INCENTRA SOLUTIONS, INC.
SECURITIES PURCHASE AGREEMENT
MARCH 31, 2006
TABLE OF CONTENTS
PAGE
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1. Agreement to Sell and Purchase...........................................1
2. Fees and Warrant.........................................................1
3. Closing, Delivery and Payment............................................2
3.1 Closing.......................................................2
3.2 Delivery......................................................2
4. Representations and Warranties of the Company............................3
4.1 Organization, Good Standing and Qualification.................3
4.2 Subsidiaries..................................................3
4.3 Capitalization; Voting Rights.................................4
4.4 Authorization; Binding Obligations............................4
4.5 Liabilities...................................................5
4.6 Agreements; Action............................................5
4.7 Obligations to Related Parties................................6
4.8 Changes.......................................................6
4.9 Title to Properties and Assets; Liens, Etc....................7
4.10 Intellectual Property.........................................8
4.11 Compliance with Other Instruments.............................8
4.12 Litigation....................................................9
4.13 Tax Returns and Payments......................................9
4.14 Employees.....................................................9
4.15 Registration Rights and Voting Rights........................10
4.16 Compliance with Laws; Permits................................10
4.17 Environmental and Safety Laws................................11
4.18 Valid Offering...............................................11
4.19 Full Disclosure..............................................11
4.20 Insurance....................................................11
4.21 SEC Reports..................................................11
4.22 Listing......................................................12
4.23 No Integrated Offering.......................................12
4.24 Stop Transfer................................................12
4.25 Dilution.....................................................12
4.26 Patriot Act..................................................12
4.27 ERISA........................................................12
5. Representations and Warranties of the Purchaser.........................13
5.1 No Shorting..................................................13
5.2 Requisite Power and Authority................................13
5.3 Investment Representations...................................14
5.4 Purchaser Bears Economic Risk................................14
5.5 Acquisition for Own Account..................................14
5.6 Purchaser Can Protect Its Interest...........................14
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5.7 Accredited Investor..........................................15
5.8 Legends......................................................15
6. Covenants of the Company................................................16
6.1 Stop-Orders..................................................16
6.2 Listing......................................................16
6.3 Market Regulations...........................................16
6.4 Reporting Requirements.......................................16
6.5 Use of Funds.................................................17
6.6 Access to Facilities.........................................17
6.7 Taxes........................................................17
6.8 Insurance....................................................17
6.9 Intellectual Property........................................18
6.10 Properties...................................................18
6.11 Confidentiality..............................................19
6.12 Required Approvals...........................................19
6.13 Reissuance of Securities.....................................20
6.14 Opinion......................................................20
6.15 Margin Stock.................................................20
6.16 [Intentionally Deleted]......................................20
6.17 Notice of Default...........................................19
7. Covenants of the Purchaser..............................................21
7.1 Confidentiality..............................................21
7.2 Non-Public Information.......................................21
7.3 LIMITATION ON ACQUISITION OF COMMON STOCK OF THE COMPANY.....19
8. Covenants of the Company and Purchaser Regarding Indemnification........21
8.1 Company Indemnification......................................21
8.2 Purchaser's Indemnification..................................21
8.3 Procedures...................................................22
9. Registration Rights.....................................................22
9.1 Registration Rights Granted..................................22
9.2 Offering Restrictions........................................22
10. Miscellaneous...........................................................22
10.1 Governing Law................................................22
10.2 Survival.....................................................23
10.3 Successors...................................................23
10.4 Entire Agreement.............................................23
10.5 Severability.................................................24
10.6 Amendment and Waiver.........................................24
10.7 Delays or Omissions..........................................24
10.8 Notices......................................................24
10.9 Titles and Subtitles.........................................25
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10.10 Facsimile Signatures; Counterparts...........................25
10.11 Broker's Fees................................................25
10.12 Construction.................................................25
10.13 Proxy........................................................25
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LIST OF EXHIBITS
Form of Convertible Note........................................... Exhibit A-1
Form of Non-Convertible Note Exhibit A-2
Form of Warrant.................................................... Exhibit B
Form of Opinion.................................................... Exhibit C
Form of Escrow Agreement........................................... Exhibit D
Form of Disbursement Letter........................................ Exhibit E
Form of Subsidiary Guarantee....................................... Exhibit F
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of March 31, 2006, by and between INCENTRA SOLUTIONS, INC., a Nevada
corporation (the "Company"), and LAURUS MASTER FUND, LTD., a Cayman Islands
company (the "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale to the Purchaser of (x) a
Secured Convertible Term Note in the aggregate principal amount of One Million
Five Hundred Thousand Dollars ($1,500,000) (the "Convertible Note"), which
Convertible Note is convertible into shares of the Company's common stock,
$0.001 par value per share (the "Common Stock"), at an initial fixed conversion
price of $1.40 per share of Common Stock ("Fixed Conversion Price") and (y) a
non-convertible Secured Term Note in the aggregate principal amount of One
Million Seven Hundred Fifty Thousand Dollars ($1,750,000) (the "Non-Convertible
Note" and, together with the Convertible Note, the "Notes" and each, a "Note");
WHEREAS, the Company wishes to issue a warrant to the Purchaser to
purchase up to 417,857 shares of the Company's Common Stock (subject to
adjustment as set forth therein) in connection with Purchaser's purchase of the
Notes;
WHEREAS, Purchaser desires to purchase the Notes and the Warrant (as
defined in Section 2) on the terms and conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Notes and Warrant to
Purchaser on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises, representations, warranties and covenants hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE. Pursuant to the terms and conditions
set forth in this Agreement, on the Closing Date (as defined in Section 3), the
Company agrees to sell to the Purchaser, and the Purchaser hereby agrees to
purchase from the Company, the Notes and the Warrant.. The offering of the Notes
and the Warrant purchased on the Closing Date shall be known as the "Offering."
A form of the Convertible Note is annexed hereto as Exhibit A-1 and a form of
the Non-Convertible Note is annexed hereto as Exhibit A-2. The Notes will mature
on the respective Maturity Date (as defined in the respective Note).
Collectively, the Notes and the Warrant (as defined in Section 2) and the Common
Stock issuable in payment of the Convertible Note, upon conversion of the
Convertible Note and upon exercise of the Warrant are referred to as the
"Securities."
2. FEES AND WARRANT. On the Closing Date:
(a) The Company will issue and deliver to the Purchaser a Warrant to
purchase up to 417,857 shares of Common Stock in connection with the
Offering (the "Warrant") pursuant to Section 1 hereof. The Warrant must be
delivered on the Closing Date. A form of Warrant is annexed hereto as
Exhibit B. The shares of Common Stock issuable upon exercise of the
Warrant are hereinafter as referred to as the "Warrant Shares".
(b) Subject to the terms of Section 2(d) below, the Company shall
pay to Laurus Capital Management, LLC, the manager of the Purchaser, a
closing payment in an amount equal to three and one-half percent (3.50%)
of the aggregate principal amount of the Notes. The foregoing fee is
referred to herein as the "Closing Payment."
(c) The Company shall reimburse the Purchaser for its reasonable
legal fees for services rendered to the Purchaser in preparation of this
Agreement and the Related Agreements (as hereinafter defined), and
reasonable out-of-pocket expenses incurred in connection with the
Purchaser's due diligence review of the Company and its Subsidiaries (as
defined in Section 6.8) and all related matters. Amounts required to be
paid under this Section 2(c) will be paid on the Closing Date and shall
not exceed $20,000.
(d) The Closing Payment, the legal fees and the due diligence
expenses (net of deposits previously paid by the Company) shall be paid at
closing out of funds held pursuant to a Funds Escrow Agreement of even
date herewith among the Company, Purchaser and an Escrow Agent in the form
attached hereto as Exhibit D (the "Funds Escrow Agreement") and a
disbursement letter in the form attached hereto as Exhibit E (the
"Disbursement Letter").
