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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of report: May 2, 2000
(Date of earliest event reported)
FRONT PORCH DIGITAL INC.
(Exact name of Registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation)
333-16031 86-0793960
(Commission File No.) (I.R.S. Employer
Identification No.)
1810 Chapel Avenue West
Suite 130
Cherry Hill, New Jersey 08002
(Address of principal executive offices; zip code)
(856) 663-3500
(Registrant's telephone number, including area code)
Empire Communications Corporation
545 West 150 South
Springville, Utah 84663
(Former Name or Former Address, if changed Since Last Report)
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Item 1. Changes in Control of Registrant.
(a) On May 2, 2000, the Registrant and Front Porch Digital Inc., a
Delaware corporation ("Front Porch"), executed an Agreement and Plan of
Reorganization (the "Plan"), whereby the Registrant acquired 100% of the
outstanding equity securities of Front Porch from its stockholders (the "Front
Porch Stockholders"), as set forth on Exhibit A to the Plan.
The source of the consideration used by the Front Porch Stockholders to
acquire their respective interests in the Registrant was the exchange of all of
the issued and outstanding equity securities of Front Porch in accordance with
the Plan.
The basis of the "control" by the Front Porch Stockholders is stock
ownership.
The Plan provided for:
1. The acquisition of 100% of the outstanding equity securities of
Front Porch;
2. The issuance and exchange of 9,400,000 shares of the Registrant's
common stock for the outstanding common stock of Front Porch, which
shares of common stock of the Registrant were "restricted
securities" under the Securities Act of 1933, as amended;
3. The resignation of Susan M. Grant as the sole director and executive
officer of the Registrant;
4. The election of Dr. Jay Yogeshwar, Donald Maggi and Dr. Richard
Mammone to the Board of Directors of the Registrant;
5. The contribution of 40,000,000 shares of common stock of the
Registrant owned by Susan M. Grant to the treasury of the
Registrant;
6. The adoption by the majority of the stockholders of Registrant of
all resolutions required or necessary to (i) change the name of
Registrant from "Empire Communications Corporation" to "Front Porch
Digital Inc." and (ii) designate and elect the nominees of Front
Porch to serve on the Board of Directors of the Registrant; and
7. The issuance and exchange of warrants to acquire 7,400,000 shares of
the common stock of the Registrant for the then-outstanding warrants
to acquire 7,400,000 shares of the common stock of Front Porch.
Prior to the completion of the Plan, there were 46,400,000 outstanding
shares of common stock of the Registrant. Giving effect to the issuance of the
shares outlined above and the cancellation of 40,000,000 shares of common stock
of the Registrant as required by the Plan, there are 15,840,000 issued and
outstanding shares of common stock of the Registrant.
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A copy of the Plan, including all material exhibits and related
instruments, accompanies this Report, which by this reference, is incorporated
herein; the foregoing summary is modified in its entirety by such reference. See
Item 7, Exhibit 2.1.
The former principal stockholder of the Registrant and her percentage of
ownership of the outstanding voting securities of the Registrant prior to the
completion of the Plan was: Susan M. Grant -- 40,000,000 shares (86.20% of the
outstanding shares).
(b) The following table contains information regarding share holdings of
the Registrant's directors and executive officers and those persons or entities
who beneficially own more than five percent of the Registrant's common stock,
taking into account the issuance of all shares under the Plan:
Amount and Nature Percent
of Beneficial of
Name Title Ownership Class
---- ----- --------- -----
Jay Yogeshwar Chairman of the Board 6,700,000(1) 42.30%
Chief Executive Officer
Director
Melanie R. Fendt Chief Technology Officer 1,000,000 6.31%
Frederick M. Venzie III Vice President 500,000 3.15%
Frances Hetherington Controller 190,000 1.19%
Donald Maggi Director 10,000(2) *
Dr. Richard Mammone Director 10,000(2) *
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* Less than one percent.
(1) Includes 300,000 shares owned by Dr. Yogeshwar's wife.
(2) Represents the shares issuable upon the exercise of currently exercisable
stock options.
Item 2. Acquisition or Disposition of Assets.
(a) See Item 1.
The consideration exchanged under the Plan was negotiated at "arms length"
and the Board of Directors of the Registrant used criteria used in similar
proposals involving the Registrant in the past, including the relative value of
the assets of the Registrant; its present and
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past business operations; the future potential of Front Porch; the management of
Front Porch; and the potential benefit to the stockholders of the Registrant.
The Board of Directors determined that the consideration for the exchange was
reasonable under these circumstances.
No director, executive officer or controlling person of the Registrant had
any direct or indirect interest in Front Porch prior to the completion of the
Plan.
(b) The Registrant intends to continue the business operations conducted
and intended to be conducted by Front Porch, and which are described under Item
5 below under the caption "Business."
Item 5. Other Events.
The following sets forth certain information regarding the business and
management of the Registrant following the consummation of the transactions
contemplated by the Plan.
BUSINESS
The Registrant is a broadband digital media solutions provider that offers
services that facilitate the distribution of digital content over a variety of
delivery mechanisms, including Internet streaming, digital cable, Digital
Versatile Disc (DVD) and digital television. The Registrant's proprietary
production process automates the pre-mastering and programming of broadband
video and audio content. Using a software-based production model that decouples
the processes of capture, compression, archiving and streaming, the Registrant
is able to offer adaptable yet cost-effective, full-featured digital media
services. The Registrant believes its production process is unique in that it
requires only a single capture of analog content to produce multiple digital
storage or transmission formats.
The Registrant believes its proprietary software-based solution offers
significant advantages over alternatives in the marketplace. Traditional
production models are heavily dependent on hardware and do not scale easily,
requiring a higher level of capital investment and people resources. Traditional
production models also require multiple captures of analog source material to
convert digital content to multiple end-user formats. In addition, most
production facilities have little or no software support, which results in
limitations in user service offerings and dependence on third-party software
vendors. Through its service bureau, the Registrant currently provides content
owners with flexible, cost-effective services and automated tools that
facilitate the distribution of digital content for business, education and
entertainment.
The Registrant maintains a research and development staff to develop
intellectual property and software products aimed at broadband content
processing, manipulation and transmission. This custom software development is
also aimed at continually optimizing the production process with the goal of
obtaining the highest quality of service. The Registrant is also an authorized
reseller of DVD authoring software tools developed by Daikin U.S. Comtec
Laboratories. The Registrant expects to enter into additional reseller
arrangements for other leading broadband content processing hardware and
software.
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Industry Trends
Over the past four years, the digital media industry has grown from niche
status to mainstream acceptance. Cable companies are transitioning from analog
delivery of video to digital-DBS and digital cable. The consumer market is
making a similar transition from VCRs to DVD and Digital VCRs.
In addition, the Internet is fast becoming a preferred conduit for content
and entertainment delivery. The advent of broadband connectivity, such as xDSL
and cable modems, is speeding this process. The lack of universal high bandwidth
connectivity to the Internet, however, provides an opportunity for DVD-based
distance learning and training.
The Internet and many Internet software, hardware and service providers
have experienced dramatic growth in recent years. In January 2000, Computer
Industry Almanac estimated that the number of global worldwide Internet users
will more than double between 2000 and 2005 and will reach a global population
of 765 million users. The use of broadband technologies on the Internet also has
shown significant growth. According to Jupiter Communications, high speed
connectivity in the form of cable modems, xDSL and satellite technology will
grow from 5.4% of all Internet access in 1999 to over 23% by the year 2003. The
development of video and audio delivery solutions, together with the development
and proliferation of broadband connectivity, has fostered the Internet's
transition from a static environment of text-oriented Web pages to a more
attractive and dynamic multimedia environment.
The Registrant believes that as the Internet continues to evolve as a mass
communications medium, end-users will spend an increasing amount of their time
online visiting sites that offer high-quality video and audio content. The
rising popularity of the Internet also has spurred the development of commercial
applications, including online commerce and advertising. International Data
Corporation estimates that the total purchases made over the Internet will grow
from $32.4 billion in 1998 to $425.7 billion by 2002. The Registrant believes
that growth in commercial applications on the Internet will increase demand for
streamed digital media as on-line merchants and businesses seek to increase the
effectiveness of their Web sites by enhancing their sites with video and audio.
Digital Media Services
The Registrant is pioneering a new hybrid software solution for the
creation of digital media that reduces the reliance on special purpose computer
hardware. The Registrant's service bureau intends to exploit the synergies
gained from its custom software development with its high throughput production
services. Proprietary processes are used by the Registrant to help streamline,
scale and optimize all aspects of production. The Registrant differentiates
itself from other digital media service bureaus that offer only one component of
digital media by offering an end-to-end solution, including the ability to
provide production services for multiple digital business modalities, including
DVD, streaming media and cable/broadcast television.
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Current Internet infrastructure businesses typically offer services in
fragmented areas. As a result, they are not able to leverage all of the
commonality associated with distribution of the same content. The Registrant is
able to provide the following services as a result of having a full
understanding of the underlying technologies, strong software development
capabilities, and key marketing and business relationships.
Encoding
o MPEG Encoding: MPEG-1, 2 and 4 standards are ubiquitous and
universally used in applications such as CD-I, digital cable,
digital television, wireless transmission of video and video
teleconferencing. The Registrant can encode user content in any of
the MPEG formats, and any derivative format, such as H.261 and H.263
used in video teleconferencing.
o JPEG and JPEG-2000: The Registrant can provide still picture
compression in standard formats, such as JPEG and JPEG-2000, or
proprietary formats as specified by customers, such as Wavelet
compression. These formats are typically used for stock footage and
picture archives.
o Quicktime, Real and Microsoft ASF: The Registrant can compress user
content in these formats, either as highband or lowband data. The
compressed digital content may then be stored on servers for
streaming via the Internet.
Archiving
o The Registrant can provide archival services in which it captures
digital media at the highest desired resolution for future
conversion to any video or audio format of the customer's choice.
The format conversions may be performed in software and on-demand
using proprietary rate and format converter software currently under
development by the Registrant. The archival media may also be
specified by the customer, including magnetic tape, hard disk or
optical media.
DVD Services
o DVD Pre-mastering - Analog content is captured and compressed to
create a digital media file. Menu graphics are added to facilitate
access to components of the DVD. Content and navigation menus are
generated for replication.
o Enhanced DVD Production - Digital media is enhanced to provide
additional functionality. Possible enhancements include the addition
of Web links to provide additional information or e-commerce support
or the addition of a Macromedia Projector-like application to tell
an
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interactive story. Applications for enhanced DVDs include games,
training, distance learning and product marketing.
o DVD Applications Development - This service is provided for a
variety of uses, such as distance learning, computer-based training
and education manuals. This service is targeted primarily at large
custom orders.
o DVD-ROM, which combines data with PC-based applications, is used as
a large storage medium and a replacement for the hard disk. Possible
uses for DVD-ROMs include factory training manuals, distance
learning courses, games, e-magazines, data books, such as phone
books or product catalogs, and interactive encyclopedias.
o DVD Audio offers a multichannel sound with extremely high quality
content. The Registrant intends to develop proprietary software to
provide DVD audio authoring services that will incorporate audio
processing with value-added services, such as compression,
normalization and sweetening.
o DVD-based Archiving is currently the most inexpensive storage media
for multimedia. Database functionality is added to the archival
process to facilitate retrieval. Utilizing a built-in browser,
snippets of video or audio from within larger assets can also be
retrieved intelligently.
Streamed Digital Media
o Internet - The quality of most video streamed over limited-bandwidth
networks is currently poor. Availability of high-speed conduits,
such as xDSL, cable modems and satellite receivers, makes it
possible to stream better-quality video from a web server while
maintaining acceptable download speeds. One key requirement for
improving Internet streaming is the ability of the server to produce
compressed streams at different compression ratios. The Registrant
provides streamed media services on the Internet in a variety of
formats, including Real Networks, Microsoft Media Technology,
Quicktime and MPEG-1/MPEG-2.
o Corporate Video On Demand (VOD) is based on non-real time video that
is produced and stored for delivery over high-bandwidth conduits for
on-demand desktop access and consumption using a browser-like
interface. The Registrant is offering content capture, management
and distribution services to enable its customers to realize the
growth and potential of corporate and educational VOD.
