<PAGE>
As filed with the Securities and Exchange Commission on July 31, 1998.
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM S-3
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
_______________
PAYMENTECH, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2634185
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
1601 Elm Street, Suite 800
Dallas, Texas 75201
(214) 849-2000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive officers)
_______________
PHILIP E. TAKEN COPY TO:
Chief Administrative Officer CHARLES D. MAGUIRE, JR.
Paymentech, Inc. Jackson Walker L.L.P.
1601 Elm Street, Suite 800 901 Main Street
Dallas, Texas 75201 Suite 6000
Dallas, Texas 75202
(Name and address of agent for service)
(214) 849-2000
(Telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================================================================================
Proposed Proposed
Title of Amount Maximum Maximum Amount of
Each Class of Securities to be Offering Price Aggregate Registration
to be Registered Registered Per Share /(1)/ Offering Price /(1)/ Fee /(1)/
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value... 67,289 shares $17.22 $1,158,717 $341.83
======================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(c), the offering price and registration fee are based
on a price of $17.22 per share, which price is an average of the high and
low prices of the Common Stock as reported on the New York Stock Exchange
on July 28, 1998.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
<PAGE>
PROSPECTUS
PAYMENTECH, INC.
67,289 SHARES OF COMMON STOCK
This Prospectus relates to the offer and sale of up to 67,289 shares (the
"Shares") of common stock, par value $0.01 per share (the "Common Stock") of
Paymentech, Inc. (the "Company").
The Common Stock being registered is being offered for the accounts of
James Margolis and Margolis Consulting Services, Inc., stockholders of the
Company (the "Selling Stockholders"). See "Selling Stockholders." The Company
will not receive any proceeds from the sale of shares of Common Stock offered
hereby. The shares may be offered in transactions on the New York Stock
Exchange (the "NYSE"), in negotiated transactions, or through a combination of
such methods of distribution, at prices relating to the prevailing market prices
or at negotiated prices. See "Plan of Distribution."
The Common Stock is quoted on the NYSE under the symbol "PTI." On July 28,
1998, the closing price of the Common Stock, as reported on the NYSE, was $17.38
per share.
Upon any sale of the Common Stock offered hereby, the Selling Stockholders
and participating agents, brokers, dealers or market-makers may be deemed to be
underwriters as that term is defined in the Securities Act of 1933, as amended
(the "Securities Act"), and commissions or discounts or any profit realized on
the resale of such securities purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. See "Plan of Distribution."
No underwriter is being utilized in connection with this offering. The
Company will pay all expenses of this Offering, which are estimated to be
approximately $7,842.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THE PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN
THE SHARES OFFERED HEREBY.
The date of this Prospectus is July 31, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549; at the Commission's Chicago Regional office located at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511; and at the Commission's New York Regional office located at 7 World Trade
Center, Room 1300, New York, New York 10048. Copies of such material may also
be obtained at prescribed rates from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549. Additionally, the Commission maintains a website
(http://www.sec.gov) that contains reports, proxy statements and information
statements and other information regarding registrants that file electronically
with the Commission. The Company is a publicly held corporation and its Common
Stock is traded on the NYSE under the symbol "PTI." Reports, proxy statements,
information statements and other information can also be inspected at the
offices of the NYSE, 20 Broad Street, New York, New York 10005.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements and such other periodic reports as it
may determine to furnish or as may be required by law.
The Company has filed with the Commission in Washington, D.C., a
Registration Statement on Form S-3 (together with all exhibits thereto, the
"Registration Statement") in connection with the offer and sale of the Common
Stock offered hereby under the Securities Act. This Prospectus does not contain
all of the information set forth or incorporated by reference in the
Registration Statement and the exhibits thereto. For further information with
respect to the Company and the Common Stock, reference is made to the
Registration Statement and the exhibits thereto. Copies of the Registration
Statement are available from the Commission. Statements contained in this
Prospectus concerning the provisions of documents filed with the Registration
Statement are necessarily summaries of such documents, and each statement is
qualified in its entirety by reference to the copy of the applicable document
filed with the Commission.
The Company's principal executive offices are located at 1601 Elm Street,
Suite 800, Dallas, Texas 75201 and its telephone number is (214) 849-2000.
