EXHIBIT 4.1


                            FRONT PORCH DIGITAL, INC.

                           7% CONVERTIBLE SECURED NOTE

$                                                                         , 2002
 ----------                                                       --------


         FRONT PORCH  DIGITAL INC., a Nevada  corporation  (the  "Company")  for
value received, hereby promises to pay to the order of __________________ or its
assigns       (the       "Holder"),       the       principal       sum       of
_____________________________________________  ($____________)  or  such  lesser
amount as shall have been  advanced  hereunder,  together  with  interest on the
unpaid  principal  amount  hereof  outstanding  from time to time after the date
hereof at the per annum rate of seven percent (7%). Principal and interest shall
be payable in lawful money of the United States at the  principal  office of the
Holder or at such other address as the Holder may from time to time designate to
the Company in writing.

         Commencing on July 1, 2002 and  continuing on the first calendar day of
each calendar  quarter  (October 1, January 1) during the term hereof,  interest
only  payments in the form of U.S.  dollars  shall be due and payable to Holder.
The entire balance of unpaid  principal and accrued and unpaid interest  thereon
at the  rate set  forth  above  shall  be due and  payable  on  March  27,  2003
("Maturity Date").  Interest hereon shall be computed on the basis of the actual
number of days elapsed over a 365 or, if applicable,  a 366 day year. Any amount
of  principal  or  interest  on this Note  which is not paid when due shall bear
interest  at the  lesser  of (i)  eighteen  percent  (18%) per annum or (ii) the
maximum  amount of interest  permitted by applicable  law, from the date thereof
until the same is paid ("Default Interest") and the Holder, at the Holder's sole
discretion,  may  include  any  accrued  but  unpaid  Default  Interest  in  the
Conversion Amount.

         Notwithstanding  the  foregoing,  if the Company  shall (i) complete an
underwritten  public offering  covering the offering and sale of Common Stock of
the  Company,  $______  par  value  per  share  ("Common  Stock"),  in which the
aggregate net proceeds to the Company equals or exceed $2,000,000;  or (ii) sell
all or  substantially  all of its assets;  the entire  unpaid  principal  amount
hereof  together with all accrued and unpaid interest  thereon,  at the Holder's
option,  shall become  immediately due and payable without any further action on
the part of the Holder.

         1.  ADDITIONAL  LOANS;  LIQUIDATION  PREFERENCE.  This  Loan  is  being
entered into  simultaneously  with a $_____________  loan from __________ to the
Company as of even date herewith and the rights of Holder and ________  shall be
equivalent  and treated PARI PASSU for all purposes  and in  accordance  with an
intercreditor  agreement  by and  between  Holder  and  ________  of  even  date
herewith.  Until the  earlier of (i) the entire  Note is  converted  into Common
Stock of the  Company  in  accordance  with the terms and  conditions  set forth
herein or (ii) the entire outstanding  balance of principal and accrued interest
hereunder is satisfied in full,  the Company shall not be permitted to incur any
other  indebtedness,  other  than  trade  payables  in the  ordinary  course  of
business, without the express written consent of Holder, which consent shall not
be unreasonably withheld or delayed. Further, the Company represents,  warrants,
covenants  and agrees that  indebtedness  held by Holder and ______ is superior,
with respect to rights,  claims and  security  interests  against all  presently
existing  and  hereafter  arising  assets,  including  license  fees and revenue
streams,  of the Company,  to any other  indebtedness  of the Company and,  upon
liquidation  or sale of all or  substantially  all of the assets or greater than
50% of the issued and  outstanding  shares of Common Stock of the  Company,  all
obligations  of the Company to Holder and  _______,  including  the  Liquidation
Preference (hereinafter defined), shall be satisfied prior to any other


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<PAGE>

creditor of the Company receiving any asset of the Company or any right or claim
thereto.  Further,  Holder shall be entitled to the Liquidation  Preference upon
any sale or liquidation of all or substantially all of the assets or business of
the Company, whether in bankruptcy or otherwise,  including, but not limited to,
a merger, business combination or any other transaction in connection with which
a majority of the then issued and outstanding  Common Stock of the Company shall
be exchanged for, converted into, acquired for or constitute solely the right to
receive  (whether  by means of an exchange  offer,  liquidation,  tender  offer,
consolidation,  merger,  combination,   reclassification,   recapitalization  or
otherwise)  cash,  securities  property  or  a  combination  thereof.  Upon  the
occurrence of any event described above, Holder shall be entitled to (i) payment
of all  outstanding  principal and accrued  interest under this Note, and (ii) a
liquidation  preference in the amount of three (3) times the outstanding  amount
of principal and accrued  interest  under this Note before any other creditor or
claimant of the  Company is entitled to receive any asset or proceeds  therefrom
or any right or claim thereto (the "Liquidation Preference").

