DELUXE CORP
EXHIBIT 10.2 EXECUTIVE RETENTION AGREEMENT
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<TYPE>EX-10
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<FILENAME>deluxe011307_ex10-2.txt
<DESCRIPTION>EXHIBIT 10.2 EXECUTIVE RETENTION AGREEMENT
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                                                                    Exhibit 10.2


                          EXECUTIVE RETENTION AGREEMENT

         AGREEMENT by and between Deluxe Corporation, a Minnesota corporation
(the "Company") and Lawrence J. Mosner (the "Executive"), dated as of the 2nd
day of April, 2001 (the "Effective Date").

I.       Certain Definitions.

         A.       "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.

         B.       "Board" shall mean the Board of Directors of the Company.

         C.       "Cause" shall mean:

                  1.       the willful and continued failure of the Executive to
                           perform substantially the Executive's duties with the
                           Company and its Affiliates (other than any such
                           failure resulting from incapacity due to physical or
                           mental illness or any such actual or anticipated
                           failure after the issuance of a Notice of Termination
                           for Good Reason by the Executive), after a written
                           demand for substantial performance is delivered to
                           the Executive by the Board which specifically
                           identifies the manner in which the Board believes
                           that the Executive has not substantially performed
                           the Executive's duties, or

                  2.       the Executive's conviction of a felony or the willful
                           engaging by the Executive in (a) other illegal
                           conduct relating to the business or assets of the
                           Company, or (b) gross misconduct which is materially
                           injurious to the Company or its Affiliates.

         For purposes of this definition, (a) no act or failure to act, on the
         part of the Executive, shall be considered "willful" unless it is done,
         or omitted to be done, by the Executive in bad faith or without
         reasonable belief that the Executive's action or omission was in the
         best interests of the Company and (b) in the event of a dispute
         concerning the application of this provision, no

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         claim by the Company that Cause exists shall be given effect unless the
         Company establishes to the Committee by clear and convincing evidence
         that Cause exists. Any act, or failure to act, based upon instructions
         given by the Board or upon the advice of counsel for the Company shall
         be conclusively presumed to be done, or omitted to be done, by the
         Executive in good faith and in the best interests of the Company.

         D.       "Committee" shall mean the Compensation Committee of the
                  Company's Board.

         E.       "Disability" shall mean the absence of the Executive from the
                  Executive's duties with the Company or its Affiliates, as the
                  case may be, on a full-time basis for 180 consecutive business
                  days as a result of incapacity due to mental or physical
                  illness which is determined to be total and permanent by a
                  physician selected by the Company or its insurers and
                  acceptable to the Executive or the Executive's legal
                  representative.

         F.       "Good Reason" shall mean:

                  1.       except with Executive's written consent given in his
                           discretion, (a) the assignment to the Executive of
                           any duties materially inconsistent with the
                           Executive's position (including status, offices,
                           titles and reporting requirements), authority, duties
                           or responsibilities or (b) any other action by the
                           Company which results in a material diminution in the
                           Executive's position (or positions) with the Company
                           or its Affiliates, excluding for this purpose an
                           isolated, insubstantial or inadvertent action not
                           taken in bad faith and which is remedied by the
                           Company promptly after receipt of notice thereof
                           given by the Executive and excluding any diminution
                           attributable to the fact that the Company is no
                           longer a public company;

                  2.       any material reduction in the Executive's aggregate
                           compensation and incentive opportunities, or any
                           failure by the Company to pay the Executive any
                           portion of the Executive's compensation when such
                           compensation is due, other than an isolated,
                           insubstantial and inadvertent failure not occurring
                           in bad faith and which is remedied by the Company
                           promptly after receipt of notice thereof given by the
                           Executive;


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                  3.       the Company's requiring the Executive to be based at
                           any location more than 50 miles from the location at
                           which the Executive is based as of the Effective
                           Date;

                  4.       any purported termination by the Company of the
                           Executive's employment which is not effected pursuant
                           to a Notice of Termination satisfying the
                           requirements of this Agreement. For purposes of this
                           Agreement, no such purported termination shall be
                           effective;

                  5.       any failure by the Company to comply with and satisfy
                           VII.C. of this Agreement; or

                  6.       any request or requirement by the Company or its
                           Affiliates that the Executive take any action or omit
                           to take any action that is inconsistent with or in
                           violation of the Company's ethical guidelines and
                           policies as in effect from time to time or any
                           professional ethical guidelines or principles that
                           may be applicable to the Executive.

