SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
(RULE 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)(1)
(AMENDMENT NO. 1)
CheckFree Corporation
---------------------
(Name of Issuer)
Common Stock
------------
(Title of Class of Securities)
45244X207
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(CUSIP Number)
Michael T. Whealy
First Data Corporation
Suite 1400
5660 New Northside Drive
Atlanta, Georgia 30328-5800
(770) 857-0001
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 21, 2001
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box.
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7 for other
parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 11 Pages)
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(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
CUSIP NO: 45244X207 13D PAGE 2 OF 11 PAGES
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
First Data Corporation
IRS No. 47-0731996
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES 6,567,250
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
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8 SHARED VOTING POWER
0
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9 SOLE DISPOSITIVE POWER
6,567,250
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10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,567,250
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.6%
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14 TYPE OF REPORTING PERSON*
CO
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First Data Corporation hereby amends its statement on Schedule 13D filed with
the Securities and Exchange Commission on September 11, 2000.
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ITEM 1. SECURITY AND ISSUER.
This Statement on Schedule 13D (this "Statement") relates to the common
stock, par value $0.01 per share, of CheckFree Corporation, a Delaware
corporation formerly known as CheckFree Holdings Corporation ("CheckFree"). The
principal executive office of CheckFree is located at 4411 East Jones Bridge,
Norcross, Georgia 30092.
ITEM 2. IDENTITY AND BACKGROUND.
The persons filing this Statement, the persons enumerated in Instruction C
of Schedule 13D and, where applicable, their respective places of organization,
general partners, directors, executive officers and controlling persons, and
certain information regarding each of them, are as follows:
(a)-(c) This Statement is being filed by First Data Corporation, a Delaware
corporation ("First Data"). First Data is a global leader in electronic commerce
and payment services, providing credit, debit and stored-value card issuing and
merchant transaction processing services, Internet commerce solutions, money
transfers and money orders, and check processing and verification services
throughout the United States, United Kingdom, Australia, Mexico, Spain and
Germany. The principal business and office address of First Data is 5660 New
Northside Drive, Suite 1400, Atlanta, Georgia 30328-5800.
The following individuals are the executive officers and directors of First
Data (with asterisks indicating the directors):
Name Present Principal Occupation or Employment Name and Business Address
---- ------------------------------------------ -------------------------
Henry C. Duques* Chairman of the Board and Chief Executive First Data Corporation
Officer of First Data 401 North Cattleman Road
Suite 106
Sarasota, FL 34232
Charles T. Fote* President and Chief Operating Officer of First Data First Data Corporation
6200 South Quebec Street
Englewood, CO 80111
Kimberly S. Patmore Executive Vice President and Chief Financial First Data Corporation
Officer of First Data 6200 South Quebec Street
Englewood, CO 80111
Michael T. Whealy Executive Vice President, Chief Administrative First Data Corporation
Officer, General Counsel and Secretary of First Data 5660 New Northside Drive
Suite 1400
Atlanta, GA 30328
3
Eula L. Adams Senior Executive Vice President of First Data First Data Corporation
6200 South Quebec Street
Englewood, CO 80111
David P. Bailis Executive Vice President of First Data First Data Corporation
10825 Farnam Drive
Omaha, NE 68154
Courtney F. Jones* Retired 500 East 77th Street
Apt. 2224
New York, NY 10162
Robert J. Levenson* Managing General Partner of Lenox Capital Group Lenox Capital Group
One Mack Centre Drive
Paramus, NJ 07652
Pamela H. Patsley Senior Executive Vice President of First Data First Data Corporation
3811 Turtle Creek Blvd.
Suite 750
Dallas, TX 75219
James D. Robinson, III* Chairman of the Board and Chief Executive Officer RRE Ventures
of RRE Ventures (private venture investment firm) 126 E. 56th Street
26th Floor
New York, NY 10022
Charles T. Russell* Retired 812 Lamont Avenue
Novato, CA 94945
Bernard L. Schwartz* Chairman of the Board and Chief Executive Officer Loral Space & Communications, Ltd.
of Loral Space & Communications, Ltd. (diversified 600 Third Avenue
electronic systems) 36th Floor
New York, NY 10016
Alan M. Silberstein Executive Vice President of First Data First Data Corporation
100 Summit Avenue
Montvale, NJ 07645
Joan E. Spero* President of Doris Duke Charitable Foundation Doris Duke Charitable Foundation
650 Fifth Avenue
19th Floor
New York, NY 10019
4
Garen K. Staglin* President and CEO of eONE Global, LLC (e-commerce P.O. Box 680
subsidiary of First Data) Rutherford, CA 94573
Arthur F. Weinbach* Chairman of the Board and Chief Executive Officer of Automatic Data Processing, Inc.
