EXHIBIT 10(i): PAYCHEX, INC. DEFERRED COMPENSATION PLAN
1. PRELIMINARY MATTERS
1.1. Name. The Plan evidenced by this instrument shall be known as
the Paychex, Inc. Deferred Compensation Plan.
1.2. Purpose. The sole and exclusive purpose of the Plan is to
enable a select group of highly compensated and/or management
employees of the Corporation and Directors of the Corporation
to defer income tax on a portion of their Compensation.
2. DEFINITIONS
2.1. "Board" means the Board of Directors of the Corporation.
2.2. "Change in Control" means: (i) one or more changes in the
ownership of stock of the Corporation if after the change or
changes, at least 50 percent of the total combined voting
power of all classes of stock of the Corporation is actually
or constructively owned by one person, corporate or otherwise;
or (ii) the transfer by the Corporation, 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.
2.3. "Compensation" means taxable wages paid by the Corporation for
services rendered by the Participant including contributions
made to the Paychex, Inc. 401(k) Incentive Retirement Plan,
excluding reimbursements of moving expenses, stock option
income, the imputed value of group-term life insurance,
Section 125 contributions, and amounts distributed from the
Paychex, Inc. 401(k) Incentive Retirement Plan. With respect
to a Director of the Corporation, "Compensation" means
Director's fees.
2.4. "Committee" means the Deferred Compensation Plan Committee of
the Corporation, as duly appointed from time to time.
2.5. "Corporation" means Paychex, Inc., or any other corporation
that is a member of the same affiliated group (as defined in
Section 1504(a) of the Internal Revenue Code) and adopts the
Plan.
2.6. "Deferred Compensation Account" or "Accounts" means the
account established by the Corporation for a Participant
pursuant to Section 3.3 of the Plan.
2.7. "Designated Fund" means any mutual fund selected by the
Committee to be an investment alternative under the Plan. The
Committee has sole authority to determine the funds that may
be used as investment alternatives under the Plan and may add,
delete or substitute funds from time to time.
2.8. "Participant" means an employee or Director of the Corporation
who has been designated by the Committee as eligible to
participate in the Plan, and who has signed a written deferral
election pursuant to Section 3.2 of the Plan.
2.9. "Plan" means the Paychex, Inc. Deferred Compensation Plan as
set forth in this document or as amended from time to time.
2.10. "Termination Date" means, with respect to each Participant,
the date on which the Participant terminates active employment
with the Corporation. For purposes of this definition, (i)
payments for accrued vacation time or sick leave following an
employment termination shall not constitute active employment,
and (ii) the period of any paid or unpaid leave shall not be
treated as a termination of active employment unless and until
the Corporation or the Participant gives notice that the
Participant will not return to active employment with the
Corporation.
2.11. "Valuation Date" means each date set by the Committee, under
Section 3.4 of the Plan, for crediting investment returns to
Accounts.
3. BENEFITS
3.1. Eligibility. The Plan is available to (a) Directors of the
Corporation and (b) employees of the Corporation who are
designated as eligible by the Committee. The determination as
to whether an employee of the Corporation is eligible to
participate in the Plan is within the sole and complete
discretion of the Committee. Notwithstanding the foregoing, no
employee may be designated as eligible unless the employee
belongs to "a select group of management or highly compensated
employees" as described in Title I of ERISA.
3.2. Deferral Elections. A Participant may elect to defer the
receipt of a portion of the Compensation otherwise payable to
him by delivering prior written notice to the Committee.
Deferral elections and modifications of existing elections,
shall take effect on the first day of January and July each
year (the normal enrollment periods), and on any additional
dates determined by the Committee. Once made, the
Participant's election shall be irrevocable and remain in
effect until the next enrollment period established by the
Committee at which point the election may be modified or
superseded in a new written election delivered to the
Committee. Notwithstanding the foregoing, the Committee, in
its sole discretion, may permit a Participant to change a
deferral election outside the normal enrollment periods if the
Committee believes such change is appropriate. All elections
shall be made in the form and manner prescribed by the
Committee in its sole discretion.
