SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN CONSENT STATEMENT
SCHEDULE 14A INFORMATION
Consent Statement Pursuant To Section 14(a)
Of The Securities Exchange Act Of 1934
Filed by the Registrant
Filed by a Party other than the Registrant:
Check the appropriate box:
[ ] Preliminary Consent Statement
[ ] Confidential, Use of the Commission Only (as permitted by Rule
14a-6(e)(2))Consent Statement
[X] Definitive Consent Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
Digital Courier Technologies, Inc.
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(Name of Registrant as Specified in its Charter)
The Proponent Group
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(Name of Person(s) Filing Consent Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
March 21, 2002
Dear Fellow Stockholders of Digital Courier Technologies, Inc.:
We are writing to urge you to assist in our effort to replace the board of
directors of Digital Courier Technologies, Inc. with directors who we believe
will manage the Company effectively and in the best interests of stockholders.
Toward that end, we have prepared and enclosed the attached Consent Statement
and Consent. Please express your consent to the proposals described in the
Consent Statement by marking, signing and dating the enclosed Consent and
returning it to James A. Egide, as set forth in the Consent Statement.
The proposals described in the Consent Statement include a proposal to
remove all current directors of Digital Courier and a proposal to replace them
with three persons that we have designated in the Consent Statement. As further
described in the Consent Statement, we are proposing to replace the existing
directors of Digital Courier because of their dedication of substantial
resources to matters extraneous to the business of the Company, their
questionable approval of a settlement agreement with a former related party,
general operational problems and their pursuit of personal agendas that are not
aligned with the interests of stockholders.
Only stockholders of record at the close of business on March 8, 2002 are
entitled to consent in connection with this consent solicitation. We believe
that there were 43,614,448 shares of common stock of Digital Courier
outstanding as of the designated record date of March 8, 2002. Our group, our
nominees for director and persons who have entered into an agreement to vote in
favor of our nominees collectively control 9,404,326 shares (approximately 21%
of the outstanding shares) of common stock of Digital Courier. Accordingly, in
order for the proposals to be approved, all of the members of our group, our
nominees for director, persons who have entered into an agreement to vote in
favor of our nominees and the holders of at least 12,402,898 additional shares
of common stock must vote in favor of the proposals described in the Consent
Statement.
Please note that the failure to sign and return a Consent will have the
same effect as a vote against our proposals to remove the directors and replace
them with our nominees. Please sign and return your Consent today. In any case,
your Consent must be received by May 6, 2002. If you have any questions, please
feel free to call James A. Egide at (415) 302-8621.
The Proponent Group
James A. Egide
Ken Nagel William Isetta
C.R. Fedrick James L. Thompson
IMPORTANT
If your Digital Courier shares are held in your name, please sign, date and
mail the enclosed Consent to James A. Egide c/o Stoel Rives LLP, 201 South Main
Street, Suite 1100, Salt Lake City, Utah 84111. If your Digital Courier shares
are held in a "street name," only your broker or bank can execute a consent
with respect to your shares and only upon receipt of your specific
instructions. Accordingly, you should deliver the enclosed form of Consent to
your broker or bank, contact the person responsible for your account, and give
instructions for the form of Consent to be signed representing your shares.
Please confirm in writing your instructions to the person responsible for your
account and provide a copy of those instructions to the Proponent Group in care
of James A. Egide c/o Stoel Rives LLP, 201 South Main Street, Suite 1100, Salt
Lake City, Utah 84111, so that the Proponent Group will be aware of all
instructions given and can attempt to ensure that such instructions are
followed. If you have any questions or require any assistance in executing your
consent, please call Mr. Egide at (415) 302-8621.
Consent Statement
OF
The Proponent Group
This Consent Statement and accompanying form of Consent are being
circulated by a concerned group of stockholders of Digital Courier Technologies,
Inc., a Delaware corporation ("Digital Courier" or the "Company"), that have
identified themselves as the "Proponent Group" to holders of the common stock,
$.0001 par value, of the Company ("Common Stock") in connection with their
solicitation of written Consents from the holders of the Common Stock. The
Proponent Group includes the following individuals: James Egide, James L.
Thompson, C.R. Fedrick, Ken Nagel, and William Isetta. The Proponent Group has
come together for the purpose of removing the existing directors of the Company
and replacing them with the "Nominees" identified in this Consent Statement.
Certain members of the Proponent Group have previously served as officers
of the Company, including James L. Thompson, Vice President from July 1999 to
June 2000 and again from October 2000 to August 2001; Ken Nagel, director from
October 1999 through January 2001 and Senior Operations Manager from June 1999
through January 2000; and William Isetta, Assistant to the CEO from December
1999 through September 2000. James Egide was CEO and a director of the Company
from March 1999 until July 2000, when he resigned following a series of
disagreements with certain former officers and directors of the Company. Allan
Grosh, a Nominee, was Chief Operating Officer and a director of the Company for
a period during 1999. In addition, R.J. Pittman, a former member of the
Proponent Group and a Nominee, was CEO and director from August 1998 to March
1999 and Vice President from March 1999 to January 2000. Additional information
regarding affiliations between the Proponent Group, the Nominees and the Company
is set forth under the headings "Reasons for the Consent Statement - Failures of
Existing Management," "Certain Information Regarding Each of the Nominees" and
"Certain Relationships and Related Transactions."
This Consent Statement and enclosed form of Consent are first being mailed
to holders of the Common Stock on or about March 22, 2002. This Consent
Statement and accompanying form of Consent propose that the following actions,
in the order set forth below, be approved and effected by written consent in
lieu of a meeting of stockholders, as authorized by the Delaware General
Corporation Law (the "Corporate Code"):
1. The removal without cause of all directors of the Company (the
"Removal Proposal").
2. The election to the board of directors of the Company of R.J.
Pittman, Allan J. Grosh and James L. Thompson (the "Nominees") to serve
until their respective successors are duly elected and qualified (the
"Election Proposal").
The Removal Proposal and the Election Proposal (collectively, the "Proposals")
are designed to permit the Proponent Group to replace the Company's board of
directors with the Nominees. We are proposing to remove the existing directors
for the reasons identified in the section of this Consent Statement entitled
"Reasons For the Consent Statement" beginning on page 2. We believe that the
Nominees have the skills and industry-specific experience to assess the various
issues facing the Company and undertake the changes necessary to make
operations of the Company profitable. The Proponent Group asks that you express
your consent to the Proposals by marking, signing and dating the enclosed form
of Consent and returning it in the enclosed, postage-paid envelope to James A.
Egide c/o Stoel Rives LLP, 201 South Main Street, Suite 1100, Salt Lake City,
Utah 84111, in accordance with the instructions set forth in Consent Procedures
beginning on page 12 below.
THIS CONSENT SOLICITATION IS BEING MADE BY THE PROPONENT GROUP AND NOT ON
BEHALF OF THE COMPANY'S CURRENT BOARD OF DIRECTORS. THIS CONSENT STATEMENT IS
NEITHER A REQUEST FOR THE TENDER OF SHARES NOR AN OFFER WITH RESPECT THERETO.
Forward Looking Statements
The Proponent Group urges you to read this Consent Statement carefully.