Automatic Data Processing, Inc. (provider of One ADP Boulevard
transaction processing) Roseland, NJ 07068
(d) During the last five years, none of the foregoing persons has been
convicted in a criminal proceeding (excluding traffic violations and similar
misdemeanors).
(e) During the last five years, none of the foregoing persons was a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
See Item 4.
ITEM 4. PURPOSE OF TRANSACTIONS.
As of July 7, 2000, First Data entered into an Amended and Restated
Agreement and Plan of Merger (the "Merger Agreement") with Microsoft
Corporation, a Washington corporation ("Microsoft"); Citibank, N.A., a Delaware
corporation ("Citibank"); H&B Finance, Inc., a Washington corporation and a
wholly-owned subsidiary of Microsoft; FDC International Partner, Inc., a
Delaware corporation and a wholly-owned subsidiary of FDR Subsidiary Corp.,
which is a Delaware corporation and a wholly-owned subsidiary of First Data
Resources, Inc., which is a Delaware corporation and a wholly-owned subsidiary
of First Data ("FDC International"); MSFDC International, Inc., a Delaware
corporation; Citi TransPoint Holdings Inc., a Delaware corporation and a
wholly-owned subsidiary of Citicorp Electronic Commerce, Inc., which is a
Delaware corporation and a wholly-owned subsidiary of Citibank; CheckFree;
TransPoint Acquisition Corporation, a Washington corporation and a wholly-owned
direct subsidiary of CheckFree; Tank Acquisition Corporation, a Delaware
corporation and a wholly-owned direct subsidiary of CheckFree ("Merger Sub B");
Chopper Merger Corporation, a Delaware corporation and a wholly-owned direct
subsidiary of CheckFree; CheckFree Corporation, a Delaware corporation and a
wholly-owned subsidiary of CheckFree; Microsoft II, LLC, a Delaware limited
liability company all of the equity interests in which are owned by Microsoft;
and First Data, L.L.C., a Delaware limited liability company all of the equity
interests in which are owned by First Data. The Merger Agreement provided for,
among other mergers, the merger (the "Merger") of Merger Sub B with and into FDC
International, with FDC International surviving as a wholly-owned direct
subsidiary of CheckFree. The Merger occurred on September 1, 2000, the closing
date of the Merger Agreement. As a result of the Merger, the
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outstanding shares of common stock of FDC International were converted into and
became 5,567,250 shares of CheckFree common stock. In addition, as described
below, pursuant to the terms of the Merger Agreement, First Data received
1,000,000 shares of CheckFree common stock in connection with the execution of
the Marketing Agreement.
The purpose of the acquisition by First Data and its affiliates of
CheckFree common stock is investment. Depending on its evaluation of CheckFree's
business, prospects, financial condition, the market for CheckFree's securities,
other opportunities available to First Data, general economic conditions,
general market conditions, other future developments and the contractual
restrictions described herein, First Data may decide to sell some or all of its
investment in CheckFree capital stock through public market sales or in
negotiated transactions, to or through one or more broker-dealers, or in
underwritten offerings, block trades, agency placements, brokerage transactions
or otherwise. Depending on the same factors, First Data may in the future
purchase additional capital stock of CheckFree or enter into hedging or similar
transactions as described in Item 6.
