EXECUTION COPY


                       DIRECTOR INDEMNIFICATION AGREEMENT

        This Director Indemnification Agreement made and entered into as of
August 18, 2004 ("Agreement"), by and between Front Porch Digital Inc., a Nevada
corporation (the "Company") and Christopher S. Gaffney (the "Indemnitee"):

        WHEREAS, it is essential to the Company that it be able to retain and
attract as directors the most capable persons available;

        WHEREAS, increased corporate litigation has subjected directors to
litigation risks and expenses, and the limitations on the availability of
directors liability insurance have made it increasingly difficult for the
Company to attract and retain such persons;

        WHEREAS, the Company's bylaws and/or Articles of Incorporation (as
amended from time to time, the "Articles of Incorporation") require it to
indemnify its directors to the fullest extent permitted by law and permit it to
make other indemnification arrangements and agreements; and

        WHEREAS, the Company desires to provide the Indemnitee with specific
contractual assurance of Indemnitee's rights to full indemnification against
litigation risks and expenses (regardless, among other things, of any amendment
to or revocation of any such bylaws or any change in the ownership of the
Company or the composition of its Board of Directors):

        NOW, THEREFORE, in consideration of the promises and the covenants
contained herein, the Companies and Indemnitee do hereby covenant and agree as
follows:

        1.      DEFINITIONS.

                (a)     "Corporate Status" describes the status of a person who
                is serving or has served (i) as a director of the Company, (ii)
                in any capacity with respect to any employee benefit plan of the
                Company, or (iii) as a director of any other Entity at the
                request of the Company. For purposes of subsection (iii) of this
                Section 1(a), a director of the Company who is serving or has
                served as a director of a Subsidiary shall be deemed to be
                serving at the request of the Company.

                (b)     "Entity" shall mean any corporation, partnership,
                limited liability company, joint venture, trust, foundation,
                association, organization or other legal entity.

                (c)     "Expenses" shall mean all fees, costs and expenses
                incurred in connection with any Proceeding, including, without
                limitation, attorneys' fees, disbursements and retainers
                (including, without limitation, any fees, disbursements and
                retainers incurred by Indemnitee pursuant to Sections 10 and
                11(c) of this Agreement), fees

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                and disbursements of expert witnesses, private investigators and
                professional advisors (including, without limitation,
                accountants and investment bankers), court costs, transcript
                costs, fees of experts, travel expenses, duplicating, printing
                and binding costs, telephone and fax transmission charges,
                postage, delivery services, secretarial services, and other
                disbursements and expenses.

                (d)     "Indemnifiable Expenses," "Indemnifiable Liabilities"
                and "Indemnifiable Amounts" shall have the meanings ascribed to
                those terms in Section 3(a) below.

                (e)     "Liabilities" shall mean judgments, damages,
                liabilities, losses, penalties, excise taxes, fines and amounts
                paid in settlement.

                (f)     "Proceeding" shall mean any threatened, pending or
                completed claim, action, suit, arbitration, alternate dispute
                resolution process, investigation, administrative hearing,
                appeal, or any other proceeding, whether civil, criminal,
                administrative, arbitrative or investigative, whether formal or
                informal, including a proceeding initiated by Indemnitee
                pursuant to Section 10 of this Agreement to enforce Indemnitee's
                rights hereunder.

                (g)     "Subsidiary" shall mean any corporation, partnership,
                limited liability company, joint venture, trust or other Entity
                of which the Company owns (either directly or through or
                together with another Subsidiary) either (i) a general partner,
                managing member or other similar interest or (ii) (A) 50% or
                more of the voting power of the voting capital equity interests
                of such corporation, partnership, limited liability company,
                joint venture or other Entity, or (B) 50% or more of the
                outstanding voting capital stock or other voting equity
                interests of such corporation, partnership, limited liability
                company, joint venture or other Entity.

        2.      SERVICES OF INDEMNITEE. In consideration of the Company's
covenants and commitments hereunder, Indemnitee agrees to serve or continue to
serve as a director of the Company. However, this Agreement shall not impose any
obligation on Indemnitee or the Company to continue Indemnitee's service to the
Company beyond any period otherwise required by law or by other agreements or
commitments of the parties, if any.