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed with the Commission by the
Company, are incorporated herein by reference and made a part hereof:
(i) Annual Report of the Company on Form 10-K for the year ended June 30,
1997 (the "Annual Report");
(ii) All other reports filed with the Commission pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since the end of the fiscal year covered by the documents referred
to in the Annual Report; and
(iii) Description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, filed on February 23, 1996, including
any amendment or reports filed for the purpose of updating such
description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Common Stock to be made
hereunder shall be deemed to be incorporated by reference herein and to be a
part hereof from the date of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference (other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference into the information that this Prospectus incorporates). Written or
telephone requests for such documents should be directed to Corporate Affairs
and Investor Relations Department, 1601 Elm Street, Suite 800, Dallas, Texas
75201, telephone number (214) 849-2000.
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<PAGE>
THE COMPANY
Paymentech, Inc. (the "Company"), is a Delaware corporation, which engages
in the credit card industry primarily as a payment processor of credit and debit
card transactions on behalf of merchants, financial institutions and sales
agents. According to published industry sources, the Company is the third
largest payment processor of credit and debit card transactions in the United
States. The Company also provides third-party credit and debit authorization
services to financial institutions, sales agents and the Company's direct
merchants. In addition, the Company markets and issues commercial cards to
business and other entities. Commercial cards facilitate centralized business-
to-business payment procedures and reporting, replacing traditional direct
payment methods.
The Company's principal offices are located at 1601 Elm Street, Suite 800,
Dallas, Texas 75201 (telephone number 214-849-2000).
RISK FACTORS
ANY INVESTMENT IN THE COMMON STOCK HEREBY INVOLVES A HIGH DEGREE OF RISK.
PROSPECTIVE INVESTORS SHOULD READ THIS ENTIRE PROSPECTUS CAREFULLY AND SHOULD
CONSIDER, AMONG OTHER THINGS, THE RISKS AND THE SPECULATIVE FACTORS INHERENT IN
AND AFFECTING THE COMPANY'S BUSINESS DESCRIBED BELOW AND THROUGHOUT THIS
PROSPECTUS.
COMPETITION AND INDUSTRY CONSOLIDATION
The payment processing industry is highly competitive, especially among the
ten largest payment processors in the United States, which the Company views as
its primary competitors. The Company also competes with other providers of
credit and debit authorization services. The Company faces intense competition
from numerous providers of payment processing services who may employ various
competitive strategies. Such competition requires that the Company continue to
invest resources in technological developments and restricts the prices it can
charge.
Due to the market's requirement that payment processors provide advanced
and efficient technology, certain financial institutions and other payment
processors have recently left the business or merged with other providers,
resulting in significant consolidation in the payment processing industry. The
Company believes the trend toward consolidation will continue as the
technological demand on processors continues to increase. Industry
consolidation has enabled a few of the Company's competitors to have access to
significant capital, management, marketing and technological resources that are
equal to or greater than those of the Company, and there can be no assurance
that the Company will continue to be able to compete successfully with such
payment processors.
In addition, competition in the industry has made it difficult for payment
processors to pass through increases in the interchange and assessments charged
by Visa and MasterCard, and as a result
4
<PAGE>
some payment processors have absorbed increased fees to maintain their merchant
bases. Although the Company's agreements with its merchants contemplate that the
Company will charge all Visa and MasterCard interchange and assessments to
merchants, there can be no assurance that competitive pressures will not require
that the Company absorb all or a portion of such fee increases in the future, or
that the Company will be able to continue to pass along fee increases to
merchants when it negotiates the renewal of such agreements. Further tightening
of margins due to fee increases or other factors may result in financial
institutions and other payment processors abandoning the payment processing
business and thus accelerating industry consolidation.
The Company also competes against issuers of commercial cards that offer
highly competitive and attractive rates, including rates which are at or below
rates charged by the Company, in order to preserve market share.
