Document:

INCENTRA SOLUTIONS, INC.

                          SECURITIES PURCHASE AGREEMENT

                                 MARCH 31, 2006

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                                TABLE OF CONTENTS

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                                                                            ----

1.    Agreement to Sell and Purchase...........................................1

2.    Fees and Warrant.........................................................1

3.    Closing, Delivery and Payment............................................2
      3.1        Closing.......................................................2
      3.2        Delivery......................................................2

4.    Representations and Warranties of the Company............................3
      4.1        Organization, Good Standing and Qualification.................3
      4.2        Subsidiaries..................................................3
      4.3        Capitalization; Voting Rights.................................4
      4.4        Authorization; Binding Obligations............................4
      4.5        Liabilities...................................................5
      4.6        Agreements; Action............................................5
      4.7        Obligations to Related Parties................................6
      4.8        Changes.......................................................6
      4.9        Title to Properties and Assets; Liens, Etc....................7
      4.10       Intellectual Property.........................................8
      4.11       Compliance with Other Instruments.............................8
      4.12       Litigation....................................................9
      4.13       Tax Returns and Payments......................................9
      4.14       Employees.....................................................9
      4.15       Registration Rights and Voting Rights........................10
      4.16       Compliance with Laws; Permits................................10
      4.17       Environmental and Safety Laws................................11
      4.18       Valid Offering...............................................11
      4.19       Full Disclosure..............................................11
      4.20       Insurance....................................................11
      4.21       SEC Reports..................................................11
      4.22       Listing......................................................12
      4.23       No Integrated Offering.......................................12
      4.24       Stop Transfer................................................12
      4.25       Dilution.....................................................12
      4.26       Patriot Act..................................................12
      4.27       ERISA........................................................12

5.    Representations and Warranties of the Purchaser.........................13
      5.1        No Shorting..................................................13
      5.2        Requisite Power and Authority................................13
      5.3        Investment Representations...................................14
      5.4        Purchaser Bears Economic Risk................................14
      5.5        Acquisition for Own Account..................................14
      5.6        Purchaser Can Protect Its Interest...........................14

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      5.7        Accredited Investor..........................................15
      5.8        Legends......................................................15

6.    Covenants of the Company................................................16
      6.1        Stop-Orders..................................................16
      6.2        Listing......................................................16
      6.3        Market Regulations...........................................16
      6.4        Reporting Requirements.......................................16
      6.5        Use of Funds.................................................17
      6.6        Access to Facilities.........................................17
      6.7        Taxes........................................................17
      6.8        Insurance....................................................17
      6.9        Intellectual Property........................................18
      6.10       Properties...................................................18
      6.11       Confidentiality..............................................19
      6.12       Required Approvals...........................................19
      6.13       Reissuance of Securities.....................................20
      6.14       Opinion......................................................20
      6.15       Margin Stock.................................................20
      6.16       [Intentionally Deleted]......................................20
      6.17        Notice of Default...........................................19

7.    Covenants of the Purchaser..............................................21
      7.1        Confidentiality..............................................21
      7.2        Non-Public Information.......................................21
      7.3        LIMITATION ON ACQUISITION OF COMMON STOCK OF THE COMPANY.....19

8.    Covenants of the Company and Purchaser Regarding Indemnification........21
      8.1        Company Indemnification......................................21
      8.2        Purchaser's Indemnification..................................21
      8.3        Procedures...................................................22

9.    Registration Rights.....................................................22
      9.1        Registration Rights Granted..................................22
      9.2        Offering Restrictions........................................22

10.   Miscellaneous...........................................................22
      10.1       Governing Law................................................22
      10.2       Survival.....................................................23
      10.3       Successors...................................................23
      10.4       Entire Agreement.............................................23
      10.5       Severability.................................................24
      10.6       Amendment and Waiver.........................................24
      10.7       Delays or Omissions..........................................24
      10.8       Notices......................................................24
      10.9       Titles and Subtitles.........................................25

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      10.10      Facsimile Signatures; Counterparts...........................25
      10.11      Broker's Fees................................................25
      10.12      Construction.................................................25
      10.13      Proxy........................................................25

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                                LIST OF EXHIBITS

Form of Convertible Note...........................................  Exhibit A-1
Form of Non-Convertible Note                                         Exhibit A-2
Form of Warrant....................................................  Exhibit B
Form of Opinion....................................................  Exhibit C
Form of Escrow Agreement...........................................  Exhibit D
Form of Disbursement Letter........................................  Exhibit E
Form of Subsidiary Guarantee.......................................  Exhibit F

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                          SECURITIES PURCHASE AGREEMENT

      THIS SECURITIES  PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of March 31, 2006,  by and between  INCENTRA  SOLUTIONS,  INC., a Nevada
corporation  (the  "Company"),  and LAURUS MASTER FUND,  LTD., a Cayman  Islands
company (the "Purchaser").

                                    RECITALS

      WHEREAS,  the Company has  authorized  the sale to the  Purchaser of (x) a
Secured  Convertible Term Note in the aggregate  principal amount of One Million
Five Hundred Thousand  Dollars  ($1,500,000)  (the  "Convertible  Note"),  which
Convertible  Note is  convertible  into shares of the  Company's  common  stock,
$0.001 par value per share (the "Common Stock"),  at an initial fixed conversion
price of $1.40 per share of Common Stock  ("Fixed  Conversion  Price") and (y) a
non-convertible  Secured  Term  Note in the  aggregate  principal  amount of One
Million Seven Hundred Fifty Thousand Dollars ($1,750,000) (the  "Non-Convertible
Note" and, together with the Convertible Note, the "Notes" and each, a "Note");

      WHEREAS,  the  Company  wishes  to issue a  warrant  to the  Purchaser  to
purchase  up to  417,857  shares  of the  Company's  Common  Stock  (subject  to
adjustment as set forth therein) in connection with Purchaser's  purchase of the
Notes;

      WHEREAS,  Purchaser  desires to  purchase  the Notes and the  Warrant  (as
defined in Section 2) on the terms and conditions set forth herein; and

      WHEREAS,  the  Company  desires to issue and sell the Notes and Warrant to
Purchaser on the terms and conditions set forth herein.

                                    AGREEMENT

      NOW, THEREFORE,  in consideration of the foregoing recitals and the mutual
promises,  representations,  warranties and covenants  hereinafter set forth and
for other good and valuable consideration,  the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

      1.  AGREEMENT TO SELL AND PURCHASE.  Pursuant to the terms and  conditions
set forth in this Agreement,  on the Closing Date (as defined in Section 3), the
Company  agrees to sell to the  Purchaser,  and the  Purchaser  hereby agrees to
purchase from the Company, the Notes and the Warrant.. The offering of the Notes
and the Warrant  purchased on the Closing Date shall be known as the "Offering."
A form of the  Convertible  Note is annexed  hereto as Exhibit A-1 and a form of
the Non-Convertible Note is annexed hereto as Exhibit A-2. The Notes will mature
on  the  respective   Maturity  Date  (as  defined  in  the  respective   Note).
Collectively, the Notes and the Warrant (as defined in Section 2) and the Common
Stock  issuable  in payment of the  Convertible  Note,  upon  conversion  of the
Convertible  Note  and upon  exercise  of the  Warrant  are  referred  to as the
"Securities."

