EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of August 18, 2004, between
FRONT PORCH DIGITAL, INC., a Nevada corporation (the "Company"), and each Person
whose name appears on SCHEDULE A attached hereto (each a "Former MSI
Stockholder").
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, and Front Porch
Merger Corp., a Delaware corporation, on the date hereof, the Company has agreed
to issue to certain Former MSI Stockholders such number of shares of 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, as a condition precedent to the consummation of the
transactions contemplated by the Merger Agreement, the Company has agreed to
provide certain registration rights pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, capitalized terms
used herein shall have the meanings set forth in the preambles hereto and in
this Section 1.
1.1 "COMMISSION" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
1.2 "COMMON STOCK" shall mean the common stock, par value
$.001 per share, of the Company or, in the case of a conversion,
reclassification or exchange of such shares of such Common Stock, shares of the
stock issued or issuable in respect of such shares of Common Stock, and all
provisions of this Agreement shall be applied appropriately thereto and to any
stock resulting therefrom.
1.3 "CURRENT SB-2" shall mean the Company's Registration
Statement on Form SB-2 filed with the Commission on June 29, 2004, as previously
or hereafter amended.
1.4 "EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended, or any similar federal statute enacted hereafter, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect from time to time.
1.5 "EXISTING RIGHTS AGREEMENTS" shall mean (i) the
warrant agreements originally dated as of October 10, 2000 between the Company
and the Original Warrantholders for the purchase of an aggregate of 900,000
shares of Common Stock and any warrant agreement executed and delivered by the
Company upon the registration or transfer of any warrants evidenced by such
warrant agreements, (ii) the Registration Rights Agreement dated as of October
10, 2000 between the Company and Equity Pier LLC and (iii) the warrant agreement
between the Company and Equity Pier LLC dated February 28, 2001 for the purchase
of up to 3,324,696 shares of Common Stock.
1.6 "FORM S-3" means such form under the Securities Act
as in effect on the date hereof or any registration form under the Securities
Act subsequently adopted by the Commission which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the Commission.
1.7 "FORMER MSI SERIES A HOLDER RIGHTS AGREEMENT" means
that certain Registration Rights Agreement of even date herewith, by and among
the Company and Providence Equity Partners III, L.P., Providence Equity
Operating Partners III, L.P. and First Union Capital Partners.
1.8 "HOLDER" shall mean any holder of Registrable
Securities.
1.9 "INITIATING HOLDERS" shall mean Holders representing
(on a fully diluted basis) at least fifty-one percent (51%) of the total number
of Registrable Securities.
1.10 "ORIGINAL WARRANTHOLDERS" shall mean Hawke Company
Ltd, Tillgrove Investments Ltd and Madona Resources Ltd.
1.11 "PERSON" shall mean any individual, firm,
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
1.12 "REGISTER", "REGISTERED" and "REGISTRATION" shall
refer to a registration effected by preparing and filing a registration
statement with the Commission in compliance with the Securities Act and
applicable rules and regulations thereunder, and the declaration or ordering of
the effectiveness of such registration statement by the Commission.
1.13 "REGISTRABLE SECURITIES" shall mean (A) (i) the
shares of Common Stock and (ii) the shares of Common Stock issued or issuable
upon the conversion of the shares of Series A Preferred Stock, issued to the
Former MSI Stockholders pursuant to the Merger Agreement, and (B) any stock of
the Company issued as a dividend or other distribution with respect to, or in
exchange for or in replacement of, the shares of Series A Preferred Stock or
Common Stock referred to in clause (A); PROVIDED, HOWEVER, that such shares of
Common Stock shall only be treated as Registrable Securities hereunder if and so
long as they have not been sold in a registered public offering or have not been
sold to the public pursuant to Rule 144 under the Securities Act or any similar
or successor rule.
1.14 "REGISTRATION EXPENSES" shall mean all expenses
incurred by the Company in compliance herewith, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, the reasonable fees and
expenses (subject to documentation thereof) of one counsel for all Holders and
Other Stockholders that offer securities being sold pursuant to the Existing
Rights Agreements, and the expense of any special audits incident to or required
by any such registration (but excluding the compensation of regular employees of
the Company, which shall be paid in any event by the Company).