The information contained in this Consent Statement includes forward-looking
statements, which are indicated by words or phrases such as "anticipates,"
"estimates," "projects," "believes," "intends," "expects," and similar words or
phrases. Forward-looking statements are subject to risks, uncertainties, and
other factors that could cause actual results to differ materially from future
results expressed or implied by such forward-looking statements. Such risks
include, among others, the possibility that the Nominees, if elected, will not
be able to make desired changes to the business of the Company, make the
Company profitable or dispose of some or all of the assets of the Company.
Given these uncertainties, you are advised not to attribute undue certainty to
such forward-looking statements. The Proponent Group disclaims any obligation
to update any such factors or to publicly announce the results of any revisions
to any of the forward-looking statements contained herein to reflect future
events or developments.
REASONS FOR THE CONSENT STATEMENT
General
The principal objective of this Consent solicitation is to seek a
sufficient number of votes by written consent to remove as many of the
directors of the Company as may be removed by holders of the Common Stock and
to elect to the board of directors as many of the Nominees as may be elected by
holders of the Common Stock. The Proponent Group has reviewed the history and
performance of the Company over the past sixteen months and believes that
management during that period, including the current directors and officers,
has failed to perform responsibly and effectively. We believe the existing
directors need to be removed immediately for a variety of reasons, including
their dedication of substantial resources to matters extraneous to the business
of the Company, their questionable approval of a settlement agreement with a
former related party, general operational problems of the Company and their
pursuit of personal agendas that are not aligned with the interests of
stockholders. As outlined in greater detail below, we believe that the
performance of the Company under the tenure of existing management and their
immediate predecessors has been disappointing, and that the time for a new
management team is now.
In our view, the existing management team has been given an adequate
opportunity to manage the Company and cause it to grow--but has failed. The
Nominees have experience in building and operating credit card processing
companies and other businesses. Each of the Nominees has served as an officer
of the Company, and accordingly is generally familiar with its business and the
issues it faces; however, because each of the Nominees is not presently
employed by the Company, we expect that each will bring a level of objectivity
that the current directors do not have. In addition, each of the Nominees is a
holder of Common Stock and has the financial incentive to act in the best
interests of the holders of the Common Stock. We believe that the Nominees have
the knowledge of the Company and its business, the general and
industry-specific business experience and the financial incentive to prevent
further erosion of stockholder value and turn the Company toward future growth
and profitability. We can provide no assurance, however, that the Nominees will
be able to turn around the business of the Company or otherwise enhance
stockholder value if they are elected.
Failures of Existing Management
The Proponent Group's reasons for desiring to remove the existing board of
directors and replace them with the Nominees include the following:
The Existing Directors Issued to Themselves Shares of Preferred Stock Giving
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Them the Ability to Elect a Majority of the Board
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On January 3, 2002, current management issued a press release announcing
that the Board of Directors had created and issued to the individuals currently
serving as directors of the Company shares of Series B Preferred Stock. On
January 15, 2002, the Company filed with the Securities and Exchange Commission
a Current Report on Form 8-K
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indicating that the Board of Directors had sold four shares of Series B
Preferred Stock to the four existing directors. Under the Certificate of
Designation approved by the board of directors (but not stockholders)
establishing the Series B Preferred Stock, the number of directors was
increased to five directors at any time shares of Series B Preferred Stock were
outstanding, and the holders of the Series B Preferred Stock were given the
right to elect four such directors. As a result, at any time shares of Series B
Preferred Stock were outstanding, the holders of the Common Stock (collectively
with holders of the Series B Preferred Stock) would elect only one director. We
believe that the directors' issuance of such stock to themselves in the face of
a proposed consent solicitation demonstrates their lack of good judgment, their
willingness to enrich themselves at the expense of stockholders and their
disregard for the best interests of the Company's stockholders.
On January 18, 2002, after our Proponent Group and other stockholders had
expressed concerns about the legality of the issuance of shares of Series B
Preferred Stock, current management issued a press release announcing that the
four shares of Series B Preferred Stock that had been issued to the directors
had been converted into four shares of Common Stock. As a result of such
conversion, there are, to our knowledge, no shares of Series B Preferred Stock
outstanding, and, according to an Amendment to Certificate of Designation filed
by current management with the Delaware Secretary of State on January 22, 2002,
all matters set forth in the Company's Certificate of Designation with respect
to the Series B Preferred Stock have been eliminated. Nevertheless, the
issuance, conversion and ultimate redemption of the Series B Preferred Stock
diverted management's time and the Company's limited resources away from the
task of building a profitable business, which we believe should be the
principal objective of the Company's management. Furthermore, because 2,499,636
shares of Series C Preferred Stock are still authorized but have not been
issued or converted, the directors could again issue themselves preferred stock
if they feel that their tenure in office is threatened or for any other reason.
Focus on Collateral Matters
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It is our opinion that, instead of focusing their attention on running the
core business of the Company, current management has spent its scarce resources
and energy on a costly and fruitless investigation. For example, during fiscal
2000, the Company spent scarce working capital in order to hire a Los Angeles
law firm to conduct a special investigation into allegations that (a) James
Egide (who is a member of the Proponent Group) was part of a group that
acquired 75% of Databank St. Kitts International Ltd. ("Databank") prior to the
Company's acquisition of Databank in 1999 and (b) Mr. Egide had not disclosed
his interest in Databank to the Company in connection with such acquisition.
Based on information set forth in 2001 Annual Report, it is our understanding
that the investigation was commenced following allegations of wrongdoing from
an unidentified source; however, we have no first-hand information regarding
the source of such allegations.
Based on information provided by Mr. Egide, our understanding of the
Databank transactions is as follows: In late 1998, Mr. Egide and Mr. Arthur
Sharpe identified an opportunity to purchase 75% of the outstanding capital
stock of Databank for a total of $6,200,000 in cash and marketable securities
from its only listed shareholder, Don Marshall. Mr. Egide informally discussed
the opportunity with fellow directors of the Company, whom we believe concluded
that the Company did not have the cash necessary to make the purchase.
Following such discussions, Mr. Egide and Mr. Sharpe recommended the purchase
of such Databank shares to some of their contacts, including members of Mr.
Egide's family. Such contacts (the "Databank Investor Group") subsequently
consummated a purchase of the Databank shares for $6,200,000 in cash and
marketable securities. Later, at a time when we believe the board of directors
knew that the Databank Investor Group had purchased a majority interest in
Databank, the Company's board of directors approved a letter of intent under
which the Company was to purchase all outstanding shares of Databank in
exchange for 16,600,000 shares of Common Stock at closing and an additional
13,066,000 shares if certain performance criteria were satisfied. A definitive
agreement effecting such acquisition was subsequently approved by the board of
directors and stockholders of the Company. We believe a significant distinction
between the purchase of the Databank shares by the Databank Investor Group in
January 1999 and the Company's acquisition of Databank in October 1999 was the
willingness and ability of the Databank Investor Group to provide cash and
marketable securities to acquire their shares of Databank, whereas the Company
was unable to pay cash for the Databank acquisition. In the initial Databank
transaction, Mr. Marshall insisted that the purchase price be paid in cash and
marketable securities. Ultimately, when the Company completed the
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Databank acquisition, the Databank Investor Group received restricted shares of
Common Stock (and accepted the risks associated therewith), rather than cash or
other liquid assets.
