Exhibit 10.15
AGREEMENT
THIS AGREEMENT ("Agreement") is made effective this 30th of September,
2002, by and between DIGITAL COURIER TECHNOLOGIES, INC., a Delaware corporation
("Company"), and M2, INC., a Florida corporation ("Provider"). The Company
and/or Provider are sometimes herein referred to individually as a "party" and
collectively as the "parties."
R E C I T A L S
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WHEREAS, the Company desires to engage Provider to perform certain
services for the Company; and
WHEREAS, Provider desires to accept such engagement, subject to all of
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows.
AGREEMENT
1. Engagement. Provider is hereby engaged by the Company to perform the
Merchant and Financial Institution Services and manage the Technology, with all
the powers, authority and duties hereinafter set forth, subject to the terms and
conditions of this Agreement.
1.1. Definitions. As used herein, the following terms shall have the
following definitions:
"CEO" means the chief executive officer of the Company.
"Merchant and Financial Institution Services" shall mean the
services provided by the Company to merchants and financial institutions as
described in the Company's brochures attached hereto as Exhibit A, as well as
the services contemplated to be provided by NIS as reflected on Exhibit B
hereto.
"NIS" means Net Integrated Systems, Ltd., a Bermuda corporation.
"Technology" shall mean the proprietary software of DCTI,
non-proprietary software used by DCTI in its business, and the computer systems
of DCTI contained in the facilities of the Company in Clearwater, Florida and
Salt Lake City, Utah.
2. Provider's Duties and Authority. Provider shall, subject to the
oversight and approval of the CEO and to the terms and conditions of this
Agreement, have the exclusive authority to carry on the Merchant and Financial
Institution Services on behalf of the Company, through the use of the
Technology, and to manage and maintain the Technology for the Company, and in
furtherance thereof, Provider shall:
2.1 Devote Provider's best efforts and skills to its duties
hereunder, and devote such working time and attention to such duties as is
reasonably indicated;
2.2. Truthfully and accurately make, maintain and preserve all
records and reports that the CEO may, from time to time, request or require in
connection with its duties hereunder, and shall fully account for all records,
equipment, materials or other property of the Company of which Provider shall
have custody and shall deliver the same to the Company promptly after the
termination of this Agreement;
2.3. Obey all lawful rules, regulations, special instructions, and
directives of the CEO which are consistent with the terms of this Agreement and
endeavor to improve Provider's ability and knowledge of the business of the
Company in an effort to increase the value of Provider's services for the
benefit of the Company; and
2.4. Make all suggestions and recommendations to the CEO which
Provider believes will be of benefit to the Company.
3. Oversight and Control. Notwithstanding anything contained in this
Agreement to the contrary, the business and affairs of the Company shall be
managed and all corporate powers shall be exercised only under the ultimate
direction of the CEO. The CEO shall, and hereby does, retain all right,
authority and power to approve, disapprove, oversee and direct the activities of
Provider in the fulfillment of its duties under this Agreement.
4. Certain Acts and Events. Provider shall not engage in any conduct
on behalf of the Company which could have the effect of or result in the
cessation or unreasonable interruption of the business of the Company;
5. Limitations On Provider's Authority. Provider shall not commit
any act of fraud, malfeasance or misfeasance in the performance of its duties,
and shall at all times use its best efforts to comply with all applicable laws,
rules and regulations in performing its duties under this Agreement.
6. Compensation. For Provider's services performed and to be
performed hereunder, the Company shall pay to Provider a Monthly Fee and Bonus
Compensation as follows:
(a) Monthly Fee. The Monthly Fee shall be equal to 115% of the
amount of Provider's costs and expenses incurred in connection with the
performance of the Provider's duties under this Agreement. The Monthly Fee shall
be calculated by Provider and billed on a monthly basis in arrears. Costs and
expenses of Provider used to calculate the Monthly Fee shall include, among
other things, fixed monthly payments made by Provider to NIS under the
Consulting Agreement, dated September 20, 2002, between Provider and NIS.