1.15 "SECURITIES ACT" shall mean the Securities Act of
1933, as amended, or any similar federal statute enacted hereafter, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect from time to time.
1.16 "SELLING EXPENSES" shall mean all underwriting
discounts and commissions applicable to the sale of Registrable Securities.
2. REQUESTED REGISTRATION.
2.1 REQUEST FOR REGISTRATION. At any time after February
18, 2006 (such date being hereinafter referred to as the "Demand Date"), if the
Company shall receive from Initiating Holders a written request that the Company
effect any registration with respect to Registrable Securities the Company will:
(a) promptly give written notice of the proposed
registration to all other Holders; and
(b) as soon as practicable, use all reasonable
efforts to effect such registration (including, without
limitation, the execution of an undertaking to file post-
effective amendments, appropriate qualification under the blue
sky or other state securities laws requested by Initiating
Holders and appropriate compliance with applicable regulations
issued under the Securities Act) as may be so requested and as
would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified
in such request, together with all or such portion of the
Registrable Securities of any Holder or Holders joining in
such request as are specified in a written request given
within thirty (30) days after receipt of such written notice
from the Company; provided, that the Company shall not be
obligated to effect, or to take any action to effect, any such
registration pursuant to this Section 2:
(i) in any particular jurisdiction in
which the Company would be required to execute a
general consent to service of process in effecting
such registration, qualification or compliance,
unless the Company is already subject to service in
such jurisdiction and except as may be required by
the Securities Act or applicable rules or regulations
thereunder;
(ii) less than ninety (90) calendar days
after the effective date of any registration declared
or ordered effective other than a registration on
Form S-3 or Form S-8;
(iii) if, while a registration request is
pending pursuant to this Section 2, the Company
determines, in the good faith judgment of the Board
of Directors of the Company, with the advice of
counsel, that the filing of a registration statement
would require the disclosure of non-public material
information the disclosure of which would have a
material adverse effect on the Company or would
otherwise materially adversely affect a financing,
acquisition, disposition, merger or other significant
transaction, in which event the Company shall deliver
a certificate to such effect signed by its President
to the proposed selling Holders and the Company shall
not be required to effect a registration pursuant to
this Section 2 until the earlier of (A) three (3)
days after the date upon which such material
information is disclosed to the public or ceases to
be material or (B) 90 days after the Company makes
such good faith determination; provided, however,
that the Company shall not utilize the right under
this Section 2.1(a)(iii) more than once in any twelve
month period; or
(iv) except as set forth in Section 2.5,
after the second such registration pursuant to this
Section 2.1 has been declared or ordered effective.
Subject to the foregoing clauses (i), (ii), (iii) and (iv), the Company
shall file a registration statement covering the Registrable Securities so
requested to be registered as soon as practicable after receipt of the request
or requests of the Initiating Holders.
2.2 ADDITIONAL SHARES TO BE INCLUDED. The registration
statement filed pursuant to the request of the Initiating Holders may, subject
to the provisions of Sections 2.4 and 3.3 below, include (a) other securities of
the Company (the "Additional Shares") which are held by (i) officers or
directors of the Company who, by virtue of agreements with the Company, are
entitled to include their securities in any such registration or (ii) other
persons who, by virtue of agreements with the Company, including the Existing
Rights Agreements, are entitled to include their securities in any such
registration (the "Other Stockholders"), and (b) securities of the Company being
sold for the account of the Company.
2.3 UNDERWRITING.
(a) If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to this Section 2 and the Company shall include such information in the
written notice to other Holders referred to in Section 2.1 above. The right of
any Holder to registration pursuant to this Section 2 shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein and subject to the limitations provided herein. A Holder may elect to
include in such underwriting all or a part of the Registrable Securities he
holds.
(b) The Company shall (together with all
Holders, officers, directors and Other Stockholders proposing to distribute
their securities through such underwriting) negotiate and enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders, which underwriter(s) shall be reasonably
acceptable to the Company.