      2. FEES AND WARRANT. On the Closing Date:

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            (a) The Company will issue and deliver to the Purchaser a Warrant to
      purchase  up to  417,857  shares of Common  Stock in  connection  with the
      Offering (the "Warrant") pursuant to Section 1 hereof. The Warrant must be
      delivered  on the  Closing  Date.  A form of Warrant is annexed  hereto as
      Exhibit  B. The  shares of Common  Stock  issuable  upon  exercise  of the
      Warrant are hereinafter as referred to as the "Warrant Shares".

            (b) Subject to the terms of Section  2(d) below,  the Company  shall
      pay to Laurus Capital  Management,  LLC, the manager of the  Purchaser,  a
      closing  payment in an amount equal to three and one-half  percent (3.50%)
      of the  aggregate  principal  amount of the Notes.  The  foregoing  fee is
      referred to herein as the "Closing Payment."

            (c) The Company shall  reimburse  the  Purchaser for its  reasonable
      legal fees for services  rendered to the Purchaser in  preparation of this
      Agreement  and  the  Related  Agreements  (as  hereinafter  defined),  and
      reasonable   out-of-pocket   expenses  incurred  in  connection  with  the
      Purchaser's due diligence  review of the Company and its  Subsidiaries (as
      defined in Section 6.8) and all related  matters.  Amounts  required to be
      paid under this  Section  2(c) will be paid on the Closing  Date and shall
      not exceed $20,000.

            (d) The  Closing  Payment,  the  legal  fees  and the due  diligence
      expenses (net of deposits previously paid by the Company) shall be paid at
      closing out of funds held  pursuant to a Funds  Escrow  Agreement  of even
      date herewith among the Company, Purchaser and an Escrow Agent in the form
      attached  hereto  as  Exhibit  D  (the  "Funds  Escrow  Agreement")  and a
      disbursement  letter  in  the  form  attached  hereto  as  Exhibit  E (the
      "Disbursement Letter").

      3. CLOSING, DELIVERY AND PAYMENT.

            3.1 CLOSING.  Subject to the terms and  conditions set forth herein,
the closing of the transactions contemplated hereby (the "Closing"),  shall take
place on such date,  and at such time or place,  as the  Company  and  Purchaser
shall  mutually  agree (such date is  hereinafter  referred  to as the  "Closing
Date").

            3.2  DELIVERY.  Pursuant to the Funds  Escrow  Agreement in the form
attached  hereto as Exhibit C, at the Closing on the Closing  Date,  the Company
will deliver to the  Purchaser,  among other things,  a Convertible  Note in the
form attached as Exhibit A-1 representing the aggregate  principal amount of One
Million Five Hundred Thousand Dollars  ($1,500,000),  a Non-Convertible  Note in
the form attached as Exhibit A-2 representing the aggregate  principal amount of
One Million Seven Hundred Fifty Thousand  Dollars  ($1,750,000) and a Warrant in
the form  attached as Exhibit B in the  Purchaser's  name  representing  417,857
Warrant  Shares and the  Purchaser  will  deliver to the  Company,  among  other
things,  the amounts set forth in the  Disbursement  Letter by wire  transfer of
immediately  available  funds to an account of the Company as the Company  shall
direct in writing.  The Company hereby  acknowledges and agrees that Purchaser's
obligation  to purchase  the Note from the Company on the Closing  Date shall be
contingent upon the satisfaction (or waiver by the Purchaser in its sole

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discretion) of the items and matters set forth in the closing checklist provided
by the Purchaser to the Company on or prior to the Closing Date.

      4.  REPRESENTATIONS  AND  WARRANTIES  OF THE COMPANY.  The Company  hereby
represents and warrants to the Purchaser as follows:

            4.1  ORGANIZATION,  GOOD  STANDING  AND  QUALIFICATION.  Each of the
Company and each of its  Subsidiaries  is a corporation,  partnership or limited
liability company,  as the case may be, duly organized,  validly existing and in
good standing under the laws of its  jurisdiction of  organization.  Each of the
Company and each of its  Subsidiaries  has the corporate  power and authority to
own and operate its properties and assets.  The Company has the corporate  power
and authority to execute and deliver (i) this Agreement,  (ii) the Notes and the
Warrant to be issued in connection with this Agreement,  (iii) the Reaffirmation
and  Ratification  Agreement  dated as of the date hereof  between the  Company,
certain  subsidiaries of the Company and the Purchaser (as amended,  modified or
supplemented  from  time to  time,  the  "Reaffirmation  Agreement"),  (iv)  the
Registration  Rights Agreement  relating to the Convertible Note and the Warrant
dated as of the date hereof  between the Company and the  Purchaser (as amended,
modified  or  supplemented   from  time  to  time,  the   "Registration   Rights
Agreement"),  (v) the Funds Escrow  Agreement  dated as of the date hereof among
the Company, the Purchaser and the escrow agent referred to therein (as amended,
modified or  supplemented  from time to time, the "Funds Escrow  Agreement") and
(vi) all other  agreements  related to this  Agreement  and the  Securities  and
referred to herein (the preceding  clauses (ii) through (vi),  together with (a)
that certain Master  Security  Agreement,  dated as of May 13, 2004 by and among
the Company,  certain subsidiaries of the Company and the Purchaser (as amended,
modified  or  supplemented   from  time  to  time,  the  "2004  Master  Security
Agreement"),  (b) that certain Stock Pledge  Agreement,  dated as of February 6,
2006,  by and among the  Company,  certain  Subsidiaries  of the Company and the
Purchaser (as amended,  modified or  supplemented  from time to time,  the "2006
Stock Pledge  Agreement",  (c) that certain  Subsidiary  Guarantee,  dated as of
February 6, 2006,  made by certain  subsidiaries of the Company to the Purchaser
(as amended,  modified or supplemented  from time to time, the "2006  Subsidiary
Guarantee")  and (d) that certain  Security  Agreement,  dated as of February 6,
2006,  by and among the  Company,  certain  subsidiaries  of the Company and the
Purchaser (as amended,  modified or  supplemented  from time to time,  the "2006
Security Agreement"), collectively, the "Related Agreements"), to issue and sell
the  Notes and the  shares  of Common  Stock  issuable  upon  conversion  of the
Convertible  Note (the "Note  Shares"),  to issue and sell the  Warrant  and the
Warrant  Shares,  and to carry  out the  provisions  of this  Agreement  and the
Related Agreements and to carry on its business as presently conducted.  Each of
the Company and each of its  Subsidiaries is duly qualified and is authorized to
do business and is in good  standing as a foreign  corporation,  partnership  or
limited liability company, as the case may be, in all jurisdictions in which the
nature of its  activities  and of its  properties  (both owned and leased) makes
such qualification necessary, except for those jurisdictions in which failure to
do so has not, or could not reasonably be expected to have,  individually  or in
the aggregate, a material adverse effect on the business,  assets,  liabilities,
condition (financial or otherwise),  properties,  operations or prospects of the
Company and it  Subsidiaries,  taken  individually  and as a whole (a  "Material
Adverse Effect").

