Exhibit 10.3

ANNEX I TO 2000 STOCK INCENTIVE PLAN

DELUXE CORPORATION

NON-EMPLOYEE DIRECTOR STOCK AND DEFERRAL PLAN, AS AMENDED

 

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 Fees (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 any
specified percentage of the cash compensation payable to that director for
services rendered as a director (including all Board and committee retainers,
meeting fees and extraordinary service fees, the “Fees”). All Eligible Directors
who have made such a Stock Election to receive shares of Common Stock with
respect to any specified percentage of such Fees shall be deemed to be a
participating director under this Plan (“Participating Director”) to at least
such extent. 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 December
31 of the year preceding the year to which such Stock Election shall apply (or
by such other date as the Administrator shall determine) and shall apply only
with respect to services as a

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director provided for the period of January 1 through December 31 of the
following year (“Plan Year”); provided, however, that an Eligible Director whose
initial election to the Board of Directors occurs during the Plan Year, 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 Plan Year, as
specified in the Stock Election. 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 Fees 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 Fees 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 Fees 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 December 31 of each year (or by such other date as the
Administrator shall determine) with respect to payments in the ensuing Plan
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 Fees to be paid in cash may not be deferred
pursuant to the Plan. Failure to timely 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 Fees payable
(i) during the ensuing Plan Year with respect to elections made on or before
December 31 of each year as aforesaid and (ii) for the portion of the Plan Year
after the date the Deferral Election is made or the ensuing Plan 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 Fees.

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 Fees
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.

 

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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.       Separation from 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 Fees entirely in cash or
Common Stock on the applicable Payment Date in accordance with such
Participating Director’s then effective Stock Election or an amount shall be
deferred in accordance with a Deferral Election on file with the Company. The
date of separation of a Participating Director’s service as a director of the
Company will be deemed to be the date of separation from service 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 separation from 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 separation from

 

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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, and subject to the requirements of Section 409A
of the Internal Revenue Code for deferrals made after December 31, 2004, 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.

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.

 

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10.        Effective Date and Duration of the Plan. This Plan shall become
effective on January 1, 2001 and 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.

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

 

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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 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.

 

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