EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of July 31, 2002, between FRONT
PORCH DIGITAL, INC., a corporation organized under the laws of Nevada (the
"Company"), and MANAGEDSTORAGE INTERNATIONAL, INC., a corporation organized
under the laws of Delaware, ("MSI") or any party to whom this Agreement is
assigned in accordance with its terms.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, on the date hereof, the Company has agreed to issue to MSI
shares of Common Stock (as defined herein) and warrants to purchase shares of
Common Stock pursuant to the terms of a Stock and Asset Purchase Agreement dated
as of July 31, 2002 (the "Purchase Agreement") between the Company and MSI; and
WHEREAS, as a condition to the consummation of the transactions
contemplated by the Purchase 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 (or any other adjustment or readjustment under
Section 4 of the Warrants) 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 "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.
1.4 "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 3,950,000 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 Storage Technology Corporation; (iii) the Registration
Rights Agreement dated as of October 10, 2000 between the Company and Equity
Pier LLC; [(iv) 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] and (v) the 7% Convertible Secured Notes by the Company in favor of each
of Rice Opportunity Fund LLC and Irl Xxxxxx.
1.5 "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.
1.6 "HOLDER" shall mean any holder of Registrable Securities;
provided, however, that any Person who acquires any of the Registrable
Securities in a distribution pursuant to a registration statement filed by the
Company under the Securities Act or pursuant to a public sale under Rule 144
under the Securities Act or any similar or successor rule shall not be
considered a Holder.
1.7 "INITIAL PUBLIC OFFERING" shall mean the first time at
which an offering, whether primary or secondary, of Common Stock or options,
warrants or other securities convertible into or exchangeable or exercisable for
Common Stock, is registered pursuant to an effective registration statement
(other than a registration statement on Form S-4 or Form S-8 or any successor
forms thereto) filed by the Company under the Securities Act. An Initial Public
Offering will be deemed to be consummated on the date such registration is
declared effective by the Commission.
1.8 "INITIATING HOLDERS" shall mean Holders representing (on a
fully diluted basis) at least twenty-five percent (25%) of the total number of
Registrable Securities.
1.9 "ORIGINAL WARRANTHOLDERS" shall mean Navesink Venture
Partners LLC, Hawke Company Ltd, Tillgrove Investments Ltd, Madona Resources Ltd
and Xxxxxx Xxxxx.
1.10 "PERSON" shall mean any individual, firm, corporation,
partnership, limited liability company, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
1.11 "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.
2
1.12 "REGISTRABLE SECURITIES" shall mean (i) the Warrant
Shares and (ii) the shares of Common Stock issued to MSI pursuant to the
Purchase Agreement; 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; provided, further, that the Company shall not be require to register the
Warrants.
1.13 "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 fees and expenses of
counsel for all Holders and Other Stockholders that offer securities being sold
pursuant to the Existing Rights Agreements, and the expense of any "comfort
letters" or 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).
1.14 "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.
1.15 "SELLING EXPENSES" shall mean all underwriting discounts
and commissions applicable to the sale of Registrable Securities.
1.16 "WARRANTS" shall mean the warrants issued to MSI pursuant
to the Purchase Agreement.
1.17 "WARRANT SHARES" shall mean the shares of Common Stock
issued or issuable upon exercise of the Warrants (and any other or additional
shares, securities or property that may hereafter be issuable upon exercise of
the Warrants) as such number may be adjusted in accordance with the terms of the
Warrants.
2. REQUESTED REGISTRATION.
2.1 REQUEST FOR REGISTRATION. At any time after the earlier of
(i) consummation of an Initial Public Offering or (ii) January 31, 2003 (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 its best 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
3
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, 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 this right 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
4
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, but not limited to, 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 hereinbelow
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. If pursuant to this
Section 2.4 any Additional Shares or securities being sold for the account of
the Company shall be excluded from registration, then the number of shares of
such securities that are entitled to be included in the
5
registration and underwriting shall be allocated as follows: first, to the
Company for securities being sold for its own account; and thereafter, among all
officers, directors and 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.
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. RESERVED.
4. EXPENSES OF REGISTRATION. All Registration Expenses and Selling
Expenses incurred in connection with any registration, qualification or
compliance pursuant to Section 2 of this Agreement shall be borne as follows:
fifty percent (50%) by the Company and fifty percent (50%) by the selling
Holders pro rata in accordance with the number of shares sold such selling
Holders.
5. REGISTRATION PROCEDURES.
5.1 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 its best 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
6
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;
7
(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 12 months, but not more than 18 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.
5.2 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.
5.3 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. INDEMNIFICATION.
8
6.1 INDEMNIFICATION BY THE COMPANY. The Company will indemnify
each Holder, each of its officers, directors and partners, and each Person
controlling 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, directors and partners, and each Person controlling 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, 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.
6.2 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 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.
6.3 NOTICES OF CLAIMS, PROCEDURES, ETC. Each party entitled to
indemnification under this Section 6 (the "Indemnified Party") shall give notice
to the party required to provide
9
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 6 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.
7. 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.
8. 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
9. 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.
10. NO CONFLICT OF RIGHTS. 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 any agreement with
respect to its securities which grants or modifies any existing agreement with
respect to its securities to grant to the 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 Section 2 of this Agreement.
11. LOCKUP AGREEMENT. In consideration for the Company agreeing to its
obligations hereunder, the Holders of Registrable Securities agree in connection
with any registration of the Company's securities other than pursuant to the
terms hereof that, upon the request of the Company, not to sell, make any short
sale of, loan, grant any option for the purchase of or otherwise dispose of any
Registrable Securities without the prior written consent of the Company for such
period of time (not to exceed 60 days) from the effective date of such
registration as the Company may specify; provided, however, that all holders of
5% or more of the Company's securities and all directors and officers shall be
subject to the restrictions set forth in this Section 11.
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. 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.
11
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 00000 Xxxxxxx Xxx, Xxxxx 000, Xx. Xxxxxx, Xxx Xxxxxx
00000, Attention: Chief Executive 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, at the address of such Holder as set forth
in the stock transfer books of the Corporation.
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 New York 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.
12
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date first set forth above.
FRONT PORCH DIGITAL, INC.
By: /s/Xxx Xxxxx
----------------------------------
Name: Xxx Xxxxx
Title: Chief Executive Officer
MANAGEDSTORAGE INTERNATIONAL, INC.
By: /s/Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
13
