EXHIBIT 2.1
INITIAL PUBLIC OFFERING AND DISTRIBUTION AGREEMENT
DATED AS OF MARCH 31, 2000
BY AND BETWEEN
DELUXE CORPORATION
AND
EFUNDS CORPORATION
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.......................................................2
Section 1.01 Definitions............................................2
ARTICLE II THE IPO AND THE DISTRIBUTION.....................................6
Section 2.01 The IPO and Other Primary Offerings....................6
Section 2.02 Transactions Prior to the IPO..........................6
Section 2.03 Conditions Precedent to Consummation of the IPO........7
Section 2.04 The Distribution.......................................8
Section 2.05 Certain Stockholder Matters............................8
Section 2.07 Further Assurances Regarding the Distribution..........9
Section 2.08 Abandonment of the Distribution........................9
ARTICLE III EXPENSES.......................................................10
Section 3.01 General...............................................10
Section 3.02 Certain Expenses Relating to the IPO and any
Other Primary Offerings by eFunds.....................10
Section 3.03 Certain Expenses Relating to the Distribution.........11
ARTICLE IV ACCESS TO INFORMATION...........................................11
Section 4.01 Restrictions on Disclosure of Information.............11
Section 4.02 Legally Required Disclosure of Confidential
Information...........................................11
Section 4.03 Access to Information.................................12
Section 4.04 Record Retention......................................12
ARTICLE V COVENANTS........................................................13
Section 5.01 Auditors and Audits; Annual and Quarterly Statements
and Accounting........................................13
Section 5.02 No Violations.........................................15
Section 5.03 Other Agreements......................................15
ARTICLE VI OPTIONS.........................................................15
Section 6.01 Options...............................................15
Section 6.02 Notice................................................16
Section 6.03 Option Exercise and Payment...........................16
Section 6.04 Effect of Failure to Exercise.........................17
Section 6.05 Termination of Options................................17
ARTICLE VII INDEMNIFICATION................................................17
Section 7.01 Indemnification Procedures............................17
ARTICLE VIII CONDITION TO CONSUMMATION OF TRANSACTIONS; TERMINATION........20
Section 8.01 Condition.............................................20
Section 8.02 Termination...........................................20
ARTICLE IX MISCELLANEOUS...................................................20
Section 9.01 Limitation of Liability...............................20
Section 9.03 Waiver................................................20
Section 9.04 Remedies..............................................21
Section 9.05 Performance...........................................21
Section 9.06 References; Construction..............................21
Section 9.07 Amendments............................................21
Section 9.08 Successors and Assignment.............................21
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Section 9.09 Severability..........................................21
Section 9.10 Entire Agreement......................................22
Section 9.11 Notices...............................................22
Section 9.12 Governing Law.........................................23
Section 9.13 Counterparts..........................................23
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INITIAL PUBLIC OFFERING AND DISTRIBUTION AGREEMENT (this "AGREEMENT") dated
as of March 31, 2000, by and between Deluxe Corporation, a Minnesota Corporation
("Deluxe"), and eFunds Corporation, a Delaware corporation and a wholly owned
subsidiary of Deluxe ("eFunds"). Certain capitalized terms used herein are
defined in Article I of this Agreement.
RECITALS
WHEREAS, the Board of Directors of Deluxe has determined that it would be
appropriate and desirable to completely separate the eFunds Business from
Deluxe;
WHEREAS, Deluxe and eFunds have previously entered into the Assignment and
Assumption Agreement, dated as of March 31, 2000 (the "Separation Date"),
pursuant to which Deluxe has contributed and assigned to eFunds and eFunds has
received and assumed, the assets and liabilities then associated with the eFunds
Business as described therein (the "Assignment and Assumption Agreement");
WHEREAS, Deluxe currently owns all of the issued and outstanding capital
stock of eFunds;
WHEREAS, Deluxe and eFunds currently contemplate that, following the
contribution and assumption of assets and liabilities, eFunds proposes to make
an initial public offering ("IPO") of an amount of its common stock pursuant to
a registration statement on form S-1 pursuant to the Securities Act of 1933, as
amended, that, together with all derivative shares, will reduce Deluxe's
ownership of eFunds to not less than 80.1%;
WHEREAS, Deluxe currently contemplates that, several months following such
IPO, Deluxe will distribute to the holders of its common stock by means of an
exchange offer and/or a pro rata distribution all of the shares of eFunds Stock
owned by Deluxe (the "Distribution");
WHEREAS, Deluxe and eFunds intend that the contribution and assumption of
assets and liabilities and the Distribution will qualify as a tax-free
reorganization under Sections 368(a)(1)(D) and 355 of the Internal Revenue Code
of 1986, as amended (the "Code"), and that this Agreement is intended to be, and
is hereby adopted as, a plan of reorganization under Section 368 of the Code;
and
WHEREAS, the parties intend in this Agreement, including the Exhibits
attached hereto, to set forth the principal arrangements between them regarding
such Initial Public Offering and Distribution.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. As used in this Agreement, the following terms
will have the following meanings, applicable both to the singular and the plural
forms of the terms described:
"Affiliates" means, with respect to any specified Person, any Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with such specified Person; provided,
however, that for purposes of this Agreement, (i) Deluxe and its Subsidiaries
(other than eFunds and its Subsidiaries) shall not be considered Affiliates of
eFunds and (ii) eFunds and its Subsidiaries shall not be considered Affiliates
of Deluxe.
"Agreement" has the meaning ascribed thereto in the Preamble.
"Ancillary Agreements" means the Registration Rights Agreement,
Transitional Services Agreement, Employee Benefits Agreement, Real Estate
Agreements, Master Agreement, ONE Channel Management Agreement, Data Sharing
Agreements, Loan Agreement, Third Party Indemnification Agreement, Government
Services Indemnity Agreement and the Tax-Sharing Agreement.
"Confidential Information" means, with respect to any party hereto, (i) any
Information concerning such party, its business or any of its Affiliates that
such party or its Affiliates treat as confidential or proprietary or is a trade
secret of any of them that was obtained by another party hereto, (ii) any
Information concerning such party that is obtained by another party under
Section 4.03, or (iii) any other Information obtained by, or furnished to,
another party hereto; provided, that, such Information shall no longer be deemed
Confidential Information, to the extent that it is or was (i) in the public
domain other than by the breach of this Agreement or by breach of any other
agreement between or among the parties hereto and/or any of their respective
Affiliates, (ii) available to such party outside the context of the Prior
Relationship on a nonconfidential basis prior to its disclosure by the other
party, (iii) lawfully acquired outside the context of the Prior Relationship on
a nonconfidential basis or independently developed by, or on behalf of, such
party by Persons who do not have access to such Confidential Information, (iv)
required to be disclosed by law, governmental order or the rules and regulations
of the SEC, or (v) mutually agreed to by the parties.
"Data Sharing Agreements" means the agreements to be entered into on or
before the IPO Effective Date between Deluxe and eFunds concerning (a) the
provision of consumer account information of Checks Unlimited to eFunds, (b) the
ability of eFunds to submit groups of bank routing numbers to Deluxe to obtain
check order history files from Deluxe for use in eFunds' Debit Bureau
operations, (c) the provision of eFunds data regarding closed consumer accounts
to Deluxe and (d) the provision of ACH services to Deluxe by eFunds.