However, Provider shall exclude from such costs and expenses any payments made
to NIS (or liabilities incurred to NIS) under the Consulting Agreement relating
to the payment of a portion of the Bonus Compensation (described below) payable
to Provider hereunder.
The Monthly Fee shall be payable by the Company within 10 days after
the submission of Provider's invoice to the Company showing its computation of
such fee, with its costs and expenses set forth in reasonable detail.
The foregoing notwithstanding, in the event that the Free Cash Flow (as
defined below) of the Company for any month is less than the amount of the
Monthly Fee for such month, the Company shall only be obligated to pay towards
such fee an amount equal to its Free Cash Flow for such month. The remainder of
the Monthly Fee for such month ("Deferred Monthly Fee Amount") shall accrue,
together with interest thereon at an annual rate of eight (8) percent,
compounded monthly, and such Deferred Monthly Fee Amounts, together with the
accrued interest thereon, shall become due and payable and be paid (i) as
provided below in this paragraph, or (ii) 30 days after the termination of this
Agreement, whichever is earlier. The Deferred Monthly Fee Amount shall be
evidenced by a demand note, in the form attached hereto as Exhibit C, duly
executed on behalf of the Company and delivered to the Provider along with the
payment of the portion of the Monthly Fee payable hereunder. Should the Company
have Free Cash Flow in any month thereafter in excess of the amount necessary to
pay the Monthly Fee for that month ("Excess Cash Flow"), an amount equal to the
lesser of (a) the Excess Cash Flow or (b) the full amount of all Deferred
Monthly Fee Amounts and the interest accrued thereon shall become payable.
Payments using Excess Cash Flow for a given month shall be paid by the Company
on the due date for that month's Monthly Fee (in addition to the regular payment
of the Monthly Fee using Free Cash Flow), with such payment being applied first
to the accrued interest, and second to Deferred Monthly Fee Amounts.
For purposes hereof, Free Cash Flow for any month means all cash
receipts of the Company and its subsidiaries (from all sources) for such month
minus the Operating Outlays (as defined below) actually paid by the Company and
its subsidiaries in the ordinary course of business during such month.
Operating Outlays shall mean the ordinary expenses actually paid by the
Company and its subsidiaries during the applicable month in connection with the
operation of the Company's and its subsidiaries' businesses plus the payment of
payables incurred in the ordinary course of business by the Company and its
subsidiaries plus the payment of accrued expenses incurred in the ordinary
course of business by the Company and its subsidiaries. However, Operating
Outlays shall specifically exclude (i) any Monthly Fees paid to Provider, (ii)
any payments of Deferred Monthly Fee Amounts or accrued interest thereon, (iii)
any interest payments relating to any loans entered into by the Company or any
of its subsidiaries prior to the date hereof, (iv) any interest payments
relating to any payables or accrued expenses incurred by the Company or any of
its subsidiaries prior to the beginning of such month, (v) the payment of any
liabilities other than payables or accrued expenses incurred in the ordinary
course of business, (vi) payments made to any officer or director of the Company
or any of its subsidiaries or any of their affiliates for anything other than
(a) normal salary in amount equal to that in effect for the month prior to the
date hereof and (b) reimbursement of ordinary business expenses in a manner
consistent with prior practice, and (vii) payments for the acquisition of
capital equipment.
(b) Bonus Compensation. The Bonus Compensation shall be equal
to 90% of Adjusted Free Cash Flow (as defined below) earned by the Company and
its subsidiaries during each month during the term hereof.
For purposes hereof, Adjusted Free Cash Flow for any month means all
cash receipts of the Company and its subsidiaries (from all sources) for such
month minus Adjusted Operating Outlays (as defined below) actually paid by the
Company and its subsidiaries in the ordinary course of business during such
month.
