EXHIBIT 4.1
SETTLEMENT AND RELEASE AGREEMENT
Thiso Settlement and Release Agreement (the "AGREEMENT") dated
effective as of January 30, 2004 (the "EFFECTIVE DATE") is between Xxxxxx Xxxxx
("Xxxxx") Xxxxx Enterprises, Inc. ("VEI")and Front Porch Digital. Inc. ("FPD")
who shall collectively be referred to as the "PARTIES".
RECITALS
WHEREAS, Xxxxx and FPD are parties to a lawsuit captioned Xxxx Xxxxx v
Front Porch Digital. Inc., Case No. 02-MK-2288 (BNB) currently pending in the
United States District Court for the District of Colorado (the "Lawsuit"). In
the Lawsuit Xxxxx has brought claims against FPD for commissions, penalties and
attorneys fees under the Colorado Wage Act and for unjust enrichment; FPD has
brought claims against Xxxxx for tortuous interference with contract and
prospective business advantage, misappropriation of trade secrets and breach of
fiduciary duty.
WHEREAS, the Parties wish to settle the Lawsuit and all claims therein;
NOW THEREFORE, in consideration of the foregoing, the mutual promises
forth in this Agreement, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Parties agree as follows:
AGREEMENT
1. SETTLEMENT CONSIDERATION. Upon full execution of this.
Agreement FPO shall pay VEI the Settlement Consideration
pursuant to the payment terms set forth in Exhibit A hereto.
Upon full payment of the Settlement Consideration as set forth
in Exhibit A: a) the parties shall cause the Lawsuit to be
dismissed with prejudice; and b) the releases set forth in
paragraph 2 below shall become effective.
2. RELEASES.
A. RELEASE BY XXXXX AND VEI. Xxxxx, for himself and his heirs,
successors, representatives, agents, attorneys and assigns
(all of whom, for the purposes of this Section 2(A), are
collectively referred to as Xxxxx) and VEI for itself, its
affiliates, predecessors, successors, representatives,
directors, officers, employees, shareholders, agents,
attorneys and assigns (all of whom, for the purposes of this
Section 2(A), are collectively referred to as VEI) hereby
fully and forever release and discharge FPD, its affiliates,
predecessors, successors, representatives, directors,
officers, employees, shareholders, agents, attorneys and
assigns (all of whom, for the purposes of this Section 2(A),
are collectively referred to as FPD) of
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and from any and all actions, causes of action. claims,
obligations, demands, costs and expenses, including attorneys'
fees, compensation, commissions, damages, wages, penalties or
otherwise, of every kind and nature whatsoever, in law,
statute or equity, whether now known or unknown, that Xxxxx or
VEI may now have, or claim at any future time to have, against
FPD including but not limited to any claims based in whole or
in part upon, relating to, or arising from the claims raised
in the Lawsuit.
B. RELEASE BY FPD. FPD, for itself, its affiliates, predecessors,
successors, representatives, directors, officers, employees,
shareholders, agents, attorneys and assigns (all of whom, for
the purposes of this Section 2(8), are collectively referred
to as FPD) hereby fully and forever releases and discharges
Xxxxx and his heirs, successors, representatives, agents,
attorneys and assigns (all of whom, for the purposes of this
Section 2(B) are collectively referred to as Xxxxx) and VEI,
its affiliates, predecessors. successors, representatives,
directors, officers,, employees, shareholders, agents,
attorneys and assigns (all of whom, for the purposes of this
Section 2(B), are collectively referred to as VEI) of and from
any and all actions, causes of action, claims, obligations,
demands, costs and expenses, including attorneys' fees,
compensation, damages; wages, penalties or otherwise, of every
kind and nature whatsoever, in law; statute or equity, whether
now known or unknown, that FPD may now have, or claim at any
future time to have, against Xxxxx or VEI including but not
limited to any claims based in whole or in part upon, relating
to, or arising from the claims raised in the Lawsuit.
3. DENIAL OF LIABILITY. The Parties understand and agree that
this Agreement shall not be construed as an admission of
liability on the part of any person or entity, liability being
expressly denied.
4. AUTHORITY AND NONASSIGNMENT. The Parties warrant and represent
that each has authority to enter into this Agreement, and that
no Party has transferred, sold, assigned, or hypothecated any
part of their respective claims, actions, demands and/or
causes of action, if any. The Parties warrant and agree that
each will sign or execute any document that is necessary to
complete the obligations as set forth within this Agreement.
