DELUXE CORPORATION
PERFORMANCE SHARE PLAN
(AS AMENDED AUGUST 9, 1996)
SECTION I. ESTABLISHMENT
On February 10, 1994, the Board of Directors of Deluxe Corporation (the
"Company"), upon recommendation by the Compensation Committee of the Board of
Directors (the "Committee"), approved an incentive plan for executives as
described herein, which plan shall be known as the "Deluxe Corporation
Performance Share Plan" (the "Plan"). The Plan shall be submitted for approval
by the shareholders of the Company at the 1994 Annual Meeting of Shareholders.
The Plan shall be effective as of January 1, 1994, subject to its approval by
the shareholders of the Company, and no benefits shall be issued pursuant to the
Plan until after the Plan has been approved by the shareholders of the Company.
SECTION II. PURPOSE
The purpose of the Plan is to advance the interests of the Company and its
shareholders by attracting and retaining key employees, and by stimulating the
efforts of such employees to contribute to the continued success and growth of
the business of the Company. The Plan is further intended to provide such
employees with an opportunity to increase their ownership of the Company's
common stock and, thereby, to increase their personal interest in the long-term
success of the business in a manner designed to increase shareholder value.
SECTION III. ADMINISTRATION
3.1 COMPOSITION OF THE COMMITTEE. The Plan shall be administered by the
Committee, which shall consist of members appointed from time to time by the
Board of Directors and shall be comprised of not less than such number of
directors as shall be required to permit grants and awards made under the Plan
to satisfy the requirements of Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor rule or regulation ("Rule 16b-3"). All
members of the Committee shall be members of the Board of Directors of the
Company who are "Non-Employee Directors" within the meaning of Rule 16b-3. In
addition, to the extent required by Section 162(m) of the Internal Revenue Code
of 1986, as amended (such statute, as it may be amended from time to time and
all proposed temporary or final Treasury Regulations promulgated thereunder
shall be referred to as the "Code"), at all times following the 1995 Annual
Meeting of Shareholders of the Company, all members of the Committee shall be
"outside directors" within the meaning of Section 162(m) of the Code.
3.2 POWER AND AUTHORITY OF THE COMMITTEE. The Committee shall have full
power and authority, subject to all the applicable provisions of the Plan and
applicable law, to (a) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it deems necessary or advisable for the
proper administration of the Plan, (b) construe, interpret and administer the
Plan and any instrument or agreement relating to, or Award (as defined below in
Section 4.2) made under, the Plan, and (c) make all other determinations and
take all other actions necessary or advisable for the administration of the
Plan. Unless otherwise expressly provided in the Plan, each determination made
and each action taken by the Committee pursuant to the Plan or any instrument or
agreement relating to, or Award made under, the Plan shall be (x) within the
sole discretion of the Committee, (y) may be made at any time and (z) shall be
final, binding and conclusive for all purposes on all persons, including, but
not limited to, holders of Awards, and their legal representatives and
beneficiaries, and employees of the Company or of any "Affiliate" of the
Company. For purposes of the Plan and any instrument or agreement relating to,
or Award made under, the Plan, the term "Affiliate" shall mean any entity that,
directly or indirectly through one or more intermediaries, is controlled by the
Company and any entity in which the Company has a significant equity interest,
in each case as determined by the Committee in its sole discretion.
3.3 DELEGATION. The Committee may delegate its powers and duties under
the Plan to one or more officers of the Company or any Affiliate or a committee
of such officers, subject to such terms, conditions and limitations as the
Committee may establish in its sole discretion; provided, however, that the
Committee shall not delegate its power (a) to make determinations regarding
officers or directors of the Company or any Affiliate who are subject to Section
16 of the Exchange Act; or (b) in such a manner as would cause the Plan not to
comply with the provisions of Section 162(m) of the Code.
SECTION IV. ELIGIBILITY AND PARTICIPATION
4.1 ELIGIBILITY. The Plan is unfunded and is maintained by the Company
for a select group of management or highly compensated employees. In order to
be eligible to participate in the Plan, an employee of the Company or of its
Affiliates must be selected by the Committee. In determining the employees who
will participate in the Plan, the Committee may take into account the nature of
the services rendered by the respective employees, their present and potential
contributions to the success of the Company and such other factors as the
Committee, in its sole discretion, shall deem relevant. A director of the
Company or of an Affiliate who is not also an employee of the Company or an
Affiliate shall not be eligible to participate in the Plan.