                  The Executive's right to terminate the Executive's employment
                  for Good Reason shall not be affected by the Executive's
                  incapacity due to physical or mental illness. The Executive's
                  continued employment shall not constitute a consent to, or a
                  waiver of rights with respect to, any act or failure to act
                  constituting Good Reason hereunder.

II.      Retention Payment.

         A.       Subject to Section II.B. hereof, if the Executive remains in
                  the employ of the Company through December 31, 2002, the
                  Company shall pay to the Executive the sum of $2,900,000 (the
                  "Retention Payment") by January 31, 2003, plus interest
                  thereon from April 1, 2000 to the date of payment, at a rate
                  of 8% per annum.

         B.       If, prior to December 31, 2002, the Executive's employment is
                  terminated (a) by the Company without Cause, (b) by the
                  Executive for Good Reason or (c) due to the Executive's death
                  or Disability, then the Company shall pay to the Executive,
                  within ten business days following the Date of Termination,
                  the Retention Payment, plus


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                  interest thereon from April 1, 2000 to the date of payment, at
                  a rate of 8% per annum.

III.     Termination of Employment.

         A.       Notice of Termination. Any purported termination of the
                  Executive's employment (other than by reason of death) shall
                  be communicated by Notice of Termination to the other party
                  hereto given in accordance with the terms of this Agreement.
                  For purposes of this Agreement, a "Notice of Termination"
                  means a written notice which (1) to the extent applicable,
                  sets forth in reasonable detail the facts and circumstances
                  claimed to provide a basis for termination of the Executive's
                  employment under the provision so indicated and (2) if the
                  Date of Termination (as defined below) is other than the date
                  of receipt of such notice, specifies the termination date
                  (which date shall be not more than thirty days after the
                  giving of such notice). Further, a Notice of Termination for
                  Cause is required to include a copy of a resolution duly
                  adopted by the affirmative vote of not less than
                  three-quarters of the entire membership of the Board at a
                  meeting of the Board called and held for such purpose (after
                  reasonable notice is provided to the Executive and the
                  Executive is given an opportunity, together with counsel, to
                  be heard before the Board), finding that, in the good faith
                  opinion of the Board, the Executive is guilty of the conduct
                  described in subparagraph I.C.1. or I.C.2. above, and
                  specifying the particulars thereof in reasonable detail. The
                  failure by the Executive or the Company to set forth in the
                  Notice of Termination any fact or circumstance which
                  contributes to a showing of Disability, Good Reason or Cause
                  shall not waive any right of the Executive or the Company,
                  respectively, hereunder or preclude the Executive or the
                  Company, respectively, from asserting such fact or
                  circumstance in enforcing the Executive's or the Company's
                  rights hereunder;

         B.       Date of Termination. "Date of Termination" means the date of
                  receipt of the Notice of Termination or any later date
                  specified therein, as the case may be; provided, however, that
                  if the Executive's employment is terminated by reason of
                  death, the Date of Termination shall be the date of death of
                  the Executive.

         C.       Dispute Concerning Termination. If within 15 days after any
                  Notice of Termination is given, or, if later, prior to the
                  Date of Termination,


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                  the party receiving such Notice of Termination notifies the
                  other party that a dispute exists concerning the termination,
                  the Date of Termination shall be extended until the date on
                  which the dispute is finally resolved, either by mutual
                  written agreement of the parties or by a final judgment, order
                  or decree of an arbitrator or a court of competent
                  jurisdiction (which is not appealable or with respect to which
                  the time for appeal therefrom has expired and no appeal has
                  been perfected); provided, however, that the Date of
                  Termination shall be extended by a notice of dispute given by
                  the Executive only if such notice is given in good faith and
                  the Executive pursues the resolution of such dispute with
                  reasonable diligence.

