Document:

ex10-1

    

      EXHIBIT
        10.1

      

      SETTLEMENT
        AND RELEASE AGREEMENT

       

      THIS
        SETTLEMENT AND RELEASE AGREEMENT (the “Settlement Agreement”), made and entered
        into this 15th day of February, 2007, is by and between Cytogen Corporation
        (“Cytogen”) and Advanced Magnetics, Inc. (“AMI”)(collectively, the
“Parties”).

      

      RECITALS

       

       

      WHEREAS,
        Cytogen and AMI currently are engaged in a dispute, and are parties to a
        certain
        civil action pending in the Superior Court Department of the Trial Court
        of the
        Commonwealth of Massachusetts (the “Court”), entitled Cytogen
        Corporation v. Advanced Magnetics, Inc.,
        Civil
        Action No. 06-0313-BLS2 (hereinafter the “Lawsuit”);

      

      WHEREAS,
        in the Lawsuit, the Parties have asserted various claims and counterclaims
        against each other;

      

      WHEREAS,
        the Parties deny the allegations set forth by the other in the
        Lawsuit;

      

      WHEREAS,
        the Parties to this Settlement Agreement recognize that in order to avoid
        further costs and uncertainty in connection with the Lawsuit, it is in their
        respective best interests to compromise and thereby terminate and conclude
        the
        Lawsuit and all disputes between them. 

      

      NOW,
        THEREFORE, in consideration of the mutual covenants expressed herein and
        other
        good and valuable consideration, the receipt and sufficiency of which is
        hereby
        acknowledged, the undersigned parties to this Settlement Agreement mutually
        agree and contract with each other, as follows:

      

      
        	
                1.

              	
                SETTLEMENT
                  PAYMENT.

              

      

       

      By
        no
        later than three (3) business days following the full execution of this
        Settlement Agreement, AMI shall pay to Cytogen a sum total of four million
        U.S.
        dollars (USD$4,000,000.00) by certified check or wire transfer (the “Settlement
        Amount”).

      

      
        	
                2.

              	
                RELEASE
                  OF ESCROWED SHARES.

              

      

       

      By
        no
        later than ten (10) business days following the full execution of this
        Settlement Agreement, the Parties shall jointly and in writing inform
        ChaseMellon Shareholder Services, L.L.C. (the “Escrow 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Agent”)
        that the License Agreement has been mutually terminated by the Parties and
        instruct the Escrow Agent to release and transfer to Cytogen the 50,000 shares
        (formerly 500,000 shares) of Cytogen stock (the "Escrow Shares"), and any
        dividends or other distributions comprising the Additional Escrow Fund currently
        being held by the Escrow Agent pursuant to the Escrow Agreement by and among
        Cytogen and AMI and the Escrow Agent, dated as of August 25, 2000 (the “Escrow
        Agreement”). If required by the Escrow Agent, Cytogen and AMI shall also execute
        and provide any further instructions reasonably necessary to enable Cytogen's
        Transfer Agent to reissue the Escrow Shares in the name of Cytogen. AMI shall
        also be responsible for its share of any fees previously incurred by the
        Escrow
        Agent pursuant to Section 5 of the Escrow Agreement. The Escrow Agreement
        shall
        terminate upon the transfer of the 50,000 shares of Cytogen stock to Cytogen
        as
        provided herein. Notwithstanding the preceding sentence, and subject only
        to
        this Section 2, AMI is no longer subject to any obligations under the Escrow
        Agreement.

       

      
        	
                3.

              	
                STIPULATION
                  OF DISMISSAL.

              

      

       

      Immediately
        following Cytogen’s receipt of the Settlement Amount, the Parties shall file
        with the Court a Stipulation of Dismissal with Prejudice in the form attached
        hereto as Exhibit A. 

      

      
        	
                4.

              	
                MUTUAL
                  RELEASES.

              

      

       

      Effective
        as of the full execution of this Settlement Agreement and payment to Cytogen
        of
        the Settlement Amount pursuant to Section 1, above, in consideration of the
        settlement of the Lawsuit and other good and valuable consideration, the
        receipt
        and sufficiency of which are hereby acknowledged, and subject only to the
        proviso contained in the second sentence of this Release, the Parties, on
        behalf
        of themselves and their parents, subsidiaries, affiliates, predecessors,
        successors and assigns, and all past and present officers, directors, employees,
        shareholders, agents, servants, attorneys and other representatives of any
        of
        the foregoing (including persons or entities controlling, controlled by or
        under
        common control with Cytogen or AMI), fully, finally, unconditionally,
        irrevocably and forever release and discharge each other, and each other’s past
        and present officers, directors, employees, agents, servants, attorneys,
        insurers, and other representatives (including but not limited to Jerome
        Goldstein and Michael Becker), 