3. CLOSING, DELIVERY AND PAYMENT.
3.1 CLOSING. Subject to the terms and conditions set forth herein,
the closing of the transactions contemplated hereby (the "Closing"), shall take
place on such date, and at such time or place, as the Company and Purchaser
shall mutually agree (such date is hereinafter referred to as the "Closing
Date").
3.2 DELIVERY. Pursuant to the Funds Escrow Agreement in the form
attached hereto as Exhibit C, at the Closing on the Closing Date, the Company
will deliver to the Purchaser, among other things, a Convertible Note in the
form attached as Exhibit A-1 representing the aggregate principal amount of One
Million Five Hundred Thousand Dollars ($1,500,000), a Non-Convertible Note in
the form attached as Exhibit A-2 representing the aggregate principal amount of
One Million Seven Hundred Fifty Thousand Dollars ($1,750,000) and a Warrant in
the form attached as Exhibit B in the Purchaser's name representing 417,857
Warrant Shares and the Purchaser will deliver to the Company, among other
things, the amounts set forth in the Disbursement Letter by wire transfer of
immediately available funds to an account of the Company as the Company shall
direct in writing. The Company hereby acknowledges and agrees that Purchaser's
obligation to purchase the Note from the Company on the Closing Date shall be
contingent upon the satisfaction (or waiver by the Purchaser in its sole
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discretion) of the items and matters set forth in the closing checklist provided
by the Purchaser to the Company on or prior to the Closing Date.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Purchaser as follows:
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the
Company and each of its Subsidiaries is a corporation, partnership or limited
liability company, as the case may be, duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Each of the
Company and each of its Subsidiaries has the corporate power and authority to
own and operate its properties and assets. The Company has the corporate power
and authority to execute and deliver (i) this Agreement, (ii) the Notes and the
Warrant to be issued in connection with this Agreement, (iii) the Reaffirmation
and Ratification Agreement dated as of the date hereof between the Company,
certain subsidiaries of the Company and the Purchaser (as amended, modified or
supplemented from time to time, the "Reaffirmation Agreement"), (iv) the
Registration Rights Agreement relating to the Convertible Note and the Warrant
dated as of the date hereof between the Company and the Purchaser (as amended,
modified or supplemented from time to time, the "Registration Rights
Agreement"), (v) the Funds Escrow Agreement dated as of the date hereof among
the Company, the Purchaser and the escrow agent referred to therein (as amended,
modified or supplemented from time to time, the "Funds Escrow Agreement") and
(vi) all other agreements related to this Agreement and the Securities and
referred to herein (the preceding clauses (ii) through (vi), together with (a)
that certain Master Security Agreement, dated as of May 13, 2004 by and among
the Company, certain subsidiaries of the Company and the Purchaser (as amended,
modified or supplemented from time to time, the "2004 Master Security
Agreement"), (b) that certain Stock Pledge Agreement, dated as of February 6,
2006, by and among the Company, certain Subsidiaries of the Company and the
Purchaser (as amended, modified or supplemented from time to time, the "2006
Stock Pledge Agreement", (c) that certain Subsidiary Guarantee, dated as of
February 6, 2006, made by certain subsidiaries of the Company to the Purchaser
(as amended, modified or supplemented from time to time, the "2006 Subsidiary
Guarantee") and (d) that certain Security Agreement, dated as of February 6,
2006, by and among the Company, certain subsidiaries of the Company and the
Purchaser (as amended, modified or supplemented from time to time, the "2006
Security Agreement"), collectively, the "Related Agreements"), to issue and sell
the Notes and the shares of Common Stock issuable upon conversion of the
Convertible Note (the "Note Shares"), to issue and sell the Warrant and the
Warrant Shares, and to carry out the provisions of this Agreement and the
Related Agreements and to carry on its business as presently conducted. Each of
the Company and each of its Subsidiaries is duly qualified and is authorized to
do business and is in good standing as a foreign corporation, partnership or
limited liability company, as the case may be, in all jurisdictions in which the
nature of its activities and of its properties (both owned and leased) makes
such qualification necessary, except for those jurisdictions in which failure to
do so has not, or could not reasonably be expected to have, individually or in
the aggregate, a material adverse effect on the business, assets, liabilities,
condition (financial or otherwise), properties, operations or prospects of the
Company and it Subsidiaries, taken individually and as a whole (a "Material
Adverse Effect").
4.2 SUBSIDIARIES. Each direct and indirect Subsidiary of the
Company, the direct owner of such Subsidiary and its percentage ownership
thereof, is set forth on Schedule
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4.2. For the purpose of this Agreement, a "SUBSIDIARY" of any person or entity
means (i) a corporation or other entity whose shares of stock or other ownership
interests having ordinary voting power (other than stock or other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the directors of such corporation, or other persons or
entities performing similar functions for such person or entity, are owned,
directly or indirectly, by such person or entity or (ii) a corporation or other
entity in which such person or entity owns, directly or indirectly, more than
50% of the equity interests at such time.
4.3 CAPITALIZATION; VOTING RIGHTS.
(a) The authorized capital stock of the Company, as of the date
hereof consists of 205,000,000 shares, of which 200,000 are shares of
Common Stock, 13,326,810 shares of which are issued and outstanding, and
5,000,000 are shares of preferred stock, par value $0.001 per share,
2,466,971 of which shares of preferred stock are issued and outstanding.
The authorized capital stock of each Subsidiary of the Company is set
forth on Schedule 4.3.
(b) Except as disclosed on Schedule 4.3, other than: (i) the shares
reserved for issuance under the Company's 2000 Equity Incentive Plan or
the Company's Executive Bonus Plan; and (ii) shares which may be granted
pursuant to this Agreement, the Related Agreements and other agreements
between the Company and the Purchaser, there are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of
first refusal), proxy or stockholder agreements, or arrangements or
agreements of any kind for the purchase or acquisition from the Company of
any of its securities. Except as disclosed on Schedule 4.3, neither the
offer, issuance or sale of the Notes or the Warrant, or the issuance of
any of the Note Shares or Warrant Shares, nor the consummation of any
transaction contemplated hereby will result in a change in the price or
number of any securities of the Company outstanding, under anti-dilution
or other similar provisions contained in or affecting any such securities.
(c) All issued and outstanding shares of the Company's Common Stock:
(i) have been duly authorized and validly issued and are fully paid and
nonassessable; and (ii) were issued in compliance with all applicable
state and federal laws concerning the issuance of securities.
(d) The rights, preferences, privileges and restrictions of the
shares of the Common Stock are as stated in the Company's Certificate of
Incorporation (the "Charter"). The Note Shares and Warrant Shares have
been duly and validly reserved for issuance. When issued in compliance
with the provisions of this Agreement and the Company's Charter, the
Securities will be validly issued, fully paid and nonassessable, and will
be free of any liens or encumbrances; provided, however, that the
Securities may be subject to restrictions on transfer under state and/or
federal securities laws as set forth herein or as otherwise required by
such laws at the time a transfer is proposed.
4.4 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the
part of the Company (including its officers and directors) necessary for the
authorization of this Agreement and the Related Agreements, the performance of
all obligations of the Company
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hereunder and under the other Related Agreements at the Closing and, the
authorization, sale, issuance and delivery of the Notes and Warrant has been
taken or will be taken prior to the Closing. This Agreement and the other
Related Agreements, when executed and delivered, will be valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except:
(a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; and
(b) general principles of equity that restrict the availability of
equitable or legal remedies.
The sale of the Notes and the subsequent conversion of the Convertible Note into
Note Shares are not and will not be subject to any preemptive rights or rights
of first refusal that have not been properly waived or complied with. The
issuance of the Warrant and the subsequent exercise of the Warrant for Warrant
Shares are not and will not be subject to any preemptive rights or rights of
first refusal that have not been properly waived or complied with.
4.5 LIABILITIES. To the Company's knowledge, neither the Company nor
any of its Subsidiaries has any material contingent liabilities, except current
liabilities incurred in the ordinary course of business and liabilities
disclosed in any of the Company's filings under the Securities Exchange Act of
1934 ("Exchange Act") made prior to the date of this Agreement (collectively,
the "Exchange Act Filings"), copies of which have been provided to the
Purchaser.