"Deluxe" has the meaning ascribed thereto in the Preamble.
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"Deluxe Business" means any assets, business or operations of Deluxe or any
of its Affiliates other than the eFunds Business.
"Deluxe Common Stock" means the common stock, par value $1.00 per share, of
Deluxe.
"Deluxe Group" includes for federal income tax purposes, Deluxe, its
Affiliates, eFunds and its Affiliates.
"Deluxe's Auditors" has the meaning ascribed thereto in Section 5.01(b).
"Deluxe Transfer Agent" means the company designated by Deluxe as the
transfer agent and registrar for the Deluxe Common Stock.
"Distribution" has the meaning ascribed thereto in the Preamble.
"Distribution Date" is the date upon which the Distribution is consummated.
"eFunds" has the meaning ascribed thereto in the Preamble.
"eFunds Business" has the meaning ascribed thereto in Section 1.1 of the
Assignment and Assumption Agreement.
"eFunds Nonvoting Stock" means any class of eFunds' capital stock not
representing the right to vote generally for the election of directors.
"eFunds Nonvoting Stock Option" has the meaning ascribed thereto in Section
6.01(c).
"eFunds Nonvoting Stock Option Notice" has the meaning ascribed thereto in
Section 6.02.
"eFunds Stock" means any class of eFunds capital stock, including any class
of eFunds Voting Stock and any class of eFunds Nonvoting Stock.
"eFunds Voting Stock" means the common stock, par value $0.01 per share of
eFunds, and any other class of eFund's capital stock representing the right to
vote generally for the election of directors.
"eFunds Voting Stock Option" has the meaning ascribed thereto in Section
6.01(a).
"eFunds Voting Stock Option Notice" has the meaning ascribed thereto in
Section 6.02.
"Employee Benefits Agreement" means the agreement to be entered into on or
before the IPO Effective Date between Deluxe and eFunds concerning the provision
of employee benefits to employees of eFunds and the separation of employee
benefit plans and agreements in connection with the Distribution.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, together with the rules and regulations promulgated thereunder.
"Government Services Indemnity Agreement" means the agreement to be entered
into on or before the IPO Effective Date between Deluxe and eFunds whereby
Deluxe will agree to indemnify eFunds with respect to certain losses that may be
sustained in connection with the government services business.
"Information" means all records, books, contracts, instruments, computer
data and other data.
"IPO Effective Date" means the date on which the IPO Registration Statement
is declared effective by the SEC.
"IPO Registration Statement" means the Registration Statement on Form S-1,
of eFunds, including all exhibits thereto and as supplemented and amended from
time to time.
"Issuance Event" has the meaning ascribed thereto in Section 6.02.
"Issuance Event Date" has the meaning ascribed thereto in Section 6.02.
"Loan Agreement" means the agreement to be entered into between Deluxe and
eFunds on or before the IPO Effective Date whereby Deluxe will provide eFunds
with a $75,000,000 revolving credit facility.
"Losses" means all losses, liabilities, deficiencies, damages, expenses or
costs (including reasonable legal and other external advisors fees and
expenses).
"Market Price" of any shares of eFunds Voting Stock on any date means (i)
the average of the last sale price of such shares on each of the five trading
days immediately preceding such date on the New York Stock Exchange or Nasdaq
Stock Market's National Market ("Nasdaq") or, if such shares are not listed
thereon, on the principal national securities exchange or automated interdealer
quotation system on which such shares are traded or (ii) if such sale prices are
unavailable or such shares are not so traded, the value of such shares on such
date determined in accordance with agreed-upon procedures reasonably
satisfactory to eFunds and Deluxe.
"Master Agreement" means the agreement to be entered into on or before the
IPO Effective Date between Deluxe and iDLX Corporation, a wholly owned
subsidiary of eFunds, pursuant to which iDLX Corporation will provide Deluxe
with information technology development services, maintenance and support,
financial shared services and order entry services.
"ONE Channel Management Agreement" means the agreement to be entered into
on or before the IPO Effective Date between Deluxe and eFunds that will govern
Deluxe's provision
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and support of its proprietary ONE system for eFunds, such that eFunds products
are available to financial institutions through any ONE product configuration.
"Owning Party" has the meaning ascribed thereto in Section 4.02.
"Person" means any individual, corporation, limited or general partnership,
limited liability company, joint venture association, joint stock company, trust
unincorporated organization or government or any agency or political subdivision
thereof.
"Prior Relationship" means the ownership relationship between Deluxe and
eFunds at any time prior to the Distribution Date.
"Real Estate Agreements" means the leases and subleases to be entered into
on or before the IPO Effective Date between Deluxe or its Subsidiaries, as
lessor or sublessor, and eFunds or its Subsidiaries as lessee or sublessee with
respect to the FSG space or space for equipment and the lease to be entered into
between eFunds or its Subsidiaries as lessor and Deluxe or its Subsidiaries as
lessee with respect to the building located in Phoenix, Arizona.
"Registration Rights Agreement" means the Registration Rights Agreement to
be entered into on or before the IPO Effective Date between Deluxe and eFunds.
"Regulation S-K" means Regulation S-K of the General Rules and Regulations
promulgated by the SEC.
"Regulation S-X" means Regulation S-X of the General Rules and Regulations
promulgated by the SEC.
"Related Parties" has the meaning ascribed thereto in Section 4.03.
"Representatives" means directors, officers, employees, agents,
consultants, advisors, accountants, attorneys and representatives.
"Requestor" has the meaning ascribed thereto in Section 4.03.
"Retention Period" has the meaning ascribed thereto in Section 4.04.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, together with the rules and regulations promulgated thereunder.
"Subsidiary" means, with respect to any Person, any other Person a majority
of the equity ownership or voting stock of which is at the time owned, directly
or indirectly, by such Person and/or one or more other Subsidiaries of such
Person; provided, however, that unless the context otherwise requires prior to
the Distribution, a Subsidiary of Deluxe shall only include Persons
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who would be a Subsidiary of Deluxe assuming the Distribution has occurred
immediately prior to the determination as to whether such Person were a
Subsidiary of Deluxe.
"Tax-Sharing Agreement" means the tax-sharing agreement to be entered into
on or before the IPO Effective Date between Deluxe and eFunds.
"Third Party Claim" has the meaning ascribed thereto in Section 7.01(b).
"Third Party Indemnification Agreement" means the third party
indemnification agreement to be entered into on or before the IPO Effective Date
between Deluxe and eFunds whereby eFunds will agree to indemnify Deluxe with
respect to any payments made under guarantees that Deluxe provided to third
parties or pursuant to master agreements that Deluxe has entered into with
respect to equipment provided to eFunds or performance of eFunds.
"Transitional Services Agreement" means the transitional services agreement
to be entered into on or before the IPO Effective Date between Deluxe and eFunds
covering the provision of certain transitional services to each other.
ARTICLE II
THE IPO AND THE DISTRIBUTION
Section 2.01 The IPO and Other Primary Offerings . Until the Distribution
Date, eFunds shall consult with, and cooperate in all respects with, Deluxe in
connection with any primary offering of the eFunds Voting Stock or any other
securities of eFunds and shall, at Deluxe's direction, promptly take any and all
actions necessary or desirable to consummate the IPO and the Distribution.