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

      and
        all
        heirs, executors, administrators, predecessors, successors, affiliates and
        assigns of any of the foregoing (the “Released Parties”), from any and all
        claims, liabilities, causes of action, rights of action and actions, demands,
        suits, proceedings, damages, costs, fees and expenses, and any and all claims,
        demands and liabilities whatsoever, of every name and nature, both at law
        and in
        equity, whether known or unknown, suspected or unsuspected (collectively,
        “Claims”), including, without limiting the generality of the foregoing, any and
        all Claims which Cytogen or AMI now has or ever had against the other, including
        but not limited to Claims arising from or relating, directly or indirectly,
        to
        any of the allegations contained in the Complaint and/or Counterclaims filed
        in
        the Lawsuit. Notwithstanding anything to the contrary in the preceding sentence,
        nothing in this Release shall release Cytogen or AMI, or any of the Released
        Parties, for any Claim which one party may have against the other for breach
        of
        this Settlement Agreement or for any wrong or breach arising out of any act,
        omission or conduct which occurs after the date of this Settlement
        Agreement.

      

      
        	
                5.

              	
                REPRESENTATION
                  BY AMI.

              

      

       

      The
        monthly reports dated September 2006, November 14, 2006, December 19, 2006,
        January 10, 2007, and February 14, 2007 delivered by AMI to Cytogen in
        accordance with the terms of the License Agreement accurately reflected the
        status of the Combidex® Project in all material respects as of the date of such
        reports.

      

      
        	
                6.

              	
                STATUS
                  OF THE PARTIES’ VARIOUS AGREEMENTS.

              

      

       

      Effective
        immediately upon complete execution of this Settlement Agreement, the License
        and Marketing Agreement by and between Cytogen Corporation and Advanced
        Magnetics, Inc., dated August 25, 2000 (the “License Agreement”) and the Supply
        Agreement by and between Cytogen Corporation and Advanced Magnetics, Inc.,
        dated
        as of August 25, 2000 (the “Supply Agreement”) are hereby terminated and are no
        longer in force or effect, and Cytogen no longer has any license, supply,
        marketing, sales or other rights whatsoever to or in Combidex® or ferumoxytol
        (formerly referred to as Code 7228). Notwithstanding the foregoing, Section
        7 of
        the License Agreement and Section 7 of the Supply Agreement continue and
        survive
        pursuant to their terms.

      

      
        
          
          

        

        
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                7.

              	
                PROVISION
                  AND RETURN OF MATERIALS.

              

      

       

      By
        no
        later than twenty-one (21) days following the full execution of this Settlement
        Agreement, Cytogen: (i) shall provide to AMI all market analyses or reports,
        if
        any, in Cytogen’s possession, custody, or control for or relating to Combidex®
or magnetic resonance imaging contrast agents; and (ii) shall return to AMI
        (a)
        the Agent Technology (as defined in the License Agreement), (b) the
        Manufacturing Technology (as defined in the License Agreement), if any, in
        its
        possession, and (c) Project Information (as defined in the License Agreement)
        not developed by Cytogen, or otherwise destroy such Agent Technology,
        Manufacturing Technology and Project Information, and certify in writing
        and
        under oath that such Agent Technology, Manufacturing Technology and Project
        Information has been destroyed.

      

      
        	
                8.

              	
                CONFIDENTIALITY.

              

      

       

      The
        Parties agree not to disclose the contents of this Settlement Agreement,
        including, but not limited to, the settlement amount or any matters pertaining
        to this Agreement and the facts and circumstances of their respective claims,
        counterclaims or allegations to any third party unless such disclosure is:
        (i)
        lawfully required by any governmental agency; (ii) otherwise required to
        be
        disclosed by law; (iii) necessary in any legal proceeding in order to enforce
        any provisions of this Settlement Agreement or to claim damages as a result
        of
        an alleged breach of this Settlement Agreement by the other Party; (iv)
        necessary for accounting or tax purposes, or (v) made to legal, accounting
        or
        tax professionals or to any other person or entity under an obligation to
        preserve the confidentiality of such information. To the extent permitted
        by
        law, each Party agrees that it will notify the other affected Party in writing
        within five (5) calendar days of the receipt of any subpoena, court order,
        or
        administrative order requiring disclosure of information subject to this
        nondisclosure provision. Notwithstanding the foregoing, the Parties agree
        that
        they may issue the press releases in the forms attached hereto as Exhibit
        B (AMI
        press release) and Exhibit C (Cytogen press release), and any future disclosure
        of the specific terms set forth in such press releases shall not be a violation
        of this Section 8.