The Proponent Group is committed to investigating and pursuing any persons
who defraud or otherwise wrongfully injure the Company. Nevertheless, the
Proponent Group does not believe the Company can afford to waste precious
resources on a veritable "witch hunt," rather than taking the steps necessary
to build an efficient, profitable business. Based on information set forth in
the 2001 Annual Report and the Company's Current Report on Form 8-K dated
January 18, 2001, it is our understanding that the Special Committee that
conducted the costly investigation into allegations against Mr. Egide could not
draw any conclusions regarding wrongdoing. According to Management's Discussion
and Analysis of Financial Condition and Results of Operations (the "2001 MD&A")
in the 2001 Annual Report, the investigation commissioned by existing
management concluded that "the results of the investigation were inconclusive."
Nevertheless, the Company continues to include a discussion of allegations
against Mr. Egide in its filings with the SEC, including the 2001 Annual
Report, the Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 2001 (the "Most Recent 10-Q") and, the Preliminary Proxy Statement
dated March 14, 2002 (the "Company's Preliminary Proxy Statement"), while
omitting information that may refute allegations against Mr. Egide or indicate
wrongdoing by others. This suggests to the Proponent Group that management of
the Company has inappropriately focused its time and resources on discrediting
Mr. Egide. The Proponent Group desires to see the Company's limited resources,
and the time and mental energy of management, focused on what the Proponent
Group believes are more important matters, such as the business and operations
of the Company.
Incomplete and Unwise Settlement Decisions
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Pursuant to a registration rights agreement executed in connection with
the Databank acquisition, the Company agreed to register under the Securities
Act of 1933, as amended (the "Securities Act"), 1,200,000 of the 16,600,000
shares of Common Stock issued at closing, in quarterly installments through
2001. Such registration statement was never filed. Although the circumstances
surrounding the Company's failure to file the registration statement are in
dispute, the Proponent Group believes that the decision not to file the
registration statement was made by the General Counsel of the Company,
notwithstanding her receipt of express directions to prepare and file it from
various senior officers of the Company, including Mr. Egide.
Under the heading "Legal Proceedings" in the 2001 Annual Report, the
Company revealed that on October 16, 2001, it entered into a settlement
agreement with a "shareholder" regarding the Company's failure to register
shares of Common Stock. According to the description of the settlement
agreement in the 2001 Annual Report, the Company agreed to issue to the
"shareholder" 3,500,000 shares of Common Stock and an $800,000 note, and
entered into a confession of judgment in an amount "substantially in excess of
the principal amount of the note," in exchange for a waiver of claims related
to the Company's failure to register under the Securities Act the re-sale of the
shares of Common Stock received in the Databank transaction. In the Company's
Preliminary Proxy Statement dated February 12, 2002, management has publicly
acknowledged that the previously unidentified "shareholder" is Don Marshall, who
was President of the Company at the time the Databank transaction closed and
thereafter until he resigned during 2001.
In order to understand the terms and evaluate the propriety of the
settlement with Mr. Marshall, a member of the Proponent Group requested a copy
of the settlement agreement from the Company. Notwithstanding the fact that
Delaware law requires a corporation to provide its stockholders with copies of
books and records upon a proper request, the Company declined to provide a copy
of the agreement, stating through counsel that the purpose of wanting to
understand and evaluate the settlement was not a proper purpose for inspecting
the documents. It is the understanding of the Proponent Group that reporting
companies such as the Company are required to file with the SEC all material
agreements, in order that stockholders and the financial community may review
their contents. To our knowledge, current management has not filed the
settlement agreement with the SEC despite our counsel's request that they do
so. Management's failure to file the settlement agreement suggests that
management is attempting to hide the terms of the settlement from the Company's
stockholders, or is derelict in fulfilling its filing obligations, or both.
To the extent we have information about it, we question the wisdom of this
settlement. Mr. Marshall was the President of the Company at the time the
Company failed to file the registration statement in question and was seemingly
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at least partially responsible for ensuring that the registration statement was
filed. Moreover, the Proponent Group believes that the settlement agreement
leaves unsettled potential claims of other stockholders who claim to have
registration rights, which if settled on comparable terms would lead to the
issuance of an additional 10,500,000 shares of Common Stock and an additional
$2,400,000 note. Also, as part of the settlement, Mr. Marshall granted a proxy
to vote the 3,500,000 newly-issued shares of Common Stock to James Condon, the
current Chairman of the Board. We do not understand how a proxy granted to Mr.
Condon personally (rather than the Company) benefits the stockholders, but
observe that such proxy has the effect of entrenching current management.
Although we do not possess enough information to determine if the Nominees can
unwind the settlement approved by existing management, the Nominees are
committed to approving only such agreements as settle the claims of all
stockholders who claim to have had registration rights (rather than only one of
approximately 30) and only if such agreements are in the best interest of all
Company stockholders - not just a former member of management.
As discussed in "Certain Relationships and Related Transactions" on page 9
hereof, two members of the Proponent Group and one of the Nominees are among
the group of shareholders who could claim that the Company failed to honor
registration rights in connection with the Databank transaction or the
Company's acquisition of SB.Com, Inc. In addition, C.R. Fedrick and William
Isetta, two members of the Proponent Group, as well as Chad Evans and Stanton
Jones, two parties to the Joint Filing and Consent Agreement who are no longer
members of the Proponent Group, are beneficiaries of registration rights
agreements under which they believe the Company has failed to perform. Such
persons have not formally commenced any legal actions against the Company but
are considering commencing lawsuits.
We believe that the Nominees would act in the best interest of the Company
in approving any future settlements but note that, as a result of their
relationship with the Proponent Group or direct interest, the Nominees would
have a conflict of interest in approving any settlement with themselves, and
may have a conflict of interest if asked to consider any proposed future
settlement with members of the Proponent Group. To date, there have been no
discussions among the Proponent Group and/or the Nominees regarding a specific
settlement proposal.
The Interests of Current Management Are Not Aligned with the Holders of the
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Common Stock.
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According to the Company's Preliminary Proxy Statement, the current board
of directors and executive officers of the Company do not own any shares of
Common Stock. Moreover, as might be expected from a board of directors with no
ownership interest in the Company, the board of directors recently granted
itself additional options and dramatically repriced old options such that the
directors now hold options to purchase 1,930,000 shares of Common Stock at an
exercise price of $.09 per share. Furthermore, it is our understanding that
none of the current directors has ever been elected by the Company's
stockholders. Each of the directors was appointed by other directors, and once
appointed, they have failed to call an annual meeting of stockholders for more
than two years. We believe that, given their lack of personal investment in the
Company and their unwillingness to permit stockholders to exercise a voice in
the management of the Company, it appears that the interests of the current
officers and directors are not adequately aligned with those of stockholders
(as further indicated by actions such as the settlement with Mr. Marshall
described above). The Proponent Group and Nominees collectively own 7,448,326
shares, or approximately 17% of the outstanding shares of Common Stock. The
Nominees alone own 2,576,076 shares of Common Stock, or approximately 5.7% of
the outstanding shares of Common Stock. Given their personal stake in the
long-term success of the Company, we expect the Nominees to have the proper
incentive to act in the best interests of holders of the Common Stock.
Reduction in Market Price of Common Stock
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Current management and their immediate predecessors took control of the
Company during the summer of 2000. During the six completed quarters since June
30, 2000, the market price of the Common Stock has fallen from a high of $9.13
during the quarter ended September 30, 2000 to a low of $.06 during the most
recent fiscal quarter. The last reported sale of the Common Stock on the OTC
Pink Sheets on March 18, 2002 was $0.10 per share. Such decline in the market
price of the Common Stock partially reflects general economic trends, but we
believe that much of such decline is attributable to the failure of current
management to effectively and intelligently manage the business of the Company.
