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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>/in/edgar/work/0000897101-00-001061/0000897101-00-001061.txt : 20001110
<SEC-HEADER>0000897101-00-001061.hdr.sgml : 20001110
ACCESSION NUMBER:		0000897101-00-001061
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		9
CONFORMED PERIOD OF REPORT:	20000930
FILED AS OF DATE:		20001109

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DELUXE CORP
		CENTRAL INDEX KEY:			0000027996
		STANDARD INDUSTRIAL CLASSIFICATION:	 [2780
]		IRS NUMBER:				410216800
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			1231
</COMPANY-DATA>

		FILING VALUES:
			FORM TYPE:		10-Q
			SEC ACT:		
			SEC FILE NUMBER:	001-07945
			FILM NUMBER:		756179
</FILING-VALUES>

			BUSINESS ADDRESS:	
				STREET 1:		3680 VICTORIA STREET NORTH
				CITY:			SHOREVIEW
				STATE:			MN
				ZIP:			55126
				BUSINESS PHONE:		6514837111
</BUSINESS-ADDRESS>

				MAIL ADDRESS:	
					STREET 1:		3680 VICOTRIA STREET NORTH
					CITY:			SHOREVIEW
					STATE:			MN
					ZIP:			55126
</MAIL-ADDRESS>

					FORMER COMPANY:	
						FORMER CONFORMED NAME:	DELUXE CHECK PRINTERS INC
						DATE OF NAME CHANGE:	19880608
</FORMER-COMPANY>
</FILER>
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>0001.txt
<TEXT>



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


(Mark one)

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934


For quarterly period ending      September 30, 2000
                            ---------------------------------------------

                                       or

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from ___________________ to ___________________

Commission file number:            1-7945
                                   -----------------


                               DELUXE CORPORATION
- --------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           MINNESOTA                                     41-0216800
- ------------------------------------------     ---------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

3680 Victoria St., N. Shoreview, Minnesota               55126-2966
- ------------------------------------------     ---------------------------------
(Address of principal executive offices)                 (Zip Code)


                                 (651) 483-7111
- --------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                                             Yes __X__  No _____

The number of shares outstanding of registrant's common stock, par value $1.00
per share, at October 26, 2000 was 72,555,533.


                                       1
<PAGE>


                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS



                       DELUXE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           ---------------------------
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                September 30,
                                                                                    2000         December 31,
                                                                                (Unaudited)          1999
                                                                                ------------     ------------
<S>                                                                             <C>              <C>
CURRENT ASSETS
Cash and cash equivalents                                                       $    111,666     $    140,465
Time deposit subject to compensating balance arrangement                              10,000               --
Restricted custodial cash                                                              4,837            3,429
Marketable securities                                                                 43,475           25,713
Trade accounts receivable, net of allowance for doubtful accounts of $4,246
      and $5,814, respectively                                                       131,330          115,775
Inventories:
    Raw material                                                                       2,803            3,110
    Semi-finished goods                                                                6,660            7,245
    Finished goods                                                                     1,052            1,261
Supplies                                                                              13,158           15,007
Deferred advertising                                                                  10,894           17,189
Deferred income taxes                                                                 19,108           14,206
Prepaid expenses and other current assets                                             37,971           75,349
                                                                                ------------     ------------
    Total current assets                                                             392,954          418,749
                                                                                ------------     ------------
LONG-TERM INVESTMENTS                                                                 65,267           40,846
RESTRICTED CASH                                                                       27,913           28,939
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements                                                            39,695           41,157
Buildings and building improvements                                                  158,241          165,028
Machinery and equipment                                                              416,076          448,445
                                                                                ------------     ------------
    Total                                                                            614,012          654,630
Less accumulated depreciation                                                        361,560          359,845
                                                                                ------------     ------------
    Property, plant, and equipment - net                                             252,452          294,785
INTANGIBLES
Cost in excess of net assets acquired - net                                          138,585           51,705
Internal use software - net                                                          174,693          142,465
Other intangible assets - net                                                         15,294           15,154
                                                                                ------------     ------------
    Total intangibles                                                                328,572          209,324
                                                                                ------------     ------------
        Total assets                                                            $  1,067,158     $    992,643
                                                                                ============     ============
</TABLE>


                                       2
<PAGE>


                       DELUXE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           ---------------------------
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                             September 30,
                                                                                 2000          December 31,
                                                                              (Unaudited)          1999
                                                                             ------------      ------------
<S>                                                                          <C>               <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
     CURRENT LIABILITIES
     Accounts payable                                                        $     59,397      $     60,876
     Accrued liabilities:
          Wages, including vacation pay                                            54,040            54,228
          Employee profit sharing and pension                                      23,775            33,490
          Accrued income taxes                                                     44,576            28,405
          Accrued rebates                                                          27,158            28,281
          Accrued contract losses                                                  26,459            20,599
          Other                                                                    89,474           111,330
     Short-term debt                                                               29,941            63,100
     Long-term debt due within one year                                           102,802             4,357
                                                                             ------------      ------------
           Total current liabilities                                              457,622           404,666
                                                                             ------------      ------------
LONG-TERM DEBT                                                                     12,770           115,542
DEFERRED INCOME TAXES                                                              46,623            46,322
OTHER LONG-TERM LIABILITIES                                                         9,183             8,805
MINORITY INTEREST IN NET ASSETS OF SUBSIDIARY                                      34,435                --
SHAREHOLDERS' EQUITY
    Common shares - $1 par value (authorized 500,000,000 shares; issued:
       2000 - 72,451,816 shares; 1999 - 72,019,898 shares)                         72,452            72,020
     Additional paid-in capital                                                    41,997                --
     Retained earnings                                                            393,777           346,617
     Unearned compensation                                                             --               (47)
     Accumulated other comprehensive income                                        (1,701)           (1,282)
                                                                             ------------      ------------
         Shareholders' equity                                                     506,525           417,308
                                                                             ------------      ------------
                Total liabilities and shareholders' equity                   $  1,067,158      $    992,643
                                                                             ============      ============
</TABLE>


See Notes to Unaudited Consolidated Financial Statements


                                       3
<PAGE>


                       DELUXE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                        ---------------------------------
                (Dollars in Thousands, Except per Share Amounts)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                       Quarter Ended                Nine Months Ended
                                                       September 30,                  September 30,
                                                       -------------                  -------------
                                                   2000            1999            2000            1999
                                                   ----            ----            ----            ----
<S>                                            <C>             <C>             <C>             <C>
NET SALES                                      $   404,947     $   417,114     $ 1,216,129     $ 1,239,033
Cost of sales                                      175,179         187,453         527,072         557,791
                                               -----------     -----------     -----------     -----------
GROSS MARGIN                                       229,768         229,661         689,057         681,242

Selling, general and administrative expense        152,543         156,296         478,462         452,718
                                               -----------     -----------     -----------     -----------

Income from operations                              77,225          73,365         210,595         228,524

OTHER INCOME (EXPENSE)
Minority interest in subsidiary earnings              (470)             --            (470)             --
Interest expense                                    (3,206)         (2,164)        (10,455)         (5,623)
Other income                                         5,486           6,483           6,025          10,606
                                               -----------     -----------     -----------     -----------
INCOME BEFORE INCOME TAXES                          79,035          77,684         205,695         233,507

PROVISION FOR INCOME TAXES                          29,638          28,627          77,136          88,638
                                               -----------     -----------     -----------     -----------

NET INCOME                                     $    49,397     $    49,057     $   128,559     $   144,869
                                               ===========     ===========     ===========     ===========

NET INCOME PER SHARE - BASIC                   $      0.68     $      0.65     $      1.78     $      1.86
NET INCOME PER SHARE - DILUTED                 $      0.68     $      0.65     $      1.78     $      1.85

CASH DIVIDENDS PER COMMON SHARE                $      0.37     $      0.37     $      1.11     $      1.11
</TABLE>


See Notes to Unaudited Consolidated Financial Statements


                                       4
<PAGE>


                       DELUXE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
                             (Dollars in Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                Nine Months Ended
                                                                                                  September 30,
                                                                                                  -------------
                                                                                               2000            1999
                                                                                               ----            ----
<S>                                                                                        <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                                 $   128,559     $   144,869
Adjustments to reconcile net income to net cash provided by operating activities:
       Depreciation                                                                             33,248          41,026
       Amortization of intangibles                                                              37,078          20,785
       Asset impairment charges                                                                     --             267
       Stock purchase discount                                                                   2,184           3,640
       Minority interest in earnings of subsidiary                                                 470              --
       Deferred income tax                                                                      (4,797)             --
       Changes in assets and liabilities, net of effects from acquisitions and sales of
          businesses:
             Restricted cash                                                                      (382)        (19,747)
             Trade accounts receivable                                                         (14,965)         10,321
             Inventories                                                                         2,124           2,559
             Accounts payable                                                                   (1,805)          2,757
             Other assets and liabilities                                                       11,053         (67,508)
                                                                                           -----------     -----------
                  Net cash provided by operating activities                                    192,767         138,969
                                                                                           -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of marketable securities with maturities of more than 3 months               7,627          19,763
Purchases of marketable securities with maturities of more than 3 months                       (25,000)        (17,915)
Purchases of capital assets                                                                    (68,613)        (78,722)
Payments for acquisitions, net of cash acquired                                               (115,991)        (35,666)
Net proceeds from sales of businesses, net of cash sold                                             --          25,106
Proceeds from sales of capital assets                                                           14,841          50,824
Loans to others                                                                                 32,500         (32,500)
Investment in time deposit to establish loan guarantee collateral                              (10,000)             --
Other                                                                                           (6,705)          2,636
                                                                                           -----------     -----------
                  Net cash used in investing activities                                       (171,341)        (66,474)
                                                                                           -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES
Net (payments) proceeds from short-term debt                                                   (33,591)          1,376
Payments on long-term debt                                                                      (2,146)         (9,554)
Net proceeds from issuance of subsidiary stock                                                  64,459              --
Payments to retire common stock                                                                 (1,093)       (216,745)
Proceeds from issuing stock under employee plans                                                 6,547          25,712
Cash dividends paid to shareholders                                                            (80,274)        (86,385)
                                                                                           -----------     -----------
                  Net cash used in financing activities                                        (46,098)       (285,596)
                                                                                           -----------     -----------

NET CASH USED BY CERTAIN INTERNATIONAL OPERATIONS DURING DECEMBER 1999 (SEE
   NOTE 10)                                                                                     (4,127)             --
                                                                                           -----------     -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                                      (28,799)       (213,101)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                               140,465         268,389
                                                                                           -----------     -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                 $   111,666     $    55,288
                                                                                           ===========     ===========
</TABLE>

See Notes to Unaudited Consolidated Financial Statements


                                       5
<PAGE>


              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

     1. The consolidated balance sheet as of September 30, 2000, the
consolidated statements of income for the quarters and nine months ended
September 30, 2000 and 1999, and the consolidated statements of cash flows for
the nine months ended September 30, 2000 and 1999 are unaudited. The amount
reflected as minority interest in net assets of subsidiary on the Company's
consolidated balance sheet as of September 30, 2000, and the amounts reflected
as minority interest in earnings of subsidiary on the Company's consolidated
statements of income for the quarter and nine months ended September 30, 2000,
represent the minority shareholders' proportionate share of the equity and net
earnings, respectively, of eFunds Corporation. In the opinion of management, all
adjustments necessary for a fair presentation of the Company's consolidated
financial statements are included. Other than those discussed in the notes
below, such adjustments consist only of normal recurring items. Interim results
are not necessarily indicative of results for a full year. The consolidated
financial statements and notes are presented in accordance with instructions for
Form 10-Q, and do not contain certain information included in the Company's
consolidated annual financial statements and notes. The consolidated financial
statements and notes appearing in this Report should be read in conjunction with
the Company's consolidated audited financial statements and related notes
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1999.

     2. The Company's total comprehensive income for the quarters ended
September 30, 2000 and 1999 was $49.3 million and $49.6 million, respectively.
Total comprehensive income for the nine months ended September 30, 2000 and 1999
was $128.1 million and $144.1 million, respectively. The Company's total
comprehensive income consists of net income, unrealized holding gains and losses
on securities and foreign currency translation adjustments.

     3. The following table reflects the calculation of basic and diluted
earnings per share (dollars and shares outstanding in thousands, except per
share amounts):

<TABLE>
<CAPTION>
                                                 Quarter Ended           Nine Months Ended
                                                 September 30,             September 30,
                                                 -------------             ------------

                                               2000         1999        2000         1999
- -------------------------------------------------------------------------------------------
<S>                                         <C>          <C>          <C>          <C>
Net income per share-basic:
  Net income                                $ 49,397     $ 49,057     $128,559     $144,869
  Weighted average shares outstanding         72,391       75,588       72,265       77,835
- -------------------------------------------------------------------------------------------
  Net income per share-basic                $   0.68     $   0.65     $   1.78     $   1.86
===========================================================================================

Net income per share-diluted:
  Net income                                $ 49,397     $ 49,057     $128,559     $144,869
- -------------------------------------------------------------------------------------------
  Weighted average shares outstanding         72,391       75,588       72,265       77,835
  Dilutive impact of options                      77          398           74          316
  Shares contingently issuable                    12           27            7           19
- -------------------------------------------------------------------------------------------
  Weighted average shares and potential
    dilutive shares outstanding               72,480       76,013       72,346       78,170
- -------------------------------------------------------------------------------------------
  Net income per share-diluted              $   0.68     $   0.65     $   1.78     $   1.85
===========================================================================================
</TABLE>


     4. As of September 30, 2000, the Company had committed lines of credit for
$450.0 million available for borrowing and as support for commercial paper. The
average amount drawn on these lines during the first nine months of 2000 was
$25.0 million at a weighted-average interest rate of 6.26%. As of September 30,
2000, no amounts were outstanding under these lines of credit. The average
amount drawn on these lines during 1999 was $39.8 million at a weighted-average
interest rate of 6.39%. As of December 31, 1999, $60.0 million was outstanding
under these lines of credit at an interest rate of 6.39%. As of September 30,
2000, the Company had $25.0 million of commercial paper outstanding at an
interest rate of 6.54%. The average amount of commercial paper outstanding
during the first nine months of 2000 was $6.2 million at a weighted-average
interest rate of 6.57%. No commercial paper was issued during 1999.

     The Company also had a $10.0 million credit facility, denominated in Indian
rupees, available to its Indian operations at the lender's prime interest rate.
Borrowings under this facility are due on demand. This facility is guaranteed by
the Company


                                       6
<PAGE>


and this guarantee is collateralized by a $10.0 million time deposit account
maintained by the Company with the lending bank. The maturity date of this
deposit is December 28, 2000, at which time the collateral may be renewed or
replaced by agreement of both parties. The average amount drawn on this credit
facility during the first nine months of 2000 was $4.6 million at a
weighted-average interest rate of 15.77%. As of September 30, 2000, $4.9 million
was outstanding at an interest rate of 15.77%. The average amount drawn on this
credit facility during 1999 was $2.7 million at a weighted-average interest rate
of 15.81%. As of December 31, 1999, $3.1 million was outstanding at an interest
rate of 15.81%.

     The Company had uncommitted bank lines of credit of $40.0 million available
at variable interest rates. The average amount drawn on these lines of credit
during the first nine months of 2000 was $44 thousand at a weighted-average
interest rate of 6.38%. The average amount drawn on these lines of credit during
1999 was $1.5 million at a weighted-average interest rate of 5.12%. As of
September 30, 2000 and December 31, 1999, no amounts were outstanding under
these lines of credit.

     The Company has a shelf registration in place for the issuance of up to
$300.0 million in medium-term notes. Such notes could be used for general
corporate purposes, including working capital, capital expenditures, possible
acquisitions and repayment or repurchase of outstanding indebtedness and other
securities of the Company. As of September 30, 2000 and December 31, 1999, no
such notes were issued or outstanding.

     5. During 1997, a judgment was entered against the Company in the U.S.
District Court for the Western District of Pennsylvania. The case was brought
against the Company by Mellon Bank (Mellon) in connection with a potential bid
to provide electronic benefit transfer (EBT) services for the Southern Alliance
of States. In September 1997, the Company recorded a pretax charge of $40
million to reserve for this judgment and other related costs. In January 1999,
the United States Court of Appeals for the Third Circuit affirmed the judgment
of the district court and the Company paid $32.2 million to Mellon in February
1999. The portion of the reserve remaining after the payment of this judgment
($2.1 million) was reversed and is reflected in other income in the consolidated
statement of income for the nine months ended September 30, 1999.

     6. During the third quarter of 1999, the Company entered into a $42.5
million sale-leaseback transaction whereby the Company sold five existing
facilities in Shoreview, Minnesota and leased back three of these facilities for
periods ranging from five to 10 years. Of the related leases, two were
classified as operating leases and one was classified as a capital lease. An
asset of $11.6 million was recorded for the capital lease and is reflected in
buildings and building improvements in the consolidated balance sheets as of
September 30, 2000 and December 31, 1999. The result of this sale was a $17.1
million gain, of which $10.6 million was deferred and is being amortized over
the lease terms in the case of the operating leases and over the life of the
capital asset in the case of the capital lease. $7.1 million and $8.7 million of
the deferred gain is reflected in other long-term liabilities in the September
30, 2000 and December 31, 1999 consolidated balance sheets, respectively. The
Company provided short-term financing for $32.5 million of the proceeds from
this sale. This amount was reflected in prepaid expenses and other current
assets in the December 31, 1999 consolidated balance sheet and was reflected as
loans to others in the consolidated statement of cash flows for the nine months
ended September 30, 1999. The loan was paid in full in January 2000.

     7. The Company's consolidated balance sheets reflect restructuring accruals
of $5.1 million and $15.1 million as of September 30, 2000 and December 31,
1999, respectively, for employee severance costs and $1.1 million as of December
31, 1999, for estimated losses on asset dispositions.

     During the second quarter of 2000, the Company recorded restructuring
charges of $1.4 million. These charges primarily related to the Paper Payment
Systems segment's transfer of certain data entry functions to the eFunds segment
and administrative reductions within the eFunds segment and assumed the
termination of approximately 185 employees, 30 of which were employed with the
eFunds segment. Additionally, the Company reversed $3.0 million of restructuring
charges relating to the Company's initiative to reduce selling, general and
administrative (SG&A) expense. This was due to higher attrition than anticipated
and the reversal of "early termination" payments to a group of employees. Under
the Company's severance program, employees are provided 60 days notice prior to
being terminated. In certain situations, the Company asks the employees to leave
immediately because they may have access to crucial infrastructure or
information. In these cases, severance includes this additional amount. In
certain situations, management decided to keep employees working for the 60 day
period and thus, a reduction in the restructuring reserves was required since
this pay was no longer severance, but an


                                       7
<PAGE>


operating expense. These new restructuring charges and reversals are reflected
in SG&A expense in the Company's consolidated statement of income for the nine
months ended September 30, 2000.

     During the first quarter of 1999, restructuring accruals of $2.0 million
were reversed. These reversals related to the Company's decision in 1999 to
retain the international operations of its eFunds segment. During the second
quarter of 1999, restructuring accruals of $4.2 million were reversed. These
amounts related to the Company's initiative to reduce SG&A expense and to
discontinue production of direct mail products. The excess accrual occurred and
was reversed when the Company determined that it was able to use a greater
portion of the direct mail production assets in its ongoing operations than was
originally anticipated. Additionally, excess accruals resulted from changes in
the SG&A expense reduction initiative due to the plan announced in April 1999 to
reorganize the Company into four independently operated business units. Also
during the second quarter of 1999, the Company recorded restructuring accruals
of $0.8 million for employee severance and $0.8 million for estimated losses on
asset dispositions related to the planned closing of one collections office and
planned employee reductions in another collections office within the Company's
collections business which was sold in December 1999. These accrual reversals
and the new restructuring accruals are reflected in the Company's consolidated
statement of income for the nine months ended September 30, 1999 as cost of
sales expense of $0.9 million, a reduction in SG&A expense of $3.2 million and
other income of $2.3 million.

     The cumulative activity for the severance portion of the Company's
restructuring accruals as of September 30, 2000 is as follows (dollars in
millions):

<TABLE>
<CAPTION>
                                      SG&A Reductions     Collection Ctr
                   Check Printing      & Direct Mail         Closing/           Data Entry          eFunds
                  Plant Closings(1)    Production(2)        Reductions           Transfer          Reductions          Total
                  -----------------    -------------        ----------           --------          ----------          -----
                   No. of             No. of             No. of              No. of              No. of            No. of
                 employees          employees          employees           employees           employees         employees
                  affected  Amount   affected  Amount   affected   Amount   affected   Amount   affected  Amount  affected   Amount
                  --------  ------   --------  ------   --------   ------   --------   ------   --------  ------  --------   ------
<S>               <C>       <C>        <C>     <C>          <C>    <C>         <C>     <C>        <C>     <C>      <C>       <C>
Original accrual   4,970    $ 68.0      860    $ 21.2        70    $ 0.8       155     $ 0.9       30     $ 0.4     6,085    $ 91.3

Severance paid    (4,295)    (59.6)    (440)    (10.8)      (70)    (0.7)      (95)     (0.5)     (12)     (0.2)   (4,912)    (71.8)

Adjustments to
accrual             (545)     (5.9)    (330)     (8.4)       --     (0.1)       --        --       --        --      (875)    (14.4)
                 -------------------------------------------------------------------------------------------------------------------
Balance,
September 30,
2000                 130    $  2.5       90    $  2.0        --    $  --        60     $ 0.4       18     $ 0.2       298    $  5.1
                 -------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes charges recorded in 1996 and 1998 for plans to close financial
institution check printing plants and charges recorded in 1996 and 1997 for
reductions in support functions at corporate operations and other businesses,
implementation of a new order processing and customer service system and
implementation of process improvements in the post-press phase of check
production. Implementation of the new order processing and customer service
system is expected to be delayed to early 2001 due to the fact that financial
institutions did not want to implement the system in late 1999 or early 2000 due
to the efforts they were expending on Year 2000 issues.

(2) Includes charges recorded in 1998 for the Company's initiatives to reduce
SG&A expense and discontinue production of direct mail products.

     The majority of the remaining severance costs are expected to be paid by
early 2001 with cash generated from the Company's operations.

     The remaining accrual for estimated losses on asset dispositions as of
December 31, 1999 related to charges recorded in 1996 and 1998 for plans to
close financial institution check printing plants. These plant closures were
completed during the first quarter of 2000. Through September 30, 2000, losses
of $15.0 million on the disposition of the assets of these plants were applied
against the restructuring reserves.

     8. In February 2000, the Company acquired all of the outstanding shares of
Designer Checks for $97.0 million in cash. Designer Checks produces specialty
design checks and related products for direct sale to consumers and is included
in the Company's Paper Payment Systems segment. This acquisition was accounted
for under the purchase method of accounting. Accordingly, the consolidated
financial statements of the Company include the results of this business
subsequent to its acquisition date. The purchase price was allocated to the
assets acquired and liabilities assumed based on their fair values on


                                       8
<PAGE>


the date of purchase. Total cost in excess of net assets acquired in the amount
of $88.8 million is being amortized over 15 years. The effect of this
acquisition was not material to the operations or financial position of the
Company.

     9. In March 2000, the Company paid cash of $20.0 million for an
approximately 24% interest in a limited liability company that provides
automated teller machine (ATM) management services. This investment is being
accounted for under the equity method of accounting and is included in other
long-term investments in the Company's consolidated balance sheet as of
September 30, 2000. The difference of $20.0 million between the carrying value
of the investment and the underlying equity in the net assets of the limited
liability company is being accounted for in the same manner as goodwill and is
being amortized over 15 years. The Company's consolidated financial statements
reflect the impact of this investment subsequent to its acquisition date in
other income (expense) within the Company's eFunds segment.

     The Company has agreed to make up to $35.0 million of cash available for
supplying ATMs managed by the limited liability company and had supplied $27.9
million of cash for this purpose as of September 30, 2000. This cash is
classified as long-term restricted cash on the Company's consolidated balance
sheet. The Company has also agreed to guarantee equipment leases of up to $3.0
million face value for Canadian customers of the limited liability company and
has indicated that, subject to the mutual agreement of the parties upon
definitive terms and conditions, the Company would be willing to work towards an
arrangement under which it would loan the limited liability company up to $12.0
million to enable it to undertake mutually agreed-upon acquisitions.

     10. Effective January 1, 2000, certain of the international operations of
the eFunds segment which had previously reported their results of operations and
financial position on a one-month lag, changed their reporting dates to coincide
with the rest of the Company's subsidiaries. This change, which was made in
conjunction with the implementation of the Company's central accounting and
financial reporting system, will reflect the financial results of these
operations on a more timely basis and will improve operating and planning
efficiencies. The results of operations for this portion of the eFunds segment
for the month of December 1999 were excluded from the Company's consolidated
statements of income and were reflected as an adjustment to retained earnings
during the first quarter of 2000. These operations generated a net loss of $1.1
million in the month of December 1999.