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

      
        	
                9.

              	
                NON-DISPARAGEMENT.

              

      

       

      The
        Parties agree and covenant to refrain from making any statements or references,
        either directly in the form of oral or written statements or indirectly,
        to any
        third party that disparages, depreciates, ridicules, deprecates, condemns,
        criticizes, or maligns Cytogen, AMI, any of Cytogen’s or AMI’s respective
        Released Parties, Combidex®, ferumoxytol, Quadramet®, ProstaScint®, Caphosol®,
        SoltamoxTM or CYT-500. A violation of this non-disparagement obligation may be
        remedied by injunctive relief and an award of damages and costs. 

      

      
        	
                10.

              	
                PURPOSE
                  AND EFFECT OF SETTLEMENT.

              

      

       

      10.01.
        Each party to this Settlement Agreement represents that this is a full, complete
        and mutual settlement and is predicated solely upon each party’s desire to avoid
        the further legal expense that would be entailed in any further discovery,
        pretrial motions, trial, and appellate proceedings in the Lawsuit.

      

      10.02.
        The Parties each warrant and represent that this Settlement Agreement is
        the
        result of a compromise. While this Settlement Agreement resolves the issues
        between the parties, it does not constitute an admission by any party of
        any
        liability whatsoever. Neither this Settlement Agreement nor anything in the
        Settlement Agreement shall be construed to be or shall be admissible in any
        proceeding as evidence of liability by any of the Parties.

      

      
        	
                11.

              	
                CONSTRUCTION
                  AND AUTHORITY.

              

      

       

      11.01.
        Construction as Contract. It is expressly understood and agreed that the
        terms
        hereof are contractual and not merely recitals and that the agreement contained
        herein, the Settlement Amount and consideration to be transferred are to
        compromise disputed claims and to avoid litigation. It is also expressly
        understood and agreed that this Settlement Agreement has been prepared jointly
        by the parties hereto. Each Party has cooperated in the drafting and preparation
        of this Settlement Agreement. Hence, in any construction to be made of this
        

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

      Settlement
        Agreement, the same shall not be construed against any Party on the basis
        that
        the Party was the drafter. Rather, the language of this Settlement Agreement
        shall in all instances be construed as a whole, according to its fair meaning
        and not strictly for or against any of the Parties.

      

      11.02.
        Warranty. All parties hereto warrant that they have read this Settlement
        Agreement and fully understand it to be a compromise and settlement and release
        of all claims as described in the releases above. Each party further warrants
        and represents that they have not heretofore assigned or transferred to any
        person not a party to this Settlement Agreement any released claim or any
        part
        or portion thereof and each shall defend, indemnify and hold harmless the
        other
        from or against any claim (including payment of attorneys’ fees and costs
        actually incurred whether or not litigation is commenced) based on or in
        connection with or arising out of such transfer made, purported or
        claimed.

      

      11.03.
        Authority. Each party hereto, and the person executing the Settlement Agreement
        for each party, warrants and represents that this Settlement Agreement is
        being
        executed by and for each of said parties by duly-authorized representatives.
        This Settlement Agreement binds and benefits Cytogen and AMI, their successors,
        assigns, parents, subsidiaries, divisions, affiliates, and controlled companies,
        whether corporations, partnerships, trusts, joint ventures or others, and
        their
        past, present and future representatives, attorneys, consultants, directors,
        officers, employees, shareholders, trustees, agents and advisors. 

      

      11.04.
        Representation by Counsel. The Parties represent and warrant that each was
        represented by an attorney employed to represent said party with respect
        to this
        Settlement Agreement and all matters covered herein; that each party hereto
        has
        been fully advised by its attorney concerning its rights with respect to
        the
        execution of this Settlement Agreement; and 

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

      that
        its
        attorney is authorized and directed to execute all documents and to take
        all
        necessary action to effectuate the terms of this Settlement Agreement and
        terminate the Lawsuit. 

       

      
        	
                12.

              	
                RULES
                  OF CONSTRUCTION: ENFORCEMENT.

              

      

       

      12.01.
        Headings. The paragraph and section headings are for convenience only and
        will
        not be deemed to affect in any way the language of the provision to which
        they
        refer. 

       

      12.02.
        Governing Law and Choice of Forum. This Settlement Agreement shall be
        interpreted, construed and enforced in accordance with the substantive laws
        of
        the Commonwealth of Massachusetts, without regard to its principles of conflict
        of laws. The Parties further consent to the exclusive jurisdiction of the
        federal and state courts in Massachusetts with respect to the interpretation,
        construction or enforcement of this Settlement Agreement or anything relating
        thereto. In any action arising under or to enforce, construe or interpret
        this
        Settlement Agreement, the prevailing party shall recover its reasonable costs,
        expenses and attorneys’ fees from the other party.