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Certain Information Regarding Each Of The Nominees
The Nominees are R.J. Pittman, James L. Thompson and Allan J. Grosh. The
following paragraphs set forth certain information about each of the Nominees
and relationships the nominee had or has with the Company:
R.J. PITTMAN, 31, has been the Chief Executive Officer of Groxis, Inc., a
recently organized research software company, since April 2001 and has been the
Chief Executive Officer of Venture Factory, Inc., a venture capital and
management firm, since June 1999. From April 1999 to January 2000, Mr. Pittman
was a Vice President of the Company, from August 1998 to March 1999, Mr.
Pittman was the Chief Executive Officer and a director of the Company, and from
June 1996 to April 1998, Mr. Pittman was the Chief Executive Officer of Digital
Courier International, Inc., a privately-held predecessor-in-interest to the
Company. Mr. Pittman was Vice President of Software Development at Paradigm
Systems Corporation, a private financial services company, from January 1994 to
October 1995, and Chief Executive Officer of Broadway Technologies Group, Inc.,
a software and technology consulting firm, from June 1993 to January 1994. Mr.
Pittman owns 1,076,076 shares of Common Stock, which he acquired directly from
the Company in exchange for his interest in Digital Courier International, Inc.
when the Company acquired that entity in 1998.
JAMES L. THOMPSON, 53, is currently President of Transdough, Inc., a
Florida corporation engaged in consulting for startup e-commerce ventures. Mr.
Thompson worked for the Company as Vice President from June 1999 to June 2000
and then again as Vice President of Marketing and Merchant Accounts from
September 2000 to August 2001. Prior to joining the Company, from June 1997 to
June 1999, Mr. Thompson formed and was Secretary/Treasurer and Managing Partner
of SB.com, Inc., a credit card processing company that was acquired by the
Company in June 1999. Prior to forming SB.com, Mr. Thompson was a partner in
Superior Bankcard of Tampa Bay, an agent office of Superior Bankcard Services
and was a partner of Worldwide Card Acceptance, a registered ISO and registered
agent office for various processing credit card processing banks.
Mr. Thompson owns 1,400,000 shares Common Stock, most of which he acquired
from the Company in exchange for his interest in SB.com, Inc. when the Company
acquired that entity. Mr. Thompson has filed a lawsuit against the Company
alleging that the Company failed to honor certain registration rights. The
Company has filed a counterclaim against Mr. Thompson seeking $500,000 plus
interest and additional damages for an alleged breach of a promissory notes
that Mr. Thompson intended to repay with the proceeds from the resale of his
registered shares of Common Stock. Mr. Thompson denies any liability under the
promissory notes as a result of the Company's default on its registration
obligations. Potential conflicts of interest could arise if Mr. Thompson is
elected to the board of directors and the board of directors subsequently
considers a proposed settlement with Mr. Thompson or evaluates its
counterclaims against Mr. Thompson.
ALLAN J. GROSH, 60, is presently the Chief Executive Officer of
BridgeWorks, a private company engaged in publications, keynote presentations
and web-based training, and has been associated with BridgeWorks since 1997.
For a brief period during 1999, Mr. Grosh served as the Chief Operating Officer
and a director of the Company. From January 1998 to July 1999, Mr. Grosh was a
principal at Dion Durrel + Associates, Inc, a risk management consulting firm.
Mr. Grosh is also the founder of Venture Mentor, where he works with companies
at various stages on strategic planning, financial planning and business plan
implementation.
The Proponents' Program
We believe that the Nominees will manage the business and affairs of the
Company in a manner that they believe would be in the best interests of all
stockholders, not just current and former management. Although no assurance can
be given that the election of the Nominees will maximize or otherwise enhance
stockholder value, certain specific items the Nominees have indicated an intent
to pursue, subject to their fiduciary duties, include the following:
. The Nominees believe that pending and threatened litigation,
investigations and associated costs are presently consuming an
inordinate amount of the Company's resources, and are inhibiting
the Company's ability to expand its business and raise necessary
capital. Accordingly, the Nominees plan to move quickly
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in order to settle pending and threatened litigation against the
Company in a manner that is appropriate, fair and equitable to all
affected parties, including the Company's stockholders.
. The Nominees plan to focus on achieving month-to-month operational
profitability in the short run. The Nominees believe that, even
without an increase in revenues, the Company could be profitable
if it were structured and operated appropriately. The Nominees
plan to carefully review the business and operations of the
Company and, as appropriate, design and effect a short-run
restructuring program in order to reduce costs and achieve
profitability. The Nominees expect that, if the Company becomes
profitable and efficient, its ability to sell its services and
increase its revenues will also be enhanced.
. In the longer run, the Nominees plan to continue to seek for ways
to make the Company more efficient and also to evaluate the
various businesses and segments of the Company in order to
determine whether stockholder value could be increased by selling
all or part of the Company's assets. The Nominees have not
identified any specific acquisition partners or transactions or
any assets that they would intend to sell, but believe that
focusing on the Company's core competence is essential for the
long-term success of the Company.
The objectives identified above are not based upon any formal analyses of
the Company, and the Nominees have not developed specific plans for achieving
the general objectives identified above. In fact, although the Proponent Group
has requested certain basic corporate information, such as copies of minutes of
meetings held by the Company's board of directors, management has refused to
provide such information.
The Proponent Group believes management's refusal to provide such
information is contrary to the requirements of the Corporate Code. Section 220
of the Corporate Code requires a Delaware corporation to make available, within
5 days of receiving a demand under oath, its list of stockholders and other
books and records to any stockholder that submits a demand under oath
identifying a proper purpose reasonably related to such person's interest as a
stockholder. Members of the Proponent Group submitted demands under oath on
December 7, 2001 and January 9, 2002 requesting copies of stockholders lists
and documents and board minutes related to the Company's recent settlement
agreement, the authorization and issuance of shares of Preferred Stock, the
Databank transaction and the subsequent failure to file a registration
statement, but, as of the date of this Consent Statement, has received only one
of the stockholders lists requested, and has received none of the other
records. The Proponent Group also believes that management's refusal to provide
the requested information reflects management's inclination to pursue their
personal interests, even to the detriment of the Company's stockholders.
Any analyses or specific plans for pursuing the Nominees' objectives will
be created if and when the Nominees are elected and have access to internal
Company information. Furthermore, the Nominees' plans could change if they are
elected, in part because of their fiduciary duty to stockholders. The
stockholders will have an opportunity to consider and vote on the plans and
proposals of the Nominees to the extent governing law requires stockholder
approval for a specific plan or proposal. In general, governing laws require
that stockholders approve a proposal only if it involves a merger or asset sale
in which substantially all of the business and assets of the Company are
transferred to a new entity or an acquisition by merger using shares of Common
Stock if the newly issued shares equal 20% of more of the number of outstanding
shares of Common Stock prior to the transaction.
The Proponent Group has not discussed any specific plans or recourse if
the Proponent Group is unsuccessful in obtaining a sufficient number of votes
to remove the current directors and elect the Nominees to the board of
directors. Although it is possible that all or part of the Proponent Group may
make subsequent attempts to remove the current directors and elect their
nominees to the board of directors, the Proponent Group has not discussed or
considered such a plan. Under the written agreement among members of the
Proponent Group, the Proponent Group will automatically dissolve upon the
abandonment of the Consent solicitation process described herein. At such
point, each member of the Proponent Group would be free to pursue whatever
recourse he believes is most appropriate.