        3.      AGREEMENT TO INDEMNIFY. The Company agrees to indemnify
Indemnitee as follows:

                (a)     Subject to the exceptions contained in Sections 4(a) and
                6 below, if Indemnitee was or is a party or is threatened to be
                made a party to any Proceeding (other than an action by or in
                the right of the Company) by reason of Indemnitee's Corporate
                Status, Indemnitee shall be indemnified by the Company against
                all Expenses and Liabilities incurred or paid by Indemnitee in
                connection with such Proceeding (referred to herein as
                "Indemnifiable Expenses" and "Indemnifiable Liabilities,"
                respectively, and collectively as "Indemnifiable Amounts").

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                (b)     Subject to the exceptions contained in Sections 4(b) and
                6 below, if Indemnitee was or is a party or is threatened to be
                made a party to any Proceeding by or in the right of the Company
                to procure a judgment in its favor by reason of Indemnitee's
                Corporate Status, Indemnitee shall be indemnified by the Company
                against all Indemnifiable Expenses.

                (c)     In making any determination required to be made under
                Nevada law with respect to entitlement to indemnification
                hereunder, the person, persons or entity making such
                determination shall presume that Indemnitee is entitled to
                indemnification under this Agreement if Indemnitee submitted a
                request therefor in accordance with Section 5 of this Agreement,
                and the Company shall have the burden of proof to overcome that
                presumption in connection with the making by any person, persons
                or entity of any determination contrary to that presumption.

        4.      EXCEPTIONS TO INDEMNIFICATION. Indemnitee shall be entitled to
indemnification under Sections 3(a) and 3(b) above in all circumstances other
than the following:

                (a)     If indemnification is requested under Section 3(a) and
                it has been adjudicated finally by a court of competent
                jurisdiction that, in connection with the subject of the
                Proceeding out of which the claim for indemnification has
                arisen, Indemnitee failed to act (i) in good faith and (ii) in a
                manner Indemnitee reasonably believed to be in or not opposed to
                the best interests of the Company, or, with respect to any
                criminal action or proceeding, Indemnitee had reasonable cause
                to believe that Indemnitee's conduct was unlawful, Indemnitee
                shall not be entitled to payment of Indemnifiable Amounts
                hereunder.

                (b)     If indemnification is requested under Section 3(b) and

                        (i)     it has been adjudicated finally by a court of
                        competent jurisdiction that, in connection with the
                        subject of the Proceeding out of which the claim for
                        indemnification has arisen, Indemnitee failed to act (A)
                        in good faith and (B) in a manner Indemnitee reasonably
                        believed to be in or not opposed to the best interests
                        of the Company, Indemnitee shall not be entitled to
                        payment of Indemnifiable Expenses hereunder; or

                        (ii)    it has been adjudicated finally by a court of
                        competent jurisdiction that Indemnitee is liable to the
                        Company with respect to any claim, issue or matter
                        involved in the Proceeding out of which the claim for
                        indemnification has arisen, including, without
                        limitation, a claim that Indemnitee received an improper
                        personal benefit, no Indemnifiable Expenses shall be
                        paid with respect to such claim, issue or matter unless
                        the Court of Chancery or another court in which such
                        Proceeding was brought shall determine upon


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                        application that, despite the adjudication of liability,
                        but in view of all the circumstances of the case,
                        Indemnitee is fairly and reasonably entitled to
                        indemnity for such Indemnifiable Expenses which such
                        court shall deem proper.

        5.      PROCEDURE FOR PAYMENT OF INDEMNIFIABLE AMOUNTS. Indemnitee shall
submit to the Company a written request specifying the Indemnifiable Amounts for
which Indemnitee seeks payment under Section 3 of this Agreement and a short
description of the basis for the claim. The Company shall pay such Indemnifiable
Amounts to Indemnitee within twenty (20) calendar days of receipt of the
request. At the request of the Company, Indemnitee shall furnish such
documentation and information as are reasonably available to Indemnitee and
necessary to establish that Indemnitee is entitled to indemnification hereunder.

        6.      INDEMNIFICATION FOR EXPENSES IF INDEMNITEE IS WHOLLY OR PARTLY
SUCCESSFUL. Notwithstanding any other provision of this Agreement, and without
limiting any such provision, to the extent that Indemnitee is, by reason of
Indemnitee's Corporate Status, a party to and is successful, on the merits or
otherwise, in any Proceeding, Indemnitee shall be indemnified against all
Expenses reasonably incurred by Indemnitee or on Indemnitee's behalf in
connection therewith. If Indemnitee is not wholly successful in such Proceeding
but is successful, on the merits or otherwise, as to one or more but less than
all claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses reasonably incurred by Indemnitee or on
Indemnitee's behalf in connection with each successfully resolved claim, issue
or matter. For purposes of this Agreement, the termination of any claim, issue
or matter in such a Proceeding by dismissal, with or without prejudice, shall be
deemed to be a successful result as to such claim, issue or matter.