Section 2.02 Transactions Prior to the IPO. Subject to the conditions
specified in Section 2.03, Deluxe and eFunds shall use their reasonable
commercial efforts to consummate the IPO. Such efforts shall include, but not
necessarily be limited to, those specified in this Section 2.02.
(a) Registration Statement. eFunds shall file the IPO Registration
Statement, and such amendments or supplements thereto, as may be necessary in
order to cause the same to become and remain effective as required by law or by
the managing underwriters for the IPO (the "Underwriters"), including, but not
limited to, filing such amendments to the IPO Registration Statement as may be
required by the underwriting agreement to be entered into among eFunds and the
Underwriters (the "Underwriting Agreement"), the SEC or federal, state or
foreign securities laws. Deluxe and eFunds shall also cooperate in preparing,
filing with the SEC and causing to become effective a registration statement
registering the common stock of eFunds under the Exchange Act, and any
registration statements or amendments thereof which are required to reflect the
establishment of, or amendments to, any employee benefit and other plans
necessary or appropriate in connection with the IPO, the Distribution or the
other transactions contemplated by this Agreement.
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(b) Underwriting Agreement. eFunds shall enter into the Underwriting
Agreement, in form and substance reasonably satisfactory to eFunds, and shall
comply with its obligations thereunder.
(c) Other Matters. Deluxe and eFunds shall consult with each other and the
Underwriters regarding the timing, pricing and other material matters with
respect to the IPO.
(d) Blue Sky. eFunds shall use its reasonable commercial efforts to take
all such action as may be necessary or appropriate under state securities and
blue sky laws of the United States (and any comparable laws under any foreign
jurisdictions) in connection with the IPO.
(e) NYSE or Nasdaq Listing. eFunds shall prepare, file and use reasonable
commercial efforts to seek to make effective, an application for listing of the
common stock of eFunds issued in the IPO on the New York Stock Exchange (the
"NYSE") or Nasdaq, subject to official notice of issuance.
Section 2.03 Conditions Precedent to Consummation of the IPO. As soon as
practicable after the date hereof, the parties hereto shall use their reasonable
commercial efforts to satisfy the conditions listed below to the consummation of
the IPO. The obligations of the parties to use their reasonable commercial
efforts to consummate the IPO shall be conditioned on the satisfaction, or
waiver by Deluxe, of the following conditions:
(a) Registration Statement. The IPO Registration Statement shall have been
filed and declared effective by the SEC, and there shall be no stop-order in
effect with respect thereto.
(b) Blue Sky. The actions and filings with regard to state securities and
blue sky laws of the United States (and any comparable laws under any foreign
jurisdictions) described in Section 2.02 shall have been taken and, where
applicable, have become effective or been accepted.
(c) NYSE or Nasdaq Listing. The common stock of eFunds to be issued in
the IPO shall have been accepted for listing on the NYSE or Nasdaq, subject to
official notice of issuance.
(d) Underwriting Agreement. eFunds shall have entered into the Underwriting
Agreement and all conditions to the obligations of eFunds and the Underwriters
shall have been satisfied or waived.
(e) eFunds Stock Ownership. Using whatever method that it determines
appropriate in its sole discretion, Deluxe shall be satisfied in its sole
discretion that at all times prior to the Distribution it will own at least
80.1% of (i) the total combined voting power of all classes of eFunds Voting
Stock and (ii) each class of eFunds Nonvoting Stock. All other conditions to
permit the Distribution to qualify as a tax-free distribution under Section 355
of the Code shall, to the extent applicable as of the time of the IPO, be
satisfied. There shall be no event or
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condition that is likely to cause any of such conditions not to be satisfied as
of the time of the Distribution or thereafter.
(f) No Legal Restraints. No order, injunction or decree issued by any court
or agency of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Assignment and Assumption Agreement or the
IPO or any of the other transactions contemplated by this Agreement shall be in
effect.
(g) Other Actions. Such other actions as the parties hereto may, based upon
the advice of counsel, reasonably request to be taken prior to the IPO in order
to assure the successful completion of the IPO shall have been taken.
(h) No Termination. This Agreement shall not have been terminated.
Section 2.04 The Distribution. Deluxe currently intends, following the
consummation of the IPO, to complete the Distribution during 2000. Deluxe shall,
in its sole and absolute discretion, determine whether to proceed with all or
part of the Distribution and all terms of the Distribution, including, without
limitation, the form, structure and terms of any transaction(s) and/or
offering(s) to effect the Distribution and the timing of and conditions to the
consummation of the Distribution. In addition, Deluxe may at any time and from
time to time until the completion of the Distribution abandon, modify or change
any or all of the terms of the Distribution, including, without limitation, by
accelerating or delaying the timing of the consummation of all or part of the
Distribution. eFunds shall cooperate with Deluxe in all commercially reasonable
respects to accomplish the Distribution and shall, at Deluxe's direction,
promptly take any and all actions necessary or desirable to effect the
Distribution, including, without limitation, the registration under the
Securities Act of eFunds Voting Stock on an appropriate registration form or
forms to be designated by Deluxe. Deluxe shall select any investment banker(s)
and manager(s) in connection with the Distribution, as well as any other
institutions providing services in connection with the Distribution.
Section 2.05 Certain Stockholder Matters. From and after the distribution
of eFunds Stock in connection with any transaction(s) included as part of the
Distribution and until such eFunds Stock is duly transferred in accordance with
applicable law, eFunds shall regard the Persons receiving eFunds Stock in such
transaction(s) as record holders of eFunds Stock in accordance with the terms of
such transaction(s) without requiring any action on the part of such Persons.
eFunds agrees that, subject to any transfers of such stock, (a) each such holder
shall be entitled to receive all dividends payable on, and exercise voting
rights and all other rights and privileges with respect to, the shares of eFunds
Stock then held by such holder and (b) each such holder shall be entitled,
without any action on the part of such holder, to receive one or more
certificates representing, or other evidence of ownership of, the shares of
eFunds Stock then held by such holder. Deluxe shall cooperate, and shall
instruct the Deluxe Transfer Agent to cooperate, with eFunds and the eFunds
Transfer Agent, and eFunds shall cooperate, and shall instruct the eFunds
Transfer Agent to cooperate, with Deluxe and the Deluxe Transfer Agent, in
connection with all aspects of the Distribution and all other matters relating
to the issuance and delivery of certificates representing, or other evidence of
ownership of, the shares of eFunds
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Stock distributed to the holders of Deluxe Common Stock in connection with any
transaction(s) included as part of the Distribution. Following the Distribution,
Deluxe shall promptly, but in no event no later than two business days
thereafter, instruct the Deluxe Transfer Agent to deliver to the eFunds Transfer
Agent true, correct and complete copies of the stock and transfer records
reflecting the holders of Deluxe Common Stock receiving shares of eFunds Stock
in connection with any transaction(s) included as part of the Distribution.