7
THE PROPOSALS
This Consent Statement and accompanying form of Consent are being
furnished to the holders of the Common Stock in connection with the Proponent
Group's solicitation from such holders of written Consents to take the
following actions by written consent without a stockholders meeting, as
permitted by the Corporate Code:
Proposal 1: Remove All Current Directors of The Company
Proposal 1, the Removal Proposal, is worded as follows:
RESOLVED, that, all of the directors of the Company be, and hereby are,
removed without cause as directors of Digital Courier Technologies, Inc.
effective as of the Effective Date.
Assuming the Company does not issue shares of Series C Preferred Stock,
the effect of the Removal Proposal would be to remove, without cause, all of
the directors of the Company as of the effective date of the Consents (the
"Effective Date"). The Effective Date will be the date that Consents signed by
persons holding a majority of the issued and outstanding shares of Common Stock
have been delivered to the Company. According to the Company's Preliminary
Proxy Statement, the directors of the Company are James J. Condon, Becky Takeda
and Evan M. Levine. The Proponent Group's reasons for desiring to remove the
entire board of directors and replace them with their own designees are set
forth in the section entitled "Reasons for the Consent Statement" beginning on
page 2 hereof.
Proposal Number 2: Election of New Directors
Proposal Number 2, the Election Proposal, is worded as follows:
RESOLVED that the following persons be, and hereby are, elected immediately
following the effectiveness of Proposal 1 set forth above as directors of
Digital Courier Technologies, Inc. to serve until their respective
successors are duly elected and qualified:
R.J. Pittman
Allan Grosh
James L. Thompson.
We believe that adopting the Election Proposal will elect the Nominees as
directors of the Company to fill director seats left vacant as a result of the
Removal Proposal. Each of the three Nominees named above has consented to being
named herein to serve as a director, if elected. Although the Proponent Group
has no reason to believe that any of the Nominees will be unable or unwilling
to serve as a director, it is anticipated that if any of the Nominees is not
available for election, the remaining Nominees will vote for the election of a
replacement proposed by the Proponent Group. The Proponent Group's reasons for
desiring to remove the entire board of directors and replace them with the
Nominees are set forth in the section entitled "Reasons for the Consent
Statement" beginning on page 2 hereof.
Joint Filing and Consent Agreement
The members of the Proponent Group, together with R.J. Pittman, Stanton
Jones and Chad Evans, who are no longer members of the Proponent Group, have
entered into a Joint Filing and Consent Agreement dated as of the 30th day of
November, 2001. Pursuant to such agreement, each member of the Proponent Group
has agreed, among other things, (a) to jointly file and update reports pursuant
to Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended
("Section 13 Reports"), and (b) to vote, and grant James A. Egide a proxy to
vote, all of their shares of Common Stock in favor of the Consent and
resolutions that are similar to or would facilitate approval of the Consent.
The Joint Filing and Consent Agreement expires upon the earliest to occur of
(x) the date the Consent becomes effective, (y) June 30, 2002 and (z) the date
the Consent Agreement is terminated by all parties thereto.
8
Certain Relationships And Related Transactions
James L. Thompson, who is a Nominee and a member of the Proponent Group,
and Ken Nagel, who is a member of the Proponent Group, acquired shares of
Common Stock as part of an acquisition transaction with the Company. Messrs.
Thompson and Nagel are among a group of shareholders who believe that the
Company granted, and then failed to honor, registration rights. Messrs.
Thompson and Nagel have filed a lawsuit against the Company to seek redress for
the alleged failure of the Company to honor their registration rights. C.R.
Fedrick and William Isetta, two other members of the Proponent Group, are
beneficiaries of registration rights agreements under which they believe the
Company has failed to perform. Such persons have not formally commenced any
legal actions against the Company but have made informal claims and are
considering commencing lawsuits.
The Company has filed counterclaims against each of Mr. Thompson and Mr.
Nagel seeking $500,000 plus interest and additional damages for alleged
breaches of promissory notes that Messrs. Thompson and Nagel intended to repay
with the proceeds from the resale of their registered shares of Common Stock
and seeking $3,800,000 against Mr. Nagel for alleged wrongful approval of
merchant applications while Mr. Nagel was an employee of the Company. Messrs.
Thompson and Nagel deny any liability under the promissory notes as a result of
the Company's default on its registration obligations, and Mr. Nagel denies any
allegations of wrongful approval of merchant applications. Of the three
merchant applications in question in the counterclaims, Mr. Nagel believes that
one was approved after Mr. Nagel was no longer employed with the Company, one
was a part of a portfolio of merchant accounts that the Company obtained when
it purchased Access Services, Inc. (with which Mr. Nagel had no prior
affiliation) and the third was approved by the President of Access Services,
Inc. at a time when the operations of Access Services had not yet been
consolidated with the Company's Florida operations and such President was the
person authorized to approved merchant accounts for Access Services.
Interests Of Certain Persons In Matters To Be Acted Upon
None.
Security Ownership Of Proponent Group, Nominees, Management And Certain
Stockholders
The following table sets forth information with respect to the beneficial
ownership of shares of the Common Stock as of February 11, 2002 by (i) each
member of the Proponent Group, (ii) each Nominee, (iii) each of the current
directors and executive officers of the Company, (iv) each person known by the
Proponent Group to be the beneficial owner of more than 5% of the Common Stock,
and (v) by all existing directors and officers as a group. All information with
respect to persons included only in (iii), (iv) and (v) above is based solely
upon publicly available filings of the Company and such persons as of March 14,
2002, and the members of the Proponent Group make no representation that such
information is current or accurate. Unless otherwise noted, each person named
has sole voting and investment power with respect to the shares indicated.
Beneficial Ownership
As of February 11, 2002 /(1)/
--------------------------------------
Name and Address of Beneficial Owner Number of shares of Percentage of
Common Stock Class/(2)/
-------------------- -------------
Proponent Group
C.R. Fedrick 1,497,000* 3.4%*
P.O. Box 688
Novato, California 94948
James L. Thompson (Nominee) 1,400,000* 3.2%*
100 Beach Drive, NE, Suite 1502
St. Petersburg, Florida 33701
9
Beneficial Ownership
As of February 11, 2002 /(1)/
--------------------------------------
Name and Address of Beneficial Owner Number of shares of Percentage of
Common Stock Class/(2)/
-------------------- -------------
James A. Egide 1,399,000* 3.2%*
313 Elks Point Road
Zephyr Cove, Nevada 89448
Ken Nagel 1,325,000* 3.0%*
1756 Arabian Lane
Palm Harbor, Florida 34685
William Isetta as Trustee for 651,250* 1.5%
Anne Marie Egide Judice Endowment
400 Bel Marin Keys Boulevard
Novato, CA 44949
Nominees (if not included in Proponent Group)
R.J. Pittman 1,076,076* 2.5%*
Allan J. Grosh 100,000 **
Officers and Directors
Becky Takeda (President; Director) 744,000/(3)/ 1.7%
James J. Condon (Chairman of the Board) 3,775,000/(4)/ 8.6%
Evan M. Levine (Interim Chief Executive
Officer; Director) 227,750/(5)/ **
Principal Holders of Common Stock (other than as included in
Proponent Group)/(6)/
Nautilus Management 5,251,250/(7)/ 12.0%
c/o DCTI
348 East 6400 South, Suite 200
Salt Lake City, Utah 84107
Brown Simpson Partners I, Ltd. 1,183,843/(8)/ 2.89%
c/o Walkers Attorneys-at-Law
P.O. Box 265GT, Walker House
Mary Street, George Town
Grand Cayman, Cayman Islands
Transaction Systems Architects, Inc. 2,250,000 5.2%
224 South 108th Avenue
Suite 7
Omaha, Nebraska 68154
All officers and directors as a group
(3 persons) 4,746,750/(9)/ 10.5%
10
* Represents shares of Common Stock beneficially owned by such person separate
from his participation in the Proponent Group. All members of the Proponent
Group are deemed to be beneficial owners of 9,304,326 shares of Common Stock,
which represents the sum of the 6,272,250 shares of Common Stock owned by all
members of the Proponent Group and 3,032,076 shares of Common owned by three
individuals who are parties to a Joint Filing and Consent Agreement with the
Proponent Group but are no longer members of the Proponent Group.