2.4 LIMITATIONS ON SHARES TO BE INCLUDED. Notwithstanding
any other provision of this Section 2, if the representative of the underwriters
advises the Initiating Holders in writing that marketing factors require a
limitation on the number of shares to be underwritten, first the Additional
Shares and any securities being sold for the account of the Company shall be
excluded from such registration pursuant to the priorities set forth in Section
3.3 of this Agreement and, if a limitation on the number of shares is still
required, the number of shares that may be included in the registration and
underwriting shall be allocated among all Holders, including Initiating Holders,
in proportion, as nearly practicable, to the respective amounts of Registrable
Securities which they have requested to be included in such registration
statement. If the Company or any Holder, officer, director or Other Stockholder
who has requested inclusion in such registration as provided above disapproves
of the terms of any such underwriting, such Person may elect to withdraw such
Person's Registrable Securities or Additional Shares therefrom by written notice
to the Company and the underwriter and the Initiating Holders. Any Registrable
Securities or other securities excluded shall also be withdrawn from such
registration. No Registrable Securities or Additional Shares excluded from such
registration by reason of such underwriters' marketing limitation shall be
included in such registration. To facilitate the allocation of shares in
accordance with this Section 2.4, the Company or underwriter or underwriters
selected as provided above may round the number of Registrable Securities of any
Holder which may be included in such registration to the nearest 100 shares.
2.5 ADDITIONAL DEMAND REGISTRATION. If with respect to
the last registration permitted to be exercised by the Holders of Registrable
Securities under Section 2.1, the Holders are unable to register all of their
Registrable Securities because of the operation of Section 2.4 hereof, such
Holders shall be entitled to require the Company to effect one additional
registration to afford the Holders an opportunity to register all such
Registrable Securities. Such additional registration shall again be subject to
the provisions of this Section 2.
3. COMPANY REGISTRATION.
3.1 If the Company shall determine to register under the
Securities Act any of its equity securities or securities convertible into
equity securities either for its own account or the account of a security holder
or holders exercising any demand registration rights, other than a registration
relating solely to employee benefit plans, or a registration relating solely to
a Commission Rule 145 transaction, or a registration on Form S-4 or S-8 (or any
successor forms thereto), the Company will:
(a) promptly give to each Holder written notice
thereof (which shall include a list of the jurisdictions in
which the Company intends to attempt to qualify such
securities under the applicable blue sky or other state
securities laws); and
(b) include in such registration (and, subject
to Section 2.1(b)(i), any related qualification under blue sky
laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written
request or request, made by any Holder within thirty (30) days
after receipt of the written notice from the Company described
in clause (a) above, except as set forth in Section 3.3 below.
Such written request may specify all or a part of a Holder's
Registrable Securities.
3.2 UNDERWRITING. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the written
notice given pursuant to Section 3.1(a). The right of any Holder to registration
pursuant to this Section 3 shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of such Holder's Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and any officers, directors or Other Stockholders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected by the Company.
3.3 LIMITATIONS ON SHARES TO BE INCLUDED. Notwithstanding
any other provision of this Section 3, if the representative of the underwriters
advises the Company in writing that marketing factors require a limitation or
elimination on the number of shares to be underwritten, the representative may
(subject to the allocation priority set forth below) limit the number of or
eliminate the Registrable Securities to be included in the registration and
underwriting. The Company shall so advise all holders of securities requesting
registration, and the number of shares of securities that are entitled to be
included in the registration and underwriting shall be allocated as follows:
first, if such underwritten offering shall have been initiated by the Company
for the sale of securities for its own account, to the Company for securities
being sold for its own account; second, among the Other Stockholders that offer
securities being sold pursuant to the Existing Rights Agreements, in proportion,
as nearly as practicable, to the respective amounts of Additional Shares which
they had requested to be included in such registration pursuant to the Existing
Rights Agreements; third, among the Holders and the Other Stockholders that
offer
securities being sold pursuant to the Former MSI Series A Rights Agreements, in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities which they had requested to be included in such registration; and
thereafter, the number of shares that may be included in the registration
statement and underwriting shall be allocated among all officers or directors or
remaining Other Stockholders, in each case in proportion, as nearly as
practicable, to the respective amounts of Additional Shares which they had
requested to be included in such registration at the time of filing the
registration statement. If any Holder of Registrable Securities or any officer,
director or Other Stockholder disapproves of the terms of any such underwriting,
he may elect to withdraw therefrom by written notice to the Company and the
underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall also be withdrawn from such registration.
