EXHIBIT NO. 4
AMENDMENT NO. 1 TO
SETTLEMENT AND RELEASE AGREEMENT
THIS AMENDMENT NO. 1 TO SETTLEMENT AND RELEASE AGREEMENT (this
"Agreement") is entered into as of the 18th day of March, 2002, by and among
DIGITAL COURIER TECHNOLOGIES, INC., a Delaware corporation with its principal
place of business and executive offices located at 348 East 6400 South, Suite
220, Salt Lake City, Utah 84107 ("DCTI"), DON MARSHALL, an individual resident
in St. Christopher & Nevis ("Marshall"), and NAUTILUS MANAGEMENT, LTD., a
company organized and existing under the laws of St. Christopher & Nevis that is
wholly owned and controlled by Marshall ("Nautilus") (unless more specifically
indicated herein, references to Marshall shall also include Nautilus)
(collectively, DCTI, Marshall and Nautilus may be referred to in this Agreement
as the "Parties").
RECITALS
A. On October 16, 2001, DCTI, Marshall and Nautilus entered into a
Settlement and Release Agreement (the "Settlement Agreement").
B. In February 2002, Marshall asserted that DCTI had defaulted with
respect to its payment obligations under Section 1 of the Settlement Agreement.
Specifically, Marshall asserted that DCTI failed to remit to him the required
quarterly payment after due notice and after the expiration of the cure period
specified in Section 3 of the Settlement Agreement. DCTI disputes all of
Marshall's assertions.
C. Marshall is willing to waive any rights accruing to him as a result
of any default by DCTI with respect to the payment obligations of Section 1 of
the Settlement Agreement arising prior to the date of this Agreement upon the
mutual execution and delivery of and performance by DCTI of its obligations
under this Agreement.
D. Except to the extent specifically set forth in this Agreement, the
parties to this Agreement do not intend to amend or modify in any way the terms,
conditions and provisions of the Settlement Agreement.
AGREEMENT
NOW, THEREFORE, pursuant to the Recitals above which are hereby
incorporated, and for and in consideration of the terms and conditions of this
Agreement, the mutual benefits to be derived from this Agreement and other good
and valuable consideration received, the Parties hereby agree as follows:
1
1. Amendments to Settlement Agreement.
----------------------------------
a. Amendment to Section 1(a) of Settlement Agreement. Section 1(a)
of the Settlement shall be deleted and replaced with the following:
"1. Payment by DCTI to Marshall As payment for Marshall's
agreement to execute and deliver this Agreement, DCTI agrees to pay Marshall as
follows:
"a. Cash Payment. DCTI agrees to pay Marshall a total of
Eight Hundred Thousand Dollars (US $800,000) (the "Cash Payment"). The Cash
Payment shall be payable as follows:
"(i) Semi-Monthly Payments. DCTI shall pay to Marshall
or his order in lawful money of the United States of America, Three Thousand
Five Hundred Dollars ($3,500) on the fifth day and twentieth day of each month
(for an aggregate monthly payment of $7,000) commencing with May 5, 2002 until
the earlier of (i) the date DCTI shall have paid to Marshall the entirety of the
Cash Payment, or (ii) March 31, 2006, on which date the entire remaining unpaid
balance of the Cash Payment shall be immediately due and payable (the "Maturity
Date"). Subject to Section 3(a), no interest shall accrue or be paid on the Cash
Payment or any portion thereof. If the day of any month on which a payment is
due is not a business day in Salt Lake City, Utah, then the payment otherwise
due on such date shall be paid to Marshall on the next business day in Salt Lake
City, Utah.
"(ii) Prepayment Without Penalty. DCTI may, in DCTI's
sole discretion, and without penalty, decide to pay in full the then unpaid
amount of the Cash Payment at any time after the date hereof but before the
Maturity Date.
"(iii) Acceleration Upon Change of Control Transaction.
