Download Deluxe Corporation Employee Stock Purchase Plan Summary and

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Deluxe Corporation
Employee Stock Purchase Plan
Summary and Prospectus
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933.
The Plan is not subject to any provisions of the Employee Retirement
Income Security Act of 1974.
The date of this Prospectus is May 1, 2013.
Deluxe Corporation
Employee Stock Purchase Plan
Deluxe Corporation (the "Company") is pleased to provide you with a copy of the Deluxe Corporation 2000
Employee Stock Purchase Plan, as amended (the "Plan"), and a summary of its principal provisions. Under
the Plan the Company offers its employees the right to buy common stock (“Stock”) of the Company at
preferential prices. A description of the Plan is outlined below in question and answer format. A full
statement of an eligible employee’s rights under the Plan is contained in the Plan document which is
attached to this Prospectus. Capitalized terms in this Prospectus are defined terms in the Plan if they are not
defined in this document.
In case of any conflict between information provided in this Prospectus and the provisions of the Plan, the
provisions of the Plan control.
Plan Approval
The Plan was approved by the Company’s Board of Directors with an effective date of February 1, 2002
and was subsequently approved by shareholders. The Plan was amended to change the per Share purchase
price to 85% of the fair market value of the Shares on any Purchase Date (as defined in the Plan), for
Offering Periods commencing after July 31, 2006. The most recent amendment to the Plan on May 1, 2013,
changed the eligibility waiting periods and employee contribution limits. The Plan is intended to be an
“employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code of 1986,
as amended (the “Code”). The Plan is a perpetual plan, subject to its modification or termination by the
Company’s Board of Directors at any time in accordance with certain limitations contained in the Plan.
General Plan Information
What is the purpose of the Plan?
The Company believes that employee ownership of the Company’s Stock contributes to the Company's
success. The purpose of the Plan is to provide employees with a continuing opportunity to purchase Shares
of the Company’s Stock at a preferential price through voluntary payroll deductions. You may not make
additional cash contributions to your stock purchase account under the Plan.
The Plan is currently intended to be perpetual subject to modification or termination by the Company’s
Board of Directors at any time in accordance with certain limitations contained in the Plan. The Company's
Board of Directors can, however, terminate or modify the Plan at any time. This summary is qualified in its
entirety by reference to the terms of the Plan. Purchases under the Plan commenced in May 2000.
Because the Plan is intended to constitute an “employee stock purchase plan” within the meaning of the
Code, participants may receive beneficial tax treatment on the purchase and ultimate sale of the Shares
purchased through the Plan. Please see “Tax Treatment” below.
How does the Plan work?
The Plan gives participating employees the opportunity to purchase Shares of the Company’s Stock at a
15% discount from the price of the Stock at the end of an Offering Period, the “Purchase Date.” If you
choose to participate, you will select a percentage (between 1% and 10%) of your Eligible Compensation
for the Company to deduct each pay period. These payroll deductions accumulate in an individual stock
purchase account that is maintained for you by the Company.
How are purchases made?
On each semi-annual Purchase Date (see below), Shares of Stock are purchased from the Company with
the funds from your stock purchase account. The number of Shares purchased on your behalf depends on
the amount of money that has accumulated in your stock purchase account during the current Offering
Period. That amount must be sufficient to buy at least one Share.
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What are Offering Periods and Offering Dates?
Shares are offered to participating employees under the Plan during six-month intervals (the "Offering
Periods"), with a new Offering Period commencing on February 1 and August 1 of each year. Each
Offering Period commencing on February 1 of any year shall end on July 31 of that year, and each Offering
Period commencing on August 1 of any year shall end on January 31 of the following year. The first
business day of any Offering Period is the Offering Date.
When are Purchase Dates?
The last day of each Offering Period (or next business day) is the Purchase Date, and signifies the date
Shares are actually purchased on your behalf for the relevant Offering Period. Business days are days on
which the New York Stock Exchange is open for trading.
Eligibility and Enrollment
Who is eligible to participate?