The Company shall have the right to terminate or withdraw any registration
initiated by it under this Section 3 prior to the effectiveness of such
registration whether or not any Holder has elected to include securities in such
registration.
4. REGISTRATIONS ON FORM S-3.
4.1 Anything contained in Section 2 to the contrary
notwithstanding, at any time after the Demand Date and if the Company is then
qualified for the use of Form S-3, the Holders representing (on a fully diluted
basis) at least twenty percent (20%) of the total number of Registrable
Securities (the "FORM S-3 INITIATING HOLDERS") shall have the right to request
in writing unlimited registrations of Registrable Shares on Form S-3, which
request or requests shall (i) specify the number of Registrable Shares intended
to be sold or disposed of and the holders thereof and (ii) state the intended
method of disposition of such Registrable Shares, and upon receipt of any such
request, the Company shall use all reasonable efforts promptly to effect the
registration under the Securities Act of the Registrable Shares so requested to
be registered. A requested registration on Form S-3 in compliance with this
Section 4 shall not count as a Registration Statement initiated pursuant to
Section 2 for purposes of determining the number of registrations which may be
requested by the Initiating Holders under such Section, but shall otherwise be
treated as a registration initiated pursuant to, and shall be subject to, the
provisions of Section 2.
4.2 Anything contained in Section 4.1 to the contrary
notwithstanding, the Company shall not be obligated to effect, or take any
action to effect, any registration under the Securities Act pursuant to Section
4.1:
(a) Unless the Form S-3 Initiating Holders
propose to dispose of shares of Registrable Securities having
an aggregate price to the public (before deduction of Selling
Expenses) of more than $7,500,000;
(b) Within one hundred eighty (180) days of the
effective date of the most recent registration pursuant to
this Section 4 in which securities held by the requesting
Holder could have been included for sale or distribution;
(c) In any particular jurisdiction in which the
Company would be required to execute a general consent to
service of process in effecting such registration,
qualification or compliance, unless the Company is already
subject to service in such jurisdiction and except as may be
required by the Securities Act or applicable rules or
regulations thereunder;
(d) If the Company shall furnish to the Form S-3
Initiating Holders a certificate signed by the President of
the Company stating that the Company intends in good faith to
file within ninety (90) days after the date of such notice a
registration statement pertaining to securities of the Company
and in which the Form S-3 Initiating Holders may request
inclusion of Registrable Securities pursuant to Section 3,
then, during the period starting with the date of such notice
and ending on the date six (6) months immediately following
the effective date of such registration statement, PROVIDED
that the Company actively employs in good faith all reasonable
efforts to cause such registration statement to become
effective; PROVIDED, HOWEVER, that the Company may only delay
an offering pursuant to this Section 4.2(d) for a period of
not more than ninety (90) days, if a filing of any other
registration statement is not made within that period and the
Company may only exercise the right specified in this clause
(d) once in any twelve (12)-month period; or
(e) If the Company determines, in the good faith
judgment of the Board of Directors of the Company, with the
advice of counsel, that the filing of a registration statement
would require the disclosure of non-public material
information the disclosure of which would have a material
adverse effect on the Company or would otherwise materially
adversely affect a financing, acquisition, disposition, merger
or other significant transaction, in which event the Company
shall deliver a certificate to such effect signed by its
President to the Form S-3 Initiating Holders and the Company
shall not be required to effect a registration under this
Section 4 until the earlier of (A) three (3) days after the
date upon which such material information is disclosed to the
public or ceases to be material or (B) 90 days after the
Company makes such good faith determination; PROVIDED,
HOWEVER, that the Company shall not utilize the right under
this Section 4.2(e) more than once in any twelve (12) month
period
5. EXPENSES OF REGISTRATION. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
Sections 2, 3 or 4 of this Agreement shall be borne by the Company, except that
Selling Expenses shall be borne pro rata by each Holder in accordance with the
number of shares sold.