IV.      Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
         limit the Executive's continuing or future participation in any plan,
         program, policy or practice provided by the Company or any of its
         Affiliates and for which the Executive may qualify, nor shall anything
         herein limit or otherwise affect such rights as the Executive may have
         under any contract or agreement with the Company or any of its
         Affiliates.

V.       Full Settlement. The Company's obligation to make the payments provided
         for in this Agreement and otherwise to perform its obligations
         hereunder shall not be affected by any set-off, counterclaim,
         recoupment, defense or other claim, right or action which the Company
         may have against the Executive or others. The Company agrees to pay as
         incurred, to the full extent permitted by law, all legal fees and
         expenses which the Executive may incur in good faith as a result of any
         contest (regardless of the outcome thereof) by the Company, the
         Executive or others of the validity or enforceability of, or liability
         under, any provision of this Agreement or any guarantee of performance
         thereof (including as a result of any contest by the Executive about
         the amount of any payment pursuant to this Agreement), plus in each
         case interest on any delayed payment at the applicable Federal rate
         provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of
         1986, as amended (the "Code"). Such payments shall be made within five
         (5) business days after delivery of the Executive's written requests
         for payment accompanied with such evidence of fees and expenses
         incurred as the Company reasonably may require.

VI.      Certain Additional Payments by the Company.


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         A.       Anything in this Agreement to the contrary notwithstanding and
                  except as set forth below, in the event it shall be determined
                  that any payment or benefit received or to be received by the
                  Executive (whether paid or payable or distributed or
                  distributable pursuant to the terms of this Agreement or any
                  other plan, arrangement or agreement, but determined without
                  regard to any additional payments required under this Section
                  VI) (a "Payment") would be subject to the excise tax imposed
                  by Section 4999 of the Code or any interest or penalties are
                  incurred by the Executive with respect to such excise tax
                  (such excise tax, together with any such interest and
                  penalties, are hereinafter collectively referred to as the
                  "Excise Tax"), then the Executive shall be entitled to receive
                  an additional payment (a "Gross-Up Payment") in an amount such
                  that after payment by the Executive of all taxes (including
                  any interest or penalties imposed with respect to such taxes),
                  including, without limitation, any income taxes (and any
                  interest and penalties imposed with respect thereto) and
                  Excise Tax imposed upon the Gross-Up Payment, the Executive
                  retains an amount of the Gross-Up Payment equal to the Excise
                  Tax imposed upon the Payments. Notwithstanding the foregoing
                  provisions of this Section VI.A., if it shall be determined
                  that the Executive is entitled to a Gross-Up Payment, but that
                  the Executive, after taking into account the Payments and the
                  Gross-Up Payment, would not receive a net increase in
                  after-tax benefit of at least $50,000 (taking into account
                  both income taxes and any Excise Tax) as compared to the net
                  after-tax benefit the Executive would receive if the Gross-Up
                  Payment were eliminated and the Payments were reduced, in the
                  aggregate, to an amount (the "Reduced Amount") such that the
                  receipt of Payments would not give rise to any Excise Tax,
                  then no Gross-Up Payment shall be made to the Executive and
                  the Payments, in the aggregate, shall be reduced to the
                  Reduced Amount. For purposes of determining whether any of the
                  Payments will be subject to the Excise Tax and the amount of
                  such Excise Tax, (i) all of the Payments shall be treated as
                  "parachute payments" (within the meaning of Section 280G(b) of
                  the Code) unless, in the opinion of tax counsel ("Tax
                  Counsel") reasonably acceptable to the Executive and selected
                  by the Accounting Firm (as defined below), such payments or
                  benefits (in whole or in part) do not constitute parachute
                  payments, including by reason of Section 280G(b)(4)(A) of the
                  Code, (ii) all "excess parachute payments" within the meaning
                  of Section 280G(b)(1) of the Code shall be treated as subject
                  to the Excise Tax unless, in the opinion of Tax