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Other Services
o System Integration Services - Digital video/audio based production
systems are highly complex and are dependent on custom solutions and
the integration of multiple components, including DVD pre-mastering,
asset management, multimedia archival, and the creation and delivery
of streaming video content. The Registrant's expertise in the areas
of complex end-to-end systems, design and integration will be used
to provide turnkey digital production systems to end-users.
Research and Development
The Registrant maintains a software development staff that designs and
develops the Registrant's new products and services. The Registrant believes
that by performing most of its own software development, it can more quickly and
cost-effectively introduce new and innovative technologies and services. In
addition, the Registrant believes it will be better equipped to incorporate
customer preferences into its development plans. The Registrant regards its
technology as proprietary and attempts to protect it with patents, copyrights,
trade secret laws, restrictions on disclosure and other methods.
The Registrant is in the process of developing software tools and products
in the following areas:
o Digital Video Workstation - Traditional production models use
software tools from multiple vendors to accomplish a task, such as
DVD pre-mastering. Typically, this process involves the use of a
compressor, an image manipulating tool, an audio processing tool, an
authoring tool and possibly a quality control tool, all from
different vendors. Each tool, with its unique user interface, may
generate data formats that are incompatible with other tools. As a
result, operators, such as compressionists and graphic artists,
typically require more time to familiarize themselves with these
tools, which slows down production. The Registrant is developing a
digital video workstation that features a single interface that can
seamlessly integrate all aspects of the DVD production process. This
workstation will also feature built-in programming for scheduling
and pipelining CPU-controlled jobs.
o Smart Database for Video Archiving - The Registrant is also involved
in the business of managing multimedia content. One aspect of this
management process is the creation and maintenance of a key-word
searchable audio, video, text and graphics archive that can be
searched using standard English text. The Registrant intends to work
with leading providers of content management tools to implement the
most efficient archival solution for its customers. The Registrant
may also develop proprietary applications to manage stock footage
sales and to preview content prior to packaged media sales, and for
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broadband Video On Demand (VOD). The Registrant believes combining
an intelligent database with DVD video will increase the value of
the content by making it more accessible. The Registrant also
believes its archival/retrieval system will enhance VOD by enabling
users to locate and access particular content of interest.
o All Format Converter - The Registrant is developing an all-format
converter product that is intended to act like a black box that
converts one of many input video and audio formats to the desired
format. A profusion of video formats in the industry has led to
market fragmentation and loss of interoperability among key
components of a production system. An example of this is the
disconnect observed in the area of non-linear editing and DVD
production. While most popular non-linear editors create video in
MJPEG or AVI file format, DVD requires the video to be either in
MPEG-1 or MPEG-2. In another scenario, cable companies hosting
compressed video on their video servers have very specific data-rate
and packetization requirements. However, previously compressed
content may not match the bit-rate or packet format. The Registrant
believes a format transcoder will easily solve the problem.
Proprietary algorithms developed by the Registrant will be used in
the creation of the Registrant's format transcoder.
Market Outlook
Digital Cable. In 1998, there were approximately 500,000 digital cable
subscribers. By the end of 1999, this number had grown to an estimated 2.7
million households. The cable subscriber revenue base is approximately $30
billion annually with advertising revenues of $7 billion. Cable companies have
invested heavily in infrastructure improvements -- over $6 billion in 1999 alone
- -- bringing customers higher quality pictures and sound, more programming and
two-way capable systems. From 1996 through 2001, the cable industry is projected
to spend an estimated $33 billion to upgrade its facilities.
Broadband Video/Audio in Consumer Electronics. Yankee Group forecasts
sales of separate Digital Video Recorders (DVRs) will reach 500,000 units in the
year 2000, compared to 850,000 units for recorders that are built into DBS
receivers. In addition, another 110,000 consumers will use DVR-like services
provided by cable operators. By the end of 2003, stand-alone recorders will make
up only 23% of the total U.S. installed base of 11.6 million units, with bundled
DBS units and cable-based services accounting for 45% and 32%, respectively.
Distributed Learning. Corporate learning today has grown to strategic
prominence in the context of the management of an enterprise. The number of
corporate universities has grown 400% in the last ten years to approximately
1,600. The result is an emerging $11.4 billion market for companies offering
business-to-business electronic/distributed learning solutions.
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DVD. In the field of consumer electronics, the strongest category in 1999
was DVD players. Following on the heels of a record breaking 1999, DVD players
opened the year 2000 with 370,000 units shipped in January, a 195% increase over
last January's shipments. The Consumer Electronics Association (CEA) estimates
that DVD player sales will again be strong in 2000, reaching more than 6.5
million units.
Business Strategy
The Registrant believes content owners are seeking to take advantage of
the digital media revolution. The Registrant's objective is to establish itself
as the leading service provider for broadband digital media solutions. The
Registrant's strategy for achieving this goal includes the following key
components:
o Target content owners to convert analog masters to digital;
o Target content owners to duplicate VHS offerings on DVD;
o Target record management firms to offer DVDs to clients as an
alternative to CD-ROMs;
o Target leading web sites and content publishers to offer enhanced
broadband deployment and transmission strategies; and
o Develop and sell custom software products.
The Registrant intends to target its sales and marketing efforts at
content owners with significant video and audio volume and quality requirements,
primarily in the areas of entertainment, business services, education and
training.
Further Develop Automated Delivery Solutions. The Registrant intends to
further develop automated broadband solutions to attract new customers and
remain a technology leader. The Registrant plans to expand the features of its
automated solutions while also developing new, innovative solutions. The
Registrant has already developed several automated pre-mastering interfaces
(APIs). These APIs allow the Registrant to more quickly and efficiently generate
DVD titles. In addition, the Registrant has developed proprietary processes
based on these software APIs, which allow for efficient capture, storage and
processing of digital video and audio.
Provide Full-Service Solutions. The Registrant is a full-service provider,
offering its customers encoding and production services, software solutions,
content distribution and storage. The Registrant believes its customized
software-based, full-service approach to DVD production increases customer
satisfaction by generally lowering the cost of production and reducing delivery
time. The Registrant believes increased customer satisfaction will facilitate
the sale of additional services to its existing customers and significantly
enhance the Registrant's ability to increase its customer base.
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Most media conversion facilities are small, stand-alone operations,
lacking the capability to convert, store and output large film libraries. To
meet the challenge of converting, storing and streaming large libraries of
video, the Registrant's research and development team intends to scale, optimize
and streamline its Service Bureau processes to allow the Registrant to exploit
the digital media opportunities that exist today while keeping an eye to the
future. The Registrant believes its ability to introduce new products
continuously and in a timely manner represents a significant competitive
advantage.
Adapt Technologies to Access New Markets. The Registrant intends to
continue to develop service offerings based on its core technologies to gain
access to new markets for broadband digital media. For example, the Registrant
intends to leverage its expertise in DVD technology to develop enhanced DVD
solutions to meet the business communications needs of various markets,
including investor relations, corporate training, internal corporate
communications and Internet sales.
Strategic Alliances
The Registrant intends to align itself with a wide range of service,
equipment and technology providers to facilitate end-to-end solutions for the
capture, storage and delivery of digital media. Existing relationships include:
o Daikin U.S. Comtec Laboratories (Novato, CA). Daikin is the creator
of the world's first commercially available DVD authoring software,
Scenarist. The Registrant is an authorized distributor of Daikin
products, and is a provider of technical support to Daikin end
users. Through this strategic partnership, the Registrant is in a
position to create value added products that utilize Daikin's
Automation Layer Software.
o Visionary Systems Inc. (Bridgewater, NJ). In April 2000, the
Registrant entered into a strategic relationship with Visionary
Systems Inc. ("VSI") to approach the distributed learning, corporate
training and education markets. VSI is a recently-established
technology company that provides solutions for automatic generation
and dissemination of educational multimedia content, also called
E-learning. VSI has been privately funded by large corporations,
such as Cisco and CMC Magnetics, and is in discussions with Oracle,
Sun and IBM to implement distance learning and training courseware
for colleges and corporations. VSI also partners with Rutgers
University to create, host and distribute on-line degree programs
for that university. VSI believes content generation is one of the
principal factors preventing growth in the $1.1 billion distributed
learning industry. By significantly reducing the cost, time and
expertise required to generate educational content, the Registrant
believes its strategic relationship with VSI can dramatically expand
the distributed learning market. On May 3, 2000, the Registrant
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purchased approximately 2.6% of the outstanding capital stock of VSI
for a purchase price of $300,000.
Sales and Marketing
The Registrant's sales and marketing strategy is designed to promote and
enhance the recognition of the Registrant and its ability to provide
comprehensive, cost effective digital media solutions. Sales leads are generated
through its sales force as well as through referrals from or relationships with
industry contacts. The Registrant also offers its services worldwide indirectly
through a network of entertainment industry contacts who seek to subcontract
phases of DVD production projects to the Registrant. In addition, the Registrant
advertises its services through direct mailings, its presence on the worldwide
web and participation in selected trade shows where potential customers or
referral sources are expected to be present. A significant aspect of the
Registrant's sales strategy is to exploit the established sales and marketing
channels created by its strategic partners.
The Registrant classifies its target customers into three principal
categories:
Business. The Registrant believes there is a growing market for video and
audio applications in business communications on the Internet. The business
communications market includes investor relations, corporate communications,
business training, online sales, and conferences and tradeshows.
Entertainment. Entertainment clients are content owners that desire to
deliver broadband audio, video and game entertainment to an end-user audience
via the Internet, DVD, cable or digital television. The Registrant's target
market is content providers, particularly providers of music, movies and game
software. The Registrant is marketing to this segment directly and through
reseller partners.
Education. Education clients include large education and training content
owners, such as schools and universities, large corporations, and placement and
testing institutions. In addition, organizations that have large inventories of
non-entertainment footage that need to be archived for later review are
potential customers. Examples include the military, airlines and broadcasters.
These clients may use snippets from archived footage to create training material
or incorporate content into new productions. The Registrant believes its
strategic relationship with VSI and other proposed alliances will bolster its
sales and marketing effort in this market segment.
Competition
The market for digital media services is rapidly expanding and highly
competitive. The Registrant expects that the competition will continue to
intensify. The streaming media distribution industry is characterized by rapidly
changing technology, evolving industry standards and frequent new product and
service introductions. The Registrant faces sustained competition from a number
of companies, including Intervu Inc., Sonic Solutions and Loudeye Technologies
Inc. The Registrant also competes with content publishers that employ in-house
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technical personnel to develop digital media technology and to manage their
digital media. Competitive factors in the broadband digital media market include
the quality and reliability of service, price, customer support, patented
technology, and brand recognition.
Employees
As of May 3, 2000, the Registrant had seven full-time employees and three
part-time consultants, of whom three were management personnel, three were
sales/marketing personnel, two were digital media personnel and two performed
software development services. As additional service contracts are received, the
Registrant expects to add employees to perform digital media and software
development services.
Facilities
The Registrant is headquartered in Cherry Hill, New Jersey, where it
leases approximately 7,500 square feet of office space under a lease that
expires February 2004. The Registrant currently pays rent of approximately
$11,500 per month.
MANAGEMENT
Officers and Directors
The following table sets forth certain information with respect to each
officer or director of the Registrant.