6. REGISTRATION PROCEDURES.
6.1 In the case of each registration effected by the
Company pursuant to this Agreement, the Company will keep each Holder advised in
writing as to the initiation of each registration and as to the completion
thereof and will, at its expense:
(a) use all reasonable efforts to keep such
registration effective for a period of 180 days or until the
Holder or Holders have completed the distribution described in
the registration statement relating thereto, whichever first
occurs; provided, however, that the Company will keep such
registration effective for longer than 180 days if the costs
and expenses associated with such extended registration are
borne by the selling Holders; and provided, further, that in
the case of any registration of Registrable Securities on Form
S-3 which are intended to be offered on a continuous or
delayed basis, such 180-day period shall, at the cost and
expense of the Company, be extended, if necessary, to keep the
registration statement effective until all such Registrable
Securities are sold, provided that Rule 415, or any successor
rule under the Securities Act, permits an offering on a
continuous or delayed basis, and provided, further, that
applicable rules and regulations under the Securities Act
governing the obligation to file a post-effective amendment
permit, in lieu of filing a post-effective amendment which (y)
includes any prospectus required by Section 10(a)(3) of the
Securities Act or (z) reflects facts or events representing a
material or fundamental change in the information set forth in
the registration statement, the incorporation by reference of
information otherwise required to be included in such
post-effective amendment covered by (y) and (z) above to be
contained in periodic reports filed pursuant to Section 13 or
15(d) of the Exchange Act in the registration statement;
(b) Prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection with such registration
statement as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(c) Furnish such number of prospectuses and
other documents incident thereto, including any amendment of
or supplement to the prospectus, as a Holder from time to time
may reasonably request;
(d) Notify each seller of Registrable Securities
covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under
the Securities Act of the happening of any event as a result
of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading or incomplete in the light of the circumstances
then existing, and at the request of any such seller, prepare
and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers
of such shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light
of the circumstances then existing;
(e) List all such Registrable Securities
registered in such registration on each securities exchange or
automated quotation system on which the Common Stock of the
Company is then listed;
(f) Provide a transfer agent and registrar for
all Registrable Securities and a CUSIP number for all such
Registrable Securities, in each case not later than the
effective date of such registration;
(g) Make available for inspection by any seller
of Registrable Securities, any underwriter participating in
any disposition pursuant to such registration statement, and
any attorney or accountant retained by any such seller or
underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause
the Company's officers and directors to supply all information
reasonably requested by any such seller, underwriter, attorney
or accountant in connection with such registration statement;
(h) Furnish to each selling Holder upon request
a signed counterpart, addressed to each such selling Holder,
of
(i) an opinion of counsel for the
Company, dated the effective date of the registration
statement in form reasonably acceptable to the
Company and such counsel, and
(ii) "comfort" letters signed by the
Company's independent public accountants who have
examined and reported on the Company's financial
statements included in the registration statement, to
the extent permitted by the standards of the American
Institute of Certified Public Accountants, covering
such matters as are customarily covered in opinions
of issuer's counsel and accountants' "comfort"
letters delivered to underwriters in underwritten
public offerings of securities;
(i) Furnish to each selling Holder upon request
a copy of all documents filed with and all correspondence from
or to the Commission in connection with any such offering; and
(j) Make available to its security holders, as
soon as reasonably practicable, an earnings statement covering
the period of at least twelve months, but not more than
eighteen months, beginning with the first month after the
effective date of the Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act.