       

      12.03.
        Entire Agreement. This Settlement Agreement contains the entire understanding
        of
        the Parties relating to the matters referred to herein, and may only be amended
        by a written document, duly executed on behalf of the respective parties.
        There
        are no understandings, agreements, representations, warranties, expressed
        or
        implied, not specified herein regarding this Settlement Agreement or the
        subject
        matter hereof. No waiver of any of the provisions of this Settlement Agreement
        shall constitute a waiver of any other provision (whether or not similar),
        nor
        shall such waiver constitute a continuing waiver unless otherwise expressly
        provided. 

       

      
        	
                13.

              	
                COUNTERPARTS.

              

      

       

      This
        Settlement Agreement may be executed in separate counterparts, each of which
        shall be considered an original but all of which shall constitute one
        agreement.

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, each of the Parties has caused three (3) original copies
        of
        this Settlement Agreement to be executed on their behalf by their duly
        authorized representative as of the day and year aforesaid. 

       

      

        
          	
                  CYTOGEN
                    CORPORATION

                	
                  ADVANCED
                    MAGNETICS, INC.

                
	 	 
	 	 
	
                  By:
                    /s/ Michael D. Becker

                	
                  By:
                    /s/
                    Brian J.G. Pereira

                
	
                    
Duly
                    Authorized

                	
                  Duly
                    Authorized

                
	 	 
	
                  Name:
                    Michael
                    D. Becker

                	
                  Name:
                    Brian
                    J.G. Pereira

                
	 	 
	
                  Title:
                    President
                    & CEO

                	
                  Title:
                    President
                    & CEO

                
	
                  Date:
                    February 15, 2007

                	
                  Date:
                    February 15, 2007

                

        

 

       

       -8-EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

         This AGREEMENT (the "Agreement") is made as of the date signed (the
"Effective Date"), by and between Incentra Solutions, Inc., a Nevada corporation
with its headquarters located in Boulder, Colorado (the "Employer"), and Anthony
DiPaolo (the "Executive"). In consideration of the mutual covenants contained in
this Agreement, the Employer and the Executive agree as follows:

         1.    EMPLOYMENT. The Employer agrees to employ the Executive and the
Executive agrees to be employed by the Employer on the terms and conditions set
forth in this Agreement.

         2.    CAPACITY; LOCATION. The Executive shall serve the Employer as
Chief Financial Officer. In his capacity as Chief Financial Officer, Executive
will report to the Chief Executive Officer, and shall be responsible for
strategic and operational matters relating to the Employer's finance and
accounting efforts subject to the direction of the Chief Executive Officer. In
such capacity, the Executive shall perform such services and duties in
connection with the business, affairs and operations of the Employer as may be
assigned or delegated to the Executive from time to time by or under the
authority of the Chief Executive Officer. Executive's employment with Employer
will be based in Employer's Boulder, Colorado offices; PROVIDED, that Employee
may be required from time to time to travel in connection with Employer's
business needs.

         3.    TERM. Executive shall be considered an at-will employee of
Employer and, subject to the provisions of Section 6, the employment
relationship described herein may be terminated by either Executive or Employer
at any time.

         4.    COMPENSATION AND BENEFITS. The regular compensation and benefits
payable to the Executive under this Agreement shall be as follows:

               (a) SALARY. For all services rendered by the Executive under this
         Agreement, the Employer shall pay the Executive a salary (the "Salary")
         at the annual rate of Two hundred Thirty Thousand Dollars
         ($230,000.00), subject to increase from time to time in the discretion
         of the Compensation Committee of the Board of Directors (the
         "Compensation Committee"). The Salary shall be payable in periodic
         installments in accordance with the Employer's usual practice for its
         senior executives.

               (b) BONUS. For the fiscal year ending December 31, 2007 Executive
         shall be guaranteed a bonus of Thirty Three Thousand Three Hundred
         Thirty Three and 33/100 Dollars ($33,333.33) and shall be eligible for
         a bonus of up to One Hundred Thousand Dollars ($100,000.00) based upon
         performance at 100% of plan for such fiscal year. Thereafter, Executive
         shall be eligible to participate in an incentive program established by
         the Compensation Committee, with such terms as may be established in
         the sole discretion of the Compensation Committee.