         2.  FIRST AND PRIOR SECURITY INTEREST. In the event of a liquidation of
the  Company,  the Company  covenants  and agrees to cause the Holder  hereof to
receive payment of all outstanding principal and interest due hereunder plus the
Liquidation Preference prior to the payment of any other creditor or claimant of
the Company.  The Company  further  covenants  and agrees to cause all presently
existing and hereafter  arising  creditors of the Company,  who are owed greater
than $100,000, to execute and deliver  subordination  agreements for the benefit
of Holder in form and content  satisfactory  to Holder.  The Company and, by its
acceptance hereof, the Holder of this Note agree that the indebtedness evidenced
by this Note,  including the principal of and interest  thereon shall be secured
by a first and prior  lien  against  all of the assets of the  Company,  whether
presently  existing or hereafter  arising,  subject to and in accordance  with a
security  agreement  (the  "Security  Agreement")  of even date  herewith by and
between the  Company,  as  Pledgor,  and Holder and  ______,  as Secured  Party,
covering all assets, including proceeds thereof, of the Company. In this regard,
the  Company  covenants  and agrees to execute  and  deliver  such  further  and
additional  documents and  instruments  to effectuate  the intent of the parties
hereto upon receipt of written request therefore by Holder.

                (a)   In the event of any insolvency, bankruptcy,  receivership,
         liquidation or any other  marshalling of the assets and  liabilities of
         the Company,  the Holder shall be entitled to receive  payment in full,
         or provision shall be made for such payment, of all principal, interest
         and other sums due on account of the Holder of this Note, including the
         Liquidation  Preference,  before any other  creditor or claimant of the
         Company shall be entitled to receive payment of principal,  interest or
         any other sums due on their respective accounts.

                (b)    Subject to the payment in full of all  obligations  under
         this Note,  the holders of all other  subordinate  indebtedness  of the
         Company shall be  subordinated to the rights of the Holder of this Note
         to  receive   payments  or   distributions  on  the  first  and  senior
         indebtedness  represented by this Note,  until all principal,  interest
         and other sums due under this Notes shall have been paid.

                (c)   No payment on account of principal, interest or other sums
         due to other  subordinate  creditors of the  Company,  other than trade
         creditors  approved by Holder in writing,  shall be made by the Company
         unless full payment of all sums then due with respect to all  principal
         and accrued  interest  hereunder  has been made or duly provided for to
         the  satisfaction  of Holder,  which consent shall not be  unreasonably
         withheld or delayed; provided,  however, that the Company may pay trade
         payables  in the  ordinary  course of  business  without the consent of
         Holder  as long as such  payments  to any one  vendor  (including  such
         vendor's  affiliates)  in any  six  (6)  month  period  do  not  exceed
         $50,000.00.(d) Notwithstanding any provision herein to the contrary, as
         long as there is any amount  outstanding  under this Note,  the Company
         shall not incur any  indebtedness  other  than trade  creditors  in the
         ordinary course of the Company's  business  without the express written
         consent  of  Holder,  which  consent shall not be unreasonably withheld


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<PAGE>

         or delayed.

         3.  DEFAULT.  Upon the  occurrence of any of the  following  "Events of
Default":

                (a)    failure to pay all unpaid  principal  or any accrued and
         unpaid interest on this Note;

                (b)     the Company shall default in any material respect in the
         performance  or  observance  of any  covenant  or  agreement  contained
         herein,  the  Security  Agreement  or in any of  the  other  agreements
         required to be entered  into  pursuant to the terms and  conditions  of
         this Note;

                (c)     any  representation  or  warranty  of the  Company  made
         herein or in the Security  Agreement  shall have been  incorrect in any
         material respect;

                (d)     the   acceleration   of  the   maturity   date   of  any
         indebtedness  for which the Company or any subsidiary or parent thereof
         is directly or contingently liable;

                (e)     the Company  shall  commence  any  voluntary  proceeding
         under  any   bankruptcy,   reorganization,   arrangement,   insolvency,
         readjustment of debt,  receivership,  dissolution or liquidation law or
         statute of any  jurisdiction,  whether  now or  hereafter  in effect or
         shall be  adjudicated  insolvent  or bankrupt by a decree of a court of
         competent  jurisdiction;  or shall petition or apply for, acquiesce in,
         or consent to, the  appointment  of any receiver or trustee of all or a
         substantial  part of its property;  or shall make an assignment for the
         benefit of  creditors;  or shall admit in writing its  inability to pay
         its debts as they come due;

