SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Proxy Statement Pursuant To Section 14(a)
Of the Securities Exchange Act Or 1934
|X| Filed by the Registrant
|_| Filed by a Party other than the Registrant
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for use of the Commission Only (as permitted by Rule
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|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-11 (C) or ss. 240.14a-12
Digital Courier Technologies, Inc.
------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(I) (1) and
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statement number, or the Form or Schedule and the date of its filing.
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DIGITAL COURIER TECHNOLOGIES, INC.
136 Heber Avenue, Suite 204
PO Box 8000
Park City, Utah 84060
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER , 1998
TO THE STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders
(the "Annual Meeting") of Digital Courier Technologies, Inc. (the "Company"),
which will be held at the Company's offices at 136 Heber Avenue, Suite 204, Park
City, Utah, on , November , 1998, at 10:00 a.m. Mountain time, to consider and
act upon the following matters;
1. The election of directors;
2. To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation increasing the authorized number
of Common Shares outstanding;
3. To ratify the appointment of Arthur Andersen LLP as the
Company's independent public accountants for the year ending
June 30, 1999; and
4. To transact such other business as may properly come before
the Annual Meeting or any adjournments of the Annual Meeting.
Only holders of record of Common Stock of the Company at the close of
business on October , 1998 will be entitled to notice of and to vote at the
Annual Meeting and any adjournments of the Annual Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD. YOU ARE INVITED TO ATTEND THE
ANNUAL MEETING IN PERSON, BUT WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE.
IF YOU DO ATTEND THE ANNUAL MEETING, YOU MAY, IF YOU PREFER, REVOKE YOUR PROXY
AND VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors
James A. Egide
Chairman of the Board
DIGITAL COURIER TECHNOLOGIES, INC.
-------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER , 1998
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Digital Courier Technologies, Inc., a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders to be held at the Company's offices at 136 Heber Avenue, Suite 204,
Park City, Utah, on , November , 1998, at 10:00 a.m. Mountain time. Accompanying
this Proxy Statement is the Proxy for the Annual Meeting, which you may use to
indicate your vote as to the proposals described in this Proxy Statement.
All Proxies which are properly completed, signed and returned to the
Company prior to the Annual Meeting, and which have not been revoked, will be
voted as specified by the stockholder, or, if no vote is indicated, the proxy
will be voted in favor of the proposals described in this Proxy Statement. A
stockholder may revoke his or her Proxy at any time before it is voted either by
filing with the Secretary of the Company, at its principal executive offices, a
written notice of revocation or a duly executed proxy bearing a later date, or
by attending the Annual Meeting and expressing a desire to vote his or her
shares in person.
The cost of the Annual Meeting, including the cost of preparing and
mailing this Proxy Statement, will be borne by the Company. The Company may, in
addition, use the services of its directors, officers and employees to solicit
Proxies, personally or by telephone, but at no additional salary or
compensation. The Company also requests banks, brokers and others who hold
Common Stock of the Company in nominee names to distribute annual reports and
Proxy soliciting materials to beneficial owners and shall reimburse such banks
and brokers for reasonable out-of-pocket expenses which they may incur in so
doing.
The Company's principal executive offices are located at 136 Heber
Avenue, Suite 204, Park City, Utah 84060. This Proxy Statement and the
accompanying Proxy were mailed to stockholders on or about October , 1998.
VOTING RIGHTS AND VOTES REQUIRED
The close of business on October , 1997 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting or any adjournments of the Annual Meeting. As of the record
date, the Company had outstanding shares of common stock, par value $0.0001 per
share (the "Common Stock"), the only outstanding voting security of the Company.
As of the record date, the Company had approximately stockholders of record. A
stockholder is entitled to cast one vote for each share held on the record date
on all matters to be considered at the Annual Meeting.
One-third of the outstanding shares of Common Stock entitled to vote at
the Meeting must be present in person or represented by proxy at the Annual
Meeting in order to constitute a quorum for the transaction of business.