Name Age Position
- ---- --- --------
Dr. Jay Yogeshwar 37 Chairman of the Board and Chief
Executive Officer
Melanie R. Fendt 44 Chief Technology Officer
Frederick M. Venzie 52 Vice President -- Delivery
Frances Hetherington 44 Controller
Donald Maggi 41 Director
Dr. Richard Mammone 46 Director
Dr. Jay Yogeshwar. Dr. Yogeshwar was a founder and the Chairman of the
Board and Chief Executive Officer of Front Porch, and became the Chairman of the
Board and Chief Executive Officer of the Registrant in connection with the Plan.
From 1996 to February 2000, Dr. Yogeshwar was the Chief Executive Officer and
the majority shareholder of Front Porch Video, Inc. ("FPV"), a company formed by
Dr. Yogeshwar in 1996 to provide system design services to the competitive
digital multimedia marketplace. FPV was involved in development projects for
Microsoft, Time Warner, Turner Broadcasting, Intel, WorldGate Communications,
FutureTel, Daikin, Custom Technology Corporation and Princeton Electronic
Systems. Prior to founding FPV, Dr. Yogeshwar was a research scientist at
Toshiba America, where he played a
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key role in the development of DVD-related technologies. Dr. Yogeshwar has
received a number of patents for his research and digital technology work. Dr.
Yogeshwar also has received recognition through the publication of numerous
papers and articles on digital media and compression technology. Dr. Yogeshwar
received both his Masters and Doctorate degrees in Electrical and Computer
Engineering from Rutgers University.
Melanie R. Fendt. Ms. Fendt was a founder and the Chief Technology Officer
of Front Porch, and became the Chief Technology Officer of the Registrant in
connection with the Plan. Since December 1998, Ms. Fendt has been a director and
the President and Chief Executive Officer of Formal Systems America Inc.
("FSAI"), which prior to December 31, 1999, provided software remediation
services. At FSAI, Ms. Fendt was responsible for the development and
implementation of strategies for marketing and sales, the establishment of
relationships with computer industry distributor intermediaries and overall
business development. From September 1996 to March 1998, Ms. Fendt was Vice
President Distribution Services of Formal Systems Inc. ("FSI"), a software
re-engineering company, where she was responsible for the distribution of FSI's
products and services throughout the United States. From June 1991 to September
1996, Ms. Fendt was employed by Maritrans Inc., a publicly-traded petroleum
distribution company, where she served as Chief Information Officer and was
responsible for the overall operations of their information technology. Ms.
Fendt received a Bachelor of Sciences degree in Management and Computer Studies
from the University of Maryland.
Frederick M. Venzie III. Mr. Venzie was a founder and the Vice
President - Delivery Services of Front Porch, and became the Vice President
- - Delivery Services of the Registrant in connection with the Plan. From
December 1998 to December 1999, Mr. Venzie was Director of Delivery Services
of FSAI. From October 1996 to September 1998, Mr. Venzie was Director of
Software Development of FSI. At FSI, Mr. Venzie was responsible for
managing and training 24 software developers and four technical writers in
the ongoing development and maintenance of FSI's proprietary toolset. Prior
to becoming Director of Software Development of FSI, Mr. Venzie was Manager
of Client Services. Prior to joining FSI, Mr. Venzie was President of
Giselle Computing, a privately-owned provider of personal computer
consulting services. Mr. Venzie attended Thiel College.
Frances Hetherington. Ms. Hetherington was a founder and the
Comptroller of Front Porch, and became the Comptroller of the Registrant in
connection with the Plan. From May 1998 to January 2000, Ms. Hetherington
was manager of investor relations and financial administration of FSAI.
From 1988 to May 1998, Ms. Hetherington was the Secretary/Treasurer of
D'Amato Enterprises, Inc., a multi-million dollar retail/wholesale
distributor. In this capacity, Ms. Hetherington managed their finances,
contract negotiations, human resource needs, inventory control, and
day-to-day operations. Prior to 1988, Ms. Hetherington was employed for
fourteen years by AMC, Inc., a nationwide theatre chain. At AMC, Ms.
Hetherington held a number of different positions including internal
auditor, human resource specialist, and office manager. Ms. Hetherington
attended Glassboro State College.
Donald Maggi. Mr. Maggi was elected a director of the Registrant in
May 2000 in connection with the Plan. Since January 1998, Mr. Maggi has
been the President and owner of Intertainment, Inc., an interactive
entertainment service company that creates marketing and
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promotional opportunities for various Fortune 500, entertainment and technology
companies, including Pepsi, Level 3, Reciprocal, Musicmaker.com, Alliance
Entertainment and TVT Records. From 1995 to December 1997, Mr. Maggi was a Vice
President of Left Bank Organization, an entertainment company. Prior to 1995,
Mr. Maggi held various positions in the entertainment business, including
positions with Geffen Records, Atlantic Records and Metropolitan Entertainment.
Mr. Maggi attended Seton Hall University.
Dr. Richard Mammone. Dr. Mammone was elected a director of the
Registrant in May 2000 in connection with the Plan. Since December 1999,
Dr. Mammone has been President and Chief Executive Officer of Visionary
Systems, Inc., an e-learning solutions provider founded by Dr. Mammone in
1999. From 1995 to September 1998, Dr. Mammone was Chief Technical Advisor
to T-Netix Corp., a public telephone company. From 1992 to 1995, Dr.
Mammone was President and Chief Executive Officer of SpeakEZ, Inc., a speech
recognition software provider founded by Dr. Mammone in 1992 that was
acquired by T-Netix Corp. in 1995. Dr. Mammone has been a professor of
Electrical and Computer Engineering at Rutgers University since 1982, and
was awarded the Henry Rutgers Faculty Fellowship in 1985, 1986 and 1987.
Dr. Mammone received his Ph.D. from the City University of New York in 1981.
Directors' Compensation
The Registrant's directors are reimbursed for expenses incurred in
attending meetings of the Board of Directors. Non-employee directors are granted
options annually to purchase 10,000 shares of common stock of the Registrant at
an exercise price equal to the fair market value of the common stock on the date
of the grant. Employee directors generally are not paid any separate fees for
serving as directors.
Employment Agreements
In March 2000, the Registrant entered into three-year employment
agreements with Jay Yogeshwar, Melanie Fendt and Ric Venzie in an effort to
ensure the Registrant of the continued employment of each officer in his or her
current executive position with the Registrant.
Under the terms of these agreements, Dr. Yogeshwar, Ms. Fendt and Mr.
Venzie receive base salaries of $125,000, $100,000 and $75,000, respectively,
and may receive annual bonuses in amounts to be determined by the Board of
Directors of the Registrant in its sole discretion. The Registrant also agreed
to pay to Dr. Yogeshwar a bonus in the amount of $500,000 that is payable within
six (6) months from the date of his employment agreement. Ms. Fendt was issued
options that vest over two years to purchase up to 2,000,000 shares of common
stock.
In their employment agreements, each of Dr. Yogeshwar, Ms. Fendt and Mr.
Venzie has agreed that during the term of his or her employment agreement and
for a period of one year thereafter (in the event of termination of employment
for other than "cause" or "good reason") or two years thereafter (in the event
of termination of employment for "cause"), each of them will not, without the
prior written consent of the Registrant, compete with the Registrant by engaging
in any capacity in any business which is competitive with the business of the
Registrant.
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Stock Option Plan
In May 2000, the Registrant adopted the Front Porch Digital Inc. 2000
Stock Option Plan (the "Option Plan") for the purpose of attracting, retaining
and maximizing the performance of executive officers and key employees and
consultants. The Registrant has reserved 4,000,000 shares of common stock for
issuance under the Option Plan. The Option Plan has a term of ten years. The
Option Plan provides for the grant of "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended,
non-statutory stock options, stock appreciation rights and restricted stock
awards. It is contemplated that the Option Plan will eventually be administered
by a Compensation Committee of the Board of Directors (the "Compensation
Committee"), which Committee has not yet been created. The exercise price for
non-statutory stock options may be equal to or more or less than 100 percent of
the fair market value of shares of common stock on the date of grant. The
exercise price for incentive stock options may not be less than 100 percent of
the fair market value of shares of common stock on the date of grant (110
percent of fair market value in the case of incentive stock options granted to
employees who hold more than ten percent of the voting power of the Registrant's
issued and outstanding shares of common stock).
Options granted under the Option Plan may not have a term of more than a
ten-year period (five years in the case of incentive stock options granted to
employees who hold more than ten percent of the voting power of the Registrant's
common stock) and generally vest over a three-year period. Options generally
terminate three months after the optionee's termination of employment by the
Registrant for any reason other than death, disability or retirement, and are
not transferable by the optionee other than by will or the laws of descent and
distribution.
The Option Plan also provides for grants of stock appreciation rights
("SARs"), which entitle a participant to receive a cash payment, equal to the
difference between the fair market value of a share of common stock on the
exercise date and the exercise price of SAR. The exercise price of any SAR
granted under the Option Plan will be determined by the Board of Directors in
its discretion at the time of the grant. SARs granted under the Option Plan may
not be exercisable for more than a ten year period. SARs generally terminate one
month after the grantee's termination of employment by the Registrant for any
reason other than death, disability or retirement. Although the Board of
Directors has the authority to grant SARs, it does not have any present plans to
do so.
Restricted stock awards, which are grants of shares of common stock that
are subject to a restricted period during which such shares may not be sold,
assigned, transferred, made subject to a gift, or otherwise disposed of, or
mortgaged, pledged or otherwise encumbered, may also be made under the Option
Plan. At this time, the Board of Directors has not granted, and does not have
any plans to grant, restricted shares of common stock.
As of the May 2, 2000, five-year options to purchase an aggregate of
2,622,500 shares of common stock at an exercise price of $.50 per share have
been granted under the Option Plan to four employees of the Registrant and
options to purchase 10,000 shares of common stock at an exercise price of $.50
per share have been granted to each of the Registrant's non-employee directors.
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Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial Statements of Business Acquired.
Financial statements, if any, required by this item will be filed by
amendment not later than July 14, 2000.
(b) Pro Forma Financial Information.
Pro form financial information, if any, required by this item will
be filed by amendment not later than July 14, 2000.
(c) Exhibits.
The Registrant hereby furnishes the following exhibit:
2.1 Agreement and Plan of Reorganization dated as of May 2,
2000 among Empire Communications Corporation, Susan M.
Grant, Front Porch Digital Inc. and the stockholders of
Front Porch Digital Inc.
Exhibit A - Stockholders of Front Porch
Exhibit B - Audited Financial Statements of the
Registrant for the fiscal years ended
December 31, 1999 and 1998
Exhibit C - Exceptions to the Registrant's financial
statements
Exhibit D - Unaudited Financial Statements of Front
Porch for the period ended March 22, 2000
Exhibit E - Exceptions to Front Porch's financial
statements
Exhibit F - Investment Letter
Exhibit G - Certificate of Officer and Controlling
Stockholder of the Registrant
Exhibit H - Certificate of Officer of Front Porch
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
FRONT PORCH DIGITAL INC.
Date: May 16, 2000 By:/s/ Jay Yogeshwar
-----------------------------
Jay Yogeshwar
Chief Executive Officer
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made
this 2nd day of May, 2000, among Empire Communications Corp., a Nevada
corporation ("Empire"); Susan M. Grant, its sole director, executive officer and
principal stockholder ("Grant"); Front Porch Digital Inc., a Delaware
corporation ("Front Porch"); and the stockholders of Front Porch as listed on
Exhibit A hereto, who execute and deliver a copy of the Agreement (the "Front
Porch Stockholders").
