EXHIBIT 10.2
THIRD PARTY INDEMNIFICATION AGREEMENT
THIRD PARTY INDEMNIFICATION AGREEMENT (this "Agreement") dated as of
_______________, 2000 by and between Deluxe Corporation, a Minnesota corporation
("Deluxe"), and eFunds Corporation, a Delaware corporation and wholly owned
subsidiary of Deluxe ("eFunds").
RECITALS
WHEREAS, Deluxe currently owns all of the issued and outstanding capital
stock of eFunds;
WHEREAS, pursuant to the Assignment and Assumption Agreement, dated March
31, 2000 between Deluxe and eFunds (the "Assignment Agreement"), Deluxe
contributed and transferred to eFunds, and eFunds received and assumed, directly
or indirectly, substantially all of the assets and liabilities currently
associated with the business and operations of eFunds (the "eFunds Business");
WHEREAS, Deluxe currently contemplates that, several months following an
initial public offering of eFunds, 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 capital stock owned by Deluxe (the "Distribution");
WHEREAS, during the period of Deluxe's ownership, the eFunds Businesses
purchased and leased certain property and services, and Deluxe purchased and
leased certain property and services for the benefit of the eFunds Businesses,
from certain third parties under master purchase and lease agreements and master
services agreements entered into between Deluxe and such third parties,
including but not limited to the agreements listed on Exhibit A ("Master
Agreements");
WHEREAS, pursuant to the Assignment Agreement, eFunds agreed to sublease
from Deluxe that portion of the property, machinery, equipment and/or services
used by the eFunds Businesses covered under such Master Agreements;
WHEREAS, during the period of Deluxe's ownership of the eFunds Businesses,
Deluxe entered into certain guaranty agreements with certain third parties under
which it guaranteed the performance of the eFunds Businesses under various
eFunds Businesses' agreements with such third parties, including but not limited
to the guaranties listed on Exhibit B ("Guaranties");
WHEREAS, as an integral step in the Distribution, without which the
Distribution would not occur in the form contemplated, the parties desire to
enter into this Agreement to set forth their agreement regarding the obligation
of eFunds to indemnify Deluxe with
respect to any costs or liability incurred by Deluxe under the Master Agreements
and the Guaranties insofar as such cost or liability is primarily related to the
eFunds Businesses.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Deluxe and eFunds, for themselves,
their successors, and assigns, hereby agree as follows:
1. Indemnification. eFunds agrees to indemnify in full Deluxe, its
officers, directors, employees, agents, representatives and officers
(collectively, the "Deluxe Indemnitees") and hold them harmless from and against
any and all losses, liabilities, deficiencies, damages, expenses or costs
(including reasonable legal and other external advisors fees and expenses)
(each, an "Indemnifiable Loss") which any Deluxe Indemnitee may suffer, sustain
or become subject to under the Master Agreements and Guaranties insofar as such
Indemnifiable Loss is primarily related to the past, present or future operation
of any of the eFunds Businesses; provided, however that in no event shall any
losses, liabilities, deficiencies, damages, expenses, costs or other payments
that Deluxe may suffer, sustain or become subject to pursuant to the provisions
of the Government Services Indemnification Agreement to be entered into between
Deluxe and eFunds constitute an Indemnifiable Loss under the terms of this
Agreement. eFunds irrevocably waives (a) any requirement that Deluxe proceed
first against any other party or against any collateral security, (b) any
defense relating to the absence of any attempt by the third party to collect
under the Master Agreements or Guaranties from eFunds or any other guarantor, or
the absence of any other action to enforce the same (c) any defense relating to
the failure by the third party to take any steps to perfect and maintain its
security interest in, or to preserve rights to, any security or collateral
relating the Master Agreements or Guaranties, or the release by operation of law
or otherwise, of any security interest, security, collateral or right of
recourse or liability relating to the Master Agreements or Guaranties or (d) any
defense relating to any assignment or transfer of rights by eFunds relating to
the Master Agreements or Guaranties. Nothing herein shall be construed to
prevent either party from pursuing a claim it may have against the other party
for the breach of such other party's obligations under the Master Agreements, or
under the Guaranties and the third party agreements under which the Guaranties
were issued.
2. Indemnification Procedures.
(a) If a claim or demand for an Indemnifiable Loss is made against a
Deluxe Indemnitee by any Person who is not a party to the this Agreement (a
"Third Party Claim") as to which such Deluxe Indemnitee is entitled to
indemnification pursuant Section 1 hereof, such Deluxe Indemnitee shall
give eFunds notice of such Third Party Claim, as promptly as practicable,
but in any event no later than 15 days of the receipt by the Deluxe
Indemnitee of such notice; provided, however, that the failure to provide
such notice shall not release eFunds from any of its obligations under this
Agreement except to the extent eFunds is materially prejudiced by such
failure and shall not relieve eFunds from any other
obligation or liability that it may have to any Deluxe Indemnitee otherwise
than under this Agreement. If eFunds acknowledges in writing its
obligations to indemnify the Deluxe Indemnitee hereunder against any
Indemnifiable Losses that may result from such Third Party Claim, then
eFunds 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 Deluxe Indemnitee (which approval shall not be
unreasonably withheld or delayed), if it gives notice of its intention to
do so to the Deluxe Indemnitee within 15 business days of the receipt of
such notice from the Deluxe Indemnitee; 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 Deluxe Indemnitee
for the same counsel to represent both the Deluxe Indemnitee and eFunds,
then the Deluxe Indemnitee shall be entitled to retain its own counsel, in
each jurisdiction for which the Deluxe Indemnitee determines counsel is
required to participate in such defense, at the expense of eFunds. In the
event eFunds exercises the right to undertake any such defense against any
such Third Party Claim as provided above, the Deluxe Indemnitee shall
cooperate with eFunds in such defense and make available to eFunds, at
eFunds's expense, all witnesses, pertinent records, materials and
information in the Deluxe Indemnitee's possession or under the Deluxe
Indemnitee`s control relating thereto as is reasonably required by eFunds,
subject to reimbursement of reasonable out-of-pocket expenses. Similarly,
in the event the Deluxe Indemnitee is, directly or indirectly, conducting
the defense against any such Third Party Claim, eFunds shall cooperate with
the Deluxe Indemnitee in such defense and make available to the Deluxe
Indemnitee all such witnesses, records, materials and information in
eFunds's possession or under eFunds's control relating thereto as is
reasonably required by the Deluxe Indemnitee, subject to reimbursement of
reasonable out-of-pocket expenses. No such Third Party Claim may be settled
by eFunds without the prior written consent of the Deluxe Indemnitee (which
shall not be unreasonably withheld or delayed) unless such settlement is
solely for money and includes an unconditional release of each Deluxe
Indemnitee from any and all Indemnifiable Losses arising out of such
action, claim, suit or proceeding and would not otherwise adversely affect
the Deluxe Indemnitee. No such Third Party Claim may be settled by the
Deluxe Indemnitee without the prior written consent of eFunds which shall
not be unreasonably withheld or delayed.
(b) 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 shall, as a
condition of their rights to indemnification hereunder, 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 2, including, without limitation, any determination regarding
selection of counsel and any consent regarding settlement, and any such
determination, action or consent made, taken, given or withheld by such
party shall be binding upon such Person as if made, taken, given or
withheld by such Person personally.
3. Notwithstanding the foregoing, eFunds 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 Deluxe Indemnitee 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 Deluxe Indemnitee which the Deluxe Indemnitee 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,
eFunds shall be entitled to assume the defense of the portion relating to
money damages.
(d) In the event any Deluxe Indemnitee should have a claim against
eFunds that does not involve a Third Party Claim, the Deluxe Indemnitee
shall deliver a notice of such claim with reasonable promptness to eFunds.
If eFunds notifies the Deluxe Indemnitee that it does not dispute the claim
described in such notice or fails to notify the Deluxe Indemnitee within 20
business days after delivery of such notice by the Deluxe Indemnitee
whether eFunds disputes the claim described in such notice, the
Indemnifiable Loss in the amount specified in the Deluxe Indemnitee's
notice will be conclusively deemed a liability of eFunds and eFunds shall
pay the amount of such Indemnifiable Loss to the Deluxe Indemnitee on
demand. If eFunds 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 Deluxe Indemnitee'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.
4. Continuing Indemnity. This is a continuing indemnity and shall not be
revoked or terminated by eFunds until all obligations under the Master
Agreements and Guaranties have been paid or performed in full, with no further
recourse whether at law or in equity, against Deluxe being available to any
third party with respect to such obligations. The indemnity set forth herein
shall be reinstated if and to the extent that, for
any reason, any payment of the Master Agreements or Guaranties is rescinded or
must be otherwise restored, whether as a result of any proceedings in bankruptcy
or reorganization or otherwise.
5. Representations and Warranties of eFunds. eFunds hereby represents and
warrants to Deluxe as follows:
(a) eFunds has all requisite power and authority to enter into this
Agreement and to perform its obligations contemplated hereby. The
execution, delivery and performance of this Agreement by eFunds and the
performance of the obligations contemplated hereby have been duly and
validly authorized by all requisite corporate action and no other corporate
proceedings on eFunds's part are necessary to authorize the execution,
delivery or performance of this Agreement. This Agreement has been duly
executed and delivered by eFunds and, assuming due authorization, execution
and delivery by Deluxe, constitutes the valid and binding obligation of
eFunds enforceable in accordance with its terms.
(b) The execution, delivery and performance of this Agreement by
eFunds does not and the performance of the obligations contemplated hereby
will not: (a) contravene any provision of the Certificate of Incorporation
or Bylaws of eFunds; (b) violate or conflict in any material respect with
any foreign, federal, state or local law, statute, ordinance, rule,
regulation or any decree, writ, injunction, judgment or order of any court
or administrative or other governmental body or of any arbitration award
which is either applicable to, binding upon or enforceable against eFunds
or the business or any assets of eFunds; (c) conflict with, result in any
breach of any of the provisions of, or constitute a default (or any event
which would, with the passage of time or the giving of notice or both,
constitute a default) under, result in a violation of, result in the
creation of a right of termination, amendment, modification, abandonment or
acceleration under any indenture, mortgage, lease, license, loan agreement
or other material agreement or instrument which is either binding upon or
enforceable against eFunds; (d) result in the creation of any material
lien, security interest, charge or encumbrance upon eFunds or any of the
assets of eFunds; or (e) require any authorization, consent, approval,
exemption or other action by or notice to any court, commission,
governmental body regulatory authority, agency or tribunal wherever located
or any other third party.
6. Representations and Warranties of Deluxe. Deluxe hereby represents and
warrants to eFunds as follows:
(a) Deluxe has all requisite power and authority to enter into this
Agreement and to perform its obligations contemplated hereby. The
execution, delivery and performance of this Agreement by Deluxe and the
performance of the obligations contemplated hereby have been duly and
validly authorized by all requisite
corporate action and no other corporate proceedings on Deluxe's part are
necessary to authorize the execution, delivery or performance of this
Agreement. This Agreement has been duly executed and delivered by Deluxe
and, assuming due authorization, execution and delivery by eFunds,
constitutes the valid and binding obligation of Deluxe enforceable in
accordance with its terms.
(b) The execution, delivery and performance of this Agreement by
Deluxe does not and the performance of the obligations contemplated hereby
will not: (a) contravene any provision of the Articles of Incorporation or
Bylaws of Deluxe; (b) violate or conflict in any material respect with any
foreign, federal, state or local law, statute, ordinance, rule, regulation
or any decree, writ, injunction, judgment or order of any court or
administrative or other governmental body or of any arbitration award which
is either applicable to, binding upon or enforceable against Deluxe or the
business or any assets of Deluxe; (c) conflict with, result in any breach
of any of the provisions of, or constitute a default (or any event which
would, with the passage of time or the giving of notice or both, constitute
a default) under, result in a violation of, result in the creation of a
right of termination, amendment, modification, abandonment or acceleration
under any indenture, mortgage, lease, license, loan agreement or other
material agreement or instrument which is either binding upon or
enforceable against Deluxe; (d) result in the creation of any material
lien, security interest, charge or encumbrance upon Deluxe or any of the
assets of Deluxe; or (e) require any authorization, consent, approval,
exemption or other action by or notice to any court, commission,
governmental body regulatory authority, agency or tribunal wherever located
or any other third party.
7. Assignment. Neither party may assign its rights or obligations under
this Agreement, in whole or in part, without the consent of the other party,
which consent will not be unreasonably withheld.
8. Entire Agreement. This Agreement contains the entire agreement of the
parties concerning the indemnification obligations of eFunds with respect to the
Master Agreements and Guaranties and may not be amended or modified except by a
writing signed by eFunds and Deluxe.
9. Choice of Law. This Agreement shall be governed by the internal laws (as
opposed to conflicts of law provisions) and decisions of the State of Minnesota.
If any provision of this indemnity shall be prohibited by or invalid under that
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement. EFUNDS WAIVES ANY RIGHT TO TRIAL BY
JURY. Each of eFunds and Deluxe consents to the jurisdiction of any local, state
or Federal court located within the State of Minnesota, and waives any objection
relating to improper venue of forum non conveniens to the conduct of any
proceeding in any such court.
10. 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 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: (000) 000-0000
Copy to: General Counsel
Facsimile: (000) 000-0000
If to eFunds:
eFunds Corporation
000 Xxxx Xxxxxx Xxxxxxx
P.O. Box 12536
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Chief Financial Officer
Facsimile: (000) 000-0000
Copy to: General Counsel
Facsimile: (000) 000-0000
11. Definitions. Capitalized terms not otherwise defined herein have the
meaning given to them in the IPO and Distribution Agreement dated March 31, 2000
between Deluxe and eFunds.
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:
