Document:

Exhibit 10.11

ESCROW AGREEMENT

          This
Escrow Agreement is dated as of the effective date (the “Effective Date”) set
forth on schedule 1 attached hereto (“Schedule 1”) by and among the
Parent identified on Schedule 1 (the “Parent”), David Condensa solely in
his capacity as Shareholders’ Representative, as defined in that certain
Agreement and Plan of Merger By and Among Incentra Solutions, Inc., Incentra
Helio Acquisition Corp., Helio Solutions, Inc., and David Condensa, as
Shareholders’ Representative, dated as of August __, 2007 (the “Shareholders’
Representative”), and JPMorgan Chase Bank, N.A. as escrow agent
hereunder (the “Escrow Agent”).

          WHEREAS,
the Parent and the Shareholders’ Representative have agreed to deposit in
escrow certain funds and wish such deposit to be subject to the terms and
conditions set forth herein.

          WHEREAS,
the purpose of the escrow is to secure certain
obligations of Helio Solutions, Inc. related to net working capital and
indemnification pursuant to the Agreement and Plan of Merger and more
specifically described therein;

          WHEREAS,
the Parent and the Shareholders’ Representative hereby acknowledge and agree
that the Escrow Agent has not reviewed, and is not a party to, the Agreement
and Plan of Merger; and is not responsible for any of the duties or
responsibilities set forth therein.

          NOW
THEREFORE, in consideration of the foregoing and of
the mutual covenants hereinafter set forth, the parties hereto agree as
follows:

          1. Appointment.
The Parent and Shareholders’ Representative hereby appoint the Escrow Agent as
their escrow agent for the purposes set forth herein, and the Escrow Agent
hereby accepts such appointment under the terms and conditions set forth
herein.

          2.
Escrow Fund. Simultaneous with the execution and
delivery of this Escrow Agreement, Parent is depositing with the Escrow Agent
the sum indicated as the escrow deposit on Schedule 1 (the “Escrow Deposit”). The
Escrow Agent shall hold the Escrow Deposit and, subject to the terms and
conditions hereof, shall invest and reinvest the Escrow Deposit and the
proceeds thereof (the “Escrow Fund”) as directed in Section
3.

          3.
Investment of Escrow Fund. Except as Parent and Shareholders’ Representative
may from time to time jointly instruct the Escrow Agent in writing (a “Joint
Instruction”), the Escrow Funds shall be invested in a trust deposit investment
vehicle with JPMorgan Chase Bank, N.A. (the “Fund”) until all of the monies in
the Escrow Fund have been liquidated or distributed pursuant to the terms
hereof. Such Joint Instruction, if any, referred to in the foregoing sentence
shall specify the type and identity of the investments to be purchased and/or
sold. The Escrow Agent is hereby authorized to execute purchases and sales of
investments through the facilities of its own trading or

1

capital markets
operations or those of any affiliated entity. An agency fee may be assessed in
connection with each transaction. The Escrow Agent is authorized to liquidate
in accordance with its customary procedures any portion of the Escrow Funds
consisting of investments to provide for payments required to be made under
this Agreement. In addition:

          (a)
The parties recognize and agree that the Escrow Agent will not provide
supervision, recommendations or advice relating to either the investment of
moneys held in the Escrow Account or the purchase, sale, retention or other
disposition of any permitted investment;

          (b)
Interest and other earnings on permitted investments shall be added to the
Escrow Account. Any loss or expense incurred as a result of an investment will
be borne by the Escrow Account;

          (c)
The Escrow Agent is hereby authorized to execute purchases and sales of
permitted investments through the facilities of its own trading or capital
markets operations or those of any affiliated entity. The Escrow Agent shall
send statements to each of the Parent and the Shareholders’ Representative on a
monthly basis reflecting activity in the Escrow Account for the preceding
month. Although Parent and the Shareholders’s Representative recognize that it
may obtain a broker confirmation or written statement containing comparable
information at no additional cost, Parent and the Shareholders’ Representative
hereby agree that confirmations of permitted investments are not required to be
issued by the Escrow Agent for each month in which a monthly statement is
rendered. No statement need be rendered for the Escrow Account if no activity
occurred for such month;

          (d)
Parent and the Shareholders’ Representative acknowledge and agree that the
delivery of the escrowed property is subject to the sale and final settlement
of permitted investments. Proceeds of a sale of permitted investments will be delivered
on the business day on which the appropriate instructions are delivered to the
Escrow Agent if received prior to the deadline for same day sale of such
permitted investments. If such instructions are received after the applicable
deadline, proceeds will be delivered on the next succeeding business day; and

          (e)
The Parent and the Shareholders’ Representative acknowledge that they have
received, upon their request, and reviewed the Fund’s prospectus and have
determined that the Fund is an appropriate investment for the Account.. 

          4.
Disposition and Termination. The Escrow Agent shall
deliver the Escrow Fund upon, and pursuant to, the joint written instructions
of Parent and Shareholders’ Representative. Upon delivery of the Escrow Fund by
the Escrow Agent, this Escrow Agreement shall terminate, subject to the
provisions of Section 8. 