CONTINGENT LIABILITIES THROUGH MERCHANTS
Under the rules of Visa, MasterCard and other credit and debit card
organizations, the payment processor has certain contingent liabilities for the
transactions it processes on behalf of merchants. If a cardholder purchases a
product or service and is dissatisfied after the purchase, the cardholder may be
able to return the product and demand a refund. If the merchant, after having
received payment from the payment processor, refuses to pay the refund or
properly provide the product or service, a chargeback results. The obligation
to fund the chargeback is the liabilitity of the payment processor if the
merchant does not have sufficient funds to repay the chargeback. In most cases,
this contingent liability is unlikely because the product or service is
delivered when purchased and credit is issued on returned items. For certain
industries, such as the direct response marketing industry, where the cardholder
is not present to provide a signature, the Company's contingent liability is
greater. The Company minimizes its exposure to such contingent liabilities by
conducting a thorough credit review of its merchants initially and on regular
basis to monitor risks. The Company also has the ability to hold a merchant's
daily settlement if fraudulent activity is suspected. In addition, the Company
obtains cash deposits from certain customers as an offset to potential
contingent liabilities that are the responsibility of such customers. These
cash deposits are primarily related to merchants in the direct response
marketing industry. The Company's payment processing operation is not exposed
to Cardholder credit losses.
SIGNIFICANT EQUITY POSITION OF BANC ONE CORPORATION
BANC ONE CORPORATION ("BANC ONE") is the indirect owner of approximately
55% of the outstanding shares of Common Stock and has substantial influence over
the election of members of the Company's Board of Directors and over the
business and affairs of the Company, including any determinations with respect
to mergers or other business combinations involving the Company, the acquisition
or disposition of assets by the Company, the incurrence of indebtedness by the
Company, the issuance of any additional Common Stock or other equity securities
and the payment of any dividends with respect to the Common Stock. In addition,
BANC ONE has substantial influence in approving matters submitted to a vote of
the Company's stockholders and in causing or preventing a
5
<PAGE>
change in control of the Company. Moreover, three of the seven members of the
Company's Board of Directors are directors and key employees of BANC ONE and one
of the members is a director of BANC ONE.
The Company and BANC ONE intend that the Company will continue to pursue
greater operating independence and the strategy for growth established under the
Company's previous parent, First USA, Inc. ("First USA"), prior to First USA's
merger with BANC ONE on June 27, 1997. BANC ONE has disclosed that, following
such merger, it intends to reduce its ownership in the Company, but only in a
manner that will preserve the "pooling of interests" accounting treatment of
BANC ONE transactions utilizing such treatment.
CONFLICTS OF INTEREST WITH BANC ONE
There is currently substantial overlap in the Boards of Directors of BANC
ONE and the Company. Certain conflicts of interest and disagreements between
BANC ONE and the Company could arise in connection with the interpretation of
the various intercompany agreements entered into between First USA, as BANC
ONE's predecessor, and the Company in connection with the Company's March 1996
initial public offering of Common Stock. In addition, BANC ONE and the Company
both own or have interests in entities in the business of payment processing and
issuing credit cards. As a result, conflicts of interest may arise between BANC
ONE and the Company in connection with future payment processing and commercial
card opportunities. Such conflicts of interest may be more difficult to resolve
than would be the case if BANC ONE and the Company did not have overlapping
directors and may be resolved in a manner which may appear to be more favorable
to one of the parties.
HOLDING COMPANY STRUCTURE
As a holding company, the Company is dependent on the cash flow from its
subsidiaries, received through dividends or other intercompany transfers of
funds, to service its debt and meet its operating expenses and other
obligations. However, First USA Financial Services, Inc. ("Financial
Services"), a wholly-owned subsidiary of the Company, may pay dividends and make
certain other intercompany transfers of funds only up to amounts permitted by
banking regulations. Cash flow from subsidiaries is expected, for the
foreseeable future, to be a significant source of the Company's liquidity.
Limitations on the availability to the Company of cash flow from its
subsidiaries could adversely impact the Company's liquidity.
ANTITAKEOVER PROVISIONS
The Company's Certificate of Incorporation and By-laws contain certain
provisions that may have the effect, either alone or in combination with each
other, of making more difficult or discouraging a business combination involving
the Company that is deemed undesirable by the Company's Board of Directors, or
of delaying or preventing changes in control or management of the Company.
Although such provisions may not have substantial practical significance to
investors while
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<PAGE>
BANC ONE maintains a significant equity interest in the Company, such provisions
could become significant should BANC ONE reduce its ownership interest in the
Company such that BANC ONE no longer has a substantial influence over the
management of the Company.
