OMNIBUS AMENDMENT
This Omnibus Amendment (this “Amendment”), dated as of
November 28, 2008, is entered into by and among Incentra Solutions, Inc. (f/k/a
Front Porch Digital, Inc.) a Nevada corporation (the "Parent"), Network System
Technologies, Inc., an Illinois corporation (“NST”), Incentra Solutions of
the Northwest, Inc., an Oregon corporation (“ISNW”) consisting of the
merged predecessor entities of Tactix, Inc. and PWI Technologies, Inc.(“PWI”), Incentra Solutions of
the Northeast, Inc., a Delaware corporation (“ISNE”), Incentra Solutions of
California, Inc., a Delaware corporation consisting of the merged predecessor
entities of Incentra Solutions of California, Inc. and Incentra Helio
Acquisition Corp. (“ISC”), ManagedStorage
International, Inc., a Delaware corporation (“MSI”), Incentra Solutions
International, Inc., a Delaware corporation (“ISI”), Sales Strategies, Inc.,
a New Jersey corporation (“SSI” and collectively with
Parent, NST, Tactix, ISNE, ISC, MSI, ISI and SSI, the “Companies”, and individually
each a “Company”) and LV
Administrative Services, Inc., as administrative and collateral agent (the
“Agent”) for each of
Valens U.S. SPV I, LLC, a Delaware limited liability company (“Valens US”) and Valens Offshore SPV
II, a Delaware corporation (“Valens Offshore II” and,
together with the Agent and Valens US, the “Holders” and each, a “Holder”) for the purpose of
amending that certain Secured Revolving Note, dated as of February 6, 2006,
issued by the Parent, PWI, ISC, MSI and ISI to Laurus Master Fund, Ltd. (In
Voluntary Liquidation) (“Laurus”) and subsequently
assigned in full to each of Valens US and Valens Offshore II (as amended,
modified or supplemented from time to time, the “Revolving
Note”). Reference is also made to that certain Security
Agreement, dated as of February 6, 2006, by and among the Companies and Laurus
(as amended, modified or supplemented from time to time, the “Security Agreement” and,
together with the Revolving Note and the Ancillary Agreements referred to in the
Security Agreement, the “Documents”). Capitalized terms
used herein without definition shall have the meanings ascribed to such terms in
the Documents, as applicable.
WHEREAS,
each Company and each Holder have agreed to make certain changes to the
Revolving Note as set forth herein.
NOW, THEREFORE, in consideration of the
above, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. The
definition of the “Maturity Date” appearing in the Preamble of the Revolving
Note is hereby amended to “February 6, 2010”.
2. The
Revolving Note is hereby amended by deleting Section 1.1 in its entirety and
replacing said Section 1.1 with the following new Section
“1.1 Contract
Rate. Subject to sections 3.2 and 4.10, interest payable on
the outstanding principal amount of this Note (the “Principal Amount”) shall
accrue at a fixed rate per annum equal to ten percent (10%) through
February 5, 2009, and at a fixed annual rate per annum of twelve percent (12%)
thereafter (the “Contract
Rate”). Interest shall be (i) calculated on the basis of a 360
day year, and (ii) payable monthly, in arrears, commencing on March 1, 2006 and
continuing on the first business day of each consecutive calendar month
thereafter through and including the Maturity Date, and on the Maturity Date,
whether by acceleration or otherwise.”
3. In
consideration of Section 1 above, each Company, jointly and severally, hereby
agrees to pay in cash to Valens US upon the earlier to occur of (the “Payment Date”) (i) the
Maturity Date as defined in the Revolving Note and (ii) the date upon which all
of the Obligations arising under the Revolving Note shall be declared due and
payable or are otherwise paid in full, a non-refundable payment (the “Valens US Payment Amount”) in the amount
of (x) in the event that the Payment Date occurs on or prior to May 31, 2009,
$425,000, (y) in the event that the Payment Date occurs after May 31, 2009 but
on or prior to August 31, 2009, $675,000 and (z) in the event that the Payment
Date occurs anytime after August 31, 2009,
$1,175,000. Notwithstanding the foregoing, at Valens US’ election, up
to fifty percent (50%) of the Valens US Payment Amount otherwise required to be
paid in cash, may be paid through the issuance by the Parent to Valens US of
such number of shares (the “Valens US Stock Payment”) of the
Parent’s common stock, par value $0.001 (the “Common Stock”) as determined
in the manner set forth below:
Valens US
Stock Payment = ((Valens US Elected Percentage)(Valens US Payment
Amount))/Applicable Closing Price
For purposes of this Amendment, the
term (i) “Applicable Closing
Price” shall mean the lesser of (x) the volume weighted average trading
price of the Common Stock on the Principal Market for the ten (10) trading days
immediately preceding the date hereof and (y) the volume weighted average
trading price of the Common Stock on the Principal Market for the ten (10)
trading days immediately preceding the Payment Date and (ii) “Valens US Elected Percentage” shall mean
such percentage as may be elected by Valens US in its sole discretion up to
50%.