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                  Counsel, such excess parachute payments (in whole or in part)
                  represent reasonable compensation for services actually
                  rendered (within the meaning of Section 280G(b)(4)(B) of the
                  Code) in excess of the "base amount" (as defined in Section
                  280G(b)(3) of the Code) allocable to such reasonable
                  compensation, or are otherwise not subject to the Excise Tax,
                  and (iii) the value of any non-cash benefits or any deferred
                  payment or benefit shall be determined by the Accounting Firm
                  in accordance with the principals of Sections 280G(d)(3) and
                  (4) of the Code. For purposes of determining the amount of the
                  Gross-Up Payment, the Executive shall be deemed to pay federal
                  income tax at the highest marginal rate of federal income
                  taxation in the calendar year in which the Gross-Up Payment is
                  to be made and state and local income taxes at the highest
                  marginal rate of taxation in the state and locality of
                  Executive's residence on the Date of Termination (or if there
                  is no Date of Termination, then the date on which the Gross-Up
                  Payment is calculated for purposes of this Section VI.A.), net
                  of the maximum reduction in federal income taxes which could
                  be obtained from deduction of such state and local taxes.

         B.       Subject to the provisions of Section VI. C., all
                  determinations required to be made under this Section VI,
                  including whether a Gross-Up Payment is required and the
                  amount of such Gross-Up Payment and the assumptions to be
                  utilized in arriving at such determination, shall be made by
                  the Company's independent auditors (the "Accounting Firm")
                  which shall provide detailed supporting calculations both to
                  the Company and the Executive within 15 business days of the
                  receipt of notice from the Executive that a Payment has been
                  made or will be required, as the case may be, or such earlier
                  time as is requested by the Company. All fees and expenses of
                  the Accounting Firm shall be borne solely by the Company. Any
                  Gross-Up Payment, as determined pursuant to this Section VI.,
                  shall be paid by the Company to the Executive within five days
                  of the receipt of the Accounting Firm's determination. Any
                  determination by the Accounting Firm shall be binding upon the
                  Company and the Executive. As a result of the uncertainty in
                  the application of Section 4999 of the Code at the time of the
                  initial determination by the Accounting Firm hereunder, it is
                  possible that Gross-Up Payments which will not have been made
                  by the Company should have been made ("Underpayment"),
                  consistent with the calculations required to be made
                  hereunder. In the event that the Company exhausts its remedies
                  pursuant to Section VI.C. and the


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                  Executive thereafter is required to make a payment of any
                  Excise Tax, the Accounting Firm shall determine the amount of
                  the Underpayment that has occurred and any such Underpayment
                  shall be promptly paid by the Company to or for the benefit of
                  the Executive.

         C.       The Executive shall notify the Company in writing of any claim
                  by the Internal Revenue Service that, if successful, would
                  require the payment by the Company of the Gross-Up Payment.
                  Such notification shall be given as soon as practicable but no
                  later than ten business days after the Executive is informed
                  in writing of such claim and shall apprise the Company of the
                  nature of such claim and the date on which such claim is
                  requested to be paid. The Executive shall not pay such claim
                  prior to the expiration of the 30-day period following the
                  date on which he gives such notice to the Company (or such
                  shorter period ending on the date that any payment of taxes
                  with respect to such claim is due). If the Company notifies
                  the Executive in writing prior to the expiration of such
                  period that it desires to contest such claim, the Executive
                  shall:

                  1.       give the Company any information reasonably requested
                           by the Company relating to such claim,

                  2.       take such action in connection with contesting such
                           claim as the Company shall reasonably request in
                           writing from time to time, including, without
                           limitation, accepting legal representation with
                           respect to such claim by an attorney reasonably
                           selected by the Company,

                  3.       cooperate with the Company in good faith in order to
                           effectively contest such claim, and