                (f)     there  shall be  commenced  against  the  Company or any
         subsidiary  or parent  thereof  any  proceeding  under any  bankruptcy,
         reorganization,   arrangement,   insolvency,   readjustment   of  debt,
         receivership,   dissolution  or  liquidation  law  or  statute  of  any
         jurisdiction,  whether  now  or  hereafter  in  effect,  and  any  such
         proceeding  shall  remain  undismissed  for a period  of 30 days;  or a
         receiver or trustee shall be appointed for all or a substantial part of
         its or his  property and any such  receivership  or  trusteeship  shall
         remain  undischarged  for  a  period  of  30  days;  or  a  warrant  of
         attachment,  execution or similar  process shall be issued  against any
         substantial  part of its or his  property  and the  same  shall  not be
         dismissed or bonded within 30 days after levy;

                (g)      a material  adverse  change shall have  occurred in the
         Company's  financial  condition,   results  of  operation  or  business
         prospects  or the  Company  is unable to pay its bills in the  ordinary
         course of business; or

                (h)      a judgment not covered by insurance  for the payment of
         money which in the  aggregate at any one time exceeds  $50,000 shall be
         rendered  against the Company or any of its subsidiaries or parent by a
         court of competent jurisdiction;

then,  and in any such event,  the Holder of this Note may by written  notice to
the Company declare the entire unpaid  principal  amount of this Note,  together
with all accrued  interest and other sums thereon due and payable,  and the same
shall, unless such Event of Default shall be cured within ten (10) business days
after the date such notice is given, immediately become due and payable upon the
expiration  of such period,  without  presentment,  demand,  protest,  notice of
intention to accelerate  maturity or notice of acceleration of maturity or other
notice of any kind, all of which are expressly waived.

         4.  CONVERSION  PRIVILEGE.  The Holder of this Note may, at its option,
convert  all or any  portion of the then  outstanding  principal  amount and, at
Holder's election, all or any portion of the


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<PAGE>

accrued interest of this Note, or a portion thereof if the portion is $10,000 or
an  integral  multiple  of  $10,000,  into  Common  Stock at any  time  prior or
subsequent to the Maturity  Date.  The number of shares of Common Stock issuable
upon  conversion  of the  entire  $_______  principal  amount of this Note shall
initially  be  _________   shares  (the   "Conversion   Number"),   such  amount
representing  a conversion  price of $0.119 per share,  subject to adjustment as
provided  below.  If less than  $_______  is  converted  to Common  Stock of the
Company  under  this  Note,  the  number  of  shares  into  which  this  Note is
convertible shall be  proportionately  reduced.  The initial conversion price of
this Note is $0.119 per share (the "Conversion Price"), subject to adjustment as
provided below. The Conversion Price and Conversion  Number represent the intent
of the  Company  and the  Holder,  that  for a period  of one (1) year  from the
effective dated hereof,  to ensure that the Conversion Number be guarantied as a
fixed  percentage  of the issued and  outstanding  shares of Common Stock of the
Company as of the  effective  date  hereof  (the  "Conversion  Percentage").  No
fractional  shares shall be issued upon conversion of a portion of the principal
amount of this Note. In the event the portion of such principal  amount being so
converted would result in the issuance of fractional  shares,  the Company shall
round down the number of shares upon conversion of such principal  amount to the
nearest whole share,  with cash being paid in lieu of any fractional share in an
amount  equal to the then  fair  market  value  (as  determined  by the Board of
Directors of the Company) of a share of Common Stock, with the remainder of such
principal amount remaining subject to the terms and conditions of this Note.

         5.  CONVERSION  PROCEDURE.  In order to convert all or a portion of the
principal  amount or accrued  interest  then  outstanding  under this Note,  the
Holder shall send written  notification  (the  "Notice") to the Company,  at the
address  herein,  of the  principal  amount the Holder wishes to convert and the
name or names in which the Holder  wishes the  certificate  or  certificates  of
shares of Common Stock to be issued.  The date on which the Holder  delivers the
Notice to the Company shall be the conversion date (the "Conversion  Date").  As
soon as practicable,  but in any event within five (5) business days,  after the
Conversion  Date,  the  Company  shall  deliver or cause its  transfer  agent to
deliver to the Holder a certificate  or  certificates  evidencing  the shares of
Common Stock  issuable upon the  conversion in accordance  with the terms of the
Notice.  The person in whose name the certificate is registered shall be treated
as a  stockholder  of  the  Company  on  and  after  the  Conversion  Date.  The
outstanding  principal  amount of the Note  shall be  reduced  by the  principal
amount  converted in  accordance  with this SECTION 5. Interest on the principal
amount of this Note  accepted  for  conversion  pursuant  to the  provisions  of
SECTION 5 hereof shall cease to accrue as of the Conversion Date.