REGULATION OF FINANCIAL SERVICES
As a Utah-chartered industrial loan corporation, the deposits of which are
insured by the Bank Insurance Fund ("BIF") of the Federal Deposit Insurance
Corporation (the "FDIC"), Financial Services is subject to regulation under both
state and federal law. The restrictions imposed by such laws and regulations
limit Financial Services' discretion in operating its businesses. No assurance
can be given that such laws and regulations will not be amended or construed
differently, or that new laws and regulations will not be adopted, the effect of
which could be to adversely affect the operations of the Company.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock in the public market, or the
perception that such sales could occur, could adversely affect prevailing market
prices of the Common Stock. The Company is unable to make any prediction as to
the effect, if any, that future sales of Common Stock or the availability of
Common Stock for sale will have on the market price of the Common Stock
prevailing from time to time.
RISKS ASSOCIATED WITH ACQUISITIONS
The Company's strategy is to grow through acquisitions, in addition to
internal growth. The Company has relied in part on acquisitions in order to
achieve greater economies of scale and to develop new types of systems and
expertise. The success of the Company's acquisition strategy is dependent on a
number of factors, including the Company's ability to identify and consummate
acquisitions of merchant portfolios, operating businesses and payment processing
assets upon satisfactory terms and the Company's ability to achieve a smooth and
timely integration of newly acquired assets and operating businesses and to
achieve anticipated synergies. There can be no assurance that the Company will
find suitable acquisition candidates at acceptable prices or succeed in
integrating any acquired business into the Company's existing business.
DEPENDENCE ON TECHNOLOGY
The payment processing and credit card industries are characterized by
advanced telecommunications systems and services. Systems delays, malfunctions
and errors in the proprietary and third party systems and networks used by the
Company for its payment processing services could lead to processing delays and
additional costs to the Company. If not corrected in a timely fashion, such
delays, malfunctions and errors could lead to customer dissatisfaction, which
could ultimately affect the Company's customer base and the level of service it
is able to provide to its customers.
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The payment processing and credit card industries have been characterized
by rapid technological advancements and frequent new product and service
introductions. The ability of the Company to compete in these industries is
dependent on the Company's ability to adapt to new technologies and develop new
products and services. There can be no assurance that the Company will not
encounter difficulties or delays in the development, production, testing and
marketing of products or services, including the Company's new commercial card
operations, or that such difficulties or delays will not result in increased
costs and losses.
LITIGATION
The Company is a defendant in a putative class action suit commenced in
October 1997 against the Company, certain officers and former officers of the
Company and BANC ONE alleging, among other things, that the defendants violated
United States securities laws by publicly issuing false and misleading
statements and omitting to disclose material adverse information regarding the
Company' business. The complaint also alleges insider trading by one or more
officers or former officers of the Company and requests control-person liability
against BANC ONE. In June 1998, the Company filed a motion to dismiss the
action.
YEAR 2000
As a result of computer programs written using two digits rather than four
to define the applicable year, certain systems may require modifications in
order to properly function beginning in the year 2000. Based on an assessment
of its systems, the Company has developed a plan to ensure that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter. Many of the Company's computer systems already comply with year
2000 requirements, primarily because of the Company's application of internal
resources and new year 2000 compliant software and equipment.
For the Company's remaining noncompliant computer systems, the Company
believes that existing internal resources can be used to modify existing
software and that the associated costs will not be significant. However, if
such modifications are not made, or are not completed timely, year 2000
noncompliance could have a material impact on the operations of the Company.
The Company is communicating with all of its significant third party
vendors and large customers to assess the extent to which the Company's
interface systems are vulnerable to those third parties' failures to remediate
their own year 2000 issues. There is no guarantee that the systems of other
companies on which the Company's systems rely will be timely corrected and will
not have a material adverse effect on the Company's systems.
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<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common Stock
hereby.