W I T N E S S E T H:
RECITALS
WHEREAS, the respective Boards of Directors of Empire and Front
Porch have adopted resolutions pursuant to which Empire shall acquire and the
Front Porch Stockholders shall exchange 100% of the outstanding common stock of
Front Porch; and
WHEREAS, the sole consideration for 100% interest in Front Porch
shall be the exchange of $0.001 par value common stock of Empire (which shares
are all "restricted securities" as defined in Rule 144 of the Securities and
Exchange Commission) as outlined in Exhibit A; and
WHEREAS, the Front Porch Stockholders shall acquire in exchange the
"restricted securities" of Empire in a reorganization within the meaning of
Section 368(a)(1)(B), Section 351 or other available sections, laws or rules and
regulations of the Internal Revenue Code of 1986, as amended, to the extent
applicable;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, it is agreed:
Section 1
Exchange of Stock
1.1 Number of Shares. The Front Porch Stockholders agree to transfer to
Empire at the closing (the "Closing") 100% of the outstanding securities of
Front Porch, listed in Exhibit A, which is attached hereto and incorporated
herein by reference (the "Front Porch Shares"), in exchange for 9,440,000 shares
of common stock of Empire, as outlined in Exhibit A, on a one for one basis.
Taking into account the current outstanding shares of Empire's common stock,
amounting to 46,400,000 shares and the proposed cancellation of 40,000,000 of
these shares in accordance with Section 1.5 hereof, there will be 15,840,000
outstanding shares of the reorganized Empire on the Closing.
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1.2 Delivery of Certificates by Front Porch Stockholders. The transfer
of the Front Porch Shares by the Front Porch Stockholders shall be effected by
the delivery to Empire at the Closing of stock certificate or certificates
representing the transferred shares duly endorsed in blank or accompanied by
stock powers executed in blank with all signatures witnessed or guaranteed to
the satisfaction of Empire and with all necessary transfer taxes and other
revenue stamps affixed and acquired at the Front Porch Stockholders' expense.
1.3 Further Assurances. At the Closing and from time to time
thereafter, the Front Porch Stockholders shall execute such additional
instruments and take such other action as Empire may request in order to
exchange and transfer clear title and ownership in the Front Porch Shares to
Empire.
1.4 Change of Name and Designation and Election of New Directors. At or
simultaneous with the Closing, the Board of Directors and the majority
stockholders of Empire shall have adopted all resolutions required or necessary
to (i) change the name of Empire to "Front Porch Digital Inc." or some similar
name selected by the Board of Directors and to (ii) designate and elect the
following nominees of Front Porch to serve on the Board of Directors of Empire,
until the next annual meeting of the stockholders of Empire and until their
respective successors are elected and qualify or their prior resignations or
terminations:
Jay Yogeshwar
Donald Maggi
Richard Mammone
1.5 Cancellation of Shares and Resignation of Current Director and
Executive Officer. Susan M. Grant, the sole director and executive officer of
Empire, shall, at or simultaneous with the Closing, (i) cancel to the treasury
of Empire the 40,000,000 shares of common stock of Empire presently owned by her
in consideration of the sum of $50,000; and (ii) following the designation and
election of the nominees of Front Porch to the Board of Directors of Empire,
resign as an officer and a director of Empire.
1.6 Filing of Reports with the Securities and Exchange Commission.
Prior to the Closing, Empire shall have filed its 10-KSB Annual Report for the
year ended December 31, 1999, with the Securities and Exchange Commission, at
its sole cost and expense, which costs and expenses shall have been paid in full
prior to Closing; and Empire shall cause an 8-K Current Report to be dated as of
the Closing concerning this Agreement to be timely filed with the Securities and
Exchange Commission, at its sole cost and expense, which costs and expenses
shall have been paid in full prior to Closing.
1.7 Outstanding Warrants and Stock Options of Front Porch. Empire shall
issue and exchange warrants and stock options to acquire shares of its common
stock on like terms in exchange for the present outstanding warrants or stock
options to acquire common stock of Front Porch, subject to the consent of the
Front Porch warrant holders.
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Section 2
Closing
The Closing contemplated by Section 1 shall be held at the offices
of Leonard W. Burningham, Esq., Suite 205 Hermes Building, 455 East 500 South,
Salt Lake City, Utah 84111, on or before ten days following the execution and
delivery of this Agreement, unless another place or time is agreed upon in
writing by the parties. The Closing may be accomplished by wire, express mail or
other courier service, conference telephone communications or as otherwise
agreed by the respective parties or their duly authorized representatives.
Section 3
Representations and Warranties of Empire and Grant
Empire and Grant, jointly and severally, represent and warrant to,
and covenant with, the Front Porch Stockholders and Front Porch as follows:
3.1 Corporate Status. Empire is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and is
licensed or qualified as a foreign corporation in all states in which the nature
of its business or the character or ownership of its properties makes such
licensing or qualification necessary. Empire is a publicly held company, having
previously and lawfully offered and sold a portion of its securities in
accordance with applicable federal and state securities laws, rules and
regulations. Such securities are nominally quoted on the OTC Bulletin Board of
the NASD under the symbol "EPCN." Empire files reports with the Securities and
Exchange Commission pursuant to Section 15(d) of the Securities Exchange Act of
1934, as amended; such reports are accurate in every material respect; and
Empire is "current" in all such filing requirements. Such reports do not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.
3.2 Capitalization. The authorized capital stock of Empire consists of
50,000,000 shares of $0.001 par value common voting stock, of which
approximately 46,400,000 shares are issued and outstanding, all fully paid and
non-assessable; and 5,000,000 shares of $0.001 par value preferred stock, none
of which are issued and outstanding. There are no outstanding options, warrants
or calls pursuant to which any person has the right to purchase any authorized
and unissued common or preferred stock of Empire.
3.3 Financial Statements. The financial statements of Empire furnished
to the Front Porch Stockholders and Front Porch, consisting of audited financial
statements for the years ended December 31, 1999 and 1998, attached hereto as
Exhibit B and incorporated herein by reference, are correct and fairly present
the financial condition of Empire at such dates and for
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the periods involved; such statements were prepared in accordance with generally
accepted accounting principles consistently applied, and no material change has
occurred in the matters disclosed therein, except as indicated in Exhibit C,
which is attached hereto and incorporated herein by reference.
3.4 Undisclosed Liabilities. Empire has no liabilities of any nature
except to the extent reflected or reserved against in its balance sheets,
whether accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities and interest due or to become due, except as set
forth in Exhibit C.
3.5 Interim Changes. Since the date of its balance sheets, except as
set forth in Exhibit C, there have been no (1) changes in financial condition,
assets, liabilities or business of Empire which, in the aggregate, have been
materially adverse; (2) damages, destruction or losses of or to property of
Empire, payments of any dividend or other distribution in respect of any class
of stock of Empire, or any direct or indirect redemption, purchase or other
acquisition of any class of any such stock; or (3) increases paid or agreed to
in the compensation, retirement benefits or other commitments to anyone.
3.6 Title to Property. Empire has good and marketable title to all
properties and assets, real and personal, reflected in its balance sheets, and
the properties and assets of Empire are subject to no mortgage, pledge, lien or
encumbrance, except for liens shown therein or in Exhibit C, with respect to
which no default exists.
3.7 Litigation. There is no litigation or proceeding pending, or to the
knowledge of Empire, threatened, against or relating to Empire, its properties
or business, except as set forth in Exhibit C. Further, no officer, director or
person who may be deemed to be an "affiliate" of Empire is party to any material
legal proceeding which could have an adverse effect on Empire (financial or
otherwise), and none is party to any action or proceeding wherein any has an
interest adverse to Empire.
3.8 Books and Records. From the date of this Agreement to the Closing,
Empire will (1) give to the Front Porch Stockholders and Front Porch or their
respective representatives full access during normal business hours to all of
Empire's offices, books, records, contracts and other corporate documents and
properties so that the Front Porch Stockholders and Front Porch or their
respective representatives may inspect and audit them; and (2) furnish such
information concerning the properties and affairs of Empire as the Front Porch
Stockholders and Front Porch or their respective representatives may reasonably
request.
3.9 Tax Returns. Empire has filed all federal and state income or
franchise tax returns required to be filed or has received currently effective
extensions of the required filing dates.
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3.10 Confidentiality. Until the Closing (and thereafter if there is no
Closing), Empire and its representatives will keep confidential any information
which they obtain from the Front Porch Stockholders or from Front Porch
concerning the properties, assets and business of Front Porch. If the
transactions contemplated by this Agreement are not consummated by May 31, 2000,
Empire will return to Front Porch all written matter with respect to Front Porch
obtained by Empire in connection with the negotiation or consummation of this
Agreement.
3.11 Corporate Authority. Empire has full corporate power and authority
to enter into this Agreement and to carry out its obligations hereunder and will
deliver to the Front Porch Stockholders and Front Porch or their respective
representatives at the Closing a certified copy of resolutions of its Board of
Directors authorizing execution of this Agreement by Empire's officers and
performance thereunder, and that the directors adopting and delivering such
resolutions are the duly elected and incumbent directors of Empire.
3.12 Due Authorization. Execution of this Agreement and performance by
Empire hereunder have been duly authorized by all requisite corporate action on
the part of Empire, and this Agreement constitutes a valid and binding
obligation of Empire and performance hereunder will not violate any provision of
the Articles of Incorporation, Bylaws, agreements, mortgages or other
commitments of Empire.
3.13 Environmental Matters. Empire has no knowledge of any assertion by
any governmental agency or other regulatory authority of any environmental lien,
action or proceeding, or of any cause for any such lien, action or proceeding
related to the business operations of Empire or Empire' predecessors. In
addition, to the best knowledge of Empire, there are no substances or conditions
which may support a claim or cause of action against Empire or any of Empire'
current or former officers, directors, agents or employees, whether by a
governmental agency or body, private party or individual, under any Hazardous
Materials Regulations. "Hazardous Materials" means any oil or petrochemical
products, PCB's, asbestos, urea formaldehyde, flammable explosives, radioactive
materials, solid or hazardous wastes, chemicals, toxic substances or related
materials, including, without limitation, any substances defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," or "toxic substances" under any applicable federal or state laws or
regulations. "Hazardous Materials Regulations" means any regulations governing
the use, generation, handling, storage, treatment, disposal or release of
hazardous materials, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, the Resource
Conservation and Recovery Act and the Federal Water Pollution Control Act.
3.14 Access to Information Regarding Front Porch. Empire acknowledges
that it has been delivered copies of what has been represented to be
documentation containing all material information respecting Front Porch and
Front Porch's present and contemplated business operations, potential
acquisitions, management and other factors; that it has had a reasonable
opportunity to review such documentation and discuss it, to the extent desired,
with its legal counsel, directors and executive officers; that it has had, to
the extent desired, the
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opportunity to ask questions of and receive responses from the directors and
executive officers of Front Porch, and with the legal and accounting firms of
Front Porch, with respect to such documentation; and that to the extent
requested, all questions raised have been answered to Empire's complete
satisfaction.
Section 4
Representations, Warranties and Covenants of Front Porch
Front Porch represents and warrants to, and covenants with, Empire
and Grant as follows:
4.1 Ownership. The Front Porch Stockholders own the Front Porch Shares
free and clear of any liens or encumbrances of any type or nature whatsoever,
and each has full right, power and authority to convey the Front Porch Shares
owned without qualification.
4.2 Corporate Status. Front Porch is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is licensed or qualified as a foreign corporation in all states or foreign
countries and provinces in which the nature of Front Porch's business or the
character or ownership of Front Porch properties makes such licensing or
qualification necessary.
4.3 Capitalization. The authorized capital stock of Front Porch
consists of 35,000,000 shares of common stock, $0.001 par value per share, of
which 9,440,000 shares are issued and outstanding, all fully paid and
non-assessable. Except as otherwise provided herein, there are no outstanding
options, warrants or calls pursuant to which any person has the right to
purchase any authorized and unissued common stock of Front Porch. Front Porch
has outstanding warrants entitling certain warrant holders to acquire an
aggregate of 7,400,000 shares of its common stock at an exercise price of $0.50
per share and outstanding stock options entitling certain option holders to
acquire an aggregate of 2,622,500 shares of its common stock at an exercise
price of $.50 per share; all warrants and stock options are for a period of five
years. These warrants and stock options, subject to the consent of the warrant
holders, shall be exchanged for like warrants or stock options, as applicable,
of Empire in accordance with Section 1.7 hereof.