         If for any reason  Holder has not  received all of the shares of Common
Stock prior to the fifth (5th) business day after  delivery of the Notice,  then
the Holder,  upon written notice to the Company's transfer agent, with a copy to
the Company,  may void its conversion Notice with respect to, and retain or have
returned,  as the case may be,  any  principal  amount of this Note that has not
been converted pursuant to such Holder's  conversion  Notice;  provided that the
voiding of Holder's conversion Notice shall not effect the Company's obligations
to make any  payments  which have  accrued  prior to the date of such  Notice or
otherwise. Thereafter, the Conversion Price of the principal amount of this Note
returned  or  retained  by the Holder for  failure  to timely  convert  shall be
adjusted to the lesser of (i) the  Conversion  Price as in effect on the date on
which the Holder voided the conversion Notice, (ii) the lowest closing bid price
during the period  beginning on the Conversion  Date and ending on the date such
Holder voided the conversion  Notice,  and (iii) the Conversion  Price as of the
Conversion Date as set forth in the conversion Notice.

         6.  TAXES ON CONVERSION.  If the Holder converts this Note, the Company
shall pay any  documentary,  stamp or similar  issue or transfer  tax due on the
issue of Common Stock upon the  conversion.  Nothing  herein shall  preclude any
income tax withholding required by law or regulation.

         7.  COMPANY  TO PROVIDE  SHARES.  The  Company  shall at all times keep
reserved a sufficient


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<PAGE>

number of shares of Common  Stock to permit the  conversion  of this  Note.  The
Company  covenants  and  agrees to  reserve  no less than 200% of the  number of
shares of Common Stock required to be issued upon  conversion of the outstanding
Note. All shares of Common Stock delivered upon conversion of this Note shall be
fully paid and  nonassessable  and shall be free from preemptive rights and free
of any lien or adverse  claim.  The  Company  will  endeavor  to comply with all
federal and state  securities  laws  regulating the offer and delivery of Common
Stock  upon  conversion  of this  Note,  if any,  and will list or cause to have
quoted  such  Common  Stock  on  a  national   securities  exchange  or  in  the
over-the-counter  market or such other  market on which the Common Stock is then
listed or quoted.

         8.  ADJUSTMENT FOR CHANGE IN SHARES;  ANTIDILUTION.  (a) If, within one
(1) year from the effective date of this Note, even if all or any portion of the
Note is or has been converted into Common Stock or the Company has tendered full
payment  thereof to the Escrow Agent  (hereinafter  defined) in accordance  with
SECTION 12 , the Company:

             i.    pays a dividend or makes a  distribution  on its Common Stock
                   in Common Stock;

             ii.   subdivides its outstanding Common Stock into a greater number
                   of shares;

             iii.  combines  its  outstanding  shares  of  Common  Stock  into a
                   smaller number of shares;

             iv.   makes a distribution on its Common Stock in shares other than
                   Common Stock;

             v.    issues by  reclassification of its Common Stock any shares of
                   the Company; or

             vi.   issues or agrees to issue any shares of Common Stock, rights,
                   warrants or any instrument that is convertible or exercisable
                   into  Common  Stock of the Company or has rights or a similar
                   economic effect of Common Stock of the Company;

then the Conversion  Number in effect  immediately prior to such action shall be
increased so that the Holder will  maintain  its  Conversion  Percentage  and be
entitled to receive upon  conversion of this Note the number of shares of Common
Stock  and/or  other  securities  of the  Company  which the  Holder  would have
acquired  immediately  following such action if such Holder had fully  converted
this Note immediately  prior to such action,  together with additional shares of
Common Stock so as to preserve Holder's  Conversion  Percentage at no additional
cost to  Holder.  The  intent of the  Company  and the Holder is to ensure for a
period of one (1) year  that  Holder  will be able to  maintain  its  Conversion
Percentage based upon the Conversion Number set forth above in SECTION 4 and the
number of issued and  outstanding  shares as of the effective  date hereof.  All
adjustments  pursuant to this SECTION 8(a) shall  become  effective  immediately
after the record date in the case of a dividend or distribution  and immediately
after  the  effective   date  in  the  case  of  a   subdivision,   combination,
reclassification  or issuance  of shares by the  Company.  Any such  adjustments
shall be made successively whenever any event listed above occurs.

              (b) In the event of any  consolidation  of the  Company  with,  or
merger of the Company into, another person (other than a consolidation or merger
in which the  Company is the  continuing  entity),  or in the event of any sale,
assignment,  lease,  transfer or other  disposition  to another person of all or
substantially  all of the  properties  and assets of the Company as an entirety,
the Holder shall  thereafter  have the right to either (i) accelerate the entire
indebtedness  represented  by this Note or (ii)  convert this Note into the kind
and  amount of  shares  and  other  securities  and  property  (including  cash)
receivable upon such  consolidation,  merger,  sale or conveyance by a holder of
the  number of shares of Common  Stock  into  which  this Note  might  have been
converted  immediately prior to such consolidation,  merger, sale or conveyance,
which amount shall include the  Liquidation  Preference.  The provisions of this


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<PAGE>

SUBSECTION  (b) shall  similarly  apply to successive  consolidations,  mergers,
sales or other dispositions.