          5.
Escrow Agent. The Escrow Agent undertakes to perform
only such duties as are expressly set forth herein and no duties shall be
implied. The Escrow Agent shall have no liability under and no duty to inquire
as to the provisions of any agreement other than this Escrow Agreement. The
Escrow Agent may rely upon and shall not be liable for acting or refraining
from acting upon any written notice, instruction or request furnished to it
hereunder and believed by it to be genuine and to have been signed or presented
by the proper party or

2

parties. The
Escrow Agent shall be under no duty to inquire into or investigate the
validity, accuracy or content of any such document. The Escrow Agent shall have
no duty to solicit any payments which may be due it or the Escrow Fund. The
Escrow Agent shall not be liable for any action taken or omitted by it in good
faith except to the extent that a court of competent jurisdiction determines
that the Escrow Agent’s gross negligence or willful misconduct was the primary
cause of any loss to the Parent or Shareholders’ Representative. The Escrow
Agent may execute any of its powers and perform any of its duties hereunder
directly or through agents or attorneys (and shall be liable only for the
careful selection of any such agent or attorney) and may consult with counsel,
accountants and other skilled persons to be selected and retained by it. The
Escrow Agent shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the advice or opinion of any such counsel,
accountants or other skilled persons. In the event that the Escrow Agent shall
be uncertain as to its duties or rights hereunder or shall receive
instructions, claims or demands from any party hereto which, in its opinion,
conflict with any of the provisions of this Escrow Agreement, it shall be
entitled to refrain from taking any action and its sole obligation shall be to
keep safely all property held in escrow until it shall be directed otherwise in
writing by all of the other parties hereto or by a final order or judgment of a
court of competent jurisdiction. Anything in this Escrow Agreement to the
contrary notwithstanding, in no event shall the Escrow Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Escrow Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
action.

          6.
Succession. The Escrow Agent may resign and be
discharged from its duties or obligations hereunder by giving ten (10) days
advance notice in writing of such resignation to the other parties hereto
specifying a date when such resignation shall take effect. The Escrow Agent
shall have the right to withhold an amount equal to any amount due and owing to
the Escrow Agent, plus any costs and expenses the Escrow Agent shall reasonably
believe may be incurred by the Escrow Agent in connection with the termination
of the Escrow Agreement. Any corporation or association into which the Escrow
Agent may be merged or converted or with which it may be consolidated, or any
corporation or association to which all or substantially all the escrow
business of the Escrow Agent’s escrow line of business may be transferred,
shall be the Escrow Agent under this Escrow Agreement without further act.

          7.
Fees. The Parent and Shareholders’ Representative
agree jointly and severally to (i) pay the Escrow Agent upon execution of this
Escrow Agreement and from time to time thereafter reasonable compensation for
the services to be rendered hereunder, which unless otherwise agreed in writing
shall be as described in Schedule 1 attached hereto, and (ii) pay or reimburse
the Escrow Agent upon request for all expenses, disbursements and advances,
including reasonable attorney’s fees and expenses, incurred or made by it in
connection with the preparation, execution, performance, delivery, modification
and termination of this Escrow Agreement. 

          8.
Indemnity. The Parent and the Shareholders’
Representative shall jointly and severally indemnify, defend and save harmless
the Escrow Agent and its directors, officers, agents and employees (the “indemnitees”)
from all loss, liability or expense (including the fees 

3

and expenses
of in house or outside counsel) arising out of or in connection with (i) the
Escrow Agent’s execution and performance of this Escrow Agreement, except in
the case of any indemnitee to the extent that such loss, liability or expense
is due to the gross negligence or willful misconduct of such indemnitee, or
(ii) its following any instructions or other directions from the Parent or the
Shareholders’ Representative, except to the extent that its following any such
instruction or direction is expressly forbidden by the terms hereof. The
parties hereto acknowledge that the foregoing indemnities shall survive the
resignation or removal of the Escrow Agent or the termination of this Escrow
Agreement. The parties hereby grant the Escrow Agent a lien on, right of
set-off against and security interest in the Escrow Fund for the payment of any
claim for indemnification, compensation, expenses and amounts due hereunder.

          9.
Account Opening Information/TINs. 

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

For accounts opened in the US:

          To
help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify,
and record information that identifies each person who opens an account. When
an account is opened, we will ask for information that will allow us to
identify relevant parties.

For non-US accounts:

          To
help in the fight against the funding of terrorism and money laundering
activities we are required along with all financial institutions to obtain,
verify, and record information that identifies each person who opens an
account. When you open an account, we will ask for information that will allow
us to identify you.

TINs:

          Taxpayer
Identification Numbers (“TINs”). The Parent and Shareholders’ Representative
have provided the Escrow Agent with their respective fully executed Internal
Revenue Service (“IRS”) Form W-8, or W-9 and/or other required documentation.
The Parent and the Shareholders’ Representative each represent that its correct
TIN assigned by the IRS, or any other taxing authority, is set forth in the
delivered documents, as well as in the Substitute IRS Form W-9 set forth in the
signature page of this Agreement. 

To the extent
that any portion of the principal amount of the Escrow Funds represents part or
all of the purchase price under the Purchase Agreement, Shareholders’
Representative shall provide all information required for Escrow Agent to
perform tax reporting on IRS Form 1099-B on or prior to each distribution to
the Shareholders’ Representative; which shall include a fully executed W-9,
W-8, or any other applicable tax form then required by the IRS. Unless
otherwise directed in a joint written instruction executed by the Shareholders’
Representative and Parent, Escrow Agent shall report to the IRS and as
appropriate withhold and remit taxes to the IRS or to any other taxing authority
as required by law based upon the information or documentation so provided and
when schedule and documentation is not properly and timely provided prior to
payment of principal to the Shareholders’ Representative. Escrow Agent shall be
entitled to rely 

4

on such
information and documentation and shall not be responsible for and shall be
indemnified by Shareholders’ Representative for any additional tax, interest or
penalty arising from the inaccuracy or late receipt of such information or
documentation. 