6.2 It shall be a condition precedent to the obligations
of the Company to take any action pursuant to this Agreement that the Holders
proposing to register Registrable Securities shall furnish to the Company such
information regarding themselves, the Registrable
Securities held by them, and their intended method of distribution of such
Registrable Securities as the Company shall reasonably request and as shall be
required in connection with the action to be taken by the Company.
6.3 In connection with the preparation and filing of each
registration statement under this Agreement, the Company will give the Holders
on whose behalf such Registrable Securities are to be registered and their
underwriters, if any, and their respective counsel and accountants, the
opportunity to review such registration statement, each prospectus included
therein or filed with the Commission, and each amendment thereof or supplement
thereto, and will give each such Holder such access to the Company's books and
records and such opportunities to discuss the business of the Company with its
officers, its counsel and the independent public accountants who have certified
the Company's financial statements, as shall be necessary, in the opinion of
such Holders or such underwriters or their respective counsel, in order to
conduct a reasonable and diligent investigation within the meaning of the
Securities Act.
6.4 Notwithstanding anything to the contrary contained in
this Agreement, the Company shall have no obligation, and the Holders shall have
no right, to include any Registrable Securities in the registration under the
Securities Act effected pursuant to the Current SB-2.
7. INDEMNIFICATION.
7.1 INDEMNIFICATION BY THE COMPANY. The Company will
indemnify each Holder, each of its officers, employees, agents, directors and
partners (including partners of partners and shareholders of such partners), and
each person controlling (within the meaning of the Securities Act) such Holder,
with respect to which registration, qualification or compliance has been
effected pursuant to this Agreement, and each underwriter, if any, and each
Person who controls any underwriter, against all claims, losses, damages and
liabilities (or actions, proceedings or settlements in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification or
compliance, and will reimburse each such Holder, each of its officers,
employees, agents, directors and partners (including partners of partners and
shareholders of such partners), and each person controlling (within the meaning
of the Securities Act) such Holder, each such underwriter and each Person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending or settling any such
claim, loss, damage, liability or action as the same are incurred, PROVIDED that
the Company will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission made in reliance upon and based upon written
information
furnished to the Company by such Holder or underwriter and stated to be
specifically for use therein.
7.2 INDEMNIFICATION BY THE HOLDERS. Each Holder will, if
Registrable Securities held by him are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify the
Company, each of its directors and officers and each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company (other than such Holder) or such underwriter within the
meaning of the Securities Act and the rules and regulations thereunder, each
other such Holder and each of their officers, directors and partners, and each
Person controlling such Holder or other stockholder, against all claims, losses,
damages, expenses and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained, on the effective date thereof, in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company, each of its directors and officers, each underwriter or control
Person, each other Holder and each of their officers, directors and partners and
each Person controlling such Holder or other stockholder for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use therein; PROVIDED, HOWEVER, that in no event
shall the liability of any Holder for indemnification under this Section 7 in
its capacity as a seller of Registrable Securities exceed the amount equal to
the proceeds to such Holder of the securities sold in any such registration; and
PROVIDED FURTHER, however, that no selling Holder shall be required to indemnify
any Person against any liability arising from any untrue or misleading statement
or omission contained in any preliminary prospectus if such deficiency is
corrected in the final prospectus or for any liability which arises out of the
failure of any Person to deliver a prospectus as required by the Securities Act.
7.3 NOTICES OF CLAIMS, PROCEDURES, ETC. Each party
entitled to indemnification under this Section 7 (the "Indemnified Party") shall
give notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom,
provided that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not be unreasonably withheld), and the
Indemnified Party may participate in such defense at the Indemnified Party's
sole expense, and provided further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 7 unless such failure is prejudicial to the
ability of Indemnifying Party to defend such claim or action. Notwithstanding
the foregoing, such Indemnified Party shall have the right to employ its own
counsel in any such litigation, proceeding or other action if (i) the employment
of
such counsel has been authorized by the Indemnifying Party, in its sole and
absolute discretion, or (ii) the named parties in any such claims (including any
impleaded parties) include any such Indemnified Party and the Indemnified Party
and the Indemnifying Party shall have been advised in writing (in suitable
detail) by counsel to the Indemnified Party either (A) that there may be one or
more legal defenses available to such Indemnified Party which are different from
or additional to those available to the Indemnifying Party, or (B) that there is
a conflict of interest by virtue of the Indemnified Party and the Indemnifying
Parties having common counsel, in any of which events, the legal fees and
expenses of a single counsel for all Indemnified Parties with respect to each
such claim, defense thereof, or counterclaims thereto shall be borne by
Indemnifying Party. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall cooperate to the extent reasonably
required and furnish such information regarding itself or the claim in question
as an Indemnifying Party may reasonably request in writing and as shall be
reasonably required in connection with defense of such claim and litigation
resulting therefrom.