<PAGE>

               (c) REGULAR BENEFITS. The Executive shall be entitled to health
         insurance benefits from Employer, and shall also be entitled to
         participate in any employee benefit plans, life insurance plans,
         disability income plans, retirement plans, expense reimbursement plans
         and other benefit plans which the Employer may from time to time have
         in effect for all or most of its executive management employees. Such
         participation shall be subject to the terms of the applicable plan
         documents, generally applicable policies of the Employer, applicable
         law and the discretion of the Board of Directors, the Compensation
         Committee or any administrative or other committee provided for in or
         contemplated by any such plan. Except with respect to the
         aforementioned health insurance benefits, nothing contained in this
         Agreement shall be construed to create any obligation on the part of
         the Employer to establish any such plan or to maintain the
         effectiveness of any such plan which may be in effect from time to
         time.

               (d) VACATION. The Executive shall be entitled to three (3) weeks
         of vacation, such vacation time to accrue on a per-pay-period basis.

               (e) TAXATION OF PAYMENTS AND BENEFITS. The Employer shall
         undertake to make deductions, withholdings and tax reports with respect
         to payments and benefits under this Agreement to the extent that it
         reasonably and in good faith believes that it is required to make such
         deductions, withholdings and tax reports. Payments under this Agreement
         shall be in amounts net of any such deductions or withholdings. Nothing
         in this Agreement shall be construed to require the Employer to make
         any payments to compensate the Executive for any adverse tax effect
         associated with any payments or benefits or for any deduction or
         withholding from any payment or benefit.

               (f) EXPENSES. The Employer shall reimburse the Executive for all
         reasonable and necessary business related travel expenses incurred or
         paid by the Executive in performing his duties under this Agreement and
         which are consistent with applicable policies of the Employer. All
         payments for reimbursement of such expenses shall be made upon
         presentation by the Executive of expense statements or vouchers and
         such other supporting information as the Employer may from time to time
         reasonably request.

               (g) STOCK OPTIONS. Executive shall also be eligible for
         participation in Employer's Stock Option Plan, and Executive shall be
         entitled to receive stock options pursuant to the terms of option
         agreements.

               (h) EXCLUSIVITY OF SALARY AND BENEFITS. The Executive shall not
         be entitled to any payments or benefits other than those provided under
         this Agreement.

         5.    EXTENT OF SERVICE. During the Executive's employment under this
Agreement, the Executive shall devote the Executive's full business time, best
efforts and business judgment, skill and knowledge to the advancement of the
Employer's interests and to the discharge of the Executive's duties and
responsibilities under this Agreement. The Executive shall not engage in any
other business activity, except as may be approved by the Board of Directors;
PROVIDED, that nothing in this Agreement shall be construed as preventing the
Executive from:

<PAGE>

               (a) investing the Executive's assets in any company or other
         entity in a manner not prohibited by Section 7(d) and in such form or
         manner as shall not require any material activities on the Executive's
         part in connection with the operations or affairs of the companies or
         other entities in which such investments are made; and

               (b) engaging in religious, charitable or other community or
         non-profit activities that do not impair the Executive's ability to
         fulfill the Executive's duties and responsibilities under this
         Agreement.

         6.    TERMINATION AND TERMINATION BENEFITS. Notwithstanding the
provisions of Section 3, the Executive's employment under this Agreement shall
terminate under the following circumstances set forth in this Section 6.

               (a) TERMINATION BY THE EMPLOYER FOR CAUSE. The Executive's
         employment under this Agreement may be terminated for "Cause" without
         further liability on the part of the Employer, effective immediately
         upon a vote of the Board of Directors and written notice to the
         Executive. Only the following shall constitute "Cause" for such
         termination:

                           (i) dishonest or fraudulent statements or acts of the
                  the Executive with respect to the Employer or any affiliate
                  of Employer;

                           (ii) the Executive's conviction of, or entry of a
                  plea of guilty or nolo contendere for, (A) a felony or (B) any
                  misdemeanor (excluding minor traffic violations) involving
                  moral turpitude, deceit, dishonesty or fraud;

                           (iii) gross negligence, willful misconduct or
                  insubordination of the Executive with respect to the Employer
                  or any affiliate of the Employer; or

                           (iv) material breach by the Executive of any of the
                  Executive's obligations under this Agreement, or any other
                  agreement to which Executive and Employer are now or hereafter
                  a party to.

               (b) TERMINATION BY THE EXECUTIVE. The Executive's employment
         under this Agreement may be terminated by the Executive by written
         notice to Employer at least thirty (30) days prior to such termination.

               (c) TERMINATION BY THE EMPLOYER WITHOUT CAUSE. Subject to the
         payment of Termination Benefits pursuant to Section 6(d), the
         Executive's employment under this Agreement may be terminated by the
         Employer without Cause upon written notice to the Executive (a
         termination "Without Cause").