[Shareholders’
Representative shall provide Escrow Agent on or before the effective date of
the Escrow Agreement and at appropriate times thereafter, including prior to
any disbursement, a detailed schedule indicating the allocation of the
disbursement amount from the Escrow Funds between (i) principal, (ii) imputed
interest to be reported on IRS Form 1099-INT or 1042S or (iii) Original Issue
Discount (“OID”) to be reported on IRS Form 1099-OID along with the relevant
payee tax information, documentation, and proportionate interest thereof..
Escrow Agent shall be entitled to rely on such information provided by
Shareholders’ Representative and shall not be responsible for and shall be
indemnified by Shareholders’ Representative for any additional tax, interest or
penalty arising from the inaccuracy or late receipt of such information. In
addition, all interest or other income earned under the Escrow Agreement shall
be allocated to the Parent and reported, as and to the extent required by law,
by the Escrow Agent to the IRS, or any other taxing authority, on IRS Form 1099
or 1042S (or other appropriate form) as income earned from the Escrow by the
Parent whether or not said income has been distributed during such calendar
year. Any other tax returns required to be filed will be prepared and filed by
the Shareholders’ Representative and/or the Parent with the IRS and any other
taxing authority as required by law, including but not limited to any
applicable reporting or withholding pursuant to the Foreign Investment in Real
Property Tax Act (“FIRPTA”). Shareholders’ Representative and Parent
acknowledge and agree that Escrow Agent shall have no responsibility for the
preparation and/or filing of any tax return or any applicable FIRPTA reporting
or withholding with respect to the Escrow Funds or any income earned by the
Escrow Funds. Parent further acknowledges and agrees that any taxes payable
from the income earned on the investment of any sums held in the Escrow Funds
shall be paid by the Parent respectively as required by law. In the absence of
written direction from the Shareholders’ Representative and Parent, all
proceeds of the Escrow Fund shall be retained in the Escrow Fund and reinvested
from time to time by the Escrow Agent as provided in this Agreement. Escrow
Agent shall withhold any taxes it is required to withhold, including but not
limited to required withholding in the absence of proper tax documentation, and
shall remit such taxes to the appropriate authorities.

          10.
Notices. All communications
hereunder shall be in writing and shall be deemed to be duly given and
received:

	
 

	
 

	
 

	
(i) upon delivery if delivered personally or upon confirmed
 transmittal if by facsimile;

	
 

	
 

	
 

	
(ii) on the next Business Day (as hereinafter defined) if sent by overnight
 courier; or

	
 

	
 

	
 

	
(iii) four (4) Business Days after mailing if mailed by prepaid
 registered mail, return receipt requested, to the appropriate notice address
 set forth on Schedule 1 or at such other address as any party hereto may have
 furnished to the other parties in writing by registered mail, return receipt
 requested.

Notwithstanding the above, in the case of communications delivered to
the Escrow Agent pursuant to (ii) and (iii) of this Section 10, such
communications shall be deemed to have been 

5

given on the date received by the Escrow Agent. In the event that the
Escrow Agent, in its sole discretion, shall determine that an emergency exists,
the Escrow Agent may use such other means of communication as the Escrow Agent
deems appropriate. “Business Day” shall mean any day other than a Saturday,
Sunday or any other day on which the Escrow Agent located at the notice address
set forth on Schedule 1 is authorized or required by law or executive order to
remain closed.

          11.
Security Procedures. In the event funds transfer instructions are given (other than in writing
at the time of execution of this Escrow Agreement, as indicated in Schedule 1
attached hereto), whether in writing or by telecopier, the Escrow Agent is
authorized to seek confirmation of such instructions by telephone call-back to
the person or persons designated on schedule 2 hereto (“Schedule 2”), and the
Escrow Agent may rely upon the confirmation of anyone purporting to be the
person or persons so designated. The persons and telephone numbers for
call-backs may be changed only in a writing actually received and acknowledged
by the Escrow Agent. If the Escrow Agent is unable to contact any of the
authorized representatives identified in Schedule 2, the Escrow Agent is hereby
authorized to seek confirmation of such instructions by telephone call-back to
any one or more of your executive officers, (“Executive Officers”),
which shall include the titles of Chief Executive Officer, Chief Operating
Officer or Chief Financial Officer, as the Escrow Agent may select. Such
“Executive Officer” shall deliver to the Escrow Agent a fully executed
Incumbency Certificate, and the Escrow Agent may rely upon the confirmation of
anyone purporting to be any such officer. The Escrow Agent and the
beneficiary’s bank in any funds transfer may rely solely upon any account
numbers or similar identifying numbers provided by the Parent or the
Shareholders’ Representative to identify (i) the beneficiary, (ii) the
beneficiary’s bank, or (iii) an intermediary bank. The Escrow Agent may apply
any of the escrowed funds for any payment order it executes using any such
identifying number, even when its use may result in a person other than the
beneficiary being paid, or the transfer of funds to a bank other than the
beneficiary’s bank or an intermediary bank designated. All funds transfer
instructions must be executed by the individual(s) listed on Schedule 2 hereto.
The parties to this Escrow Agreement acknowledge that these security procedures
are commercially reasonable.

          12.
Miscellaneous. The provisions of this Escrow Agreement
may be waived, altered, amended or supplemented, in whole or in part, only by a
writing signed by all of the parties hereto. Neither this Escrow Agreement nor
any right or interest hereunder may be assigned in whole or in part by any
party, except as provided in Section 6, without the prior consent of the
other parties. This Escrow Agreement shall be governed by and construed under
the laws of the State of California. Each party hereto irrevocably waives any
objection on the grounds of venue, forum non-conveniens or any similar grounds
and irrevocably consents to service of process by mail or in any other manner
permitted by applicable law and consents to the jurisdiction of the courts
located in the State of California. The parties further hereby waive any right
to a trial by jury with respect to any lawsuit or judicial proceeding arising
or relating to this Escrow Agreement. No party to this Escrow Agreement is
liable to any other party for losses due to, or if it is unable to perform its
obligations under the terms of this Escrow Agreement because of, acts of God,
fire, floods, strikes, equipment or transmission failure, or other causes
reasonably beyond its control. This Escrow Agreement may be executed in one or

6

more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

          IN
WITNESS WHEREOF, the parties hereto have executed this
Escrow Agreement as of the date set forth in Schedule 1.

	
 

	
 

	
 

	

	
 

	
as Escrow Agent

	
 

	
 

	
 

	
 

	
By: 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
Name:

	
 

	
 

	

	
 

	
 

	
 

	
 

	
Title:

	
 

	
 

	

Tax Certification: Taxpayer
ID#: ___________________________

	
 

	
 

	
Name &
 Address:

	
_______________________________

	
 

	
_______________________________

	
 

	
_______________________________

Customer is a
(check one):

	
 

	
 

	
 

	
 

	
___ Corporation

	
___ Municipality

	
___ Partnership

	
___ Non-profit
 or Charitable Org

	
___ Individual

	
___ REMIC

	
___ Trust

	
___ Other ___________________

Under the penalties of perjury, the
undersigned certifies that:

	
 

	
 

	
(1)

	
the entity is organized under the laws of
 the United States

	
 

	
 

	
(2)

	
the number shown above is its correct
 Taxpayer Identification Number (or it is waiting for a number to be issued to
 it); and 

	
 

	
 

	
(3)

	
it is not subject to backup withholding
 because: (a) it is exempt from backup withholding or (b) it has not been
 notified by the Internal Revenue Service (IRS) that it is subject to backup
 withholding as a result of failure to report all interest or dividends, or
 (c) the IRS has notified it that it is no longer subject to backup
 withholding. 

(If the entity is subject to backup
withholding, cross out the words after the (3) above.)

Investors who do not supply a tax
identification number will be subject to backup withholding in accordance with
IRS regulations.

Note: The IRS does
not require your consent to any provision of this document other than the
certifications required to avoid backup withholding.

	
 

	
 

	
 

	
 

	
PARENT

	
 

	
INCENTRA SOLUTIONS, INC.

	
 

	
By: 

	
 

	
 

	

	
 

	
Name: Thomas
 P. Sweeney III

	
 

	
Title: Chief
 Executive Officer

7

Tax Certification: Taxpayer
ID#: ___________________________

	
 

	
 

	
Name &
 Address:  

	
_______________________________

	
 

	
_______________________________

	
 

	
_______________________________

Customer is a
(check one):

	
 

	
 

	
 

	
 

	
___ Corporation

	
___ Municipality

	
___ Partnership

	
___ Non-profit
 or Charitable Org

	
___ Individual

	
___ REMIC

	
___ Trust

	
___ Other ___________________

Under the penalties of perjury, the
undersigned certifies that:

	
 

	
 

	
(4)

	
the entity is organized under the laws of
 the United States

	
 

	
 

	
(5)

	
the number shown above is its correct
 Taxpayer Identification Number (or it is waiting for a number to be issued to
 it); and 

	
 

	
 

	
(6)

	
it is not subject to backup withholding
 because: (a) it is exempt from backup withholding or (b) it has not been
 notified by the Internal Revenue Service (IRS) that it is subject to backup
 withholding as a result of failure to report all interest or dividends, or
 (c) the IRS has notified it that it is no longer subject to backup
 withholding. 

(If the entity is subject to backup
withholding, cross out the words after the (3) above.)

Investors who do not supply a tax
identification number will be subject to backup withholding in accordance with
IRS regulations.

Note: The IRS does
not require your consent to any provision of this document other than the
certifications required to avoid backup withholding.

	
 

	
 

	
 

	
SHAREHOLDERS’ REPRESENTATIVE

	
 

	
 

	
 

	

	
 

	
    David Condensa

8

Schedule 1

	
 

	
 

	
Effective Date:

	
August ___, 2007

	
 

	
 

	
Name of Parent:

	
Incentra Solutions, Inc.

	
Parent
 Notice Address:

	
1140 Pearl
 Street, Boulder, CO 80302

	
Parent TIN:

	
 

	
Wiring
 Instructions:

	
 

	
 

	
 

	
Name of Shareholders’ Representative: David Condensa

Shareholders’
Representative Notice Address: Helio Solutions, Inc.

5676 Scenic Meadow Lane

San Jose, CA 95135

Shareholders’
Representative TIN:

Wiring Instructions:

	
 

	
 

	
Escrow Deposit: $750,000

	
 

	
 

	
 

	
 

	
Escrow Agent notice address:

	
 

	
JPMorgan
 Chase Bank, N.A

	
 

	
300 S Grand
 Ave, 4th Floor

	
 

	
Los Angeles, CA 90071

	
 

	
Attention: Michael Bergantino

	
 

	
Fax No.:
 213/621-8167

	
 

	
 

	
Escrow Agent’s compensation:

	
$_3,500.00_______________

9

Schedule
2

Telephone
Number(s) for Call-Backs and

Person(s) Designated to Give and Confirm Funds Transfer Instructions

	
If to
 Shareholders’ Representative:

	
 

	
 

	
 

	
 

	
 

	
Name

	
Telephone Number

	
Signature

	

	

	

	
 

	
 

	
 

	
1. David
 Condensa

	
(408) 361-6200

	
____________________________________

	
 

	
 

	
 

	
If to
 Parent:

	
 

	
 

	
 

	
 

	
 

	
Name

	
Telephone Number

	
Signature

	

	

	

	
1. Thomas P.
 Sweeney III

	
(303) 449-8279

	
____________________________________

	
 

	
 

	
 

	
2. Anthony
 DiPaolo

	
(720) 566-5000

	
____________________________________

	
 

	
 

	
 

	
3. George
 Vareldzis

	
(720) 566-5022

	
____________________________________

	
 

	
 

	
 

Telephone
call-backs shall be made to each Parent and Shareholders’ Representative if
joint instructions are required pursuant to this Escrow Agreement.

10Exhibit 10.12

INCENTRA SOLUTIONS, INC.

SECURITIES PURCHASE AGREEMENT

July 31, 2007

TABLE OF CONTENTS

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Page 

	
 

	
 

	
 

	
 

	

	
 

	
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

	
2

	
 

	
 

	
4.1

	
 

	
Organization,
 Good Standing and Qualification

	
2

	
 

	
 

	
4.2

	
 

	
Subsidiaries

	
3

	
 

	
 

	
4.3

	
 

	
Capitalization;
 Voting Rights

	
3

	
 

	
 

	
4.4

	
 

	
Authorization;
 Binding Obligations

	
4

	
 

	
 

	
4.5

	
 

	
Liabilities;
 Solvency

	
5

	
 

	
 

	
4.6

	
 

	
Agreements;
 Action

	
5

	
 

	
 

	
4.7

	
 

	
Obligations
 to Related Parties

	
6

	
 

	
 

	
4.8

	
 

	
Changes

	
7

	
 

	
 

	
4.9

	
 

	
Title to
 Properties and Assets; Liens, Etc

	
8

	
 

	
 

	
4.10

	
 

	
Intellectual
 Property

	
9

	
 

	
 

	
4.11

	
 

	
Compliance
 with Other Instruments

	
9

	
 

	
 

	
4.12

	
 

	
Litigation

	
9

	
 

	
 

	
4.13

	
 

	
Tax Returns
 and Payments

	
10

	
 

	
 

	
4.14

	
 

	
Employees

	
10

	
 

	
 

	
4.15

	
 

	
Registration
 Rights and Voting Rights

	
11

	
 

	
 

	
4.16

	
 

	
Compliance
 with Laws; Permits

	
11

	
 

	
 

	
4.17

	
 

	
Environmental
 and Safety Laws

	
11

	
 

	
 

	
4.18

	
 

	
Valid
 Offering

	
12

	
 

	
 

	
4.19

	
 

	
Full
 Disclosure

	
12

	
 

	
 

	
4.20

	
 

	
Insurance

	
12

	
 

	
 

	
4.21

	
 

	
SEC Reports

	
12

	
 

	
 

	
4.22

	
 

	
Listing

	
12

	
 

	
 

	
4.23

	
 

	
No
 Integrated Offering

	
13

	
 

	
 

	
4.24

	
 

	
Stop
 Transfer

	
13

	
 

	
 

	
4.25

	
 

	
Dilution

	
13

	
 

	
 

	
4.26

	
 

	
Patriot Act

	
13

	
 

	
 

	
5.

	
Representations
 and Warranties of the Purchaser

	
14

	
 

	
 

	
5.1

	
 

	
No Shorting

	
14

	
 

	
 

	
5.2

	
 

	
Requisite
 Power and Authority

	
14

	
 

	
 

	
5.3

	
 

	
Investment
 Representations

	
15

	
 

	
 

	
5.4

	
 

	
Purchaser
 Bears Economic Risk

	
15

	
 

	
 

	
5.5

	
 

	
Acquisition
 for Own Account

	
15

	
 

	
 

	
5.6

	
 

	
Purchaser
 Can Protect Its Interest

	
15

	
 

	
 

	
5.7

	
 

	
Accredited
 Investor

	
15

	
 

i

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
5.8

	
 

	
Legends

	
15

	
 

	
 

	
6.

	
Covenants of
 the Company

	
16

	
 

	
 

	
6.1

	
 

	
Stop-Orders

	
16

	
 

	
 

	
6.2

	
 

	
Listing

	
17

	
 

	
 

	
6.3

	
 

	
Market
 Regulations

	
17

	
 

	
 

	
6.4

	
 

	
Reporting
 Requirements

	
17

	
 

	
 

	
6.5

	
 

	
Use of Funds

	
17

	
 

	
 

	
6.6

	
 

	
Access to
 Facilities

	
17

	
 

	
 

	
6.7

	
 

	
Taxes

	
18

	
 

	
 

	
6.8

	
 

	
Insurance

	
18

	
 

	
 

	
6.9

	
 

	
Intellectual
 Property

	
19

	
 

	
 

	
6.10

	
 

	
Properties

	
19

	
 

	
 

	
6.11

	
 

	
Confidentiality

	
19

	
 

	
 

	
6.12

	
 

	
Required
 Approvals

	
19

	
 

	
 

	
6.13

	
 

	
Reissuance
 of Securities

	
20

	
 

	
 

	
6.14

	
 

	
Opinion

	
21

	
 

	
 

	
6.15

	
 

	
Margin Stock

	
21

	
 

	
 

	
6.16

	
 

	
[Intentionally
 Deleted]

	
21

	
 

	
 

	
6.17

	
 

	
Notice of
 Default

	
21

	
 

	
 

	
7.

	
Covenants of
 the Purchaser

	
21

	
 

	
 

	
7.1

	
 

	
Confidentiality

	
21

	
 

	
 

	
7.2

	
 

	
Non-Public
 Information

	
21

	
 

	
 

	
7.3

	
 

	
Intentionally
 Omitted]

	
21

	
 

	
 

	
8.

	
Covenants of
 the Company and Purchaser Regarding Indemnification

	
21

	
 

	
 

	
8.1

	
 

	
Company
 Indemnification

	
21

	
 

	
 

	
8.2

	
 

	
Purchaser’s
 Indemnification

	
22

	
 

	
 

	
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

	
24

	
 

	
 

	
10.3

	
 

	
Successors

	
24

	
 

	
 

	
10.4

	
 

	
Entire
 Agreement; Maximum Interest

	
24

	
 

	
 

	
10.5

	
 

	
Severability

	
25

	
 

	
 

	
10.6

	
 

	
Amendment
 and Waiver

	
25

	
 

	
 

	
10.7

	
 

	
Delays or
 Omissions

	
25

	
 

	
 

	
10.8

	
 

	
Notices

	
25

	
 

	
 

	
10.9

	
 

	
Titles and
 Subtitles

	
26

	
 

	
 

	
10.10

	
 

	
Facsimile
 Signatures; Counterparts

	
26

	
 

	
 

	
10.11

	
 

	
Broker’s
 Fees

	
26

	
 

	 	10.12	 	Construction	26
	 

ii

LIST OF EXHIBITS

	
 

	
 

	
Form of Term
 Note

	
Exhibit A

	
Form of
 Warrant

	
Exhibit B

	
 

	
 

	
Form of
 Escrow Agreement

	
Exhibit C

	
Form of
 Disbursement Letter

	
Exhibit D

	
Form of
 Opinion

	
Exhibit E

	
Form of
 Subsidiary Guarantee

	
Exhibit F

	
 

	
 

iii

SECURITIES PURCHASE AGREEMENT

          THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of
July 31, 2007, by and between INCENTRA SOLUTIONS, INC., a Nevada corporation
(the “Company”), and CALLIOPE CAPITAL CORPORATION, a Delaware corporation (the
“Purchaser”).

RECITALS

          WHEREAS,
the Company has authorized the sale to the Purchaser of a Secured Term Note in
the aggregate principal amount of Twelve Million Dollars ($12,000,000) (the
“Note”);

          WHEREAS,
the Company wishes to issue a penny warrant to the Purchaser to purchase up to
3,750,000 shares of the Company’s Common Stock (subject to adjustment as set
forth therein) in connection with Purchaser’s purchase of the Note;

          WHEREAS,
Purchaser desires to purchase the Note 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 Note 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 Note and the Warrant. The offering of the Note and the
Warrant purchased on the Closing Date shall be known as the “Offering.” A form
of the Note is annexed hereto as Exhibit A. The Note will mature on the
Maturity Date (as defined in the Note). Collectively, the Note and the Warrant
(as defined in Section 2) and the Common Stock issuable 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 3,750,000
 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(c) below, the Company shall pay to Laurus Capital
 Management, LLC, the investment manager of the Purchaser (“LCM”), a
 non-refundable payment in an amount equal to $415,000 (the “LCM Payment”)
 which LCM Payment is intended to defray certain of LCM’s due diligence, legal
 and other expenses incurred in connection with the entering into of this
 Agreement and the Related Agreements and all related matters.

	
 

	
 

	
 

	
 

	
(c)

	
The LCM
 Paymentshall 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 C (the “Funds Escrow Agreement”)
 and a disbursement letter in the form attached hereto as Exhibit D (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 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 Note in the form attached as Exhibit A
representing the aggregate principal amount of Twelve Million Dollars
($12,000,000) and a Warrant in the form attached as Exhibit B in the
Purchaser’s name representing 3,750,000 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 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 Note and the
Warrant to be issued in connection with this Agreement, (iii) the Master
Security Agreement dated as of the date hereof between the Company, certain
Subsidiaries of the Company and the Purchaser (as amended, modified and/or
supplemented from time to time, the “Master Security Agreement”), (iv) the
Registration Rights Agreement relating to 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
Subsidiary Guaranty dated as of the date 

2

hereof made by
certain Subsidiaries of the Company (as amended, modified and/or supplemented
from time to time, the “Subsidiary Guaranty”), (vi) the Stock Pledge Agreement
dated as of the date hereof among the Company, certain Subsidiaries of the
Company and the Purchaser (as amended, modified and/or or supplemented from
time to time, the “Stock Pledge Agreement”), (vii) the Grant of Security
Interests in Patents and Trademarks dated as of the date hereof among the
Company, certain Subsidiaries of the Company and the Purchaser (as amended,
modified or supplemented from time to time, the “IP Grant”), (viii) 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 (ix) all other agreements
related to this Agreement and the Securities and referred to herein (the
preceding clauses (ii) through (ix), collectively, the “Related Agreements”),
to issue and sell the Note, 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 its 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 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 200,000,000 are shares of Common Stock,
 13,087,142 shares of which are issued and outstanding, and 5,000,000 are
 shares of preferred stock, par value $0.001 per share, 2,450,457 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 2006 Stock Option 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, 

3

	
 

	
 

	
 

	
 

	
 

	
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 Note or the Warrant, or 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 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 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 hereunder and under the other Related Agreements
at the Closing and, the authorization, sale, issuance and delivery of the Note
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 Note is 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

          4.5
Liabilities; Solvency. (a) 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.

	
 

	
 

	
 

	
          (b)
 Both
 before and after giving effect to (a) the transactions contemplated hereby
 that are to be consummated on the Closing Date, (b) the disbursement of the
 proceeds of, or the assumption of the liability in respect of, the Note
 pursuant to the instructions or agreement of the Company and (c) the payment
 and accrual of all transaction costs in connection with the foregoing, the
 Company and each Subsidiary of the Company, is and will be, Solvent. For
 purposes of this Section 4.5(b), “Solvent” means, with respect to any person
 on a particular date, that on such date (a) the fair value of the property of
 such person is greater than the total amount of liabilities, including
 contingent liabilities, of such person; (b) the present fair salable value of
 the assets of such person is not less than the amount that will be required
 to pay the probable liability of such person on its debts as they become
 absolute and matured; (c) such person does not intend to, and does not
 believe that it will, incur debts or liabilities beyond such person’s ability
 to pay as such debts and liabilities mature; and (d) such person is not
 engaged in a business or transaction, and is not about to engage in a
 business or transaction, for which such person’s property would constitute
 and unreasonably small capital. The amount of contingent liabilities (such as
 litigation, guaranties and pension plan liabilities) at any time shall be
 computed as the amount that, in light of all the facts and circumstances
 existing at the time, represents the amount that can reasonably be expected
 to become an actual or matured liability.

          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, 2006, 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 

5

	
 

	
 

	
 

	
 

	
 

	
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 $100,000 or, in the case of indebtedness and/or liabilities individually
 less than $100,000, in excess of $250,000 in the aggregate; (iii) made any
 loans or advances to any person not in excess, individually or in the
 aggregate, 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 $100,000, 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 

6

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, 2006, 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;

	
 

	
 

	
 

	
 

	
(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,
 except for equipment leasing through Commvest, LLC as previously consented to
 by Purchaser, 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;

7

	
 

	
 

	
 

	
 

	
(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 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.

