FRONT PORCH DIGITAL INC
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>2
<FILENAME>c34230_ex10-6.txt
<TEXT>
                                                                    EXHIBIT 10.6

                              AMENDMENT AND WAIVER

         This Amendment and Waiver (this  "AMENDMENT"),  dated as of October 25,
2004,  is entered  into by and  between  FRONT  PORCH  DIGITAL,  INC.,  a Nevada
corporation  (the  "COMPANY"),  and LAURUS MASTER FUND,  LTD., a Cayman  Islands
company ("LAURUS"),  for the purpose of amending the terms of (i) the Securities
Purchase  Agreement,  dated as of May 13,  2004,  by and between the Company and
Laurus (as amended,  modified or supplemented from time to time, the "SECURITIES
PURCHASE AGREEMENT"), (ii) the Secured Convertible Term Note, dated May 13, 2004
(as amended, modified or supplemented from time to time, the "TERM NOTE") issued
by the Company pursuant to the Securities Purchase  Agreement,  (iii) the Common
Stock Purchase Warrant, dated May 13, 2004 (as amended, modified or supplemented
from  time to  time,  the  "WARRANT")  issued  by the  Company  pursuant  to the
Securities Purchase Agreement, and (iv) the Registration Rights Agreement by and
between the Company and Laurus,  dated as of May 13, 2004 (as amended,  modified
or  supplemented  from time to time, the  "REGISTRATION  RIGHTS  AGREEMENT" and,
together with the Securities Purchase Agreement,  the Term Note and the Warrant,
the "LOAN  DOCUMENTS").  Capitalized terms used herein without  definition shall
have the meanings ascribed to such terms in the Securities Purchase Agreement.

         WHEREAS,  on August 12, 2004 the  Company  created  Front Porch  Merger
Corp., a Delaware  corporation  ("Merger Corp"),  which was subsequently  merged
into ManagedStorage  International,  Inc., a Delaware  Corporation ("MSI"), in a
transaction in which MSI became a wholly owned subsidiary of the Company; and

         WHEREAS,  Neither  Merger  Corp  nor MSI was  joined  as a party to the
Master Security  Agreement within the thirty (30) day period required by Section
6.12(e)(ii) of the Securities  Purchase  Agreement  (such failure,  the "MSI Non
Joinder"); and

         WHEREAS,  the Company has failed to maintain the  effectiveness  of the
registration  statement  required to be filed by it under the Registration Right
Agreement as set forth in Section 2(b)(iii) thereof, and the Company pursuant to
Section 2(b)  thereof,  therefore  owes Laurus a total of $89,000 in  liquidated
damages (the "Liquidated Damages") as of the date hereof; the Liquidated Damages
have not been paid by the Company to Laurus when due; and

         WHEREAS,  the Company and Laurus have agreed to make certain changes to
the Loan Documents as set forth herein;

         NOW,  THEREFORE,  in consideration of the above, and for other good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged, the parties hereto agree as follows:

         1.  Section  2.1(a) of the Term Note is hereby  amended by deleting the
last sentence thereof and inserting the following in lieu thereof:

<PAGE>

           "For  purposes  hereof,  the "FIXED  CONVERSION  PRICE"  means  $0.30
           (subject to adjustments as provided herein)."

         2. Laurus hereby agrees that in  consideration of the adjustment of the
Fixed Conversion Price set forth in Section 1 hereof, on the date hereof, Laurus
will (i) direct the North Fork Bank to release to the Company,  by wire transfer
of immediately  available funds, all funds currently remaining in the restricted
account at North Fork Bank (less  outstanding  interest and fees accruing on the
Non-Amortizing  Principal  amount  of the  Term  Note to the  date of  release),
totaling  $2,987,981.06  (the "Released Funds") and (ii) postpone the payment of
Monthly  Principal  Amounts due and  payable by the Company  each of November 1,
2004, December 1, 2004, January 1, 2005 and February 1, 2005 (collectively,  the
"Postponed Monthly Principal Payments"),  which such Postponed Monthly Principal
Payments  shall  become due and  payable on the  Maturity  Date.  In  connection
therewith,  Section 1.2 of the Term Note shall be amended by deleting the period
at the end of the last  sentence  thereof,  inserting a semicolon and adding the
following immediately after the semicolon:

         "and provided  further that,  following a release of an amount of funds
from the Restricted Account (as defined in the Master Security Agreement,  dated
as of May 13,  2004)  (other  than with  respect to a release  that  occurs as a
result of a  conversion  of any  non-amortizing  Principal  Amount) (a  "RELEASE
AMOUNT") each Monthly Principal Amount due on any Repayment Date,  commencing on
March 1, 2005,  following any such release shall be increased by an amount equal
to (x) such Release Amount divided by (y) the sum of (I) the number of Repayment
Dates remaining until the Maturity Date plus (II) one (1)."

         3. The Company and Laurus agree that on the date hereof  certain Events
of Default have occurred and are continuing (beyond any applicable cure or grace
period) and Laurus hereby (i) waives the Events of Default under Section  4.1(b)
of the Note and Section 4(a) of the Master Security  Agreement  triggered by the
MSI Non Joinder and all fees and default interest rates otherwise  applicable to
such Events of  Default,  and (ii)  extends  the time the Company  shall have to
comply with Section  6.12(e)(ii) of the Securities  Purchase  Agreement (as such
Section  relates  to MSI) by causing  MSI to execute  and  deliver  the  Joinder
Agreement attached hereto as Exhibit 2, on or before November 30, 2004;

         4. The  Company  and Laurus  agree that on the date  hereof an Event of
Default has  occurred and is  continuing  (beyond any  applicable  cure or grace
period) under Section  4.1(b) of the Note relating to the failure by the Company
to pay to Laurus the Liquidated Damages as set forth in the Registration  Rights
Agreement.  Laurus  hereby  (i) waives  such  Event of Default  and all fees and
default interest rates otherwise  applicable to such Event of Default;  and (ii)
hereby further  waives any  Liquidated  Damages due and payable to Laurus by the
Company up to and including the date hereof.  In consideration of the waivers in
this Section 4, the Company will, on the date hereof, issue a seven year warrant
to Laurus to purchase  500,000 shares of the common stock of the Company with an
exercise price of $0.50 per share (the  "Additional  Warrant"),  such Additional
Warrant to be in the form  attached  hereto as Exhibit  3. The  Company  further
agrees to amend its Registration  Statement,  initially filed on the Filing Date
(as defined in the  Registration  Rights  Agreement),  to include the Additional
Warrant and additional

<PAGE>

shares of the Company's  common stock issuable to Laurus upon  conversion of the
Term  Note due to the  adjustment  of the  Fixed  Conversion  Price set forth in
Section 1 hereof,  such amendment to be filed on or before November 30, 2004 and
to be made  effective by the  Securities  and Exchange  commission no later than
January  15,  2005.  The  provisions  of  Section 2 of the  Registration  Rights
Agreement  regarding  liquidated  damages  will  resume on December 1, 2004 with
respect to the filing of the registration statement,  and will resume on January
16, 2005 with respect to the effectiveness of the registration statement.

         5. Section 4(b) of the Master  Security  Agreement is hereby deleted in
its entirety,  and the following  inserted in its stead:  "the  occurrence of an
Event of Default as defined in the Note."

         6. Section 1 of the Master Security  Agreement is hereby amended to add
the  words  "and  Lockbox  Deposit  Accounts"  immediately  following  the words
"referred to in the Restricted Account Agreement)" contained in such Section 1.

         7.  Section 3 of the Master  Security  Agreement  is hereby  amended to
delete the period after the last sentence of Section 3(j) and insert a semicolon
after such sentence and to add the following  immediately following Section 3(j)
thereof:

         "(k) On or before November 30, 2004, the Assignor shall (x) irrevocably
direct all of its present  and future  Account  Debtors  (as defined  below) and
other persons  obligated to make payments  constituting  Collateral to make such
payments directly to the lockboxes maintained by such Assignor (the "Lockboxes")
with Wells Fargo  Bank,  N.A. or such other  financial  institution  accepted by
Laurus in writing as may be selected by the Assignor (the "Lockbox  Bank") (each
such  direction  pursuant  to this  clause (x), a  "Direction  Notice")  and (y)
provide  Laurus with  copies of each  Direction  Notice,  each of which shall be
agreed to and  acknowledged by the respective  Account  Debtor.  Upon receipt of
such  payments,  the  Lockbox  Bank has agreed to deposit  the  proceeds of such
payments in that  certain  deposit  account  maintained  at the Lockbox Bank and
evidenced  by the account  name of  ManagedStorage  International,  Inc. and the
account  number of  4121059398,  or such  other  deposit  accepted  by Laurus in
writing (the "Lockbox Deposit  Account").  On or prior to November 30, 2004, the
Assignor  shall  and  shall  cause  the  Lockbox  Bank to  enter  into  all such
documentation  acceptable to Laurus pursuant to which,  among other things,  the
Lockbox Bank agrees to,  following  notification  by Laurus (which  notification
Laurus shall only give following the occurrence and during the continuance of an
Event of Default),  comply only with the  instructions  or other  directions  of
Laurus concerning the Lockbox and the Lockbox Deposit Account. All of Assignor's
invoices, account statements and other written or oral communications directing,
instructing, demanding or requesting payment of any Account of any such Assignor
or any other amount constituting  Collateral shall conspicuously direct that all
payments  be made to the  Lockbox or such other  address as Laurus may direct in
writing.  If,  notwithstanding the instructions to Account Debtors, any Assignor
receives any payments,  such Assignor shall  immediately  remit such payments to
the  Lockbox   Deposit  Account  in  their  original  form  with  all  necessary
endorsements.  Until so remitted,  the Assignor  shall hold all such payments in
trust for and as the property of Laurus and shall not  commingle  such  payments
with any of its other funds or property. For the purposes hereof, (x)

<PAGE>

"Accounts"  shall mean all  "accounts",  as such term is defined in the  Uniform
Commercial  Code as in effect in the State of New York on the date  hereof,  now
owned or hereafter  acquired by any Assignor and (y) "Account Debtor" shall mean
any person or entity who is or may be  obligated  with respect to, or on account
of, an Account."

         8. Each  amendment  set forth  herein shall be effective as of the date
hereof  following  (i) the execution and delivery of same by each of the Company
and Laurus, (ii) the execution and delivery of the Additional Warrant to Laurus.

         9. Except as  specifically  set forth in this  Amendment,  there are no
other  amendments to the Loan Documents,  and all of the other forms,  terms and
provisions of the Loan Documents remain in full force and effect.

         10. The Company hereby represents and warrants to Laurus that as of the
date hereof all  representations,  warranties  and covenants  made by Company in
connection  with the Loan  Documents  are true,  correct and complete and all of
Company's and its Subsidiaries' covenant requirements have been met.

         11. This  Amendment  shall be binding upon the parties hereto and their
respective  successors  and permitted  assigns and shall inure to the benefit of
and be  enforceable  by each  of the  parties  hereto  and  its  successors  and
permitted assigns.  THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH AND  GOVERNED BY THE LAW OF THE STATE OF NEW YORK.  This  Amendment  may be
executed in any number of counterparts,  each of which shall be an original, but
all of which shall constitute one instrument.

<PAGE>

         IN WITNESS  WHEREOF,  each of the  Company  and Laurus has caused  this
Amendment to the Loan  Documents  to be signed in its name  effective as of this
25th day of October, 2004.



                                    FRONT PORCH DIGITAL, INC.



                                    By: /s/ MATTHEW RICHMAN
                                        ----------------------------------------
                                        Name: Matthew Richman
                                        Title: Senior Vice President - Corporate
                                               Development and Treasurer



                                    LAURUS MASTER FUND, LTD.



                                    By: /s/ DAVID GRIN
                                        ----------------------------------------
                                    Name: David Grin
                                    Title: Managing Partner

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</DOCUMENT>