** Indicates the ownership of less than 1% of the outstanding Common Stock.
- ---------------------------------
/(1)/ Information with respect to beneficial ownership as a percentage of the
class for each person holding options, warrants or other rights exercisable
within 60 days of February 11, 2002 has been calculated as though shares of
Common Stock subject to such options were outstanding, but such shares have not
been deemed outstanding for the purpose of calculating the percentage of the
class owned by any other person. With respect to persons other than members of
the Proponent Group and Nominees, the information is based upon publicly
available filings by the Company as of March 14, 200. We can provide no
assurance that such information is current or accurate.
/(2)/ The percentage indicated represents the number of shares of Common Stock,
warrants and options exercisable within 60 days of February 11, 2002 held by
the indicated person divided by the sum of (a) the number of shares subject to
options exercisable by such stockholder within 60 days and (b) 43,614,448,
which is, based upon publicly available information, the number of shares of
Common Stock issued and outstanding as of February 11, 2002.
/(3)/ Includes 744,000 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days of February 11, 2002. Does not include
156,000 shares of Common Stock subject to options that may not be exercised
within 60 days of February 11, 2002.
/(4)/ Includes 275,000 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days of February 11, 2002 and includes 3,500,000
shares whose disposition rights belong to Nautilus Management but whose voting
rights have been assigned to James Condon, current Chairman of the Board, for a
period ending June 30, 2004. The Company reports that Don Marshall is the
individual who is authorized to make investment decisions on behalf of Nautilus
Management.
/(5)/ Includes 227,750 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days of February 11, 2002. Does not include
47,250 shares of Common Stock subject to options that may not be exercised
within 60 days of February 11, 2002.
/(6)/ Although prior filings by the Proponent Group have identified Amathus
Holdings as the beneficial owner of more than 5% of the Common Stock,
information set forth in the Company's Preliminary Proxy Statement indicates
that Amathus Holdings no longer holds more than 5% of the Common Stock.
Accordingly, Amathus Holdings is not identified in the foregoing table.
/(7)/ Includes 3,500,000 shares of Common Stock whose voting rights are assigned
to James J. Condon, current Chairman of the Board, for a period extending
through June 30, 2004. The Company reports that the rights of disposition
related to such shares are held by Don Marshall. As described in note (4), the
Company reports that voting rights respect to such shares have been assigned to
Mr. Condon for a period ending June 30, 2004.
/(8)/ Does not include 11,999,880 shares of Common Stock issuable upon the
conversion of 360 shares of Series D Preferred Stock owned by such shareholder
convertible into Common Stock after May 31, 2002 because such conversion cannot
occur within 60 days of February 11, 2002. Were such 11,999,880 shares to be
included, such person would beneficially own 23.8% of the outstanding Common
Stock. The Company reports that Matthew C. Brown and James R. Simpson are
authorized to make investment decisions on behalf of Brown Simpson Partners.
Such information is included in reliance upon the Company's Preliminary Proxy
Statement. The Proponent Group can provide no assurance that such information
is accurate.
11
/(9)/ Includes 1,832,325 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days of February 11, 2002. Does not include
585,752 shares of Common Stock subject to options that may not be exercised
within 60 days of February 11, 2002. Includes only shares of Common Stock
reported as being beneficially owned by officers and directors of the Company
in the Company's Preliminary Proxy Statement. The Proponent Group can provide
no assurance that such information is accurate.
Recent Issuance of Series D Preferred Stock
On February 4, 2002, the Company announced that on January 22, 2002, it
entered into an agreement with Brown Simpson Partners I, Ltd. ("Brown
Simpson"), under which, in exchange for the Company's issuance of 360 shares of
Series D Preferred Stock, Brown Simpson agreed (a) to surrender all shares of
Series A Preferred Stock of the Company, all warrants to purchase shares of
capital stock of the Company, and all registration, anti-dilution or
participation rights Brown Simpson may have with respect to the Company's
capital stock previously issued to Brown Simpson, and (b) to release the
Company from any liability arising from claims it has asserted against the
Company in connection with the acquisition of DataBank International Ltd. and
the delisting of the Company's Common Stock by Nasdaq. According to the
Company's press release, each share of Series D Preferred Stock issued to Brown
Simpson has a stated value of $10,000, and is convertible into 33,333 shares of
Common Stock, although Brown Simpson cannot exercise any conversion right until
May 31, 2002.
Legal Proceedings
On January 7, 2002, the Company filed, and on January 18, 2002, the
Company served on various members of the Proponent Group, a Complaint in United
States District Court in the Northern District of California (the "Complaint").
The Complaint alleges that Amendment No. 1 to Schedule 14A filed by the
Proponent Group with the SEC on December 27, 2001 is false and misleading and
seeks an order prohibiting the defendants from soliciting consent statements,
voting any shares pursuant to any consent statements and exercising any voting
rights pertaining to consent statements acquired by them unless and until a
revised consent statement that does not contain false and misleading statements
is filed and disseminated. On February 7, 2002, the members of the Proponent
Group, together with R.J. Pittman, Stanton Jones and Chad Evans, three former
members of the Proponent Group, filed a response to the Complaint, generally
denying the allegations made by the Company's management. The Proponent Group
does not believe that the Complaint has merit and believes that the Complaint
is just another example of current management expending Company resources in
order to limit the voting rights of the holders of the Common Stock and extend
management's tenure in office.
See "Certain Relationships and Related Transactions" beginning on page 9.
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, as well as persons who
beneficially own more than ten percent of the Common Stock, to file initial
reports of ownership and reports of changes in ownership with the SEC. Based
solely on a review of the copies of such forms obtained by the Proponent Group
from the SEC, the Company believes that that there were no forms filed
delinquently or not filed during the most recent fiscal year or prior years (to
the extent not previously disclosed) by any of the Nominees who previously
worked for the Company and had a filing obligation.