     11. During the second quarter of 2000, the Company recorded net charges of
$9.7 million for additional expected future losses on the contracts of the
eFunds segment's EBT business. This amount is reflected in cost of sales in the
Company's consolidated statement of income for the nine months ended September
30, 2000. In April 2000, the Company completed negotiations with the prime
contractor for a state coalition for which the Company provides EBT services.
Prior to this, the Company and the prime contractor were operating without a
binding, legally enforceable contract. The Company increased its accrual for
expected future losses on long-term service contracts by $12.2 million to
reflect the fact that the Company now had a definitive agreement with this
contractor. Although the Company believed that it did not have a legal
obligation to provide services to this coalition, the states included in this
coalition did not have alternate means of delivering benefits under their
entitlement programs. As a result, the Company believed it could not terminate
the provision of services during its contract negotiations with the prime
contractor because any unilateral decision to do so would have subjected the
Company to a substantial risk of litigation by the coalition states, as well as
potential claims by the prime contractor. The execution of the contract allowed
the Company to avoid the possibility that its future losses associated with the
provision of these services would be larger than the charge the Company recorded
if the prime contractor ultimately prevailed on all of the points pursued by it
during negotiations. Partially offsetting this charge was the reversal of $2.5
million of previously recorded contract loss accruals. These reversals resulted
from productivity improvements and cost savings from lower than anticipated
telecommunications and interchange expenses.

     12. In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES, which provides guidance on accounting for derivatives
and hedge transactions. This statement is effective for the Company on January
1, 2001. The Company anticipates that the effect of this pronouncement will not
have a material impact on the Company's reported operating results or financial
position.

     13. In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, REVENUE RECOGNITION IN FINANCIAL STATEMENTS,
which provides guidance in applying generally accepted accounting principles to
revenue recognition in financial statements. Application of this SAB did not
have a material impact on the Company's reported operating results or financial
position.


                                       9
<PAGE>


     14. In January 2000, the Company announced that its board of directors
approved a plan to combine its Electronic Payment Systems, Professional Services
and Government Services segments into a separate, independent, publicly traded
company called eFunds Corporation (eFunds). As a result, the Company modified
its internal management reporting in the first half of 2000 and restated its
segment information for prior years to conform to the current operating
structure which presents the business units as two operating segments based on
the nature of the products and services offered by each: Paper Payment Systems
and eFunds. Paper Payment Systems provides checks and related products to
financial institutions, consumers and small businesses. eFunds provides
transaction processing, ATM outsourcing services, decision support and risk
management products and services to financial institutions, retailers,
electronic funds transfer networks, e-commerce providers and government agencies
and offers information technology consulting and business process management
services both on a stand-alone basis and as a complement to its electronic
payments business. In December 1999, the Company sold its collections business.
The results of this business are not included in the Company's segment
information, but are included in the Company's reconciliations to consolidated
amounts. The Company's segments operate primarily in the United States. The
eFunds segment also has some international operations.

     The accounting policies of the segments are the same as those described in
the summary of significant accounting policies as presented in the Company's
notes to the consolidated financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999. In evaluating segment
performance, management focuses on income from operations and earnings before
interest, income taxes, depreciation and amortization (EBITDA). The income from
operations measurement utilized by management excludes special charges (e.g.,
certain restructuring charges, asset impairment charges, certain one-time
charges that management believes are not reflective of on-going operations,
etc.).

     During 1999, holding company expenses were allocated to the segments as a
fixed percentage of segment revenues. This allocation included expenses for
various support functions such as human resources, information services and
finance and included depreciation and amortization expense related to holding
company assets. The corresponding corporate asset balances were also allocated
to the segments. During 2000, the majority of the costs for these support
functions were incurred directly by the operating segments. The remaining
holding company expenses were allocated to the segments based on estimates of
the costs which would have been incurred by the operating segments if they were
stand-alone, independent entities. Intersegment sales are generally based on
current market pricing.

     Prior to the Company's acquisition of the remaining 50% interest in
HCL-Deluxe, N.V. in April 1999, the results of this business were recorded under
the equity method of accounting. As such, the Company recorded its 50% ownership
of the joint venture's results of operations prior to the acquisition in other
expense in the consolidated statements of income. To be consistent with internal
management reporting, the entire results of the joint venture for the
pre-acquisition period are reflected in the business segment information for the
eFunds segment as if the business had been a consolidated entity.

     Segment information for the quarter and nine months ended September 30,
2000 and 1999 is as follows (dollars in thousands):


                                       10
<PAGE>


<TABLE>
<CAPTION>
QUARTER ENDED                                 PAPER PAYMENT                       TOTAL
SEPTEMBER 30, 2000                               SYSTEMS           eFUNDS        SEGMENTS
- ---------------------------------------------------------------------------------------------
<S>                                            <C>              <C>             <C>
Net sales to external customers                $  314,581       $   90,366      $  404,947
Intersegment sales                                     --           13,637          13,637
Operating income excluding special
   charges                                         77,208            7,717          84,925
Special charges                                        --            1,338           1,338
Operating income including special
   charges                                         77,208            6,379          83,587
EBITDA                                             95,649           14,132         109,781
Depreciation and amortization expense              17,523            7,719          25,242
Segment assets                                    541,396          406,553         947,949
Capital purchases                                  13,890           11,912          25,802
- ---------------------------------------------------------------------------------------------

<CAPTION>
QUARTER ENDED                                 PAPER PAYMENT                       TOTAL
SEPTEMBER 30, 1999                               SYSTEMS          eFUNDS         SEGMENTS
- ---------------------------------------------------------------------------------------------
<S>                                            <C>              <C>             <C>
Net sales to external customers                $  311,519       $   77,419      $  388,938
Intersegment sales                                     --            2,476           2,476
Operating income excluding special
   charges                                         76,069            1,331          77,400
Special charges                                        --               --              --
Operating income including special
   charges                                         76,069            1,331          77,400
EBITDA                                             92,962            4,232          97,194
Depreciation and amortization expense              15,391            5,771          21,162
Segment assets                                    512,586          266,305         778,891
Capital purchases                                  16,842            9,345          26,187
- ---------------------------------------------------------------------------------------------
</TABLE>


                                       11
<PAGE>


<TABLE>
<CAPTION>
NINE MONTHS ENDED                             PAPER PAYMENT                       TOTAL
SEPTEMBER 30, 2000                               SYSTEMS          eFUNDS         SEGMENTS
- ---------------------------------------------------------------------------------------------
<S>                                            <C>              <C>             <C>
Net sales to external customers                $  954,979       $  261,150      $1,216,129
Intersegment sales                                     --           44,078          44,078
Operating income excluding special
   charges                                        235,396           17,426         252,822
Special (recoveries) charges                       (2,128)          13,912          11,784
Operating income including special
   charges                                        237,524            3,514         241,038
EBITDA                                            286,459           24,587         311,046
Depreciation and amortization expense              49,063           21,152          70,215
Segment assets                                    541,396          406,553         947,949
Capital purchases                                  40,642           27,935          68,577
- ---------------------------------------------------------------------------------------------

<CAPTION>
NINE MONTHS ENDED                             PAPER PAYMENT                       TOTAL
SEPTEMBER 30, 1999                               SYSTEMS          eFUNDS         SEGMENTS
- ---------------------------------------------------------------------------------------------
<S>                                            <C>              <C>             <C>
Net sales to external customers                $  927,178       $  220,525      $1,147,703
Intersegment sales                                     --            4,118           4,118
Operating income excluding special
   charges                                        228,274            8,393         236,667
Special charges                                        --              898             898
Operating income including special
   charges                                        228,274            7,495         235,769
EBITDA                                            270,478           23,265         293,743
Depreciation and amortization expense              43,069           16,726          59,795
Segment assets                                    512,586          266,305         778,891
Capital purchases                                  50,553           26,063          76,616
- ---------------------------------------------------------------------------------------------
</TABLE>

     Segment information reconciles to consolidated amounts as follows (dollars
in thousands):

<TABLE>
<CAPTION>
                                                               Quarter Ended               Nine Months Ended
                                                               September 30,                 September 30,
                                                               -------------                 -------------
NET SALES TO EXTERNAL CUSTOMERS                             2000           1999           2000           1999
- -----------------------------------------------------------------------------------------------------------------
<S>                                                     <C>            <C>            <C>            <C>
Total segment net sales to external customers           $   404,947    $   388,938    $ 1,216,129    $ 1,147,703
Divested businesses not included in segments                     --         28,176             --         94,736
eFunds pre-acquisition elimination                               --             --             --         (3,406)
- -----------------------------------------------------------------------------------------------------------------
Total consolidated net sales to external
   customers                                            $   404,947    $   417,114    $ 1,216,129    $ 1,239,033
- -----------------------------------------------------------------------------------------------------------------
</TABLE>


                                       12
<PAGE>


<TABLE>
<CAPTION>
                                                       Quarter Ended               Nine Months Ended
                                                       September 30,                 September 30,
                                                       -------------                 -------------
OPERATING INCOME INCLUDING SPECIAL CHARGES          2000           1999           2000           1999
- --------------------------------------------------------------------------------------------------------
<S>                                             <C>            <C>            <C>            <C>
Total segment operating income                  $   83,587     $   77,400     $  241,038     $  235,769
Divested businesses not included in segments            --           (597)            --            978
eFunds pre-acquisition elimination                      --             --             --          1,234
Unallocated holding company expenses                (6,362)        (3,438)       (30,443)        (9,457)
- --------------------------------------------------------------------------------------------------------
Total consolidated operating income             $   77,225     $   73,365     $  210,595     $  228,524
- --------------------------------------------------------------------------------------------------------
</TABLE>

     Holding company expenses consisted primarily of charges for certain
liabilities that are not allocated to the segments.

<TABLE>
<CAPTION>
                                                        Quarter Ended           Nine Months Ended
                                                        September 30,             September 30,
                                                        -------------             -------------
DEPRECIATION AND AMORTIZATION EXPENSE                 2000         1999         2000         1999
- ----------------------------------------------------------------------------------------------------
<S>                                                <C>          <C>          <C>          <C>
Total segment depreciation and amortization
   expense                                         $  25,242    $  21,162    $  70,215    $  59,795
Divested businesses not included in segments              --           --           --        2,081
eFunds pre-acquisition elimination                        --           --           --         (143)
Unallocated holding company expense                       62           26          111           78
- ----------------------------------------------------------------------------------------------------
Total consolidated depreciation and amortization
   expense                                         $  25,304    $  21,188    $  70,326    $  61,811
- ----------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                 September 30,
                                                                 -------------
TOTAL ASSETS                                                  2000          1999
- -----------------------------------------------------------------------------------
<S>                                                       <C>           <C>
Total segment assets                                      $  947,949    $  778,891
Assets of divested businesses not included in
  segments                                                        --        87,838
Unallocated holding company assets                           119,209       141,834
- -----------------------------------------------------------------------------------
Total consolidated assets                                 $1,067,158    $1,008,563
- -----------------------------------------------------------------------------------
</TABLE>

     Unallocated holding company assets consist primarily of cash, investments
and deferred tax assets relating to holding company activities.

<TABLE>
<CAPTION>
                                                             Quarter Ended           Nine Months Ended
                                                             September 30,             September 30,
                                                             -------------             -------------
CAPITAL PURCHASES                                          2000         1999         2000         1999
- ---------------------------------------------------------------------------------------------------------
<S>                                                     <C>          <C>          <C>          <C>
Total segment capital purchases                         $  25,802    $  26,187    $  68,577    $  76,616
Divested businesses not included in segments                   --          920           --        2,212
eFunds pre-acquisition elimination                             --           --           --         (145)
Holding company capital purchases                              19           23           36           39
- ---------------------------------------------------------------------------------------------------------
Total consolidated capital purchases                    $  25,821    $  27,130    $  68,613    $  78,722
- ---------------------------------------------------------------------------------------------------------
</TABLE>


                                       13
<PAGE>


     Revenues are attributed to geographic areas based on the location of the
assets and employees producing the revenues. The Company's operations by
geographic area are as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                 NET SALES TO EXTERNAL CUSTOMERS
                            Quarter Ended             Nine Months Ended          LONG-LIVED ASSETS
                            September 30,               September 30,              September 30,
- -------------------------------------------------------------------------------------------------------
                         2000          1999          2000          1999          2000          1999
                         ----          ----          ----          ----          ----          ----
<S>                   <C>           <C>           <C>           <C>           <C>           <C>
United States         $  400,676    $  411,997    $1,203,424    $1,223,630    $  245,600    $  310,790
Foreign countries          4,271         5,117        12,705        15,403         6,852         5,595
- -------------------------------------------------------------------------------------------------------
Total consolidated    $  404,947    $  417,114    $1,216,129    $1,239,033    $  252,452    $  316,385
- -------------------------------------------------------------------------------------------------------
</TABLE>

     15. In January 2000, the Company announced that its board of directors
approved a plan to operate the Company's eFunds segment as a separate,
independent, publicly traded company to be called eFunds Corporation. eFunds
issued 5.5 million shares of its common stock to the public in June 2000. Prior
to the initial public offering (IPO), the Company owned 40 million, or 100%, of
eFunds' total outstanding shares. Subsequent to the IPO, the Company continues
to own 40 million shares of eFunds common stock, representing 87.9% of eFunds'
total outstanding common shares. Proceeds from the offering, based on the
offering price of $13.00 per share, totaled $71.5 million ($64.5 million, net of
offering expenses). The difference of $30.5 million between the net proceeds
from the offering and the carrying amount of the Company's investment in eFunds
was recorded as additional paid-in capital. The Company also recorded charges of
$7.2 million for payments which must be made to certain officers of the Company
under change of control and executive employment agreements. These charges are
reflected in SG&A expense in the Company's consolidated statement of income for
the nine months ended September 30, 2000.

     In October 2000, the Company announced that it plans to distribute all of
its shares of eFunds common stock to its shareholders through a spin-off
transaction rather than by an exchange offer, or split-off, as had been
previously announced. The 40 million shares of eFunds common stock currently
owned by the Company will now be distributed on a designated distribution date
to every Deluxe shareholder of record on a designated record date. Each
shareholder will receive a fixed number of eFunds shares for each Deluxe share
owned. Because the Company is planning to spin-off eFunds, the issuance of
eFunds common stock in June 2000 was treated as a capital transaction under the
guidance of Staff Accounting Bulletin No. 51, ACCOUNTING FOR SALES OF STOCK BY A
SUBSIDIARY.

     The Company's plans for a spin-off are subject to receiving confirmation
from the Internal Revenue Service (IRS) that the spin-off will be tax-free to
the Company and to its shareholders for U.S. federal income tax purposes. The
Company has the sole discretion to determine whether to proceed with the
spin-off and to determine the timing and other aspects of the transaction.
Subject to these conditions, the Company plans to complete the spin-off on or
before December 31, 2000. The Company has submitted a request to the IRS for
confirmation that the spin-off will be tax-free to the Company and to its
shareholders for U.S. federal income tax purposes. The Company cannot be certain
when or whether it will receive this confirmation from the IRS, or that the
distribution by the Company will be completed. If consummated, the Company would
recognize the distribution of eFunds stock as a reduction of retained earnings
and would reflect eFunds results of operations as discontinued operations in the
Company's consolidated financial statements. If the Company does not complete
the spin-off, it will continue to control eFunds and the Company and eFunds may
not realize the anticipated benefits from the separation of the two companies.

     In connection with the eFunds' IPO and the planned spin-off, the Company
and eFunds have entered into various agreements that address the allocation of
assets and liabilities between them and that define their relationship after the
separation. The agreements relate to matters such as consummation of the IPO and
the distribution of eFunds stock, registration rights for the Company,
intercompany loans, information technology consulting, business process
management services, indemnification, data sharing, real estate matters, tax
sharing and transition services. For transition services, eFunds will compensate
the Company for providing services and will negotiate for third-party rates
after the transition arrangements terminate. The transition period varies
depending on the agreement, but many transition services will terminate upon the
distribution of eFunds stock. Some of the transition agreements may be extended
beyond the initial transition period. Additionally, the Company has agreed to
indemnify eFunds for future losses arising from any litigation based on the
conduct


                                       14
<PAGE>


of the EBT and medical eligibility verification businesses prior to eFunds' IPO
in June 2000, and from future losses on identified loss contracts in excess of
the Company's $29.2 million accrual for contract losses as of April 30, 2000.
The indemnification obligation does not apply to losses covered by the existing
reserves. The maximum amount of litigation and contract losses for which the
Company will indemnify eFunds is $14.6 million. Prior to the spin-off, any
indemnification payments to eFunds will be treated as capital contributions.
After the spin-off, any indemnification payments to eFunds will be recorded as
other expense in the Company's consolidated statements of income. Through
September 30, 2000, no such indemnification payments have been made.

     16. In August 2000, the Company announced an e-commerce growth strategy
that is intended to leverage the Company's personalization and information
management competencies from its core check printing business into other
profitable revenue growth opportunities. The first outcome of this strategy was
PlaidMoon.com, an Internet-based business concept that allowed consumers to
design and purchase personalized items. In October 2000, the Company announced
that it is repositioning its PlaidMoon.com business concept within its Paper
Payment Systems segment. Instead of being a stand-alone business as had been
planned, PlaidMoon.com will be folded into existing businesses. The
PlaidMoon.com web site will be inactive while it is being repositioned. The
Company is currently evaluating to what extent the long-lived assets and
employees of this business will be utilized by the Company's Paper Payment
Systems segment. It is possible that this evaluation could result in asset
impairment and restructuring charges in the fourth quarter of 2000.

     17. In October 2000, the Company announced that by the beginning of 2001 it
will begin outsourcing the eFunds segment's consumer voice inquiry operations
relating to Chex Systems records. Approximately 300 eFunds employees are
impacted by this decision. Although some of these employees may not find other
positions within eFunds, the Company does not expect to record a significant
restructuring charge in the fourth quarter of 2000 as a result of this
initiative.

     18. Certain prior period amounts have been reclassified to conform with the
current year presentation. These changes had no impact on previously reported
results of operations or shareholders' equity.


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Company Profile

     We have organized our businesses into two operating segments based on the
nature of the products and services offered by each: Paper Payment Systems and
eFunds. Paper Payment Systems provides checks and related products to financial
institutions, consumers and small businesses. eFunds provides transaction
processing, automated teller machine (ATM) outsourcing services, decision
support and risk management products and services to financial institutions,
retailers, electronic funds transfer networks, e-commerce providers and
government agencies and offers information technology consulting and business
process management services both on a stand-alone basis and as a complement to
its electronic payments business. In December 1999, we sold our collections
business, NRC Holding Corporation and its subsidiaries. Our segments operate
primarily in the United States. The eFunds segment also has some international
operations.

     In January 2000, we announced that our board of directors approved a plan
to combine the businesses within the eFunds segment into a separate,
independent, publicly traded company called eFunds Corporation. eFunds issued
5.5 million shares to the public in June 2000. Prior to this initial public
offering (IPO), we owned 40 million, or 100%, of eFunds' total outstanding
shares. Subsequent to the IPO, we continue to own 40 million eFunds shares,
representing 87.9% of eFunds' total outstanding shares. eFunds' proceeds from
the IPO totaled $71.5 million ($64.5 million, net of offering expenses).

     In October 2000, we announced that we plan to distribute all of our shares
of eFunds common stock to our shareholders through a spin-off transaction rather
than by an exchange offer, or split-off, as had been previously announced. The
40 million shares of eFunds common stock which we currently own will now be
distributed on a designated distribution date to every Deluxe shareholder of
record on a designated record date. Each shareholder will receive a fixed number
of eFunds shares for each Deluxe share owned. Our plans for a spin-off are
subject to confirmation from the Internal Revenue Service (IRS) that the
spin-off will be tax-free to us and to our shareholders for U.S. federal income
tax purposes. We have the sole discretion to determine whether to proceed with
the spin-off and to determine the timing and other aspects of the transaction.
Subject to these conditions, we plan to complete the spin-off on or before
December 31, 2000. We have submitted a request to the IRS for confirmation that
the spin-off will be tax-free to us and to our shareholders for U.S. federal
income tax purposes. We


                                       15
<PAGE>


cannot be certain when or whether we will receive this confirmation from the
IRS, or that the distribution will be completed. If consummated, we would
recognize the distribution of eFunds stock as a reduction of retained earnings
and would reflect eFunds results of operations as discontinued operations in our
consolidated financial statements. If we do not complete the spin-off, we will
continue to control eFunds and we and eFunds may not realize the anticipated
benefits from the separation of the two companies.

     In connection with eFunds' IPO and the planned spin-off, we have entered
into various agreements with eFunds that address the allocation of assets and
liabilities between us and that define our relationship after the separation.
These agreements relate to matters such as consummation of the IPO and the
distribution of eFunds stock, our registration rights, intercompany loans,
information technology consulting, business process management services,
indemnification, data sharing, real estate matters, tax sharing and transition
services. An intercompany loan which we have made to eFunds matures at the
earlier of December 31, 2000 or the completion of the spin-off. For transition
services, eFunds will compensate us for providing services and will negotiate
third-party rates after the transition arrangements terminate. The transition
period varies depending on the agreement, but many transition services will
terminate upon the distribution of eFunds stock. Some of the transition
agreements may be extended beyond the initial transition period.

     We presently plan to exit the electronic benefits transfer (EBT) and
medical eligibility verification businesses when our current contractual
commitments expire in 2006. During the wind-down period, we intend to continue
to take steps to improve the profitability of the current business, although the
revenues of this business may decline as existing contracts expire.
Additionally, we have agreed to indemnify eFunds for future losses arising from
any litigation based on the conduct of these businesses prior to eFunds' IPO in
June 2000, and from future losses on identified loss contracts in excess of our
$29.2 million accrual for contract losses as of April 30, 2000. The
indemnification obligation does not apply to losses covered by the existing
reserves. The maximum amount of litigation and contract losses for which we will
indemnify eFunds is $14.6 million. Prior to the completion of the spin-off, any
indemnification payments to eFunds will be treated as capital contributions.
After completion of the spin-off, any indemnification payments to eFunds will be
recorded as other expense in our consolidated statements of income. Through
September 30, 2000, no such indemnification payments have been made.

Results of Operations - Quarter and Nine Months Ended September 30, 2000
Compared to the Quarter and Nine Months Ended September 30, 1999

     NET SALES - Net sales decreased $12.2 million, or 2.9%, to $404.9 million
during the third quarter of 2000 from $417.1 million during the third quarter of
1999 and decreased $22.9 million, or 1.8%, to $1,216.1 million during the first
nine months of 2000 from $1,239.0 million during the first nine months of 1999.
1999 third quarter sales included $28.2 million of sales from our collections
business which was sold in December 1999, while sales for the first nine months
of 1999 included sales of $94.7 million from this business. With these sales
excluded, net sales increased 4.1% during the third quarter of 2000 and 6.3%
during the first nine months of 2000.

     Paper Payment Systems net sales increased $3.1 million, or 1.0%, to
$314.6 million in the third quarter of 2000 from $311.5 million in the third
quarter of 1999. Net sales increased $27.8 million, or 3.0%, to $955.0 million
in the first nine months of 2000 from $927.2 million in the first nine months of
1999. These increases were due, in part, to the acquisition in February 2000 of
Designer Checks which contributed revenues of $14.6 million during the third
quarter of 2000 and $41.3 million during the first nine months of 2000.
Additionally, the segment experienced volume increases in its business forms and
direct checks businesses for the first nine months of 2000 and had increased
revenue per unit for all businesses. A price increase for postage and new
services within its financial institution checks business and a price increase
for phone reorders in its direct checks business contributed to the increase in
revenue per unit. Partially offsetting these improvements was a decrease in
volume for the financial institution checks business due to lost customers. The
loss of business was due primarily to competitive pricing requirements that fell
below the segment's revenue and profitability per unit targets.

     eFunds net sales increased $24.1 million, or 30.2%, to $104.0 million in
the third quarter of 2000 from $79.9 million in the third quarter of 1999. Net
sales increased $84.9 million, or 38.5%, to $305.2 million in the first nine
months of 2000 from $220.3 million in the first nine months of 1999. On a full
year pro forma basis, assuming our April 1999 acquisition of the remaining 50%
interest in HCL-Deluxe, N.V occurred on January 1, 1999, net sales increased
$80.6 million, or 35.9%, to $305.2 million in the first nine months of 2000 from
$224.6 million in the first nine months of 1999. These increases were due to
increased transaction processing volumes, offset to some extent by lower fees
for new customers and customers renewing their agreements, increased account
verification inquiry volumes coupled with a price increase, expanded collection


                                       16
<PAGE>


service product offerings and increased utilization of these services. In
September 2000, the eFunds segment entered into a new ATM deployment agreement
that resulted in additional revenue. Additionally, the segment initiated
business process management and information technology consulting services for
our Paper Payment Systems segment in 2000. Excluding intersegment sales on a pro
forma basis, assuming our April 1999 acquisition of the remaining 50% interest
in HCL-Deluxe, N.V. occurred on January 1, 1999, eFunds net sales increased
$13.0 million, or 16.7%, to $90.4 million in the third quarter of 2000 from
$77.4 million in the third quarter of 1999 and increased $40.7 million, or
18.4%, to $261.2 million in the first nine months of 2000 from $220.5 million in
the first nine months of 1999. Partially offsetting these increases, was
slightly lower revenue for the EBT portion of this segment due to the expiration
of one contract.

     GROSS MARGIN - Gross margin increased $0.1 million to $229.8 million for
the third quarter of 2000 from $229.7 million for the third quarter of 1999.
Gross margin increased $7.9 million, or 1.1%, to $689.1 million for the first
nine months of 2000 from $681.2 million for the first nine months of 1999. As a
percentage of net sales, gross margin increased to 56.7% for the third quarter
of 2000 from 55.1% for the third quarter of 1999 and increased to 56.7% for the
first nine months of 2000 from 55.0% for the first nine months of 1999. Cost of
sales for the first nine months of 2000 included net charges of $9.7 million for
additional expected future losses on the contracts of the eFunds segment's EBT
business. In April 2000, we completed negotiations with the prime contractor for
a state coalition for which eFunds provides EBT services. Previously, we were
operating without a binding, legally enforceable contract with this contractor.
We increased our accrual for expected future losses on long-term service
contracts by $12.2 million to reflect the fact that we now had a definitive
agreement with this contractor. Although we believed that we did not have a
legal obligation to provide services for the coalition, the states included in
the coalition did not have alternate means of delivering benefits under their
entitlement programs. As a result, we believed we could not terminate the
provision of services during our contract negotiations with the prime contractor
because any unilateral decision to do so would have subjected us to a
substantial risk of litigation by the coalition states, as well as potential
claims by the prime contractor. The execution of this contract allowed us to
avoid the possibility that future losses associated with the provision of these
services would be larger than the charge we recorded if the prime contractor
ultimately prevailed on all of the points pursued by it during negotiations.
Partially offsetting this charge was the reversal of $2.5 million of previously
recorded contract loss accruals resulting from productivity improvements and
cost savings from lower than anticipated telecommunications and interchange
expenses. Excluding the net charges of $9.7 million, our gross margin percentage
would have been 57.5% for the first nine months of 2000. The improvement in
gross margin percentage was partially due to the sale of our collections
business in December 1999. This business had a gross margin percentage of 15.3%
for the third quarter of 1999 and 25.1% for the first nine months of 1999.

     Paper Payment Systems gross margin percentage increased to 64.5% for the
third quarter of 2000 from 62.8% for the third quarter of 1999 and increased to
64.8% for the first nine months of 2000 from 62.2% for the same period in 1999.
These increases were due to cost reductions realized from closing financial
institution check printing plants, continuing process improvements within all
businesses and the loss of lower margin customers within the financial
institution checks business. The last of the scheduled check printing plant
closings was completed during the first quarter of 2000, and we consolidated two
facilities into one at the end of the second quarter. We plan to continue our
process improvements and focus on increasing sales of higher margin products
during the remainder of 2000.

     eFunds gross margin percentage was 39.0% for the third quarter of 2000 and
38.9% for the third quarter of 1999. For the first nine months of 2000, eFunds
gross margin percentage decreased to 37.3% from 37.8% for the same period in
1999. Cost of sales for the first nine months of 2000 included net charges of
$9.7 million for additional expected future losses on the contracts of the
segment's EBT business. Excluding these charges, eFunds' gross margin percentage
would have been 40.5% for the first nine months of 2000, showing improvement
over 1999. The improvement was due to a shift toward electronic customer
inquiries in the account verification business which generate higher margins,
increased utilization of existing infrastructure, less reliance on
sub-contractors, an increasing portion of work being performed at the India
facilities where margins are higher and the implementation of cost containment
measures within the segment's EBT business. Partially offsetting these
improvements was the new ATM deployment agreement entered into in September
2000. In the third quarter, this agreement exhibited a slight loss.

     SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSE - SG&A expense decreased
$3.8 million, or 2.4%, to $152.5 million during the third quarter of 2000 from
$156.3 million during the third quarter of 1999. SG&A expense increased $25.8
million, or 5.7%, to $478.5 million during the first nine months of 2000 from
$452.7 million during the first nine months of 1999. As a percentage of net
sales, SG&A expense increased to 37.7% during the third quarter of 2000 as


                                       17
<PAGE>


compared to 37.5% during the third quarter of 1999 and increased to 39.3% during
the first nine months of 2000 as compared to 36.5% during the first nine months
of 1999. SG&A expense for the first nine months of 2000 included net
restructuring reversals of $1.6 million, charges of $7.2 million for payments
due to certain officers under change of control and executive employment
agreements, as well as additional charges of $7.2 million for administrative
costs relating to the planned spin-off of the eFunds segment. SG&A expense for
the first nine months of 1999 included net restructuring reversals of $3.2
million. Additionally, the increase in SG&A expense was due to a number of other
factors including the HCL-Deluxe, N.V. and Designer Checks acquisitions, as well
as increased marketing and infrastructure expenses for new and existing
products. These increases were partially offset by the sale of our collections
business in December 1999. The collections business had $4.9 million and $22.8
million of SG&A expense in the third quarter and first nine months of 1999,
respectively.

     Paper Payment Systems SG&A expense increased 5.1% in the third quarter of
2000 from the third quarter of 1999 and increased 9.3% for the first nine months
of 2000 from the first nine months of 1999. This reflects increased spending on
Internet commerce infrastructure and additional capabilities for new ventures,
as well as increased marketing expenses for the direct checks business as it
continues to emphasize new customer acquisition. Additionally, the segment
experienced increased SG&A expense due to the acquisition of Designer Checks in
February 2000. Partially offsetting these increases were decreased data entry
costs at the direct checks business due to an improved order entry system, the
continuing roll-out of a new order entry and customer service system at the
financial institution checks business, as well as the net reversal of $2.1
million of restructuring charges in the second quarter of 2000.

     eFunds SG&A expense increased 14.8% in the third quarter of 2000 from the
third quarter of 1999 and increased 48.0% for the first nine months of 2000 from
the first nine months of 1999. The increases in SG&A expense were due to several
factors, including the acquisitions of an electronic check conversion company in
February 1999 and HCL-Deluxe, N.V. in April 1999, additional promotional
advertising geared toward creating brand awareness, infrastructure investments
and costs associated with the separation from Deluxe. Additionally, in the first
quarter of 1999 the segment reversed $2.0 million of restructuring accruals from
prior periods related to the decision to retain the international operations of
this segment, reducing SG&A expense for the first nine months of 1999. As a
percentage of net sales, SG&A expense decreased to 32.8% during the third
quarter of 2000 compared to 37.2% during the third quarter of 1999 and increased
to 36.2% during the first nine months of 2000 compared to 33.8% during the first
nine months of 1999.

     OTHER INCOME (EXPENSE) - Other income decreased $2.5 million to $1.8
million during the third quarter of 2000 from $4.3 million during the third
quarter of 1999. Other expense was $4.9 million during the first nine months of
2000 compared to other income of $5.0 million during the first nine months of
1999. The decreases were due primarily to higher interest expense and lower
investment income, gains on facility and equipment sales in 1999, as well as the
fact that results for the first nine months of 1999 included the reversals of
$2.1 million of reserves for legal proceedings and $2.3 million of restructuring
reserves.

     PROVISION FOR INCOME TAXES - Our effective tax rate for the third quarter
of 2000 was 37.5% compared to 36.9% for the third quarter of 1999. Our effective
tax rate for the first nine months of 2000 was 37.5% compared to 38.0% for the
first nine months of 1999. The decreased rate for the first nine months of the
year was due primarily to decreased state tax expense resulting from various tax
reduction initiatives.

     NET INCOME - Net income for the third quarter of 2000 increased $0.3
million, or 0.7%, to $49.4 million from $49.1 million for the third quarter of
1999. Net income decreased $16.3 million, or 11.3%, to $128.6 million for the
first nine months of 2000 from $144.9 million for the first nine months of 1999.
Our improved gross margin was offset by increased SG&A expense related to
Internet commerce spending and other infrastructure investments, increased
marketing expenses within the direct checks and eFunds businesses, increased
goodwill amortization due to acquisitions and costs of the planned eFunds
separation.

Liquidity, Capital Resources and Financial Condition

     As of September 30, 2000, we had cash and cash equivalents of $111.7
million. In addition, we had a $10.0 million time deposit pledged as collateral
to support our guarantee of a credit facility available to our Indian
operations. The maturity date of this deposit is December 28, 2000, at which
time the collateral may be renewed or replaced by the agreement of both parties.
We also had $4.8 million of restricted cash that we temporarily hold in
custodial accounts on behalf of clients and had supplied $27.9 million of
restricted cash to ATMs deployed by us. We have agreed with the company who
manages this


                                       18
<PAGE>


ATM base to make up to $35.0 million of cash available for this purpose. We have
also agreed to guarantee equipment leases of up to $3.0 million face value for
Canadian customers of this company and we have indicated that, subject to mutual
agreement of the parties upon definitive terms and conditions, we would be
willing to work towards an arrangement under which we would loan this company up
to $12.0 million to enable it to undertake mutually agreed-upon acquisitions.
These obligations will continue to be eFunds' obligations upon completion of the
separation of eFunds from Deluxe.

     Our working capital on September 30, 2000 was a negative $64.7 million
compared to a positive $14.1 million on December 31, 1999. The current ratio on
September 30, 2000 and December 31, 1999 was 0.9 to 1 and 1.0 to 1,
respectively. The decreases in working capital and the current ratio were
primarily due to the fact that formerly long-term debt of $100.0 million is
payable in February 2001. Thus, the debt is included in current liabilities on
the consolidated balance sheet at September 30, 2000. Cash provided by
operations represents our primary source of working capital and the source for
financing capital expenditures and paying cash dividends. We believe that cash
generated from operations and from our current credit facilities is sufficient
to sustain our existing operations.

     Cash provided by operating activities was $192.8 million during the first
nine months of 2000 compared to $139.0 million during the first nine months of
1999. The increase in 2000 was primarily due to the payment of $32.2 million in
February 1999 resulting from a judgment in a lawsuit involving the eFunds
segment and the increase in restricted cash in 1999. Partially offsetting these
items was an increase in eFunds accounts receivable in 2000 due to increased
sales volume, as well as the fact that 1999 operating cash flow reflected a
large decrease in accounts receivable. As the result of a management plan to
drive a reduction in accounts receivable and maximize working capital, we saw a
significant decrease in accounts receivable in 1999 due to an increase in
Automated Clearing House (ACH) processing of cash receipts within the Paper
Payment Systems segment.

     Cash used in investing activities was $171.3 million during the first nine
months of 2000 compared to $66.5 million during the same period in 1999. The
most significant use of cash for investing activities was the payment of $116.0
million during the first nine months of 2000 to complete the acquisition of
Designer Checks and to purchase an investment interest in a limited liability
company. We paid $35.7 million during the first nine months of 1999 to complete
two acquisitions. Purchases of capital assets totaled $68.6 million during the
first nine months of 2000 and $78.7 million during the same period in 1999.
Sources of investing cash flows were the sales of businesses and capital assets.
These activities generated investing cash inflows of $14.8 million during the
first nine months of 2000 and $75.9 million during the same period in 1999.
Additionally, during the first nine months of 1999, we used $32.5 million of
cash to provide short-term financing on sales of facilities. We collected that
cash in early 2000. We estimate that capital expenditures, including the capital
expenditures of eFunds, will be approximately $90.0 to $100.0 million in 2000.

     Cash used in financing activities was $46.1 million during the first nine
months of 2000 and $285.6 million during the same period in 1999. During the
first nine months of 1999, we used cash of $216.7 million to repurchase our
common stock. Additionally, we used cash of $116.0 million during the first nine
months of 2000 and $95.9 million during the first nine months of 1999 to repay
debt and pay dividends to shareholders. The primary sources of cash from
financing activities were the sale of approximately 12% of eFunds shares to the
public in June 2000 and the issuance of shares to employees under our stock
purchase plan. The sale of eFunds common stock provided cash of $64.5 million in
2000. Common stock issued to employees generated financing cash inflows of $6.5
million during the first nine months of 2000 and $25.7 million during the same
period in 1999. Additionally, during the first nine months of 1999, we had net
short-term borrowings of $1.4 million.

     As of September 30, 2000, we had committed lines of credit for $450.0
million available for borrowing and as support for commercial paper. The average
amount drawn on these lines during the first nine months of 2000 was $25.0
million at a weighted-average interest rate of 6.26%. As of September 30, 2000,
no amounts were outstanding under these lines of credit. The average amount
drawn on these lines during 1999 was $39.8 million at a weighted-average
interest rate of 6.39%. As of December 31, 1999, $60.0 million was outstanding
under these lines of credit at an interest rate of 6.39%. As of September 30,
2000, we had $25.0 million of commercial paper outstanding at a weighted-average
interest rate of 6.54%. The average amount of commercial paper outstanding
during the first nine months of 2000 was $6.2 million at a weighted-average
interest rate of 6.57%. No commercial paper was issued during 1999.

     We also had a $10.0 million credit facility, denominated in Indian rupees,
available to our Indian operations at the lender's prime interest rate.
Borrowings under this facility are due on demand. This facility is guaranteed by
us and this guarantee is collateralized by a $10.0 million time deposit account
maintained by us with the lending bank. The maturity date


                                       19
<PAGE>


of this deposit is December 28, 2000, at which time the collateral may be
renewed or replaced by agreement of both parties. The average amount drawn on
this line during the first nine months of 2000 was $4.6 million at a
weighted-average interest rate of 15.77%. As of September 30, 2000, $4.9 million
was outstanding at an interest rate of 15.77%. The average amount drawn on this
line during 1999 was $2.7 million at a weighted-average interest rate of 15.81%.
As of December 31, 1999, $3.1 million was outstanding at an interest rate of
15.81%.

     We had uncommitted bank lines of credit of $40.0 million available at
variable interest rates. The average amount drawn on these lines of credit
during the first nine months of 2000 was $44 thousand at a weighted-average
interest rate of 6.38%. The average amount drawn on these lines of credit during
1999 was $1.5 million at a weighted-average interest rate of 5.12%. As of
September 30, 2000 and December 31, 1999, no amounts were outstanding under
these lines of credit.

     We have a shelf registration in place for the issuance of up to $300.0
million in medium-term notes. These notes could be used for general corporate
purposes, including working capital, capital expenditures, possible acquisitions
and repayment or repurchase of our outstanding indebtedness and securities. As
of September 30, 2000 and December 31, 1999, no notes were issued or outstanding
under this shelf registration.

Outlook/Recent Developments

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES, which provides guidance on accounting for derivatives
and hedge transactions. This statement is effective for us on January 1, 2001.
We anticipate that the effect of this pronouncement will not have a material
impact on our reported operating results or financial position.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, REVENUE RECOGNITION IN FINANCIAL STATEMENTS,
which provides guidance in applying generally accepted accounting principles to
revenue recognition in financial statements. Application of this SAB did not
have a material impact on our reported operating results or financial position.

     In August 2000, we announced an e-commerce growth strategy that is intended
to leverage the personalization and information management competencies from our
core check printing business into other profitable revenue growth opportunities.
This strategy involves increased expense and investment in the development of
Internet commerce capabilities for both new ventures and existing
infrastructure. We expect to continue these expenditures into 2001 to create
additional opportunities to offer new types of customized products to
individuals and small businesses and to enhance our Internet ordering
capabilities.

     One outcome of our e-commerce growth strategy was PlaidMoon.com, an
Internet-based business concept that allowed consumers to design and purchase
personalized items. In October 2000, we announced that we are scaling back and
repositioning our PlaidMoon.com business concept within our Paper Payment
Systems segment. Instead of being a stand-alone business as had been planned,
PlaidMoon.com will be folded into existing businesses. The PlaidMoon.com web
site will be inactive while it is being repositioned. We are currently
evaluating to what extent the long-lived assets and employees of this business
will be utilized by the Company's Paper Payment Systems segment. It is possible
that this evaluation could result in asset impairment and restructuring charges
in the fourth quarter of 2000.

     As we move into 2001, we intend to focus on retaining our existing
customers and obtaining new customers in the direct channel. We intend to invest
in our core check business to retain our financial institution customer base. At
the same time we will target new customers by offering higher levels of quality
and service than our competitors. In the direct checks business, we plan to
increase promotional spending to obtain new customers.

     In October 2000, we announced that by the beginning of 2001 we will begin
outsourcing the eFunds segment's consumer voice inquiry operations relating to
Chex Systems records. Approximately 300 eFunds employees are impacted by this
decision. Although some of these employees may not find other positions within
eFunds, we do not expect to record a significant restructuring charge in the
fourth quarter of 2000 as a result of this initiative.


                                       20
<PAGE>


Item 3. Quantitative and Qualitative Disclosure About Market Risk

     As of September 30, 2000, we had an investment portfolio of fixed income
securities, excluding those classified as cash and cash equivalents, of $43.5
million. These securities, like all fixed income instruments, are subject to
interest rate risk and will decline in value if market interest rates increase.
However, we have the ability to hold these fixed income investments until
maturity and therefore would not expect to recognize an adverse impact on income
or cash flows.

     We operate internationally, and so we are subject to potentially adverse
movements in foreign currency rate changes. We have not entered into foreign
exchange forward contracts to reduce our exposure to foreign currency rate
changes on intercompany foreign currency denominated balance sheet positions. As
of September 30, 2000, we have borrowed $4.9 million on a line of credit
denominated in Indian rupees. The rupee-denominated funds borrowed are used
exclusively by the business within India to pay for expenses denominated in
Indian rupees.

     We are exposed to foreign exchange risk to the extent of adverse
fluctuations in the Indian rupee and British pound. We do not believe that a
change in the Indian rupee or British pound exchange rates of 10% would result
in a material impact on our future earnings, financial position or cash flows.
Historically, the effect of movements in these exchange rates has been
immaterial to our consolidated results.


                                       21
<PAGE>


                           PART II - OTHER INFORMATION


Item 4. Submission of Matters to a Vote of Security Holders

     The Company held its annual shareholders' meeting on August 4, 2000.

     59,636,620 shares were represented (82.46% of the 72,322,238 shares
outstanding and entitled to vote at the meeting). Four items were considered at
the meeting and the results of the voting were as follows:

     1.   Election of Directors:

          The nominees listed in the proxy statement were: John A. Blanchard
          III, Lawrence J. Mosner, Barbara B. Grogan, Stephen P. Nachtsheim,
          Calvin W. Aurand, Jr., Donald R. Hollis, Robert C. Salipante, Ronald
          E. Eilers. The results were as follows:

          Election of Directors               For         Withhold
          ---------------------               ---         --------
          John A. Blanchard III            53,064,561     6,572,059
          Lawrence J. Mosner               53,283,420     6,353,200
          Barbara B. Grogan                53,305,749     6,330,871
          Stephen P. Nachtsheim            53,325,033     6,311,587
          Calvin W. Aurand, Jr.            53,302,392     6,334,228
          Donald R. Hollis                 53,318,556     6,318,064
          Robert C. Salipante              52,696,061     6,940,559
          Ronald E. Eilers                 53,307,899     6,328,721

     2.   Adoption of the Deluxe Corporation 2000 Annual Incentive Plan:

          For:              41,312,593
          Against:          17,285,432
          Abstain:           1,038,595

     3.   Adoption of the Deluxe Corporation 2000 Stock Incentive Plan:

          For:              35,411,767
          Against:          23,191,244
          Abstain:           1,033,609

     4.   Ratification of the selection of Deloitte & Touche LLP as independent
          auditors:

          For:              59,007,979
          Against:             343,792
          Abstain:             284,849



Item 5. Other Information

RISK FACTORS AND CAUTIONARY STATEMENTS.

     When used in this Quarterly Report on Form 10-Q and in future filings by
the Company with the Securities and Exchange Commission (the "Commission"), in
the Company's press releases, letters to shareholders and in oral statements
made by the Company's representatives, the words or phrases "should result,"
"are expected to," "targeted," "will continue," "will approximate," "is
anticipated," "estimate," "project" or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are necessarily


                                       22
<PAGE>


subject to certain risks and uncertainties, including those discussed below,
that could cause actual results to differ materially from the Company's
historical experience and its present expectations or projections. Caution
should be taken not to place undue reliance on any such forward-looking
statements, which speak only as of the date made. The factors listed below could
affect the Company's financial performance and could cause the Company's actual
results for future periods to differ from any opinions or statements expressed
with respect thereto. Such differences could be material and adverse.

     The Company will not undertake and specifically declines any obligation to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances occurring after
the date of such statements or to reflect the occurrence of anticipated or
unanticipated events. This discussion supersedes the discussion in the Company's
Amendment No. 2 to its Quarterly Report on Form 10-Q/A for the quarter ended
June 30, 2000.

     Earnings Estimates. From time to time, representatives of the Company may
make predictions or forecasts regarding the Company's future results, including
estimated earnings or earnings from operations. Any forecast regarding the
Company's future performance reflects various assumptions. These assumptions are
subject to significant uncertainties, and, as a matter of course, many of them
will prove to be incorrect. Further, the achievement of any forecast depends on
numerous factors (including those described in this discussion), many of which
are beyond the Company's control. As a result, there can be no assurance that
the Company's performance will be consistent with any management forecasts or
that the variation from such forecasts will not be material and adverse.
Investors are cautioned not to base their entire analysis of the Company's
business and prospects upon isolated predictions, but instead are encouraged to
utilize the entire available mix of historical and forward-looking information
made available by the Company, and other information affecting the Company and
its products and services, when evaluating the Company's prospective results of
operations.

     In addition, representatives of the Company may occasionally comment
publicly on the perceived reasonableness of published reports by independent
analysts regarding the Company's projected future performance. Such comments
should not be interpreted as an endorsement or adoption of any given estimate or
range of estimates or the assumptions and methodologies upon which such
estimates are based. Generally speaking the Company does not make public its own
internal projections, budgets or estimates. Undue reliance should not be placed
on any comments regarding the conformity, or lack thereof, of any independent
estimates with the Company's own present expectations regarding its future
results of operations. The methodologies employed by the Company in arriving at
its own internal projections and the approaches taken by independent analysts in
making their estimates are likely different in many significant respects.
Although the Company may presently perceive a given estimate to be reasonable,
changes in the Company's business, market conditions or the general economic
climate may have varying effects on the results obtained through the use of
differing analyses and assumptions. The Company expressly disclaims any
continuing responsibility to advise analysts or the public markets of its view
regarding the current accuracy of the published estimates of outside analysts.
Persons relying on such estimates should pursue their own independent
investigation and analysis of their accuracy and the reasonableness of the
assumptions on which they are based.

     Separation of eFunds. The Company has announced that it plans to
distribute all of its shares of eFunds common stock to its shareholders through
a spin-off transaction rather than by an exchange offer, or split-off, as had
been previously announced. The 40 million shares of eFunds common stock
currently owned by the Company will now be distributed on a designated
distribution date to every Deluxe shareholder of record on a designated record
date. Each shareholder will receive a fixed number of eFunds shares for each
Deluxe share owned. The Company has requested confirmation from the Internal
Revenue Service (IRS) that the spin-off will be tax-free to the Company and to
its shareholders for U.S. federal income tax purposes. The Company has the sole
discretion to determine whether to proceed with the spin-off and to determine
the timing and other aspects of the transaction. Subject to these conditions,
the Company plans to complete the separation of eFunds on or before December 31,
2000. However, the timing of the proposed spin-off and may be affected by
actions of the IRS and, assuming the Company receives the desired confirmation
that the spin-off will be tax-free to the Company and to its shareholders for
U.S. federal income tax purposes, completion of the spin-off could occur
during 2001 rather than during the fourth quarter of 2000. The timing of the
spin-off, if consummated, could have an adverse impact on the Company's ability
to meet profitability and operating earnings targets. Once the split-off occurs,
the results of eFunds will no longer be included in the Company's consolidated
results of operations. Additionally, the Company will incur additional costs
associated with the separation and spin-off of eFunds. These costs will be
expensed in future periods and may adversely affect the Company's ability to
achieve expected levels of profitability

     The Company's intentions with respect to eFunds are subject to further
risks and uncertainties, including the ability of eFunds to successfully manage
and complete the integration of three businesses into eFunds, the potential that
the separation


                                       23
<PAGE>


of the two companies may disrupt one or more of Deluxe's businesses and customer
relationships, and the uncertainty of obtaining confirmation from the IRS, which
is a necessary condition of the spin-off. There can be no assurance that the
separation of the Company and eFunds will result in increased value to the
Company's shareholders for many reasons, including prevailing market conditions
and potential dispositions by holders of the common stock of either company
following the spin-off or that the separation will achieve the desired levels of
efficiency or cost savings in the Company's operations.

     The Company cannot be certain that the spin-off will be completed. If the
Company does not complete the separation of eFunds, it will continue to control
eFunds and the Company and eFunds may not realize the anticipated benefits from
the separation of the two companies.