4.2 PARTICIPATION. The Committee shall determine the employees to be
granted an award opportunity (the "Award"), the amount of each Award, the time
or times when Awards will be made, the period of time over which such Awards are
intended to be earned, and all other terms and conditions of each Award. The
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provisions of the Awards need not be the same with respect to any recipient of
an Award (the "Participant") or with respect to different Participants. The
Committee's decision to approve an Award to an employee at any time shall not
require the Committee to approve a similar Award or any Award at all to that
employee or any other employee or person at any future date. The Company and
the Committee shall not have any obligation for uniformity of treatment of any
person, including, but not limited to, Participants and their legal
representatives and beneficiaries and employees of the Company or of any
Affiliate of the Company.
4.3 AWARD AGREEMENT. Any employee selected for participation by the
Committee shall, if requested by the Committee, execute and return to the
Committee a written agreement setting forth the terms and conditions of the
Award (the "Award Agreement"). A separate Award Agreement may be entered into
between the Company and each Participant for each Award.
4.4 QUALIFIED PERFORMANCE-BASED COMPENSATION. Awards granted pursuant to
the Plan are intended to be "qualified performance-based compensation" within
the meaning of Section 162(m) of the Code. Accordingly, all of the other terms
and conditions of the Plan as it applies to any Award shall be interpreted in
such a fashion so as to qualify all compensation paid thereunder as "qualified
performance-based compensation" within the meaning of Section 162(m) of the
Code.
4.5 MAXIMUM SHARE LIMITATIONS. No Participant may be granted an Award or
Awards of any Stock Units (as defined below in Section 5.1) or Shares (as
defined below in Section 5.6) under this Plan (i) and under any other stock-
based benefit plan adopted by the Company (including the Stock Incentive Plan as
defined in Section 5.1) of more than 200,000 Shares in the aggregate in any
calendar year or (ii) of more than 120,000 Shares in the aggregate during the
period from January 1, 1994 through December 31, 2000; provided, however, that,
for purposes of calculating the limitation in clause (i), any Shares acquired
pursuant to the Deluxe Corporation Annual Incentive Plan or the Deluxe
Corporation 1996 Annual Incentive Plan shall not be taken into account.
4.6 EMPLOYMENT RIGHTS AND OTHER BENEFIT PROGRAMS. The provisions of this
Plan shall not give any Participant any right to be retained in the employment
of the Company. In the absence of any specific agreement to the contrary, this
Plan shall not affect any right of the Company, or of any Affiliate of the
Company, to terminate, with or without cause, any Participant's employment at
any time. This Plan shall not replace any contract of employment, whether oral
or written, between the Company and any Participant, but shall be considered a
supplement thereto. This Plan is in addition to, and not in lieu of, any other
employee benefit plan or program in which any Participant may be or become
eligible to participate by reason of employment with the Company. No
compensation or benefit awarded to or realized by any Participant under the Plan
shall be included for the purpose of computing such Participant's compensation
under
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any compensation-based retirement, disability, or similar plan of the Company
unless required by law or otherwise provided by such other plan.
SECTION V. AWARDS
5.1 GENERAL. The Committee shall determine that Award or Awards to be
made to each Participant, and each Award shall be subject to the terms and
conditions of the Plan and the applicable Award Agreement. An Award shall be
made in the form of units equivalent to Shares (the "Stock Units"). Awards may
be granted singly or in combination, or in addition to, in tandem with or in
substitution for any grants or rights under any employee or compensation plan of
the Company or of any Affiliate, including the Deluxe Corporation Stock
Incentive Plan (the "Stock Incentive Plan"). All or part of an Award may be
subject to conditions and forfeiture provisions established by the Committee,
and set forth in the Award Agreement, which may include, but are not limited to,
continuous service with the Company or an Affiliate.