            4.2  SUBSIDIARIES.  Each  direct  and  indirect  Subsidiary  of  the
Company,  the  direct  owner of such  Subsidiary  and its  percentage  ownership
thereof, is set forth on Schedule

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4.2. For the purpose of this  Agreement,  a "SUBSIDIARY" of any person or entity
means (i) a corporation or other entity whose shares of stock or other ownership
interests  having  ordinary  voting power  (other than stock or other  ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority  of the  directors  of such  corporation,  or other  persons or
entities  performing  similar  functions  for such person or entity,  are owned,
directly or indirectly,  by such person or entity or (ii) a corporation or other
entity in which such person or entity owns,  directly or  indirectly,  more than
50% of the equity interests at such time.

            4.3 CAPITALIZATION; VOTING RIGHTS.

            (a) The  authorized  capital  stock of the  Company,  as of the date
      hereof  consists of  205,000,000  shares,  of which  200,000 are shares of
      Common Stock,  13,326,810 shares of which are issued and outstanding,  and
      5,000,000  are  shares of  preferred  stock,  par value  $0.001 per share,
      2,466,971 of which shares of preferred  stock are issued and  outstanding.
      The  authorized  capital  stock of each  Subsidiary  of the Company is set
      forth on Schedule 4.3.

            (b) Except as disclosed on Schedule 4.3,  other than: (i) the shares
      reserved for issuance  under the Company's  2000 Equity  Incentive Plan or
      the Company's  Executive  Bonus Plan; and (ii) shares which may be granted
      pursuant to this Agreement,  the Related  Agreements and other  agreements
      between the Company and the Purchaser,  there are no outstanding  options,
      warrants,  rights (including conversion or preemptive rights and rights of
      first  refusal),  proxy or  stockholder  agreements,  or  arrangements  or
      agreements of any kind for the purchase or acquisition from the Company of
      any of its  securities.  Except as disclosed on Schedule 4.3,  neither the
      offer,  issuance or sale of the Notes or the  Warrant,  or the issuance of
      any of the Note  Shares or Warrant  Shares,  nor the  consummation  of any
      transaction  contemplated  hereby  will result in a change in the price or
      number of any securities of the Company  outstanding,  under anti-dilution
      or other similar provisions contained in or affecting any such securities.

            (c) All issued and outstanding shares of the Company's Common Stock:
      (i) have been duly  authorized  and validly  issued and are fully paid and
      nonassessable;  and (ii) were  issued in  compliance  with all  applicable
      state and federal laws concerning the issuance of securities.

            (d) The rights,  preferences,  privileges  and  restrictions  of the
      shares of the Common Stock are as stated in the Company's  Certificate  of
      Incorporation  (the  "Charter").  The Note Shares and Warrant  Shares have
      been duly and validly  reserved for  issuance.  When issued in  compliance
      with the  provisions  of this  Agreement and the  Company's  Charter,  the
      Securities will be validly issued, fully paid and nonassessable,  and will
      be  free  of any  liens  or  encumbrances;  provided,  however,  that  the
      Securities may be subject to  restrictions  on transfer under state and/or
      federal  securities  laws as set forth herein or as otherwise  required by
      such laws at the time a transfer is proposed.

            4.4 AUTHORIZATION;  BINDING OBLIGATIONS. All corporate action on the
part of the Company  (including  its officers and  directors)  necessary for the
authorization of this Agreement and the Related  Agreements,  the performance of
all obligations of the Company

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hereunder  and  under the other  Related  Agreements  at the  Closing  and,  the
authorization,  sale,  issuance  and  delivery of the Notes and Warrant has been
taken or will be taken  prior  to the  Closing.  This  Agreement  and the  other
Related  Agreements,  when  executed  and  delivered,  will be valid and binding
obligations of the Company,  enforceable  against the Company in accordance with
their terms, except:

            (a) as limited by applicable bankruptcy, insolvency, reorganization,
      moratorium or other laws of general application  affecting  enforcement of
      creditors' rights; and

            (b) general  principles of equity that restrict the  availability of
      equitable or legal remedies.

The sale of the Notes and the subsequent conversion of the Convertible Note into
Note Shares are not and will not be subject to any  preemptive  rights or rights
of first  refusal  that have not been  properly  waived or  complied  with.  The
issuance of the Warrant and the  subsequent  exercise of the Warrant for Warrant
Shares  are not and will not be subject  to any  preemptive  rights or rights of
first refusal that have not been properly waived or complied with.

            4.5 LIABILITIES. To the Company's knowledge, neither the Company nor
any of its Subsidiaries has any material contingent liabilities,  except current
liabilities  incurred  in  the  ordinary  course  of  business  and  liabilities
disclosed in any of the Company's  filings under the Securities  Exchange Act of
1934  ("Exchange  Act") made prior to the date of this Agreement  (collectively,
the  "Exchange  Act  Filings"),  copies  of  which  have  been  provided  to the
Purchaser.

            4.6 AGREEMENTS; ACTION. Except as set forth on Schedule 4.6:

            (a) there are no agreements, understandings, instruments, contracts,
      proposed  transactions,  judgments,  orders, writs or decrees to which the
      Company  or any of its  Subsidiaries  is a party  or by  which it is bound
      which may  involve:  (i)  obligations  (contingent  or  otherwise)  of, or
      payments to, the Company in excess of $100,000 (other than obligations of,
      or  payments  to,  the  Company  arising  from  purchase,  sale or license
      agreements  entered into in the ordinary course of business);  or (ii) the
      transfer  or  license  of any  patent,  copyright,  trade  secret or other
      proprietary right to or from the Company (other than licenses arising from
      the  purchase  of "off the shelf" or other  standard  products);  or (iii)
      provisions restricting the development, manufacture or distribution of the
      Company's  products or services;  or (iv)  indemnification  by the Company
      with respect to infringements of proprietary rights.