5. NONRELIANCE. Each Party understands and agrees that it assumes
all risk that the facts or law may be, or become, different
than the facts or law as believed by the Party at the time it
executes this Agreement. The Parties acknowledge that their
adversary relationship precludes any affirmative obligation of
disclosure, and expressly disclaim all reliance upon
information supplied or concealed by any adverse Party or its
counsel in connection with the negotiation and/or execution of
this Agreement.
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6. ADDITIONAL WARRANTY AND ACKNOWLEDGMENT. The Parties warrant
and represent that they have been offered no promise or
inducement except as expressly provided in this Agreement, and
that this Agreement is not in violation of or in conflict with
any other Agreement of any of the Parties.
7. CONFIDENTIALITY. The Parties warrant and represent to each
other that, other than to their shareholders, accountants
and/or counsel, the terms of this Agreement or the
circumstances under which the Lawsuit has been resolved have
not been disclosed. After the Effective Date, neither the
Parties, nor their counsel, nor their shareholders, nor any
other person under the Parties' control shall disclose any
term of this Agreement or the circumstances under which the
Lawsuit has been resolved, except that the Parties may
disclose such information as required by subpoena or court
order or to an attorney or accountant to the extent necessary
to obtain professional advice. The Parties shall not be
entitled to rely upon the foregoing exception for disclosures
pursuant to subpoena or court order unless the Parties. have
given each other written notice, within three business days
following service of the subpoena or court order.
8. SURVIVAL OF COVENANTS AND WARRANTIES. All covenants and
warranties contained in this Agreement are contractual and
shall survive the closing of this Agreement.
9. FEES AND COSTS. Except as expressly set forth herein, each
Party shall be responsible for its own attorneys' fees, costs
and expenses.
10. MISCELLANEOUS.
A. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding in all respects upon, and shall inure to the
benefit of, the Parties' successors and assigns.
B. GOVERNING LAW/DISPUTES. This Agreement shall be
governed by the laws of the State of Colorado,
irrespective of the choice of law rules of any
jurisdiction. The Parties hereby consent to arid
submit to the jurisdiction of the federal and state
courts located in the State of Colorado. The Parties
shall not raise in connection with any such action or
suit, and hereby waive, any defenses based upon the
venue, the inconvenience of the forum, the lack of
personal jurisdiction, the' sufficiency of the
service pf process, or the like.
C. SEVERABILITY. In the, event that a court of competent
jurisdiction enters a final judgment holding invalid
any provision of this
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Agreement, the remainder of this Agreement shall be
fully enforceable.
D. INTEGRATION. This Agreement and Exhibit A hereto
constitute the entire agreement of the Parties and a
complete merger of prior negotiations and agreements.
E. MODIFICATION. This Agreement shall not be modified
except in a writing signed by the Parties.
F WAIVER. No term or condition of this Agreement shall
be deemed to have' been waived, nor shall there be an
estoppel against the enforcement of any provision of
this Agreement, except by a writing signed by the
Party charged with the waiver or estoppel. No waiver
of any breach of this Agreement shall be deemed. a
waiver of any later breach of the same provision or
any other provision of this Agreement.
G. HEADINGS. Headings are intended solely as a
convenience and shall not control the meaning or
interpretation of any provision of this Agreement.
H. CONSTRUCTION. The Parties acknowledge that they and
their respective counsel have reviewed this Agreement
in its entirety and `have had a full and fair
opportunity to negotiate its terms. Each Party
therefore waives all applicable rules of construction
that any provision of this agreement should be
construed against its drafter, and agrees that all,
provisions of this Agreement shall be construed as a
whole, according to the fair meaning of the language
used.
I. COUNTERPARTS AND TELECOPIES. This Agreement may be
executed in counterparts, or by copies transmitted by
telecopier, all, of which shall be given the same
force and effect as the original.
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FRONT PORCH DIGITAL, INC.
By:/s/ Xxxxxxx Xxxxxxx, CFO/COO
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Date: January 30, 2004
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Xxxxxx Xxxxx
By: /s/ Xxxxxx Xxxxx
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Date: January 30, 2004
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XXXXX ENTERPRISES, INC.
By: /s/ Xxxxxx Xxxxx
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Date: January 30, 2004
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FRONT PORCH DIGITAL, INC.