               (d) CERTAIN TERMINATION BENEFITS. Unless otherwise specifically
         provided in this Agreement or otherwise required by law, all
         compensation and benefits payable to

<PAGE>

         the Executive under this Agreement shall terminate on the date of
         termination of the Executive's employment under this Agreement.
         Notwithstanding the foregoing, in the event of termination of the
         Executive's employment with the Employer Without Cause pursuant to
         Section 6(c) above, the Employer shall provide to the Executive the
         following termination benefits ("Termination Benefits"):

                           (i) payment of the Executive's Salary at the rate
                  then in effect pursuant to Section 4(a) for the period from
                  the date of termination until the date that is twelve (12)
                  months after the date of termination; and

                           (ii) continuation of group health plan benefits to
                  the extent authorized by and consistent with 29 U.S.C. ss.
                  1161 ET SEQ. (commonly known as "COBRA"), with the cost of the
                  regular premium for such benefits shared in the same relative
                  proportion by the Employer and the Executive as in effect on
                  the date of termination for twelve (12) months and at a cost
                  of 102% of premium provided under COBRA, for up to an
                  additional six (6) months.

               Notwithstanding the foregoing, nothing in this Section 6(d) shall
         be construed to affect the Executive's right to receive COBRA
         continuation entirely at the Executive's own cost to the extent that
         the Executive may continue to be entitled to COBRA continuation after
         the Executive's right to cost sharing under Section 6(d)(ii) ceases.

               (e) DISABILITY. If the Executive shall be disabled so as to be
         unable to perform the essential functions of the Executive's then
         existing position or positions under this Agreement with reasonable
         accommodation, the CEO may remove the Executive from any
         responsibilities and/or reassign the Executive to another position with
         the Employer during the period of such disability. Notwithstanding any
         such removal or reassignment, the Executive shall continue to receive
         the Executive's full Salary (less any disability pay or sick pay
         benefits to which the Executive may be entitled under the Employer's
         policies) and benefits under Section 4 of this Agreement (except to the
         extent that the Executive may be ineligible for one or more such
         benefits under applicable plan terms) for a period of time equal to
         nine (9) months. If any question shall arise as to whether during any
         period the Executive is disabled so as to be unable to perform the
         essential functions of the Executive's then existing position or
         positions with reasonable accommodation, the Executive may, and at the
         request of the Employer shall, submit to the Employer a certification
         in reasonable detail by a physician selected by the Employer to whom
         the Executive or the Executive's guardian has no reasonable objection
         as to whether the Executive is so disabled or how long such disability
         is expected to continue, and such certification shall for the purposes
         of this Agreement be conclusive of the issue. The Executive shall
         cooperate with any reasonable request of the physician in connection
         with such certification. If such question shall arise and the Executive
         shall fail to submit such certification, the Employer's determination
         of such issue shall be binding on the Executive. Nothing in this
         Section 6(e) shall be construed to waive the Executive's rights, if
         any, under existing law including, without limitation, the Family and
         Medical Leave Act of 1993, 29 U.S.C. ss.2601 ET SEQ. and the Americans
         with Disabilities Act, 42 U.S.C. ss.12101 ET SEQ.

<PAGE>

         7. CONFIDENTIAL INFORMATION, NONCOMPETITION AND COOPERATION.

               (a) CONFIDENTIAL INFORMATION. As used in this Agreement,
         "Confidential Information" means information belonging to the Employer
         which is of value to the Employer in the course of conducting its
         business and the disclosure of which could result in a competitive or
         other disadvantage to the Employer. Confidential Information includes,
         without limitation, financial information, reports, and forecasts;
         inventions, improvements and other intellectual property; trade
         secrets; know-how; designs, processes or formulae; software; market or
         sales information or plans; customer lists; and business plans,
         prospects and opportunities (such as possible acquisitions or
         dispositions of businesses or facilities) which have been discussed or
         considered by the management of the Employer. Confidential Information
         includes information developed by the Executive in the course of the
         Executive's employment by the Employer, as well as other information to
         which the Executive may have access in connection with the Executive's
         employment. Confidential Information also includes the confidential
         information of others with which the Employer has a business
         relationship. Notwithstanding the foregoing, Confidential Information
         does not include information in the public domain, unless due to breach
         of the Executive's duties under Section 7(b).

               (b) CONFIDENTIALITY. The Executive understands and agrees that
         the Executive's employment creates a relationship of confidence and
         trust between the Executive and the Employer with respect to all
         Confidential Information. At all times, both during the Executive's
         employment with the Employer and after its termination, the Executive
         will keep in confidence and trust all such Confidential Information,
         and will not use or disclose any such Confidential Information without
         the written consent of the Employer, except as may be necessary in the
         ordinary course of performing the Executive's duties to the Employer.