All shares represented by the accompanying proxy, if the proxy is
properly executed and returned, will be voted as specified by the stockholder,
or, if no vote is indicated, the proxy will be voted FOR the nominees for
director, FOR the approval of the amendment to the Company's Amended and
Restated Certificate of Incorporation, and FOR the ratification of the selection
1
of Arthur Andersen LLP as independent public accountants for the Company. As to
any other matter of business which may properly be brought before the Annual
Meeting, a vote may be cast pursuant to the accompanying proxy in accordance
with the judgment and discretion of the person or persons voting the same,
although management does not presently know of any such other matter of
business. Votes withheld by nominee recordholders who did not receive specific
instructions from the beneficial owners of shares will not be treated as votes
cast or as shares present or represented and will reduce the absolute number
(although not the percentage) of affirmative votes needed for approval.
In the election of directors, the five candidates receiving the highest
number of votes at the Annual Meeting will be elected as directors. Approval of
the amendment to the Company's Amended and Restated Certificate of Incorporation
requires the affirmative vote of the holders of a majority of the Company's
issued and outstanding shares of Common stock. In order to approve the
ratification of the selection of Arthur Andersen LLP as independent public
accountants of the Company, the affirmative vote of the holders of a majority of
the Common Stock present in person or represented by proxy and properly voting
at the Annual Meeting will be required.
In the event that the votes necessary to approve any of the foregoing
proposals have not been obtained by the date of the Annual Meeting or a quorum
is not present at the Meeting, the Chairman of the Meeting may, in his
discretion, adjourn the Annual Meeting from time-to-time to permit the
solicitation of additional proxies by the Board of Directors.
DIRECTORS AND EXECUTIVE OFFICERS
The stockholders are being asked to elect five directors to serve until
the next Annual Meeting of Stockholders and until their successors are duly
elected and qualified. The proxies will be voted in favor of the nominees unless
otherwise specifically instructed. Although the Board of Directors does not
anticipate that any nominee will be unavailable for election, in the event of
such occurrence the proxies will be voted for such substitute, if any, as the
Board of Directors may designate.
The five nominees receiving the highest number of affirmative votes of
the shares entitled to be voted will be elected directors; votes withheld and
broker non-votes have no legal effect.
The following table sets forth certain information with respect to each
director, nominee and executive officer of the Company as of October , 1998:
Name Age Position
---- --- --------
James A. Egide* 64 Director and Chairman
Raymond J. Pittman 29 Director and Chief Executive
Officer
Mitchell L. Edwards 40 Director, Executive Vice President
and Chief Financial Officer
Glen Hartman* 41 Director
Kenneth M. Woolley* 51 Director
*Serves on compensation and audit committees.
2
Nominees. The following individuals have been nominated by the Board of
Directors of the Company to stand for election at the Annual Meeting:
James A.. Egide: Director and Chairman
Mr. Egide was appointed as a Director of the Company in January 1995
and Chairman in September 1997. Since 1990, Mr. Egide has primarily been
involved in managing his personal investments, including multiple international
and national business enterprises. In 1978 he co-founded Carme, a public
company, and served as CEO and Chairman of the Board until 1989 when it was
sold. From 1976 until 1980, Mr. Egide's primary occupation was President and
Director of Five Star Industries, Inc., a California corporation which was a
general contractor and real estate developer. His principal responsibilities
were land acquisition, lease negotiations and financing.
Raymond J. Pittman: Director and Chief Executive Officer.
Mr. Pittman has been Chief Executive Officer of the Company since March
1998. Mr. Pittman was the founder and Chief Executive Officer of Digital Courier
International, Inc. from 1996 until Digital Courier International was acquired
by the Company in September 1998. Prior to forming Digital Courier
International, Inc., Mr. Pittman was the Chief Executive Officer of Broadway
Technologies Group, a technology development and consulting group. Mr. Pittman
received a Masters degree in Engineering-Economic Systems from Stanford
University and a Bachelors degree in Computer Engineering from the University of
Michigan.