4.4 Financial Statements. The financial statements of Front Porch
furnished to Empire, consisting of an unaudited balance sheet and statement of
operations as of March 22, 2000, attached hereto as Exhibit D and incorporated
herein by reference, are correct and fairly present the financial condition of
Front Porch as of these dates and for the periods involved, and such statements
were prepared by management in good faith from the books and records of Front
Porch, and no material adverse change has occurred in the matters disclosed
therein, except as indicated in Exhibit E, which is attached hereto and
incorporated herein by reference.
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4.5 Undisclosed Liabilities. Front Porch has no material liabilities of
any nature except to the extent reflected or reserved against in the unaudited
balance sheet, whether accrued, absolute, contingent or otherwise, including,
without limitation, tax liabilities and interest due or to become due, except as
set forth in Exhibit E attached hereto and incorporated herein by reference.
4.6 Interim Changes. Since the date of the unaudited balance sheet,
except as set forth in Exhibit E, there have been no (1) changes in the
financial condition, assets, liabilities or business of Front Porch which, in
the aggregate, have been materially adverse; (2) damages, destruction or loss of
or to the property of Front Porch, payment of any dividend or other distribution
in respect of the capital stock of Front Porch, or any direct or indirect
redemption, purchase or other acquisition of any such stock; or (3) increases
paid or agreed to in the compensation, retirement benefits or other commitments
to their employees.
4.7 Title to Property. Front Porch has good and marketable title to all
properties and assets, real and personal, proprietary or otherwise, reflected in
the unaudited balance sheet, and the properties and assets of Front Porch are
subject to no mortgage, pledge, lien or encumbrance, except as reflected in the
unaudited balance sheet or in Exhibit E, with respect to which no default
exists.
4.8 Litigation. There is no litigation or proceeding pending, or to the
knowledge of Front Porch, threatened, against or relating to Front Porch or its
properties or business, except as set forth in Exhibit E. Further, no officer,
director or person who may be deemed to be an affiliate of Front Porch is party
to any material legal proceeding which could have an adverse effect on Front
Porch (financial or otherwise), and none is party to any action or proceeding
wherein any has an interest adverse to Front Porch.
4.9 Books and Records. From the date of this Agreement to the Closing,
the Front Porch Stockholders will cause Front Porch to (1) give to Empire and
its representatives full access during normal business hours to all of its
offices, books, records, contracts and other corporate documents and properties
so that Empire may inspect and audit them; and (2) furnish such information
concerning the properties and affairs of Front Porch as Empire may reasonably
request.
4.10 Tax Returns. Front Porch has filed all federal and state income or
franchise tax returns required to be filed or has received currently effective
extensions of the required filing dates.
4.11 Confidentiality. Until the Closing (and continuously if there is
no Closing), Front Porch, the Front Porch Stockholders and their representatives
will keep confidential any information which they obtain from Empire concerning
its properties, assets and business. If the transactions contemplated by this
Agreement are not consummated by May 31, 2000, Front Porch and the Front Porch
Stockholders will return to Empire all written matter with
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respect to Empire obtained by them in connection with the negotiation or
consummation of this Agreement.
4.12 Investment Intent. The Front Porch Stockholders are acquiring the
shares to be exchanged and delivered to them under this Agreement for investment
and not with a view to the sale or distribution thereof, and the Front Porch
Stockholders have no commitment or present intention to liquidate Empire or to
sell or otherwise dispose of the Empire shares. The Front Porch Stockholders
shall execute and deliver to Empire on the Closing an Investment Letter attached
hereto as Exhibit F and incorporated herein by reference, acknowledging the
"unregistered" and "restricted" nature of the shares of Empire being received
under this Agreement in exchange for the Front Porch Shares; receipt of certain
material information regarding Empire; and whereby each is compromising and/or
waiving any claims each has or may have against Front Porch by reason of the
purchase of any securities of Front Porch by each or any of them prior to the
Closing of the Agreement.
4.13 Corporate Authority. Front Porch has full corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder and will deliver to Empire or its representative at the Closing a
certified copy of resolutions of its Board of Directors authorizing execution of
this Agreement by its officers and performance thereunder.
4.14 Due Authorization. Execution of this Agreement and performance by
Front Porch hereunder have been duly authorized by all requisite corporate
action on the part of Front Porch, and this Agreement constitutes a valid and
binding obligation of Front Porch and performance hereunder will not violate any
provision of the Articles of Incorporation, Bylaws, agreements, mortgages or
other commitments of Front Porch.
4.15 Environmental Matters. Front Porch and the Front Porch
Stockholders have no knowledge of any assertion by any governmental agency or
other regulatory authority of any environmental lien, action or proceeding, or
of any cause for any such lien, action or proceeding related to the business
operations of Front Porch or its predecessors. In addition, to the best
knowledge of Front Porch, there are no substances or conditions which may
support a claim or cause of action against Front Porch or any of its current or
former officers, directors, agents, employees or predecessors, whether by a
governmental agency or body, private party or individual, under any Hazardous
Materials Regulations. "Hazardous Materials" means any oil or petrochemical
products, PCB's, asbestos, urea formaldehyde, flammable explosives, radioactive
materials, solid or hazardous wastes, chemicals, toxic substances or related
materials, including, without limitation, any substances defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," or "toxic substances" under any applicable federal or state laws or
regulations. "Hazardous Materials Regulations" means any regulations governing
the use, generation, handling, storage, treatment, disposal or release of
hazardous materials, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, the Resource
Conservation and Recovery Act and the Federal Water Pollution Control Act.
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4.16 Access to Information Regarding Empire. Front Porch and the Front
Porch Stockholders acknowledge that they have been delivered copies of what has
been represented to be documentation containing all material information
respecting Empire and its present and contemplated business operations,
potential acquisitions, management and other factors; that they have had a
reasonable opportunity to review such documentation and discuss it, to the
extent desired, with their legal counsel, directors and executive officers; that
they have had, to the extent desired, the opportunity to ask questions of and
receive responses from the directors and executive officers of Empire, and with
the legal and accounting firms of Empire, with respect to such documentation;
and that to the extent requested, all questions raised have been answered to
their complete satisfaction.
Section 5
Conditions Precedent to Obligations of Front Porch
and the Front Porch Stockholders
All obligations of Front Porch and the Front Porch Stockholders
under this Agreement are subject, at their option, to the fulfillment, before or
at the Closing, of each of the following conditions:
5.1 Representations and Warranties True at Closing. The representations
and warranties of Empire and Grant contained in this Agreement shall be deemed
to have been made again at and as of the Closing and shall then be true in all
material respects and shall survive the Closing.
5.2 Due Performance. Empire shall have performed and complied with all
of the terms and conditions required by this Agreement to be performed or
complied with by it before the Closing.
5.3 Officers' Certificate. Front Porch and the Front Porch Stockholders
shall have been furnished with a certificate signed by the President of Empire,
in such capacity, attached hereto as Exhibit G and incorporated herein by
reference, dated as of the Closing, certifying (1) that all representations and
warranties of Empire contained herein are true and correct; and (2) that since
the date of the financial statements (Exhibit B hereto), there has been no
material adverse change in the financial condition, business or properties of
Empire, taken as a whole.
5.4 Books and Records. Empire or Grant shall have caused Empire to make
available all books and records of Empire, including minute books and stock
transfer records; provided, however, only to the extent requested in writing by
Front Porch at Closing.
-9-
<PAGE>
Section 6
Conditions Precedent to Obligations of Empire
All obligations of Empire under this Agreement are subject, at
Empire's option, to the fulfillment, before or at the Closing, of each of the
following conditions:
6.1 Representations and Warranties True at Closing. The representations
and warranties of Front Porch contained in this Agreement shall be deemed to
have been made again at and as of the Closing and shall then be true in all
material respects and shall survive the Closing.
6.2 Due Performance. Front Porch and the Front Porch Stockholders shall
have performed and complied with all of the terms and conditions required by
this Agreement to be performed or complied with by them before the Closing.
6.3 Officers' Certificate. Empire shall have been furnished with a
certificate signed by the Chief Executive Officer of Front Porch, in such
capacity, attached hereto as Exhibit H and incorporated herein by reference,
dated as of the Closing, certifying (1) that all representations and warranties
of Front Porch and the Front Porch Stockholders contained herein are true and
correct; and (2) that since the date of the financial statements (Exhibit D),
there has been no material adverse change in the financial condition, business
or properties of Front Porch, taken as a whole.
6.4 Books and Records. The Front Porch Stockholders or the Board of
Directors of Front Porch shall have caused Front Porch to make available all
books and records of Front Porch, including minute books and stock transfer
records; provided, however, only to the extent requested in writing by Empire at
Closing.
6.5 Front Porch Stockholders' Consent. The Front Porch Stockholders
owning not less than 85% of the outstanding securities of Front Porch shall have
executed and delivered this Agreement.
-10-
<PAGE>
Section 7
Termination
Prior to Closing, this Agreement may be terminated (1) by mutual
consent in writing; (2) by either the directors of Empire or Front Porch and the
Front Porch Stockholders if there has been a material misrepresentation or
material breach of any warranty or covenant by the other party; or (3) by either
the directors of Empire or Front Porch and the Front Porch Stockholders if the
Closing shall not have taken place, unless adjourned to a later date by mutual
consent in writing, by the date fixed in Section 2.
Section 8
General Provisions
8.1 Further Assurances. At any time, and from time to time, after the
Closing, each party will execute such additional instruments and take such
action as may be reasonably requested by the other party to confirm or perfect
title to any property transferred hereunder or otherwise to carry out the intent
and purposes of this Agreement.
8.2 Waiver. Any failure on the part of any party hereto to comply with
any of its obligations, agreements or conditions hereunder may be waived in
writing by the party to whom such compliance is owed.
8.3 Brokers. Each party represents to the other parties hereunder that
no broker or finder has acted for it in connection with this Agreement, and
agrees to indemnify and hold harmless the other parties against any fee, loss or
expense arising out of claims by brokers or finders employed or alleged to have
been employed by he/she/it.
8.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or sent by
prepaid first-class registered or certified mail, return receipt requested, as
follows:
If to Empire: 545 West 150 South
Springville, Utah 84663
With a copy to: Leonard W. Burningham, Esq.
455 East 500 South, #205
Salt Lake City, Utah 84111
If to Front Porch: 1810 Chapel Avenue West, Suite 130
Cherry Hill, New Jersey 08002
-11-
<PAGE>
With a copy to: Eric M. Hellige, Esq.
Pryor Cashman Sherman & Flynn LLP
410 Park Avenue
New York, New York 10022
If to the Front Porch
Stockholders: To the addresses listed on Exhibit A
8.5 Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes and cancels any other agreement,
representation or communication, whether oral or written, between the parties
hereto relating to the transactions contemplated herein or the subject matter
hereof.
8.6 Headings. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.7 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Nevada, except to the
extent pre-empted by federal law, in which event (and to that extent only),
federal law shall govern.
8.8 Assignment. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their successors and assigns.
8.9 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.10 Default. In the event of any default hereunder, the prevailing
party in any action to enforce the terms and provisions hereof shall be entitled
to recover reasonable attorney's fees and related costs.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement and
Plan of Reorganization effective the day and year first above written.
EMPIRE COMMUNICATIONS CORP.
Date: May 2, 2000 By /s/ Susan M. Grant
-------------------------------
Susan M. Grant, President
Date: May 2, 2000 /s/ Susan M. Grant
----------------------------------
Susan M. Grant, Individually
FRONT PORCH DIGITAL INC.