               (c) DOCUMENTS, RECORDS, ETC. All documents, records, data,
         apparatus, equipment and other physical property, whether or not
         pertaining to Confidential Information, which are furnished to the
         Executive by the Employer or are produced by the Executive in
         connection with the Executive's employment will be and remain the sole
         property of the Employer. The Executive will return to the Employer all
         such materials and property as and when requested by the Employer. In
         any event, the Executive will return all such materials and property
         immediately upon termination of the Executive's employment for any
         reason. The Executive will not retain with the Executive any such
         material or property or any copies thereof after such termination.

               (d) NONCOMPETITION AND NONSOLICITATION. Without the prior written
         consent of the CEO, during the period that Executive is employed by
         Employer and for one (1) year thereafter, the Executive (i) will not,
         directly or indirectly, whether as owner, partner, shareholder,
         consultant, agent, employee, co-venturer or otherwise, engage,
         participate, assist or invest in any Competing Business (as hereinafter
         defined); (ii) for a period of two (2) years thereafter will refrain
         from directly or indirectly employing, attempting to employ, recruiting
         or otherwise soliciting, inducing or influencing any person to leave

<PAGE>

         employment with the Employer; and (iii) for a period of two (2) years
         thereafter will refrain from soliciting or encouraging any customer or
         supplier to terminate or otherwise modify adversely its business
         relationship with the Employer. The Executive understands that the
         restrictions set forth in this Section 7(d) are intended to protect the
         Employer's interest in its Confidential Information and established
         employee, customer and supplier relationships and goodwill, and agrees
         that such restrictions are reasonable and appropriate for this purpose.
         For purposes of this Agreement, the term "Competing Business" shall
         mean any business that provides or intends to provide the same or
         similar types of services or products as those provided or targeted by
         Employer or any of its subsidiaries in any geographic area then served
         or targeted by Employer or any of its subsidiaries. Notwithstanding the
         foregoing, the Executive may own up to two percent (2%) of the
         outstanding stock of a publicly held corporation.

               (e) THIRD-PARTY AGREEMENTS AND RIGHTS. The Executive hereby
         confirms that the Executive is not bound by the terms of any agreement
         with any previous employer or other party which restricts in any way
         the Executive's use or disclosure of information or the Executive's
         engagement in any business. The Executive represents to the Employer
         that the Executive's execution of this Agreement, the Executive's
         employment with the Employer and the performance of the Executive's
         proposed duties for the Employer will not violate any obligations the
         Executive may have to any such previous employer or other party. In the
         Executive's work for the Employer, the Executive will not disclose or
         make use of any information in violation of any agreements with or
         rights of any such previous employer or other party, and the Executive
         will not bring to the premises of the Employer any copies or other
         tangible embodiments of non-public information belonging to or obtained
         from any such previous employment or other party.

               (f) LITIGATION AND REGULATORY COOPERATION. During and after the
         Executive's employment, the Executive shall cooperate fully with the
         Employer in the defense or prosecution of any claims or actions now in
         existence or which may be brought in the future against or on behalf of
         the Employer which relate to events or occurrences that transpired
         while the Executive was employed by the Employer. The Executive's full
         cooperation in connection with such claims or actions shall include,
         but not be limited to, being available to meet with counsel to prepare
         for discovery or trial and to act as a witness on behalf of the
         Employer at mutually convenient times. During and after the Executive's
         employment, the Executive also shall cooperate fully with the Employer
         in connection with any investigation or review of any federal, state or
         local regulatory authority as any such investigation or review relates
         to events or occurrences that transpired while the Executive was
         employed by the Employer. The Employer shall reimburse the Executive
         for any reasonable out-of-pocket expenses incurred in connection with
         the Executive's performance of obligations pursuant to this Section
         7(f) and shall pay the Executive for his time at his annual salary rate
         in effect at the time of the termination of his employment.

               (g) DEVELOPMENTS. Executive will make full and prompt disclosure
         to the Employer of all inventions, discoveries, designs, developments,
         methods, modifications, improvements, processes, algorithms, databases,
         computer programs,

<PAGE>

         formulae, techniques, trade secrets, graphics or images, audio or
         visual works, and other works of authorship (collectively
         "Developments"), whether or not patentable or copyrightable, that are
         created, made, conceived or reduced to practice by Executive (alone or
         jointly with others) or under Executive's direction during the period
         of his employment. Executive acknowledges that all work performed by
         Executive for Employer hereunder is on a "work for hire" basis, and
         Executive hereby assigns and transfers, and will assign and transfer,
         to the Employer and its successors and assigns all of Executive's
         right, title and interest, including but not limited to all patents,
         patent applications, trademarks and trademark applications, copyrights
         and copyright applications, and other intellectual property rights in
         all countries and territories worldwide and under any international
         conventions, in and to all Developments that (a) relate to the business
         of the Employer or any of the products or services of the Employer; (b)
         result from tasks assigned to Executive by the Employer; or (c) result
         from the use of personal property (whether tangible or intangible)
         owned, leased or contracted for by the Employer.

