Cross-Indemnification Agreement between Deluxe Corporation and eFunds Corporation (June 26, 2000)

Summary

Deluxe Corporation and its subsidiary, eFunds Corporation, enter into this agreement to clarify how they will protect each other from financial losses or liabilities related to their joint obligations under an Underwriting Agreement for eFunds' initial public offering. Each company agrees to cover the other for certain losses, with eFunds generally covering Deluxe except for Deluxe's own breaches, and Deluxe covering eFunds only for losses caused by Deluxe's breaches. The agreement also sets out procedures for handling third-party claims and cooperation between the parties in defending such claims.

EX-10.23 3 0003.txt CROSS-INDEMNIFICATION AGREEMENT Exhibit 10.23 ------------- CROSS-INDEMNIFICATION AGREEMENT CROSS-INDEMNIFICATION AGREEMENT (this "Agreement") dated as of June 26, 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, 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; WHEREAS, Deluxe currently contemplates that, several months following an initial public offering of eFunds (the "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 capital stock owned by Deluxe; WHEREAS, in connection with the IPO, eFunds and Deluxe have proposed to enter into an Underwriting Agreement as of the date hereof with Lehman Brothers Inc., Bear, Stearns & Co. Inc., First Albany Corporation, John G. Kinnard & Company and Fidelity Capital Markets, a division of National Financial Services Corporation, for themselves and as representatives of the several underwriters named therein (the "Underwriting Agreement"); WHEREAS, Section 9 of the Underwriting Agreement provides that eFunds and Deluxe, jointly and severally, shall indemnify and hold harmless the persons specified therein, or provide contribution as an alternative thereto; and WHEREAS, as an integral step in the IPO, without which the IPO would not occur in the form contemplated, the parties desire to enter into this Agreement to set forth their agreement regarding the obligations of Deluxe and eFunds to indemnify each other with respect to any costs or liabilities incurred by them under the Underwriting Agreement; 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. (a) eFunds agrees to indemnify in full Deluxe, and hold it 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 Deluxe may suffer, sustain or become subject to resulting from or arising out of the Underwriting Agreement except insofar as such Indemnifiable Loss arises exclusively from a breach of the Underwriting Agreement by Deluxe. eFunds irrevocably waives (i) any requirement that Deluxe proceed first against any other party or against any collateral security, (ii) any defense relating to the absence of any attempt by the third party to collect under the Underwriting Agreement from eFunds, or the absence of any other action to enforce the same, (iii) 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 Underwriting Agreement, or the release by operation of law or otherwise, of any security interest, security, collateral or right of recourse or liability relating to the Underwriting Agreement, or (iv) 1 any defense relating to any assignment or transfer of rights by Deluxe relating to the Underwriting Agreement. (b) Deluxe agrees to indemnify in full eFunds and hold it harmless from and against any and all Indemnifiable Losses which eFunds may suffer, sustain or become subject to or arising out of the Underwriting Agreement insofar as such Indemnifiable Loss arises exclusively from a breach of the Underwriting Agreement by Deluxe. Deluxe irrevocably waives (i) any requirement that eFunds proceed first against any other party or against any collateral security, (ii) any defense relating to the absence of any attempt by the third party to collect under the Underwriting Agreement from Deluxe, or the absence of any other action to enforce the same, (iii) 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 Underwriting Agreement, or the release by operation of law or otherwise, of any security interest, security, collateral or right of recourse or liability relating to the Underwriting Agreement or (iv) any defense relating to any assignment or transfer of rights by eFunds relating to the Underwriting Agreement. 2. Indemnification Procedures. (a) If a claim or demand for an Indemnifiable Loss is made against eFunds or Deluxe (the "Indemnitee") by any Person who is not a party to this Agreement (a "Third Party Claim") as to which such Indemnitee is entitled to indemnification pursuant to Section 1 hereof, such Indemnitee shall give the other party hereto (the "Indemnitor") notice of such Third Party Claim, as promptly as practicable, but in any event no later than 15 days of the receipt by the Indemnitee of such notice; provided, however, that the failure to provide such notice shall not release the Indemnitor from any of its obligations under this Agreement except to the extent the Indemnitor is materially prejudiced by such failure and shall not relieve the Indemnitor from any other obligation or liability that it may have to the Indemnitee otherwise than under this Agreement. If the Indemnitor acknowledges in writing its obligations to indemnify the Indemnitee hereunder against any Indemnifiable Losses that may result from such Third Party