CONSENT PROCEDURES
What Corporate Documents and Provisions of Law Govern The Removal and
Replacement Of Directors and the Use of a Written Consent
With respect to the removal of directors, Section 141(k) of the Corporate
Code provides that, unless the directors have staggered terms or the
corporation has cumulative voting, any director or the entire board of
directors may be removed, with or without cause, by the holders of a majority
of the shares then entitled to vote at an election of directors. The Company's
directors do not have staggered terms, and neither the certificate of
incorporation of the
12
Company, as amended and restated to date (the "Certificate"), nor the Bylaws of
the Company provide for cumulative voting. Article IX of the Certificate
provides that a director may be removed for cause at an annual or special
meeting by the same vote as that required to elect a director provided that
certain procedures are complied with. The Proponent Group believes that Article
IX applies only to removal for cause (and we propose to remove the incumbent
directors without cause) and, in light of its use of the permissive word "may,"
does not exclude other methods of removing directors. Moreover, even if Article
IX purports to provide the exclusive means for removing directors, the
Proponent Group believes that the provisions of Section 141(k) of the Corporate
Code, which clearly authorize removal without cause and without following the
procedures outlined in Article IX of the Certificate, govern the removal of the
Company's directors.
With respect to the use of written consents, Section 228 of the
Corporate Code provides as follows:
Unless otherwise provided in the certificate of incorporation, any
actions required by this chapter to be taken at an annual or special
meeting of stockholders of a corporation, or any action which may be
taken at any annual or special meeting of stockholders, may be taken
without a meeting, without prior notice or without a vote, if a consent
or consents in writing setting forth the action to be taken, shall be
signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon
were present and voted.
The Certificate does not limit or prohibit the use of written consents. Article
II, Section 13 of the Company's Bylaws permits stockholder action by written
consent. Accordingly, the Proponent Group believes that written Consents in the
form enclosed signed by the holders of a majority of the outstanding Common
Stock (and, if issued, Series C Preferred Stock voting with the Common Stock as
a class) will be sufficient to remove and elect the number of directors
identified in the succeeding section.
How Many Directors Will Be Removed and Elected as A Result of The Consent?
To our knowledge, the Series B Preferred Stock has been cancelled and
there are presently no shares of Series C Preferred Stock issued and
outstanding. Assuming that no shares of Series C Preferred Stock are
outstanding on the date Consents from a majority of the holders of the Common
Stock are tendered to the Company, we believe that the effect of tendering
Consents signed by the holders of a majority of the Common Stock will be to
remove from office all persons serving as directors of the Company as of the
Effective Date and to replace them with the three Nominees.
Who Is Entitled to Sign and Deliver a Consent?
Consents may be executed by holders of Common Stock of record at the close
of business on the Record Date. All holders of Common Stock at the close of
business on the Record Date have the right to consent to the Proposals, even if
they have disposed of their shares of Common Stock after the Record Date. If at
any time the Proponent Group receives valid and unrevoked Consents representing
a majority of the total voting power of the outstanding shares of Common Stock
as of the Record Date and approving the Proposals, the Proponent Group will
deliver the Consents to the Company. After the Proponent Group makes that
delivery, stockholders will be unable to revoke a Consent. The Proponent Group
or the Company will notify all stockholders who have not consented to the
actions at such time as the Proponent Group has been able to secure a
sufficient number of Consents to adopt the Proposals.
It is our understanding that there are issued and outstanding
approximately 360 shares of Series D Convertible Preferred Stock of the Company
(the "Series D Preferred Stock"). With respect to the voting rights of holders
of the Company's outstanding Preferred Stock, the Certificate provides that,
with certain exceptions not applicable to the Proposals, "the Preferred Stock
shall have no voting rights." Based on the foregoing, the Proponent Group
believes that Consents signed and delivered by holders of a majority of the
total voting power of the outstanding shares of Common Stock will be sufficient
to approve the Proposals and that the holders of the Preferred Stock do not
have the right to approve (or decline to approve) the Proposals. To our
knowledge, there are presently no shares of Series C Preferred Stock
outstanding.
13
What is the Record Date for the Consents?
The Record Date is March 8, 2002, which is the date on which a Consent
executed by a member of the Proponent Group was first delivered to the Company.
Under Section 213(b) of the Corporate Code, the Record Date is the first date a
signed Consent is delivered to the Company, unless the Board has previously
fixed a record date. To the knowledge of the Proponent Group, the Board has not
previously fixed a record date for this solicitations. Only holders of record
of Common Stock on the Record Date may execute a Consent.
How Many Shares Must Consent to the Proposals?
Consents signed by the holders of at least a majority of the total voting
power of the outstanding shares of Common Stock are required to adopt Proposals
1 and 2. According to the Most Recent 10-Q, the number of shares of Common
Stock issued and outstanding on February 14, 2002 was 43,614,448. Based on the
foregoing, and assuming that from February 14, 2002 through the Record Date, no
additional shares of Common Stock were issued, 43,614,448 shares of Common
Stock were issued and outstanding on the Record Date, which shares comprised
the total voting power of the Company's outstanding stock with respect to the
Proposals.
Based on the foregoing assumptions, the number of votes required for a
majority of the total voting power of the outstanding shares of Common Stock
would be 21,807,225 shares of Common Stock. The actual number of votes required
will depend on the facts as they existed on the Record Date.
How Many Consents Must the Proponent Group Receive?
C.R. Fedrick, a member of the Proponent Group who holds 1,497,000 shares
of Common Stock, has executed a Consent and delivered it to the Company. In
addition, it is expected that the other members of the Proponent Group, the
Nominees who are not members of the Proponent Group and Chad Evans and Stanton
Jones (who own, in the aggregate, 1,956,000 shares of Common Stock) who have
signed a Joint Filing and Consent Agreement but are no longer members of the
Proponent Group, will execute Consents with respect to their shares of Common
Stock. Assuming that the other members of the Proponent Group, such Nominees
and Messrs. Evans and Jones execute Consents with respect to their shares of
Common Stock, and assuming that there were 43,614,448 shares of capital stock
entitled to vote on the Proposals outstanding on the Record Date, the minimum
number of additional shares of Common Stock for which Consents in favor of the
Proposals must be received is 12,402,898. The actual number of votes necessary
to effect the Proposals will depend on the actual facts as they existed on the
Record Date.
When Must I Return My Signed Consent?
The Proponent Group urges you to sign, date and return your Consent as
soon as possible. In order for the Proposals to be approved, the Proponent
Group must receive your signed Consent on or before May 6, 2002. If the
Proponent Group does not receive timely a Consent from you, it will be the same
as a "no" vote. The Proponent Group therefore, urges you to mark, sign, date
and return the enclosed Consent as soon as possible.
What Must I do to Consent and How Do I Complete The Form Of Consent?
To participate in this Consent solicitation, you should mark the
"Consent," "Consent Withheld," or "Abstain" box, as applicable, underneath each
Proposal on the accompanying form of Consent. You must then sign, date and
return the form of Consent promptly in the enclosed postage-paid envelope. If
you execute and return the form of Consent but fail to check a box marked
"Consent," "Consent Withheld," or "Abstain" for any or all of the Proposals,
such Consent will be treated as a Consent to such Proposal or Proposals. You
may withhold consent to the removal of any incumbent director under Proposal 1,
or withhold consent to the election of any individual Nominee under Proposal 2,
by striking a line through such person's name in the appropriate space on the
form of Consent.
14
If your shares of Common Stock are held in the name of a brokerage firm,
bank nominee, or other institution, only that entity can execute a Consent with
respect to your shares of Common Stock. They will do so only upon receipt of
your specific instructions. Accordingly, you should contact the person
responsible for your account and instruct him or her to sign a Consent on your
behalf today.
The Proponent Group urges you to confirm in writing your instructions to
the person responsible for your account and provide a copy of those
instructions to the Proponent Group in care of James A. Egide at the address
set forth on the back cover of this Consent Statement so that the Proponent
Group will be aware of all instructions given and can attempt to ensure that
such instructions are followed.