            (b) Since  December  31,  2004,  except  equipment  leasing  through
      CommVest,  LLC,  as  previously  consented  to by  Purchaser,  neither the
      Company  nor  any of its  Subsidiaries  has:  (i)  declared  or  paid  any
      dividends,  or authorized or made any distribution upon or with respect to
      any class or series of its capital stock;  (ii) incurred any  indebtedness
      for money borrowed or any other  liabilities  (other than ordinary  course
      obligations)  individually  in  excess  of  $50,000  or,  in the  case  of
      indebtedness and/or liabilities  individually less than $50,000, in excess
      of  $100,000  in the  aggregate;  (iii) made any loans or  advances to any
      person not in excess, individually or in the aggregate,

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      of $100,000,  other than ordinary course advances for travel expenses;  or
      (iv) sold,  exchanged or otherwise disposed of any of its assets or rights
      valued  in  excess  of  $50,000,  other  than in the  ordinary  course  of
      business.

            (c)  For  the  purposes  of  subsections  (a)  and  (b)  above,  all
      indebtedness,   liabilities,  agreements,   understandings,   instruments,
      contracts  and proposed  transactions  involving the same person or entity
      (including  persons or  entities  the  Company  has reason to believe  are
      affiliated  therewith)  shall be aggregated for the purpose of meeting the
      individual minimum dollar amounts of such subsections.

            4.7 OBLIGATIONS TO RELATED PARTIES.  Except as set forth on Schedule
4.7,  there are no  obligations  of the  Company or any of its  Subsidiaries  to
officers,  directors,  stockholders  or  employees  of the Company or any of its
Subsidiaries other than:

            (a) for  payment  of  salary  for  services  rendered  and for bonus
      payments;

            (b) reimbursement for reasonable  expenses incurred on behalf of the
      Company and its Subsidiaries;

            (c) for other standard employee benefits made generally available to
      all employees  (including stock option  agreements  outstanding  under any
      stock option plan approved by the Board of Directors of the Company); and

            (d)  obligations  listed in the  Company's  financial  statements or
      disclosed in any of its Exchange Act Filings.

Except as  described  above or set  forth on  Schedule  4.7 or in the  Company's
Exchange Act Filings,  none of the  officers,  directors  or, to the best of the
Company's knowledge, key employees or stockholders of the Company or any members
of their immediate families, are indebted to the Company, individually or in the
aggregate,  in excess  of  $50,000  or have any  direct  or  indirect  ownership
interest in any firm or corporation with which the Company is affiliated or with
which the Company has a business relationship,  or any firm or corporation which
competes with the Company,  other than passive  investments  in publicly  traded
companies  (representing  less than one percent (1%) of such company)  which may
compete with the Company.  Except as described  above,  no officer,  director or
stockholder,  or any  member  of  their  immediate  families,  is,  directly  or
indirectly,  interested  in  any  material  contract  with  the  Company  and no
agreements, understandings or proposed transactions are contemplated between the
Company and any such person. Except as set forth on Schedule 4.7, the Company is
not a guarantor or indemnitor of any  indebtedness of any other person,  firm or
corporation.

            4.8 CHANGES.  Since  December  31, 2004,  except as disclosed in any
Exchange  Act  Filing  or in any  Schedule  to this  Agreement  or to any of the
Related Agreements, there has not been:

            (a) any  change  in the  business,  assets,  liabilities,  condition
      (financial  or  otherwise),  properties,  operations  or  prospects of the
      Company or any of its Subsidiaries, which individually or in the aggregate
      has had, or could  reasonably be expected to have,  individually or in the
      aggregate, a Material Adverse Effect;

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            (b) any  resignation or termination of any officer,  key employee or
      group of employees of the Company or any of its Subsidiaries;

            (c) any material change,  except in the ordinary course of business,
      in the contingent obligations of the Company or any of its Subsidiaries by
      way of guaranty, endorsement, indemnity, warranty or otherwise;

            (d) any  damage,  destruction  or loss,  whether  or not  covered by
      insurance,  has had, or could reasonably be expected to have, individually
      or in the aggregate, a Material Adverse Effect;

            (e)  any  waiver  by the  Company  or any of its  Subsidiaries  of a
      valuable right or of a material debt owed to it;

            (f) any direct or  indirect  loans made by the Company or any of its
      Subsidiaries  to any  stockholder,  employee,  officer or  director of the
      Company  or any of its  Subsidiaries,  other  than  advances  made  in the
      ordinary course of business;

            (g) any material change in any compensation arrangement or agreement
      with any employee,  officer, director or stockholder of the Company or any
      of its Subsidiaries;

            (h) any declaration or payment of any dividend or other distribution
      of the assets of the Company or any of its Subsidiaries;

            (i) any labor organization activity related to the Company or any of
      its Subsidiaries;

            (j)  any  debt,   obligation  or  liability  incurred,   assumed  or
      guaranteed  by the Company or any of its  Subsidiaries,  except  those for
      immaterial  amounts and for current  liabilities  incurred in the ordinary
      course of business;

            (k) any sale,  assignment  or transfer of any  patents,  trademarks,
      copyrights,  trade secrets or other intangible assets owned by the Company
      or any of its Subsidiaries;

            (l) any change in any material agreement to which the Company or any
      of its  Subsidiaries  is a party or by which  either the Company or any of
      its  Subsidiaries  is bound which either  individually or in the aggregate
      has had, or could  reasonably be expected to have,  individually or in the
      aggregate, a Material Adverse Effect;

            (m) any other  event or  condition  of any  character  that,  either
      individually or in the aggregate, has had, or could reasonably be expected
      to have, individually or in the aggregate, a Material Adverse Effect; or

            (n) any  arrangement  or  commitment  by the  Company  or any of its
      Subsidiaries to do any of the acts described in subsection (a) through (m)
      above.

            4.9 TITLE TO PROPERTIES AND ASSETS;  LIENS, ETC. Except as set forth
on Schedule 4.9, each of the Company and each of its  Subsidiaries  has good and
marketable title to its

                                       7
<PAGE>

properties  and assets,  and good title to its leasehold  estates,  in each case
subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than:

            (a) those resulting from taxes which have not yet become delinquent;

            (b) minor liens and  encumbrances  which do not  materially  detract
      from the value of the property  subject  thereto or materially  impair the
      operations of the Company or any of its Subsidiaries; and

            (c) those  that have  otherwise  arisen  in the  ordinary  course of
      business.

All facilities,  machinery,  equipment,  fixtures, vehicles and other properties
owned,  leased or used by the Company and its Subsidiaries are in good operating
condition and repair  (ordinary  wear and tear  excepted) and are reasonably fit
and usable for the purposes  for which they are being used.  Except as set forth
on Schedule 4.9, the Company and its  Subsidiaries  are in  compliance  with all
material terms of each lease to which it is a party or is otherwise bound.