Adjusted Operating Outlays shall mean the ordinary expenses actually
paid by the Company and its subsidiaries during the applicable month in
connection with the operation of the Company's and its subsidiaries' businesses
plus the payment of payables incurred in the ordinary course of business by the
Company and its subsidiaries plus the payment of accrued expenses incurred in
the ordinary course of business by the Company and its subsidiaries. Adjusted
Operating Outlays shall include (i) any Monthly Fees paid to Provider for such
month and (ii) any payments for such month of Deferred Monthly Fee Amounts and
accrued interest thereon. However, Operating Outlays shall specifically exclude
(i) any interest payments relating to any loans entered into by the Company or
any of its subsidiaries prior to the date hereof, (ii) any interest payments
relating to any payables or accrued expenses incurred by the Company or any of
its subsidiaries prior to the beginning of such month, (iii) the payment of any
liabilities other than payables or accrued expenses incurred in the ordinary
course of business, (iv) payments made to any officer or director of the Company
or any of its subsidiaries or any of their affiliates for anything other than
(a) normal salary in amount equal to that in effect for the month prior to the
date hereof and (b) reimbursement of ordinary business expenses in a manner
consistent with prior practice, and (v) payments for the acquisition of capital
equipment.
The Bonus Compensation shall be calculated and paid monthly, on or
before the 20th day of the following month. The Company shall include with each
check for such compensation a schedule showing its computation of the Bonus
Compensation, with a breakdown showing separately the cash collections during
such month and a detailed listing of Adjusted Operating Outlays. In the event
that there is no Bonus Compensation payable for any month, the Company shall,
nevertheless, deliver to Provider, on or before the 20th day of the following
month, a schedule showing its computation of the Bonus Compensation.
7. Representations and Warranties of the Company. The Company
represents and warrants to Provider, as of the date of execution of this
Agreement, as follows:
7.1. The Company has the full power and authority to execute, deliver
and perform this Agreement. The Company has the right, power, legal capacity,
and authority to enter into and perform its obligations under this Agreement,
and no approvals or consents of any persons other than the Company are necessary
in connection with it.
7.2. The execution and delivery of this Agreement by the Company have
been duly authorized by all necessary corporate action on the part of the
Company.
7.3. This Agreement is valid, binding, and enforceable against the
Company in accordance with its terms and no provision requiring the performance
of the Company is in conflict with Company's obligations under its charter or
bylaws or any agreement (of whatever form or subject) to which the Company is a
party or by which the Company or any of its subsidiaries, or any of its or their
assets, are bound.
7.4 The Company is duly organized, authorized and in good standing
under the laws of the State of Delaware.
7.5 The Company's financial condition is as set forth in its most
recent form 10-QSB, as filed with the Securities & Exchange Commission, and
there has been no material adverse change in the Company's financial condition
since the date thereof.
7.6 The Company is not bound by any other agreement or other contract,
instrument or obligation that would adversely impact the implementation of this
Agreement or the rights granted to Provider by this Agreement.
8. Representations and Warranties of Provider. Provider represents and
warrants to the Company, as of the date of execution of this Agreement, as
follows:
8.1. Provider has the full power and authority to execute, deliver and
perform this Agreement. Provider has the right, power, legal capacity, and
authority to enter into and perform its obligations under this Agreement, and no
approvals or consents of any persons other than Provider are necessary in
connection with it.
8.2. The execution and delivery of this Agreement by Provider have been
duly authorized by all necessary corporate action on the part of Provider.
8.3. This Agreement is valid, binding, and enforceable against Provider
in accordance with its terms and no provision requiring the performance of
Provider is in conflict with Provider's obligations under its charter or bylaws
or any agreement (of whatever form or subject) to which Provider is a party or
by which Provider or its assets are bound.
8.4 Provider is duly organized, authorized and in good standing under
the laws of Florida.
9. Term. The term of this Agreement shall be for a period of five (5)
years (the "Initial Term"), subject to earlier termination as set forth herein.
Additionally, this Agreement shall automatically renew for an additional five
(5) year period, unless either party gives written notice of non-renewal to the
other party at least ninety (90) days prior to the renewal date.
10. Loan from Provider. Provider will establish a Line of Credit (LOC)
for the Company on the terms attached to this Agreement as Exhibit D. The
Company will execute promissory notes and such other documents as are reasonably
requested by Provider evidencing such line of credit.