Section 2.06 Prior Relationship. eFunds, with respect to eFunds and its
Affiliates, and Deluxe, with respect to Deluxe and its Affiliates, agree to take
all commercially reasonable action to discontinue their respective uses as
promptly as is commercially reasonable of any printed material that indicates an
ownership or other relationship between or among Deluxe and eFunds or any of
their respective Affiliates that has changed as a result of the IPO, the
Distribution or any other transactions contemplated hereby; provided, that, this
Section 2.06 shall not prohibit the use of printed material containing
appropriate and accurate references to such relationship.
Section 2.07 Further Assurances Regarding the Distribution. In addition to
the actions specifically provided for elsewhere in this Agreement, eFunds shall,
at Deluxe's direction, use all commercially reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things
commercially reasonably necessary, proper or expeditious under applicable laws,
regulations and agreements in order to consummate and make effective the
Distribution as promptly as reasonably practicable. Without limiting the
generality of the foregoing, eFunds shall, at Deluxe's direction, cooperate with
Deluxe, and execute and deliver, or use all commercially reasonable efforts to
cause to have executed and delivered, all instruments, including instruments of
conveyance, assignment and transfer, and to make all filings with, and to obtain
all consents, approvals or authorizations of, any domestic or foreign
governmental or regulatory authority requested by Deluxe in order to consummate
and make effective the Distribution.
Section 2.08 Abandonment of the Distribution. The parties expressly
acknowledge and agree that Deluxe is not obligated in any respect to proceed
with or complete the Distribution and that Deluxe may, in its sole and absolute
discretion, at any time abandon its plans to proceed with or complete the
Distribution. In the event that Deluxe so determines that it no longer intends
to proceed with or complete the Distribution, Deluxe shall provide to eFunds a
written notification of such determination (an "Abandonment Notice"). Effective
as of the date of the Abandonment Notice, (a) this Agreement shall terminate,
become null and void and have no further force and effect and (b) Deluxe's
rights, and eFunds' obligations, set forth in the Registration Rights Agreement
shall immediately become effective.
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ARTICLE III
EXPENSES
Section 3.01 General. Except as otherwise provided in this Agreement, the
Ancillary Agreements or any other agreement between the parties relating to the
IPO or the Distribution, all costs and expenses of either party hereto in
connection with the IPO and the Distribution shall be paid by the party that
incurs such costs and expenses.
Section 3.02 Certain Expenses Relating to the IPO and any Other Primary
Offerings by eFunds. eFunds shall cause to be paid from the proceeds of the IPO
all out-of-pocket expenses (including, without limitation, fees and expenses of
eFunds and Deluxe's counsel and accountants or other third parties) relating to
the IPO or any other primary offering by eFunds prior to the Distribution Date,
including, without limitation, (i) the preparation, printing and filing of the
IPO Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto or any other registration
statements, (ii) the preparation, printing and delivery to any underwriters of
any underwriting agreement, any agreement among underwriters and any other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the eFunds Voting Stock or any other securities of
eFunds, (iii) the preparation, issuance and delivery of the certificates for the
eFunds Voting Stock or any other securities of eFunds to any underwriters or any
other purchasers, including any stock or other transfer taxes and any stamp or
other duties payable upon the sale, issuance or delivery of the eFunds Voting
Stock or any other securities of eFunds to any underwriters or any other
securities, (iv) the qualification of the eFunds Voting Stock or any other
securities of eFunds under the securities laws in accordance with any state
(Blue Sky laws), including filing fees and the reasonable fees and disbursements
of counsel for any underwriters in connection therewith and in connection with
the preparation of any Blue Sky survey and any supplement thereto, (v) the
printing and delivery to any underwriters of copies of each preliminary
prospectus, any term sheets and of the final prospectus and any amendments or
supplements thereto, (vi) the preparation, printing and delivery to any
underwriters of copies of any Blue Sky survey and any supplement thereto, (vii)
the fees and expenses of any transfer agent or registrar for the eFunds Voting
Stock or any other securities of eFunds, (viii) the filing fees incident to, the
review by the National Association of Securities Dealers, Inc. (the "NASD") of
the terms of the sale of the eFunds Voting Stock or any other securities of
eFunds and (ix) the fees and expenses incurred in connection with the listing of
the eFunds Voting Stock or any other securities of eFunds on the NYSE, Nasdaq,
any other national securities exchange or any national over the counter
quotation system, (x) any other fees and disbursements payable to the
underwriters in connection with the IPO, whether in the form of an underwriting
discount or otherwise, (xi) the preparation and implementation of the Assignment
and Assumption Agreement, and (xii) any miscellaneous expenses incurred in
connection with the IPO such as travel expenses.
Section 3.03 Certain Expenses Relating to the Distribution. Deluxe shall
pay all out-of-pocket expenses relating to the Distribution, including (i) the
fees and expenses of the underwriter or dealer-manager, (ii) the fees and
expenses of eFunds and Deluxe's attorneys, accountants and other advisors, (iii)
the preparation, printing, filing (including under federal and
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state securities laws), mailing and publishing of the offering materials
relating to the eFunds Stock, (iv) the preparation, printing and delivery of any
certificates or documents entered into in connection with the Distribution, (v)
the fees and Stock, (v) the fees and expenses incurred in connection with the
listing of the eFunds Stock with the NYSE or Nasdaq, any other national
securities exchange or any national over the counter quotation system, if
applicable and (vi) any other fees incurred in connection with the Distribution.
ARTICLE IV
ACCESS TO INFORMATION
Section 4.01 Restrictions on Disclosure of Information.
(a) Without limiting any rights or obligations under any other agreement
between or among the parties hereto and/or any of their respective Affiliates
relating to confidentiality, with respect to Confidential Information that is
not a trade secret of the disclosing party or its Affiliates for a period of
three years following the date hereof, otherwise for a perpetual period, each of
the parties hereto agrees that it shall not, and shall not permit any of its
Affiliates or Representatives to, disclose any Confidential Information to any
Person, other than to such Affiliates or Representatives on a need-to-know basis
in connection with the purpose for which the Confidential Information was
originally disclosed.
(b) Each of the parties hereto shall maintain, and shall cause its
respective Affiliates to maintain, policies and procedures, and develop such
further policies and procedures as shall from time to time become necessary or
appropriate, to ensure compliance with this Section 4.01.
Section 4.02 Legally Required Disclosure of Confidential Information. If
any of the parties to this Agreement or any of their respective Affiliates or
Representatives become legally required to disclose any Confidential
Information, such disclosing party shall promptly notify the party owning the
Confidential Information (the "Owning Party") and shall use all commercially
reasonable efforts to cooperate with the Owning Party so that the Owning Party
may seek a protective order or other appropriate remedy and/or waive compliance
with this Section 4.02. All expenses reasonably incurred in seeking a protective
order or other remedy shall be borne by the Owning Party. If such protective
order or other remedy is not obtained, or if the Owning Party waives compliance
with this Section 4.02, the disclosing party or its Affiliate or Representative,
as applicable, shall (a) disclose only that portion of the Confidential
Information it is compelled by law to disclose, (b) use all commercially
reasonable efforts to obtain reliable assurance requested by the Owning Party
that confidential treatment will be accorded such Confidential Information, and
(c) promptly provide the Owning Party with a copy of the Confidential
Information so disclosed, in the same form and format so disclosed, together
with a description of all Persons to whom such Confidential Information was
disclosed.
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Section 4.03 Access to Information.