3.3. Establishment of Deferred Compensation Accounts. Subject to
the provisions of Section 3.7 of the Plan, the Corporation
shall establish on its books a Deferred Compensation Account
in the name of each Participant who elects to defer the
receipt of a portion of Compensation pursuant to Section 3.2
of the Plan. Each deferral of Compensation by a Participant
shall, as of a date determined by the Committee on a uniform
and consistent basis for all Participants in the Plan,
nominally be credited to the Participant's Deferred
Compensation Account. The Corporation is under no obligation
to segregate or otherwise set aside amounts nominally credited
to any Participant's Deferred Compensation Account.
3.4. Deemed Investment Returns. Participants shall elect, as part
of the written notice described in Section 3.2 of the Plan, to
have all amounts credited to their Deferred Compensation
Account deemed to earn income, or suffer loss, at the rate of
increase or decrease in the value of one or more Designated
Funds. Amounts of income or loss shall be added to, or
subtracted from, Participants' Deferred
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Compensation Accounts on the Valuation Dates determined by the
Committee on a uniform and consistent basis for all
Participants in the Plan.
3.5. Reallocation Among Designated Indexes or Funds. Participants
may change the allocation of investments of future
contributions to or existing balances in their Deferred
Compensation Accounts among any of the Designated Funds at
such times and in such manner as determined by the Committee.
3.6. Maintenance of Records. The Committee shall maintain records,
including records relating to the amount nominally credited to
each Participant's Deferred Compensation Account for all
Participants who elect to defer the receipt of a portion of
their Compensation pursuant to the Plan. These records shall
indicate the effective date and amount of each deferral as
well as any income or loss credited to, or debited from, a
Participant's Deferred Compensation Account. The Committee
shall, no less frequently than once a year, deliver to each
Participant a statement of all amounts credited to his
Deferred Compensation Account.
3.7. No Property Rights or Fiduciary Relationships Created. The
right of any Participant to receive future payments under the
provisions of the Plan shall be a contractual obligation of
the Corporation and is subject to the claims of the creditors
of the Corporation in the event of the Corporation's
insolvency or bankruptcy. Accordingly, the rights of any
Participant to amounts nominally credited to a Participant's
Deferred Compensation Account shall be no greater than the
right of any unsecured general creditor of the Corporation.
Title to and beneficial ownership of all assets the
Corporation may identify for the distribution of amounts under
the Plan shall remain at all times in the Corporation, and no
Participant shall have an interest in specific assets of the
Corporation, including amounts nominally credited to a
Participant's Deferred Compensation Account, by virtue of the
Plan. Neither the existence of the Plan nor the creation of
the Deferred Compensation Accounts on behalf of Participants
shall create or be construed to create a trust of any kind or
any type of fiduciary relationship between the Corporation and
any Participant.
4. DISTRIBUTIONS
4.1. Payment of Benefits. In the first deferral election made under
Section 3.2 of the Plan, each Participant shall specify the
date and method of payment for amounts credited to his
Deferred Compensation Account. All elections shall be made in
the form and manner prescribed by the Committee.
4.1.1. Timing. Participants may elect to begin receiving
payment of amounts credited to their Deferred
Compensation Accounts on any one of the following
dates: (i) the Participant's Termination Date; (ii)
the date on which the Participant retires from active
employment (including self-employment); or (iii) a
specific date selected by the Participant. Payments
shall begin as soon as administratively practical
after the payment date selected by the Participant.
If a Participant elects to commence distributions on
a specified date and the Participant is an active
employee or Director of the Corporation
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on such date, the Participant may continue to
participate in the Plan by electing during any
following open enrollment period to make future
deferrals; provided that the following conditions are
satisfied:
- the Participant's participation is suspended
and future deferrals will not be permitted
until the Participant receives all amounts
credited to the Participant's Deferred
Compensation Account; and
- after such suspension, the Participant
re-enrolls in the Plan (at which time the
Participant can make a new election as to
the commencement date and form of payment
that will apply to the new Deferred
Compensation Account that the Committee will
establish for the Participant to track new
deferrals).