     Tax Risks Associated with the Spin-Off of eFunds. The Company has requested
confirmation from the IRS that, for U.S. federal income tax purposes, the
spin-off will be generally tax-free to the Company and to its shareholders. This
confirmation, if received, will be premised on a number of representations and
undertakings made by Deluxe and eFunds to the IRS, including representations
with respect to each company's intention not to engage in certain transactions
in the future. The spin-off may be held to be taxable to the Company and to its
shareholders who receive eFunds shares if the IRS determines that any of the
representations made are incorrect or untrue in any respect, or if any
undertakings made are not complied with. If the Company completes the spin-off
and, notwithstanding such confirmation, the spin-off is held to be taxable, both
the Company and its shareholders who receive eFunds shares could be subject to a
material amount of taxes. eFunds will be liable to the Company for any such
taxes incurred by the Company to the extent such taxes are attributable to
specific actions or failures to act by eFunds, or to specific transactions
involving eFunds following the spin-off. In addition, eFunds will be liable to
the Company for a portion of any taxes incurred by the Company if the spin-off
fails to qualify as tax-free as a result of a retroactive change of law or other
reason unrelated to the action or inaction of either eFunds or the Company.
eFunds may not, however, have adequate funds to perform its indemnification
obligations. Further, eFunds indemnification obligations are only for the
benefit of the Company and not individual shareholders.

     Recent Strategic Initiatives. The Paper Payment Systems segment is
developing and evaluating plans and launching initiatives for future growth.
These plans and initiatives will involve increased expense and investment in the
development of Internet commerce capabilities for both new ventures and existing
infrastructure. There can be no assurance that the amount of this investment
will not exceed the Company's expectations and result in materially increased
levels of expense. Also, as these Internet commerce initiatives involve new
technologies and business methods, are dependent on product and service
innovations and serve new or developing markets, there is no assurance that they
will achieve targeted revenue, profit or cash flow levels or result in positive
returns on the Company's investment. Further, Internet commerce is rapidly
evolving and there is no assurance that the Company's products and services will
achieve acceptance or be competitive with the current or future offerings of
existing or emerging competitors. Internet commerce is also a recent phenomenon
and may not continue to expand as a medium of commerce.

     One of the outcomes of this e-commerce strategy was PlaidMoon.com, an
Internet-based business concept that allowed consumers to design and purchase
personalized items. The Company has announced that it is scaling back and
repositioning its PlaidMoon.com business concept within its Paper Payment
Systems segment. Instead of being a standalone business as had been planned,
PlaidMoon.com will be folded into existing businesses. The PlaidMoon.com web
site will be inactive while it is being repositioned. There can be no assurance
that PlaidMoon.com, when repositioned within the Company's other operations,
will achieve desired levels of revenue, profit or cash flow or that reductions
in costs associated with the scaling back or repositioning of PlaidMoon.com or
the suspension of its operations will favorably affect future financial results.

     Acquisitions. The Company may consider undertaking one or more significant
acquisitions. The Company cannot predict whether any acquired products,
services, technologies or businesses will contribute to its revenues or earnings
to any material extent. Additionally, a significant acquisition could result in
the potentially dilutive issuance of equity securities, the incurrence of
contingent liabilities or debt, or additional amortization expense relating to
goodwill and other intangible assets, and thus, could adversely affect the
Company's business, results of operations and financial condition. Additionally,
the success of any acquisition would depend upon the Company's ability to
effectively integrate the acquired businesses into the Company. The process of
integrating acquired businesses may involve numerous risks, including, among
others: difficulties in assimilating operations and products; diversion of
management's attention from other business concerns; risks of operating
businesses in which the Company has limited or no direct prior experience;
potential loss of key employees of acquired


                                       24
<PAGE>


businesses or of the Company; potential exposure to unknown liabilities; and
possible loss of customers of the Company or of the acquired businesses.

     Tax Limitations on Issuance or Acquisitions of the Company's Shares. The
Company may be limited in the amount of the Company's shares that it can acquire
or issue because the acquisition or issuance of the Company's shares may cause
the planned spin-off of eFunds to be taxable to the Company under Section 355(e)
of the Internal Revenue Code. As a result of such possible adverse tax
consequences, following the spin-off, the Company may be restricted in its
ability to effect certain acquisitions, to issue or repurchase the Company's
shares or to enter into other transactions that would result in a change of
control of the Company.

     Consumer Privacy Protection. Laws and regulations relating to consumer
privacy protection could harm the Company's ability to collect and use data,
increase its operating costs or otherwise harm its business. There is an
increasing public concern over consumer privacy rights. The Congress and state
legislatures have adopted and are considering adopting laws and regulations
restricting the purchase, sale and sharing of personal information about
consumers.

     The Gramm-Leach-Bliley Act (the Act) imposes significant new consumer
privacy requirements on any entity engaged in the business of providing
financial services, including entities that provide services to financial
institutions. The Act requires covered companies to develop and implement
policies to protect the security and confidentiality of consumers' nonpublic
personal information and to disclose these policies to consumers before a
customer relationship is established and annually thereafter.

     In addition, the Act requires covered companies to give an opt-out notice
to consumers before sharing consumer information with third parties. The opt-out
notice requirement in the Act is subject to several exceptions for credit
reporting and fraud prevention purposes. Although the Company believes these
exceptions apply to its eFunds segment, government agencies could interpret
their regulations in a manner that could expand the scope of the Act in ways
which could adversely affect eFunds' businesses. In addition, uncertainty over
the scope of the regulations could make financial institutions unwilling to
share consumer-related information with the Company.

     Regulations promulgated pursuant to the Act may also limit the Company's
ability to use its direct checks business data in its other businesses,
including the other e-commerce and direct to consumer businesses within the
Paper Payment Systems segment. The impact of the Act and regulations issued
under the Act could have the effect of increasing the Company's expenses and
otherwise foreclosing future business initiatives.

     The Act does not prohibit state legislation or regulations that are more
restrictive on the collection and use of data. More restrictive legislation or
regulations have been introduced in the past and could be introduced in the
future in Congress and the states. The Company is unable to predict whether more
restrictive legislation or regulations will be adopted in the future. Any future
legislation or regulations could have a negative impact on the Company's
business, results of operations and prospects.

     Laws and regulations may be adopted in the future with respect to the
Internet or e-commerce covering issues such as user privacy. New laws or
regulations may impede the growth of the Internet. This could decrease traffic
to the Company's websites and decrease the demand for the Company's products or
services. Additionally, the applicability to the Internet of existing laws
governing property ownership, taxation, libel and personal privacy is uncertain
and may remain uncertain for a considerable length of time.

     Competition. Although the Company believes it is the leading check printer
in the United States, it faces considerable competition from other smaller
companies in its traditional sales channel to financial institutions, from
direct mail sellers of checks and increasingly, from Internet-based sellers of
checks. From time to time, some of the Company's competitors have reduced the
prices of their products in an attempt to gain volume. The corresponding pricing
pressure placed on the Company has resulted in reduced profit margins for the
Company's check printing business in the past and similar pressures can
reasonably be expected in the future. The Company has also experienced some loss
of business due to its refusal to meet competitive prices that fell below the
Company's revenue per unit and profitability per unit targets. Similar pressures
may result in margin reductions in the future, particularly since the Company
does not believe that it can continue to achieve cost reductions of a magnitude
similar to those it has achieved in recent years. The Company can provide no
assurance that it will


                                       25
<PAGE>


be able to compete effectively against current and future competitors. Continued
competition could result in price reductions, reduced margins and loss of
customers.

     Check printing is, and is expected to continue to be, an essential part of
the Company's business and the principal source of its operating income for at
least the next several years. A wide variety of alternative payment delivery
systems, including credit cards, debit cards, smart cards, ATM machines, direct
deposit, electronic and other bill paying services, home banking applications
and Internet-based payment services, are in various stages of maturity or
development and additional systems will likely be introduced. The Company
primarily sells checks for personal and small business use and believes that
there will continue to be a substantial demand for these checks for the
foreseeable future. However, according to Company estimates, growth in total
checks written by individuals and small businesses, the primary purchasers of
the Company's checks, was flat in 1999 and the total number of personal,
business and government checks written in the United States has been in decline
since 1997. The Company believes that the individual and small business segments
of the check industry will eventually decline due to the increasing use of
alternative payment methods. However, the rate and the extent to which
alternative payment methods will achieve consumer acceptance and replace checks
cannot be predicted with certainty. A surge in the popularity of any of these
alternative payment methods could have a material, adverse effect on the demand
for checks and a material adverse effect on the Company's business, results of
operations and prospects.

     The introduction of the alternative payment methodologies described above
has also resulted in an increased interest by third parties in transaction
processing, authorization and verification, as well as other methods of
effecting electronic payments, as a source of revenue. This increased interest
level has led to increased competition for the Company's transaction processing
and authorization businesses. The payment processing industry is characterized
by continuously evolving technology and intense competition. Many participants
in the industry have substantially greater financial, technical and marketing
resources, greater name recognition and a larger installed customer base than
the Company. In addition to current competitors, the Company expects substantial
competition from established and new companies as the e-commerce and Internet
markets continue to develop and expand. There can be no assurance that the
Company's competitors and potential competitors will not succeed in developing
and marketing technologies, services or products that are more accepted in the
marketplace than those offered or envisioned by the Company. Such a development
could result in the loss of significant customers by the Company's eFunds
segment, render the Company's technology and proposed products obsolete or
noncompetitive or otherwise materially hinder the achievement of the growth
targets established for this business unit. Initiatives that may be undertaken
by the Company in connection with Internet commerce-based activities would be
particularly susceptible to these types of competitive risks and the rapid
development and deployment of Internet technologies, products and services may
present unanticipated competitive risks to the Company's current business that
may be material and adverse.

     Effect of Financial Institution Consolidation. Mergers, acquisitions and
personnel changes at financial institutions may adversely affect the Company's
business, financial condition and results of operations. Financial institutions
have been undergoing large-scale consolidation, causing the number of financial
institutions to decline. Margin pressures arise from this consolidation when
merged entities seek not only the most favorable prices formerly offered to the
predecessor institutions, but also additional discounts due to the greater
volume represented by the combined entity. This concentration greatly increases
the importance to the Company of retaining its major customers and attracting
significant additional customers in an increasingly competitive environment.
Although the Company devotes considerable efforts towards the development of a
competitively priced, high quality suite of products and services for the
financial services industry, there can be no assurance that significant
customers will not be lost or that any such loss can be counterbalanced through
the addition of new customers or by expanded sales to the Company's remaining
customers.

     Intellectual Property. Despite efforts by the Company to protect its
intellectual property, third parties may infringe or misappropriate the
Company's intellectual property or otherwise independently develop substantially
equivalent products and services. The loss of intellectual property protection
or the inability to secure or enforce intellectual property protection could
harm the Company's business and ability to compete. The Company relies on a
combination of trademarks, software and know-how. The Company may be required to
spend significant resources to protect its trade secrets and monitor and police
its intellectual property rights.

     Third parties may assert infringement claims against the Company in the
future. In particular, there has been a substantial increase in the issuance of
patents for Internet-related systems and business methods, which may have broad
implications for participants in Internet commerce. Claims for infringement of
these patents are increasingly becoming a


                                       26
<PAGE>


subject of litigation. If the Company becomes subject to an infringement claim,
it may be required to modify its products, services and technologies or obtain a
license to permit its continued use of those rights. The Company may not be able
to do either of these things in a timely manner or upon reasonable terms and
conditions. Failure to do so could seriously harm the Company's business,
operating results and prospects as a result of lost business, increased expense
or being barred from offering its products or implementing its systems or other
business methods. In addition, future litigation relating to infringement claims
could result in substantial costs to the Company and a diversion of management
resources. Adverse determinations in any litigation or proceeding could also
subject the Company to significant liabilities and could prevent the Company
from using or offering some of its products, services or technologies.

     Software Defects, Development Delays and Installation Difficulties. All of
the Company's businesses use sophisticated software and computing systems.
Additionally, the Company's eFunds segment often encounters delays when
developing new products and services. The software underlying eFunds' products
and services has occasionally contained and may in the future contain undetected
errors or defects when first introduced or when new versions are released. The
Company may experience difficulties in installing or integrating its
technologies on platforms used by its customers or in new environments, such as
the Internet. Errors or delays in the processing of check orders or electronic
transactions or other difficulties could result in lost customers, delay in
market acceptance, additional development costs, diversion of technical and
other resources, negative publicity or exposure to liability claims.

     Although the eFunds segment attempts to limit its potential liability for
warranty claims through disclaimers and limitation-of-liability provisions in
its license and client agreements, the Company cannot be certain that these
measures will be successful in limiting its liability.

     Conditions in India. The Company's eFunds segment employs approximately 680
people in India in its software development and business process management
facilities. Political and economic conditions in India could adversely affect
the Company's operations.

     The Company's Indian software development and business process management
operations qualify for certain tax incentives. Such incentives generally provide
us with a complete exemption from Indian tax on business income generated
through these facilities through the end of 2008. The Company cannot be certain
that these tax benefits will be continued in the future at their current levels
or at all. If these tax benefits were reduced or eliminated, the Company's taxes
in future periods would likely increase.

     Increased Production and Delivery Costs. The Company's contracts with
financial institution customers typically have a term of several years or more
and do not allow the Company to pass through increased production costs to the
financial institutions. Increases in production costs such as labor and paper
could adversely affect the Company's profitability. In addition, events such as
the 1997 United Parcel Services strike can also adversely impact the Company's
margins by imposing higher delivery costs. Competitive pressures may have the
effect of inhibiting the Company's ability to reflect these increased costs in
the prices of its products.

     Limited Source of Supply. The Company's check printing business utilizes a
paper printing plate material that is available from only a limited number of
sources. The Company believes it has a reliable source of supply for this
material and that it maintains an inventory sufficient to avoid any production
disruptions in the event of an interruption of its supply. In the event,
however, that the Company's current supplier becomes unwilling or unable to
supply the required printing plate material at an acceptable price and the
Company is unable to locate a suitable alternative source within a reasonable
time frame, the Company would be forced to convert its facilities to an
alternative printing process. Any such conversion would require the
unanticipated investment of significant sums and could result in production
delays and loss of business.

     Environmental Matters. The Company's check printing plants are subject to
many existing and proposed federal and state regulations designed to protect the
environment. In some instances, the Company has owned and operated its check
printing plants prior to the enactment of environmental regulations. The Company
has sold former check printing plants to third parties and in most instances has
agreed to indemnify the current owner of the facility for on-site environmental
liabilities. Although the Company is not aware of any fact or circumstance which
would require the future expenditure of material amounts for environmental
compliance, if environmental liabilities are discovered at its check printing
plants, it could be required to spend material amounts for environmental
compliance in the future.


                                       27
<PAGE>


     Sales and Other Taxes. In accordance with current federal, state and local
tax laws, and the constitutional limitations thereon, the Company currently
collects sales, use or similar taxes in state and local jurisdictions where the
Company's direct checks and business forms businesses have a physical presence.
One or more state or local jurisdictions may seek to impose sales tax collection
obligations on the Company and other out-of-state companies which engage in
remote or online commerce. Further, tax laws and the interpretation of
constitutional limitations thereon, are subject to change. In addition, any new
operations of these businesses in states where they do not presently have a
physical presence could subject shipments of goods by these businesses into such
states to sales tax under current or future laws. If one or more state or local
jurisdictions successfully assert that the Company must collect sales or other
taxes beyond its current practice, it could have a material adverse affect on
the Company's business.

Item 6. Exhibits and Reports on Form 8-K

         (a)      The following exhibits are filed as part of this report:

     Exhibit No.                     Description                Method of Filing
     -----------                     -----------                ----------------

         2.1      Initial Public Offering and Distribution              *
                  Agreement, dated as of March 31, 2000, by and
                  between Deluxe and eFunds (incorporated by
                  reference to Exhibit 2.1 to the Registration
                  Statement on Form S-1 filed by eFunds with the
                  Securities and Exchange Commission (the
                  "Commission") on April 4, 2000, Registration No.
                  333-33992).

         3.1      Articles of Incorporation (incorporated by            *
                  reference to Exhibit 3(A) to the Company's Annual
                  Report on Form 10-K for the year ended December
                  31, 1990).

         3.2      Bylaws (incorporated by reference to Exhibit 3.2      *
                  to the Company's Quarterly Report on Form 10-Q
                  (the "September 1999 10-Q") for the quarter ended
                  September 30, 1999).

         4.1      Amended and Restated Rights Agreement, dated as of    *
                  January 31, 1997, by and between the Company and
                  Norwest Bank Minnesota, National Association, as
                  Rights Agent, which includes as Exhibit A thereto,
                  the form of Rights Certificate (incorporated by
                  reference to Exhibit 4.1 to the Company's
                  Amendment No. 1 on Form 8-A/A-1 (File No.
                  001-07945) filed with the Commission on February
                  7, 1997).

         4.2      Indenture, relating to up to $150,000,000 of debt     *
                  securities (incorporated by reference to Exhibit
                  4.1 to the Company's Registration Statement on
                  Form S-3 (33-32279) filed with the Commission on
                  November 24, 1989).

         4.3      Amended and Restated Credit Agreement, dated as of    *
                  July 8, 1997, among the Company, Bank of America
                  National Trust and Savings Association, as agent,
                  and the other financial institutions party thereto
                  related to a $150,000,000 committed line of credit
                  (incorporated by reference to Exhibit 4.3 to the
                  Company's Annual Report on Form 10-K for the year
                  ended December 31, 1997).

         4.4      Credit Agreement, dated as of August 30, 1999 (the    *
                  "August 30, 1999 Credit Agreement"), among the
                  Company, Bank of America, N.A. as the sole and
                  exclusive administrative agent,


                                 28
<PAGE>


                  and the other financial institution party thereto
                  related to a $500,000,000 revolving credit
                  agreement (incorporated by reference to Exhibit
                  4.4 to the September 1999 10-Q).

         4.5      Amendment No. 1 to Amended and Restated Rights        *
                  Agreement, entered into as of January 21, 2000,
                  between the Company and Norwest Bank Minnesota,
                  National Association as Rights Agent (incorporated
                  by reference to Exhibit 4.1 to the Company's
                  Amendment No. 1 to its Quarterly Report on Form
                  10-Q for the Quarter Ended June 30, 2000).

        10.1      Deluxe Corporation 2000 Annual Incentive        Filed herewith
                  Plan

        10.2      Deluxe Corporation 2000 Stock Incentive Plan    Filed herewith

        10.3      Deluxe Corporation 2000 Employee Stock          Filed herewith
                  Purchase Plan

        10.4      Extension of the August 30, 1999 Credit         Filed herewith
                  Agreement, entered into as of August 14,
                  2000.

        10.5      Amendment to Amended and Restated Credit        Filed herewith
                  Agreement dated July 8, 1997, entered into
                  as of August 14, 2000.

        10.6      Severance agreement with Ronald E. Eilers       Filed herewith
                  dated August 19, 1998.

        12.4      Statement re: computation of ratios             Filed herewith

        27.6      Financial Data Schedule for the nine months     Filed herewith
                  ended September 30, 2000

- --------------------
      *Incorporated by reference

      (b)  Reports on Form 8-K:  None


                                 29
<PAGE>


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                       DELUXE CORPORATION
                                          (Registrant)


Date: November 8, 2000                 /s/ J. A. Blanchard III
                                       -------------------------------------
                                       J.A. Blanchard III, President
                                       and Chief Executive Officer
                                       (Principal Executive Officer)


Date: November 8, 2000                 /s/ Lois M. Martin
                                       -------------------------------------
                                       Lois M. Martin
                                       Senior Vice President and
                                       Chief Financial Officer
                                       (Principal Financial Officer)


                                       30
<PAGE>


INDEX TO EXHIBITS


Exhibit No.                       Description                        Page Number
- -----------                       -----------                        -----------

   10.1      Deluxe Corporation 2000 Annual Incentive Plan

   10.2      Deluxe Corporation 2000 Stock Incentive Plan

   10.3      Deluxe Corporation 2000 Employee Stock Purchase Plan

   10.4      Extension of the August 30, 1999 Credit Agreement,
             entered into as of August 14, 2000

   10.5      Amendment to Amended and Restated Credit Agreement
             dated July 8, 1997, entered into as of August 14,
             2000

   10.6      Severance agreement with Ronald E. Eilers dated
             August 19, 1998

   12.4      Statement re: computation of ratios

   27.6      Financial Data Schedule for the Nine Months Ended
             September 30, 2000


                                       31

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>2000 ANNUAL INCENTIVE PLAN
<TEXT>


                                                                    Exhibit 10.1


                               DELUXE CORPORATION
                                      2000
                              ANNUAL INCENTIVE PLAN
                          (AS ADOPTED JANUARY 28, 2000)


         1. ESTABLISHMENT. On January 28, 2000 the Board of Directors of Deluxe
Corporation, upon recommendation by the Compensation Committee of the Board of
Directors, approved an incentive plan for executives as described herein, which
plan shall be known as the "Deluxe Corporation 2000 Annual Incentive Plan." This
Plan shall be submitted for approval by the shareholders of Deluxe Corporation
at the 2000 Annual Meeting of Shareholders. This Plan shall be effective as of
January 1, 2001, subject to its approval by the shareholders, and no benefits
shall be issued pursuant thereto until after this Plan has been approved by the
shareholders.

         2. PURPOSE. The purpose of this Plan is to advance the interests of
Deluxe Corporation and its shareholders by attracting and retaining key
employees, and by stimulating the efforts of such employees to contribute to the
continued success and growth of the business of the Company. This Plan is
further intended to provide employees with an opportunity to increase their
ownership of the Company's common stock and, thereby, to increase their personal
interest in the long-term success of the business in a manner designed to
increase shareholder value.

         3. DEFINITIONS. When the following terms are used herein with initial
capital letters, they shall have the following meanings:

         3.1. BASE SALARY - a Participant's annualized base salary, as
determined by the Committee, as of the last day of a Performance Period.

         3.2. COMPENSATION COMMITTEE - a committee of the Board of Directors of
the Company designated by such Board to administer the Plan which shall consist
of members appointed from time to time by the Board of Directors and shall be
composed of not fewer than such number of directors as shall be required to
permit grants and awards made under the Plan to satisfy the requirements of Rule
16b-3 promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934 (the "1934 Act"), as amended, or any successor rule or
regulation ("Rule 16b-3"). Each member of the Compensation Committee shall be a
"Non-Employee Director" within the meaning of Rule 16b-3 and an "outside
director" within the meaning of Section 162(m) of the Code.

         3.3. CODE - the Internal Revenue Code of 1986, as it may be amended
from time to time, and any proposed, temporary or final Treasury Regulations
promulgated thereunder.

         3.4. COMMON STOCK - the common stock, par value $1.00 per share, of the
Company.

         3.5. COMPANY - Deluxe Corporation, a Minnesota corporation, and any of
its subsidiaries or affiliates, whether now or hereafter established.

         3.6. DELUXE - Deluxe Corporation, a Minnesota corporation, and all
subsidiaries included in its consolidated financial reports for a given period.

         3.7. EXECUTIVES - all Participants for a given Performance Period
designated by the Compensation Committee as "Executives" for purposes of this
Plan. The Compensation Committee shall designate as Executives all Participants
it reasonably believes may be "named executive officers" under Rule 402
promulgated under the 1934 Act for that Performance Period.

<PAGE>


         3.8. MAXIMUM AWARD PERCENTAGE - a percentage, which may be greater or
less than 100%, as determined by the Committee for each Participant with respect
to each Performance Period and with respect to each Performance Factor.

         3.9. OTHER PARTICIPANTS - all Participants for a given Performance
Period who are not designated as "Executives" by the Compensation Committee for
such Performance Period.

         3.10. PARTICIPANTS - any management or highly compensated employees of
the Company who are designated by the Compensation Committee prior to the start
of a Performance Period as Participants in this Plan. Directors of the Company
who are not also employees of the Company are not eligible to participate in the
Plan. Participants shall be designated as either Executives or Other
Participants by the Compensation Committee as provided in Section 4.3 below.

         3.11. PERFORMANCE FACTOR - the pre-established, objective performance
goals selected by the Committee for each Participant with respect to each
Performance Period and which shall be determined solely on account of the
attainment of one or more pre-established, objective performance goals selected
by the Committee in connection with the grant of an award hereunder; provided,
however, that in the case of Other Participants, such performance goals need not
be objective and may be based on such business criteria as the Committee may
determine to be appropriate, which may include financial and nonfinancial
performance goals that are linked to such individual's business unit or the
Company as a whole or to such individual's areas of responsibility. The
objective performance goals for Executives shall be based solely on one or more
of the following business criteria, which may apply to the individual in
question, an identifiable business unit or the Company as a whole, and on an
annual or other periodic or cumulative basis: sales values, margins, volume,
cash flow, stock price, market share, sales, earnings per share, profits,
earnings before interest expense and taxes, earnings before interest expense,
interest income and taxes, earnings before interest expense, taxes, and
depreciation and/or amortization, earnings before interest expense, interest
income, taxes, and depreciation and/or amortization, return on equity or costs,
return on invested or average capital employed, or cumulative total return to
stockholders (in each case, whether compared to pre-selected peer groups or
not).