SELLING STOCKHOLDERS
The table below sets forth information with respect to the beneficial
ownership of the Company's Common Stock by the Selling Stockholders immediately
prior to this offering and as adjusted to reflect the sale of shares of Common
Stock pursuant to the offering:
<TABLE>
<CAPTION>
OWNERSHIP OF COMMON STOCK AMOUNT AND
COMMON STOCK PRIOR OFFERED FOR SELLING PERCENTAGE OF CLASS
NAME TO OFFERING SHAREHOLDERS AFTER OFFERING/(1)/
- ---- ----------- ------------ -------------------
<S> <C> <C> <C>
James Margolis 353,517 67,289 **
Margolis Consulting Services, Inc. -0- -0- **
</TABLE>
____________________
** Indicates shares held are less than 1% of class.
(1) Based on 36,025,944 shares of Common Stock outstanding on June 30, 1998.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by any of the Selling
Stockholders, or permitted transferees. The Shares may be disposed of from time
to time in one or more transactions through any one or more of the following:
(i) to purchasers directly, (ii) in ordinary brokerage transactions and
transactions in which the broker solicits purchasers, (iii) through underwriters
or dealers who may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Stockholders or such permitted
transferees/or from the purchasers of the Shares for whom they may act as agent,
(iv) the writing of options on the Shares, (v) the pledge of the Shares as
security for any loan or obligation, including pledges to brokers or dealers who
may, from time to time, themselves effect distributions of the Shares or
interests therein, (vi) purchases by a broker or dealer as principal and resale
by such broker or dealer for its own account pursuant to this Prospectus, (vii)
a block trade in which the broker or dealer so engaged will attempt to sell the
Shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction and (viii) an exchange distribution in accordance
with the rules of such exchange, including the NYSE. Such sales may be made at
prices and at terms then prevailing or at prices related to the then current
market price or at negotiated prices and terms. In effecting sales, brokers or
dealers may arrange for other brokers or dealers to participate. The Selling
Stockholders or such successors in interest, and any underwriters, brokers,
dealers or agents that participate in the distribution of the Shares, may be
deemed to be "underwriters" within the meaning of the Securities Act, and any
profit on the sale of the Shares by them and any discounts,
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<PAGE>
commissions or concessions received by any such underwriters, brokers, dealers
or agents may be deemed to be underwriting commissions or discounts under the
Securities Act.
The Selling Stockholders will pay all underwriting discounts or
commissions, brokers' fees and the fees and expenses of any counsel to the
Selling Stockholders related thereto. The Company will pay the remaining
expenses of the Offering.
In the event of a material change in the plan of distribution disclosed in
this Prospectus, the Selling Stockholders will not be able to effect
transactions in the Shares pursuant to this Prospectus until such time as a
post-effective amendment to the Registration Statement is filed with, and
declared effective by, the Commission.
LEGAL MATTERS
Certain legal matters in connection with the Common Stock offered hereby
have been passed upon for the Company by Philip E. Taken, Chief Administrative
Officer and General Counsel to the Company. Mr. Taken owns, and has options to
acquire, an aggregate of less than 0.1% of the outstanding shares of Common
Stock of the Company.
EXPERTS
The consolidated financial statements of Paymentech, Inc. incorporated by
reference in Paymentech, Inc.'s Annual Report (Form 10-K) for the year ended
June 30, 1997, have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon incorporated by reference therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
INDEMNIFICATION
As authorized by Section 145 of the Delaware General Corporate Law, each
director and officer of the Company may be indemnified by the Company against
expenses (including attorney's fees, judgments, fines and amounts paid in
settlement) actually and reasonably incurred in connection with the defense or
settlement of any threatened, pending or completed legal proceedings in which he
is involved by reason of the fact he is or was a director or officer of the
Company if he acted in good faith and in a manner that he reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect to
any criminal action or proceeding, if he had no reasonable cause to believe that
his conduct was unlawful. If the legal proceeding, however, is by or in the
right of the Company, the director or officer may not be indemnified in respect
of any claim, issue or matter as to which he shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Company unless a court determines otherwise.
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In addition, the Company has directors' and officers' liability coverage
pursuant to a policy maintained by Paymentech, Inc.