4.6 AGREEMENTS; ACTION. Except as set forth on Schedule 4.6:
(a) there are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the
Company or any of its Subsidiaries is a party or by which it is bound
which may involve: (i) obligations (contingent or otherwise) of, or
payments to, the Company in excess of $100,000 (other than obligations of,
or payments to, the Company arising from purchase, sale or license
agreements entered into in the ordinary course of business); or (ii) the
transfer or license of any patent, copyright, trade secret or other
proprietary right to or from the Company (other than licenses arising from
the purchase of "off the shelf" or other standard products); or (iii)
provisions restricting the development, manufacture or distribution of the
Company's products or services; or (iv) indemnification by the Company
with respect to infringements of proprietary rights.
(b) Since December 31, 2004, except equipment leasing through
CommVest, LLC, as previously consented to by Purchaser, neither the
Company nor any of its Subsidiaries has: (i) declared or paid any
dividends, or authorized or made any distribution upon or with respect to
any class or series of its capital stock; (ii) incurred any indebtedness
for money borrowed or any other liabilities (other than ordinary course
obligations) individually in excess of $50,000 or, in the case of
indebtedness and/or liabilities individually less than $50,000, in excess
of $100,000 in the aggregate; (iii) made any loans or advances to any
person not in excess, individually or in the aggregate,
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of $100,000, other than ordinary course advances for travel expenses; or
(iv) sold, exchanged or otherwise disposed of any of its assets or rights
valued in excess of $50,000, other than in the ordinary course of
business.
(c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments,
contracts and proposed transactions involving the same person or entity
(including persons or entities the Company has reason to believe are
affiliated therewith) shall be aggregated for the purpose of meeting the
individual minimum dollar amounts of such subsections.
4.7 OBLIGATIONS TO RELATED PARTIES. Except as set forth on Schedule
4.7, there are no obligations of the Company or any of its Subsidiaries to
officers, directors, stockholders or employees of the Company or any of its
Subsidiaries other than:
(a) for payment of salary for services rendered and for bonus
payments;
(b) reimbursement for reasonable expenses incurred on behalf of the
Company and its Subsidiaries;
(c) for other standard employee benefits made generally available to
all employees (including stock option agreements outstanding under any
stock option plan approved by the Board of Directors of the Company); and
(d) obligations listed in the Company's financial statements or
disclosed in any of its Exchange Act Filings.
Except as described above or set forth on Schedule 4.7 or in the Company's
Exchange Act Filings, none of the officers, directors or, to the best of the
Company's knowledge, key employees or stockholders of the Company or any members
of their immediate families, are indebted to the Company, individually or in the
aggregate, in excess of $50,000 or have any direct or indirect ownership
interest in any firm or corporation with which the Company is affiliated or with
which the Company has a business relationship, or any firm or corporation which
competes with the Company, other than passive investments in publicly traded
companies (representing less than one percent (1%) of such company) which may
compete with the Company. Except as described above, no officer, director or
stockholder, or any member of their immediate families, is, directly or
indirectly, interested in any material contract with the Company and no
agreements, understandings or proposed transactions are contemplated between the
Company and any such person. Except as set forth on Schedule 4.7, the Company is
not a guarantor or indemnitor of any indebtedness of any other person, firm or
corporation.
4.8 CHANGES. Since December 31, 2004, except as disclosed in any
Exchange Act Filing or in any Schedule to this Agreement or to any of the
Related Agreements, there has not been:
(a) any change in the business, assets, liabilities, condition
(financial or otherwise), properties, operations or prospects of the
Company or any of its Subsidiaries, which individually or in the aggregate
has had, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
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(b) any resignation or termination of any officer, key employee or
group of employees of the Company or any of its Subsidiaries;
(c) any material change, except in the ordinary course of business,
in the contingent obligations of the Company or any of its Subsidiaries by
way of guaranty, endorsement, indemnity, warranty or otherwise;
(d) any damage, destruction or loss, whether or not covered by
insurance, has had, or could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect;
(e) any waiver by the Company or any of its Subsidiaries of a
valuable right or of a material debt owed to it;
(f) any direct or indirect loans made by the Company or any of its
Subsidiaries to any stockholder, employee, officer or director of the
Company or any of its Subsidiaries, other than advances made in the
ordinary course of business;
(g) any material change in any compensation arrangement or agreement
with any employee, officer, director or stockholder of the Company or any
of its Subsidiaries;
(h) any declaration or payment of any dividend or other distribution
of the assets of the Company or any of its Subsidiaries;
(i) any labor organization activity related to the Company or any of
its Subsidiaries;
(j) any debt, obligation or liability incurred, assumed or
guaranteed by the Company or any of its Subsidiaries, except those for
immaterial amounts and for current liabilities incurred in the ordinary
course of business;
(k) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets owned by the Company
or any of its Subsidiaries;
(l) any change in any material agreement to which the Company or any
of its Subsidiaries is a party or by which either the Company or any of
its Subsidiaries is bound which either individually or in the aggregate
has had, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(m) any other event or condition of any character that, either
individually or in the aggregate, has had, or could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect; or
(n) any arrangement or commitment by the Company or any of its
Subsidiaries to do any of the acts described in subsection (a) through (m)
above.
4.9 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Except as set forth
on Schedule 4.9, each of the Company and each of its Subsidiaries has good and
marketable title to its
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properties and assets, and good title to its leasehold estates, in each case
subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than:
(a) those resulting from taxes which have not yet become delinquent;
(b) minor liens and encumbrances which do not materially detract
from the value of the property subject thereto or materially impair the
operations of the Company or any of its Subsidiaries; and
(c) those that have otherwise arisen in the ordinary course of
business.
All facilities, machinery, equipment, fixtures, vehicles and other properties
owned, leased or used by the Company and its Subsidiaries are in good operating
condition and repair (ordinary wear and tear excepted) and are reasonably fit
and usable for the purposes for which they are being used. Except as set forth
on Schedule 4.9, the Company and its Subsidiaries are in compliance with all
material terms of each lease to which it is a party or is otherwise bound.
4.10 INTELLECTUAL PROPERTY. (a) Each of the Company and each of its
Subsidiaries owns or possesses sufficient legal rights to all patents,
trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes necessary
for its business as now conducted and to the Company's knowledge, as
presently proposed to be conducted (the "Intellectual Property"), without
any known infringement of the rights of others. There are no outstanding
options, licenses or agreements of any kind relating to the foregoing
proprietary rights, nor is the Company or any of its Subsidiaries bound by
or a party to any options, licenses or agreements of any kind with respect
to the patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses, information and other proprietary rights and processes
of any other person or entity other than such licenses or agreements
arising from the purchase of "off the shelf" or standard products.
(b) Neither the Company nor any of its Subsidiaries has received any
communications alleging that the Company or any of its Subsidiaries has
violated any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other
person or entity, nor is the Company or any of its Subsidiaries aware of
any basis therefor.
(c) The Company does not believe it is or will be necessary to
utilize any inventions, trade secrets or proprietary information of any of
its employees made prior to their employment by the Company or any of its
Subsidiaries, except for inventions, trade secrets or proprietary
information that have been rightfully assigned to the Company or any of
its Subsidiaries.
4.11 COMPLIANCE WITH OTHER INSTRUMENTS. Except as disclosed on
Schedule 4.11, neither the Company nor any of its Subsidiaries is in violation
or default of (x) any term of its Charter or Bylaws, or (y) of any provision of
any indebtedness, mortgage, indenture, contract, agreement or instrument to
which it is party or by which it is bound or of any judgment, decree, order or
writ, which violation or default, in the case of this clause (y), has had, or
could reasonably be expected to have, either individually or in the aggregate, a
Material Adverse
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Effect. The execution, delivery and performance of and compliance with this
Agreement and the Related Agreements to which it is a party, and the issuance
and sale of the Notes by the Company and the other Securities by the Company,
each pursuant hereto and thereto, will not, with or without the passage of time
or giving of notice, result in any such material violation, or be in conflict
with or constitute a default under any such term or provision, or result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company or any of its Subsidiaries or the
suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to the Company, its business or
operations or any of its assets or properties.