              (c) The  Conversion  Price  in  effect  immediately  prior  to any
adjustment  of the  number of shares of Common  Stock  into  which  this Note is
convertible  shall be  simultaneously  adjusted  (but not below par value of the
Common Stock) by multiplying the Conversion Price in effect immediately prior to
such  adjustment  by a fraction,  the  numerator of which shall be the number of
shares of Common Stock into which this Note is exercisable  immediately prior to
such  adjustment,  and the denominator of which shall be the number of shares of
Common Stock into which this Note is exercisable after such adjustment.

              (d) The  provisions  of THIS  SECTION  8 shall  not  apply  to the
issuance of shares upon exercise of previously  issued options granted  pursuant
to any employee stock  incentive plan  identified on the Company's most recently
filed annual or quarterly report or otherwise approved by Holder in writing.

         9.  NOTICE OF ADJUSTMENT. Whenever an adjustment is to be made pursuant
to SECTION 8, the Company  shall use best  commercial  efforts to deliver to the
Holder of this Note at least five (5) business days prior written  notice of the
adjustment  to the  Conversion  Number and, in any event,  such notice  shall be
delivered  within  three (3)  business  days  following  the  adjustment  to the
Conversion Number.

         10.  PIGGY-BACK  REGISTRATIONS.  If at any time the Company proposes to
file with the  Securities  and Exchange  Commission  (the "SEC") a  registration
statement  relating to an offering  for its own account or the account of others
under the  Securities  Act of 1933 Act (the "1933 Act") of any of its securities
(other than on Form S-4 or Form S-8 or their  equivalents  at such time relating
to  securities to be issued solely in  connection  with any  acquisition  of any
entity or business or equity securities issuable in connection with stock option
or other  employee  benefit  plans),  the Company shall  promptly send to Holder
written notice of the Company's  intention to file a registration  statement and
of Holder's  rights  under this SECTION 10 and, if within  twenty (20)  business
days after  receipt of such  notice,  Holder  shall so request in  writing,  the
Company  shall  include in such  registration  statement  all or any part of the
Common Stock held by Holder or to be held by Holder  after  delivery of Holder's
conversion  Notice in accordance  with the terms an conditions  set forth herein
that Holder  requests to be registered.  If an offering in connection with which
Holder is  entitled to  registration  under this  SECTION 10 is an  underwritten
offering,  then Holder shall offer and sell such  registrable  securities  in an
underwritten offering using the same underwriter or underwriters and on the same
terms  and  conditions  as  other  shares  of  Common  Stock  included  in  such
underwritten offering by the Company. If a registration pursuant to this SECTION
10 is to be an  underwritten  public  offering and the  managing  underwriter(s)
advise the  Company in writing,  that in their  reasonable  good faith  opinion,
marketing or other factors  dictate that a limitation on the number of shares of
Common Stock which may be included in the registration statement is necessary to
facilitate  and not  adversely  affect the proposed  offering,  then the Company
shall cause such  registration to include a minimum of the greater of: (1) fifty
percent  (50%) of the shares  requested to be  registered by Holder or (2) fifty
percent (50%) of the shares of Common Stock offered by the Company. All costs of
the registration of the Holder's shares,  including legal fees shall be borne by
the Company.

         11.  MANDATORY  REGISTRATION.  Except as provided in SECTION 12 hereof,
upon the later of (i)  conversion  of all or a portion of this Note into  Common
Stock or (ii) April 15, 2003,  the Company shall,  at its sole expense,  prepare
and file with the SEC a registration statement or registration statements (as is
necessary) on Form S-3 covering the resale of all of Holder's  Common Stock.  In
the event that Form S-3 is  unavailable  for such a  registration,  the  Company
shall use such other form as is available for such a  registration.  The Company
shall us its best efforts to have the registration  statement declared effective
by the SEC as soon as  practicable.  In the event that Form S-3 is not available
for any registration of Holder's Common Stock  hereunder,  the Company shall (i)
register the sale of the Holder's Common


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<PAGE>

Stock on another  appropriate  form and (ii)  undertake to register the Holder's
Common Stock on Form S-3 as soon as such form is  available,  provided  that the
Company shall maintain the  effectiveness of the registration  statement then in
effect  until such time as a  registration  statement  on Form S-3  covering the
Holder's Common Stock has been declared  effective by the SEC. The Company shall
us its best efforts to have the registration statement declared effective by the
SEC as soon as practicable.