         3.12. PERFORMANCE PERIOD - each consecutive twelve-month period
commencing on January 1 of each year during the term of this Plan.

         3.13. PLAN - this Deluxe Corporation 2000 Annual Incentive Plan.

         3.14. STOCK INCENTIVE PLAN - The Deluxe Corporation 2000 Stock
Incentive Plan.

         3.15. TARGET AWARD - a dollar amount or a percentage of Base Salary,
which may be greater or less than 100%, as determined by the Committee with
respect to each Participant for each Performance Period.

         3.16. UNITS - Restricted Stock Units, as defined in the Stock Incentive
Plan.

         4. ADMINISTRATION.

         4.1. POWER AND AUTHORITY OF COMPENSATION COMMITTEE. The Plan shall be
administered by the Compensation Committee. The Compensation Committee shall
have full power and authority, subject to all the applicable provisions of the
Plan and applicable law, to (a) establish, amend, suspend or waive such rules
and regulations and appoint such agents as it deems necessary or advisable for
the proper administration of the Plan, (b) construe, interpret and administer
the Plan and any instrument or agreement relating to the Plan, (c) determine,
from


                                       2
<PAGE>


time to time, whether shares of Common Stock and/or Units will be made available
to Participants under the Plan, and (d) make all other determinations and take
all other actions necessary or advisable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, each determination made and
each action taken by the Compensation Committee pursuant to the Plan or any
instrument or agreement relating to the Plan shall be (x) within the sole
discretion of the Compensation Committee, (y) may be made at any time and (z)
shall be final, binding and conclusive for all purposes on all persons,
including, but not limited to, Participants and their legal representatives and
beneficiaries, and employees of the Company.

         4.2 DELEGATION. The Compensation Committee may delegate its powers and
duties under the Plan to one or more officers of the Company or a committee of
such officers, subject to such terms, conditions and limitations as the
Compensation Committee may establish in its sole discretion; provided, however,
that the Compensation Committee shall not delegate its power (a) to make
determinations regarding officers or directors of the Company who are subject to
Section 16 of the 1934 Act; or (b) in such a manner as would cause the Plan not
to comply with the provisions of Section 162(m) of the Code.

         4.3. DETERMINATIONS MADE PRIOR TO EACH PERFORMANCE PERIOD. On or before
the 90th day of each Performance Period, the Compensation Committee shall:

                  (a) designate all Participants (including designation as
Executives or Other Participants) for such Performance Period;

                  (b) establish a Target Award for each Participant;

                  (c) with respect to each Participant, establish one or more
Performance Factors and a corresponding Maximum Award Percentage for each
Performance Factor;

         4.4. CERTIFICATION. Following the close of each Performance Period and
prior to payment of any amount to any Participant under the Plan, the Committee
must certify in writing which of the applicable Performance Factors for that
Performance Period (and the corresponding Maximum Award Percentages) have been
achieved and certify as to the attainment of all other factors upon which any
payments to a Participant for that Performance Period are to be based.

         4.5. SHAREHOLDER APPROVAL. The material terms of this Plan shall be
disclosed to and approved by shareholders of the Company in accordance with
Section 162(m) of the Code. No amount shall be paid to any Participant under
this Plan unless such shareholder approval has been obtained.

         5. INCENTIVE PAYMENT.

         5.1. FORMULA. Each Participant shall receive an incentive payment for
each Performance Period in an amount not greater than:

                  (a) the Participant's Target Award for the Performance Period,
multiplied by

                  (b) the Participant's Maximum Award Percentage for the
Performance Period that corresponds to the Performance Factor achieved by the
Participant for that Performance Period.

         5.2. LIMITATIONS.

                  (a) DISCRETIONARY INCREASE OR REDUCTION. The Compensation
Committee shall retain sole and absolute discretion to increase or reduce the
amount of any incentive


                                       3
<PAGE>


payment otherwise payable to any Participant under this Plan, but may not
increase the payment to any Executive for any Performance Period.

                  (b) CONTINUED EMPLOYMENT. Except as otherwise provided by the
Compensation Committee, no incentive payment under this Plan with respect to a
Performance Period shall be paid or owed to a Participant whose employment
terminates prior to the last day of such Performance Period.

                  (c) MAXIMUM PAYMENTS. No Participant shall receive a payment
under this Plan for any Performance Period in excess of $2.0 million.

         6. BENEFIT PAYMENTS.

         6.1. TIME AND FORM OF PAYMENTS. Prior to a date specified by the
Compensation Committee but in no event later than the 90th day of a Performance
Period, each Participant shall elect whether to receive benefits which may be
paid under the Plan in cash or in the form of shares of Common Stock or Units
(whichever is made available by the Compensation Committee to such Participant
in the Compensation Committee's sole discretion) or some combination thereof.
Participants who elect to receive some percentage of the incentive payment in
the form of cash shall be entitled to elect, at the same time as the cash
election is made, to defer such receipt in accordance with the terms of any
Company deferred compensation plan in effect at the time and applicable to such
cash payment. In the event a Participant has elected to receive some percentage
of the incentive payment in the form of cash, and subject to any such deferred
compensation election, such cash incentive shall be paid as soon as
administratively feasible after the Compensation Committee has made the
certifications provided for in Section 4.4 above and otherwise determined the
amount of such Participant's incentive payment payable under this Plan. In the
event that a Participant chooses to receive some percentage of the incentive
payment in the form of shares or Units (as the case may be), in lieu of cash
(the "Share Dollar Amount"), the Participant shall be entitled to receive shares
of restricted Common Stock (or Units, as the case may be) equal to 125% of the
Share Dollar Amount pursuant to this Plan, based on the fair market value of a
share of Common Stock (as determined in accordance with the terms of the Stock
Incentive Plan, as of the date such shares or Units are to be issued or awarded,
respectively, after the Compensation Committee has made the certifications
provided for in Section 4.4 above and otherwise determined the amount of a
Participant's incentive payment payable under this Plan.

         In the event a Participant has elected to receive some percentage of
the incentive payment in the form of shares of Common Stock or Units (as the
case may be), such shares or Units shall be issued or awarded, respectively,
pursuant to the Stock Incentive Plan, which shares or Units shall be subject to
such forfeiture rights and to such restrictions regarding transfer as may be
established by the Compensation Committee; provided, however, that the
individual share limitation provided for in Section 4(d) of the Stock Incentive
Plan shall not apply to shares issued under this Plan.

         6.2. NONTRANSFERABILITY. Except as otherwise determined by the
Compensation Committee, no right to any incentive payment hereunder, whether
payable in cash or other property, shall be transferable by a Participant
otherwise than by will or by the laws of descent and distribution; provided
however, that if so determined by the Compensation Committee, a Participant may,
in the manner established by the Compensation Committee (i) designate a
beneficiary or beneficiaries to exercise the rights of the Participant and
receive any cash or property hereunder upon the death of the Participant, or
(ii) transfer any rights to any cash incentive payment hereunder to any member
of such Participant's "immediate family" (as such term is defined in Rule
16a-1(e) promulgated by the Securities and Exchange Commission under the 1934
Act, or any successor rule or regulation) or to a trust whose beneficiaries are
members of such Participant's "immediate family." No right to any incentive
payment hereunder may be


                                       4
<PAGE>


pledged, alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment or encumbrance thereof shall be void and unenforceable
against the Company.

         6.3. TAX WITHHOLDING. In order to comply with all applicable federal or
state income, social security, payroll, withholding or other tax laws or
regulations, the Compensation Committee may establish such policy or policies as
it deems appropriate with respect to such laws and regulations, including
without limitation, the establishment of policies to ensure that all applicable
federal or state income, social security, payroll, withholding or other taxes,
which are the sole and absolute responsibility of the Participant, are withheld
or collected from such Participant. In order to assist a Participant in paying
all or part of the federal and state taxes to be withheld or collected upon
receipt or payment of (or the lapse of restrictions relating to) an incentive
payment payable hereunder, the Compensation Committee, in its sole discretion
and subject to such additional terms and conditions as it may adopt, may permit
the Participant to satisfy such tax obligation by (a) electing to have the
Company withhold a portion of the shares of Common Stock otherwise to be
delivered upon payment of (or the lapse of restrictions relating to) an
incentive payment hereunder with a fair market value equal to the amount of such
taxes or (b) delivering to the Company shares of Common Stock other than the
shares issuable upon payment of (or the lapse of restrictions relating to) such
incentive payment with a fair market value equal to the amount of such taxes.

         7. AMENDMENT AND TERMINATION; ADJUSTMENTS. Except to the extent
prohibited by applicable law and unless otherwise expressly provided in the
Plan:

                  (a) AMENDMENTS TO THE PLAN. The Board of Directors of the
Company may amend, alter, suspend, discontinue or terminate the Plan, without
the approval of the shareholders of the Company, except that no such amendment,
alteration, suspension, discontinuation or termination shall be made that,
absent such approval:

                           (i) would cause Rule 16b-3 to become unavailable with
respect to grants and awards made under the Plan; or

                           (ii) would violate the rules or regulations of the
New York Stock Exchange, any other securities exchange or the National
Association of Securities Dealers, Inc. that are applicable to the Company.

                  (b) WAIVERS OF INCENTIVE PAYMENT CONDITIONS OR RIGHTS. The
Compensation Committee may waive any conditions of or rights of the Company
under any right to an incentive payment hereunder, prospectively or
retroactively.

                  (c) LIMITATION ON AMENDMENTS TO INCENTIVE PAYMENT RIGHTS.
Neither the Compensation Committee nor the Company may amend, alter, suspend,
discontinue or terminate any rights to an incentive payment, prospectively or
retroactively, without the consent of the Participant or holder or beneficiary
thereof, except as otherwise herein provided.

                  (d) CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. The
Compensation Committee may correct any defect, supply any omission or reconcile
any inconsistency in the Plan in the manner and to the extent it shall deem
desirable to carry the Plan into effect.

         8. MISCELLANEOUS.

         8.1. EFFECTIVE DATE. This Plan shall be deemed effective, subject to
shareholder approval, as of January 1, 2001.


                                       5
<PAGE>


         8.2. TERM OF THE PLAN. Unless the Plan shall have been discontinued or
terminated, the Plan shall terminate on December 31, 2003. No right to receive
an incentive payment shall be granted after the termination of the Plan.
However, unless otherwise expressly provided in the Plan, any right to receive
an incentive payment theretofore granted may extend beyond the termination of
the Plan, and the authority of the Board of Directors and Compensation Committee
to amend or otherwise administer the Plan shall extend beyond the termination of
the Plan.

         8.3. HEADINGS. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.

         8.4. APPLICABILITY TO SUCCESSORS. This Plan shall be binding upon and
inure to the benefit of the Company and each Participant, the successors and
assigns of the Company, and the beneficiaries, personal representatives and
heirs of each Participant. If the Company becomes a party to any merger,
consolidation or reorganization, this Plan shall remain in full force and effect
as an obligation of the Company or its successors in interest (except to the
extent modified by the terms of the Stock Incentive Plan with respect to the
shares of restricted Common Stock issued under Section 6.1 hereof).

         8.5. EMPLOYMENT RIGHTS AND OTHER BENEFIT PROGRAMS. The provisions of
this Plan shall not give any Participant any right to be retained in the
employment of the Company. In the absence of any specific agreement to the
contrary, this Plan shall not affect any right of the Company, or of any
affiliate of the Company, to terminate, with or without cause, any Participant's
employment at any time. This Plan shall not replace any contract of employment,
whether oral or written, between the Company and any Participant, but shall be
considered a supplement thereto. This Plan is in addition to, and not in lieu
of, any other employee benefit plan or program in which any Participant may be
or become eligible to participate by reason of employment with the Company. No
compensation or benefit awarded to or realized by any Participant under the Plan
shall be included for the purpose of computing such Participant's compensation
under any compensation-based retirement, disability, or similar plan of the
Company unless required by law or otherwise provided by such other plan.

         8.6. NO TRUST OR FUND CREATED. This Plan shall not create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any affiliate and a Participant or any other
person. To the extent that any person acquires a right to receive payments from
the Company or any affiliate pursuant to this Plan, such right shall be no
greater than the right of any unsecured general creditor of the Company or of
any affiliate.

         8.7. GOVERNING LAW. The validity, construction and effect of the Plan
or any incentive payment payable under the Plan shall be determined in
accordance with the laws of the State of Minnesota.

         8.8. SEVERABILITY. If any provision of the Plan is or becomes or is
deemed to be invalid, illegal or unenforceable in any jurisdiction such
provision shall be construed or deemed amended to conform to applicable laws, or
if it cannot be so construed or deemed amended without, in the determination of
the Compensation Committee, materially altering the purpose or intent of the
Plan, such provision shall be stricken as to such jurisdiction, and the
remainder of the Plan shall remain in full force and effect.

         8.9. QUALIFIED PERFORMANCE-BASED COMPENSATION. All of the terms and
conditions of the Plan shall be interpreted in such a fashion as to qualify all
compensation paid hereunder as "qualified performance-based compensation" within
the meaning of Section 162(m) of the Code.


                                       6

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>2000 STOCK INCENTIVE PLAN
<TEXT>


                                                                    Exhibit 10.2


                  DELUXE CORPORATION 2000 STOCK INCENTIVE PLAN
                           (AS AMENDED AUGUST 4, 2000)


SECTION 1. PURPOSE.

  The purpose of the plan is to promote the interests of the Company and its
shareholders by aiding the Company in attracting management personnel capable of
assuring the future success of the Company, by offering such personnel
incentives to put forth maximum efforts for the success of the Company's
business, and by affording such personnel an opportunity to acquire a
proprietary interest in the Company.

SECTION 2. DEFINITIONS.

  As used in the plan, the following terms shall have the meanings set forth
below:

  (a) "Affiliate" shall mean (i) any entity that, directly or indirectly through
one or more intermediaries, is controlled by the Company and (ii) any entity in
which the Company has a significant equity interest, in each case as determined
by the committee.

  (b) "Award" shall mean any option, stock appreciation right, restricted stock,
restricted stock unit, performance award, dividend equivalent or other
stock-based award granted under the plan.

  (c) "Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any award granted under the plan.

  (d) "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and any regulations promulgated thereunder.

  (e) "Committee" shall mean a committee of the board of directors of the
Company designated by such board to administer the plan, which shall consist of
members appointed from time to time by the board of directors and shall be
comprised of not fewer than such number of directors as shall be required to
permit grants and awards made under the plan to satisfy the requirements of Rule
16b-3. Each member of the committee shall be a "Non-Employee Director" within
the meaning of Rule 16b-3 and an "outside director" within the meaning of
Section 162(m) of the Code.

  (f) "Company" shall mean DELUXE CORPORATION, a Minnesota corporation, and any
successor corporation.

  (g) "Dividend Equivalent" shall mean any right granted under Section 6(e) of
the plan.

  (h) "Eligible Person" shall mean a non-employee director and any employee (as
determined by the committee) providing services to the Company or any affiliate
who the committee determines to be an eligible person.

  (i) "Fair Market Value" shall mean, with respect to any property (including,
without limitation, any shares or other securities), the fair market value of
such property determined by such methods or procedures as shall be established
from time to time by the committee.

  (j) "Incentive Stock Option" shall mean an option granted under Section 6(a)
of the plan that is intended to meet the requirements of Section 422 of the Code
or any successor provision.

  (k) "Non-Employee Director" shall have the meaning provided in Section 7.1 of
the plan.

  (l) "Non-Qualified Stock Option" shall mean an option granted under Section
6(a) of the plan that is not intended to be an incentive stock option.

  (m) "Option" shall mean an incentive stock option or a non-qualified stock
option and shall be deemed to include any reload option issued under the plan.

<PAGE>


  (n) "Other Stock-Based Award" shall mean any right granted under Section 6(f)
of the plan.

  (o) "Participant" shall mean an eligible person designated to be granted an
award under the plan.

  (p) "Performance Award" shall mean any right granted under Section 6(d) of the
plan.

  (q) "Person" shall mean any individual, corporation, partnership, association
or trust.

  (r) "Plan" shall mean this stock incentive plan, as amended from time to time.

  (s) "Reload Option" means an option issued under Section 6(a) to purchase a
number of shares equal to the number of shares delivered by an option holder (or
such lesser number as the committee may determine) in payment of all or any
portion of the exercise price of an option previously granted under this plan to
such holder, provided that the option term of such option shall not end later
than the option term of the option so exercised

  (t) "Reload Option Feature" means provisions in an option granted under this
plan that permit the holder of the option to receive a reload option upon the
exercise of the option through the delivery of shares in payment of all or any
portion of the exercise price. A reload option feature may be included in any
reload option issued under the plan.

  (u) "Restricted Stock" shall mean any share granted under Section 6(c) of the
plan.

  (v) "Restricted Stock Unit" shall mean any unit granted under Section 6(c) of
the plan evidencing the right to receive a share (or a cash payment equal to the
fair market value of a share) at some future date.

  (w) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, or
any successor rule or regulation.

  (x) "Shares" shall mean shares of common stock, $1.00 par value, of the
Company or such other securities or property as may become subject to awards
pursuant to an adjustment made under Section 4(c) of the plan.

  (y) "Stock Appreciation Right" shall mean any right granted under Section 6(b)
of the plan.

SECTION 3. ADMINISTRATION.

  (a) POWER AND AUTHORITY OF THE COMMITTEE. The plan shall be administered by
the committee. Except as provided in Section 7 and subject to the express
provisions of the plan and to applicable law, the committee shall have full
power and authority to: (i) designate participants; (ii) determine the type or
types of awards to be granted to each participant under the plan; (iii)
determine the number of shares to be covered by (or with respect to which
payments, rights or other matters are to be calculated in connection with) each
award; (iv) determine the terms and conditions of any award or award agreement;
(v) amend the terms and conditions of any award or award agreement and
accelerate the exercisability of options or the lapse of restrictions relating
to restricted stock or other awards; (vi) determine whether, to what extent and
under what circumstances awards may be exercised in cash, shares, other
securities, other awards or other property, or canceled, forfeited or suspended;
(vii) determine whether, to what extent and under what circumstances cash,
shares, other securities, other awards, other property and other amounts payable
with respect to an award under the plan shall be deferred either automatically
or at the election of the holder thereof or the committee; (viii) interpret and
administer the plan and any instrument or agreement relating to, or award made
under, the plan; (ix) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the plan; and (x) make any other determination and take any
other action that the committee deems necessary or desirable for the
administration of the plan. Unless otherwise expressly provided in the plan, all
designations, determinations, interpretations and other decisions under or with
respect to the plan or any award shall be within


                                       2
<PAGE>


the sole discretion of the committee, may be made at any time and shall be
final, conclusive and binding upon any participant, any holder or beneficiary of
any award and any employee of the Company or any affiliate.

  (b) DELEGATION. The committee may delegate its powers and duties under the
plan to one or more officers of the company or an affiliate or a committee of
such officers, subject to such terms, conditions and limitations as the
committee may establish in its sole discretion; provided, however, that the
committee shall not delegate its powers and duties under the plan (i) with
regard to officers or directors of the Company or any affiliate who are subject
to Section 16 of the Securities Exchange Act of 1934, as amended, if the effect
of such delegation would make the exemption under Rule 16b-3 unavailable or (ii)
in such a manner as would cause the plan not to comply with the requirements of
Section 162(m) of the Code.

SECTION 4. SHARES AVAILABLE FOR AWARDS.

  (a) SHARES AVAILABLE. Subject to adjustment as provided in Section 4(c), the
number of shares available for granting awards under the plan shall be
3,000,000. Shares to be issued under the plan may be either shares reacquired or
authorized but unissued shares. If any shares covered by an award or to which an
award relates are not purchased or are forfeited, or if an award otherwise
terminates without delivery of any shares, then the number of shares counted
against the aggregate number of shares available under the plan with respect to
such award, to the extent of any such forfeiture or termination, shall again be
available for grants under the plan. Shares delivered in payment of the option
exercise price of an option containing a reload option feature shall again be
available for granting awards under the plan (other than incentive stock
options) to the extent that the number of shares so delivered are made subject
to an option granted pursuant to the said reload option feature. Shares
delivered in payment of the option exercise price of an option not containing a
reload option feature shall again be available for granting awards under the
plan (other than incentive stock options) to the extent that the number of
shares so delivered are made subject to an option granted pursuant to section
6(a)(v).

  (b) ACCOUNTING FOR AWARDS. For purposes of this Section 4, if an award
entitles the holder thereof to receive or purchase shares, the number of shares
covered by such award or to which such award relates shall be counted on the
date of grant of such award against the aggregate number of shares available for
grants under the plan.

  (c) ADJUSTMENTS. In the event that the committee shall determine that any
dividend or other distribution (whether in the form of cash, shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of shares or other securities of the Company, issuance of
warrants or other rights to purchase shares or other securities of the Company
or other similar corporate transaction or event affects the shares such that an
adjustment is determined by the committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the plan, then the committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number and type of shares (or
other securities or other property) which thereafter may be made the subject of
awards, (ii) the number and type of shares (or other securities or other
property) subject to outstanding awards and (iii) the purchase or exercise price
with respect to any award; provided, however, that the number of shares covered
by any award or to which such award relates shall always be a whole number.

  (d) AWARDS LIMITATION UNDER THE PLAN. No eligible person may be granted any
award or awards under the plan (including the Company's performance share plan)
of more than 400,000 shares, in the aggregate, in any calendar year. The
foregoing limitation shall not include any shares acquired pursuant to the
annual incentive plan. Furthermore, no more than 1,000,000 shares, in the
aggregate, may be issued under the plan in the form of either restricted stock
or restricted stock units or any combination thereof.


                                       3
<PAGE>


SECTION 5. ELIGIBILITY.

  Any eligible person, including any eligible person who is an officer or
director of the Company or any affiliate, shall be eligible to be designated a
participant. In determining which eligible persons shall receive an award and
the terms of any award, the committee may take into account the nature of the
services rendered by the respective eligible persons, their present and
potential contributions to the success of the Company, and such other factors as
the committee, in its discretion shall deem relevant. Notwithstanding the
foregoing, incentive stock options may only be granted to full or part-time
employees (which term as used herein includes, without limitation, officers and
directors who are also employees) and an incentive stock option shall not be
granted to an employee of an affiliate unless such affiliate is also a
"subsidiary corporation" of the Company within the meaning of Section 424(f) of
the Code or any successor provision.

SECTION 6. AWARDS.

  (a) OPTIONS. The committee is hereby authorized to grant options to
participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the plan as the
committee shall determine:

      (i)   EXERCISE PRICE. The purchase price per share purchasable under an
            option shall be determined by the committee; provided, however, that
            such purchase price shall not be less than 100 percent of the fair
            market value of a share on the date of grant of such option and
            provided further, that in no event shall options previously granted
            under this Plan be re-priced by reducing the exercise price thereof,
            nor shall options previously granted under this Plan be cancelled
            and replaced by a subsequent re-grant under this Plan of options
            having an exercise price lower than the options so cancelled.

      (ii)  OPTION TERM. The term of each option shall be fixed by the
            committee.

      (iii) TIME AND METHOD OF EXERCISE. The committee shall determine the time
            or times at which an option may be exercised in whole or in part and
            the method or methods by which, and the form or forms (including,
            without limitation, cash, shares, promissory notes, other
            securities, other awards or other property, or any combination
            thereof, having a fair market value on the exercise date equal to
            the relevant exercise price) in which, payment of the exercise price
            with respect thereto may be made or deemed to have been made.

      (iv)  RELOAD OPTION FEATURE. The committee may determine, in its
            discretion, whether to grant an option containing a reload option
            feature and whether any reload option issued upon the exercise of an
            option containing a reload option feature may itself contain a
            reload option feature.

      (v)   ISSUANCE OF OPTIONS TO REPLACE SHARES. The committee may determine,
            in its discretion, whether to grant to a participant who exercises
            by delivery of shares in payment of all or any portion of the
            exercise price an option, previously or hereafter granted under the
            plan, that does not contain a reload option feature, an option to
            acquire the number of shares so delivered (or such lesser number as
            the committee may determine), provided that the option term of such
            option shall not end later than the option term of the option so
            exercised.

  (b) STOCK APPRECIATION RIGHTS. The committee is hereby authorized to grant
stock appreciation rights to participants subject to the terms of the plan and
any applicable award agreement. A stock appreciation right granted under the
plan shall confer on the holder thereof a right to receive upon exercise thereof
the excess of (i) the fair market value of one share on the date of exercise
(or, if the committee shall so determine, at any time during a specified period
before or after the date of exercise) over (ii) the grant price of the stock
appreciation right as specified by the committee, which price shall not be less
than 100 percent of the fair market value of one share on the date of grant of
the stock appreciation right. Subject to the terms of the plan and any


                                       4
<PAGE>


applicable award agreement, the grant price, term, methods of exercise, dates of
exercise, methods of settlement and any other terms and conditions of any stock
appreciation right shall be as determined by the committee. The committee may
impose such conditions or restrictions on the exercise of any stock appreciation
right as it may deem appropriate.