4.12 LITIGATION. Except as set forth on Schedule 4.12 hereto, there
is no action, suit, proceeding or investigation pending or, to the Company's
knowledge, currently threatened against the Company or any of its Subsidiaries
that prevents the Company or any of its Subsidiaries from entering into this
Agreement or the other Related Agreements, or from consummating the transactions
contemplated hereby or thereby, or which has had, or could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect or any change in the current equity ownership of the Company or any of
its Subsidiaries, nor is the Company aware that there is any basis to assert any
of the foregoing. Neither the Company nor any of its Subsidiaries is a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company or any of its Subsidiaries currently
pending or which the Company or any of its Subsidiaries intends to initiate.
4.13 TAX RETURNS AND PAYMENTS. Except as set forth on Schedule 4.13,
each of the Company and each of its Subsidiaries has timely filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and all other
taxes due and payable by the Company or any of its Subsidiaries on or before the
Closing, have been paid or will be paid prior to the time they become
delinquent. Except as set forth on Schedule 4.13, neither the Company nor any of
its Subsidiaries has been advised:
(a) that any of its returns, federal, state or other, have been or
are being audited as of the date hereof; or
(b) of any deficiency in assessment or proposed judgment to its
federal, state or other taxes.
The Company has no knowledge of any liability of any tax to be imposed upon its
properties or assets as of the date of this Agreement that is not adequately
provided for.
4.14 EMPLOYEES. Except as set forth on Schedule 4.14, neither the
Company nor any of its Subsidiaries has any collective bargaining agreements
with any of its employees. There is no labor union organizing activity pending
or, to the Company's knowledge, threatened with respect to the Company or any of
its Subsidiaries. Except as disclosed in the Exchange Act Filings or on Schedule
4.14, neither the Company nor any of its Subsidiaries is a party to or bound by
any currently effective employment contract, deferred compensation arrangement,
bonus plan, incentive plan, profit sharing plan, retirement agreement or other
employee
9
compensation plan or agreement. To the Company's knowledge, no employee of the
Company or any of its Subsidiaries, nor any consultant with whom the Company or
any of its Subsidiaries has contracted, is in violation of any term of any
employment contract, proprietary information agreement or any other agreement
relating to the right of any such individual to be employed by, or to contract
with, the Company or any of its Subsidiaries because of the nature of the
business to be conducted by the Company or any of its Subsidiaries; and to the
Company's knowledge the continued employment by the Company or any of its
Subsidiaries of its present employees, and the performance of the Company's and
its Subsidiaries' contracts with its independent contractors, will not result in
any such violation. Neither the Company nor any of its Subsidiaries is aware
that any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with their duties to the Company or any of its Subsidiaries. Neither
the Company nor any of its Subsidiaries has received any notice alleging that
any such violation has occurred. Except for employees who have a current
effective employment agreement with the Company or any of its Subsidiaries, no
employee of the Company or any of its Subsidiaries has been granted the right to
continued employment by the Company or any of its Subsidiaries or to any
material compensation following termination of employment with the Company or
any of its Subsidiaries. Except as set forth on Schedule 4.14, the Company is
not aware that any officer, key employee or group of employees intends to
terminate his, her or their employment with the Company or any of its
Subsidiaries, nor does the Company or any of its Subsidiaries have a present
intention to terminate the employment of any officer, key employee or group of
employees.
4.15 REGISTRATION RIGHTS AND VOTING RIGHTS. Except as set forth on
Schedule 4.15 and except as disclosed in Exchange Act Filings, neither the
Company nor any of its Subsidiaries is presently under any obligation, and
neither the Company nor any of its Subsidiaries has granted any rights, to
register any of the Company's or its Subsidiaries' presently outstanding
securities or any of its securities that may hereafter be issued. Except as set
forth on Schedule 4.15 and except as disclosed in Exchange Act Filings, to the
Company's knowledge, no stockholder of the Company or any of its Subsidiaries
has entered into any agreement with respect to the voting of equity securities
of the Company or any of its Subsidiaries.
4.16 COMPLIANCE WITH LAWS; PERMITS. Neither the Company nor any of
its Subsidiaries is in violation of any applicable statute, rule, regulation,
order or restriction of any domestic or foreign government or any
instrumentality or agency thereof in respect of the conduct of its business or
the ownership of its properties which has had, or could reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect. No
governmental orders, permissions, consents, approvals or authorizations are
required to be obtained and no registrations or declarations are required to be
filed in connection with the execution and delivery of this Agreement or any
other Related Agreement and the issuance of any of the Securities, except such
as has been duly and validly obtained or filed, or with respect to any filings
that must be made after the Closing, as will be filed in a timely manner. Each
of the Company and its Subsidiaries has all material franchises, permits,
licenses and any similar authority necessary for the conduct of its business as
now being conducted by it, the lack of which could, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
10
4.17 ENVIRONMENTAL AND SAFETY LAWS. Neither the Company nor any of
its Subsidiaries is in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and to its
knowledge, no material expenditures are or will be required in order to comply
with any such existing statute, law or regulation. Except as set forth on
Schedule 4.17, no Hazardous Materials (as defined below) are used or have been
used, stored, or disposed of by the Company or any of its Subsidiaries or, to
the Company's knowledge, by any other person or entity on any property owned,
leased or used by the Company or any of its Subsidiaries. For the purposes of
the preceding sentence, "Hazardous Materials" shall mean:
(a) materials which are listed or otherwise defined as "hazardous"
or "toxic" under any applicable local, state, federal and/or foreign laws
and regulations that govern the existence and/or remedy of contamination
on property, the protection of the environment from contamination, the
control of hazardous wastes, or other activities involving hazardous
substances, including building materials; or
(b) any petroleum products or nuclear materials.
4.18 VALID OFFERING. Assuming the accuracy of the representations
and warranties of the Purchaser contained in this Agreement, the offer, sale and
issuance of the Securities will be exempt from the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and will have
been registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws.
4.19 FULL DISCLOSURE. Each of the Company and each of its
Subsidiaries has provided the Purchaser with all information requested by the
Purchaser in connection with its decision to purchase the Notes and Warrant.
Neither this Agreement, the Related Agreements, the exhibits and schedules
hereto and thereto nor any other document delivered by the Company or any of its
Subsidiaries to Purchaser or its attorneys or agents in connection herewith or
therewith or with the transactions contemplated hereby or thereby, contain any
untrue statement of a material fact nor omit to state a material fact necessary
in order to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading. Any financial projections
and other estimates provided to the Purchaser by the Company or any of its
Subsidiaries were based on the Company's and its Subsidiaries' experience in the
industry and on assumptions of fact and opinion as to future events which the
Company or any of its Subsidiaries, at the date of the issuance of such
projections or estimates, believed to be reasonable.
4.20 INSURANCE. Each of the Company and each of its Subsidiaries has
general commercial, product liability, fire and casualty insurance policies with
coverages which the Company believes are customary for companies similarly
situated to the Company and its Subsidiaries in the same or similar business.
4.21 SEC REPORTS. Except as set forth on Schedule 4.21, the Company
has filed all proxy statements, reports and other documents required to be filed
by it under the Securities Xxxxxxxx Xxx 0000, as amended (the "Exchange Act").
The Company has furnished
11
the Purchaser with a copy of its Annual Report on Form 10-KSB for its fiscal
years ended December 31, 2003 and December 31, 2004 and its Quarterly Reports on
Form 10-Q for the fiscal quarters ended March 31, 2005, June 30, 2005 and
September 30, 2005 (the "SEC Reports"). To the knowledge of the Company, the SEC
Reports were, at the time of its filing, in substantial compliance with the
requirements of its form and neither the SEC Reports, nor the financial
statements (and the notes thereto) included in the SEC Reports, as of its filing
date, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.22 LISTING. The Company's Common Stock is listed for trading on
the National Association of Securities Dealers, Inc. Over-the-Counter Bulletin
Board ("OTC BB") and satisfies all requirements for the continuation of such
listing. The Company has not received any notice that its Common Stock will be
delisted from OTC BB or that its Common Stock does not meet all requirements for
listing.