8

          4.10 Intellectual
Property. 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 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 Note 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

9

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 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

10

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.

          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 

11

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
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 Note 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. Except as disclosed on Schedule 4.20, 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 Exchange Act 1934, as amended (the “Exchange Act”). The
Company has furnished the Purchaser with a copy of its Annual Report on Form
10-KSB for its fiscal years ended December 31, 2005 and December 31, 2006 and
its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2007
(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

12

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 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 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

13

	
 

	
 

	
 

	
 

	
 

	
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 Note
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 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.

14

          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 Note and the Warrant to be purchased by
it under this Agreement and the Warrant Shares acquired by it upon 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 Note, 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 Note and
Warrant 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 Note, 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.

          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 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

15

	
 

	
 

	
 

	
 

	
 

	
 

	
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.

	
 

	
 

	
 

	
 

	
 

	
 

	
(b)

	
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.”

	
 

	
 

	
 

	
 

	
 

	
(c)

	
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 Note
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.

16

          6.2
Listing. The Company shall promptly secure the listing of the shares of
Common Stock issuable 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. 

          6.5
Use of Funds.
The Company agrees that it will use (i) $11,000,000 of the proceeds of the sale
of the Note to consummate the Contemplated Acquisitions previously disclosed to
the Purchaser, (ii) $1,000,000 of the proceeds of the sale of the Note to refinance
that certain Term Note, issued as of March 31, 2006 by the Company to Laurus
Master Fund, Ltd. and (iii) the remainder of the proceeds of the sale of the
Note 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.

17

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 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 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 Purchaser 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 

18

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.

          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 and the Related Agreements to its current and prospective debt
and equity financing sources. The Purchaser shall be permitted to discuss,
distribute or otherwise transfer any non-public information of the Company and
its Subsidiaries in the Purchaser’s possession now or in the future to
potential or actual (i) direct or indirect investors in the Purchaser and (ii)
third party assignees or transferees of all or a portion of the obligations of
the Company and/or any of its Subsidiaries hereunder and under the Related
Agreements, to the extent that such investor or assignee or transferee enters
into a confidentiality agreement for the benefit of the Company in such form as
may be necessary to address the Company’s Regulation FD or other securities law
requirements.

          6.12
Required Approvals.
(I) For so long as twenty-five percent (25%) of the principal amount of the
Note 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;

19

	
 

	
 

	
 

	
 

	
 

	
 

	
(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 

	
 

	
 

	
 

	
 

	
 

	
          (e)       The
  Company shall not, and shall not permit any of its Subsidiaries to 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 Master Security Agreement, the Stock Pledge Agreement and the
  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.

          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.

20

          6.14
Opinion. On
the Closing Date, the Company will deliver to the Purchaser an opinion in
substantially the form attached hereto as Exhibit E. The Company will provide,
at the Company’s expense, such other legal opinions in the future as are
reasonably necessary for the exercise of the Warrant.

	
 

	
 

	
 

	
 

	
6.15 

	
Margin
  Stock. The Company will not permit any
  of the proceeds of the Note 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 the 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.

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
Intentionally Omitted].

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 

21

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
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 of the Note (together
with all accrued and unpaid interest and fees related thereto) (the “Exclusion
Period”).

          10.
Miscellaneous.

	
 

	
 

	
 

	
 

	
 

	
10.1

	
Governing
  Law. 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

22

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
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 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 10.8 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.

23

          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 or entity which 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 may assign any or all of its rights hereunder or under
any Related Agreement to any person and any such assignee shall succeed to the
Purchaser’s rights with respect thereto; provided that the Purchaser shall not
be permitted to effect any such assignment to a competitor of the Company
unless an Event of Default (as defined in the Note) has occurred and is
continuing. Upon such assignment, the Purchaser shall be released from all
responsibility for the Collateral (as defined in the Master Security Agreement,
the Stock Pledge Agreement and each other security agreement, mortgage, cash
collateral deposit letter, pledge and other agreements which are executed by
the Company or any of its Subsidiaries in favor of the Purchaser) to the extent
same is assigned to any transferee. The Purchaser may from time to time sell or
otherwise grant participations in any of the Obligations (as defined in the
Master Security Agreement) and the holder of any such participation shall,
subject to the terms of any agreement between the Purchaser and such holder, be
entitled to the same benefits as the Purchaser with respect to any security for
the Obligations (as defined in the Master Security Agreement) in which such
holder is a participant. The Company agrees that each such holder may exercise
any and all rights of banker’s lien, set-off and counterclaim with respect to
its participation in the Obligations (as defined in the Master Security
Agreement) as fully as though the Company were directly indebted to such holder
in the amount of such participation. The Company may not assign any of its
rights or obligations hereunder without the prior written consent of the
Purchaser. All of the terms, conditions, promises, covenants, provisions and
warranties of this Agreement shall inure to the benefit of each of the
undersigned, and shall bind the representatives, successors and permitted
assigns of the Company.

          10.4
Entire Agreement; Maximum
Interest. This Agreement, the Related Agreements, the
exhibits and schedules hereto and thereto and the other documents delivered
pursuant hereto constitute 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.
Nothing contained in this Agreement, any Related Agreement or in any document
referred to herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum rate permitted by applicable law. In the event that the
rate of interest or dividends required to be paid or other charges hereunder
exceed the maximum rate permitted by such law, any payments in excess of such
maximum shall be credited against amounts owed by the Company to the Purchaser
and thus refunded to the Company.

24

          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.

  1140 Pearl Street

  Boulder, Colorado 80302

	
 

	
 

	
Attention:

	
 

	
Chief
  Financial Officer

	
 

	
 

	
Facsimile:

	
 

	
(303)
  449-9584

25

	
 

	
 

	
 

	
 

	
 

	
 

	
with a copy to:

	
Law Offices
  of Karl Reed Guest

  94 Underhill Road

  Orinda, CA 94563

	
 

	
 

	
Attention:

	
 

	
Reed Guest,
  Esq.