If any time after the date hereof but prior to the date on which DCTI has paid
in the full the Cash Payment plus any interest accrued thereon (1) DCTI shall
enter into any transaction pursuant to which it sells all or substantially all
of its assets, (2) DCTI shall complete any merger pursuant to which the owners
of DCTI's common stock prior to such transaction do not own in excess of fifty
percent (50%) of the voting capital stock of the entity surviving such merger,
(3) DCTI repurchases in excess of fifty percent (50%) of the then issued and
outstanding capital stock of DCTI, (4) DCTI issues voting capital stock in any
transaction or series of transactions within any six month period as a result of
which the holders of DCTI's voting capital stock before such transaction or
series of transactions hold less than fifty percent (50%) of DCTI's voting
capital stock after such transaction, or (5) a majority of DCTI's board of
directors is replaced other than by voluntary action of such board of directors
(any such occurrence or transaction being a "Change of Control Transaction"),
then all amounts then payable to Marshall under this Agreement shall accelerate
and become immediately due and payable in full and shall be paid in full prior
to or simultaneously with the closing or effective date of any such Change of
Control Transaction, which payment shall be a condition to the completion or
effectiveness of such Change of Control Transaction unless waived by Marshall in
writing."
2
b. Amendment to Section 2 of Settlement Agreement. Section 2 of the
Settlement shall be deleted and replaced with the following:
"2. Default.
"a. Events of Default. An event of default (each an "Event
of Default") shall occur if any of the following events shall occur:
"(i) Failure to pay Marshall in the amounts and within
three (3) business days of the dates set forth in Section 1, including any
obligation to pay any amounts due on an accelerated basis pursuant to Section
1(a)(iii), and such default continues for a period of three (3) business days
after Marshall provides written notice to DCTI of such default;
"(ii) Filing by DCTI of a voluntary petition in
bankruptcy or a voluntary petition seeking reorganization, adjustment,
readjustment of debts or any other relief under the Bankruptcy Code as amended
or any insolvency act or law, state or federal, now or hereafter existing;
"(iii) Filing of an involuntary petition against DCTI in
bankruptcy or seeking reorganization, arrangement, readjustment of debts or any
other relief under the Bankruptcy Code as amended or under any other insolvency
act or law, state or federal, now or hereafter existing, and the continuance
thereof for sixty (60) days undismissed, unbonded, or undischarged; or
"(iv) All or any substantial part of the property of
DCTI shall be condemned, seized or otherwise appropriated or custody or control
of such property shall be assumed by any governmental agency or any court of
competent jurisdiction and shall be retained for a period of thirty (30) days."
c. Amendment to Section 3 of the Settlement Agreement. Section 3 of the
Settlement shall be deleted and replaced with the following:
"3. Remedies.
"a. Default Interest Rate. Upon the occurrence of an Event
of Default, any then unpaid balance of the Cash Payment shall accrue simple
interest at the rate of 1.5% per month until paid in full.
"b. Option to Convert. At any time after the occurrence of
an Event of Default, Marshall may convert all or any portion of the then unpaid
balance of the Cash Payment plus any accrued and unpaid interest thereon into
that number of shares of DCTI's restricted common stock as shall be obtained by
3
dividing the dollar amount to be so converted by the lesser of (A) $0.07 per
share, or (B) the average closing bid price of DCTI's common stock as quoted on
any nationally recognized quotation service for the twenty (20) trading days
immediately preceding the date of such conversion. Marshall shall provide
written notice to DCTI of the amount of the Cash Payment and interest accrued
thereon that he desires to convert into common stock, together with instructions
for issuing and delivering the certificate or certificates issuable upon such
conversion, and within ten (10) business days after such notice is given, DCTI
shall cause to be delivered to Marshall or his agents (as directed by Marshall
in such written notice) a certificate or certificates representing the shares of
DCTI common stock issuable upon such conversion. In such written notice,
Marshall shall further certify to DCTI that all of the representations contained
in Section 10 of the Settlement Agreement are true and correct as of the date of
such notice.
"c. Acceleration. Upon any occurrence of an Event of
Default, the entire unpaid balance of the Cash Payment that has not been
converted into DCTI's restricted common stock under Section 3(b) of this
Agreement, plus any accrued but unpaid interest thereon, shall become
immediately due and payable.