Date: May 2, 2000 By /s/ Jay Yogeshwar
-------------------------------
Jay Yogeshwar, CEO
-13-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
COUNTERPART SIGNATURE PAGE FOR SIGNATURE OF
THE FRONT PORCH STOCKHOLDERS
This Counterpart Signature Page for that certain Agreement and Plan
of Reorganization (the "Agreement") dated as of the 2nd day of May, 2000,
among Empire Communications Corporation, a Nevada corporation ("Empire");
Susan M. Grant, its sole director, executive officer and principal
stockholder ("Grant"); Front Porch Digital Inc., a Delaware corporation
("Front Porch"); the Front Porch stockholders (the "Front Porch
Stockholders"), who are signatories thereto, is executed by the
undersigned, a Front Porch Stockholder as of the date first written above.
The undersigned, through execution and delivery of this Counterpart
Signature page, intends to be legally bound by the terms of the Agreement.
Andreas Moschonikolakis
----------------------------
Name (Please Print)
/s/Andreas Moschonikolakis
----------------------------
Signature
163 Van Brackle Road
----------------------------
Address
Aberdeen, N.J. 07747
----------------------------
-14-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
COUNTERPART SIGNATURE PAGE FOR SIGNATURE OF
THE FRONT PORCH STOCKHOLDERS
This Counterpart Signature Page for that certain Agreement and Plan
of Reorganization (the "Agreement") dated as of the 2nd day of May, 2000,
among Empire Communications Corporation, a Nevada corporation ("Empire");
Susan M. Grant, its sole director, executive officer and principal
stockholder ("Grant"); Front Porch Digital Inc., a Delaware corporation
("Front Porch"); the Front Porch stockholders (the "Front Porch
Stockholders"), who are signatories thereto, is executed by the
undersigned, a Front Porch Stockholder as of the date first written above.
The undersigned, through execution and delivery of this Counterpart
Signature page, intends to be legally bound by the terms of the Agreement.
Melanie R. Fendt
----------------------------
Name (Please Print)
/s/Melanie R. Fendt
----------------------------
Signature
18 Dean Lane
----------------------------
Address
Cherry Hill, N.J. 08034
----------------------------
-15-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
COUNTERPART SIGNATURE PAGE FOR SIGNATURE OF
THE FRONT PORCH STOCKHOLDERS
This Counterpart Signature Page for that certain Agreement and Plan
of Reorganization (the "Agreement") dated as of the 2nd day of May, 2000,
among Empire Communications Corporation, a Nevada corporation ("Empire");
Susan M. Grant, its sole director, executive officer and principal
stockholder ("Grant"); Front Porch Digital Inc., a Delaware corporation
("Front Porch"); the Front Porch stockholders (the "Front Porch
Stockholders"), who are signatories thereto, is executed by the
undersigned, a Front Porch Stockholder as of the date first written above.
The undersigned, through execution and delivery of this Counterpart
Signature page, intends to be legally bound by the terms of the Agreement.
Frederick M. Venzie III
----------------------------
Name (Please Print)
/s/Frederick M. Venzie III
----------------------------
Signature
109 Crooked Lane
----------------------------
Address
Cherry Hill, N.J. 08034
----------------------------
-16-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
COUNTERPART SIGNATURE PAGE FOR SIGNATURE OF
THE FRONT PORCH STOCKHOLDERS
This Counterpart Signature Page for that certain Agreement and Plan
of Reorganization (the "Agreement") dated as of the 2nd day of May, 2000,
among Empire Communications Corporation, a Nevada corporation ("Empire");
Susan M. Grant, its sole director, executive officer and principal
stockholder ("Grant"); Front Porch Digital Inc., a Delaware corporation
("Front Porch"); the Front Porch stockholders (the "Front Porch
Stockholders"), who are signatories thereto, is executed by the
undersigned, a Front Porch Stockholder as of the date first written above.
The undersigned, through execution and delivery of this Counterpart
Signature page, intends to be legally bound by the terms of the Agreement.
Frances D'Amato Hetherington
---------------------------------
Name (Please Print)
/s/Frances D'Amato Hetherington
---------------------------------
Signature
30 Dean Lane
---------------------------------
Address
Cherry Hill, N.J. 08034
---------------------------------
-17-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
COUNTERPART SIGNATURE PAGE FOR SIGNATURE OF
THE FRONT PORCH STOCKHOLDERS
This Counterpart Signature Page for that certain Agreement and Plan
of Reorganization (the "Agreement") dated as of the 2nd day of May, 2000,
among Empire Communications Corporation, a Nevada corporation ("Empire");
Susan M. Grant, its sole director, executive officer and principal
stockholder ("Grant"); Front Porch Digital Inc., a Delaware corporation
("Front Porch"); the Front Porch stockholders (the "Front Porch
Stockholders"), who are signatories thereto, is executed by the
undersigned, a Front Porch Stockholder as of the date first written above.
The undersigned, through execution and delivery of this Counterpart
Signature page, intends to be legally bound by the terms of the Agreement.
Domenic Polimeni
---------------------------------
Name (Please Print)
/s/Domenic Polimeni
---------------------------------
Signature
122 Watkins Avenue
---------------------------------
Address
Gibbstown, N.J. 08027
---------------------------------
-18-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
COUNTERPART SIGNATURE PAGE FOR SIGNATURE OF
THE FRONT PORCH STOCKHOLDERS
This Counterpart Signature Page for that certain Agreement and Plan
of Reorganization (the "Agreement") dated as of the 2nd day of May, 2000,
among Empire Communications Corporation, a Nevada corporation ("Empire");
Susan M. Grant, its sole director, executive officer and principal
stockholder ("Grant"); Front Porch Digital Inc., a Delaware corporation
("Front Porch"); the Front Porch stockholders (the "Front Porch
Stockholders"), who are signatories thereto, is executed by the
undersigned, a Front Porch Stockholder as of the date first written above.
The undersigned, through execution and delivery of this Counterpart
Signature page, intends to be legally bound by the terms of the Agreement.
Anna Richmond
---------------------------------
Name (Please Print)
/s/Anna Richmond
---------------------------------
Signature
1032 Walnut Avenue
---------------------------------
Address
Woodbury Heights, N.J. 08097
---------------------------------
-19-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
COUNTERPART SIGNATURE PAGE FOR SIGNATURE OF
THE FRONT PORCH STOCKHOLDERS
This Counterpart Signature Page for that certain Agreement and Plan
of Reorganization (the "Agreement") dated as of the 2nd day of May, 2000,
among Empire Communications Corporation, a Nevada corporation ("Empire");
Susan M. Grant, its sole director, executive officer and principal
stockholder ("Grant"); Front Porch Digital Inc., a Delaware corporation
("Front Porch"); the Front Porch stockholders (the "Front Porch
Stockholders"), who are signatories thereto, is executed by the
undersigned, a Front Porch Stockholder as of the date first written above.
The undersigned, through execution and delivery of this Counterpart
Signature page, intends to be legally bound by the terms of the Agreement.
Michael S. Thaler
---------------------------------
Name (Please Print)
/s/Michael S. Thaler
---------------------------------
Signature
2 Dickens Avenue
---------------------------------
Address
Dix Hills, NY 11746
---------------------------------
-20-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
COUNTERPART SIGNATURE PAGE FOR SIGNATURE OF
THE FRONT PORCH STOCKHOLDERS
This Counterpart Signature Page for that certain Agreement and Plan
of Reorganization (the "Agreement") dated as of the 2nd day of May, 2000,
among Empire Communications Corporation, a Nevada corporation ("Empire");
Susan M. Grant, its sole director, executive officer and principal
stockholder ("Grant"); Front Porch Digital Inc., a Delaware corporation
("Front Porch"); the Front Porch stockholders (the "Front Porch
Stockholders"), who are signatories thereto, is executed by the
undersigned, a Front Porch Stockholder as of the date first written above.
The undersigned, through execution and delivery of this Counterpart
Signature page, intends to be legally bound by the terms of the Agreement.
Bob R. Gupta
---------------------------------
Name (Please Print)
/s/Bob R. Gupta
---------------------------------
Signature
1 Pickering Drive
---------------------------------
Address
Robbinsville, N.J. 08691
---------------------------------
-21-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
COUNTERPART SIGNATURE PAGE FOR SIGNATURE OF
THE FRONT PORCH STOCKHOLDERS
This Counterpart Signature Page for that certain Agreement and Plan
of Reorganization (the "Agreement") dated as of the 2nd day of May, 2000,
among Empire Communications Corporation, a Nevada corporation ("Empire");
Susan M. Grant, its sole director, executive officer and principal
stockholder ("Grant"); Front Porch Digital Inc., a Delaware corporation
("Front Porch"); the Front Porch stockholders (the "Front Porch
Stockholders"), who are signatories thereto, is executed by the
undersigned, a Front Porch Stockholder as of the date first written above.
The undersigned, through execution and delivery of this Counterpart
Signature page, intends to be legally bound by the terms of the Agreement.
Jay Yogeshwar
---------------------------------
Name (Please Print)
/s/Jay Yogeshwar
---------------------------------
Signature
34 Anthony Lane
---------------------------------
Address
Lawrenceville, N.J. 08648
---------------------------------
-22-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
COUNTERPART SIGNATURE PAGE FOR SIGNATURE OF
THE FRONT PORCH STOCKHOLDERS
This Counterpart Signature Page for that certain Agreement and Plan
of Reorganization (the "Agreement") dated as of the 2nd day of May, 2000,
among Empire Communications Corporation, a Nevada corporation ("Empire");
Susan M. Grant, its sole director, executive officer and principal
stockholder ("Grant"); Front Porch Digital Inc., a Delaware corporation
("Front Porch"); the Front Porch stockholders (the "Front Porch
Stockholders"), who are signatories thereto, is executed by the
undersigned, a Front Porch Stockholder as of the date first written above.
The undersigned, through execution and delivery of this Counterpart
Signature page, intends to be legally bound by the terms of the Agreement.
Rupa Balachandran
---------------------------------
Name (Please Print)
/s/Rupa Balachandran
---------------------------------
Signature
397 Laurie Meadows Drive #436
---------------------------------
Address
San Mateo, CA 94403
---------------------------------
-23-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
COUNTERPART SIGNATURE PAGE FOR SIGNATURE OF
THE FRONT PORCH STOCKHOLDERS
This Counterpart Signature Page for that certain Agreement and Plan
of Reorganization (the "Agreement") dated as of the 2nd day of May, 2000,
among Empire Communications Corporation, a Nevada corporation ("Empire");
Susan M. Grant, its sole director, executive officer and principal
stockholder ("Grant"); Front Porch Digital Inc., a Delaware corporation
("Front Porch"); the Front Porch stockholders (the "Front Porch
Stockholders"), who are signatories thereto, is executed by the
undersigned, a Front Porch Stockholder as of the date first written above.
The undersigned, through execution and delivery of this Counterpart
Signature page, intends to be legally bound by the terms of the Agreement.
Vanita Balchandran
---------------------------------
Name (Please Print)
/s/Vanita Balachandran
---------------------------------
Signature
34 Anthony Lane
---------------------------------
Address
Lawrenceville, N.J. 08048
---------------------------------
-24-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
COUNTERPART SIGNATURE PAGE FOR SIGNATURE OF
THE FRONT PORCH STOCKHOLDERS
This Counterpart Signature Page for that certain Agreement and Plan
of Reorganization (the "Agreement") dated as of the 2nd day of May, 2000,
among Empire Communications Corporation, a Nevada corporation ("Empire");
Susan M. Grant, its sole director, executive officer and principal
stockholder ("Grant"); Front Porch Digital Inc., a Delaware corporation
("Front Porch"); the Front Porch stockholders (the "Front Porch
Stockholders"), who are signatories thereto, is executed by the
undersigned, a Front Porch Stockholder as of the date first written above.
The undersigned, through execution and delivery of this Counterpart
Signature page, intends to be legally bound by the terms of the Agreement.