4.23 NO INTEGRATED OFFERING. Neither the Company, nor any of its
Subsidiaries or affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales of any security or solicited any
offers to buy any security under circumstances that would cause the offering of
the Securities pursuant to this Agreement or any of the Related Agreements to be
integrated with prior offerings by the Company for purposes of the Securities
Act which would prevent the Company from selling the Securities pursuant to Rule
506 under the Securities Act, or any applicable exchange-related stockholder
approval provisions, nor will the Company or any of its affiliates or
Subsidiaries take any action or steps that would cause the offering of the
Securities to be integrated with other offerings.
4.24 STOP TRANSFER. The Securities are restricted securities as of
the date of this Agreement. Neither the Company nor any of its Subsidiaries will
issue any stop transfer order or other order impeding the sale and delivery of
any of the Securities at such time as the Securities are registered for public
sale or an exemption from registration is available, except as required by state
and federal securities laws.
4.25 DILUTION. The Company specifically acknowledges that its
obligation to issue the shares of Common Stock upon conversion of the
Convertible Note and exercise of the Warrant is binding upon the Company and
enforceable regardless of the dilution such issuance may have on the ownership
interests of other shareholders of the Company.
4.26 PATRIOT ACT. The Company certifies that, to the best of
Company's knowledge, neither the Company nor any of its Subsidiaries has been
designated, and is not owned or controlled, by a "suspected terrorist" as
defined in Executive Order 13224. The Company hereby acknowledges that the
Purchaser seeks to comply with all applicable laws concerning money laundering
and related activities. In furtherance of those efforts, the Company hereby
represents, warrants and agrees that: (i) none of the cash or property that the
Company or any of its Subsidiaries will pay or will contribute to the Purchaser
has been or shall be derived from, or related to, any activity that is deemed
criminal under United States law; and (ii) no contribution or payment by the
Company or any of its Subsidiaries to the Purchaser, to the
12
extent that they are within the Company's and/or its Subsidiaries' control shall
cause the Purchaser to be in violation of the United States Bank Secrecy Act,
the United States International Money Laundering Control Act of 1986 or the
United States International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001. The Company shall promptly notify the Purchaser if any of
these representations ceases to be true and accurate regarding the Company or
any of its Subsidiaries. The Company agrees to provide the Purchaser any
additional information regarding the Company or any of its Subsidiaries that the
Purchaser deems necessary or convenient to ensure compliance with all applicable
laws concerning money laundering and similar activities. The Company understands
and agrees that if at any time it is discovered that any of the foregoing
representations are incorrect, or if otherwise required by applicable law or
regulation related to money laundering or similar activities, the Purchaser may
undertake appropriate actions to ensure compliance with applicable law or
regulation, including but not limited to segregation and/or redemption of the
Purchaser's investment in the Company. The Company further understands that the
Purchaser may release confidential information about the Company and its
Subsidiaries and, if applicable, any underlying beneficial owners, to proper
authorities if the Purchaser, in its sole discretion, determines that it is in
the best interests of the Purchaser in light of relevant rules and regulations
under the laws set forth in subsection (ii) above.
4.27 ERISA. Based upon the Employee Retirement Income Security Act of 1974
("ERISA"), and the regulations and published interpretations thereunder: (i)
neither the Company nor any of its Subsidiaries has engaged in any Prohibited
Transactions (as defined in Section 406 of ERISA and Section 4975 of the
Internal Revenue Code of 1986, as amended (the "CODE")); (ii) each of the
Company and each of its Subsidiaries has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of its plans; (iii) neither
the Company nor any of its Subsidiaries has any knowledge of any event or
occurrence which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Title IV of ERISA to terminate any employee benefit
plan(s); (iv) neither the Company nor any of its Subsidiaries has any fiduciary
responsibility for investments with respect to any plan existing for the benefit
of persons other than the Company's or such Subsidiary's employees; and (v)
neither the Company nor any of its Subsidiaries has withdrawn, completely or
partially, from any multi-employer pension plan so as to incur liability under
the Multiemployer Pension Plan Amendments Act of 1980.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby
represents and warrants to the Company as follows (such representations and
warranties do not lessen or obviate the representations and warranties of the
Company set forth in this Agreement):
5.1 NO SHORTING. Neither the Purchaser nor any of its affiliates and
investment partners has, will nor will cause any person or entity, directly, to
engage in "short sales" of the Company's Common Stock, , as long as the Notes
shall be outstanding.
5.2 REQUISITE POWER AND AUTHORITY. The Purchaser has all necessary
power and authority under all applicable provisions of law to execute and
deliver this Agreement and the Related Agreements and to carry out their
provisions. All corporate action on Purchaser's part required for the lawful
execution and delivery of this Agreement and the Related Agreements have been or
will be effectively taken prior to the Closing. Upon their execution and
13
delivery, this Agreement and the Related Agreements will be valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except:
(a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; and
(b) as limited by general principles of equity that restrict the
availability of equitable and legal remedies.
5.3 INVESTMENT REPRESENTATIONS. Purchaser understands that the
Securities are being offered and sold pursuant to an exemption from registration
contained in the Securities Act based in part upon Purchaser's representations
contained in the Agreement, including, without limitation, that the Purchaser is
an "accredited investor" within the meaning of Regulation D under the Securities
Act. The Purchaser confirms that it has received or has had full access to all
the information it considers necessary or appropriate to make an informed
investment decision with respect to the Notes and the Warrant to be purchased by
it under this Agreement and the Note Shares and the Warrant Shares acquired by
it upon the conversion of the Convertible Note and the exercise of the Warrant,
respectively. The Purchaser further confirms that it has had an opportunity to
ask questions and receive answers from the Company regarding the Company's and
its Subsidiaries' business, management and financial affairs and the terms and
conditions of the Offering, the Notes, the Warrant and the Securities and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to the Purchaser or to which the
Purchaser had access.
5.4 PURCHASER BEARS ECONOMIC RISK. The Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. The Purchaser must bear the economic risk
of this investment until the Securities are sold pursuant to: (i) an effective
registration statement under the Securities Act; or (ii) an exemption from
registration is available with respect to such sale.
5.5 ACQUISITION FOR OWN ACCOUNT. The Purchaser is acquiring the
Notes and Warrant and the Note Shares and the Warrant Shares for the Purchaser's
own account for investment only, and not as a nominee or agent and not with a
view towards or for resale in connection with their distribution.
5.6 PURCHASER CAN PROTECT ITS INTEREST. By reason of its, or of its
management's, business and financial experience, the Purchaser has the capacity
to evaluate the merits and risks of its investment in the Notes, the Warrant and
the Securities and to protect its own interests in connection with the
transactions contemplated in this Agreement and the other Related Agreements.
Further, Purchaser is aware of no publication of any advertisement in connection
with the transactions contemplated in the Agreement or the Related Agreements.
14
5.7 ACCREDITED INVESTOR. The Purchaser is an accredited investor
within the meaning of Regulation D under the Securities Act.
5.8 LEGENDS.
(a) The Convertible Note shall bear substantially the following
legend:
"THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE, STATE SECURITIES LAWS. THIS NOTE AND THE
COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE OR SUCH SHARES
UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO INCENTRA SOLUTIONS, INC. THAT
SUCH REGISTRATION IS NOT REQUIRED."
(b) The Non-Convertible Note shall bear substantially the following
legend:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND
ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO INCENTRA SOLUTIONS, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.
(c) The Note Shares and the Warrant Shares, if not issued by DWAC
system (as hereinafter defined), shall bear a legend which shall be in
substantially the following form until such shares are covered by an
effective registration statement filed with the SEC:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND APPLICABLE
STATE LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
INCENTRA SOLUTIONS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED."