4. In
further consideration of Section 1 above, each Company, jointly and severally,
hereby agrees to pay in cash to Valens Offshore II on the Payment Date (as
defined in Section 3 above), a non-refundable payment (the “Valens Offshore II Payment Amount”) in the amount
of (x) in the event that the Payment Date occurs on or prior to May 31, 2009,
$1,275,000, (y) in the event that the Payment Date occurs after May 31, 2009 but
on or prior to August 31, 2009, $2,025,000 and (z) in the event that the Payment
Date occurs anytime after August 31, 2009,
$3,525,000. Notwithstanding the foregoing, at Valens Offshore II’s
election, up to fifty percent (50%) of the Valens Offshore II Payment Amount
otherwise required to be paid in cash, may be paid through the issuance by the
Parent to Valens Offshore II of such number of shares (the “Valens Offshore II Stock Payment”) of the
Parent’s Common stock as determined in the manner set forth below:
Valens
Offshore II Stock Payment = ((Valens Offshore II Elected Percentage)(Valens
Offshore II Payment Amount))/Applicable Closing Price (as defined in Section 3
above)
For purposes hereof, the term “Valens Offshore II Elected Percentage” shall mean
such percentage as may be elected by Valens Offshore II in its sole discretion
up to 50%.
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5. Upon
execution of this Amendment, the Companies, jointly and severally, shall pay (i)
to Valens Capital Management, LLC, the investment manager of Valens US and
Valens Offshore II (“VCM”), a non-refundable
payment in an amount equal to $100,000, which payment is intended to defray
certain of VCM’s due diligence, legal and other expenses incurred in connection
with amending the maturity date of the Revolving Note, (ii) to Valens US, a
non-refundable payment in an amount equal to $33,250 and (iii) to Valens
Offshore II, a non-refundable payment in an amount equal to $99,750
(collectively, the “Payment”). Each of
the foregoing payments in clauses (i), (ii) and (iii) shall be deemed fully
earned on the date hereof and shall not be subject to rebate or proration for
any reason.
6. This
Amendment shall be effective as of the date first written above (the “Amendment Effective Date”) on
the date when (i) each Company and each Holder shall have executed this
Amendment, (ii) the Companies shall have delivered to Agent their respective
counterpart to this Amendment and (iii) each of VCM, Valens US and Valens
Offshore II shall have received the Payment.
7. Except
as specifically set forth in this Amendment, there are no other amendments,
modifications or waivers to the Documents, and all of the other forms, terms and
provisions of the Documents remain in full force and effect.
8. Each
Company hereby represents and warrants to the Holders that as of the date
hereof, both before and after giving effect to this Amendment, (i) no Event of
Default exists and is continuing and (ii) all representations, warranties and
covenants made by each Company in connection with the Documents are true,
correct and complete and (iii) on the date hereof, all of the Companies covenant
requirements have been met. The Company hereby agrees to, no later than five
days after the date hereof, file an 8-K with the Securities and Exchange
Commission disclosing the transactions set forth in this Amendment (the “8-K”)
on the date hereof.
9. The
Companies further covenant and agree that, (i) except as disclosed in the
Parent’s Exchange Act Filing and other than shares which may be granted pursuant
to this Amendment, 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 Parent of any of its securities, (ii) the issuance
of the Valens US Stock Payment and the Valens Offshore II Stock Payment will not
result in a change in the price or number of any securities of the Parent
outstanding under anti-dilution or other similar provisions contained in or
affecting any such securities, (iii) at the time of issuance, all issued and
outstanding shares of Common Stock constituting the Valens US Stock Payment and
the Valens Offshore II Stock Payment shall be duly authorized and validly issued
and fully paid and nonassessable, (iv) the rights, preferences, privileges and
restrictions of the Common Stock that shall constitute the Valens US Stock
Payment and the Valens Offshore II Stock Payment are as stated in the Parent’s
Certificate of Incorporation as amended through the date hereof, (v) at the time
of issuance, the Common Stock constituting the Valens US Stock Payment and the
Valens Offshore II Stock Payment shall be validly issued, fully paid and
nonassessable, and will be free of any liens or encumbrances, (vi) at the time
of issuance, the Common Stock constituting the Valens US Stock Payment and
Valens Offshore II Stock Payment shall not be subject to any preemptive rights
or rights of first refusal that have not been properly waived or complied with,
(vii) at the time of issuance, the Common Stock constituting the Valens US Stock
Payment and the Valens Offshore II Stock Payment shall be issued in compliance
with all applicable state and federal laws concerning the issuance of
securities, and (viii) they each will cooperate with both Valens US and Valens
Offshore II in connection with all resales pursuant to Rule 144 under the
Securities Act of 1933, as amended and provide legal opinions necessary to allow
such resales.