  (c) RESTRICTED STOCK AND RESTRICTED STOCK UNITS. The committee is hereby
authorized to grant awards of restricted stock and restricted stock units to
participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the plan as the
committee shall determine:

      (i)   RESTRICTIONS. Shares of restricted stock and restricted stock units
            shall be subject to such restrictions as the committee may impose
            (including, without limitation, any limitation on the right to vote
            a share of restricted stock or the right to receive any dividend or
            other right or property with respect thereto or with respect to a
            restricted stock unit), which restrictions may lapse separately or
            in combination at such time or times, in such installments or
            otherwise as the committee may deem appropriate.

      (ii)  STOCK CERTIFICATES. Any restricted stock granted under the plan may
            be evidenced by issuance of a stock certificate or certificatesor by
            the creation of a book entry at the Company's transfer agent. Any
            such certificate or certificates shall be held by the Company. Such
            certificate or certificates or book entry shall be registered in the
            name of the participant and any such certificate or certificates
            shall bear an appropriate legend referring to the terms, conditions
            and restrictions applicable to such restricted stock. A similar
            notation shall be made in the records of the transfer agent with
            respect to any shares evidenced by a book entry. In the case of
            restricted stock units, no shares shall be issued at the time such
            awards are granted.

      (iii) FORFEITURE; DELIVERY OF SHARES. Except as otherwise determined by
            the committee or provided in a plan governed by this Plan, upon
            termination of employment (as determined under criteria established
            by the committee) or, in the case of a director, service as a
            director during the applicable restriction period, all shares of
            restricted stock and all restricted stock units at such time subject
            to restriction shall be forfeited and reacquired by the Company;
            provided, however, that the committee may, when it finds that a
            waiver would be in the best interest of the Company, waive in whole
            or in part any or all remaining restrictions with respect to shares
            of restricted stock or restricted stock units. Any share
            representing restricted stock that is no longer subject to
            restrictions shall be delivered to the holder thereof promptly after
            the applicable restrictions lapse or are waived. Upon the lapse or
            waiver of restrictions and the restricted period relating to
            restricted stock units evidencing the right to receive shares, such
            shares shall be issued and delivered to the holders of the
            restricted stock units, subject to the provisions of the plan and
            any applicable award agreement.

  (d) PERFORMANCE AWARDS. The committee is hereby authorized to grant
performance awards to participants subject to the terms of the plan and any
applicable award agreement. A performance award granted under the plan (i) may
be denominated or payable in cash, shares (including, without limitation,
restricted stock and restricted stock units), other securities, other awards or
other property and (ii) shall confer on the holder thereof the right to receive
payments, in whole or in part, upon the achievement of such performance goals
during such performance periods as the committee shall establish. Subject to the
terms of the plan and any applicable award agreement, the performance goals to
be achieved during any performance period, the length of any performance period,
the amount of any performance award granted, the amount of any payment or
transfer to be made pursuant to any performance award, and any other terms and
conditions of any performance award shall be determined by the committee.

  (e) DIVIDEND EQUIVALENTS. The committee is hereby authorized to grant to
participants dividend equivalents under which such participants shall be
entitled to receive payments (in cash, shares, other securities, other awards or
other property as determined in the discretion of the committee)


                                       5
<PAGE>


equivalent to the amount of cash dividends paid by the Company to holders of
shares with respect to a number of shares determined by the committee. Subject
to the terms of the plan and any applicable award agreement, such dividend
equivalents may have such terms and conditions as the committee shall determine.

  (f) OTHER STOCK-BASED AWARDS. The committee is hereby authorized to grant to
participants such other awards that are denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or related to, shares
(including, without limitation, securities convertible into shares), as are
deemed by the committee to be consistent with the purpose of the plan; provided,
however, that such grants must comply with Rule 16b-3 and applicable law.
Subject to the terms of the plan and any applicable award agreement, the
committee shall determine the terms and conditions of such awards. Shares or
other securities delivered pursuant to a purchase right granted under this
Section 6(f) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms (including, without limitation,
cash, shares, promissory notes, other securities, other awards or other property
or any combination thereof), as the committee shall determine, the value of
which consideration, as established by the committee, shall not be less than 100
percent of the fair market value of such shares or other securities as of the
date such purchase right is granted.

  (g) GENERAL

      (i)   NO CASH CONSIDERATION FOR AWARDS. Awards shall be granted for no
            cash consideration or for such minimal cash consideration as may be
            required by applicable law.

      (ii)  AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Awards may, in the
            discretion of the committee, be granted either alone or in addition
            to, in tandem with, or in substitution for any other award or any
            award granted under any plan of the Company or any affiliate other
            than the plan. Awards granted in addition to or in tandem with other
            awards or in addition to or in tandem with awards granted under any
            such other plan of the Company or any affiliate, may be granted
            either at the same time as or at a different time from the grant of
            such other award or awards.

      (iii) FORMS OF PAYMENTS UNDER AWARDS. Subject to the terms of the plan and
            of any applicable award agreement, payments or transfers to be made
            by the Company or an affiliate upon the grant, exercise or payment
            of an award may be made in such form or forms as the committee shall
            determine (including, without limitation, cash, shares, promissory
            notes, other securities, other awards or other property or any
            combination thereof), and may be made in a single payment or
            transfer, in installments or on a deferred basis, in each case in
            accordance with rules and procedures established by the committee.
            Such rules and procedures may include, without limitation,
            provisions for the payment or crediting of reasonable interest on
            installment or deferred payments or the grant or crediting of
            dividend equivalents with respect to installment or deferred
            payments.

      (iv)  LIMITS ON TRANSFER OF AWARDS. No award and no right under any such
            award shall be transferable by a participant otherwise than by will
            or by the laws of descent and distribution; provided, however, that
            if so determined by the committee, a participant may, in the manner
            established by the committee, (x) designate a beneficiary or
            beneficiaries to exercise the rights of the participant and receive
            any property distributable with respect to any award upon the death
            of the participant, or (y) transfer an award (other than an
            incentive stock option) to any member of such participant's
            "immediate family" (as such term is defined in Rule 16a-1(e)
            promulgated by the Securities and Exchange Commission under the
            Securities Exchange Act of 1934, as amended, or any successor rule
            or regulation) or to a trust whose beneficiaries are members of such
            participant's "immediate family." Each award or right under any
            award shall be exercisable during the participant's lifetime only by
            the participant, or by a member of such participant's immediate
            family or a trust for members of such


                                       6
<PAGE>


            immediate family pursuant to a transfer as described above, or if
            permissible under applicable law, by the participant's guardian or
            legal representative. No award or right under any such award may be
            pledged, alienated, attached or otherwise encumbered, and any
            purported pledge, alienation, attachment or encumbrance thereof
            shall be void and unenforceable against the Company or any
            affiliate.

      (v)   TERM OF AWARDS. The term of each award shall be for such period as
            may be determined by the committee.

      (vi)  RESTRICTIONS; SECURITIES EXCHANGE LISTING. All certificates for
            shares or other securities delivered under the plan pursuant to any
            award or the exercise thereof shall be subject to such stop transfer
            orders and other restrictions as the committee may deem advisable
            under the plan or the rules, regulations and other requirements of
            the Securities and Exchange Commission and any applicable federal or
            state securities laws, and the committee may cause a legend or
            legends to be placed on any such certificates to make appropriate
            reference to such restrictions. If the shares or other securities
            are traded on a securities exchange, the Company shall not be
            required to deliver any shares or other securities covered by an
            award unless and until such shares or other securities have been
            admitted for trading on such securities exchange.

      (vii) ATTESTATION. Where the plan or any applicable award agreement
            provides for or permits delivery of shares by a participant in
            payment with respect to any award or grant under this plan or for
            taxes, such payment may be made constructively through attestation
            in the discretion of and in accordance with rules established by the
            committee.

SECTION 7. AWARDS TO NON-EMPLOYEE DIRECTORS.

  7.1 ELIGIBILITY; ONE-TIME AWARD. If this plan is approved by the shareholders
of the Company at the annual meeting of the shareholders in 2000 (the 2000
annual meeting), each member of the board of directors who is not an employee of
the Company or of any affiliate of the Company (a non-employee director). who is
elected to the board subsequent to December 31, 2000 shall, upon the date of his
or her initial election to the board, receive an award of 1,000 shares of
restricted stock. These shares shall vest in three equal installments, on the
dates of the annual shareholder meeting in each of the three succeeding years,
if such director remains in office immediately following such meeting. In the
event that in accordance with the Company's policy with respect to mandatory
retirement of directors, any director is not nominated for election to serve as
a director of the Company, all restricted stock so awarded shall immediately
vest in full upon such director's retirement from the board. If a director
ceases to be a director prior to the date on which the award is fully vested for
any reason other than mandatory retirement, any unvested portion of the award
shall terminate and be irrevocably forfeited. Such awards shall be subject to
Sections 6(c), 9 and 10 of this plan. The authority of the committee under this
Section 7 shall be limited to ministerial and non-discretionary matters.

  7.2 STOCK COMPENSATION. Each non-employee director shall be eligible to
receive or elect to receive his or her fees for service on the Company's board
of directors and the committees thereof in shares or restricted stock units and
to defer the receipt of such units, all as described in the Deluxe Corporation
Non-Employee Director Stock and Deferral Plan attached hereto as Annex I and
hereby made a part hereof.

  7.3 AMENDMENTS TO SECTION 7. The provisions of this Section 7 may not be
amended more often than once every six months other than to comply with changes
in the Code or the Employee Retirement Income Security Act of 1974, as amended,
or the respective rules promulgated under either statute.

SECTION 8. AMENDMENT AND TERMINATION; ADJUSTMENTS.

  Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an award agreement or in the plan:


                                       7
<PAGE>


  (a) AMENDMENTS TO THE PLAN. The board of directors of the Company may amend,
alter, suspend, discontinue or terminate the plan; provided, however, that,
notwithstanding any other provision of the plan or any award agreement, without
the approval of the shareholders of the Company, no such amendment, alteration,
suspension, discontinuation or termination shall be made that, absent such
approval:

      (i)   would cause Rule 16b-3 to become unavailable with respect to grants
            and awards made under the plan;

      (ii)  would violate the rules or regulations of the New York Stock
            Exchange, any other securities exchange or the National Association
            of Securities Dealers, Inc., that are applicable to the Company; or

      (iii) would cause the Company to be unable, under the Code, to grant
            incentive stock options under the plan.

  The board of directors shall be entitled to delegate to the committee the
power to amend such terms of the plan and for such purposes as the board of
directors shall from time to time determine.

  (b) WAIVERS. The committee may waive any conditions of or rights of the
Company under any outstanding award, prospectively or retroactively.

  (c) LIMITATIONS ON AMENDMENTS. Neither the committee nor the Company may
amend, alter, suspend, discontinue or terminate any outstanding award,
prospectively or retroactively, without the consent of the participant or holder
or beneficiary thereof, except as otherwise provided herein or in the award
agreement.

  (d) CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. The committee may
correct any defect, supply any omission or reconcile any inconsistency in the
plan or any award in the manner and to the extent it shall deem desirable to
carry the plan into effect.

SECTION 9. INCOME TAX WITHHOLDING.

  In order to comply with all applicable federal or state income tax laws or
regulations, the committee may establish such policy or policies as it deems
appropriate with respect to such laws and regulations, including without
limitation the establishment of policies to ensure that all applicable federal
or state payroll, withholding, income or other taxes, which are the sole and
absolute responsibility of a participant, are withheld or collected from such
participant. In order to assist a participant in paying all or a portion of the
federal and state taxes to be withheld or collected upon exercise or receipt of
(or the lapse of restrictions relating to) an award, the committee, in its
discretion and subject to such additional terms and conditions as it may adopt,
may permit the participant to satisfy such tax obligation by (i) electing to
have the Company withhold a portion of the payment or transfer otherwise to be
made upon exercise or receipt of (or the lapse of restrictions relating to) such
award with a fair market value equal to the amount of such taxes or (ii)
delivering to the Company shares or other property other than shares issuable
upon exercise or receipt of (or the lapse of restrictions relating to) such
award with a fair market value equal to the amount of such taxes. The election,
if any, must be on or before the date that the amount of tax to be withheld is
determined.

SECTION 10. GENERAL PROVISIONS.

  (a) NO RIGHTS TO AWARDS. No eligible person, participant or other person shall
have any claim to be granted any award under the plan, and there is no
obligation for uniformity of treatment of eligible persons, participants or
holders or beneficiaries of awards under the plan. The terms and conditions of
awards need not be the same with respect to any participant or with respect to
different participants.


                                       8
<PAGE>


  (b) AWARD AGREEMENTS. No participant will have rights under an award granted
to such participant unless and until an award agreement shall have been duly
executed on behalf of the Company and, if requested by the Company, signed by
the participant.

  (c) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the plan
shall prevent the Company or any affiliate from adopting or continuing in effect
other or additional compensation arrangements, and such arrangements may be
either generally applicable or applicable only in specific cases.

  (d) NO RIGHT TO EMPLOYMENT. The grant of an award shall not be construed as
giving a participant the right to be retained in the employ of the Company or
any affiliate, nor will it affect in any way the right of the Company or the
affiliate to terminate such employment at any time, with or without cause. In
addition, the Company or an affiliate may at any time dismiss a participant from
employment free from any liability or any claim under the plan, unless otherwise
expressly provided in the plan or in any award agreement.

  (e) GOVERNING LAW. The validity, construction and effect of the plan or any
award, and any rules and regulations relating to the plan or any award, shall be
determined in accordance with the laws of the State of Minnesota.

  (f) SEVERABILITY. If any provision of the plan or any award is or becomes or
is deemed to be invalid, illegal or unenforceable in any jurisdiction or would
disqualify the plan or any award under any law deemed applicable by the
committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the committee, materially altering the purpose or intent of
the plan or the award, such provision shall be stricken as to the plan or such
jurisdiction or award, and the remainder of the plan or any such award shall
remain in full force and effect.

  (g) NO TRUST OR FUND CREATED. Neither the plan nor any award shall create or
be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any affiliate and a participant or any other
person. To the extent that any person acquires a right to receive payments from
the Company or any affiliate pursuant to an award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
affiliate.

  (h) NO FRACTIONAL SHARES. No fractional shares shall be issued or delivered
pursuant to the plan or any award, and the committee shall determine whether
cash shall be paid in lieu of any fractional shares or whether such fractional
shares or any rights thereto shall be canceled, terminated or otherwise
eliminated.

  (i) HEADINGS. Headings are given to the sections and subsections of the plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the plan or any provision thereof.

  (j) OTHER BENEFITS. No compensation or benefit awarded to or realized by any
participant under the plan shall be included for the purpose of computing such
participant's compensation under any compensation-based retirement, disability,
or similar plan of the Company unless required by law or otherwise provided by
such other plan.

SECTION 11. SECTION 16(b) COMPLIANCE.

  The plan is intended to comply in all respects with Rule 16b-3 or any
successor provision, as in effect from time to time and in all events the plan
shall be construed in accordance with the requirements of Rule 16b-3. If any
plan provision does not comply with Rule 16b-3 as hereafter amended or
interpreted, the provision shall be deemed inoperative. The board of directors,
in its absolute discretion, may bifurcate the plan so as to restrict, limit or
condition the use of any provision of the plan to participants who are officers
or directors subject to Section 16 of the Securities and Exchange Act of 1934,
as amended, without so restricting, limiting or conditioning the plan with
respect to other participants.


                                       9
<PAGE>


SECTION 12. EFFECTIVE DATE OF THE PLAN.

  The plan shall be effective as of January 1, 2001, subject to approval by the
shareholders of the Company, either prior to such date or within one year
thereafter.

SECTION 13. TERM OF THE PLAN.

  Unless the plan shall have been discontinued or terminated as provided in
Section 8(a), the plan shall terminate on December 31, 2003. No award shall be
granted after the termination of the plan, provided that nothing herein shall be
construed to limit the issuance of options pursuant to an option containing a
reload option feature or the provisions of section 6(a)(v). However, unless
otherwise expressly provided in the plan or in an applicable award agreement,
any award theretofore granted may extend beyond the termination of the plan, and
the authority of the committee provided for hereunder with respect to the plan
and any awards, and the authority of the board of directors of the Company to
amend the plan, shall extend beyond the termination of the plan.


                                       10
<PAGE>


                                                                         ANNEX I

                               DELUXE CORPORATION
                  NON-EMPLOYEE DIRECTOR STOCK AND DEFERRAL PLAN
                                    ("PLAN")


         1. Purpose of the Plan. The purpose of the Deluxe Corporation
Non-Employee Director Stock and Deferral Plan (the "Plan") is to provide an
opportunity for non-employee members of the Board of Directors (the "Board") of
Deluxe Corporation ("Deluxe" or the "Company") to increase their ownership of
Deluxe Common Stock, $1.00 par value ("Common Stock"), and thereby align their
interest in the long-term success of the Company with that of the other
shareholders. This will be accomplished by allowing each participating director
to elect voluntarily to receive all or a portion of his or her Retainer (as
hereinafter defined) in the form of shares of Common Stock and to allow each of
them to defer the receipt of such shares until a later date pursuant to
elections made by him or her under this Plan.

         2. Eligibility. Directors of the Company who are not also officers or
other employees of the Company or its subsidiaries are eligible to participate
in this Plan ("Eligible Directors").

         3. Administration. This Plan will be administered by or under the
direction of the Secretary of the Company (the "Administrator"). Since the
issuance of shares of Common Stock pursuant to this Plan is based on elections
made by Eligible Directors, the Administrator's duties under this Plan will be
limited to matters of interpretation and administrative oversight. All questions
of interpretation of this Plan will be determined by the Administrator, and each
determination, interpretation or other action that the Administrator makes or
takes pursuant to the provisions of this Plan will be conclusive and binding for
all purposes and on all persons. The Administrator will not be liable for any
action or determination made in good faith with respect to this Plan.

         4. Election to Receive Stock and Stock Issuance.

         4.1. Election to Receive Stock in Lieu of Cash. On forms provided by
the Company and approved by the Administrator, each Eligible Director may
irrevocably elect ("Stock Election") to receive, in lieu of cash, shares of
Common Stock having a Fair Market Value, as defined in Section 4.6, equal to 50%
or more of the annual cash retainer and all meeting fees (including all
committee retainers and meeting fees, the "Retainer") payable to that director
for services rendered as a director. From and after January 1, 2001, all
Eligible Directors will be deemed to have made such a Stock Election to receive
shares of Common Stock with respect to no less than 50% of such Retainer and
shall be deemed to be a participating director under this Plan ("Participating
Director") to at least such extent. Except as provided in the preceding
sentence, to be effective, any Stock Election must be filed with the Company
(the date of such filing being the date of such election) no later than May 31
of each year (or by such other date as the Administrator shall determine) and
shall apply only with respect to services as a director provided for the period
of July 1 of that year through June 30 of the year following ("Fiscal Year");
provided, however, that an Eligible Director whose initial election to the Board
of Directors occurs after May 31, shall have 30 days following such election to
make a Stock Election, which shall apply only with respect to services as a
director provided following the filing of such Stock Election with the Company
during the then current or the ensuing Fiscal Year, as specified in the Stock
Election. Following the implementationof the Plan upon the expiration of the
existing Deluxe Corporation Non-Employee Director Stock and Deferral Plan,
effective as of October 31, 1997, Eligible Directors shall continue to be bound
by theStock Elections previously made by them for the Fiscal


                                       11
<PAGE>


Year ending June 30, 2001 with respect to their services as a director during
the period from January 1, 2001 through June 30, 2001. In the event that an
Eligible Director shall fail to file with the Company the required form for
making a Stock Election, such director shall be deemed to have made the same
Stock Election that such director made with respect to the then current Fiscal
Year, or in the absence of having made such Stock Election, to have elected to
receive 50% of his or her Retainer in cash and 50% in Common Stock, and such
election will be deemed to have been made on (i) May 31 in any year with respect
to the ensuing Fiscal Year as aforesaid and (ii) the thirtieth day following
initial election to the Board of new directors with respect to the current
Fiscal Year only unless such date is within the period of May 31 through June 30
of that Fiscal Year, in which event the election shall be deemed made for both
the current and next following Fiscal Years. Any Stock Election made in
accordance with the provisions of this Section 4.1 shall be irrevocable for the
period to which such election applies.

         4.2. Issuance of Stock in Lieu of Cash. Shares of Deluxe Common Stock
having a Fair Market Value equal to the amount of the Retainer so elected shall
(i) be issued to each Participating Director or (ii) at the Participating
Director's election pursuant to Section 4.3, be credited to such director's
account (a "Deferred Stock Account"), on March 15, June 15, September 15 and
December 15 for the calendar quarter ending on the last day of each such month
(each such payment date, a "Payment Date"). The Company shall not issue
fractional shares. Whenever, under the terms of this Plan, a fractional share
would be required to be issued, the Company will round the number of shares (up
or down) to the nearest integer. In the event that a Participating Director
elects to receive less than 100% of each quarterly installment of the Retainer
in shares of Common Stock (or Stock Units as defined and provided in Section
4.4), that Participating Director shall receive the balance of the quarterly
installment in cash.

         4.3. Manner of Making Deferral Election. A Participating Director may
elect to defer payment of the Retainer otherwise payable in shares of Common
Stock pursuant to this Plan by filing (the date of such filing being the date of
such election), no later than May 31 of each year (or by such other date as the
Administrator shall determine) with respect to payments in the ensuing Fiscal
Year, an irrevocable election with the Administrator on a form (the "Deferral
Election Form") provided by the Administrator for that purpose ("Deferral
Election"). Any portion of the Retainer to be paid in cash may not be deferred
pursuant to the Plan. The special Stock Election rules set forth in Section 4.1
with respect to new directors and continuingelections under the Plan during 2001
shall also apply to the corresponding Deferral Elections. Failure timely to file
a Deferral Election shall conclusively be deemed to mean that no election to
defer has been made for the applicable period. The Deferral Election shall be
effective for the Retainer payable (i) during the ensuing Fiscal Year with
respect to elections made on or before May 31 of each year as aforesaid and (ii)
for the portion of the Fiscal Year after the date the Deferral Election is made
or the ensuing Fiscal Year as specified in the Deferral Election with respect to
Deferral Elections made by new directors. Any Deferral Election made in
accordance with the provisions of this Section shall be irrevocable for the
period to which such election applies. The Deferral Election form shall specify
the amount to be deferred expressed as a percentage of the Participating
Director's Retainer.

         4.4. Credits to Deferred Stock Account for Elective Deferrals. On each
Payment Date, a Participating Director who has made a then effective Deferral
Election shall receive a credit in the form of restricted stock units ("Stock
Units") to his or her Deferred Stock Account. Each Stock Unit shall represent
the right to receive one share of Common Stock. The number of Stock Units
credited to a Participating Director's Deferred Stock Account shall be
determined by dividing an amount equal to the Participating Director's Retainer
payable on the Payment Date for the current calendar quarter and specified for
deferral pursuant to Section 4.3, by the Fair Market Value of a share of Common
Stock on such Payment Date. If that computation would result in a fractional
Stock Unit being credited to a Participating Director's Deferred Stock Account,
the Company will round the number of Stock Units so credited (up or down) to the
nearest integer.


                                       12
<PAGE>


         4.5. Dividend Equivalent Payments. Each time a dividend is paid on the
Common Stock, the Participating Director who has a Deferred Stock Account shall
receive a dividend equivalent payment on the dividend payment date equal to the
amount of the dividend payable on a single share of Common Stock multiplied by
the number of Stock Units credited to the Participating Director's Deferred
Stock Account on the dividend record date.

         4.6. Fair Market Value. The Fair Market Value of each share of Common
Stock shall be equal to the closing price of one share of Common Stock on the
New York Stock Exchange ("NYSE") on the relevant date as reported by the WALL
STREET JOURNAL, MIDWEST EDITION; provided that if, on such date, the NYSE is not
open for business or there are no shares of Common Stock traded on such date,
the Fair Market Value of a share of Common Stock shall be equal to the closing
price of one share of Common Stock on the first day preceding such date on which
the NYSE is open for business and has reported trades in the Common Stock.

         4.7. Termination of Service as a Director. If a Participating Director
leaves the Board before the conclusion of any quarter of a Fiscal Year, he or
she will be paid the quarterly installment of the Retainer entirely in cash or
Common Stock on the applicable Payment Date in accordance with such
Participating Director's then effective Stock Election, notwithstanding that a
Deferral Election is on file with the Company. The date of termination of a
Participating Director's service as a director of the Company will be deemed to
be the date of termination recorded on the personnel or other records of the
Company.

         5. Shares Available for Issuance. This Plan constitutes part of the
Deluxe Corporation 2000 Stock Incentive Plan, as amended from time to time (the
"SIP"), and is subject to the terms and conditions of the SIP. Any shares of
Common Stock issued under this Plan shall be issued pursuant to the terms and
conditions of the SIP, and any such shares so issued shall be subject to the
limits set forth in the SIP, including, without limiting the generality of the
foregoing, the limits contained in Section 4(a) of the SIP.

