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Item 1.01
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Entry into a Material Definitive Agreement.
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On April 21, 2021, Deluxe Corporation, a Minnesota
corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among
the Company, FAPS Holdings, Inc., a Delaware corporation (“FAPS”), Fox Acquirer Sub, Inc., a wholly owned subsidiary of the
Company (“Merger Sub”) and Applepoint FAPS Holdings LP, a Delaware limited partnership (the “Stockholder Representative”),
solely in its capacity as the Stockholder Representative (as defined in the Merger Agreement). Pursuant to the terms and conditions of
the Merger Agreement, on the closing date (the “Closing Date”), Merger Sub will merge with and into FAPS, with FAPS surviving
such merger as a wholly owned subsidiary of the Company (the “FAPS Acquisition”).
The aggregate purchase price payable by the Company
on the Closing Date is $960 million in cash, subject to customary adjustments for cash, debt, net working capital, transaction expenses
and certain tax benefits. The FAPS Acquisition is subject to customary closing conditions, including the expiration or termination of
the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended. The shareholders of FAPS have
approved the transaction and no further shareholder approvals are required. The Company expects to finance the acquisition with a combination
of cash-on-hand and the proceeds of new debt financings, and in connection with the merger has obtained a $2.2 billion financing commitment
from JPMorgan Chase Bank, N.A., MUFG Bank, Ltd., Truist Bank, Fifth Third Bank, National Association and U.S. Bank National
Association.
The Merger Agreement contains customary representations,
warranties and covenants of the Company, Merger Sub and FAPS. From the date of the Merger Agreement until the Closing Date, FAPS is, with
limited exceptions, required to conduct its business in the ordinary course consistent with past practice and to comply with certain covenants
regarding the operation of its business. The representations and warranties of the parties contained in the Merger Agreement will terminate
and be of no further force and effect as of the Closing Date, except for those covenants that by their terms expressly apply in whole
or in part after the closing of the FAPS Acquisition. The Company has obtained representation and warranty insurance to cover, subject
to certain limitations, losses resulting from potential breaches of FAPS’s representations and warranties made in the Merger Agreement.
Pursuant to the Merger Agreement, the Company is entitled to limited indemnification for certain expenses and losses, if any, that may
be incurred after the consummation of the FAPS Acquisition that arise out of certain matters, including a Federal Trade Commission investigation
initiated in December 2019 seeking information to determine whether certain subsidiaries of FAPS may have engaged in conduct prohibited
by the Federal Trade Commission Act, the Fair Credit Reporting Act or the Duties of Furnishers of Information. As more fully set forth
in the Merger Agreement, the Company’s rights to indemnification for any such expenses and losses are limited to the amount of an
indemnity holdback, which will be the Company’s sole recourse for any such losses.
The Merger Agreement provides for certain termination
rights of the Company and FAPS, including termination by the Company or FAPS if the closing has not been consummated on or before September
21, 2021, provided that this termination right will not be available to any party whose failure to perform any material obligation under
the Merger Agreement is the primary cause of the failure of the FAPS Acquisition to be consummated or during the pendency of any suit
for specific performance by the other party.
The above description of the Merger Agreement
does not purport to be complete and is included solely as a summary of the material terms of the Merger Agreement, a copy of which is
filed as Exhibit 2.1 hereto and is incorporated herein by reference. The Merger Agreement contains representations and warranties made
by the Company, Merger Sub and FAPS to, and solely for the benefit of, one another. The assertions embodied in the representations and
warranties of FAPS contained in the Merger Agreement are qualified by information in disclosure schedules provided by FAPS to the Company
and Merger Sub in connection with the signing of the Merger Agreement. While the Company does not believe that these disclosure schedules
contain information that the securities laws will require the Company to publicly disclose, other than information that has already been
so disclosed, they do contain information that modifies, qualifies and creates exceptions to the representations and warranties of FAPS
set forth in the Merger Agreement. Investors should not rely on the representations and warranties in the Merger Agreement as characterizations
of the actual state of facts about the parties, because they were only made as of the date of the Merger Agreement and the representations
and warranties of FAPS are modified in important part by the underlying disclosure schedules. Moreover, certain representations and warranties
in the Merger Agreement were used for the purpose of allocating risk between the Company, Merger Sub and FAPS rather than establishing
matters as fact. Finally, information concerning the subject matter of the representations and warranties may have changed since the date
of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.