"d. Cumulative. The remedies set forth in this Section 3
shall be cumulative and shall be in addition to and not in lieu of any other
legal or equitable remedies Marshall would have upon the occurrence of an Event
of Default or other breach of this Agreement."
d. Amendment to Section 11(b) of the Settlement Agreement. Section
11(b) of the Settlement Agreement shall be deleted and replaced with the
following:
"b. Notices. Any notice given to any party shall be
delivered personally, or by first class mail, or by nationally recognized
overnight courier service, or by facsimile copy, and any notice shall be deemed
to be have delivered and complete ten (10) calendar days after deposit with the
postal agency, upon delivery if by personal delivery, upon confirmed receipt if
by facsimile copy, and on the next following business day if by nationally
recognized overnight courier. Notice may be given by any party or by a party's
counsel or agents. Notice shall be addressed as follows, unless written notice
of change of address is given to all other parties:
If to DCTI:
Digital Courier Technologies, Inc.
Attention: Chief Executive Officer
348 East 6400 South, Suite 220
Salt Lake City, Utah 84107
Fax: (801) 266-5417
4
and
Digital Courier Technologies, Inc.
Attention: Controller
348 East 6400 South, Suite 220
Salt Lake City, Utah 84107
Fax: (801) 266-5417
with a copy to:
Stephen D. Hibbard, Esq.
McCutchen, Doyle, Brown & Enersen, LLP
Three Embarcadero Center
San Francisco, California 94111
Fax: (415) 393-2286
If to Marshall:
Donald J. Marshall
c/o Durham Jones & Pinegar, P.C.
Attn. N. Todd Leishman, Esq.
111 East Broadway, Suite 900
Salt Lake City, Utah 84111
Fax: (801) 415-3500"
2. Waiver; Terms. In consideration of DCTI's execution and delivery of
and performance under this Agreement, Marshall agrees to waive any claim he may
have for all defaults by DCTI in respect of the Settlement Agreement arising on
or prior to the date of this Agreement, provided that such waiver shall be
subject to DCTI's payment to Marshall of a concession fee equal to One Hundred
Thirty-six Thousand Dollars (US $136,000), which shall be payable as follows:
(a) Thirty-six Thousand Dollars ($36,000) shall be paid at or before
5:00 p.m., Salt Lake City, Utah time, on March 20, 2002, the actual receipt of
which amount on or before such time being a condition subsequent to the efficacy
of this Agreement, absent which this Agreement shall be null and void ab initio
and shall have no force or effect. Such amount shall be paid by wire transfer
according to the following instructions: KeyBank National Association, ABA No.
124000737, Durham Jones & Pinegar Trust Account, Account No. 4450-1000-1292; and
(b) One Hundred Thousand Dollars ($100,000) shall be payable by
delivery to Marshall of One Million Four Hundred Twenty-Eight Thousand Five
Hundred Seventy-One (1,428,571) shares of DCTI's restricted common stock issued
in the name of Nautilus. DCTI agrees to deliver a certificate representing such
shares to Marshall within ten (10) business days after the date of this
5
Agreement, but covenants that the issuance date of such shares for all purposes
shall be prior to March 15, 2002. Such certificate shall be delivered to
Marshal, c/o Durham Jones & Pinegar, 111 East Broadway, Suite 900, Salt Lake
City, Utah 84111, attention N. Todd Leishman. For purposes of this Section 2(b),
Marshall represents and warrants that all of the representations and warranties
set forth in Section 10 of the Settlement Agreement are true and correct as of
the date of this Agreement.
3. Joint Defense Agreement. The Parties agree that promptly after the
date hereof they will enter into a mutually acceptable joint defense agreement
regarding the case captioned Ameropa Ltd. v. Digital Courier Technologies, Inc.
et al., Case No. BC240619 currently pending in the Superior Court of the State
of California for the County of Los Angeles. DCTI covenants that within ten (10)
business days after the date hereof it shall propose a form of joint defense
agreement to Marshall, and the Parties shall thereafter negotiate in good faith
to complete, execute and deliver a definitive joint defense agreement.
4. Board Representation. DCTI covenants that, immediately after the
date hereof, and until the Cash Payment has been paid in full, Marshall shall
have the right to name one person, who shall be other than Marshall, to serve as
a member of DCTI's Board of Directors.
5. Closing. The closing (the "Closing") of the transactions
contemplated by this Agreement shall be on the date that this Agreement shall
have been mutually signed by all parties, but in no event shall be later than
March 18, 2002 (the "Closing Date"), but shall have no force or effect unless
and until Marshall's receipt of the cash component of the concession fee
described above in Section 2(a). The Closing shall occur at the offices of
counsel to Marshall, Durham, Jones & Pinegar, Broadway Centre, Suite 900, 111
East Broadway, Salt Lake City, Utah 84111.
