EXHIBIT 10.1
SEPARATION AGREEMENT AND RELEASE
THIS SEPARATION AGREEMENT AND RELEASE (“Agreement”), by and between Walter Turek
(“Employee” or “you”) and PAYCHEX, INC. (the “Company”) and its parents,
subsidiaries, divisions, affiliates, and/or related business entities, and with respect to each of
them, their predecessors, successors and assigns, employee benefit plans or funds, and with respect
to each such entity, all of its or their past and/or present shareholders, directors, officers,
attorneys, fiduciaries, agents, trustees, administrators, employees and assigns, whether acting on
behalf of the Company or in their individual capacities (collectively the “Company
Entities”) is made on August 18, 2009.
1. SEPARATION DATE.
a. You acknowledge that your retirement date, which shall be your last day of employment with
the Company, will be May 31, 2009 (the “Separation Date”). From the date hereof through
the Separation Date (the “Notice Period”), you shall continue to be an at-will employee of
the Company and conditioned on your continued satisfactory performance, the Company will, during
the Notice Period, continue to pay you your regular base salary and continue to provide you with
those benefits that you were eligible to receive prior to the date hereof; provided that (i) you
comply with your obligations as an employee of the Company, including, but not limited to, your
duty of undivided loyalty and those duties enumerated herein and (ii) you do not engage in any
conduct that is determined by the Company to have been detrimental. During the Notice Period the
Company may, at its sole discretion, choose to discontinue or otherwise limit your access to
confidential information and/or elect to: (i) require you to continue to perform your regular
and/or alternative duties; (ii) require you to discontinue your duties, in whole or in part; and/or
(iii) require you to aid and assist in the transition process associated with your departure.
b. After the Separation Date, you shall not represent yourself as being an employee, officer,
agent or representative of the Company for any purpose and you shall have no authority or power to
act on behalf of the Company or to hold yourself out as an officer or agent of the Company. The
Separation Date shall be the termination date of your employment for purposes of participation in
and coverage under all benefit/pension plans and programs sponsored by or through the Company
Entities. You agree to submit all requests for reimbursable business expenses incurred prior to
the Separation Date for reimbursement no later than one week following the Separation Date (all
such reimbursement requests shall otherwise be in accordance with Company’s usual guidelines and
practices).
c. The Company will compensate you for accrued but unused paid time off benefits (totaling
$48,350.40, representing your 240 unused paid time off hours), less applicable tax withholdings and
ordinary payroll deductions, through the Separation Date, and Employee will receive such payment
within thirty (30) days of the Separation Date.
d. Except as otherwise expressly provided for herein, you affirm that you have been paid
and/or have received all compensation, bonuses, severance and/or benefits to which you may have
been entitled during the period of employment with the Company Entities, including any payments or
benefits you may have been entitled to and you shall not be entitled to
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any other compensation, severance, equity or option payments, incentives, bonuses, awards or
any other form of payment or benefits from any of the Company Entities, either with respect to
prior years or service or your employment in 2009. Notwithstanding the foregoing, you shall remain
entitled to (i) any bonus for which you may eligible and that is otherwise earned by you for fiscal
2009, subject to the terms of the bonus plan and the discretion of the Governance and Compensation
Committee; (ii) your restricted stock and option awards to the extent vested as of the Separation
Date (or any earlier termination date) and (iii) your accrued and vested balance in the Company’s
non-qualified and unfunded deferred compensation plan (the “Deferral Plan”). Your rights with
respect to the exercise of any vested stock options shall be governed by the terms of the
applicable option grant and plan. Amounts payable to you under the Deferral Plan shall be paid to
you in accordance with your prior election and otherwise subject to the terms of such plan.
Furthermore, for purposes of the Paychex, Inc. 401(k) Retirement Plan (referred to as the “Plan”),
Employee will be considered a terminated employee as of June 1, 2009. As such, contributions,
vesting, matches and other service based benefits, rights and features accorded to employees will
terminate as of end of business on May 31, 2009. All the terms and conditions of the Plan will be
governed by the controlling plan documents. The Plan has not been modified in any way by this
Agreement. Nothing in the Agreement is intended to waive or release Employee’s ability to receive
benefits in accordance with the Plan.
2. CONSIDERATION. In consideration of and exchange for your release and waiver of all
claims against the Company Entities and your compliance with all other terms and conditions of this
Agreement and conditioned on your satisfactory completion of service during the Notice Period, the
Company agrees to provide you with the following “Consideration”:
a. The Company shall pay you two-hundred ten thousand four-hundred seventy dollars
($210,470.00) (less applicable taxes and withholdings), payable in bi-weekly installments over six
(6) months in accordance with the Company’s payroll policy (the “Payment”). The Payment
will be payable, minus applicable tax withholdings, beginning not later than ten (10) business days
following the Effective Date of the annexed General Release following your Separation Date.