Full-time and part-time employees of Deluxe Corporation whose regularly scheduled work week consists of
at least 20 hours and who have completed six (6) months of continuous service with the Company are
eligible to participate in
the Plan. Seasonal or temporary employees and independent contractors are not eligible to participate in
the Plan. Persons employed by subsidiaries of the Company are also eligible to participate, unless
otherwise determined by the Company’s Board of Directors or Plan Administrator.
Participation in the Plan ends when a participant terminates employment, whether because of death,
retirement, or any other reason; transfers to a subsidiary that does not participate in the Plan; or ceases to
have a scheduled work week of at least 20 hours. An approved leave of absence does not constitute
termination of employment.
Are employees of some subsidiaries excluded from participating in the Plan?
The Board of Directors of the Company, or other persons nominated by the Board to administer the Plan,
may exclude one or more subsidiaries from the Plan. If this occurs, employees of these subsidiaries are
not eligible to participate in the Plan.
What happens if I transfer to a subsidiary that does not participate in the Plan?
If you transfer to a subsidiary that does not participate in the Plan, your eligibility to continue to purchase
Shares under the Plan will terminate. In such an event, any amounts in your stock purchase account will
be paid to you within 30 days of your transfer. You will receive service time credit for any time you are
continuously employed by a non-participating subsidiary if you should later transfer back to a
participating subsidiary and you meet the Plan’s eligibility requirements.
How do I enroll in the Plan?
You can enroll online through HR Online by logging into My Employee Record/My Personal Data/My
Stock/Change-View and completing the enrollment process there. As an alternative, you can complete the
enrollment form on eContact located in HR Forms and deliver it to Human Resources.
Enrollment authorizes payroll deductions from your Eligible Compensation. If you are eligible to
participate in the Plan and enroll, payroll deductions will begin with the first pay period ending after the
next Offering Period.
Payroll deductions are credited to your Stock Purchase Account, where they accumulate without interest
until the end of the Offering Period, at which time Shares of Deluxe stock are purchased. Deductions will
continue until you change your payroll deduction rate under the Plan to 0%, withdraw from the Plan or are
no longer eligible to participate in the Plan.
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Payroll Deductions
What amount may I have deducted from my wages?
You may authorize payroll deductions, in multiples of 1%, and between 1% and 10% of your current
Eligible Compensation. Pursuant to Section 423(b) of the Code, the maximum value of Stock that each
employee may purchase in a year is $25,000, which equates to an annual limit of $21,250 in payroll
deductions ($25,000 less 15%). When making your payroll deduction authorization, remember that any
funds in your Stock Purchase Account that are used to purchase Shares, will not become available to you
again until you sell those Shares.
Can I change the amount of my deduction?
At any time, and as often as you like, you may increase or decrease your payroll deduction through HR
Online by logging into My Employee Record/My Personal Data/My Stock/Change-View and recording the
change there or by filing appropriate forms with Human Resources. The change becomes effective as soon
as administratively feasible.
What does Eligible Compensation include?
Eligible Compensation includes wages, salaries, short-term disability payments and any amounts received
under a paid time-off policy. It does not include overtime earnings, bonuses, commissions, incentive or
benefit plan payments, severance payments, and all other forms of extra compensation.
Do I receive interest on the amounts in my Stock Purchase Account?
No, you do not receive interest on these funds.
Could I lose the money in my Stock Purchase Account?
The funds retained by the Company through payroll deductions from Participants in the Plan are not
segregated from the Company’s other funds. Pending their application to purchase Shares under the Plan,
the Company may use this money for other purposes. If the Company were to go bankrupt or otherwise
become unable to pay its bills, all or part of the money in your Stock Purchase Account could be lost.
Also, if the Company were to grant a lien on its corporate funds to one or more lenders, that lien could
extend to the funds maintained for employee Stock Purchase Accounts.
Stock Purchases Under the Plan
What is the purchase price per Share?
The price you pay for the Stock is 85% of the fair market value of the Company’s Stock on the Offering
Period’s Purchase Date.
How is the fair market value determined?