        7.      EFFECT OF CERTAIN RESOLUTIONS. Neither the settlement or
termination of any Proceeding nor the failure of the Company to award
indemnification or to determine that indemnification is payable shall create an
adverse presumption that Indemnitee is not entitled to indemnification
hereunder. In addition, the termination of any Proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent
shall not create a presumption that Indemnitee did not act in good faith and in
a manner which Indemnitee reasonably believed to be in or not opposed to the
best interests of the Company or, with respect to any criminal action or
proceeding, had reasonable cause to believe that Indemnitee's action was
unlawful.

        8.      AGREEMENT TO ADVANCE EXPENSES; CONDITIONS. The Company shall pay
to Indemnitee all Indemnifiable Expenses incurred by Indemnitee in connection
with any Proceeding, including a Proceeding by or in the right of the Company,
in advance (unless prohibited by applicable laws) of the final disposition of
such Proceeding. Indemnitee hereby undertakes to repay the amount of
Indemnifiable Expenses paid to Indemnitee if it is finally determined by a court
of competent jurisdiction that Indemnitee is not entitled under this Agreement
to, or is prohibited by applicable law from, indemnification with respect to
such Expenses. This undertaking is an unlimited general obligation of
Indemnitee.

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        9.      PROCEDURE FOR ADVANCE PAYMENT OF EXPENSES. Indemnitee shall
submit to the Company a written request specifying the Indemnifiable Expenses
for which Indemnitee seeks an advancement under Section 8 of this Agreement,
together with documentation evidencing that Indemnitee has incurred such
Indemnifiable Expenses. Payment of Indemnifiable Expenses under Section 8 shall
be made no later than twenty (20) calendar days after the Company's receipt of
such request.

        10.     REMEDIES OF INDEMNITEE.

                (a)     RIGHT TO PETITION COURT. In the event that Indemnitee
                makes a request for payment of Indemnifiable Amounts under
                Sections 3 and 5 above or a request for an advancement of
                Indemnifiable Expenses under Sections 8 and 9 above and the
                Company fails to make such payment or advancement in a timely
                manner pursuant to the terms of this Agreement, Indemnitee may
                petition the Court of Chancery to enforce the Company's
                obligations under this Agreement.

                (b)     Burden of Proof. In any judicial proceeding brought
                under Section 10(a) above, the Company shall have the burden of
                proving that Indemnitee is not entitled to payment of
                Indemnifiable Amounts hereunder.

                (c)     EXPENSES. The Company agrees to reimburse Indemnitee in
                full for any Expenses incurred by Indemnitee in connection with
                investigating, preparing for, litigating, defending or settling
                any action brought by Indemnitee under Section 10(a) above, or
                in connection with any claim or counterclaim brought by the
                Company in connection therewith, whether or not Indemnitee is
                successful in whole or in part in connection with any such
                action.

                (d)     VALIDITY OF AGREEMENT. The Company shall be precluded
                from asserting in any Proceeding, including, without limitation,
                an action under Section 10(a) above, that the provisions of this
                Agreement are not valid, binding and enforceable or that there
                is insufficient consideration for this Agreement and shall
                stipulate in court that the Company is bound by all the
                provisions of this Agreement.

                (e)     FAILURE TO ACT NOT A DEFENSE. The failure of the Company
                (including its Board of Directors or any committee thereof,
                independent legal counsel, or stockholders) to make a
                determination concerning the permissibility of the payment of
                Indemnifiable Amounts or the advancement of Indemnifiable
                Expenses under this Agreement shall not be a defense in any
                action brought under Section 10(a) above, and shall not create a
                presumption that such payment or advancement is not permissible.

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        11.     DEFENSE OF THE UNDERLYING PROCEEDING.

                (a)     NOTICE BY INDEMNITEE. Indemnitee agrees to notify the
                Company promptly upon being served with any summons, citation,
                subpoena, complaint, indictment, information, or other document
                relating to any Proceeding which may result in the payment of
                Indemnifiable Amounts or the advancement of Indemnifiable
                Expenses hereunder; PROVIDED, HOWEVER, that the failure to give
                any such notice shall not disqualify Indemnitee from the right,
                or otherwise affect in any manner any right of Indemnitee, to
                receive payments of Indemnifiable Amounts or advancements of
                Indemnifiable Expenses unless the Company's ability to defend in
                such Proceeding is materially and adversely prejudiced thereby.