             (a)  The  Company  and  the  Holder  each   acknowledge  that  each
registration   statement  prepared  in  accordance  herewith  shall  include  an
indeterminate  number of shares of Common  Stock  pursuant to Rule 416 under the
1933 Act so as to cover any and all Common  Stock which may become  issuable (1)
to prevent  dilution  resulting  from stock splits,  stock  dividends or similar
transactions  and (ii) if  permitted  by law, by reason of certain  antidilution
provisions or reductions in the Conversion  Price or increases in the Conversion
Number in accordance  with the terms and  conditions  set forth herein.  In this
regard, the Company agrees to use best efforts to ensure that the maximum number
of shares of Common Stock which may be registered pursuant to Rule 416 under the
1933 Act are covered by each  registration  statement and,  absent guidance from
the SEC or other  definitive  authority to the  contrary,  the Company shall use
best efforts to  affirmatively  support and to not take any position  adverse to
the  position  that each  registration  statement  filed  hereunder  covers  all
eligible  shares of Common Stock of Holder.  If the Company  determines that the
registration  statement  filed  hereunder does not cover all of Holder's  Common
Stock,  the Company shall  immediately  (1) provide to Holder  written  evidence
setting forth the basis for the Company's position and the authority  therefore,
and (ii) prepare and file an amendment to such  registration  statement or a new
registration statement within 45 days thereafter.

             (b) Whenever Holder has requested that any of Holder's Common Stock
be  registered  pursuant  to this  SECTION 11 or at such time as the  Company is
obligated to file a registration  statement with the SEC pursuant to SECTION 10,
the Company will use its best efforts to effect the registration of the Holder's
Common Stock in accordance with the intended method of disposition  thereof and,
pursuant thereto, the Company shall have the following obligations:

                   i. The  Company  shall and keep such  registration  statement
             effective  pursuant to Rule 415  promulgated  under the 1933 Act at
             all times until the earlier of (1) the date as of which  Holder may
             sell all of Holder's Common Stock without  restriction  pursuant to
             Rule 144 promulgated  under the 1933 Act (or successor  thereto) or
             (2) the  date on  which  (A) the  Holder  shall  have  sold  all of
             Holder's   Common  Stock  and  (B)  no  portion  of  this  Note  is
             outstanding  (the   "Registration   Period"),   which  Registration
             Statement  (including  any  amendments or  supplements  thereto and
             prospectuses  contained  therein)  shall  not  contain  any  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, in light of the circumstances in which they were made, not
             misleading.

                   ii.  The  Company  shall  prepare  and file with the SEC such
             amendments (including post-effective amendments) and supplements to
             the  registration  statement and the prospectus  used in connection
             with such registration  statement,  which prospectus is to be filed
             pursuant  to Rule 424  promulgated  under the 1933  Act,  as may be
             necessary  to keep such  registration  statement  effective  at all
             times  during the  registration  period,  and,  during such period,
             comply  with the  provisions  of the 1933 Act with  respect  to the
             disposition of all registrable securities of the Company covered by
             such registration statement, including Holder's Common Stock, until
             such time as all of Holder's  Common Stock shall have been disposed
             of in accordance  with the intended  methods of  disposition as set
             forth in such registration statement.

                   iii.  The Company  shall use its best efforts to (A) register
             and qualify the  Holder's  Common Stock  covered by a  Registration
             Statement  under such other  securities  or "blue sky" laws of such
             jurisdictions in the United States as Holder  reasonably  requests,
             (B)  prepare  and  file in  those  jurisdictions,  such  amendments
             (including  post-effective  amendments)  and  supplements


                                       7
<PAGE>

             to such  registrations  and  qualifications  as may be necessary to
             maintain the effectiveness  thereof during the Registration Period,
             (iii) take such other  actions as may be necessary to maintain such
             registrations and  qualifications in effect at all times during the
             Registration  Period,  and (iv) take all other  actions  reasonably
             necessary or  advisable  to qualify the  Holder's  Common Stock for
             sale in such  jurisdictions.  The  Company  shall  promptly  notify
             Holder of the  receipt  by the  Company  of any  notification  with
             respect to the suspension of the  registration or  qualification of
             any of the Holder's  Common Stock for sale under the  securities or
             "blue sky" laws of any  jurisdiction  in the  United  States or its
             receipt of actual notice of the  initiation or  threatening  of any
             proceeding for such purpose.

                   iv. The  Company  shall hold in  confidence  and not make any
             disclosure of information concerning Holder provided to the Company
             unless (i)  disclosure of such  information  is necessary to comply
             with federal or state  securities laws, (ii) the disclosure of such
             information  is  necessary  to avoid or correct a  misstatement  or
             omission in any registration  statement,  (iii) the release of such
             information  is  ordered  pursuant  to a subpoena  or other  final,
             non-appealable order from a court or governmental body of competent
             jurisdiction,  or (iv) such  information  has been  made  generally
             available  to the public other than by  disclosure  in violation of
             this Note or any other agreement. The Company agrees that it shall,
             upon learning that disclosure of such information concerning Holder
             is  sought  in or by a court  or  governmental  body  of  competent
             jurisdiction or through other means,  give prompt written notice to
             Holder and allow such  Holder to  undertake  appropriate  action to
             prevent  disclosure  of, or to obtain a protective  order for, such
             information.

