10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2016

o 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 (State or other jurisdiction of incorporation or organization)	41-0216800 (I.R.S. Employer Identification No.)
3680 Victoria St. N., Shoreview, Minnesota (Address of principal executive offices)	55126-2966 (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. þYes   o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).

þYes   o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes þ  No

The number of shares outstanding of registrant’s common stock, par value $1.00 per share, at October 19, 2016 was 48,596,289.

1

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

DELUXE CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share par value)

(Unaudited)

	September 30, 2016			December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	80,065		$	62,427
Trade accounts receivable (net of allowances for uncollectible accounts of $3,161 and $4,816, respectively)	117,761			123,654
Inventories and supplies	41,474			41,956
Funds held for customers	92,170			53,343
Other current assets	41,038			42,605
Total current assets	372,508			323,985
Deferred income taxes	1,749			1,238
Long-term investments (including $1,868 and $2,091 of investments at fair value, respectively)	41,893			41,691
Property, plant and equipment (net of accumulated depreciation of $349,856 and $344,785, respectively)	83,667			85,732
Assets held for sale	13,966			13,969
Intangibles (net of accumulated amortization of $451,214 and $407,747, respectively)	313,878			285,311
Goodwill	989,641			976,415
Other non-current assets	123,846			113,812
Total assets	$	1,941,148		$	1,842,153
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	86,835		$	87,575
Accrued liabilities	240,637			228,423
Long-term debt due within one year	951			1,045
Total current liabilities	328,423			317,043
Long-term debt	616,790			627,973
Deferred income taxes	80,754			81,076
Other non-current liabilities	65,234			70,992
Commitments and contingencies (Notes 11 and 12)
Shareholders’ equity:
Common shares $1 par value (authorized: 500,000 shares; outstanding: September 30, 2016 – 48,586; December 31, 2015 – 49,019)	48,586			49,019
Retained earnings	851,420			751,253
Accumulated other comprehensive loss	(50,059		)	(55,203		)
Total shareholders’ equity	849,947			745,069
Total liabilities and shareholders’ equity	$	1,941,148		$	1,842,153

See Condensed Notes to Unaudited Consolidated Financial Statements

2

DELUXE CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share amounts)

(Unaudited)

	Quarter Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Product revenue	$	364,680		$	361,781		$	1,090,686		$	1,075,692
Service revenue	94,240			78,035			278,174			233,616
Total revenue	458,920			439,816			1,368,860			1,309,308
Cost of products	(133,628		)	(132,594		)	(391,161		)	(384,590		)
Cost of services	(32,642		)	(26,708		)	(99,246		)	(83,332		)
Total cost of revenue	(166,270		)	(159,302		)	(490,407		)	(467,922		)
Gross profit	292,650			280,514			878,453			841,386
Selling, general and administrative expense	(198,365		)	(189,641		)	(598,563		)	(575,110		)
Net restructuring charges	(1,993		)	(1,505		)	(4,007		)	(2,738		)
Operating income	92,292			89,368			275,883			263,538
Loss on early debt extinguishment	—			—			—			(8,917		)
Interest expense	(4,855		)	(4,387		)	(15,281		)	(15,322		)
Other income	742			919			1,335			2,174
Income before income taxes	88,179			85,900			261,937			241,473
Income tax provision	(29,516		)	(28,983		)	(86,783		)	(82,553		)
Net income	$	58,663		$	56,917		$	175,154		$	158,920
Comprehensive income	$	57,824		$	52,680		$	180,298		$	150,190
Basic earnings per share	1.20			1.14			3.57			3.18
Diluted earnings per share	1.19			1.13			3.55			3.16
Cash dividends per share	0.30			0.30			0.90			0.90

See Condensed Notes to Unaudited Consolidated Financial Statements

3

DELUXE CORPORATION

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

(in thousands)

(Unaudited)

	Common shares		Common shares par value			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total
Balance, December 31, 2015	49,019		$	49,019		$	—		$	751,253		$	(55,203	)	$	745,069
Net income	—		—			—			175,154			—			175,154
Cash dividends	—		—			—			(44,127		)	—			(44,127		)
Common shares issued	403		403			11,079			—			—			11,482
Common shares repurchased	(733	)	(733		)	(13,351		)	(30,860		)	—			(44,944		)
Other common shares retired	(103	)	(103		)	(6,230		)	—			—			(6,333		)
Fair value of share-based compensation	—		—			8,502			—			—			8,502
Other comprehensive income	—		—			—			—			5,144			5,144
Balance, September 30, 2016	48,586		$	48,586		$	—		$	851,420		$	(50,059	)	$	849,947

See Condensed Notes to Unaudited Consolidated Financial Statements

4

DELUXE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Nine Months Ended September 30,
	2016			2015
Cash flows from operating activities:
Net income	$	175,154		$	158,920
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	11,347			12,006
Amortization of intangibles	56,364			42,425
Amortization of contract acquisition costs	14,700			14,059
Deferred income taxes	(1,477		)	(945		)
Employee share-based compensation expense	9,264			8,774
Loss on early debt extinguishment	—			8,917
Other non-cash items, net	3,128			1,197
Changes in assets and liabilities, net of effect of acquisitions:
Trade accounts receivable	5,320			13,970
Inventories and supplies	176			(1,368		)
Other current assets	(2,379		)	2,377
Non-current assets	(3,351		)	(560		)
Accounts payable	(1,619		)	(12,547		)
Contract acquisition payments	(17,190		)	(9,843		)
Other accrued and non-current liabilities	(41,316		)	(18,234		)
Net cash provided by operating activities	208,121			219,148
Cash flows from investing activities:
Purchases of capital assets	(32,215		)	(29,549		)
Payments for acquisitions, net of cash acquired	(64,637		)	(50,933		)
Proceeds from company-owned life insurance policies	4,123			3,973
Other	2,330			805
Net cash used by investing activities	(90,399		)	(75,704		)
Cash flows from financing activities:
Proceeds from short-term borrowings	—			50,000
Proceeds from issuing long-term debt	169,000			276,500
Payments on long-term debt, including costs of debt reacquisition	(185,873		)	(375,291		)
Proceeds from issuing shares under employee plans	6,861			5,492
Excess tax benefit from share-based employee awards	—			1,816
Employee taxes paid for shares withheld	(2,333		)	(1,236		)
Payments for common shares repurchased	(44,944		)	(46,996		)
Cash dividends paid to shareholders	(44,127		)	(44,965		)
Other	(1,634		)	(378		)
Net cash used by financing activities	(103,050		)	(135,058		)
Effect of exchange rate change on cash	2,966			(7,032		)
Net change in cash and cash equivalents	17,638			1,354
Cash and cash equivalents, beginning of year	62,427			61,541
Cash and cash equivalents, end of period	$	80,065		$	62,895

See Condensed Notes to Unaudited Consolidated Financial Statements

5

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Note 1: Consolidated financial statements

The consolidated balance sheet as of September 30, 2016, the consolidated statements of comprehensive income for the quarters and nine months ended September 30, 2016 and 2015, the consolidated statement of shareholders’ equity for the nine months ended September 30, 2016, and the consolidated statements of cash flows for the nine months ended September 30, 2016 and 2015 are unaudited. The consolidated balance sheet as of December 31, 2015 was derived from audited consolidated financial statements, but does not include all disclosures required by generally accepted accounting principles (GAAP) in the United States of America. In the opinion of management, all adjustments necessary for a fair statement of the consolidated financial statements are included. Adjustments consist only of normal recurring items, except for any discussed in the notes below. 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 our annual consolidated financial statements and notes. The consolidated financial statements and notes appearing in this report should be read in conjunction with the consolidated audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Form 10-K”).

During the quarter ended June 30, 2016, we identified an error in the balance sheet presentation of borrowings under our credit facility and the related asset for debt issuance costs. These amounts were previously presented as current items in our consolidated balance sheets, and we determined that they should have been presented as non-current. This change also corrects the presentation of the cash flows associated with borrowings under our credit facility. Previously these cash flows were presented on a net basis. The change in the balance sheet presentation requires that they be presented on a gross basis.

We assessed the materiality of this error on prior periods' financial statements in accordance with the Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 99, Materiality, codified in Accounting Standards Codification (ASC) 250, Presentation of Financial Statements. We concluded that the error was not material to any prior annual or interim period and therefore, amendments of previously filed reports are not required. In accordance with ASC 250, we have corrected the error for all prior periods presented by revising the consolidated financial statements appearing herein. Periods not presented herein will be revised, as applicable, in future filings. The revisions had no impact on total assets, total liabilities, shareholders' equity, net income or net cash used by financing activities.

The impact of this revision on our unaudited consolidated balance sheet as of December 31, 2015 was as follows:

	December 31, 2015
(in thousands)	As Previously Reported		Adjustment			As Revised
Other current assets	$	44,608	$	(2,003	)	$	42,605
Total current assets	325,988		(2,003		)	323,985
Other non-current assets	111,809		2,003			113,812
Short-term borrowings	434,000		(434,000		)	—
Total current liabilities	751,043		(434,000		)	317,043
Long-term debt	193,973		434,000			627,973

The impact of this revision on our unaudited consolidated statement of cash flows for the nine months ended September 30, 2015 was as follows:

	Nine Months Ended September 30, 2015
(in thousands)	As Previously Reported			Adjustment			As Revised
Proceeds from short-term borrowings	$	159,000		$	(109,000	)	$	50,000
Proceeds from issuing long-term debt	—			276,500			276,500
Payments on long-term debt, including costs of debt reacquisition	(207,791		)	(167,500		)	(375,291		)

6

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Note 2: New accounting pronouncements

Recently adopted accounting pronouncements – In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The standard requires that a performance target that affects vesting and that could be achieved after the requisite service period should be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. We adopted this standard on January 1, 2016. As our accounting treatment for these awards was in compliance with the new guidance, adoption of this standard had no impact on our consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The standard requires that debt issuance costs related to a recognized debt liability be presented in the consolidated balance sheets as a direct reduction from the carrying amount of the debt liability. We adopted this standard on January 1, 2016, applying it retrospectively. The consolidated balance sheet as of December 31, 2015 reflects the reclassification of debt issuance costs of $2,249 from other non-current assets to long-term debt. The amount of debt issuance costs included in long-term debt as of September 30, 2016 was $1,906. In August 2015, the FASB issued ASU No. 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements – Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting. This standard adds SEC paragraphs pursuant to the SEC Staff announcement at the June 18, 2015 Emerging Issues Task Force (EITF) meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. Under this guidance, the SEC Staff would not object to presenting such costs as an asset and subsequently amortizing the deferred costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings under the arrangement. Debt issuance costs of $1,528 as of September 30, 2016 and $2,003 as of December 31, 2015 related to our line-of-credit arrangement. We continue to include these costs within other non-current assets, amortizing them over the term of the arrangement.

In April 2015, the FASB issued ASU No. 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. The standard provides guidance to customers about whether a cloud computing arrangement includes a software license. If the arrangement does include a software license, the software license element of the arrangement should be accounted for in the same manner as the acquisition of other software licenses. We adopted this standard on January 1, 2016, applying it prospectively to all arrangements entered into or materially modified on or after January 1, 2016. Adoption of this standard did not have a significant impact on our results of operations or financial position.

In May 2015, the FASB issued ASU No. 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or its Equivalent). Under the standard, investments measured at net asset value (NAV) as a practical expedient for fair value are excluded from the fair value hierarchy. As such, they are not assigned a fair value measurement level in financial statement disclosures of fair value. This standard was effective for us on January 1, 2016. It impacts the disclosures included in our Annual Report on Form 10-K regarding the plan assets of our postretirement benefit plan. As such, we will reflect this new guidance in the disclosures included in our Form 10-K for the year ending December 31, 2016, applying the guidance retrospectively to all periods presented.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. The standard requires that inventory within the scope of the guidance be measured at the lower of cost or net realizable value. Previously, inventory was measured at the lower of cost or market. We elected to early adopt this standard on January 1, 2016, applying it prospectively. Application of this standard did not have a significant impact on our results of operations or financial position.

In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. When recording the purchase price allocation for a business combination in the financial statements, an acquirer may record preliminary amounts when measurements are incomplete as of the end of a reporting period. When the required information is received to finalize the purchase price allocation, the preliminary amounts are adjusted. These adjustments are referred to as measurement-period adjustments. This standard eliminates the requirement to restate prior period financial statements for measurement-period adjustments. Instead, it requires that the cumulative impact of a measurement-period adjustment be recognized in the reporting period in which the adjustment is identified. We adopted this standard on January 1, 2016, applying it prospectively. Application of this standard did not have a significant impact on our results of operations or financial position.

7

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. The standard is intended to simplify various aspects of the accounting and presentation of share-based payments. We elected to early adopt this standard as of January 1, 2016. Adoption of this standard had the following impacts on our consolidated financial statements:

• Consolidated statements of comprehensive income – The new standard requires that the tax effects of share-based compensation be recognized in the income tax provision. Previously, these amounts were recognized in additional paid-in capital. Net tax benefits related to share-based compensation awards of $234 for the quarter ended September 30, 2016 and $1,745 for the nine months ended September 30, 2016 were recognized as reductions of income tax expense in the consolidated statements of comprehensive income. These tax benefits reduced our effective income tax rate 0.3 points for the quarter ended September 30, 2016 and 0.7 points for the nine months ended September 30, 2016. In addition, in calculating potential common shares used to determine diluted earnings per share, GAAP requires us to use the treasury stock method. The new standard requires that assumed proceeds under the treasury stock method be modified to exclude the amount of excess tax benefits that would have been recognized in additional paid-in capital. These changes were applied on a prospective basis and resulted in an increase in diluted earnings per share of $0.03 for the nine months ended September 30, 2016. These changes had no impact on diluted earnings per share for the quarter ended September 30, 2016.

In recording share-based compensation expense, the standard allows companies to make a policy election as to whether they will include an estimate of awards expected to be forfeited or whether they will account for forfeitures as they occur. We have elected to include an estimate of forfeitures in the computation of our share-based compensation expense. As this treatment is consistent with previous guidance, this election had no impact on our consolidated financial statements.

• Consolidated statements of cash flows – The standard requires that excess tax benefits from share-based employee awards be reported as operating activities in the consolidated statements of cash flows. Previously, these cash flows were included in financing activities. We elected to apply this change on a prospective basis, resulting in an increase in net cash provided by operating activities and in net cash used by financing activities of $2,069 for the nine months ended September 30, 2016.

The standard requires that employee taxes paid when an employer withholds shares for tax-withholding purposes be reported as financing activities in the consolidated statements of cash flows. Previously, these cash flows were included in operating activities. This change was required to be applied on a retrospective basis. As such, the consolidated statement of cash flows for the prior period was restated. This change resulted in an increase in net cash provided by operating activities and in net cash used by financing activities of $2,333 for the nine months ended September 30, 2016 and $1,236 for the nine months ended September 30, 2015.

In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. The standard is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. We elected to early adopt this standard as of July 1, 2016. As our consolidated statement of cash flows presentation was in compliance with the new guidance, adoption of this standard had no impact on our consolidated financial statements.

Accounting pronouncements not yet adopted – In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The standard provides revenue recognition guidance for any entity that enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets, unless those contracts are within the scope of other accounting standards. The standard also expands the required financial statement disclosures regarding revenue recognition. The new guidance is effective for us on January 1, 2018. In addition, in March 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), in April 2016, the FASB issued ASU No. 2016-10, Identifying Performance Obligations and Licensing, and in May 2016, the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients. These standards are intended to clarify aspects of ASU No. 2014-09 and are effective for us upon adoption of ASU No. 2014-09. We are currently assessing the impact of these standards on our consolidated financial statements, as well as the method of transition that we will use in adopting the new guidance.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The standard is intended to improve the recognition, measurement, presentation and disclosure of financial

8

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

instruments. The guidance is effective for us on January 1, 2018. We do not expect the application of this standard to have a significant impact on our results of operations or financial position.

In February 2016, the FASB issued ASU No. 2016-02, Leasing. The standard is intended to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities for virtually all leases and by requiring the disclosure of key information about leasing arrangements. The guidance is effective for us on January 1, 2019, and requires adoption using a modified retrospective approach. We are currently assessing the impact of this standard on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. The standard introduces new guidance for the accounting for credit losses on instruments within its scope, including trade and loans receivable and available-for-sale debt securities. The guidance is effective for us on January 1, 2020, and requires adoption using a modified retrospective approach. We do not expect the application of this standard to have a significant impact on our results of operations or financial position.

Note 3: Supplemental balance sheet information

Inventories and supplies – Inventories and supplies were comprised of the following:

(in thousands)	September 30, 2016		December 31, 2015
Raw materials	$	5,593	$	5,719
Semi-finished goods	8,857		8,208
Finished goods	23,937		24,955
Supplies	3,087		3,074
Inventories and supplies	$	41,474	$	41,956

Available-for-sale securities – Available-for-sale securities included within funds held for customers and other current assets were comprised of the following:

	September 30, 2016
(in thousands)	Cost		Gross unrealized gains		Gross unrealized losses			Fair value
Funds held for customers:(1)
Canadian and provincial government securities	$	8,491	$	—	$	(43	)	$	8,448
Canadian guaranteed investment certificates	7,618		—		—			7,618
Available-for-sale securities	$	16,109	$	—	$	(43	)	$	16,066

⁽¹⁾ Funds held for customers, as reported on the consolidated balance sheet as of September 30, 2016, also included cash of $76,104. This cash included amounts related to FISC Solutions, which was acquired in December 2015. This business provides cash receipt processing services. A portion of the cash receipts are remitted to our clients the business day following receipt. As such, the amounts on-hand are reported as funds held for customers in the consolidated balance sheets, with a corresponding liability included in accrued liabilities. The asset and liability of $18,743 were recorded as acquisition measurement-period balance sheet adjustments during 2016. In addition, this cash included $12,532 related to the September 2016 acquisition of Payce, Inc., a payroll services provider (see Note 6).

9

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

	December 31, 2015
(in thousands)	Cost		Gross unrealized gains		Gross unrealized losses			Fair value
Canadian and provincial government securities	$	7,932	$	—	$	(91	)	$	7,841
Canadian guaranteed investment certificates	7,226		—		—			7,226
Available-for-sale securities (funds held for customers)(1)	15,158		—		(91		)	15,067
Canadian money market fund (other current assets)	1,616		—		—			1,616
Available-for-sale securities	$	16,774	$	—	$	(91	)	$	16,683

⁽¹⁾ Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2015, also included cash of $38,276.

Expected maturities of available-for-sale securities as of September 30, 2016 were as follows:

(in thousands)	Fair value
Due in one year or less	$	9,629
Due in two to five years	4,190
Due in six to ten years	2,247
Available-for-sale securities	$	16,066

Further information regarding the fair value of available-for-sale securities can be found in Note 8.

Assets held for sale – Assets held for sale as of September 30, 2016 and December 31, 2015 included the operations of a small business distributor that we previously acquired. This business is included in our Small Business Services segment and the assets acquired consisted primarily of a customer list intangible asset. We are actively marketing the business and expect the selling price will exceed its carrying value. Net assets held for sale consisted of the following:

(in thousands)	September 30, 2016			December 31, 2015			Balance sheet caption
Current assets	$	4		$	3		Other current assets
Intangibles	13,533			13,533			Assets held for sale
Other non-current assets	433			436			Assets held for sale
Accrued liabilities	(112		)	(366		)	Accrued liabilities
Deferred income tax liabilities	(5,775		)	(5,777		)	Other non-current liabilities
Net assets held for sale	$	8,083		$	7,829

10

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Intangibles – Intangibles were comprised of the following:

	September 30, 2016							December 31, 2015
(in thousands)	Gross carrying amount		Accumulated amortization			Net carrying amount		Gross carrying amount		Accumulated amortization			Net carrying amount
Indefinite-lived intangibles:
Trade name	$	19,100	$	—		$	19,100	$	19,100	$	—		$	19,100
Amortizable intangibles:
Internal-use software	410,231		(336,356		)	73,875		375,037		(310,665		)	64,372
Customer lists/relationships	239,972		(67,366		)	172,606		202,682		(54,990		)	147,692
Trade names	65,481		(40,029		)	25,452		64,881		(36,325		)	28,556
Software to be sold	28,500		(6,141		)	22,359		28,500		(3,765		)	24,735
Other	1,808		(1,322		)	486		2,858		(2,002		)	856
Amortizable intangibles	745,992		(451,214		)	294,778		673,958		(407,747		)	266,211
Intangibles	$	765,092	$	(451,214	)	$	313,878	$	693,058	$	(407,747	)	$	285,311

Amortization of intangibles was $19,273 for the quarter ended September 30, 2016 and $14,686 for the quarter ended September 30, 2015. Amortization of intangibles was $56,364 for the nine months ended September 30, 2016 and $42,425 for the nine months ended September 30, 2015. Based on the intangibles in service as of September 30, 2016, estimated future amortization expense is as follows:

(in thousands)	Estimated amortization expense
Remainder of 2016	$	18,260
2017	65,293
2018	51,235
2019	37,788
2020	31,737

During the nine months ended September 30, 2016, we acquired internal-use software in the normal course of business. We also acquired intangible assets in conjunction with acquisitions (Note 6). The following intangible assets were acquired during the nine months ended September 30, 2016:

(in thousands)	Amount		Weighted-average amortization period (in years)
Internal-use software	$	34,970	4
Customer lists/relationships	48,982		7
Trade names	600		5
Acquired intangibles	$	84,552	6

11

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Goodwill – Changes in goodwill during the nine months ended September 30, 2016 were as follows:

(in thousands)	Small Business Services			Financial Services		Direct Checks		Total
Balance, December 31, 2015:
Goodwill, gross	$	671,295		$	176,614	$	148,506	$	996,415
Accumulated impairment charges	(20,000		)	—		—		(20,000		)
Goodwill, net of accumulated impairment charges	651,295			176,614		148,506		976,415
Acquisition of 180 Fusion (Note 6)	575			—		—		575
Acquisition of Inkhead (Note 6)	4,421			—		—		4,421
Acquisition of Payce (Note 6)	7,979			—		—		7,979
Adjustment for acquisition of Datamyx (Note 6)	—			172		—		172
Currency translation adjustment	79			—		—		79
Balance, September 30, 2016:
Goodwill, gross	684,349			176,786		148,506		1,009,641
Accumulated impairment charges	(20,000		)	—		—		(20,000		)
Goodwill, net of accumulated impairment charges	$	664,349		$	176,786	$	148,506	$	989,641

Other non-current assets – Other non-current assets were comprised of the following:

(in thousands)	September 30, 2016		December 31, 2015
Contract acquisition costs	$	67,488	$	58,792
Loans and notes receivable from distributors	21,531		23,957
Postretirement benefit plan asset	20,260		16,250
Deferred advertising costs	6,660		7,500
Other	7,907		7,313
Other non-current assets	$	123,846	$	113,812

Changes in contract acquisition costs during the nine months ended September 30, 2016 and 2015 were as follows:

	Nine Months Ended September 30,
(in thousands)	2016			2015
Balance, beginning of year	$	58,792		$	74,101
Additions(1)	23,471			4,828
Amortization	(14,700		)	(14,059		)
Other	(75		)	(3,458		)
Balance, end of period	$	67,488		$	61,412

⁽¹⁾ Contract acquisition costs are accrued upon contract execution. Cash payments made for contract acquisition costs were $17,190 for the nine months ended September 30, 2016 and $9,843 for the nine months ended September 30, 2015.

12

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Accrued liabilities – Accrued liabilities were comprised of the following:

(in thousands)	September 30, 2016		December 31, 2015
Funds held for customers	$	90,960	$	52,366
Deferred revenue	32,418		48,119
Employee profit sharing/cash bonus	24,771		40,683
Customer rebates	17,077		18,900
Contract acquisition costs due within one year	11,980		9,045
Wages, including vacation	11,260		5,731
Restructuring due within one year (Note 9)	2,648		3,864
Other	49,523		49,715
Accrued liabilities	$	240,637	$	228,423

Note 4: Earnings per share

The following table reflects the calculation of basic and diluted earnings per share. During each period, certain stock options, as noted below, were excluded from the calculation of diluted earnings per share because their effect would have been antidilutive. 

	Quarter Ended September 30,						Nine Months Ended September 30,
(dollars and shares in thousands, except per share amounts)	2016			2015			2016			2015
Earnings per share – basic:
Net income	$	58,663		$	56,917		$	175,154		$	158,920
Income allocated to participating securities	(491		)	(386		)	(1,445		)	(1,054		)
Income available to common shareholders	$	58,172		$	56,531		$	173,709		$	157,866
Weighted-average shares outstanding	48,493			49,396			48,634			49,592
Earnings per share – basic	$	1.20		$	1.14		$	3.57		$	3.18
Earnings per share – diluted:
Net income	$	58,663		$	56,917		$	175,154		$	158,920
Income allocated to participating securities	(487		)	(384		)	(1,436		)	(1,049		)
Re-measurement of share-based awards classified as liabilities	(64		)	(114		)	230			(67		)
Income available to common shareholders	$	58,112		$	56,419		$	173,948		$	157,804
Weighted-average shares outstanding	48,493			49,396			48,634			49,592
Dilutive impact of potential common shares	455			366			427			391
Weighted-average shares and potential common shares outstanding	48,948			49,762			49,061			49,983
Earnings per share – diluted	$	1.19		$	1.13		$	3.55		$	3.16
Antidilutive options excluded from calculation	223			255			223			255

13

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Note 5: Other comprehensive income

Reclassification adjustments– Information regarding amounts reclassified from accumulated other comprehensive loss to net income was as follows:

Accumulated other comprehensive loss components	Amounts reclassified from accumulated other comprehensive loss												Affected line item in consolidated statements of comprehensive income
	Quarter Ended September 30,						Nine Months Ended September 30,
(in thousands)	2016			2015			2016			2015
Amortization of postretirement benefit plan items:
Prior service credit	$	355		$	355		1,066			1,066			(1)
Net actuarial loss	(949		)	(780		)	(2,848		)	(2,340		)	(1)
Total amortization	(594		)	(425		)	(1,782		)	(1,274		)	(1)
Tax benefit	181			113			544			339			(1)
Total reclassifications, net of tax	$	(413	)	$	(312	)	$	(1,238	)	$	(935	)

⁽¹⁾ Amortization of postretirement benefit plan items is included in the computation of net periodic benefit income. Additional details can be found in Note 10.

Accumulated other comprehensive loss– Changes in the components of accumulated other comprehensive loss during the nine months ended September 30, 2016 were as follows:

(in thousands)	Postretirement benefit plans, net of tax			Net unrealized loss on marketable securities, net of tax(1)			Currency translation adjustment			Accumulated other comprehensive loss
Balance, December 31, 2015	$	(38,822	)	$	(114	)	$	(16,267	)	$	(55,203	)
Other comprehensive income before reclassifications	—			40			3,866			3,906
Amounts reclassified from accumulated other comprehensive loss	1,238			—			—			1,238
Net current-period other comprehensive income	1,238			40			3,866			5,144
Balance, September 30, 2016	$	(37,584	)	$	(74	)	$	(12,401	)	$	(50,059	)

⁽¹⁾ Other comprehensive income before reclassifications is net of income tax expense of $14.

Note 6: Acquisitions

We periodically complete business combinations that align with our business strategy. The assets and liabilities acquired are recorded at their estimated fair values and the results of operations of each acquired business are included in our consolidated statements of comprehensive income from their acquisition dates. Transaction costs related to acquisitions were expensed as incurred and were not significant to the consolidated statements of comprehensive income for the quarters or nine months ended September 30, 2016 and 2015.

During the nine months ended September 30, 2016, we completed the following acquisitions which are included within our Small Business Services segment and for which the allocation of the purchase price to the assets acquired and liabilities assumed has been finalized:

• In February 2016, we acquired selected assets of Category 99, Inc., doing business as MacHighway®, a web hosting and domain registration service provider.

14

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

• In March 2016, we acquired selected assets of New England Art Publishers, Inc., doing business as Birchcraft Studios, a supplier of personalized invitations, holiday cards, all-occasion cards and social announcements. 

• In June 2016, we acquired selected assets of L.A.M. Enterprises, Inc., a provider of printed and promotional products.

During the nine months ended September 30, 2016, we completed several acquisitions which are included within our Small Business Services segment and for which we expect to finalize the allocation of the purchase price by the end of 2016 when our valuation of all of the acquired assets and liabilities is completed, as well as the determination of the estimated useful lives of the acquired customer lists. These acquisitions were as follows:

• In April 2016, we acquired selected assets of 180 Fusion LLC, a digital marketing services provider. The preliminary allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $575. The acquisition resulted in goodwill as we expect it will enhance our Small Business Services product set by providing valuable marketing tools to our customers, thus, enhancing customer acquisition and loyalty.

• In June 2016, we acquired selected assets of Liquid Web, LLC, a web hosting services provider.

• In June 2016, we acquired selected assets of National Document Solutions, LLC, a provider of printing, promotional products, office products, scanning and document management solutions.

• In July 2016, we acquired selected assets of Inkhead, Inc., a provider of customized promotional products. The preliminary allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $4,421. The acquisition resulted in goodwill as it enables us to diversify our promotional product offerings and bring these offerings to our customer base.

• In August 2016, we acquired selected assets of BNBS, Inc., doing business as B&B Solutions, a provider of printing, promotional and office products and services.

• In September 2016, we acquired all of the outstanding capital stock of Payce, Inc., a provider of payroll processing, payroll tax filing and related payroll services. The preliminary allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $7,979. The acquisition resulted in goodwill as we expect Payce's expertise, customer mix and operational strength to enhance our existing portfolio of small business services.

Also during the nine months ended September 30, 2016, we acquired the operations of several small business distributors which are included in our Small Business Services segment. The assets acquired consisted primarily of customer list intangible assets. As these distributors were previously part of our Safeguard® distributor network, our revenue was not impacted by these acquisitions and the impact to our costs was not significant. We expect to finalize the allocations of the purchase price by the end of 2016 when our valuations of the acquired customer lists are completed, including the determination of the related estimated useful lives.

15

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

As our acquisitions were not significant to our operating results both individually and in the aggregate, pro forma results of operations are not provided. The following illustrates the preliminary allocation as of September 30, 2016 of the aggregate purchase price for the above acquisitions to the assets acquired and liabilities assumed:

(in thousands)	2016 acquisitions
Net tangible assets acquired and liabilities assumed	$	(784	)
Identifiable intangible assets:
Customer lists/relationships	48,982
Internal-use software	10,250
Trade names	600
Total intangible assets	59,832
Goodwill	12,975
Total aggregate purchase price	72,023
Liabilities for holdback payments	(6,900		)
Non-cash consideration(1)	(2,020		)
Net cash paid for 2016 acquisitions	63,103
Holdback payments for prior year acquisitions	1,534
Payments for acquisitions, net of cash acquired	$	64,637

⁽¹⁾ Consists of pre-acquisition amounts owed to us by certain of the acquired businesses.

Further information regarding the calculation of the estimated fair values of the intangibles acquired can be found in Note 8.

During the quarter ended September 30, 2016, we finalized purchase accounting for the acquisition of Datamyx LLC, which was acquired in October 2015. Further information regarding this acquisition can be found under the caption “Note 5: Acquisitions” in the Notes to Consolidated Financial Statements appearing in the 2015 Form 10-K. The adjustments recorded during the quarter ended September 30, 2016 increased goodwill $172 from the preliminary amount recorded as of December 31, 2015, with the offset to various assets and liabilities, primarily property, plant and equipment and other current assets.

During the nine months ended September 30, 2015, we acquired selected assets of Range, Inc., a marketing services provider; Verify Valid LLC, a provider of electronic check payment services; Tech Assets, Inc., a provider of shared hosting websites to small businesses using cPanel web hosting technology; and FMC Resource Management Corporation, a marketing services provider, as well as the operations of eight small business distributors, five of which were previously part of our Safeguard distributor network. The assets acquired consisted primarily of customer list intangible assets and goodwill. Payments for acquisitions, net of cash acquired, as presented on the consolidated statement of cash flows for the nine months ended September 30, 2015, included payments of $46,796 for these acquisitions and $4,137 for holdback payments for prior year acquisitions. Further information regarding our 2015 acquisitions can be found under the caption “Note 5: Acquisitions” in the Notes to Consolidated Financial Statements appearing in the 2015 Form 10-K.

Note 7: Derivative financial instruments

We have entered into interest rate swaps, which we designated as fair value hedges, to hedge against changes in the fair value of a portion of our long-term debt. At the time we entered into these swaps in 2012, we were targeting a mix of fixed and variable rate debt, where we receive a fixed rate and pay a variable rate based on the London Interbank Offered Rate (LIBOR). The interest rate swaps related to our long-term debt due in 2020 have a notional amount of $200,000 and meet the criteria for using the short-cut method for a fair value hedge based on the structure of the hedging relationship. As such, changes in the fair value of the derivatives and the related long-term debt are equal. The fair value of these interest rate swaps was included in other non-current liabilities in the consolidated balance sheets and was $109 as of September 30, 2016 and $4,842 as of December 31, 2015. As the short-cut method is being used to account for these hedges, the consolidated balance sheets included a decrease in long-term debt of $109 as of September 30, 2016 and $4,842 as of December 31, 2015 due to fair value adjustments.

16

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Note 8: Fair value measurements

Annual asset impairment analyses – We evaluate the carrying value of goodwill and our indefinite-lived trade name as of July 31 of each year and between annual evaluations if events occur or circumstances change that would indicate a possible impairment. Our policy on impairment of indefinite-lived intangibles and goodwill, which is included under the caption "Note 1: Significant accounting policies" in the Notes to Consolidated Financial Statements appearing in the 2015 Form 10-K, explains our methodology for assessing impairment of these assets. In completing the 2016 annual goodwill impairment analysis, we elected to perform a qualitative assessment for all of our reporting units to which goodwill is assigned, with one exception. We elected to perform a quantitative analysis for our Financial Services Commercial reporting unit as the previous quantitative analysis completed as of July 31, 2015 indicated that the estimated fair value of this reporting unit exceeded its carrying value by approximately 13%. This relatively small percentage was primarily due to the fact that the reporting unit had been recently acquired.

Our qualitative analysis evaluated factors including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. We also considered the quantitative analysis we completed as of July 31, 2014. In completing the 2016 qualitative analysis, we noted no changes in events or circumstances which would have required us to complete the two-step quantitative goodwill impairment analysis for any of the reporting units analyzed. The quantitative analysis completed for the Financial Services Commercial reporting unit indicated that its estimated fair value exceeded its carrying value by approximately 49% as of July 31, 2016. Total goodwill for this reporting unit was approximately $45,000 as of September 30, 2016. In completing the 2016 annual impairment analysis of our indefinite-lived trade name, we elected to perform a quantitative assessment which indicated that the calculated fair value of the asset exceeded its carrying value of $19,100 by approximately $32,000 as of July 31, 2016. We recorded no impairment charges as a result of our 2016 annual impairment analyses.

2016 acquisitions – For all acquisitions, we are required to measure the fair value of the net identifiable tangible and intangible assets and liabilities acquired, excluding goodwill and deferred income taxes. Information regarding the acquisitions completed during the nine months ended September 30, 2016 can be found in Note 6. The identifiable net assets acquired during the nine months ended September 30, 2016 were comprised primarily of customer lists with an aggregate fair value of $48,982 and internal-use software with an aggregate fair value of $10,250. Fair value of the customer lists was estimated by discounting the estimated cash flows expected to be generated by the assets. Assumptions used in the calculations included same-customer revenue growth rates and estimated customer retention rates based on the acquirees' historical information. A portion of the fair value of the acquired software was estimated using the cost of reproduction method. The primary components of the software were identified and the estimated cost to reproduce the software was calculated based on data provided by the acquirees. The fair value of the remainder of the software was estimated using the relief from royalty method, which calculates the cost savings associated with owning rather than licensing the technology. Assumed royalty rates were applied to projected revenue for the remaining useful life of the software to estimate the royalty savings. Information regarding the useful lives of acquired intangibles can be found in Note 3.

Recurring fair value measurements – Funds held for customers included available-for-sale marketable securities (Note 3). These securities consisted of a mutual fund investment that invests in Canadian and provincial government securities, as well as investments in Canadian guaranteed investment certificates (GICs) with maturities of one year or less. The mutual fund is not traded in an active market and its fair value is determined by obtaining quoted prices in active markets for the underlying securities held by the fund. The fair value of the GICs approximated cost due to their relatively short duration. Unrealized gains and losses, net of tax, are included in accumulated other comprehensive loss in the consolidated balance sheets. The cost of securities sold is determined using the average cost method. Realized gains and losses are included in revenue in the consolidated statements of comprehensive income and were not significant for the quarters or nine months ended September 30, 2016 and 2015.

Other current assets as of December 31, 2015 included available-for-sale marketable securities (Note 3). These securities were sold during the first quarter of 2016, and consisted of a Canadian money market fund that was not traded in an active market. As such, the fair value of this investment was determined by obtaining quoted prices in active markets for the underlying securities held by the fund. Because of the short-term nature of the underlying investments, the cost of these securities approximated their fair value. No gains or losses on sales of these marketable securities were realized during the nine months ended September 30, 2016 and 2015.

17

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

We have elected to account for a long-term investment in domestic mutual funds under the fair value option for financial assets and financial liabilities. The fair value option provides companies an irrevocable option to measure many financial assets and liabilities at fair value with changes in fair value recognized in earnings. The investment is included in long-term investments in the consolidated balance sheets. Long-term investments also include the cash surrender values of company-owned life insurance policies. Realized and unrealized gains and losses, as well as dividends earned by the mutual fund investment, are included in selling, general and administrative (SG&A) expense in the consolidated statements of comprehensive income. This investment corresponds to a liability under an officers’ deferred compensation plan that is not available to new participants and is fully funded by the investment in mutual funds. The liability under the plan equals the fair value of the investment in mutual funds. Thus, as the value of the investment changes, the value of the liability changes accordingly. As changes in the liability are reflected within SG&A expense in the consolidated statements of comprehensive income, the fair value option of accounting for the investment in mutual funds allows us to net changes in the investment and the related liability in the statements of comprehensive income. The cost of securities sold is determined using the average cost method. During the nine months ended September 30, 2016 and 2015, net realized gains were not significant. We recognized net unrealized losses of $160 during the nine months ended September 30, 2016 and $333 during the nine months ended September 30, 2015.

The fair value of interest rate swaps (Note 7) is determined at each reporting date by means of a pricing model utilizing readily observable market interest rates. The change in fair value is determined as the change in the present value of estimated future cash flows discounted using the LIBOR rate. Our interest rate swaps relate to our long-term debt due in 2020 and meet the criteria for using the short-cut method for a fair value hedge based on the structure of the hedging relationship. As such, the changes in the fair value of the derivative and related long-term debt are equal.

Liabilities for contingent consideration relate to acquisitions completed during 2015. Information concerning these acquisitions can be found under the caption "Note 5: Acquisitions" in the Notes to Consolidated Financial Statements included in the 2015 Form 10-K. Under the agreement related to the acquisition of Verify Valid, we are required to make annual contingent payments over a period of up to eight years, based on the revenue generated by the business. A specified payment percentage for each year is applied to the revenue generated by the business in that year to determine the amount of the payment. There is no maximum amount of contingent payments specified in the agreement. Under the agreement related to the acquisition of a small business distributor, we are required to make annual contingent payments over a period of up to three years, based on the gross profit generated by the business. A specified payment percentage for each year is applied to the gross profit generated by the business in that year to determine the amount of the payment. The maximum contingent payment in any year of the agreement is $925. The fair value of the liabilities for contingent payments is estimated by discounting to present value the probability-weighted contingent payments expected to be made. Assumptions used in the calculations include the discount rate, projected revenue or gross profit based on our most recent internal forecast, and factors indicating the probability of achieving the forecasted revenue or gross profit. The liabilities are remeasured each reporting period. Increases or decreases in projected revenue or gross profit and the related probabilities may result in a higher or lower fair value measurement. Changes in fair value resulting from changes in the timing, amount of, or likelihood of contingent payments are included in SG&A expense in the consolidated statements of comprehensive income. Changes in fair value resulting from accretion for the passage of time are included in interest expense in the consolidated statements of comprehensive income.

Information regarding recurring fair value measurements completed during each period was as follows:

				Fair value measurements using
	Fair value as of  September 30, 2016			Quoted prices in active markets for identical assets		Significant other observable inputs			Significant unobservable inputs
(in thousands)				(Level 1)		(Level 2)			(Level 3)
Available-for-sale marketable securities (funds held for customers)	$	16,066		$	—	$	16,066		$	—
Long-term investment in mutual funds	1,868			1,868		—			—
Derivative liabilities	(109		)	—		(109		)	—
Accrued contingent consideration	(4,276		)	—		—			(4,276		)

18

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

				Fair value measurements using
	Fair value as of December 31, 2015			Quoted prices in active markets for identical assets		Significant other observable inputs			Significant unobservable inputs
(in thousands)				(Level 1)		(Level 2)			(Level 3)
Available-for-sale marketable securities (funds held for customers)	$	15,067		$	—	$	15,067		$	—
Available-for-sale marketable securities (other current assets)	1,616			—		1,616			—
Long-term investment in mutual funds	2,091			2,091		—			—
Derivative liabilities	(4,842		)	—		(4,842		)	—
Accrued contingent consideration	(5,861		)	—		—			(5,861		)

Our policy is to recognize transfers between fair value levels as of the end of the reporting period in which the transfer occurred. There were no transfers between fair value levels during the nine months ended September 30, 2016.

Changes in accrued contingent consideration during the nine months ended September 30, 2016 were as follows:

(in thousands)	Nine Months Ended September 30, 2016
Balance, December 31, 2015	$	5,861
Change in fair value	(448		)
Payments	(1,137		)
Balance, September 30, 2016	$	4,276

Fair value measurements of other financial instruments – The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate fair value.

Cash and cash included within funds held for customers – The carrying amounts reported in the consolidated balance sheets approximate fair value because of the short-term nature of these items.

Loans and notes receivable from distributors – We have receivables for loans made to certain of our Safeguard distributors. In addition, we have acquired the operations of several small business distributors, which we then sold to our Safeguard distributors. In most cases, we entered into notes receivable upon the sale of the assets to the distributors. The fair value of these loans and notes receivable is calculated as the present value of expected future cash flows, discounted using an estimated interest rate based on published bond yields for companies of similar risk.

Long-term debt – The carrying amounts reported in the consolidated balance sheets for the amount drawn on our credit facility approximates fair value because our interest rate is variable and reflects current market rates. The fair value of our long-term notes due in 2020 is based on significant observable market inputs other than quoted prices in active markets. The fair value of long-term debt included in the table below does not reflect the impact of hedging activity or debt issuance costs. The carrying amount of long-term debt includes the change in fair value of hedged long-term debt, as well as unamortized debt issuance costs related to our notes due in 2020 (Note 11).

19

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

The estimated fair values of these financial instruments were as follows:

					Fair value measurements using
	September 30, 2016				Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(in thousands)	Carrying value		Fair value		(Level 1)		(Level 2)		(Level 3)
Cash	$	80,065	$	80,065	$	80,065	$	—	$	—
Cash (funds held for customers)	76,104		76,104		76,104		—		—
Loans and notes receivable from distributors	23,329		21,290		—		—		21,290
Long-term debt(1)	615,985		624,758		—		624,758		—

⁽¹⁾ Amounts exclude capital lease obligations.

					Fair value measurements using
	December 31, 2015				Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(in thousands)	Carrying value		Fair value		(Level 1)		(Level 2)		(Level 3)
Cash	$	62,427	$	62,427	$	62,427	$	—	$	—
Cash (funds held for customers)	38,276		38,276		38,276		—		—
Loans and notes receivable from distributors	25,745		23,383		—		—		23,383
Long-term debt(1)	626,909		641,000		—		641,000		—

⁽¹⁾ Amounts exclude capital lease obligations.

Note 9: Restructuring charges

Net restructuring charges for each period consisted of the following components:

	Quarter Ended September 30,						Nine Months Ended September 30,
(in thousands, except number of employees)	2016			2015			2016			2015
Severance accruals	$	1,824		$	1,443		$	3,870		$	3,493
Severance reversals	(198		)	(282		)	(666		)	(976		)
Operating lease obligations	—			88			—			88
Net restructuring accruals	1,626			1,249			3,204			2,605
Other costs	432			489			939			551
Net restructuring charges	$	2,058		$	1,738		$	4,143		$	3,156
Number of employees included in severance accruals	55			50			120			200

20

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

The net restructuring charges are reflected in the consolidated statements of comprehensive income as follows:

	Quarter Ended September 30,				Nine Months Ended September 30,
(in thousands)	2016		2015		2016		2015
Total cost of revenue	$	65	$	233	$	136	$	418
Operating expenses	1,993		1,505		4,007		2,738
Net restructuring charges	$	2,058	$	1,738	$	4,143	$	3,156

During the nine months ended September 30, 2016 and September 30, 2015, the net restructuring accruals included severance charges related to employee reductions across functional areas as we continue to reduce costs, primarily within our sales and marketing, information technology and fulfillment functions. These charges were reduced by the reversal of restructuring accruals recorded in previous periods, as fewer employees received severance benefits than originally estimated. Other restructuring costs, which were expensed as incurred, included items such as information technology costs, employee and equipment moves, training and travel related to our restructuring activities.

Restructuring accruals of $2,648 as of September 30, 2016 and $3,864 as of December 31, 2015 are included in accrued liabilities in the consolidated balance sheets. The majority of the employee reductions are expected to be completed by the fourth quarter of 2016, and we expect most of the related severance payments to be paid by mid-2017, utilizing cash from operations. The remaining payments due under operating lease obligations will be paid by the end of 2016. As of September 30, 2016, approximately 25 employees had not yet started to receive severance benefits.

Accruals for our restructuring initiatives, summarized by year, were as follows:

(in thousands)	2014  initiatives			2015  initiatives			2016 initiatives			Total
Balance, December 31, 2015	$	176		$	3,688		$	—		$	3,864
Restructuring charges	—			78			3,792			3,870
Restructuring reversals	(111		)	(465		)	(90		)	(666		)
Payments	(65		)	(2,989		)	(1,366		)	(4,420		)
Balance, September 30, 2016	$	—		$	312		$	2,336		$	2,648
Cumulative amounts:
Restructuring charges	$	8,242		$	6,205		$	3,792		$	18,239
Restructuring reversals	(1,444		)	(923		)	(90		)	(2,457		)
Payments	(6,798		)	(4,970		)	(1,366		)	(13,134		)
Balance, September 30, 2016	$	—		$	312		$	2,336		$	2,648

21

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

The components of our restructuring accruals, by segment, were as follows:

	Employee severance benefits												Operating lease obligations
(in thousands)	Small Business Services			Financial Services			Direct Checks			Corporate			Small Business Services			Financial Services			Total
Balance, December 31, 2015	$	1,023		$	884		$	—		$	1,859		$	56		$	42		$	3,864
Restructuring charges	1,979			768			135			929			59			—			3,870
Restructuring reversals	(255		)	(50		)	(2		)	(359		)	—			—			(666		)
Payments	(1,457		)	(922		)	(85		)	(1,811		)	(103		)	(42		)	(4,420		)
Balance, September 30, 2016	$	1,290		$	680		$	48		$	618		$	12		$	—		$	2,648
Cumulative amounts(1):
Restructuring charges	$	7,704		$	5,027		$	171		$	4,940		$	344		$	53		$	18,239
Restructuring reversals	(1,455		)	(361		)	(4		)	(637		)	—			—			(2,457		)
Inter-segment transfer	41			(14		)	—			(27		)	—			—			—
Payments	(5,000		)	(3,972		)	(119		)	(3,658		)	(332		)	(53		)	(13,134		)
Balance, September 30, 2016	$	1,290		$	680		$	48		$	618		$	12		$	—		$	2,648

⁽¹⁾ Includes accruals related to our cost reduction initiatives for 2014 through 2016.

Note 10: Postretirement benefits

We have historically provided certain health care benefits for a portion of our retired U.S. employees. In addition to our retiree health care plan, we also have a supplemental executive retirement plan in the United States. Further information regarding our postretirement benefit plans can be found under the caption “Note 12: Postretirement benefits” in the Notes to Consolidated Financial Statements appearing in the 2015 Form 10-K.

Postretirement benefit income for each period consisted of the following components:

	Quarter Ended September 30,						Nine Months Ended September 30,
(in thousands)	2016			2015			2016			2015
Interest cost	$	780		$	859		$	2,339		$	2,578
Expected return on plan assets	(1,834		)	(1,958		)	(5,501		)	(5,875		)
Amortization of prior service credit	(355		)	(355		)	(1,066		)	(1,066		)
Amortization of net actuarial losses	949			780			2,848			2,340
Net periodic benefit income	$	(460	)	$	(674	)	$	(1,380	)	$	(2,023	)

22

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Note 11: Debt

Debt outstanding was comprised of the following:

(in thousands)	September 30, 2016			December 31, 2015
6.0% senior notes due November 15, 2020, principal amount	$	200,000		$	200,000
Less unamortized debt issuance costs	(1,906		)	(2,249		)
Cumulative change in fair value of hedged debt (Note 7)	(109		)	(4,842		)
6.0% senior notes, carrying value	197,985			192,909
Amount drawn on credit facility	418,000			434,000
Long-term portion of capital lease obligations	805			1,064
Long-term portion of debt	616,790			627,973
Capital lease obligations due within one year	951			1,045
Total debt	$	617,741		$	629,018

Our senior notes due in 2020 include covenants that place certain restrictions on the issuance of additional debt and limitations on certain liens. If our ratio of earnings before interest, taxes, depreciation and amortization (EBITDA) to interest expense, as defined in such instruments, falls below two to one, there would be additional limitations on our ability to issue additional debt. The notes due in 2020 also include limitations on our ability to issue redeemable stock and preferred stock, make loans and investments, and consolidate, merge or sell all or substantially all of our assets. Absent certain defined events of default under our debt instruments, and as long as our ratio of EBITDA to interest expense is in excess of two to one, our debt covenants do not restrict our ability to pay cash dividends at our current rate. There are currently no limitations on the amount of dividends and share repurchases under the terms of our credit facility agreement. However, if our leverage ratio, defined as total debt less unrestricted cash to EBITDA, should exceed 2.75 to one, there would be an annual limitation on the amount of dividends and share repurchases under the terms of this agreement.

In November 2012, we issued $200,000 of 6.0% senior notes maturing on November 15, 2020. The notes were issued via a private placement under Rule 144A of the Securities Act of 1933. These notes were subsequently registered with the SEC via a registration statement that became effective on April 3, 2013. Interest payments are due each May and November. The notes are guaranteed by certain of our subsidiaries and place a limitation on restricted payments, including share repurchases and increases in dividend levels. The limitation on restricted payments does not apply if the notes are upgraded to an investment-grade credit rating. Financial information for the guarantor subsidiaries can be found in Note 15. Proceeds from the offering, net of offering costs, were $196,340. These proceeds were used to retire our senior notes that were due in June 2015. In October 2016, we issued a notice to redeem all of these notes on November 15, 2016 at a redemption price of 103% of the principal amount. The fair value of these notes was $206,758 as of September 30, 2016, based on quoted prices that are directly observable. As discussed in Note 7, we entered into interest rate swaps to hedge these notes.

In March 2011, we issued $200,000 of 7.0% senior notes that were scheduled to mature on March 15, 2019. The notes were issued via a private placement under Rule 144A of the Securities Act of 1933. These notes were subsequently registered with the SEC via a registration statement that became effective on January 10, 2012. Proceeds from the offering, net of offering costs, were $196,195. These proceeds were used to retire a portion of our senior, unsecured notes due in 2012. In March 2015, we retired all of these notes, realizing a loss on early debt extinguishment of $8,917 during the nine months ended September 30, 2015, consisting of a contractual call premium and the write-off of related debt issuance costs. This retirement was funded utilizing our credit facility and a short-term bank loan that we have since repaid.

We had capital lease obligations of $1,756 as of September 30, 2016 and $2,109 as of December 31, 2015 related to information technology hardware. The lease obligations will be paid through August 2020. The related assets are included in property, plant and equipment in the consolidated balance sheets. Depreciation of the leased assets is included in depreciation expense in the consolidated statements of cash flows.

As of September 30, 2016, we had a $525,000 revolving credit facility, which is scheduled to expire in February 2019. Our quarterly commitment fee ranges from 0.20% to 0.40% based on our leverage ratio. As of September 30, 2016, $418,000 was drawn on our revolving credit facility at a weighted-average interest rate of 1.95%. As of December 31, 2015, $434,000

23

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

was drawn on our revolving credit facility at a weighted-average interest rate of 1.89%. In September 2016, we amended the credit agreement governing our credit facility to include a new term loan facility in the aggregate principal amount of $200,000 in order to retire our senior notes due in 2020, which we expect to redeem on November 15, 2016. The term loan facility will be fully drawn on the date that it is funded and amounts repaid may not be reborrowed. Interest will be calculated at a variable rate and will be paid quarterly. Aggregate principal payments of $21,250 will be due in 2017 and $26,250 will be due in 2018, with the remainder due in February 2019 at the expiration of the credit agreement. We may prepay the term loan in full or in part at our discretion.

All borrowings under our credit agreement are collateralized by substantially all of our personal and intangible property. The credit agreement governing our credit facility contains customary covenants regarding limits on levels of subsidiary indebtedness and capital expenditures, liens, investments, acquisitions, certain mergers, certain asset sales outside the ordinary course of business, and change in control as defined in the agreement. The agreement also contains financial covenants regarding our leverage ratio, interest coverage and liquidity.

In March 2015, we entered into a $75,000 short-term variable rate bank loan. Proceeds from this loan, net of related costs, were $74,880 and were used, along with a draw on our credit facility, to retire all $200,000 of our 7.0% senior notes that were scheduled to mature on March 15, 2019. During December 2015, we elected to repay this loan in full.

Daily average amounts outstanding under our credit facility and short-term borrowings were as follows:

(in thousands)	Nine Months Ended September 30, 2016			Year Ended December 31, 2015
Revolving credit facility:
Daily average amount outstanding	$	416,814		$	270,063
Weighted-average interest rate	1.91		%	1.66		%
Short-term bank loan:
Daily average amount outstanding	$	—		$	47,178
Weighted-average interest rate	—			1.59		%

As of September 30, 2016, amounts were available for borrowing under our revolving credit facility as follows:

(in thousands)	Total available
Revolving credit facility commitment	$	525,000
Amount drawn on revolving credit facility	(418,000		)
Outstanding letters of credit(1)	(12,795		)
Net available for borrowing as of September 30, 2016	$	94,205

⁽¹⁾ We use standby letters of credit to collateralize certain obligations related primarily to our self-insured workers’ compensation claims, as well as claims for environmental matters, as required by certain states. These letters of credit reduce the amount available for borrowing under our revolving credit facility.

Note 12:  Other commitments and contingencies

Indemnifications – In the normal course of business, we periodically enter into agreements that incorporate general indemnification language. These indemnifications encompass third-party claims arising from our products and services, including, without limitation, service failures, breach of security, intellectual property rights, governmental regulations and/or employment-related matters. Performance under these indemnities would generally be triggered by our breach of the terms of the contract. In disposing of assets or businesses, we often provide representations, warranties and/or indemnities to cover various risks, including, for example, unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition. We do not have the ability to estimate the potential liability from such indemnities because they relate to unknown conditions. While we do not believe that any liability under these indemnities would likely have a material adverse effect on our financial position, annual results of operations or

24

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

annual cash flows, inherent uncertainties exist regarding the scope and nature of such indemnities that could lead to material unfavorable outcomes. We have recorded liabilities for known indemnifications related to environmental matters.

Environmental matters – We are currently involved in environmental compliance, investigation and remediation activities at some of our current and former sites, primarily printing facilities of our Financial Services and Small Business Services segments that have been sold. Remediation costs are accrued on an undiscounted basis when the obligations are either known or considered probable and can be reasonably estimated. Remediation or testing costs that result directly from the sale of an asset and which we would not have otherwise incurred are considered direct costs of the sale of the asset. As such, they are included in our measurement of the carrying value of the asset sold.

Accruals for environmental matters were $3,329 as of September 30, 2016 and $5,952 as of December 31, 2015, primarily related to facilities that have been sold. These accruals are included in accrued liabilities and other non-current liabilities in the consolidated balance sheets. Accrued costs consist of direct costs of the remediation activities, primarily fees that will be paid to outside engineering and consulting firms. Although recorded accruals include our best estimates, our total costs cannot be predicted with certainty due to various factors such as the extent of corrective action that may be required, evolving environmental laws and regulations and advances in environmental technology. Where the available information is sufficient to estimate the amount of the liability, that estimate is used. Where the information is only sufficient to establish a range of probable liability and no point within the range is more likely than any other, the lower end of the range is recorded. We do not believe that the range of possible outcomes could have a material effect on our financial condition, results of operations or liquidity. The consolidated statement of comprehensive income for the nine months ended September 30, 2016 included a benefit from environmental matters of $1,759. During the quarter ended June 30, 2016, we reversed a portion of the liability for one of our sold facilities as we determined that it was no longer probable that a portion of the estimated environmental remediation costs for this location would be incurred. Environmental expense was $915 for the nine months ended September 30, 2015.

We purchased an insurance policy during 2002 that covers up to $10,000 of third-party pollution claims through 2032 at certain owned, leased and divested sites. We also purchased an insurance policy during 2009 that covers up to $15,000 of third-party pollution claims through April 2019. This policy covers liability for claims of bodily injury or property damage arising from pollution events at the covered facilities. The policy also provides remediation coverage should we be required by a governing authority to perform remediation activities at the covered sites. No accruals have been recorded in our consolidated financial statements for any of the events contemplated in these insurance policies. We do not anticipate significant net cash outlays for environmental matters during 2016.

Self-insurance – We are self-insured for certain costs, primarily workers' compensation claims and medical and dental benefits for active employees and those employees on long-term disability. The liabilities associated with these items represent our best estimate of the ultimate obligations for reported claims plus those incurred, but not reported, and totaled $6,766 as of September 30, 2016 and $6,457 as of December 31, 2015. These accruals are included in accrued liabilities and other non-current liabilities in the consolidated balance sheets. Our workers' compensation liability is accounted for on a present value basis. The difference between the discounted and undiscounted liability was not significant as of September 30, 2016 or December 31, 2015.

Our self-insurance liabilities are estimated, in part, by considering historical claims experience, demographic factors and other actuarial assumptions. The estimated accruals for these liabilities could be significantly affected if future events and claims differ from these assumptions and historical trends.

Litigation – On September 2, 2014, one of our suppliers filed a petition for binding arbitration under the Commercial Rules of the American Arbitration Association, alleging that it is entitled to additional payment from us under our reseller agreement and seeking damages of up to approximately $43,000. We did not record a liability for damages in connection with this matter in our consolidated balance sheets. In March 2016, the arbitrator rejected all of the supplier's claims and ruled in our favor.

Recorded liabilities for legal matters were not material to our financial position, results of operations or liquidity, and we do not believe that any of the currently identified claims or litigation will materially affect our financial position, results of operations or liquidity upon resolution. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, it may cause a material adverse impact on our financial position, results of operations or liquidity for the period in which the ruling occurs or in future periods.

25

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Note 13: Shareholders’ equity

We have an outstanding authorization from our board of directors to purchase up to 10,000 shares of our common stock. This authorization has no expiration date, and 233 shares remained available for purchase under this authorization as of September 30, 2016. During the nine months ended September 30, 2016, we repurchased 733 shares for $44,944.

In May 2016, our board of directors approved an additional authorization for the repurchase of up to $300,000 of our common stock, effective at the conclusion of our previous authorization. The additional authorization also has no expiration date.

Note 14: Business segment information

We operate three reportable business segments: Small Business Services, Financial Services and Direct Checks. Our business segments are generally organized by type of customer served and reflect the way we manage the company. Small Business Services promotes and sells products and services to small businesses via direct response mail and internet advertising; referrals from financial institutions, telecommunications clients and other partners; networks of distributors and independent dealers; a direct sales force that focuses on selling to and through major accounts; and an outbound telemarketing group. Financial Services' products and services are sold primarily through a direct sales force, which executes product and service supply contracts with our financial institution clients nationwide, including banks, credit unions and financial services companies. In the case of check supply contracts, once the financial institution relationship is established, consumers may submit their check orders through their financial institution or over the phone or internet. Direct Checks sells products and services directly to consumers using direct marketing, including print advertising and search engine marketing and optimization strategies. All three segments operate primarily in the United States. Small Business Services also has operations in Canada and portions of Europe.

Our product and service offerings are comprised of the following:

Checks – We remain one of the largest providers of checks in the United States. During 2015, checks represented 40.1% of our Small Business Services segment's revenue, 59.7% of our Financial Services segment's revenue and 84.6% of our Direct Checks segment's revenue.

Marketing solutions and other services – We offer products and services that help small businesses and/or financial institutions promote their businesses and acquire customers, as well as various other service offerings. Our Small Business Services segment offers services designed to fulfill the marketing and sales needs of small businesses, including logo and web design; hosting and other web services; search engine optimization; marketing programs, including email, mobile, social media and other self-service marketing solutions; and digital printing services. In addition, Small Business Services offers specialized services, including fraud protection and security, payroll services and electronic checks, as well as promotional solutions such as postcards, brochures, retail packaging supplies, apparel, greeting cards and business cards. Financial Services offers a suite of financial technology ("FinTech") solutions focused on enabling financial institutions to better manage the customer life cycle for their retail and commercial customers. These FinTech solutions include outsourced marketing campaign targeting and execution, digital channel onboarding, loyalty and rewards, technology-enabled treasury services, financial performance management, and fraud protection and security services. Our Direct Checks segment provides fraud protection and security services, as well as package insert programs under which companies' marketing materials are included in our check packages.

Forms – Our Small Business Services segment provides printed forms to small businesses, including deposit tickets, billing forms, work orders, job proposals, purchase orders, invoices and personnel forms. This segment also offers computer forms compatible with accounting software packages commonly used by small businesses. Forms sold by our Financial Services and Direct Checks segments include deposit tickets and check registers.