                (b)     DEFENSE BY COMPANY. Subject to the provisions of the
                last sentence of this Section 11(b) and of Section 11(c) below,
                the Company shall have the right to defend Indemnitee in any
                Proceeding which may give rise to the payment of Indemnifiable
                Amounts hereunder; PROVIDED, HOWEVER that the Company shall
                notify Indemnitee of any such decision to defend within ten (10)
                calendar days of receipt of notice of any such Proceeding under
                Section 11(a) above. The Company shall not, without the prior
                written consent of Indemnitee, consent to the entry of any
                judgment against Indemnitee or enter into any settlement or
                compromise which (i) includes an admission of fault of
                Indemnitee or (ii) does not include, as an unconditional term
                thereof, the full release of Indemnitee from all liability in
                respect of such Proceeding, which release shall be in form and
                substance reasonably satisfactory to Indemnitee. This Section
                11(b) shall not apply to a Proceeding brought by Indemnitee
                under Section 10(a) above or pursuant to Section 19 below.

                (c)     INDEMNITEE'S RIGHT TO COUNSEL. Notwithstanding the
                provisions of Section 11(b) above, if in a Proceeding to which
                Indemnitee is a party by reason of Indemnitee's Corporate
                Status, (i) Indemnitee reasonably concludes that he or she may
                have separate defenses or counterclaims to assert with respect
                to any issue which may not be consistent with the position of
                other defendants in such Proceeding, (ii) a conflict of interest
                or potential conflict of interest exists between Indemnitee and
                the Company, or (iii) if the Company fails to assume the defense
                of such proceeding in a timely manner, Indemnitee shall be
                entitled to be represented by separate legal counsel of
                Indemnitee's choice at the expense of the Company. In addition,
                if the Company fails to comply with any of its obligations under
                this Agreement or in the event that the Company or any other
                person takes any action to declare this Agreement void or
                unenforceable, or institutes any action, suit or proceeding to
                deny or to recover from Indemnitee the benefits intended to be
                provided to Indemnitee hereunder, Indemnitee shall have the
                right to retain counsel of Indemnitee's choice, at the expense
                of the Company, to represent Indemnitee in connection with any
                such matter.

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        12.     REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Indemnitee as follows:

                (a)     AUTHORITY. The Company has all necessary power and
                authority to enter into, and be bound by the terms of, this
                Agreement, and the execution, delivery and performance of the
                undertakings contemplated by this Agreement have been duly
                authorized by the Company.

                (b)     ENFORCEABILITY. This Agreement, when executed and
                delivered by the Company in accordance with the provisions
                hereof, shall be a legal, valid and binding obligation of the
                Company, enforceable against the Company in accordance with its
                terms, except as such enforceability may be limited by equitable
                principles, applicable bankruptcy, insolvency, moratorium,
                reorganization or similar laws affecting the enforcement of
                creditors' rights generally.

        13.     INSURANCE. The Company shall, from time to time, make the good
faith determination whether or not it is practicable for the Company to obtain
and maintain a policy or policies of insurance with a reputable insurance
company providing the Indemnitee with coverage for losses from wrongful acts,
and to ensure the Company's performance of its indemnification obligations under
this Agreement. Among other considerations, the Company will weigh the costs of
obtaining such insurance coverage against the protection afforded by such
coverage. In all policies of director and officer liability insurance,
Indemnitee shall be named as an insured in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's officers and directors. Notwithstanding the foregoing,
the Company shall have no obligation to obtain or maintain such insurance if the
Company determine in good faith that such insurance is not reasonably available,
if the premium costs for such insurance are disproportionate to the amount of
coverage provided, or if the coverage provided by such insurance is limited by
exclusions so as to provide an insufficient benefit. The Company shall promptly
notify Indemnitee of any good faith determination not to provide such coverage.

        14.     CONTRACT RIGHTS NOT EXCLUSIVE. The rights to payment of
Indemnifiable Amounts and advancement of Indemnifiable Expenses provided by this
Agreement shall be in addition to, but not exclusive of, any other rights which
Indemnitee may have at any time under applicable law, the Company's bylaws or
Articles of Incorporation, or any other agreement, vote of stockholders or
directors (or a committee of directors), or otherwise, both as to action in
Indemnitee's official capacity and as to action in any other capacity as a
result of Indemnitee's serving as a director of the Company.