Notwithstanding anything herein to the contrary, the Company may withhold any further payments to
you hereunder in the event the Company determines that you have breached the material terms of the
General Release or have violated any of your other continuing obligations hereunder, including the
post termination obligations set forth in section 7 and the cooperation provisions set forth in
section 9. The Payment shall not constitute compensation for any purpose under any retirement plan
maintained by the Company Entities. In the event of your death or incapacity, the Payment shall be
made to your estate or personal representative, as applicable, subject to the delivery and
effectiveness of the General Release signed by your estate or personal representative, as
applicable.
b. If you timely elect COBRA coverage for yourself and/or your eligible dependents, the
Company will pay the premiums for such coverage for six (6) months following the Effective Date of
the annexed General Release following your Separation Date (or until you secure health coverage
through employment with another entity or you are no longer eligible for COBRA coverage, if
earlier). In addition, following the six (6) months coverage period, you may be eligible to elect
to continue health coverage on a self-pay basis in accordance with your rights and obligations
under COBRA. Information regarding your rights under COBRA will be provided to you under separate
cover.
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c. You acknowledge and agree that the Consideration provided to you under this Agreement
exceeds any payment, benefit, or other thing of value to which you might otherwise be entitled
under any policy, plan or procedure of the Company and/or any agreement between you and the
Company.
3. GENERAL RELEASE OF ALL CLAIMS.
a. No later than twenty-one (21) days from the date hereof, you agree to execute and not
revoke the General Release attached as Annex A.
b. In order to be entitled to the payments and benefits set forth in section 2 hereof, you
must re-execute and not revoke the General Release attached as Annex A on or after the
Separation Date. You will again have the opportunity to consider for twenty-one (21) days whether
to re-execute this Agreement. If the General Release is not re-executed on or within twenty-one
(21) days after the Separation Date, the Company shall have no further obligations under this
Agreement and all further payment obligations shall terminate. This in no way affects your prior
General Release. By your re-execution of the General Release, the release set forth therein shall
be deemed to cover any claims which you have, may have had, or thereafter may have existing or
occurring at any time on or before the date on which you re-execute the General Release.
4. RESIGNATIONS. Effective as of the Separation Date (or earlier if your employment
is terminated), you agree to resign from all board seats and any other positions that you hold in
connection with your employment by or service in connection with any of the Company Entities and to
execute the omnibus resignation letter attached as Annex B and any implementing
documentation that the Company may request in connection with such resignations.
5. RESPONSE TO LEGAL PROCESS. Nothing in this Agreement shall preclude you from
providing truthful information to a government agency, or in response to a valid subpoena, or as
otherwise required by law.
6. NON-ADMISSION OF WRONGDOING. This Agreement is not intended, and shall not be
construed, as an admission that any of the Company Entities have violated any law (statutory or
decisional), ordinance or regulation, breached any contract or policy, or committed any wrong
whatsoever against you.
7. POST TERMINATION OBLIGATIONS.
a. Your Existing Confidential Information and Non-Solicitation Agreement-You
acknowledge that by virtue of your long standing employment by the Company as Senior Vice
President, Sales and Marketing, you have had unfettered access to a range of sensitive and
confidential information regarding the business operations, strategies, customers, prospects,
employees and finances of the Company and its affiliates. You acknowledge that you are bound by
the terms of the PAYCHEX “Employee Confidential Information and Non-Solicitation Agreement,” as
signed by you on June 18th, 1992 (a copy of which is attached as Exhibit A, the
“Confidentiality Agreement”), through the Separation Date and for eighteen (18) months
thereafter, and that the provisions of the Confidentiality Agreement shall continue in full force
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and effect following the Separation Date. In particular, and in consideration of the terms of
this Agreement and your prior employment with the Company, you agree that the non-solicitation
provisions of Section (4) of the Confidentiality Agreement shall apply, without limitation, to (i)
customers or prospects of the Company who were solicited or serviced directly by you or where you
supervised, directly or indirectly, in whole or in part, the solicitation or servicing related to
such customers or prospects and (ii) to any former customer of the Company or its affiliates who
was such within one (1) year prior to your termination of employment and who were solicited or
serviced directly by you or where you supervised, directly or indirectly, in whole or in part, the
solicitation or servicing related to such customers. You agree further that during the eighteen
(18) month period following your termination of employment you shall not induce or otherwise
recommend to any third party, including, but not limited to, referral resources, retailers,
vendors, suppliers, customers (or any other provider or recipient of goods or services to or from
the Company Entities), that they terminate or diminish their business relationship with the Company
or its affiliates or undertake any other action that would, directly or indirectly, be materially
detrimental to the Company or its affiliates’ relationships with these entities or that could
otherwise interfere with the Company or its affiliates’ business.