	
 

	
 

	
Facsimile:

	
 

	
(925)
  254-9226

	
 

	
 

	
 

	
 

	
 

	
 

	
If to the Purchaser, to:

	
Calliope
  Capital Corporation

  874 Walker Road

  Suite C

  Dover, DE 19904

	
 

	
 

	
Facsimile:

	
 

	
914-949-9618

	
 

	
 

	
 

	
 

	
 

	
 

	
with a copy to:

	
Laurus
  Capital Management, LLC

  335 Madison Avenue, 10th Floor

  New York, New York 10017

	
 

	
 

	
Attn:

	
 

	
Portfolio
  Services

	
 

	
 

	
Facsimile:

	
 

	
212-581-5037

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.

                              [Intentionally
Omitted].

26

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

27

          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.

	
 

	
CALLIOPE CAPITAL CORPORATION

	
 

	
 

	
 

	
By:

	
 

	
 

	
By:

	
 

	
 

	

	
 

	
 

	

	
Name:

	
Matthew G.
  Richman

	
 

	
Name:

	
 

	
Title:

	
Senior Vice
  President, Chief Corporate
Development
  Officer & Treasurer 

	
 

	
 

	

	
 

	
Title:

	
 

	
 

	
 

	
 

	
 

	

28

EXHIBIT A

FORM OF NOTE

B-1

EXHIBIT B

FORM OF WARRANT

2

 

EXHIBIT C

FORM OF ESCROW
AGREEMENT

3

EXHIBIT D

FORM OF
DISBURSEMENT LETTER

D-1

EXHIBIT E

FORM OF OPINION

          1. Each of the Company and each
of its Subsidiaries is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of [Nevada] [other jurisdiction] and
has all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as it is now being conducted. 

          2. Each of the Company and each
of its Subsidiaries has the requisite corporate power and authority to execute,
deliver and perform its obligations under the Agreement and the Related
Agreements. All corporate action on the part of the Company and each of its
Subsidiaries and its officers, directors and stockholders necessary has been taken
for: (i) the authorization of the Agreement and the Related Agreements and the
performance of all obligations of the Company and each of its Subsidiaries
thereunder; and (ii) the authorization, sale, issuance and delivery of the
Securities pursuant to the Agreement and the Related Agreements. The Warrant
Shares, when issued pursuant to and in accordance with the terms of the
Agreement and the Related Agreements and upon delivery shall be validly issued
and outstanding, fully paid and non assessable. 

          3.The execution, delivery and
performance by each of the Company and each of its Subsidiaries of the
Agreement and the Related Agreements to which it is a party and the
consummation of the transactions on its part contemplated by any thereof, will
not, with or without the giving of notice or the passage of time or both:

          (a) Violate the
  provisions of their respective Charter or bylaws; or

          (b) Violate any
  judgment, decree, order or award of any court binding upon the Company or any
  of its Subsidiaries; or

          (c) Violate any [insert
jurisdictions in which counsel is qualified] or
  federal law

          4. The Agreement and the Related
Agreements will constitute valid and legally binding obligations of each of the
Company and each of its Subsidiaries (to the extent such person is a party
thereto), and are enforceable against each of the Company and each of its
Subsidiaries in accordance with their respective 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.

          5. To such counsel’s knowledge,
the sale of the Note is not subject to any preemptive rights or rights of first
refusal that have not been properly waived or complied with. To such counsel’s
knowledge, the sale of the Warrant and the subsequent exercise of the Warrant

E-1

for
Warrant Shares are not subject to any preemptive rights or, to such counsel’s
knowledge, rights of first refusal that have not been properly waived or
complied with.

          6. Assuming the accuracy of the
representations and warranties of the Purchaser contained in the Agreement, the
offer, sale and issuance of the Securities on the Closing Date will be exempt
from the registration requirements of the Securities Act. To such counsel’s
knowledge, neither the Company, nor any of its 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 the
Agreement or any Related Agreement 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. 

          7. There is no action, suit,
proceeding or investigation pending or, to such counsel’s knowledge, currently
threatened against the Company or any of its Subsidiaries that prevents the
right of the Company or any of its Subsidiaries to enter into this Agreement or
any of the Related Agreements, or to consummate the transactions contemplated
thereby. To such counsel’s knowledge, the Company is not a party or subject to
the provisions of any order, writ, injunction, judgment or decree of any court
or government agency or instrumentality; nor is there any action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.

          8. The
terms and provisions of the Master Security Agreement and the Stock Pledge
Agreement create a valid security interest in favor of Calliope, in the
respective rights, title and interests of the Company and its Subsidiaries in
and to the Collateral (as defined in each of the Master Security Agreement and
the Stock Pledge Agreement).Each UCC-1 Financing Statement naming the Company or any Subsidiary
thereof as debtor and Calliope as secured party are in proper form for filing
and assuming that such UCC-1 Financing Statements have been filed with the Secretary
of State of [Nevada], the security interest created under the Master Security
Agreement will constitute a perfected security interest under the Uniform
Commercial Code in favor of Calliope in respect of the Collateral that can be
perfected by filing a financing statement. After giving effect to the delivery
to Calliope of the stock certificates representing the ownership interests of
each Subsidiary of the Company (together with effective endorsements) and
assuming the continued possession by Calliope of such stock certificates in the
State of New York, the security interest
created in favor of Calliope under the Stock Pledge Agreement constitutes a
valid and enforceable perfected security interest in such ownership interests
(and the proceeds thereof) in favor of Calliope,. No filings, registrations or
recordings are required in order to perfect (or maintain the perfection or
priority of) the security interest created under the Stock Pledge Agreement in
respect of such ownership interests.

E-2

EXHIBIT F

FORM OF
SUBSIDIARY GUARANTEE

F-1

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