Your Consent is important. Please mark, sign and date the enclosed form of
Consent and return it in the enclosed postage-paid envelope promptly. Failure
to timely return your Consent will have the same effect as voting against the
Proposals. If you have any questions or require any assistance in executing or
delivery your Consent, please contact James A. Egide at (415) 302-8621.
What Is The Effect Of My Not Executing A Consent And Not Authorizing The Record
Holder To Do So?
The Consents with respect to each Proposal will become effective only when
and if properly completed, signed and delivered to the Proponent Group (and
then to the Company) by the holders of record of a majority of the outstanding
shares of Common Stock on the Record Date. Because the receipt of Consents from
a majority of outstanding shares of Common Stock (as opposed to a lower
threshold such as more vote for than against) is required before the Proposals
will be approved, any abstentions, broker non-votes or other failures to
execute and timely return a Consent (or to cause a nominee holder to do the
same) will have the same effect as voting against the Proposals.
Can I Revoke My Consent?
You can revoke your Consent at any time before it becomes effective by
submitting a written, dated revocation of such Consent or a letter dated after
the date of such Consent covering the same shares of Common Stock. Your
revocation may be in any written form validly signed by the record holder and
should clearly state that the Consent previously given is no longer effective.
You must execute and deliver your revocation before the time that the action
authorized by the executed Consent is taken. You may deliver the revocation to
James A. Egide c/o Stoel Rives LLP, 201 South Main Street, Suite 1100, Salt
Lake City, Utah 84111.
When Will The Proposals Become Effective?
The Proposals will become effective when and if the Proponent Group has
received and delivered to the Company properly completed, unrevoked Consents
signed by the holders of record on the Record Date representing a majority of
the issued and outstanding Common Stock on the Record Date. No Consent will be
effective unless received by the Proponent Group on or before May 6, 2002. It
is the intent of the Proponent Group not to deliver the Consents to the Company
unless Consents sufficient to approve both of the Proposals have been received.
If both Proposals are not approved, none of the Proposals will be enacted even
though sufficient Consents may have been received to approve a particular
Proposal. The failure to execute and timely return a Consent will have the same
effect as voting against the Proposals.
Do I Have Appraisal Rights?
You do not have dissenters' rights of appraisal as a result of this
solicitation of Consents or either of the Proposals.
COSTS AND METHOD OF SOLICITATION; REIMBURSEMENT OF COSTS
Written Consents may be solicited in person or by mail, advertisement,
telephone, facsimile or e-mail. Other than communications by e-mail to persons
with whom the Proponent Group has an existing relationship, the Proponent Group
does not intend to use the Internet to solicit proxies. The Proponent Group has
not retained a shareholders
15
communication or public relations firm to solicit Consents pursuant to this
Consent Statement. Rather, any active solicitation will be performed by the
members of the Proponent Group and the Nominees.
Banks, brokerage houses and other custodians, nominees and fiduciaries may
be requested to forward the Proponent Group's solicitation materials to the
beneficial owners of the shares of Common Stock they hold of record, and the
Proponent Group will reimburse them for their reasonable out-of-pocket
expenses. If your shares of Common Stock are registered in your own name, you
may mail or fax your Consent to James A. Egide, c/o Stoel Rives LLP, 201 South
Main Street, Suite 1100, Salt Lake City, Utah 84111, facsimile (801) 578-6999.
The entire expense of preparing, assembling, printing and mailing this
Consent Statement and any other Consent soliciting materials and the cost of
soliciting Consents will be borne by the Proponent Group. If the Proposals are
approved, the Proponent Group will request reimbursement from the Company for
these expenses.
ADDITIONAL INFORMATION
If you have any questions regarding this Consent Statement or the
execution of a Consent, please contact James A. Egide at (415) 302-8621.
16
Majority Consent of Shareholders
Of Digital Courier Technologies, Inc.
This Consent is being solicited the Proponent Group
and not on behalf of the Company's Board of Directors.
First Consent Delivered to Company: March 8, 2002
Unless otherwise indicated below, the undersigned, a stockholder on March 8,
2002 (the "Record Date") of Digital Courier Technologies, Inc., a Delaware
corporation (the "Company"), hereby consents, pursuant to Section 228 of the
Delaware General Corporation Law, with respect to all shares of Common Stock,
$.0001 par value ("Common Stock"), of the Company held by the undersigned, to
each of the following actions without a meeting, without prior notice and
without a vote, effective as of the date (the "Effective Date") on which the
Company receives duly executed and unrevoked consents substantially in the form
of this Majority Consent of Shareholders from the holders of a majority of the
issued and outstanding shares of Common Stock on the Record Date:
PROPOSAL 1. RESOLVED, that all of the directors of the Company be, and
hereby are, removed without cause as directors of Digital
Courier Technologies, Inc. effective as of the Effective
Date.
[ ] CONSENT [ ] CONSENT WITHHELD [ ] ABSTAIN
INSTRUCTIONS: To Consent, Withhold Consent or Abstain from consenting to the
removal of all of the directors of the Company, check the appropriate box
above. To the knowledge of the Proponent Group, the current directors of the
Company are James J. Condon, Becky Takeda and Evan M. Levine. If you wish to
consent to removal of certain of the directors of the Company, but not all of
them, check the "consent" box above and write the name of each person you do
not wish removed in the following space:_______________________________________.
If no box is marked above with respect to Proposal 1, the undersigned will
be deemed to consent to such Proposal, except that the undersigned will not be
deemed to consent to the removal of any incumbent director whose name is
written in the space provided immediately above.
[Proposal 2 and signature block are on the reverse side]
PROPOSAL 2. RESOLVED that the following persons be, and hereby are,
elected immediately following the effectiveness of Proposal 1
set forth above, as directors of Digital Courier
Technologies, Inc. to serve until their successors are duly
elected and qualified:
R.J. Pittman
Allan Grosh
James L. Thompson.
[ ] CONSENT [ ] CONSENT WITHHELD [ ] ABSTAIN
INSTRUCTIONS: To Consent, Withhold Consent or Abstain from consenting to the
election of all of the above-named nominees for director, check the appropriate
box above. If you wish to consent to the election of certain of the above-named
nominees for director, but not all of them, check the "Consent" box above and
cross out the name of each person you do not wish to elect.
If no box is marked above with respect to Proposal 2, the undersigned will be
deemed to consent to such Proposal, except that the undersigned will not be
deemed to consent to the election of any nominee for director whose name is
crossed out above.
PLEASE DATE, SIGN AND MAIL THE CONSENT PROMPTLY, USING THE ENCLOSED ENVELOPE.
Dated: _________________, 2002
______________________________________________________________
[print name of record shareholder as set forth on certificate]
______________________________________________________________
[signature of record shareholder or person
authorized to sign on behalf of record shareholder]
______________________________________________________________
[Title or authority of authorized person, if applicable]
______________________________________________________________
[signature, if held jointly]
If an individual, please sign exactly as the name appears on the certificate
representing your shares of Common Stock. If a corporation, partnership, trust,
limited liability company or other entity, please identify the entity as the
name appears on the certificate representing your shares of Common Stock, cause
an authorized person to sign on behalf of the entity, and clearly identify the
title of such authorized person. This Majority Consent of Shareholders shall
vote all shares the signatory is entitled to vote.