(a) During the Retention Period, each of the parties hereto shall cooperate
with and afford, and shall cause their respective Affiliates, Representatives,
Subsidiaries, successors and/or assignees, and shall use reasonable efforts to
cause joint ventures that are not Affiliates (collectively, "Related Parties")
to cooperate with, and afford to the other party, reasonable access upon
reasonable advance written request to all information (other than information
created after the Distribution Date (i) the disclosure of which would have the
effect of waiving a legal privilege, (ii) which is the subject of a
confidentiality agreement between such party and a third party which prohibits
disclosure to the other party, or (iii) which is necessary or desirable to
fulfill any obligations of Requestor under contracts existing as of the
Distribution Date, provided, that, such party shall use all commercially
reasonable efforts to obtain such third party's consent to disclosure of such
information) within such party's or any Related Party's possession. Access to
the requested information shall be provided so long as it relates to the
requesting party's (the "Requestor") assets, business and operations, and access
is reasonably required by the Requestor as a result of the parties' Prior
Relationship for purposes of auditing, accounting, claims or litigation (except
for claims or litigation between the parties hereto), employee benefits,
regulatory or tax purposes or fulfilling disclosure or reporting obligations
including, without limitation, information reasonably necessary for the
preparation of reports required by or filed under the Securities Act or the
Exchange Act with respect to any period entirely or partially prior to the
Distribution Date or any other reasonable purpose.
(b) Each party agrees to cooperate fully to allow access to each other's
employees (i) to the extent that they are reasonably necessary to discuss and
explain all requested Information with and to the requesting party and (ii) with
respect to any claims brought against the other involving the conduct of the
eFunds Business prior to the Distribution Date.
Section 4.04 Record Retention. Deluxe and eFunds shall preserve and keep
all of their respective books and records in the possession of such party or its
Related Parties, whether in electronic form or otherwise, for no less than the
later of (i) the record retention policy of Deluxe and eFunds as in effect as of
the Distribution Date or (ii) any period as may be required by any laws,
regulations or rulings promulgated thereunder of any jurisdiction (or of any
political subdivision or taxing authority thereof) (the "Retention Period"), at
such party's sole cost and expense. Deluxe shall deliver to eFunds on the
Distribution Date any and all original corporate organization books that Deluxe
has in its possession relating solely to the eFunds Business, copies of which
Deluxe may retain at its own expense. Upon reasonable prior written request,
Deluxe and eFunds shall deliver to the other copies of any and all books and
records that Deluxe or eFunds, as the case may be, has in its possession
relating to the eFunds Business or the Deluxe Business, respectively.
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ARTICLE V
COVENANTS
Section 5.01 Auditors and Audits; Annual and Quarterly Statements and
Accounting. Each party agrees that, for so long as Deluxe is required in
accordance with United States generally accepted accounting principles and rules
and regulations established by the SEC to consolidate eFunds's results of
operations and financial position:
(a) Selection of Auditors. eFunds shall not select a different accounting
firm than Deloitte & Touche LLP to serve as its (and its Subsidiaries')
independent certified public accountants ("eFunds's Auditors") for purposes of
providing a report on its consolidated financial statements without Deluxe's
prior written consent (which shall not be unreasonably withheld).
(b) Date of Auditors' Report and Quarterly Reviews. eFunds shall use its
reasonable commercial efforts to enable the eFunds Auditors to complete their
audit such that they will date their report on eFunds's audited annual financial
statements on the same date that Deluxe's independent certified public
accountants ("Deluxe's Auditors") date their report on Deluxe's audited annual
financial statements, and to enable Deluxe to meet its timetable for the
printing, filing and public dissemination of Deluxe's annual financial
statements. eFunds shall use its reasonable commercial efforts to enable the
eFunds Auditors to complete their quarterly review procedures such that they
will provide a review report on eFunds's quarterly financial statements on the
same date that Deluxe's Auditors provide a review report on Deluxe's quarterly
financial statements.
(c) Annual and Quarterly Financial Statements. eFunds shall provide to
Deluxe on a timely basis all Information that Deluxe reasonably requires to meet
its schedule for the preparation, printing, filing, and public dissemination of
Deluxe's annual and quarterly financial statements. Without limiting the
generality of the foregoing, eFunds will provide all required financial
Information with respect to eFunds and its Subsidiaries to eFunds's Auditors in
a sufficient and reasonable time and in sufficient detail to permit eFunds's
Auditors to take all steps and perform all reviews necessary to provide
sufficient assistance to Deluxe's Auditors with respect to Information to be
included or contained in Deluxe's annual and quarterly financial statements.
Similarly, Deluxe shall provide to eFunds on a timely basis all Information that
eFunds reasonably requires to meet its schedule for the preparation, printing,
filing, and public dissemination of eFunds's annual and quarterly financial
statements. Without limiting the generality of the foregoing, Deluxe will
provide all required financial Information with respect to Deluxe and its
Subsidiaries to Deluxe's Auditors in a sufficient and reasonable time and in
sufficient detail to permit Deluxe's Auditors to take all steps and perform all
reviews necessary to provide sufficient assistance to eFunds's Auditors with
respect to Information to be included or contained in eFunds's annual and
quarterly financial statements.
(d) Identity of Personnel Performing the Annual Audit and Quarterly
Reviews. eFunds shall authorize eFunds's Auditors to make available to Deluxe's
Auditors both the personnel who performed or are performing the annual audits
and quarterly reviews of eFunds
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and work papers related to the annual audits and quarterly reviews of eFunds, in
all cases within a reasonable time prior to eFunds's Auditors' report date, so
that Deluxe's Auditors are able to perform the procedures they consider
necessary to take responsibility for the work of eFunds's Auditors as it relates
to Deluxe's Auditors' report on Deluxe's financial statements, all within
sufficient time to enable Deluxe to meet its timetable for the printing, filing
and public dissemination of Deluxe's annual and quarterly statements. Similarly,
Deluxe shall authorize Deluxe's Auditors to make available to eFunds's Auditors
both the personnel who performed or are performing the annual audits and
quarterly reviews of Deluxe and work papers related to the annual audits and
quarterly reviews of Deluxe, in all cases within a reasonable time prior to
Deluxe's Auditors' report date, so that eFunds's Auditors are able to perform
the procedures they consider necessary to take responsibility for the work of
Deluxe's Auditors as it relates to eFunds's Auditors' report on eFunds's
statements, all within sufficient time to enable eFunds to meet its timetable
for the printing, filing and public dissemination of eFunds's annual and
quarterly financial statements.
(e) Access to Books and Records. eFunds shall provide Deluxe's internal
auditors and their designees access to eFunds's and its Subsidiaries' books and
records so that Deluxe may conduct reasonable audits relating to the financial
statements provided by eFunds pursuant hereto as well as to the internal
accounting controls and operations of eFunds and its Subsidiaries. Similarly,
Deluxe shall provide eFunds's internal auditors and their designees access to
Deluxe's and its Subsidiaries' books and records so that eFunds may conduct
reasonable audits relating to the financial statements provided by Deluxe
pursuant hereto as well as to the internal accounting controls and operations of
Deluxe and its Subsidiaries.