6. Miscellaneous.
a. Limited Effect. Except to the extent specifically amended,
modified or superceded hereby, this Agreement shall have no effect on the
Settlement Agreement, which shall continue in full force and effect, as amended
by this Agreement.
b. Notice. Any notice required under this Agreement shall be
provided in the manner prescribed in the Settlement Agreement, as amended by
this Agreement.
c. Execution in Counterparts; Facsimile. This Agreement may be
executed in any number of counterparts, each of which when executed and
delivered shall be deemed to be an original, binding agreement between the
executing parties, and all of which shall together constitute one and the same
instrument. This Agreement also may be executed and delivered by facsimile
transmission.
d. No Third Party Beneficiaries. This Agreement is executed for the
benefit of the parties hereto and is not intended for the benefit of any third
party.
6
e. Interpretation. All Agreement terms used in the singular number,
or in the neuter or masculine gender, will apply to the plural number, and the
masculine, feminine or neuter gender, as the context requires. The recitals set
forth above are incorporated in this Agreement. Further, this Agreement is to be
construed to effectuate the normal and reasonable expectations of sophisticated
commercial entities entering into a final and conclusive agreement. This
Agreement has been prepared by both parties and their professional advisors and
shall be construed without regard to the rules of construction that otherwise
might apply against a drafter.
f. Modification. This Agreement may not be modified except by a
mutually executed amendment to this Agreement, dated and executed by the
authorized representatives of DCTI and Marshall. No oral statement or writing
that does not meet the requirements of this paragraph will constitute a
modification or waiver of any provision of this Agreement.
g. Nonwaiver. Waiver of performance of any provision shall not be a
waiver of nor prejudice the party's right otherwise to require performance of
the same provision or any other provision of this Agreement.
h. Governing Law and Venue. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Utah. Any suit
brought hereon and any and all legal proceedings to enforce, interpret, or
rescind this Agreement shall be brought solely in the state or federal courts
sitting in Salt Lake County, State of Utah. Each party hereby agrees that any
such court shall have exclusive in personam jurisdiction over it. DCTI hereby
waives any defense that it was not personally served with process in the Action.
i. Dispute; Attorney's Fees. In the event of a dispute over
interpretation or breach of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees in addition to any other relief granted
at or law or equity.
j. Authorization. Any person signing this Agreement for or on
behalf of an entity other than a natural person does by said signature warrant
that he or she is duly authorized by said entity to undertake such action on its
behalf, and that such signature is the valid and binding act of that entity. The
parties represent and warrant to each other that this Agreement is valid and
binding and in all respects enforceable in accordance with its terms.
k. Invalidity. In the event that any one or more of the provisions
of this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable, the same shall not affect any other provisions of this Agreement,
but this Agreement shall be construed as if such invalid, illegal, or
unenforceable provision had not been contained herein.
l. Confidentiality. Except as otherwise provided in this Agreement,
unless required by applicable law or a valid and enforceable subpoena or court
order of a court of competent jurisdiction, neither party shall disclose or
cause or allow to be disclosed any of the terms or conditions of, or the
existence of, this Agreement, provided, however, that each party may disclose
the terms or conditions of, and the existence of, this Agreement, to (a) its
legal counsel, or (b) its tax and financial advisors, and further provided that
7
Marshall understands that DCTI is a publicly held corporation and has reporting
obligations under the Securities Exchange Act of 1934 (the "1934 Act"), and DCTI
may be required to disclose the terms or conditions of, or the existence of,
this Agreement pursuant to the 1934 Act, and that any such required disclosure
shall not be deemed to be a breach of this Section 5(l).
m. Authorization; Corporate Power. The Parties represent and
warrant to each other than they have the full corporate power and authority to
execute and deliver and perform under this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGE FOLLOWS IMMEDIATELY]
8
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
DCTI: DIGITAL COURIER TECHNOLOGIES, INC.
a Delaware corporation
By: __________________________________________
Its:__________________________________________
Marshall: ______________________________________________
DON MARSHALL, individually
Nautilus: NAUTILUS MANAGEMENT, LTD.,
a St. Christopher & Nevis company
By: __________________________________________
Its:__________________________________________
9