Accessories and other products – Small Business Services offers products designed to supply small business owners with the customized documents necessary to efficiently manage their business, including envelopes, office supplies, stamps and labels. Our Financial Services and Direct Checks segments offer checkbook covers and stamps.

26

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

The accounting policies of the segments are the same as those described in the Notes to Consolidated Financial Statements included in the 2015 Form 10-K. We allocate corporate costs for our shared services functions to our business segments, including costs of our executive management, human resources, supply chain, finance, information technology and legal functions. Generally, where costs incurred are directly attributable to a business segment, primarily within the areas of information technology, supply chain, finance and legal, those costs are charged directly to that segment. Because we use a shared services approach for many of our functions, certain costs are not directly attributable to a business segment. These costs are allocated to our business segments based on segment revenue, as revenue is a measure of the relative size and magnitude of each segment and indicates the level of corporate shared services consumed by each segment. Corporate assets are not allocated to the segments and consist of property, plant and equipment; internal-use software; and inventories and supplies related to our corporate shared services functions of manufacturing, information technology and real estate, as well as long-term investments.

We are an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations and the sharing of assets. Therefore, we do not represent that these segments, if operated independently, would report the operating income and other financial information shown.

The following is our segment information as of and for the quarters ended September 30, 2016 and 2015:

		Reportable Business Segments
(in thousands)		Small Business Services		Financial Services		Direct Checks		Corporate		Consolidated
Total revenue from external	2016	$	298,931	$	123,033	$	36,956	$	—	$	458,920
customers:	2015	288,966		110,894		39,956		—		439,816
Operating income:	2016	50,670		28,708		12,914		—		92,292
	2015	51,873		23,364		14,131		—		89,368
Depreciation and amortization	2016	13,315		8,876		868		—		23,059
expense:	2015	11,825		5,979		949		—		18,753
Total assets:	2016	1,075,661		434,374		160,624		270,489		1,941,148
	2015	990,282		270,421		161,636		267,718		1,690,057
Capital asset purchases:	2016	—		—		—		10,031		10,031
	2015	—		—		—		10,242		10,242

27

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

The following is our segment information as of and for the nine months ended September 30, 2016 and 2015:

		Reportable Business Segments
(in thousands)		Small Business Services		Financial Services		Direct Checks		Corporate		Consolidated
Total revenue from external	2016	$	877,384	$	374,511	$	116,965	$	—	$	1,368,860
customers:	2015	848,216		335,134		125,958		—		1,309,308
Operating income:	2016	150,776		84,467		40,640		—		275,883
	2015	149,545		69,280		44,713		—		263,538
Depreciation and amortization	2016	38,195		26,888		2,628		—		67,711
expense:	2015	33,265		17,760		3,406		—		54,431
Total assets:	2016	1,075,661		434,374		160,624		270,489		1,941,148
	2015	990,282		270,421		161,636		267,718		1,690,057
Capital asset purchases:	2016	—		—		—		32,215		32,215
	2015	—		—		—		29,549		29,549

Note 15: Supplemental guarantor financial information

Our long-term notes due in 2020 (Note 11), as well as obligations under our credit facility, are jointly and severally guaranteed on a full and unconditional basis, subject to the release provisions described herein, by certain 100%-owned subsidiaries. The subsidiary guarantees with respect to our long-term notes are subject to release upon the occurrence of certain events: the sale of all or substantially all of a subsidiary's assets, when the requirements for defeasance of the guaranteed securities have been satisfied, when the subsidiary is declared an unrestricted subsidiary, or upon satisfaction and discharge of the indenture.

The following supplemental condensed consolidating financial information reflects the summarized financial information of Deluxe Corporation, the guarantors on a combined basis and the non-guarantor subsidiaries on a combined basis. Separate financial statements of the guarantors are not presented because the guarantors are jointly, severally, fully and unconditionally liable under the guarantees, subject to the release provisions described herein, and we believe that the condensed consolidating financial statements presented are sufficient to provide an understanding of the financial position, results of operations and cash flows of the guarantors. During the quarter ended June 30, 2016, we identified an error in the balance sheet presentation of borrowings under our credit facility and the related asset for debt issuance costs. These amounts were previously presented as current items in our consolidated balance sheets, and we have determined that they should have been presented as non-current. This change also corrects the presentation of the cash flows associated with borrowings under our credit facility. Previously these cash flows were presented on a net basis. The change in the balance sheet presentation requires that they be presented on a gross basis. Prior period consolidated amounts, as well as those for Deluxe Corporation, have been revised to reflect these changes. Further information about the revision can be found in Note 1.

We are an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations and the sharing of assets. Therefore, we do not represent that the financial information presented is indicative of the financial position, results of operations or cash flows that the entities would have reported if they had operated independently. The condensed consolidating financial statements should be read in conjunction with our consolidated financial statements.

28

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Condensed Consolidating Balance Sheet

(Unaudited)

	September 30, 2016
(in thousands)	Deluxe Corporation		Guarantor subsidiaries		Non-guarantor subsidiaries		Eliminations			Total
ASSETS
Current assets:
Cash and cash equivalents	$	14,019	$	902	$	66,903	$	(1,759	)	$	80,065
Trade accounts receivable, net	—		109,326		8,435		—			117,761
Inventories and supplies	—		39,175		2,299		—			41,474
Funds held for customers	—		24,031		68,139		—			92,170
Other current assets	6,718		32,934		1,386		—			41,038
Total current assets	20,737		206,368		147,162		(1,759		)	372,508
Deferred income taxes	14,754		—		1,749		(14,754		)	1,749
Long-term investments	34,156		7,737		—		—			41,893
Property, plant and equipment, net	11,914		66,833		4,920		—			83,667
Assets held for sale	—		—		13,966		—			13,966
Intangibles, net	19,119		283,237		11,522		—			313,878
Goodwill	—		980,142		9,499		—			989,641
Investments in consolidated subsidiaries	1,395,804		108,954		—		(1,504,758		)	—
Intercompany receivable	23,164		—		—		(23,164		)	—
Other non-current assets	6,549		117,215		82		—			123,846
Total assets	$	1,526,197	$	1,770,486	$	188,900	$	(1,544,435	)	$	1,941,148
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	25,328	$	60,456	$	2,810	$	(1,759	)	$	86,835
Accrued liabilities	20,577		149,507		70,553		—			240,637
Long-term debt due within one year	906		—		45		—			951
Total current liabilities	46,811		209,963		73,408		(1,759		)	328,423
Long-term debt	616,697		—		93		—			616,790
Deferred income taxes	—		95,508		—		(14,754		)	80,754
Intercompany payable	—		22,494		670		(23,164		)	—
Other non-current liabilities	12,742		46,717		5,775		—			65,234
Total shareholders' equity	849,947		1,395,804		108,954		(1,504,758		)	849,947
Total liabilities and shareholders' equity	$	1,526,197	$	1,770,486	$	188,900	$	(1,544,435	)	$	1,941,148

29

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Condensed Consolidating Balance Sheet

(Unaudited)

	December 31, 2015
(in thousands)	Deluxe Corporation		Guarantor subsidiaries		Non-guarantor subsidiaries		Eliminations			Total
ASSETS
Current assets:
Cash and cash equivalents	$	5,187	$	940	$	56,422	$	(122	)	$	62,427
Trade accounts receivable, net	—		115,951		7,703		—			123,654
Inventories and supplies	—		39,758		2,198		—			41,956
Funds held for customers	—		—		53,343		—			53,343
Other current assets	7,230		32,765		2,610		—			42,605
Total current assets	12,417		189,414		122,276		(122		)	323,985
Deferred income taxes	13,498		—		1,238		(13,498		)	1,238
Long-term investments	34,304		7,387		—		—			41,691
Property, plant and equipment, net	10,111		71,017		4,604		—			85,732
Assets held for sale	—		—		13,969		—			13,969
Intangibles, net	9,066		273,051		3,194		—			285,311
Goodwill	—		974,973		1,442		—			976,415
Investments in consolidated subsidiaries	1,248,549		81,099		—		(1,329,648		)	—
Intercompany receivable	99,506		—		—		(99,506		)	—
Other non-current assets	5,861		107,767		184		—			113,812
Total assets	$	1,433,312	$	1,704,708	$	146,907	$	(1,442,774	)	$	1,842,153
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	15,625	$	69,809	$	2,263	$	(122	)	$	87,575
Accrued liabilities	23,567		148,279		56,577		—			228,423
Long-term debt due within one year	1,026		—		19		—			1,045
Total current liabilities	40,218		218,088		58,859		(122		)	317,043
Long-term debt	627,942		—		31		—			627,973
Deferred income taxes	—		94,574		—		(13,498		)	81,076
Intercompany payable	—		98,365		1,141		(99,506		)	—
Other non-current liabilities	20,083		45,132		5,777		—			70,992
Total shareholders' equity	745,069		1,248,549		81,099		(1,329,648		)	745,069
Total liabilities and shareholders' equity	$	1,433,312	$	1,704,708	$	146,907	$	(1,442,774	)	$	1,842,153

30

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Condensed Consolidating Statement of Comprehensive Income

(Unaudited)

	Quarter Ended September 30, 2016
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Product revenue	$	—		$	350,454		$	14,226		$	—		$	364,680
Service revenue	36,078			89,355			6,006			(37,199		)	94,240
Total revenue	36,078			439,809			20,232			(37,199		)	458,920
Cost of products	—			(127,210		)	(6,418		)	—			(133,628		)
Cost of services	(40,487		)	(30,363		)	(1,934		)	40,142			(32,642		)
Total cost of revenue	(40,487		)	(157,573		)	(8,352		)	40,142			(166,270		)
Gross profit	(4,409		)	282,236			11,880			2,943			292,650
Operating expenses	—			(188,768		)	(8,647		)	(2,943		)	(200,358		)
Operating (loss) income	(4,409		)	93,468			3,233			—			92,292
Interest expense	(5,019		)	(4,206		)	(1		)	4,371			(4,855		)
Other income	3,994			919			200			(4,371		)	742
(Loss) income before income taxes	(5,434		)	90,181			3,432			—			88,179
Income tax benefit (provision)	4,592			(33,138		)	(970		)	—			(29,516		)
(Loss) income before equity in earnings of consolidated subsidiaries	(842		)	57,043			2,462			—			58,663
Equity in earnings of consolidated subsidiaries	59,505			2,462			—			(61,967		)	—
Net income	$	58,663		$	59,505		$	2,462		$	(61,967	)	$	58,663
Comprehensive income	$	57,824		$	58,614		$	1,212		$	(59,826	)	$	57,824

31

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Condensed Consolidating Statement of Comprehensive Income

(Unaudited)

	Quarter Ended September 30, 2015
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Product revenue	$	—		$	345,820		$	15,961		$	—		$	361,781
Service revenue	28,005			72,419			6,709			(29,098		)	78,035
Total revenue	28,005			418,239			22,670			(29,098		)	439,816
Cost of products	—			(124,910		)	(7,684		)	—			(132,594		)
Cost of services	(29,218		)	(24,016		)	(2,272		)	28,798			(26,708		)
Total cost of revenue	(29,218		)	(148,926		)	(9,956		)	28,798			(159,302		)
Gross profit	(1,213		)	269,313			12,714			(300		)	280,514
Operating expenses	—			(182,823		)	(8,623		)	300			(191,146		)
Operating (loss) income	(1,213		)	86,490			4,091			—			89,368
Interest expense	(4,126		)	(4,126		)	—			3,865			(4,387		)
Other income	3,737			746			301			(3,865		)	919
(Loss) income before income taxes	(1,602		)	83,110			4,392			—			85,900
Income tax benefit (provision)	3,382			(31,341		)	(1,024		)	—			(28,983		)
(Loss) income before equity in earnings of consolidated subsidiaries	1,780			51,769			3,368			—			56,917
Equity in earnings of consolidated subsidiaries	55,137			3,368			—			(58,505		)	—
Net income	$	56,917		$	55,137		$	3,368		$	(58,505	)	$	56,917
Comprehensive income	$	52,680		$	50,857		$	(1,181	)	$	(49,676	)	$	52,680

32

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Condensed Consolidating Statement of Comprehensive Income

(Unaudited)

	Nine Months Ended September 30, 2016
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Product revenue	$	—		$	1,048,288		$	42,398		$	—		$	1,090,686
Service revenue	103,173			263,292			18,241			(106,532		)	278,174
Total revenue	103,173			1,311,580			60,639			(106,532		)	1,368,860
Cost of products	—			(372,165		)	(18,996		)	—			(391,161		)
Cost of services	(115,810		)	(95,125		)	(5,600		)	117,289			(99,246		)
Total cost of revenue	(115,810		)	(467,290		)	(24,596		)	117,289			(490,407		)
Gross profit	(12,637		)	844,290			36,043			10,757			878,453
Operating expenses	—			(566,081		)	(25,732		)	(10,757		)	(602,570		)
Operating (loss) income	(12,637		)	278,209			10,311			—			275,883
Interest expense	(14,920		)	(11,171		)	(2		)	10,812			(15,281		)
Other income	10,302			1,786			59			(10,812		)	1,335
(Loss) income before income taxes	(17,255		)	268,824			10,368			—			261,937
Income tax benefit (provision)	11,431			(95,924		)	(2,290		)	—			(86,783		)
(Loss) income before equity in earnings of consolidated subsidiaries	(5,824		)	172,900			8,078			—			175,154
Equity in earnings of consolidated subsidiaries	180,978			8,078			—			(189,056		)	—
Net income	$	175,154		$	180,978		$	8,078		$	(189,056	)	$	175,154
Comprehensive income	$	180,298		$	185,966		$	11,989		$	(197,955	)	$	180,298

33

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Condensed Consolidating Statement of Comprehensive Income

(Unaudited)

	Nine Months Ended September 30, 2015
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Product revenue	$	—		$	1,018,518		$	57,174		$	—		$	1,075,692
Service revenue	83,116			217,412			19,638			(86,550		)	233,616
Total revenue	83,116			1,235,930			76,812			(86,550		)	1,309,308
Cost of products	—			(355,690		)	(28,900		)	—			(384,590		)
Cost of services	(89,348		)	(78,770		)	(6,192		)	90,978			(83,332		)
Total cost of revenue	(89,348		)	(434,460		)	(35,092		)	90,978			(467,922		)
Gross profit	(6,232		)	801,470			41,720			4,428			841,386
Operating expenses	—			(544,450		)	(28,970		)	(4,428		)	(577,848		)
Operating (loss) income	(6,232		)	257,020			12,750			—			263,538
Loss on early debt extinguishment	(8,917		)	—			—			—			(8,917		)
Interest expense	(14,727		)	(10,121		)	(1		)	9,527			(15,322		)
Other income	9,680			1,355			666			(9,527		)	2,174
(Loss) income before income taxes	(20,196		)	248,254			13,415			—			241,473
Income tax benefit (provision)	10,671			(89,743		)	(3,481		)	—			(82,553		)
(Loss) income before equity in earnings of consolidated subsidiaries	(9,525		)	158,511			9,934			—			158,920
Equity in earnings of consolidated subsidiaries	168,445			9,934			—			(178,379		)	—
Net income	$	158,920		$	168,445		$	9,934		$	(178,379	)	$	158,920
Comprehensive income	$	150,190		$	159,587		$	269		$	(159,856	)	$	150,190

34

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Condensed Consolidating Statement of Cash Flows

(Unaudited)

	Nine Months Ended September 30, 2016
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Net cash provided by operating activities	$	3,734		$	196,493		$	9,531		$	(1,637	)	$	208,121
Cash flows from investing activities:
Purchases of capital assets	(18,463		)	(11,777		)	(1,975		)	—			(32,215		)
Payments for acquisitions, net of cash acquired	—			(64,637		)	—			—			(64,637		)
Proceeds from company-owned life insurance policies	4,123			—			—			—			4,123
Other	(290		)	965			1,655			—			2,330
Net cash used by investing activities	(14,630		)	(75,449		)	(320		)	—			(90,399		)
Cash flows from financing activities:
Proceeds from issuing long-term debt	169,000			—			—			—			169,000
Payments on long-term debt, including costs of debt reacquisition	(185,849		)	—			(24		)	—			(185,873		)
Proceeds from issuing shares under employee plans	6,861			—			—			—			6,861
Employee taxes paid for shares withheld	(2,333		)	—			—			—			(2,333		)
Payments for common shares repurchased	(44,944		)	—			—			—			(44,944		)
Cash dividends paid to shareholders	(44,127		)	—			—			—			(44,127		)
Advances from (to) consolidated subsidiaries	121,653			(119,981		)	(1,672		)	—			—
Other	(533		)	(1,101		)	—			—			(1,634		)
Net cash provided (used) by financing activities	19,728			(121,082		)	(1,696		)	—			(103,050		)
Effect of exchange rate change on cash	—			—			2,966			—			2,966
Net change in cash and cash equivalents	8,832			(38		)	10,481			(1,637		)	17,638
Cash and cash equivalents, beginning of year	5,187			940			56,422			(122		)	62,427
Cash and cash equivalents, end of period	$	14,019		$	902		$	66,903		$	(1,759	)	$	80,065

35

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Condensed Consolidating Statement of Cash Flows

(Unaudited)

	Nine Months Ended September 30, 2015
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Net cash (used) provided by operating activities	$	(820	)	$	205,987		$	10,852		$	3,129		$	219,148
Cash flows from investing activities:
Purchases of capital assets	(1,317		)	(26,094		)	(2,138		)	—			(29,549		)
Payments for acquisitions, net of cash acquired	(26		)	(50,907		)	—			—			(50,933		)
Proceeds from company-owned life insurance policies	3,973			—			—			—			3,973
Other	(387		)	1,182			10			—			805
Net cash provided (used) by investing activities	2,243			(75,819		)	(2,128		)	—			(75,704		)
Cash flows from financing activities:
Proceeds from short-term borrowings	50,000			—			—			—			50,000
Proceeds from issuing long-term debt	276,500			—			—			—			276,500
Payments on long-term debt, including costs of debt reacquisition	(375,279		)	—			(12		)	—			(375,291		)
Proceeds from issuing shares under employee plans	5,492			—			—			—			5,492
Excess tax benefit from share-based employee awards	1,816			—			—			—			1,816
Employee taxes paid for shares withheld	(1,236		)	—			—			—			(1,236		)
Payments for common shares repurchased	(46,996		)	—			—			—			(46,996		)
Cash dividends paid to shareholders	(44,965		)	—			—			—			(44,965		)
Advances from (to) consolidated subsidiaries	132,878			(133,077		)	199			—			—
Other	(136		)	(92		)	(150		)	—			(378		)
Net cash (used) provided by financing activities	(1,926		)	(133,169		)	37			—			(135,058		)
Effect of exchange rate change on cash	—			—			(7,032		)	—			(7,032		)
Net change in cash and cash equivalents	(503		)	(3,001		)	1,729			3,129			1,354
Cash and cash equivalents, beginning of year	8,335			4,342			52,193			(3,329		)	61,541
Cash and cash equivalents, end of period	$	7,832		$	1,341		$	53,922		$	(200	)	$	62,895

36

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Note 16: Subsequent events

In October 2016, we issued a notice to redeem all $200,000 of our senior notes due in 2020 on November 15, 2016 at a redemption price of 103% of the principal amount. We plan to utilize borrowings under our recently expanded credit facility to fund the redemption (see Note 11). In conjunction with the redemption, we plan to terminate our $200,000 of interest rate swaps (see Note 7).

In October 2016, we acquired selected assets of Data Support Systems, Inc. for aggregate estimated cash payments of $21,000, subject to post-closing adjustments, and including estimated contingent consideration. Data Support Systems is a provider of image-based software for payments reconciliation and back-office case management and will be included in our Financial Services segment. The allocation of the purchase price to the assets acquired and liabilities assumed has not yet been determined.

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

EXECUTIVE OVERVIEW

We provide a suite of customer life cycle management solutions that help our customers acquire and engage their customers across multiple channels. To promote and sell a wide range of products and services, we use printed and electronic marketing; a direct sales force; referrals from financial institutions, telecommunication clients and other partners; purchased search results from online search engines; and networks of distributors and independent dealers. Our Small Business Services segment provides products and services to approximately 4.5 million small business customers and our Direct Checks segment has provided products and services to more than six million consumers. Through our Financial Services segment, we provide products and services to approximately 5,100 financial institution clients. We operate primarily in the United States. Small Business Services also has operations in Canada and portions of Europe. Our product and service offerings are comprised of the following:

Checks – We remain one of the largest providers of checks in the United States. During 2015, checks represented 40.1% of our Small Business Services segment's revenue, 59.7% of our Financial Services segment's revenue and 84.6% of our Direct Checks segment's revenue.

Marketing solutions and other services – We offer products and services that help small businesses and/or financial institutions promote their businesses and acquire customers, as well as various other service offerings. Our Small Business Services segment offers services designed to fulfill the marketing and sales needs of small businesses, including logo and web design; hosting and other web services; search engine optimization; marketing programs, including email, mobile, social media and other self-service marketing solutions; and digital printing services. In addition, Small Business Services offers specialized services, including fraud protection and security, payroll services and electronic checks, as well as promotional solutions such as postcards, brochures, retail packaging supplies, apparel, greeting cards and business cards. Financial Services offers a suite of financial technology ("FinTech") solutions focused on enabling financial institutions to better manage the customer life cycle for their retail and commercial customers. These FinTech solutions include outsourced marketing campaign targeting and execution, digital channel onboarding, loyalty and rewards, technology-enabled treasury services, financial performance management, and fraud protection and security services. Our Direct Checks segment provides fraud protection and security services, as well as package insert programs under which companies' marketing materials are included in our check packages.

Forms – Our Small Business Services segment is a leading provider of printed forms to small businesses, including deposit tickets, billing forms, work orders, job proposals, purchase orders, invoices and personnel forms. This segment also offers computer forms compatible with accounting software packages commonly used by small businesses. Forms sold by our Financial Services and Direct Checks segments include deposit tickets and check registers.

Accessories and other products – Small Business Services offers products designed to provide small business owners with the customized documents necessary to efficiently manage their business, including envelopes, office supplies, stamps and labels. Our Financial Services and Direct Checks segments offer checkbook covers and stamps.

Throughout the past several years, we have focused on opportunities to increase revenue, while maintaining strong operating margins. These opportunities have included new product and service offerings, brand awareness and positioning initiatives, investing in technology for our service offerings, enhancing our internet capabilities, improving customer

37

segmentation, adding new small business customers, and reducing costs. In addition, we invested in various acquisitions that extend the range of products and services we offer to our customers, primarily marketing solutions and other services offerings. Information about our acquisitions can be found under the captions “Note 6: Acquisitions” and "Note 16: Subsequent events" of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report and under the caption "Note 5: Acquisitions" of the Notes to Consolidated Financial Statements appearing in our Annual Report on Form 10-K for the year ended December 31, 2015 (the "2015 Form 10-K"). During the remainder of 2016, we plan to continue our focus in these areas, with an emphasis on profitable revenue growth and increasing the mix of marketing solutions and other services revenue. We also plan to continue small-to-medium-sized acquisitions that complement our large customer bases, with a focus on marketing solutions and other services.

Earnings for the first nine months of 2016, as compared to the first nine months of 2015, benefited from price increases and continuing initiatives to reduce our cost structure, primarily within our sales, marketing and fulfillment organizations. These increases in earnings were partially offset by volume reductions for both personal and business checks, due primarily to the continuing decline in check usage, as well as increased investments in revenue growth opportunities.

Certain amounts included in our consolidated balance sheet as of December 31, 2015 and our consolidated statement of cash flows for the first nine months of 2015 have been revised to correct the presentation of borrowings under our credit facility and the related asset for debt issuance costs. Further information can be found under the caption “Note 1: Consolidated financial statements” of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report.

Our Strategies

Details concerning our strategies were provided under the caption "Business Segments" appearing in Item 1 of the 2015 Form 10-K. We made no significant changes to our strategies during the first nine months of 2016.

Consistent with our strategies, during the first nine months of 2016, we acquired selected assets of several businesses and the outstanding common stock of one business in our Small Business Services segment. Further information regarding these acquisitions can be found under the captions "Note 6: Acquisitions" and "Note 16: Subsequent events" of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report.

Cost Reduction Initiatives

As discussed in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of the 2015 Form 10-K, we anticipated that we would realize net cost reductions of approximately $50 million in 2016, as compared to our 2015 results of operations. We are currently on track to realize these cost reductions, primarily from our sales, marketing and fulfillment organizations. Approximately 70% of these savings are expected to impact selling, general and administrative (SG&A) expense, with the remaining 30% affecting cost of revenue.

Outlook for 2016

We anticipate that consolidated revenue will be between $1.850 billion and $1.860 billion for 2016, compared to $1.773 billion for 2015. In Small Business Services, we expect revenue to increase between 4% and 5% compared to 2015 revenue of $1.152 billion. Volume declines in core business products and the negative impact of foreign exchange rates are expected to be more than offset by growth in our online, dealer and major accounts channels, price increases, and growth in our marketing solutions and other services offerings, as well as the impact of continued small tuck-in acquisitions. In Financial Services, we expect revenue to increase between 9% and 10% compared to 2015 revenue of $455.4 million. We expect continued growth in marketing solutions and other services, including incremental revenue from the acquisitions of Datamyx in October 2015 and FISC Solutions in December 2015, as well as growth in Wausau Financial Systems and Deluxe Rewards revenue and the impact of small tuck-in acquisitions. We expect these revenue increases to be partially offset by year-over-year secular check order declines of approximately 4%, as well as the impact of expected contract renewal allowances. In Direct Checks, we expect revenue to decline approximately 8%, compared to 2015 revenue of $165.5 million, driven primarily by secular check order volume declines resulting from reduced check usage.

We expect that 2016 diluted earnings per share will be between $4.78 and $4.83, including charges of $0.17 per share related to a loss on early debt extinguishment we expect in the fourth quarter of 2016, as well as restructuring costs and transaction costs related to acquisitions. This compares to $4.36 for 2015, which included total charges of $0.23 per share related to the loss on early debt extinguishment in the first quarter of 2015, as well as restructuring costs and transaction costs related to acquisitions. We expect that the benefits of our cost reduction activities will be partially offset by a continued

38

sluggish economy and increases in medical expenses, material costs and delivery rates, as well as continued investments in revenue growth opportunities, including brand awareness, marketing solutions and other services offers, and enhanced internet capabilities. We estimate that our annual effective tax rate for 2016 will be approximately 33%, consistent with 33.3% for 2015.

We anticipate that net cash provided by operating activities will be between $315 million and $320 million in 2016, compared to $310 million in 2015, driven by stronger operating performance and lower interest payments, partially offset by higher income tax, contract acquisition and employee medical payments. We anticipate contract acquisition payments of approximately $25 million in 2016, and we estimate that capital spending will be approximately $43 million in 2016, as we continue to invest in key revenue growth initiatives and order fulfillment and information technology infrastructure.

We believe that cash generated by operating activities, along with availability under our credit facility, will be sufficient to support our operations for the next 12 months, including dividend payments, capital expenditures, required interest payments, and periodic share repurchases, as well as possible small-to-medium-sized acquisitions. We expect to maintain a disciplined approach to capital deployment that focuses on our need to continue investing in initiatives to drive revenue growth, including small-to-medium-sized acquisitions and continued expansion of our distributor and major accounts channels. We anticipate that our board of directors will maintain our current dividend level. However, dividends are approved by the board of directors on a quarterly basis, and thus are subject to change. As of September 30, 2016, $94.2 million was available for borrowing under our revolving credit facility. To the extent we generate excess cash, we plan to reduce the amount outstanding under our credit facility. In September 2016, we amended the credit agreement governing our credit facility to provide a new term loan facility in the aggregate principal amount of $200.0 million. On November 15, 2016, we expect to use this term loan, as needed, to redeem our remaining senior notes of $200.0 million at a redemption price of 103% of the principal amount. This redemption is expected to result in a loss on early debt extinguishment of approximately $0.11 per diluted share in the fourth quarter of 2016. In conjunction with the redemption, we plan to terminate our $200.0 million of interest rate swaps. We believe our increasing cash flow, strong balance sheet and flexible capital structure position us well to continue advancing our transformation.

BUSINESS CHALLENGES/MARKET RISKS

Information regarding business challenges/market risks was provided in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of the 2015 Form 10-K. There were no significant changes in these items during the first nine months of 2016.

CONSOLIDATED RESULTS OF OPERATIONS

Consolidated Revenue

	Quarter Ended September 30,						Nine Months Ended September 30,
(in thousands, except per order amounts)	2016		2015		Change		2016		2015		Change
Total revenue	$	458,920	$	439,816	4.3	%	$	1,368,860	$	1,309,308	4.5	%
Orders(1)	12,912		13,198		(2.2	%)	39,173		40,110		(2.3	%)
Revenue per order	$	35.54	$	33.32	6.7	%	$	34.94	$	32.64	7.0	%

⁽¹⁾ Orders is our company-wide measure of volume and includes both products and services.

The increase in total revenue for the third quarter and first nine months of 2016, as compared to the same periods in 2015, was primarily due to growth in marketing solutions and other services revenue of $21 million for the third quarter of 2016 and $65 million for the first nine months of 2016, including incremental revenue from businesses acquired during 2016 and 2015. Information regarding our acquisitions can be found under the caption “Note 6: Acquisitions” of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report and under the caption "Note 5: Acquisitions" of the Notes to Consolidated Financial Statements appearing in the 2015 Form 10-K. In addition, revenue benefited from previous price increases. These revenue increases were partially offset by lower order volume for both personal and business checks, as well as contract renewal allowances within Financial Services.

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Service revenue represented 20.3% of total revenue for the first nine months of 2016 and 17.8% for the first nine months of 2015. As such, the majority of our revenue is generated by product sales. We do not manage our business based on product versus service revenue. Instead, we analyze our products and services based on the following categories:

	Quarter Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Checks	46.9	%	49.1	%	47.8	%	50.4	%
Marketing solutions and other services	33.5	%	30.1	%	32.5	%	29.0	%
Forms	11.8	%	12.1	%	11.6	%	12.1	%
Accessories and other products	7.8	%	8.7	%	8.1	%	8.5	%
Total revenue	100.0	%	100.0	%	100.0	%	100.0	%

The number of orders decreased for the third quarter and first nine months of 2016, as compared to the same periods in 2015, due primarily to the continuing decline in check and forms usage, partially offset by growth in marketing solutions and other services, including the impact of acquisitions in 2016 and 2015. Revenue per order increased for the third quarter and first nine months of 2016, as compared to the same periods in 2015, primarily due to the benefit of previous price increases and favorable product and service mix, partially offset by the impact of Financial Services contract renewal allowances.

Consolidated Cost of Revenue

	Quarter Ended September 30,								Nine Months Ended September 30,
(in thousands)	2016			2015			Change		2016			2015			Change
Total cost of revenue	$	166,270		$	159,302		4.4	%	$	490,407		$	467,922		4.8	%
Total cost of revenue as a percentage of total revenue	36.2		%	36.2		%	—		35.8		%	35.7		%	0.1 pts.

Cost of revenue consists primarily of raw materials used to manufacture our products, shipping and handling costs, third-party costs for outsourced products and services, payroll and related expenses, information technology costs, depreciation and amortization of assets used in the production process and in support of our service offerings, and related overhead.

The increase in total cost of revenue for the third quarter and first nine months of 2016, as compared to the same periods in 2015, was primarily attributable to the growth in revenue, including an increase in outsourced product costs of $2 million for the third quarter of 2016 and $13 million for the first nine months of 2016, primarily resulting from investments to expand our distributor and major accounts channels. In addition, the businesses acquired in 2015 in our Financial Services segment incurred incremental costs of approximately $4 million for the third quarter of 2016 and $13 million for the first nine months of 2016, and delivery rates and material costs increased in 2016. Partially offsetting these increases in total cost of revenue were the impact of lower order volume for both personal and business checks, as well as manufacturing efficiencies and other benefits resulting from our continued cost reduction initiatives of approximately $4 million for the third quarter of 2016 and $12 million for the first nine months of 2016. In addition, during the first nine months of 2016, we reduced by $2 million a liability for environmental remediation costs related to a manufacturing facility which we previously sold.

Consolidated Selling, General & Administrative Expense

	Quarter Ended September 30,								Nine Months Ended September 30,
(in thousands)	2016			2015			Change		2016			2015			Change
SG&A expense	$	198,365		$	189,641		4.6	%	$	598,563		$	575,110		4.1	%
SG&A expense as a percentage of total revenue	43.2		%	43.1		%	0.1 pts.		43.7		%	43.9		%	(0.2) pts.

The increase in SG&A expense for the third quarter and first nine months of 2016, as compared to the same periods in 2015, was driven primarily by incremental operating expenses of the businesses we acquired in 2015 in our Financial Services segment of approximately $7 million for the third quarter of 2016 and $21 million for the first nine months of 2016, as well as investments in revenue growth opportunities, including investments to expand our major accounts channel. These increases were partially offset by various expense reduction initiatives of approximately $8 million for the third quarter of 2016 and $21

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million for the first nine months of 2016, primarily within our sales and marketing organizations, as well as lower incentive compensation expense.

Net Restructuring Charges

	Quarter Ended September 30,						Nine Months Ended September 30,
(in thousands)	2016		2015		Change		2016		2015		Change
Net restructuring charges	$	1,993	$	1,505	$	488	$	4,007	$	2,738	$	1,269

We recorded net restructuring charges related to the cost reduction initiatives discussed under ExecutiveOverview. The net charges for each period relate primarily to costs of our restructuring activities, such as employee severance benefits, information technology costs, employee and equipment moves, training and travel. Further information can be found under Restructuring Costs.

Loss on Early Debt Extinguishment

	Quarter Ended September 30,						Nine Months Ended September 30,
(in thousands)	2016		2015		Change		2016		2015		Change
Loss on early debt extinguishment	$	—	$	—	$	—	$	—	$	8,917	$	(8,917	)

During the first quarter of 2015, we retired all $200.0 million of our 7.0% senior notes due in March 2019, realizing a pre-tax loss of $8.9 million, consisting of a contractual call premium and the write-off of related debt issuance costs. We funded the retirement utilizing our credit facility and a short-term bank loan that we have since repaid. On November 15, 2016, we expect to redeem all $200.0 million of our senior notes due in 2020 at a redemption price of 103% of the principal amount. This redemption is expected to result in a loss on early debt extinguishment of approximately $0.11 per diluted share in the fourth quarter of 2016.

Interest Expense

	Quarter Ended September 30,								Nine Months Ended September 30,
(in thousands)	2016			2015			Change		2016			2015			Change
Interest expense	$	4,855		$	4,387		10.7	%	$	15,281		$	15,322		(0.3	%)
Weighted-average debt outstanding	613,244			516,582			18.7	%	618,644			533,940			15.9	%
Weighted-average interest rate	3.0		%	2.9		%	0.1 pts.		3.0		%	3.4		%	(0.4) pts.

The increase in interest expense for the third quarter of 2016, as compared to the third quarter of 2015, was primarily due to our higher weighted-average debt level in 2016 and the slight increase in our weighted-average interest rate.

The slight decrease in interest expense for the first nine months of 2016, as compared to the first nine months of 2015, was driven by changes in our debt structure. In March 2015, we retired $200.0 million of long-term debt with an interest rate of 7.0%. We utilized our credit facility and a short-term bank loan, which we have since repaid, to fund this redemption. Amounts outstanding under our credit facility carried a weighted-average interest rate of 1.9% during the first nine months of 2016. Partially offsetting the decrease in interest expense resulting from our lower weighted-average interest rate, was our higher weighted-average debt level in 2016.

Income Tax Provision

	Quarter Ended September 30,								Nine Months Ended September 30,
(in thousands)	2016			2015			Change		2016			2015			Change
Income tax provision	$	29,516		$	28,983		1.8	%	$	86,783		$	82,553		5.1	%
Effective income tax rate	33.5		%	33.7		%	(0.2) pts.		33.1		%	34.2		%	(1.1) pts.

The decrease in our effective tax rate for the third quarter and first nine months of 2016, as compared to the same periods in 2015, was primarily due to the adoption of Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which reduced income tax expense $0.2 million for the third quarter of 2016 and $1.7 million for the first nine months of 2016. This resulted in a reduction in our effective income tax rate of 0.3 points for the third

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quarter of 2016 and 0.7 points for the first nine months of 2016. Further information regarding the adoption of this accounting standard can be found under the caption "Note 2: New accounting pronouncements" of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report. In addition, our effective tax rate for the third quarter and first nine months of 2016 included the benefit of the federal research and development credit, which we were not able to record in the same periods in 2015, as legislation extending the credit had not yet been enacted. Partially offsetting these decreases in our effective income tax rate for the third quarter of 2016 were a number of individually minor items which increased our effective income tax rate. We expect that our annual effective tax rate for 2016 will be approximately 33%.

RESTRUCTURING COSTS

We have recorded expenses related to our restructuring activities, including accruals consisting primarily of employee severance benefits, as well as costs that are expensed when incurred, including information technology costs, employee and equipment moves, training and travel. Our restructuring activities are driven by our cost reduction initiatives and include employee reductions in various functional areas, as well as the closing of facilities. During the first nine months of 2016, we closed a call center, a fulfillment facility and a sales office. During 2015, we closed two call centers, a sales office, a warehouse, a fulfillment facility and one facility that contained both fulfillment and call center functions. Restructuring costs have been reduced by the reversal of severance accruals when fewer employees receive severance benefits than originally estimated.

Net restructuring charges for each period were as follows:

	Quarter Ended September 30,						Nine Months Ended September 30,
(in thousands, except number of employees)	2016			2015			2016			2015
Severance accruals	$	1,824		$	1,443		$	3,870		$	3,493
Severance reversals	(198		)	(282		)	(666		)	(976		)
Operating lease obligations	—			88			—			88
Net restructuring accruals	1,626			1,249			3,204			2,605
Other costs	432			489			939			551
Net restructuring charges	$	2,058		$	1,738		$	4,143		$	3,156
Number of employees included in severance accruals	55			50			120			200

The majority of the employee reductions included in our restructuring accruals are expected to be completed by the fourth quarter of 2016, and we expect most of the related severance payments to be paid by mid-2017, utilizing cash from operations.

As a result of our employee reductions and facility closings, we expect to realize cost savings of approximately $3 million in total cost of revenue and $11 million in SG&A expense in 2016, in comparison to our 2015 results of operations, which represents a portion of the estimated $50 million of total net cost reductions we expect to realize in 2016. Expense reductions consist primarily of labor and facility costs. Information about the other initiatives driving our cost savings can be found in Executive Overview.

Further information regarding our restructuring charges can be found under the caption “Note 9: Restructuring charges” of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report.

SEGMENT RESULTS

Additional financial information regarding our business segments appears under the caption “Note 14: Business segment information” of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report.

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Small Business Services

This segment's products and services are promoted through direct response mail and internet advertising; referrals from financial institutions, telecommunications clients and other partners; networks of distributors and independent dealers; a growing direct sales force that focuses on selling to and through major accounts; and an outbound telemarketing group. Results for this segment were as follows:

	Quarter Ended September 30,								Nine Months Ended September 30,
(in thousands)	2016			2015			Change		2016			2015			Change
Total revenue	$	298,931		$	288,966		3.4	%	$	877,384		$	848,216		3.4	%
Operating income	50,670			51,873			(2.3	%)	150,776			149,545			0.8	%
Operating margin	17.0		%	18.0		%	(1.0) pts.		17.2		%	17.6		%	(0.4) pts.

The increase in total revenue for the third quarter and first nine months of 2016, as compared to the same periods in 2015, was due primarily to growth in marketing solutions and other services revenue of $9 million for the third quarter of 2016 and $26 million for the first nine months of 2016, including incremental revenue from businesses acquired in 2016 and 2015. Information about our acquisitions can be found under the caption “Note 6: Acquisitions” of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report and under the caption "Note 5: Acquisitions" of the Notes to Consolidated Financial Statements appearing in the 2015 Form 10-K. In addition, revenue benefited from previous price increases. These increases in revenue were partially offset by a decrease in business check and forms volume, as well as an unfavorable currency exchange rate impact of $3 million for the first nine months of 2016.

The decrease in operating income for the third quarter of 2016, as compared to the third quarter of 2015, was primarily due to increased investments in revenue growth opportunities, including investments to expand our major accounts channel and brand awareness initiatives, as well as increased delivery rates and material costs in 2016. Partially offsetting these decreases in operating income were price increases, benefits of our cost reduction initiatives and lower incentive compensation expense.

The increase in operating income for the first nine months of 2016, as compared to the first nine months of 2015, was primarily due to price increases and benefits of our cost reduction initiatives. Partially offsetting these increases in operating income were increased investments in revenue growth opportunities, including investments to expand our major accounts channel. In addition, delivery rates and material costs increased in 2016 and commission expense increased approximately $3 million due primarily to increased financial institution commission rates.

Financial Services

Financial Services' products and services are sold primarily through a direct sales force, which executes product and service supply contracts with our financial institution clients nationwide, including banks, credit unions and financial services companies. In the case of check supply contracts, once the financial institution relationship is established, consumers may submit their check orders through their financial institution or over the phone or internet. Results for this segment were as follows:

	Quarter Ended September 30,								Nine Months Ended September 30,
(in thousands)	2016			2015			Change		2016			2015			Change
Total revenue	$	123,033		$	110,894		10.9	%	$	374,511		$	335,134		11.7	%
Operating income	28,708			23,364			22.9	%	84,467			69,280			21.9	%
Operating margin	23.3		%	21.1		%	2.2 pts.		22.6		%	20.7		%	1.9 pts.

The increase in revenue for the third quarter and first nine months of 2016, as compared to the same periods in 2015, was driven by growth in marketing solutions and other services of $13 million for the third quarter of 2016 and $40 million for the first nine months of 2016, including incremental revenue from the acquisitions of Datamyx LLC and FISC Solutions in 2015 of $11 million for the third quarter of 2016 and $35 million for the first nine months of 2016. In addition, Wausau Financial Systems revenues increased $1 million for the third quarter of 2016 and $5 million for the first nine months of 2016. Information about our acquisitions can be found under the caption "Note 5: Acquisitions" of the Notes to Consolidated Financial Statements appearing in the 2015 Form 10-K. Additionally, revenue benefited from previous price increases. Partially offsetting these revenue increases was lower check order volume due to the continued decline in check usage, as well as the impact of contract renewal allowances.

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The increase in operating income for the third quarter and first nine months of 2016, as compared to the same periods in 2015, was primarily due to previous price increases, the benefit of our continuing cost reduction initiatives and compensation expense in 2015 for an earn-out agreement related to a 2013 acquisition. Partially offsetting these increases in operating income was the impact of lower check order volume, contract renewal allowances and increased delivery and material costs in 2016. The operating results of our acquisitions, including acquisition-related amortization, reduced Financial Services' operating margin 2.2 points for the third quarter of 2016 and 2.0 points for the first nine months of 2016.

Direct Checks

Direct Checks sells products and services directly to consumers using direct marketing, including print advertising and search engine marketing and optimization strategies. Direct Checks sells under various brand names, including Checks Unlimited®, Designer® Checks, Checks.com, Check Gallery®, The Styles Check Company®, and Artistic Checks®, among others. Results for this segment were as follows:

	Quarter Ended September 30,								Nine Months Ended September 30,
(in thousands)	2016			2015			Change		2016			2015			Change
Total revenue	$	36,956		$	39,956		(7.5	%)	$	116,965		$	125,958		(7.1	%)
Operating income	12,914			14,131			(8.6	%)	40,640			44,713			(9.1	%)
Operating margin	34.9		%	35.4		%	(0.5) pts.		34.7		%	35.5		%	(0.8) pts.

The decrease in revenue for the third quarter of 2016, as compared to the the third quarter of 2015, was primarily due to a reduction in orders stemming from the continued decline in check usage. Partially offsetting the volume decline was higher revenue per order, driven by price increases and other initiatives to improve revenue per order.

The decrease in revenue for the first nine months of 2016, as compared to the first nine months of 2015, was primarily due to a reduction in orders stemming from the continued decline in check usage. Partially offsetting the volume decline was higher revenue per order, primarily driven by an improved call center incentive plan.

The decrease in operating income for the third quarter and first nine months of 2016, as compared to the same periods in 2015, was due primarily to lower order volume and increased delivery rates and material costs in 2016, as well as increased restructuring costs in 2016. These decreases in operating income were partially offset by the benefits from our cost reduction initiatives, including lower advertising expense, as well as higher revenue per order.

CASH FLOWS AND LIQUIDITY

As of September 30, 2016, we held cash and cash equivalents of $80.1 million. The following table shows our cash flow activity for the nine months ended September 30, 2016 and 2015, and should be read in conjunction with the consolidated statements of cash flows appearing in Item 1 of this report.

	Nine Months Ended September 30,
(in thousands)	2016			2015			Change
Net cash provided by operating activities	$	208,121		$	219,148		$	(11,027	)
Net cash used by investing activities	(90,399		)	(75,704		)	(14,695		)
Net cash used by financing activities	(103,050		)	(135,058		)	32,008
Effect of exchange rate change on cash	2,966			(7,032		)	9,998
Net change in cash and cash equivalents	$	17,638		$	1,354		$	16,284

The $11.0 million decrease in net cash provided by operating activities for the first nine months of 2016, as compared to the first nine months of 2015, was primarily due to a $10.4 million increase in income tax payments, a $7.3 million increase in contract acquisition payments and the payment in 2016 of an incentive related to a 2013 acquisition. These decreases in cash provided by operating activities were partially offset by stronger operating performance and a $4.2 million decrease in interest payments due primarily to the retirement of long-term notes in March 2015.

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Included in net cash provided by operating activities were the following operating cash outflows:

	Nine Months Ended September 30,
(in thousands)	2016		2015		Change
Income tax payments	$	93,993	$	83,546	$	10,447
Performance-based compensation payments(1)	32,821		31,046		1,775
Contract acquisition payments	17,190		9,843		7,347
Interest payments	12,274		16,497		(4,223		)
Incentive payment related to previous acquisition	5,434		—		5,434
Severance payments	4,275		4,420		(145		)

⁽¹⁾ Amounts reflect compensation based on total company performance.

Net cash used by investing activities for the first nine months of 2016 was $14.7 million higher than the first nine months of 2015, driven primarily by a $13.7 million increase in payments for acquisitions and a $2.7 million increase in capital asset purchases. Partially offsetting this increase in cash used by investing activities was proceeds from the sale of Canadian marketable securities during 2016.

Net cash used by financing activities for the first nine months of 2016 was $32.0 million lower than the first nine months of 2015 due primarily to a decrease of $189.4 million in payments on long-term debt driven primarily by the 2015 redemption of $200.0 million of long-term notes due in 2019. Partially offsetting this decrease in net cash used by financing activities was a decrease of $157.5 million in amounts borrowed under our credit facility and short-term borrowings, as we utilized these borrowings in 2015 to redeem the long-term notes due in 2019.

Significant cash inflows, excluding those related to operating activities, for each period were as follows:

	Nine Months Ended September 30,
(in thousands)	2016		2015		Change
Proceeds from issuing long-term debt	$	169,000	$	276,500	$	(107,500	)
Proceeds from short-term borrowings	—		50,000		(50,000		)
Proceeds from issuing shares under employee plans	6,861		5,492		1,369
Proceeds from company-owned life insurance policies	4,123		3,973		150

Significant cash outflows, excluding those related to operating activities, for each period were as follows:

	Nine Months Ended September 30,
(in thousands)	2016		2015		Change
Payments on long-term debt, including costs of debt reacquisition	$	185,873	$	375,291	$	(189,418	)
Payments for acquisitions, net of cash acquired	64,637		50,933		13,704
Payments for common shares repurchased	44,944		46,996		(2,052		)
Cash dividends paid to shareholders	44,127		44,965		(838		)
Purchases of capital assets	32,215		29,549		2,666

As of September 30, 2016, our subsidiaries located in Canada held cash and cash equivalents of $65.0 million. Deferred income taxes have not been recognized on unremitted earnings of our foreign subsidiaries, as these amounts are intended to be reinvested indefinitely in the operations of those subsidiaries. If we were to repatriate all of the Canadian cash and cash equivalents into the United States at one time, we would incur a federal tax liability of approximately $6.5 million, based on current federal tax law.

We anticipate that net cash provided by operating activities will be between $315 million and $320 million in 2016, compared to $310 million in 2015, driven by stronger operating performance and lower interest payments, partially offset by higher income tax, contract acquisition and employee medical payments. We anticipate that net cash provided by operating activities in 2016 will be utilized for dividend payments, capital expenditures of approximately $43 million, periodic share repurchases and small-to-medium-sized acquisitions. We intend to focus our capital spending on key revenue growth initiatives and investments in order fulfillment and information technology infrastructure. As of September 30, 2016, $94.2 million was

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available for borrowing under our revolving credit facility. We believe that cash generated by operating activities, along with availability under our credit facility, will be sufficient to support our operations for the next 12 months, including dividend payments, capital expenditures and required interest payments, as well as periodic share repurchases and small-to-medium-sized acquisitions. To the extent we generate excess cash, we plan to reduce the amount outstanding under our credit facility.

CAPITAL RESOURCES

Our total debt was $617.7 million as of September 30, 2016, a decrease of $11.3 million from December 31, 2015. We have entered into interest rate swaps to hedge against changes in the fair value of a portion of our long-term debt. Further information concerning our outstanding debt and related interest rate swaps can be found under the captions “Note 11: Debt” and “Note 7: Derivative financial instruments” of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report. Information regarding our debt service obligations can be found under Off-Balance Sheet Arrangements, Guarantees and Contractual Obligations in the 2015 Form 10-K.

Our capital structure for each period was as follows:

	September 30, 2016				December 31, 2015
(in thousands)	Amount		Weighted- average interest rate		Amount		Weighted- average interest rate		Change
Fixed interest rate	$	1,756	2.3	%	$	2,109	2.0	%	$	(353	)
Floating interest rate	615,985		3.0	%	626,909		2.9	%	(10,924		)
Total debt	617,741		3.0	%	629,018		2.9	%	(11,277		)
Shareholders’ equity	849,947				745,069				104,878
Total capital	$	1,467,688			$	1,374,087			$	93,601

We have an outstanding authorization from our board of directors to purchase up to 10 million shares of our common stock. This authorization has no expiration date, and 0.2 million shares remained available for purchase under this authorization as of September 30, 2016. During the first nine months of 2016, we repurchased 0.7 million shares for $44.9 million. In May 2016, our board of directors approved an additional authorization for the repurchase of up to $300.0 million of our common stock, effective at the conclusion of our previous authorization. The additional authorization also has no expiration date. Information regarding changes in shareholders' equity can be found in the consolidated statement of shareholders' equity appearing in Item 1 of this report.

As of September 30, 2016, we had a $525.0 million revolving credit facility, which is scheduled to expire in February 2019. Our quarterly commitment fee ranges from 0.20% to 0.40% based on our leverage ratio. In September 2016, we amended the credit agreement governing our credit facility to include a new term loan facility in the aggregate principal amount of $200.0 million in order to retire our senior notes due in 2020, which we expect to redeem on November 15, 2016. The term loan facility will be fully drawn on the date that it is funded and amounts repaid may not be reborrowed.

Borrowings under our credit agreement are collateralized by substantially all of our personal and intangible property. The credit agreement governing our credit facility contains customary covenants regarding limits on levels of subsidiary indebtedness and capital expenditures, liens, investments, acquisitions, certain mergers, certain asset sales outside the ordinary course of business, and change in control as defined in the agreement. The agreement also contains financial covenants regarding our leverage ratio, interest coverage and liquidity. We were in compliance with all debt covenants as of September 30, 2016, and we expect to remain in compliance with all debt covenants throughout the next 12 months.

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As of September 30, 2016, $418.0 million was drawn on our revolving credit facility at a weighted-average interest rate of 2.0%. As of December 31, 2015, $434.0 million was drawn on our revolving credit facility at a weighted-average interest rate of 1.9%. As of September 30, 2016, amounts were available for borrowing under our revolving credit facility as follows:

(in thousands)	Total available
Revolving credit facility commitment	$	525,000
Amount drawn on revolving credit facility	(418,000		)
Outstanding letters of credit(1)	(12,795		)
Net available for borrowing as of September 30, 2016	$	94,205

⁽¹⁾ We use standby letters of credit to collateralize certain obligations related primarily to our self-insured workers’ compensation claims, as well as claims for environmental matters, as required by certain states. These letters of credit reduce the amount available for borrowing under our revolving credit facility.

OTHER FINANCIAL POSITION INFORMATION

Acquisitions – The impact of acquisitions on our consolidated balance sheet as of September 30, 2016 can be found under the caption “Note 6: Acquisitions” of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report.

Contract acquisition costs – Other non-current assets include contract acquisition costs of our Financial Services segment. These costs, which are essentially pre-paid product discounts, are recorded as non-current assets upon contract execution and are amortized, generally on the straight-line basis, as reductions of revenue over the related contract term. Changes in contract acquisition costs during the nine months ended September 30, 2016 and 2015 can be found under the caption "Note 3: Supplemental balance sheet information" of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report. Cash payments for contract acquisition costs were $17.2 million for the first nine months of 2016 and $9.8 million for the first nine months of 2015. We anticipate cash payments of approximately $25 million for the year ending December 31, 2016.

The number of checks being written has been declining, which has contributed to increased competitive pressure when attempting to retain or acquire clients. Both the number of financial institution clients requesting contract acquisition payments and the amount of the payments has fluctuated from year to year. Although we anticipate that we will selectively continue to make contract acquisition payments, we cannot quantify future amounts with certainty. The amount paid depends on numerous factors, such as the number and timing of contract executions and renewals, competitors’ actions, overall product discount levels and the structure of up-front product discount payments versus providing higher discount levels throughout the term of the contract.

Liabilities for contract acquisition payments are recorded upon contract execution. These obligations are monitored for each contract and are adjusted as payments are made. Contract acquisition payments due within the next year are included in accrued liabilities in our consolidated balance sheets. These accruals were $12.0 million as of September 30, 2016 and $9.0 million as of December 31, 2015. Accruals for contract acquisition payments included in other non-current liabilities in our consolidated balance sheets were $32.3 million as of September 30, 2016 and $29.2 million as of December 31, 2015.

Funds held for customers – Funds held for customers was $92.2 million as of September 30, 2016, an increase of $38.8 million from December 31, 2015. The increase was driven by acquisitions. In December 2015, we acquired FISC Solutions, which provides cash receipt processing services. A portion of the cash receipts are remitted to our clients the business day following receipt. As such, the amounts on-hand are reported as funds held for customers in the consolidated balance sheets, with a corresponding liability included in accrued liabilities. The asset and liability of $18.7 million were recorded as acquisition measurement-period balance sheet adjustments during 2016. In addition, we acquired funds held for customers, and assumed the related liability, of $12.5 million related to the September 2016 acquisition of Payce, Inc., a payroll services provider.

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OFF-BALANCE SHEET ARRANGEMENTS, GUARANTEES AND CONTRACTUAL OBLIGATIONS

It is not our general business practice to enter into off-balance sheet arrangements or to guarantee the performance of third parties. In the normal course of business we periodically enter into agreements that incorporate general indemnification language. These indemnifications encompass third-party claims arising from our products and services, including, without limitation, service failures, breach of security, intellectual property rights, governmental regulations and/or employment-related matters. Performance under these indemnities would generally be triggered by our breach of terms of the contract. In disposing of assets or businesses, we often provide representations, warranties and/or indemnities to cover various risks, including, for example, unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition. We do not have the ability to estimate the potential liability from such indemnities because they relate to unknown conditions. While we do not believe that any liability under these indemnities would likely have a material adverse effect on our financial position, annual results of operations or annual cash flows, inherent uncertainties exist regarding the scope and nature of such indemnities that could lead to material unfavorable outcomes. We have recorded liabilities for known indemnifications related to environmental matters. Further information regarding our environmental liabilities, as well as liabilities related to self-insurance and litigation, can be found under the caption “Note 12: Other commitments and contingencies” of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in the Item 1 of this report.

We are not engaged in any transactions, arrangements or other relationships with unconsolidated entities or other third parties that are reasonably likely to have a material effect on our liquidity or on our access to, or requirements for, capital resources. In addition, we have not established any special purpose entities.

A table of our contractual obligations was provided in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of the 2015 Form 10-K. There were no significant changes in these obligations during the first nine months of 2016.

RELATED PARTY TRANSACTIONS

We did not enter into any material related party transactions during the first nine months of 2016 or during 2015.

CRITICAL ACCOUNTING POLICIES

A description of our critical accounting policies was provided in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of the 2015 Form 10-K. There were no changes in these policies during the first nine months of 2016.

During the third quarter of 2016, we completed the annual impairment analysis of goodwill and our indefinite-lived trade name. In completing the 2016 annual goodwill impairment analysis, we elected to perform a qualitative assessment for all

of our reporting units to which goodwill is assigned, with one exception. We elected to perform a quantitative analysis for our Financial Services Commercial reporting unit as the previous quantitative analysis completed as of July 31, 2015 indicated that the estimated fair value of this reporting unit exceeded its carrying value by approximately 13%. This relatively small percentage was primarily due to the fact that the reporting unit had been recently acquired.

Our qualitative analysis evaluated factors including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. We also considered the quantitative analysis we completed as of July 31, 2014 in which the estimated fair values of our reporting units' net assets exceeded their carrying values by approximate amounts between $74.0 million and $1.13 billion, or by amounts between 47% and 482% above the carrying values of their net assets. In completing our 2016 qualitative analysis, we noted no changes in events or circumstances which would have required us to complete the two-step quantitative goodwill impairment analysis for any of the reporting units analyzed. In addition, the quantitative analysis completed for our Financial Services Commercial reporting unit indicated that its fair value exceeded its carrying value by approximately 49%. This impairment assessment is sensitive to changes in forecasted cash flows, as well as our selected discount rate of 10%. Changes in the reporting unit's results, forecast assumptions and estimates could materially affect the estimation of the fair value of this reporting unit. Total goodwill for this reporting unit was approximately $45.0 million as of September 30, 2016.

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In completing the annual impairment analysis of our indefinite-lived trade name, we elected to perform a quantitative assessment. This assessment indicated that the estimated fair value of the asset exceeded its carrying value of $19.1 million by approximately $32.0 million. In this analysis, we assumed a discount rate of 10.0% and a royalty rate of 1.5%. A one-half percentage point increase in the discount rate would reduce the indicated fair value of the asset by approximately $3.0 million and a one-half percentage point decrease in the royalty rate would reduce the indicated fair value of the asset by approximately $17.0 million.

NEW ACCOUNTING PRONOUNCEMENTS

Information regarding accounting pronouncements adopted during the first nine months of 2016 and those not yet adopted can be found under the caption “Note 2: New accounting pronouncements” of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 (the Reform Act) provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information. We are filing this cautionary statement in connection with the Reform Act. When we use the words or phrases “should result,” “believe,” “intend,” “plan,” “are expected to,” “targeted,” “will continue,” “will approximate,” “is anticipated,” “estimate,” “project,” “outlook,” "forecast" or similar expressions in this Quarterly Report on Form 10-Q, in future filings with the Securities and Exchange Commission, in our press releases and in oral statements made by our representatives, they indicate forward-looking statements within the meaning of the Reform Act.

We want to caution you that any forward-looking statements made by us or on our behalf are subject to uncertainties and other factors that could cause them to be incorrect. Known material risks are discussed in Item 1A of the 2015 Form 10-K and are incorporated into this Item 2 of this report on Form 10-Q as if fully stated herein. Although we have attempted to compile a comprehensive list of these important factors, we want to caution you that other factors may prove to be important in affecting future operating results. New factors emerge from time to time, and it is not possible for us to predict all of these factors, nor can we assess the impact each factor or combination of factors may have on our business.

You are further cautioned not to place undue reliance on those forward-looking statements because they speak only of our views as of the date the statements were made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to changes in interest rates primarily as a result of the borrowing activities used to support our capital structure, maintain liquidity and fund business operations. We do not enter into financial instruments for speculative or trading purposes. The nature and amount of debt outstanding can be expected to vary as a result of future business requirements, market conditions and other factors. As of September 30, 2016, our total debt was comprised of the following:

(in thousands)	Carrying amount		Fair value(1)		Weighted-average interest rate
Amount drawn on revolving credit facility	$	418,000	$	418,000	2.0	%
Long-term notes maturing November 2020(2)	197,985		206,758		5.2	%
Capital lease obligations	1,756		1,756		2.3	%
Total debt	$	617,741	$	626,514	3.0	%

⁽¹⁾ For the amount drawn on our revolving credit facility, fair value equals carrying value because our interest rate is variable and reflects current market rates. For our long-term notes, fair value is based on significant observable market inputs other than quoted prices in active markets. Capital lease obligations are presented at their carrying amount.

⁽²⁾ The carrying value has been reduced by unamortized debt issuance costs of $1.9 million and includes a decrease of $0.1 million related to the cumulative change in the fair value of hedged debt.

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We have entered into interest rate swaps to hedge against changes in the fair value of a portion of our long-term debt. As of September 30, 2016, interest rate swaps with a notional amount of $200.0 million were designated as fair value hedges. The carrying amount of long-term debt as of September 30, 2016 included a $0.1 million decrease related to adjusting the hedged debt for changes in its fair value. The interest rate swaps outstanding as of September 30, 2016 related to our long-term debt due in 2020 and meet the criteria for using the short-cut method of accounting for a fair value hedge based on the structure of the hedging relationship. As such, changes in the fair value of the derivative and the related long-term debt are equal.

Based on the daily average amount of outstanding variable rate debt in our portfolio, a one percentage point change in our weighted-average interest rates would have resulted in a $4.6 million change in interest expense for the first nine months of 2016.

We are exposed to changes in foreign currency exchange rates. Investments in, loans and advances to foreign subsidiaries and branches, as well as the operations of these businesses, are denominated in foreign currencies, primarily the Canadian dollar. The effect of exchange rate changes is expected to have a minimal impact on our earnings and cash flows, as our foreign operations represent a relatively small portion of our business. We have not entered into hedges against changes in foreign currency exchange rates.