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4.1.2. Method. Participants may elect to receive payment of
their Deferred Compensation Accounts in one lump sum,
or in annual installments over a term of years (not
to exceed ten) specified by Participants in their
initial or subsequent elections. If Participants
elect to receive their payment in annual
installments, subsequent payments shall continue in
January of each succeeding year, and each payment
shall equal the amount credited to the Participant's
Deferred Compensation Account divided by the
remaining number of annual installments selected by
the Participant. A Participant's Deferred
Compensation Account shall be credited with deemed
investment returns pursuant to Section 3.4 of the
Plan until all payments have been made to the
Participant or his designated beneficiary.
4.1.3. Suspension of Payments. If a Participant who has
installment payments from the Plan pursuant to an
election made under Section 4.1.1(i) or (ii) above is
reemployed by the Corporation and again becomes
eligible for participation in the Plan, then all
payments shall cease until the Participant again
satisfies the conditions of Section 4.1.1(i) or (ii)
of the Plan. The payment elections previously made by
the Participant under the Plan shall apply to any
compensation deferred after re-employment.
4.2. One-Time Modification. A Participant may change the method of
payment initially elected by filing a written election with
the Committee at any time up to 12 months prior to the date
payments would otherwise have commenced under the Plan. Any
change of an earlier election that is made within 12 months of
the date payments commence under the Plan shall be disregarded
by the Committee. A Participant may also defer the date that
payments are to commence to a subsequent date by filing a
written election with the Committee at any time up to 12
months prior to the date payments would otherwise have
commenced under the Plan. Any change of an earlier election
that is made within 12 months of the date payments commence
under the Plan shall be disregarded by the Committee. A
Participant may not elect to defer the commencement date or
form of payment the Participant initially elected for
receiving benefits more than once.
4.3. Benefits Payable Upon Death. Participants may designate a
beneficiary to receive payments of their benefits under this
Plan in the event of their death. Beneficiary designations
shall be made in a form and manner prescribed by the
Committee. Participants may change their designations at any
time by making a subsequent designation. In the event that a
Participant dies before the payments of all amounts credited
to his Deferred Compensation Account, any remaining balance in
the Account shall be paid to his designated beneficiary in a
single cash sum. If a Participant dies without having
designated a beneficiary, or if the designated beneficiary
predeceases the Participant, a single cash sum payment of all
amounts due to the Participant shall be made to the
Participant's estate.
4.4. Benefits Payable Upon Unanticipated Emergency. In the event of
an unanticipated emergency that would result in severe
financial hardship, a
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Participant may request the Committee to make a distribution
to him of all or a portion of the amounts deferred under this
Plan. The hardship must result from a sudden and unexpected
illness or accident of the Participant or a dependent of the
Participant, loss of the Participant's property due to
casualty, or similar extraordinary and unforeseeable
circumstances which are beyond the control of the Participant,
and which cannot be relieved by reimbursement through
insurance, liquidation of the Participant's assets (to the
extent that the liquidation itself would not cause severe
financial hardship), or the cessation of deferral
contributions under this Plan or any other plan maintained by
the Corporation. The amount of the distribution shall be no
greater than the amount necessary to meet the emergency and to
pay any income tax due on the withdrawal. The decision to make
a distribution to the Participant shall be made by the
Committee in its sole discretion.
4.5. Tax Consequences of Contributions/Distributions. Amounts
deferred into the Plan and distributions from the Plan are
subject to all applicable federal, state, and local employment
taxes and appropriate withholdings on such amounts will be
made to the extent required by applicable law.
5. AMENDMENT AND TERMINATION OF THE PLAN
5.1. Amendment. The Corporation may amend the Plan at any time or
from time to time by a written instrument executed by an
officer of the Corporation and approved by the Board.