(f) Notice of Change in Accounting Principles. eFunds shall give Deluxe as
much prior notice as reasonably practical of any proposed determination of, or
any significant changes in, its accounting estimates or accounting principles
from those in effect on the Separation Date. eFunds will consult with Deluxe
and, if requested by Deluxe, eFunds will consult with Deluxe's Auditors with
respect thereto. Deluxe shall give eFunds as much prior notice as reasonably
practical of any proposed determination of, or any significant changes in, its
accounting estimates or accounting principles from those in effect on the
Separation Date.
(g) Conflict with Third-Party Agreements. Nothing in Sections 4.03 and 5.01
shall require either Deluxe or eFunds to violate any agreement with any third
parties regarding the confidentiality of confidential and proprietary
information relating to that third party or its business; provided, however,
that in the event that either Deluxe or eFunds is required under Sections 4.03
and 5.01 to disclose any such information, such party shall use all commercially
reasonable efforts to seek to obtain such customer's consent to the disclosure
of such information.
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Section 5.02 No Violations.
(a) For so long as Deluxe owns, in the aggregate, greater than or equal to
50% of the total combined voting power of all classes of eFunds Voting Stock,
eFunds covenants and agrees that it will not take any action or enter into any
commitment or agreement which may reasonably be anticipated to result, with or
without notice and with or without lapse of time or otherwise, in a
contravention or event of default by any of its Affiliates of (i) any provisions
of applicable law or regulation, including but not limited to provisions
pertaining to the Code or the Employee Retirement Income Security Act of 1974,
as amended, (ii) any provision of Deluxe's Articles of Incorporation or Bylaws,
(iii) any credit agreement or other material agreements (including agreements
relating to covenants not to compete) binding upon Deluxe or (iv) any judgment,
order or decree of any governmental body, agency or court having jurisdiction
over Deluxe or any of its respective assets.
(b) eFunds and Deluxe agree to provide to the other any information and
documentation necessary or requested by the other for the purpose of evaluating
and ensuring compliance with Section 5.02(a) hereof.
(c) Notwithstanding the foregoing Section 5.01, nothing in this Agreement
is intended to limit or restrict in any way Deluxe's rights as a stockholder of
eFunds.
Section 5.03 Other Agreements. On or prior to the consummation of the IPO,
Deluxe and eFunds shall have executed and delivered to each other each of the
Ancillary Agreements.
ARTICLE VI
OPTIONS
Section 6.01 Options.
(a) eFunds hereby grants to Deluxe, on the terms and conditions set forth
herein, a continuing right (the "eFunds Voting Stock Option") to purchase from
eFunds, at the times set forth herein, such number of shares of eFunds Voting
Stock as is necessary to allow Deluxe to maintain ownership of at least 80.1% of
the total combined voting power of all classes of eFunds Voting Stock. The
exercise price for the shares of eFunds Voting Stock purchased pursuant to the
eFunds Voting Stock Option shall be the Market Price of the eFunds Voting Stock
as of the date of first delivery of notice of exercise of the eFunds Voting
Stock Option by Deluxe to eFunds.
(b) The provisions of Section 6.01(a) hereof notwithstanding, the eFunds
Voting Stock Option granted pursuant to Section 6.01(a) shall not apply and
shall not be exercisable in connection with the issuance by eFunds of any shares
of eFunds Voting Stock pursuant to any stock option or other executive or
employee benefit or compensation plan maintained by eFunds, so long as, from and
after the date hereof and prior to the issuance of such shares, eFunds has
repurchased from shareholders and not subsequently reissued a number of shares
equal or greater to the number of shares to be issued in any such issuance.
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(c) eFunds hereby grants to Deluxe, on the terms and conditions set forth
herein, a continuing right (the "eFunds Nonvoting Stock Option" and, together
with the eFunds Voting Stock Option, the "Options") to purchase from eFunds, at
the times set forth herein, such number of shares of eFunds Nonvoting Stock as
is necessary to allow the Deluxe to own at least 80.1% of each class of
outstanding eFunds Nonvoting Stock. The exercise price for the shares of eFunds
Nonvoting Stock purchased pursuant to the eFunds Nonvoting Stock option shall be
the price at which such eFunds Nonvoting Stock is then being sold to third
parties, or, if no eFunds Nonvoting Stock is being sold, the fair market value
thereof as determined in good faith by an independent investment advisor.
Section 6.02 Notice.
(a) At least fifteen business days prior to (i) the issuance of any shares
of eFunds Voting Stock (other than in connection with the IPO, including the
full exercise of all underwriters' over-allotment options granted in connection
therewith) or (ii) the first date on which any event could occur that, in the
absence of a full or partial exercise of the eFunds Voting Stock Option, would
result in Deluxe not owning at least 80.1% of the total combined voting power of
all classes of eFunds Voting Stock, eFunds will notify Deluxe in writing (a
"eFunds Voting Stock Option Notice") of any plans it has to issue such shares or
the date on which such event could first occur.
(b) At least fifteen business days prior to (i) the issuance of any shares
of eFunds Nonvoting Stock (other than issuances of eFunds Nonvoting Stock to
Deluxe) or (ii) the first date on which any event could occur that, in the
absence of a full or partial exercise of the eFunds Nonvoting Stock Option,
would result in the Deluxe not owning at least 80.1% of any class of outstanding
eFunds Nonvoting Stock, eFunds will notify Deluxe in writing (a "eFunds
Nonvoting Stock Option Notice" and, together with a eFunds Voting Stock Option
Notice, an "Option Notice") of any plans it has to issue such shares or the date
on which such event could first occur. Each Option Notice must specify the date
on which eFunds intends to issue such additional shares or on which such event
could first occur (such issuance or event being referred to herein as an
"Issuance Event" and the date of such issuance or event as an "Issuance Event
Date"), the number of shares eFunds intends to issue or may issue and the other
terms and conditions of such Issuance Event.
Section 6.03 Option Exercise and Payment. The eFunds Voting Stock Option
may be exercised by Deluxe for a number of shares equal to or less than the
number of shares that are necessary for the Deluxe to maintain, in the
aggregate, ownership of at least 80.1% of the total combined voting power of all
classes of eFund Voting Stock. The eFunds Nonvoting Stock Option may be
exercised by Deluxe for a number of shares equal to or less than the number of
shares that are necessary for the Deluxe to own, in the aggregate, at least
80.1% of each class of outstanding eFunds Nonvoting Stock. Each option may be
exercised at any time after receipt of an applicable Option Notice and prior to
the applicable Issuance Event Date by the delivery to eFunds of a written notice
to such effect specifying (i) the number of shares of eFunds Voting Stock or
eFunds Nonvoting Stock, as the case may be, to be purchased by Deluxe and (ii) a
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calculation of the exercise price for such shares. Upon any such exercise of
either Option, eFunds will, prior to the applicable issuance Event Date, deliver
to Deluxe, against payment therefore, certificates (issued in the name of
Deluxe) representing the shares of eFunds Voting Stock or eFunds Nonvoting
Stock, as the case may be, being purchased upon such exercise. Payment for such
shares shall be made by wire transfer or intrabank transfer of
immediately-available funds to such account as shall be specified by eFunds, for
the full purchase price for such shares.
Section 6.04 Effect of Failure to Exercise. Except as provided in Section
6.06, any failure by Deluxe to exercise either Option, or any exercise for less
than all shares purchasable under either Option, in connection with any
particular Issuance Event shall not affect Deluxe's right to exercise the
relevant Option in connection with any subsequent Issuance Event.
Section 6.05 Termination of Options. The Options shall terminate upon the
occurrence of any Issuance Event that, after considering Deluxe's response
thereto and to any other Issuance Events, results in Deluxe owning, in the
aggregate, less than 45% of the total combined voting power of all classes of
eFunds Voting Stock, other than any Issuance Event in violation of this
Agreement.
ARTICLE VII
INDEMNIFICATION
Section 7.01 Indemnification Procedures.
(a) Deluxe shall indemnify eFunds and each of its Subsidiaries and their
respective officers, directors, employees, agents and representatives (each, an
"eFunds Indemnified Party") and hold them harmless against any and all Losses
resulting from, relating to or arising out of (i) any breach of, or failure to
perform, any agreement of Deluxe contained in this Agreement or (ii) any third
party claims arising in connection with the performance by Deluxe of its
agreements contained in this Agreement.
(b) eFunds shall indemnify Deluxe and each of its Subsidiaries and their
respective officers, directors, employees, agents and representatives (each, a
"Deluxe Indemnified Party") and hold them harmless against any and all Losses
resulting from, relating to or arising out of (i) any breach of or failure to
perform any agreement of eFunds contained in this Agreement or (ii) any third
party claims arising in connection with the performance by eFunds of its
agreements contained in this Agreement.
(c) The indemnification procedures set forth in Section 7.01(d) herein are
applicable to any indemnity granted pursuant to the Ancillary Agreements (other
than the Tax-Sharing Agreement).
(d) If a claim or demand is made against an Indemnified Party by any Person
who is not a party to the Ancillary Agreements (a "Third Party Claim") as to
which such Indemnified Party is entitled to indemnification pursuant to the
Ancillary Agreements, such Indemnified Party
17
shall give the Indemnifying Party notice of such Third Party Claim, as promptly
as practicable, but in any event no later than 15 days of the receipt by the
Indemnified Party of such notice; provided, however, that the failure to provide
such notice shall not release the Indemnifying Party from any of its obligations
under the Ancillary Agreements except to the extent the Indemnifying Party is
materially prejudiced by such failure and shall not relieve the Indemnifying
Party from any other obligation or liability that it may have to any Indemnified
Party otherwise than under the Ancillary Agreements. If the Indemnifying Party
acknowledges in writing its obligations to indemnify the Indemnified Party
hereunder against any Losses that may result from such Third Party Claim, then
such Indemnifying Party shall be entitled to assume and control the defense of
such Third Party Claim at its expense and through counsel of its choice, subject
to the approval of the Indemnified Party (which approval shall not be
unreasonably withheld or delayed), if it gives notice of its intention to do so
to the Indemnified Party within 15 business days of the receipt of such notice
from the Indemnified Party; provided, however, that if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate in the reasonable judgment of the Indemnified Party for the same
counsel to represent both the Indemnified Party and the Indemnifying Party, then
the Indemnified Party shall be entitled to retain its own counsel, in each
jurisdiction for which the Indemnified Party determines counsel is required to
participate in such defense, at the expense of the Indemnifying Party. In the
event the Indemnifying Party exercises the right to undertake any such defense
against any such Third Party Claim as provided above, the Indemnified Party
shall cooperate with the Indemnifying Party in such defense and make available
to the Indemnifying Party, at the Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party's
possession or under the Indemnified Party's control relating thereto as is
reasonably required by the Indemnifying Party, subject to reimbursement of
reasonable out-of-pocket expenses. Similarly, in the event the Indemnified Party
is, directly or indirectly, conducting the defense against any such Third Party
Claim, the Indemnifying Party shall cooperate with the Indemnified Party in such
defense and make available to the Indemnified Party all such witnesses, records,
materials and information in the Indemnifying Party's possession or under the
Indemnifying Party's control relating thereto as is reasonably required by the
Indemnified Party, subject to reimbursement of reasonable out-of-pocket
expenses. No such Third Party Claim may be settled by the Indemnifying Party
without the prior written consent of the Indemnified Party (which shall not be
unreasonably withheld or delayed) unless such settlement is solely for money and
includes an unconditional release of each Indemnified Party from any and all
Losses arising out of such action, claim, suit or proceeding and would not
otherwise adversely affect the Indemnified Party. No such Third Party Claim may
be settled by the Indemnified Party without the prior written consent of the
Indemnifying Party which shall not be unreasonably withheld or delayed.
(e) All Persons who by their relationship to a party to this agreement
(including, without limitation all Affiliates of such party and all officers,
directors, employees and agents of such party and its Affiliates) are, or may
become, entitled to indemnification hereunder or under the Ancillary Agreements
(other than the Tax-Sharing Agreement) shall, as a condition of their rights to
indemnification hereunder or thereunder, be deemed to have granted such party an
irrevocable power of attorney, coupled with an interest, with respect to all
matters for which any determination may be made, action may be taken or consent
may be given or withheld under this section 7.01, including, without limitation,
any determination regarding selection of counsel and
18
any consent regarding settlement, and any such determination, action or consent
made, taken, given or withheld by such party shall be binding up such Person as
if made, taken, given or withheld by such Person personally.
(f) Notwithstanding the foregoing, the Indemnifying Party shall not be
entitled to assume the defense of any Third Party Claim and shall be liable for
the fees and expenses of counsel incurred by the Indemnified Party in defending
such Third Party Claim if the Third Party Claim seeks an order, injunction or
other equitable relief or relief for other than money damages against the
Indemnified Party which the Indemnified Party reasonably determines, after
conferring with its counsel, cannot be separated from any related claim for
money damages. If such equitable relief or other relief portion of the Third
Party Claim can be so separated from that for money damages, the Indemnifying
Party shall be entitled to assume the defense of the portion relating to money
damages.
(g) In the event any Indemnified Party should have a claim against the
Indemnifying Party that does not involve a Third Party Claim, the Indemnified
Party shall deliver a notice of such claim with reasonable promptness to the
Indemnifying Party. If the Indemnifying Party notifies the Indemnified Party
that it does not dispute the claim described in such notice or fails to notify
the Indemnified Party within 20 business days after delivery of such notice by
the Indemnified Party whether the Indemnifying Party disputes the claim
described in such notice, the Loss in the amount specified in the Indemnified
Party's notice will be conclusively deemed a liability of the Indemnifying Party
and the Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed the liability
with respect to such claim, the Chief Financial Officer of eFunds and the Chief
Financial Officer of Deluxe will proceed in good faith to negotiate a resolution
of such dispute, and if not resolved through the negotiations of such
individuals within 20 days after the delivery of the Indemnified Party's notice
of such claim, such dispute shall be resolved fully and finally in Minneapolis,
Minnesota, by an arbitrator selected pursuant to and an arbitration governed by
Commercial Arbitration Rules of the American Arbitration Association, as
modified herein. The parties will jointly appoint a mutually acceptable
independent arbitrator, seeking assistance in such regard from the American
Arbitration Association. The arbitrator shall resolve the dispute within 30 days
after selection and judgment upon the award rendered by such arbitrator may be
entered in any court of competent jurisdiction. Each of Deluxe, on the one hand,
and eFunds, on the other, shall bear its own fees and expenses in connection
with such arbitration and shall bear 50% of the fees and expenses of the
arbitrator.