        15.     SUCCESSORS. This Agreement shall be (a) binding upon all
successors and assigns of the Company (including any transferee of all or a
substantial portion of the business, stock and/or assets of the Company and any
direct or indirect successor by merger or consolidation or otherwise by
operation of law) and (b) binding on and shall inure to the benefit of the
heirs, personal representatives, executors and administrators of Indemnitee.
This Agreement shall continue for the benefit of Indemnitee and such heirs,
personal representatives, executors and administrators after Indemnitee has
ceased to have Corporate Status.

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        16.     SUBROGATION. In the event of any payment of Indemnifiable
Amounts under this Agreement, the Company shall be subrogated to the extent of
such payment to all of the rights of contribution or recovery of Indemnitee
against other persons, and Indemnitee shall take, at the request of the Company,
all reasonable action necessary to secure such rights, including the execution
of such documents as are necessary to enable the Company to bring suit to
enforce such rights.

        17.     CHANGE IN LAW. To the extent that a change in Nevada law
(whether by statute or judicial decision) shall permit broader indemnification
or advancement of expenses than is provided under the terms of the bylaws of the
Company and this Agreement, Indemnitee shall be entitled to such broader
indemnification and advancements, and this Agreement shall be deemed to be
amended to such extent.

        18.     SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement, or any clause
thereof, shall be determined by a court of competent jurisdiction to be illegal,
invalid or unenforceable, in whole or in part, such provision or clause shall be
limited or modified in its application to the minimum extent necessary to make
such provision or clause valid, legal and enforceable, and the remaining
provisions and clauses of this Agreement shall remain fully enforceable and
binding on the parties.

        19.     INDEMNITEE AS PLAINTIFF. Except as provided in Section 10(d) of
this Agreement and in the next sentence, Indemnitee shall not be entitled to
payment of Indemnifiable Amounts or advancement of Indemnifiable Expenses with
respect to any Proceeding brought by Indemnitee against the Company, any Entity
which it controls, any director or officer thereof, or any third party, unless
the Company has consented to the initiation of such Proceeding. This Section
shall not apply to counterclaims or affirmative defenses asserted by Indemnitee
in an action brought against Indemnitee.

        20.     MODIFICATIONS AND WAIVER. Except as provided in Section 17 above
with respect to changes in Nevada law which broaden the right of Indemnitee to
be indemnified by the Company, no supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by each of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions of this Agreement (whether or
not similar), nor shall such waiver constitute a continuing waiver.

        21.     GENERAL NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given (a) when delivered by hand, (b) when transmitted by facsimile and
receipt is acknowledged, or (c) if mailed by certified or registered mail with
postage prepaid, on the third business day after the date on which it is so
mailed:

                (i)     If to Indemnitee, to:

                        At the home address as shown
                        in the Company's personnel records;

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                (ii)    If to the Company, to:

                        Front Porch Digital Inc.
                        1140 Pearl Street
                        Boulder, CO 80302
                        Attn: Chief Executive Officer

or to such other address as may have been furnished in the same manner by any
party to the others.

        22.     GOVERNING LAW. This Agreement shall be governed by and construed
and enforced under the laws of State of Nevada without giving effect to the
provisions thereof relating to conflicts of law.

        23.     CONSENT TO JURISDICTION. Each of the Company and Indemnitee
hereby irrevocably and unconditionally consents to submit to the sole and
exclusive the jurisdiction of the courts of the State of Colorado and the
Federal courts located in the State of Colorado (the "Colorado Courts"), and
agrees not to commence any litigation relating thereto except in such Colorado
Courts. Each of the Company and Indemnitee hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Proceeding
arising out of or relating to this Agreement in the Colorado Courts, and hereby
irrevocably and unconditionally waives and agrees not to plead or claim that any
such Proceeding brought in any such Colorado Court has been brought in an
inconvenient forum.

                            [SIGNATURE PAGE FOLLOWS]
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        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

                                            THE COMPANY

                                            FRONT PORCH DIGITAL INC.


                                            By: /s/ Michael Knaisch
                                                --------------------------------
                                                Name:  Michael Knaisch
                                                Title: Chief Executive Officer


                                            INDEMNITEE


                                            /s/ Christopher S. Gaffney
                                            ------------------------------------
                                            Christopher S. Gaffney






           [Signature page to the Director Indemnification Agreement]