5.2 BUSINESS CRITERIA FOR PERFORMANCE-BASED AWARDS. The right to have an
Award vest or become payable in any fashion shall be determined solely on
account of the attainment of one pre-established, objective performance goal
selected by the Committee at the time of the grant of the Award. Such goal
shall be based solely on the Company's total return to shareholders during a
period selected by the Committee (a "Performance Period") as compared to the
total return to shareholders of companies comprising the Standard & Poor's 500
Company Stock Index (the "S & P 500") during a measurement period (a
"Measurement Period") selected by the Committee, which Measurement Period need
not be the same as the Performance Period. The Performance Period and
Measurement Period with respect to each Award shall be designated by the
Committee in its sole discretion at the time of the grant of the Award. Total
return to shareholders shall mean appreciation in share price between the date
of grant and the end of the applicable Performance Period or Measurement Period,
plus dividends paid during such period.
5.3 AWARD OF STOCK UNITS. All Awards shall be granted in the form of
Stock Units. No certificates shall be issued with respect to such Stock Units,
but the Company shall maintain a bookkeeping account in the name of the
Participant to which the Stock Units shall relate. Each Stock Unit shall
represent the right to receive a payment of one or more Shares of the Company's
Common Stock or a continuing Stock Unit, or other Awards, or a combination
thereof, with such restrictions and conditions as the Committee may determine in
its sole discretion, including, but not limited to, the issuance of Shares as
restricted stock legended to indicate restrictions on transferability.
5.4 DIVIDEND EQUIVALENTS. The Committee, in its sole discretion, may
provide that any Award may earn dividend equivalents as provided in the Stock
Incentive Plan.
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5.5 PAYMENT OF AWARDS; MINIMUM ACHIEVEMENT FOR PAYMENT. Payment of Awards
may be made at such times, with such restrictions and conditions, and in such
forms (Shares, including restricted Shares, Stock Units, other Awards, or
combinations thereof) as the Committee in its sole discretion may determine at
the time of grant of the Awards. Notwithstanding any other provision of the
Plan to the contrary, a payment will not be made with respect to any Award or
any Stock Unit included as part of an Award for any Performance Period unless
the Company's total return to shareholders for the Performance Period is at
least equal to the total return to shareholders for companies in the 50th
percentile of the S & P 500 for the Measurement Period.
5.6 STOCK INCENTIVE PLAN. All shares ("Shares") of Company Common Stock,
$1.00 par value, to be issued under the Plan shall be issued pursuant to the
Stock Incentive Plan to be voted upon for approval by the shareholders of the
Company at the 1994 Annual Meeting of Shareholders. Accordingly, such Shares
shall be subject to all of the additional terms and conditions of Stock
Incentive Plan. In the event the Stock Incentive Plan is not so approved by the
Company's shareholders, this Plan shall be of no effect, as described in Section
9.1 hereof.
SECTION VI. TERMINATION OF EMPLOYMENT
Each Award Agreement shall include provisions governing the disposition of
an Award in the event of the retirement, disability, death or other termination
of a Participant's employment with the Company or an Affiliate.
SECTION VII. NON-TRANSFERABILITY
Except as otherwise determined by the Committee or as set forth in the
applicable Award Agreement, no Award and no right under any Award shall be
transferable by a Participant otherwise than by will or by the laws of descent
and distribution; provided however, that if so determined by the Committee, a
Participant may, in the manner established by the Committee, (i) designate a
beneficiary or beneficiaries to exercise the rights of the Participant and
receive any property distributable with respect to any Award upon the death of
the Participant, or (ii) transfer any Award to any member of such Participant's
"immediate family" (as such term is defined in Rule 16a-1(e) promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended, or any successor rule or regulation) or to a trust whose beneficiaries
are members of such Participant's "immediate family." Each Award or right under
any Award shall be exercisable during a Participant's lifetime only by the
Participant, or by a member of such Participant's "immediate family" or a trust
for members of such "immediate family" pursuant to a transfer as described
above, or if permissible under applicable law, by the Participant's guardian or
legal representative. No Award or right under any Award may be pledged,
alienated, attached or otherwise encumbered and any purported pledge,
alienation,
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attachment or encumbrance thereof shall be void and unenforceable against the
Company or any Affiliate of the Company.