The fair market value of the Stock on any day is the closing price of the Stock on the New York Stock
Exchange on that day, as reported in the Wall Street Journal, Midwest edition. If the date for determining
fair market value is not a trading day on the New York Stock Exchange, the fair market value will be
determined on the immediately preceding trading day.
How do I purchase Shares?
On each Purchase Date, the Company will automatically purchase the maximum number of full Shares
possible with the amount of money in your Stock Purchase Account. That amount must, however, be
sufficient to purchase at least one Share. Any unused funds will stay in your account to be applied to your
next purchase as long as you continue payroll deductions into the Plan, while you are a Participant.
Approximately two weeks after the Purchase Date, Shares will be credited to a "book entry" account
established for you at Wells Fargo Shareowner Relations, and a book entry confirmation form will be
mailed to you. The confirmation form reflects recent purchases, transfers, and sales. It also shows your
Stock balance and provides instructions on transaction options.
Are there limitations on the number of Shares I can purchase?
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Yes, the following limitations apply:
You may not purchase Shares under the Plan if you own 5% or more of the total voting power or
value of all classes of Company stock.
During any one calendar year, you may not purchase more than $25,000 worth of Company Stock
based on the fair market value at the beginning of each Offering Period. The limit is based on the
value of the stock, not the price you pay. For this reason, your annual contributions are limited to
$21,250 ($25,000 x 85%).
During any one calendar year, you may not purchase more than 5,000 Shares of Company Stock.
Account Statements
What reports will I receive?
Each pay period, your pay statement will show the previous balance in your Stock Purchase Account, the
amount deducted from your current pay, and the new balance in your account. After a purchase is made,
you will receive a book entry confirmation statement that shows your current purchase, and balance and
provides instructions for changing your address or depositing, withdrawing, transferring, or selling Shares.
Keep all of your Plan confirmation statements, as you will need this information in the future to
determine the cost basis of your Shares, when you sell the Shares.
You will also receive the Company's annual financial report, proxy statement, and other materials that are
sent to Deluxe shareholders generally.
Sales of Shares
When can I sell Shares I purchase under the Plan?
There is currently no required holding period for any Shares purchased at any time under the Plan. The
administrator of the Plan may in the future, however, require that persons purchasing Shares under the Plan
hold them for certain minimum time periods before they may sell them. Please note that there may be tax
advantages to holding Shares purchased under the Plan (see “Tax Treatment” below).
What if the price of the Shares goes down before I sell them?
You will bear the risk of investment while you hold the Stock and it is possible that the Share price could
decline during this period. You will not be entitled to reimbursement from the Company if this occurs.
How do I sell my Shares?
You may sell your Shares through a stock brokerage company or privately to someone else. You are
responsible for the brokerage commissions associated with the sale of your Shares.
You are prohibited from trading in the Company’s stock when you are in possession of material inside
information about the Company, and you are cautioned against transactions during periods immediately
preceding the Company’s release of its quarterly financial results. Certain leaders and managers may only
trade during the Company’s recommended “open window” periods. If you are an executive officer of the
Company who must report transactions in the Company's securities to the Securities and Exchange
Commission (“SEC”), you must comply with the resale provisions of Rule 144 promulgated under the
Securities Act of 1933, as amended, and the reporting requirements and short-swing profit prohibitions
under Section 16 of the Securities Exchange Act of 1934.
Ending your Participation in the Plan
How do I stop contributing to the Plan, but not withdraw from the Plan?
You can change your payroll deduction percentage to zero (0%) of Eligible Compensation, not withdraw
from the Plan, but participate in the then current Offering Period purchase. At the end of the next Offering
Period, if a Participant remains at 0% payroll deduction and has a balance remaining in the Plan that is too
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small to buy a Share of Stock, then this balance will be refunded to the Participant in the next payroll
period. Eligible Participants may elect to restart their payroll deduction, but the election will not take effect
until the beginning of the next Offering Period following receipt of the election.
How do I withdraw from the Plan?