11. Security for the Obligations of the Company. To secure its
obligations to make the payments to Provider provided for herein, the Company
shall grant to Provider a first priority lien on all tangible and intangible
assets of the Company, to be evidenced by the following, as appropriate: (i) a
security agreement, (ii) UCC-1 financing statements, (iii) mortgages or
leasehold mortgages, (iv) collateral assignments of leases and material
contracts with consent of third parties; (v) stock pledge agreements with
respect to stock of all subsidiaries of the Company, and (vi) escrow of source
code for all proprietary software and software products of the Company.
12. Termination.
12.1 Voluntary Termination. Provider may, in its sole and exclusive
discretion, terminate this Agreement for any reason upon ten (10) days' prior
written notice to the Company, in which event the Company shall pay to Provider
within 30 days after the effective date of such termination all sums then owing
to Provider hereunder, including, without limitation, all accrued and unpaid
Monthly Fees and any unpaid interest thereon. The Company may, in its sole and
exclusive discretion, terminate this Agreement for any reason upon ten (10)
days' prior written notice to Provider, stating the date and time of the
proposed termination of this Agreement (the "Effective Time"), provided that (i)
immediately before the Effective Time, the Company pays to Provider all sums
then owing to Provider under Paragraph 6, including, without limitation, all
accrued and unpaid Monthly Fees and any unpaid interest thereon, and all amounts
due or to become due through and including the Effective Date, and (ii) if this
Agreement is terminated by the Company without cause (as defined below) during
the Initial Term, the Company also shall (a) immediately before the Effective
Time, grant to Provider a perpetual, nonexclusive license to use, sell and
license to others all of the Company's proprietary software and each of the
Company's proprietary software products and deliver to Provider a copy of the
source code for all of such software and each of such software products.
12.2 Termination for Cause. Notwithstanding anything in this Agreement
to the contrary, the Company may, at its option, terminate this Agreement for
cause at any time upon the payment of the amounts described above in Paragraph
12.1(i). For purposes hereof, "cause" means any one of the following:
12.2.1 The conviction of Provider, or any shareholder or
member of Provider owning more than 25% of the shares or interests in Provider,
by a court of competent jurisdiction (and to which no further appeal can be
taken) of a felony or any other crime involving moral turpitude;
12.2.2 The commission by Provider, or any shareholder or
member of Provider owning more than 25% of the shares or interests in Provider,
of an act of fraud or other act evidencing bad faith or dishonesty that
materially affects the Company;
12.2.3. The willful refusal to follow any lawful directive of
the CEO or Board of Directors of the Company;
12.2.4. The filing by the Provider of any petition, or
commencement by Provider of any proceeding, under the Bankruptcy Act or any
state insolvency law;
12.2.5. The making by the Provider of any general assignment
for the benefit of creditors;
12.2.6. The filing of a voluntary or involuntary application
for or appointment of a receiver with regard to Provider;
12.2.7. The filing of any involuntary petition, or
commencement of any involuntary proceeding, under the Bankruptcy Act or any
state insolvency law, against Provider, or the appointment of any receiver or
trustee, which petition, proceeding or appointment is not fully and completely
discharged, dismissed or vacated within sixty (60) days;
12.2.8. The liquidation of Provider.
12.2.9. The substantial cessation of business by Provider for
a material amount of time;
12.2.10. The dissolution of Provider; or
12.2.11. The insolvency of Provider as evidenced by the
inability of Provider to meet its ordinary obligations as they become due.