5.2. Termination by the Corporation. The Plan is intended by the
Corporation to be a long-term program for the deferral of
income by Participants. The Corporation, by action of the
Board, nevertheless reserves the right to terminate the Plan
at any time and for any reason. Upon termination of the Plan,
all amounts held in the Participants' Deferred Compensation
Accounts, determined as of the date of termination, shall be
distributed to Participants within thirty days.
5.3. Termination Upon Change in Control. In the event of a Change
in Control, the Plan shall immediately terminate, and all
amounts held in a Participant's Deferred Compensation Account,
determined as of the date of termination, shall be distributed
to the Participants within thirty days.
6. MISCELLANEOUS
6.1. No Employment Rights Conferred. The adoption and maintenance
of the Plan shall not be deemed to constitute an employment
contract between the Corporation and any Participant or to be
in consideration for, or an inducement to or condition of, the
employment of any person. Nothing herein contained shall be
deemed to: (i) give to any Participant the right to be
retained in the employment of the Corporation; (ii) interfere
with the right of the Corporation to discharge any Participant
at any time; (iii) give to the Corporation the right to
require any Participant to remain in its employment; or (iv)
interfere with any Participant's right to terminate his
employment with the Corporation at any time.
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6.2. No Compensation for Other Purposes. Amounts deferred under the
terms of the Plan and distributions paid under the Plan shall
not be treated as compensation to the Participant for purposes
of any qualified retirement plan maintained by the Corporation
or for purposes of any other benefit obligations of the
Corporation, unless otherwise provided under the terms of the
relevant plan.
6.3. Spendthrift Provision. Except to the extent that this
provision may be contrary to law, the rights of Participants
under the Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors of the
Participant or the Participant's beneficiary.
6.4. Impossibility of Performance. In the event that it becomes
impossible for the Corporation to perform any act under the
Plan, that act shall be performed which in the judgment of the
Corporation will most nearly carry out the intent and purposes
of the Plan.
6.5. Interpretation/Administration. The Committee shall have full
discretionary power and authority to interpret this Plan and
decide any and all questions arising in the application of its
terms. The interpretation and construction of this Plan by the
Committee, and any actions taken by the Committee, shall be
binding and conclusive upon all parties. The Committee also
has full discretionary authority to administer the Plan. The
Committee's powers include the power, in its sole discretion
and consistent with the terms of the Plan, to determine who is
eligible to participate in this Plan, to determine the amount
of benefits payable under the Plan, to determine when and how
amounts are allocated to a Participant's Deferred Compensation
Account, to establish rules for determining when and how
elections can be made, to adopt any rules relating to
administering the Plan and to take any other action it deems
appropriate to administer the Plan.
6.6. Claims Procedures. The Committee shall maintain a procedure
under which a Participant or a Participant's beneficiary
(hereinafter called "claimant") whose claim for benefits under
the Plan has been denied will receive written notice which
clearly sets forth the specific reason or reasons for such
denial, the specific plan provision or provisions on which the
denial is based, any additional information necessary for the
claimant to perfect the claim, if possible, (including an
explanation of why such additional information is needed), and
an explanation of the Plan's claims review procedures. Such
procedures shall allow a claimant 60 days after receipt of the
written notice of denial to request a review of such denied
claim, and the Committee shall make its decision based on such
review within 60 days (120 days if special circumstances
require more time) of its receipt of the request for review.
The decision on review shall be in writing and shall clearly
describe the reasons for the Committee's decision. The
decisions of the Committee shall be final and binding on the
Participant and beneficiary.
6.7. Governing Law. All legal questions pertaining to the Plan
shall be determined in accordance with the laws of the State
of New York.
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IN WITNESS WHEREOF, Paychex, Inc. has caused this instrument to be
executed effective as of February 1, 2002.
PAYCHEX, INC.
By: /S/ John M. Morphy
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