You may withdraw from the Plan for any reason through HR Online by logging into My Employee
Record/My Personal Data/My Stock/Change-View and completing the withdrawal request or by filing a
withdrawal request with Human Resources. Your payroll deductions will then stop, and the balance in your
account will be paid to you within 30 days. If you withdraw, you may not re-enter the Plan for six months.
You may not make withdrawals from your Stock Purchase Account, without withdrawing from the Plan.
What happens if I take a leave of absence?
An approved leave of absence or layoff is not considered a termination of employment. The amount in your
Stock Purchase Account will be used to purchase Shares at the end of the Offering Period, unless you
request a payout of your account balance. Your participation in the Plan will resume when you return to
work. If you request a payout of your account balance, however, you will terminate from the Plan and be
unable to re-enter the Plan for six months.
What happens if I terminate employment, retire, or die or become ineligible to participate in the Plan?
If you terminate your employment, retire, or otherwise become ineligible to participate in the Plan, the
amount in your Stock Purchase Account, will be paid to you within 30 days. If you die, it will be paid to
your estate.
Tax Treatment
What are the general tax consequences of participating in the Plan?
Due to the complexity of the applicable provisions of the Internal Revenue Code, as amended (the
"Code"), this Prospectus only sets forth the general tax principles regarding participation in the Plan.
These principles are subject to changes that may be brought about by subsequent legislation or by
regulations and administrative rulings, any of which may be applied on a retroactive basis. Employees
participating in the Plan may be subject to state or local income taxes or estate taxes and should refer to
the applicable laws in their jurisdictions. Each employee participating in the Plan should consult his
or her own tax advisor for advice on questions regarding tax liability for Plan Participants or the
subsequent disposition of Shares received. The Plan is not qualified under Section 401 of the Code.
A Participant’s contributions to the Plan through payroll deductions are taken on an after-tax basis and are
not tax deductible, but will constitute a part of the cost basis of the Shares purchased under the Plan.
Will I have taxes withheld from my paycheck at the time the Shares are purchased?
No. The Plan is intended to be an “employee stock purchase plan” under the Section 423 of the Code.
Under a Section 423 plan, you are not required to report taxable income until you sell the Shares.
When will I be subject to federal income tax on the Shares purchased under the Plan?
In the year in which there is a sale of the Shares.
How is the federal income tax liability determined?
Your federal income tax liability will depend on whether you make a “qualifying” or “disqualifying”
disposition of the Shares purchased under the Plan. A qualifying disposition will occur if the sale or other
disposition of the Shares is made more than two years after the Offering Date or more than one-and-a-half
years after the Purchase Date. A disqualifying disposition is any sale or other disposition made before
either of these two periods expire.
Example of a qualifying disposition: Assume that on July 31, 2013, the Deluxe stock price is $40.00. On the
Purchase Date, July 31, 2013, you purchase one Share of stock for $34 ($40 less 15%). On March 15, 2016,
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you sell the Share for $50. You must include $6.00 in your gross income in 2016, as compensation, which
is the excess of the fair market value on the Purchase Date over the price you paid for the Share ($40.00 $34.00 = $6.00). Your basis in the Share will be increased to $40.00 by the amount of compensation
recognized ($34.00 + $6.00 = $40.00). Because you held the Shares for more than one-and-a-half years
from the Purchase Date, the remaining gain of $10.00 ($50.00 - $40.00 = $10.00) is treated as long-term
capital gain and taxed at the applicable long-term capital gain rate.
Example of a disqualifying disposition: Assume that on July 31, 2013, the Deluxe stock price is $40.00. On
the Purchase Date, July 31, 2013, you purchase one Share of stock for $34 ($40 less 15%). On March 15,
2014, you sell the Share for $50. You must include $6.00 in gross income in 2014, as compensation, which
is the excess of the fair market value of the Share on the Purchase Date over the price you paid for the Share
($40.00 - $34.00 = $6.00). Your basis in the Share will be increased to $40.00 by the amount of the
compensation income recognized ($34.00 + $6.00 = $40.00). Because the Shares were not held longer than
one-and-a-half years from the Purchase Date, the remaining gain of $10.00 ($50.00 - $40.00 = $10.00) is
treated as short-term capital gain and taxed as ordinary income. If you had held the Share for more than
one-and-a-half years after the Purchase Date, the remaining gain of $10.00 would have been treated as longterm capital gain and taxed at the applicable long-term capital gain rate.
