EXHIBIT 10.3
LOCK-UP AGREEMENT
LOCK-UP AGREEMENT (the "Agreement") dated as of July 31, 2002, by and
among FRONT PORCH DIGITAL INC., a Delaware corporation (the "Company"), and
MANAGEDSTORAGE INTERNATIONAL, INC. ("MSI"), a Delaware corporation.
W I T N E S S E T H
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WHEREAS, on the date hereof, the Company has agreed to issue to MSI
shares of Common Stock 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 and MSI desire to provide for
certain restrictions on the transfer of such shares by MSI;
NOW THEREFORE, in consideration of the premises and the mutual
covenants of the parties hereto, it is hereby agreed as follows:
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) "Disposition" shall have the meaning assigned in
Section 2.1.
(d) "Person" means any individual, estate, trust, partnership,
joint venture, limited liability company, association, firm, corporation,
company or other entity.
(e) "Senior Secured Convertible Notes" mean the Senior Secured
Convertible Notes of MSI issued from time to time after the date hereof.
(f) "Shares" mean, the shares of Common Stock, $.001 par
value, of the Company, as well as: (i) any shares into which shares then
authorized 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 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.
(g) "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.
ARTICLE II
DISPOSITION OF SHARES
2.1 RESTRICTION ON TRANSFER OF SHARES.
(a) Except as provided in Section 2.1(b), prior to July 31, 2003, MSI
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 hereafter acquired 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) MSI may Transfer all or a portion of its Shares to (i) any Person
to which MSI shall sell, assign or transfer all or substantially all of its
assets; (ii) any Affiliate of MSI or (iii) any holder of the Senior Secured
Convertible Notes in connection with the exercise of remedies of such holders
against MSI pursuant to the terms of such notes. If MSI intends to make a
Disposition of all or a portion of its Shares pursuant to this paragraph, MSI
shall give at least 30 days prior written notice of such proposed Disposition to
the Company. Any such notice shall specify the number of Shares subject to such
proposed disposition, identify the proposed transferee and state the
relationship between MSI and the proposed transferee.
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(c) Each Disposition otherwise permitted by this Article II shall not
become effective unless and until the transferee executes and delivers to the
Company a counterpart to this Agreement, agreeing to be treated in the same
manner as MSI. Upon such Disposition and such execution and delivery, the
transferee shall be bound by, and entitled to the benefits of, this Agreement
with respect to the transferred Shares in the same manner as the MSI.
2.2 AFTER ACQUIRED STOCK. Any Shares acquired by MSI after the date of
this Agreement pursuant to the provisions of the Purchase Agreement shall become
or remain subject to the terms of this Agreement.
ARTICLE III
MISCELLANEOUS
3.1 LEGEND. MSI shall cause each certificate representing Shares that
are subject to this Agreement to have stamped, printed or typed thereon the
following legend:
The securities represented by this certificate are subject to a
Lock-Up Agreement, dated as of July 31, 2002, between Front Porch
Digital Inc. (the "Company") and ManagedStorage International,
Inc., a copy of which may be examined at the principal office of
the Company.
3.2 NOTICE. Any notice or document required or permitted by this
Agreement to be given to a party hereto shall be in writing and is sufficiently
given if delivered personally, or if sent by prepaid certified mail, return
receipt requested, to MSI or to the Company addressed as follows:
the Company: Front Porch Digital Inc.
20000 Horizon Way
Suite 120
Mt. Laurel, New Jersey 08054
Attention: Chief Financial Officer
with a copy to: Pryor Cashman Sherman & Flynn LLP
410 Park Avenue
New York, N.Y. 10022
Attention: Eric M. Hellige, Esq.
MSI: ManagedStorage International, Inc.
12303 Airport way
Suite 250
Broomfield, Colorado 80021
Attention: Reed Guest, Esq.
With a copy: Hogan & Hartson, LLP
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1470 Walnut
Suite 200
Boulder, Colorado 80302-5341
Attn: Patrick Perrin, Esq.
Notice so mailed shall be deemed to have been given upon receipt if delivered
personally or on the fifth business day next following the date of the returned
receipt. Any notice delivered to the party to whom it is addressed shall be
deemed to have been given and received on the day it is delivered. Any party may
from time to time notify the others in the manner provided herein of any change
of address which thereafter, until changed by like notice, shall be the address
of such party for all purposes hereof.
3.3 TERM OF AGREEMENT.
(a) This Agreement shall terminate on the earlier to occur of
July 31, 2003 or such date as is mutually agreed in writing by the parties
hereto.
(b) Nothing contained in this Section 3.3 shall affect or
impair any rights or obligations arising prior to the time of the termination of
this Agreement, or which may arise by an event causing the termination of this
Agreement.
3.4 SEVERABILITY. If in any jurisdiction, any provision of this
Agreement or its application to any party or circumstance is restricted,
prohibited or unenforceable, such provision shall, as to such jurisdiction, be
ineffective only to the extent of such restriction, prohibition or
unenforceability without invalidating the remaining provisions hereof and
without affecting the validity or enforceability of such provision in any other
jurisdiction or its application to other parties or circumstances.
3.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and together shall
constitute one document.
3.6 ENTIRE AGREEMENT; ETC. This Agreement sets forth the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, among the parties hereto and there are no warranties,
representations and other agreements between the parties hereto in connection
with the subject matter hereof except as specifically set forth herein or
therein. No supplement, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by all the parties to this
Agreement. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provisions nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
3.7 GOVERNING LAW. This Agreement shall be construed in accordance with
the internal laws of the State of New York applicable to agreements made and to
be performed in
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New York. IN WITNESS WHEREOF, this Agreement has been executed by or on behalf
of each of the parties hereto as of the date first above written.
FRONT PORCH DIGITAL INC.
By: /s/ Don Maggi
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Name: Don Maggi
Title: Chief Executive Officer
MANAGEDSTORAGE INTERNATIONAL, INC.
By: /s/ Thomas P. Sweeney
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Name: Thomas P. Sweeney
Title: Chief Executive Officer
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