Information regarding business challenges/market risks was provided in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of the 2015 Form 10-K.

Item 4.  Controls and Procedures.

(a)  Disclosure Controls and Procedures — As of the end of the period covered by this report, September 30, 2016 (the “Evaluation Date”), we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in applicable rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

(b) Internal Control Over Financial Reporting —There were no changes in our internal control over financial reporting identified in connection with our evaluation during the quarter ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We record provisions with respect to identified claims or lawsuits when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Claims and lawsuits are reviewed quarterly and provisions are taken or adjusted to reflect the status of a particular matter. We believe the recorded reserves in our consolidated financial statements are adequate in light of the probable and estimable outcomes. Recorded liabilities were not material to our financial position, results of operations or liquidity, and we do not believe that any of the currently identified claims or litigation will materially affect our financial position, results of operations or liquidity upon resolution. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, it may cause a material adverse impact on our financial position, results of operations or liquidity in the period in which the ruling occurs or in future periods.

Item 1A.  Risk Factors.

Our risk factors are outlined in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Form 10-K”). There have been no significant changes to these risk factors since we filed the 2015 Form 10-K.

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Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

The following table shows purchases of our own equity securities, based on trade date, that were completed during the third quarter of 2016:

Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs(1)
July 1, 2016 – July 31, 2016	—	$	—	—	452,941
August 1, 2016 – August 31, 2016	62,339	67.10		62,339	390,602
September 1, 2016 – September 30, 2016	157,608	68.40		157,608	232,994
Total	219,947	68.03		219,947	232,994

⁽¹⁾ Amounts do not include shares which may be purchased under an additional authorization approved by our board of directors in May 2016 for the repurchase of up to $300 million of our common stock.

In August 2003, our board of directors approved an authorization to purchase up to 10 million shares of our common stock. This authorization has no expiration date and 232,994 shares remained available for purchase under this authorization as of September 30, 2016. In May 2016, our board of directors approved an additional authorization for the repurchase of up to $300 million of our common stock, effective at the conclusion of our previous authorization. This authorization also has no expiration date.

While not considered repurchases of shares, we do at times withhold shares that would otherwise be issued under equity-based awards to cover the withholding taxes due as a result of the exercising or vesting of such awards. During the quarter ended September 30, 2016, we withheld 1,086 shares in conjunction with the vesting and exercise of equity-based awards.

Item 3.  Defaults Upon Senior Securities.

None.

Item 4.  Mine Safety Disclosures.

Not applicable.

Item 5.  Other Information.

None.

Item 6.  Exhibits.

Exhibit Number	Description	Method of Filing
3.1	Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2010)	*
3.2	Bylaws (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the Commission on October 23, 2008)	*

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Exhibit Number	Description	Method of Filing
4.1	Amended and Restated Rights Agreement, dated as of December 20, 2006, by and between us and Wells Fargo Bank, 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 Current Report on Form 8-K filed with the Commission on December 21, 2006)	*
4.2	Indenture, dated as of April 30, 2003, by and between us and Wells Fargo Bank Minnesota, N.A., as trustee (incorporated by reference to Exhibit 4.8 to the Registration Statement on Form S-3 (Registration No. 333-104858) filed with the Commission on April 30, 2003)	*
4.3	Indenture, dated as of November 27, 2012, by and among us, the guarantors listed on the signature pages thereto and U.S. Bank National Association, as trustee (including form of 6.000% Senior Notes due 2020) (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the Commission on November 27, 2012)	*
4.4	Supplemental Indenture, dated as of June 28, 2013, among us, VerticalResponse, Inc., the guarantors listed on the signature pages thereto, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.14 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2013)	*
4.5	Second Supplemental Indenture, dated as of September 25, 2013, among us, ChecksByDeluxe.com, LLC, Direct Checks Unlimited, LLC, Direct Checks Unlimited Sales, Inc., Safeguard Acquisitions, Inc., Safeguard Franchise Systems, Inc., the guarantors listed on the signature pages thereto, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.15 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2013)	*
4.6	Third Supplemental Indenture, dated as of December 17, 2014, among us, Safeguard Franchise Sales, Inc., Wausau Financial Systems, Inc., the guarantors listed on the signature pages thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.13 to the Annual Report on Form 10-K for the year ended December 31, 2014)	*
4.7	Fourth Supplemental Indenture, dated as of March 4, 2015, among us, AccuSource Solutions Corporation, SyncSuite, LLC, the guarantors listed on the signature pages thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.13 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2015)	*
4.8	Fifth Supplemental Indenture, dated as of June 15, 2015, among us, Image Distribution Services, the guarantors listed on the signature pages thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.14 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2015)	*
4.9	Sixth Supplemental Indenture, dated as of December 4, 2015, among us, Datamyx LLC, the guarantors listed on the signature pages thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.15 to the Annual Report on Form 10-K for the year ended December 31, 2015)	*
10.1	Omnibus Amendment No. 3 to Credit Agreement, Amendment No. 2 to Pledge and Security Agreement and Waiver, dated as of September 21, 2016, by and among us, our subsidiaries signatory thereto as guarantors, the institutions from time to time parties thereto as lenders, and JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent for itself and the other lenders, including Exhibit A-2 to Omnibus Amendment	Filed herewith
12.1	Statement re: Computation of Ratios	Filed herewith
31.1	CEO Certification of Periodic Report pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	CFO Certification of Periodic Report pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.1	CEO and CFO Certification of Periodic Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith

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Exhibit Number	Description	Method of Filing
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015, (ii) Consolidated Statements of Comprehensive Income for the quarters and nine months ended September 30, 2016 and 2015, (iii) Consolidated Statement of Shareholders' Equity for the nine months ended September 30, 2016, (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015, and (v) Condensed Notes to Unaudited Consolidated Financial Statements	Filed herewith

___________________

* Incorporated by reference

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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: October 28, 2016	/s/ Lee Schram
	Lee Schram Chief Executive Officer (Principal Executive Officer)
Date: October 28, 2016	/s/ Edward A. Merritt
	Edward A. Merritt Chief Financial Officer, Treasurer and Vice President of Investor Relations (Principal Financial Officer and Principal Accounting Officer)

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INDEX TO EXHIBITS

Exhibit No.	Description
10.1	Omnibus Amendment No. 3 to Credit Agreement, Amendment No. 2 to Pledge and Security Agreement and Waiver, dated as of September 21, 2016, by and among us, our subsidiaries signatory thereto as guarantors, the institutions from time to time parties thereto as lenders, and JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent for itself and the other lenders, including Exhibit A-2 to Omnibus Amendment
12.1	Statement re: Computation of Ratios
31.1	CEO Certification of Periodic Report pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	CFO Certification of Periodic Report pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	CEO and CFO Certification of Periodic Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015, (ii) Consolidated Statements of Comprehensive Income for the quarters and nine months ended September 30, 2016 and 2015, (iii) Consolidated Statement of Shareholders' Equity for the nine months ended September 30, 2016, (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015, and (v) Condensed Notes to Unaudited Consolidated Financial Statements

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EX-10.1

Exhibit 10.1

OMNIBUS

AMENDMENT NO. 3 to CREDIT AGREEMENT,

AMENDMENT NO. 2 to PLEDGE AND SECURITY AGREEMENT and

WAIVER

THIS OMNIBUS AMENDMENT NO. 3 TO CREDIT AGREEMENT, AMENDMENT NO. 2 TO PLEDGE AND SECURITY AGREEMENT and WAIVER (the “Amendment”) is made as of September 21, 2016 by and among DELUXE CORPORATION (the “Borrower”), the Subsidiaries of the Borrower party hereto (the “Guarantors” and together with the Borrower, the “Loan Parties”), the financial institutions signatory hereto, JPMORGAN CHASE BANK, N.A., in its capacity as Administrative Agent for itself and the other Lenders (as defined below) (the “Administrative Agent”) under that certain Credit Agreement dated as of March 12, 2010 by and among the Borrower, the financial institutions from time to time party thereto (the “Lenders”) and the Administrative Agent (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). Defined terms used herein and not otherwise defined herein shall have the meaning given to them in the Credit Agreement.

WITNESSETH

WHEREAS, the Borrower, the Lenders, and the Administrative Agent are parties to the Credit Agreement; and

WHEREAS, the Borrower has requested that the Administrative Agent and the Lenders amend the Credit Agreement to, among other things, incorporate a term loan facility in an aggregate principal amount of $200,000,000, all on the terms and conditions set forth herein;

WHEREAS, Section 9.02(c) of the Credit Agreement provides for amendments to the Credit Agreement with the written consent of the Required Lenders, the Administrative Agent and the Borrower (x) to add one or more credit facilities (in addition to the Incremental Term Loans pursuant to an Incremental Term Loan Amendment) to this Agreement and to permit extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Revolving Loans, Incremental Term Loans and the accrued interest and fees in respect thereof and (y) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders and Lenders;

WHEREAS, the Borrower has also requested that the Administrative Agent and the Lenders amend the Pledge and Security Agreement on the terms and conditions set forth herein; and

WHEREAS, the Borrower has (x) notified the Administrative Agent that AccuSource Solutions Corporation, a Guarantor, has changed its name to Deluxe Strategic Sourcing, Inc. effective as of July 8, 2016, and (y) requested that the Administrative Agent and the Lenders waive any Default or Event of Default that may exist in connection with the failure of the Loan Parties to provide fifteen days prior written notice of such name change pursuant to Section 4.1.8 of the Pledge and Security Agreement (such waiver, the “Specified Waiver”);

WHEREAS, the Borrower, the Lenders and the Administrative Agent have agreed to amend the Credit Agreement and the Pledge and Security Agreement and to grant the Specified Waiver on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto have agreed to the following:

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1.Amendments to the Credit Agreement.

(A) Effective as of the date hereof, subject to the satisfaction of the conditions precedent set forth in Section 4 below, (i) the Credit Agreement is hereby amended as set forth in the marked terms on Exhibit A-1 attached hereto (the “Amended Credit Agreement”), (ii) Schedule 2.01 (Commitments), Schedule 6.01 (Existing Indebtedness), Schedule 6.02 (Existing Liens) and Schedule 6.04 (Existing Investments) to the Credit Agreement are hereby amended in their entirety to be in the forms of Schedule 2.01, Schedule 6.01, Schedule 6.02 and Schedule 6.04, respectively, attached to the Amended Credit Agreement, (iii) Exhibit A (Form of Assignment and Assumption) to the Credit Agreement is hereby amended in its entirety to be in the form of Exhibit A attached to the Amended Credit Agreement, and (iv) Exhibit G-1 and G-2 (Form of Borrowing Request and Form of Interest Election Request) to the Credit Agreement are each hereby amended in their entirety to be in the forms of Exhibits G-1 and G-2, respectively, attached to the Amended Credit Agreement. In Exhibit A-1 hereto, deletions of text in the Amended Credit Agreement or the relevant Schedule or Exhibit are indicated by struck-through text, and insertions of text are indicated by bold, double-underlined text. Exhibit A-2 attached hereto sets forth a clean copy of the Amended Credit Agreement and the amended Schedules and Exhibits, after giving effect to such amendments. This Amendment shall constitute a Loan Document.

(B) By its execution below, each Lender identified on the signature pages hereto as a “Term Lender” agrees, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 3 below, to make Term Loans in an aggregate amount not to exceed the Term Loan Commitment set forth for such Lender on Schedule 2.01 attached to the Amended Credit Agreement and any such Lender not party to the Credit Agreement prior to the date hereof are hereby deemed to be bound by the provisions of the Credit Agreement and to be and become a Lender for all purposes of the Loan Documents to the same extent as if originally a party thereto. The terms applicable to such Term Loan Commitments (and the related Term Loans) are set forth in the Amended Credit Agreement.

2.Amendments to the Pledge and Security Agreement. Effective as of the date of the date hereof, subject to the satisfaction of the conditions precedent set forth in Section 4 below:

(A) The Pledge and Security Agreement is hereby amended to delete the text of clause (b) of the definition of “Excluded Property” set forth therein and to substitute “[Reserved]” therefor.

(B) The Pledge and Security Agreement is hereby amended to delete the definition of “Scheduled Reporting Date” and to substitute the following definition therefor:

“Scheduled Reporting Date” means the Effective Date and from and after the Effective Date (i) the most recent date as and when the Borrower is required to deliver updated versions of the Exhibits pursuant to Section 4.12 and (ii) solely in the case of Exhibit “D”, the Amendment No. 3 Effective Date.

(C) Section 3.12(a)(iii) of the Pledge and Security Agreement is hereby amended to add the words “upon the request of the Administrative Agent” to the beginning of such clause.

(D) Section 4.5 of the Pledge and Security Agreement is hereby amended to delete the language “Each Grantor will” in the last sentence thereof and to substitute “Upon the request of the Administrative Agent, each Grantor will” therefor.

(E) Section 4.7 of the Pledge and Security Agreement is hereby amended to delete the language “Each Grantor will” in the first sentence thereof and to substitute “Upon the request of the Administrative Agent, each Grantor will” therefor.

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(F) Section 4.12 of the Pledge and Security Agreement is hereby amended to add the following new sentence to the end of Section 4.12:

In addition to the foregoing, the Borrower will provide to the Administrative Agent on the Amendment No. 3 Effective Date (after giving effect to Amendment No. 3), an updated version of Exhibit “D” to this Security Agreement reflecting any and all changes to the information provided by the Grantors on the Effective Date (or, if previously updated, since the previous updating thereof required hereby).

3.Specified Waiver. Effective as of the date hereof, subject to the satisfaction of the conditions precedent set forth in Section 4 below, the Lenders signatory hereto and the Administrative Agent hereby grant the Specified Waiver.

4.Conditions of Effectiveness. The effectiveness of this Amendment is subject to the conditions precedent that the Administrative Agent shall have received the following:

(A) duly executed originals of this Amendment from the Borrower, the Guarantors, the Required Lenders (determined immediately before the effectiveness of this Amendment), the Term Lenders and the Administrative Agent;

(B) such other documents, instruments and agreements as the Administrative Agent may reasonably request (including, without limitation, those agreements, documents, instruments and other deliverables appearing in Annex I hereto); and

(C) all fees and expenses due and payable on or prior to the date hereof in connection with this Amendment.

5.Representations and Warranties of the Loan Parties.

(A) Each of this Amendment, the Credit Agreement and the Pledge and Security Agreement as amended by this Amendment constitute the legal, valid and binding obligations of each Loan Party party thereto, and are enforceable against each such Loan Party in accordance with their terms (except as enforceability may be limited by bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally).

(B) Upon the effectiveness of this Amendment and after giving effect hereto no Default or Event of Default has occurred and is continuing.

(C) Upon the effectiveness of this Amendment and after giving effect hereto, each Loan Party hereby reaffirms all covenants, representations and warranties made in the Credit Agreement or the Pledge and Security Agreement, as applicable, as amended hereby, and agrees that all such covenants, representations and warranties shall be true and correct as of the effective date of this Amendment (unless such representation and warranty is made as of a specific date, in which case such representation and warranty shall be true and correct as of such date).

6.References to the Credit Agreement and the Pledge and Security Agreement.

(A) Upon the effectiveness of Section 1 hereof, each reference to the Credit Agreement or “this Agreement” in the Credit Agreement or any other Loan Document, to the Pledge and Security Agreement or “this Security Agreement” in the Pledge and Security Agreement or any other Loan Document (unless limited by reference to such Loan Document as in effect on a prior date) shall mean and be a reference to the Credit Agreement or Pledge and Security Agreement as applicable, as amended by this Amendment.

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(B) Except as specifically amended above, the Credit Agreement, the Pledge and Security Agreement and all other documents, instruments and agreements executed and/or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed. Each Loan Party (i) agrees that, except as specifically provided herein, this Amendment and the transactions contemplated hereby shall not limit or diminish the obligations of such Loan Party arising under or pursuant to the Credit Agreement, the Pledge and Security Agreement, the Subsidiary Guaranty or the other Loan Documents to which it is a party, (ii) reaffirms its obligations under the Credit Agreement, the Pledge and Security Agreement, the Subsidiary Guaranty and each and every other Loan Document to which it is a party and (iii) reaffirms all Liens on the Collateral which have been granted by it in favor of the Administrative Agent (for itself and the other Secured Parties) pursuant to any of the Loan Documents.

(C) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the administrative agent or the Lenders, nor constitute a waiver of any provision of the Credit Agreement or the Pledge and Security Agreement or any other documents, instruments and agreements executed and/or delivered in connection therewith.

7.GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.

8.Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

9.Counterparts. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

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IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.

DELUXE CORPORATION, as the Borrower
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: Chief Financial Officer

DELUXE ENTERPRISE OPERATIONS, LLC
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer
DELUXE SMALL BUSINESS SALES, INC.
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer
DELUXE MANUFACTURING OPERATIONS, LLC
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer
SAFEGUARD BUSINESS SYSTEMS, INC.
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer
DELUXE FINANCIAL SERVICES, LLC
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer
DELUXE BUSINESS OPERATIONS, INC.
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer
SAFEGUARD HOLDINGS, INC.
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer

SIGNATURE PAGE TO OMNIBUS AMENDMENT

CHECKSBYDELUXE.COM, LLC
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer
DIRECT CHECKS UNLIMITED, LLC
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer
DIRECT CHECKS UNLIMITED SALES, INC.
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer
SAFEGUARD ACQUISITIONS, INC.
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer
SAFEGUARD FRANCHISE SYSTEMS, INC.
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer
SAFEGUARD FRANCHISE SALES, INC.
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer

SIGNATURE PAGE TO OMNIBUS AMENDMENT

WAUSAU FINANCIAL SYSTEMS, INC.
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer
DELUXE STRATEGIC SOURCING, INC.
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer
SYNCSUITE, LLC
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer
IMAGE DISTRIBUTION SERVICES
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer
DATAMYX LLC
By:	/s/ Edward A. Merritt
	Name: Edward A. Merritt
	Title: VP & Treasurer

SIGNATURE PAGE TO OMNIBUS AMENDMENT

JPMORGAN CHASE BANK, N.A., individually as a Lender (including as a Term Lender), as the Swingline Lender, as the Issuing Bank and as Administrative Agent
By	/s/ Suzanne Ergastolo
	Name: Suzanne Ergastolo
	Title: Executive Director

SIGNATURE PAGE TO OMNIBUS AMENDMENT

FIFTH THIRD BANK, as a Lender (including as a Term Lender)
By	/s/ Kurt Marsan
	Name: Kurt Marsan
	Title: Vice President

SIGNATURE PAGE TO OMNIBUS AMENDMENT

U.S. BANK NATIONAL ASSOCIATION, as a Lender (including as a Term Lender)
By	/s/ Andrew Beckman
	Name: Andrew Beckman
	Title: Vice President

SIGNATURE PAGE TO OMNIBUS AMENDMENT

MUFG UNION BANK, N.A., as a Lender
By	/s/ Mark Maloney
	Name: Mark Maloney
	Title: Authorized Signatory

SIGNATURE PAGE TO OMNIBUS AMENDMENT

PNC BANK, NATIONAL ASSOCIATION, as a Lender (including as a Term Lender)
By	/s/ Shanti Aiyer
	Name: Shanti Aiyer
	Title: Vice President

SIGNATURE PAGE TO OMNIBUS AMENDMENT

SUNTRUST BANK, as a Lender (including as a Term Lender)
By	/s/ Carlos Cruz
	Name: Carlos Cruz
	Title: Vice President

SIGNATURE PAGE TO OMNIBUS AMENDMENT

WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender (including as a Term Lender)
By	/s/ Sid Khanolkar
	Name: Sid Khanolkar
	Title: Director

SIGNATURE PAGE TO OMNIBUS AMENDMENT

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Lender
By	/s/ Robert Hetu
	Name: Robert Hetu
	Title: Authorized Signatory
By	/s/ Lingzi Huang
	Name: Lingzi Huang
	Title: Authorized Signatory

SIGNATURE PAGE TO OMNIBUS AMENDMENT

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as a Term Lender
By	/s/ Mark Maloney
	Name: Mark Maloney
	Title: Authorized Signatory

SIGNATURE PAGE TO OMNIBUS AMENDMENT

BMO HARRIS BANK, N.A., as a Term Lender
By	/s/ Sean T. Ball
	Name: Sean T. Ball
	Title: Vice President

SIGNATURE PAGE TO OMNIBUS AMENDMENT

EXHIBIT A-1 TO OMNIBUS AGREEMENT

Marked Credit Agreement

(See Attached)

EXHIBIT A-2 TO

OMNIBUS AMENDMENT NO. 3 TO CREDIT AGREEMENT

DATED AS OF SEPTEMBER 21, 2016

CONFORMED COPY

as amended by Amendment No. 1 to Credit Agreement dated as of February 8, 2012,

Omnibus Amendment No. 2 to Credit Agreement dated as of February 21, 2014, and Omnibus

Amendment No. 3 to Credit Agreement dated as of September 21, 2016

J.P.Morgan

CREDIT AGREEMENT

dated as of

March 12, 2010 among

DELUXE CORPORATION, as Borrower

The Lenders Party Hereto

JPMORGAN CHASE BANK, N.A., as Administrative Agent

and

FIFTH THIRD BANK, as Syndication Agent

and

PNC BANK, NATIONAL ASSOCIATION, UNION BANK, N.A. and U.S. BANK NATIONAL ASSOCIATION,

as Co-Documentation Agents

JPMORGAN CHASE BANK, N.A. and FIFTH THIRD BANK,

as Joint Bookrunners and Joint Lead Arrangers for the Revolving Facility

and

JPMORGAN CHASE BANK, N.A.,

as Sole Bookrunner and Lead Arranger for the Term Loan Facility

ARTICLE I
Definitions
SECTION 1.01. Defined Terms	1
SECTION 1.02. Classification of Loans and Borrowings	26
SECTION 1.03. Terms Generally	26
SECTION 1.04. Accounting Terms; GAAP	27
SECTION 1.05. Status of Obligations	27
ARTICLE II
The Credits
SECTION 2.01. Commitments	28
SECTION 2.02. Loans and Borrowings	28
SECTION 2.03. Requests for Borrowings	28
SECTION 2.04. Intentionally Omitted	29
SECTION 2.05. Swingline Loans	29
SECTION 2.06. Letters of Credit	30
SECTION 2.07. Funding of Borrowings	34
SECTION 2.08. Interest Elections	35
SECTION 2.09. Termination and Reduction of Commitments	36
SECTION 2.10. Repayment and Amortization of Loans; Evidence of Debt	36
SECTION 2.11. Prepayment of Loans	37
SECTION 2.12. Fees	38
SECTION 2.13. Interest	39
SECTION 2.14. Alternate Rate of Interest	40
SECTION 2.15. Increased Costs	40
SECTION 2.16. Break Funding Payments	41
SECTION 2.17. Taxes	42
SECTION 2.18. Payments Generally; Allocations of Proceeds; Pro Rata Treatment; Sharing of Set-offs	45
SECTION 2.19. Mitigation Obligations; Replacement of Lenders	47
SECTION 2.20. Expansion Option	48
SECTION 2.21. Defaulting Lenders	49
ARTICLE III
Representation and Warranties
SECTION 3.01. Organization; Powers; Subsidiaries	51
SECTION 3.02. Authorization; Enforceability	51
SECTION 3.03. Governmental Approvals; No Conflicts	51
SECTION 3.04. Financial Condition; No Material Adverse Change	52
SECTION 3.05. Properties	52
SECTION 3.06. Litigation, Environmental and Labor Matters	52
SECTION 3.07. Compliance with Laws and Agreements	52
SECTION 3.08. Investment Company Status	53

SECTION 3.09. Taxes	53
SECTION 3.10. ERISA	53
SECTION 3.11, Disclosure	53
SECTION 3.12. Federal Reserve Regulations	53
SECTION 3.13. Liens	53
SECTION 3.14. No Default	53
SECTION 3.15. No Burdensome Restrictions	53
SECTION 3.16. Solvency	53
SECTION 3.17. Insurance	54
SECTION 3.18. Security Interest in Collateral	54
SECTION 3.19. Anti-Corruption Laws and Sanctions	54
SECTION 3.20. EEA Financial Institutions	54
ARTICLE IV
Conditions
SECTION 4.01. Effective Date	54
SECTION 4.02. Each Credit Event	56
SECTION 4.03. Funding of Term Loans	57
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements and Other Information	57
SECTION 5.02. Notices of Material Events	59
SECTION 5.03. Existence; Conduct of Business	59
SECTION 5.04. Payment of Obligations	59
SECTION 5.05. Maintenance of Properties; Insurance	60
SECTION 5.06. Books and Records; Inspection Rights	60
SECTION 5.07. Compliance with Laws and Material Contractual Obligations	60
SECTION 5.08. Use of Proceeds	60
SECTION 5.09. Subsidiary Guarantors; Pledges; Additional Collateral; Further Assurances	61
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness	62
SECTION 6.02. Liens	64
SECTION 6.03. Fundamental Changes and Asset Sales	65
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions	66
SECTION 6.05. Swap Agreeements	67
SECTION 6.06. Transactions with Affiliates	68
SECTION 6.07. Restricted Payments	68
SECTION 6.08. Restrictive Agreements	68
SECTION 6.09. Subordinated Indebtedness and Amendments to Subordinated Indebtedness Documents	69
SECTION 6.10. Sale and Leaseback Transactions	70

SECTION 6.11. [Reserved]	70
SECTION 6.12. Financial Covenants	70
SECTION 6.13. Guarantors	70
SECTION 6.14. Anti-Corruption Laws and Sanctions	71
ARTICLE VII
Events of Default
ARTICLE VIII
The Administrative Agent
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices	77
SECTION 9.02. Waivers; Amendments	78
SECTION 9.03. Expenses; Indemnity; Damage Waiver	80
SECTION 9.04. Successors and Assigns	82
SECTION 9.05. Survival	85
SECTION 9.06. Counterparts; Integration; Effectiveness; Electronic Execution	85
SECTION 9.07. Severability	86
SECTION 9.08. Right of Setoff	86
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process	86
SECTION 9.10. WAIVER OF JURY TRIAL	86
SECTION 9.11. Headings	87
SECTION 9.12. Confidentiality	87
SECTION 9.13. USA PATRIOT Act	88
SECTION 9.14. Appointment for Perfection	88
SECTION 9.15. No Advisory or Fiduciary Responsibility	88
SECTION 9.16. Releases of Subsidiary Guarantors	89
SECTION 9.17. Interest Rate Limitation	89
SECTION 9.18. Acknowledgment and Consent to Bail-In of EEA Financial Institutions	89

SCHEDULES:

Schedule 2.01 - Commitments

Schedule 2.06 - Existing Letters of Credit

Schedule 3.01 - Subsidiaries

Schedule 6.01 - Existing Indebtedness

Schedule 6.02 - Existing Liens

Schedule 6.04 - Existing Investments

Schedule 6.10 - Sale and Leaseback Transactions

EXHIBITS:

Exhibit A - Form of Assignment and Assumption

Exhibit B - Form of Opinion of Loan Parties’ Counsel

Exhibit C - Form of Increasing Lender Supplement

Exhibit D - Form of Augmenting Lender Supplement

Exhibit E - List of Closing Documents

Exhibit F - Form of Compliance Certificate

Exhibit G-1 - Form of Borrowing Request

Exhibit G-2 - Form of Interest Election Request

CREDIT AGREEMENT (this “Agreement”) dated as of March 12, 2010 among DELUXE CORPORATION, as Borrower, the LENDERS from time to time party hereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent and FIFTH THIRD BANK, as Syndication Agent and U.S. BANK NATIONAL ASSOCIATION and UNION BANK, N.A., as Co-Documentation Agents.

The parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

“2012 Indenture” means that certain Indenture, dated November 27, 2012, between the Borrower and U.S. Bank National Association, as trustee, as amended, restated, supplemented or otherwise modified from time to time.

“2012 Indenture Repayment” means all guarantees issued in connection with the 2020 Bonds shall have been released and any and all 2020 Bonds shall have been fully repaid.

“2020 Bonds” means the series of interest-bearing notes due in 2020 created and issued under the 2012 Indenture (as amended, restated, supplemented or modified from time to time).

“ABR”, when used in reference to any Loan or Borrowing, refers to a Loan, or the Loans comprising such Borrowing, bearing interest at a rate determined by reference to the Alternate Base Rate.

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

“Administrative Agent” means JPMorgan Chase Bank, N.A. (including its branches and Affiliates as may be required to administer its duties), in its capacity as administrative agent for the Lenders hereunder.

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

“Affected Foreign Subsidiary” means any Foreign Subsidiary to the extent such Foreign Subsidiary acting as a Subsidiary Guarantor would cause a Deemed Dividend Problem.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“Agent Party” has the meaning assigned to such term in Section 9.01(d).

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus ½ of 1% and (c) the Adjusted LIBO Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that for the purpose of this definition, the Adjusted LIBO Rate for any day shall be based on the LIBO Screen Rate (or if the LIBO Screen Rate is not available for such one month Interest Period, the Interpolated Rate) at approximately 11:00 a.m. London time on such day. Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate shall be effective from and including the effective

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date of such change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate, respectively. For the avoidance of doubt, if the Alternate Base Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“Amendment No. 3” means that certain Omnibus Amendment No. 3 to Credit Agreement, Amendment No. 2 to Pledge and Security Agreement and Waiver, dated as of September 21, 2016, by and among the Borrower, the Subsidiaries of the Borrower party thereto as Guarantors, the Lenders party thereto and the Administrative Agent.

“Amendment No. 3 Effective Date” means September 21, 2016.

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption.

“Applicable Percentage” means, with respect to any Lender, (a) with respect to Revolving Loans, LC Exposure or Swingline Loans, the percentage equal to a fraction the numerator of which is such Lender’s Revolving Commitment and the denominator of which is the aggregate Revolving Commitments of all Revolving Lenders (if the Revolving Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Revolving Commitments most recently in effect, giving effect to any assignments); provided that, in the case of Section 2.21 when a Defaulting Lender shall exist, any such Defaulting Lender’s Revolving Commitment shall be disregarded in the calculation and (b) with respect to the Term Loans, a percentage equal to a fraction the numerator of which is such Lender’s outstanding principal amount of the Term Loans and the denominator of which is the aggregate outstanding principal amount of the Term Loans of all Term Lenders.

“Applicable Pledge Percentage” means 100%, but 65% in the case of a pledge by the Borrower or any Domestic Subsidiary of its Equity Interests in a Foreign Subsidiary that is an Affected Foreign Subsidiary due to a Deemed Dividend Problem.

“Applicable Rate” means, for any day, with respect to any Eurodollar Loan or any ABR Loan or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “Commitment Fee Rate”, “Ticking Fee Rate”, “Applicable Rate for Eurodollar Loans”, or “Applicable Rate for ABR Loans”, as the case may be, based upon the Leverage Ratio applicable on such date:

Pricing Level	Leverage Ratio	Commitment Fee Rate	Ticking Fee Rate	Applicable Rate for Eurodollar Loans	Applicable Rate for ABR Loans
Level I	< 1.50 to 1.00	0.20%	0.20%	1.50%	0.50%
Level II	> 1.50 to 1.00 but < 2.00 to 1.00	0.25%	0.25%	1.625%	0.625%
Level III	> 2.00 to 1.00 but < 2.50 to 1.00	0.30%	0.30%	1.750%	0.750%
Level IV	> 2.50 to 1.00 but < 3.00 to 1.00	0.35%	0.35%	1.875%	0.875%
Level V	> 3.00 to 1.00	0.40%	0.40%	2.125%	1.125%

For purposes of the foregoing,

(a) if at any time the Borrower fails to deliver the Financials on or before the date such Financials are due pursuant to Section 5.01, Pricing Level V shall be deemed applicable for the period commencing three (3) Business Days after such required date of delivery and ending on the date which is three (3) Business Days after such Financials

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are actually delivered, after which the Pricing Level shall be determined in accordance with the table above as applicable; and

(b) except as otherwise provided in the paragraph below, adjustments, if any, to the Pricing Level then in effect shall be effective three (3) Business Days after the Administrative Agent has received the applicable Financials (it being understood and agreed that each change in Pricing Level shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change).

“Approved Fund” has the meaning assigned to such term in Section 9.04(b).

“Assignment and Assumption” means an assignment and assumption agreement entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.

“Augmenting Lender” has the meaning assigned to such term in Section 2.20.

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“Banking Services” means each and any of the following bank services provided to the Borrower or any Subsidiary by any Lender or any of its Affiliates: (a) credit cards for commercial customers (including, without limitation, commercial credit cards and purchasing cards), (b) stored value cards, (c) merchant processing services and (d) treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, any direct debit scheme or arrangement, overdrafts and interstate depository network services).

“Banking Services Agreement” means any agreement entered into by the Borrower or any Subsidiary in connection with Banking Services.

“Banking Services Obligations” means any and all obligations of the Borrower or any Subsidiary, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor) in connection with Banking Services.

“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

“Borrower” means Deluxe Corporation, a Minnesota corporation.

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“Borrowing” means (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect or (b) a Swingline Loan, or (c) a Term Loan of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

“Borrowing Request” means a request by the Borrower for a Borrowing in accordance with Section 2.03 in the form attached hereto as Exhibit G-1.

“Burdensome Restrictions” means any consensual encumbrance or restriction of the type described in clause (a) or (b) of Section 6.08.

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in Chicago, Illinois and New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in Dollars in the London interbank market.

“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required, subject to Section 1.04(b), to be classified and accounted for as capital lease obligations on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

“Change in Control” means:

(a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof), of Equity Interests representing more than 25% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Borrower;

(b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were (i) not nominated by, or whose nomination for election was not approved or ratified by a majority of the directors of, the board of directors of the Borrower, or (ii) not appointed by Persons described in the foregoing clause (i); or

(c) the occurrence of a change in control, or other similar provision, as defined in any agreement or instrument evidencing any Material Indebtedness.

“Change in Law” means the occurrence, after the date of this Agreement (or with respect to any Lender, if later, the date on which such Lender becomes a Lender), of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty after the date of this Agreement, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.15(b), by any lending office of such Lender or by such Lender’s or the Issuing Bank’s holding company, if any) with any request, rule, guideline, requirement or directive (whether or not having the force of law) by any Governmental Authority made or issued after the date of this Agreement; providedhowever, that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directives thereunder, issued in connection therewith or in implementation thereof, and (ii) all requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law” regardless of the date enacted, adopted, issued or implemented.

“Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term Loans or Swingline Loans.

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“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Co-Documentation Agent” means each of PNC Bank, National Association, U.S. Bank National Association and Union Bank, N.A. in its capacity as co-documentation agent for the credit facility evidenced by this Agreement.

“Collateral” means any and all personal property owned, leased or operated by a Person covered by the Collateral Documents and any and all other personal property of any Loan Party, now existing or hereafter acquired, that may at any time be or become subject to a security interest or Lien in favor of Administrative Agent, on behalf of itself and the Secured Parties, to secure the Secured Obligations.

“Collateral Documents” means, collectively, the Security Agreement, and all other agreements, instruments and documents executed in connection with this Agreement that are intended to create, perfect or evidence, or establish enforcement rights or priority of claims in respect of, Liens to secure the Secured Obligations whether heretofore, now, or hereafter executed by the Borrower or any of its Subsidiaries and delivered to the Administrative Agent.

“Commitment” means, with respect to each Lender, the sum of such Lender’s Revolving Commitment and Term Loan Commitment. The initial amount of each Lender’s Commitment is set forth on Schedule 2.01 (as amended by Amendment No. 3), or in the Assignment and Assumption or other documentation contemplated hereby pursuant to which such Lender shall have assumed its Commitment, as applicable.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

“Communications” has the meaning assigned to such term in Section 9.01(d).

“Consolidated Capital Expenditures” means, without duplication, any expenditures for any purchase or other acquisition of any asset which would be classified as a fixed or capital asset on a consolidated balance sheet of the Borrower and its Subsidiaries prepared in accordance with GAAP.

“Consolidated EBIT” means Consolidated Net Income plus, (a) to the extent deducted from revenues in determining Consolidated Net Income and without duplication, (i) Consolidated Interest Expense, (ii) expense for taxes paid or accrued, (iii) extraordinary or non-recurring non-cash expenses or losses incurred other than in the ordinary course of business, (iv) non-cash expenses related to stock based compensation, and (v) non-recurring non-cash charges and expenses related to write-downs of goodwill or asset impairment minus, (b) to the extent included in Consolidated Net Income, (i) interest income, (ii) income tax credits and refunds (to the extent not netted from tax expense), (iii) any cash payments made during such period in respect of items described in clauses (a)(iii), (a)(iv) or (a)(v) above subsequent to the fiscal quarter in which the relevant non-cash expenses or losses were incurred and (iv) extraordinary, unusual or non-recurring income or gains realized other than in the ordinary course of business, all calculated for the Borrower and its Subsidiaries in accordance with GAAP on a consolidated basis.

“Consolidated EBITDA” means Consolidated EBIT plus, to the extent deducted from revenues in determining Consolidated Net Income, (i) depreciation and (ii) amortization. For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”), (i) if at any time during such Reference Period the Borrower or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period, and (ii) if during such Reference Period the Borrower or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving effect thereto on a Pro Forma Basis as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes (i)

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assets comprising all or substantially all or any significant portion of a business or operating unit of a business, or (ii) all or substantially all of the common stock or other Equity Interests of a Person, and (b) involves the payment of consideration by the Borrower and its Subsidiaries in excess of $10,000,000; and “Material Disposition” means any sale, transfer or disposition of property or series of related sales, transfers, or dispositions of property that yields gross proceeds to the Borrower or any of its Subsidiaries in excess of $10,000,000.

“Consolidated Interest Expense” means, with reference to any period, the interest expense (including, without limitation, interest expense under Capital Lease Obligations that is treated as interest in accordance with GAAP, subject to Section 1.04(b)) of the Borrower and its Subsidiaries calculated on a consolidated basis for such period with respect to all outstanding Indebtedness of the Borrower and its Subsidiaries allocable to such period in accordance with GAAP (including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers acceptance financing and net costs under interest rate Swap Agreements to the extent such net costs are allocable to such period in accordance with GAAP).

“Consolidated Net Income” means, with reference to any period, the net income (or loss) of the Borrower and its Subsidiaries calculated in accordance with GAAP on a consolidated basis (without duplication) for such period; provided that there shall be excluded any income (or loss) of any Person other than the Borrower or a Subsidiary, but any such income so excluded may be included in such period or any later period to the extent of any cash dividends or distributions actually paid in the relevant period to the Borrower or any wholly-owned Subsidiary of the Borrower.

“Consolidated Total Assets” means, as of the date of any determination thereof, total assets of the Borrower and its Subsidiaries calculated in accordance with GAAP on a consolidated basis as of such date.

“Consolidated Total Indebtedness” means at any time the sum, without duplication, of (a) the aggregate Indebtedness of the Borrower and its Subsidiaries calculated on a consolidated basis as of such time in accordance with GAAP, (b) the aggregate amount of Indebtedness of the Borrower and its Subsidiaries relating to the maximum amount available to be drawn under all outstanding letters of credit and bankers acceptances and (c) Indebtedness of the type referred to in clauses (a) or (b) hereof of another Person guaranteed by the Borrower or any of its Subsidiaries in an amount calculated on a consolidated basis as of such time in accordance with GAAP.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Credit Event” means a Borrowing, the issuance, amendment, renewal or extension of a Letter of Credit, an LC Disbursement or any of the foregoing.

“Credit Exposure” means, as to any Lender at any time, the sum of (a) such Lender’s Revolving Credit Exposure at such time, plus (b) an amount equal to the aggregate principal amount of its Term Loans outstanding at such time.

“Credit Party” means the Administrative Agent, the Issuing Bank, the Swingline Lender or any other Lender.

“Deemed Dividend Problem” means, with respect to any Foreign Subsidiary, such Foreign Subsidiary’s accumulated and undistributed earnings and profits being deemed to be repatriated to the Borrower or the applicable parent Domestic Subsidiary under Section 956 of the Code and the effect of such repatriation causing materially adverse tax consequences to the Borrower or such parent Domestic Subsidiary, in each case as determined by the Borrower in its commercially reasonable judgment acting in good faith and in consultation with its legal and tax advisors.

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

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“Defaulting Lender” means any Lender that (a) has failed, within two (2) Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or Swingline Loans or (iii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three (3) Business Days after request by a Credit Party, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit and Swingline Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, (d) has become the subject of a Bankruptcy Event or (e) has become the subject of a Bail-In Action.

“Dollars” or “$” refers to lawful money of the United States of America.

“Domestic Subsidiary” means a Subsidiary organized under the laws of a jurisdiction located in the United States of America.

“ECP” means an “eligible contract participant” as defined in Section 1(a)(18) of the Commodity Exchange Act or any regulations promulgated thereunder and the applicable rules issued by the Commodity Futures Trading Commission and/or the SEC.

“EEA Financial Institution” means (a) any institution established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“Effective Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).

“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.

“Electronic System” means any electronic system, including e-mail, e-fax, Intralinks®, ClearPar®, Debt Domain, Syndtrak and any other Internet or extranet-based site, whether such electronic system is owned, operated or hosted by the Administrative Agent and the Issuing Bank and any of its respective Related Parties or any other Person, providing for access to data protected by passcodes or other security system.

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“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the failure to satisfy the “minimum funding standard” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal of the Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition upon the Borrower or any of its ERISA Affiliates of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“Eurodollar”, when used in reference to any Loan or Borrowing, means that such Loan, or the Loans comprising such Borrowing, bears interest at a rate determined by reference to the Adjusted LIBO Rate.

“Event of Default” has the meaning assigned to such term in Article VII.

“Excluded Restricted Subsidiary Equity Interests” means, prior to the 2012 Indenture Repayment (but not at any time after the 2012 Indenture Repayment), Equity Interests of any Subsidiary to the extent constituting shares of stock of any “Restricted Subsidiary” (as defined in the 2012 Indenture) held or owned by the Borrower.

“Excluded Swap Obligation” means, with respect to any Loan Party, any Specified Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Loan Party of, or the grant by such Loan Party of

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a security interest to secure, such Specified Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Loan Party’s failure for any reason to constitute an ECP at the time the Guarantee of such Loan Party or the grant of such security interest becomes effective with respect to such Specified Swap Obligation. If a Specified Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Specified Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located, (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.19(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure to comply with Section 2.17(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.17(a) and (d) any U.S. federal withholding Taxes imposed under FATCA.

“Existing Letters of Credit” has the meaning given to such term in Section 2.06(k).

“Fair Market Value” means, with respect to any asset or liability, the fair market value of such asset or liability as determined by the Borrower in good faith; provided that if the fair market value is equal to or exceeds $5,000,000, such determination shall be approved by the board of directors of the Borrower.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreement entered into pursuant to Section 1471(b)(1) of the Code.

“Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depository institutions (as determined in such manner as the NYFRB shall set forth on its public website from time to time) and published on the next succeeding Business Day by the NYFRB as the federal funds effective rate. For the avoidance of doubt, if the Federal Funds Effective Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower.

“Financials” means the annual or quarterly financial statements, and accompanying certificates and other documents, of the Borrower and its Subsidiaries required to be delivered pursuant to Section 5.01(a) or 5.01(b).

“First Tier Foreign Subsidiary” means each Foreign Subsidiary with respect to which any one or more of the Borrower and its Domestic Subsidiaries directly owns or Controls more than 50% of such Foreign Subsidiary’s issued and outstanding Equity Interests.

“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

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“Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary.

“GAAP” means generally accepted accounting principles in the United States of America.

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).

“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants regulated pursuant to any Environmental Law, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

“Hostile Acquisition” means (a) the acquisition of the Equity Interests of a Person through a tender offer or similar solicitation of the owners of such Equity Interests which has not been approved (prior to such acquisition) by the board of directors (or any other applicable governing body) of such Person or by similar action if such Person is not a corporation and (b) any such acquisition as to which such approval has been withdrawn.

“Impacted Interest Period” has the meaning assigned to such term in the definition of "LIBO Rate."

“Increasing Lender” has the meaning assigned to such term in Section 2.20.

“Incremental Term Loan” has the meaning assigned to such term in Section 2.20.

“Incremental Term Loan Amendment” has the meaning assigned to such term in Section 2.20.

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness

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secured thereby has been assumed, provided that the amount of such Indebtedness which has not been assumed by such Person shall be the lesser of (i) the amount of such Indebtedness and (ii) the Fair Market Value of such property, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, and (k) all obligations of such Person under Sale and Leaseback Transactions. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.

“Ineligible Institution” has the meaning assigned to such term in Section 9.04(b).

“Information Memorandum” means the Confidential Information Memorandum dated August 2016 relating to the Borrower and the Transactions.

“Interest Coverage Ratio” has the meaning assigned to such term in Section 6.12(b).

“Interest Election Request” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.08 in the form attached hereto as Exhibit G-2.

“Interest Payment Date” means (a) with respect to any ABR Revolving Loan (other than a Swingline Loan), the last day of each March, June, September and December and the Maturity Date, (b) with respect to any ABR Term Loan, the 14th day of each March, June, September and December and the Maturity Date, (c) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period and the Maturity Date and (d) with respect to any Swingline Loan, the day that such Loan is required to be repaid in accordance with Section 2.10 and the Maturity Date.

“Interest Period” means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is seven days or one, two, three or six months thereafter, as the Borrower may elect; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

“Interpolated Rate” means, at any time, for any Interest Period, the rate per annum determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBO Screen Rate for the longest period (for which the LIBO Screen Rate is available for the applicable currency) that is shorter than the Impacted Interest Period and (b) the LIBO Screen Rate for the shortest period (for which the LIBO Screen Rate is available for the applicable currency) that exceeds the Impacted Interest Period, in each case, at such time. When determining the rate for a period which is less than the shortest period for which the LIBO Screen Rate is available, the LIBO Screen Rate for purposes of paragraph (a) above shall be deemed to be the overnight screen rate where “overnight screen

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rate” means the overnight rate determined by the Administrative Agent from such service as the Administrative Agent may select.

“Issuing Bank” means JPMorgan Chase Bank, N.A., in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.06(i). The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

“LC Collateral Account” has the meaning assigned to such term in Section 2.06(j).

“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter of Credit.

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.

“Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a Lender hereunder pursuant to Section 2.20 or pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption. Unless the context otherwise requires, the term “Lenders” includes the Swingline Lender and the Issuing Bank.

“Letter of Credit” means any letter of credit issued pursuant to this Agreement and any Existing Letter of Credit.

“Leverage Ratio” has the meaning assigned to such term in Section 6.12(a).

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any applicable Interest Period, the LIBO Screen Rate at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period; provided that, if the LIBO Screen Rate shall not be available at such time for such Interest Period (the “Impacted Interest Period”), then the LIBO Rate for such Interest Period shall be the Interpolated Rate. It is understood and agreed that all of the terms and conditions of this definition of “LIBO Rate” shall be subject to Section 2.14.

“LIBOR Screen Rate” means, for any day and time, with respect to any Eurodollar Borrowing for any Interest Period, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate) for Dollars for a period equal in length to such Interest Period as displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion); provided that if the LIBO Screen Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities, other than (i) any purchase option, call or other similar right in respect of the Equity Interests of the Borrower created in connection with an employee stock option or stock incentive plan existing as of the Effective Date, as amended, renewed, re-adopted, modified, extended or administered from time to time in the ordinary course of business in accordance with past practices and (ii) any Equity Interest granted in respect of the Borrower’s Equity Interests certified by the Borrower to the Administrative Agent in writing as having a bona fide purpose directly related to effecting any disposition otherwise permitted under Section 6.03 or a Permitted Acquisition (as determined by the Administrative Agent in its reasonable discretion).

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“Limited Equity Acquisition” means any acquisition (whether by purchase, merger, consolidation or otherwise) or series of related acquisitions by the Borrower or any Subsidiary of 50% or less of the Equity Interests in a Person, if, at the time of and immediately after giving effect thereto, (a) no Default has occurred and is continuing or would arise after giving effect thereto, (b) such Person is engaged in the same or a similar line of business as the Borrower and the Subsidiaries or business reasonably related thereto.

“Loan Documents” means this Agreement, any promissory notes issued pursuant to Section 2.10(e) of this Agreement, any Letter of Credit applications, the Collateral Documents, the Post-Closing Matters Side Letter, the Subsidiary Guaranty, and all other agreements, instruments, documents and certificates identified in Section 4.01 executed and delivered to, or in favor of, the Administrative Agent or any Lenders and including all other pledges, powers of attorney, consents, assignments, contracts, notices, letter of credit agreements and all other written matter whether heretofore, now or hereafter executed by or on behalf of any Loan Party, or any employee of any Loan Party, and delivered to the Administrative Agent or any Lender in connection with this Agreement or the transactions contemplated hereby. Any reference in this Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to this Agreement or such Loan Document as the same may be in effect at any and all times such reference is operative.

“Loan Parties” means, collectively, the Borrower and the Subsidiary Guarantors.

“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

“Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations, or financial condition of the Borrower and the Subsidiaries taken as a whole, (b) the validity or enforceability of (i) this Agreement, the Security Agreement, the Subsidiary Guaranty, any Letter of Credit application or any fee letter constituting a Loan Document or (ii) taken as a whole, any of the other material Loan Documents, (c) the ability of the Borrower or any Subsidiary Guarantor to perform any of its payment or other material obligations under this Agreement, the Security Agreement, the Subsidiary Guaranty, any Letter of Credit application, any fee letter constituting a Loan Document or any other material Loan Document, (d) all or any portion of the Collateral with a Fair Market Value in excess of $35,000,000 or any of the Administrative Agent’s liens (on behalf of itself and the other Secured Parties) on all or any portion of the Collateral with a Fair Market Value in excess of $35,000,000 or, giving effect to any Lien permitted under Section 6.02, the priority of such Liens, or (e) the rights or remedies of the Administrative Agent and the Lenders under this Agreement or under any other Loan Document.

“Material Indebtedness” means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements, of any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding $35,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Swap Agreement were terminated at such time.

“Material Subsidiary” means each Subsidiary (i) which, as of the most recent fiscal quarter of the Borrower, for the period of four consecutive fiscal quarters then ended, for which Financials have been delivered pursuant to Section 5.01, contributed greater than ten percent (10%) of the Borrower’s Consolidated EBITDA for such period, (ii) which contributed greater than ten percent (10%) of the Borrower’s Consolidated Total Assets as of such date or (iii) which owns, directly or indirectly, any Equity Interests of any Subsidiary that satisfies the criteria set forth in either clause (i) or clause (ii) above; provided that, if at any time the aggregate amount of the EBITDA or consolidated total assets of all Subsidiaries that are not Material Subsidiaries exceeds ten percent (10%) of the Borrower’s Consolidated EBITDA for any such period or ten percent (10%) of the Borrower’s Consolidated Total Assets as of the end of any such fiscal quarter, the Borrower (or, in the event the Borrower has failed to do so within ten (10) days after delivery of Financials for such fiscal quarter pursuant to Sections 5.01(a) or 5.01(b), the

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Administrative Agent) shall within ten (10) days after delivery of Financials for such fiscal quarter pursuant to Sections 5.01(a) or 5.01(b) designate sufficient Subsidiaries as “Material Subsidiaries” to eliminate such excess, and such designated Subsidiaries shall for all purposes of this Agreement constitute Material Subsidiaries.

“Maturity Date” means February 21, 2019.

"Moody's" means Moody’s Investors Service, Inc.

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“Net Cash Proceeds” means, with respect to any event:

(a)the cash proceeds received in respect of such event including:

(i) any cash received in respect of any non-cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but excluding any interest payments), but only as and when received;

(ii)in the case of a casualty, insurance proceeds; and

(iii)in the case of a condemnation or similar event, condemnation awards and similar payments;

net of

(b)the sum of:

(i) all reasonable fees and out-of-pocket expenses paid to third parties in connection with such event;

(ii) in the case of a sale, transfer or other disposition of an asset, the amount of all payments required to be made as a result of such event to repay Indebtedness (other than Loans) secured by such asset or otherwise subject to mandatory prepayment as a result of such event; and

(iii) the amount of all taxes paid (or reasonably estimated to be payable) and the amount of any reserves established to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by a Financial Officer).

“NYFRB” means the Federal Reserve Bank of New York.

“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from a Federal funds broker of recognized standing selected by it; provided,further, that if any of the aforesaid rates shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“Obligations” means all unpaid principal of and accrued and unpaid interest on the Loans, all LC Exposure, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations and indebtedness (including interest and fees accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), obligations and liabilities

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of any of the Borrower and its Subsidiaries to any of the Lenders, the Administrative Agent, the Issuing Bank or any indemnified party, individually or collectively, existing on the Effective Date or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise, arising or incurred under this Agreement or any of the other Loan Documents or in respect of any of the Loans made or reimbursement or other obligations incurred or any of the Letters of Credit or other instruments at any time evidencing any thereof.

“OFAC” means the Office of Foreign Assets Control of the U.S. Department of Treasury.

“Other Taxes” means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight Eurodollar borrowings by U.S.-managed banking offices of depository institutions (as such composite rate shall be determined by the NYFRB as set forth on its public website from time to time) and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate (from and after such date as the NYFRB shall commence to publish such composite rate).

“Parent” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.

“Participant” has the meaning set forth in Section 9.04.

“Participant Register” has the meaning assigned to such term in Section 9.04(c).

“Patriot Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

“Permitted Acquisition” means any acquisition (whether by purchase, merger, consolidation or otherwise, but excluding in any event a Hostile Acquisition) or series of related acquisitions by the Borrower or any Subsidiary of (i) all or substantially all the assets of or (ii) all or substantially all the Equity Interests in, a Person or division or line of business of a Person, if, at the time of and immediately after giving effect thereto, (a) no Default has occurred and is continuing or would arise after giving effect thereto, (b) such Person or division or line of business is engaged in the same or a similar line of business as the Borrower and the Subsidiaries or business reasonably related thereto, (c) all actions required to be taken with respect to such acquired or newly formed Subsidiary under Section 5.09 shall have been taken, (d) the Borrower and the Subsidiaries are (i) in compliance with the covenant contained in Section 6.12(b) as of the last day of the most recently completed fiscal quarter, and (ii) in compliance with the covenant contained in Section 6.12(a) on a pro forma basis reasonably acceptable to the Administrative Agent after giving effect to such acquisition (but without giving effect to any synergies or cost savings), with such covenants under this clause (ii) recomputed as of the last day of the most recently ended fiscal quarter of the Borrower for which Financials are available, as if such acquisition (and any related incurrence or repayment of Indebtedness, with any new Indebtedness being deemed to be amortized over the applicable testing period in accordance with its terms) had occurred on the first day of each relevant period for testing such compliance and, if the aggregate consideration paid in respect of such acquisition exceeds $50,000,000, the Borrower shall have delivered to the Administrative Agent a certificate of a Financial Officer of the Borrower to such effect, together with all relevant financial information, statements and projections reasonably requested by the Administrative Agent and (e) in the case of an acquisition or merger involving the Borrower or a Subsidiary, the Borrower or such Subsidiary is the surviving entity of such merger and/or consolidation.

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“Permitted Encumbrances” means:

(a) Liens imposed by law for taxes, assessments or government charges or claims that are not yet due or are being contested in compliance with Section 5.04;

(b) landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law or customary reservations or restrictions of title, in each case, arising in the ordinary course of business and securing obligations that are not overdue by more than thirty (30) days or are being contested in compliance with Section 5.04;

(c) Liens or deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;

(d) Liens or deposits to secure the performance of bids, trade contracts, leases, statutory or regulatory obligations, surety and appeal bonds, performance bonds, bids, leases, government contracts, trade contracts and other obligations of a like nature, in each case in the ordinary course of business;

(e) judgment Liens in respect of judgments that do not constitute an Event of Default under clause (k) of Article VII;

(f) non-exclusive licenses (with respect to intellectual property and other property), leases or subleases granted to third parties in the ordinary course of business which do not interfere in any material respect with the ordinary conduct of the business of the Borrower or any of its Subsidiaries;

(g) exclusive licenses (with respect to intellectual property and other property) granted to third parties in the ordinary course of business of the Borrower or any of its Subsidiaries consistent with past practice that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary;

(h) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary;

(i) any interest or title of a lessor or sublessor or lessee or sublessee under any lease entered into by the Borrower or any of its Subsidiaries in the ordinary course of business;

(j) Liens arising from precautionary filings of UCC financing statements relating solely to leases and other transactions entered into in the ordinary course of business;

(k) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation or exportation of goods in the ordinary course of business;

(l) Liens arising with respect to repurchase agreements and reverse repurchase agreements permitted under Section 6.04, provided that such Liens do not extend to any assets other than those that are the subject of such repurchase agreement or reverse repurchase agreement;

(m) Liens in favor of a collection bank on items in the course of collection (and the documents related thereto) arising in the ordinary course of business of the Borrower and the Subsidiaries under Article IV of the UCC; and

(n) any zoning or similar law or right reserved to or vested in any Government Authority to control or regulate the use of any real property;

provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.

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“Permitted Investments” means:

(a) direct obligations of, or obligations, the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

(b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s;

(c) investments in certificates of deposit, banker’s acceptances, time deposits and overnight bank deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;

(d) fully collateralized repurchase agreements with a term of not more than thirty (30) days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above;

(e) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000;

(f) securities, with average maturities of 12 months or less from the date of acquisition, issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory that are rated AA by S&P and Aa by Moody’s; and

(g) instruments equivalent to those referred to in clauses (a) through (f) above denominated in Canadian dollars comparable in credit quality and tenor to those referred to above and customarily used by corporation for cash purposes in Canada to the extent reasonably required in connection with any business conducted by any Subsidiary organized in such jurisdiction.

“Permitted Safeguard Distributor Transaction” means (i) the acquisition (whether by purchase, merger, consolidation or otherwise) or series of related acquisitions by the Borrower or any of its Subsidiaries of (a) all or substantially all of the assets of or (b) all or substantially all of the Equity Interests in, a Person or division or line of business of a Person engaged in the sale or distribution of the Safeguard services and product line of the Borrower and its Subsidiaries (or any competitor services or product lines thereto), if, at the time of and immediately after giving effect thereto, (w) no Default has occurred and is continuing or would arise after giving effect thereto, (x) in the case of any such acquisition or merger involving the Borrower or a Subsidiary, the Borrower or such Subsidiary is the surviving entity of such merger and/or consolidation, (y) the aggregate consideration paid in respect of such acquisition, when taken together with the aggregate consideration paid in respect of all other Permitted Safeguard Acquisition Transactions does not exceed $20,000,000 in any fiscal year of the Borrower and (z) all of the assets (other than de minimis immaterial assets and any assets related to customer lists) acquired pursuant to any such acquisition or all of the equity of an entity holding such assets shall have been sold, transferred, leased or otherwise disposed of pursuant to clause (ii) below on or prior to the 12-month anniversary of such acquisition (each a “Permitted Safeguard Acquisition Transaction”), and (ii) the sale, transfer, lease or other disposition (in one transaction or in any series of related transactions) for Fair Market Value of any assets acquired pursuant to a Permitted Safeguard Acquisition Transaction or the equity of an entity holding such assets, the consideration for which may be cash, installment payments settled through future commissions or otherwise as determined by the Borrower in its commercially reasonable judgment acting in good faith (“Permitted Safeguard Sale Consideration”).

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“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Pledge Subsidiary” means (i) each Domestic Subsidiary which is a Material Subsidiary and (ii) each First Tier Foreign Subsidiary which is a Material Subsidiary.

“Post-Closing Matters Side Letter” means that certain Post Closing Matters Side Letter, dated as of the date hereof between the Borrower and the Administrative Agent, as the same may be amended, restated or otherwise modified from time to time.

“Prepayment Event” means:

(a) any sale, transfer or other disposition (including pursuant to a sale and leaseback transaction) of any property or asset of the Borrower or any Subsidiary, but excluding dispositions described in Section 6.03(a) other than Section 6.03(a)(iv)(D); or

(b) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of the Borrower or any Subsidiary (excluding inventory) with a fair market value immediately prior to such event equal to or greater than $25,000,000.

“Prime Rate” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

“Pro Forma Basis” means, with respect to any event, that the Borrower is in compliance on a proforma basis with the applicable covenant, calculation or requirement herein recomputed as if the event with respect to which compliance on a Pro Forma Basis is being tested had occurred on the first day of the four fiscal quarter period most recently ended on or prior to such date for which Financials have been delivered pursuant to Section 5.01.

“Register” has the meaning set forth in Section 9.04.

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents, advisors and representatives of such Person and such Person’s Affiliates.

“Required Lenders” means, subject to Section 2.21, at any time, Lenders having Credit Exposures and unused Commitments representing more than 50% of the sum of the Total Credit Exposure and unused Commitments at such time; provided that, for purposes of declaring the Loans to be due and payable pursuant to Article VII, and for all purposes after the Loans become due and payable pursuant to Article VII or the Commitments expire or terminate, then, as to each Lender, clause (a) of the definition of Swingline Exposure shall only be applicable for purposes of determining its Revolving Credit Exposure to the extent such Lender shall have funded its participation in the outstanding Swingline Loans.

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in the Borrower or any Subsidiary or any option, warrant or other right to acquire any such Equity Interests in the Borrower or any Subsidiary;

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provided that no such dividend, distribution or payment certified by the Borrower to the Administrative Agent in writing as having a bona fide purpose directly related to effecting any disposition permitted under Section 6.03 or any Permitted Acquisition (as determined by the Administrative Agent in its reasonable discretion) shall constitute a Restricted Payment.

“Revolving Availability Period” means the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of the Revolving Commitments.

“Revolving Commitment” means, with respect to each Lender, the commitment of such Lender, if any, to make Revolving Loans and to acquire participations in Letters of Credit and Swingline Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such commitment may be (a) reduced or terminated from time to time pursuant to Section 2.09, (b) increased from time to time pursuant to Section 2.20 or (c) reduced or increased from time to time pursuant to the assignments by or to such Revolving Lender pursuant to Section 9.04. The amount of each Lender’s Revolving Commitment as of the Amendment No. 3 Effective Date is set forth on Schedule A (as amended by Amendment No. 3), and otherwise may be reflected in the Assignment and Assumption or other documentation contemplated hereby pursuant to which such Lender shall have assumed its Revolving Commitment, as applicable. The aggregate amount of the Revolving Commitments as of the Amendment No. 3 Effective Date is $525,000,000.

“Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans, its LC Exposure and its Swingline Exposure at such time.

“Revolving Lender” means, as of any date of determination, each Lender that has a Revolving Commitment or, if the Revolving Commitments have terminated or expired, a Lender with Revolving Credit Exposure.

“Revolving Loan” means a Loan made by a Revolving Lender pursuant to Section 2.01(a).

“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business.

“Sale and Leaseback Transaction” means any sale or other transfer of any property or asset by any Person with the intent to lease such property or asset as lessee.

“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, including Crimea, Cuba, Iran, North Korea, Sudan and Syria).

“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State, the United Nations Security Council, the European Union, any European Union member state, Her Majesty’s Treasury of the United Kingdom, or any other relevant sanctions authority, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b).

“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State or (b) the United Nations Security Council, the European Union, any European Union member state, Her Majesty’s Treasury of the United Kingdom, or any other relevant sanctions authority.

“SEC” means the United States Securities and Exchange Commission.

“Secured Obligations” means all Obligations, together with all Swap Obligations and Banking Services Obligations owing to one or more Lenders or their respective Affiliates; provided that the definition of

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“Secured Obligations” shall not create or include any guarantee by any Loan Party of (or grant of security interest by any Loan Party to support, as applicable) any Excluded Swap Obligations of such Loan Party for purposes of determining any obligations of any Loan Party.

“Secured Parties” means the holders of the Secured Obligations from time to time and shall include (i) each Lender and the Issuing Bank in respect of its Loans and LC Exposure respectively, (ii) the Administrative Agent, the Issuing Bank and the Lenders in respect of all other present and future obligations and liabilities of the Borrower and each Subsidiary of every type and description arising under or in connection with this Agreement or any other Loan Document, (iii) each Lender and affiliate of such Lender in respect of Swap Agreements and Banking Services Agreements entered into with such Person by the Borrower or any Subsidiary, (iv) each indemnified party under Section 9.03 in respect of the obligations and liabilities of the Borrower to such Person hereunder and under the other Loan Documents, and (v) their respective successors and (in the case of a Lender, permitted) transferees and assigns.

“Security Agreement” means that certain Pledge and Security Agreement (including any and all supplements thereto), dated as of the date hereof, between the Loan Parties and the Administrative Agent, for the benefit of the Administrative Agent and the other Secured Parties, and any other pledge or security agreement entered into, after the date of this Agreement by any other Loan Party (as required by this Agreement or any other Loan Document), or any other Person, as the same may be amended, restated or otherwise modified from time to time.

“Solvent” means, in reference to the Borrower, (i) the fair value of the assets of the Borrower as a going concern, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (ii) the present fair saleable value of the property of the Borrower as a going concern will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii) the Borrower will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) the Borrower will not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted after the Effective Date.

“Specified Swap Obligation” means, with respect to any Loan Party, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act or any rules or regulations promulgated thereunder.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D of the Board. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D of the Board or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“Subordinated Indebtedness” means any Indebtedness of the Borrower or any Subsidiary the payment of which is subordinated pursuant to Subordinated Indebtedness Documents to payment of the obligations under the Loan Documents.

“Subordinated Indebtedness Documents” means any document, agreement or instrument evidencing any Subordinated Indebtedness or entered into in connection with any Subordinated Indebtedness.

“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership,

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association or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned or held.

“Subsidiary” means any subsidiary of the Borrower.

“Subsidiary Guarantor” means each Material Subsidiary (other than Affected Foreign Subsidiaries) that is party to the Subsidiary Guaranty. The Subsidiary Guarantors on the Effective Date are identified as such in Schedule 3.01 hereto.

“Subsidiary Guaranty” means that certain Guaranty dated as of the Effective Date (including any and all supplements thereto) and executed by each Subsidiary Guarantor party thereto, and, in the case of any guaranty by a Foreign Subsidiary, any other guaranty agreements as are reasonably requested by the Administrative Agent and its counsel which would not cause the occurrence of a Deemed Dividend Problem, in each case as amended, restated, supplemented or otherwise modified from time to time.

“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a Swap Agreement.

“Swap Obligations” means any and all obligations of the Borrower or any Subsidiary, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Swap Agreements permitted hereunder with a Lender or an Affiliate of a Lender, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any such Swap Agreement transaction.

“Swingline Exposure” means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall be the sum of (a) its Applicable Percentage of the total Swingline Exposure at such time other than with respect to any Swingline Loans made by such Lender in its capacity as a Swingline Lender and (b) the aggregate principal amount of all Swingline Loans made by such Lender as a Swingline Lender outstanding at such time (less the amount of participations funded by the other Lenders in such Swingline Loans).

“Swingline Lender” means JPMorgan Chase Bank, N.A., in its capacity as lender of Swingline Loans hereunder.

“Swingline Loan” means a Loan made pursuant to Section 2.05.

“Syndication Agent” means Fifth Third Bank in its capacity as syndication agent for the credit facility evidenced by this Agreement.

“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, assessment fees, charges or withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Term Lender” means, as of any date of determination, each Lender having a Term Loan Commitment or that holds Term Loans.

“Term Loan Availability Period” means the period commencing on the Amendment No. 3 Effective Date and ending on the Term Loan Commitment Termination Date.

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“Term Loan Commitment” means, (a) as to any Lender, the aggregate commitment of such Lender to make Term Loans as set forth on Schedule 2.01 (as amended by Amendment No. 3) or in the most recent Assignment and Assumption or other documentation contemplated hereby executed by such Lender, and (b) as to all Lenders, the aggregate commitment to make Term Loans, which aggregate commitment shall be $200,000,000 as of the Amendment No. 3 Effective Date. After advancing the Term Loan, each reference to a Lender’s Term Loan Commitment shall refer to that Lender’s Applicable Percentage of the Term Loans.

“Term Loan Commitment Termination Date” means the earliest to occur of (a) the Term Loan Funding Date (it being understood and agreed that, unless previously terminated, any undrawn Term Loan Commitments shall be reduced to zero at 5:00 p.m. (Chicago time) on the Term Loan Funding Date), (b) March 21, 2017, and (c) any earlier date upon which the Term Loan Commitments are terminated in accordance with the terms hereof.

“Term Loan Funding Date” means the date on which the Term Loans are funded, subject to satisfaction (or waiver in accordance with Section 9.02) of the conditions specified in Sections 4.02 and 4.03.

“Term Loans” means the term loans made by the Term Lenders to the Borrower pursuant to Section 2.01(b).

“Total Credit Exposure” means the sum of the Total Revolving Credit Exposure and the aggregate principal amount of all Term Loans outstanding at such time.

“Total Revolving Credit Exposure” means the sum of the outstanding principal amount of all Lenders’ Revolving Loans, their LC Exposure and their Swingline Exposure at such time; provided, that, clause (a) of the definition of Swingline Exposure shall only be applicable to the extent Lenders shall have funded their respective participations in the outstanding Swingline Loans.

“Transactions” means the execution, delivery and performance by the Loan Parties of this Agreement and the other Loan Documents, the borrowing of Loans and other credit extensions, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.

“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or any other state the laws of which are required to be applied in connection with the issue of perfection of security interests.

“Unliquidated Obligations” means, at any time, any Secured Obligations (or portion thereof) that are contingent in nature or unliquidated at such time, including any Secured Obligation that is: (i) an obligation to reimburse a bank for drawings not yet made under a letter of credit issued by it; (ii) any other obligation (including any guarantee) that is contingent in nature at such time; or (iii) an obligation to provide collateral to secure any of the foregoing types of obligations.

“Unrestricted Cash” means the aggregate unrestricted cash and Permitted Investments of the Borrower and the Subsidiary Guarantors (but excluding any cash pledged to third parties) in respect of which the Administrative Agent shall have a first priority (subject solely to Permitted Encumbrances in favor of depository banks and to the Administrative Agent’s Lien created pursuant to any Loan Document) perfected security interest.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding aggregate principal amount of such Indebtedness into (b) the sum of the total of the products obtained by multiplying (i) the amount of each then remaining installment,

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sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such date the making of such payment.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

SECTION 1.02. Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar Revolving Loan”). Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).

SECTION 1.03. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. The word “law” shall be construed as referring to all statutes, rules, regulations, codes and other laws (including official rulings and interpretations thereunder having the force of law or with which affected Persons customarily comply), and all judgments, orders and decrees, of all Governmental Authorities. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein), (b) any definition of or reference to any statute, rule or regulation shall be construed as referring thereto as from time to time amended, supplemented or otherwise modified (including by succession of comparable successor laws), (c) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all functions thereof, (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

SECTION 1.04. Accounting Terms; GAAP.

(a) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (previously referred to as Statement of Financial Accounting Standards 159) (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other

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liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein and (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.

(b) Notwithstanding anything to the contrary contained in paragraph (a) above or the definition of “Capital Lease Obligations”, in the event of an accounting change requiring operating leases to be capitalized, only those leases that would constitute Capital Lease Obligations as of the Amendment No. 3 Effective Date shall be considered Capital Lease Obligations and all calculations and deliverables under this Agreement or any other Loan Document shall be made in accordance therewith (provided that all financial statements delivered to the Administrative Agent in accordance with the terms of this Agreement after the date of such accounting change shall contain a schedule showing the adjustments necessary to reconcile such financial statements with GAAP as in effect immediately prior to such accounting change).

SECTION 1.05. Status of Obligations. In the event that the Borrower or any other Loan Party shall at any time issue or have outstanding any other Subordinated Indebtedness, the Borrower shall take or cause such other Loan Party to take all such actions as shall be necessary to cause the Secured Obligations to constitute senior indebtedness (however denominated) in respect of such Subordinated Indebtedness and to enable the Administrative Agent and the Lenders to have and exercise any payment blockage or other remedies available or potentially available to holders of senior indebtedness under the terms of such Subordinated Indebtedness. Without limiting the foregoing, the Secured Obligations are hereby designated as “senior indebtedness” and as “designated senior indebtedness” and words of similar import under and in respect of any indenture or other agreement or instrument under which such other Subordinated Indebtedness is outstanding and are further given all such other designations as shall be required under the terms of any such Subordinated Indebtedness in order that the Lenders may have and exercise any payment blockage or other remedies available or potentially available to holders of senior indebtedness under the terms of such Subordinated Indebtedness.

ARTICLE II

The Credits

SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein, (a) each Revolving Lender (severally and not jointly) agrees to make Revolving Loans to the Borrower in Dollars from time to time during the Revolving Availability Period in an aggregate principal amount that will not result in (i) such Lender’s Revolving Credit Exposure exceeding such Lender’s Revolving Commitment or (ii) the sum of the total Revolving Credit Exposures exceeding the aggregate Revolving Commitments and (b) each Term Lender with a Term Loan Commitment (severally and not jointly) agrees to make a Term Loan to the Borrower in Dollars on any single date (and in a single draw) during the Term Loan Availability Period, in an amount equal to such Lender’s Term Loan Commitment by making immediately available funds available to the Administrative Agent’s designated account, not later than the time specified by the Administrative Agent. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans. Amounts repaid or prepaid in respect of Term Loans may not be reborrowed.

SECTION 2.02. Loans and Borrowings. (a) Each Loan (other than a Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the applicable Lenders ratably in accordance with their respective Commitments of the applicable Class. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required. Any Swingline Loan shall be made in accordance with the procedures set forth in Section 2.05. The Term Loans shall be repaid as set forth in Section 2.10.

(b) Subject to Section 2.14, each Revolving Borrowing and Term Loan Borrowing shall be comprised

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entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan (and in the case of an Affiliate, the provisions of Sections 2.14, 2.15, 2.16 and 2.17 shall apply to such Affiliate to the same extent as to such Lender); provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

(c) At the commencement of each Interest Period for any Eurodollar Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $500,000. At the time that each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $500,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the aggregate Revolving Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e). Each Swingline Loan shall be in an amount that is an integral multiple of $100,000 and not less than $500,000. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of eight (8) Eurodollar Borrowings outstanding.

(d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.

SECTION 2.03. Requests for Borrowings. To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., Chicago time, three (3) Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., Chicago time, on the date of the proposed Borrowing; provided that any such notice of an ABR Revolving Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e) may be given not later than 9:00 a.m., Chicago time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

(i)the aggregate principal amount of the requested Borrowing;

(ii)the date of such Borrowing, which shall be a Business Day;

(iii)whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

(iv)whether such Borrowing is a Revolving Borrowing or a Term Loan Borrowing;

(v)in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and

(vi)the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.07.

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of seven days’ duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

SECTION 2.04. Intentionally Omitted.

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SECTION 2.05. Swingline Loans. (a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans in Dollars to the Borrower from time to time during the Revolving Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $35,000,000, (ii) the sum of the Total Revolving Credit Exposure exceeding the aggregate Revolving Commitments; provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan or (iii) such Swingline Lender’s Total Revolving Credit Exposure exceeding its Revolving Commitment. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans.

(b) To request a Swingline Loan, the Borrower shall notify the Administrative Agent of such request by telephone (confirmed by telecopy), not later than 11:00 a.m., Chicago time, on the day of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan. The Administrative Agent will promptly advise the Swingline Lender of any such notice received from the Borrower. The Swingline Lender shall make each Swingline Loan available to the Borrower by means of a credit to an account designated by the Borrower (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e), by remittance to the Issuing Bank) by 2:00 p.m., Chicago time, on the requested date of such Swingline Loan.

(c) The Swingline Lender may by written notice given to the Administrative Agent not later than 9:00 a.m., Chicago time, on any Business Day require the Revolving Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which Revolving Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Revolving Lender, specifying in such notice such Revolving Lender’s Applicable Percentage of such Swingline Loan or Loans. Each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Revolving Lender’s Applicable Percentage of such Swingline Loan or Loans. Each Revolving Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Revolving Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.07 with respect to Loans made by such Revolving Lender (and Section 2.07 shall apply, mutatismutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Revolving Lenders. The Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear; provided that any such payment so remitted shall be repaid to the Swingline Lender or to the Administrative Agent, as applicable, if and to the extent such payment is required to be refunded to the Borrower for any reason. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.

SECTION 2.06. Letters of Credit. (a) General. Subject to the terms and conditions set forth herein, the Borrower may request the issuance of Letters of Credit denominated in Dollars for its own account, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Revolving Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. Notwithstanding anything herein to the contrary, (i) the Issuing Bank

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shall have no obligation hereunder to issue, and shall not issue, any Letter of Credit the proceeds of which would be made available to any Person (x) to fund any activity or business of or with any Sanctioned Person or (y) in any manner that would result in a violation of any Sanctions by any party to this Agreement, and (ii) the Issuing Bank shall have no obligation hereunder to issue any Letter of Credit the proceeds of which would be made available to any Person in any country or territory that, at the time of such funding, is subject of any Sanctions.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with clause (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the amount of the LC Exposure shall not exceed $20,000,000 (ii) no Lender’s Revolving Credit Exposure shall exceed its Revolving Commitment (iii) the sum of the Total Revolving Credit Exposure shall not exceed the aggregate Revolving Commitments.

(c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five (5) Business Days prior to the Maturity Date; provided that (i) if the Borrower requests that any Letter of Credit have an expiration date after the Maturity Date, it is understood and agreed that such Letter of Credit shall only be issued, amended, renewed or extended, as applicable, if agreed to by the Issuing Bank and the Administrative Agent in their sole discretion and (ii) to the extent that any Letter of Credit shall have an expiration date after the Maturity Date, subject in all cases to the immediately preceding clause (i), such Letter of Credit may expire on the date that is one year after the Maturity Date if the Borrower has deposited into the LC Collateral Account (as defined in clause (j) of this Section) cash collateral in an amount equal to 105% of the LC Exposure plus any accrued and unpaid interest and fees thereon as of the Maturity Date, in accordance with the terms set forth in clause (j) of this Section.

(d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Revolving Lenders, the Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Revolving Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Revolving Lender’s Applicable Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in clause (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason. Each Revolving Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent in Dollars the amount equal to such LC Disbursement, calculated as of the date the Issuing Bank made such LC Disbursement not later than 11:00 a.m., Chicago time, on the date that such LC Disbursement is made, if the Borrower shall have

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received notice of such LC Disbursement prior to 9:00 a.m., Chicago time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 11:00 a.m., Chicago time, on the Business Day immediately following the day that the Borrower receives such notice, provided that, if such LC Disbursement is not less than $1,000,000, the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.05 that such payment be financed with an ABR Revolving Borrowing or Swingline Loan in an equivalent amount of such LC Disbursement and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Revolving Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatismutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Revolving Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Revolving Lenders and the Issuing Bank as their interests may appear. Any payment made by a Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

(f) Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements as provided in clause (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder. Neither the Administrative Agent, the Revolving Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to special, indirect, consequential or punitive damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank

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shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.

(h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to clause (e) of this Section, then Section 2.13(c) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to clause(e) of this Section to reimburse the Issuing Bank shall be for the account of such Revolving Lender to the extent of such payment.

(i) Replacement of Issuing Bank. The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Revolving Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit then outstanding and issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

(j) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Revolving Lenders (the “LC Collateral Account”), an amount in cash equal to 105% of the amount of the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (h) or (i) of Article VII. Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the Secured Obligations. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account and the Borrower hereby grants the Administrative Agent a security interest in the LC Collateral Account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other Secured Obligations. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three (3) Business Days after all Events of Default have been cured or waived. If the Borrower is required to provide an amount of cash collateral hereunder pursuant to Section 2.11, such amount (to the extent not applied is aforesaid) shall be returned to the Borrower as and to the extent that, after giving effect to such return, the Total Revolving Credit

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Exposure would not exceed the aggregate Revolving Commitments and no Event of Default shall have occurred and be continuing.

(k) Existing Letters of Credit. Certain letters of credit issued for the account of the Borrower by JPMorgan Chase Bank, N.A., and outstanding on the Effective Date are identified on Schedule 2.06 (the “Existing Letters of Credit”). As of the Effective Date, (i) the Existing Letters of Credit shall be deemed to be Letters of Credit issued pursuant to and in compliance with this Section 2.06, (ii) the undrawn amount of the Existing Letters of Credit and the unreimbursed amount of LC Disbursements with respect to the Existing Letters of Credit shall be included in the calculation of LC Exposure and (iii) the provisions of this Section 2.06 and Section 2.12(b) shall apply to the Existing Letters of Credit, and the Borrower and the Revolving Lenders hereby expressly acknowledge their respective obligations hereunder with respect to the Existing Letters of Credit.

SECTION 2.07. Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 p.m., Chicago time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders in an amount equal to such Lender’s Applicable Percentage of the requested Borrowing; provided that Swingline Loans shall be made as provided in Section 2.05. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower designated by the Borrower in the applicable Borrowing Request; provided that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e) shall be remitted by the Administrative Agent to the Issuing Bank.

(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with clause (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans; provided, that, to the extent the Borrower pays such interest, the Borrower shall not be required to pay any additional interest thereon it would otherwise be required to pay pursuant to Section 2.13. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

SECTION 2.08. Interest Elections. (a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall not apply to Swingline Borrowings, which may not be converted or continued.

(b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request signed by the Borrower. Notwithstanding any contrary provision herein, this Section shall not be construed to permit the Borrower to elect an Interest Period for Eurodollar Loans that does not comply with Section 2.02(d).

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(c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii)whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which Interest Period shall be a period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of seven days’ duration.

(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to a ABR Borrowing having an interest period of seven days’ duration at the end of the Interest Period applicable thereto.

SECTION 2.09. Termination and Reduction of Commitments. (a) Unless previously terminated, (i) the Term Loan Commitments shall terminate on the Term Loan Commitment Termination Date and (ii) the Revolving Loan Commitments and all other commitments hereunder shall terminate on the Maturity Date.

(b) The Borrower may at any time terminate, or from time to time reduce, the Revolving Commitments or, prior to the Term Loan Commitment Termination Date, the Term Loan Commitments; provided that (i) each reduction of the Revolving Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000, (ii) each reduction of the Term Loan Commitments shall be in an amount that is an integral multiple of $5,000,000 and not less than $25,000,000 and (iii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.11, the Total Revolving Credit Exposure would exceed the aggregate Revolving Commitments.

(c) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under clause (b) of this Section at least three (3) Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments shall

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be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.

SECTION 2.10. Repayment and Amortization of Loans; Evidence of Debt. (a) The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Revolving Lender the then unpaid principal amount of each Revolving Loan on the Maturity Date and (ii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the fifth Business Day after such Swingline Loan is made; provided that on each date that a Revolving Borrowing is made, the Borrower shall repay all Swingline Loans then outstanding and the proceeds of any such Borrowing shall be applied by the Administrative Agent to repay any Swingline Loans outstanding. The Borrower shall repay Term Loans on each date set forth below in the aggregate principal amount set forth opposite such date (as adjusted from time to time pursuant to Section 2.11(a) and Section 2.11(b)) (it being understood that no principal payments shall be required on a date specified below if the Term Loans have not been drawn prior to such date):

Date	Amount
March 14, 2017	$5,000,000
June 14, 2017	$5,000,000
September 14, 2017	$5,000,000
December 14, 2017	$6,250,000
March 14, 2018	$6,250,000
June 14, 2018	$6,250,000
September 14, 2018	$6,250,000
December 14, 2018	$7,500,000

To the extent not previously repaid, all unpaid Term Loans shall be paid in full in Dollars by the Borrower on the Maturity Date.

(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(d) The entries made in the accounts maintained pursuant to clause (b) or (c) of this Section shall be primafacie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

(e) Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with the provisions

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of this Section 2.11. The Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., Chicago time, three (3) Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., Chicago time, one (1) Business Day before the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 11:00 a.m., Chicago time, on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.09, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.09. Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Revolving Borrowing shall be applied ratably to the Revolving Loans included in the prepaid Revolving Borrowing, each voluntary prepayment of a Term Loan Borrowing shall be applied ratably to the Term Loans included in the prepaid Term Loan Borrowing in such order of application as directed by the Borrower and each mandatory prepayment of a Term Loan Borrowing shall be applied in accordance with Section 2.11(b). Prepayments shall be accompanied by (i) accrued interest to the extent required by Section 2.13 and (ii) break funding payments pursuant to Section 2.16.

(b) In the event and on each occasion that any Net Cash Proceeds are received by or on behalf of the Borrower or any of its Subsidiaries in respect of any Prepayment Event, the Borrower shall, immediately after such Net Cash Proceeds are received, prepay the Term Loans in the inverse order of maturity in an aggregate amount equal to 100% of such Net Cash Proceeds; provided that, if the Borrower shall deliver to the Administrative Agent a certificate of a Financial Officer to the effect that the Borrower or its relevant Subsidiaries intend to apply the Net Cash Proceeds from any Prepayment Event (or a portion thereof specified in such certificate), within 270 days after receipt of such Net Cash Proceeds, to acquire (or replace or rebuild) real property, equipment or other tangible assets (excluding inventory) to be used in the business of the Borrower and/or its Subsidiaries, and certifying that no Default has occurred and is continuing, then no prepayment shall be required pursuant to this paragraph in respect of the Net Cash Proceeds specified in such certificate; providedfurther that to the extent of any such Net Cash Proceeds therefrom that have not been so applied by the end of such 270 day period, at which time a prepayment shall be required in an amount equal to such Net Cash Proceeds that have not been so applied; provided, further that the Borrower shall not be permitted to make elections to use Net Cash Proceeds to acquire (or replace or rebuild) real property, equipment or other tangible assets (excluding inventory) with respect to Net Cash Proceeds in any fiscal year in an aggregate amount in excess of

$75,000,000.

(c) If at any time the sum of the aggregate principal amount of all of the Revolving Credit Exposures exceeds the aggregate Revolving Commitments, the Borrower shall immediately repay Borrowings or cash collateralize LC Exposure in an account with the Administrative Agent pursuant to Section 2.06(j), as applicable, in an aggregate principal amount of all Revolving Credit Exposures to be less than or equal to the aggregate Revolving Commitments.

SECTION 2.12. Fees. (a)The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee, which shall accrue at the Applicable Rate on the daily unused amount of the Revolving Commitment of such Revolving Lender during the period from and including the Effective Date to but excluding the date on which such Revolving Commitment terminates; provided, that for the purpose of calculating the commitment fee payable hereunder by the Borrower, such Lender’s Applicable Percentage of the total Swingline Exposure at such time shall not be considered as part of the used portion of its Commitment. Accrued commitment fees shall be payable quarterly in arrears on the last day of March, June, September and December of each year and on the date on which the Revolving Commitments terminate, commencing on the first such date to occur after the date hereof. The Borrower also agrees to pay the Administrative Agent for the account of each Lender a ticking fee, which shall accrue at the Applicable Rate on the average daily unused amount of the Term Loan Commitment. Ticking fees shall accrue during the period commencing on the date that is sixty (60) days after the Amendment No. 3 Effective

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Date and ending on the Term Loan Commitment Termination Date and shall be payable quarterly in arrears on the last day of March, June, September and December (if applicable) and on the date on the Term Loan Commitment Termination Date, commencing on the first such date to occur after such fees begin to accrue. All commitment and ticking fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(b) The Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate used to determine the interest rate applicable to Eurodollar Revolving Loans on the average daily amount of such Revolving Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Revolving Lender’s Commitment terminates and the date on which such Revolving Lender ceases to have any LC Exposure and (ii) to the Issuing Bank for its own account a fronting fee, which shall accrue at the rate of 0.125% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) attributable to Letters of Credit issued by the Issuing Bank during the period from and including the Effective Date to but excluding the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank’s standard fees and commissions with respect to the issuance, amendment, cancellation, negotiation, transfer, presentment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Unless otherwise specified above, accrued participation fees and fronting fees shall be payable quarterly in arrears on the last day of March, June, September and December (commencing on the first such date to occur after the Effective Date); provided that all such fees shall be payable on the date on which the Revolving Commitments terminate and any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within ten (10) days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(c) The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent.

(d) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the Issuing Bank, in the case of fees payable to it) for distribution, in the case of commitment fees, participation fees and ticking fees, to the applicable Lenders. Fees paid shall not be refundable under any circumstances.

SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at the Alternate Base Rate plus the Applicable Rate.

(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted

LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.

(c) Notwithstanding the foregoing, during the occurrence and continuance of an Event of Default, the Administrative Agent or the Required Lenders may, at their option, by notice to the Borrower (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 9.02 requiring the consent of “each Lender directly affected thereby” for reductions in interest rates), declare that (i) all Loans shall bear interest at 2% plus the rate otherwise applicable to such Loans as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount outstanding hereunder, such amount shall accrue at 2% plus the rate applicable to such fee or other obligation as provided hereunder.

(d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, upon termination of the Revolving Commitments; provided that (i) interest accrued pursuant to clause (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Revolving Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the

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date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.14. Alternate Rate of Interest. If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(a) the Administrative Agent determines (which determination shall be conclusive and binding absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period; or

(b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and any such Eurodollar Borrowing shall be repaid on the last day of the then current Interest Period applicable thereto and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

SECTION 2.15. Increased Costs. (a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any compulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank;

(ii) impose on any Lender or the Issuing Bank or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein; or

(iii) subject the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment hereunder to any Taxes (other than (A) Indemnified Taxes, (B) Excluded Taxes and (C) Other Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto;

and the result of any of the foregoing shall be to increase the cost to such Person of making, continuing, converting into or maintaining any Loan or of maintaining its obligation to make any such Loan or to increase the cost to such Person of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Person hereunder, whether of principal, interest or otherwise, then the Borrower will pay to such Person, such additional amount or amounts as will compensate such Person for such additional costs incurred or reduction suffered.

(b) If any Lender or the Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of this Agreement

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or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction suffered.

(c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in clause (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.

(d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor; providedfurther that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

SECTION 2.16. Break Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default or as a result of any prepayment pursuant to Section 2.11), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11 and is revoked in accordance therewith) or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. Such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for deposits in Dollars of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

SECTION 2.17. Taxes. (a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

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(b) In addition, the Borrower shall pay any Other Taxes imposed on or incurred by the Administrative Agent, a Lender or the Issuing Bank to the relevant Governmental Authority in accordance with applicable law.

(c) The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within ten (10) days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error.

(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Unless not legally entitled to do so:

(i) any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such forms or other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements;

(ii) any Foreign Lender that is entitled to an exemption from or reduction of any Tax with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower and the Administrative Agent, on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter, as may be necessary in the determination of the Borrower or the Administrative Agent, each in the reasonable exercise of its discretion), such properly completed and duly executed forms or other documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding;

(iii) without limiting the generality of the foregoing, in the event that the Borrower is resident for tax purposes in the United States, any Foreign Lender shall deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter, as may be necessary in the determination of the Borrower or the Administrative Agent, each in the reasonable exercise of its discretion), whichever of the following is applicable:

(A) properly completed and duly executed copies of Internal Revenue Service Form W-8BEN or Internal Revenue Service Form W-8BEN-E, as applicable, claiming eligibility for benefits of an income tax treaty to which the United States is a party, or

(B) properly completed and duly executed copies of Internal Revenue Service Form W-8ECI, or

(C) in the case of a Foreign Lender claiming the benefits of the exemption for “portfolio interest” under Section 881(c) of the Code, (A) a duly executed certificate to the effect that such Foreign Lender is not (i) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (ii) a ten-percent shareholder (within the meaning of Section 881(c)(3)(B) of the Code)

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of the Borrower or (iii) a controlled foreign corporation described in Section 881(c)(3)(C) of the Code and (B) properly completed and duly executed copies of Internal Revenue Service Form W-8BEN or Internal Revenue Service Form W-8BEN-E, as applicable,

(D) properly completed and duly executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in any Tax,

in each case together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower and the Administrative Agent to determine the withholding or deduction required to be made, if any;

(iv) without limiting the generality of the foregoing, in the event that the Borrower is resident for tax purposes in the United States, any Foreign Lender that does not act or ceases to act for its own account with respect to any portion of any sums paid or payable to such Lender under any of the Loan Documents (for example, in the case of a typical participation by such Lender) shall deliver to the Administrative Agent and the Borrower (in such number of copies as shall be requested by the recipient), on or prior to the date such Foreign Lender becomes a Lender, or on such later date when such Foreign Lender ceases to act for its own account with respect to any portion of any such sums paid or payable, and from time to time thereafter, as may be necessary in the determination of the Borrower or the Administrative Agent (each in the reasonable exercise of its discretion):

(A) duly executed and properly completed copies of the forms and statements required to be provided by such Foreign Lender under clause (iii), above, to establish the portion of any such sums paid or payable with respect to which such Lender acts for its own account and may be entitled to an exemption from or a reduction of the applicable Tax, and

(B) duly executed and properly completed copies of Internal Revenue Service Form W-8IMY (or any successor forms) properly completed and duly executed by such Foreign Lender, together with any information, if any, such Foreign Lender chooses to transmit with such form, and any other certificate or statement of exemption required under the Internal Revenue Code or the regulations thereunder, to establish that such Foreign Lender is not acting for its own account with respect to a portion of any such sums payable to such Foreign Lender;

(v) without limiting the generality of the foregoing, in the event that the Borrower is resident for tax purposes in the United States, any Lender that is not a Foreign Lender and is not an exempt recipient (as defined in section 6049(b)(4) of the Code and the United States Treasury Regulations thereunder) shall deliver to the Borrower and the Administrative Agent (in such numbers of copies as shall be requested by the recipient) on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter as prescribed by applicable law or upon the reasonable request of the Borrower or the Administrative Agent), duly executed and properly completed copies of Internal Revenue Service Form W-9; and

(vi) without limiting the generality of the foregoing, each Lender hereby agrees, from time to time after the initial delivery by such Lender of such forms, whenever a lapse in time or change in circumstances renders such forms, certificates or other evidence so delivered obsolete or inaccurate in any material respect, that such Lender shall promptly (1) deliver to the Administrative Agent and the Borrower two original copies of renewals, amendments or additional or successor forms, properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required in order to confirm or establish that such Lender is entitled to an exemption from or reduction of any Tax with respect to payments to such Lender under the Loan Documents and, if applicable, that such Lender does not act for its own account with respect to any portion of such payment, or (2) notify the Administrative Agent and the Borrower of its inability to deliver any such forms, certificates or other evidence.

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(f) If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent, at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this Section 2.17(f), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(g) Each Lender shall severally indemnify the Administrative Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes or Other Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender's failure to comply with the provisions of Section 9.04(c) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this Section 2.17(g).

(h) If the Administrative Agent or a Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.17, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.17 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This Section shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its Taxes which it deems confidential) to the Borrower or any other Person.

(i) For purposes of determining withholding Taxes imposed under FATCA, from and after the Amendment No. 3 Effective Date, the Borrower and the Administrative Agent shall treat (and the Lenders authorize the Administrative Agent to treat) the Obligations as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).

SECTION 2.18. Payments Generally; Allocations of Proceeds; Pro Rata Treatment; Sharing of Set-offs.

(a) The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to 11:00 a.m., Chicago time on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 10 South Dearborn Street, 7th

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Floor, Chicago, Illinois 60603, except payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in Dollars.

(b) Any proceeds of Collateral received by the Administrative Agent (i) not constituting a specific payment of principal, interest, fees or other sum payable under the Loan Documents (which shall be applied as required hereunder or otherwise as specified by the Borrower) or (ii) after an Event of Default has occurred and is continuing and the Administrative Agent so elects or the Required Lenders so direct, such funds shall be applied ratably first, to pay any fees, indemnities, or expense reimbursements including amounts then due to the Administrative Agent and the Issuing Bank from the Borrower, second, to pay any fees or expense reimbursements then due to the Lenders from the Borrower, third, to pay interest then due and payable on the Loans ratably, fourth, to prepay principal on the Loans and unreimbursed LC Disbursements and any other amounts owing with respect to Banking Services Obligations and Swap Obligations ratably, fifth, to pay an amount to the Administrative Agent equal to one hundred five percent (105%) of the aggregate undrawn face amount of all outstanding Letters of Credit and the aggregate amount of any unpaid LC Disbursements, to be held as cash collateral for such Obligations, and sixth, to the payment of any other Secured Obligation due to the Administrative Agent or any Lender by the Borrower. Notwithstanding the foregoing, amounts received from any Loan Party shall not be applied to any Excluded Swap Obligation of such Loan Party. Notwithstanding anything to the contrary contained in this Agreement, unless so directed by the Borrower, or unless a Default is in existence, none of the Administrative Agent or any Lender shall apply any payment which it receives to any Eurodollar Loan of a Class, except (a) on the expiration date of the Interest Period applicable to any such Eurodollar Loan or (b) in the event, and only to the extent, that there are no outstanding ABR Loans of the same Class and, in any event, the Borrower shall pay the break funding payment required in accordance with Section 2.16. The Administrative Agent and the Lenders shall have the continuing and exclusive right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Secured Obligations.

(c) At the election of the Administrative Agent, all payments of principal, interest, LC Disbursements, fees, premiums, reimbursable expenses (including, without limitation, all reimbursement for fees and expenses pursuant to Section 9.03), and other sums payable under the Loan Documents, may be paid from the proceeds of Borrowings made hereunder whether made following a request by the Borrower pursuant to Section 2.03 or a deemed request as provided in this Section or may be deducted from any deposit account of the Borrower maintained with the Administrative Agent. The Borrower hereby irrevocably authorizes (i) the Administrative Agent to make a Borrowing for the purpose of paying each payment of principal, interest and fees as it becomes due hereunder or any other amount due under the Loan Documents and agrees that all such amounts charged shall constitute Loans (including Swingline Loans) and that all such Borrowings shall be deemed to have been requested pursuant to Section 2.03 or 2.05, as applicable and (ii) the Administrative Agent to charge any deposit account of the Borrower maintained with the Administrative Agent for each payment of principal, interest and fees as it becomes due hereunder or any other amount due under the Loan Documents.

(d) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other similarly situated Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the applicable Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and participations in LC Disbursements and Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed

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to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements and Swingline Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

(e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the relevant Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the relevant Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the relevant Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

(f) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.05(c), 2.06(d) or (e), 2.07(b), 2.18(e) or 9.03(c), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender and for the benefit of the Administrative Agent, the Swingline Lender or the Issuing Bank to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid and/or (ii) hold any such amounts in a segregated account as cash collateral for, and application to, any future funding obligations of such Lender under such Sections; in the case of each of (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.

SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If (i) any Lender requests compensation under Section 2.15, or (ii) the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, or (iii) any Lender becomes a Defaulting Lender, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b) If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, or if any Lender becomes a Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under the Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and if a Revolving Commitment is being assigned, the Issuing Bank and the Swingline Lender), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a

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reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

SECTION 2.20. Expansion Option. The Borrower may from time to time elect to increase the Revolving Commitments or enter into one or more tranches of term loans (each an “Incremental Term Loan”), in each case in minimum increments of $15,000,000 so long as after giving effect thereto, the aggregate amount of such increases and all such Incremental Term Loans from and after the Amendment No. 3 Effective Date does not exceed $175,000,000. The Borrower may arrange for any such increase or tranche to be provided by one or more Lenders (each Lender so agreeing to an increase in its Commitment, or to participate in such Incremental Term Loans, an “Increasing Lender”), or by one or more new banks, financial institutions or other entities (each such new bank, financial institution or other entity, an “Augmenting Lender”; provided that no Ineligible Institution may be an Augmenting Lender), which agree to increase their existing Revolving Commitments, or to participate in such Incremental Term Loans, or provide new Revolving Commitments, as the case may be; provided that (i) each Augmenting Lender and Increasing Lender, shall be subject to the approval of the Borrower, the Administrative Agent and the Issuing Bank and (ii) (x) in the case of an Increasing Lender, the Borrower and such Increasing Lender execute an agreement substantially in the form of Exhibit C hereto, and (y) in the case of an Augmenting Lender, the Borrower and such Augmenting Lender execute an agreement substantially in the form of Exhibit D hereto. No Lender shall have any obligation to provide any such increase and each Lender may refuse to provide such increase in its absolute and sole discretion. No consent of any Lender (other than the Lenders participating in the increase or any Incremental Term Loan) shall be required for any increase in Revolving Commitments or Incremental Term Loan pursuant to this Section 2.20. Increases and new Revolving Commitments and Incremental Term Loans created pursuant to this Section 2.20 shall become effective on the date agreed by the Borrower, the Administrative Agent and the relevant Increasing Lenders or Augmenting Lenders, and the Administrative Agent shall notify each Lender thereof. Notwithstanding the foregoing, no increase in the Revolving Commitments (or in the Revolving Commitment of any Lender) or tranche of Incremental Term Loans shall become effective under this paragraph unless, (i) on the proposed date of the effectiveness of such increase or Incremental Term Loans, (A) the conditions set forth in clauses (a) and (b) of Section 4.02 shall be satisfied or waived by the Required Lenders and the Administrative Agent shall have received a certificate to that effect dated such date and executed by a Financial Officer of the Borrower and (B) the Borrower shall be in compliance (on a Pro Forma Basis) with the covenants contained in Section 6.12 and (ii) the Administrative Agent shall have received documents and opinions consistent with those delivered on the Effective Date as to the organizational power and authority of the Borrower to borrow hereunder after giving effect to such increase. On the effective date of any increase in the Revolving Commitments or any Incremental Term Loans being made, (i) each relevant Increasing Lender and Augmenting Lender shall make available to the Administrative Agent such amounts in immediately available funds as the Administrative Agent shall determine, for the benefit of the other Lenders, as being required in order to cause, after giving effect to such increase and the use of such amounts to make payments to such other Lenders, each Revolving Lender’s portion of the outstanding Revolving Loans of all the Lenders to equal its Applicable Percentage of such outstanding Revolving Loans, and (ii) except in the case of any Incremental Term Loans, the Borrower shall be deemed to have repaid and reborrowed all outstanding Revolving Loans as of the date of any increase in the Revolving Commitments (with such reborrowing to consist of the Types of Revolving Loans, with related Interest Periods if applicable, specified in a notice delivered by the Borrower, in accordance with the requirements of Section 2.03). The deemed payments made pursuant to clause (ii) of the immediately preceding sentence shall be accompanied by payment of all accrued interest on the amount prepaid and, in respect of each Eurodollar Loan, shall be subject to indemnification by the Borrower pursuant to the provisions of Section 2.16 if the deemed payment occurs other than on the last day of the related Interest Periods. The Incremental Term Loans (a) shall rank pari passu in right of payment with the Revolving Loans and the existing Term Loans, (b) shall not mature earlier than the Maturity Date (but may have amortization prior to such date) and (c) shall be treated substantially the same as (and in any event no more favorably than) the Revolving Loans and the existing Term Loans; provided that (i) the terms and conditions applicable to any tranche of Incremental Term Loans maturing after the Maturity Date may provide for material additional or different financial or other covenants or prepayment requirements applicable only during periods after the Maturity Date and (ii) the Incremental Term Loans may be priced differently than the Revolving Loans and the existing Term Loans. Incremental Term Loans may be made hereunder pursuant to an amendment or restatement (an “Incremental Term Loan

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Amendment”) of this Agreement and, as appropriate, the other Loan Documents, executed by the Borrower, each Increasing Lender participating in such tranche, each Augmenting Lender participating in such tranche, if any, and the Administrative Agent. The Incremental Term Loan Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent, to effect the provisions of this Section 2.20. Nothing contained in this Section 2.20 shall constitute, or otherwise be deemed to be, a commitment on the part of any Lender to increase its Revolving Commitment hereunder, or provide Incremental Term Loans, at any time. In connection with any increase of the Revolving Commitments or Incremental Term Loans pursuant to this Section 2.20, any Augmenting Lender becoming a party hereto shall (1) execute such documents and agreements as the Administrative Agent may reasonably request and (2) in the case of any Augmenting Lender that is organized under the laws of a jurisdiction outside of the United States of America, provide to the Administrative Agent, its name, address, tax identification number and/or such other information as shall be necessary for the Administrative Agent to comply with “know your customer” and anti-money laundering rules and regulations, including without limitation, the Patriot Act.

SECTION 2.21. Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a) fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.12(a);

(b) the Commitment and Revolving Credit Exposure of such Defaulting Lender shall not be included in determining whether all Lenders or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 9.02); provided that, except as otherwise provided in Section 9.02, this clause (b) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of such Lender or each Lender directly affected thereby;

(c) if any Swingline Exposure or LC Exposure exists at the time a Lender becomes a Defaulting Lender then:

(i) all or any part of such Swingline Exposure and LC Exposure of such Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to the extent (x) such reallocation does not cause the aggregate Revolving Credit Exposure of any non-Defaulting Lender to exceed such non-Defaulting Lender’s Revolving Commitment, (y) the sum of all non-Defaulting Lenders’ Revolving Credit Exposures plus such Defaulting Lender’s Swingline Exposure and LC Exposure does not exceed the total of all non-Defaulting Lenders’ Revolving Commitments and (z) the conditions set forth in Section 4.02 are satisfied at such time;

(ii) if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within one (1) Business Day following notice by the Administrative Agent (x) first, prepay such Swingline Exposure and (y) second, cash collateralize for the benefit of the Issuing Bank only the Borrower’s obligations corresponding to such Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.06(j) for so long as such LC Exposure is outstanding;

(iii) if the Borrower cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to Section 2.21(c), the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.12(b) with respect to such Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized;

(iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to Section 2.21(c), then the fees payable to the Lenders pursuant to Sections 2.12(a) and 2.12(b) shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; or

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(v) if any Defaulting Lender’s LC Exposure is neither cash collateralized nor reallocated pursuant to Section 2.21(c), then, without prejudice to any rights or remedies of the Issuing Bank or any Lender hereunder, all letter of credit fees payable under Section 2.12(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Bank until such LC Exposure is cash collateralized and/or reallocated; and

(d) so long as any Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loan and the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure and the Defaulting Lender’s then outstanding LC Exposure will be 100% covered by the Revolving Commitments of the non- Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 2.21(c), and participating interests in any such newly issued or increased Letter of Credit or newly made Swingline Loan shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.21(c)(i) (and Defaulting Lenders shall not participate therein).

If (i) a Bankruptcy Event or a Bail-In Action with respect to a Parent of any Lender shall occur following the Amendment No. 3 Effective Date and for so long as such event shall continue or (ii) the Swingline Lender or the Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, the Swingline Lender shall not be required to fund any Swingline Loan and the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless the Swingline Lender or the Issuing Bank, as the case may be, shall have entered into arrangements with the Borrower or such Lender, satisfactory to the Swingline Lender or the Issuing Bank, as the case may be, to defease any risk to it in respect of such Lender hereunder.

In the event that the Administrative Agent, the Borrower, the Issuing Bank and the Swingline Lender each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swingline Exposure and LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swingline Loans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage.

ARTICLE III

Representations and Warranties

The Borrower represents and warrants to the Lenders that:

SECTION 3.01. Organization; Powers; Subsidiaries. Each of the Borrower and its Subsidiaries is duly organized, validly existing and, except as set forth on Schedule 3.01, in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required. Schedule 3.01 hereto (as supplemented from time to time) identifies each Subsidiary as of the Effective Date, noting whether such Subsidiary is a Material Subsidiary, the jurisdiction of its incorporation or organization, as the case may be, the percentage of issued and outstanding shares of each class of its Equity Interests owned by the Borrower and the other Subsidiaries and, if such percentage is not 100% (excluding directors’ qualifying shares as required by law), a description of each class issued and outstanding. All of the outstanding shares of capital stock and other equity interests of each Subsidiary are validly issued and outstanding and fully paid and nonassessable and all such shares and other equity interests indicated on Schedule 3.01 as owned by the Borrower or another Subsidiary as of the Effective Date are owned, beneficially and of record, by the Borrower or any Subsidiary free and clear of all Liens, other than Liens created under the Loan Documents. As of the Effective Date, except as set forth on Schedule 3.01, there are no outstanding commitments or other obligations of the Borrower or any Subsidiary to issue, and no options, warrants or other rights of any Person to acquire, any Equity Interests of the Borrower or any Subsidiary. As of any date after the Effective Date, except as set forth on Schedule 3.01, there are no outstanding commitments or other obligations of any Subsidiary of the Borrower to issue, and no options, warrants or other rights

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of any Person to acquire, any Equity Interests of any Subsidiary of the Borrower.

SECTION 3.02. Authorization; Enforceability. The Transactions are within each Loan Party’s organizational powers and have been duly authorized by all necessary organizational actions and, if required, actions by equity holders. The Loan Documents to which each Loan Party is a party have been duly executed and delivered by such Loan Party and constitute a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except for filings necessary to perfect Liens created pursuant to the Loan Documents, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Borrower or any of its Subsidiaries or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any of its Subsidiaries or its assets, or give rise to a right thereunder to require any payment to be made by the Borrower or any of its Subsidiaries, and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries, other than Liens created under the Loan Documents.

SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The Borrower has heretofore furnished to the Lenders its consolidated balance sheet and statements of income, stockholders equity and cash flows as of and for the fiscal year ended December 31, 2015 reported on by PricewaterhouseCoopers LLP, independent public accountants. Such Financials present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP.

(b) Since December 31, 2015, there has been no material adverse change in the business, assets, operations or financial condition of the Borrower and its Subsidiaries, taken as a whole.

SECTION 3.05. Properties. (a) Each of the Borrower and its Subsidiaries has marketable title to, or valid leasehold interests in, all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.

(b) Each of the Borrower and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.06. Litigation, Environmental and Labor Matters. (a) There are no actions, suits, proceedings or investigations by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any of its Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve this Agreement or the Transactions.

(b) Except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any of its Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

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(c) There are no strikes, lockouts or slowdowns against the Borrower or any of its Subsidiaries pending or, to their knowledge, threatened. The hours worked by and payments made to employees of the Borrower and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law relating to such matters where such violation could reasonably be expected to result in a Material Adverse Effect. All material payments due from the Borrower or any of its Subsidiaries, or for which any claim may be made against the Borrower or any of its Subsidiaries, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as liabilities on the books of the Borrower or such Subsidiary, except to the extent such payments or claims could not reasonably be expected to result in a Material Adverse Effect. The consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement under which the Borrower or any of its Subsidiaries is bound.

SECTION 3.07. Compliance with Laws and Agreements. Each of the Borrower and its Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.08. Investment Company Status. Neither the Borrower nor any of its Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.

SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject as of the Effective Date, and all other matters known to it as of the Effective Date, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. Neither the Information Memorandum nor any of the other reports, Financials, certificates or other information furnished by or on behalf of the Borrower or any Subsidiary to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished), and taken as a whole, contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

SECTION 3.12. Federal Reserve Regulations.No part of the proceeds of any Loan have been used or will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X.

SECTION 3.13. Liens. There are no Liens on any of the real or personal properties of the Borrower or any Subsidiary except for Liens permitted by Section 6.02.

SECTION 3.14. No Default. No Default or Event of Default has occurred and is continuing.

SECTION 3.15. No Burdensome Restrictions. The Borrower is not subject to any Burdensome Restrictions except Burdensome Restrictions permitted under Section 6.08.

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SECTION 3.16. Solvency.

(a) Immediately after the consummation of the Transactions to occur on each of the Effective Date and the Term Loan Funding Date, the Borrower and its Subsidiaries, taken as a whole, are and will be Solvent.

(b) The Borrower does not intend to, nor does it intend to permit any of its Subsidiaries to, and the Borrower does not believe that it or any of its Subsidiaries will, incur debts beyond its ability to pay such debts as they mature, taking into account the timing of and amounts of cash to be received by it or any such Subsidiary and the timing of the amounts of cash to be payable on or in respect of its Indebtedness or the Indebtedness of any such Subsidiary.

SECTION 3.17. Insurance. The Borrower maintains, and has caused each Subsidiary to maintain, with financially sound and reputable insurance companies, insurance on all their real and personal property in such amounts, subject to such deductibles and self-insurance retentions and covering such properties and risks as are adequate and customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations.

SECTION 3.18. Security Interest in Collateral. The provisions of the Security Agreement, taken together with the provisions of the other Loan Documents, creates legal and valid Liens on all the Collateral in favor of the Administrative Agent, for the benefit of the Secured Parties, and such Liens, upon the filing of applicable financing statements and applicable intellectual property security agreements and the execution of applicable control agreements, will constitute perfected and continuing Liens on the Collateral, securing the Secured Obligations, enforceable against the applicable Loan Party and all third parties, and having priority over all other Liens on the Collateral except in the case of (a) Liens permitted under clauses (b), (c), (d), (e), (f) and (h) (solely to the extent the collateral in respect of such Lien is cash or Permitted Investments) of Section 6.02, to the extent any such Permitted Encumbrances would have priority over the Liens in favor of the Administrative Agent pursuant to any applicable law and (b) Liens perfected only by possession (including possession of any certificate of title) or control to the extent the Administrative Agent has not obtained or does not maintain possession or control of such Collateral.

SECTION 3.19. Anti-Corruption Laws and Sanctions. The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and their respective officers and employees and to the knowledge of the Borrower its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) the Borrower, any Subsidiary or to the knowledge of the Borrower or such Subsidiary any of their respective directors, officers or employees, or (b) to the knowledge of the Borrower, any authorized agent of the Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No Borrowing or Letter of Credit, use of proceeds of Loans or other Transactions will violate Anti-Corruption Laws or applicable Sanctions.

SECTION 3.20. EEA Financial Institutions. No Loan Party is an EEA Financial Institution.

ARTICLE IV

Conditions

SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02):

(a) The Administrative Agent (or its counsel) shall have received from (i) each party hereto either (A) a counterpart of this Agreement signed on behalf of such party or (B) written evidence satisfactory to the Administrative Agent (which may include telecopy or electronic transmission of a signed signature page of

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this Agreement) that such party has signed a counterpart of this Agreement and (ii) duly executed copies of the Loan Documents and such other legal opinions, certificates, documents, instruments and agreements as the Administrative Agent shall reasonably request in connection with the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel and as further described in the list of closing documents attached as Exhibit E.

(b) The Administrative Agent shall have received favorable written opinions (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of (i) Anthony C. Scarfone, General Counsel, Secretary and Senior Vice President of the Borrower and (ii) Dorsey & Whitney LLP, counsel for the Borrower (“Dorsey & Whitney”), in each case addressing the matters set forth on Exhibit B, and covering such other matters relating to the Loan Parties (other than, with respect to Safeguard Holdings, Inc., matters under Texas law as set forth in the Post Closing Matters Side Letter), the Loan Documents or the Transactions as the Administrative Agent shall reasonably request. The Borrower hereby requests such counsel to deliver such opinion.

(c) The Lenders shall have received (i) satisfactory audited consolidated Financials of the Borrower for the two most recent fiscal years ended prior to the Effective Date as to which such Financials are available, (ii) satisfactory unaudited interim consolidated Financials of the Borrower for each quarterly period ended subsequent to the date of the latest Financials delivered pursuant to clause (i) of this paragraph as to which such Financials are publicly available and (iii) satisfactory financial statement projections through and including the Borrower’s 2018 fiscal year, together with such information as the Administrative Agent and the Lenders shall reasonably request (including, without limitation, a detailed description of the assumptions used in preparing such projections).

(d) The Administrative Agent shall have received (i) such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the initial Loan Parties, the authorization of the Transactions and any other legal matters relating to such Loan Parties, the Loan Documents or the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel and as further described in the list of closing documents attached as Exhibit E and (ii) to the extent reasonably requested by any of the Lenders, all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the Patriot Act.

(e) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the Borrower, confirming compliance with the conditions set forth in clauses (a) and (b) of Section 4.02.

(f) The Administrative Agent shall have received evidence satisfactory to it that any revolving loan credit facility currently in effect for the Borrower shall have been terminated and cancelled and all indebtedness thereunder shall have been fully repaid (except to the extent being so repaid with the initial Revolving Loans and the Existing Letters of Credit issued thereunder shall remain outstanding as Letters of Credit under this Agreement) and any and all Liens thereunder shall have been terminated and released.

(g) The Administrative Agent shall have received evidence reasonably satisfactory to it that all governmental and third party approvals necessary or, in the discretion of the Administrative Agent, advisable in connection with the Transactions and the continuing operations of the Borrower and its Subsidiaries have been obtained and are in full force and effect.

(h) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder.

(i) To the extent not previously delivered, the Administrative Agent shall have received (i) the certificates or other instruments representing the Applicable Pledge Percentage of the issued and outstanding Equity Interests of each Pledge Subsidiary (other than Excluded Restricted Subsidiary Equity Interests) directly owned by the

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Borrower or any other Loan Party pledged pursuant to the Security Agreement, together with stock powers or other instruments of transfer with respect thereto endorsed in blank and (ii) each promissory note pledged and required to be delivered to the Administrative Agent pursuant to the Security Agreement, together with note powers or other instruments of transfer with respect thereto endorsed in blank.

(j) All documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create the Liens intended to be created by the Collateral Documents and to perfect such Liens to the extent required by, and with the priority required by, the Collateral Documents, shall have been executed or authorized, as applicable, and be in proper form for filing, subject only to exceptions satisfactory to the Administrative Agent.

The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding.

SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions:

(a) The representations and warranties of the Borrower set forth in this Agreement shall be true and correct in all respects with respect to representations and warranties containing qualifications as to materiality, and true and correct in all material respects with respect to representations and warranties without qualifications as to materiality, on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date.

(b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default or Event of Default shall have occurred and be continuing.

(c) Prior to the 2012 Indenture Repayment, all conditions under the 2012 Indenture required thereunder for the extension of such Borrowing to the Borrower have been satisfied in full. Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in clauses (a) through (c) of this Section.

SECTION 4.03. Funding of Term Loans. The obligation of each Term Lender to make a Term Loan is subject to the satisfaction of the following conditions precedent on or before the Term Loan Commitment Termination Date:

(a) The Administrative Agent shall have received a certificate signed by the President, a Vice President or a Financial Officer of the Borrower, confirming compliance with the conditions set forth in clauses (a) and (b) of Section 4.02 both before and after giving effect to the making of the Term Loans.

(b) The Administrative Agent shall have received a compliance certificate in the form of Exhibit F attached hereto from the Chief Financial Officer or Treasurer of the Borrower demonstrating compliance with the covenants set forth in Section 6.12, in each case, as of the most recent fiscal quarter for which financial statements are available, computed on a Pro Forma Basis acceptable to the Administrative Agent giving effect to the incurrence of the Term Loans and other Transactions occurring on such date.

(c) The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Term Loan Funding Date from Dorsey & Whitney addressing non-contravention matters with respect to this Agreement and the 2012 Indenture.

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(d) The Administrative Agent shall have received evidence that concurrently with application of the proceeds of the Term Loans, the 2012 Indenture Repayment shall have occurred.

(e) All documents and instruments (including Uniform Commercial Code financing statements and amendments thereto for each Loan Party reflecting the amended definition of Excluded Property), required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create the Liens intended to be created by the Collateral Documents (after giving effect to the 2012 Indenture Repayment) and to perfect such Liens to the extent required by, and with the priority required by, the Collateral Documents, shall have been executed, authorized or reaffirmed, as applicable, in any such case, to secure the Secured Obligations (including the Term Loans).

ARTICLE V

Affirmative Covenants

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:

SECTION 5.01. Financial Statements and Other Information. The Borrower will furnish to the Administrative Agent and each Lender:

(a) within ninety (90) days after the end of each fiscal year of the Borrower (or, if earlier, by the date that the Annual Report on Form 10-K of the Borrower for such fiscal year would be required to be filed under the rules and regulations of the SEC, giving effect to any automatic extension available thereunder for the filing of such form), its audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by PricewaterhouseCoopers LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated Financials present fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;

(b) within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower (or, if earlier, by the date that the Quarterly Report on Form 10- Q of the Borrower for such fiscal quarter would be required to be filed under the rules and regulations of the SEC, giving effect to any automatic extension available thereunder for the filing of such form), its consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;

(c) concurrently with any delivery of Financials under clause (a) or (b) above, a compliance certificate in the form of Exhibit F of a Financial Officer of the Borrower (i) certifying as to whether a Default or Event of Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Section 6.12 and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited Financials referred to in Section 3.04 and, if

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any such change has occurred, specifying the effect of such change on the Financials accompanying such certificate;

(d) concurrently with any delivery of Financials under clause (a) above, a certificate of the accounting firm that reported on such Financials stating whether they obtained knowledge during the course of their examination of such Financials of any Default (which certificate may be limited to the extent required by accounting rules or guidelines);

(e) as soon as available, but in any event not later than forty-five (45) days after the beginning of each fiscal year of the Borrower, a copy of the plan and forecast (including a projected consolidated balance sheet, income statement and funds flow statement) of the Borrower for each quarter of such fiscal year in form reasonably satisfactory to the Administrative Agent;

(f) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the SEC, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed by the Borrower to its shareholders generally, as the case may be; and

(g) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request.

Documents required to be delivered pursuant to clauses (a) and (b) of this Section 5.01 may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which such documents are filed for public availability on the SEC’s Electronic Data Gathering and Retrieval System; provided that the Borrower shall, if requested by the Administrative Agent, notify (which may be by facsimile or electronic mail) the Administrative Agent of the filing of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide copies of the compliance certificates (by facsimile or electronic email)required by clause (c) of this Section 5.01 to the Administrative Agent.

SECTION 5.02. Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following:

(a) the occurrence of any Default or Event of Default;

(b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any Subsidiary that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect;

(c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect;

(d) any casualty or other insured damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking of any material portion of the Collateral or interest therein under power of eminent domain or by condemnation or similar proceeding; and

(e) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

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SECTION 5.03. Existence; Conduct of Business. The Borrower will, and will cause each of its Subsidiaries to (a) do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, qualifications, licenses, permits, privileges, franchises, governmental authorizations and intellectual property rights material to the conduct of its business and (b) maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted, except where the failure to maintain all requisite authority to conduct its business in foreign jurisdictions, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect; provided that the foregoing clauses (a) and (b) shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03.

SECTION 5.04. Payment of Obligations. The Borrower will, and will cause each of its Subsidiaries to, pay its obligations, including Tax liabilities, that, if not paid, could result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.05. Maintenance of Properties; Insurance. The Borrower will, and will cause each of its Subsidiaries to, (a) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (b) maintain with financially sound and reputable carriers (i) insurance in such amounts and against such risks (including all-risk, property damage, crime/fidelity, business interruption and commercial general liability) and such other hazards, as is customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations and (ii) all insurance required pursuant to the Collateral Documents. The Borrower will furnish to the Lenders, upon request of the Administrative Agent, certificates of insurance providing proof of the insurance so maintained. The Borrower shall deliver to the Administrative Agent endorsements which provide that (x) the Administrative Agent is lender loss payee on all “All Risk” property damage insurance policies, and (y) the Administrative Agent is an additional insured on all commercial general liability policies as required by contract. So long as no Event of Default has occurred and is continuing, the Borrower and its Subsidiaries shall be entitled to receive payment of all insurance proceeds. In the event the Borrower or any of its Subsidiaries at any time or times hereafter shall fail to obtain or maintain any of the policies or insurance required herein or to pay any premium in whole or in part relating thereto, then the Administrative Agent, without waiving or releasing any obligations or resulting Default hereunder, may at any time or times thereafter (but shall be under no obligation to do so) obtain and maintain such policies of insurance and pay such premiums and take any other action with respect thereto which the Administrative Agent deems advisable. All sums so disbursed by the Administrative Agent shall constitute part of the Obligations, payable as provided in this Agreement.

SECTION 5.06. Books and Records; Inspection Rights. The Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries in all material respects are made of all material transactions in relation to its business and activities. The Borrower will, and will cause each of its Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, including environmental assessment reports and Phase I or Phase II studies, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested. The Borrower acknowledges that the Administrative Agent, after exercising its rights of inspection, may prepare and distribute to the Lenders certain reports pertaining to the Borrower and its Subsidiaries’ assets for internal use by the Administrative Agent and the Lenders.

SECTION 5.07. Compliance with Laws and Material Contractual Obligations. The Borrower will, and will cause each of its Subsidiaries to, (i) comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property (including without limitation Environmental Laws) and (ii) perform in all material respects its obligations under material agreements to which it is a party, in each case except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Borrower will maintain in effect and enforce policies and procedures designed to ensure

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compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.

SECTION 5.08. Use of Proceeds. The proceeds of the Revolving Loans will be used only (i) to finance the working capital needs, and for general corporate purposes, of the Borrower and its Subsidiaries in the ordinary course of business (ii) to finance Permitted Acquisitions and Limited Equity Acquisitions and Permitted Safeguard Distributor Transactions and (iii) to refinance the 2020 Bonds. The proceeds of the Term Loans shall be used for general corporate purposes of the Borrower and its Subsidiaries (including, but not limited to, the repayment of all remaining 2020 Bonds). No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X. The Borrower will not request any Borrowing or Letter of Credit, and the Borrower shall not use, and the Borrower shall ensure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Letter of Credit (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, to the extent such activities, business or transaction would be prohibited by Sanctions if conducted by a corporation incorporated in the United States or in a European Union member state or (iii) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

SECTION 5.09. Subsidiary Guarantors; Pledges; Additional Collateral; Further Assurances.

(a) As promptly as possible but in any event within thirty (30) days (or such later date as may be agreed upon by the Administrative Agent) after any Person qualifies as, or is designated by the Borrower or the Administrative Agent as, a Subsidiary Guarantor pursuant to the definition of “Material Subsidiary”, the Borrower shall provide the Administrative Agent with written notice thereof setting forth information in reasonable detail describing the material assets of such Person and shall cause each such Person which qualifies as a Material Subsidiary to deliver to the Administrative Agent a joinder to the Subsidiary Guaranty and the Security Agreement (in each case in the form contemplated thereby) pursuant to which such Person agrees to be bound by the terms and provisions thereof, such Subsidiary Guaranty and the Security Agreement to be accompanied by appropriate corporate resolutions, other corporate documentation and legal opinions in form and substance reasonably satisfactory to the Administrative Agent and its counsel.

(b) The Borrower will cause, and will cause each other Loan Party to cause, its owned personal property (whether tangible, intangible, or mixed) to be subject at all times to first priority, perfected Liens in favor of the Administrative Agent for the benefit of the Secured Parties to secure the Secured Obligations in accordance with the terms and conditions of the Collateral Documents, subject to exclusions for certain personal property as set forth in the Collateral Documents and to Liens permitted by Section 6.02. Without limiting the generality of the foregoing, (i) the Borrower will cause the Applicable Pledge Percentage of the issued and outstanding Equity Interests of each Pledge Subsidiary (other than Excluded Restricted Subsidiary Equity Interests) directly owned by the Borrower or any other Loan Party to be subject at all times to a first priority, perfected Lien in favor of the Administrative Agent to secure the Secured Obligations in accordance with the terms and conditions of the Collateral Documents or such other pledge and security documents as the Administrative Agent shall reasonably request, and (ii) no such pledge agreement in respect of the Equity Interests of a Foreign Subsidiary shall be required hereunder (A) until June 30, 2010 or such later date as the Administrative Agent may agree in the exercise of its reasonable discretion with respect thereto, and (B) to the extent the Administrative Agent or its counsel determines that such pledge would not provide material credit support for the benefit of the Secured Parties pursuant to legally valid, binding and enforceable pledge agreements.

(c) Without limiting the foregoing, the Borrower will, and will cause each Subsidiary to, execute and deliver, or cause to be executed and delivered, to the Administrative Agent such documents, agreements and instruments, and will take or cause to be taken such further actions (including the filing and recording of financing statements, fixture filings, and other documents and such other actions or deliveries of the type required by Section 4.01, as applicable), which may be required by law or which the Administrative Agent may, from time to time,

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reasonably request to carry out the terms and conditions of this Agreement and the other Loan Documents and to ensure perfection and priority of the Liens created or intended to be created by the Collateral Documents, all at the expense of the Borrower.

(d) If any assets are acquired by a Loan Party after the Effective Date (other than assets constituting Collateral under the Security Agreement that become subject to the Lien under the Security Agreement upon acquisition thereof), the Borrower will notify the Administrative Agent thereof, and, if requested by the Administrative Agent, the Borrower will cause such assets to be subjected to a Lien securing the Secured Obligations and will take, and cause the other Loan Parties to take, such actions as shall be necessary or reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions described in clause (c) of this Section, all at the expense of the Borrower.

(e) At any time the Borrower determines that a Subsidiary Guarantor is not required to be a Subsidiary Guarantor under the definition of “Material Subsidiary”, including upon the addition of another Subsidiary as a Subsidiary Guarantor, the Borrower shall provide the Administrative Agent with written notice thereof setting forth information in reasonable detail describing why such Subsidiary is no longer required to be a Subsidiary Guarantor. Upon the Administrative Agent’s reasonable determination that such Subsidiary is no longer required to be a Subsidiary Guarantor, the Administrative Agent shall, at the Borrower’s expense, release such Subsidiary from the Subsidiary Guaranty and the Collateral Documents pursuant to such documentation as the Borrower shall reasonably request.

ARTICLE VI

Negative Covenants

Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:

SECTION 6.01. Indebtedness.The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except:

(a) the Secured Obligations;

(b) (i) Indebtedness existing on the Amendment No. 3 Effective Date and set forth in Schedule 6.01 and extensions, renewals and replacements of any such Indebtedness with Indebtedness of a similar type that does not increase the outstanding principal amount thereof (except to the extent any increase thereof shall otherwise be permitted under Section 6.01(e) or Section 6.01(m)) and (ii) prior to the Term Loan Funding Date, the 2020 Bonds;

(c) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the Borrower or any other Subsidiary; provided that Indebtedness owed to a Loan Party by any Subsidiary that is not a Loan Party shall be (i) in connection with cash management of the Borrower and its Subsidiaries in the ordinary course of business consistent with past practice or (ii) otherwise subject to the limitations set forth in Section 6.04(d);

(d) Guarantees (i) by the Borrower of Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary and (ii) in respect of customary indemnification and purchase price adjustment obligations, including, without limitation, earnout payment obligations, incurred in connection with dispositions of properties or assets or with purchases of properties or assets;

(e) Indebtedness of the Borrower or any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding

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principal amount thereof; provided that (i) such Indebtedness is incurred prior to or within ninety (90) days after such acquisition or the completion of such construction or improvement and (ii) the aggregate principal amount of Indebtedness permitted by this clause (e) shall not exceed $50,000,000 at any time outstanding;

(f) Indebtedness of the Borrower or any Subsidiary as an account party in respect of trade letters of credit;

(g) Indebtedness (i) of a Person existing at the time such Person became a Subsidiary in connection with an investment permitted pursuant to Section 6.04, or (ii) secured by a Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Subsidiary to the extent such Lien is permitted under Section 6.02(d), and in the case of each of clause (i) and (ii), solely to the extent that such Indebtedness was not incurred in contemplation of, such Person becoming a Subsidiary or the acquisition of such assets, respectively;

(h) obligations in respect of Swap Contracts to the extent such agreements are permitted pursuant to Section 6.05;

(i) Indebtedness arising from the honoring of a bank or other financial institution of a check, draft or other similar instrument drawn against insufficient funds in the ordinary course of business and unpaid for not more than two (2) Business Days;

(j) obligations in respect of performance bonds and completion, guarantee, surety and similar bonds, in each case obtained in the ordinary course of business to support statutory and contractual obligations (other than Indebtedness) arising in the ordinary course of business;

(k) obligations owed to customers of the Borrower or any Subsidiary arising from the receipt of advance payments from a customer in the ordinary course of business and consistent with past practices;

(l) additional Indebtedness not otherwise permitted under this Section 6.01 in an aggregate outstanding principal amount not to exceed $25,000,000 at any time; provided that to the extent any Indebtedness permitted under this clause (l) shall be secured, such Lien shall not apply to any property or asset of the Borrower or any Subsidiary other than cash or Permitted Investments; and

(m) other unsecured Indebtedness of the Borrower or any Subsidiary, including, without limitation, Subordinated Indebtedness; provided that (i) prior to and after giving effect to the incurrence of any such Indebtedness, no Default or Event of Default has occurred and is continuing or would arise therefrom, (ii) the Borrower is in compliance, on a pro forma basis reasonably acceptable to the Administrative Agent after giving effect to the incurrence of any such Indebtedness, with the covenants contained in Section 6.12 recomputed as of the last day of the most recently ended fiscal quarter of the Borrower for which Financials are available, as if such Indebtedness (and any related repayment of Indebtedness, and with any such new Indebtedness being deemed to be amortized over the applicable testing period in accordance with its terms) had occurred on the first day of each relevant period for testing such compliance and (iii) the aggregate principal amount of Indebtedness of the Borrower’s Subsidiaries permitted by this clause (m) shall not exceed $75,000,000 at any time outstanding.

SECTION 6.02. Liens. The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:

(a) Liens created pursuant to any Loan Document;

(b) Permitted Encumbrances;

(c) any Lien on any property or asset of the Borrower or any Subsidiary existing on the Amendment No. 3 Effective Date and set forth in Schedule 6.02; provided that (i) such Lien shall not apply to any other property or asset of the Borrower or any Subsidiary and (ii) such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereof that do not increase

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the outstanding principal amount thereof;

(d) any Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Subsidiary or existing on any property or asset of any Person that becomes a Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other property or assets of the Borrower or any Subsidiary and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be, and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;

(e) Liens on fixed or capital assets acquired, constructed or improved by the Borrower or any Subsidiary; provided that (i) such security interests secure Indebtedness permitted by clause(e) of Section 6.01, (ii) such security interests and the Indebtedness secured thereby are incurred prior to or within ninety (90) days after such acquisition or the completion of such construction or improvement, (iii) the Indebtedness secured thereby does not exceed the cost of acquiring, constructing or improving such fixed or capital assets and (iv) such security interests shall not apply to any other property or assets of the Borrower or any Subsidiary;

(f) bankers’ Liens and rights of setoff created or incurred on deposits or with respect to deposit accounts that are within the general parameters customary in the banking industry and arising in the ordinary course of business;

(g) customary restrictions on transfers of assets contained in agreements related to the sale by the Borrower or the Subsidiaries of such assets pending their sale; provided that such restrictions apply only to the assets to be sold and such sale is permitted under this Agreement; and

(h) Liens on assets of the Borrower and its Subsidiaries not otherwise permitted above so long as the aggregate principal amount of the Indebtedness and other obligations secured by such Liens does not at any time exceed $25,000,000.

SECTION 6.03. Fundamental Changes and Asset Sales. (a) The Borrower will not, and will not permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) any of its assets (including pursuant to a Sale and Leaseback Transaction), or any of the Equity Interests of any of its Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing:

(i) any Person may merge into the Borrower in a transaction in which the Borrower is the surviving corporation;

(ii) (A) any Subsidiary may merge into a Loan Party in a transaction in which the surviving entity is such Loan Party (provided that any such merger involving the Borrower must result in the Borrower as the surviving entity), (B) any wholly-owned Subsidiary of the Borrower that is not a Loan Party may merge into another wholly-owned Subsidiary of the Borrower that is not a Loan Party (provided that the survivor thereof shall be a wholly-owned Subsidiary of the Borrower) and (C) any non-wholly-owned Subsidiary of the Borrower that is not a Loan Party may merge into another Subsidiary of the Borrower that is not a Loan Party to the extent permitted under clause (iv) below;

(iii)any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to a Loan Party;

(iv) the Borrower and its Subsidiaries may (A) sell inventory in the ordinary course of business, (B) effect sales, trade-ins or dispositions of used equipment for value in the ordinary course of business consistent with past practice, (C) enter into licenses of technology in the ordinary course of business, and (D) make any other sales, transfers, leases or dispositions that, together with the Fair Market Value of all

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other property of the Borrower and its Subsidiaries previously leased, sold or disposed of as permitted by this clause (D) during any fiscal year of the Borrower, does not exceed $25,000,000;

(v) the Borrower and its Subsidiaries may make dispositions of, or discount without recourse, accounts receivable in connection with the compromise or collection thereof in the ordinary course of business (and not as part of any financing transaction);

(vi)the Borrower and its Subsidiaries may make dispositions of cash and Permitted Investments in the ordinary course of business;

(vii) the Borrower and its Subsidiaries may make dispositions of obsolete, used, worn out or surplus equipment, raw materials and supplies in the ordinary course of business;

(viii) the Borrower and its Subsidiaries may make sales or dispositions of shares of Equity Interests of any of Subsidiary in order to qualify members of the governing body of such Subsidiary if required by applicable law;

(ix) the Borrower and its Subsidiaries may enter into sale and leaseback transactions permitted under Section 6.10;

(x) the Borrower and its Subsidiaries may make charitable donations in the ordinary course of business and consistent with past practices;

(xi) the Borrower and its Subsidiaries may grant Liens to the extent such Liens are permitted under Section 6.02;

(xii)the Borrower and its Subsidiaries may enter into Permitted Safeguard Distributor Transactions; and

(xiii) any Subsidiary that is not a Loan Party may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders.

(b) The Borrower will not, and will not permit any of its Subsidiaries to, engage to any material extent in any business other than businesses of the type conducted by the Borrower and its Subsidiaries on the Effective Date and businesses reasonably related thereto.

(c) The Borrower will not, nor will it permit any of its Subsidiaries to, change its fiscal year from the basis in effect on the Effective Date.

SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. The Borrower will not, and will not permit any of its Subsidiaries to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly-owned Subsidiary prior to such merger) any capital stock, evidences of indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any Person or any assets of any other Person constituting a business unit, except:

(a) cash and Permitted Investments;

(b) Permitted Acquisitions and Limited Equity Acquisitions; provided, that (i) the aggregate consideration paid in respect of such Permitted Acquisition or Limited Equity Acquisition, when taken together with the aggregate consideration paid in respect of all other Permitted Acquisitions and paid or contributed in respect of all other Limited Equity Acquisitions, does not exceed $275,000,000 during any twelve-month period, (ii) the

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aggregate consideration paid in respect of any Permitted Acquisition does not exceed $150,000,000, (iii) the aggregate consideration paid in respect of all Limited Equity Acquisitions does not exceed $50,000,000 during any twelve-month period, and (iv) the Leverage Ratio, calculated on a Pro Forma Basis after giving effect to such acquisition, does not exceed 3.00 to 1.00;

(c) investments by the Borrower and its Subsidiaries existing on the date hereof in the capital stock of its Subsidiaries;

(d) investments, loans or advances made by the Borrower in or to any Subsidiary and made by any Subsidiary in or to the Borrower or any other Subsidiary (provided that not more than an aggregate amount of $25,000,000 in investments, loans or advances or capital contributions may be made and remain outstanding, at any time, by Loan Parties to Subsidiaries which are not Loan Parties);

(e) Guarantees constituting Indebtedness permitted by Section 6.01;

(f) extended payment terms to customers of the Borrower and any Subsidiary in the ordinary course of business and consistent with past practices;

(g) investments in the form of promissory notes and other non-cash consideration received by the Borrower or any Subsidiary in connection with any disposition or discount of accounts receivable to the extent permitted under Section 6.03(a)(v);

(h) loans and advances to (i) distributors of the Safeguard services and product lines of the Borrower and its Subsidiaries (other than with respect to a Permitted Safeguard Distributor Transaction) and (ii) officers and employees of the Borrower or its Subsidiaries in accordance with prior practices, so long as (x) the aggregate amount of all loans and advances made pursuant to clause (h)(i) above does not exceed $1,000,000 at any time and (y) the aggregate amount of all loans and advances made pursuant to this Section 6.04(h) does not exceed $5,000,000 at any time;

(i) investments consisting of the purchase, repurchase, redemption or acquisition of Equity Interests of the Borrower or any Subsidiary permitted under Section 6.07, provided that such Equity Interests so purchased, repurchased, redeemed or acquired are promptly retired and cancelled, other than Equity Interests of the Borrower consisting of capital stock which may be held by the Borrower as treasury stock;

(j) any purchase, repurchase or acquisition by the Borrower or any other Subsidiary of outstanding loans or advances owed by the Borrower to any Subsidiary or owed by any Subsidiary to the Borrower or any other Subsidiary, provided that any such purchase, repurchase or acquisition by a Loan Party from a Subsidiary that is not a Subsidiary Guarantor shall comply with Section 6.06 (without giving effect to the exception under Section 6.06(b));

(k) investments in Swap Agreements permitted under Section 6.05;

(l) investments of advance payments received from customers to the extent such advance payments shall be permitted under Section 6.01(k);

(m) investments existing on the Amendment No. 3 Effective Date and set forth on Schedule 6.04;

(n) investments, advances or loans having a bona fide purpose directly related to effecting any Permitted Safeguard Distributor Transaction (as determined by the Borrower in its commercially reasonable judgment acting in good faith), including, without limitation, any Permitted Safeguard Sale Consideration; and

(o) any other investment, loan or advance (other than acquisitions) so long as the aggregate amount of all such investments, loans and advances does not exceed $60,000,000 during the term of this Agreement.

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For purposes of determining the amount of any investment outstanding for purposes of this Section 6.04, such amount shall be deemed to be the amount of such investment when made, purchased or acquired without adjustment for subsequent increases or decreases in the value of such investment.

SECTION 6.05. Swap Agreements. The Borrower will not, and will not permit any of its Subsidiaries to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which the Borrower or any Subsidiary has actual exposure (other than those in respect of Equity Interests of the Borrower or any of its Subsidiaries), and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of the Borrower or any Subsidiary.

SECTION 6.06. Transactions with Affiliates. The Borrower will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among the Borrower and any wholly-owned Subsidiaries not involving any other Affiliate, (c) any transaction permitted by Section 6.01, 6.03, 6.04 or 6.07, (d) payment of customary fees and expenses to members of the board of directors of the Borrower and its Subsidiaries in the ordinary course of business; and (e) payment of employee compensation in the ordinary course of business to any Affiliate who is an individual in such Person’s capacity as an officer, employee or consultant of the Borrower or any of its Subsidiaries.

SECTION 6.07. Restricted Payments. The Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except (a) the Borrower may declare and pay dividends with respect to its Equity Interests payable solely in additional shares of its common stock, (b) Subsidiaries may declare and pay dividends ratably with respect to their Equity Interests, (c) the Borrower may make Restricted Payments pursuant to and in accordance with stock option plans or other benefit plans for management or employees of the Borrower and its Subsidiaries, (d) the Borrower and the Subsidiaries may make Restricted Payments (i) to effect any merger or consolidation of any Subsidiary of the Borrower permitted under Section 6.03 and (ii) certified by the Borrower to the Administrative Agent in writing as having a bona fide purpose directly related to effecting the capitalization of a Subsidiary to the extent such investment shall otherwise be permitted under Section 6.04 (as determined by the Administrative Agent in its reasonable discretion), and (e) the Borrower and its Subsidiaries may make any other Restricted Payment so long as no Default or Event of Default has occurred and is continuing prior to making such Restricted Payment or would arise after giving effect (including giving effect on a Pro Forma Basis) thereto and the aggregate amount of all such Restricted Payments shall be (i) without limitation at any time the Leverage Ratio (calculated on a Pro Forma Basis after giving effect to such Restricted Payment) shall be less than or equal to 2.75 to 1.00 and (ii) shall not exceed (1) at any time the Leverage Ratio (calculated on a Pro Forma Basis after giving effect to such Restricted Payment) shall be greater than 2.75 to 1.00 and less than 3.00 to 1.00, during any twelve-month period an aggregate amount equal to $120,000,000 (calculated inclusive of all Restricted Payments made in reliance on this clause (1) and clause (2) during such period), and (2) at any time the Leverage Ratio (calculated on a Pro Forma Basis after giving effect to such Restricted Payment) shall be greater than or equal to 3.00 to 1.00, during any twelve-month period an aggregate amount equal to $95,000,000 (calculated inclusive of all Restricted Payments made in reliance on clause (1) and this clause (2) during such period).

SECTION 6.08. Restrictive Agreements. The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any enforceable agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to holders of its Equity Interests or to make or repay loans or advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law, by any Loan Document or, prior to the 2012 Indenture Repayment, by the 2012 Indenture, (ii) the foregoing shall not apply to customary

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restrictions and conditions contained in agreements relating to the sale or other disposition of assets or Equity Interests pending such sale or disposition, provided such restrictions and conditions apply only to the assets or Equity Interests is to be sold and such sale or disposition is permitted hereunder, (iii) the foregoing shall not apply customary provisions in agreements relating to Limited Equity Acquisitions solely to the respective Limited Equity Acquisition or the Equity Interest therein, (iv) the foregoing shall not apply to restrictions and conditions imposed by any Governmental Authority, (v) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness, (vi) clause(a) of the foregoing shall not apply to customary provisions in leases, licenses and other contracts restricting the assignment thereof or, to the extent such restrictions shall exist as of the Effective Date or are otherwise entered into consistent with past practice, such customary provisions restricting the assignment of or Liens upon property subject thereto, (vii) clause (a) of the foregoing shall not apply to limitations or restrictions consisting of customary net worth, leverage or other financial covenants in each case contained in, or required by, any contractual obligation governing Indebtedness permitted under Section 6.01 and (viii) clause (b) of the foregoing shall not apply to customary restrictions and conditions that waive or prohibit the subrogation of claims and/or prohibit parties to from collecting intercompany obligations customarily included in indemnity agreements or Guarantees.

SECTION 6.09. Subordinated Indebtedness and Amendments to Subordinated Indebtedness Documents. The Borrower will not, and will not permit any Subsidiary to, directly or indirectly voluntarily prepay, defease or in substance defease, purchase, redeem, retire or otherwise acquire, any Subordinated Indebtedness or any Indebtedness from time to time outstanding under the Subordinated Indebtedness Documents. Furthermore, the Borrower will not, and will not permit any Subsidiary to, amend the Subordinated Indebtedness Documents or any document, agreement or instrument evidencing any Indebtedness incurred pursuant to the Subordinated Indebtedness Documents (or any replacements, substitutions, extensions or renewals thereof) or pursuant to which such Indebtedness is issued where such amendment, modification or supplement provides for the following or which has any of the following effects:

(a) increases the overall principal amount of any such Indebtedness or increases the amount of any single scheduled installment of principal or interest;

(b) shortens or accelerates the date upon which any installment of principal or interest becomes due or adds any additional mandatory redemption provisions;

(c) shortens the final maturity date of such Indebtedness or otherwise accelerates the amortization schedule with respect to such Indebtedness;

(d)increases the rate of interest accruing on such Indebtedness;

(e)provides for the payment of additional fees or increases existing fees;

(f) amends or modifies any financial or negative covenant (or covenant which prohibits or restricts the Borrower or any Subsidiary from taking certain actions) in a manner which is more onerous or more restrictive in any material respect to the Borrower or such Subsidiary or which is otherwise materially adverse to the Borrower, any Subsidiary and/or the Lenders or, in the case of any such covenant, which places material additional restrictions on the Borrower or such Subsidiary or which requires the Borrower or such Subsidiary to comply with more restrictive financial ratios or which requires the Borrower to better its financial performance, in each case from that set forth in the existing applicable covenants in the Subordinated Indebtedness Documents or the applicable covenants in this Agreement; or

(g) amends, modifies or adds any affirmative covenant in a manner which (i) when taken as a whole, is materially adverse to the Borrower, any Subsidiary and/or the Lenders or (ii) is more onerous than the existing applicable covenant in the Subordinated Indebtedness Documents or the applicable covenant in this Agreement.

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SECTION 6.10. Sale and Leaseback Transactions. Except as set forth on Schedule 6.10, the Borrower shall not, nor shall it permit any Subsidiary to, enter into any Sale and Leaseback Transaction, other than Sale and Leaseback Transactions in respect of which the Net Cash Proceeds received in connection therewith does not exceed $10,000,000 in the aggregate during any fiscal year of the Borrower, determined on a consolidated basis for the Borrower and its Subsidiaries.

SECTION 6.11. [Reserved]

SECTION 6.12. Financial Covenants.

(a) Maximum Leverage Ratio. The Borrower will not permit the ratio (the “LeverageRatio”) as of the last day of any fiscal quarter of (i) the sum of (x) Consolidated Total Indebtedness at such time minus (y) the amount of Unrestricted Cash in excess of $15,000,000 at such time to (ii) Consolidated EBITDA for the period of four consecutive fiscal quarters of the Borrower then ending, all calculated for the Borrower and its Subsidiaries on a consolidated basis, to be greater than 3.25 to 1.00; provided that if the Leverage Ratio, calculated on a Pro Forma Basis, exceeds 2.75 to 1.00 after giving effect to a Permitted Acquisition, the aggregate consideration of which is equal to or greater than $25,000,000, the Borrower will not permit the Leverage Ratio for the twelve-month period following such Permitted Acquisition to be greater than 3.50 to 1.00.

(b) Minimum Interest Coverage Ratio. The Borrower will not permit the ratio (the “Interest Coverage Ratio”) as of the last day of any fiscal quarter of (i) Consolidated EBIT for the period of four consecutive fiscal quarters of the Borrower then ending to (ii) Consolidated Interest Expense for the period of four consecutive fiscal quarters of the Borrower then ending, all calculated for the Borrower and its Subsidiaries on a consolidated basis, to be less than 3.25 to 1.00.

SECTION 6.13. Guarantors.The Borrower shall not permit any Domestic Subsidiary to guaranty any other Indebtedness of the Borrower or any of its Subsidiaries in an aggregate amount in excess of $5,000,000 unless and until such Domestic Subsidiary shall have become a Subsidiary Guarantor pursuant to Section 5.09(a) and, if applicable, complied with all other applicable terms of Section 5.09.

SECTION 6.14. Anti-Corruption Laws and Sanctions. The Borrower will not request any Borrowing or Letter of Credit, and the Borrower shall not use, and the Borrower shall not procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall use, the proceeds of any Borrowing or Letter of Credit (i) in furtherance of any offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country or (iii) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

ARTICLE VII

Events of Default

If any of the following events (“Events of Default”) shall occur:

(a) the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;

(b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement or any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of three (3) Business Days;

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(c) any representation or warranty made or deemed made by or on behalf of the Borrower or any Subsidiary in or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder, or in any report, certificate, Financials or other document furnished pursuant to or in connection with this Agreement or any other Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect when made or deemed made;

(d) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02, 5.03 (with respect to the Borrower’s existence), 5.08 or 5.09 or in Article VI;

(e) the Borrower or any Subsidiary Guarantor, as applicable, shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b) or (d) of this Article) or any other Loan Document, and such failure shall continue unremedied for a period of thirty (30) days after notice thereof from the Administrative Agent to the Borrower (which notice will be given at the request of any Lender);

(f) the Borrower or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable;

(g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness;

(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Subsidiary or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered;

(i) the Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

(j) the Borrower or any Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

(k) one or more judgments for the payment of money in an aggregate amount in excess of $35,000,000 shall be rendered against the Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any Subsidiary to enforce any such judgment;

(l) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken

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together with all other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect;

(m) a Change in Control shall occur;

(n) the occurrence of any “default”, as defined in any Loan Document (other than this Agreement) or the breach of any of the terms or provisions of any Loan Document (other than this Agreement), which default or breach continues beyond any period of grace therein provided;

(o) any material provision of any Loan Document for any reason ceases to be valid, binding and enforceable in accordance with its terms (or the Borrower or any Subsidiary shall challenge the enforceability of any Loan Document or shall assert in writing, or engage in any action or inaction based on any such assertion, that any provision of any of the Loan Documents has ceased to be or otherwise is not valid, binding and enforceable in accordance with its terms); or

(p) any Collateral Document shall for any reason fail to create a valid and perfected first priority security interest in any portion of the Collateral with a Fair Market Value in excess of $15,000,000 purported to be covered thereby, except as permitted by the terms of any Loan Document;

then, and in every such event (other than an event with respect to the Borrower described in clause (h), (i) or (j) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other Secured Obligations of the Borrower accrued hereunder and under the other Loan Documents, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower and (iii) require cash collateral for the LC Exposure in accordance with Section 2.06(j) hereof; and in case of any event with respect to the Borrower described in clause (h) or (i) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding and cash collateral for the LC Exposure, together with accrued interest thereon and all fees and other Secured Obligations accrued hereunder and under the other Loan Documents, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may, and at the request of the Required Lenders shall, exercise any rights and remedies provided to the Administrative Agent under the Loan Documents or at law or equity, including all remedies provided under the UCC.

ARTICLE VIII

The Administrative Agent

Each of the Lenders, on behalf of itself and any Affiliates that are Secured Parties, and the Issuing Bank hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf, including execution of the other Loan Documents, and to exercise such powers as are delegated to the Administrative Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto.

The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder.

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The Administrative Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is required to exercise in writing as directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of its own gross negligence or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or in connection with any Loan Document, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, (v) the creation, perfection or priority of Liens on the Collateral or the existence of the Collateral or (vi) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrower. Upon any such resignation, the Required Lenders shall have the right, with the consent of the Borrower, such consent not to be unreasonably withheld or delayed, to appoint a successor; provided that no such consent of the Borrower shall be required at any time an Event of Default has occurred and is continuing. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the

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Borrower and such successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.

Each Lender acknowledges and agrees that the extensions of credit made hereunder are commercial loans and letters of credit and not investments in a business enterprise or securities. Each Lender further represents that it is engaged in making, acquiring or holding commercial loans in the ordinary course of its business and has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Loans hereunder. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning the Borrower and its Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder and in deciding whether or to the extent to which it will continue as a Lender or assign or otherwise transfer its rights, interests and obligations hereunder.

None of the Lenders, if any, identified in this Agreement as a Syndication Agent or Co- Documentation Agent shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of such Lenders shall have or be deemed to have a fiduciary relationship with any Lender. Each Lender hereby makes the same acknowledgments with respect to the relevant Lenders in their respective capacities as Syndication Agent or Co-Documentation Agents, as applicable, as it makes with respect to the Administrative Agent in the preceding paragraph.

Except with respect to the exercise of setoff rights of any Lender, in accordance with Section 9.08, the proceeds of which are applied in accordance with this Agreement, each Lender agrees that it will not take any action, nor institute any actions or proceedings, against the Borrower or with respect to any Loan Document, without the prior written consent of the Required Lenders or, as may be provided in this Agreement or the other Loan Documents, with the consent of the Administrative Agent.

The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of the Administrative Agent) authorized to act for, any other Lender. The Administrative Agent shall have the exclusive right on behalf of the Lenders to enforce the payment of the principal of and interest on any Loan after the date such principal or interest has become due and payable pursuant to the terms of this Agreement.

In its capacity, the Administrative Agent is a “representative” of the Secured Parties within the meaning of the term “secured party” as defined in the New York Uniform Commercial Code. Each Lender authorizes the Administrative Agent to enter into each of the Collateral Documents to which it is a party and to take all action contemplated by such documents. Each Lender agrees that no Secured Party (other than the Administrative Agent) shall have the right individually to seek to realize upon the security granted by any Collateral Document, it being understood and agreed that such rights and remedies may be exercised solely by the Administrative Agent for the benefit of the Secured Parties upon the terms of the Collateral Documents. In the event that any Collateral is hereafter pledged by any Person as collateral security for the Secured Obligations, the Administrative Agent is hereby authorized, and hereby granted a power of attorney, to execute and deliver on behalf of the Secured Parties any Loan Documents necessary or appropriate to grant and perfect a Lien on such Collateral in favor of the Administrative Agent on behalf of the Secured Parties. The Lenders hereby authorize the Administrative Agent, at its option and in its discretion, to release any Lien granted to or held by the Administrative Agent upon any Collateral (i) as described in Section 9.02(d); (ii) as permitted by, but only in accordance with, the terms of the applicable Loan Document; or (iii) if approved, authorized or ratified in writing by the Required Lenders, unless such release is required to be approved by all of the Lenders hereunder. Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Administrative Agent’s authority to release particular types or items of Collateral pursuant hereto. Upon any sale lease, transfer or other disposition of assets constituting Collateral which is permitted pursuant

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to the terms of any Loan Document, or consented to in writing by the Required Lenders or all of the Lenders, as applicable, and upon at least five (5) Business Days’ prior written request by the Borrower to the Administrative Agent, the Administrative Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to the Administrative Agent for the benefit of the Secured Parties herein or pursuant hereto upon the Collateral that was sold or transferred; provided, however, that (i) the Administrative Agent shall not be required to execute any such document on terms which, in the Administrative Agent’s opinion, would expose the Administrative Agent to liability or create any obligation or entail any consequence other than the release of such Liens without recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Secured Obligations or any Liens upon (or obligations of the Borrower or any Subsidiary in respect of) all interests retained by the Borrower or any Subsidiary, including (without limitation) the proceeds of the sale, all of which shall continue to constitute part of the Collateral.

In case of the pendency of any proceeding with respect to any Loan Party under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, the Administrative Agent (irrespective of whether the principal of any Loan or any LC Disbursement shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, LC Exposure and all other Secured Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Issuing Bank and the Administrative Agent (including any claim under Sections 2.12, 2.13, 2.15, 2.16, 2.17 and 9.03) allowed in such judicial proceeding; and

(b) collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Lender, the Issuing Bank and each other Secured Party to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, the Issuing Bank or the other Secured Parties, to pay to the Administrative Agent any amount due to it, in its capacity as the Administrative Agent, under the Loan Documents (including under Section 9.03).

The Borrower, on its behalf and on behalf of its Subsidiaries, and each Lender, on its behalf and on the behalf of its affiliated Secured Parties, hereby irrevocably constitute the Administrative Agent as the holder of an irrevocable power of attorney (fondé de pouvoir within the meaning of Article 2692 of the Civil Code of Québec) in order to hold hypothecs and security granted by the Borrower or any Subsidiary on property pursuant to the laws of the Province of Quebec to secure obligations of the Borrower or any Subsidiary under any bond, debenture or similar title of indebtedness issued by the Borrower or any Subsidiary in connection with this Agreement, and agree that the Administrative Agent may act as the bondholder and mandatary with respect to any bond, debenture or similar title of indebtedness that may be issued by the Borrower or any Subsidiary and pledged in favor of the Secured Parties in connection with this Agreement. Notwithstanding the provisions of Section 32 of the An Act respecting the special powers of legal persons (Quebec), JPMorgan Chase Bank, N.A. as Administrative Agent may acquire and be the holder of any bond issued by the Borrower or any Subsidiary in connection with this Agreement (i.e., the fondé de pouvoir may acquire and hold the first bond issued under any deed of hypothec by the Borrower or any Subsidiary).

ARTICLE IX

Miscellaneous

SECTION 9.01. Notices. (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to clause (b) below), all notices and other communications provided

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for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(i)if to the Borrower, to it at 3680 Victoria Street North, Shoreview, MN 55126, Attention of Edward A. Merritt (Telecopy No. (651) 787-1068; Telephone No. (651) 787-1370);

(ii)if to the Administrative Agent, to JPMorgan Chase Bank, N.A., 10 South Dearborn Street, 7th Floor, Chicago, Illinois 60603, Attention of April Yebd (Telecopy No. (312) 385-7096),with a copy to JPMorgan Chase Bank, N.A., 10 South Dearborn Street, 9th Floor, Chicago, Illinois 60603, Attention of Suzanne Ergastolo (Telecopy No. (312) 794-7682);

(iii)if to the Issuing Bank, to it at JPMorgan Chase Bank, N.A., 10 South Dearborn Street, 7th Floor, Chicago, Illinois 60603, Attention of Debra Williams (Telecopy No. (312) 256-2608; Telephone No. (312) 732-2590);

(iv)if to the Swingline Lender, to it at JPMorgan Chase Bank, N.A., 10 South Dearborn Street, 7th Floor, Chicago, Illinois 60603, Attention of April Yebd (Telecopy No. (312) 385-7096); and

(v)if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through Electronic Systems, to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).

(b) Notices and other communications to the Lenders and the Issuing Banks hereunder may be delivered or furnished by using Electronic Systems pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

(c) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

(d) Electronic Systems.

(i) The Borrower agrees that the Administrative Agent may, but shall not be obligated to, make Communications (as defined below) available to the Issuing Banks and the Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak, ClearPar or a substantially similar Electronic

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System.

(ii) Any Electronic System used by the Administrative Agent is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the adequacy of such Electronic Systems and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or any Electronic System. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to any Loan Party, any Lender, any Issuing Bank or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Loan Party’s or the Administrative Agent’s transmission of Communications through an Electronic System. “Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any Loan Document or the transactions contemplated therein which is distributed by the Administrative Agent, any Lender or any Issuing Bank by means of electronic communications pursuant to this Section, including through an Electronic System.

SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the Administrative Agent, the Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by clause (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default or Event of Default, regardless of whether the Administrative Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default or Event of Default at the time.

(b) Except as provided in Section 2.20 with respect to an Incremental Term Loan Amendment, neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender directly affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender directly affected thereby, (iv) change Section 2.18(b) or (d) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender (it being understood that, solely with the consent of the parties prescribed by Section 2.20 to be parties to an Incremental Term Loan Amendment, Incremental Term Loans may be included in the determination of Required Lenders on substantially the same basis as the Commitments and the Revolving Loans are included on the Effective Date), (vi) release all or substantially all of the Subsidiary Guarantors from their obligations under the Subsidiary Guaranty without the written consent of each Lender, or (viii) except as provided in clause (d) of this Section or in any Collateral Document, release all or substantially all of the Collateral, without the written consent of each Lender; providedfurther that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Issuing Bank or the Swingline Lender hereunder without the prior written consent of the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be. Notwithstanding the foregoing, no consent with respect to any

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amendment, waiver or other modification of this Agreement shall be required of any Defaulting Lender, except with respect to any amendment, waiver or other modification referred to in clause (i), (ii) or (iii) of the first proviso of this paragraph and then only in the event such Defaulting Lender shall be directly affected by such amendment, waiver or other modification.

(c) Notwithstanding the foregoing, this Agreement and any other Loan Document may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Borrower to each relevant Loan Document (x) to add one or more credit facilities (in addition to the Incremental Term Loans pursuant to an Incremental Term Loan Amendment) to this Agreement and to permit extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Revolving Loans, Incremental Term Loans and the accrued interest and fees in respect thereof and (y) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders and Lenders.

(d) The Lenders hereby irrevocably authorize the Administrative Agent, at its option and in its sole discretion, to release any Liens granted to the Administrative Agent by the Loan Parties on any Collateral (i) upon the termination of all the Commitments, payment and satisfaction in full in cash of all Secured Obligations (other than Unliquidated Obligations), and the cash collateralization of all Unliquidated Obligations in a manner satisfactory to the Administrative Agent, (ii) constituting property being sold, leased, transferred or disposed of if the Borrower certifies to the Administrative Agent that the sale, lease, transfer or disposition is made in compliance with the terms of this Agreement (and the Administrative Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property leased to the Borrower or any Subsidiary under a lease which has expired or been terminated in a transaction permitted under this Agreement, (iv) constituting property of a Subsidiary that is no longer required to be a Subsidiary Guarantor pursuant to Section 5.09(e) or (v) as required to effect any sale or other disposition of such Collateral in connection with any exercise of remedies of the Administrative Agent and the Lenders pursuant to Article VII. Any such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of the Loan Parties in respect of) all interests retained by the Loan Parties, including the proceeds of any sale, all of which shall continue to constitute part of the Collateral.

(e) Notwithstanding anything to the contrary contained herein or in any other Loan Document, the Administrative Agent is hereby irrevocably authorized by each Lender (without requirement of notice to or consent of any Lender) to take any action requested by the Borrower having the effect of releasing the Subsidiary Guaranty (i) to the extent necessary to permit consummation of any proposed sale, lease, transfer or other disposition of assets not prohibited by any Loan Document or that has been consented to in accordance with Section 9.02(b), (ii) with respect to a Subsidiary that is no longer required to be a Subsidiary Guarantor pursuant to Section 5.09(e) or (iii) at such time as the Loans, the Letters of Credit and the other Obligations under the Loan Documents shall have been paid in full, the Commitments have been terminated and no Letters of Credit shall be outstanding. Following such termination, the Administrative Agent shall execute (at the Borrower’s expense) any documents or instruments reasonably requested and prepared by the Borrower to evidence such termination.

(f) If, in connection with any proposed amendment, waiver or consent requiring the consent of “each Lender” or “each Lender directly affected thereby,” the consent of the Required Lenders is obtained, but the consent of other necessary Lenders is not obtained (any such Lender whose consent is necessary but not obtained being referred to herein as a “Non-Consenting Lender”), then the Borrower may elect to replace a Non-Consenting Lender as a Lender party to this Agreement, provided that, concurrently with such replacement, (i) another bank or other entity which is reasonably satisfactory to the Borrower and the Administrative Agent shall agree, as of such date, to purchase for cash the Loans and other Obligations due to the Non-Consenting Lender pursuant to an Assignment and Assumption and to become a Lender for all purposes under this Agreement and to assume all obligations of the Non- Consenting Lender to be terminated as of such date and to comply with the requirements of clause (b) of Section 9.04, and (ii) the Borrower shall pay to such Non-Consenting Lender in same day funds on the day of such replacement (1) all interest, fees and other amounts then accrued but unpaid to such Non- Consenting Lender by the Borrower hereunder to and including the date of termination, including without limitation payments due to such Non-Consenting

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Lender under Sections 2.15 and 2.17, and (2) an amount, if any, equal to the payment which would have been due to such Lender on the day of such replacement under Section 2.16 had the Loans of such Non-Consenting Lender been prepaid on such date rather than sold to the replacement Lender.

(g) Notwithstanding anything to the contrary herein the Administrative Agent may, with the consent of the Borrower only, amend, modify or supplement this Agreement or any of the other Loan Documents to cure any ambiguity, omission, mistake, defect or inconsistency.

SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i) following receipt of written invoices and statements of account, all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the syndication and distribution (including, without limitation, via the internet or through a service such as Intralinks) of the credit facilities provided for herein, the preparation and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, the Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement and any other Loan Document, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

(b) The Borrower shall indemnify the Administrative Agent, the Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of any Loan Document or any agreement or instrument contemplated thereby, the performance by the parties hereto of their respective obligations thereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether or not brought by the Borrower or any of its Subsidiaries, equity holders, Affiliates creditors or any other Person, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or the breach in bad faith, by such indemnified person of its express obligations hereunder or under any other Loan Document pursuant to a claim initiated by the Borrower. To the extent permitted by applicable law, any Person seeking to be indemnified under this Section 9.03(b) shall, upon obtaining knowledge thereof, use commercially reasonable efforts to give prompt written notice to the Borrower of the commencement of any action or proceeding giving rise to such indemnification claim, provided that the failure to give such notice shall not relieve the Borrower of any indemnification obligations hereunder.

(c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, the Issuing Bank or the Swingline Lender under clause (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount (it being understood that the Borrower’s failure to pay any such

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amount shall not relieve the Borrower of any default in the payment thereof); provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the Issuing Bank or the Swingline Lender in its capacity as such.

(d) Subject to the obligations of the Administrative Agent and the Lenders under Section 9.12 which are not hereby waived, to the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee (i) for any damages arising from the use by others of information or other materials obtained through telecommunications, electronic or other information transmission systems (including the Internet), or (ii) on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

(e) All amounts due under this Section shall be payable not later than fifteen (15) days after written demand therefor.

SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in clause (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)(i) Subject to the conditions set forth in clause (b)(ii) below, any Lender may assign to one or more Persons (other than an Ineligible Institution) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld) of:

(A) the Borrower; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten (10) Business Days after having received notice thereof; provided, further, that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default has occurred and is continuing, any other assignee;

(B) the Administrative Agent;

(C) the Issuing Bank; provided that no consent of the Issuing Bank shall be required for an assignment of all or any portion of a Term Loan; and

(D) the Swingline Lender; provided that no consent of the Swingline Lender shall be required for an assignment of all or any portion of a Term Loan.

(ii)Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 (in the case

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of Revolving Commitments and Revolving Loans) or $1,000,000 (in the case of a Term Loan) unless each of the Borrower and the Administrative Agent otherwise consent, provided that no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing;

(B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement, provided that this clause shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans;

(C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500, such fee to be paid by either the assigning Lender or the assignee Lender or shared between such Lenders; and

(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire in which the assignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non- public information about the Borrower and its affiliates and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws.

For the purposes of this Section 9.04(b), the terms “Approved Fund” and “Ineligible Institution” have the following meanings:

“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Ineligible Institution” means (a) a natural person, (b) a Defaulting Lender, (c) the Borrower, any of its Subsidiaries or any of its Affiliates, or (d) a company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person or relative(s) thereof.

(iii) Subject to acceptance and recording thereof pursuant to clause (b)(iv) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with clause (c) of this Section.

(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

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(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in clause (b) of this Section and any written consent to such assignment required by clause (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant to Section 2.05(c), 2.06(d) or (e), 2.07(b), 2.18(e) or 9.03(c), the Administrative Agent shall have no obligation to accept such Assignment and Assumption and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(c) (i) Any Lender may, without the consent of the Borrower, the Administrative Agent, the Issuing Bank or the Swingline Lender, sell participations to one or more banks or other entities (a “Participant”), other than an Ineligible Institution, in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. Subject to clause (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to clause (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.18(d) as though it were a Lender.

(ii)A Participant shall not be entitled to receive any greater payment under Section 2.15 or 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.17 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.17(e) as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under this Agreement) except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

SECTION 9.05. Survival. All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or

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pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any other Loan Document or any provision hereof or thereof.

SECTION 9.06. Counterparts; Integration; Effectiveness; Electronic Execution. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy, e-mailed .pdf or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to any document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include Electronic Signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

SECTION 9.07. Severability. Any provision of any Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final and in whatever currency denominated) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower or any Subsidiary Guarantor against any of and all of the Secured Obligations held by such Lender, irrespective of whether or not such Lender shall have made any demand under the Loan Documents and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York.

(b) The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County, Borough of Manhattan, and of the United States District Court for the Southern District of New York sitting in the Borough of

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Manhattan, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Loan Party or its properties in the courts of any jurisdiction.

(c) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in clause (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 9.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 9.12. Confidentiality. Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential; provided that each of the Administrative Agent, the Issuing Bank and the Lenders shall use commercially reasonable efforts to ensure that such Information shall not be disclosed to those employees of the Administrative Agent, the Issuing Bank or such Lender or its Affiliates having direct responsibility for engaging in direct commercial transactions (excluding debt financing, equity capital or other financial advisory services) with the Borrower or its Subsidiaries, (b) to the extent requested by any regulatory authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies under this Agreement or any other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to a written agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower, (h) to the extent such Information (i) becomes publicly available other than as a

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result of a breach of this Section or (ii) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source other than the Borrower or (i) on a confidential basis to (1) any rating agency in connection with rating the Borrower or its Subsidiaries or the credit facilities provided for herein or (2) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the credit facilities provided for herein. For the purposes of this Section, “Information” means all information received from the Borrower by virtue of the Transactions contemplated by this Agreement relating to the Borrower or its business, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrower and other than information pertaining to this Agreement routinely provided by arrangers to data service providers, including league table providers, that serve the lending industry; provided that, in the case of information received from the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN THE IMMEDIATELY PRECEDING PARAGRAPH FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE COMPANY AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE COMPANY OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE COMPANY, THE OTHER LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE COMPANY AND THE ADMINISTRATIVE AGENT THAT IT HAS INDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.

SECTION 9.13. USA PATRIOT Act. Each Lender that is subject to the requirements of the Patriot Act hereby notifies each Loan Party that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies such Loan Party, which information includes the name and address of such Loan Party and other information that will allow such Lender to identify such Loan Party in accordance with the Patriot Act.

SECTION 9.14. Appointment for Perfection. Each Lender hereby appoints each other Lender as its agent for the purpose of perfecting Liens, for the benefit of the Administrative Agent and the Secured Parties, in assets which, in accordance with Article 9 of the UCC or any other applicable law can be perfected only by possession or control. Should any Lender (other than the Administrative Agent) obtain possession or control of any such Collateral, such Lender shall notify the Administrative Agent thereof, and, promptly upon the Administrative Agent’s request therefor shall deliver such Collateral to the Administrative Agent or otherwise deal with such Collateral in accordance with the Administrative Agent’s instructions.

SECTION 9.15. No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees that: (i) (A) the arranging and other services regarding this Agreement provided by the Lenders are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Lenders and their Affiliates, on the other hand, (B) the Borrower has

76

consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each of the Lenders and their Affiliates is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person and (B) no Lender or any of its Affiliates has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except, in the case of a Lender, those obligations expressly set forth herein and in the other Loan Documents; and (iii) each of the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and no Lender or any of its Affiliates has any obligation to disclose any of such interests to the Borrower or its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against each of the Lenders and their Affiliates with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

SECTION 9.16. Releases of Subsidiary Guarantors.

(a) A Subsidiary Guarantor shall automatically be released from its obligations under the Subsidiary Guaranty upon the consummation of any transaction permitted by this Agreement as a result of which such Subsidiary Guarantor ceases to be a Subsidiary; provided that, if so required by this Agreement, the Required Lenders shall have consented to such transaction and the terms of such consent shall not have provided otherwise. In connection with any termination or release pursuant to this Section, the Administrative Agent shall (and is hereby irrevocably authorized by each Lender to) execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this Section shall be without recourse to or warranty by the Administrative Agent.

(b) At such time as the principal and interest on the Loans, all LC Disbursements, the fees, expenses and other amounts payable under the Loan Documents and the other Secured Obligations (other than Swap Obligations, Banking Services Obligations, and other Obligations expressly stated to survive such payment and termination) shall have been paid in full in cash, the Commitments shall have been terminated and no Letters of Credit shall be outstanding, the Subsidiary Guaranty and all obligations (other than those expressly stated to survive such termination) of each Subsidiary Guarantor thereunder shall automatically terminate, all without delivery of any instrument or performance of any act by any Person.

SECTION 9.17. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

SECTION 9.18. Acknowledgment and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document may be subject to the Write-Down and Conversion Powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(i) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

77

(ii) the effects of any Bail-In Action on any such liability, including, if applicable:

(A)    a reduction in full or in part or cancellation of any such liability;

(B)    a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(C) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any EEA Resolution Authority.

[Signature Pages Follow]

78

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

[SIGNATURE PAGES OMITTED FOR CONFORMED CREDIT AGREEMENT]

79

SCHEDULE 2.01

COMMITMENTS

LENDER	REVOLVING COMMITMENT	TERM LOAN COMMITMENT
JPMORGAN CHASE BANK, N.A.	$92,000,000.00	$30,000,000.00
FIFTH THIRD BANK	$92,000,000.00	$25,000,000.00
U.S. BANK NATIONAL ASSOCIATION	$76,000,000.00	$30,000,000.00
MUFG UNION BANK, N.A.	$76,000,000.00	$0
PNC BANK, NATIONAL ASSOCIATION	$76,000,000.00	$25,000,000.00
SUNTRUST BANK	$53,000,000.00	$30,000,000.00
WELLS FARGO BANK, NATIONAL ASSOCIATION	$40,000,000.00	$10,000,000.00
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH	$20,000,000.00	$0
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.	$0	$25,000,000.00
BMO HARRIS BANK N.A.	$0	$25,000,000.00
AGGREGATE COMMITMENT	$525,000,000	$200,000,000

EXHIBIT A

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any letters of credit, guarantees, and swingline loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1.Assignor:    

2.Assignee:    

[and is an Affiliate/Approved Fund of [identify Lender]¹]

3.Borrower(s):Deluxe Corporation

4.    Administrative Agent:JPMorgan Chase Bank, N.A., as the administrative agent under the

Credit Agreement

5. Credit Agreement: The Credit Agreement dated as of March 12, 2010 among Deluxe Corporation, the Lenders parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents parties thereto

6.Assigned Interest:

¹Select as applicable.

1

Facility Assigned2	Aggregate Amount of Commitment/Loans for all Lenders	Amount of Commitment/ Loans Assigned	Percentage Assigned of Commitment/Loans3
	$	$	%
	$	$	%
	$	$	%

Effective Date: , 20[TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR

[NAME OF ASSIGNOR]

By:

Title:

ASSIGNEE

[NAME OF ASSIGNEE]

By:

Title:

Consented to and Accepted:

JPMORGAN CHASE BANK, N.A., as

Administrative Agent and Issuing Bank

By:
	Title:
[Consented to]4
DELUXE CORPORATION
By:
	Title:

² Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Agreement (e.g., “Revolving Commitment”, “Term Loan Commitment”, etc.)

³Set forth, so at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

⁴ To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.

2

ANNEX I

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent Financials delivered pursuant to Section 5.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Acceptance and adoption of the terms of this Assignment and Assumption by the Assignee and the Assignor by Electronic Signature or delivery of an executed counterpart of a signature page of this Assignment and Assumption by any Electronic System shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

1

EXHIBIT G-1

FORM OF BORROWING REQUEST

JPMorgan Chase Bank, N.A., as Administrative Agent

for the Lenders referred to below

10 South Dearborn

Chicago, Illinois 60603

Attention: April Yebd

Facsimile: (312) 385-7096

With a copy to:

10 South Dearborn

Chicago, Illinois 60603

Attention: Suzanne Ergastolo

Facsimile: (312) 794-7682

Re: Deluxe Corporation

[Date]

Ladies and Gentlemen:

Reference is hereby made to the Credit Agreement, dated as of March 12, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Deluxe Corporation (the “Borrower”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”). Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement. The Borrower hereby gives you notice pursuant to Section 2.03 of the Credit Agreement that it requests a Borrowing under the Credit Agreement, and in that connection the Borrower specifies the following information with respect to such Borrowing requested hereby:

1.The requested Borrowing is in respect of the [Revolving Commitment [Term Loan Commitment].

2.Aggregate principal amount of Borrowing:¹

3.Date of Borrowing (which shall be a Business Day):

4.Type of Borrowing (ABR or Eurodollar):

5.Interest Period and the last day thereof (if a Eurodollar Borrowing):²

¹ Not less than applicable amounts specified in Section 2.02(c).

² Which must comply with the definition of “Interest Period” and end not later than the Maturity Date.

1

6.     Location and number of the Borrower's account or any other account agreed upon by the Administrative Agent and the Borrower to which proceeds of Borrowing are to be disbursed:

[Signature Page Follows]

2

The undersigned hereby represents and warrants that the conditions to lending specified in Section[s][4.01 and]¹4.02 of the Credit Agreement are satisfied as of the date hereof.

Very truly yours,

DELUXE CORPORATION

as the Borrower

By:

Name:

Title:

¹To be included only for Borrowings on the Effective Date.

3

EXHIBIT G-2

FORM OF INTEREST ELECTION REQUEST

JPMorgan Chase Bank, N.A.,

as Administrative Agent

for the Lenders referred to below

10 South Dearborn

Chicago, Illinois 60603

Attention: April Yebd

Facsimile: (312) 385-7096

With a copy to:

10 South Dearborn

Chicago, Illinois 60603

Attention: Suzanne Ergastolo

Facsimile: (312) 794-7682

Re: Deluxe Corporation

[Date]

Ladies and Gentlemen:

Reference is hereby made to the Credit Agreement, dated as of March 12, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Deluxe Corporation (the “Borrower”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”). Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement. The Borrower hereby gives you notice pursuant to Section 2.08 of the Credit Agreement that it requests to [convert][continue] an existing Borrowing under the Credit Agreement, and in that connection the Borrower specifies the following information with respect to such [conversion][continuation]requested hereby:

1.List date, Type, Class, principal amount and Interest Period (if applicable) of existing

Borrowing:

2.Aggregate principal amount of resulting Borrowing:

3.Effective date of interest election (which shall be a Business Day):

4.Type of Borrowing (ABR or Eurodollar):

5.Interest Period and the last day thereof (if a Eurodollar Borrowing):¹

[Signature Page Follows]

¹ Which must comply with the definition of “Interest Period” and end not later than the Maturity Date.

1

The undersigned hereby represents and warrants that the conditions to lending specified in Section[s][4.01 and]¹4.02 of the Credit Agreement are satisfied as of the date hereof.

Very truly yours,

DELUXE CORPORATION

as the Borrower

By:

Name:

Title:

¹ To be included for Borrowings on the Effective Date.

2

ANNEX I TO OMNIBUS AMENDMENT

List of Closing Documents¹ 

1.Omnibus Amendment No. 3 to Credit Agreement, Amendment No. 2 to Pledge and Security Agreement and Waiver (the “Amendment”).

2.Term Loan Notes to the extent requested by any Lender.

3.Updated Exhibit “D” to the Pledge and Security Agreement, together with any additional stock certificates (and stock powers) and instruments (and allonges) after giving effect to the Amendment (including the amended definition of “Excluded Property”).

4.UCC-3 Amendment to the existing UCC-1 financing statement for AccuSource Solutions Corporation changing its name to Deluxe Strategic Sourcing, Inc.

5.Opinion of Dorsey & Whitney LLP, counsel to the Borrower, with respect to noncontravention of laws, material indebtedness and the 2012 Indenture, enforceability of the Loan Documents, and such other matters relating to the Borrower and the other Loan Parties, this Amendment or the Loan Documents, or the Collateral as the Administrative Agent shall reasonably request.

6.Opinion (addressed to the Administrative Agent and the Lenders and dated the date hereof) of in-house counsel to the Borrower, with respect to general corporate matters, noncontravention of laws and material indebtedness, and such other matters relating to the Borrower, this Amendment, the Loan Documents or the Collateral as the Administrative Agent shall reasonably request.

7.Opinions (addressed to the Administrative Agent and the Lenders and dated the date hereof) of local counsels to the Loan Parties (as applicable), with respect to general corporate matters, noncontravention of laws and material indebtedness, and such other matters relating to such Loan Parties, this Amendment, the Loan Documents or the Collateral as the Administrative Agent shall reasonably request.

8.Certificate of the Secretary or an Assistant Secretary of each Loan Party certifying and attaching (i) the Certificate of Incorporation or other charter document of such Loan Party, (ii) the By-Laws or other applicable organizational document of such Loan Party as in effect on the date of such certification, (iii) resolutions of the Board of Directors or other governing body of such Loan Party authorizing the execution and delivery of the Amendment and the performance of the Amendment and each Loan Document to which it is a party, as modified by and after giving effect to the Amendment, and (iv) the names and true signatures of the incumbent officers of such Loan Party authorized to sign the Amendment, and authorized to request a Borrowing under the Credit Agreement (if applicable).

9.Good standing certificate for each Loan Party from the Secretary of State of its jurisdiction of organization.

¹ Documents in bold italics to be delivered by the Borrower and counsel.

10.(i) Audited consolidated financial statements of the Borrower for the two most recent fiscal years ended prior to the date hereof as to which such financial statements are available, (ii) unaudited interim consolidated financial statements of the Borrower for each quarterly period ended subsequent to the date of the latest financial statements, and (iii) financial statement projections through and including the Borrower’s 2019 fiscal year, together with such information as the Administrative Agent and the Lenders shall reasonably request (including, without limitation, a detailed description of the assumptions used in preparing such projections).

11.Officer’s Certificate as to (i) the accuracy of all representations and warranties in the Loan Documents and (ii) no Default or Event of Default.

12.Restated Schedules 6.01, 6.02 and 6.04 to the Credit Agreement.

EX-12.1

Exhibit 12.1

Deluxe Corporation

Computation of Ratio of Earnings to Fixed Charges

	Nine Months Ended September 30,		Year Ended December 31,
	2016		2015		2014		2013		2012		2011
Earnings:
Income from continuing operations before income taxes	$	261,937	$	327,947	$	297,181	$	281,059	$	250,753	$	216,084
Interest expense (excluding capitalized interest)(1)	15,281		20,299		36,529		38,301		46,847		47,797
Portion of rent expense under long-term operating leases representative of an interest factor	4,138		5,124		4,366		3,952		4,463		3,215
Total earnings	$	281,356	$	353,370	$	338,076	$	323,312	$	302,063	$	267,096
Fixed charges:
Interest expense (including capitalized interest)(1)	$	15,281	$	20,299	$	36,529	$	38,301	$	46,847	$	47,797
Portion of rent expense under long-term operating leases representative of an interest factor	4,138		5,124		4,366		3,952		4,463		3,215
Total fixed charges	$	19,419	$	25,423	$	40,895	$	42,253	$	51,310	$	51,012
Ratio of earnings to fixed charges	14.5		13.9		8.3		7.7		5.9		5.2

⁽¹⁾ Does not include interest expense related to uncertain tax positions.

EX-31.1

Exhibit 31.1

CEO CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Lee Schram, Chief Executive Officer of Deluxe Corporation, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Deluxe Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:     October 28, 2016	/s/ Lee Schram
	Lee Schram
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CFO CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Edward A. Merritt, Chief Financial Officer of Deluxe Corporation, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Deluxe Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:     October 28, 2016	/s/ Edward A. Merritt
	Edward A. Merritt
	Chief Financial Officer, Treasurer and Vice President of Investor Relations

EX-32.1

Exhibit 32.1

CEO AND CFO CERTIFICATION OF PERIODIC REPORT

We, Lee Schram, Chief Executive Officer of Deluxe Corporation (the “Company”), and Edward A. Merritt, Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1) the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  October 28, 2016	/s/ Lee Schram
	Lee Schram
	Chief Executive Officer

/s/ Edward A. Merritt

Edward A. Merritt

Chief Financial Officer, Treasurer and Vice President of Investor Relations

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 19, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	DELUXE CORP
Entity Central Index Key	0000027996
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		48,596,289

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 80,065	$ 62,427
Trade accounts receivable (net of allowances for uncollectible accounts of $3,161 and $4,816, respectively)	117,761	123,654
Inventories and supplies	41,474	41,956
Funds held for customers	92,170	53,343
Other current assets	41,038	42,605
Total current assets	372,508	323,985
Deferred income taxes	1,749	1,238
Long-term investments (including $1,868 and $2,091 of investments at fair value, respectively)	41,893	41,691
Property, plant and equipment (net of accumulated depreciation of $349,856 and $344,785, respectively)	83,667	85,732
Assets held for sale	13,966	13,969
Intangibles (net of accumulated amortization of $451,214 and $407,747, respectively)	313,878	285,311
Goodwill	989,641	976,415
Other non-current assets	123,846	113,812
Total assets	1,941,148	1,842,153
Current liabilities:
Accounts payable	86,835	87,575
Accrued liabilities	240,637	228,423
Long-term debt due within one year	951	1,045
Total current liabilities	328,423	317,043
Long-term debt	616,790	627,973
Deferred income taxes	80,754	81,076
Other non-current liabilities	65,234	70,992
Commitments and contingencies (Notes 11 and 12)
Shareholders' equity:
Common shares $1 par value (authorized: 500,000 shares; outstanding: September 30, 2016 - 48,586; December 31, 2015 - 49,019)	48,586	49,019
Retained earnings	851,420	751,253
Accumulated other comprehensive loss	(50,059)	(55,203)
Total shareholders' equity	849,947	745,069
Total liabilities and shareholders' equity	$ 1,941,148	$ 1,842,153

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CONSOLIDATED BALANCE SHEETS (Parentheticals) (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Allowances for uncollectible accounts	$ 3,161	$ 4,816
Investments at fair value	1,868	2,091
Accumulated depreciation	349,856	344,785
Accumulated amortization	$ 451,214	$ 407,747
Shareholders' equity:
Common stock, par value (per share)	$ 1.00	$ 1.00
Common stock, shares authorized	500,000	500,000
Common stock, shares outstanding	48,586	49,019

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Product revenue	$ 364,680	$ 361,781	$ 1,090,686	$ 1,075,692
Service revenue	94,240	78,035	278,174	233,616
Total revenue	458,920	439,816	1,368,860	1,309,308
Cost of products	(133,628)	(132,594)	(391,161)	(384,590)
Cost of services	(32,642)	(26,708)	(99,246)	(83,332)
Total cost of revenue	(166,270)	(159,302)	(490,407)	(467,922)
Gross profit	292,650	280,514	878,453	841,386
Selling, general and administrative expense	(198,365)	(189,641)	(598,563)	(575,110)
Net restructuring charges	(1,993)	(1,505)	(4,007)	(2,738)
Operating income	92,292	89,368	275,883	263,538
Loss on early debt extinguishment	0	0	0	(8,917)
Interest expense	(4,855)	(4,387)	(15,281)	(15,322)
Other income	742	919	1,335	2,174
Income before income taxes	88,179	85,900	261,937	241,473
Income tax provision	(29,516)	(28,983)	(86,783)	(82,553)
Net income	58,663	56,917	175,154	158,920
Comprehensive income	$ 57,824	$ 52,680	$ 180,298	$ 150,190
Basic earnings per share	$ 1.20	$ 1.14	$ 3.57	$ 3.18
Diluted earnings per share	1.19	1.13	3.55	3.16
Cash dividends per share	$ 0.30	$ 0.30	$ 0.90	$ 0.90

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CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($) shares in Thousands, $ in Thousands	Total	Common shares par value [Member]	Additional paid-in capital [Member]	Retained earnings [Member]	Accumulated other comprehensive loss [Member]
Balance at Dec. 31, 2015	$ 745,069	$ 49,019	$ 0	$ 751,253	$ (55,203)
Balance (in shares) at Dec. 31, 2015	49,019
Net income	$ 175,154	0	0	175,154	0
Cash dividends	(44,127)	0	0	(44,127)	0
Common shares issued	$ 11,482	403	11,079	0	0
Common shares issued (in shares)	403
Common shares repurchased	$ (44,944)	(733)	(13,351)	(30,860)	0
Common shares repurchased (in shares)	(733)
Other common shares retired	$ (6,333)	(103)	(6,230)	0	0
Other common shares retired (in shares)	(103)
Fair value of share-based compensation	$ 8,502	0	8,502	0	0
Other comprehensive income	5,144	0	0	0	5,144
Balance at Sep. 30, 2016	$ 849,947	$ 48,586	$ 0	$ 851,420	$ (50,059)
Balance (in shares) at Sep. 30, 2016	48,586

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income	$ 175,154	$ 158,920
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	11,347	12,006
Amortization of intangibles	56,364	42,425
Amortization of contract acquisition costs	14,700	14,059
Deferred income taxes	(1,477)	(945)
Employee share-based compensation expense	9,264	8,774
Loss on early debt extinguishment	0	8,917
Other non-cash items, net	3,128	1,197
Changes in assets and liabilities, net of effect of acquisitions:
Trade accounts receivable	5,320	13,970
Inventories and supplies	176	(1,368)
Other current assets	(2,379)	2,377
Non-current assets	(3,351)	(560)
Accounts payable	(1,619)	(12,547)
Contract acquisition payments	(17,190)	(9,843)
Other accrued and non-current liabilities	(41,316)	(18,234)
Net cash provided by operating activities	208,121	219,148
Cash flows from investing activities:
Purchases of capital assets	(32,215)	(29,549)
Payments for acquisitions, net of cash acquired	(64,637)	(50,933)
Proceeds from company-owned life insurance policies	4,123	3,973
Other	2,330	805
Net cash used by investing activities	(90,399)	(75,704)
Cash flows from financing activities:
Proceeds from short-term borrowings	0	50,000
Proceeds from issuing long-term debt	169,000	276,500
Payments on long-term debt, including costs of debt reacquisition	(185,873)	(375,291)
Proceeds from issuing shares under employee plans	6,861	5,492
Excess tax benefit from share-based employee awards	0	1,816
Employee taxes paid for shares withheld	(2,333)	(1,236)
Payments for common shares repurchased	(44,944)	(46,996)
Cash dividends paid to shareholders	(44,127)	(44,965)
Other	(1,634)	(378)
Net cash used by financing activities	(103,050)	(135,058)
Effect of exchange rate change on cash	2,966	(7,032)
Net change in cash and cash equivalents	17,638	1,354
Cash and cash equivalents, beginning of year	62,427	61,541
Cash and cash equivalents, end of period	$ 80,065	$ 62,895

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Consolidated financial statements

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Consolidated financial statements

Consolidated financial statements

The consolidated balance sheet as of September 30, 2016, the consolidated statements of comprehensive income for the quarters and nine months ended September 30, 2016 and 2015, the consolidated statement of shareholders’ equity for the nine months ended September 30, 2016, and the consolidated statements of cash flows for the nine months ended September 30, 2016 and 2015 are unaudited. The consolidated balance sheet as of December 31, 2015 was derived from audited consolidated financial statements, but does not include all disclosures required by generally accepted accounting principles (GAAP) in the United States of America. In the opinion of management, all adjustments necessary for a fair statement of the consolidated financial statements are included. Adjustments consist only of normal recurring items, except for any discussed in the notes below. 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 our annual consolidated financial statements and notes. The consolidated financial statements and notes appearing in this report should be read in conjunction with the consolidated audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Form 10-K”).

During the quarter ended June 30, 2016, we identified an error in the balance sheet presentation of borrowings under our credit facility and the related asset for debt issuance costs. These amounts were previously presented as current items in our consolidated balance sheets, and we determined that they should have been presented as non-current. This change also corrects the presentation of the cash flows associated with borrowings under our credit facility. Previously these cash flows were presented on a net basis. The change in the balance sheet presentation requires that they be presented on a gross basis.

We assessed the materiality of this error on prior periods' financial statements in accordance with the Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 99, Materiality, codified in Accounting Standards Codification (ASC) 250, Presentation of Financial Statements. We concluded that the error was not material to any prior annual or interim period and therefore, amendments of previously filed reports are not required. In accordance with ASC 250, we have corrected the error for all prior periods presented by revising the consolidated financial statements appearing herein. Periods not presented herein will be revised, as applicable, in future filings. The revisions had no impact on total assets, total liabilities, shareholders' equity, net income or net cash used by financing activities.

The impact of this revision on our unaudited consolidated balance sheet as of December 31, 2015 was as follows:

	December 31, 2015
(in thousands)	As Previously Reported		Adjustment			As Revised
Other current assets	$	44,608	$	(2,003	)	$	42,605
Total current assets	325,988		(2,003		)	323,985
Other non-current assets	111,809		2,003			113,812
Short-term borrowings	434,000		(434,000		)	—
Total current liabilities	751,043		(434,000		)	317,043
Long-term debt	193,973		434,000			627,973

The impact of this revision on our unaudited consolidated statement of cash flows for the nine months ended September 30, 2015 was as follows:

	Nine Months Ended September 30, 2015
(in thousands)	As Previously Reported			Adjustment			As Revised
Proceeds from short-term borrowings	$	159,000		$	(109,000	)	$	50,000
Proceeds from issuing long-term debt	—			276,500			276,500
Payments on long-term debt, including costs of debt reacquisition	(207,791		)	(167,500		)	(375,291		)

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New accounting pronouncements

9 Months Ended

Sep. 30, 2016

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New accounting pronouncements

New accounting pronouncements

Recently adopted accounting pronouncements – In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The standard requires that a performance target that affects vesting and that could be achieved after the requisite service period should be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. We adopted this standard on January 1, 2016. As our accounting treatment for these awards was in compliance with the new guidance, adoption of this standard had no impact on our consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The standard requires that debt issuance costs related to a recognized debt liability be presented in the consolidated balance sheets as a direct reduction from the carrying amount of the debt liability. We adopted this standard on January 1, 2016, applying it retrospectively. The consolidated balance sheet as of December 31, 2015 reflects the reclassification of debt issuance costs of $2,249 from other non-current assets to long-term debt. The amount of debt issuance costs included in long-term debt as of September 30, 2016 was $1,906. In August 2015, the FASB issued ASU No. 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements – Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting. This standard adds SEC paragraphs pursuant to the SEC Staff announcement at the June 18, 2015 Emerging Issues Task Force (EITF) meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. Under this guidance, the SEC Staff would not object to presenting such costs as an asset and subsequently amortizing the deferred costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings under the arrangement. Debt issuance costs of $1,528 as of September 30, 2016 and $2,003 as of December 31, 2015 related to our line-of-credit arrangement. We continue to include these costs within other non-current assets, amortizing them over the term of the arrangement.

In April 2015, the FASB issued ASU No. 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. The standard provides guidance to customers about whether a cloud computing arrangement includes a software license. If the arrangement does include a software license, the software license element of the arrangement should be accounted for in the same manner as the acquisition of other software licenses. We adopted this standard on January 1, 2016, applying it prospectively to all arrangements entered into or materially modified on or after January 1, 2016. Adoption of this standard did not have a significant impact on our results of operations or financial position.

In May 2015, the FASB issued ASU No. 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or its Equivalent). Under the standard, investments measured at net asset value (NAV) as a practical expedient for fair value are excluded from the fair value hierarchy. As such, they are not assigned a fair value measurement level in financial statement disclosures of fair value. This standard was effective for us on January 1, 2016. It impacts the disclosures included in our Annual Report on Form 10-K regarding the plan assets of our postretirement benefit plan. As such, we will reflect this new guidance in the disclosures included in our Form 10-K for the year ending December 31, 2016, applying the guidance retrospectively to all periods presented.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. The standard requires that inventory within the scope of the guidance be measured at the lower of cost or net realizable value. Previously, inventory was measured at the lower of cost or market. We elected to early adopt this standard on January 1, 2016, applying it prospectively. Application of this standard did not have a significant impact on our results of operations or financial position.

In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. When recording the purchase price allocation for a business combination in the financial statements, an acquirer may record preliminary amounts when measurements are incomplete as of the end of a reporting period. When the required information is received to finalize the purchase price allocation, the preliminary amounts are adjusted. These adjustments are referred to as measurement-period adjustments. This standard eliminates the requirement to restate prior period financial statements for measurement-period adjustments. Instead, it requires that the cumulative impact of a measurement-period adjustment be recognized in the reporting period in which the adjustment is identified. We adopted this standard on January 1, 2016, applying it prospectively. Application of this standard did not have a significant impact on our results of operations or financial position.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. The standard is intended to simplify various aspects of the accounting and presentation of share-based payments. We elected to early adopt this standard as of January 1, 2016. Adoption of this standard had the following impacts on our consolidated financial statements:

• Consolidated statements of comprehensive income – The new standard requires that the tax effects of share-based compensation be recognized in the income tax provision. Previously, these amounts were recognized in additional paid-in capital. Net tax benefits related to share-based compensation awards of $234 for the quarter ended September 30, 2016 and $1,745 for the nine months ended September 30, 2016 were recognized as reductions of income tax expense in the consolidated statements of comprehensive income. These tax benefits reduced our effective income tax rate 0.3 points for the quarter ended September 30, 2016 and 0.7 points for the nine months ended September 30, 2016. In addition, in calculating potential common shares used to determine diluted earnings per share, GAAP requires us to use the treasury stock method. The new standard requires that assumed proceeds under the treasury stock method be modified to exclude the amount of excess tax benefits that would have been recognized in additional paid-in capital. These changes were applied on a prospective basis and resulted in an increase in diluted earnings per share of $0.03 for the nine months ended September 30, 2016. These changes had no impact on diluted earnings per share for the quarter ended September 30, 2016.

In recording share-based compensation expense, the standard allows companies to make a policy election as to whether they will include an estimate of awards expected to be forfeited or whether they will account for forfeitures as they occur. We have elected to include an estimate of forfeitures in the computation of our share-based compensation expense. As this treatment is consistent with previous guidance, this election had no impact on our consolidated financial statements.

• Consolidated statements of cash flows – The standard requires that excess tax benefits from share-based employee awards be reported as operating activities in the consolidated statements of cash flows. Previously, these cash flows were included in financing activities. We elected to apply this change on a prospective basis, resulting in an increase in net cash provided by operating activities and in net cash used by financing activities of $2,069 for the nine months ended September 30, 2016.

The standard requires that employee taxes paid when an employer withholds shares for tax-withholding purposes be reported as financing activities in the consolidated statements of cash flows. Previously, these cash flows were included in operating activities. This change was required to be applied on a retrospective basis. As such, the consolidated statement of cash flows for the prior period was restated. This change resulted in an increase in net cash provided by operating activities and in net cash used by financing activities of $2,333 for the nine months ended September 30, 2016 and $1,236 for the nine months ended September 30, 2015.

In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. The standard is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. We elected to early adopt this standard as of July 1, 2016. As our consolidated statement of cash flows presentation was in compliance with the new guidance, adoption of this standard had no impact on our consolidated financial statements.

Accounting pronouncements not yet adopted – In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The standard provides revenue recognition guidance for any entity that enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets, unless those contracts are within the scope of other accounting standards. The standard also expands the required financial statement disclosures regarding revenue recognition. The new guidance is effective for us on January 1, 2018. In addition, in March 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), in April 2016, the FASB issued ASU No. 2016-10, Identifying Performance Obligations and Licensing, and in May 2016, the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients. These standards are intended to clarify aspects of ASU No. 2014-09 and are effective for us upon adoption of ASU No. 2014-09. We are currently assessing the impact of these standards on our consolidated financial statements, as well as the method of transition that we will use in adopting the new guidance.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The standard is intended to improve the recognition, measurement, presentation and disclosure of financial instruments. The guidance is effective for us on January 1, 2018. We do not expect the application of this standard to have a significant impact on our results of operations or financial position.

In February 2016, the FASB issued ASU No. 2016-02, Leasing. The standard is intended to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities for virtually all leases and by requiring the disclosure of key information about leasing arrangements. The guidance is effective for us on January 1, 2019, and requires adoption using a modified retrospective approach. We are currently assessing the impact of this standard on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. The standard introduces new guidance for the accounting for credit losses on instruments within its scope, including trade and loans receivable and available-for-sale debt securities. The guidance is effective for us on January 1, 2020, and requires adoption using a modified retrospective approach. We do not expect the application of this standard to have a significant impact on our results of operations or financial position.

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Supplemental balance sheet information

9 Months Ended

Sep. 30, 2016

Balance Sheet Related Disclosures [Abstract]

Supplemental balance sheet information

Supplemental balance sheet information

Inventories and supplies – Inventories and supplies were comprised of the following:

(in thousands)	September 30, 2016		December 31, 2015
Raw materials	$	5,593	$	5,719
Semi-finished goods	8,857		8,208
Finished goods	23,937		24,955
Supplies	3,087		3,074
Inventories and supplies	$	41,474	$	41,956

Available-for-sale securities – Available-for-sale securities included within funds held for customers and other current assets were comprised of the following:

	September 30, 2016
(in thousands)	Cost		Gross unrealized gains		Gross unrealized losses			Fair value
Funds held for customers:(1)
Canadian and provincial government securities	$	8,491	$	—	$	(43	)	$	8,448
Canadian guaranteed investment certificates	7,618		—		—			7,618
Available-for-sale securities	$	16,109	$	—	$	(43	)	$	16,066

⁽¹⁾ Funds held for customers, as reported on the consolidated balance sheet as of September 30, 2016, also included cash of $76,104. This cash included amounts related to FISC Solutions, which was acquired in December 2015. This business provides cash receipt processing services. A portion of the cash receipts are remitted to our clients the business day following receipt. As such, the amounts on-hand are reported as funds held for customers in the consolidated balance sheets, with a corresponding liability included in accrued liabilities. The asset and liability of $18,743 were recorded as acquisition measurement-period balance sheet adjustments during 2016. In addition, this cash included $12,532 related to the September 2016 acquisition of Payce, Inc., a payroll services provider (see Note 6).

	December 31, 2015
(in thousands)	Cost		Gross unrealized gains		Gross unrealized losses			Fair value
Canadian and provincial government securities	$	7,932	$	—	$	(91	)	$	7,841
Canadian guaranteed investment certificates	7,226		—		—			7,226
Available-for-sale securities (funds held for customers)(1)	15,158		—		(91		)	15,067
Canadian money market fund (other current assets)	1,616		—		—			1,616
Available-for-sale securities	$	16,774	$	—	$	(91	)	$	16,683

⁽¹⁾ Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2015, also included cash of $38,276.

Expected maturities of available-for-sale securities as of September 30, 2016 were as follows:

(in thousands)	Fair value
Due in one year or less	$	9,629
Due in two to five years	4,190
Due in six to ten years	2,247
Available-for-sale securities	$	16,066

Further information regarding the fair value of available-for-sale securities can be found in Note 8.

Assets held for sale – Assets held for sale as of September 30, 2016 and December 31, 2015 included the operations of a small business distributor that we previously acquired. This business is included in our Small Business Services segment and the assets acquired consisted primarily of a customer list intangible asset. We are actively marketing the business and expect the selling price will exceed its carrying value. Net assets held for sale consisted of the following:

(in thousands)	September 30, 2016			December 31, 2015			Balance sheet caption
Current assets	$	4		$	3		Other current assets
Intangibles	13,533			13,533			Assets held for sale
Other non-current assets	433			436			Assets held for sale
Accrued liabilities	(112		)	(366		)	Accrued liabilities
Deferred income tax liabilities	(5,775		)	(5,777		)	Other non-current liabilities
Net assets held for sale	$	8,083		$	7,829

Intangibles – Intangibles were comprised of the following:

	September 30, 2016							December 31, 2015
(in thousands)	Gross carrying amount		Accumulated amortization			Net carrying amount		Gross carrying amount		Accumulated amortization			Net carrying amount
Indefinite-lived intangibles:
Trade name	$	19,100	$	—		$	19,100	$	19,100	$	—		$	19,100
Amortizable intangibles:
Internal-use software	410,231		(336,356		)	73,875		375,037		(310,665		)	64,372
Customer lists/relationships	239,972		(67,366		)	172,606		202,682		(54,990		)	147,692
Trade names	65,481		(40,029		)	25,452		64,881		(36,325		)	28,556
Software to be sold	28,500		(6,141		)	22,359		28,500		(3,765		)	24,735
Other	1,808		(1,322		)	486		2,858		(2,002		)	856
Amortizable intangibles	745,992		(451,214		)	294,778		673,958		(407,747		)	266,211
Intangibles	$	765,092	$	(451,214	)	$	313,878	$	693,058	$	(407,747	)	$	285,311

Amortization of intangibles was $19,273 for the quarter ended September 30, 2016 and $14,686 for the quarter ended September 30, 2015. Amortization of intangibles was $56,364 for the nine months ended September 30, 2016 and $42,425 for the nine months ended September 30, 2015. Based on the intangibles in service as of September 30, 2016, estimated future amortization expense is as follows:

(in thousands)	Estimated amortization expense
Remainder of 2016	$	18,260
2017	65,293
2018	51,235
2019	37,788
2020	31,737

During the nine months ended September 30, 2016, we acquired internal-use software in the normal course of business. We also acquired intangible assets in conjunction with acquisitions (Note 6). The following intangible assets were acquired during the nine months ended September 30, 2016:

(in thousands)	Amount		Weighted-average amortization period (in years)
Internal-use software	$	34,970	4
Customer lists/relationships	48,982		7
Trade names	600		5
Acquired intangibles	$	84,552	6

Goodwill – Changes in goodwill during the nine months ended September 30, 2016 were as follows:

(in thousands)	Small Business Services			Financial Services		Direct Checks		Total
Balance, December 31, 2015:
Goodwill, gross	$	671,295		$	176,614	$	148,506	$	996,415
Accumulated impairment charges	(20,000		)	—		—		(20,000		)
Goodwill, net of accumulated impairment charges	651,295			176,614		148,506		976,415
Acquisition of 180 Fusion (Note 6)	575			—		—		575
Acquisition of Inkhead (Note 6)	4,421			—		—		4,421
Acquisition of Payce (Note 6)	7,979			—		—		7,979
Adjustment for acquisition of Datamyx (Note 6)	—			172		—		172
Currency translation adjustment	79			—		—		79
Balance, September 30, 2016:
Goodwill, gross	684,349			176,786		148,506		1,009,641
Accumulated impairment charges	(20,000		)	—		—		(20,000		)
Goodwill, net of accumulated impairment charges	$	664,349		$	176,786	$	148,506	$	989,641

Other non-current assets – Other non-current assets were comprised of the following:

(in thousands)	September 30, 2016		December 31, 2015
Contract acquisition costs	$	67,488	$	58,792
Loans and notes receivable from distributors	21,531		23,957
Postretirement benefit plan asset	20,260		16,250
Deferred advertising costs	6,660		7,500
Other	7,907		7,313
Other non-current assets	$	123,846	$	113,812

Changes in contract acquisition costs during the nine months ended September 30, 2016 and 2015 were as follows:

	Nine Months Ended September 30,
(in thousands)	2016			2015
Balance, beginning of year	$	58,792		$	74,101
Additions(1)	23,471			4,828
Amortization	(14,700		)	(14,059		)
Other	(75		)	(3,458		)
Balance, end of period	$	67,488		$	61,412

⁽¹⁾ Contract acquisition costs are accrued upon contract execution. Cash payments made for contract acquisition costs were $17,190 for the nine months ended September 30, 2016 and $9,843 for the nine months ended September 30, 2015.

Accrued liabilities – Accrued liabilities were comprised of the following:

(in thousands)	September 30, 2016		December 31, 2015
Funds held for customers	$	90,960	$	52,366
Deferred revenue	32,418		48,119
Employee profit sharing/cash bonus	24,771		40,683
Customer rebates	17,077		18,900
Contract acquisition costs due within one year	11,980		9,045
Wages, including vacation	11,260		5,731
Restructuring due within one year (Note 9)	2,648		3,864
Other	49,523		49,715
Accrued liabilities	$	240,637	$	228,423

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Earnings per share

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Earnings per share

Earnings per share

The following table reflects the calculation of basic and diluted earnings per share. During each period, certain stock options, as noted below, were excluded from the calculation of diluted earnings per share because their effect would have been antidilutive. 

	Quarter Ended September 30,						Nine Months Ended September 30,
(dollars and shares in thousands, except per share amounts)	2016			2015			2016			2015
Earnings per share – basic:
Net income	$	58,663		$	56,917		$	175,154		$	158,920
Income allocated to participating securities	(491		)	(386		)	(1,445		)	(1,054		)
Income available to common shareholders	$	58,172		$	56,531		$	173,709		$	157,866
Weighted-average shares outstanding	48,493			49,396			48,634			49,592
Earnings per share – basic	$	1.20		$	1.14		$	3.57		$	3.18
Earnings per share – diluted:
Net income	$	58,663		$	56,917		$	175,154		$	158,920
Income allocated to participating securities	(487		)	(384		)	(1,436		)	(1,049		)
Re-measurement of share-based awards classified as liabilities	(64		)	(114		)	230			(67		)
Income available to common shareholders	$	58,112		$	56,419		$	173,948		$	157,804
Weighted-average shares outstanding	48,493			49,396			48,634			49,592
Dilutive impact of potential common shares	455			366			427			391
Weighted-average shares and potential common shares outstanding	48,948			49,762			49,061			49,983
Earnings per share – diluted	$	1.19		$	1.13		$	3.55		$	3.16
Antidilutive options excluded from calculation	223			255			223			255

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Other comprehensive income

9 Months Ended

Sep. 30, 2016

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Other comprehensive income

Other comprehensive income

Reclassification adjustments– Information regarding amounts reclassified from accumulated other comprehensive loss to net income was as follows:

Accumulated other comprehensive loss components	Amounts reclassified from accumulated other comprehensive loss												Affected line item in consolidated statements of comprehensive income
	Quarter Ended September 30,						Nine Months Ended September 30,
(in thousands)	2016			2015			2016			2015
Amortization of postretirement benefit plan items:
Prior service credit	$	355		$	355		1,066			1,066			(1)
Net actuarial loss	(949		)	(780		)	(2,848		)	(2,340		)	(1)
Total amortization	(594		)	(425		)	(1,782		)	(1,274		)	(1)
Tax benefit	181			113			544			339			(1)
Total reclassifications, net of tax	$	(413	)	$	(312	)	$	(1,238	)	$	(935	)

⁽¹⁾ Amortization of postretirement benefit plan items is included in the computation of net periodic benefit income. Additional details can be found in Note 10.

Accumulated other comprehensive loss– Changes in the components of accumulated other comprehensive loss during the nine months ended September 30, 2016 were as follows:

(in thousands)	Postretirement benefit plans, net of tax			Net unrealized loss on marketable securities, net of tax(1)			Currency translation adjustment			Accumulated other comprehensive loss
Balance, December 31, 2015	$	(38,822	)	$	(114	)	$	(16,267	)	$	(55,203	)
Other comprehensive income before reclassifications	—			40			3,866			3,906
Amounts reclassified from accumulated other comprehensive loss	1,238			—			—			1,238
Net current-period other comprehensive income	1,238			40			3,866			5,144
Balance, September 30, 2016	$	(37,584	)	$	(74	)	$	(12,401	)	$	(50,059	)

⁽¹⁾ Other comprehensive income before reclassifications is net of income tax expense of $14.

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Acquisitions

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Acquisitions

Acquisitions

We periodically complete business combinations that align with our business strategy. The assets and liabilities acquired are recorded at their estimated fair values and the results of operations of each acquired business are included in our consolidated statements of comprehensive income from their acquisition dates. Transaction costs related to acquisitions were expensed as incurred and were not significant to the consolidated statements of comprehensive income for the quarters or nine months ended September 30, 2016 and 2015.

During the nine months ended September 30, 2016, we completed the following acquisitions which are included within our Small Business Services segment and for which the allocation of the purchase price to the assets acquired and liabilities assumed has been finalized:

• In February 2016, we acquired selected assets of Category 99, Inc., doing business as MacHighway®, a web hosting and domain registration service provider.

• In March 2016, we acquired selected assets of New England Art Publishers, Inc., doing business as Birchcraft Studios, a supplier of personalized invitations, holiday cards, all-occasion cards and social announcements. 

• In June 2016, we acquired selected assets of L.A.M. Enterprises, Inc., a provider of printed and promotional products.

During the nine months ended September 30, 2016, we completed several acquisitions which are included within our Small Business Services segment and for which we expect to finalize the allocation of the purchase price by the end of 2016 when our valuation of all of the acquired assets and liabilities is completed, as well as the determination of the estimated useful lives of the acquired customer lists. These acquisitions were as follows:

• In April 2016, we acquired selected assets of 180 Fusion LLC, a digital marketing services provider. The preliminary allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $575. The acquisition resulted in goodwill as we expect it will enhance our Small Business Services product set by providing valuable marketing tools to our customers, thus, enhancing customer acquisition and loyalty.

• In June 2016, we acquired selected assets of Liquid Web, LLC, a web hosting services provider.

• In June 2016, we acquired selected assets of National Document Solutions, LLC, a provider of printing, promotional products, office products, scanning and document management solutions.

• In July 2016, we acquired selected assets of Inkhead, Inc., a provider of customized promotional products. The preliminary allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $4,421. The acquisition resulted in goodwill as it enables us to diversify our promotional product offerings and bring these offerings to our customer base.

• In August 2016, we acquired selected assets of BNBS, Inc., doing business as B&B Solutions, a provider of printing, promotional and office products and services.

• In September 2016, we acquired all of the outstanding capital stock of Payce, Inc., a provider of payroll processing, payroll tax filing and related payroll services. The preliminary allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $7,979. The acquisition resulted in goodwill as we expect Payce's expertise, customer mix and operational strength to enhance our existing portfolio of small business services.

Also during the nine months ended September 30, 2016, we acquired the operations of several small business distributors which are included in our Small Business Services segment. The assets acquired consisted primarily of customer list intangible assets. As these distributors were previously part of our Safeguard® distributor network, our revenue was not impacted by these acquisitions and the impact to our costs was not significant. We expect to finalize the allocations of the purchase price by the end of 2016 when our valuations of the acquired customer lists are completed, including the determination of the related estimated useful lives.

As our acquisitions were not significant to our operating results both individually and in the aggregate, pro forma results of operations are not provided. The following illustrates the preliminary allocation as of September 30, 2016 of the aggregate purchase price for the above acquisitions to the assets acquired and liabilities assumed:

(in thousands)	2016 acquisitions
Net tangible assets acquired and liabilities assumed	$	(784	)
Identifiable intangible assets:
Customer lists/relationships	48,982
Internal-use software	10,250
Trade names	600
Total intangible assets	59,832
Goodwill	12,975
Total aggregate purchase price	72,023
Liabilities for holdback payments	(6,900		)
Non-cash consideration(1)	(2,020		)
Net cash paid for 2016 acquisitions	63,103
Holdback payments for prior year acquisitions	1,534
Payments for acquisitions, net of cash acquired	$	64,637

⁽¹⁾ Consists of pre-acquisition amounts owed to us by certain of the acquired businesses.

Further information regarding the calculation of the estimated fair values of the intangibles acquired can be found in Note 8.

During the quarter ended September 30, 2016, we finalized purchase accounting for the acquisition of Datamyx LLC, which was acquired in October 2015. Further information regarding this acquisition can be found under the caption “Note 5: Acquisitions” in the Notes to Consolidated Financial Statements appearing in the 2015 Form 10-K. The adjustments recorded during the quarter ended September 30, 2016 increased goodwill $172 from the preliminary amount recorded as of December 31, 2015, with the offset to various assets and liabilities, primarily property, plant and equipment and other current assets.

During the nine months ended September 30, 2015, we acquired selected assets of Range, Inc., a marketing services provider; Verify Valid LLC, a provider of electronic check payment services; Tech Assets, Inc., a provider of shared hosting websites to small businesses using cPanel web hosting technology; and FMC Resource Management Corporation, a marketing services provider, as well as the operations of eight small business distributors, five of which were previously part of our Safeguard distributor network. The assets acquired consisted primarily of customer list intangible assets and goodwill. Payments for acquisitions, net of cash acquired, as presented on the consolidated statement of cash flows for the nine months ended September 30, 2015, included payments of $46,796 for these acquisitions and $4,137 for holdback payments for prior year acquisitions. Further information regarding our 2015 acquisitions can be found under the caption “Note 5: Acquisitions” in the Notes to Consolidated Financial Statements appearing in the 2015 Form 10-K.

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Derivative financial instruments

9 Months Ended

Sep. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative financial instruments

Derivative financial instruments

We have entered into interest rate swaps, which we designated as fair value hedges, to hedge against changes in the fair value of a portion of our long-term debt. At the time we entered into these swaps in 2012, we were targeting a mix of fixed and variable rate debt, where we receive a fixed rate and pay a variable rate based on the London Interbank Offered Rate (LIBOR). The interest rate swaps related to our long-term debt due in 2020 have a notional amount of $200,000 and meet the criteria for using the short-cut method for a fair value hedge based on the structure of the hedging relationship. As such, changes in the fair value of the derivatives and the related long-term debt are equal. The fair value of these interest rate swaps was included in other non-current liabilities in the consolidated balance sheets and was $109 as of September 30, 2016 and $4,842 as of December 31, 2015. As the short-cut method is being used to account for these hedges, the consolidated balance sheets included a decrease in long-term debt of $109 as of September 30, 2016 and $4,842 as of December 31, 2015 due to fair value adjustments.

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Fair value measurements

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair value measurements

Fair value measurements

Annual asset impairment analyses – We evaluate the carrying value of goodwill and our indefinite-lived trade name as of July 31 of each year and between annual evaluations if events occur or circumstances change that would indicate a possible impairment. Our policy on impairment of indefinite-lived intangibles and goodwill, which is included under the caption "Note 1: Significant accounting policies" in the Notes to Consolidated Financial Statements appearing in the 2015 Form 10-K, explains our methodology for assessing impairment of these assets. In completing the 2016 annual goodwill impairment analysis, we elected to perform a qualitative assessment for all of our reporting units to which goodwill is assigned, with one exception. We elected to perform a quantitative analysis for our Financial Services Commercial reporting unit as the previous quantitative analysis completed as of July 31, 2015 indicated that the estimated fair value of this reporting unit exceeded its carrying value by approximately 13%. This relatively small percentage was primarily due to the fact that the reporting unit had been recently acquired.

Our qualitative analysis evaluated factors including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. We also considered the quantitative analysis we completed as of July 31, 2014. In completing the 2016 qualitative analysis, we noted no changes in events or circumstances which would have required us to complete the two-step quantitative goodwill impairment analysis for any of the reporting units analyzed. The quantitative analysis completed for the Financial Services Commercial reporting unit indicated that its estimated fair value exceeded its carrying value by approximately 49% as of July 31, 2016. Total goodwill for this reporting unit was approximately $45,000 as of September 30, 2016. In completing the 2016 annual impairment analysis of our indefinite-lived trade name, we elected to perform a quantitative assessment which indicated that the calculated fair value of the asset exceeded its carrying value of $19,100 by approximately $32,000 as of July 31, 2016. We recorded no impairment charges as a result of our 2016 annual impairment analyses.

2016 acquisitions – For all acquisitions, we are required to measure the fair value of the net identifiable tangible and intangible assets and liabilities acquired, excluding goodwill and deferred income taxes. Information regarding the acquisitions completed during the nine months ended September 30, 2016 can be found in Note 6. The identifiable net assets acquired during the nine months ended September 30, 2016 were comprised primarily of customer lists with an aggregate fair value of $48,982 and internal-use software with an aggregate fair value of $10,250. Fair value of the customer lists was estimated by discounting the estimated cash flows expected to be generated by the assets. Assumptions used in the calculations included same-customer revenue growth rates and estimated customer retention rates based on the acquirees' historical information. A portion of the fair value of the acquired software was estimated using the cost of reproduction method. The primary components of the software were identified and the estimated cost to reproduce the software was calculated based on data provided by the acquirees. The fair value of the remainder of the software was estimated using the relief from royalty method, which calculates the cost savings associated with owning rather than licensing the technology. Assumed royalty rates were applied to projected revenue for the remaining useful life of the software to estimate the royalty savings. Information regarding the useful lives of acquired intangibles can be found in Note 3.

Recurring fair value measurements – Funds held for customers included available-for-sale marketable securities (Note 3). These securities consisted of a mutual fund investment that invests in Canadian and provincial government securities, as well as investments in Canadian guaranteed investment certificates (GICs) with maturities of one year or less. The mutual fund is not traded in an active market and its fair value is determined by obtaining quoted prices in active markets for the underlying securities held by the fund. The fair value of the GICs approximated cost due to their relatively short duration. Unrealized gains and losses, net of tax, are included in accumulated other comprehensive loss in the consolidated balance sheets. The cost of securities sold is determined using the average cost method. Realized gains and losses are included in revenue in the consolidated statements of comprehensive income and were not significant for the quarters or nine months ended September 30, 2016 and 2015.

Other current assets as of December 31, 2015 included available-for-sale marketable securities (Note 3). These securities were sold during the first quarter of 2016, and consisted of a Canadian money market fund that was not traded in an active market. As such, the fair value of this investment was determined by obtaining quoted prices in active markets for the underlying securities held by the fund. Because of the short-term nature of the underlying investments, the cost of these securities approximated their fair value. No gains or losses on sales of these marketable securities were realized during the nine months ended September 30, 2016 and 2015.

We have elected to account for a long-term investment in domestic mutual funds under the fair value option for financial assets and financial liabilities. The fair value option provides companies an irrevocable option to measure many financial assets and liabilities at fair value with changes in fair value recognized in earnings. The investment is included in long-term investments in the consolidated balance sheets. Long-term investments also include the cash surrender values of company-owned life insurance policies. Realized and unrealized gains and losses, as well as dividends earned by the mutual fund investment, are included in selling, general and administrative (SG&A) expense in the consolidated statements of comprehensive income. This investment corresponds to a liability under an officers’ deferred compensation plan that is not available to new participants and is fully funded by the investment in mutual funds. The liability under the plan equals the fair value of the investment in mutual funds. Thus, as the value of the investment changes, the value of the liability changes accordingly. As changes in the liability are reflected within SG&A expense in the consolidated statements of comprehensive income, the fair value option of accounting for the investment in mutual funds allows us to net changes in the investment and the related liability in the statements of comprehensive income. The cost of securities sold is determined using the average cost method. During the nine months ended September 30, 2016 and 2015, net realized gains were not significant. We recognized net unrealized losses of $160 during the nine months ended September 30, 2016 and $333 during the nine months ended September 30, 2015.

The fair value of interest rate swaps (Note 7) is determined at each reporting date by means of a pricing model utilizing readily observable market interest rates. The change in fair value is determined as the change in the present value of estimated future cash flows discounted using the LIBOR rate. Our interest rate swaps relate to our long-term debt due in 2020 and meet the criteria for using the short-cut method for a fair value hedge based on the structure of the hedging relationship. As such, the changes in the fair value of the derivative and related long-term debt are equal.

Liabilities for contingent consideration relate to acquisitions completed during 2015. Information concerning these acquisitions can be found under the caption "Note 5: Acquisitions" in the Notes to Consolidated Financial Statements included in the 2015 Form 10-K. Under the agreement related to the acquisition of Verify Valid, we are required to make annual contingent payments over a period of up to eight years, based on the revenue generated by the business. A specified payment percentage for each year is applied to the revenue generated by the business in that year to determine the amount of the payment. There is no maximum amount of contingent payments specified in the agreement. Under the agreement related to the acquisition of a small business distributor, we are required to make annual contingent payments over a period of up to three years, based on the gross profit generated by the business. A specified payment percentage for each year is applied to the gross profit generated by the business in that year to determine the amount of the payment. The maximum contingent payment in any year of the agreement is $925. The fair value of the liabilities for contingent payments is estimated by discounting to present value the probability-weighted contingent payments expected to be made. Assumptions used in the calculations include the discount rate, projected revenue or gross profit based on our most recent internal forecast, and factors indicating the probability of achieving the forecasted revenue or gross profit. The liabilities are remeasured each reporting period. Increases or decreases in projected revenue or gross profit and the related probabilities may result in a higher or lower fair value measurement. Changes in fair value resulting from changes in the timing, amount of, or likelihood of contingent payments are included in SG&A expense in the consolidated statements of comprehensive income. Changes in fair value resulting from accretion for the passage of time are included in interest expense in the consolidated statements of comprehensive income.

Information regarding recurring fair value measurements completed during each period was as follows:

				Fair value measurements using
	Fair value as of  September 30, 2016			Quoted prices in active markets for identical assets		Significant other observable inputs			Significant unobservable inputs
(in thousands)				(Level 1)		(Level 2)			(Level 3)
Available-for-sale marketable securities (funds held for customers)	$	16,066		$	—	$	16,066		$	—
Long-term investment in mutual funds	1,868			1,868		—			—
Derivative liabilities	(109		)	—		(109		)	—
Accrued contingent consideration	(4,276		)	—		—			(4,276		)

				Fair value measurements using
	Fair value as of December 31, 2015			Quoted prices in active markets for identical assets		Significant other observable inputs			Significant unobservable inputs
(in thousands)				(Level 1)		(Level 2)			(Level 3)
Available-for-sale marketable securities (funds held for customers)	$	15,067		$	—	$	15,067		$	—
Available-for-sale marketable securities (other current assets)	1,616			—		1,616			—
Long-term investment in mutual funds	2,091			2,091		—			—
Derivative liabilities	(4,842		)	—		(4,842		)	—
Accrued contingent consideration	(5,861		)	—		—			(5,861		)

Our policy is to recognize transfers between fair value levels as of the end of the reporting period in which the transfer occurred. There were no transfers between fair value levels during the nine months ended September 30, 2016.

Changes in accrued contingent consideration during the nine months ended September 30, 2016 were as follows:

(in thousands)	Nine Months Ended September 30, 2016
Balance, December 31, 2015	$	5,861
Change in fair value	(448		)
Payments	(1,137		)
Balance, September 30, 2016	$	4,276

Fair value measurements of other financial instruments – The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate fair value.

Cash and cash included within funds held for customers – The carrying amounts reported in the consolidated balance sheets approximate fair value because of the short-term nature of these items.

Loans and notes receivable from distributors – We have receivables for loans made to certain of our Safeguard distributors. In addition, we have acquired the operations of several small business distributors, which we then sold to our Safeguard distributors. In most cases, we entered into notes receivable upon the sale of the assets to the distributors. The fair value of these loans and notes receivable is calculated as the present value of expected future cash flows, discounted using an estimated interest rate based on published bond yields for companies of similar risk.

Long-term debt – The carrying amounts reported in the consolidated balance sheets for the amount drawn on our credit facility approximates fair value because our interest rate is variable and reflects current market rates. The fair value of our long-term notes due in 2020 is based on significant observable market inputs other than quoted prices in active markets. The fair value of long-term debt included in the table below does not reflect the impact of hedging activity or debt issuance costs. The carrying amount of long-term debt includes the change in fair value of hedged long-term debt, as well as unamortized debt issuance costs related to our notes due in 2020 (Note 11).

The estimated fair values of these financial instruments were as follows:

					Fair value measurements using
	September 30, 2016				Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(in thousands)	Carrying value		Fair value		(Level 1)		(Level 2)		(Level 3)
Cash	$	80,065	$	80,065	$	80,065	$	—	$	—
Cash (funds held for customers)	76,104		76,104		76,104		—		—
Loans and notes receivable from distributors	23,329		21,290		—		—		21,290
Long-term debt(1)	615,985		624,758		—		624,758		—

⁽¹⁾ Amounts exclude capital lease obligations.

					Fair value measurements using
	December 31, 2015				Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(in thousands)	Carrying value		Fair value		(Level 1)		(Level 2)		(Level 3)
Cash	$	62,427	$	62,427	$	62,427	$	—	$	—
Cash (funds held for customers)	38,276		38,276		38,276		—		—
Loans and notes receivable from distributors	25,745		23,383		—		—		23,383
Long-term debt(1)	626,909		641,000		—		641,000		—

⁽¹⁾ Amounts exclude capital lease obligations.

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Restructuring charges

9 Months Ended

Sep. 30, 2016

Restructuring and Related Activities [Abstract]

Restructuring charges

Restructuring charges

Net restructuring charges for each period consisted of the following components:

	Quarter Ended September 30,						Nine Months Ended September 30,
(in thousands, except number of employees)	2016			2015			2016			2015
Severance accruals	$	1,824		$	1,443		$	3,870		$	3,493
Severance reversals	(198		)	(282		)	(666		)	(976		)
Operating lease obligations	—			88			—			88
Net restructuring accruals	1,626			1,249			3,204			2,605
Other costs	432			489			939			551
Net restructuring charges	$	2,058		$	1,738		$	4,143		$	3,156
Number of employees included in severance accruals	55			50			120			200

The net restructuring charges are reflected in the consolidated statements of comprehensive income as follows:

	Quarter Ended September 30,				Nine Months Ended September 30,
(in thousands)	2016		2015		2016		2015
Total cost of revenue	$	65	$	233	$	136	$	418
Operating expenses	1,993		1,505		4,007		2,738
Net restructuring charges	$	2,058	$	1,738	$	4,143	$	3,156

During the nine months ended September 30, 2016 and September 30, 2015, the net restructuring accruals included severance charges related to employee reductions across functional areas as we continue to reduce costs, primarily within our sales and marketing, information technology and fulfillment functions. These charges were reduced by the reversal of restructuring accruals recorded in previous periods, as fewer employees received severance benefits than originally estimated. Other restructuring costs, which were expensed as incurred, included items such as information technology costs, employee and equipment moves, training and travel related to our restructuring activities.

Restructuring accruals of $2,648 as of September 30, 2016 and $3,864 as of December 31, 2015 are included in accrued liabilities in the consolidated balance sheets. The majority of the employee reductions are expected to be completed by the fourth quarter of 2016, and we expect most of the related severance payments to be paid by mid-2017, utilizing cash from operations. The remaining payments due under operating lease obligations will be paid by the end of 2016. As of September 30, 2016, approximately 25 employees had not yet started to receive severance benefits.

Accruals for our restructuring initiatives, summarized by year, were as follows:

(in thousands)	2014  initiatives			2015  initiatives			2016 initiatives			Total
Balance, December 31, 2015	$	176		$	3,688		$	—		$	3,864
Restructuring charges	—			78			3,792			3,870
Restructuring reversals	(111		)	(465		)	(90		)	(666		)
Payments	(65		)	(2,989		)	(1,366		)	(4,420		)
Balance, September 30, 2016	$	—		$	312		$	2,336		$	2,648
Cumulative amounts:
Restructuring charges	$	8,242		$	6,205		$	3,792		$	18,239
Restructuring reversals	(1,444		)	(923		)	(90		)	(2,457		)
Payments	(6,798		)	(4,970		)	(1,366		)	(13,134		)
Balance, September 30, 2016	$	—		$	312		$	2,336		$	2,648

The components of our restructuring accruals, by segment, were as follows:

	Employee severance benefits												Operating lease obligations
(in thousands)	Small Business Services			Financial Services			Direct Checks			Corporate			Small Business Services			Financial Services			Total
Balance, December 31, 2015	$	1,023		$	884		$	—		$	1,859		$	56		$	42		$	3,864
Restructuring charges	1,979			768			135			929			59			—			3,870
Restructuring reversals	(255		)	(50		)	(2		)	(359		)	—			—			(666		)
Payments	(1,457		)	(922		)	(85		)	(1,811		)	(103		)	(42		)	(4,420		)
Balance, September 30, 2016	$	1,290		$	680		$	48		$	618		$	12		$	—		$	2,648
Cumulative amounts(1):
Restructuring charges	$	7,704		$	5,027		$	171		$	4,940		$	344		$	53		$	18,239
Restructuring reversals	(1,455		)	(361		)	(4		)	(637		)	—			—			(2,457		)
Inter-segment transfer	41			(14		)	—			(27		)	—			—			—
Payments	(5,000		)	(3,972		)	(119		)	(3,658		)	(332		)	(53		)	(13,134		)
Balance, September 30, 2016	$	1,290		$	680		$	48		$	618		$	12		$	—		$	2,648

⁽¹⁾ Includes accruals related to our cost reduction initiatives for 2014 through 2016.

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Postretirement benefits

9 Months Ended

Sep. 30, 2016

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Postretirement benefits

Postretirement benefits

We have historically provided certain health care benefits for a portion of our retired U.S. employees. In addition to our retiree health care plan, we also have a supplemental executive retirement plan in the United States. Further information regarding our postretirement benefit plans can be found under the caption “Note 12: Postretirement benefits” in the Notes to Consolidated Financial Statements appearing in the 2015 Form 10-K.

Postretirement benefit income for each period consisted of the following components:

	Quarter Ended September 30,						Nine Months Ended September 30,
(in thousands)	2016			2015			2016			2015
Interest cost	$	780		$	859		$	2,339		$	2,578
Expected return on plan assets	(1,834		)	(1,958		)	(5,501		)	(5,875		)
Amortization of prior service credit	(355		)	(355		)	(1,066		)	(1,066		)
Amortization of net actuarial losses	949			780			2,848			2,340
Net periodic benefit income	$	(460	)	$	(674	)	$	(1,380	)	$	(2,023	)

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Debt

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Debt

Debt

Debt outstanding was comprised of the following:

(in thousands)	September 30, 2016			December 31, 2015
6.0% senior notes due November 15, 2020, principal amount	$	200,000		$	200,000
Less unamortized debt issuance costs	(1,906		)	(2,249		)
Cumulative change in fair value of hedged debt (Note 7)	(109		)	(4,842		)
6.0% senior notes, carrying value	197,985			192,909
Amount drawn on credit facility	418,000			434,000
Long-term portion of capital lease obligations	805			1,064
Long-term portion of debt	616,790			627,973
Capital lease obligations due within one year	951			1,045
Total debt	$	617,741		$	629,018

Our senior notes due in 2020 include covenants that place certain restrictions on the issuance of additional debt and limitations on certain liens. If our ratio of earnings before interest, taxes, depreciation and amortization (EBITDA) to interest expense, as defined in such instruments, falls below two to one, there would be additional limitations on our ability to issue additional debt. The notes due in 2020 also include limitations on our ability to issue redeemable stock and preferred stock, make loans and investments, and consolidate, merge or sell all or substantially all of our assets. Absent certain defined events of default under our debt instruments, and as long as our ratio of EBITDA to interest expense is in excess of two to one, our debt covenants do not restrict our ability to pay cash dividends at our current rate. There are currently no limitations on the amount of dividends and share repurchases under the terms of our credit facility agreement. However, if our leverage ratio, defined as total debt less unrestricted cash to EBITDA, should exceed 2.75 to one, there would be an annual limitation on the amount of dividends and share repurchases under the terms of this agreement.

In November 2012, we issued $200,000 of 6.0% senior notes maturing on November 15, 2020. The notes were issued via a private placement under Rule 144A of the Securities Act of 1933. These notes were subsequently registered with the SEC via a registration statement that became effective on April 3, 2013. Interest payments are due each May and November. The notes are guaranteed by certain of our subsidiaries and place a limitation on restricted payments, including share repurchases and increases in dividend levels. The limitation on restricted payments does not apply if the notes are upgraded to an investment-grade credit rating. Financial information for the guarantor subsidiaries can be found in Note 15. Proceeds from the offering, net of offering costs, were $196,340. These proceeds were used to retire our senior notes that were due in June 2015. In October 2016, we issued a notice to redeem all of these notes on November 15, 2016 at a redemption price of 103% of the principal amount. The fair value of these notes was $206,758 as of September 30, 2016, based on quoted prices that are directly observable. As discussed in Note 7, we entered into interest rate swaps to hedge these notes.

In March 2011, we issued $200,000 of 7.0% senior notes that were scheduled to mature on March 15, 2019. The notes were issued via a private placement under Rule 144A of the Securities Act of 1933. These notes were subsequently registered with the SEC via a registration statement that became effective on January 10, 2012. Proceeds from the offering, net of offering costs, were $196,195. These proceeds were used to retire a portion of our senior, unsecured notes due in 2012. In March 2015, we retired all of these notes, realizing a loss on early debt extinguishment of $8,917 during the nine months ended September 30, 2015, consisting of a contractual call premium and the write-off of related debt issuance costs. This retirement was funded utilizing our credit facility and a short-term bank loan that we have since repaid.

We had capital lease obligations of $1,756 as of September 30, 2016 and $2,109 as of December 31, 2015 related to information technology hardware. The lease obligations will be paid through August 2020. The related assets are included in property, plant and equipment in the consolidated balance sheets. Depreciation of the leased assets is included in depreciation expense in the consolidated statements of cash flows.

As of September 30, 2016, we had a $525,000 revolving credit facility, which is scheduled to expire in February 2019. Our quarterly commitment fee ranges from 0.20% to 0.40% based on our leverage ratio. As of September 30, 2016, $418,000 was drawn on our revolving credit facility at a weighted-average interest rate of 1.95%. As of December 31, 2015, $434,000 was drawn on our revolving credit facility at a weighted-average interest rate of 1.89%. In September 2016, we amended the credit agreement governing our credit facility to include a new term loan facility in the aggregate principal amount of $200,000 in order to retire our senior notes due in 2020, which we expect to redeem on November 15, 2016. The term loan facility will be fully drawn on the date that it is funded and amounts repaid may not be reborrowed. Interest will be calculated at a variable rate and will be paid quarterly. Aggregate principal payments of $21,250 will be due in 2017 and $26,250 will be due in 2018, with the remainder due in February 2019 at the expiration of the credit agreement. We may prepay the term loan in full or in part at our discretion.

All borrowings under our credit agreement are collateralized by substantially all of our personal and intangible property. The credit agreement governing our credit facility contains customary covenants regarding limits on levels of subsidiary indebtedness and capital expenditures, liens, investments, acquisitions, certain mergers, certain asset sales outside the ordinary course of business, and change in control as defined in the agreement. The agreement also contains financial covenants regarding our leverage ratio, interest coverage and liquidity.

In March 2015, we entered into a $75,000 short-term variable rate bank loan. Proceeds from this loan, net of related costs, were $74,880 and were used, along with a draw on our credit facility, to retire all $200,000 of our 7.0% senior notes that were scheduled to mature on March 15, 2019. During December 2015, we elected to repay this loan in full.

Daily average amounts outstanding under our credit facility and short-term borrowings were as follows:

(in thousands)	Nine Months Ended September 30, 2016			Year Ended December 31, 2015
Revolving credit facility:
Daily average amount outstanding	$	416,814		$	270,063
Weighted-average interest rate	1.91		%	1.66		%
Short-term bank loan:
Daily average amount outstanding	$	—		$	47,178
Weighted-average interest rate	—			1.59		%

As of September 30, 2016, amounts were available for borrowing under our revolving credit facility as follows:

(in thousands)	Total available
Revolving credit facility commitment	$	525,000
Amount drawn on revolving credit facility	(418,000		)
Outstanding letters of credit(1)	(12,795		)
Net available for borrowing as of September 30, 2016	$	94,205

⁽¹⁾ We use standby letters of credit to collateralize certain obligations related primarily to our self-insured workers’ compensation claims, as well as claims for environmental matters, as required by certain states. These letters of credit reduce the amount available for borrowing under our revolving credit facility.

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Other commitments and contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Other commitments and contingencies

Other commitments and contingencies

Indemnifications – In the normal course of business, we periodically enter into agreements that incorporate general indemnification language. These indemnifications encompass third-party claims arising from our products and services, including, without limitation, service failures, breach of security, intellectual property rights, governmental regulations and/or employment-related matters. Performance under these indemnities would generally be triggered by our breach of the terms of the contract. In disposing of assets or businesses, we often provide representations, warranties and/or indemnities to cover various risks, including, for example, unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition. We do not have the ability to estimate the potential liability from such indemnities because they relate to unknown conditions. While we do not believe that any liability under these indemnities would likely have a material adverse effect on our financial position, annual results of operations or annual cash flows, inherent uncertainties exist regarding the scope and nature of such indemnities that could lead to material unfavorable outcomes. We have recorded liabilities for known indemnifications related to environmental matters.

Environmental matters – We are currently involved in environmental compliance, investigation and remediation activities at some of our current and former sites, primarily printing facilities of our Financial Services and Small Business Services segments that have been sold. Remediation costs are accrued on an undiscounted basis when the obligations are either known or considered probable and can be reasonably estimated. Remediation or testing costs that result directly from the sale of an asset and which we would not have otherwise incurred are considered direct costs of the sale of the asset. As such, they are included in our measurement of the carrying value of the asset sold.

Accruals for environmental matters were $3,329 as of September 30, 2016 and $5,952 as of December 31, 2015, primarily related to facilities that have been sold. These accruals are included in accrued liabilities and other non-current liabilities in the consolidated balance sheets. Accrued costs consist of direct costs of the remediation activities, primarily fees that will be paid to outside engineering and consulting firms. Although recorded accruals include our best estimates, our total costs cannot be predicted with certainty due to various factors such as the extent of corrective action that may be required, evolving environmental laws and regulations and advances in environmental technology. Where the available information is sufficient to estimate the amount of the liability, that estimate is used. Where the information is only sufficient to establish a range of probable liability and no point within the range is more likely than any other, the lower end of the range is recorded. We do not believe that the range of possible outcomes could have a material effect on our financial condition, results of operations or liquidity. The consolidated statement of comprehensive income for the nine months ended September 30, 2016 included a benefit from environmental matters of $1,759. During the quarter ended June 30, 2016, we reversed a portion of the liability for one of our sold facilities as we determined that it was no longer probable that a portion of the estimated environmental remediation costs for this location would be incurred. Environmental expense was $915 for the nine months ended September 30, 2015.

We purchased an insurance policy during 2002 that covers up to $10,000 of third-party pollution claims through 2032 at certain owned, leased and divested sites. We also purchased an insurance policy during 2009 that covers up to $15,000 of third-party pollution claims through April 2019. This policy covers liability for claims of bodily injury or property damage arising from pollution events at the covered facilities. The policy also provides remediation coverage should we be required by a governing authority to perform remediation activities at the covered sites. No accruals have been recorded in our consolidated financial statements for any of the events contemplated in these insurance policies. We do not anticipate significant net cash outlays for environmental matters during 2016.

Self-insurance – We are self-insured for certain costs, primarily workers' compensation claims and medical and dental benefits for active employees and those employees on long-term disability. The liabilities associated with these items represent our best estimate of the ultimate obligations for reported claims plus those incurred, but not reported, and totaled $6,766 as of September 30, 2016 and $6,457 as of December 31, 2015. These accruals are included in accrued liabilities and other non-current liabilities in the consolidated balance sheets. Our workers' compensation liability is accounted for on a present value basis. The difference between the discounted and undiscounted liability was not significant as of September 30, 2016 or December 31, 2015.

Our self-insurance liabilities are estimated, in part, by considering historical claims experience, demographic factors and other actuarial assumptions. The estimated accruals for these liabilities could be significantly affected if future events and claims differ from these assumptions and historical trends.

Litigation – On September 2, 2014, one of our suppliers filed a petition for binding arbitration under the Commercial Rules of the American Arbitration Association, alleging that it is entitled to additional payment from us under our reseller agreement and seeking damages of up to approximately $43,000. We did not record a liability for damages in connection with this matter in our consolidated balance sheets. In March 2016, the arbitrator rejected all of the supplier's claims and ruled in our favor.

Recorded liabilities for legal matters were not material to our financial position, results of operations or liquidity, and we do not believe that any of the currently identified claims or litigation will materially affect our financial position, results of operations or liquidity upon resolution. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, it may cause a material adverse impact on our financial position, results of operations or liquidity for the period in which the ruling occurs or in future periods.

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Shareholders' equity

9 Months Ended

Sep. 30, 2016

Stockholders' Equity Note [Abstract]

Shareholders' equity

Shareholders’ equity

We have an outstanding authorization from our board of directors to purchase up to 10,000 shares of our common stock. This authorization has no expiration date, and 233 shares remained available for purchase under this authorization as of September 30, 2016. During the nine months ended September 30, 2016, we repurchased 733 shares for $44,944.

In May 2016, our board of directors approved an additional authorization for the repurchase of up to $300,000 of our common stock, effective at the conclusion of our previous authorization. The additional authorization also has no expiration date.

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Business segment information

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Business segment information

Business segment information

We operate three reportable business segments: Small Business Services, Financial Services and Direct Checks. Our business segments are generally organized by type of customer served and reflect the way we manage the company. Small Business Services promotes and sells products and services to small businesses via direct response mail and internet advertising; referrals from financial institutions, telecommunications clients and other partners; networks of distributors and independent dealers; a direct sales force that focuses on selling to and through major accounts; and an outbound telemarketing group. Financial Services' products and services are sold primarily through a direct sales force, which executes product and service supply contracts with our financial institution clients nationwide, including banks, credit unions and financial services companies. In the case of check supply contracts, once the financial institution relationship is established, consumers may submit their check orders through their financial institution or over the phone or internet. Direct Checks sells products and services directly to consumers using direct marketing, including print advertising and search engine marketing and optimization strategies. All three segments operate primarily in the United States. Small Business Services also has operations in Canada and portions of Europe.

Our product and service offerings are comprised of the following:

Checks – We remain one of the largest providers of checks in the United States. During 2015, checks represented 40.1% of our Small Business Services segment's revenue, 59.7% of our Financial Services segment's revenue and 84.6% of our Direct Checks segment's revenue.

Marketing solutions and other services – We offer products and services that help small businesses and/or financial institutions promote their businesses and acquire customers, as well as various other service offerings. Our Small Business Services segment offers services designed to fulfill the marketing and sales needs of small businesses, including logo and web design; hosting and other web services; search engine optimization; marketing programs, including email, mobile, social media and other self-service marketing solutions; and digital printing services. In addition, Small Business Services offers specialized services, including fraud protection and security, payroll services and electronic checks, as well as promotional solutions such as postcards, brochures, retail packaging supplies, apparel, greeting cards and business cards. Financial Services offers a suite of financial technology ("FinTech") solutions focused on enabling financial institutions to better manage the customer life cycle for their retail and commercial customers. These FinTech solutions include outsourced marketing campaign targeting and execution, digital channel onboarding, loyalty and rewards, technology-enabled treasury services, financial performance management, and fraud protection and security services. Our Direct Checks segment provides fraud protection and security services, as well as package insert programs under which companies' marketing materials are included in our check packages.

Forms – Our Small Business Services segment provides printed forms to small businesses, including deposit tickets, billing forms, work orders, job proposals, purchase orders, invoices and personnel forms. This segment also offers computer forms compatible with accounting software packages commonly used by small businesses. Forms sold by our Financial Services and Direct Checks segments include deposit tickets and check registers.

Accessories and other products – Small Business Services offers products designed to supply small business owners with the customized documents necessary to efficiently manage their business, including envelopes, office supplies, stamps and labels. Our Financial Services and Direct Checks segments offer checkbook covers and stamps.

The accounting policies of the segments are the same as those described in the Notes to Consolidated Financial Statements included in the 2015 Form 10-K. We allocate corporate costs for our shared services functions to our business segments, including costs of our executive management, human resources, supply chain, finance, information technology and legal functions. Generally, where costs incurred are directly attributable to a business segment, primarily within the areas of information technology, supply chain, finance and legal, those costs are charged directly to that segment. Because we use a shared services approach for many of our functions, certain costs are not directly attributable to a business segment. These costs are allocated to our business segments based on segment revenue, as revenue is a measure of the relative size and magnitude of each segment and indicates the level of corporate shared services consumed by each segment. Corporate assets are not allocated to the segments and consist of property, plant and equipment; internal-use software; and inventories and supplies related to our corporate shared services functions of manufacturing, information technology and real estate, as well as long-term investments.

We are an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations and the sharing of assets. Therefore, we do not represent that these segments, if operated independently, would report the operating income and other financial information shown.

The following is our segment information as of and for the quarters ended September 30, 2016 and 2015:

		Reportable Business Segments
(in thousands)		Small Business Services		Financial Services		Direct Checks		Corporate		Consolidated
Total revenue from external	2016	$	298,931	$	123,033	$	36,956	$	—	$	458,920
customers:	2015	288,966		110,894		39,956		—		439,816
Operating income:	2016	50,670		28,708		12,914		—		92,292
	2015	51,873		23,364		14,131		—		89,368
Depreciation and amortization	2016	13,315		8,876		868		—		23,059
expense:	2015	11,825		5,979		949		—		18,753
Total assets:	2016	1,075,661		434,374		160,624		270,489		1,941,148
	2015	990,282		270,421		161,636		267,718		1,690,057
Capital asset purchases:	2016	—		—		—		10,031		10,031
	2015	—		—		—		10,242		10,242

The following is our segment information as of and for the nine months ended September 30, 2016 and 2015:

		Reportable Business Segments
(in thousands)		Small Business Services		Financial Services		Direct Checks		Corporate		Consolidated
Total revenue from external	2016	$	877,384	$	374,511	$	116,965	$	—	$	1,368,860
customers:	2015	848,216		335,134		125,958		—		1,309,308
Operating income:	2016	150,776		84,467		40,640		—		275,883
	2015	149,545		69,280		44,713		—		263,538
Depreciation and amortization	2016	38,195		26,888		2,628		—		67,711
expense:	2015	33,265		17,760		3,406		—		54,431
Total assets:	2016	1,075,661		434,374		160,624		270,489		1,941,148
	2015	990,282		270,421		161,636		267,718		1,690,057
Capital asset purchases:	2016	—		—		—		32,215		32,215
	2015	—		—		—		29,549		29,549

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Supplemental guarantor financial information

9 Months Ended

Sep. 30, 2016

Supplemental guarantor financial information [Abstract]

Supplemental guarantor financial information

Supplemental guarantor financial information

Our long-term notes due in 2020 (Note 11), as well as obligations under our credit facility, are jointly and severally guaranteed on a full and unconditional basis, subject to the release provisions described herein, by certain 100%-owned subsidiaries. The subsidiary guarantees with respect to our long-term notes are subject to release upon the occurrence of certain events: the sale of all or substantially all of a subsidiary's assets, when the requirements for defeasance of the guaranteed securities have been satisfied, when the subsidiary is declared an unrestricted subsidiary, or upon satisfaction and discharge of the indenture.

The following supplemental condensed consolidating financial information reflects the summarized financial information of Deluxe Corporation, the guarantors on a combined basis and the non-guarantor subsidiaries on a combined basis. Separate financial statements of the guarantors are not presented because the guarantors are jointly, severally, fully and unconditionally liable under the guarantees, subject to the release provisions described herein, and we believe that the condensed consolidating financial statements presented are sufficient to provide an understanding of the financial position, results of operations and cash flows of the guarantors. During the quarter ended June 30, 2016, we identified an error in the balance sheet presentation of borrowings under our credit facility and the related asset for debt issuance costs. These amounts were previously presented as current items in our consolidated balance sheets, and we have determined that they should have been presented as non-current. This change also corrects the presentation of the cash flows associated with borrowings under our credit facility. Previously these cash flows were presented on a net basis. The change in the balance sheet presentation requires that they be presented on a gross basis. Prior period consolidated amounts, as well as those for Deluxe Corporation, have been revised to reflect these changes. Further information about the revision can be found in Note 1.

We are an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations and the sharing of assets. Therefore, we do not represent that the financial information presented is indicative of the financial position, results of operations or cash flows that the entities would have reported if they had operated independently. The condensed consolidating financial statements should be read in conjunction with our consolidated financial statements.

Condensed Consolidating Balance Sheet

(Unaudited)

	September 30, 2016
(in thousands)	Deluxe Corporation		Guarantor subsidiaries		Non-guarantor subsidiaries		Eliminations			Total
ASSETS
Current assets:
Cash and cash equivalents	$	14,019	$	902	$	66,903	$	(1,759	)	$	80,065
Trade accounts receivable, net	—		109,326		8,435		—			117,761
Inventories and supplies	—		39,175		2,299		—			41,474
Funds held for customers	—		24,031		68,139		—			92,170
Other current assets	6,718		32,934		1,386		—			41,038
Total current assets	20,737		206,368		147,162		(1,759		)	372,508
Deferred income taxes	14,754		—		1,749		(14,754		)	1,749
Long-term investments	34,156		7,737		—		—			41,893
Property, plant and equipment, net	11,914		66,833		4,920		—			83,667
Assets held for sale	—		—		13,966		—			13,966
Intangibles, net	19,119		283,237		11,522		—			313,878
Goodwill	—		980,142		9,499		—			989,641
Investments in consolidated subsidiaries	1,395,804		108,954		—		(1,504,758		)	—
Intercompany receivable	23,164		—		—		(23,164		)	—
Other non-current assets	6,549		117,215		82		—			123,846
Total assets	$	1,526,197	$	1,770,486	$	188,900	$	(1,544,435	)	$	1,941,148
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	25,328	$	60,456	$	2,810	$	(1,759	)	$	86,835
Accrued liabilities	20,577		149,507		70,553		—			240,637
Long-term debt due within one year	906		—		45		—			951
Total current liabilities	46,811		209,963		73,408		(1,759		)	328,423
Long-term debt	616,697		—		93		—			616,790
Deferred income taxes	—		95,508		—		(14,754		)	80,754
Intercompany payable	—		22,494		670		(23,164		)	—
Other non-current liabilities	12,742		46,717		5,775		—			65,234
Total shareholders' equity	849,947		1,395,804		108,954		(1,504,758		)	849,947
Total liabilities and shareholders' equity	$	1,526,197	$	1,770,486	$	188,900	$	(1,544,435	)	$	1,941,148

Condensed Consolidating Balance Sheet

(Unaudited)

	December 31, 2015
(in thousands)	Deluxe Corporation		Guarantor subsidiaries		Non-guarantor subsidiaries		Eliminations			Total
ASSETS
Current assets:
Cash and cash equivalents	$	5,187	$	940	$	56,422	$	(122	)	$	62,427
Trade accounts receivable, net	—		115,951		7,703		—			123,654
Inventories and supplies	—		39,758		2,198		—			41,956
Funds held for customers	—		—		53,343		—			53,343
Other current assets	7,230		32,765		2,610		—			42,605
Total current assets	12,417		189,414		122,276		(122		)	323,985
Deferred income taxes	13,498		—		1,238		(13,498		)	1,238
Long-term investments	34,304		7,387		—		—			41,691
Property, plant and equipment, net	10,111		71,017		4,604		—			85,732
Assets held for sale	—		—		13,969		—			13,969
Intangibles, net	9,066		273,051		3,194		—			285,311
Goodwill	—		974,973		1,442		—			976,415
Investments in consolidated subsidiaries	1,248,549		81,099		—		(1,329,648		)	—
Intercompany receivable	99,506		—		—		(99,506		)	—
Other non-current assets	5,861		107,767		184		—			113,812
Total assets	$	1,433,312	$	1,704,708	$	146,907	$	(1,442,774	)	$	1,842,153
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	15,625	$	69,809	$	2,263	$	(122	)	$	87,575
Accrued liabilities	23,567		148,279		56,577		—			228,423
Long-term debt due within one year	1,026		—		19		—			1,045
Total current liabilities	40,218		218,088		58,859		(122		)	317,043
Long-term debt	627,942		—		31		—			627,973
Deferred income taxes	—		94,574		—		(13,498		)	81,076
Intercompany payable	—		98,365		1,141		(99,506		)	—
Other non-current liabilities	20,083		45,132		5,777		—			70,992
Total shareholders' equity	745,069		1,248,549		81,099		(1,329,648		)	745,069
Total liabilities and shareholders' equity	$	1,433,312	$	1,704,708	$	146,907	$	(1,442,774	)	$	1,842,153

Condensed Consolidating Statement of Comprehensive Income

(Unaudited)

	Quarter Ended September 30, 2016
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Product revenue	$	—		$	350,454		$	14,226		$	—		$	364,680
Service revenue	36,078			89,355			6,006			(37,199		)	94,240
Total revenue	36,078			439,809			20,232			(37,199		)	458,920
Cost of products	—			(127,210		)	(6,418		)	—			(133,628		)
Cost of services	(40,487		)	(30,363		)	(1,934		)	40,142			(32,642		)
Total cost of revenue	(40,487		)	(157,573		)	(8,352		)	40,142			(166,270		)
Gross profit	(4,409		)	282,236			11,880			2,943			292,650
Operating expenses	—			(188,768		)	(8,647		)	(2,943		)	(200,358		)
Operating (loss) income	(4,409		)	93,468			3,233			—			92,292
Interest expense	(5,019		)	(4,206		)	(1		)	4,371			(4,855		)
Other income	3,994			919			200			(4,371		)	742
(Loss) income before income taxes	(5,434		)	90,181			3,432			—			88,179
Income tax benefit (provision)	4,592			(33,138		)	(970		)	—			(29,516		)
(Loss) income before equity in earnings of consolidated subsidiaries	(842		)	57,043			2,462			—			58,663
Equity in earnings of consolidated subsidiaries	59,505			2,462			—			(61,967		)	—
Net income	$	58,663		$	59,505		$	2,462		$	(61,967	)	$	58,663
Comprehensive income	$	57,824		$	58,614		$	1,212		$	(59,826	)	$	57,824

Condensed Consolidating Statement of Comprehensive Income

(Unaudited)

	Quarter Ended September 30, 2015
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Product revenue	$	—		$	345,820		$	15,961		$	—		$	361,781
Service revenue	28,005			72,419			6,709			(29,098		)	78,035
Total revenue	28,005			418,239			22,670			(29,098		)	439,816
Cost of products	—			(124,910		)	(7,684		)	—			(132,594		)
Cost of services	(29,218		)	(24,016		)	(2,272		)	28,798			(26,708		)
Total cost of revenue	(29,218		)	(148,926		)	(9,956		)	28,798			(159,302		)
Gross profit	(1,213		)	269,313			12,714			(300		)	280,514
Operating expenses	—			(182,823		)	(8,623		)	300			(191,146		)
Operating (loss) income	(1,213		)	86,490			4,091			—			89,368
Interest expense	(4,126		)	(4,126		)	—			3,865			(4,387		)
Other income	3,737			746			301			(3,865		)	919
(Loss) income before income taxes	(1,602		)	83,110			4,392			—			85,900
Income tax benefit (provision)	3,382			(31,341		)	(1,024		)	—			(28,983		)
(Loss) income before equity in earnings of consolidated subsidiaries	1,780			51,769			3,368			—			56,917
Equity in earnings of consolidated subsidiaries	55,137			3,368			—			(58,505		)	—
Net income	$	56,917		$	55,137		$	3,368		$	(58,505	)	$	56,917
Comprehensive income	$	52,680		$	50,857		$	(1,181	)	$	(49,676	)	$	52,680

Condensed Consolidating Statement of Comprehensive Income

(Unaudited)

	Nine Months Ended September 30, 2016
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Product revenue	$	—		$	1,048,288		$	42,398		$	—		$	1,090,686
Service revenue	103,173			263,292			18,241			(106,532		)	278,174
Total revenue	103,173			1,311,580			60,639			(106,532		)	1,368,860
Cost of products	—			(372,165		)	(18,996		)	—			(391,161		)
Cost of services	(115,810		)	(95,125		)	(5,600		)	117,289			(99,246		)
Total cost of revenue	(115,810		)	(467,290		)	(24,596		)	117,289			(490,407		)
Gross profit	(12,637		)	844,290			36,043			10,757			878,453
Operating expenses	—			(566,081		)	(25,732		)	(10,757		)	(602,570		)
Operating (loss) income	(12,637		)	278,209			10,311			—			275,883
Interest expense	(14,920		)	(11,171		)	(2		)	10,812			(15,281		)
Other income	10,302			1,786			59			(10,812		)	1,335
(Loss) income before income taxes	(17,255		)	268,824			10,368			—			261,937
Income tax benefit (provision)	11,431			(95,924		)	(2,290		)	—			(86,783		)
(Loss) income before equity in earnings of consolidated subsidiaries	(5,824		)	172,900			8,078			—			175,154
Equity in earnings of consolidated subsidiaries	180,978			8,078			—			(189,056		)	—
Net income	$	175,154		$	180,978		$	8,078		$	(189,056	)	$	175,154
Comprehensive income	$	180,298		$	185,966		$	11,989		$	(197,955	)	$	180,298

Condensed Consolidating Statement of Comprehensive Income

(Unaudited)

	Nine Months Ended September 30, 2015
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Product revenue	$	—		$	1,018,518		$	57,174		$	—		$	1,075,692
Service revenue	83,116			217,412			19,638			(86,550		)	233,616
Total revenue	83,116			1,235,930			76,812			(86,550		)	1,309,308
Cost of products	—			(355,690		)	(28,900		)	—			(384,590		)
Cost of services	(89,348		)	(78,770		)	(6,192		)	90,978			(83,332		)
Total cost of revenue	(89,348		)	(434,460		)	(35,092		)	90,978			(467,922		)
Gross profit	(6,232		)	801,470			41,720			4,428			841,386
Operating expenses	—			(544,450		)	(28,970		)	(4,428		)	(577,848		)
Operating (loss) income	(6,232		)	257,020			12,750			—			263,538
Loss on early debt extinguishment	(8,917		)	—			—			—			(8,917		)
Interest expense	(14,727		)	(10,121		)	(1		)	9,527			(15,322		)
Other income	9,680			1,355			666			(9,527		)	2,174
(Loss) income before income taxes	(20,196		)	248,254			13,415			—			241,473
Income tax benefit (provision)	10,671			(89,743		)	(3,481		)	—			(82,553		)
(Loss) income before equity in earnings of consolidated subsidiaries	(9,525		)	158,511			9,934			—			158,920
Equity in earnings of consolidated subsidiaries	168,445			9,934			—			(178,379		)	—
Net income	$	158,920		$	168,445		$	9,934		$	(178,379	)	$	158,920
Comprehensive income	$	150,190		$	159,587		$	269		$	(159,856	)	$	150,190

Condensed Consolidating Statement of Cash Flows

(Unaudited)

	Nine Months Ended September 30, 2016
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Net cash provided by operating activities	$	3,734		$	196,493		$	9,531		$	(1,637	)	$	208,121
Cash flows from investing activities:
Purchases of capital assets	(18,463		)	(11,777		)	(1,975		)	—			(32,215		)
Payments for acquisitions, net of cash acquired	—			(64,637		)	—			—			(64,637		)
Proceeds from company-owned life insurance policies	4,123			—			—			—			4,123
Other	(290		)	965			1,655			—			2,330
Net cash used by investing activities	(14,630		)	(75,449		)	(320		)	—			(90,399		)
Cash flows from financing activities:
Proceeds from issuing long-term debt	169,000			—			—			—			169,000
Payments on long-term debt, including costs of debt reacquisition	(185,849		)	—			(24		)	—			(185,873		)
Proceeds from issuing shares under employee plans	6,861			—			—			—			6,861
Employee taxes paid for shares withheld	(2,333		)	—			—			—			(2,333		)
Payments for common shares repurchased	(44,944		)	—			—			—			(44,944		)
Cash dividends paid to shareholders	(44,127		)	—			—			—			(44,127		)
Advances from (to) consolidated subsidiaries	121,653			(119,981		)	(1,672		)	—			—
Other	(533		)	(1,101		)	—			—			(1,634		)
Net cash provided (used) by financing activities	19,728			(121,082		)	(1,696		)	—			(103,050		)
Effect of exchange rate change on cash	—			—			2,966			—			2,966
Net change in cash and cash equivalents	8,832			(38		)	10,481			(1,637		)	17,638
Cash and cash equivalents, beginning of year	5,187			940			56,422			(122		)	62,427
Cash and cash equivalents, end of period	$	14,019		$	902		$	66,903		$	(1,759	)	$	80,065

Condensed Consolidating Statement of Cash Flows

(Unaudited)

	Nine Months Ended September 30, 2015
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Net cash (used) provided by operating activities	$	(820	)	$	205,987		$	10,852		$	3,129		$	219,148
Cash flows from investing activities:
Purchases of capital assets	(1,317		)	(26,094		)	(2,138		)	—			(29,549		)
Payments for acquisitions, net of cash acquired	(26		)	(50,907		)	—			—			(50,933		)
Proceeds from company-owned life insurance policies	3,973			—			—			—			3,973
Other	(387		)	1,182			10			—			805
Net cash provided (used) by investing activities	2,243			(75,819		)	(2,128		)	—			(75,704		)
Cash flows from financing activities:
Proceeds from short-term borrowings	50,000			—			—			—			50,000
Proceeds from issuing long-term debt	276,500			—			—			—			276,500
Payments on long-term debt, including costs of debt reacquisition	(375,279		)	—			(12		)	—			(375,291		)
Proceeds from issuing shares under employee plans	5,492			—			—			—			5,492
Excess tax benefit from share-based employee awards	1,816			—			—			—			1,816
Employee taxes paid for shares withheld	(1,236		)	—			—			—			(1,236		)
Payments for common shares repurchased	(46,996		)	—			—			—			(46,996		)
Cash dividends paid to shareholders	(44,965		)	—			—			—			(44,965		)
Advances from (to) consolidated subsidiaries	132,878			(133,077		)	199			—			—
Other	(136		)	(92		)	(150		)	—			(378		)
Net cash (used) provided by financing activities	(1,926		)	(133,169		)	37			—			(135,058		)
Effect of exchange rate change on cash	—			—			(7,032		)	—			(7,032		)
Net change in cash and cash equivalents	(503		)	(3,001		)	1,729			3,129			1,354
Cash and cash equivalents, beginning of year	8,335			4,342			52,193			(3,329		)	61,541
Cash and cash equivalents, end of period	$	7,832		$	1,341		$	53,922		$	(200	)	$	62,895

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Subsequent events

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

Subsequent events

Subsequent events

In October 2016, we issued a notice to redeem all $200,000 of our senior notes due in 2020 on November 15, 2016 at a redemption price of 103% of the principal amount. We plan to utilize borrowings under our recently expanded credit facility to fund the redemption (see Note 11). In conjunction with the redemption, we plan to terminate our $200,000 of interest rate swaps (see Note 7).

In October 2016, we acquired selected assets of Data Support Systems, Inc. for aggregate estimated cash payments of $21,000, subject to post-closing adjustments, and including estimated contingent consideration. Data Support Systems is a provider of image-based software for payments reconciliation and back-office case management and will be included in our Financial Services segment. The allocation of the purchase price to the assets acquired and liabilities assumed has not yet been determined.

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New accounting pronouncements (Policies)

9 Months Ended

Sep. 30, 2016

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New accounting pronouncements

New accounting pronouncements

Recently adopted accounting pronouncements – In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The standard requires that a performance target that affects vesting and that could be achieved after the requisite service period should be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. We adopted this standard on January 1, 2016. As our accounting treatment for these awards was in compliance with the new guidance, adoption of this standard had no impact on our consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The standard requires that debt issuance costs related to a recognized debt liability be presented in the consolidated balance sheets as a direct reduction from the carrying amount of the debt liability. We adopted this standard on January 1, 2016, applying it retrospectively. The consolidated balance sheet as of December 31, 2015 reflects the reclassification of debt issuance costs of $2,249 from other non-current assets to long-term debt. The amount of debt issuance costs included in long-term debt as of September 30, 2016 was $1,906. In August 2015, the FASB issued ASU No. 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements – Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting. This standard adds SEC paragraphs pursuant to the SEC Staff announcement at the June 18, 2015 Emerging Issues Task Force (EITF) meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. Under this guidance, the SEC Staff would not object to presenting such costs as an asset and subsequently amortizing the deferred costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings under the arrangement. Debt issuance costs of $1,528 as of September 30, 2016 and $2,003 as of December 31, 2015 related to our line-of-credit arrangement. We continue to include these costs within other non-current assets, amortizing them over the term of the arrangement.

In April 2015, the FASB issued ASU No. 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. The standard provides guidance to customers about whether a cloud computing arrangement includes a software license. If the arrangement does include a software license, the software license element of the arrangement should be accounted for in the same manner as the acquisition of other software licenses. We adopted this standard on January 1, 2016, applying it prospectively to all arrangements entered into or materially modified on or after January 1, 2016. Adoption of this standard did not have a significant impact on our results of operations or financial position.

In May 2015, the FASB issued ASU No. 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or its Equivalent). Under the standard, investments measured at net asset value (NAV) as a practical expedient for fair value are excluded from the fair value hierarchy. As such, they are not assigned a fair value measurement level in financial statement disclosures of fair value. This standard was effective for us on January 1, 2016. It impacts the disclosures included in our Annual Report on Form 10-K regarding the plan assets of our postretirement benefit plan. As such, we will reflect this new guidance in the disclosures included in our Form 10-K for the year ending December 31, 2016, applying the guidance retrospectively to all periods presented.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. The standard requires that inventory within the scope of the guidance be measured at the lower of cost or net realizable value. Previously, inventory was measured at the lower of cost or market. We elected to early adopt this standard on January 1, 2016, applying it prospectively. Application of this standard did not have a significant impact on our results of operations or financial position.

In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. When recording the purchase price allocation for a business combination in the financial statements, an acquirer may record preliminary amounts when measurements are incomplete as of the end of a reporting period. When the required information is received to finalize the purchase price allocation, the preliminary amounts are adjusted. These adjustments are referred to as measurement-period adjustments. This standard eliminates the requirement to restate prior period financial statements for measurement-period adjustments. Instead, it requires that the cumulative impact of a measurement-period adjustment be recognized in the reporting period in which the adjustment is identified. We adopted this standard on January 1, 2016, applying it prospectively. Application of this standard did not have a significant impact on our results of operations or financial position.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. The standard is intended to simplify various aspects of the accounting and presentation of share-based payments. We elected to early adopt this standard as of January 1, 2016. Adoption of this standard had the following impacts on our consolidated financial statements:

• Consolidated statements of comprehensive income – The new standard requires that the tax effects of share-based compensation be recognized in the income tax provision. Previously, these amounts were recognized in additional paid-in capital. Net tax benefits related to share-based compensation awards of $234 for the quarter ended September 30, 2016 and $1,745 for the nine months ended September 30, 2016 were recognized as reductions of income tax expense in the consolidated statements of comprehensive income. These tax benefits reduced our effective income tax rate 0.3 points for the quarter ended September 30, 2016 and 0.7 points for the nine months ended September 30, 2016. In addition, in calculating potential common shares used to determine diluted earnings per share, GAAP requires us to use the treasury stock method. The new standard requires that assumed proceeds under the treasury stock method be modified to exclude the amount of excess tax benefits that would have been recognized in additional paid-in capital. These changes were applied on a prospective basis and resulted in an increase in diluted earnings per share of $0.03 for the nine months ended September 30, 2016. These changes had no impact on diluted earnings per share for the quarter ended September 30, 2016.

In recording share-based compensation expense, the standard allows companies to make a policy election as to whether they will include an estimate of awards expected to be forfeited or whether they will account for forfeitures as they occur. We have elected to include an estimate of forfeitures in the computation of our share-based compensation expense. As this treatment is consistent with previous guidance, this election had no impact on our consolidated financial statements.

• Consolidated statements of cash flows – The standard requires that excess tax benefits from share-based employee awards be reported as operating activities in the consolidated statements of cash flows. Previously, these cash flows were included in financing activities. We elected to apply this change on a prospective basis, resulting in an increase in net cash provided by operating activities and in net cash used by financing activities of $2,069 for the nine months ended September 30, 2016.

The standard requires that employee taxes paid when an employer withholds shares for tax-withholding purposes be reported as financing activities in the consolidated statements of cash flows. Previously, these cash flows were included in operating activities. This change was required to be applied on a retrospective basis. As such, the consolidated statement of cash flows for the prior period was restated. This change resulted in an increase in net cash provided by operating activities and in net cash used by financing activities of $2,333 for the nine months ended September 30, 2016 and $1,236 for the nine months ended September 30, 2015.

In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. The standard is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. We elected to early adopt this standard as of July 1, 2016. As our consolidated statement of cash flows presentation was in compliance with the new guidance, adoption of this standard had no impact on our consolidated financial statements.

Accounting pronouncements not yet adopted – In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The standard provides revenue recognition guidance for any entity that enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets, unless those contracts are within the scope of other accounting standards. The standard also expands the required financial statement disclosures regarding revenue recognition. The new guidance is effective for us on January 1, 2018. In addition, in March 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), in April 2016, the FASB issued ASU No. 2016-10, Identifying Performance Obligations and Licensing, and in May 2016, the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients. These standards are intended to clarify aspects of ASU No. 2014-09 and are effective for us upon adoption of ASU No. 2014-09. We are currently assessing the impact of these standards on our consolidated financial statements, as well as the method of transition that we will use in adopting the new guidance.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The standard is intended to improve the recognition, measurement, presentation and disclosure of financial instruments. The guidance is effective for us on January 1, 2018. We do not expect the application of this standard to have a significant impact on our results of operations or financial position.

In February 2016, the FASB issued ASU No. 2016-02, Leasing. The standard is intended to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities for virtually all leases and by requiring the disclosure of key information about leasing arrangements. The guidance is effective for us on January 1, 2019, and requires adoption using a modified retrospective approach. We are currently assessing the impact of this standard on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. The standard introduces new guidance for the accounting for credit losses on instruments within its scope, including trade and loans receivable and available-for-sale debt securities. The guidance is effective for us on January 1, 2020, and requires adoption using a modified retrospective approach. We do not expect the application of this standard to have a significant impact on our results of operations or financial position.

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Long-term investments (Policies)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Long-term investments

We have elected to account for a long-term investment in domestic mutual funds under the fair value option for financial assets and financial liabilities. The fair value option provides companies an irrevocable option to measure many financial assets and liabilities at fair value with changes in fair value recognized in earnings. The investment is included in long-term investments in the consolidated balance sheets. Long-term investments also include the cash surrender values of company-owned life insurance policies. Realized and unrealized gains and losses, as well as dividends earned by the mutual fund investment, are included in selling, general and administrative (SG&A) expense in the consolidated statements of comprehensive income. This investment corresponds to a liability under an officers’ deferred compensation plan that is not available to new participants and is fully funded by the investment in mutual funds. The liability under the plan equals the fair value of the investment in mutual funds. Thus, as the value of the investment changes, the value of the liability changes accordingly. As changes in the liability are reflected within SG&A expense in the consolidated statements of comprehensive income, the fair value option of accounting for the investment in mutual funds allows us to net changes in the investment and the related liability in the statements of comprehensive income. The cost of securities sold is determined using the average cost method.

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Recurring fair value measurements (Policies)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair value level transfers

Our policy is to recognize transfers between fair value levels as of the end of the reporting period in which the transfer occurred.

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Consolidated financial statements (Tables)

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Impact of revision

The impact of this revision on our unaudited consolidated balance sheet as of December 31, 2015 was as follows:

	December 31, 2015
(in thousands)	As Previously Reported		Adjustment			As Revised
Other current assets	$	44,608	$	(2,003	)	$	42,605
Total current assets	325,988		(2,003		)	323,985
Other non-current assets	111,809		2,003			113,812
Short-term borrowings	434,000		(434,000		)	—
Total current liabilities	751,043		(434,000		)	317,043
Long-term debt	193,973		434,000			627,973

The impact of this revision on our unaudited consolidated statement of cash flows for the nine months ended September 30, 2015 was as follows:

	Nine Months Ended September 30, 2015
(in thousands)	As Previously Reported			Adjustment			As Revised
Proceeds from short-term borrowings	$	159,000		$	(109,000	)	$	50,000
Proceeds from issuing long-term debt	—			276,500			276,500
Payments on long-term debt, including costs of debt reacquisition	(207,791		)	(167,500		)	(375,291		)

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Supplemental balance sheet information (Tables)

9 Months Ended

Sep. 30, 2016

Balance Sheet Related Disclosures [Abstract]

Inventories and supplies

Inventories and supplies – Inventories and supplies were comprised of the following:

(in thousands)	September 30, 2016		December 31, 2015
Raw materials	$	5,593	$	5,719
Semi-finished goods	8,857		8,208
Finished goods	23,937		24,955
Supplies	3,087		3,074
Inventories and supplies	$	41,474	$	41,956

Available-for-sale securities

Available-for-sale securities – Available-for-sale securities included within funds held for customers and other current assets were comprised of the following:

	September 30, 2016
(in thousands)	Cost		Gross unrealized gains		Gross unrealized losses			Fair value
Funds held for customers:(1)
Canadian and provincial government securities	$	8,491	$	—	$	(43	)	$	8,448
Canadian guaranteed investment certificates	7,618		—		—			7,618
Available-for-sale securities	$	16,109	$	—	$	(43	)	$	16,066

⁽¹⁾ Funds held for customers, as reported on the consolidated balance sheet as of September 30, 2016, also included cash of $76,104. This cash included amounts related to FISC Solutions, which was acquired in December 2015. This business provides cash receipt processing services. A portion of the cash receipts are remitted to our clients the business day following receipt. As such, the amounts on-hand are reported as funds held for customers in the consolidated balance sheets, with a corresponding liability included in accrued liabilities. The asset and liability of $18,743 were recorded as acquisition measurement-period balance sheet adjustments during 2016. In addition, this cash included $12,532 related to the September 2016 acquisition of Payce, Inc., a payroll services provider (see Note 6).

	December 31, 2015
(in thousands)	Cost		Gross unrealized gains		Gross unrealized losses			Fair value
Canadian and provincial government securities	$	7,932	$	—	$	(91	)	$	7,841
Canadian guaranteed investment certificates	7,226		—		—			7,226
Available-for-sale securities (funds held for customers)(1)	15,158		—		(91		)	15,067
Canadian money market fund (other current assets)	1,616		—		—			1,616
Available-for-sale securities	$	16,774	$	—	$	(91	)	$	16,683

⁽¹⁾ Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2015, also included cash of $38,276.

Expected maturities of available-for-sale securities

Expected maturities of available-for-sale securities as of September 30, 2016 were as follows:

(in thousands)	Fair value
Due in one year or less	$	9,629
Due in two to five years	4,190
Due in six to ten years	2,247
Available-for-sale securities	$	16,066

Assets held for sale

Net assets held for sale consisted of the following:

(in thousands)	September 30, 2016			December 31, 2015			Balance sheet caption
Current assets	$	4		$	3		Other current assets
Intangibles	13,533			13,533			Assets held for sale
Other non-current assets	433			436			Assets held for sale
Accrued liabilities	(112		)	(366		)	Accrued liabilities
Deferred income tax liabilities	(5,775		)	(5,777		)	Other non-current liabilities
Net assets held for sale	$	8,083		$	7,829

Intangibles

Intangibles – Intangibles were comprised of the following:

	September 30, 2016							December 31, 2015
(in thousands)	Gross carrying amount		Accumulated amortization			Net carrying amount		Gross carrying amount		Accumulated amortization			Net carrying amount
Indefinite-lived intangibles:
Trade name	$	19,100	$	—		$	19,100	$	19,100	$	—		$	19,100
Amortizable intangibles:
Internal-use software	410,231		(336,356		)	73,875		375,037		(310,665		)	64,372
Customer lists/relationships	239,972		(67,366		)	172,606		202,682		(54,990		)	147,692
Trade names	65,481		(40,029		)	25,452		64,881		(36,325		)	28,556
Software to be sold	28,500		(6,141		)	22,359		28,500		(3,765		)	24,735
Other	1,808		(1,322		)	486		2,858		(2,002		)	856
Amortizable intangibles	745,992		(451,214		)	294,778		673,958		(407,747		)	266,211
Intangibles	$	765,092	$	(451,214	)	$	313,878	$	693,058	$	(407,747	)	$	285,311

Estimated future amortization expense

Based on the intangibles in service as of September 30, 2016, estimated future amortization expense is as follows:

(in thousands)	Estimated amortization expense
Remainder of 2016	$	18,260
2017	65,293
2018	51,235
2019	37,788
2020	31,737

Acquired intangibles

The following intangible assets were acquired during the nine months ended September 30, 2016:

(in thousands)	Amount		Weighted-average amortization period (in years)
Internal-use software	$	34,970	4
Customer lists/relationships	48,982		7
Trade names	600		5
Acquired intangibles	$	84,552	6

Goodwill

Goodwill – Changes in goodwill during the nine months ended September 30, 2016 were as follows:

(in thousands)	Small Business Services			Financial Services		Direct Checks		Total
Balance, December 31, 2015:
Goodwill, gross	$	671,295		$	176,614	$	148,506	$	996,415
Accumulated impairment charges	(20,000		)	—		—		(20,000		)
Goodwill, net of accumulated impairment charges	651,295			176,614		148,506		976,415
Acquisition of 180 Fusion (Note 6)	575			—		—		575
Acquisition of Inkhead (Note 6)	4,421			—		—		4,421
Acquisition of Payce (Note 6)	7,979			—		—		7,979
Adjustment for acquisition of Datamyx (Note 6)	—			172		—		172
Currency translation adjustment	79			—		—		79
Balance, September 30, 2016:
Goodwill, gross	684,349			176,786		148,506		1,009,641
Accumulated impairment charges	(20,000		)	—		—		(20,000		)
Goodwill, net of accumulated impairment charges	$	664,349		$	176,786	$	148,506	$	989,641

Other non-current assets

Other non-current assets – Other non-current assets were comprised of the following:

(in thousands)	September 30, 2016		December 31, 2015
Contract acquisition costs	$	67,488	$	58,792
Loans and notes receivable from distributors	21,531		23,957
Postretirement benefit plan asset	20,260		16,250
Deferred advertising costs	6,660		7,500
Other	7,907		7,313
Other non-current assets	$	123,846	$	113,812

Changes in contract acquisition costs

Changes in contract acquisition costs during the nine months ended September 30, 2016 and 2015 were as follows:

	Nine Months Ended September 30,
(in thousands)	2016			2015
Balance, beginning of year	$	58,792		$	74,101
Additions(1)	23,471			4,828
Amortization	(14,700		)	(14,059		)
Other	(75		)	(3,458		)
Balance, end of period	$	67,488		$	61,412

⁽¹⁾ Contract acquisition costs are accrued upon contract execution. Cash payments made for contract acquisition costs were $17,190 for the nine months ended September 30, 2016 and $9,843 for the nine months ended September 30, 2015.

Accrued liabilities

Accrued liabilities – Accrued liabilities were comprised of the following:

(in thousands)	September 30, 2016		December 31, 2015
Funds held for customers	$	90,960	$	52,366
Deferred revenue	32,418		48,119
Employee profit sharing/cash bonus	24,771		40,683
Customer rebates	17,077		18,900
Contract acquisition costs due within one year	11,980		9,045
Wages, including vacation	11,260		5,731
Restructuring due within one year (Note 9)	2,648		3,864
Other	49,523		49,715
Accrued liabilities	$	240,637	$	228,423

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Earnings per share (Tables)

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Earnings per share

The following table reflects the calculation of basic and diluted earnings per share. During each period, certain stock options, as noted below, were excluded from the calculation of diluted earnings per share because their effect would have been antidilutive. 

	Quarter Ended September 30,						Nine Months Ended September 30,
(dollars and shares in thousands, except per share amounts)	2016			2015			2016			2015
Earnings per share – basic:
Net income	$	58,663		$	56,917		$	175,154		$	158,920
Income allocated to participating securities	(491		)	(386		)	(1,445		)	(1,054		)
Income available to common shareholders	$	58,172		$	56,531		$	173,709		$	157,866
Weighted-average shares outstanding	48,493			49,396			48,634			49,592
Earnings per share – basic	$	1.20		$	1.14		$	3.57		$	3.18
Earnings per share – diluted:
Net income	$	58,663		$	56,917		$	175,154		$	158,920
Income allocated to participating securities	(487		)	(384		)	(1,436		)	(1,049		)
Re-measurement of share-based awards classified as liabilities	(64		)	(114		)	230			(67		)
Income available to common shareholders	$	58,112		$	56,419		$	173,948		$	157,804
Weighted-average shares outstanding	48,493			49,396			48,634			49,592
Dilutive impact of potential common shares	455			366			427			391
Weighted-average shares and potential common shares outstanding	48,948			49,762			49,061			49,983
Earnings per share – diluted	$	1.19		$	1.13		$	3.55		$	3.16
Antidilutive options excluded from calculation	223			255			223			255

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Other comprehensive income (Tables)

9 Months Ended

Sep. 30, 2016

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Reclassification adjustments

Reclassification adjustments– Information regarding amounts reclassified from accumulated other comprehensive loss to net income was as follows:

Accumulated other comprehensive loss components	Amounts reclassified from accumulated other comprehensive loss												Affected line item in consolidated statements of comprehensive income
	Quarter Ended September 30,						Nine Months Ended September 30,
(in thousands)	2016			2015			2016			2015
Amortization of postretirement benefit plan items:
Prior service credit	$	355		$	355		1,066			1,066			(1)
Net actuarial loss	(949		)	(780		)	(2,848		)	(2,340		)	(1)
Total amortization	(594		)	(425		)	(1,782		)	(1,274		)	(1)
Tax benefit	181			113			544			339			(1)
Total reclassifications, net of tax	$	(413	)	$	(312	)	$	(1,238	)	$	(935	)

⁽¹⁾ Amortization of postretirement benefit plan items is included in the computation of net periodic benefit income. Additional details can be found in Note 10.

Accumulated other comprehensive loss

Accumulated other comprehensive loss– Changes in the components of accumulated other comprehensive loss during the nine months ended September 30, 2016 were as follows:

(in thousands)	Postretirement benefit plans, net of tax			Net unrealized loss on marketable securities, net of tax(1)			Currency translation adjustment			Accumulated other comprehensive loss
Balance, December 31, 2015	$	(38,822	)	$	(114	)	$	(16,267	)	$	(55,203	)
Other comprehensive income before reclassifications	—			40			3,866			3,906
Amounts reclassified from accumulated other comprehensive loss	1,238			—			—			1,238
Net current-period other comprehensive income	1,238			40			3,866			5,144
Balance, September 30, 2016	$	(37,584	)	$	(74	)	$	(12,401	)	$	(50,059	)

⁽¹⁾ Other comprehensive income before reclassifications is net of income tax expense of $14.

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Allocation of the aggregate purchase price for acquisitions completed during the current period

The following illustrates the preliminary allocation as of September 30, 2016 of the aggregate purchase price for the above acquisitions to the assets acquired and liabilities assumed:

(in thousands)	2016 acquisitions
Net tangible assets acquired and liabilities assumed	$	(784	)
Identifiable intangible assets:
Customer lists/relationships	48,982
Internal-use software	10,250
Trade names	600
Total intangible assets	59,832
Goodwill	12,975
Total aggregate purchase price	72,023
Liabilities for holdback payments	(6,900		)
Non-cash consideration(1)	(2,020		)
Net cash paid for 2016 acquisitions	63,103
Holdback payments for prior year acquisitions	1,534
Payments for acquisitions, net of cash acquired	$	64,637

⁽¹⁾ Consists of pre-acquisition amounts owed to us by certain of the acquired businesses.

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Fair value measurements (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Recurring fair value measurements

Information regarding recurring fair value measurements completed during each period was as follows:

				Fair value measurements using
	Fair value as of  September 30, 2016			Quoted prices in active markets for identical assets		Significant other observable inputs			Significant unobservable inputs
(in thousands)				(Level 1)		(Level 2)			(Level 3)
Available-for-sale marketable securities (funds held for customers)	$	16,066		$	—	$	16,066		$	—
Long-term investment in mutual funds	1,868			1,868		—			—
Derivative liabilities	(109		)	—		(109		)	—
Accrued contingent consideration	(4,276		)	—		—			(4,276		)

				Fair value measurements using
	Fair value as of December 31, 2015			Quoted prices in active markets for identical assets		Significant other observable inputs			Significant unobservable inputs
(in thousands)				(Level 1)		(Level 2)			(Level 3)
Available-for-sale marketable securities (funds held for customers)	$	15,067		$	—	$	15,067		$	—
Available-for-sale marketable securities (other current assets)	1,616			—		1,616			—
Long-term investment in mutual funds	2,091			2,091		—			—
Derivative liabilities	(4,842		)	—		(4,842		)	—
Accrued contingent consideration	(5,861		)	—		—			(5,861		)

Changes in accrued contingent consideration

Changes in accrued contingent consideration during the nine months ended September 30, 2016 were as follows:

(in thousands)	Nine Months Ended September 30, 2016
Balance, December 31, 2015	$	5,861
Change in fair value	(448		)
Payments	(1,137		)
Balance, September 30, 2016	$	4,276

Estimated fair value of other financial instruments

The estimated fair values of these financial instruments were as follows:

					Fair value measurements using
	September 30, 2016				Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(in thousands)	Carrying value		Fair value		(Level 1)		(Level 2)		(Level 3)
Cash	$	80,065	$	80,065	$	80,065	$	—	$	—
Cash (funds held for customers)	76,104		76,104		76,104		—		—
Loans and notes receivable from distributors	23,329		21,290		—		—		21,290
Long-term debt(1)	615,985		624,758		—		624,758		—

⁽¹⁾ Amounts exclude capital lease obligations.

					Fair value measurements using
	December 31, 2015				Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(in thousands)	Carrying value		Fair value		(Level 1)		(Level 2)		(Level 3)
Cash	$	62,427	$	62,427	$	62,427	$	—	$	—
Cash (funds held for customers)	38,276		38,276		38,276		—		—
Loans and notes receivable from distributors	25,745		23,383		—		—		23,383
Long-term debt(1)	626,909		641,000		—		641,000		—

⁽¹⁾ Amounts exclude capital lease obligations.

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Restructuring charges (Tables)

9 Months Ended

Sep. 30, 2016

Restructuring and Related Activities [Abstract]

Components of net restructuring charges

Net restructuring charges for each period consisted of the following components:

	Quarter Ended September 30,						Nine Months Ended September 30,
(in thousands, except number of employees)	2016			2015			2016			2015
Severance accruals	$	1,824		$	1,443		$	3,870		$	3,493
Severance reversals	(198		)	(282		)	(666		)	(976		)
Operating lease obligations	—			88			—			88
Net restructuring accruals	1,626			1,249			3,204			2,605
Other costs	432			489			939			551
Net restructuring charges	$	2,058		$	1,738		$	4,143		$	3,156
Number of employees included in severance accruals	55			50			120			200

The net restructuring charges are reflected in the consolidated statements of comprehensive income as follows:

	Quarter Ended September 30,				Nine Months Ended September 30,
(in thousands)	2016		2015		2016		2015
Total cost of revenue	$	65	$	233	$	136	$	418
Operating expenses	1,993		1,505		4,007		2,738
Net restructuring charges	$	2,058	$	1,738	$	4,143	$	3,156

Restructuring accruals, initiatives summarized by year

Accruals for our restructuring initiatives, summarized by year, were as follows:

(in thousands)	2014  initiatives			2015  initiatives			2016 initiatives			Total
Balance, December 31, 2015	$	176		$	3,688		$	—		$	3,864
Restructuring charges	—			78			3,792			3,870
Restructuring reversals	(111		)	(465		)	(90		)	(666		)
Payments	(65		)	(2,989		)	(1,366		)	(4,420		)
Balance, September 30, 2016	$	—		$	312		$	2,336		$	2,648
Cumulative amounts:
Restructuring charges	$	8,242		$	6,205		$	3,792		$	18,239
Restructuring reversals	(1,444		)	(923		)	(90		)	(2,457		)
Payments	(6,798		)	(4,970		)	(1,366		)	(13,134		)
Balance, September 30, 2016	$	—		$	312		$	2,336		$	2,648

Restructuring accruals, by segment

The components of our restructuring accruals, by segment, were as follows:

	Employee severance benefits												Operating lease obligations
(in thousands)	Small Business Services			Financial Services			Direct Checks			Corporate			Small Business Services			Financial Services			Total
Balance, December 31, 2015	$	1,023		$	884		$	—		$	1,859		$	56		$	42		$	3,864
Restructuring charges	1,979			768			135			929			59			—			3,870
Restructuring reversals	(255		)	(50		)	(2		)	(359		)	—			—			(666		)
Payments	(1,457		)	(922		)	(85		)	(1,811		)	(103		)	(42		)	(4,420		)
Balance, September 30, 2016	$	1,290		$	680		$	48		$	618		$	12		$	—		$	2,648
Cumulative amounts(1):
Restructuring charges	$	7,704		$	5,027		$	171		$	4,940		$	344		$	53		$	18,239
Restructuring reversals	(1,455		)	(361		)	(4		)	(637		)	—			—			(2,457		)
Inter-segment transfer	41			(14		)	—			(27		)	—			—			—
Payments	(5,000		)	(3,972		)	(119		)	(3,658		)	(332		)	(53		)	(13,134		)
Balance, September 30, 2016	$	1,290		$	680		$	48		$	618		$	12		$	—		$	2,648

⁽¹⁾ Includes accruals related to our cost reduction initiatives for 2014 through 2016.

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Postretirement benefits (Tables)

9 Months Ended

Sep. 30, 2016

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Components of net periodic benefit income

Postretirement benefit income for each period consisted of the following components:

	Quarter Ended September 30,						Nine Months Ended September 30,
(in thousands)	2016			2015			2016			2015
Interest cost	$	780		$	859		$	2,339		$	2,578
Expected return on plan assets	(1,834		)	(1,958		)	(5,501		)	(5,875		)
Amortization of prior service credit	(355		)	(355		)	(1,066		)	(1,066		)
Amortization of net actuarial losses	949			780			2,848			2,340
Net periodic benefit income	$	(460	)	$	(674	)	$	(1,380	)	$	(2,023	)

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Debt (Tables)

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Debt outstanding

Debt outstanding was comprised of the following:

(in thousands)	September 30, 2016			December 31, 2015
6.0% senior notes due November 15, 2020, principal amount	$	200,000		$	200,000
Less unamortized debt issuance costs	(1,906		)	(2,249		)
Cumulative change in fair value of hedged debt (Note 7)	(109		)	(4,842		)
6.0% senior notes, carrying value	197,985			192,909
Amount drawn on credit facility	418,000			434,000
Long-term portion of capital lease obligations	805			1,064
Long-term portion of debt	616,790			627,973
Capital lease obligations due within one year	951			1,045
Total debt	$	617,741		$	629,018

Daily average amounts outstanding

Daily average amounts outstanding under our credit facility and short-term borrowings were as follows:

(in thousands)	Nine Months Ended September 30, 2016			Year Ended December 31, 2015
Revolving credit facility:
Daily average amount outstanding	$	416,814		$	270,063
Weighted-average interest rate	1.91		%	1.66		%
Short-term bank loan:
Daily average amount outstanding	$	—		$	47,178
Weighted-average interest rate	—			1.59		%

Revolving credit facility, amount available for borrowing

As of September 30, 2016, amounts were available for borrowing under our revolving credit facility as follows:

(in thousands)	Total available
Revolving credit facility commitment	$	525,000
Amount drawn on revolving credit facility	(418,000		)
Outstanding letters of credit(1)	(12,795		)
Net available for borrowing as of September 30, 2016	$	94,205

⁽¹⁾ We use standby letters of credit to collateralize certain obligations related primarily to our self-insured workers’ compensation claims, as well as claims for environmental matters, as required by certain states. These letters of credit reduce the amount available for borrowing under our revolving credit facility.

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Business segment information (Tables)

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Business segment information

The following is our segment information as of and for the quarters ended September 30, 2016 and 2015:

		Reportable Business Segments
(in thousands)		Small Business Services		Financial Services		Direct Checks		Corporate		Consolidated
Total revenue from external	2016	$	298,931	$	123,033	$	36,956	$	—	$	458,920
customers:	2015	288,966		110,894		39,956		—		439,816
Operating income:	2016	50,670		28,708		12,914		—		92,292
	2015	51,873		23,364		14,131		—		89,368
Depreciation and amortization	2016	13,315		8,876		868		—		23,059
expense:	2015	11,825		5,979		949		—		18,753
Total assets:	2016	1,075,661		434,374		160,624		270,489		1,941,148
	2015	990,282		270,421		161,636		267,718		1,690,057
Capital asset purchases:	2016	—		—		—		10,031		10,031
	2015	—		—		—		10,242		10,242

The following is our segment information as of and for the nine months ended September 30, 2016 and 2015:

		Reportable Business Segments
(in thousands)		Small Business Services		Financial Services		Direct Checks		Corporate		Consolidated
Total revenue from external	2016	$	877,384	$	374,511	$	116,965	$	—	$	1,368,860
customers:	2015	848,216		335,134		125,958		—		1,309,308
Operating income:	2016	150,776		84,467		40,640		—		275,883
	2015	149,545		69,280		44,713		—		263,538
Depreciation and amortization	2016	38,195		26,888		2,628		—		67,711
expense:	2015	33,265		17,760		3,406		—		54,431
Total assets:	2016	1,075,661		434,374		160,624		270,489		1,941,148
	2015	990,282		270,421		161,636		267,718		1,690,057
Capital asset purchases:	2016	—		—		—		32,215		32,215
	2015	—		—		—		29,549		29,549

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Supplemental guarantor financial information (Tables)

9 Months Ended

Sep. 30, 2016

Supplemental guarantor financial information [Abstract]

Condensed Consolidating Balance Sheets

Condensed Consolidating Balance Sheet

(Unaudited)

	September 30, 2016
(in thousands)	Deluxe Corporation		Guarantor subsidiaries		Non-guarantor subsidiaries		Eliminations			Total
ASSETS
Current assets:
Cash and cash equivalents	$	14,019	$	902	$	66,903	$	(1,759	)	$	80,065
Trade accounts receivable, net	—		109,326		8,435		—			117,761
Inventories and supplies	—		39,175		2,299		—			41,474
Funds held for customers	—		24,031		68,139		—			92,170
Other current assets	6,718		32,934		1,386		—			41,038
Total current assets	20,737		206,368		147,162		(1,759		)	372,508
Deferred income taxes	14,754		—		1,749		(14,754		)	1,749
Long-term investments	34,156		7,737		—		—			41,893
Property, plant and equipment, net	11,914		66,833		4,920		—			83,667
Assets held for sale	—		—		13,966		—			13,966
Intangibles, net	19,119		283,237		11,522		—			313,878
Goodwill	—		980,142		9,499		—			989,641
Investments in consolidated subsidiaries	1,395,804		108,954		—		(1,504,758		)	—
Intercompany receivable	23,164		—		—		(23,164		)	—
Other non-current assets	6,549		117,215		82		—			123,846
Total assets	$	1,526,197	$	1,770,486	$	188,900	$	(1,544,435	)	$	1,941,148
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	25,328	$	60,456	$	2,810	$	(1,759	)	$	86,835
Accrued liabilities	20,577		149,507		70,553		—			240,637
Long-term debt due within one year	906		—		45		—			951
Total current liabilities	46,811		209,963		73,408		(1,759		)	328,423
Long-term debt	616,697		—		93		—			616,790
Deferred income taxes	—		95,508		—		(14,754		)	80,754
Intercompany payable	—		22,494		670		(23,164		)	—
Other non-current liabilities	12,742		46,717		5,775		—			65,234
Total shareholders' equity	849,947		1,395,804		108,954		(1,504,758		)	849,947
Total liabilities and shareholders' equity	$	1,526,197	$	1,770,486	$	188,900	$	(1,544,435	)	$	1,941,148

Condensed Consolidating Balance Sheet

(Unaudited)

	December 31, 2015
(in thousands)	Deluxe Corporation		Guarantor subsidiaries		Non-guarantor subsidiaries		Eliminations			Total
ASSETS
Current assets:
Cash and cash equivalents	$	5,187	$	940	$	56,422	$	(122	)	$	62,427
Trade accounts receivable, net	—		115,951		7,703		—			123,654
Inventories and supplies	—		39,758		2,198		—			41,956
Funds held for customers	—		—		53,343		—			53,343
Other current assets	7,230		32,765		2,610		—			42,605
Total current assets	12,417		189,414		122,276		(122		)	323,985
Deferred income taxes	13,498		—		1,238		(13,498		)	1,238
Long-term investments	34,304		7,387		—		—			41,691
Property, plant and equipment, net	10,111		71,017		4,604		—			85,732
Assets held for sale	—		—		13,969		—			13,969
Intangibles, net	9,066		273,051		3,194		—			285,311
Goodwill	—		974,973		1,442		—			976,415
Investments in consolidated subsidiaries	1,248,549		81,099		—		(1,329,648		)	—
Intercompany receivable	99,506		—		—		(99,506		)	—
Other non-current assets	5,861		107,767		184		—			113,812
Total assets	$	1,433,312	$	1,704,708	$	146,907	$	(1,442,774	)	$	1,842,153
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	15,625	$	69,809	$	2,263	$	(122	)	$	87,575
Accrued liabilities	23,567		148,279		56,577		—			228,423
Long-term debt due within one year	1,026		—		19		—			1,045
Total current liabilities	40,218		218,088		58,859		(122		)	317,043
Long-term debt	627,942		—		31		—			627,973
Deferred income taxes	—		94,574		—		(13,498		)	81,076
Intercompany payable	—		98,365		1,141		(99,506		)	—
Other non-current liabilities	20,083		45,132		5,777		—			70,992
Total shareholders' equity	745,069		1,248,549		81,099		(1,329,648		)	745,069
Total liabilities and shareholders' equity	$	1,433,312	$	1,704,708	$	146,907	$	(1,442,774	)	$	1,842,153

Condensed Consolidating Statements of Comprehensive Income

Condensed Consolidating Statement of Comprehensive Income

(Unaudited)

	Quarter Ended September 30, 2016
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Product revenue	$	—		$	350,454		$	14,226		$	—		$	364,680
Service revenue	36,078			89,355			6,006			(37,199		)	94,240
Total revenue	36,078			439,809			20,232			(37,199		)	458,920
Cost of products	—			(127,210		)	(6,418		)	—			(133,628		)
Cost of services	(40,487		)	(30,363		)	(1,934		)	40,142			(32,642		)
Total cost of revenue	(40,487		)	(157,573		)	(8,352		)	40,142			(166,270		)
Gross profit	(4,409		)	282,236			11,880			2,943			292,650
Operating expenses	—			(188,768		)	(8,647		)	(2,943		)	(200,358		)
Operating (loss) income	(4,409		)	93,468			3,233			—			92,292
Interest expense	(5,019		)	(4,206		)	(1		)	4,371			(4,855		)
Other income	3,994			919			200			(4,371		)	742
(Loss) income before income taxes	(5,434		)	90,181			3,432			—			88,179
Income tax benefit (provision)	4,592			(33,138		)	(970		)	—			(29,516		)
(Loss) income before equity in earnings of consolidated subsidiaries	(842		)	57,043			2,462			—			58,663
Equity in earnings of consolidated subsidiaries	59,505			2,462			—			(61,967		)	—
Net income	$	58,663		$	59,505		$	2,462		$	(61,967	)	$	58,663
Comprehensive income	$	57,824		$	58,614		$	1,212		$	(59,826	)	$	57,824

Condensed Consolidating Statement of Comprehensive Income

(Unaudited)

	Quarter Ended September 30, 2015
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Product revenue	$	—		$	345,820		$	15,961		$	—		$	361,781
Service revenue	28,005			72,419			6,709			(29,098		)	78,035
Total revenue	28,005			418,239			22,670			(29,098		)	439,816
Cost of products	—			(124,910		)	(7,684		)	—			(132,594		)
Cost of services	(29,218		)	(24,016		)	(2,272		)	28,798			(26,708		)
Total cost of revenue	(29,218		)	(148,926		)	(9,956		)	28,798			(159,302		)
Gross profit	(1,213		)	269,313			12,714			(300		)	280,514
Operating expenses	—			(182,823		)	(8,623		)	300			(191,146		)
Operating (loss) income	(1,213		)	86,490			4,091			—			89,368
Interest expense	(4,126		)	(4,126		)	—			3,865			(4,387		)
Other income	3,737			746			301			(3,865		)	919
(Loss) income before income taxes	(1,602		)	83,110			4,392			—			85,900
Income tax benefit (provision)	3,382			(31,341		)	(1,024		)	—			(28,983		)
(Loss) income before equity in earnings of consolidated subsidiaries	1,780			51,769			3,368			—			56,917
Equity in earnings of consolidated subsidiaries	55,137			3,368			—			(58,505		)	—
Net income	$	56,917		$	55,137		$	3,368		$	(58,505	)	$	56,917
Comprehensive income	$	52,680		$	50,857		$	(1,181	)	$	(49,676	)	$	52,680

Condensed Consolidating Statement of Comprehensive Income

(Unaudited)

	Nine Months Ended September 30, 2016
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Product revenue	$	—		$	1,048,288		$	42,398		$	—		$	1,090,686
Service revenue	103,173			263,292			18,241			(106,532		)	278,174
Total revenue	103,173			1,311,580			60,639			(106,532		)	1,368,860
Cost of products	—			(372,165		)	(18,996		)	—			(391,161		)
Cost of services	(115,810		)	(95,125		)	(5,600		)	117,289			(99,246		)
Total cost of revenue	(115,810		)	(467,290		)	(24,596		)	117,289			(490,407		)
Gross profit	(12,637		)	844,290			36,043			10,757			878,453
Operating expenses	—			(566,081		)	(25,732		)	(10,757		)	(602,570		)
Operating (loss) income	(12,637		)	278,209			10,311			—			275,883
Interest expense	(14,920		)	(11,171		)	(2		)	10,812			(15,281		)
Other income	10,302			1,786			59			(10,812		)	1,335
(Loss) income before income taxes	(17,255		)	268,824			10,368			—			261,937
Income tax benefit (provision)	11,431			(95,924		)	(2,290		)	—			(86,783		)
(Loss) income before equity in earnings of consolidated subsidiaries	(5,824		)	172,900			8,078			—			175,154
Equity in earnings of consolidated subsidiaries	180,978			8,078			—			(189,056		)	—
Net income	$	175,154		$	180,978		$	8,078		$	(189,056	)	$	175,154
Comprehensive income	$	180,298		$	185,966		$	11,989		$	(197,955	)	$	180,298

Condensed Consolidating Statement of Comprehensive Income

(Unaudited)

	Nine Months Ended September 30, 2015
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Product revenue	$	—		$	1,018,518		$	57,174		$	—		$	1,075,692
Service revenue	83,116			217,412			19,638			(86,550		)	233,616
Total revenue	83,116			1,235,930			76,812			(86,550		)	1,309,308
Cost of products	—			(355,690		)	(28,900		)	—			(384,590		)
Cost of services	(89,348		)	(78,770		)	(6,192		)	90,978			(83,332		)
Total cost of revenue	(89,348		)	(434,460		)	(35,092		)	90,978			(467,922		)
Gross profit	(6,232		)	801,470			41,720			4,428			841,386
Operating expenses	—			(544,450		)	(28,970		)	(4,428		)	(577,848		)
Operating (loss) income	(6,232		)	257,020			12,750			—			263,538
Loss on early debt extinguishment	(8,917		)	—			—			—			(8,917		)
Interest expense	(14,727		)	(10,121		)	(1		)	9,527			(15,322		)
Other income	9,680			1,355			666			(9,527		)	2,174
(Loss) income before income taxes	(20,196		)	248,254			13,415			—			241,473
Income tax benefit (provision)	10,671			(89,743		)	(3,481		)	—			(82,553		)
(Loss) income before equity in earnings of consolidated subsidiaries	(9,525		)	158,511			9,934			—			158,920
Equity in earnings of consolidated subsidiaries	168,445			9,934			—			(178,379		)	—
Net income	$	158,920		$	168,445		$	9,934		$	(178,379	)	$	158,920
Comprehensive income	$	150,190		$	159,587		$	269		$	(159,856	)	$	150,190

Condensed Consolidating Statements of Cash Flows

Condensed Consolidating Statement of Cash Flows

(Unaudited)

	Nine Months Ended September 30, 2016
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Net cash provided by operating activities	$	3,734		$	196,493		$	9,531		$	(1,637	)	$	208,121
Cash flows from investing activities:
Purchases of capital assets	(18,463		)	(11,777		)	(1,975		)	—			(32,215		)
Payments for acquisitions, net of cash acquired	—			(64,637		)	—			—			(64,637		)
Proceeds from company-owned life insurance policies	4,123			—			—			—			4,123
Other	(290		)	965			1,655			—			2,330
Net cash used by investing activities	(14,630		)	(75,449		)	(320		)	—			(90,399		)
Cash flows from financing activities:
Proceeds from issuing long-term debt	169,000			—			—			—			169,000
Payments on long-term debt, including costs of debt reacquisition	(185,849		)	—			(24		)	—			(185,873		)
Proceeds from issuing shares under employee plans	6,861			—			—			—			6,861
Employee taxes paid for shares withheld	(2,333		)	—			—			—			(2,333		)
Payments for common shares repurchased	(44,944		)	—			—			—			(44,944		)
Cash dividends paid to shareholders	(44,127		)	—			—			—			(44,127		)
Advances from (to) consolidated subsidiaries	121,653			(119,981		)	(1,672		)	—			—
Other	(533		)	(1,101		)	—			—			(1,634		)
Net cash provided (used) by financing activities	19,728			(121,082		)	(1,696		)	—			(103,050		)
Effect of exchange rate change on cash	—			—			2,966			—			2,966
Net change in cash and cash equivalents	8,832			(38		)	10,481			(1,637		)	17,638
Cash and cash equivalents, beginning of year	5,187			940			56,422			(122		)	62,427
Cash and cash equivalents, end of period	$	14,019		$	902		$	66,903		$	(1,759	)	$	80,065

Condensed Consolidating Statement of Cash Flows

(Unaudited)

	Nine Months Ended September 30, 2015
(in thousands)	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Net cash (used) provided by operating activities	$	(820	)	$	205,987		$	10,852		$	3,129		$	219,148
Cash flows from investing activities:
Purchases of capital assets	(1,317		)	(26,094		)	(2,138		)	—			(29,549		)
Payments for acquisitions, net of cash acquired	(26		)	(50,907		)	—			—			(50,933		)
Proceeds from company-owned life insurance policies	3,973			—			—			—			3,973
Other	(387		)	1,182			10			—			805
Net cash provided (used) by investing activities	2,243			(75,819		)	(2,128		)	—			(75,704		)
Cash flows from financing activities:
Proceeds from short-term borrowings	50,000			—			—			—			50,000
Proceeds from issuing long-term debt	276,500			—			—			—			276,500
Payments on long-term debt, including costs of debt reacquisition	(375,279		)	—			(12		)	—			(375,291		)
Proceeds from issuing shares under employee plans	5,492			—			—			—			5,492
Excess tax benefit from share-based employee awards	1,816			—			—			—			1,816
Employee taxes paid for shares withheld	(1,236		)	—			—			—			(1,236		)
Payments for common shares repurchased	(46,996		)	—			—			—			(46,996		)
Cash dividends paid to shareholders	(44,965		)	—			—			—			(44,965		)
Advances from (to) consolidated subsidiaries	132,878			(133,077		)	199			—			—
Other	(136		)	(92		)	(150		)	—			(378		)
Net cash (used) provided by financing activities	(1,926		)	(133,169		)	37			—			(135,058		)
Effect of exchange rate change on cash	—			—			(7,032		)	—			(7,032		)
Net change in cash and cash equivalents	(503		)	(3,001		)	1,729			3,129			1,354
Cash and cash equivalents, beginning of year	8,335			4,342			52,193			(3,329		)	61,541
Cash and cash equivalents, end of period	$	7,832		$	1,341		$	53,922		$	(200	)	$	62,895

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Consolidated financial statements (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Impact of revision [Line Items]
Other current assets	$ 41,038		$ 42,605
Total current assets	372,508		323,985
Other non-current assets	123,846		113,812
Short-term borrowings			0
Total current liabilities	328,423		317,043
Long-term debt	616,790		627,973
Proceeds from short-term borrowings	0	$ 50,000
Proceeds from issuing long-term debt	169,000	276,500
Payments on long-term debt, including costs of debt reacquisition	$ (185,873)	(375,291)
As Previously Reported [Member]
Impact of revision [Line Items]
Other current assets			44,608
Total current assets			325,988
Other non-current assets			111,809
Short-term borrowings			434,000
Total current liabilities			751,043
Long-term debt			193,973
Proceeds from short-term borrowings		159,000
Proceeds from issuing long-term debt		0
Payments on long-term debt, including costs of debt reacquisition		(207,791)
Adjustment [Member]
Impact of revision [Line Items]
Other current assets			(2,003)
Total current assets			(2,003)
Other non-current assets			2,003
Short-term borrowings			(434,000)
Total current liabilities			(434,000)
Long-term debt			$ 434,000
Proceeds from short-term borrowings		(109,000)
Proceeds from issuing long-term debt		276,500
Payments on long-term debt, including costs of debt reacquisition		$ (167,500)

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New accounting pronouncements (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Senior notes due 2020 [Member]
New accounting pronouncements [Line Items]
Debt issuance costs	$ 1,906	$ 1,906		$ 2,249
Revolving credit facility [Member] | Other non-current assets [Member]
New accounting pronouncements [Line Items]
Debt issuance costs	1,528	1,528		2,003
Accounting Standards Update No. 2015-03 [Member] | Senior notes due 2020 [Member] | Other non-current assets [Member]
New accounting pronouncements [Line Items]
Debt issuance costs				(2,249)
Accounting Standards Update No. 2015-03 [Member] | Senior notes due 2020 [Member] | Long-term debt [Member]
New accounting pronouncements [Line Items]
Debt issuance costs	1,906	1,906		$ 2,249
Accounting Standards Update No. 2016-09 [Member]
New accounting pronouncements [Line Items]
New accounting pronouncement, effect of change on net income	$ 234	$ 1,745
New accounting pronouncement effect of change on effective income tax rate	0.30%	0.70%
New accounting pronouncement, effect of change on diluted earnings per share	$ 0.00	$ 0.03
New accounting pronouncement, effect on net cash provided by operating activities, excess tax benefits		$ 2,069
New accounting pronouncement, effect on net cash used by financing activities, excess tax benefits		2,069
New accounting pronouncement, effect on net cash provided by operating activities. shares withheld		2,333	$ 1,236
New accounting pronouncement effect on net cash used by financing activities, shares withheld		$ 2,333	$ 1,236

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Supplemental balance sheet information (inventories and supplies) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Inventories and supplies
Raw materials	$ 5,593	$ 5,719
Semi-finished goods	8,857	8,208
Finished goods	23,937	24,955
Supplies	3,087	3,074
Inventories and supplies	$ 41,474	$ 41,956

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Supplemental balance sheet information (available-for-sale securities) (Details) - USD ($) $ in Thousands	1 Months Ended		9 Months Ended
	Sep. 30, 2016		Sep. 30, 2016		Dec. 31, 2015
Available-for-sale securities [Line Items]
Cost	$ 16,109		$ 16,109		$ 16,774
Gross unrealized gains	0		0		0
Gross unrealized losses	(43)		(43)		(91)
Fair value	16,066		16,066		16,683
Measurement period adjustment, liability for funds held for customers			18,743
Expected maturities of available-for-sale securities
Due in one year or less	9,629		9,629
Due in two to five years	4,190		4,190
Due in six to ten years	2,247		2,247
Fair value	16,066		16,066		16,683
FISC Solutions [Member]
Available-for-sale securities [Line Items]
Measurement period adjustment, funds held for customers			18,743
Payce, Inc. [Member]
Available-for-sale securities [Line Items]
Acquired funds held for customers	12,532
Funds held for customers [Member]
Available-for-sale securities [Line Items]
Cost	16,109	[1]	16,109	[1]	15,158	[2]
Gross unrealized gains	0	[1]	0	[1]	0	[2]
Gross unrealized losses	(43)	[1]	(43)	[1]	(91)	[2]
Fair value	16,066	[1]	16,066	[1]	15,067	[2]
Cash	76,104		76,104		38,276
Expected maturities of available-for-sale securities
Fair value	16,066	[1]	16,066	[1]	15,067	[2]
Funds held for customers [Member] | Canadian and provincial government securities [Member]
Available-for-sale securities [Line Items]
Cost	8,491	[1]	8,491	[1]	7,932
Gross unrealized gains	0	[1]	0	[1]	0
Gross unrealized losses	(43)	[1]	(43)	[1]	(91)
Fair value	8,448	[1]	8,448	[1]	7,841
Expected maturities of available-for-sale securities
Fair value	8,448	[1]	8,448	[1]	7,841
Funds held for customers [Member] | Canadian guaranteed investment certificates [Member]
Available-for-sale securities [Line Items]
Cost	7,618	[1]	7,618	[1]	7,226
Gross unrealized gains	0	[1]	0	[1]	0
Gross unrealized losses	0	[1]	0	[1]	0
Fair value	7,618	[1]	7,618	[1]	7,226
Expected maturities of available-for-sale securities
Fair value	$ 7,618	[1]	$ 7,618	[1]	7,226
Other current assets [Member] | Money market securities [Member] | Canadian [Member]
Available-for-sale securities [Line Items]
Cost					1,616
Gross unrealized gains					0
Gross unrealized losses					0
Fair value					1,616
Expected maturities of available-for-sale securities
Fair value					$ 1,616

[1] Funds held for customers, as reported on the consolidated balance sheet as of September 30, 2016, also included cash of $76,104. This cash included amounts related to FISC Solutions, which was acquired in December 2015. This business provides cash receipt processing services. A portion of the cash receipts are remitted to our clients the business day following receipt. As such, the amounts on-hand are reported as funds held for customers in the consolidated balance sheets, with a corresponding liability included in accrued liabilities. The asset and liability of $18,743 were recorded as acquisition measurement-period balance sheet adjustments during 2016. In addition, this cash included $12,532 related to the September 2016 acquisition of Payce, Inc., a payroll services provider (see Note 6).