Claim, then the Indemnitor 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 Indemnitee (which approval shall not be unreasonably withheld or delayed), if it gives notice of its intention to do so to the Indemnitee within 15 business days of the receipt of such notice from the 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 Indemnitee for the same counsel to represent both the Indemnitee and the Indemnitor, then the Indemnitee shall be entitled to retain its own counsel, in each jurisdiction for which the Indemnitee determines counsel is required to participate in such defense, at the expense of the Indemnitor. In the event the Indemnitor exercises the right to undertake any such defense against any such Third Party Claim as provided above, the Indemnitee shall cooperate with the Indemnitor in such defense and make available to the Indemnitor, at the Indemnitor*s expense, all witnesses, pertinent records, materials and information in the Indemnitee's possession or under the Indemnitee's control relating thereto as is reasonably required by the Indemnitor, subject to reimbursement of reasonable out-of-pocket expenses. Similarly, in the event the Indemnitee is, directly or indirectly, conducting the defense against any such Third Party Claim, the Indemnitor shall cooperate with the Indemnitee in such defense and make available to the Indemnitee all such witnesses, records, materials and information in the Indemnitor's possession 2 or under the Indemnitor's control relating thereto as is reasonably required by the Indemnitee, subject to reimbursement of reasonable out-of-pocket expenses. No such Third Party Claim may be settled by the Indemnitor without the prior written consent of the Indemnitee (which shall not be unreasonably withheld or delayed) unless such settlement is solely for money and includes an unconditional release of the Indemnitee from any and all Indemnifiable Losses arising out of such action, claim, suit or proceeding and would not otherwise adversely affect the Indemnitee. No such Third Party Claim may be settled by the Indemnitee without the prior written consent of the Indemnitor, which shall not be unreasonably withheld or delayed. (b) Notwithstanding the foregoing, the Indemnitor 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 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 Indemnitee which the 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, the Indemnitor shall be entitled to assume the defense of the portion relating to money damages. (c) In the event the Indemnitee should have a claim against the Indemnitor that does not involve a Third Party Claim, the Indemnitee shall deliver a notice of such claim with reasonable promptness to the Indemnitor. If the Indemnitor notifies the Indemnitee that it does not dispute the claim described in such notice or fails to notify the Indemnitee within 20 business days after delivery of such notice by the Indemnitee whether the Indemnitor disputes the claim described in such notice, the Indemnifiable Loss in the amount specified in the Indemnitee*s notice will be conclusively deemed a liability of the Indemnitor and the Indemnitor shall pay the amount of such Indemnifiable Loss to the Indemnitee on demand. If the Indemnitor 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 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 eFunds, on the one hand, and Deluxe, 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. 3. Continuing Indemnity. This is a continuing indemnity and shall not be revoked or terminated by Deluxe or eFunds until all obligations under the Underwriting Agreement have been paid or performed in full, with no further recourse whether at law or in equity, against eFunds or 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 under the Underwriting Agreement is rescinded or must be otherwise restored, whether as a result of any proceedings in bankruptcy or reorganization or otherwise. 3 4. 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. 5. 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 4 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. 6. 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. 7. Entire Agreement. This Agreement contains the entire agreement of the parties concerning the indemnification and contribution obligations of Deluxe and eFunds with respect to the Underwriting Agreement and may not be amended or modified except by a writing signed by eFunds and Deluxe. 8. 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. DELUXE AND EFUNDS WAIVE 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. 9. 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 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 3680 Victoria Street North Shoreview, Minnesota 55126 Attn: Chief Financial Officer Facsimile: (651) 481-4477 5 Copy to: General Counsel Facsimile: (651) 787-2749 If to eFunds: eFunds Corporation 400 West Deluxe Parkway P.O. Box 12536 Milwaukee, Wisconsin 53212 Attn: Chief Financial Officer Facsimile: (651) 483-7337 Copy to: General Counsel Facsimile: (651) 787-2749 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: /s/ Morris Goodwin Jr. --------------------------- Name: Morris Goodwin Jr. Title: SVP eFUNDS CORPORATION By: /s/ John A. Blanchard, III --------------------------- Name: John A. Blanchard, III Title: 6