b. Non-Competition. You agree that through the Separation Date and for a period of
six (6) months thereafter, you will not directly or indirectly engage in, have any equity interest
in (except to the extent you own less than two percent (2%) of the outstanding shares of a publicly
traded company), or manage or operate any person, firm, corporation, partnership or business
(whether as a director, officer, employee, agent, representative, partner, security holder,
consultant or otherwise) that engages in any business or activity which competes with any business
that, as of the Separation Date, the Company Entities are engaged in, or have taken affirmative
steps to engage in, anywhere in the world in which the Company does business. You agree that
during this non-compete period, you will notify the Company’s Chief Legal Officer in writing
regarding the nature and scope of any proposed employment opportunity you may be considering and
before entering into such employment will apprise any prospective employer in writing of your
post-termination obligations under this Agreement.
c. Non-Disparagement. The parties agree that they will not disparage or defame or
encourage or induce others to disparage or defame Employee, the Company, or any of the Company
Entities, including comments that would adversely affect or damage in any manner (or otherwise
portray in a false or negative light) the conduct of the business of, or business reputation of,
any of the Company Entities or any of their officers, executives or personnel.
d. Damages. The parties acknowledge that the damages resulting from your breach of
the provisions of Section (7)(a) above and your breach of the provisions of Sections (4) and (5)
of the Confidentiality Agreement are impossible to calculate in advance with any specificity and
that the parties have agreed to the following liquidated damages formula as a reasonable estimate
of damages to be incurred by the Company as a result of such a breach: (I) in the event of your
breach of Section (7)(a) of this Agreement and Section (4) of the Confidentiality Agreement, an
amount equal to 150% of the annualized revenues of the solicited customer (measured by the average
of the last three (3) months’ fees payable by such customer to the Company before termination of
its relationship with the Company); (II) in the event of your breach of Section (5) of the
Confidentiality Agreement with respect to any sales representative of the Company or its
affiliates, an agreed upon sum equal to 150% of the greater
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of (i) the annualized sales revenue attributed by the Company to such sales representative for
the year in which his/her employment terminated or (ii) the annual sales revenue attributed by the
Company to such sales representative for the immediately preceding full fiscal year; and (III) in
the event of your breach of Section (5) of the Confidentiality Agreement with respect to any other
employee of the Company or its affiliates, an agreed upon sum equal to 100% of annual compensation
including but not limited to salary, commission and bonus, as applicable, measured by the twelve
month period immediately preceding the employee’s termination of employment with the Company.
e. Additional Remedies. Nothing in this Agreement shall affect the right of the
Company to enforce any other remedies that might be available to it with respect to your violation
of any non-competition, non-solicitation, or confidentiality obligation, or with respect to your
engagement in any post-termination detrimental conduct, including, without limitation, any
provision under any equity plan or award agreement, or under any deferred compensation plan
providing for the forfeiture of any equity award or amounts deferred or the repayment of any gain
realized in connection with the exercise of any previously granted options.
8. RETURN OF PROPERTY. On or before the Separation Date you shall comply in all
respects with the Confidentiality Agreement and shall immediately return to the Company all
property belonging to the Company and/or the Company Entities, including but not limited to laptop,
cell phone, keys, card access to the building and office floors, internal policies and other
confidential business financial information and documents, such as files and material in your
possession (including any computers, pagers, Blackberry, cellular phones, etc.), and all copies of
computerized databases and related materials regarding the Company Entities.
9. COOPERATION. You agree that it is an essential term and condition of this
Agreement that you cooperate with the Company Entities and its counsel (i) with respect to all
matters, for which you had responsibility or oversight while employed and (ii) any claims and/or
lawsuits involving the Company Entities of which you may have particular knowledge or in which you
may be a witness, and following your termination of employment, you agree to fully cooperate with,
and make yourself available to respond to inquiries from, representatives of any of the Company
Entities regarding any matters arising during the course of your employment or in connection with
any investigation, administrative proceeding, arbitration, mediation or litigation (each, a
“Proceeding”) relating to any matter arising during the course of your employment or of
which you have knowledge, including without limitation any Proceeding relating to E-Chx, Inc.
and/or Rapid Payroll, Inc.. Such cooperation includes meeting the Company Entities’
representatives and counsel to disclose such facts as you may know, preparing with the Company
Entities’ counsel for any deposition, trial, hearing or other proceeding; attending any deposition,
trial, hearing or other proceeding to provide truthful testimony; and providing other assistance to
the Company Entities and to the Company Entities’ counsel as may, in the judgment of the Company
Entities’ counsel, be necessary. You agree that, in the event you are subpoenaed or otherwise
required by any person or entity (including, but not limited to, any government agency) to give
testimony or produce documents (in a deposition, court proceeding or otherwise) which in any way
relates to your employment by the Company, you will, to the extent not legally prohibited from
doing so, give prompt notice of such request to the Chief Legal Officer of the Company so that the
Company may contest the right of the requesting person or entity to such disclosure before making
such disclosure. Nothing in this
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provision shall require you to violate your obligation to comply with valid legal process.