XXXX XXXXX/XXXXX ENTERPRISES SETTLEMENT SUMMARY --
EXHIBIT A
TO SETTLEMENT AGREEMENT DATED JANUARY 30, 2004
SETTLEMENT TERMS AND CONDITIONS:
1) Settlement amount - $105,000 in value in freely-tradeable
common stock of Front Porch Digital Inc. ("FPDI"). The number
of Initial Shares ("Initial Shares") to be issued in
consideration for this amount will be determined by the
closing price of the common stock (as quoted on the exchange)
on the date the agreement is executed.
2) FPDI expects to issue these Initial Shares to Xxxxx
Enterprises. Inc. within 3 weeks of the date the agreements
are executed (expected to be Friday, January 30, 2004).
3) Any proceeds realized from the sale of the Initial Shares in
excess of the $105,000 will be retained by Xxxxx Enterprises,
Inc.
4) FPDI is guaranteeing the $105,000 to be realized through the
sale of its common stock to be issued to Xxxxx Enterprises,
Inc. It is the intent and meaning of this agreement to
guarantee that Xxxxx Enterprises, Inc. receives $105,000
(pretax) from the proceeds of the sale of the Initial Shares.
If Xxxxx Enterprises, Inc. does not realize the full $105,000
from the sale of the Initial Shares, FPDI will immediately
issue to Xxxxx Enterprises, Inc. additional shares of its
common stock ("Additional Shares") (number of shares to be
determined based upon the closing market price of the stock on
the date of issue) equal to the value shortfall below the
$105,000 agreed amount. The Additional Shares will be
immediately tradeable and the ability to realize the full
value would be certain. Technically, on the date the
Additional Shares are issued, Xxxxx Enterprises, Inc. can
execute a sell order in the amount of those Additional Shares
at that price and then cover the sale upon receipt of the
stock certificate within 1 business day of the issuance of the
Additional Shares. In the event that the realization from the
sale of the Additional Shares does not cover the shortfall the
process will be repeated by a second issuance of Additional
Shares, followed by additional issuances if necessary. EPO
may, at its election, provide any shortfall amount in cash
rather than stock.
5) Under this agreement all Initial Shares must be sold within
seven (7) trading days of the date of issuance. The proceeds
realized by Xxxxx Enterprises. Inc. will be reported to FPDI
upon the sate of the last of the Initial Shares. FPDI will
then make the determination of the Additional Shares that same
business day. The Additional Shares will be issued that day
and a stock certificate will be delivered to Xxxxx
Enterprises, Inc. the next business day.
6) All obligations for taxes on this settlement are Xxxxx
Enterprises. Inc.'s sole responsibility.
OTHER REPRESENTATIONS AND WARRANTIES:
1) FPDI represents that it will not declare bankruptcy or
initiate any type of disposition of the company's assets in a
fire/liquidation type sale prior to the realization of the
$105,000 in proceeds by Xxxxx Enterprises, Inc.
2) FPDI represents that it will not execute a reverse stock split
which could impair the value of the stock and thus the
proceeds to be realized by Xxxxx Enterprises, Inc.
3) FPDI represents that it has the authority to issue these
shares and will obtain formal Board of Directors approval
prior to the execution of the final agreements regarding this
settlement.
4) FPDI represents that will attempt to assist Xxxxx Enterprises,
Inc. in the timely disposition of these shares and the full
realization of the $105,000 from the sale of the Initial
Shares.
5) Xxxxx Enterprises, Inc. represents that it will use best
efforts in selling the Initial Shares within the time period
allotted for the maximum price per share using good reason and
judgment in selling the shares (i.e. Xxxxx Enterprises, Inc.
will not sell the entire block of stock in I transaction at a
price lower than the market price and thus cause FPDI to have
to issue Additional Shares).
6) Xxxxx Enterprises, Inc. represents that it xxxx obtain
preapproval from the CEO of FPDI before selling any block of
stock that is 25,000 shares or more at a price less than the
market price at that time.
XXXXX ENTERPRISES, INC.
/s/ Xxxxxx Xxxxx
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by: Xxxxxx Xxxxx
FRONT PORCH DIGITAL, INC.
By: /s/ Xxxxxxx Xxxxxxx
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Its: CHIEF FINANCIAL OFFICER/CHIEF
OPERATING OFFICER
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