13. Limitations on Liability of Provider. In no event shall Provider,
any of its affiliates or any of their respective directors, officers, employees,
agents or subcontractors, be liable for lost business opportunities, exemplary,
punitive, or consequential damages under this Agreement. Except as elsewhere
provided in this Agreement, none of Provider or any of its affiliates or any of
their respective directors, officers, employees, agents or subcontractors, shall
be liable for lost profits, lost revenues, general, incidental, indirect or any
other damages under this Agreement, so long as Provider carries out its duties
hereunder (i) in good faith and in a manner Provider believes to be in the best
interests of the Company with such care, including reasonable inquiry, as an
ordinarily prudent person in a like position would use under similar
circumstances or (ii) in compliance with the directives of the CEO or Board of
Directors of the Company. In performing its duties hereunder, Provider shall be
entitled to rely on information, opinions, reports or statements, including
financial statements and other financial data, presented by the CEO or chief
financial officer of the Company, or prepared or presented by other officers or
employees of the Company whom Provider believes to be reliable and competent in
the matters presented, or counsel, independent accountants or other persons as
to matters which Provider believes to be within such person's professional or
expert competence. In no event shall Provider be liable to the Company or any
other third party for any merchant moneys or chargebacks or any indebtedness
that the Company may incur by virtue of processing merchant accounts. The
Company acknowledges that Provider is subcontracting with NIS to provide some of
the Merchant and Financial Institution Services. In no event shall Provider be
liable for any damage or loss caused by the action or inaction of NIS, its
officers, directors, employees or agents.
14. Confidentiality. Unless specified in writing otherwise by the party
providing the same, all information pertaining to any party hereto is and shall
remain confidential. The above information shall include, but not be limited to,
all computer programs, software, source codes, computations, data files,
algorithms, techniques, processes, designs, specifications, drawings, charts,
plans, schematics, computer disks, magnetic tapes, books, files, records,
reports, documents, instruments, agreements, contracts, correspondence, letters,
memoranda, financial, accounting, sales, purchase and employment data, and
capital structure information. Notwithstanding the foregoing, confidential
information shall not include: (i) any information which is recorded in any
county or filed with any public body and available for public inspection or
which may be otherwise generally available to the public, through no
unauthorized act of any party or its agents or employees; and (ii) information
that is required to be disclosed pursuant to applicable law, including any court
order or subpoena. All confidential information and other items, whether or not
directly furnished or prepared by any party or its agents or employees, is and
shall remain the property of the party who originally produced the same. Each
party and its agents and employees shall:
14.1. Not directly or indirectly divulge, disclose, disseminate,
distribute, license, sell or otherwise make known any confidential information
to any third party or person or entity not expressly authorized or permitted by
the providing party to receive such confidential information (it being agreed by
the Company that NIS is authorized to receive all confidential information
necessary to perform the Merchant and Financial Institution Services;
14.2. Use its best efforts to prevent disclosure of any confidential
information to any third party and exercise the highest degree of care and
discretion in accordance with all express duties hereunder to prevent the same;
14.3. Except as otherwise set forth herein above, not directly or
indirectly make any use whatsoever of the confidential information or of any
feature, specification, detail or other characteristic contained in or derived
from, the confidential information, except for purposes of performing services
hereunder; and
14.4. Return to the other party all confidential information or other
items then in its possession or control, or that of its agents or employees,
including originals, reproductions, replications and photocopies thereof, at any
time upon request by any other party or upon the termination of this Agreement
for any reason.
15. Injunctive Relief; Specific Performance. Each party agrees that in
the event of any action by the other party that in the non-breaching party's
reasonable judgment will create an actual or threatened breach of Paragraph 14
of this Agreement, the non-breaching party's remedies shall include specific
performance or injunctive relief, or both, without the necessity of posting bond
or other security, in addition to any and all remedies at law or in equity and
all such rights shall be cumulative.
16. Relationship of Parties. The Company intends no contract of
employment, express or implied, with Provider and Provider shall make no
representations to the contrary. Without limitation, Provider has not obtained
any right to employment or compensation or any other benefits of an employee by
way of this Agreement. The parties agree that in performing their
responsibilities pursuant to this Agreement they are in the position of
independent contractors. This Agreement is not intended to create, nor does it
create and shall not be construed to create, a relationship of partnership or
joint venture. Provider is not authorized by this Agreement to make any
representation or warranty, or create any liability or potential liability on
behalf of the Company without the Company's written consent.