         6. Deferral Payment.

         6.1. Deferral Payment Election. At the time of making the Deferral
Election and as a part thereof, each Participating Director shall make and file
with the Company, a deferral payment election on the Deferral Election Form
specifying one of the payment options described in Section 6.2. If a
Participating Director fails to make a deferral payment election at the time any
Deferral Election is made in accordance with this Plan, the Participating
Director shall conclusively be deemed to have elected to receive the Common
Stock represented by the Stock Units earned during the period covered by the
Deferral Election in a lump sum payment at the time of the Participating
Director's termination of service on the Board as provided in Section 6.2. The
deferral payment election shall be irrevocable as to all amounts credited to the
Participating Director's Deferred Stock Account during the period covered by the
relevant Deferral Election.

         6.2. Payment of Deferred Stock Accounts in a Lump Sum. Stock Units
credited to a Participating Director's Deferred Stock Account shall be converted
to an equal number of shares of Common Stock and issued in full to the
Participating Director on the earlier of the tenth anniversary of February 1 of
the year following the Participating Director's termination of service on the
Board (or the first business day thereafter) or such other date as elected by
the Participating Director by making a deferral payment election in accordance
with the provisions of Section 6.1. All payments shall be made in whole shares
of Common Stock (rounded as necessary to the nearest integer). Notwithstanding
the foregoing, in the event of a Change of Control (as defined in Section 12),
Stock Units credited to a Participating Director's Deferred Stock Account as of
the business day immediately prior to the effective date of the transaction
constituting the Change of Control shall be converted to an equal number of
shares of Common Stock (rounded as necessary to the nearest integer) and issued
in full to the Participating Director in whole shares of Common Stock on such
date.


                                       13
<PAGE>


         6.3. Payment to Estate. In the event that a Participating Director
shall die before full distribution of his or her Deferred Stock Account, any
shares that issue therefrom shall be issued to such Director's estate or
beneficiaries, as the case may be.

         7. Holding Period. All shares of Common Stock issued under this Plan,
including shares that are issued as a result of distributions of a Participating
Director's Deferred Stock Account, shall be held by the Participating Director
receiving such shares for a minimum period of six months from the date of
issuance or such longer period as may be required for compliance with Rule
16b-3, as amended or any successor rule ("Rule 16b-3"), promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Administrator may, in his or her discretion,
require that shares of Common Stock issued pursuant to this Plan contain a
suitable legend restricting trading in such shares during such holding period.

         8. Limitation on Rights of Eligible and Participating Directors.

         8.1. Service as a Director. Nothing in this Plan will interfere with or
limit in any way the right of the Company's Board or its shareholders not to
nominate for re-election, elect or remove an Eligible or Participating Director
from the Board. Neither this Plan nor any action taken pursuant to it will
constitute or be evidence of any agreement or understanding, express or implied,
that the Company or its Board or shareholders have retained or will retain an
Eligible or Participating Director for any period of time or at any particular
rate of compensation.

         8.2. Nonexclusivity of the Plan. Nothing contained in this Plan is
intended to affect, modify or rescind any of the Company's existing compensation
plans or programs or to create any limitations on the power of the Company's
officers or Board to modify or adopt compensation arrangements as they or it may
from time to time deem necessary or desirable.

         9. Plan Amendment, Modification and Termination. The Board may suspend
or terminate this Plan at any time. The Board may amend this Plan from time to
time in such respects as the Board may deem advisable in order that this Plan
will conform to any change in applicable laws or regulations or in any other
respect that the Board may deem to be in the Company's best interests; provided,
however, that no amendments to this Plan will be effective without approval of
the Company's shareholders, if shareholder approval of the amendment is then
required to exempt issuance or crediting of shares of Common Stock or Stock
Units from Section 16 of the Exchange Act under Rule 16b-3, or pursuant to the
rules of the New York Stock Exchange.

         10. Effective Date and Duration of the Plan. This Plan shall become
effective on January 1, 2001and shall continue, unless terminated by action of
the Board, until the expiration or termination of the SIP, provided that the
expiration or termination of this Plan shall not affect any rights of
Participating Directors with respect to their Deferral Accounts which shall
continue to be governed by the provisions of this Plan until the final
distribution of all Deferral Accounts established under this Plan.

         11. Participants are General Creditors of the Company. The
Participating Directors and beneficiaries thereof shall be general, unsecured
creditors of the Company with respect to any payments to be made pursuant to
this Plan and shall not have any preferred interest by way of trust, escrow,
lien or otherwise in any specific assets of the Company. If the Company shall,
in fact, elect to set aside monies or other assets to meet its obligations
hereunder (there being no obligation to do so), whether in a grantor's trust or
otherwise, the same shall, nevertheless, be regarded as a part of the general
assets of the Company subject to the claims of its general creditors, and
neither any Participating Director nor any beneficiary thereof shall have a
legal, beneficial or security interest therein.


                                       14
<PAGE>


         12. Change of Control. A "Change of Control" shall be deemed to have
occurred if the conditions set forth in any one of the following paragraphs
shall have been satisfied:

                  A. Any Person (other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company) is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any securities
acquired directly from the Company or its Affiliates) representing 25% or more
of the combined voting power of the Company's then outstanding securities; or

                  B. During the period from the effective date of this Plan
until final distribution to all Participating Directors of their Deferred Stock
Accounts, individuals who at the beginning of such period constitute the Board
and any new director (other than a director designated by a Person who has
acquired securities of the Company or entered into an agreement with the Company
to effect a transaction constituting a Change of Control as described in
paragraphs (A), (C) or (D) of this Section 12) whose election by the Board or
nomination for election by the Company's shareholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof; or

                  C. The shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (a) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, at
least 51% of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation, or (b) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person
acquires more than 40% of the combined voting power of the Company's then
outstanding securities; or

                  D. The shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.

                  E. For the purposes of this Section 12, the following terms
shall have definitions ascribed herein to them:

                           (i)      "Person" shall have the meaning defined in
                                    Sections 3(a)(9) and 13(d) of the Securities
                                    Exchange.

                           (ii)     "Beneficial Owner" shall have the meaning
                                    defined in Rule 13d-3 promulgated under the
                                    Exchange Act.

                           (iii)    "Affiliate" shall mean a company controlled
                                    directly or indirectly by the Company, where
                                    "control" shall mean the right, either
                                    directly or indirectly, to elect a majority
                                    of the directors thereof without the consent
                                    or acquiescence of any third party.

         13. Miscellaneous.

         13.1 Securities Law and Other Restrictions. Notwithstanding any other
provision of this Plan or any Stock Election or Deferral Election delivered
pursuant to this Plan, the Company will not be required to issue any shares of
Common Stock under this Plan and a Participating Director may not sell, assign,
transfer or otherwise dispose of shares of Common Stock issued


                                       15
<PAGE>


pursuant to this Plan, unless (a) there is in effect with respect to such shares
a registration statement under the Securities Act of 1933, as amended (the
"Securities Act") and any applicable state securities laws or an exemption from
such registration under the Securities Act and applicable state securities laws,
and (b) there has been obtained any other consent, approval or permit from any
other regulatory body that the Administrator, in his or her sole discretion,
deems necessary or advisable. The Company may condition such issuance, sale or
transfer upon the receipt of any representations or agreements from the parties
involved, and the placement of any legends on certificates representing shares
of Common Stock, as may be deemed necessary or advisable by the Company, in
order to comply with such securities law or other restriction.

         13.2. Governing Law. The validity, construction, interpretation,
administration and effect of this Plan and any rules, regulations and actions
relating to this Plan will be governed by and construed exclusively in
accordance with the laws of the State of Minnesota.


                                       16

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>2000 EMPLOYEE STOCK PURCHASE PLAN
<TEXT>


                                                                    Exhibit 10.3


                               DELUXE CORPORATION
                                      2000
                          EMPLOYEE STOCK PURCHASE PLAN
                           (AMENDED AS OF MAY 1, 2000)


SECTION 1. CERTAIN DEFINITIONS.

1.01. PLAN. The term "Plan" shall mean the Employee Stock Purchase Plan, the
terms and provisions of which are set forth herein.

1.02. COMPANY. The term "company" shall mean Deluxe Corporation.

1.03. SHARES. The term "Shares" shall mean the $1 par value Common Shares of the
company.

1.04. PARTICIPANT. The term "Participant" shall mean a Full-Time Employee of the
company or of its Participating Subsidiaries, who is eligible to participate in
the Plan and who has elected to participate in the manner set forth in the Plan.

1.05. CURRENT COMPENSATION. The term "Current Compensation" shall mean all
regular wage, salary, and commission payments (including periodic sales
commission bonuses) paid by the company to a Participant in accordance with the
terms of his employment, including payments made to him under the short term
disability or paid time off plan of the company or subsidiary of which the
Participant is an employee in effect at the applicable time, but excluding all
overtime earnings, bonus and other incentive payments and awards, and all other
forms of extra compensation.

1.06. QUARTER DATE. The term "Quarter Date" shall mean the first business day of
each February, May, August, and November, commencing with the effective date of
the Plan and ending with the last such date during the term of this Plan, a
"business" day being, for this purpose, a trading day on the New York Stock
Exchange.

1.07. FULL-TIME EMPLOYEE. The term "Full-Time Employee" means, with respect to
employees of the Company, all employees (including officers and directors who
are also employees of the Company) who are employed on a full-time basis and
whose regularly scheduled work week consists of (i) prior to May 1, 2000, at
least forty (40) hours and (ii) from and after May 1, 2000 at least thirty-two
(32) hours. With respect to employees of subsidiaries, "Full-Time Employee"
means employees who are considered full-time employees under the employment
policies of their company. "Full-Time Employees" does not include seasonal or
temporary employees or independent contractors.

1.08. STOCK PURCHASE ACCOUNT. The term "Stock Purchase Account" means a current
bookkeeping record maintained by the company of cumulative payroll deductions
made from the Current Compensation of each Participant in the Plan as reduced by
amounts applied toward the purchase of Shares under the Plan.

<PAGE>


1.09. PARTICIPATING SUBSIDIARIES. The term "Participating Subsidiaries" shall
mean each subsidiary of the company that is not an Excluded Subsidiary.

1.10. EXCLUDED SUBSIDIARY. The term "Excluded Subsidiary" shall mean those
subsidiaries of the company that are designated as such by the Plan
Administrator.

1.11. PLAN ADMINISTRATOR. The term "Plan Administrator" shall mean the board of
directors of the company or any committee appointed by such board.

SECTION 2. ELIGIBLE EMPLOYEES AND ELECTION TO PARTICIPATE.

2.01. Each Full-Time Employee of the company and its Participating Subsidiaries
shall be eligible to participate in the Plan commencing with the Quarter Date on
which, or next following, the date on which he or she completes twelve (12)
consecutive months of employment with the company or its subsidiaries, provided
that an approved leave of absence shall not be deemed to terminate an employee's
continuous employment. Notwithstanding the foregoing, no employee shall be
granted any right to purchase Shares hereunder if such employee, immediately
after such a right to purchase is granted, would own, directly or indirectly,
within the meaning of Section 423(b)(3) and Section 424(d) of the Internal
Revenue Code of 1986, as amended, Shares possessing five percent (5%) or more of
the total combined voting power or value of all the classes of the capital stock
of the company or of all of its affiliates.

2.02. An eligible employee may elect to participate in the Plan by completing a
form known as "Payroll Deduction Authorization," which authorizes regular
payroll deduction from the employee's Current Compensation, beginning with the
first payroll period ending after a Quarter Date, provided the authorization is
received by the company's Employee Services Department at least fifteen days
prior to each Quarter Date. Payroll deductions shall continue until the employee
withdraws or ceases to be eligible to participate in the Plan.

2.03. Employees of an Excluded Subsidiary shall not be eligible to participate
in the Plan unless and until they transfer employment to the company or a
Participating Subsidiary or the Plan Administrator should redesignate the
Excluded Subsidiary as a Participating Subsidiary. In any such event, the period
during which an employee was employed by the Excluded Subsidiary shall, unless
otherwise determined by the Plan Administrator, be treated as employment by the
company or a Participating Subsidiary for purposes of determining the employee's
eligibility under Section 2.01 to participate in the Plan following such
transfer or redesignation.

SECTION 3. PAYROLL DEDUCTIONS AND STOCK PURCHASE ACCOUNT.

3.01. A Participant may elect payroll deductions of any multiple of one percent
not less than three percent nor more than ten percent of his Current
Compensation. A Participant may, at any time, but only once in any twelve-month
period, increase or reduce the

<PAGE>


percentage of his or her payroll deduction within the foregoing limitations by
filing a "Notice of Change," such change to become effective with the first
payroll period commencing on or after the receipt of the Notice of Change by the
company's Employee Services Department.

3.02. Payroll deductions shall be credited currently to the Participant's Stock
Purchase Account. A Participant may not make any separate cash payment into his
Stock Purchase Account.

3.03. No interest will be paid upon payroll deductions or upon any amount
credited to, or on deposit in, an employee's Stock Purchase Account.

SECTION 4. PURCHASE OF SHARES.

4.01. On each Quarter Date, each Participant shall automatically have purchased
for him that number of whole Shares, not less than two, as can be purchased with
the amount in his or her Stock Purchase Account on such Quarter Date.

4.02. The per-Share purchase price of Shares purchased shall be seventy-five
percent (75%) of the fair market value of the Shares on the Quarter Date,
rounded up to the next higher full cent. The fair market value on any day means
the closing price of the Shares on the New York Stock Exchange on such day as
reported by the WALL STREET JOURNAL, MIDWEST EDITION.

SECTION 5. STOCK PURCHASE ACCOUNT BALANCE.

5.01. Any funds remaining in a Participant's Stock Purchase Account after the
purchase of Shares on a Quarter Date shall remain in his or her Stock Purchase
Account and be applied toward the purchase of Shares on the next Quarter Date,
unless the Participant withdraws from the Plan.

SECTION 6. WITHDRAWAL FROM THE PLAN.

6.01. A Participant may, at any time, by written notice to the Employee Services
Department, withdraw from the Plan and cease making any further payroll
deductions. In such event, the company shall refund, within thirty (30) days,
the entire balance, if any, in the employee's Stock Purchase Account. Once an
employee withdraws from the Plan, or his or her employment is terminated, the
employee shall not be eligible to re-enter the Plan for a period of twelve (12)
months. For purposes of the foregoing sentence, a transfer of an employee to an
Excluded Subsidiary or a designation of such employee's employer as an Excluded
Subsidiary shall not be deemed a termination of employment requiring the
employee to accrue an additional year of service time in the event the employee
thereafter transfers to a Participating Subsidiary or the designation of such
employee's employer is subsequently changed to a Participating Subsidiary.

<PAGE>


6.02. Participation in the Plan shall cease upon the date of a Participant's
termination of employment, death, transfer to other than full-time status,
transfer to an Excluded Subsidiary or a change in the designation of a
Participant's employer to an Excluded Subsidiary; and any amounts theretofore
credited to the individual's Stock Purchase Account shall be refunded within
thirty (30) days to the former Participant or to his or her estate; provided
that if during their lifetime a Participant has delivered to the Employee
Services Department a notice in writing, upon a form furnished by the company,
to pay such amount in the event of the Participant's death to a specified person
or persons, such amount in the event of the Participant's death, shall be
refunded to such person or persons whose designation as aforesaid has not been
revoked by the Participant during his or her lifetime. An approved leave of
absence shall not be deemed a termination of employment for purposes of this
section.

SECTION 7. TRANSFERABILITY.

7.01. Stock purchase benefits granted hereunder may not be assigned,
transferred, pledged, or hypothecated (whether by operation of law or otherwise)
and shall not be subject to execution, attachment or similar process. Any
attempted assignment, transfer, pledge, hypothecation, or other disposition or
levy of attachment or similar process upon the stock purchase benefits shall be
null and void and without effect.

7.02. The funds accumulated in a Stock Purchase Account may not be assigned,
transferred, pledged or hypothecated in any way, and any attempted assignment,
transfer, pledge, hypothecation or other disposition of the funds accumulated in
the Stock Purchase Account shall be null and void and without effect.

7.03. The Plan Administrator may, from time to time, establish or modify minimum
required holding periods for Shares purchased by Participants under the Plan
and, in connection therewith, may establish such rules and regulations as it
determines to be necessary or appropriate for the administration of such minimum
holding periods, including, without limiting the generality of the authority
herein, by requiring that the Shares issued under the Plan be restricted or bear
a legend against transfer or by requiring periodic certifications by
Participants concerning compliance with such minimum required holding periods,
provided that the establishment of or any change to any minimum required holding
period shall be made effective on a Quarter Date and that notice thereof shall
be given to Participants on or before the commencement of the calendar quarter
ending on such Quarter Date by such means as the Plan Administrator determines
to be appropriate in the circumstances. The failure of a Participant to receive
any such notice shall not affect the establishment of any such minimum holding
period or any change thereto with respect to that or any other Participant.

SECTION 8. SHARE CERTIFICATES.

8.01. Shares purchased under the Plan may be originally issued in certificated
or uncertificated form, as determined by the Plan Administrator. Shares issued
under the

<PAGE>


Plan may contain restrictions against transfer (including applicable legends to
that effect) as provided in Section 7.03.

8.02. The company shall not be required to issue or deliver any Shares purchased
prior to registration under the Securities Act of 1933 or registration or
qualification under any state law if such registration is required. The company
will use its best efforts to accomplish such registration, if and to the extent
required or determined desirable, not later than a reasonable time following a
Quarter Date, and issuance of Shares may be deferred until such registration is
accomplished.

8.03. An employee shall have no interest in the Shares purchased until a Share
certificate representing the same is issued or an appropriate book-entry is made
with the transfer agent reflecting such purchase.

8.04. The Share certificates or book-entries representing Shares issued under
the Plan shall be registered in the name of the Participant or jointly in the
name of the Participant and another person, as the Participant may direct.

SECTION 9. EFFECTIVE DATE AND AMENDMENT OR TERMINATION OF PLAN.

9.01. The Plan shall become effective on the date fixed by the board of
directors of the company; provided, however, that the date fixed by the board of
directors as the effective date of the Plan shall coincide with a Quarter Date.

9.02. The board of directors of the company may at any time terminate or amend
the Plan.

9.03. The Plan shall automatically terminate on the fifth (5th) anniversary date
of the Quarter Date it became effective (or next ensuing business day, as the
case may be).

SECTION 10. STOCK PLAN COMMITTEE.

10.01. In administering the Plan, it will be necessary to follow various laws
and regulations. It may be necessary from time to time to change or waive
requirements of the Plan to conform with law, to meet special circumstances not
anticipated or covered in the Plan, or to carry on successful operations of the
Plan. Therefore, the company reserves the right, exercisable by the Plan
Administrator, to make variations in the provisions of the Plan for such
purposes and to determine any questions which may arise regarding interpretation
and application of the provisions of the Plan. The determination of the Plan
Administrator as to the interpretation and operation of the Plan shall be final
and conclusive, provided that any such determination by a committee appointed by
the board of directors of the company shall be subject to review by such board.

<PAGE>


SECTION 11. STOCK DIVIDEND OR RECLASSIFICATION, MERGER, OR CONSOLIDATION.

11.01. Upon the payment of any stock dividend or reclassification by way of
split-up in the number of Shares of the company, the total number of Shares
authorized by Section 12 to be sold under the Plan shall be adjusted
accordingly.

11.02. If the company is merged into or consolidated with one or more
corporations during the Plan, appropriate adjustments shall be made to give
effect thereto on a equitable basis in terms of issuance of Shares of the
corporation surviving the merger or of the consolidated corporation, as the case
may be.

SECTION 12. SHARES TO BE SOLD.

12.01. The number of Shares authorized to be sold under the Plan during the
current renewal period, which commences February 1, 2000, shall not exceed 5
million.

SECTION 13. NOTICES.

13.01. Notices to the company pertaining to the Plan may be addressed as
follows:

         Deluxe Corporation
         Attention: Employee Benefits Department
         Post Office Box 64235
         St. Paul, MN 55164-0235

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>AMENDMENT TO CREDIT AGREEMENT
<TEXT>


                                                                    Exhibit 10.4


                          AMENDMENT TO CREDIT AGREEMENT


                  THIS AMENDMENT TO CREDIT AGREEMENT (this "Amendment
Agreement"), dated as of August 14, 2000, is made among DELUXE CORPORATION, a
Minnesota corporation (the "Company"), the financial institutions listed on the
signature pages hereof under the heading "THE BANKS" (each a "Bank" and,
collectively, the "Banks") and Bank of America, N.A. (formerly known as Bank of
America National Trust and Savings Association), as administrative agent for
itself and the Banks (in such capacity, the "Agent").

                  The Company, the Banks and the Agent are parties to an Amended
and Restated Credit Agreement dated as of July 8, 1997 (as in effect as of the
date of this Amendment Agreement, the "Credit Agreement"). The Company has
requested that the Banks agree to certain amendments of the Credit Agreement,
and the Banks are willing to agree to such request, subject to the terms and
conditions of this Amendment Agreement.

                  Accordingly, the parties hereto agree as follows:

                  SECTION 1 Definitions; Interpretation.

                  (a) Terms Defined in Credit Agreement. All capitalized terms
used in this Amendment Agreement (including in the Recitals hereof) and not
otherwise defined herein shall have the meanings assigned to them in the Credit
Agreement.

                  (b) Interpretation. The rules of interpretation set forth in
Section 1.02 of the Credit Agreement shall be applicable to this Amendment
Agreement and are incorporated herein by this reference.

                  SECTION 2 Amendments to the Credit Agreement. The Credit
         Agreement shall be amended as set forth in this Section 2, effective as
         of the date of satisfaction of the conditions set forth in Section 3
         hereof (the "Effective Date").

                  (a) Amendments. The Credit Agreement shall be amended as
follows:

                           (i) Section 7.02(c) is amended by deleting the word
                  "and" from the end thereof.

                           (ii) The existing Section 7.02(d) is redesignated as
                  Section 7.02(e). The existing Section 7.02(d) is further
                  amended by changing the reference therein to "subsections
                  7.02(a) through (c)" to read "subsections 7.02(a) through
                  (d)".

                           (iii) A new Section 7.02(d) is inserted to read as
                  follows:

                                    "(d) dispositions by the Company of common
                                    stock of eFunds Corporation to Company
                                    shareholders, pursuant to an exchange offer
                                    (in which shares of the Company are
                                    exchanged for shares of eFunds Corporation)
                                    and spin-off or in-kind dividend of any
                                    remaining eFund shares, as described
                                    generally in that S-1/A

<PAGE>


                                    Registration Statement of eFunds Corporation
                                    filed with the SEC on or about June 23,
                                    2000, and pursuant to an S-4 Registration
                                    Statement of eFunds Corporation to be filed
                                    with the SEC (together, the "Exchange Offer
                                    Transaction"); and".

                           (iv) Section 7.06(b) is amended by deleting the word
                  "and" from the end thereof.

                           (v) The existing Section 7.06(c) is redesignated as
                  Section 7.06(d).

                           (vi) A new Section 7.06(c) is inserted to read as
                  follows:

                                    "(c) make distributions by the Company to
                                    its shareholders of common stock of eFunds
                                    Corporation pursuant to the Exchange Offer
                                    Transaction; and".

                  (b) References Within Credit Agreement. Each reference in the
Credit Agreement to "this Agreement" and the words "hereof," "herein,"
"hereunder," or words of like import, shall mean and be a reference to the
Credit Agreement as amended by this Amendment Agreement.

                  SECTION 3 Conditions of Effectiveness. The effectiveness of
this Amendment Agreement shall be subject to the satisfaction of each of the
following conditions precedent:

                  (a) Executed Amendment Agreement. The Agent shall have
received an executed counterpart of this Amendment Agreement from each of the
Company and the Majority Banks.

                  (b) Additional Closing Documents and Actions. The Agent shall
have received, in form and substance satisfactory to the Agent, a certificate of
a Responsible Officer of the Company dated the Effective Date stating that (A)
the representations and warranties contained in Section 4 hereof are true and
correct on and as of the Effective Date, and (B) on and as of the Effective
Date, after giving effect to the amendment of the Credit Agreement contemplated
hereby, no Default or Event of Default shall have occurred and be continuing.

                  (c) Corporate Authority. The Agent shall have received, in
form and substance satisfactory to the Agent, evidence of the authority of each
officer of the Company executing and delivering this Amendment Agreement.

                  (d) Additional Documents. The Agent shall have received, in
form and substance satisfactory to the Agent, such additional approvals,
documents and other information as the Agent or any Bank (through the Agent) may
reasonably request.

For purposes of determining compliance with the foregoing conditions specified
in this Section 3, each of the Banks that has executed this Amendment Agreement
shall be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter either sent by the Agent to such Banks for
consent, approval, acceptance or satisfaction, or required hereunder to be
consented to or approved by or acceptable or satisfactory to, such Bank.