Article Eighth of the Certificate of Incorporation of the Company provides
that, to the fullest extent permitted by law, directors of the Company will not
be liable for monetary damages to the Company or its stockholders for breaches
of their fiduciary duties.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
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<PAGE>
No person has been authorized to 67,289 SHARES
give any information or to make any
representations other than those
contained in this Prospectus, and
if given or made, such information COMMON STOCK
or representations must not be
relied upon. This Prospectus does
not constitute an offer to sell or
a solicitation to buy any securities
other than registered securities to
which it relates, or an offer to or
a solicitation of any person in any
jurisdiction where such offer or
solicitation would be unlawful.
The delivery of this Prospectus at
any time does not imply that the PAYMENTECH, INC.
information herein is correct as of
any time subsequent to its date.
TABLE OF CONTENTS
-----------------
Page
----
Available Information ......... 2
Incorporation by Reference .... 3
The Company ................... 4
Risk Factors .................. 4
Use of Proceeds ............... 9
SELLING STOCKHOLDERS .......... 9
PLAN OF DISTRIBUTION .......... 9
LEGAL MATTERS ................. 10
EXPERTS ....................... 10
INDEMNIFICATION ............... 11 JULY 31, 1998
=====================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be incurred in connection with the issuance and
distribution of the Common Stock covered by this Registration Statement will be
paid by the Company, are as follows:
Registration Fee.................. $ 342
Printer Expenses.................. 1,000
Accounting Fees and Expenses...... 3,000
Legal Fees and Expenses........... 3,000
Miscellaneous..................... 500
Total............................. $7,842
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As authorized by Section 145 of the Delaware General Corporate Law, each
director and officer of the Company may be indemnified by the Company against
expenses (including attorneys' fees, judgments, fines and amounts paid in
settlement) actually and reasonably incurred in connection with the defense or
settlement of any threatened, pending or completed legal proceedings in which he
is involved by reason of the fact he is or was a director or officer of the
Company if he acted in good faith and in a manner that he reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect to
any criminal action or proceeding, if he had no reasonable cause to believe that
his conduct was unlawful. If the legal proceeding, however, is by or in the
right of the Company, the director or officer may not be indemnified in respect
of any claim, issue or matter as to which he shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Company unless a court determines otherwise.
In addition, the Company has directors' and officers' liability coverage
pursuant to a policy maintained by Paymentech, Inc.
Article Eighth of the Certificate of Incorporation of the Company provides
that, to the fullest extent permitted by law, directors of the Company will not
be liable for monetary damages to the Company or its stockholders for breaches
of their fiduciary duties.
Item 16. Exhibits.
The following is a list of all exhibits filed as a part of this
Registration Statement on Form S-3, including those incorporated herein by
reference.
Exhibit
Number Description of Exhibit
- ------- ----------------------
1 None.
2 None.
4 Description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed on February 23, 1996,
incorporated herein by reference.
5 Opinion of Philip E. Taken.*
8 None.
12 None.
15 None.
II-1
<PAGE>
23(a) Consent of Ernst & Young, LLP*
23(b) Consent of Philip E. Taken (included in its opinion filed as
Exhibit 5 to this Registration Statement).*
24 Power of Attorney (appearing on page II-4 of this Registration
Statement).*
25 None.
26 None.
27 None.
- ------------
* Filed herewith.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of a
prospectus filed with the Commission pursuant to Rule 424(b) ((S)
230.424(b)) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be singed on its behalf by the
undersigned, thereunto duly authorized, the the City of Dallas, State of Texas,
on July 31, 1998.
PAYMENTECH, INC.
By: /S/ Pamela Patsley
------------------------------------------------
President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on July 31, 1998.
POWER OF ATTORNEY
We, the undersigned directors and officers of Paymnentech, Inc. and each of
us, do hereby constitute and appoint Pamela H. Patsley and Philip E. Taken, our
true and lawful attorneys and agents, with power of substitution, to do any and
all acts and things in our name and behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated above, which said attorneys and agents may deem necessary
or advisable to enable said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the Securities
and Exchange Commission, in connection with this Registration Statement,
including specifically, but without limitation, power and authority to sign for
us or any of us in our names in the capacities indicated below, and any and all
amendments (including post-effective amendments) hereto and we do hereby ratify
and confirm all that the said attorneys and agents, or their substitute or
substitutes shall do or cause to be done by virtue hereof.