                   v. The  Company  shall  take  all  other  reasonable  actions
             necessary  to  expedite  and  facilitate  disposition  by Holder of
             Holder's common Stock pursuant to a registration statement.

                   vi. To the fullest extent permitted by law, the Company will,
             and hereby does, indemnify, hold harmless and defend Holder against
             any  losses,  claims,  damages,   liabilities,   judgments,  fines,
             penalties,   charges,  costs,  attorneys'  fees,  amounts  paid  in
             settlement or expenses, joint or several, (collectively,  "Claims")
             incurred  in  investigating,  preparing  or  defending  any action,
             claim,  suit,  inquiry,  proceeding,  investigation or appeal taken
             from  the  foregoing  by  or  before  any  court  or  governmental,
             administrative or other regulatory agency, body or the SEC, whether
             pending or threatened,  whether or not an  indemnified  party is or
             may be a party thereto ("Indemnified Damages"), to which Holder may
             become subject  insofar as such Claims (or actions or  proceedings,
             whether  commenced or threatened,  in respect thereof) arise out of
             or are based  upon:  (A) any untrue  statement  or  alleged  untrue
             statement  of a material  fact in a  registration  statement or any
             post-effective   amendment   thereto  or  in  any  filing  made  in
             connection  with  the  qualification  of  the  offering  under  the
             securities  or other "blue sky" laws of any  jurisdiction  in which
             Holder's  Common  Stock  is  offered  ("Blue  Sky  Fi1ing")  or the
             omission or alleged  omission to state a material  fact required to
             be stated therein or necessary to make the  statements  therein not
             misleading,   or  (Bi)  any  untrue  statement  or  alleged  untrue
             statement  of  a  material  fact   contained  in  any   preliminary
             prospectus if used prior to the effective date of such registration
             statement,  or  contained  in the final  prospectus  (as amended or
             supplemented,  if  the  Company  files  any  amendment  thereof  or
             supplement  thereto  with  the  SEC)  or the  omission  or  alleged
             omission to state therein any material  fact  necessary to make the
             statements made therein,  in light of the circumstances under which
             the statements therein were made, not misleading.

      12.  PREPAYMENTS.  This Note may not be prepaid by the Company without the
express written consent of the Holder, which consent may be withheld in its sole
discretion  after  receipt  of ten (10)  business  days  prior  written  notice.
Notwithstanding the foregoing,  in the event the Company raises $2,500,000.00 of
equity capital in a single private offering of its equity  securities,  then the
Company,  may


                                       8
<PAGE>

upon thirty (30) days prior written  notice to Holder,  elect to prepay the Note
in whole,  but not in part and the Holder shall have ten (10)  business  days to
elect  one  of  the  following  options:  (a)  accept  prepayment  of all of the
outstanding  principal and accrued interest under this Note; or (ii) convert the
balance of  outstanding  principal  and  accrued  interest  under this Note into
Common Stock in accordance  with the terms and conditions  set forth herein;  or
(iii) cause the Company to pay the outstanding  principal and accrue interest to
a mutually agreeable escrow agent (the "Escrow Agent"),  which Escrow Agent will
hold such  amount  until the  earlier of (A)  Holder's  election  to convert the
outstanding  balance of  outstanding  principal and accrued  interest under this
Note into Common Stock in  accordance  with the terms and  conditions  set forth
herein or (B)  Holder's  election  to  accept  such sum in  satisfaction  of the
Company's  obligations  hereunder,  whereupon  Escrow  Agent  shall  deliver the
escrowed sum to the Company or the Holder, as the case may be. The Company shall
bear the cost of the Escrow Agent.

         Notwithstanding   any  provision  herein  to  the  contrary,   Holder's
antidilution  rights described in SECTION 8 hereof shall survive any of Holder's
elections set forth above in this SECTION 12.

         In the event  this Note is  satisfied  in full or the amount to satisfy
the Note is delivered to Escrow Agent, Holder's first and prior lien against the
Company's assets and the Security  Agreement shall be released by Holder and the
Company  shall no longer be restricted by this Note from paying any creditors or
issuing any debt instruments.

         13.  ASSIGNMENT.  This Note is not assignable by the Company. This Note
and the Common Stock into which it is  convertible  are  assignable by Holder to
its affiliates  (as defined in Rule 405  promulgated  under the Securities  Act)
that are Accredited  Investors.

