceled as of your last day worked, and the remaining portion of the Option may be
exercised in whole or in part, subject to all of the conditions on exercise imposed by the Plan and
this Award Agreement, within one year after the date of such termination, but only (i) to the
extent that the Option was vested and exercisable on the date of such termination, and (ii) prior
to the close of business on the Expiration Date of the Option. Notwithstanding the foregoing, if
your employment is terminated by reason of conduct that is determined by the Company to have been
detrimental to the Company, including violation of the Company’s Code of Business Ethics, or
conduct which is criminal, fraudulent, deliberately dishonest, disloyal or willful misconduct, you
will forfeit all rights under the Option (both unvested and vested) as of your last day worked.

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     8. Non-competition, Non-solicitation, Confidentiality, and Detrimental Conduct. In
consideration for the Award, you agree that during your employment and for a period of twelve (12)
months following termination of employment for any reason, you will not, directly or indirectly,
either as an employee, employer, consultant, agent, principal, partner, stockholder, corporate
officer, board member, director, or in any other individual or representative capacity, engage or
attempt to engage in any activity that is competitive to the business of the Company within the
geographic and substantive area or areas of responsibility assigned to the you during the last 24
months of employment. In addition, you agree that for a period of eighteen (18) months following
the termination of employment for any reason, you will not directly or indirectly by assisting
others, solicit Company clients, prospects or referral resources; nor will you recruit or hire, or
attempt to recruit or hire any other employee of Company or its affiliates, or induce or attempt to
induce any employee of Company to terminate employment with Company. You also agree and acknowledge
that during the course of your employment with the Company, you will obtain, have access and be
privy to nonpublic information important to the Company’s business solely as a result of employment
with the Company, which information you hereby acknowledge and agree to be confidential
(“Confidential Information”). You agree that during and after employment, you shall not divulge or
make use of any Confidential Information, directly or indirectly, personally or on behalf of any
other person, business, corporation, or entity without prior written consent of the Company. You
further agree that you will not, during your employment, engage in conduct which is detrimental to
the Company, including violation of the Company’s Code of Business Ethics and Conduct, criminal
conduct, fraud, or willful misconduct. These covenants are not intended to, and do not, limit in
any way the rights and remedies provided to the Company under the Plan, other agreements with you,
or under common or statutory law.

     9. Repayment of Financial Gain.

          (a) If you fail to comply with Section 8 of this Award Agreement, the Company may cancel any
unexercised portion of this Option and recover from you the gross amount, before deduction of
applicable taxes or other amounts, of any gain realized on the exercise of stock options pursuant
to this Option during the 24-month period preceding your breach of any covenant in Section 8 of
this Award Agreement.

          (b) If you fail to comply with Section 8 of this Award Agreement, upon demand by the Company,
you will repay the Company in accordance with the terms of Section 9(a), and the Company shall be
entitled to offset the amount of any such repayment obligation against any amount owed to you by
the Company. The remedies set forth in this Section are in addition to any other remedies the
Company may have, at law or equity, for your violation of the terms of this Award Agreement.

     10. Transfer of Option. Except as otherwise determined by the Committee, the Option
may not be transferred, assigned or pledged (except by will or the laws of descent and
distribution, or pursuant to a domestic relations order).

     11. Limitation of Rights. You will not have any rights as a stockholder with respect
to the shares of Common Stock covered by the Option until you become the holder of record of such
shares by exercising the Option. Neither the Plan, the granting of the Option nor this

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Award Agreement gives you any right to remain in the employment of the Company or any Affiliate.

     12. Rights of Company and Affiliates. This Award Agreement does not affect the right
of the Company or any Affiliate to take any corporate action whatsoever, including without
limitation its right to recapitalize, reorganize or make other changes in its capital structure or
business, merge or consolidate, issue bonds, notes, shares of Common Stock or other securities,
including preferred stock, or options therefore, dissolve or liquidate, or sell or transfer any
part of its assets or business.