Pursuant to the Merger Agreement, at the closing of the Merger, First Data
entered into a Stockholder Agreement, dated as of September 1, 2000, with
CheckFree. The Stockholder Agreement provides that First Data will be entitled
to appoint one individual designated by it to the board of directors of
CheckFree, provided that such designee is approved by a majority of the board of
directors of CheckFree. For so long as First Data is entitled to designate a
director, CheckFree will be obligated to include that designee as part of the
management slate in its proxy statement relating to the election of directors
and to use commercially reasonable efforts to support such designee consistent
with its current and historical support of other persons standing for election
as part of the management slate. As long as First Data can designate a nominee
for election as a director, First Data has agreed to vote all of its voting
stock in each stockholder vote for the election of directors in the following
manner: (a) if there is no bona fide proxy contest for the election of
directors, in favor of the management slate; or (b) if there is a bona fide
proxy contest for the election of directors, either (1) in favor of the
management slate or (2) in the same proportion as all votes cast by
disinterested stockholders. The director designation right of First Data will
terminate upon the earlier of (a) the first date on which First Data and its
controlled affiliates own less than 75% of the shares acquired at the closing of
the Merger Agreement and (b) the occurrence of a change of control of CheckFree
in which First Data and its controlled affiliates no longer own at least 5% of
the voting shares of the surviving company. For purposes of the Stockholder
Agreement, a "change of control" includes any of the following: (a) any merger,
consolidation or other business combination transaction in which the
stockholders of CheckFree immediately prior to the transaction no longer own at
least 50% of the total voting stock of the surviving entity or its parent after
the transaction; (b) an acquisition by any person, other than First Data and its
controlled affiliates, of at least 30% of the total voting stock of CheckFree;
(c) a sale of the assets of CheckFree to any person, other than First Data and
its controlled affiliates, for a total price in excess of 30% of the market
value of the outstanding common stock of CheckFree at that time; or (d) the
liquidation or dissolution of CheckFree.
The Stockholder Agreement provides that during the "standstill period,"
neither First Data nor any of its controlled affiliates will be able to do,
announce an intention to do or facilitate or encourage another person to do, any
of the following: (a) offer or seek to acquire
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ownership of any of the assets or businesses of CheckFree for a total price in
excess of 30% of the market value of the outstanding common stock of CheckFree;
(b) acquire beneficial ownership of any of the voting stock of CheckFree or of
any of its subsidiaries, or any options or other rights to acquire the voting
stock, except for acquisitions to maintain their percentage ownership of
CheckFree common stock; (c) make or participate in any solicitation of proxies
with respect to the voting of any of the securities of CheckFree or any of its
subsidiaries; (d) deposit any securities of CheckFree or of its subsidiaries in
a voting trust or arrangement with any person; (e) become a member of a "group,"
as defined in Section 13(d) of the Securities Exchange Act of 1934 with respect
to any voting securities of CheckFree or any of its subsidiaries; (f) arrange
any financing for the purchase of any of the voting securities of CheckFree or
its subsidiaries, or securities convertible into similar securities; (g) propose
or participate in any proposal of a tender offer, exchange offer, merger,
business combination, restructuring, liquidation, recapitalization or similar
transaction involving CheckFree or any of its subsidiaries; (h) nominate any
person as a director who is not nominated by the incumbent directors, or propose
any matter to be voted upon by the stockholders of CheckFree, except that they
may nominate directors in accordance with the governance provisions described
above; or (i) solicit, initiate, encourage or knowingly or intentionally
facilitate any of its affiliates to undertake any of the immediately foregoing
acts. The "standstill period" is defined in the Stockholder Agreement as the
period beginning September 1, 2000, the closing date of the Merger Agreement,
and ending upon the earliest to occur of (a) the third anniversary of the
closing of the Merger Agreement, (b) the date of the execution of an agreement
that will result in a change of control, as defined above, in CheckFree or the
actual occurrence of a change of control, (c) the commencement of a bona fide
third-party public offer to acquire at least 25% of the voting stock of
CheckFree, or (d) a reduction in the beneficial ownership of the voting stock of
CheckFree by First Data to less than 5% of the total voting stock of CheckFree.
If the standstill period terminates due to a change of control of CheckFree
or the execution of an agreement that would result in a change of control of
CheckFree, and the change of control transaction is later terminated and First
Data has not acquired control of CheckFree before the termination, then the
standstill will be reinstated. Also, if the standstill period terminates due to
a third-party public offer for CheckFree common stock, the public offer is
withdrawn or terminated prior to its consummation and no tender offer of First
Data for CheckFree common stock is pending, then the standstill period will be
reinstated. If, at any time during the standstill period, any third party has
made any proposal or offer relating to a takeover transaction or other change of
control of CheckFree that has not been rejected by its board of directors, the
board of directors of CheckFree has determined to pursue, and is pursuing, a
takeover transaction or other change of control of CheckFree, or the board of
directors or officers of CheckFree have engaged in any discussions or
negotiations with, or provided any information to, any third person with respect
to a potential takeover transaction or change of control of CheckFree and have
not resolved to terminate the discussions, negotiations or provision of
information, then, for so long as any one of these conditions applies, First
Data or its controlled affiliates will be able to make an offer or proposal
directed privately to CheckFree relating to a takeover transaction or other
change of control. If, during the standstill period, CheckFree discloses
non-public information to another party, then First Data will have the option to
be subject to the terms of any less restrictive standstill provision that is
negotiated by CheckFree with the party for the same duration as the less
restrictive standstill applies to this third party. In
7
addition, if, during the standstill period, CheckFree provides non-public
information to another party without a signed confidentiality agreement with the
third party, then the standstill restrictions will no longer apply to First Data
or its controlled affiliates.
First Data will not be able to transfer any shares of CheckFree common
stock that it beneficially owns during the period ending on the one-year
anniversary of the closing of the Merger Agreement, except for transfers: (a) to
any controlled affiliate who agrees to be bound by the Stockholder Agreement;
(b) which have been consented to in writing by CheckFree; (c) pursuant to a
third-party tender offer that is recommended by the board of directors of
CheckFree or a merger transaction in which CheckFree is a party; or (d) pursuant
to certain bona fide hedging transactions with, or arranged by, a nationally
recognized investment banking firm.
Unless First Data beneficially owns less than 5% of the outstanding
CheckFree common stock, during the period beginning on the one-year anniversary
of the closing of the Merger Agreement and ending on the three-year anniversary
thereof, First Data will not be able to transfer any shares of CheckFree common
stock that it beneficially owns, except for the following: (a) the transfer
exceptions listed in the preceding paragraph; (b) in a bona fide public
distribution or underwritten public offering, including pursuant to the
registration rights granted to First Data pursuant to the Registration Rights
Agreement described below; or (c) of shares in amounts that could be sold under
the volume limitations of Rule 144 during any applicable Rule 144 period,
assuming during any period that all shares underlying hedging transactions are
considered to be transfers subject to the Rule 144 limitations. With respect to
clauses (b) and (c), however, except as permitted by the following sentence,
these transfers may not be made if they would result, to the knowledge of First
Data, in the transferee holding more than 5% of the outstanding shares of
CheckFree common stock. First Data may transfer only a 5% block of CheckFree
common stock or knowingly transfer shares to a third party so that after the
transfer that third party would own more than 5% of CheckFree common stock, if
the transfer is to a person that is qualified to file a Schedule 13G pursuant to
Rule 13d-1(b) of the Securities Exchange Act of 1934. Prior to these transfers,
however, First Data must offer to sell those shares to CheckFree at least two
days prior to making the transfer. For this two-day period, CheckFree will have
the option to purchase all of the shares at the same price and upon the same
terms as the proposed transfer. If CheckFree does not exercise its right of
first offer, First Data will be able to sell the 5% block for a set period at no
less than 95% of the price offered to CheckFree.
For so long as First Data beneficially owns at least 5% of the outstanding
CheckFree common stock, CheckFree will not amend its Stockholder Rights
Agreement in a manner adverse to First Data, and if CheckFree waives application
of the Stockholder Rights Agreement to any other person, it will also waive
application of the rights agreement to First Data. This agreement regarding the
Stockholder Rights Agreement, however, will not apply to an amendment or waiver
pursuant to the consummation of a transaction approved by the board of directors
of CheckFree.
Pursuant to the Merger Agreement, at the closing of the Merger Agreement,
First Data executed a Registration Rights Agreement with CheckFree providing
that as promptly as practicable after the closing of the Merger Agreement,
CheckFree will file a registration
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statement allowing the offering for sale on a continuous basis of the shares of
CheckFree common stock received by First Data in the closing of the Merger
Agreement. CheckFree has agreed to use commercially reasonable best efforts to
cause the registration statement to be declared effective by the Securities and
Exchange Commission by the 30th day after the effective time of the Merger and
to keep the shelf registration statement effective until First Data has either
sold all of the shares it received at the closing or is able to sell all of such
shares under Rule 144. CheckFree will be able to suspend the effectiveness of
the shelf registration statement if the negotiation or consummation of a
transaction by CheckFree is pending or an event has occurred, and in each case
CheckFree has a bona fide business purpose for keeping this negotiation,
consummation or event confidential, and the nondisclosure would cause the
registration statement to fail to comply with applicable disclosure
requirements, or if an underwritten public offering of CheckFree common stock
pursuant to the shelf registration statement would adversely affect a pending or
proposed offering of CheckFree common stock by CheckFree. The Registration
Rights Agreement also provides First Data with certain demand and "piggy back"
rights with respect to underwritten offerings.
Pursuant to the Merger Agreement, on the closing date, First Data and
CheckFree executed a Marketing Agreement, as part consideration for which First
Data received an additional 1,000,000 shares of CheckFree common stock. The
Marketing Agreement provides that CheckFree will use First Data's payment
processing services and services if, in each case in CheckFree's reasonable
business judgment, substantially similar services are not then obtainable from a
third party at an overall economic cost that is less than the overall economic
cost of First Data's services. If CheckFree is able to find substantially
similar payment processing services at a lower overall economic cost from a
third party, First Data will have the chance to meet these terms for provision
of the services. When using its reasonable business judgment regarding the use
of First Data's payment processing services or products, CheckFree will be able
to take into consideration the following: (a) the fact that First Data or its
affiliates offer a directly competing product or service offered by CheckFree or
its affiliates; and (b) the use of First Data's or its affiliates' product or
service by CheckFree or its affiliates would either (1) allow First Data or its
affiliates to achieve substantial competitive benefits due to increased volume
or (2) provide First Data or its affiliates with CheckFree's and its affiliates'
proprietary technology and that provides First Data or its affiliates with a
substantial competitive advantage.
If (1) the fees received by CheckFree from First Data and various billers
for which First Data has played a role in obtaining for CheckFree and (2) the
expense savings received by CheckFree from using First Data's services do not
exceed the annual minimum for the first year of the agreement, or the monthly
minimums for the subsequent periods, each so indicated below, then First Data
will pay the difference to CheckFree after the first year or each monthly
period, as applicable. The minimums for the five-year term of the agreement are
the following:
Year 1..................................... $6,000,000 in the aggregate
Year 2..................................... $750,000 per month
Year 3..................................... $1,000,000 per month
Year 4..................................... $1,250,000 per month
Year 5..................................... $1,500,000 per month
9
If First Data chooses to offer pay anyone services, First Data will agree
to use CheckFree's "pay anyone" services if in First Data's reasonable business
judgment substantially similar services could not be obtained at an equal or
lesser overall economic cost from a third party.
Subject to numerous exceptions that allow First Data to continue to conduct
various types of payment processing activities that it currently conducts and
expects to conduct in some form during the term of the Marketing Agreement,
First Data has agreed that it will not offer or provide an integrated
interactive bill payment system for the delivery or payment of more than a
specified ratio of household bills to an aggregation service company by means of
any interactive service anywhere in the world. To the extent that First Data
engages in an activity that would violate the general non-compete agreement
indicated above, First Data may pursue these activities if: (a) First Data and
its affiliates limit the gross revenues received by First Data and its
affiliates from these activities to $50,000,000 per year, with some exceptions;
(b) except in some circumstances, 25% of all gross revenues derived solely from
these activities will be paid to CheckFree, with these payments being counted
against the minimum revenue guarantees owed by First Data to CheckFree; and (c)
CheckFree is notified as soon as is practicable after First Data signs an
agreement to engage in these activities. The non-compete provision also contains
customary exceptions for providing an integrated interactive bill payment system
and for investments in persons that engage in activities that would otherwise
violate the non-compete provision. In addition, in no event will First Data be
required to pay damages in excess of $100 million for breaches of the
non-competition provisions in the Marketing Agreement.
The Marketing Agreement has a term of five years, but may be terminated
earlier by First Data in the event of a change of control of CheckFree involving
specified competitors to First Data. A "change of control" is generally defined
to have occurred if any First Data competitor acquires more than 30% of
CheckFree's voting stock or CheckFree's stockholders own less than 70% of
CheckFree's voting stock after a transaction involving any specified First Data
competitor.
The foregoing descriptions of the above referenced agreements are subject
to, and qualified in their entirety by reference to, the text of such
agreements, which are incorporated by reference as exhibits hereto.
Except as otherwise described in this Item 4, First Data does not have any
plan or proposal relating to, or which would result in, any event described in
(a)-(j) of the instructions to this Item 4.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As a result of the consummation of the transactions contemplated by
the Merger Agreement, First Data received from CheckFree 6,567,250 shares of
CheckFree common stock, representing 7.6% of the outstanding shares of CheckFree
common stock (such percentage being calculated based on information in the
Quarterly Report on Form 10-Q filed by CheckFree for the quarterly period ended
December 31, 2000, that on February 9, 2001 there were 86,626,706 shares of
CheckFree common stock outstanding). Except as set forth in this Item 5(a),
neither
10
First Data, nor, to the knowledge of First Data, any executive officer or
director of First Data identified in Item 2 above beneficially owns any shares
of CheckFree common stock.