Kamala Anantharam
---------------------------------
Name (Please Print)
/s/Kamala Anantharam
---------------------------------
Signature
374 Tysens Drive
---------------------------------
Address
Staten Island, N.Y. 10306
---------------------------------
-25-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
COUNTERPART SIGNATURE PAGE FOR SIGNATURE OF
THE FRONT PORCH STOCKHOLDERS
This Counterpart Signature Page for that certain Agreement and Plan
of Reorganization (the "Agreement") dated as of the 2nd day of May, 2000,
among Empire Communications Corporation, a Nevada corporation ("Empire");
Susan M. Grant, its sole director, executive officer and principal
stockholder ("Grant"); Front Porch Digital Inc., a Delaware corporation
("Front Porch"); the Front Porch stockholders (the "Front Porch
Stockholders"), who are signatories thereto, is executed by the
undersigned, a Front Porch Stockholder as of the date first written above.
The undersigned, through execution and delivery of this Counterpart
Signature page, intends to be legally bound by the terms of the Agreement.
Ronald Obsgarten
---------------------------------
Name (Please Print)
/s/Ronald Obsgarten
---------------------------------
Signature
8743 NW 76 Drive
---------------------------------
Address
Tamarac, FL 33321
---------------------------------
-26-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
COUNTERPART SIGNATURE PAGE FOR SIGNATURE OF
THE FRONT PORCH STOCKHOLDERS
This Counterpart Signature Page for that certain Agreement and Plan
of Reorganization (the "Agreement") dated as of the 2nd day of May, 2000,
among Empire Communications Corporation, a Nevada corporation ("Empire");
Susan M. Grant, its sole director, executive officer and principal
stockholder ("Grant"); Front Porch Digital Inc., a Delaware corporation
("Front Porch"); the Front Porch stockholders (the "Front Porch
Stockholders"), who are signatories thereto, is executed by the
undersigned, a Front Porch Stockholder as of the date first written above.
The undersigned, through execution and delivery of this Counterpart
Signature page, intends to be legally bound by the terms of the Agreement.
Pryor Cashman Sherman & Flynn LLP
---------------------------------
Name (Please Print)
By: /s/Eric M. Hellige, Partner
---------------------------------
Signature
410 Park Avenue
---------------------------------
Address
New York, N.Y 10022
---------------------------------
-27-
<PAGE>
EXHIBIT A
FRONT PORCH DIGITAL INC.
Founders' Shares
- --------------------------------------------------------------------------------
Grant Shares To Shares Addresses
- --------------------------------------------------------------------------------
Andreas Moschonikolakis 60,000 163 Van Brackle Drive
Aberdeen, NJ 07747
- --------------------------------------------------------------------------------
Melanie R. Fendt 1,000,000 18 Dean Lane
Cherry Hill, NJ 08034
- --------------------------------------------------------------------------------
Frederick M. Venzie III 500,000 109 Crooked Lane
Cherry Hill, NJ 08034
- --------------------------------------------------------------------------------
Frances D'Amato Hetherington 190,000 30 Dean Lane
Cherry Hill, NJ 08034
- --------------------------------------------------------------------------------
Domenic Polimeni 10,000 122 Watkins
Gibbstown, NJ 08027
- --------------------------------------------------------------------------------
Anna Richmond 200,000 1032 Walnut Avenue
Woodbury Hts, NJ 08097
- --------------------------------------------------------------------------------
Mike Thaler 80,000 2 Dickens Avenue
Dix Hills, NY 11746
- --------------------------------------------------------------------------------
Bob Gupta 100,000 1 Pickering Drive
Robbinsville, NJ 08691
- --------------------------------------------------------------------------------
Jay Yogeshwar 6,400,000 34 Anthony Lane
Lawrenceville, NJ 08648
- --------------------------------------------------------------------------------
Rupa Balachandran 150,000 397 Laurie Meadows Drive
#436
San Mateo, CA 94403
- --------------------------------------------------------------------------------
Vanita Balachandran 300,000 34 Anthony Drive
Lawrenceville, NJ 08648
- --------------------------------------------------------------------------------
Kamala Anantharam 150,000 374 Tysens Drive
Staten Island, NY 10306
- --------------------------------------------------------------------------------
Ron Obsgarten 100,000 8743 NW 76th Drive
Tamarac, FL 33321
- --------------------------------------------------------------------------------
Pryor Cashman Sherman & Flynn, 200,000 410 Park Avenue, 10th Floor
LLP New York, NY 10022
- --------------------------------------------------------------------------------
Total
9,440,000
- --------------------------------------------------------------------------------
-28-
<PAGE>
EXHIBIT B
EMPIRE COMMUNICATIONS CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1999
-29-
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Empire Communications Corporation
(A Development Stage Company)
Springville, Utah
We have audited the accompanying balance sheet of Empire Communications
Corporation (a development stage company) as of December 31, 1999 and the
related statements of operations, stockholders' equity and cash flows for the
years ended December 31, 1999 and 1998 and from inception on April 27, 1995
through December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Empire Communications
Corporation (a development stage company) as of December 31, 1999 and the
results of its operations and its cash flows for the years ended December 31,
1999 and 1998 and from inception on April 27, 1995 through December 31, 1999 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company is a development stage company with no
significant operating results to date, which raises substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 3. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Jones, Jensen & Company
Salt Lake City, Utah
March 27, 2000
-30-
<PAGE>
EMPIRE COMMUNICATIONS CORPORATION
(A Development Stage Company)
Balance Sheet
ASSETS
CURRENT ASSETS
Cash $ 14,483
------------
Total Current Assets 14,483
------------
TOTAL ASSETS $ 14,483
============
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,075
------------
Total Liabilities 5,075
------------
STOCKHOLDERS EQUITY
Preferred stock; authorized 5,000,000 shares at $0.001
par value; no shares issued or outstanding -
Common stock; authorized 50,000,000 shares at $0.001
par value; 23,200,000 shares issued and outstanding 23,200
Additional paid-in capital 102,800
Deficit accumulated during the development stage (116,592)
------------
Total Stockholders Equity 9,408
------------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 14,483
============
The accompanying notes are an integral part of these financial statements.
-31-
<PAGE>
EMPIRE COMMUNICATIONS
(A Development Stage Company)
Statements of Operations
From
Inception on
For the Years Ended April 27,
December 31, 1995 through
-------------------------- December 31,
1999 1998 1999
------------- ------------ ------------
REVENUES $ - $ - $ -
------------- ------------ ------------
EXPENSES
General and administrative 10,156 - 10,156
------------- ------------ ------------
Total Expenses 10,156 - 10,156
------------- ------------ ------------
LOSS FROM OPERATIONS (10,156) - (10,156)
------------- ------------ ------------
OTHER INCOME
Interest income 70 - 70
------------- ------------ ------------
Total Other Income 70 - 70
------------- ------------ ------------
LOSS BEFORE DISCONTINUED
OPERATIONS (10,086) - (10,086)
------------- ------------ ------------
DISCONTINUED OPERATIONS
Loss on discontinued operations - (81,422) (106,506)
------------- ------------ ------------
Total Discontinued Operations - (81,422) (106,506)
------------- ------------ ------------
NET LOSS $ (10,086)$ (81,422) $ (116,592)
============= ============ ============
BASIC NET LOSS PER SHARE
Loss from operations $ (0.00)$ -
Discontinued operations - (0.03)
------------- ------------
Basic Net Loss Per Share $ (0.00)$ (0.03)
============= ============
The accompanying notes are an integral part of these financial statements.
-32-
<PAGE>
EMPIRE COMMUNICATIONS CORPORATION
(A Development Stage Company)
Statement of Stockholders' Equity
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
-------------------------- Paid-in Development
Shares Amount Capital Stage
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Balance, April 27, 1995 - $ - $ - $ -
Common stock issued for
cash at $0.001 per share 2,000,000 2,000 (1,000) -
Recapitalization of G.E.C., Inc. 1,000,000 1,000 4,000 -
Net loss for the period ended
December 31, 1996 - - - (5,125)
---------- ----------- ---------- ------------
Balance, December 31, 1996 3,000,000 3,000 3,000 (5,125)
Common stock issued for
cash at $1.00 per share 200,000 200 99,800 -
Net loss for the year ended
December 31, 1997 - - - (19,959)
---------- ----------- ---------- ------------
Balance, December 31, 1997 3,200,000 3,200 102,800 (25,084)
Net loss for the year ended
December 31, 1998 - - - (81,422)
---------- ----------- ---------- ------------
Balance, December 31, 1998 3,200,000 3,200 102,800 (106,506)
Common stock issued for cash
at $0.001 per share 20,000,000 20,000 - -
Net loss for the year ended
December 31, 1999 - - - (10,086)
---------- ----------- ---------- ------------
Balance, December 31, 1999 23,200,000 $ 23,200 $ 102,800 $ (116,592)
========== =========== ========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-33-
<PAGE>
EMPIRE COMMUNICATIONS CORPORATION
(A Development Stage Company)
Statements of Cash Flows
<TABLE>
<CAPTION>
From
Inception on
For the Years Ended April 27,
December 31, 1995 through
-------------------------- December 31,
1999 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (10,086) $ (81,422) $ (116,592)
Adjustments to reconcile net loss to net
cash used by operating activities:
Loss on sale of subsidiary - 58,930 58,930
Changes in assets and liabilities:
Increase in accounts payable 4,569 506 5,075
------------ ------------ ------------
Net Cash Used by Operating Activities (5,517) (21,986) (52,587)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of subsidiary - 16,912 16,912
Investment in subsidiary - - (75,842)
------------ ------------ ------------
Net Cash Used by Investing Activities - 16,912 (58,930)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash acquired in recapitalization of
subsidiary - - 5,000
Common stock issued for cash 20,000 - 121,000
------------ ------------ ------------
Net Cash Provided by Financing
Activities 20,000 - 126,000
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH 14,483 (5,074) 14,483
CASH AT BEGINNING OF PERIOD - 5,074 -
------------ ------------ ------------
CASH AT END OF PERIOD $ 14,483 $ - $ 14,483
============ ============ ============
Cash Paid for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
</TABLE>
-34-
<PAGE>
EMPIRE COMMUNICATIONS CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Operating History
The Company was incorporated in the State of Nevada on April 27, 1995,
under the name of Landmark Leasing, Corp.
The Company planned on operating as a leasing company of residential
property, commercial property, vehicles, and related activities. The
Company has discontinued pursuing any of these activities and
accordingly remains a development stage company. The Company changed
its name to Litigation Economics, Inc. on December 22, 1996. The
Company changed its name to Empire Communications Corporation on March
23, 1998.
On December 22, 1996, the Company acquired all of the outstanding stock
of G.E.C., Inc., (the Subsidiary) for 1,000,000 shares of the Company's
common stock valued at $.001 per share or $1,000 which represented the
capital contributed to the subsidiary. The acquisition of the
Subsidiary was recorded as a recapitalization of the Subsidiary,
whereby the acquired company is treated as the surviving entity for
accounting purposes. The Subsidiary was formed on July 31, 1996 in the
State of Idaho. The Subsidiary was engaged in the field of economic
advising and consulting and commenced principal business operations
during 1997. Accordingly, the subsidiary was also considered a
development stage company. On December 1, 1998, the Company sold all of
the outstanding stock of the Subsidiary for $16,911.
Summary of Significant Accounting Policies
a. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a December 31 year end.
b. Basic Net Loss Per Share
The computation of basic net (loss) per share of common stock is based
on the weighted average number of shares outstanding during the period
of the financial statements.
1999 1998
------------ -------------
Numerator (loss) $ (10,086) $ (81,422)
------------ -------------
Denominator - shares 18,597,260 3,200,000
------------ -------------
Loss per share $ (0.00) $ (0.03)
============ =============
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EMPIRE COMMUNICATIONS CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
c. Provision for Taxes
At December 31, 1999, the Company has net operating loss carryforwards
of approximately $116,000 that may be offset against future taxable
income through 2019. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater
chance the operating loss carryforwards will expire unused.