SECTION VIII. TAXES
In order to comply with all applicable federal or state income, social
security, payroll, withholding or other tax laws or regulations, the Committee
may establish such policy or policies as it deems appropriate with respect to
such laws and regulations, including without limitation, the establishment of
policies to ensure that all applicable federal or state income, social security,
payroll, withholding or other taxes, which are the sole and absolute
responsibility of the Participant, are withheld or collected from such
Participant. In order to assist a Participant in paying all or part of the
federal and state taxes to be withheld or collected upon receipt or payment of
(or the lapse of restrictions relating to) an Award, the Committee, in its sole
discretion and subject to such additional terms and conditions as it may adopt,
may permit the Participant to satisfy such tax obligation by (a) electing to
have the Company withhold a portion of the shares of Common Stock otherwise to
be delivered upon receipt or payment of (or the lapse of restrictions relating
to) such Award with a fair market value equal to the amount of such taxes or (b)
delivering to the Company shares of Common Stock other than the shares issuable
upon receipt or payment of (or the lapse of restrictions relating to) such Award
with a fair market value equal to the amount of such taxes.
SECTION IX. AMENDMENT AND TERMINATION
9.1 TERM OF PLAN. Unless the Plan shall have been discontinued or
terminated as provided in Section 9.2 hereof, or unless the Company's
shareholders have failed to approve this Plan and the Stock Incentive Plan, the
Plan shall terminate on December 31, 2000. This Plan shall be of no effect, and
the Board of Directors shall be deemed automatically to have terminated this
Plan, if the Company's shareholders fail to approve the Stock Incentive Plan at
the Company's 1994 Annual Meeting of Shareholders. No Awards may be granted
after such termination, but termination of the Plan shall not alter or impair
any rights or obligations under any Award theretofore granted, without the
consent of the Participant or holder or beneficiary thereof, except as otherwise
provided in the Plan or the Award Agreement.
9.2 AMENDMENTS TO PLAN. Except to the extent prohibited by applicable law
and unless otherwise expressly provided in the Plan or an Award Agreement, the
Board of Directors of the Company may amend, alter, suspend, discontinue or
terminate the Plan; provided, however, that notwithstanding any other provision
of the Plan or any Award Agreement, without the approval of the shareholders of
the Company, no such amendment, alteration, suspension, discontinuation or
termination shall be made that, absent such approval:
(a) would cause Rule 16b-3 to become unavailable with respect to
grants and awards made under the Plan; or
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(b) would violate the rules or regulations of the New York Stock
Exchange, any other securities exchange or the National Association of
Securities Dealers, Inc. that are applicable to the Company.
9.3 WAIVERS OF AWARD CONDITIONS OR RIGHTS. The Committee may waive any
condition of, or rights of the Company under, any outstanding Award,
prospectively or retroactively.
9.4 LIMITATION ON AMENDMENTS TO AWARDS. Neither the Committee nor the
Company may amend, alter, suspend, discontinue or terminate any outstanding
Award, prospectively or retroactively, without the consent of the Participant or
holder or beneficiary thereof, except as otherwise provided in the Plan or the
Award Agreement.
9.5 CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. Except to the
extent prohibited by applicable law and unless otherwise expressly provided in
the Plan or an Award Agreement, the Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan, any Award or any Award
Agreement in the manner and to the extent it shall deem desirable to carry the
Plan into effect.
SECTION X. MISCELLANEOUS
10.1 GOVERNING LAW. The Plan and any Award Agreement shall be governed by
and construed in accordance with the internal laws, and not the laws of
conflicts, of the State of Minnesota.
10.2 SEVERABILITY. If any provision of the Plan, any Award or any Award
Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in
any jurisdiction or would disqualify the Plan, any Award or any Award Agreement
under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws, or if it cannot be so
construed or deemed amended without, in the determination of the Committee,
materially altering the purpose of intent of the Plan, the Award or the Award
Agreement, such provision shall be stricken as to such jurisdiction, and the
remainder of the Plan, any such Award or any such Award Agreement shall remain
in full force and effect.
10.3 NO TRUST OR FUND CREATED. Neither the Plan nor any Award or Award
Agreement shall create or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Company or any Affiliate and a
Participant or any other person. To the extent that any person acquires a right
to receive payments from the Company or any Affiliate pursuant to an Award, such
right shall be no greater than the right of any unsecured general creditor of
the Company or of any Affiliate.
10.4 HEADINGS. Headings are given to the sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed
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in any way material or relevant to the construction or interpretation of the
Plan or any provision thereof.
10.5 STOCK INCENTIVE PLAN. Except as otherwise specifically stated herein,
all of the terms and conditions of the Stock Incentive Plan shall also govern
Awards under this Plan.
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