Mitchell L. Edwards: Director, Executive Vice President and Chief Financial
Officer
Mr. Edwards has been Executive Vice President and Chief Financial
Officer of the Company since June 1998. From June 1997, he was Senior Vice
President / Finance and Legal of DataMark Holding, Inc., the public company
which acquired Digital Courier Technologies. From 1995 until joining the
Company, Mr. Edwards was Managing Director of Law and Business Counselors, a
mergers and acquisitions and corporate finance consulting firm with offices in
California and Utah, and prior to that was a Partner in the law firm of Brobeck,
Phleger & Harrison in Los Angeles. Mr. Edwards' practice for over 10 years has
specialized in mergers and acquisitions, corporate finance, public offerings,
venture capital and other transactions for emerging and high technology
companies throughout the country. Mr. Edwards received a J.D. from Stanford Law
School, a B.A/M.A. in International Business Law from Oxford University
(Marshall Scholar), and a B.A. in Economics from Brigham Young University
(Valedictorian). He has also worked at the White House and at the United States
Supreme Court.
Kenneth M. Woolley: Director
Mr. Woolley has been a founder and director of several companies. Mr.
Woolley served on the Board of Directors of Megahertz Holding Corporation, the
leading manufacturer of fax/modems for laptop and notebook computers until
February 1995. Prior to the merger of Megahertz and VyStar Group, Inc. in June
1993, Mr. Woolley had served as President of the parent company. Since 1979, Mr.
Woolley has been a principal in Extra Space Management, Inc. and Extra Space
Storage, privately held companies engaged in the ownership and management of
mini-storage facilities. Since 1989, Mr. Woolley has been a partner in D.K.S.
Associates, and since 1990 a director and executive officer of Realty
Management, Inc., privately held companies engaged in the ownership and
management of apartments, primarily in Las Vegas, Nevada. Mr. Woolley is a
director of Cirque Corporation. Mr. Woolley also serves as an associate
professor of business management at Brigham Young University. Mr. Woolley holds
a B.A. in Physics from Brigham Young University, an M.B.A. and a Ph.D. in
Business Administration from the Stanford University Graduate School of
Business. Mr. Woolley is available to the Company on a part-time, as needed
basis.
3
Glen Hartman: Director
Mr. Hartman has been a director of the Company since July 1998. Mr.
Hartman is the founder. principal and a member of the board of directors of
Cosine Communications, Inc. since 1996. Mr. Hartman is also the founding general
partner of Falcon Capital, LLC, a private equity investment company,
specializing in technology companies since 1995. From 1992 to 1995 Mr. Hartman
served as CEO and Chairman of Apex Data, a computer peripherals manufacturing
company. Mr. Hartman holds a B.A. in Economics from UCLA..
Meetings. The Board of Directors held 12 meetings in fiscal 1998. The
Board of Directors has appointed a Compensation Committee consisting of Mr.
Egide, Mr. Woolley and Mr. Hartman. The Compensation Committee, which is
responsible for reviewing and recommending the approval to the Board of
Directors of compensation of the officers of the Company, met two times during
fiscal 1998. The Audit Committee, comprised of Mr. Egide, Mr. Woolley and Mr.
Hartman, is responsible for periodically reviewing the financial condition and
the results of audits of the Company with its independent public accountants.
The Audit Committee met one time in fiscal 1998.
Non-employee directors are reimbursed their out-of-pocket expenses for
attending Board and Committee meetings.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding Common Stock of
the Company beneficially owned as of October 7, 1998 by: (i) each person known
by the Company to beneficially own 5% or more of the outstanding Common Stock,
(ii) each director and director nominee, (iii) each executive officer named in
the Summary Compensation Table, and (iv) all officers and directors as a group.
As of October 7, 1998, there were 13,099,210 shares of Common Stock outstanding
and no Preferred Stock outstanding.
Amount of Percentage
Names and Addresses of Common of Voting
Principal Stockholders Shares* Securities
---------------------- ------- ----------
L. H. Trust 995,296 7.6%
Castletown, Isle of Man
955,414 7.3%
America Online, Inc.
22000 AOL Way
Dulles, Virginia 20166
Officers and Directors
----------------------
James A. Egide 1,663,898(1) 12.7%
136 Heber Avenue, Suite 204
Park City, Utah 84060
Raymond J. Pittman 1,930,127 14.7%
187 Fremont Street
San Francisco, California 94105
Kenneth M. Woolley 387,000(2) 2.9%
136 Heber Avenue., Suite 204
Park City, Utah 84060
Mitchell L. Edwards 420,307(3) 3.1%
136 Heber Avenue., Suite 204
Park City, Utah 84060
Glen Hartman 66,667 0.5%
136 Heber Avenue, Suite 204
Park City, Utah 84060
All Directors and Executive Officers 4,467,999 32.7%
(5 persons)
* Assumes exercise of all exercisable options held by listed security holders
which can be acquired within 60 days from October 7, 1998.
4
(1) Includes 25,000 shares which Mr. Egide may acquire on exercise of options.
(2) Includes 225,000 shares which Mr. Woolley may acquire on exercise of
options.
(3) Includes 280,000 shares which Mr. Edwards may acquire on exercise of
options. Does not include 85,000 shares which may be acquired on exercise of
options which are not currently exercisable.
The stockholders listed have sole voting and investment power, except as
otherwise noted.
EXECUTIVE COMPENSATION
The following table sets forth the aggregate cash compensation paid by
the Company for services rendered during the last three years to the Company's
Chief Executive Officer as of June 30, 1997 and to each of the Company's other
executive officers whose annual salary and bonus exceeded $100,000.
Summary Compensation
Long-Term
Annual Compensation Compensation
------------------- ------------
Other Annual
Name and Principal Year Ended Salary Bonus Compensation Options/SARs
Position June 30 ($) ($) ($) (#)
-------- ------- --- --- --- ---
Raymond J. Pittman 1998 $ -
Chief Executive Officer
Mitchell L. Edwards 1998 $ 150,000 $25,000 215,000
Executive Vice
President, Chief
Financial Officer
Compensation of the executive officers may be increased from time to time as
recommended by the compensation committee and approved by the Board of
Directors.
Stock Options Granted in Last Fiscal Year
5
Potential Realizable Value
as Assumed Annual Rates
of Stock Price Appreciations
Individual Grants for Option Term
- ------------------------------------------------------------------------------------------------------------
% of Total
Options
Granted to
Options Employees Exercise Expiration 5% 10%
Name Granted (#) in 1998 Price Date ($)
- ------------------------------------------------------------------------------------------------------------
Mitchell L.
Edwards 65,000 8.0% $2.75 Oct. 2007 $ 8,938 $17,875
- ------------------------------------------------------------------------------------------------------------
150,000 18.3% $2.75 Mar. 2008 20,625 41,250
- ------------------------------------------------------------------------------------------------------------
Total 215,000 26.3% $2.75 $29,563 $59,125
- ------------------------------------------------------------------------------------------------------------
Aggregated Option Exercises and Year-End Option Values in Fiscal 1998
The following table summarizes for each of the named executive officers
of the Company the number of stock options, if any, exercised during fiscal
1998, the aggregate dollar value realized upon exercise, the total number of
unexercised options held at June 30, 1998 and the aggregate dollar value of
in-the-money unexercised options, if any, held at June 30, 1998. Value realized
upon exercise is the difference between the fair market value of the underlying
stock on the exercise date and the exercise price of the option. The value of
unexercised, in-the-money options at June 30, 1998 is the difference between its
exercise price and the fair market value of the underlying stock on June 30,
1998, which was $9.375 per share based on the closing bid price of the Common
Stock on June 30, 1998. The underlying options have not been, and may never be,
exercised; and actual gains, if any, on exercise will depend on the value of the
Common Stock on the actual date of exercise. There can be no assurance that
these values will be realized.
Value of Unexercised
Number of Unexercised Options In-the-Money Options at
at 6/30/98 6/30/98
---------- -------
Shares
Acquired Value
on Realized
Name Exercise(#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------
Raymond J. Pittman 0 $ 0 0 0 $ 0 0
Mitchell L. Edwards 0 $ 0 265,000 150,000 $1,755,625 $ 993,750
Stock Option Plan
The Company has adopted the Amended and Restated Incentive Plan (the
"Option Plan") to assist the Company in securing and retaining key employees and
directors. The Option Plan provides that options to purchase a maximum of
2,500,000 shares of Common Stock may be granted to (i) directors and
consultants, and (ii) officers (whether or not a director) or key employees of
the Company ("Eligible Employees"). The Option Plan will terminate in 2014
unless sooner terminated by the Board of Directors.
The Option Plan is administered by a committee (the "Option Committee")
currently consisting of the Board of Directors. The total number of options
granted in any year to Eligible Employees, the number and selection of Eligible
Employees to receive options, the number of options granted to each and the
other terms and provisions of such options are wholly within the discretion of
the Option Committee, subject to the limitations set forth in the Option Plan.
The option exercise price for options granted under the Plan may not be less
than 100% of the fair market value of the underlying common stock on the date
6
the option is granted. Options granted under the Option Plan expire upon the
earlier of an expiration date fixed by the Option Committee or five years from
the date of grant.
Under the Option Plan, the Company may issue both qualified and
non-qualified stock options. As of June 30, 1998, options to purchase 1,643,000
shares of Common Stock were outstanding under the Plan.
Compensation of Directors
The Company's non-employee Directors are not currently compensated for
attendance at Board of Director meetings. Non-employee directors may be granted,
on an ad hoc basis, stock options upon being appointed to the Board. The Company
may adopt a formal director compensation plan in the future. All of the
Directors are reimbursed for their expenses for each Board and committee meeting
attended.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the National Association of Securities Dealers. Officers, directors and
greater than ten-percent stockholders are required by Securities and Exchange
Commission regulations to furnish the Company with copies of all Section 16(a)
forms they file. Based solely on a review of the copies of such forms furnished
to the Company and on representations that no other reports were required, the
Company has determined that during the last fiscal year all applicable 16(a)
filing requirements were met except as follows: Mitchell Edwards and Michael
Bard were late in filing a Form 4 which was due within 10 days of the month end.
CERTAIN TRANSACTIONS
During the year ended June 30, 1994, the Company made cash loans to two
officers totaling $46,000, which were settled during the year ended June 30,
1995, except for $1,000 which was settled during the year ended June 30, 1997.
Prior to July 1, 1994, the Company had borrowed money from certain
officers. Additional borrowings of $50,000 and $129,500 were made during the
years ended June 30, 1996 and 1995, respectively. Principal payments on these
notes were $1,666, $199,500, and $2,152 during the years ended June 30, 1997,
1996 and 1995, respectively. The amounts due on these loans at June 30, 1998,
1997 and 1996 were $0, $0 and $1,666, respectively.
During the year ended June 30, 1996, the Company borrowed $500,000 from
a bank to fund computer equipment purchases. Certain officers and stockholders
guaranteed the loan. In exchange for the guarantee, such persons received a
one-year option to purchase 25,000 shares of common stock at $5.00 per share.
During the year ended June 30, 1997, the Company negotiated services
and equipment purchase agreements with CasinoWorld Holdings, Ltd., Cybergames,
Inc., Online Investments, Inc. and Barrons Online, Inc., companies in which Mr.
Egide, one of the Company's directors and stockholders has an ownership
interest. Under the agreements, the Company provided software development
services, and configured hardware and other computer equipment.
7
COMPENSATION COMMITTEE REPORT
The Company's executive compensation policies are administered by the
Compensation Committee. The Compensation Committee reviews and determines the
compensation of the Company's officers and evaluates management performance,
management succession and related matters.
The compensation policy of the Company is to provide competitive levels
of compensation that are influenced by performance, that reward individual
achievements, and that enable the Company to attract and retain qualified
executives. Compensation consists primarily of annual salary and long-term
incentive compensation in the form of stock options. Bonuses are awarded only in
circumstances when, in the Compensation Committee's subjective judgment, a
particular executive had exceptional performance during the prior year.
The Compensation Committee believes that Mr. Edwards' contribution to
the Company in fiscal 1998 justifies the bonus he received and the stock options
he was granted.
The Compensation Committee:
James A. Egide
Kenneth M. Woolley
Glen Hartman
PERFORMANCE GRAPH
The following chart shows how $100 invested as of June 30, 1995, in
shares of the Company's Common Stock would have grown during the two-year period
ended June 30, 1998, as a result of changes in the Company's stock price,
compared with $100 invested in the Standard & Poor's 500 Stock Index and in the
Standard & Poor's Technology 500 Index.
The Company's Common Stock began to be quoted on the OTC Bulletin Board
in January 1995, prior to that time there was no public market for the
securities of the Company's predecessor and the Company is not aware of any
quotations for its securities during that period.
Comparison of Two Year Cumulative Total Return
Digital Courier Technologies, Inc., S&P 500 Index, and S&P Technology 500
8
[GRAPHIC OMITTED]
Company/Index Name 1995 1996 1997 1998
- ------------------ ---- ---- ---- ----
Digital Courier Technologies $ 100.00 $ 3600.00 $ 685.71 $ 937.50
S&P 500 Index 100.00 119.16 181.16 195.29
S&P Technology - 500 100.00 126.00 169.72 228.02
PROPOSAL No. 1
ELECTION OF DIRECTORS
Pursuant to the Articles of Incorporation of the Company, the Board of
Directors is to be comprised of not fewer than three members. The term of the
directors is to be for a period of one year or until their successors are duly
elected and qualified. Accordingly, the directors elected at this meeting will
serve until the next annual meeting to be held in 1999, or until their
successors are elected and qualified. The persons named in the enclosed form of
Proxy will vote the shares represented by such Proxy FOR the election of the
nominees for director named below. The nominees are:
Name of Nominee Age Current Position
James A. Egide 64 Director, Chairman
Raymond J. Pittman 29 Director, Chief Executive Officer
Mitchell L. Edwards 40 Director, Executive Vice
President, Chief Financial
Officer
Kenneth M. Woolley 51 Director
Glen Hartman 41 Director
9
Biographical information regarding the nominees is set forth above
under the caption "Directors and Executive Officers."
Pursuant to the Company's Amended and Restated Certificate of
Incorporation, every holder of Common Stock voting for the election of directors
is entitled to one vote for each share of Common Stock. A stockholder may vote
each share once for one nominee to each of the director positions being filled,
and there is no cumulative voting.
Proxies solicited hereby (other than Proxies in which the vote is
withheld as to one or more nominees) will be voted for the candidates standing
for election as directors nominated by the Board. If any nominee is unable to
serve, the shares represented by all valid proxies will be voted for election of
such substitute as the Board may recommend. At this time, the Board knows of no
reason why any nominee might be unavailable to serve.
The Board of Directors unanimously recommends a vote FOR each of the
director nominees.
PROPOSAL No. 2
APPROVAL OF AMENDMENT TO COMPANY'S AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK
The Board of Directors has unanimously adopted, subject to stockholder
approval, an amendment to Article IV of the Company's Amended and Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 20,000,000 shares to 50,000,000 shares. The text of Article
IV, as it is proposed to be amended, is as follows: "The total number of shares
of stock of all classes which the Corporation shall have the authority to issue
is Fifty Two Million Five Hundred Thousand (52,500,000), of which Fifty Million
shares shall have the a par value of One Hundredth of One Cent ($.0001) each and
shall be shares of common stock (the "Common Stock"), and Two Million Five
Hundred Thousand (2,500,000) shares shall have the par value of One Hundredth of
One Cent ($.0001) each and shall be shares of preferred stock (the "Preferred
Stock")."
The additional Common Stock to be authorized by adoption of the
proposed amendment would have rights identical to the currently outstanding
Common Stock of the Company. Adoption of the proposed amendment and issuance of
the Common Stock would not affect the rights of the holders of currently
outstanding Common Stock, except for effects incidental to increasing the number
of shares of the Common Stock outstanding, such as dilution of the earnings per
share and voting rights of current holders of Common Stock. The holders of
Common Stock do not presently have preemptive rights to subscribe for the
additional Common Stock proposed to be authorized. If the amendment is adopted,
it will become effective upon filing of a Certificate of Amendment of the
Company's Amended and Restated Certificate of Incorporation with the Secretary
of State of Delaware. Under the present Amended and Restated Certificate of
Incorporation, the Company has the authority to issue 20,000,000 shares of
Common Stock, $.0001 par value per share, and 2,500,000 shares of Preferred
Stock, $.0001 par value per share. At October , 1998, 13,099,210 shares of
Common Stock were issued and outstanding and no shares of Preferred Stock were
outstanding. Accordingly, as of October , 1998, after taking into account the
shares reserved for issuance upon the exercise of Company stock options and upon
the conversion or exercise of certain warrants issued by the Company, there
remained approximately 3,563,848 shares of Common Stock available for issuance.
The proposed amendment would provide for an additional 30,000,000 shares of
Common Stock available for issuance.
10
The purpose of the increase in authorized shares is to provide
additional shares of Common Stock that could be issued for corporate purposes
without further stockholder approval unless required by applicable law or
regulation. The Company currently expects that purposes for additional shares
will include effecting acquisitions of other businesses or properties, providing
equity incentives to employees, officers and directors, establishing strategic
relationships with other companies, and securing additional financing for the
operation of the Company through the issuance of additional shares. The Board of
Directors believes that it is in the best interests of the Company to have
additional shares of Common Stock authorized at this time in order to alleviate
the expense and delay of holding a special meeting of stockholders if and when
there is a need to issue additional shares of Common Stock.
The Company is currently in negotiations with various parties to obtain
additional working capital through a private placement of the Company's debt or
equity securities. Certain of these potential transactions could involve the
issuance of convertible debt or convertible preferred stock which would be
convertible into shares of Common Stock. The Company could be required, under
certain circumstances, to reserve for issuance or issue more shares of Common
Stock than are presently authorized. Although there can be no assurance that the
Company will enter into such a private placement, authorization of the
additional shares will facilitate these negotiations.
The additional shares of Common Stock that would become available for
issuance if the proposed amendment were adopted could also be used by the
Company to oppose a hostile takeover attempt or delay or prevent changes of
control (whether by merger, tender offer, proxy contest or assumption of control
by a holder of a large block of the Company's securities) or changes in or
removal of management of the Company. For example, without further stockholder
approval, the Board of Directors could strategically sell shares of Common Stock
in a private transaction to purchasers who would oppose a takeover or favor the
current Board of Directors. Although this proposal to increase the number of
authorized shares of Common Stock has been prompted by business and financial
considerations, not by the threat of any attempt to accumulate shares or
otherwise gain control of the Company (nor is the Board of Directors currently
aware of any such attempts directed at the Company), stockholders nevertheless
should be aware that approval of the proposal could facilitate future efforts by
the Company to deter or prevent changes of control of the Company, including
transactions in which the stockholders might otherwise receive a premium for
their shares over then-current market prices or benefit in some other manner. In
addition, the authority granted by the Company's Amended and Restated
Certificate of Incorporation to the Board of Directors to fix the designations,
powers, preferences, rights, qualifications, limitations and restrictions of any
class or series of the Company's stock could be used for anti-takeover purposes.
The proposal to increase the number of authorized shares of Common Stock,
however, is not part of any plan to adopt a series of amendments having an
anti-takeover effect, and the Company's management presently does not intend to
propose anti-takeover measures in future proxy solicitations.
For the reasons stated herein, the Board of Directors unanimously
recommends that stockholders vote FOR approval of the AMENDMENT TO THE AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK.
PROPOSAL No. 3
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has selected Arthur
Andersen LLP as the independent public accountants to audit the consolidated
financial statements of the Company for the fiscal year ending June 30, 1999. A
member of such firm is expected to be present at the Annual Meeting, will have
an opportunity to make a statement if so desired, and will be available to
respond to appropriate questions.
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If the stockholders of the Company do not ratify the selection of
Arthur Andersen LLP, or if such firm should decline to act or otherwise become
incapable of acting, or if its employment is discontinued, the Board of
Directors or the Audit Committee will appoint other independent public
accountants.
Ratification of the selection of Arthur Andersen LLP as the Company's
independent public accountants will require the affirmative vote of a majority
of the Common Stock present and properly voting at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
SELECTION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS.
STOCKHOLDER PROPOSALS
Stockholder proposals to be presented at the 1999 Annual Meeting of
Stockholders must be received at the Company's executive offices at 136 Heber
Avenue, Suite 204, P.O. Box 8000, Park City, UT, 84060, addressed to the
attention of the Secretary, by June 5, 1999 in order to be considered for
inclusion in the Proxy Statement and form of proxy relating to such meeting.
ANNUAL REPORT
The Annual Report of the Company for the year ended June 30, 1998 is
being mailed to the stockholders of the Company along with this Proxy Statement.
The Annual Report contains the Company's Annual Report for the year ended June
30, 1998, including the financial statements and management's discussion and
analysis of such financial statements and the report thereon of Arthur Andersen
LLP.
OTHER BUSINESS
The Board of Directors knows of no other business which will be
presented for consideration at the Annual Meeting other than as stated in the
accompanying Notice of Annual Meeting of Stockholders. If, however, other
matters are properly brought before the Annual Meeting, it is the intention of
the persons named in the accompanying form of Proxy to vote the shares
represented thereby on such matters in accordance with their best judgment and
in their discretion, and authority to do so is included in the Proxy.
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Digital Courier Technologies, Inc.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON NOVEMBER 1998
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Mitchell L. Edwards and Michael D. Bard, or
either of them, each with full power of substitution, as proxies, attorneys and
agents of the undersigned, to attend the Annual Meeting of Stockholders of
Digital Courier Technologies, Inc., at the offices of the Company, 136 Heber
Ave., Suite 204, Park City, UT 84060, on November __, 1998 at 10:00 am Mountain
Time, and any adjournment or postponement thereof, and to vote the number of
shares the undersigned would be entitled to vote if personally present on the
following:
1. Election of Directors:
James D. Egide; Kenneth W. Woolley; Raymond J. Pittman; Mitchell L.
Edwards; Glen Hartman INSTRUCTIONS: To withhold authority to vote for
any individual nominee, place the "X" through that individual's name
above.
2. To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation increasing the authorized number of Common
Shares outstanding:
_ For _Against _ Abstain
3. To ratify the appointment of Arthur Anderson LLP as the Company's
independent public accountants for the year ending June 30, 1999:
4. In their discretion, upon any and all such other matters as may
properly come before the meeting or any adjournment or postponement
thereof.
The Board of Directors recommends a vote FOR each of the above proposals.
THIS PROXY WILL BE VOTED AS SPECIFIED, OR IF NO CHOICE IS SPECIFIED, WILL BE
VOTED FOR THE FIVE NOMINEES FOR ELECTION AND FOR PROPOSALS 2 AND 3.
Date:_____________, 1998
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Signature
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Signature, if held jointly.
Please sign exactly as name appears. When shares are held by joint tenants, both
should sign. When signing as attorney, as executor, as administrator, trustee,
or guardian, please give full title as such. If a corporation, please sign full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
STOCKHOLDERS ARE URGED TO MARK, DATE, SIGN AND RETURN THIS PROXY IN THE ENVELOPE
PROVIDED WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.