                                       2.
<PAGE>


                  SECTION 4 Representations and Warranties. To induce the Agent
and the Banks to enter into this Amendment Agreement, the Company hereby
confirms and restates, as of the date hereof, the representations and warranties
made by it in Article V of the Credit Agreement. For the purposes of this
Section 4, (i) each reference in Article V of the Credit Agreement to "this
Agreement," and the words "hereof," "herein," "hereunder," or words of like
import in such Section, shall mean and be a reference to the Credit Agreement as
amended by this Amendment Agreement, and each reference in such Section to "the
Loan Documents" shall mean and be a reference to the Loan Documents as amended
hereby, (ii) the representation and warranty set forth in Section 5.11 of the
Credit Agreement shall be deemed instead to refer to the last day of the most
recent fiscal quarter and fiscal year for which financial statements have then
been delivered, and (iii) any representations and warranties which relate solely
to an earlier date shall not be deemed confirmed and restated as of the date
hereof (provided that such representations and warranties shall be true, correct
and complete as of such earlier date).

                  SECTION 5 Miscellaneous.

                  (a) Notice. The Agent shall notify the Company and the Banks
of the occurrence of the Effective Date and thereafter distribute to the Company
and the Banks copies of all documents delivered under Section 3.

                  (b) Credit Agreement Otherwise Not Affected. Except as
expressly amended and restated pursuant hereto, the Credit Agreement shall
remain unchanged and in full force and effect and is hereby ratified and
confirmed in all respects. The Banks' and the Agent's execution and delivery of,
or acceptance of, this Amendment Agreement and any other documents and
instruments in connection herewith shall not be deemed to create a course of
dealing or otherwise create any express or implied duty by any of them to
provide any other or further amendments, consents or waivers in the future.

                  (c) No Reliance By Company. The Company hereby acknowledges
and confirms to the Agent and the Banks that the Company is executing this
Amendment Agreement on the basis of its own investigation and for its own
reasons without reliance upon any agreement, representation, understanding or
communication by or on behalf of any other Person.

                  (d) Costs and Expenses. The Company agrees to pay to the Agent
on demand the reasonable out-of-pocket costs and expenses of the Agent, and the
reasonable fees and disbursements of counsel to the Agent, in connection with
the negotiation, preparation, execution and delivery of this Amendment Agreement
and any other documents to be delivered in connection herewith.

                  (e) Binding Effect. This Amendment Agreement shall be binding
upon, inure to the benefit of and be enforceable by the Company, the Agent and
each Bank and their respective successors and assigns.

                  (f) Governing Law. THIS AMENDMENT AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.


                                       3.
<PAGE>


                  (g) Complete Agreement; Amendments. This Amendment Agreement,
together with the other Amendment Documents and the other Loan Documents,
contains the entire and exclusive agreement of the parties hereto and thereto
with reference to the matters discussed herein and therein. This Amendment
Agreement supersedes all prior commitments, drafts, communications, discussion
and understandings, oral or written, with respect thereto. This Amendment
Agreement may not be modified, amended or otherwise altered except in accordance
with the terms of Section 10.01 of the Credit Agreement.

                  (h) Severability. Whenever possible, each provision of this
Amendment Agreement shall be interpreted in such manner as to be effective and
valid under all applicable laws and regulations. If, however, any provision of
this Amendment Agreement shall be prohibited by or invalid under any such law or
regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed
modified to conform to the minimum requirements of such law or regulation, or,
if for any reason it is not deemed so modified, it shall be ineffective and
invalid only to the extent of such prohibition or invalidity without affecting
the remaining provisions of this Amendment Agreement, or the validity or
effectiveness of such provision in any other jurisdiction.

                  (i) Counterparts. This Amendment Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.

                  (j) Interpretation. This Amendment Agreement is the result of
negotiations among, and has been reviewed by, counsel to the Agent, the Company
and the other parties hereto and are the product of all parties hereto.
Accordingly, this Amendment Agreement shall not be construed against any of the
Banks or the Agent merely because of the Agent's or any Bank's involvement in
the preparation thereof.

                  (k) Loan Documents. This Amendment Agreement shall constitute
a Loan Document.

                                       [SIGNATURE PAGES FOLLOW.]


                                       4.
<PAGE>


                  IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment Agreement, as of the date first above written.

                                       THE COMPANY
                                       -----------

                                       DELUXE CORPORATION


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       THE AGENT
                                       ---------

                                       BANK OF AMERICA, N.A. (formerly
                                       known as Bank of America National Trust
                                       and Savings Association), as Agent


                                       By:
                                           -------------------------------------
                                       Name:  Matthew A. Gabel
                                       Title: Vice President


                                       THE BANKS
                                       ---------

                                       BANK OF AMERICA, N.A. (formerly
                                       known as Bank of America National Trust
                                       and Savings Association), as a Bank


                                       By:
                                           -------------------------------------
                                       Name:  Kenneth J. Beck
                                       Title: Vice President


                                       U.S. BANK NATIONAL ASSOCIATION


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       5.
<PAGE>


                                       THE BANK OF NEW YORK


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       WELLS FARGO BANK, N.A. (formerly
                                       known as Norwest Bank Minnesota,
                                       National Association)


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       WACHOVIA BANK, N.A.


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       BANK ONE, N.A.


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       6.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>AMENDED AND RESTATED CREDIT AGREEMENT
<TEXT>


                                                                    Exhibit 10.5


                      AMENDED AND RESTATED CREDIT AGREEMENT


                  THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"),
dated as of August 14, 2000, is made among DELUXE CORPORATION, a Minnesota
corporation (the "Company"), the financial institutions listed on the signature
pages hereof under the heading "THE BANKS" (each a "Bank" and, collectively, the
"Banks"), and Bank of America, N.A., as administrative agent for itself and the
Banks (in such capacity, the "Agent").

                  The Company, the Banks and the Agent are parties to a Credit
Agreement dated as of August 30, 1999 (the "Credit Agreement"). The Company has
requested that the Banks agree to an amendment and restatement of the Credit
Agreement in order to (i) extend the Revolving Termination Date thereunder, (ii)
and to amend certain covenants contained therein.

                  The parties hereto desire to amend the Credit Agreement as set
forth in this Agreement and to restate the Credit Agreement in its entirety to
read as set forth in the Credit Agreement with the amendments specified below.

                  Accordingly, the parties hereto agree as follows:

                  SECTION 1 Definitions; Interpretation.

                  (a) Terms Defined in Credit Agreement. All capitalized terms
used in this Agreement (including in the Recitals hereof) and not otherwise
defined herein shall have the meanings assigned to them in the Credit Agreement.

                  (b) Interpretation. The rules of interpretation set forth in
Section 1.02 of the Credit Agreement shall be applicable to this Agreement and
are incorporated herein by this reference.

                  SECTION 2 Amendments to the Credit Agreement.

                  (a) Amendment and Restatement. As of the date of satisfaction
of the condition set forth in Section 3(a) (the "Initial Effective Date"), the
Credit Agreement shall be amended as set forth in subsection 2(b) below. As of
August 28, 2000, provided all of the conditions set forth in Section 3 hereof
have been satisfied on or before such date, (the "Subsequent Effective Date"),
the Credit Agreement shall be further amended as set forth in subsection 2(c)
below and restated in its entirety to read as set forth in Credit Agreement with
the amendments specified in subsections 2(b) and 2(c) below.

                  (b) Initial Amendments. Upon the Initial Effective Date, the
Credit Agreement shall be amended as follows:

                           (i) Section 7.02(c) is amended by deleting the word
                  "and" from the end thereof.

<PAGE>


                           (ii) The existing Section 7.02(d) is redesignated as
                  Section 7.02(e). The existing Section 7.02(d) is further
                  amended by changing the reference therein to "subsections
                  7.02(a) through (c)" to read "subsections 7.02(a) through
                  (d)".

                           (iii) A new Section 7.02(d) is inserted to read as
                  follows:

                                    "(d) dispositions by the Company of common
                                    stock of eFunds Corporation to Company
                                    shareholders, pursuant to an exchange offer
                                    (in which shares of the Company are
                                    exchanged for shares of eFunds Corporation)
                                    and spin-off or in-kind dividend of any
                                    remaining eFunds shares, as described
                                    generally in that S-1/A Registration
                                    Statement of eFunds Corporation filed with
                                    the SEC on or about June 23, 2000, and
                                    pursuant to an S-4 Registration Statement of
                                    eFunds Corporation to be filed with the SEC
                                    (together, the "Exchange Offer
                                    Transaction"); and".

                           (iv) Section 7.06(b) is amended by deleting the word
                  "and" from the end thereof.

                           (v) The existing Section 7.06(c) is redesignated as
                  Section 7.06(d).

                           (vi) A new Section 7.06(c) is inserted to read as
                  follows:

                                    "(c) make distributions by the Company to
                                    its shareholders of common stock of eFunds
                                    Corporation, pursuant to the Exchange Offer
                                    Transaction; and".

                  (c) Subsequent Amendment. Upon the Subsequent Effective Date,
the Credit Agreement shall be further amended at Section 1.1, the definition of
"Revolving Termination Date", by deleting the date "August 28, 2000" and
substituting in its place the date "August 24, 2001".

                  (d) References Within Credit Agreement. Each reference in the
Credit Agreement to "this Agreement" and the words "hereof," "herein,"
"hereunder," or words of like import, shall mean and be a reference to the
Credit Agreement as amended by this Agreement.

                  SECTION 3 Conditions of Effectiveness. The following are
conditions precedent to this Agreement as set forth in Section 2 hereof:

                  (a) Executed Amendment. The Agent shall have received an
executed counterpart of this Agreement from the Company and each of the Banks.

                  (b) Additional Closing Documents and Actions. The Agent shall
have received, in form and substance satisfactory to it a certificate of a
Responsible Officer of the Company dated the Subsequent Effective Date, stating
that (A) the representations and warranties contained in Section 4 hereof are
true and correct on and as of the Subsequent Effective Date, and (B) on and as
of the Subsequent Effective Date, after giving effect to the


                                       2.
<PAGE>


amendment of the Credit Agreement contemplated hereby, no Default or Event of
Default shall have occurred and be continuing.

                  (c) Corporate Documents. The Agent shall have received, in
form and substance satisfactory to it, a certificate of the Secretary or
Assistant Secretary of the Company, dated the Subsequent Effective Date,
certifying (A) the resolutions of the Board of Directors of the Company
authorizing the execution, delivery and performance of this Agreement, and (B)
the incumbency, authority and signature of each officer of the Company
authorized to execute and deliver this Agreement.

                  (d) Legal Opinions. The Agent shall have received a legal
opinion from the General Counsel of the Company, dated as of the Subsequent
Effective Date, in form and substance satisfactory to the Agent.

                  (e) Additional Documents. The Agent shall have received, in
form and substance satisfactory to it, such additional approvals, documents and
other information as the Agent or any Bank (through the Agent) may reasonably
request.

                  (f) Fees. The Company shall have paid (i) to the Agent, for
the ratable benefit of the Banks from whom the Agent received, on or before
August 7, 2000, a signed copy of the letter dated July 17, 2000, from the Agent
to the Banks requesting their commitment to the amendment to the Credit
Agreement contemplated by Section 2(c), an upfront fee equal to 0.03% of the
Commitment of each such Bank, and (ii) to the Agent for its own account such
additional fees as are specified in the fee letter dated August 1, 2000 between
the Company and the Agent.

For purposes of determining compliance with the foregoing conditions specified
in this Section 3, each of the Banks that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Bank for consent,
approval, acceptance or satisfaction, or required hereunder to be consented to
or approved by or acceptable or satisfactory to, such Bank.

                  SECTION 4 Representations and Warranties of the Company. To
induce the Agent and the Banks to enter into this Agreement, the Company hereby
confirms and restates, as of the Initial Effective Date and the Subsequent
Effective Date, the representations and warranties made by it in Article V of
the Credit Agreement. For the purposes of this Section 4, (i) each reference in
Article V of the Credit Agreement to "this Agreement," and the words "hereof,"
"herein," "hereunder," or words of like import in such Section, shall mean and
be a reference to the Credit Agreement as amended by this Agreement, and each
reference in such Section to "the Loan Documents" shall mean and be a reference
to the Loan Documents as amended, as contemplated hereby, (ii) the
representation and warranty set forth in Section 5.11 of the Credit Agreement
shall be deemed instead to refer to the last day of the most recent fiscal
quarter and fiscal year for which financial statements have then been delivered,
and (iii) any representations and warranties which relate solely to an earlier
date shall not be deemed confirmed and restated as of the date hereof (provided
that such representations and warranties shall be true, correct and complete as
of such earlier date).


                                       3.
<PAGE>


                  SECTION 5 Miscellaneous.

                  (a) Notice. The Agent shall notify the Company and the Banks
of the occurrence of the Initial Effective Date and the Subsequent Effective
Date, and thereafter distribute to the Company and Banks copies of all documents
delivered under Section 3.

                  (b) Credit Agreement Otherwise Not Affected. Except as
expressly amended and restated pursuant hereto, the Credit Agreement shall
remain unchanged and in full force and effect and is hereby ratified and
confirmed in all respects. The Banks' and the Agent's execution and delivery of,
or acceptance of, this Agreement and any other documents and instruments in
connection herewith shall not be deemed to create a course of dealing or
otherwise create any express or implied duty by any of them to provide any other
or further amendments, consents or waivers in the future.

                  (c) No Reliance By Company. The Company hereby acknowledges
and confirms to the Agent and the Banks that the Company is executing this
Agreement on the basis of its own investigation and for its own reasons without
reliance upon any agreement, representation, understanding or communication by
or on behalf of any other Person.

                  (d) Costs and Expenses. The Company agrees to pay to the Agent
on demand the reasonable out-of-pocket costs and expenses of the Agent, and the
reasonable fees and disbursements of counsel to the Agent, in connection with
the negotiation, preparation, execution and delivery of this Agreement and any
other documents to be delivered in connection herewith.

                  (e) Binding Effect. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by the Company, the Agent and each
Bank and their respective successors and assigns.

                  (f) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

                  (g) Complete Agreement; Amendments. This Agreement, together
with the other Loan Documents, contains the entire and exclusive agreement of
the parties hereto and thereto with reference to the matters discussed herein
and therein. This Agreement supersedes all prior commitments, drafts,
communications, discussion and understandings, oral or written, with respect
thereto. This Agreement may not be modified, amended or otherwise altered except
in accordance with the terms of Section 10.01 of the Credit Agreement.

                  (h) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
all applicable laws and regulations. If, however, any provision of this
Agreement shall be prohibited by or invalid under any such law or regulation in
any jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any
reason it is not deemed so modified, it shall be ineffective and invalid only to
the extent of such prohibition or invalidity without affecting the remaining
provisions of this Agreement, or the validity or effectiveness of such provision
in any other jurisdiction.


                                       4.
<PAGE>


                  (i) Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.

                  (j) Interpretation. This Agreement is the result of
negotiations among, and has been reviewed by, counsel to the Agent, the Company
and the other parties hereto and are the product of all parties hereto.
Accordingly, this Agreement shall not be construed against any of the Banks or
the Agent merely because of the Agent's or any Bank's involvement in the
preparation thereof.

                  (k) Loan Document. This Agreement shall constitute a Loan
Document.

                                       [SIGNATURE PAGES FOLLOW.]


                                       5.
<PAGE>


                  IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.

                                       THE COMPANY
                                       -----------

                                       DELUXE CORPORATION


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       THE AGENT
                                       ---------

                                       BANK OF AMERICA, N.A., as Agent


                                       By:
                                           -------------------------------------
                                       Name:  Matthew A. Gabel
                                       Title: Vice President


                                       THE BANKS
                                       ---------

                                       BANK OF AMERICA, N.A., as a Bank


                                       By:
                                           -------------------------------------
                                       Name:  Kenneth J. Beck
                                       Title: Vice President


                                       ABN AMRO BANK N.V.


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:

                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       6.
<PAGE>


                                       BANCA DI ROMA - CHICAGO BRANCH


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       THE BANK OF NEW YORK


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       BANK ONE, N.A. (formerly known
                                       as The First National Bank of Chicago)


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       FIRSTAR BANK, NATIONAL ASSOCIATION


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       7.
<PAGE>


                                       LLOYDS TSB BANK PLC


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       THE NORTHERN TRUST COMPANY


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       SUNTRUST BANK


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       UMB BANK, N.A.


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       8.

<PAGE>


                                       WACHOVIA BANK, N.A.


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       WELLS FARGO BANK, N.A.


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                       9.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>SEVERANCE AGREEMENT
<TEXT>


                                                                    Exhibit 10.6


August 19, 1998



Ronald E. Eilers
4920 Neal Avenue North
Stillwater, MN 55082

Dear Ron:

In order to facilitate your orderly attention to the affairs of Deluxe
Corporation and its Affiliates (as defined below), you will be provided certain
separation benefits in the event of your employment separation due to a Business
Reorganization (as defined below), subject to the terms and conditions described
below.

Beginning August 1, 1998 through July 31, 2001, if, at the time of your
employment separation, you sign a separation agreement and release and if you
are not offered a position having an equal or greater base salary and Deluxe
Annual Incentive Plan (or equivalent) bonus target, then you will receive:

         A.       Twelve (12) months of severance pay at your then-current level
                  of base monthly salary in accordance with regular Deluxe
                  Corporation (Deluxe) payroll practices;
         B.       For a period of six (6) months commencing on the first
                  anniversary of the initial payment in paragraph A, a monthly
                  payment during each month in such six (6) month period equal
                  to the amount, if any, that your monthly base salary at the
                  time of your separation exceeds your monthly compensation
                  during that month in such six (6) month period. In order to be
                  eligible to receive any such payment, you agree to provide
                  Deluxe a copy of documentation concerning your monthly
                  compensation, such as your payroll statement or, if
                  applicable, your written statement that you are not then
                  employed, and within thirty (30) days thereafter, Deluxe will
                  make such differential payment to you; and
         C.       Continuation of the medical, life, vision and dental plan
                  coverage in which you were a participant, if any, at the time
                  of your separation for the subsequent twelve (12) month period
                  at employee rates as such plan terms and rates may change from
                  time to time.

"Affiliate" means a company which is directly, or indirectly through one or more
intermediaries, controlled by or under common control with another company where
control shall mean the right, either directly or indirectly, to elect the
majority of the directors thereof without the consent or acquiescence of any
third party.

"Business Reorganization" means a change in the structure of Deluxe or any
Affiliate that results in the elimination or material reduction of your job
responsibilities.

<PAGE>


You also agree that during the term of your employment by Deluxe or any of its
Affiliates and for a period of two (2) years thereafter, you shall retain in
confidence all proprietary and confidential information concerning Deluxe or any
of its Affiliates, including, without limitation, customer and mailing lists,
cost and pricing information, employee data, financial data, business plans,
sales and marketing plans, business acquisition or divestiture plans, research
and development activities relating to existing commercial activities and new
products, services and offerings under active consideration, trade secrets and
software which you may have acquired during the course of your employment with
Deluxe or its Affiliates and, notwithstanding the exceptions contained in the
next sentence, shall return all copies and extracts thereof (however and on
whatever medium recorded, to Deluxe, or as otherwise requested by Deluxe,
without keeping any copies thereof). The foregoing obligation does not apply to
(i) any information which was known to you prior to disclosure to you by Deluxe
or any of its Affiliates; (ii) any information which was in the public domain
prior to its disclosure to you; (iii) any information which comes into the
public domain through no fault of yours; (iv) any information which you are
required to disclose by a court or similar authority or under subpoena, provided
that you provide Deluxe with notice thereof and assist, at Deluxe's or its
Affiliates sole expense, any reasonable Deluxe or Affiliate endeavor by
appropriate means to obtain a protective order limiting the disclosure of such
information; and (v) any information which is disclosed to you by a third party
which has a legal right to make such disclosure.

You may not assign or delegate any of your rights or obligations in respect of
this agreement and any attempted assignment or delegation shall be void and of
no effect. This agreement is binding upon Deluxe Corporation and your affiliated
employer and its successors and assigns and inures to the benefit of you, your
heirs and executors. You acknowledge that you are an employee at will and agree
that your employment may be terminated, by Deluxe or any of its Affiliates of
which you were an employee, at any time for any reason or no reason. This
agreement is governed by the substantive laws of the State of Minnesota.

This agreement is not intended to provide you with payments or benefits that are
duplicative or overlap payments or benefits that will be paid or provided to you
under other agreements between you and Deluxe or its Affiliates. Accordingly,
except as provided herein, you acknowledge that there are no other agreements to
which you and Deluxe or any of its Affiliates are a party that provide severance
or continuation of income payments or welfare benefits to you or your family
following the termination of your employment, except:

         Executive Retention Agreement dated as of the 9th day of January, 1998
         ("Retention Agreement")

This agreement will be superceded and replaced in its entirety by the Retention
Agreement on the Effective Date thereof or upon the termination prior to the
Effective Date of your employment by (i) the Company without Cause or (ii) you
for Good Reason,


                                       2
<PAGE>


where the effect of such termination is to entitle you to receive the benefits
described in Section V.A as a result of the occurrence of event or circumstances
described in Section IV. H of the Retention Agreement. The capitalized terms
used in this paragraph will have the meanings ascribed to them in the Retention
Agreement.

We look forward to your continued contributions to Deluxe or its Affiliates
under these circumstances which we hope will provide you a greater degree of
assurance concerning your livelihood. Please contact Sonia St. Charles if you
have any questions about this letter.

With kindest regards,

/s/ J.A. Blanchard III

J.A. Blanchard III                               /s/ Ronald E. Eilers
Chairman, President and                -----------------------------------------
Chief Executive Officer                Employee

                                                 8/22/98
                                       -----------------------------------------
                                       Date


                                       3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.4
<SEQUENCE>8
<FILENAME>0008.txt
<DESCRIPTION>STATEMENT RE: COMPUTATION OF RATIOS
<TEXT>


                                                                    Exhibit 12.4

DELUXE CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

<TABLE>
<CAPTION>
                                     Nine Months
                                        Ended                              Years Ended December 31,
                                        -----                              ------------------------

                                    September 30,
                                        2000             1999           1998         1997          1996         1995         1994
                                        ----             ----           ----         ----          ----         ----         ----
<S>                                   <C>            <C>            <C>          <C>           <C>          <C>          <C>
Earnings
- --------

Income from Continuing Operations
  before Income Taxes                 $205,695       $324,655       $242,915     $115,150      $118,765     $169,319     $246,706

Interest expense
(excluding capitalized interest)        10,455          8,506          8,273        8,822        10,649       13,099        9,733

Portion of rent expense under
long-term operating leases
representative of an interest factor     9,043         14,640         15,126       13,621        13,467       14,761       13,554

Amortization of debt expense               402            263            122          122           121           84           84
                                          ----           ----           ----         ----          ----         ----         ----

TOTAL EARNINGS                        $225,595       $348,064       $266,436     $137,715      $143,002     $197,262     $270,077


Fixed charges
- -------------

Interest Expense
(including capitalized interest)        10,455          9,479          9,664       $9,742       $11,978      $14,714      $10,492

Portion of rent expense under
long-term operating leases
representative of an interest factor     9,043         14,640         15,126       13,621        13,467       14,761       13,554

Amortization of debt expense               402            263            122          122           121           84           84
                                          ----           ----           ----         ----          ----         ----         ----

TOTAL FIXED CHARGES                    $19,900        $24,382        $24,912      $23,485       $25,566      $29,559      $24,130



RATIO OF EARNINGS
TO FIXED CHARGES:                         11.3           14.3           10.7          5.9           5.6          6.7         11.2
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27.6
<SEQUENCE>9
<FILENAME>0009.txt
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>


<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000

<S>                                  <C>
<PERIOD-TYPE>                        9-MOS
<FISCAL-YEAR-END>                               DEC-31-2000
<PERIOD-START>                                  JAN-01-2000
<PERIOD-END>                                    SEP-30-2000
<CASH>                                              111,666
<SECURITIES>                                         43,475
<RECEIVABLES>                                       135,576
<ALLOWANCES>                                          4,246
<INVENTORY>                                          10,515
<CURRENT-ASSETS>                                    392,954
<PP&E>                                              614,012
<DEPRECIATION>                                      361,560
<TOTAL-ASSETS>                                    1,067,158
<CURRENT-LIABILITIES>                               457,622
<BONDS>                                              12,770
<PREFERRED-MANDATORY>                                     0
<PREFERRED>                                               0
<COMMON>                                             72,452
<OTHER-SE>                                          434,073
<TOTAL-LIABILITY-AND-EQUITY>                      1,067,158
<SALES>                                           1,216,129
<TOTAL-REVENUES>                                  1,216,129
<CGS>                                               527,072
<TOTAL-COSTS>                                     1,005,534
<OTHER-EXPENSES>                                     (5,555)
<LOSS-PROVISION>                                          0
<INTEREST-EXPENSE>                                   10,455
<INCOME-PRETAX>                                     205,695
<INCOME-TAX>                                         77,136
<INCOME-CONTINUING>                                 128,559
<DISCONTINUED>                                            0
<EXTRAORDINARY>                                           0
<CHANGES>                                                 0
<NET-INCOME>                                        128,559
<EPS-BASIC>                                            1.78
<EPS-DILUTED>                                          1.78



</TABLE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