            4.10 INTELLECTUAL  PROPERTY. (a) Each of the Company and each of its
      Subsidiaries  owns or  possesses  sufficient  legal rights to all patents,
      trademarks,   service  marks,  trade  names,  copyrights,  trade  secrets,
      licenses, information and other proprietary rights and processes necessary
      for its  business as now  conducted  and to the  Company's  knowledge,  as
      presently proposed to be conducted (the "Intellectual Property"),  without
      any known  infringement of the rights of others.  There are no outstanding
      options,  licenses or  agreements  of any kind  relating to the  foregoing
      proprietary rights, nor is the Company or any of its Subsidiaries bound by
      or a party to any options, licenses or agreements of any kind with respect
      to the patents, trademarks,  service marks, trade names, copyrights, trade
      secrets, licenses,  information and other proprietary rights and processes
      of any other  person or entity  other  than such  licenses  or  agreements
      arising from the purchase of "off the shelf" or standard products.

            (b) Neither the Company nor any of its Subsidiaries has received any
      communications  alleging that the Company or any of its  Subsidiaries  has
      violated  any of the  patents,  trademarks,  service  marks,  trade names,
      copyrights  or trade  secrets  or other  proprietary  rights  of any other
      person or entity,  nor is the Company or any of its Subsidiaries  aware of
      any basis therefor.

            (c) The  Company  does not  believe  it is or will be  necessary  to
      utilize any inventions, trade secrets or proprietary information of any of
      its employees made prior to their  employment by the Company or any of its
      Subsidiaries,   except  for  inventions,   trade  secrets  or  proprietary
      information  that have been  rightfully  assigned to the Company or any of
      its Subsidiaries.

            4.11  COMPLIANCE  WITH OTHER  INSTRUMENTS.  Except as  disclosed  on
Schedule 4.11,  neither the Company nor any of its  Subsidiaries is in violation
or default of (x) any term of its Charter or Bylaws,  or (y) of any provision of
any  indebtedness,  mortgage,  indenture,  contract,  agreement or instrument to
which it is party or by which it is bound or of any judgment,  decree,  order or
writ,  which  violation or default,  in the case of this clause (y), has had, or
could reasonably be expected to have, either individually or in the aggregate, a
Material Adverse

                                       8
<PAGE>

Effect.  The execution,  delivery and  performance  of and compliance  with this
Agreement and the Related  Agreements  to which it is a party,  and the issuance
and sale of the Notes by the Company and the other  Securities  by the  Company,
each pursuant hereto and thereto,  will not, with or without the passage of time
or giving of notice,  result in any such material  violation,  or be in conflict
with or constitute a default under any such term or provision,  or result in the
creation of any mortgage,  pledge,  lien,  encumbrance or charge upon any of the
properties  or  assets  of  the  Company  or  any  of  its  Subsidiaries  or the
suspension,  revocation,  impairment,  forfeiture  or  nonrenewal of any permit,
license,  authorization or approval  applicable to the Company,  its business or
operations or any of its assets or properties.

            4.12 LITIGATION.  Except as set forth on Schedule 4.12 hereto, there
is no action,  suit,  proceeding or  investigation  pending or, to the Company's
knowledge,  currently  threatened against the Company or any of its Subsidiaries
that  prevents the Company or any of its  Subsidiaries  from  entering into this
Agreement or the other Related Agreements, or from consummating the transactions
contemplated  hereby  or  thereby,  or which  has had,  or could  reasonably  be
expected to have,  either  individually or in the aggregate,  a Material Adverse
Effect or any change in the current  equity  ownership  of the Company or any of
its Subsidiaries, nor is the Company aware that there is any basis to assert any
of the foregoing.  Neither the Company nor any of its Subsidiaries is a party or
subject to the provisions of any order, writ, injunction,  judgment or decree of
any court or government  agency or  instrumentality.  There is no action,  suit,
proceeding or investigation by the Company or any of its Subsidiaries  currently
pending or which the Company or any of its Subsidiaries intends to initiate.

            4.13 TAX RETURNS AND PAYMENTS. Except as set forth on Schedule 4.13,
each of the  Company  and each of its  Subsidiaries  has  timely  filed  all tax
returns  (federal,  state and local) required to be filed by it. All taxes shown
to be due and payable on such returns,  any assessments  imposed,  and all other
taxes due and payable by the Company or any of its Subsidiaries on or before the
Closing,  have  been  paid or  will  be  paid  prior  to the  time  they  become
delinquent. Except as set forth on Schedule 4.13, neither the Company nor any of
its Subsidiaries has been advised:

            (a) that any of its returns,  federal,  state or other, have been or
      are being audited as of the date hereof; or

            (b) of any  deficiency  in  assessment  or proposed  judgment to its
      federal, state or other taxes.

The Company has no knowledge of any  liability of any tax to be imposed upon its
properties  or assets as of the date of this  Agreement  that is not  adequately
provided for.

            4.14  EMPLOYEES.  Except as set forth on Schedule 4.14,  neither the
Company nor any of its  Subsidiaries  has any collective  bargaining  agreements
with any of its employees.  There is no labor union organizing  activity pending
or, to the Company's knowledge, threatened with respect to the Company or any of
its Subsidiaries. Except as disclosed in the Exchange Act Filings or on Schedule
4.14,  neither the Company nor any of its Subsidiaries is a party to or bound by
any currently effective employment contract,  deferred compensation arrangement,
bonus plan,  incentive plan, profit sharing plan,  retirement agreement or other
employee

                                       9
<PAGE>

compensation plan or agreement.  To the Company's knowledge,  no employee of the
Company or any of its Subsidiaries,  nor any consultant with whom the Company or
any of its  Subsidiaries  has  contracted,  is in  violation  of any term of any
employment contract,  proprietary  information  agreement or any other agreement
relating to the right of any such  individual  to be employed by, or to contract
with,  the  Company  or any of its  Subsidiaries  because  of the  nature of the
business to be conducted by the Company or any of its  Subsidiaries;  and to the
Company's  knowledge  the  continued  employment  by the  Company  or any of its
Subsidiaries of its present employees,  and the performance of the Company's and
its Subsidiaries' contracts with its independent contractors, will not result in
any such  violation.  Neither the Company nor any of its  Subsidiaries  is aware
that any of its employees is obligated under any contract  (including  licenses,
covenants or  commitments of any nature) or other  agreement,  or subject to any
judgment,  decree or order of any court or  administrative  agency,  that  would
interfere with their duties to the Company or any of its  Subsidiaries.  Neither
the Company nor any of its  Subsidiaries  has received any notice  alleging that
any such  violation  has  occurred.  Except  for  employees  who have a  current
effective employment  agreement with the Company or any of its Subsidiaries,  no
employee of the Company or any of its Subsidiaries has been granted the right to
continued  employment  by the  Company  or any  of  its  Subsidiaries  or to any
material  compensation  following  termination of employment with the Company or
any of its  Subsidiaries.  Except as set forth on Schedule  4.14, the Company is
not aware  that any  officer,  key  employee  or group of  employees  intends to
terminate  his,  her  or  their  employment  with  the  Company  or  any  of its
Subsidiaries,  nor does the  Company or any of its  Subsidiaries  have a present
intention to terminate the  employment of any officer,  key employee or group of
employees.