8. INFORMATION BY HOLDER. Each Holder of Registrable Securities
shall furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Agreement.
9. TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The rights to
cause the Company to register securities granted by the Company under this
Agreement may be transferred or assigned by a Holder to a transferee or assignee
of any Registrable Securities; provided that the Company is given written notice
at or prior to the time of said transfer or assignment, stating the name and
address of said transferee or assignee and identifying the securities with
respect to which such registration rights are being transferred or assigned; and
provided further that the transferee or assignee of such rights assumes in
writing the obligations of a Holder under this Agreement to the Company and
other Holders in effect at the time of transfer under all effective agreements.
10. EXCHANGE ACT COMPLIANCE. So long as the Company remains
subject to the reporting requirements of the Exchange Act, the Company shall
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the Commission thereunder,
and will take all actions reasonably necessary to enable holders of Registrable
Securities to sell such securities without registration under the Securities Act
within the limitation of the provisions of (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, (b) Rule 144A under the
Securities Act, as such Rule may be amended from time to time, if applicable or
(c) any similar rules or regulations hereunder adopted by the Commission. Upon
the request of any Holder of Registrable Securities, the Company will deliver to
such Holder a written statement as to whether it has complied with such
requirements.
11. NO CONFLICT OF RIGHTS. Without the consent of holders of 80%
of the Registrable Securities, the Company will not hereafter enter into any
agreement with respect to its securities which is inconsistent with the rights
granted to the Holders in this Agreement. Without limiting the generality of the
foregoing, the Company will not hereafter enter into or modify any agreement
with respect to its securities which grants, or modifies any existing agreement
with respect to its securities to grant, to a holder of its securities in
connection with an incidental registration of such securities equal or higher
priority to the rights granted to the Holders under Sections 2, 3 and 4 of this
Agreement. The Company hereby represents and warrants to each Holder that the
execution, delivery or performance of this Agreement does not (including with
the passage of time) (i) constitute a breach or an event of default under any
Existing Rights Agreement and any other agreement between the Company and any
Other Stockholder, or (ii) cause or trigger a right of termination or right of
acceleration under any such agreement.
12. BENEFITS OF AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns, legal representatives and heirs.
Except as provided in Section 9 above, this Agreement does not create, and shall
not be construed as creating, any rights enforceable by any other Person.
13. COMPLETE AGREEMENT. This Agreement constitutes the complete
understanding among the parties with respect to its subject matter and
supersedes all existing agreements and understandings, whether oral or written,
among them. No alteration or modification of any provisions of this Agreement
shall be valid unless made in writing and signed, on the one hand, by the
Holders of a majority of the Registrable Securities then outstanding and, on the
other, by the Company.
14. SECTION HEADINGS. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
15. NOTICES. All notices, offers, acceptances and other
communications required or permitted to be given or to otherwise be made to any
party to this Agreement shall be deemed to be sufficient if contained in a
written instrument delivered by hand, first class mail (registered or certified,
return receipt requested), telecopier or overnight air courier guaranteeing next
day delivery, if to the Company, at 0000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000,
Attention: Chief Financial Officer, with a copy to Xxxxx Xxxxxxx Xxxxxxx & Xxxxx
LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxxxx,
Esq., and if to any Holder, to the address listed on Schedule A attached hereto
or at such other address as may have been furnished the Company in writing.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and the next business day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any party may change the address to which each such notice or communication
shall
be sent by giving written notice to the other parties of such new address in the
manner provided herein for giving notice.
16. GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware
without giving effect to the provisions, policies or principles thereof
respecting conflict or choice of laws.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original but all of which taken
together shall constitute one and the same agreement.
18. SEVERABILITY. Any provision of this Agreement which is
determined to be illegal, prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such illegality,
prohibition or unenforceability without invalidating the remaining provisions
hereof which shall be severable and enforceable according to their terms and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties have signed this Registration Rights
Agreement as of the date first set forth above.
FRONT PORCH DIGITAL INC.
By: /s/ Xxxxxxx Xxxxxxx
------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
IN WITNESS WHEREOF, the parties have signed this Registration Rights
Agreement as of the date first set forth above.
FORMER MSI STOCKHOLDERS
GREAT HILL EQUITY PARTNERS LIMITED
PARTNERSHIP
By: Great Hill Partners GP, LLC,
its General Partner
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Manager
GREAT HILL INVESTORS, LLC
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Manager
IN WITNESS WHEREOF, the parties have signed this Registration Rights
Agreement as of the date first set forth above.
JPMORGAN CHASE BANK, as Investment
Advisor for X.X. XXXXXX DIRECT VENTURE
CAPITAL INSTITUTIONAL INVESTORS, LLC
By: /s/ Xxxxxx X. Kiss
---------------------------------------
Name: Xxxxxx X. Kiss
Title: Portfolio Manager
X.X. XXXXXX INVESTMENT MANAGEMENT INC.,
as Investment Advisor for
X.X. XXXXXX DIRECT VENTURE CAPITAL
PRIVATE INVESTORS, LLC
By: /s/ Xxxxxx X. Kiss
---------------------------------------
Name: Xxxxxx X. Kiss
Title: Portfolio Manager
X.X. XXXXXX INVESTMENT MANAGEMENT INC.,
as Investment Advisor for
000 XXXXX XXXXXX FUND, L.P.
By: /s/ Xxxxxx X. Kiss
---------------------------------------
Name: Xxxxxx X. Kiss
Title: Portfolio Manager
IN WITNESS WHEREOF, the parties have signed this Registration Rights
Agreement as of the date first set forth above.
/s/ Xxxxxx X. Xxxxxxx III
------------------------------------
Xxxxxx X. Xxxxxxx III
IN WITNESS WHEREOF, the parties have signed this Registration Rights
Agreement as of the date first set forth above.
TUDOR VENTURES II L.P.
By: Tudor Ventures Group, L.P., general partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director, Tudor Ventures Group LLC
THE RAPTOR GLOBAL PORTFOLIO LTD.
By: Tudor Investment Corporation as Investment Adviser
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
THE ALTAR ROCK FUND L.P.
By: Tudor Investment Corporation as General Partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
SCHEDULE A
NAMES AND ADDRESSES OF FORMER MSI STOCKHOLDERS
XXXXXX X. XXXXXXX III
ManagedStorage International, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
GREAT HILL EQUITY PARTNERS LIMITED PARTNERSHIP
GREAT HILLS INVESTORS, LLC
c/o Great Hills Partners
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Mr. Xxx Xxxxxx
JPMORGAN CHASE BANK, AS INVESTMENT ADVISOR FOR X.X. XXXXXX DIRECT VENTURE
CAPITAL INSTITUTIONAL INVESTORS, LLC
X.X. XXXXXX INVESTMENT MANAGEMENT, AS INVESTMENT ADVISOR FOR X.X. XXXXXX DIRECT
VENTURE CAPITAL PRIVATE INVESTORS, LLC
X.X. XXXXXX INVESTMENT MANAGEMENT INC., AS INVESTMENT ADVISOR FOR 000 XXXXX
XXXXXX FUND, LLC
c/o XX Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. Kiss
TUDOR VENTURES II L.P.
THE RAPTOR GLOBAL PORTFOLIO LTD.
THE ALTAR ROCK FUND L.P.
c/o Tudor Ventures
00 Xxxxx Xxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx
