Unassociated Document


     

    ASSIGNMENT
      AND AMENDMENT AGREEMENT

     

    THIS
      ASSIGNMENT AND AMENDMENT AGREEMENT
      (this
“Agreement”)
      dated
      as of December 28, 2007 by and among LAURUS MASTER FUND, LTD., a Cayman Islands
      company (“Assignor”);
      VALENS U.S. SPV I, LLC, a Delaware limited liability company (“Assignee”);
      INCENTRA SOLUTIONS, INC., a Nevada corporation (“Parent“),
      PWI
      TECHNOLOGIES, INC., a Washington corporation (“PWI”),
      MANAGEDSTORAGE INTERNATIONAL, INC., a Delaware corporation (“MSI”),
      INCENTRA SOLUTIONS INTERNATIONAL, INC., a Delaware corporation (“ISI”),
      INCENTRA SOLUTIONS OF CALIFORNIA, INC., a Delaware corporation (“ISC”),
      NETWORK SYSTEM TECHNOLOGIES, INC., an Illinois corporation (“NST”),
      TACTIX, INC., an Oregon corporation (“Tactix”),
      INCENTRA SOLUTIONS OF THE NORTHEAST, INC., a Delaware corporation (“ISN”),
      SALES
      STRATEGIES, INC., a New Jersey corporation (“SSI”)
      and
      INCENTRA HELIO ACQUISITION CORP., a Delaware corporation (“Helio,”
and
      collectively with Parent, PWI, MSI, ISI, ISC, NST, Tactix, SSI and ISN, the
      “Companies”,
      and
      individually each are referred to herein sometimes as a “Company”).

     

    BACKGROUND

     

    Companies
      and Assignor are parties to a Security Agreement dated as of February 6, 2006
      (as amended, restated, modified and/or supplemented from time to time, the
      “Security
      Agreement”)
      and
      the Ancillary Agreements as therein defined (such Ancillary Agreements together
      with the Security Agreement, as each may be amended, restated modified and/or
      supplemented from time to time, collectively, the “Loan
      Documents”).

     

    Assignor
      has agreed to sell and assign to Assignee a portion of its interest in all
      Loans
      outstanding from time to time under, and its funding and other obligations
      and
      commitments pursuant to, the Loan Documents and Assignee has agreed to purchase
      the same from Assignor on the terms and conditions herein
      contained.

     

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

     

    1. Definitions.
      Capitalized terms not otherwise defined herein shall have the meanings set
      forth
      in the Security Agreement.

     

    
      
        2.
          Assignment
          and Assumption.

      

    

     

    (a) As
      of the
      date hereof, Assignor hereby TRANSFERS, ASSIGNS, SELLS, GRANTS and CONVEYS,
      WITHOUT RECOURSE, REPRESENTATION OR WARRANTY OF ANY NATURE WHATSOEVER (except
      as
      expressly set forth in Section 6(a) of this Agreement) unto Assignee a
      twenty-five percent (25%) interest in all Loans outstanding on and after the
      date hereof, together with an attendant twenty-five percent (25%) interest
      in
      all liens, rights, claims, title, assignments and interests (including security
      interests), pertaining to or arising from the Loan Documents (the “Assigned
      Rights”).
      Notwithstanding anything to the contrary contained herein, the Assigned Rights
      shall not include any warrants previously issued to Assignor that are
      exercisable for shares of Common Stock of Parent evidenced by certain of the
      Existing Common Stock Purchase Warrants and Options (as defined in paragraph
      5(b) below) provided,
      that
      nothing contained herein shall in any way address, revise or otherwise modify
      any such warrant expressly assigned, transferred or conveyed by Assignor to
      Assignee prior to the date hereof, if any.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) Effective
      as of the date hereof, Assignee hereby PURCHASES all of the Assigned Rights
      and
      ASSUMES a twenty-five percent (25%), pro-rata, share of all of Assignor’s
      obligations under and with respect to the Loan Documents (including its funding
      and other obligations and commitments thereunder arising on and after the date
      hereof) (“Assumed
      Obligations”).

     

    3. Payment
      of Purchase Price.
      In
      consideration for the Assigned Rights, Assignee shall on the date hereof pay
      to
      Assignor an amount equal to twenty-five percent (25%) of the amount of all
      Loans
      outstanding as of the date hereof, including, without limitation, all Loans
      to
      be made on the date hereof pursuant to the request of the Company
      Agent.

     

    4. Amendment
      of Security Agreement and Certain Ancillary Agreements.
      As of
      the date hereof, the Security Agreement is amended as follows:

     

    (a) The
      definitions of “Capital Availability Amount” and “Revolving Note” set forth in
      Annex A to the Security Agreement are each hereby amended by deleting the amount
      “Fifteen Million Dollars ($15,000,000)” appearing therein and inserting the
      amount “Twenty Million Dollars ($20,000,000)” in lieu thereof in each
      case.

     

    (b) The
      Revolving Note is hereby amended by increasing the stated amount as appearing
      in
      the first paragraph thereof from “Fifteen Million Dollars ($15,000,000)” to
“Twenty Million Dollars ($20,000,000)”.

     

    (c) The
      Revolving Note is hereby amended by deleting Section 1.1 and replacing such
      section in its entirety with the following:

     

    “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%) (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.”

     

    (d) The
      Revolving Note is hereby amended by adding a new section to Article 1 thereof
      as
      follows:

     

    “1.2 Rebate.
      If by
      June 27 2008, the Companies prepay in full the Principal Amount outstanding
      at
      such time together with accrued but unpaid interest thereon and any and all
      other sums due, accrued or payable to the Holder arising under this Note, the
      Security Agreement or any other Ancillary Agreement (collectively, the
“Redemption
      Amount”)
      and
      the Security Agreement has been irrevocably terminated, upon receipt in full
      of
      the Redemption Amount in good funds, Valens U.S. SPV I, LLC (“Valens
      U.S.) will
      rebate to the Parent fifty percent (50%) of any fees it received from the
      Companies pursuant to that certain Assignment and Amendment Agreement dated
      December 28, 2007 among Valens U.S., Laurus Master Fund, Ltd. and the
      Companies.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5. Additional
      Consideration to Assignee.
      In
      consideration for Assignee’s agreement to purchase all of the Assigned Rights
      and to assume all of the Assumed Obligations, each of the Companies hereby
      agrees as follows:

     

    (a) Parent
      shall, on the date hereof, issue to Assignee a common stock purchase warrant,
      in
      the form of Exhibit
      A
      hereto
      (the “Warrant”),
      exercisable for 350,000 shares of Common Stock of the Parent, subject to
      adjustment as therein set forth (the “Warrant
      Shares”);

     

    (b) Each
      Company hereby represents and warrants to Assignor and Assignee that
      (i) such Company is a corporation duly organized, validly existing and in
      good standing under the laws of its state of incorporation (which is as set
      forth in the preamble to this Agreement), (ii) it has the corporate power
      and authority to own and operate its properties and assets and to execute and
      deliver this Agreement and, as applicable, the Warrant and to issue the Warrant
      Shares, (iii) each direct and indirect Subsidiary of Parent and the authorized,
      issued and outstanding capital stock of Parent and each direct and indirect
      Subsidiary of Parent, together with a detailed list of the persons and entities
      (together with percentage ownership interests) owning such capital stock (other
      than owners of capital stock of Parent who, together with their affiliates,
      own
      less than five percent (5%) of the aggregate outstanding capital stock of
      Parent), is set forth on Schedule
      1
      hereto,
      (iv) except as set forth on Schedule
      2
      hereto,
      other than shares which may be granted pursuant to (A) this Agreement, (B)
      that
      certain Common Stock Purchase Warrant originally exercisable for 4,435,000
      shares of Common Stock of Parent dated as of May 13, 2004 made by Parent in
      favor of Assignor, (C) that certain Common Stock Purchase Warrant originally
      exercisable for 500,000 shares of Common Stock of Parent dated as of October
      25,
      2004 made by Parent in favor of Assignor, (D) that certain Common Stock Purchase
      Warrant originally exercisable for 3,625,000 shares of Common Stock of Parent
      dated as of February 17, 2005 made by Parent in favor of Assignor, (E) that
      certain Common Stock Purchase Warrant originally exercisable for 400,000 shares
      of Common Stock of Parent dated as of June 30, 2005 made by Parent in favor
      of
      Assignor, (F) that certain Common Stock Purchase Option dated as of February
      6,
      2006 issued by the Parent to Assignor, (G) that certain Common Stock Purchase
      Warrant originally exercisable for 417,857 shares of Common stock of Parent
      dated as of March 31, 2006 made by Parent in favor of Assignor, (H) that certain
      Common Stock Purchase Warrant originally exercisable for 360,000 shares of
      Common Stock of Parent dated as of June 18, 2007 made by Parent in favor of
      Assignor and (I) that certain Common Stock Purchase Warrant originally
      exercisable for 3,750,000 shares of Common Stock of Parent dated as of July
      31,
      2007 made by Parent in favor of Calliope Capital Corporation (the items
      referenced in subclauses (B) and (I) above, collectively, and each as amended,
      modified, restated and/or supplemented from time to time, referred to as the
      “Existing
      Common Stock Purchase Warrants and Options”),
      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, (v) neither the issuance of the Warrant, the
      issuance of any of the Warrant Shares nor the consummation of any transaction
      contemplated hereby will result in a change in the price or number of any
      securities of Parent outstanding under anti-dilution or other similar provisions
      contained in or affecting any such securities, (vi) all issued and outstanding
      shares of Parent’s Common Stock have been duly authorized and validly issued and
      are fully paid and nonassessable, (vii) the rights, preferences, privileges
      and
      restrictions of the shares of Parent’s Common Stock are as stated in Parent’s
      Articles of Incorporation as amended through the date hereof, (viii) the Warrant
      Shares have been duly and validly reserved for issuance and when issued will
      be
      validly issued, fully paid and nonassessable, and will be free of any liens
      or
      encumbrances, (ix) neither the issuance of the Warrant nor the issuance of
      the
      Warrant Shares is subject to any preemptive rights or rights of first refusal
      that have not been properly waived or complied with, (x) to the extent it is
      a
      party thereto, its execution, delivery and performance of and compliance with
      this Agreement and the issuance of the Warrant pursuant hereto, will not, with
      or without the passage of time or giving of notice, result in any 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 any Company or the suspension,
      revocation, impairment, forfeiture or nonrenewal of any permit, license,
      authorization or approval applicable to any of the Companies, their respective
      businesses or operations or any of their respective assets or properties, (xi)
      Parent’s obligation to issue the Warrant Shares upon exercise of the Warrant is
      binding upon Parent and enforceable regardless of the dilution such issuance
      may
      have on the ownership interests of other shareholders of Parent; and (xii)
      all
      issued and outstanding shares of Parent’s capital stock shall be issued in
      compliance with all applicable state and federal laws concerning the issuance
      of
      securities; and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) On
      the
      date hereof, Parent shall pay (i) to Valens Capital Management, LLC, the
      investment manager of the Assignee (“VCM”),
      a
      non-refundable payment in an amount equal to $32,145, plus
      reasonable expenses (including legal fees and expenses) incurred in connection
      with the entering into of this Agreement and the Ancillary Agreements,
plus
      expenses
      incurred in connection with each of VCM’s and/or Assignee’s due diligence review
      of the Companies and all other related matters, (ii) to Valens US, a
      non-refundable payment in an amount equal to $21,427.50 and (iii) to Valens
      US,
      an advance prepayment discount in an amount equal to $21,427.50. Each of the
      foregoing payments in clauses (i), (ii) and (iii) shall be deemed fully earned
      on the date hereof and, except as expressly set forth in Section 1.2 of the
      Revolving Note, shall not be subject to rebate or proration for any
      reason.

     

    
      
        6.
          Representations,
          Warranties and Covenants of Assignor and Assignee.

      

    

     

    (a) Assignor
      represents and warrants that (i) upon the assignment hereby, the Assigned Rights
      are free and clear of any lien or encumbrance created by Assignor; (ii) this
      Agreement has been duly authorized, executed and delivered by Assignor, and
      is
      the legal, valid and binding obligation of Assignor enforceable in accordance
      with its terms; (iii) it has title to the Assigned Rights, (iv) it has not
      previously assigned, sold, sold a participation interest in, hypothecated or
      otherwise transferred any interest that it had or may have in the Assigned
      Rights or the Loan Documents, (v) no Loan Document has been modified or amended
      in any manner, except to the extent disclosed by Assignor to Assignee, and
      (vi)
      as of the date hereof, the aggregate outstanding balance of the Loans is
      $15,031,137.53 (inclusive of Loans made or to be made on the date
      hereof).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) Assignee
      hereby acknowledges that it is taking the Assigned Rights as is, without
      recourse to Assignor, without the benefit of any representations or warranties
      from Assignor, except as expressly stated in Section 6(a) above.

     

    (c) Assignee
      represents and warrants that this Agreement has been duly authorized, executed
      and delivered by it, and is the legal, valid and binding obligation of Assignee
      enforceable in accordance with its terms.

     

    7. Ratification.
      Each
      Company hereby acknowledges, ratifies and confirms that Assignor and Assignee
      (as partial assignee of Assignor) has and shall continue to have (and hereby
      grants to Assignor and Assignee) as security for the Obligations a valid first
      priority perfected security interest in the Collateral pursuant to and in
      accordance with the Loan Documents. Each Company hereby acknowledges, ratifies
      and confirms that it is a party to the Security Agreement and the Revolving
      Note
      and is joined thereto as a Company, and, in the case of each Company other
      than
      Parent, an Eligible Subsidiary, and is bound by all of the terms, conditions
      and
      duties applicable to a Company and an Eligible Subsidiary thereunder. Each
      Company acknowledges and confirms that as of the date hereof, the aggregate
      outstanding balance of the Loans is the amount set forth in clause (vi) of
      paragraph 6(a) above.

     

    8. Miscellaneous.
      Each
      Company hereby acknowledges, confirms and agrees that (a) any breach by any
      Company of any term or provision of this Agreement shall constitute an Event
      of
      Default under the Loan Documents. Each Company hereby reaffirms and restates,
      as
      of the date hereof, all of the representations and warranties made by such
      Company to Assignor in the Security Agreement and represents and warrants to
      Assignor and Assignee that all such representations and warranties are true
      and
      correct as of the date hereof (unless made expressly as of an earlier date
      in
      which case the Companies represent and warrant that such representations and
      warranties were true and correct as of such date).

     

    9. Further
      Assurances.
      

     

    (a) Assignor
      agrees to execute and deliver all such further documents, to do or cause to
      be
      done all such further acts and things in order to effect the transactions
      contemplated by this Agreement and to otherwise grant to Assignee the intended
      benefit of this Agreement. Such actions include without limitation (a) filing
      of
      assignments sufficient to transfer Assignor’s security interests, (b)
      instructing depositary banks to accept the instructions of Assignee with respect
      to disbursements from bank accounts, (c) effecting the transfers or re-issuances
      of any Loan Document and (d) delivering any documents necessary to effect the
      transactions contemplated by this Agreement and to otherwise grant to Assignee
      the intended benefit of this Agreement, the delivery of which Assignee expressly
      waives on the date hereof. Assignor hereby authorizes Assignee to file
      assignments of all security interests (including assignments of UCC financing
      statements) currently naming Assignor as secured party and any one or more
      of
      the Companies as debtors.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) Each
      Company agrees to execute and deliver all such further documents, to do or
      cause
      to be done all such further acts and things, and to obtain all consents
      reasonably requested by Assignor or Assignee, in order to effect the
      transactions contemplated by this Agreement and to otherwise grant to Assignor
      and Assignee the intended benefit of this Agreement. Such actions include,
      without limitation, (a) executing any and all documents requested by
      Assignee to ensure that Assignee’s security interest in the Collateral is
      properly perfected and (b) executing and delivering to Assignee, upon
      Assignee’s request, a promissory note in substantially the form of the Revolving
      Note. Each Company hereby authorizes Assignee to file amendments to any and
      all
      UCC financing statements previously filed by Assignor against such Company
      and/or new UCC financing statements naming Assignee as secured party and any
      one
      or more Companies
      as
      debtors.

     

    10. GOVERNING
      LAW.
      THIS
      AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
      ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
      TO
      CONFLICTS OF LAWS PRINCIPLES.

     

    11. WAIVER
      OF JURY TRIAL.
      EACH OF
      ASSIGNOR, ASSIGNEE AND EACH COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY
      WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
      AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM
      THEREIN.

     

    12. Counterparts.
      This
      Agreement may be executed in one or more counterparts, each of which when so
      executed shall be deemed to be an original, but all of which when taken together
      shall constitute one and the same agreement. Any signature delivered by
      facsimile transmission or other electronic transmission shall be deemed an
      original signature hereto.

     

    [Signatures
      appear on the following page]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, this Assignment of, and Amendment to, Loans, Liens and
      Documents has been executed by the parties hereto on the date first written
      above.

     

    
      	
              ASSIGNOR:

            	 	
              ASSIGNEE:

            
	 	 	 
	
              LAURUS
                MASTER FUND, LTD.

            	 	
              VALENS
                U.S. SPV I, LLC

            
	 	 	 
	
              By:  

            	
              Laurus
                Capital Management, LLC,

              
                its
                  investment manager

              

            	 	
              By:  

            	
              Valens
                Capital Management, LLC,

              
                its
                  investment manager 

              

            
	 	 	 	 	 
	 	
              By:

            	/s/
              Scott Bluestein  	 	 	
              By:

            	/s/
              Scott Bluestein  
	 	
              Name:

            	Scott
              Bluestein 	 	 	
              Name:

            	Scott
              Bluestein 
	 	
              Title:

            	Authorized
              Signatory	 	 	
              Title:

            	Authorized
              Signatory


    

    


    
      	
              COMPANIES:

            
	 
	
              INCENTRA
                SOLUTIONS, INC.

            
	 
	
              By:

            	/s/
              Matthew G. Richman
	
              Name:

            	Matthew
              G. Richman
	
              Title:

            	Asst.
              Secretary
	 	 
	
              PWI
                TECHNOLOGIES, INC.

            
	 	 
	
              By:

            	/s/
              Matthew G. Richma
	
              Name:

            	Matthew
              G. Richman
	
              Title:

            	Secretary
	 	 
	
              MANAGEDSTORAGE
                INTERNATIONAL, INC.

            
	 	 
	
              By:

            	/s/
              Matthew G. Richman
	
              Name:

            	Matthew
              G. Richman
	
              Title:

            	Asst.
              Secretary
	 	 
	
              INCENTRA
                SOLUTIONS INTERNATIONAL, INC.

            
	 	 
	
              By:

            	/s/
              Matthew G. Richman
	
              Name:

            	Matthew
              G. Richman
	
              Title:

            	Asst.
              Secretary

 

    
      
        	 	 	
                SIGNTURE
                  PAGE TO ASSIGNMENT AND 

                AMENDMENT
                  AGREEMENT

              


      

    

    
       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              INCENTRA
                SOLUTIONS OF CALIFORNIA, INC.

            
	 	 
	
              By:

            	/s/
              Matthew G. Richman
	
              Name:

            	Matthew
              G. Richman
	
              Title:

            	Secretary
	 	 
	
              NETWORK
                SYSTEM TECHNOLOGIES, INC.

            
	 	 
	
              By:

            	/s/
              Matthew G. Richman
	
              Name:

            	Matthew
              G. Richman
	
              Title:

            	Secretary
	 	 
	 	 
	
              TACTIX,
                INC.

            
	 	 
	
              By:

            	/s/
              Matthew G. Richman
	
              Name:

            	Matthew
              G. Richman
	
              Title:

            	Secretary
	 	 
	
              INCENTRA
                SOLUTIONS OF THE NORTHEAST, INC.

            
	 	 
	
              By:

            	/s/
              Matthew G. Richman
	
              Name:

            	Matthew
              G. Richman
	
              Title:

            	 

	 	 
	
              INCENTRA
                HELIO ACQUISITION CORP.

            
	 	 
	
              By:

            	/s/
              Matthew G. Richman
	
              Name:

            	Matthew
              G. Richman
	
              Title:

            	Secretary


    

     

    
      
        
          	 	 	
                  SIGNTURE
                    PAGE TO ASSIGNMENT AND 

                  AMENDMENT
                    AGREEMENT

                


        

      

      
         

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              SALES
                STRATEGIES, INC.

            
	 	 
	
              By:

            	/s/
              Matthew G. Richman
	
              Name:

            	Matthew
              G. Richman
	
              Title:

            	Secretary


    

     

    
      
        
          	 	 	
                  SIGNTURE
                    PAGE TO ASSIGNMENT AND 

                  AMENDMENT
                    AGREEMENT

                


        

      

      
         

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      1

     

    (Parent
      and Subsidiary Corporate Structure and Capitalization)

    


    Incentra
      Solutions, Inc. –
      Public Company, OTCBB: ICNS

    Greater
      than 5% shareholders:

    


    
      	 	 	
              Common

            	
               

            	
              % of Total

            	
               

            	
              Preferred

            	
               

            	
              % of

              Total

            	 
	 	 	 	 	 	 	 	 	 	 
	
              Great
                Hill

            	 	 	
              2,046,271
                

            	 	 	
              10

            	
              %

            	 	
              843,170
                

            	 	 	
              34

            	
              %

            
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Tudor
                

            	 	 	
              675,867
                

            	 	 	
              3

            	
              %

            	 	
              1,004,405
                

            	
               

            	 	
              41

            	
              %

            
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              JP
                Morgan

            	 	 	
              1,125,246
                

            	 	 	
              5

            	
              %

            	 	
              602,775
                

            	 	 	
              24

            	
              %

            
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Joseph
                Graziano

            	 	 	
              1,063,878
                

            	 	 	
              5

            	
              %

            	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              David
                Condensa

            	 	 	
              2,882,231
                

            	 	 	
              14

            	
              %

            	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Thomas
                Kunigonis

            	 	 	
              1,369,863
                

            	 	 	
              6

            	
              %

            	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	
               

            	 	 	 	 	 	 	 	 	 	 
	
              Total
                Outstanding

            	 	 	
              21,317,863
                

            	 	 	 	 	 	
              2,466,971

            	 	 	
              99

            	
              %

            


    

    


    


    


    
      	
              Subsidiaries:

            	 
	
              1.

            	
              ManagedStorage
                International, Inc.

            	
              100%
                Direct Ownership

            
	
              2.

            	
              PWI
                Technologies, Inc.

            	
              100%
                Direct Ownership

            
	
              3.

            	
              Incentra
                Solutions of California, Inc.

            	
              100%
                Direct Ownership

            
	
              4.

            	
              Network
                System Technologies, Inc.

            	
              100%
                Direct Ownership

            
	
              5.

            	
              Incentra
                Solutions International, Inc.

            	
              Indirect
                Ownership – 100% Owned

              by
                ManagedStorage International, Inc.

            
	
              6.

            	
              Tactix,
                Inc.

            	
              100%
                Direct Ownership

            
	
              7.

            	
              Incentra
                Solutions of the Northeast, Inc.

            	
              Indirect
                Ownership – 100% Owned

              by
                ManagedStorage International

            
	
              8.

            	
              Incentra
                Helio Acquisition Corporation

            	
              100%
                Direct Ownership

            
	
              9.

            	
              Sales
                Strategies, Inc.

            	
              100%
                Direct Ownership

            


    

    


    Subsidiary
      Capitalization

    ManagedStorage
      International, Inc.

    100
      Common Shares (par value $.01) Authorized, Issued and Outstanding

    


    PWI
      Technologies, Inc.

    1,000,000
      Common Shares Authorized (no par)

    800,000
      Common Shares Issued and Outstanding

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Incentra
      Solutions of California, Inc.

    200
      Common Shares (par value $.001) Authorized, Issued and Outstanding

     

    Network
      System Technologies, Inc.

    10,000
      Common Shares Authorized, 1,000 Common Shares (no par) Issued and
      Outstanding

    


    Incentra
      Solutions International, Inc.

    100
      Common Shares (par value $.01) Authorized, Issued and Outstanding

    


    Tactix,
      Inc. (no par value)

    10,000
      Common Shares Authorized

    680.3403
      Common Shares Issued and Outstanding

    


    Incentra
      Solutions of the Northeast, Inc.

    200
      Common Shares (par value $.001) Authorized

    100
      Common Shares Issued and Outstanding

    


    Incentra
      Helio Acquisition Corporation, Inc.

    200
      Common Shares (par value $.001) Authorized, Issued and Outstanding

    


    Sales
      Strategies, Inc. (no par value)

    2,000
      Common Shares Authorized

    100
      Common Shares Issued and Outstanding

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      2

     

    (outstanding
      options, warrants, rights, proxy or stockholder agreements, or arrangements
      or

    agreements
      of any kind for the purchase or acquisition from Parent of any of its
      securities)

    


    Earnout
      agreements with former owners of Network System Technologies, Helio Solutions
      and Sales Strategies to issue common stock

    


    Series
      A
      Preferred Stock:

    
      	 	
              ·

            	
              Series
                A Preferred shareholders have the right to participate in any new
                offerings in an amount proportionate to their ownership in the
                company

            


    

    
      	 	
              ·

            	
              As
                a result of the warrants issued in the Laurus funding for the Helio/SSI
                acquisitions and the shares issued at the closings for each of the
                acquisitions, the conversion price for the Series A Preferred will
                be
                reduced from $6.30 to approximately
                $4.00.

            


    

    


    $770,000
      unsecured promissory note issued in connection with Helio acquisition,
      convertible at $1.00 per share 

    


    $1,350,000
      of unsecured notes payable, convertible at $1.40 per share

    


    
      	
              Common
                Stock Warrants:

            	 	
              # of shares

            	 	
              Strike Price

            	 
	
              Unsecured
                Notes June 2006

            	 	 	
              570,688
                

            	 	
              $

            	
              1.400

            	 
	
              AllianceSoft
                acquisition

            	 	 	
              100,000
                

            	 	
              $

            	
              1.400

            	 
	
              Pagemill
                Partners - Helio Acquisition

            	 	 	
              600,000
                

            	 	
              $

            	
              0.800

            	 
	
              other

            	 	 	
              82,500
                

            	 	
              $

            	
              1.000

            	 
	
              other

            	 	 	
              20,274
                

            	 	
              $

            	
              0.003

            	 
	
              other

            	 	 	
              74,371
                

            	 	
              $

            	
              >
                1.40

            	 
	
              Total
                Warrants (ex Laurus)

            	 	 	
              1,447,833
                

            	 	 	 	 


    

     

    Series
      A
      Preferred Stock Purchase warrants to purchase 33,029 Series A Preferred
      Shares

    


    Employee
      Stock Options: approximately 4,012,312 outstanding