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10. Each
Company hereby further represents and warrants to each of Valens US and Valens
Offshore II that it
(a)
has
reviewed and approved the terms and provisions of this Amendment and the
documents, instruments and agreements entered into in connection
therewith;
(b) acknowledges,
ratifies and confirms that all of the indebtedness incurred by, and all other
obligations and liabilities of, each of the undersigned contained in the
Documents, including, without limitation, the Valens US Payment Amount and
Valens Offshore II Payment Amount, are deemed “Obligations” under and as defined
in the Documents, are in full force and effect and shall remain in full force
and effect as of and after the date hereof;
(c) acknowledges,
ratifies and confirms that all liabilities and obligations of each of the
undersigned under the Documents include, without limitation, all obligations and
liabilities of the undersigned in respect of the Valens US Payment Amount and
Valens Offshore II Payment Amount;
(d) represents
and warrants that no offsets, counterclaims or defenses exist as of the date
hereof with respect to any of the undersigned’s obligations under any Document,
including, without limitation, in respect of the Valens US Payment Amount and
Valens Offshore II Payment Amount; and
(e) acknowledges,
ratifies and confirms the grant by each such undersigned to each Valens US and
Valens Offshore II of a security interest and charge, to the extent applicable,
in the assets of such undersigned as more specifically set forth in the
Documents, as applicable, and to the extent such grant of a security interest
and charge was not previously made, the undersigned hereby grants to Valens US
and Valens Offshore II a security interest in the collateral of such undersigned
as set forth and described in the Documents.
11. From
and after the Amendment Effective Date, this Amendment shall constitute an
“Ancillary Agreement” for all purposes of the Security Agreement and the
Ancillary Agreements referred to in the Security Agreement, as each are amended,
modified or supplemented from time to time.
12. This
Amendment shall be binding upon the parties hereto and their respective
successors and permitted assigns and shall inure to the benefit of and be
enforceable by each of the parties hereto and its successors and permitted
assigns. THIS
AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE
LAW OF THE STATE OF NEW YORK. This Amendment may be
executed in any number of counterparts, each of which shall be an original, but
all of which shall constitute one instrument.
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IN WITNESS WHEREOF, each
Company and each Holder has caused this Amendment to be effective and signed in
its name effective as of the date set forth above.
| INCENTRA SOLUTIONS, INC. | |||
|
By:
|
\s\ Xxxxxxx Xxxxxxx | ||
| Name: Xxxxxxx Xxxxxxx | |||
| Title: Chief Corporate Development Officer and Treasurer | |||
| MANAGEDSTORAGE INTERNATIONAL, INC. | |||
|
By:
|
\s\ Xxxxxxx Xxxxxxx | ||
| Name: Xxxxxxx Xxxxxxx | |||
| Title: Secretary | |||
| INCENTRA SOLUTIONS INTERNATIONAL, INC. | |||
|
By:
|
\s\ Xxxxxxx Xxxxxxx | ||
| Name: Xxxxxxx Xxxxxxx | |||
| Title: Secretary | |||
| INCENTRA SOLUTIONS OF CALIFORNIA, INC. | |||
|
By:
|
\s\ Xxxxxxx Xxxxxxx | ||
| Name: Xxxxxxx Xxxxxxx | |||
| Title: Secretary | |||
| NETWORK SYSTEM TECHNOLOGIES, INC. | |||
|
By:
|
\s\ Xxxxxxx Xxxxxxx | ||
| Name: Xxxxxxx Xxxxxxx | |||
| Title: Secretary | |||
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| INCENTRA SOLUTIONS OF THE NORTHWEST, INC. | |||
|
By:
|
\s\ Xxxxxxx Xxxxxxx | ||
| Name: Xxxxxxx Xxxxxxx | |||
| Title: Secretary | |||
| INCENTRA SOLUTIONS OF THE NORTHEAST, INC. | |||
|
By:
|
\s\ Xxxxxxx Xxxxxxx | ||
| Name: Xxxxxxx Xxxxxxx | |||
| Title: Secretary | |||
| SALES STRATEGIES, INC. | |||
|
By:
|
\s\ Xxxxxxx Xxxxxxx | ||
| Name: Xxxxxxx Xxxxxxx | |||
| Title: Secretary | |||
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|
LV
ADMINISTRATIVE SERVICES, INC.
as
Agent
|
|||
|
By:
|
\s\ Xxxxx Xxxxxxxxx | ||
| Name: Xxxxx Xxxxxxxxx | |||
| Title: Authorized Signer | |||
|
VALENS
U.S. SPV I, LLC
By: Valens
Capital Management, LLC,
its
investment manager
|
|||
|
By:
|
\s\ Xxxxx Xxxxxxxxx | ||
| Name: Xxxxx Xxxxxxxxx | |||
| Title: Authorized Signer | |||
|
|
VALENS
OFFSHORE SPV II, CORP.
By: Valens
Capital Management, LLC,
its
investment manager
|
||
|
By:
|
\s\ Xxxxx Xxxxxxxxx | ||
| Name: Xxxxx Xxxxxxxxx | |||
| Title: Authorized Signer | |||
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