17. Assignment. Except as provided below, neither party shall be
allowed to assign, delegate, and/or subcontract this Agreement without the prior
written consent of the other party. The Company may assign, delegate and/or
subcontract this Agreement and its rights and obligations hereunder to a
corporation or other entity which controls, is controlled by, or is under common
control with, it; provided that the Company shall remain liable with its
assignee for the full performance of all of its obligations hereunder. Provider
may assign some or all of its obligations with respect to the performance of the
Merchant and Financial Institution Services to NIS, and may assign, delegate
and/or subcontract this Agreement and all of its rights and obligations
hereunder to a corporation or other entity which controls, is controlled by, or
is under common control with, it.
18. Amendments. Except as otherwise provided in this Agreement, no
provision of this Agreement may be amended, modified or waived except by a
written agreement signed by both parties.
19. Notices. All notices and other communication required or permitted
under this Agreement shall be in writing and given by personal delivery,
telecopy (confirmed by a mailed copy) or first class mail, postage prepaid,
addressed as follows:
If to the Company:
DIGITAL COURIER TECHNOLOGIES, INC.
348 East 6400 South, Suite 220
Salt Lake City, UT 84107
If to Provider:
M2, Inc.
850 Trafalgar Court
Suite 100
Maitland, Florida 32751
20. Severability. If any provision of this agreement is determined to
be invalid or unenforceable by any court of final jurisdiction, it is the intent
of the parties that all other provisions of this agreement be construed to
remain fully valid, enforceable, and binding on the parties. The invalidity of
any Section or Subsection shall not affect the validity of any other Section or
Subsection.
21. Section Headings. The Section headings contained in this Agreement
are for convenient reference only and shall not in any way affect the meaning or
interpretation of this Agreement.
22. Counterparts. This Agreement may be executed in one or more
counterparts, each of, which shall be deemed to be an original, and the
counterparts shall together constitute one and the same instrument. Fax
signatures shall be deemed as valid and enforceable as original signatures and
shall have the same force and effect.
23. Entire Agreement; Binding Effect. This Agreement, including all
Schedules, Addendums, Exhibits and attachments, embodies the entire
understanding and agreement of the parties concerning the subject matter hereof.
This Agreement shall be binding upon and shall inure only to the benefit of the
parties and their respective permitted successors and assigns. Nothing in this
Agreement, express or implied, is intended to confer or shall be deemed to
confer upon any persons or entities not parties to this Agreement any rights or
remedies under or by reason of this Agreement.
24. Recovery of Litigation Costs. If any legal action or any
arbitration or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover as an
element of their damages, reasonable attorneys' fees and other costs incurred in
that action or proceeding, in addition to any other relief to which they may be
entitled.
25. Survival. All representations and warranties shall survive the
execution of this Agreement.
26. Authority. Each of the respective persons executing this Agreement
covenants and warrants that he has full legal power, right, and authority to
execute this Agreement on behalf of his principal.
27. Construction. The parties agree that each party and its counsel
have received and revised this Agreement and that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not apply in the interpretation of this Agreement or any amendments, Schedules,
Addendums or Exhibits thereto.
28. Governing Law. This Agreement shall be construed in accordance
with, and governed by, the laws of the State of Florida without regard to or
application of conflict of laws or choice of law rules.
29. Venue. Venue for any action brought regarding the interpretation or
enforcement of this Agreement shall lie exclusively in Orange County, Florida.
30. Forum Selection. Any litigation shall be brought and litigated in
the state courts sitting in Orange County, Florida, or in the United States
District Court(s) sitting in Orange County, Florida. All parties hereto consent
to the personal jurisdiction of such courts and waive any defense of forum non
conveniens.
31. Expenses. Upon the execution of this Agreement, the Company shall
reimburse expenses Provider for all expenses incurred by it in connection with
the negotiation and preparation of this Agreement, including its attorneys'
fees.
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IN WITNESS WHEREOF, this Agreement has been executed below on behalf of
the corporations party hereto by their duly authorized officers as of the date
first set forth above.
DIGITAL COURIER TECHNOLOGIES, INC.
By: /s/ Craig Darling
--------------------------------
Craig Darling
Chairman of the Board
M2, INC.
By: /s/ Joseph W. Adams
--------------------------------
Joseph W Adams
President