Shareholder Rights
In whose name are Shares issued?
As a Participant, you may have your Shares registered in either a book-entry account in your
name or jointly in your name and that of another person. You may not register Shares in the joint names of
yourself and a minor unless a legal guardian has been appointed for the minor.
What is the effect of a stock split or stock dividend?
If the Board of Directors declares a stock split, stock dividend or stock reclassification, the number of
Shares that can be issued under the Plan will be adjusted.
What should I do if I receive duplicate mailings of shareholder materials?
If you receive duplicate mailings of the Deluxe annual report, more than one form of your name may
appear on your account records. Whenever the slightest variation in a name or address appears, the
Company's transfer agent assumes that the certificates belong to different people. The transfer agent then
establishes a separate account for each name.
To consolidate your accounts, which will save the Company printing and mailing costs, contact:
Wells Fargo Shareowner Relations
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120 1-877-536-3557
If you wish to combine separate accounts, such as yours and your spouse's, you should also contact Wells
Fargo Shareowner Relations.
Amending or Terminating the Plan
How may the Plan be changed?
The Board of Directors may amend the Plan at any time.
When does the Plan end?
The Board of Directors may terminate the Plan at any time.
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Plan Administration and General Plan Provisions
May I transfer my rights under the Plan?
You may not transfer your rights under the Plan, nor may you assign or pledge the funds in your account.
You are the only person who can exercise your rights under the Plan.
Who administers the Plan?
The Company's Board of Directors, or a committee appointed by the Board, administers the Plan. As
managers of the Plan, the Board of Directors may resolve any questions concerning the interpretation of the
Plan and determinations of the Board are final and conclusive. The Board may also change or waive Plan
requirements to conform to new or changing laws or to meet special situations not presently covered in the
Plan.
Directors do not receive additional compensation for administering the Plan, but they may participate in
the Plan, if they are Company employees and meet eligibility requirements. Members of the Board of
Directors serve until their successors are elected and qualified or until their earlier death, resignation, or
removal.
You may obtain additional information about the Plan and its administration by writing or calling the
Treasurer, Deluxe Corporation, 3680 Victoria Street North, Shoreview, MN 55126-2966, telephone (651)
483-7111.
How many Shares may be issued under the Plan?
A maximum of 5,000,000 Shares may be issued under the Plan in the aggregate.
Who pays for the Plan?
The Company pays all costs of the Plan. Your deductions are used solely to pay for the Shares you
purchase. You will, however, be responsible for any fees or other costs related to the sale or other
disposition of the Shares purchased by you under the Plan.
Incorporation of Certain Documents by Reference
We file annual, quarterly and special reports, proxy statements and other information with the SEC. The
SEC allows us to incorporate by reference some of the information we file with it, which means that we
can disclose important information to you by referring you to those documents. The information that we
incorporate by reference is considered to be part of this prospectus, and later information that we file with
the SEC will automatically update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act:
our annual report on Form 10-K for the year ended December 31, 2012 filed on February 22, 2013;
our quarterly reports on Form 10-Q for the quarters ended: March 31, 2012; June 30, 2012; and
September 30, 2012;
our current reports on Form 8-K filed in April 25, 2013; February 26, 2013; November 27, 2012;
November 13, 2012 and January 24, 2012; and
the description of our common stock contained in any registration statement or report filed by us
under the Exchange Act, including any amendment or report filed for the purpose of updating such
description.
We will provide you at no cost, upon your written or oral request, a copy of any or all of the documents
incorporated by reference in this prospectus (other than exhibits, unless such exhibits are specifically
incorporated by reference into such documents) and any report, proxy statement or other communication
distributed by us to our shareholders generally.
Requests for such copies should be directed to the Treasurer, Deluxe Corporation, 3680 Victoria Street
North, Shoreview, MN 55126-2966, telephone (651) 483-7111.
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