ARTICLE VIII
CONDITION TO CONSUMMATION OF TRANSACTIONS; TERMINATION
Section 8.01 Condition. Consummation of the transactions provided for in
this Agreement and the Ancillary Agreements is conditioned upon, and shall only
be effected upon or after (i) the final approval of the IPO by the Board of
Directors of eFunds and Deluxe, and (ii) the closing of the IPO.
19
Section 8.02 Termination. This Agreement may be terminated and the IPO and
Distribution abandoned by the Board of Directors of Deluxe in its sole
discretion, without the approval of eFunds at any time prior to the IPO
Effective Date or Distribution Date, as applicable. In the event of any such
termination, no party shall have any liability of any kind to the other party.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Limitation of Liability. Neither Deluxe nor eFunds shall be
liable to the other for any special, indirect, incidental or consequential
damages of the other arising in connection with this Agreement.
Section 9.02 Further Assurances. Each party agrees to execute, acknowledge,
deliver, file, record and publish such further certificates, amendments to
certificates, instruments and documents, and do all such other acts and things
as may be required by law, or as may be required to carry out the intent and
purposes of this Agreement and the Ancillary Agreements and the translations
contemplated thereby.
Section 9.03 Waiver. The observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but such waiver shall
be effective only if it is in writing signed by a duly authorized officer of the
party against which such waiver is to be asserted. Unless other expressly
provided in this Agreement, no delay or omission on the part of any party in
exercising any right or privilege under this Agreement shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right or privilege
under this Agreement operates as a waiver of any other right or privilege under
this Agreement nor shall any single or partial exercise of any right or
privilege preclude any other or future exercise thereof or the exercise of any
other right or privilege under this Agreement. No failure by either party to
take any action or assert any right or privilege hereunder shall be deemed to be
a waiver of such right or privilege in the event of the continuation or
repetition of the circumstances giving rise to such right unless expressly
waived in writing by the party against whom the existence of such waiver is
asserted.
Section 9.04 Remedies. Each of Deluxe and eFunds acknowledges and agrees
that under certain circumstances the breach by Deluxe or any of its Affiliates
or eFunds or any of its Affiliates of a term or provision of this Agreement will
materially and irreparably harm the other party, that money damages will
accordingly not be an adequate remedy for such breach and that the
non-defaulting party, in its sole discretion and in addition to its rights under
this Agreement and any other remedies it may have at law or in equity, may apply
to any court of law or equity of competent jurisdiction for specific performance
and/or other injunctive relief in order to enforce or prevent any breach of the
provisions of this Agreement.
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Section 9.05 Performance. Each of the parties hereto shall use all
commercially reasonable efforts to cause to be performed all actions, agreements
and obligations set forth herein to be performed by any Affiliate of such party.
Section 9.06 References; Construction. The table of contents and the
section and other headings and subheadings contained in this Agreement and the
exhibits hereto are solely for the purpose of reference, are not part of the
agreement of the parties hereto, and shall not in any way affect the meaning or
interpretation of this Agreement or any exhibit hereto. All references to days
or months shall be deemed references to calendar days or months. Unless the
context otherwise requires, any reference to a "Section" or an "Exhibit" shall
be deemed to refer to a section of this Agreement or an exhibit to this
Agreement, as applicable. The words "hereof," "herein" and "hereunder" and words
of similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. This Agreement shall be
construed without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing the document to be drafted.
Section 9.07 Amendments. This Agreement shall not be supplemented, amended
or modified in any manner whatsoever (including without limitation by course of
dealing or of performance or usage of trade) except in writing signed by the
parties.
Section 9.08 Successors and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. Except as set forth below, this Agreement may not be assigned
by any party by operation of law or otherwise without the express written
consent of the other party (which consent may be granted or withheld). The
option granted to Deluxe pursuant to Article VII hereof may be assigned to any
Subsidiary of Deluxe.
Section 9.09 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law. If any portion of this Agreement is declared invalid for
any reason in any jurisdiction, such declaration shall have no effect upon the
remaining portions of this Agreement, which shall continue in full force and
effect as if this Agreement had been executed with the invalid portions thereof
deleted; provided, that, the entirety of this Agreement shall continue in full
force and effect in all other jurisdictions.
Section 9.10 Entire Agreement. Other than the Assignment and Assumption
Agreement and the Ancillary Agreements, this Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof and supersedes all prior agreements and undertakings, both written and
oral, between the parties with respect to the subject matter hereof and thereof.
Section 9.11 Notices. All notices, consents, requests, approvals, and other
communications provided for or required herein, and all legal process in regard
thereto, must be in writing and shall be deemed validly given, made or served,
(a) when delivered personally or sent by telecopy to the facsimile number
indicated below with a required confirmation copy sent
21
in accordance with subsection (c) below; or (b) on the next business day after
delivery to a nationally-recognized express delivery service with instructions
and payment for overnight delivery; or (c) on the fifth (5th) day after
deposited in any depository regularly maintained by the United States postal
service, postage prepaid, certified or registered mail, return receipt
requested, addressed to the following addresses or to such other address as the
party to be notified shall have specified to the other party in accordance with
this section:
If to Deluxe:
Deluxe Corporation
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Chief Financial Officer
Facsimile:
Copy to: General Counsel
Facsimile:
If to eFunds:
eFunds Corporation
000 Xxxx Xxxxxx Xxxxxxx
P.O. Box 12536
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Chief Financial Officer
Facsimile:
Copy to: General Counsel
Facsimile:
Section 9.12 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota. Each of the
parties hereto agrees that any dispute relating to or arising from this
Agreement or the transactions contemplated hereby shall be resolved only in the
court of the State of Minnesota sitting in the County of Hennepin or the United
States District Court for the District of Minnesota and the appellate court
having jurisdiction of appeals in such courts. In that context, and without
limiting the generality of the foregoing, each of the parties hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal suit, action or
proceeding relating to this Agreement or any transaction contemplated hereby, or
for recognition and enforcement of any judgment in respect thereof, to the
exclusive jurisdiction of the courts of the State of Minnesota sitting in the
County of Hennepin or the United States District Court for the District of
Minnesota and appellate court having jurisdiction of appeals in such courts, and
each of the parties hereto irrevocably and unconditionally agrees that all
claims in respect of any such suit, action, or proceeding shall be heard and
determined in such Minnesota State court or, to the extent permitted by law, in
such federal court;
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(b) consents that any such suit, action or proceeding may and shall be
brought in such courts and waives any objection that it may now or hereafter
have to the venue or jurisdiction or any such action or proceeding in such court
or that such action or proceeding was brought in an inconvenient forum and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such party in its
address as provided in Section 9.11 hereof;
(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by Minnesota law; and
(e) agrees that this Agreement has been entered into in the State of
Minnesota and performed in part in the State of Minnesota.
Section 9.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date and year first written above.
DELUXE CORPORATION
By:
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Name:
Title:
EFUNDS CORPORATION
By:
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Name:
Title:
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