               (h) INJUNCTION. The Executive agrees that it would be difficult
         to measure any damages caused to the Employer which might result from
         any breach by the Executive of the promises set forth in this Section
         7, and that in any event money damages would be an inadequate remedy
         for any such breach. Accordingly, subject to Section 8 of this
         Agreement, the Executive agrees that if the Executive breaches, or
         proposes to breach, any portion of this Agreement, the Employer shall
         be entitled, in addition to all other remedies that it may have, to an
         injunction or other appropriate equitable relief to restrain any such
         breach without showing or proving any actual damage to the Employer.

         8. ARBITRATION OF DISPUTES. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof or otherwise arising out of the
Executive's employment or the termination of that employment (including, without
limitation, any claims of unlawful employment discrimination whether based on
age or otherwise) shall, to the fullest extent permitted by law, be settled by
arbitration in any forum and form agreed upon by the parties or, in the absence
of such an agreement, under the auspices of the American Arbitration Association
("AAA") in Denver, Colorado in accordance with the Employment Dispute Resolution
Rules of the AAA, including, but not limited to, the rules and procedures
applicable to the selection of arbitrators. In the event that any person or
entity other than the Executive or the Employer may be a party with regard to
any such controversy or claim, such controversy or claim shall be submitted to
arbitration subject to such other person or entity's agreement. Judgment upon
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. This Section 8 shall be specifically enforceable.
Notwithstanding the foregoing, this Section 8 shall not preclude either party
from pursuing a court action for the sole purpose of obtaining a temporary
restraining order or a preliminary injunction in circumstances in which such
relief is appropriate; PROVIDED, that any other relief shall be pursued through
an arbitration proceeding pursuant to this Section 8.

         9. CONSENT TO JURISDICTION. To the extent that any court action is
permitted consistent with or to enforce Section 8 of this Agreement, the parties
hereby consent to the jurisdiction of the courts of the State of Colorado.
Accordingly, with respect to any such court action, the

<PAGE>

Executive (a) submits to the personal jurisdiction of such courts; (b) consents
to service of process; and (c) waives any other requirement (whether imposed by
statute, rule of court, or otherwise) with respect to personal jurisdiction or
service of process.

         10. INTEGRATION. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements between the parties with respect to any related subject matter.

         11. ASSIGNMENT; SUCCESSORS AND ASSIGNS, ETC. Neither the Employer nor
the Executive may make any assignment of this Agreement or any interest herein,
by operation of law or otherwise, without the prior written consent of the other
party; PROVIDED, that the Employer may assign its rights under this Agreement
without the consent of the Executive in the event that the Employer shall effect
a reorganization, consolidate with or merge into any other corporation,
partnership, organization or other entity, or transfer all or substantially all
of its properties or assets to any other corporation, partnership, organization
or other entity. This Agreement shall inure to the benefit of and be binding
upon the Employer and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns.

         12. ENFORCEABILITY. If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.

         13. WAIVER. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.

         14. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, to the
Executive at the last address the Executive has filed in writing with the
Employer or, in the case of the Employer, at 1140 Pearl Street, Boulder, CO
80302, ATTN: Chief Executive Officer, and shall be effective on the date of
delivery in person or by courier or three (3) days after the date mailed.

         15. AMENDMENT. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Employer.

         16. GOVERNING LAW. This is a Colorado contract and shall be construed
under and be governed in all respects by the laws of the State of Colorado,
without giving effect to the conflict of laws principles of such State.

<PAGE>

         17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to be
an original; but such counterparts shall together constitute one and the same
document.

         IN WITNESS WHEREOF, this Agreement has been executed by the Employer
and by the Executive as of the Effective Date.

                                    INCENTRA SOLUTIONS, INC.:

                                    By: /s/ THOMAS P. SWEENEY
                                       ----------------------
                                    Name: Thomas P. Sweeney, III
                                    Title: President & CEO

                                    EXECUTIVE:

                                     /s/ ANTHONY DIPAOLO
                                    -------------------------
                                    Anthony DiPaolo

                                    FEBRUARY 15, 2007
                                    -----------------
                                    Date

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