[2] Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2015, also included cash of $38,276.

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Supplemental balance sheet information (assets held for sale) (Details) - Assets held for sale [Member] - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Assets held for sale [Line Items]
Current assets	$ 4	$ 3
Intangibles	13,533	13,533
Other non-current assets	433	436
Accrued liabilities	(112)	(366)
Deferred income tax liabilities	(5,775)	(5,777)
Net assets held for sale	$ 8,083	$ 7,829

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Supplemental balance sheet information (intangibles) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Intangibles [Line Items]
Amortizable intangibles, gross carrying amount	$ 745,992		$ 745,992		$ 673,958
Accumulated amortization	(451,214)		(451,214)		(407,747)
Amortizable intangibles, net carrying amount	294,778		294,778		266,211
Gross carrying amount, total	765,092		765,092		693,058
Net carrying amount, total	313,878		313,878		285,311
Amortization of intangibles	19,273	$ 14,686	56,364	$ 42,425
Amount acquired			$ 84,552
Amount acquired, weighted-average amortization period (in years)			6 years
Estimated future amortization expense
Remainder of 2016	18,260		$ 18,260
2017	65,293		65,293
2018	51,235		51,235
2019	37,788		37,788
2020	31,737		31,737
Trade names [Member]
Intangibles [Line Items]
Indefinite-lived intangibles, carrying amount	19,100		19,100		19,100
Internal-use software [Member]
Intangibles [Line Items]
Amortizable intangibles, gross carrying amount	410,231		410,231		375,037
Accumulated amortization	(336,356)		(336,356)		(310,665)
Amortizable intangibles, net carrying amount	73,875		73,875		64,372
Amount acquired			$ 34,970
Amount acquired, weighted-average amortization period (in years)			4 years
Customer lists/relationships [Member]
Intangibles [Line Items]
Amortizable intangibles, gross carrying amount	239,972		$ 239,972		202,682
Accumulated amortization	(67,366)		(67,366)		(54,990)
Amortizable intangibles, net carrying amount	172,606		172,606		147,692
Amount acquired			$ 48,982
Amount acquired, weighted-average amortization period (in years)			7 years
Trade names [Member]
Intangibles [Line Items]
Amortizable intangibles, gross carrying amount	65,481		$ 65,481		64,881
Accumulated amortization	(40,029)		(40,029)		(36,325)
Amortizable intangibles, net carrying amount	25,452		25,452		28,556
Amount acquired			$ 600
Amount acquired, weighted-average amortization period (in years)			5 years
Software to be sold [Member]
Intangibles [Line Items]
Amortizable intangibles, gross carrying amount	28,500		$ 28,500		28,500
Accumulated amortization	(6,141)		(6,141)		(3,765)
Amortizable intangibles, net carrying amount	22,359		22,359		24,735
Other [Member]
Intangibles [Line Items]
Amortizable intangibles, gross carrying amount	1,808		1,808		2,858
Accumulated amortization	(1,322)		(1,322)		(2,002)
Amortizable intangibles, net carrying amount	$ 486		$ 486		$ 856

XML

Supplemental balance sheet information (goodwill) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Goodwill [Roll Forward]
Goodwill, gross, beginning of year	$ 996,415
Accumulated impairment charges, beginning of year	(20,000)
Goodwill, net of accumulated impairment charges, beginning of year	976,415
Currency translation adjustment	79
Goodwill, gross, end of period	1,009,641
Accumulated impairment charges, end of period	(20,000)
Goodwill, net of accumulated impairment charges, end of period	989,641
180 Fusion LLC [Member]
Goodwill [Roll Forward]
Goodwill acquired during period	575
Inkhead, Inc. [Member]
Goodwill [Roll Forward]
Goodwill acquired during period	4,421
Payce, Inc. [Member]
Goodwill [Roll Forward]
Goodwill acquired during period	7,979
Datamyx LLC [Member]
Goodwill [Roll Forward]
Adjustment to goodwill	172
Small Business Services [Member]
Goodwill [Roll Forward]
Goodwill, gross, beginning of year	671,295
Accumulated impairment charges, beginning of year	(20,000)
Goodwill, net of accumulated impairment charges, beginning of year	651,295
Currency translation adjustment	79
Goodwill, gross, end of period	684,349
Accumulated impairment charges, end of period	(20,000)
Goodwill, net of accumulated impairment charges, end of period	664,349
Small Business Services [Member] | 180 Fusion LLC [Member]
Goodwill [Roll Forward]
Goodwill acquired during period	575
Small Business Services [Member] | Inkhead, Inc. [Member]
Goodwill [Roll Forward]
Goodwill acquired during period	4,421
Small Business Services [Member] | Payce, Inc. [Member]
Goodwill [Roll Forward]
Goodwill acquired during period	7,979
Financial Services [Member]
Goodwill [Roll Forward]
Goodwill, gross, beginning of year	176,614
Accumulated impairment charges, beginning of year	0
Goodwill, net of accumulated impairment charges, beginning of year	176,614
Currency translation adjustment	0
Goodwill, gross, end of period	176,786
Accumulated impairment charges, end of period	0
Goodwill, net of accumulated impairment charges, end of period	176,786
Direct Checks [Member]
Goodwill [Roll Forward]
Goodwill, gross, beginning of year	148,506
Accumulated impairment charges, beginning of year	0
Goodwill, net of accumulated impairment charges, beginning of year	148,506
Currency translation adjustment	0
Goodwill, gross, end of period	148,506
Accumulated impairment charges, end of period	0
Goodwill, net of accumulated impairment charges, end of period	$ 148,506

XML

Supplemental balance sheet information (other) (Details) - USD ($) $ in Thousands		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Dec. 31, 2015
Other non-current assets
Contract acquisition costs		$ 58,792	$ 74,101	$ 67,488	$ 58,792
Loans and notes receivable from distributors				21,531	23,957
Postretirement benefit plan asset				20,260	16,250
Deferred advertising costs				6,660	7,500
Other				7,907	7,313
Other non-current assets				123,846	113,812
Contract acquisition costs [Roll Forward]
Balance, beginning of year		58,792	74,101
Additions	[1]	23,471	4,828
Amortization		(14,700)	(14,059)
Other		(75)	(3,458)
Balance, end of period		67,488	61,412
Contract acquisition payments		$ 17,190	$ 9,843
Accrued liabilities
Funds held for customers				90,960	52,366
Deferred revenue				32,418	48,119
Employee profit sharing/cash bonus				24,771	40,683
Customer rebates				17,077	18,900
Contract acquisition costs due within one year				11,980	9,045
Wages, including vacation				11,260	5,731
Restructuring due within one year (Note 9)				2,648	3,864
Other				49,523	49,715
Accrued liabilities				$ 240,637	$ 228,423

[1] Contract acquisition costs are accrued upon contract execution. Cash payments made for contract acquisition costs were $17,190 for the nine months ended September 30, 2016 and $9,843 for the nine months ended September 30, 2015.

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Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Earnings per share - basic:
Net income	$ 58,663	$ 56,917	$ 175,154	$ 158,920
Income allocated to participating securities	(491)	(386)	(1,445)	(1,054)
Income available to common shareholders	$ 58,172	$ 56,531	$ 173,709	$ 157,866
Weighted-average shares outstanding	48,493	49,396	48,634	49,592
Earnings per share - basic	$ 1.20	$ 1.14	$ 3.57	$ 3.18
Earnings per share - diluted:
Net income	$ 58,663	$ 56,917	$ 175,154	$ 158,920
Income allocated to participating securities	(487)	(384)	(1,436)	(1,049)
Re-measurement of share-based awards classified as liabilities	(64)	(114)	230	(67)
Income available to common shareholders	$ 58,112	$ 56,419	$ 173,948	$ 157,804
Weighted-average shares outstanding	48,493	49,396	48,634	49,592
Dilutive impact of potential common shares	455	366	427	391
Weighted-average shares and potential common shares outstanding	48,948	49,762	49,061	49,983
Earnings per share - diluted	$ 1.19	$ 1.13	$ 3.55	$ 3.16
Antidilutive options excluded from calculation	223	255	223	255

XML

Other comprehensive income (reclassification adjustments) (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Reclassification adjustments [Line Items]
Total reclassifications, net of tax				$ 1,238
Amortization of postretirement benefit plan items [Member]
Reclassification adjustments [Line Items]
Total reclassifications, net of tax				1,238
Amounts reclassified from accumulated other comprehensive loss [Member] | Amortization of postretirement benefit plan items [Member]
Reclassification adjustments [Line Items]
Prior service credit	[1]	$ 355	$ 355	1,066	$ 1,066
Net actuarial loss	[1]	(949)	(780)	(2,848)	(2,340)
Total amortization	[1]	(594)	(425)	(1,782)	(1,274)
Tax benefit	[1]	181	113	544	339
Total reclassifications, net of tax		$ (413)	$ (312)	$ (1,238)	$ (935)

[1] Amortization of postretirement benefit plan items is included in the computation of net periodic benefit income. Additional details can be found in Note 10.

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Other comprehensive income (accumulated other comprehensive loss) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Accumulated other comprehensive loss [Line Items]
Accumulated other comprehensive loss, beginning of year	$ (55,203)
Other comprehensive income before reclassifications	3,906
Amounts reclassified from accumulated other comprehensive loss	1,238
Net current-period other comprehensive income	5,144
Accumulated other comprehensive loss, end of period	(50,059)
Postretirement benefit plans, net of tax [Member]
Accumulated other comprehensive loss [Line Items]
Accumulated other comprehensive loss, beginning of year	(38,822)
Other comprehensive income before reclassifications	0
Amounts reclassified from accumulated other comprehensive loss	1,238
Net current-period other comprehensive income	1,238
Accumulated other comprehensive loss, end of period	(37,584)
Net unrealized loss on marketable securities, net of tax [Member]
Accumulated other comprehensive loss [Line Items]
Accumulated other comprehensive loss, beginning of year	(114)	[1]
Other comprehensive income before reclassifications	40	[1]
Amounts reclassified from accumulated other comprehensive loss	0	[1]
Net current-period other comprehensive income	40	[1]
Accumulated other comprehensive loss, end of period	(74)	[1]
Unrealized holding gains on securities arising during the period, tax	14
Currency translation adjustment [Member]
Accumulated other comprehensive loss [Line Items]
Accumulated other comprehensive loss, beginning of year	(16,267)
Other comprehensive income before reclassifications	3,866
Amounts reclassified from accumulated other comprehensive loss	0
Net current-period other comprehensive income	3,866
Accumulated other comprehensive loss, end of period	$ (12,401)

[1] Other comprehensive income before reclassifications is net of income tax expense of $14.

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Acquisitions (Details) $ in Thousands		9 Months Ended
		Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($) business
Acquisitions [Line Items]
Intangibles acquired		$ 84,552
Payments for acquisitions, net of cash acquired		64,637	$ 50,933
Holdback payments for prior year acquisitions		1,534	$ 4,137
Customer lists/relationships [Member]
Acquisitions [Line Items]
Intangibles acquired		48,982
Internal-use software [Member]
Acquisitions [Line Items]
Intangibles acquired		34,970
Trade names [Member]
Acquisitions [Line Items]
Intangibles acquired		600
180 Fusion LLC [Member]
Acquisitions [Line Items]
Goodwill acquired during period		575
Inkhead, Inc. [Member]
Acquisitions [Line Items]
Goodwill acquired during period		4,421
Payce, Inc. [Member]
Acquisitions [Line Items]
Goodwill acquired during period		7,979
2016 acquisitions [Member]
Acquisitions [Line Items]
Net tangible assets acquired and liabilities assumed		(784)
Intangibles acquired		59,832
Goodwill acquired during period		12,975
Total aggregate purchase price		72,023
Liabilities for holdback payments		(6,900)
Non-cash consideration	[1]	(2,020)
Payments for acquisitions, net of cash acquired		63,103
2016 acquisitions [Member] | Customer lists/relationships [Member]
Acquisitions [Line Items]
Intangibles acquired		48,982
2016 acquisitions [Member] | Internal-use software [Member]
Acquisitions [Line Items]
Intangibles acquired		10,250
2016 acquisitions [Member] | Trade names [Member]
Acquisitions [Line Items]
Intangibles acquired		600
Small business distributors [Member]
Acquisitions [Line Items]
Number of businesses acquired | business			8
Small business distributors previously in Safeguard network [Member]
Acquisitions [Line Items]
Number of businesses acquired | business			5
Datamyx LLC [Member]
Acquisitions [Line Items]
Adjustment to goodwill		$ 172
2015 acquisitions [Member]
Acquisitions [Line Items]
Payments for acquisitions, net of cash acquired			$ 46,796

[1] Consists of pre-acquisition amounts owed to us by certain of the acquired businesses.

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Derivative financial instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Senior notes due 2020 [Member]
Derivative financial instruments [Line Items]
Decrease in debt due to fair value adjustments	$ (109)	$ (4,842)
Fair value hedge related to long-term debt due in 2020 [Member]
Derivative financial instruments [Line Items]
Notional amount	200,000	200,000
Fair value of interest rate swaps, liability	$ (109)	$ (4,842)

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Fair value measurements (annual asset impairment analyses) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Jul. 31, 2016	Dec. 31, 2015	Jul. 31, 2015
Schedule of goodwill and indefinite-lived intangibles [Line Items]
Goodwill	$ 989,641		$ 976,415
Carrying value of indefinite-lived trade name		$ 19,100
Indefinite-lived trade name, fair value in excess of carrying value		$ 32,000
Goodwill [Member]
Schedule of goodwill and indefinite-lived intangibles [Line Items]
Asset impairment charge	0
Indefinite-lived intangibles [Member]
Schedule of goodwill and indefinite-lived intangibles [Line Items]
Asset impairment charge	0
Financial Services Commercial [Member]
Schedule of goodwill and indefinite-lived intangibles [Line Items]
Excess of fair value over carrying value of reporting unit		49.00%		13.00%
Goodwill	$ 45,000

XML

Fair value measurements (acquisitions) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Acquisitions [Line Items]
Intangibles acquired	$ 84,552
2016 acquisitions [Member]
Acquisitions [Line Items]
Intangibles acquired	59,832
Customer lists/relationships [Member]
Acquisitions [Line Items]
Intangibles acquired	48,982
Customer lists/relationships [Member] | 2016 acquisitions [Member]
Acquisitions [Line Items]
Intangibles acquired	48,982
Internal-use software [Member]
Acquisitions [Line Items]
Intangibles acquired	34,970
Internal-use software [Member] | 2016 acquisitions [Member]
Acquisitions [Line Items]
Intangibles acquired	$ 10,250

XML

Fair value measurements (recurring fair value measurements) (Details) - USD ($) $ in Thousands	9 Months Ended			12 Months Ended
	Sep. 30, 2016		Sep. 30, 2015	Dec. 31, 2015
Recurring fair value measurements [Line Items]
Net unrealized loss on investment in mutual funds	$ 160		$ 333
Available-for-sale marketable securities	16,066			$ 16,683
Long-term investment in mutual funds	1,868			$ 2,091
Verify Valid [Member]
Recurring fair value measurements [Line Items]
Contingent consideration, period				8 years
Liability for contingent consideration, maximum unlimited				There is no maximum amount of contingent payments specified in the agreement
Small business distributors [Member]
Recurring fair value measurements [Line Items]
Contingent consideration, period				3 years
Liability for contingent consideration, maximum amount				$ 925
Funds held for customers [Member]
Recurring fair value measurements [Line Items]
Available-for-sale marketable securities	$ 16,066	[1]		15,067	[2]
Funds held for customers [Member] | Guaranteed investment certificates [Member]
Recurring fair value measurements [Line Items]
Maximum maturity period, debt securities	1 year
Available-for-sale marketable securities	$ 7,618	[1]		7,226
Other current assets [Member]
Recurring fair value measurements [Line Items]
Realized gain (loss) on available-for-sale securities	0		$ 0
Recurring fair value measurements [Member]
Recurring fair value measurements [Line Items]
Long-term investment in mutual funds	1,868			2,091
Derivative liabilities	(109)			(4,842)
Accrued contingent consideration	(4,276)			(5,861)
Transfers between fair value levels	0
Recurring fair value measurements [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Recurring fair value measurements [Line Items]
Long-term investment in mutual funds	1,868			2,091
Derivative liabilities	0			0
Accrued contingent consideration	0			0
Recurring fair value measurements [Member] | Significant other observable inputs (Level 2) [Member]
Recurring fair value measurements [Line Items]
Long-term investment in mutual funds	0			0
Derivative liabilities	(109)			(4,842)
Accrued contingent consideration	0			0
Recurring fair value measurements [Member] | Significant unobservable inputs (Level 3) [Member]
Recurring fair value measurements [Line Items]
Long-term investment in mutual funds	0			0
Derivative liabilities	0			0
Accrued contingent consideration	(4,276)			(5,861)
Recurring fair value measurements [Member] | Funds held for customers [Member]
Recurring fair value measurements [Line Items]
Available-for-sale marketable securities	16,066			15,067
Recurring fair value measurements [Member] | Funds held for customers [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Recurring fair value measurements [Line Items]
Available-for-sale marketable securities	0			0
Recurring fair value measurements [Member] | Funds held for customers [Member] | Significant other observable inputs (Level 2) [Member]
Recurring fair value measurements [Line Items]
Available-for-sale marketable securities	16,066			15,067
Recurring fair value measurements [Member] | Funds held for customers [Member] | Significant unobservable inputs (Level 3) [Member]
Recurring fair value measurements [Line Items]
Available-for-sale marketable securities	$ 0			0
Recurring fair value measurements [Member] | Other current assets [Member]
Recurring fair value measurements [Line Items]
Available-for-sale marketable securities				1,616
Recurring fair value measurements [Member] | Other current assets [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Recurring fair value measurements [Line Items]
Available-for-sale marketable securities				0
Recurring fair value measurements [Member] | Other current assets [Member] | Significant other observable inputs (Level 2) [Member]
Recurring fair value measurements [Line Items]
Available-for-sale marketable securities				1,616
Recurring fair value measurements [Member] | Other current assets [Member] | Significant unobservable inputs (Level 3) [Member]
Recurring fair value measurements [Line Items]
Available-for-sale marketable securities				$ 0

[1] Funds held for customers, as reported on the consolidated balance sheet as of September 30, 2016, also included cash of $76,104. This cash included amounts related to FISC Solutions, which was acquired in December 2015. This business provides cash receipt processing services. A portion of the cash receipts are remitted to our clients the business day following receipt. As such, the amounts on-hand are reported as funds held for customers in the consolidated balance sheets, with a corresponding liability included in accrued liabilities. The asset and liability of $18,743 were recorded as acquisition measurement-period balance sheet adjustments during 2016. In addition, this cash included $12,532 related to the September 2016 acquisition of Payce, Inc., a payroll services provider (see Note 6).

[2] Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2015, also included cash of $38,276.

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Fair value measurements (changes in Level 3 recurring fair value measurement) (Details) - Accrued contingent consideration [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Change in accrued contingent consideration
Balance, beginning of year	$ 5,861
Change in fair value	(448)
Payments	(1,137)
Balance, end of period	$ 4,276

XML

Fair value measurements (other financial instruments) (Details) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Carrying value [Member]
Fair value measurements, other financial instruments [Line Items]
Loans and notes receivable from distributors		$ 23,329	$ 25,745
Long-term debt	[1]	615,985	626,909
Carrying value [Member] | Cash [Member]
Fair value measurements, other financial instruments [Line Items]
Cash		80,065	62,427
Carrying value [Member] | Funds held for customers [Member]
Fair value measurements, other financial instruments [Line Items]
Cash		76,104	38,276
Fair value [Member]
Fair value measurements, other financial instruments [Line Items]
Loans and notes receivable from distributors		21,290	23,383
Long-term debt	[1]	624,758	641,000
Fair value [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Fair value measurements, other financial instruments [Line Items]
Loans and notes receivable from distributors		0	0
Long-term debt	[1]	0	0
Fair value [Member] | Significant other observable inputs (Level 2) [Member]
Fair value measurements, other financial instruments [Line Items]
Loans and notes receivable from distributors		0	0
Long-term debt	[1]	624,758	641,000
Fair value [Member] | Significant unobservable inputs (Level 3) [Member]
Fair value measurements, other financial instruments [Line Items]
Loans and notes receivable from distributors		21,290	23,383
Long-term debt	[1]	0	0
Fair value [Member] | Cash [Member]
Fair value measurements, other financial instruments [Line Items]
Cash		80,065	62,427
Fair value [Member] | Cash [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Fair value measurements, other financial instruments [Line Items]
Cash		80,065	62,427
Fair value [Member] | Cash [Member] | Significant other observable inputs (Level 2) [Member]
Fair value measurements, other financial instruments [Line Items]
Cash		0	0
Fair value [Member] | Cash [Member] | Significant unobservable inputs (Level 3) [Member]
Fair value measurements, other financial instruments [Line Items]
Cash		0	0
Fair value [Member] | Funds held for customers [Member]
Fair value measurements, other financial instruments [Line Items]
Cash		76,104	38,276
Fair value [Member] | Funds held for customers [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Fair value measurements, other financial instruments [Line Items]
Cash		76,104	38,276
Fair value [Member] | Funds held for customers [Member] | Significant other observable inputs (Level 2) [Member]
Fair value measurements, other financial instruments [Line Items]
Cash		0	0
Fair value [Member] | Funds held for customers [Member] | Significant unobservable inputs (Level 3) [Member]
Fair value measurements, other financial instruments [Line Items]
Cash		$ 0	$ 0

[1] Amounts exclude capital lease obligations.

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Restructuring charges (Details) $ in Thousands	3 Months Ended		9 Months Ended		33 Months Ended
	Sep. 30, 2016 USD ($) Employees	Sep. 30, 2015 USD ($) Employees	Sep. 30, 2016 USD ($) Employees	Sep. 30, 2015 USD ($) Employees	Sep. 30, 2016 USD ($) Employees		Dec. 31, 2015 USD ($)
Restructuring charges [Line Items]
Restructuring charges	$ 2,058	$ 1,738	$ 4,143	$ 3,156
Restructuring reversals			(666)		$ (2,457)	[1]
Net restructuring accruals	$ 1,626	$ 1,249	$ 3,204	$ 2,605
Number of employees in severance accruals | Employees	55	50	120	200
Other restructuring charges disclosures
Restructuring accruals, total	$ 2,648		$ 2,648		$ 2,648		$ 3,864
Number of employees that have not started to receive severance benefits | Employees	25		25		25
Total cost of revenue [Member]
Restructuring charges [Line Items]
Restructuring charges	$ 65	$ 233	$ 136	$ 418
Operating expenses [Member]
Restructuring charges [Line Items]
Restructuring charges	1,993	1,505	4,007	2,738
Severance [Member]
Restructuring charges [Line Items]
Restructuring charges	1,824	1,443	3,870	3,493
Restructuring reversals	(198)	(282)	(666)	(976)
Operating lease obligations [Member]
Restructuring charges [Line Items]
Restructuring charges	0	88	0	88
Other costs [Member]
Restructuring charges [Line Items]
Restructuring charges	$ 432	$ 489	$ 939	$ 551

[1] Includes accruals related to our cost reduction initiatives for 2014 through 2016.

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Restructuring charges (restructuring accruals by year and by segment) (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended		21 Months Ended	33 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2016
Restructuring accruals [Line Items]
Balance, beginning of year				$ 3,864
Restructuring charges				3,870			$ 18,239	[1]
Restructuring reversals				(666)			(2,457)	[1]
Inter-segment transfer	[1]						0
Payments				(4,420)			(13,134)	[1]
Balance, end of period		$ 2,648		2,648		$ 2,648	2,648
2014 initiatives [Member]
Restructuring accruals [Line Items]
Balance, beginning of year				176
Restructuring charges				0			8,242
Restructuring reversals				(111)			(1,444)
Payments				(65)			(6,798)
Balance, end of period		0		0		0	0
2015 initiatives [Member]
Restructuring accruals [Line Items]
Balance, beginning of year				3,688
Restructuring charges				78		6,205
Restructuring reversals				(465)		(923)
Payments				(2,989)		(4,970)
Balance, end of period		312		312		312	312
2016 initiatives [Member]
Restructuring accruals [Line Items]
Balance, beginning of year				0
Restructuring charges				3,792
Restructuring reversals				(90)
Payments				(1,366)
Balance, end of period		2,336		2,336		2,336	2,336
Employee severance benefits [Member]
Restructuring accruals [Line Items]
Restructuring reversals		(198)	$ (282)	(666)	$ (976)
Employee severance benefits [Member] | Small Business Services [Member]
Restructuring accruals [Line Items]
Balance, beginning of year				1,023
Restructuring charges				1,979			7,704	[1]
Restructuring reversals				(255)			(1,455)	[1]
Inter-segment transfer	[1]						41
Payments				(1,457)			(5,000)	[1]
Balance, end of period		1,290		1,290		1,290	1,290
Employee severance benefits [Member] | Financial Services [Member]
Restructuring accruals [Line Items]
Balance, beginning of year				884
Restructuring charges				768			5,027	[1]
Restructuring reversals				(50)			(361)	[1]
Inter-segment transfer	[1]						(14)
Payments				(922)			(3,972)	[1]
Balance, end of period		680		680		680	680
Employee severance benefits [Member] | Direct Checks [Member]
Restructuring accruals [Line Items]
Balance, beginning of year				0
Restructuring charges				135			171	[1]
Restructuring reversals				(2)			(4)	[1]
Inter-segment transfer	[1]						0
Payments				(85)			(119)	[1]
Balance, end of period		48		48		48	48
Employee severance benefits [Member] | Corporate [Member]
Restructuring accruals [Line Items]
Balance, beginning of year				1,859
Restructuring charges				929			4,940	[1]
Restructuring reversals				(359)			(637)	[1]
Inter-segment transfer	[1]						(27)
Payments				(1,811)			(3,658)	[1]
Balance, end of period		618		618		618	618
Operating lease obligations [Member] | Small Business Services [Member]
Restructuring accruals [Line Items]
Balance, beginning of year				56
Restructuring charges				59			344	[1]
Restructuring reversals				0			0	[1]
Inter-segment transfer	[1]						0
Payments				(103)			(332)	[1]
Balance, end of period		12		12		12	12
Operating lease obligations [Member] | Direct Checks [Member]
Restructuring accruals [Line Items]
Balance, beginning of year				42
Restructuring charges				0			53	[1]
Restructuring reversals				0			0	[1]
Inter-segment transfer	[1]						0
Payments				(42)			(53)	[1]
Balance, end of period		$ 0		$ 0		$ 0	$ 0

[1] Includes accruals related to our cost reduction initiatives for 2014 through 2016.

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Postretirement benefits (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net periodic benefit income
Interest cost	$ 780	$ 859	$ 2,339	$ 2,578
Expected return on plan assets	(1,834)	(1,958)	(5,501)	(5,875)
Amortization of prior service credit	(355)	(355)	(1,066)	(1,066)
Amortization of net actuarial losses	949	780	2,848	2,340
Net periodic benefit income	$ (460)	$ (674)	$ (1,380)	$ (2,023)

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Debt (Details) $ in Thousands		1 Months Ended				3 Months Ended		9 Months Ended		12 Months Ended
		Nov. 30, 2016 USD ($)	Mar. 31, 2015 USD ($)	Nov. 30, 2012 USD ($)	Mar. 31, 2011 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Debt instruments [Line Items]
Long-term portion of debt						$ 616,790		$ 616,790		$ 627,973
Capital lease obligations due within one year						951		951		1,045
Total debt						$ 617,741		$ 617,741		629,018
Ratio of EBITDA to interest expense						2		2
Ratio of total debt less unrestricted cash to EBITDA						2.75		2.75
Loss on early debt extinguishment						$ 0	$ 0	$ 0	$ (8,917)
Capital lease obligations						1,756		$ 1,756		2,109
Capital lease obligations, expiration date								Aug. 31, 2020
Credit facility, date of expiration								Feb. 21, 2019
Senior notes due 2020 [Member]
Debt instruments [Line Items]
Principal amount issued						200,000		$ 200,000		200,000
Less unamortized debt issuance costs						(1,906)		(1,906)		(2,249)
Cumulative change in fair value of hedged debt (Note 7)						(109)		(109)		(4,842)
Long-term portion of debt						197,985		197,985		192,909
Debt issuance date				Nov. 27, 2012
Stated interest rate				6.00%
Debt maturity date				Nov. 15, 2020
Proceeds from offering, net of offering costs				$ 196,340
Fair value of notes outstanding						206,758		206,758
Senior notes due 2020 [Member] | Subsequent event [Member]
Debt instruments [Line Items]
Redemption price, percentage		103.00%
Principal amount retired		$ 200,000
Senior notes due 2019 [Member]
Debt instruments [Line Items]
Principal amount issued					$ 200,000
Debt issuance date					Mar. 15, 2011
Stated interest rate					7.00%
Debt maturity date					Mar. 15, 2019
Proceeds from offering, net of offering costs					$ 196,195
Principal amount retired			$ 200,000
Loss on early debt extinguishment									$ 8,917
Capital lease obligations [Member]
Debt instruments [Line Items]
Long-term portion of debt						805		805		1,064
Revolving credit facility [Member]
Debt instruments [Line Items]
Long-term portion of debt						418,000		418,000		$ 434,000
Credit facility commitment						$ 525,000		$ 525,000
Credit facility, interest rate, amount outstanding						1.95%		1.95%		1.89%
Credit facility, daily average amount outstanding								$ 416,814		$ 270,063
Credit facility, weighted-average interest rate								1.91%		1.66%
Outstanding letters of credit	[1]					$ (12,795)		$ (12,795)
Credit facility, net available for borrowing at end of period						94,205		$ 94,205
Revolving credit facility [Member] | Minimum [Member]
Debt instruments [Line Items]
Credit facility, commitment fee								0.20%
Revolving credit facility [Member] | Maximum [Member]
Debt instruments [Line Items]
Credit facility, commitment fee								0.40%
Term loan facility [Member]
Debt instruments [Line Items]
Credit facility commitment						200,000		$ 200,000
Principal payments due in 2017						21,250		21,250
Principal payments due in 2018						$ 26,250		26,250
Short-term bank loan [Member]
Debt instruments [Line Items]
Principal amount issued			$ 75,000
Debt issuance date			Mar. 05, 2015
Proceeds from offering, net of offering costs			$ 74,880
Short-term borrowings, daily average amount outstanding								$ 0		$ 47,178
Short-term borrowings, weighted-average interest rate								0.00%		1.59%

[1] We use standby letters of credit to collateralize certain obligations related primarily to our self-insured workers’ compensation claims, as well as claims for environmental matters, as required by certain states. These letters of credit reduce the amount available for borrowing under our revolving credit facility.

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Other commitments and contingencies (Details) - USD ($) $ in Thousands	1 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Environmental matters [Line Items]
Accruals for environmental matters		$ 3,329		$ 5,952
Expense for environmental matters		(1,759)	$ 915
Self-insurance
Self-insurance liabilities		6,766		$ 6,457
Litigation
Damages sought	$ 43,000
Environmental insurance policy purchased during 2002 [Member]
Environmental matters [Line Items]
Environmental insurance coverage		10,000
Environmental insurance policy purchased during 2009 [Member]
Environmental matters [Line Items]
Environmental insurance coverage		15,000
Environmental insurance policies in effect [Member]
Environmental matters [Line Items]
Accruals for environmental matters		$ 0

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Shareholders' equity (Details) - USD ($) shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	May 04, 2016	Aug. 01, 2003
Stockholders' Equity Note [Abstract]
Common shares authorized for repurchase				10,000
Common shares that remain available for repurchase	233
Common shares repurchased (in shares)	733
Payments for common shares repurchased	$ 44,944	$ 46,996
Share repurchase program, authorized amount			$ 300,000

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Business segment information (Details) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Business segment information [Line Items]
Number of reportable business segments			3
Total revenue from external customers:	$ 458,920	$ 439,816	$ 1,368,860	$ 1,309,308
Operating income	92,292	89,368	275,883	263,538
Depreciation and amortization expense:	23,059	18,753	67,711	54,431
Total assets	1,941,148	1,690,057	1,941,148	1,690,057	$ 1,842,153
Capital asset purchases:	10,031	10,242	32,215	29,549
Reportable Business Segments [Member] | Small Business Services [Member]
Business segment information [Line Items]
Total revenue from external customers:	298,931	288,966	877,384	848,216
Operating income	50,670	51,873	150,776	149,545
Depreciation and amortization expense:	13,315	11,825	38,195	33,265
Total assets	1,075,661	990,282	1,075,661	990,282
Capital asset purchases:	0	0	0	0
Reportable Business Segments [Member] | Small Business Services [Member] | Checks [Member] | Product concentration risk [Member]
Business segment information [Line Items]
Percentage of revenue					40.10%
Reportable Business Segments [Member] | Financial Services [Member]
Business segment information [Line Items]
Total revenue from external customers:	123,033	110,894	374,511	335,134
Operating income	28,708	23,364	84,467	69,280
Depreciation and amortization expense:	8,876	5,979	26,888	17,760
Total assets	434,374	270,421	434,374	270,421
Capital asset purchases:	0	0	0	0
Reportable Business Segments [Member] | Financial Services [Member] | Checks [Member] | Product concentration risk [Member]
Business segment information [Line Items]
Percentage of revenue					59.70%
Reportable Business Segments [Member] | Direct Checks [Member]
Business segment information [Line Items]
Total revenue from external customers:	36,956	39,956	116,965	125,958
Operating income	12,914	14,131	40,640	44,713
Depreciation and amortization expense:	868	949	2,628	3,406
Total assets	160,624	161,636	160,624	161,636
Capital asset purchases:	0	0	0	0
Reportable Business Segments [Member] | Direct Checks [Member] | Checks [Member] | Product concentration risk [Member]
Business segment information [Line Items]
Percentage of revenue					84.60%
Corporate [Member]
Business segment information [Line Items]
Total revenue from external customers:	0	0	0	0
Operating income	0	0	0	0
Depreciation and amortization expense:	0	0	0	0
Total assets	270,489	267,718	270,489	267,718
Capital asset purchases:	$ 10,031	$ 10,242	$ 32,215	$ 29,549

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Supplemental guarantor financial information (Condensed Consolidating Balance Sheets) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 80,065	$ 62,427	$ 62,895	$ 61,541
Trade accounts receivable, net	117,761	123,654
Inventories and supplies	41,474	41,956
Funds held for customers	92,170	53,343
Other current assets	41,038	42,605
Total current assets	372,508	323,985
Deferred income taxes	1,749	1,238
Long-term investments	41,893	41,691
Property, plant and equipment, net	83,667	85,732
Assets held for sale	13,966	13,969
Intangibles, net	313,878	285,311
Goodwill	989,641	976,415
Investments In consolidated subsidiaries	0	0
Intercompany receivable	0	0
Other non-current assets	123,846	113,812
Total assets	1,941,148	1,842,153	1,690,057
Current liabilities:
Accounts payable	86,835	87,575
Accrued liabilities	240,637	228,423
Long-term debt due within one year	951	1,045
Total current liabilities	328,423	317,043
Long-term debt	616,790	627,973
Deferred income taxes	80,754	81,076
Intercompany payable	0	0
Other non-current liabilities	65,234	70,992
Total shareholders' equity	849,947	745,069
Total liabilities and shareholders' equity	1,941,148	1,842,153
Eliminations [Member]
Current assets:
Cash and cash equivalents	(1,759)	(122)	(200)	(3,329)
Trade accounts receivable, net	0	0
Inventories and supplies	0	0
Funds held for customers	0	0
Other current assets	0	0
Total current assets	(1,759)	(122)
Deferred income taxes	(14,754)	(13,498)
Long-term investments	0	0
Property, plant and equipment, net	0	0
Assets held for sale	0	0
Intangibles, net	0	0
Goodwill	0	0
Investments In consolidated subsidiaries	(1,504,758)	(1,329,648)
Intercompany receivable	(23,164)	(99,506)
Other non-current assets	0	0
Total assets	(1,544,435)	(1,442,774)
Current liabilities:
Accounts payable	(1,759)	(122)
Accrued liabilities	0	0
Long-term debt due within one year	0	0
Total current liabilities	(1,759)	(122)
Long-term debt	0	0
Deferred income taxes	(14,754)	(13,498)
Intercompany payable	(23,164)	(99,506)
Other non-current liabilities	0	0
Total shareholders' equity	(1,504,758)	(1,329,648)
Total liabilities and shareholders' equity	(1,544,435)	(1,442,774)
Deluxe Corporation [Member]
Current assets:
Cash and cash equivalents	14,019	5,187	7,832	8,335
Trade accounts receivable, net	0	0
Inventories and supplies	0	0
Funds held for customers	0	0
Other current assets	6,718	7,230
Total current assets	20,737	12,417
Deferred income taxes	14,754	13,498
Long-term investments	34,156	34,304
Property, plant and equipment, net	11,914	10,111
Assets held for sale	0	0
Intangibles, net	19,119	9,066
Goodwill	0	0
Investments In consolidated subsidiaries	1,395,804	1,248,549
Intercompany receivable	23,164	99,506
Other non-current assets	6,549	5,861
Total assets	1,526,197	1,433,312
Current liabilities:
Accounts payable	25,328	15,625
Accrued liabilities	20,577	23,567
Long-term debt due within one year	906	1,026
Total current liabilities	46,811	40,218
Long-term debt	616,697	627,942
Deferred income taxes	0	0
Intercompany payable	0	0
Other non-current liabilities	12,742	20,083
Total shareholders' equity	849,947	745,069
Total liabilities and shareholders' equity	1,526,197	1,433,312
Guarantor subsidiaries [Member]
Current assets:
Cash and cash equivalents	902	940	1,341	4,342
Trade accounts receivable, net	109,326	115,951
Inventories and supplies	39,175	39,758
Funds held for customers	24,031	0
Other current assets	32,934	32,765
Total current assets	206,368	189,414
Deferred income taxes	0	0
Long-term investments	7,737	7,387
Property, plant and equipment, net	66,833	71,017
Assets held for sale	0	0
Intangibles, net	283,237	273,051
Goodwill	980,142	974,973
Investments In consolidated subsidiaries	108,954	81,099
Intercompany receivable	0	0
Other non-current assets	117,215	107,767
Total assets	1,770,486	1,704,708
Current liabilities:
Accounts payable	60,456	69,809
Accrued liabilities	149,507	148,279
Long-term debt due within one year	0	0
Total current liabilities	209,963	218,088
Long-term debt	0	0
Deferred income taxes	95,508	94,574
Intercompany payable	22,494	98,365
Other non-current liabilities	46,717	45,132
Total shareholders' equity	1,395,804	1,248,549
Total liabilities and shareholders' equity	1,770,486	1,704,708
Non-guarantor subsidiaries [Member]
Current assets:
Cash and cash equivalents	66,903	56,422	$ 53,922	$ 52,193
Trade accounts receivable, net	8,435	7,703
Inventories and supplies	2,299	2,198
Funds held for customers	68,139	53,343
Other current assets	1,386	2,610
Total current assets	147,162	122,276
Deferred income taxes	1,749	1,238
Long-term investments	0	0
Property, plant and equipment, net	4,920	4,604
Assets held for sale	13,966	13,969
Intangibles, net	11,522	3,194
Goodwill	9,499	1,442
Investments In consolidated subsidiaries	0	0
Intercompany receivable	0	0
Other non-current assets	82	184
Total assets	188,900	146,907
Current liabilities:
Accounts payable	2,810	2,263
Accrued liabilities	70,553	56,577
Long-term debt due within one year	45	19
Total current liabilities	73,408	58,859
Long-term debt	93	31
Deferred income taxes	0	0
Intercompany payable	670	1,141
Other non-current liabilities	5,775	5,777
Total shareholders' equity	108,954	81,099
Total liabilities and shareholders' equity	$ 188,900	$ 146,907

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Supplemental guarantor financial information (Condensed Consolidating Statements of Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Condensed Consolidating Statements of Comprehensive Income [Abstract]
Product revenue	$ 364,680	$ 361,781	$ 1,090,686	$ 1,075,692
Service revenue	94,240	78,035	278,174	233,616
Total revenue	458,920	439,816	1,368,860	1,309,308
Cost of products	(133,628)	(132,594)	(391,161)	(384,590)
Cost of services	(32,642)	(26,708)	(99,246)	(83,332)
Total cost of revenue	(166,270)	(159,302)	(490,407)	(467,922)
Gross profit	292,650	280,514	878,453	841,386
Operating expenses	(200,358)	(191,146)	(602,570)	(577,848)
Operating income	92,292	89,368	275,883	263,538
Loss on early debt extinguishment	0	0	0	(8,917)
Interest expense	(4,855)	(4,387)	(15,281)	(15,322)
Other income	742	919	1,335	2,174
Income before income taxes	88,179	85,900	261,937	241,473
Income tax benefit (provision)	(29,516)	(28,983)	(86,783)	(82,553)
(Loss) income before equity in earnings of consolidated subsidiaries	58,663	56,917	175,154	158,920
Equity in earnings of consolidated subsidiaries	0	0	0	0
Net income	58,663	56,917	175,154	158,920
Comprehensive income	57,824	52,680	180,298	150,190
Eliminations [Member]
Condensed Consolidating Statements of Comprehensive Income [Abstract]
Product revenue	0	0	0	0
Service revenue	(37,199)	(29,098)	(106,532)	(86,550)
Total revenue	(37,199)	(29,098)	(106,532)	(86,550)
Cost of products	0	0	0	0
Cost of services	40,142	28,798	117,289	90,978
Total cost of revenue	40,142	28,798	117,289	90,978
Gross profit	2,943	(300)	10,757	4,428
Operating expenses	(2,943)	300	(10,757)	(4,428)
Operating income	0	0	0	0
Loss on early debt extinguishment				0
Interest expense	4,371	3,865	10,812	9,527
Other income	(4,371)	(3,865)	(10,812)	(9,527)
Income before income taxes	0	0	0	0
Income tax benefit (provision)	0	0	0	0
(Loss) income before equity in earnings of consolidated subsidiaries	0	0	0	0
Equity in earnings of consolidated subsidiaries	(61,967)	(58,505)	(189,056)	(178,379)
Net income	(61,967)	(58,505)	(189,056)	(178,379)
Comprehensive income	(59,826)	(49,676)	(197,955)	(159,856)
Deluxe Corporation [Member]
Condensed Consolidating Statements of Comprehensive Income [Abstract]
Product revenue	0	0	0	0
Service revenue	36,078	28,005	103,173	83,116
Total revenue	36,078	28,005	103,173	83,116
Cost of products	0	0	0	0
Cost of services	(40,487)	(29,218)	(115,810)	(89,348)
Total cost of revenue	(40,487)	(29,218)	(115,810)	(89,348)
Gross profit	(4,409)	(1,213)	(12,637)	(6,232)
Operating expenses	0	0	0	0
Operating income	(4,409)	(1,213)	(12,637)	(6,232)
Loss on early debt extinguishment				(8,917)
Interest expense	(5,019)	(4,126)	(14,920)	(14,727)
Other income	3,994	3,737	10,302	9,680
Income before income taxes	(5,434)	(1,602)	(17,255)	(20,196)
Income tax benefit (provision)	4,592	3,382	11,431	10,671
(Loss) income before equity in earnings of consolidated subsidiaries	(842)	1,780	(5,824)	(9,525)
Equity in earnings of consolidated subsidiaries	59,505	55,137	180,978	168,445
Net income	58,663	56,917	175,154	158,920
Comprehensive income	57,824	52,680	180,298	150,190
Guarantor subsidiaries [Member]
Condensed Consolidating Statements of Comprehensive Income [Abstract]
Product revenue	350,454	345,820	1,048,288	1,018,518
Service revenue	89,355	72,419	263,292	217,412
Total revenue	439,809	418,239	1,311,580	1,235,930
Cost of products	(127,210)	(124,910)	(372,165)	(355,690)
Cost of services	(30,363)	(24,016)	(95,125)	(78,770)
Total cost of revenue	(157,573)	(148,926)	(467,290)	(434,460)
Gross profit	282,236	269,313	844,290	801,470
Operating expenses	(188,768)	(182,823)	(566,081)	(544,450)
Operating income	93,468	86,490	278,209	257,020
Loss on early debt extinguishment				0
Interest expense	(4,206)	(4,126)	(11,171)	(10,121)
Other income	919	746	1,786	1,355
Income before income taxes	90,181	83,110	268,824	248,254
Income tax benefit (provision)	(33,138)	(31,341)	(95,924)	(89,743)
(Loss) income before equity in earnings of consolidated subsidiaries	57,043	51,769	172,900	158,511
Equity in earnings of consolidated subsidiaries	2,462	3,368	8,078	9,934
Net income	59,505	55,137	180,978	168,445
Comprehensive income	58,614	50,857	185,966	159,587
Non-guarantor subsidiaries [Member]
Condensed Consolidating Statements of Comprehensive Income [Abstract]
Product revenue	14,226	15,961	42,398	57,174
Service revenue	6,006	6,709	18,241	19,638
Total revenue	20,232	22,670	60,639	76,812
Cost of products	(6,418)	(7,684)	(18,996)	(28,900)
Cost of services	(1,934)	(2,272)	(5,600)	(6,192)
Total cost of revenue	(8,352)	(9,956)	(24,596)	(35,092)
Gross profit	11,880	12,714	36,043	41,720
Operating expenses	(8,647)	(8,623)	(25,732)	(28,970)
Operating income	3,233	4,091	10,311	12,750
Loss on early debt extinguishment				0
Interest expense	(1)	0	(2)	(1)
Other income	200	301	59	666
Income before income taxes	3,432	4,392	10,368	13,415
Income tax benefit (provision)	(970)	(1,024)	(2,290)	(3,481)
(Loss) income before equity in earnings of consolidated subsidiaries	2,462	3,368	8,078	9,934
Equity in earnings of consolidated subsidiaries	0	0	0	0
Net income	2,462	3,368	8,078	9,934
Comprehensive income	$ 1,212	$ (1,181)	$ 11,989	$ 269

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Supplemental guarantor financial information (Condensed Consolidating Statements of Cash Flows) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Condensed Consolidating Statements of Cash Flows [Abstract}
Net cash provided by operating activities			$ 208,121	$ 219,148
Cash flows from investing activities:
Purchases of capital assets	$ (10,031)	$ (10,242)	(32,215)	(29,549)
Payments for acquisitions, net of cash acquired			(64,637)	(50,933)
Proceeds from company-owned life insurance policies			4,123	3,973
Other			2,330	805
Net cash used by investing activities			(90,399)	(75,704)
Cash flows from financing activities:
Proceeds from short-term borrowings			0	50,000
Proceeds from issuing long-term debt			169,000	276,500
Payments on long-term debt, including costs of debt reacquisition			(185,873)	(375,291)
Proceeds from issuing shares under employee plans			6,861	5,492
Excess tax benefit from share-based employee awards			0	1,816
Employee taxes paid for shares withheld			(2,333)	(1,236)
Payments for common shares repurchased			(44,944)	(46,996)
Cash dividends paid to shareholders			(44,127)	(44,965)
Advances from (to) consolidated subsidiaries			0	0
Other			(1,634)	(378)
Net cash used by financing activities			(103,050)	(135,058)
Effect of exchange rate change on cash			2,966	(7,032)
Net change in cash and cash equivalents			17,638	1,354
Cash and cash equivalents, beginning of year			62,427	61,541
Cash and cash equivalents, end of period	80,065	62,895	80,065	62,895
Eliminations [Member]
Condensed Consolidating Statements of Cash Flows [Abstract}
Net cash provided by operating activities			(1,637)	3,129
Cash flows from investing activities:
Purchases of capital assets			0	0
Payments for acquisitions, net of cash acquired			0	0
Proceeds from company-owned life insurance policies			0	0
Other			0	0
Net cash used by investing activities			0	0
Cash flows from financing activities:
Proceeds from short-term borrowings				0
Proceeds from issuing long-term debt			0	0
Payments on long-term debt, including costs of debt reacquisition			0	0
Proceeds from issuing shares under employee plans			0	0
Excess tax benefit from share-based employee awards				0
Employee taxes paid for shares withheld			0	0
Payments for common shares repurchased			0	0
Cash dividends paid to shareholders			0	0
Advances from (to) consolidated subsidiaries			0	0
Other			0	0
Net cash used by financing activities			0	0
Effect of exchange rate change on cash			0	0
Net change in cash and cash equivalents			(1,637)	3,129
Cash and cash equivalents, beginning of year			(122)	(3,329)
Cash and cash equivalents, end of period	(1,759)	(200)	(1,759)	(200)
Deluxe Corporation [Member]
Condensed Consolidating Statements of Cash Flows [Abstract}
Net cash provided by operating activities			3,734	(820)
Cash flows from investing activities:
Purchases of capital assets			(18,463)	(1,317)
Payments for acquisitions, net of cash acquired			0	(26)
Proceeds from company-owned life insurance policies			4,123	3,973
Other			(290)	(387)
Net cash used by investing activities			(14,630)	2,243
Cash flows from financing activities:
Proceeds from short-term borrowings				50,000
Proceeds from issuing long-term debt			169,000	276,500
Payments on long-term debt, including costs of debt reacquisition			(185,849)	(375,279)
Proceeds from issuing shares under employee plans			6,861	5,492
Excess tax benefit from share-based employee awards				1,816
Employee taxes paid for shares withheld			(2,333)	(1,236)
Payments for common shares repurchased			(44,944)	(46,996)
Cash dividends paid to shareholders			(44,127)	(44,965)
Advances from (to) consolidated subsidiaries			121,653	132,878
Other			(533)	(136)
Net cash used by financing activities			19,728	(1,926)
Effect of exchange rate change on cash			0	0
Net change in cash and cash equivalents			8,832	(503)
Cash and cash equivalents, beginning of year			5,187	8,335
Cash and cash equivalents, end of period	14,019	7,832	14,019	7,832
Guarantor subsidiaries [Member]
Condensed Consolidating Statements of Cash Flows [Abstract}
Net cash provided by operating activities			196,493	205,987
Cash flows from investing activities:
Purchases of capital assets			(11,777)	(26,094)
Payments for acquisitions, net of cash acquired			(64,637)	(50,907)
Proceeds from company-owned life insurance policies			0	0
Other			965	1,182
Net cash used by investing activities			(75,449)	(75,819)
Cash flows from financing activities:
Proceeds from short-term borrowings				0
Proceeds from issuing long-term debt			0	0
Payments on long-term debt, including costs of debt reacquisition			0	0
Proceeds from issuing shares under employee plans			0	0
Excess tax benefit from share-based employee awards				0
Employee taxes paid for shares withheld			0	0
Payments for common shares repurchased			0	0
Cash dividends paid to shareholders			0	0
Advances from (to) consolidated subsidiaries			(119,981)	(133,077)
Other			(1,101)	(92)
Net cash used by financing activities			(121,082)	(133,169)
Effect of exchange rate change on cash			0	0
Net change in cash and cash equivalents			(38)	(3,001)
Cash and cash equivalents, beginning of year			940	4,342
Cash and cash equivalents, end of period	902	1,341	902	1,341
Non-guarantor subsidiaries [Member]
Condensed Consolidating Statements of Cash Flows [Abstract}
Net cash provided by operating activities			9,531	10,852
Cash flows from investing activities:
Purchases of capital assets			(1,975)	(2,138)
Payments for acquisitions, net of cash acquired			0	0
Proceeds from company-owned life insurance policies			0	0
Other			1,655	10
Net cash used by investing activities			(320)	(2,128)
Cash flows from financing activities:
Proceeds from short-term borrowings				0
Proceeds from issuing long-term debt			0	0
Payments on long-term debt, including costs of debt reacquisition			(24)	(12)
Proceeds from issuing shares under employee plans			0	0
Excess tax benefit from share-based employee awards				0
Employee taxes paid for shares withheld			0	0
Payments for common shares repurchased			0	0
Cash dividends paid to shareholders			0	0
Advances from (to) consolidated subsidiaries			(1,672)	199
Other			0	(150)
Net cash used by financing activities			(1,696)	37
Effect of exchange rate change on cash			2,966	(7,032)
Net change in cash and cash equivalents			10,481	1,729
Cash and cash equivalents, beginning of year			56,422	52,193
Cash and cash equivalents, end of period	$ 66,903	$ 53,922	$ 66,903	$ 53,922

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Subsequent events (Details) - USD ($) $ in Thousands	1 Months Ended		9 Months Ended
	Nov. 30, 2016	Oct. 31, 2016	Sep. 30, 2016	Sep. 30, 2015	Nov. 15, 2016	Dec. 31, 2015
Subsequent events [Line Items]
Payments for acquisitions, net of cash acquired			$ 64,637	$ 50,933
Fair value hedge related to long-term debt due in 2020 [Member]
Subsequent events [Line Items]
Derivative notional amount			$ 200,000			$ 200,000
Subsequent event [Member] | Data Support Systems, Inc. [Member]
Subsequent events [Line Items]
Payments for acquisitions, net of cash acquired		$ 21,000
Subsequent event [Member] | Fair value hedge related to long-term debt due in 2020 [Member]
Subsequent events [Line Items]
Derivative notional amount					$ 200,000
Subsequent event [Member] | Senior notes due 2020 [Member]
Subsequent events [Line Items]
Principal amount retired	$ 200,000
Redemption price, percentage	103.00%