The Company will not pay any consulting, per diem, or professional fees for cooperation in such
matters; provided, however, the Company shall pay for or directly reimburse you for your reasonable
out-of-pocket expenses incurred pursuant to this section 9 (including but not limited to reasonable
travel expenses), in each case incurred with the prior written approval of the Company.
10. MATERIAL BREACH. Any breach of the provisions of Paragraphs 4, 7, 8 and/or 9
above, shall be considered a material breach of this Agreement. In the event that you have
committed a material breach of this Agreement, in addition to any remedies available to the Company
under the Confidentiality Agreement, you consent to the entry of injunctive relief against
yourself, in addition to the Company Entities’ right to pursue any and all of their remedies under
the law. You further agree that the Company Entities may obtain injunctive relief without the
posting of a bond. The parties further agree that, in the event the Company Entities prevail in
pursuing their legal remedies against you as a result of your breach of this Agreement or the
Confidentiality Agreement, you shall pay and reimburse the Company Entities for their attorneys’
fees and costs incurred in any such action.
11. REFERENCES; PUBLIC STATEMENTS. All inquiries relating to your employment with the
Company shall be directed to the Vice President of Organizational Development. You agree to make
no public statements or comments to the media regarding your separation of employment from the
Company.
12. GOVERNING LAW AND ENFORCEMENT. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York without regard to the principles of conflicts of
law. Additionally, any action concerning this Agreement shall be commenced exclusively in the
state courts of Monroe Country, New York or United States District Court for the Western District
of New York, in Rochester, New York. Both parties consent to the exclusive jurisdiction of such
state and federal courts and waive any claim under the doctrine of forum non conveniens.
13. ENTIRE AGREEMENT. You understand that, except as otherwise provided herein, this
Agreement constitutes the complete understanding between the Company and you, and, supersedes any
and all agreements, understandings, and discussions, whether written or oral, between you and any
of the Company Entities, except that any indemnification rights you were provided as an officer of
the Company will survive this Agreement. No other promises or agreements, or modifications,
waivers or amendments to this Agreement, shall be binding unless in writing and signed by both the
Company and you after the execution of this Agreement. This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of which counterparts, when
executed together, shall constitute but one and the same Agreement. The parties further agree that
if any part or any provision of this Agreement is determined to be invalid or unenforceable under
applicable law by a court of competent jurisdiction, that part shall be ineffective to the extent
of such invalidity only, without in any way affecting the remaining parts of said provision or the
remaining provisions of the Agreement.
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14. ACKNOWLEDGMENTS. You acknowledge that you: (a) have carefully read this Agreement
in its entirety; (b) are hereby advised by the Company, in this writing, to consult with an
attorney of your choice before signing this Agreement; (c) fully understand the significance of all
of the terms and conditions of this Agreement and have discussed them with an attorney of your
choice, or have had a reasonable opportunity to do so; and (d) are signing this Agreement
voluntarily and of your own free will and agree to abide by all the terms and conditions contained
herein.
15. 409A Considerations. The intent of the parties is that payments and benefits
under this Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”) and the regulations and guidance promulgated thereunder (collectively “Code
Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be
interpreted to be in compliance therewith. In no event whatsoever shall the Company be liable for
any additional tax, interest or penalties that may be imposed on Employee by Code Section 409A or
any damages for failing to comply with Code Section 409A hereunder or otherwise. The reimbursement
payment for costs, expenses or in-kind benefits provided for under Section 2(b) of this Agreement
or otherwise, except as permitted by Code Section 409A, shall (i) be made no later than the end of
the calendar year following the calendar year in which such costs, expenses or in-kind benefits
were incurred or provided; (ii) the amount of expenses eligible for reimbursement, or in-kind
benefits provided, during any taxable year shall not affect the amounts of expenses eligible for
reimbursement, or in-kind benefits to be provided, in any other taxable year (other than with
regard to a limit related to the period in which an arrangement is in effect (other than with
regard to a limit related to the period in which the arrangement is in effect with regard to an
arrangement subject to Section 105(b) of the Code), and (iii) the reimbursement or in-kind benefit
cannot be liquidated or exchanged for any other benefit.
IN WITNESS WHEREOF, the parties hereto have approved and executed this Agreement as of the
dates set forth below:
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| THE COMPANY |
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EMPLOYEE |
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BY:
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/s/ Jonathan J. Judge
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BY:
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/s/ Walter Turek |
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Name: Jonathan Judge
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Walter Turek |
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Title: President and Chief
Executive Officer |
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