                  4.       permit the Company to participate in any proceedings
                           relating to such claim;

                  provided, however, that the Company shall bear and pay
                  directly all costs and expenses (including additional interest
                  and penalties) incurred in connection with such contest and
                  shall indemnify and hold the Executive harmless, on an
                  after-tax basis, for any Excise Tax or income tax (including
                  interest and penalties with respect thereto) imposed as a
                  result of such representation and payment of costs and


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                  expenses. Without limitation on the foregoing provisions of
                  this Section VI.C., the Company shall control all proceedings
                  taken in connection with such contest and, at its sole option,
                  may pursue or forego any and all administrative appeals,
                  proceedings, hearings and conferences with the taxing
                  authority in respect of such claim and may, at its sole
                  option, either direct the Executive to pay the tax claimed and
                  sue for a refund or contest the claim in any permissible
                  manner, and the Executive agrees to prosecute such contest to
                  a determination before any administrative tribunal, in a court
                  of initial jurisdiction and in one or more appellate courts,
                  as the Company shall determine; provided, however, that if the
                  Company directs the Executive to pay such claim and sue for a
                  refund, the Company shall advance the amount of such payment
                  to the Executive, on an interest-free basis and shall
                  indemnify and hold the Executive harmless, on an after-tax
                  basis, from any Excise Tax or income tax (including interest
                  and penalties with respect thereto) imposed with respect to
                  such advance or with respect to any imputed income with
                  respect to such advance; and further provided that any
                  extension of the statute of limitations relating to payment of
                  taxes for the taxable year of the Executive with respect to
                  which such contested amount is claimed to be due is limited
                  solely to such contested amount. Furthermore, the Company's
                  control of the contest shall be limited to issues with respect
                  to which a Gross-Up Payment would be payable hereunder and the
                  Executive shall be entitled to settle or contest, as the case
                  may be, any other issue raised by the Internal Revenue Service
                  or any other taxing authority.

         D.       If, after the receipt by the Executive of an amount advanced
                  by the Company pursuant to Section VI.C., the Executive
                  becomes entitled to receive any refund with respect to such
                  claim, the Executive shall (subject to the Company's complying
                  with the requirements of Section VI.C.) promptly pay to the
                  Company the amount of such refund (together with any interest
                  paid or credited thereon after taxes applicable thereto). If,
                  after the receipt by the Executive of any amount advanced by
                  the Company pursuant to Section VI.C., a determination is made
                  that the Executive shall not be entitled to any refund with
                  respect to such claim and the Company does not notify the
                  Executive in writing of its intent to contest such denial of
                  refund prior to the expiration of 30 days after such
                  determination, then such advance shall be forgiven and shall
                  not be required to be repaid and the amount


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                  of such advance shall offset, to the extent thereof, the
                  amount of Gross-Up Payment required to be paid.

         E.       The Gross-Up Payment shall be made not later than the fifth
                  day following the date on which the Retention Payment is paid;
                  provided, however, that if the amount of such Gross-Up
                  Payment, and the limitation on such payments set forth in
                  Section VI.A. hereof, cannot be finally determined on or
                  before such day, the Company shall pay to the Executive on
                  such day an estimate, as determined in good faith by the
                  Accounting Firm, of the minimum amount of such Gross-Up
                  Payment to which the Executive is clearly entitled and shall
                  pay the remainder of such payments (together with interest on
                  the unpaid remainder (or on all such payments to the extent
                  the Company fails to make such payments when due) at 120% of
                  the rate provided in Section 1274(b)(2)(B) of the Code) as
                  soon as the amount thereof can be determined but in no event
                  later than the thirtieth (30th) day after such day. In the
                  event that the amount of the estimated payments exceeds the
                  amount subsequently determined to have been due, such excess
                  shall constitute a loan by the Company to the Executive,
                  payable on the fifth (5th) business day after demand by the
                  Company (together with interest at 120% of the rate provided
                  in section 1274(b)(2)(B) of the Code). At the time that
                  payments are made under this Agreement, the Company shall
                  provide the Executive with a written statement setting forth
                  the manner in which such payments were calculated and the
                  basis for such calculations including, without limitation, any
                  opinions or other advice the Company has received from Tax
                  Counsel, the Accounting Firm or other advisors or consultants
                  (and any such opinions or advice which are in writing shall be
                  attached to the statement).