         14. NOTICES. Any notice necessary under this Agreement shall be in
writing and shall be considered delivered three days after the mailing is sent
by certified mail, return receipt requested, or when received, if sent by
telecopy, prepaid courier, express mail or personal delivery to the following
addresses:

If to the Company:        Front Porch Digital Inc.
                          20000 Horizon Way, Suite 120
                          Mt. Laurel, New Jersey 08054
                          Attention: Chief Executive Officer
                          Telecopy: (   )
                                     ---  --------------

With a copy to:           Pryor Cashman Sherman & Flynn LLP
                          410 Park Avenue
                          New York, N.Y. 10022
                          Attention: Eric M. Hellige
                          Telecopy: (212) 326-0846

If to Holder:
                          -------------------------------

                          -------------------------------

                          -------------------------------

                          -------------------------------

                          -------------------------------


                                       9
<PAGE>

With a copy to:           Creel, Sussman & Moore, LLP
                          8235 Douglas Avenue, Suite 1100
                          Dallas, Texas 75225
                          Attention: Ronald L .Sussman
                          Telecopy: (214) 378-8290

         15.  SEVERABILITY. If any provision of this Note is held to be illegal,
invalid or  unenforceable  under any current or future law, and if the rights or
obligations of the parties under this Note would not be materially and adversely
affected thereby,  such provision shall be fully separable,  and this Note shall
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part thereof,  the remaining provisions of this Note shall
remain in full  force and  effect  and shall  not be  affected  by the  illegal,
invalid or  unenforceable  provision or by its severance  therefrom.  In lieu of
such  illegal,  invalid  or  unenforceable  provision,   there  shall  be  added
automatically as a part of this Note, a legal,  valid and enforceable  provision
as similar in terms to such illegal,  invalid or unenforceable  provision as may
be possible,  and the parties hereto request the court or any arbitrator to whom
disputes  relating to this Note are submitted to reform the  otherwise  illegal,
invalid or unenforceable provision in accordance with this SECTION 15.

         16.  MISCELLANEOUS.  Past due principal and interest on this Note shall
bear  interest  from the date due until  paid at a per annum  rate  equal to the
maximum  lawful  rate in  effect  from time to time.  Notwithstanding  any other
provision  of this Note,  interest on the  indebtedness  evidenced  by this Note
shall  not  exceed  the  maximum  amount  of  nonusurious  interest  that may be
contracted  for,  charged or received  under  applicable law and any interest in
excess of that amount  shall be credited on the unpaid  principal  amount of the
indebtedness  or,  if  that  has  been  paid,  refunded.   Except  as  otherwise
specifically  provided  herein,  the obligations of the Company set forth herein
may not be waived,  modified or amended  without the prior written  agreement of
the  Holder  hereof.  If  suit  or an  arbitration  proceeding  is  brought  for
collection  of this  Note or if it is  collected  through  bankruptcy  or  other
judicial  process,  the Company  shall pay, in addition to all other amounts due
hereon, the Holder's costs of collection,  including reasonable attorneys' fees.
The Company shall be responsible  for  reimbursing  Holder for its legal fees in
connection with consummation of this transaction;  provided,  that the Company's
obligation  for such  legal  fees do not  exceed  $5,000.00.  THIS NOTE HAS BEEN
EXECUTED  AND  DELIVERED  IN  NORTHBROOK,  ILLINOIS  AND SHALL BE  ENFORCED  AND
CONSTRUED  IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF  ILLINOIS.  EACH  PARTY
HEREBY  IRREVOCABLY  WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST,  A
JURY  TRIAL FOR THE  ADJUDICATION  OF ANY  DISPUTE  HEREUNDER  OR IN  CONNECTION
HEREWITH  OR  ARISING  OUT OF THIS  AGREEMENT  OR ANY  TRANSACTION  CONTEMPLATED
HEREBY. Any dispute arising between the Holder and the Company shall be resolved
by  arbitration in the County of the principal  place of business of Holder.  No
failure or delay on the part of this Note in the exercise of any power, right or
privilege  hereunder shall operate as a waiver thereof,  nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

         THE  WRITTEN  AGREEMENTS  FOR THE LOAN OR OTHER  EXTENSIONS  OF  CREDIT
DESCRIBED ABOVE REPRESENT THE FINAL AGREEMENT  BETWEEN THE PARTIES,  AND MAY NOT
BE  CONTRADICTED  BY  EVIDENCE OF PRIOR,  CONTEMPORANEOUS,  OR  SUBSEQUENT  ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL  AGREEMENTS  BETWEEN THE
PARTIES.


                                       10
<PAGE>

         IN WITNESS  WHEREOF,  the  Company has caused this Note to be signed by
its duly authorized officer.

                                       FRONT PORCH DIGITAL, INC.

                                       By:
                                           -------------------------------------

                                       Name:
                                             -----------------------------------

                                       Title:
                                              ----------------------------------


                                              ----------------------------------

                                       By:
                                           -------------------------------------

                                              By:

                                                  ------------------------------


                                       11