Accordingly, the potential tax benefits of the operating loss
carryforwards are offset by a valuation allowance of the same amount.
d. Cash and Cash Equivalents
For purposes of the financial statement presentation, the Company
considers all highly liquid investments with a maturity of three months
or less to be cash equivalents.
e. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
f. Revenue Recognition
The Company currently has no source of revenues. Revenue recognition
policies will be determined when principal operations begin.
NOTE 2 - COMMON STOCK OPTIONS
In October of 1996, the Board of Directors adopted the 1996 Stock
Option Plan (the "Plan"), allowing the Company to offer its key
employees, officers, directors, consultants, and sales representatives
an opportunity to acquire a proprietary interest in the Company. The
total number of shares reserved and available for distribution under
the Plan were 400,000 shares. These shares will underlie the Options
issued by the Company pursuant to the Plan. The Option holders will not
be protected against dilution if the Company should issue additional
shares of common stock in the future. Neither the Options, nor the
shares underlying the Options have pre-emptive rights. The plan was
amended on March 13, 1998 to increase the shares available under the
plan to 800,000 pre-split. Accordingly, with the effect of the 2 for 1
forward stock split 1,600,000 shares became available under the plan in
1998. As of December 31, 1999, no activity has transpired with regard
to the Plan.
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EMPIRE COMMUNICATIONS CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. However, the Company does not have
significant cash and has not had significant operations. To date, the
Company has been able to cover operating costs with existing financial
resources. The Company is seeking a merger with an existing, operating
company. In the interim, officers of the Company have committed to make
capital contributions or advances to the Company should additional
funds be needed to pay operating expenses.
NOTE 4 - STOCK TRANSACTIONS
On March 13, 1998 the Company approved a 2-for-1 forward stock split.
These financial statements have been retroactively restated to reflect
the change.
On March 25, 1999, the Company issued 20,000,000 shares of common stock
for $20,000 to a related party.
NOTE 5 - DISCONTINUED OPERATIONS
On December 31, 1998, the Company agreed to sell all of its
ownership of G.E.C., Inc. to the individual from whom it was
originally purchased for $16,911 in cash. All prior operations have
been classified as discontinued.
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The following is a summary of the discontinued operations:
From
Inception on
For the April 27,
Year Ended 1995 Through
December 31, December 31,
1998 1998
------------ ------------
REVENUES $ - $ -
------------ ------------
EXPENSES
General and administrative 22,492 47,576
------------ ------------
Total Expenses 22,492 47,576
------------ ------------
LOSS FROM OPERATIONS (22,492) (47,576)
------------ ------------
LOSS ON SALE OF SUBSIDIARY (58,930) (58,930)
------------ ------------
NET LOSS FROM DISCONTINUED OPERATIONS $ (81,422) $ (106,506)
============ ============
No income tax benefit has been attributed to the loss from discontinued
operations.
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EXHIBIT C
None.
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EXHIBIT D
FRONT PORCH DIGITAL INC.
UNAUDITED FINANCIAL STATEMENTS
Balance Sheet and Statement of Operations for the period ended
March 22, 2000
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FRONT PORCH DIGITAL INC.
Balance Sheet
As of March 22, 2000
[Unaudited]
Assets
Current Assets
Cash and cash equivalents $ 155,000
Accounts Receivable $ 22,780
Total Current Assets $ 177,780
Property and Equipment - Net $ 211,552
Total Assets $ 389,332
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $ 114,297
Notes Payable $ 300,000
Total Current Liabilities $ 414,297
Stockholders' Equity
Common Stock Issued
11,800,000 Shares $ 11,800
Total Stockholders Equity $ (24,965)
Total Liabilities and Stockholders' Equity $ 389,332
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FRONT PORCH DIGITAL INC.
Statement of Operations
As of March 22, 2000
[Unaudited]
For the Month
March 2000 Year To Date
Revenues
Encoding Services $ - $ -
DVD Authoring Services $ 22,750 $ 22,750
Web Solutions $ - $ -
Other $ - $ -
Total Revenues $ 22,750 $ 22,750
Operating Expenses
Salaries $ 25,089 $ 50,178
Payroll Taxes & Benefits $ 16,429 $ 32,858
Consulting/Contractor Fees $ 11,000 $ 11,000
Office Rent $ 11,800 $ 23,600
Equipment Lease $ 10,989 $ 21,978
Travel Expense $ 2,263 $ 13,969
Insurance Expense $ 3,814 $ 7,628
Other $ 3,877 $ 7,104
Total Operating Expenses $ 85,261 $ 168,315
Net Loss $ (62,511) $ (145,565)
Weighted Average Number of
Common Shares Outstanding $11,800,000
Loss Per Common Share $ (0.01)
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EXHIBIT E
In April 2000, the Company borrowed $500,000.00 from one investor on
the same terms as the Bridge Loan in March 2000.
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EXHIBIT F
Interwest Transfer Company
Transfer Agent & Registrar Agent
1981 Murray Holladay Road
Salt Lake City, Utah 84117
Empire Communications Corp.
545 West 150 South
Springville, Utah 84663
Re: Exchange of shares of Front Porch Digital, Inc., a Delaware
corporation ("Front Porch"), for shares of Empire
Communications Corp., a Nevada corporation ("Empire
or "the Company")
Dear Ladies and Gentlemen:
Pursuant to that certain Agreement and Plan of Reorganization (the
"Agreement") among Empire, Susan M. Grant, Front Porch and the stockholders of
Front Porch, I acknowledge that I have approved this exchange; that I am aware
of all of the terms and conditions of the Agreement; that I have had the
opportunity to receive and personally review a copy of any and all material
documents regarding the Company, including, but not limited to Articles of
Incorporation, Bylaws, minutes of meetings of directors and stockholders,
financial statements and the Company's reports which have been filed with the
Securities and Exchange Commission during the past 12 months. I represent and
warrant that no director or officer of the Company or any associate of either
has solicited this exchange; that I am an "accredited investor" as that term is
known under the Rules and Regulations of the Securities and Exchange Commission
(see Exhibit "A" hereto); and/or, I represent and warrant that I have sufficient
knowledge and experience to understand the nature of the exchange and am fully
capable of bearing the economic risk of the loss of my entire cost basis.
I understand that the Company has and will make books and records of
the Company available to me for my inspection in connection with the
contemplated exchange of my shares, and that I have been encouraged to review
the information and ask any questions I may have concerning the information of
any director or officer of the Company or of the legal and accounting firms for
the Company. I understand that the accounting firm for Empire is Jones Jenson &
Co., 50 South Main Street, No. 1450, Salt Lake City, Utah 84144, Telephone
#801-328-4408; and that legal counsel for Empire is Leonard W. Burningham, Esq.,
455 East 5th South, Suite 205, Salt Lake City, Utah 84111, Telephone
#801-363-7411.
I also understand that I must bear the economic risk of ownership of
any of the Empire shares for a long period of time, the minimum of which will be
one (1) year, as these
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shares are "unregistered" shares and may not be sold unless any subsequent offer
or sale is registered with the United States Securities and Exchange Commission
or otherwise exempt from the registration requirements of the Securities Act of
1933, as amended (the "Act"), or other applicable laws, rules and regulations.
I intend that you rely on all of my representations made herein and
those in the personal questionnaire (if applicable) I provided to Front Porch
for use by Empire as they are made to induce you to issue me the shares of
Empire under the Agreement, and I further represent (of my personal knowledge or
by virtue of my reliance on one or more personal representatives), and agree as
follows, to-wit:
1. That the shares being acquired are being received for
investment purposes and not with a view toward further distribution;
2. That I have a full and complete understanding of the phrase
"for investment purposes and not with a view toward further distribution";
3. That I understand the meaning of "unregistered shares" and
know that they are not freely tradeable;
4. That any stock certificate issued by you to me in connection with
the shares being acquired shall be imprinted with a legend restricting the sale,
assignment, hypothecation or other disposition unless it can be made in
accordance with applicable laws, rules and regulations;
5. I agree that the stock transfer records of your Company shall
reflect that I have requested the Company not to effect any transfer of any
stock certificate representing any of the shares being acquired unless I shall
first have obtained an opinion of legal counsel to the effect that the shares
may be sold in accordance with applicable laws, rules and regulations, and I
understand that any opinion must be from legal counsel satisfactory to the
Company and, regardless of any opinion, I understand that the exemption covered
by any opinion must in fact be applicable to the shares;
6. That I shall not sell, offer to sell, transfer, assign,
hypothecate or make any other disposition of any interest in the shares being
acquired except as may be pursuant to any applicable laws, rules and
regulations;
7. I fully understand that my shares which are being exchanged for
shares of the Company are "risk capital," and I am fully capable of bearing the
economic risks attendant to this investment, without qualification; and
8. I also understand that without approval of counsel for Empire all
shares of Empire to be issued and delivered to me in exchange for my shares of
Front Porch shall be
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represented by one stock certificate only which shall be imprinted with the
following legend or a reasonable facsimile thereof on the front and reverse
sides thereof:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not
be sold or otherwise transferred unless compliance with the
registration provisions of such Act has been made or unless
availability of an exemption from such registration provisions has
been established, or unless sold pursuant to Rule 144 under the Act.
Any request for more than one stock certificate must be accompanied
by a letter signed by the requesting stockholder setting forth all relevant
facts relating to the request. Empire will attempt to accommodate any
stockholders' request where Empire views the request is made for valid business
or personal reasons so long as in the sole discretion of Empire the granting of
the request will not facilitate a "public" distribution of unregistered shares
of common voting stock of Empire.
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You are requested and instructed to issue a stock certificate as
follows, to-wit:
--------------------------------------------------------
(Name(s) and Number of Shares)
--------------------------------------------------------
(Address)
--------------------------------------------------------
(City, State and Zip Code)
If joint tenancy with full rights of survivorship is desired, put
the initials JTRS after your names.
Dated this day of , 2000.
--------- -----------------------
Very truly yours,
---------------------------
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EXHIBIT G
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Empire Communications Corp., a
Nevada corporation ("Empire"), represents and warrants the following as
required by the Agreement and Plan of Reorganization (the "Agreement")
between Empire and Front Porch Digital, Inc., a Delaware corporation ("Front
Porch"), and the stockholders of Front Porch (the "Front Porch Stockholders"):
1. That she is the President of Empire and has been authorized
and empowered by its Board of Directors to execute and deliver this Certificate
to Front Porch and the Front Porch Stockholders.
2. Based on her personal knowledge, information, belief and
opinions of counsel for Empire regarding the Agreement:
(i) All representations and warranties of Empire contained
within the Agreement are true and correct;
(ii) Empire has complied with all terms and provisions required
of it pursuant to the Agreement; and
(iii) There have been no material adverse changes in the financial
position of Empire as set forth in its financial statements
for the periods ended December 31, 1999 and 1998, except as
set forth in Exhibit C to the Agreement.
EMPIRE COMMUNICATIONS CORP.
By
-----------------------------
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EXHIBIT H
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the Chief Executive Officer of Front Porch Digital
Inc., a Delaware corporation ("Front Porch"), represents and warrants the
following as required by the Agreement and Plan of Reorganization (the
"Agreement") among Front Porch, its stockholders (the "Front Porch
Stockholders"), Empire Communications Corp., a Nevada corporation ("Empire") and
Susan M. Grant, the sole director and principal stockholder of Empire:
1. That he is the CEO of Front Porch and has been authorized
and empowered by its Board of Directors to execute and
deliver this Certificate to Empire.
2. Based on his personal knowledge, information, belief:
(i) All representations and warranties of Front Porch contained
within the Agreement are true and correct;
(ii) Front Porch has complied with all terms and provisions
required of it pursuant to the Agreement; and
(iii) There have been no material adverse changes in the financial
position of Front Porch as set forth in its balance sheet
and statement of operations for the period ended March 22,
2000, except as set forth in Exhibit E to the Agreement.
FRONT PORCH DIGITAL, INC.
By
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