SIGNATURES
SIGNATURE TITLE
--------- -----
/S/ John C. Tolleson Chairman of the Board
- ----------------------------------
John C. Tolleson
/S/ Pamela H. Patsley President, Chief Executive Officer and
- ---------------------------------- Director (Principal Executive Officer)
Pamela H. Patsley
/S/ Kathryn J. Kessler Chief Accounting Officer
- ---------------------------------- (Principal Financial Officer)
Kathryn J. Kessler
/S/ Gene H. Bishop Director
- ----------------------------------
Gene H. Bishop
Director
- ----------------------------------
William P. Boardman
Director
- ----------------------------------
John B. McCoy
/S/ Rupinder S. Sidhu Director
- ----------------------------------
Rupinder S. Sidhu
Director
- ----------------------------------
Ronald G. Steinhart
II-4
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit No. Exhibit
- ----------- -------
1 None.
2 None.
4 Description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed on February 23, 1996,
incorporated herein by reference.
5 Opinion of Philip E. Taken.*
8 None.
12 None.
15 None.
23(a) Consent of Ernst & Young, LLP*
23(b) Consent of Philip E. Taken (included in its opinion filed as
Exhibit 5 to this Registration Statement).*
24 Power of Attorney (appearing on page II-4 of this Registration
Statement).*
25 None.
26 None.
27 None.
- ------------
* Filed herewith.
II-5
<PAGE>
EXHIBIT 5
OPINION OF PHILIP E. TAKEN
July 31, 1998
Paymentech, Inc.
1601 Elm Street, 8/th/ Floor
Dallas, Texas 75201
Ladies and Gentlemen:
I am general counsel of Paymentech, Inc., a Delaware corporation (the
"Company"), and have acted as such in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of 67,289 shares of the
Company's common stock, par value $.01 per share (the "Common Stock") held by
James Margolis and Margolis Consulting Services, Inc. (the "Selling
Stockholders") as described in the Registration Statement of the Company on Form
S-3 (the "Registration Statement") to be filed with the Securities and Exchange
Commission.
In connection with this opinion, I have examined and am familiar with
originals or copies, certified or otherwise identified to my satisfaction, of
(i) the Registration Statement, (ii) the Certificate of Incorporation and By-
laws of the Company, each as amended to the date hereof, and (iii) a specimen
certificate for the Common Stock. I have also examined originals or copies,
certified or otherwise identified to my satisfaction, of such records of the
Company and such agreements, certificates of public officials, certificates of
officers or other representatives of the Company and others, and such other
documents, certificates and records, as I have deemed necessary or appropriate
as a basis for the opinions set forth herein.
In my examination, I have assumed the legal capacity of all persons who
executed documents reviewed by me, the genuineness of all signatures on
documents reviewed by me, the authenticity of all documents submitted to me as
originals, the conformity to original documents of all documents submitted to me
as certified or photostatic copies and the authenticity of the originals of such
latter documents. I have also assumed that the certificates representing such
shares of Common Stock will be signed by facsimile or otherwise by authorized
officers of the Company and of the transfer agent for the Common Stock and
registered by the registrar for the Common Stock and conform and will conform to
the specimen thereof examined by me. As to any facts material to the opinions
expressed herein which were not independently established or verified, I have
relied upon oral or written statements and representations of officers and other
representatives of the Company and others.
Based upon and subject to the foregoing, I am of the opinion that such
shares of Common Stock have been duly authorized and, when issued and delivered,
against receipt by the Company of the agreed consideration therefor, will be
validly issued, fully paid and nonassessable.
1
<PAGE>
I hereby consent to the filing of this opinion with the Securities and
Exchange Commission as Exhibit 5 to the Registration Statement.
Very truly yours,
/s/ Philip E. Taken
-------------------------------------
Philip E. Taken
Chief Administrative Officer and
General Counsel
2
<PAGE>
EXHIBIT 23(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3, to be filed on or about July 31, 1998) and
related Prospectus of Paymentech, Inc. for the registration of 67,289 shares of
its common stock and to the incorporation by reference therein of our report
dated September 23, 1997, with respect to the consolidated financial statements
of Paymentech, Inc. included in its Annual Report (Form 10-K) for the year ended
June 30, 1997, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Dallas, Texas
July 30, 1998
