LOCK-UP AND VOTING AGREEMENT
LOCK-UP AND VOTING AGREEMENT (the "Agreement") dated as of August
18,
2004, by and among FRONT PORCH DIGITAL
INC., a Nevada corporation (the
"Company"), THOMAS P. SWEENEY III
("Sweeney"), EQUITY PIER LLC, a Colorado
limited liability company ("EP" and
collectively with Sweeney, the "Restricted
Parties") and each Person whose name
appears on SCHEDULE A attached hereto
(collectively the "Former MSI
Stockholders").
W I T N E
S S E T H
- - - - - - - - - -
WHEREAS, pursuant to the terms of an Agreement and Plan of Merger
dated
as of August 16, 2004 (the "Merger
Agreement") between the Company,
ManagedStorage International, Inc., a
Delaware corporation ("MSI"), and Front
Porch Merger Corp., a Delaware corporation,
on the date hereof, the Company has
agreed to issue to the Former MSI
Stockholders such number of shares of Common
Stock, $.001 par value, of the Company (the
"Common Stock") or Series A
Convertible Preferred Stock, $.001 par
value, of the Company (the "Series A
Preferred Stock") as determined pursuant to
the Merger Agreement; and
WHEREAS, pursuant to the terms of an Employment Agreement of even
date
herewith (the "Employment Agreement")
between the Company and Sweeney, Sweeney
will become the Chief Executive Officer of
the Company upon the consummation of
the transactions contemplated by the Merger
Agreement; and
WHEREAS, Sweeney is the founder and Managing Member of EP;
WHEREAS, following the consummation of the transactions
contemplated in
the Merger Agreement, the Restricted
Parties will beneficially own approximately
18,879,289 shares of Common Stock; and
WHEREAS, as a condition precedent to the consummation of the
transactions contemplated by the Merger
Agreement and the Employment Agreement,
the Company, the Restricted Parties and the
Former MSI Stockholders desire to
provide for certain restrictions on the
transfer of such shares by the
Restricted Parties;
NOW THEREFORE, in consideration of the premises and the mutual
covenants
of the parties hereto, it is hereby agreed
as follows:
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ARTICLE I
CERTAIN DEFINITIONS
1.1
DEFINITIONS. Whenever used in this Agreement, unless otherwise
defined or the subject matter or context
dictates, the following terms shall
have these respective meanings:
(a)
Affiliate" shall have the meaning ascribed to it in Rule
12(b)(2) promulgated under the Securities
Exchange Act of 1934, as amended.
(b)
"Agreement" means this Lock-up Agreement, any agreement
which is supplementary to or in amendment
or confirmation of this Agreement, and
any schedules hereto or thereto.
(c)
"Certificate of Designations" means the Certificate of
Designations, Preferences and Rights of the
Series A Preferred Stock.
(d)
"Disposition" shall have the meaning assigned in Section
2.1.
(e)
"Lock Up Expiration Date" means the earliest date on
which the Former MSI Stockholders and/or
their permitted transferees receive
aggregate proceeds (whether in cash or
otherwise) of at least $31,500,000 from
the disposition of the shares of Series A
Preferred Stock and/or Common Stock
(whether underlying the Series A Preferred
Stock or otherwise) acquired pursuant
to the Merger Agreement, including without
limitation, upon the occurrence of
one or more of the following events: (A) a
Liquidation Event or event deemed to
be a Liquidation Event pursuant to Section
4 of the Certificate of Designations,
(B) a redemption of the Series A Preferred
Stock pursuant to Section 5 of the
Certificate of Designations, (C) a public
offering of the Common Stock, (D) the
sale of such shares (or the shares of
Common Stock into which they may be
converted) in the public or private market
or (E) the Transfer of such shares to
any member, partner or stockholder of such
Former MSI Stockholder(s).
(f)
"Person" means any individual, estate, trust,
partnership, joint venture, limited
liability company, association, firm,
corporation, company or other entity.
(g)
"Shares" mean the shares of Common Stock beneficially
owned by the Restricted Parties, as well
as: (i) any shares into which such
shares may be converted, reclassified,
redesignated, subdivided, consolidated or
otherwise changed; (ii) any shares of the
Company or any successor or other body
corporate which may be received by the
holders of such shares on a merger,
amalgamation or other reorganization of or
including the Company; and (iii) any
securities which may now or hereinafter be
convertible or exercisable into such
shares.
(h)
"Transfer" shall have the meaning assigned in Section
2.1.
1.2
EXTENDED MEANINGS. Words importing the singular number include
the plural and vice versa and words
importing gender include all genders.
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ARTICLE II
DISPOSITION OF SHARES
2.1
RESTRICTION ON TRANSFER OF SHARES.
(a)
Except as provided in Section 2.1(b), prior to the Lock Up
Expiration Date, the Restricted Parties may
not sell, assign, transfer,
mortgage, alienate, pledge, hypothecate,
create or permit to exist a security
interest in or lien on, place in trust or
in any other way encumber or otherwise
dispose of (any of the foregoing shall
constitute a "Transfer," and the
consummation of such being a "Disposition")
any Shares now owned or any interest
therein except as expressly permitted by
the terms and provisions of this
Agreement. The Company shall have no
obligation to recognize or accede to any
Disposition or to register any Transfer of
Shares on its books unless such
Disposition is effected in accordance with
the terms and provisions of this
Agreement. No Person who purports to be a
holder of Shares acquired in violation
of the terms and provisions of this
Agreement shall be entitled to any rights
with respect to such Shares, including any
rights to vote such Shares, to
receive any dividends declared thereon, or
to receive any notice with respect
thereto under this Agreement or
otherwise.
(b)
Any Restricted Party may Transfer all or a portion of his
or its Shares to (i) any Person to which
such Restricted Party shall sell,
assign or transfer all or substantially all
of its assets; or (ii) any Affiliate
of such Restricted Party. If a Restricted
Party intends to make a D