VII.     Successors.

         A.       This Agreement is personal to the Executive and without the
                  prior written consent of the Company shall not be assignable
                  by the Executive otherwise than by will or the laws of descent
                  and distribution. This Agreement shall inure to the benefit of
                  and be enforceable by the Executive's legal representatives.
                  If the Executive shall die while any amount would still be
                  payable to the Executive hereunder if the


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                  Executive had continued to live, all such amounts, unless
                  otherwise provided herein, shall be paid in accordance with
                  the terms of this Agreement to the executors, personal
                  representatives or administrators of the Executive's estate.

         B.       This Agreement shall inure to the benefit of and be binding
                  upon the Company and its successors and assigns.

         C.       The Company will require any successor (whether direct or
                  indirect, by purchase, merger, consolidation or otherwise) to
                  all or substantially all of the business and/or assets of the
                  Company to assume expressly and agree to perform this
                  Agreement in the same manner and to the same extent that the
                  Company would be required to perform it if no such succession
                  had taken place. As used in this Agreement, "Company" shall
                  mean the Company as hereinbefore defined and shall include any
                  successor to its business and/or assets as aforesaid which
                  assumes and agrees to perform this Agreement by operation of
                  law, or otherwise.

VIII.    Miscellaneous.

         A.       This Agreement shall be governed by and construed in
                  accordance with the laws of the State of Minnesota, without
                  reference to principles of conflict of laws. The captions of
                  this Agreement are not part of the provisions hereof and shall
                  have no force or effect. This Agreement may not be amended or
                  modified otherwise than by a written agreement executed by the
                  parties hereto or their respective successors and legal
                  representatives.

         B.       All notices and other communications hereunder shall be in
                  writing and shall be given by hand delivery to the other party
                  or by registered or certified mail, return receipt requested,
                  postage prepaid, addressed as follows:

         If to the Executive:

         Lawrence J. Mosner
         483 Highcroft Road
         Wayzata, MN 55391-1548


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         If to the Company:

         Deluxe Corporation
         3680 Victoria Street North
         Shoreview, MN 55126

         Attn: General Counsel

         or to such other address as either party shall have furnished to the
         other in writing in accordance herewith. Notice and communications
         shall be effective when actually received by the addressee.

         C.       The invalidity or unenforceability of any provision of this
                  Agreement shall not affect the validity or enforceability of
                  any other provision of this Agreement.

         D.       The Company may withhold from any amounts payable under this
                  Agreement such Federal, state, local or foreign taxes as shall
                  be required to be withheld pursuant to any applicable law or
                  regulation.

         E.       The Executive's or the Company's failure to insist upon strict
                  compliance with any provision of this Agreement or the failure
                  to assert any right the Executive or the Company may have
                  hereunder, including, without limitation, the right of the
                  Executive to terminate employment for Good Reason, shall not
                  be deemed to be a waiver of such provision or right or any
                  other provision or right of this Agreement.


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         F.       The obligations of the Company and the Executive under this
                  Agreement which by their nature may require either partial or
                  total performance after the expiration of the term of this
                  Agreement shall survive such expiration.

         G.       All claims by the Executive for benefits under this Agreement
                  shall be directed to and determined by the Committee and shall
                  be in writing. Any denial by the Committee of a claim for
                  benefits under this Agreement shall be delivered to the
                  Executive in writing and shall set forth the specific reasons
                  for the denial and the specific provisions of this Agreement
                  relied upon. The Committee shall afford a reasonable
                  opportunity to the Executive for a review of the decision
                  denying a claim and shall further allow the Executive to
                  appeal to the Committee a decision of the Committee within
                  sixty (60) days after notification by the Committee that the
                  Executive's claims has been denied.

         IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.


Deluxe Corporation                             Executive

By:
    --------------------------------           --------------------------------
    Calvin W. Aurand, Jr.                      Lawrence J. Mosner
    Chairman, Compensation Committee
     of the Board of Directors


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