     13. Restrictions on Issuance of Shares. If at any time the Company determines that
the listing, registration or qualification of the shares covered by the Option upon any securities
exchange or under any state or federal law, or the approval of any governmental agency, is
necessary or advisable as a condition to the exercise of the Option, the Option may not be
exercised in whole or in part unless and until such listing, registration, qualification or
approval shall have been effected or obtained free of any conditions not acceptable to the Company.

     14. Plan Controls. The Option is subject to all of the provisions of the Plan, which
is hereby incorporated by reference, and is further subject to all the interpretations, amendments,
rules and regulations that may from time to time be promulgated and adopted by the Committee
pursuant to the Plan. In the event of any conflict among the provisions of the Plan and this Award
Agreement, the provisions of the Plan will be controlling and determinative.

     15. Amendment. Except as otherwise provided by the Plan, the Company may only alter,
amend or terminate the Option with your consent.

     16. Governing Law. This Award Agreement shall be governed by and construed in
accordance with the laws of the State of New York, except as superseded by applicable federal law,
without giving effect to its conflicts of law provisions. All parties consent to exclusive
personal jurisdiction in New York courts and agree that venue shall be New York State Supreme
Court, Monroe County.

     17. Section 409A. The Option is intended to qualify for an exemption from the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the treasury
regulations promulgated and other official guidance issued thereunder, and the Plan and this Award
Agreement shall be administered and interpreted consistent with such intention.

* * * * *

4exv10w20

EXHIBIT 10.20

PAYCHEX, INC.

2002 STOCK INCENTIVE PLAN

(as amended and restated effective October 12, 2005)

FORM OF OFFICER PERFORMANCE INCENTIVE

AWARD AGREEMENT (LONG_TERM)

	 	 	 	 	 

	Participant Name
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Award Date
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Performance Period	 	June 1, 20XX
through May 31, 20XX
	 
	 	 	 	 
	Maximum Number of Restricted Shares
	 	 	 	 
	 

	 	 	 	 

     1. Grant of Award. This Officer Performance Incentive Award Agreement (this “Award
Agreement”) sets forth the terms and conditions of the Performance Award (the “Award”) granted to
you by the Governance and Compensation Committee (the “Committee”) of the Board of Directors of
Paychex, Inc. (the “Company”) under the Company’s 2002 Stock Incentive Plan, as amended and
restated effective October 12, 2005 (the “Plan”). The Award is subject to all of the provisions of
your Award Notice and the Plan, which is hereby incorporated by reference and made a part of this
Award Agreement. The capitalized terms used in this Award Agreement are defined in the Plan. In
the event of any conflict among the provisions of the Plan and this Award Agreement, the provisions
of the Plan will be controlling and determinative.

     2. Maximum Number of Restricted Shares and Components. The Maximum Number of
Restricted Shares of the Award is set forth above and consists of two components: (a) the Service
Revenue component; and (b) the Operating Income component, each of which shall represent 50 percent
of the Maximum Number of Restricted Shares.

     3. Requirement of Employment. Your rights to the Actual Number of Restricted Shares
(as that term is defined below) under Section 5, shall be provisional and shall be canceled in
whole or in part, as determined by the Committee in its sole discretion if your continuous
employment with the Company terminates for any reason other than death or Disability on or before
the last day of the Performance Period. Whether and as of what date your employment with the
Company shall terminate if you are granted a leave of absence or commence any other break in
employment intended by your employer to be temporary, shall be determined by the Committee in its
sole discretion. In the event of your death or Disability, you or your estate shall be entitled to
receive a pro-rata payment of the Actual Number of Restricted Shares of the Award
based on the ratio of the number of days from the beginning of the Performance Period through
the date of your death or Disability, and the total number of days in the Performance Period.

 

 

     4. Determination of Number of Restricted Shares.

          (a) Potential Number of Restricted Shares and Actual Number of Restricted Shares. As soon as
practicable after the last day of the Performance Period and prior to the payment of the Award, the
Committee shall determine the Restricted Shares due under Section 4(b) and 4(c), each as of the
last day of the Performance Period, if any. The sum of the Restricted Shares under the Service
Revenue metric and the Restricted Shares under the Operating Income metric shall be the Potential
Number of Restricted Shares of the Award as so determined. The Committee may, in its sole
discretion, then reduce, but not increase, the Potential Number of Restricted Shares to determine
the Actual Number of Restricted Shares of the Award.