(b) First Data has the sole voting power and sole dispositive power over
the 6,567,250 shares of CheckFree common stock delivered to it as a result of
the consummation of the transactions contemplated by the Merger Agreement. The
information contained in Items 2 and 5(a) is incorporated herein by reference.
(c) In March 2001, First Data Corporation entered into the hedging
transactions described in Item 6. Except as set forth in this Item 5(c), neither
First Data, nor, to the knowledge of First Data, any executive officer or
director of First Data identified in Item 2 above has effected transactions in
CheckFree common stock during the past sixty days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
The information set forth under Items 3, 4 and 5 of this Statement is
incorporated herein by reference.
First Data has recently entered into the following hedging transactions.
On March 21, 2001, in privately negotiated transactions with Bear Stearns
International Limited ("BSIL"), First Data purchased put options and sold call
options covering an aggregate of 1,000,000 shares of CheckFree common stock. The
strike price of the put options was $37.6088 per share and the strike price of
the call options was $49.6436 per share. The options expire in three equal
installments on February 23, 2004, March 22, 2004 and April 21, 2004, and may
only be exercised on the date of expiration. The put and call options, if
exercised, will be settled in cash, unless First Data elects to physically
settle with shares of CheckFree common stock. First Data has pledged 1,000,000
shares of CheckFree common stock to secure its obligations to BSIL under such
options.
On March 29, 2001, in privately negotiated transactions with BSIL, First
Data purchased put options and sold call options covering an aggregate of
1,000,000 shares of CheckFree common stock. The strike price of the put options
was $32.8703 per share and the strike price of the call options was $47.8263 per
share. The options expire in three equal installments on February 28, 2005,
March 29, 2005 and April 29, 2005, and may only be exercised on the date of
expiration. The put and call options, if exercised, will be settled in cash,
unless First Data elects to physically settle with shares of CheckFree common
stock. First Data has pledged 1,000,000 shares of CheckFree common stock to
secure its obligations to BSIL under such options.
First Data entered into the call and put options to reduce the investment
risk associated with the CheckFree common stock. Subject to the contractual
restrictions described above, First Data may from time to time enter into
hedging transactions, including short sales and buying
11
puts and selling calls, for its own account or with broker-dealers and the
broker-dealers may engage in short sales of CheckFree common stock in the course
of hedging the positions they assume with First Data. In connection with such
transactions, First Data may also loan or pledge shares of CheckFree common
stock to a broker-dealer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit Number Description
-------------- -----------
1 Amended and Restated Agreement and Plan of Merger, dated as
of July 7, 2000, among Microsoft, First Data, Citibank, H&B
Finance, Inc., FDC International Partner, Inc., MSFDC
International, Inc., Citi TransPoint Holdings Inc.,
CheckFree, TransPoint Acquisition Corporation, Tank
Acquisition Corporation, Chopper Merger Corporation,
CheckFree Corporation, Microsoft II, LLC and First Data,
L.L.C. (1)
2. Stockholder Agreement, dated as of September 1, 2000,
between CheckFree and First Data (2)
3. Registration Rights Agreement, dated as of September 1,
2000, between CheckFree and First Data (2)
4. Marketing Agreement, dated as of September 1, 2000, between
CheckFree and First Data (3)
(1) Incorporated herein by reference to CheckFree's Prospectus pursuant to Rule
424(b)(3), filed with the Securities and Exchange Commission on August 2,
2000.
(2) Incorporated herein by reference to CheckFree's Registration Statement on
form S-4 (File No. 333-41098), filed with the Securities and Exchange
Commission on July 10, 2000.
(3) Incorporated herein by reference to Amendment Number 1 to CheckFree's
Registration Statement on form S-4 (File No. 333-32644), filed with the
Commission on April 18, 2000.
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Dated: March 30, 2001
FIRST DATA CORPORATION
By: /s/ Michael T. Whealy
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Name: Michael T. Whealy
Title: Executive Vice President, Chief Administrative
Officer, General Counsel and Secretary
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