            4.15 REGISTRATION  RIGHTS AND VOTING RIGHTS.  Except as set forth on
Schedule  4.15 and except as  disclosed  in Exchange  Act  Filings,  neither the
Company nor any of its  Subsidiaries  is  presently  under any  obligation,  and
neither  the  Company nor any of its  Subsidiaries  has  granted any rights,  to
register  any  of  the  Company's  or its  Subsidiaries'  presently  outstanding
securities or any of its securities that may hereafter be issued.  Except as set
forth on Schedule  4.15 and except as disclosed in Exchange Act Filings,  to the
Company's  knowledge,  no stockholder of the Company or any of its  Subsidiaries
has entered into any agreement  with respect to the voting of equity  securities
of the Company or any of its Subsidiaries.

            4.16 COMPLIANCE WITH LAWS;  PERMITS.  Neither the Company nor any of
its Subsidiaries is in violation of any applicable  statute,  rule,  regulation,
order  or   restriction   of  any   domestic  or  foreign   government   or  any
instrumentality  or agency  thereof in respect of the conduct of its business or
the ownership of its properties  which has had, or could  reasonably be expected
to have, either individually or in the aggregate,  a Material Adverse Effect. No
governmental  orders,  permissions,  consents,  approvals or authorizations  are
required to be obtained and no  registrations or declarations are required to be
filed in connection  with the  execution  and delivery of this  Agreement or any
other Related  Agreement and the issuance of any of the Securities,  except such
as has been duly and validly  obtained or filed,  or with respect to any filings
that must be made after the Closing,  as will be filed in a timely manner.  Each
of the  Company  and its  Subsidiaries  has all  material  franchises,  permits,
licenses and any similar authority  necessary for the conduct of its business as
now being  conducted by it, the lack of which could,  either  individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.

                                       10
<PAGE>

            4.17  ENVIRONMENTAL AND SAFETY LAWS.  Neither the Company nor any of
its  Subsidiaries is in violation of any applicable  statute,  law or regulation
relating  to the  environment  or  occupational  health and  safety,  and to its
knowledge,  no material  expenditures are or will be required in order to comply
with any such  existing  statute,  law or  regulation.  Except  as set  forth on
Schedule  4.17, no Hazardous  Materials (as defined below) are used or have been
used,  stored,  or disposed of by the Company or any of its  Subsidiaries or, to
the Company's  knowledge,  by any other person or entity on any property  owned,
leased or used by the Company or any of its  Subsidiaries.  For the  purposes of
the preceding sentence, "Hazardous Materials" shall mean:

            (a) materials  which are listed or otherwise  defined as "hazardous"
      or "toxic" under any applicable local, state,  federal and/or foreign laws
      and regulations  that govern the existence  and/or remedy of contamination
      on property,  the protection of the environment  from  contamination,  the
      control of  hazardous  wastes,  or other  activities  involving  hazardous
      substances, including building materials; or

            (b) any petroleum products or nuclear materials.

            4.18 VALID  OFFERING.  Assuming the accuracy of the  representations
and warranties of the Purchaser contained in this Agreement, the offer, sale and
issuance of the Securities will be exempt from the registration  requirements of
the Securities  Act of 1933, as amended (the  "Securities  Act"),  and will have
been registered or qualified (or are exempt from registration and qualification)
under the registration,  permit or qualification  requirements of all applicable
state securities laws.

            4.19  FULL  DISCLOSURE.   Each  of  the  Company  and  each  of  its
Subsidiaries  has provided the Purchaser with all  information  requested by the
Purchaser  in  connection  with its  decision to purchase the Notes and Warrant.
Neither this  Agreement,  the Related  Agreements,  the  exhibits and  schedules
hereto and thereto nor any other document delivered by the Company or any of its
Subsidiaries  to Purchaser or its attorneys or agents in connection  herewith or
therewith or with the transactions  contemplated hereby or thereby,  contain any
untrue  statement of a material fact nor omit to state a material fact necessary
in order to make the  statements  contained  herein or therein,  in light of the
circumstances in which they are made, not misleading.  Any financial projections
and other  estimates  provided  to the  Purchaser  by the  Company or any of its
Subsidiaries were based on the Company's and its Subsidiaries' experience in the
industry and on  assumptions  of fact and opinion as to future  events which the
Company  or  any of its  Subsidiaries,  at the  date  of the  issuance  of  such
projections or estimates, believed to be reasonable.

            4.20 INSURANCE. Each of the Company and each of its Subsidiaries has
general commercial, product liability, fire and casualty insurance policies with
coverages  which the Company  believes are  customary  for  companies  similarly
situated to the Company and its Subsidiaries in the same or similar business.

            4.21 SEC REPORTS.  Except as set forth on Schedule 4.21, the Company
has filed all proxy statements, reports and other documents required to be filed
by it under the Securities  Exchange Act 1934, as amended (the "Exchange  Act").
The Company has furnished

                                       11
<PAGE>

the  Purchaser  with a copy of its Annual  Report on Form  10-KSB for its fiscal
years ended December 31, 2003 and December 31, 2004 and its Quarterly Reports on
Form 10-Q for the  fiscal  quarters  ended  March 31,  2005,  June 30,  2005 and
September 30, 2005 (the "SEC Reports"). To the knowledge of the Company, the SEC
Reports  were, at the time of its filing,  in  substantial  compliance  with the
requirements  of its  form  and  neither  the SEC  Reports,  nor  the  financial
statements (and the notes thereto) included in the SEC Reports, as of its filing
date,  contained  any untrue  statement of a material fact or omitted to state a
material fact required to be stated  therein or necessary to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.

            4.22 LISTING.  The  Company's  Common Stock is listed for trading on
the National Association of Securities Dealers, Inc.  Over-the-Counter  Bulletin
Board ("OTC BB") and satisfies all  requirements  for the  continuation  of such
listing.  The Company has not  received any notice that its Common Stock will be
delisted from OTC BB or that its Common Stock does not meet all requirements for
listing.

            4.23 NO  INTEGRATED  OFFERING.  Neither the Company,  nor any of its
Subsidiaries  or affiliates,  nor any person acting on its or their behalf,  has
directly or indirectly made any offers or sales of any security or solicited any
offers to buy any security under  circumstances that would cause the offering of
the Securities pursuant to this Agreement or any of the Related Agreements to be
integrated  with prior  offerings by the Company for purposes of the  Securities
Act which would prevent the Company from selling the Securities pursuant to Rule
506 under the  Securities  Act, or any applicable  exchange-related  stockholder
approval  provisions,  nor  will  the  Company  or  any  of  its  affiliates  or
Subsidiaries  take any  action or steps  that would  cause the  offering  of the
Securities to be integrated with other offerings.

            4.24 STOP TRANSFER.  The Securities are restricted  securities as of
the date of this Agreement. Neither the Company nor any of its Subsidiaries will
issue any stop transfer  order or other order  impeding the sale and delivery of
any of the  Securities at such time as the  Securities are registered for public
sale or an exemption from registration is available, except as required by state
and federal securities laws.

            4.25  DILUTION.  The  Company  specifically  acknowledges  that  its
obligation  to  issue  the  shares  of  Common  Stock  upon  conversion  of  the
Convertible  Note and  exercise of the  Warrant is binding  upon the Company and
enforceable  regardless  of the dilution such issuance may have on the ownership
interests of other shareholders of the Company.

            4.26  PATRIOT  ACT.  The  Company  certifies  that,  to the  best of
Company's  knowledge,  neither the Company nor any of its  Subsidiaries has been
designated,  and is not  owned or  controlled,  by a  "suspected  terrorist"  as
defined in  Executive  Order 13224.  The Company  hereby  acknowledges  that the
Purchaser seeks to comply with all applicable laws concerning  money  laundering
and related  activities.  In furtherance  of those  efforts,  the Company hereby
represents,  warrants and agrees that: (i) none of the cash or property that the
Company or any of its Subsidiaries  will pay or will contribute to the Purchaser
has been or shall be derived  from,  or related to, any activity  that is deemed
criminal  under United  States law; and (ii) no  contribution  or payment by the
Company or any of its Subsidiaries to the Purchaser, to the

                                       12
<PAGE>

extent that they are within the Company's and/or its Subsidiaries' control shall
cause the  Purchaser to be in  violation of the United  States Bank Secrecy Act,
the United  States  International  Money  Laundering  Control Act of 1986 or the
United  States  International  Money  Laundering  Abatement  and  Anti-Terrorist
Financing Act of 2001. The Company shall promptly notify the Purchaser if any of
these  representations  ceases to be true and accurate  regarding the Company or
any of its  Subsidiaries.  The  Company  agrees to  provide  the  Purchaser  any
additional information regarding the Company or any of its Subsidiaries that the
Purchaser deems necessary or convenient to ensure compliance with all applicable
laws concerning money laundering and similar activities. The Company understands
and  agrees  that if at any  time it is  discovered  that  any of the  foregoing
representations  are  incorrect,  or if otherwise  required by applicable law or
regulation related to money laundering or similar activities,  the Purchaser may
undertake  appropriate  actions  to ensure  compliance  with  applicable  law or
regulation,  including but not limited to segregation  and/or  redemption of the
Purchaser's  investment in the Company. The Company further understands that the
Purchaser  may  release  confidential  information  about  the  Company  and its
Subsidiaries  and, if applicable,  any underlying  beneficial  owners, to proper
authorities if the Purchaser,  in its sole discretion,  determines that it is in
the best interests of the Purchaser in light of relevant  rules and  regulations
under the laws set forth in subsection (ii) above.

      4.27 ERISA. Based upon the Employee Retirement Income Security Act of 1974
("ERISA"),  and the regulations and published  interpretations  thereunder:  (i)
neither the Company nor any of its  Subsidiaries  has engaged in any  Prohibited
Transactions  (as  defined  in  Section  406 of ERISA  and  Section  4975 of the
Internal  Revenue  Code of 1986,  as  amended  (the  "CODE"));  (ii) each of the
Company and each of its  Subsidiaries  has met all  applicable  minimum  funding
requirements  under Section 302 of ERISA in respect of its plans;  (iii) neither
the  Company  nor any of its  Subsidiaries  has any  knowledge  of any  event or
occurrence  which  would  cause the  Pension  Benefit  Guaranty  Corporation  to
institute  proceedings under Title IV of ERISA to terminate any employee benefit
plan(s);  (iv) neither the Company nor any of its Subsidiaries has any fiduciary
responsibility for investments with respect to any plan existing for the benefit
of persons  other than the  Company's or such  Subsidiary's  employees;  and (v)
neither the Company nor any of its  Subsidiaries  has  withdrawn,  completely or
partially,  from any multi-employer  pension plan so as to incur liability under
the Multiemployer Pension Plan Amendments Act of 1980.

      5.  REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.  The Purchaser hereby
represents  and  warrants to the Company as follows  (such  representations  and
warranties do not lessen or obviate the  representations  and  warranties of the
Company set forth in this Agreement):

            5.1 NO SHORTING. Neither the Purchaser nor any of its affiliates and
investment partners has, will nor will cause any person or entity,  directly, to
engage in "short  sales" of the Company's  Common Stock,  , as long as the Notes
shall be outstanding.

            5.2 REQUISITE  POWER AND AUTHORITY.  The Purchaser has all necessary
power and  authority  under all  applicable  provisions  of law to  execute  and
deliver  this  Agreement  and the  Related  Agreements  and to carry  out  their
provisions.  All corporate  action on  Purchaser's  part required for the lawful
execution and delivery of this Agreement and the Related Agreements have been or
will be effectively taken prior to the Closing. Upon their execution and

                                       13
<PAGE>

delivery,  this Agreement and the Related  Agreements  will be valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except:

            (a) as limited by applicable bankruptcy, insolvency, reorganization,
      moratorium or other laws of general application  affecting  enforcement of
      creditors' rights; and

            (b) as limited by general  principles  of equity that  restrict  the
      availability of equitable and legal remedies.

            5.3  INVESTMENT  REPRESENTATIONS.  Purchaser  understands  that  the
Securities are being offered and sold pursuant to an exemption from registration
contained in the Securities Act based in part upon  Purchaser's  representations
contained in the Agreement, including, without limitation, that the Purchaser is
an "accredited investor" within the meaning of Regulation D under the Securities
Act. The  Purchaser  confirms that it has received or has had full access to all
the  information  it  considers  necessary  or  appropriate  to make an informed
investment decision with respect to the Notes and the Warrant to be purchased by
it under this Agreement and the Note Shares and the Warrant  Shares  acquired by
it upon the conversion of the Convertible  Note and the exercise of the Warrant,
respectively.  The Purchaser  further confirms that it has had an opportunity to
ask questions and receive  answers from the Company  regarding the Company's and
its Subsidiaries'  business,  management and financial affairs and the terms and
conditions of the Offering,  the Notes,  the Warrant and the  Securities  and to
obtain  additional  information  (to  the  extent  the  Company  possessed  such
information  or  could  acquire  it  without  unreasonable  effort  or  expense)
necessary to verify any  information  furnished to the Purchaser or to which the
Purchaser had access.

            5.4 PURCHASER  BEARS ECONOMIC  RISK.  The Purchaser has  substantial
experience in  evaluating  and investing in private  placement  transactions  of
securities  in  companies  similar  to the  Company  so  that it is  capable  of
evaluating  the merits and risks of its  investment  in the  Company and has the
capacity to protect its own interests. The Purchaser must bear the economic risk
of this  investment  until the Securities are sold pursuant to: (i) an effective
registration  statement  under the  Securities  Act; or (ii) an  exemption  from
registration is available with respect to such sale.