          (b) Service Revenue. The Restricted Shares earned under the Service Revenue metric shall be
determined based upon the Company’s cumulative Service Revenue for the Performance Period, as
determined by the Committee, and the Service Revenue Restricted Shares matrix attached hereto as
Exhibit A.

          (c) Operating Income. The Restricted Shares earned under the Operating Income metric shall be
determined based upon the Company’s cumulative Operating Income for the Performance Period, as
determined by the Committee, and the Operating Income Restricted Shares matrix attached hereto as
Exhibit A.

          (d) Calculation. In determining the Potential Number of Restricted Shares of the Award,
“Service Revenue” and “Operating Income” for the Performance Period, mean the cumulative Company
Service Revenue and Operating Income, respectively, each as determined by summing the values
reported in the Company’s annual audited financial statements for such period, but in each case
excluding the following (each, an “Exclusion Item”): asset write-downs or impairments; litigation
or claim judgments or settlements; changes in tax law, accounting principles or other such laws or
provisions affecting reported results; severance, contract termination and other costs related to
entering or exiting certain business activities; and gains or losses from the acquisition or
disposition of businesses or assets, from discontinued operations, or from the early extinguishment
of debt, or other unusual items. In addition to its general authority to reduce the Potential
Number of Restricted Shares when determining the Actual Number of Restricted Shares of the Award,
the Committee may, in its sole discretion, take into consideration the effect of the inclusion of
one or more of the Exclusion Items, provided, however, that the Actual Number of Restricted Shares
may not exceed the Potential Number of Restricted Shares as determined pursuant to this Section 4.

          (e) Committee’s Determinations Final. The Committee’s determination of the Service Revenue,
the Operating Income, the Potential Number of Restricted Shares and the Actual Number of Restricted
Shares pursuant to this Award Agreement shall be final, binding and conclusive upon you and all
persons claiming under or through you.

     5. Payment of Award.

          (a) The Actual Number of Restricted Shares, as determined pursuant to Section 4, if any, shall
become payable to you in shares of restricted stock as promptly as

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practicable following the
Committee’s certification of performance achievement at the end of the Performance Period, but in
no event later than 90 days after the end of the Performance Period (the “Payment Date”). Such
restricted shares shall be subject to a one-year continued-employment vesting period commencing as
of the date of issuance of the shares and subject to such other terms and conditions as may be set
forth by the Committee at the time of issue. You shall not be entitled to receive dividends with
respect to the shares underlying this Award until such restricted shares have been issued to you
following the end of the Performance Period, and the dividends paid on any unvested restricted
shares shall be retained by the Company and held in escrow, trust or similar manner, and shall only
be paid to you upon the vesting of the underlying shares to which the dividends relate; upon the
forfeiture of any such shares, your right to the dividends paid on the underlying shares which are
forfeited shall also be forfeited.

          (b) Any payment made in respect to the Award may be reduced by the amount of all taxes
required by any governmental authority to be withheld and paid over by the Company or any Affiliate
to the governmental authority on account of such payment; the Actual Number of Shares may be
reduced by the number of shares necessary to pay such withholding.

     6. Miscellaneous.

          (a) Section 409A. The Award is intended to comply with the requirements of Section 409A of
the Code, and this Award Agreement shall be interpreted and the Award shall be administered
consistent with such intention.

          (b) Amendment. Except as otherwise provided by the Plan, the Company may only alter, amend or
terminate the Award with your consent.

          (c) No Right to Employment. Neither the Plan, the granting of the Award nor this Award
Agreement gives you any right to remain in the employment of the Company or any Affiliate.

          (d) Nontransferable. The Award may not be sold, assigned, transferred, pledged or encumbered
in any way prior to the payment thereof, whether by operation of law or otherwise.

          (e) Governing Law. This Award Agreement shall be governed by and construed in accordance with
the laws of the State of New York, except as superseded by applicable federal law, without giving
effect to its conflicts of law provisions.

* * * * *

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