15
(d) The Warrant shall bear substantially the following legend:
"THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THIS WARRANT
AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT OR THE
UNDERLYING SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO INCENTRA SOLUTIONS, INC. THAT SUCH REGISTRATION IS
NOT REQUIRED."
6. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
Purchaser that, so long as the Notes remains outstanding:
6.1 STOP-ORDERS. The Company will advise the Purchaser, promptly
after it receives notice of issuance by the Securities and Exchange Commission
(the "SEC"), any state securities commission or any other regulatory authority
of any stop order or of any order preventing or suspending any offering of any
securities of the Company, or of the suspension of the qualification of the
Common Stock of the Company for offering or sale in any jurisdiction, or the
initiation of any proceeding for any such purpose.
6.2 LISTING. The Company shall promptly secure the listing of the
shares of Common Stock issuable upon conversion of the Convertible Note and upon
the exercise of the Warrant on the OTC BB (the "Principal Market"), and shall
maintain such listing so long as any other shares of Common Stock shall be so
listed. The Company will maintain the listing of its Common Stock on the
Principal Market or on Nasdaq or any securities exchange acceptable to the
Purchaser, and, to the extent applicable to the Company, will comply in all
material respects with the Company's reporting, filing and other obligations
under the bylaws or rules of the National Association of Securities Dealers
("NASD") and such exchanges, as applicable.
6.3 MARKET REGULATIONS. The Company shall notify the SEC, NASD and
applicable state authorities, in accordance with their requirements, to the
extent applicable to the Company, of the transactions contemplated by this
Agreement, and shall take all other necessary action and proceedings as may be
required and permitted by applicable law, rule and regulation, for the legal and
valid issuance of the Securities to the Purchaser and promptly provide copies
thereof to the Purchaser.
6.4 REPORTING REQUIREMENTS. The Company will timely file with the
SEC all reports required to be filed pursuant to the Exchange Act and refrain
from terminating its status as an issuer required by the Exchange Act to file
reports thereunder even if the Exchange Act or the rules or regulations
thereunder would permit such termination.
16
6.5 USE OF FUNDS. The Company agrees that it will use (i) $3,250,000
of the proceeds of the sale of the Notes to consummate the Contemplated
Acquisition previously disclosed to the Purchaser. and (ii) the remainder of the
proceeds of the sale of the Notes and the proceeds of the sale of the Warrant
for general working capital and general business purposes of the Company and its
Subsidiaries.
6.6 ACCESS TO FACILITIES. Each of the Company and each of its
Subsidiaries will permit any representatives designated by the Purchaser (or any
successor of the Purchaser), upon reasonable notice and during normal business
hours, at such person's expense and accompanied by a representative of the
Company, to:
(a) visit and inspect any of the properties of the Company or any of
its Subsidiaries;
(b) examine the corporate and financial records of the Company or
any of its Subsidiaries (unless such examination is not permitted by
federal, state or local law or by contract) and make copies thereof or
extracts therefrom; and
(c) discuss the affairs, finances and accounts of the Company or any
of its Subsidiaries with the directors, officers and independent
accountants of the Company or any of its Subsidiaries.
Notwithstanding the foregoing, neither the Company nor any of its Subsidiaries
will provide any material, non-public information to the Purchaser unless the
Purchaser signs a confidentiality agreement and otherwise complies with
Regulation FD, under the federal securities laws.
6.7 TAXES. Each of the Company and each of its Subsidiaries will
promptly pay and discharge, or cause to be paid and discharged, when due and
payable, all lawful taxes, assessments and governmental charges or levies
imposed upon the income, profits, property or business of the Company and its
Subsidiaries; provided, however, that any such tax, assessment, charge or levy
need not be paid if the validity thereof shall currently be contested in good
faith by appropriate proceedings and if the Company and/or such Subsidiary shall
have set aside on its books adequate reserves with respect thereto, and
provided, further, that the Company and its Subsidiaries will pay all such
taxes, assessments, charges or levies forthwith upon the commencement of
proceedings to foreclose any lien which may have attached as security therefor.
6.8 INSURANCE. Each of the Company and its Subsidiaries will keep
its assets which are of an insurable character insured by financially sound and
reputable insurers against loss or damage by fire, explosion and other risks
customarily insured against by companies in similar business similarly situated
as the Company and its Subsidiaries; and the Company and its Subsidiaries will
maintain, with financially sound and reputable insurers, insurance against other
hazards and risks and liability to persons and property to the extent and in the
manner which the Company reasonably believes is customary for companies in
similar business similarly situated as the Company and its Subsidiaries and to
the extent available on commercially reasonable terms. The Company and each of
its Subsidiaries will jointly and severally bear the full risk of loss from any
loss of any nature whatsoever with respect to the assets pledged to the
Purchaser as
17
security for its obligations hereunder and under the Related Agreements. At the
Company's and each of its Subsidiaries' joint and several cost and expense in
amounts and with carriers reasonably acceptable to Purchaser, the Company and
each of its Subsidiaries shall (i) keep all its insurable properties and
properties in which it has an interest insured against the hazards of fire,
flood, sprinkler leakage, those hazards covered by extended coverage insurance
and such other hazards, and for such amounts, as is customary in the case of
companies engaged in businesses similar to the Company's or the respective
Subsidiary's including business interruption insurance; (ii) maintain public and
product liability insurance against claims for personal injury, death or
property damage suffered by others, in each case consistent with past practices;
(iii) maintain all such worker's compensation or similar insurance as may be
required under the laws of any state or jurisdiction in which the Company or the
respective Subsidiary is engaged in business; and (iv) furnish Purchase with (x)
copies of all policies and evidence of the maintenance of such policies at least
thirty (30) days before any expiration date, (y) excepting the Company's
workers' compensation policy, endorsements to such polices naming Purchaser as
"co insured" or "additional insured" and appropriate loss payable endorsements
in form and substance satisfactory to Purchaser, naming Purchaser as loss payee,
an (z) evidence that as to Purchaser the insurance coverage shall not be
impaired or invalidated by any act or neglect of the Company or any Subsidiary
and the insurer will provide Purchaser with at least thirty (30) days notice
prior to cancellation. The Company and each Subsidiary shall instruct the
insurance carriers that in the event of any loss thereunder, the carriers shall
make payment for such loss to the Company and/or the Subsidiary and Purchaser
jointly. In the event that as of the date of receipt of each loss recovery upon
any such insurance, the Purchaser has not declared an Event of Default with
respect to this Agreement or any of the Related Agreements, then the Company
and/or such Subsidiary shall be permitted to direct the application of such loss
recovery proceeds toward investment in property, plant and equipment that would
comprise "Collateral" secured by Purchaser's security interest pursuant to a
security agreement, with any surplus funds to be applied by the Company for
working capital purposes. In the event that Purchaser has properly declared an
Event of Default with respect to this Agreement or any of the Related
Agreements, then all loss recoveries received by Purchaser upon any such
insurance thereafter may be applied to the obligations of the Company hereunder
and under the Related Agreements, in such order as the Purchaser may determine.
Any surplus (following satisfaction of all Company obligations to Purchaser)
shall be paid by Purchaser to the Company or applied as may be otherwise
required by law. Any deficiency thereon shall be paid by the Company or the
Subsidiary, as applicable, to Purchaser, on demand.
6.9 INTELLECTUAL PROPERTY. Each of the Company and each of its
material Subsidiaries shall maintain in full force and effect its existence,
rights and franchises and all licenses and other rights to use Intellectual
Property owned or possessed by it and reasonably deemed to be necessary to the
conduct of its business.
6.10 PROPERTIES. Each of the Company and each of its Subsidiaries
will keep its properties in good repair, working order and condition, reasonable
wear and tear excepted, and from time to time make all needful and proper
repairs, renewals, replacements, additions and improvements thereto; and each of
the Company and each of its Subsidiaries will at all times comply with each
provision of all leases to which it is a party or under which it occupies
property if the breach of such provision could, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
18
6.11 CONFIDENTIALITY. The Company agrees that it will not disclose,
and will not include in any public announcement, the name of the Purchaser,
unless expressly agreed to by the Purchaser or unless and until such disclosure
is required by law or applicable regulation, and then only to the extent of such
requirement. Notwithstanding the foregoing, the Company may disclose Purchaser's
identity and the terms of this Agreement to its current and prospective debt and
equity financing sources.
6.12 REQUIRED APPROVALS. (I) For so long as twenty-five percent
(25%) of the principal amount of the Notes is outstanding, the Company, without
the prior written consent of the Purchaser (which consent shall not be
unreasonably withheld), shall not:
(a) directly or indirectly declare or pay any dividends, other than
dividends paid to the Company or any of its wholly owned Subsidiaries;
(b) liquidate, dissolve or effect a material reorganization (it
being understood that in no event shall the Company dissolve, liquidate or
merge with any other person or entity (unless the Company is the surviving
entity);
(c) become subject to (including, without limitation, by way of
amendment to or modification of) any agreement or instrument which by its
terms would (under any circumstances) restrict the Company's or any of its
Subsidiaries right to perform the provisions of this Agreement, any other
Related Agreement or any of the agreements contemplated hereby or thereby;
and/or
(d) (i) create, incur, assume or suffer to exist any secured
indebtedness (exclusive of trade debt and debt incurred to finance the
purchase of equipment (not in excess of five percent (5%) per annum of the
fair market value of the Company's assets) other than (x) the Company's
indebtedness to Laurus, (y) indebtedness set forth on SCHEDULE 6.12(C)
attached hereto and made a part hereof and any refinancings or
replacements thereof on terms no less favorable to the Purchaser than the
indebtedness being refinanced or replaced, and (z) any debt incurred in
connection with the purchase of assets in the ordinary course of business,
or any refinancings or replacements thereof on terms no less favorable to
the Purchaser than the indebtedness being refinanced or replaced; or (ii)
cancel any debt owning to it in excess of $250,000 in the aggregate during
any 12 month period; and/or
(II) The Company shall not, and shall not permit any of its Subsidiaries
to:
(a) create or acquire any Subsidiary after the date hereof unless
(i) such Subsidiary is a wholly-owned Subsidiary of the
Company and (ii) such Subsidiary becomes party to the 2004
Master Security Agreement, the 2006 Security Agreement, the
2006 Stock Pledge Agreement and the 2006 Subsidiary Guarantee
(either by executing a counterpart thereof or an assumption or
joinder agreement in respect thereof) and, to the extent
required by the Purchaser, satisfies each condition of this
Agreement and the Related Agreements as if such Subsidiary
were a Subsidiary on the Closing Date; and/or
19
(b) (i) make investments in, make any loans or advances to, or
transfer assets to, Front Porch Digital International, SAS or
(ii) permit any Subsidiary to make investments in, make any
loans or advances to, or transfer assets to, Front Porch
Digital International, SAS (the "French Subsidiary"), other
than, in the case of each of the foregoing clauses (i) and
(ii), (a) immaterial investments, loans, advances and/or asset
transfers made in the ordinary course of business and (b)
payments to the French Subsidiary to pay operating expenses of
the French Subsidiary incurred in the ordinary course of
business and consistent with past practices, in an amount,
taken in the aggregate for the Company and its Subsidiaries,
not to exceed $_______ in any fiscal quarter of the Company .
6.13 REISSUANCE OF SECURITIES. The Company agrees to reissue
certificates representing the Securities without the legends set forth in
Section 5.7 above at such time as:
(a) the holder thereof is permitted to dispose of such Securities
pursuant to Rule 144(k) under the Securities Act; or
(b) upon resale subject to an effective registration statement after
such Securities are registered under the Securities Act.
The Company agrees to cooperate with the Purchaser in connection with all
resales pursuant to Rule 144(d) and Rule 144(k) and provide legal opinions
necessary to allow such resales provided the Company and its counsel receive
reasonably requested representations from the selling Purchaser and broker, if
any.
6.14 OPINION. On the Closing Date, the Company will deliver to the
Purchaser an opinion in substantially the form attached hereto as Exhibit C. The
Company will provide, at the Company's expense, such other legal opinions in the
future as are reasonably necessary for the conversion of the Convertible Note
and exercise of the Warrant.
6.15 MARGIN STOCK. The Company will not permit any of the proceeds
of the Notes or the Warrant to be used directly or indirectly to "purchase" or
"carry" "margin stock" or to repay indebtedness incurred to "purchase" or
"carry" "margin stock" within the respective meanings of each of the quoted
terms under Regulation U of the Board of Governors of the Federal Reserve System
as now and from time to time hereafter in effect.
6.16 [Intentionally Deleted]
6.17 NOTICE OF DEFAULT. The Company shall from time to time
diligently review its obligations hereunder and under the Related Agreements to
confirm its compliance in all material respects with its duties hereunder and
thereunder, and shall promptly notify the Purchaser of any event or circumstance
that has resulted in, or could reasonably be expected to result in, the
occurrence of any default or Event of Default (as defined in either Note)
hereunder or thereunder. For purposes of this Section 6.17, the term "default"
shall mean an event or condition the occurrence of which is, or with the lapse
of time or the giving of notice or both would be, an Event of Default.
20
7. COVENANTS OF THE PURCHASER. The Purchaser covenants and agrees with the
Company as follows:
7.1 CONFIDENTIALITY. The Purchaser agrees that it will not disclose,
and will not include in any public announcement, the name of the Company, unless
expressly agreed to by the Company or unless and until such disclosure is
required by law or applicable regulation, and then only to the extent of such
requirement.
7.2 NON-PUBLIC INFORMATION. The Purchaser agrees not to effect any
sales in the shares of the Company's Common Stock while in possession of
material, non-public information regarding the Company if such sales would
violate applicable securities law.
7.3 LIMITATION ON ACQUISITION OF COMMON STOCK OF THE COMPANY.
Notwithstanding anything to the contrary contained in this Agreement, any
Related Agreement or any document, instrument or agreement entered into in
connection with any other transactions between the Purchaser and the Company,
the Purchaser may not acquire stock in the Company (including, without
limitation, pursuant to a contract to purchase, by exercising an option or
warrant, by converting any other security or instrument, by acquiring or
exercising any other right to acquire, shares of stock or other security
convertible into shares of stock in the Company, or otherwise, and such
contracts, options, warrants, conversion or other rights shall not be
enforceable or exercisable) to the extent such stock acquisition would cause any
interest (including any original issue discount) payable by the Company to the
Purchaser not to qualify as "portfolio interest" within the meaning of Section
881(c)(2) of the Code, by reason of Section 881(c)(3) of the Code, taking into
account the constructive ownership rules under Section 871(h)(3)(C) of the Code
(the "Stock Acquisition Limitation").
8. COVENANTS OF THE COMPANY AND PURCHASER REGARDING INDEMNIFICATION.
8.1 COMPANY INDEMNIFICATION. The Company agrees to indemnify, hold
harmless, reimburse and defend the Purchaser, each of the Purchaser's officers,
directors, agents, affiliates, control persons, and principal shareholders,
against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the
Purchaser which results, arises out of or is based upon: (i) any
misrepresentation by the Company or any of its Subsidiaries or breach of any
warranty by the Company or any of its Subsidiaries in this Agreement, any other
Related Agreement or in any exhibits or schedules attached hereto or thereto; or
(ii) any breach or default in performance by Company or any of its Subsidiaries
of any covenant or undertaking to be performed by the Company or any of its
Subsidiaries hereunder, under any other Related Agreement or any other agreement
entered into by the Company and/or any of its Subsidiaries and Purchaser
relating hereto or thereto.
8.2 PURCHASER'S INDEMNIFICATION. Purchaser agrees to indemnify, hold
harmless, reimburse and defend the Company and each of the Company's officers,
directors, agents, affiliates, control persons and principal shareholders, at
all times against any claim, cost, expense, liability, obligation, loss or
damage (including reasonable legal fees) of any nature, incurred by or imposed
upon the Company which results, arises out of or is based upon: (i) any
misrepresentation by Purchaser or breach of any warranty by Purchaser in this
Agreement or any Related Agreement or in any exhibits or schedules attached
hereto; or (ii) any breach or default
21
in performance by Purchaser of any covenant or undertaking to be performed by
Purchaser hereunder, under any Related Agreement or any other agreement entered
into by the Company and Purchaser relating hereto or thereto.
8.3 PROCEDURES. The procedures and limitations set forth in Section
10.2(c) and (d) shall apply to the indemnifications set forth in Sections 8.1
and 8.2 above.
9. Registration Rights.
9.1 REGISTRATION RIGHTS GRANTED. At the Closing, the Company shall
grant registration rights to the Purchaser pursuant to a Registration Rights
Agreement dated as of even date herewith between the Company and the Purchaser.
9.2 OFFERING RESTRICTIONS. Except as previously disclosed in the SEC
Reports or in the Exchange Act Filings, or stock or stock options granted to
employees or directors of the Company (these exceptions hereinafter referred to
as the "Excepted Issuances"), neither the Company nor any of its Subsidiaries
will issue any securities with a continuously variable/floating conversion
feature which are or could be (by conversion or registration) free-trading
securities (i.e. common stock subject to a registration statement) prior to the
full repayment or conversion of the Notes (as applicable) (together with all
accrued and unpaid interest and fees related thereto) (the "Exclusion Period").
10. MISCELLANEOUS.
10.1 GOVERNING LAW(a). THIS AGREEMENT AND THE OTHER RELATED
AGREEMENTS SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.
(b) THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN THE COMPANY, ON THE ONE HAND, AND THE PURCHASER, ON THE OTHER
HAND, PERTAINING TO THIS AGREEMENT OR ANY OF THE RELATED AGREEMENTS OR TO
ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER
RELATED AGREEMENTS; PROVIDED, THAT THE PURCHASER AND THE COMPANY
ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND
FURTHER PROVIDED, THAT, NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE THE PURCHASER FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON
THE COLLATERAL (AS DEFINED IN THE MASTER SECURITY AGREEMENT) OR ANY OTHER
SECURITY FOR
22
THE OBLIGATIONS (AS DEFINED IN THE MASTER SECURITY AGREEMENT), OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE PURCHASER. THE
COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE COMPANY HEREBY
WAIVES ANY OBJECTION THAT IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. THE COMPANY HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED
IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN SECTION 11.9 AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE
COMPANY'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
U.S. MAILS, PROPER POSTAGE PREPAID.
(c) THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING
SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING
BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR
OTHERWISE BETWEEN THE PURCHASER AND/OR THE COMPANY ARISING OUT OF,
CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, ANY OTHER RELATED
AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.
10.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Purchaser and
the closing of the transactions contemplated hereby to the extent provided
therein. All statements as to factual matters contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.
10.3 SUCCESSORS. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, heirs, executors and administrators of the parties hereto and shall
inure to the benefit of and be enforceable by each person who shall be a holder
of the Securities from time to time, other than the holders of Common Stock
which has been sold by the Purchaser pursuant to Rule 144 or an effective
registration statement. The Purchaser shall not be permitted to assign its
rights hereunder or under any Related Agreement to a competitor of the Company
unless an Event of Default (as defined in either Note) has occurred and is
continuing.
10.4 ENTIRE AGREEMENT. This Agreement, the Related Agreements, the
exhibits and schedules hereto and thereto and the other documents delivered
pursuant hereto constitute
23
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and no party shall be liable or bound to any other in any
manner by any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.
10.5 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
10.6 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the written
consent of the Company and the Purchaser.
(b) The obligations of the Company and the rights of the Purchaser
under this Agreement may be waived only with the written consent of the
Purchaser.
(c) The obligations of the Purchaser and the rights of the Company
under this Agreement may be waived only with the written consent of the
Company.
10.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or the Related
Agreements, shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. All remedies, either under this Agreement or the Related
Agreements, by law or otherwise afforded to any party, shall be cumulative and
not alternative.
10.8 NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given:
(a) upon personal delivery to the party to be notified;
(b) when sent by confirmed facsimile if sent during normal business
hours of the recipient, if not, then on the next business day;
(c) three (3) business days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or
(d) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of
receipt.
All communications shall be sent as follows:
IF TO THE COMPANY, TO: Incentra Solutions, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
24
WITH A COPY TO: Law Offices of Xxxx Xxxx Guest
00 Xxxxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxx Guest, Esq.
Facsimile: (000) 000-0000
IF TO THE PURCHASER, TO: Laurus Master Fund, Ltd.
c/o M&C Corporate Services Limited
X.X. Xxx 000 XX
Xxxxxx Xxxxx
Xxxxxx Xxxx
South Church Street
Grand Cayman, Cayman Islands
Facsimile: 000-000-0000
WITH A COPY TO: Xxxx X. Xxxxxx, Esq.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
or at such other address as the Company or the Purchaser may designate by
written notice to the other parties hereto given in accordance herewith.
10.9 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
10.10 FACSIMILE SIGNATURES; COUNTERPARTS. This Agreement may be
executed by facsimile signatures and in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
10.11 BROKER'S FEES. Except as set forth on Schedule 10.11 hereof,
each party hereto represents and warrants that no agent, broker, investment
banker, person or firm acting on behalf of or under the authority of such party
hereto is or will be entitled to any broker's or finder's fee or any other
commission directly or indirectly in connection with the transactions
contemplated herein. Each party hereto further agrees to indemnify each other
party for any claims, losses or expenses incurred by such other party as a
result of the representation in this Section 10.11 being untrue.
10.12 CONSTRUCTION. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement and the Related Agreements
and, therefore, stipulates that the rule of construction that ambiguities are to
be resolved against the drafting party shall not be applied in the
interpretation of this Agreement to favor any party against the other.
25
10.13 Proxy. For good and valuable consideration, receipt of
which is hereby acknowledged, the Purchaser, hereby appoints the Company (the
"Proxy Holder"), with a mailing address set forth in Section 29, with full power
of substitution, as proxy, to vote all shares of Common Stock of the Company,
now or in the future owned by the Purchaser (including shares acquired upon
conversion of any convertible security or exercise of any option or warrant
(other than the Warrant)) but not including those shares of Common Stock
issuable upon conversion of the Warrant (the "Shares").
This proxy is irrevocable and coupled with an interest. Upon the
sale or other transfer of the Shares, in whole or in part, this proxy shall
automatically terminate (x) with respect to such sold or transferred Shares at
the time of such sale and/or transfer and (y) with respect to all Shares in the
case of an assignment, at the time of such assignment, in each case, without any
further action required by any person.
The Purchaser shall use its best efforts to forward to Proxy Holder
within two (2) business days following the Purchaser's receipt thereof, at the
address for Proxy Holder set forth in Section 10.8, copies of all materials
received by the Purchaser relating, in each case, to the solicitation of the
vote of shareholders of the Company.
This proxy shall remain in effect with respect to the Shares of the
Company during the period commencing on the date hereof and continuing until the
earlier of (a) payment in full of all obligations and liabilities owing by the
Company to Purchaser (as the same may be amended, restated, extended or modified
from time to time) and (b) the occurrence and continuance of a default or event
of default under any document, instrument or agreement between the Company and,
or made by the Company in favor of, the Purchaser.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
26
IN WITNESS WHEREOF, the parties hereto have executed the SECURITIES
PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY: PURCHASER:
INCENTRA SOLUTIONS, INC. LAURUS MASTER FUND, LTD.
By: /s/ Xxxxxx X. Xxxxxxx III By: /s/ Xxxxx Grin
------------------------------ ------------------------------
Name: Xxxxxx X. Xxxxxxx III Name: Xxxxx Grin
------------------------------ ------------------------------
Title: Chief Executive Officer Title: Managing Partner
------------------------------ ------------------------------
27