            5.5  ACQUISITION  FOR OWN ACCOUNT.  The  Purchaser is acquiring  the
Notes and Warrant and the Note Shares and the Warrant Shares for the Purchaser's
own account for  investment  only,  and not as a nominee or agent and not with a
view towards or for resale in connection with their distribution.

            5.6 PURCHASER CAN PROTECT ITS INTEREST.  By reason of its, or of its
management's,  business and financial experience, the Purchaser has the capacity
to evaluate the merits and risks of its investment in the Notes, the Warrant and
the  Securities  and to  protect  its  own  interests  in  connection  with  the
transactions  contemplated  in this Agreement and the other Related  Agreements.
Further, Purchaser is aware of no publication of any advertisement in connection
with the transactions contemplated in the Agreement or the Related Agreements.

                                       14
<PAGE>

            5.7  ACCREDITED  INVESTOR.  The Purchaser is an accredited  investor
within the meaning of Regulation D under the Securities Act.

            5.8 LEGENDS.

            (a) The  Convertible  Note shall bear  substantially  the  following
      legend:

            "THIS NOTE AND THE COMMON STOCK  ISSUABLE  UPON  CONVERSION  OF THIS
            NOTE HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
            AMENDED, OR ANY APPLICABLE, STATE SECURITIES LAWS. THIS NOTE AND THE
            COMMON STOCK ISSUABLE UPON  CONVERSION OF THIS NOTE MAY NOT BE SOLD,
            OFFERED  FOR SALE,  PLEDGED  OR  HYPOTHECATED  IN THE  ABSENCE OF AN
            EFFECTIVE  REGISTRATION  STATEMENT  AS TO THIS  NOTE OR SUCH  SHARES
            UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
            COUNSEL  REASONABLY  SATISFACTORY TO INCENTRA  SOLUTIONS,  INC. THAT
            SUCH REGISTRATION IS NOT REQUIRED."

            (b) The Non-Convertible  Note shall bear substantially the following
      legend:

            THIS NOTE HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933,
            AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD,
            OFFERED  FOR SALE,  PLEDGED  OR  HYPOTHECATED  IN THE  ABSENCE OF AN
            EFFECTIVE  REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND
            ANY  APPLICABLE  STATE  SECURITIES  LAWS OR AN  OPINION  OF  COUNSEL
            REASONABLY  SATISFACTORY  TO  INCENTRA  SOLUTIONS,  INC.  THAT  SUCH
            REGISTRATION IS NOT REQUIRED.

            (c) The Note  Shares and the Warrant  Shares,  if not issued by DWAC
      system (as  hereinafter  defined),  shall bear a legend  which shall be in
      substantially  the  following  form  until such  shares are  covered by an
      effective registration statement filed with the SEC:

            "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
            UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED,  OR ANY  APPLICABLE
            STATE  SECURITIES  LAWS.  THESE SHARES MAY NOT BE SOLD,  OFFERED FOR
            SALE,  PLEDGED  OR  HYPOTHECATED  IN  THE  ABSENCE  OF AN  EFFECTIVE
            REGISTRATION  STATEMENT  UNDER SUCH  SECURITIES  ACT AND  APPLICABLE
            STATE  LAWS OR AN  OPINION OF  COUNSEL  REASONABLY  SATISFACTORY  TO
            INCENTRA SOLUTIONS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED."

                                       15
<PAGE>

            (d) The Warrant shall bear substantially the following legend:

            "THIS WARRANT AND THE COMMON  SHARES  ISSUABLE UPON EXERCISE OF THIS
            WARRANT HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933,
            AS AMENDED,  OR ANY APPLICABLE  STATE  SECURITIES LAWS. THIS WARRANT
            AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT
            BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
            AN  EFFECTIVE  REGISTRATION  STATEMENT  AS TO  THIS  WARRANT  OR THE
            UNDERLYING  SHARES OF COMMON  STOCK  UNDER  SAID ACT AND  APPLICABLE
            STATE   SECURITIES   LAWS  OR  AN  OPINION  OF  COUNSEL   REASONABLY
            SATISFACTORY TO INCENTRA  SOLUTIONS,  INC. THAT SUCH REGISTRATION IS
            NOT REQUIRED."

      6.  COVENANTS OF THE COMPANY.  The Company  covenants  and agrees with the
Purchaser that, so long as the Notes remains outstanding:

            6.1  STOP-ORDERS.  The Company will advise the  Purchaser,  promptly
after it receives  notice of issuance by the Securities and Exchange  Commission
(the "SEC"), any state securities  commission or any other regulatory  authority
of any stop order or of any order  preventing or suspending  any offering of any
securities  of the Company,  or of the  suspension of the  qualification  of the
Common  Stock of the Company for  offering or sale in any  jurisdiction,  or the
initiation of any proceeding for any such purpose.

            6.2 LISTING.  The Company shall  promptly  secure the listing of the
shares of Common Stock issuable upon conversion of the Convertible Note and upon
the exercise of the Warrant on the OTC BB (the  "Principal  Market"),  and shall
maintain  such  listing so long as any other  shares of Common Stock shall be so
listed.  The  Company  will  maintain  the  listing of its  Common  Stock on the
Principal  Market or on  Nasdaq or any  securities  exchange  acceptable  to the
Purchaser,  and, to the extent  applicable  to the  Company,  will comply in all
material  respects with the Company's  reporting,  filing and other  obligations
under the bylaws or rules of the  National  Association  of  Securities  Dealers
("NASD") and such exchanges, as applicable.

            6.3 MARKET  REGULATIONS.  The Company shall notify the SEC, NASD and
applicable  state  authorities,  in accordance with their  requirements,  to the
extent  applicable  to the Company,  of the  transactions  contemplated  by this
Agreement,  and shall take all other necessary  action and proceedings as may be
required and permitted by applicable law, rule and regulation, for the legal and
valid  issuance of the  Securities to the Purchaser and promptly  provide copies
thereof to the Purchaser.

            6.4  REPORTING  REQUIREMENTS.  The Company will timely file with the
SEC all reports  required to be filed  pursuant to the  Exchange Act and refrain
from  terminating  its status as an issuer  required by the Exchange Act to file
reports  thereunder  even  if  the  Exchange  Act or the  rules  or  regulations
thereunder would permit such termination.

                                       16
<PAGE>

            6.5 USE OF FUNDS. The Company agrees that it will use (i) $3,250,000
of the  proceeds  of the  sale  of the  Notes  to  consummate  the  Contemplated
Acquisition previously disclosed to the Purchaser. and (ii) the remainder of the
proceeds  of the sale of the Notes and the  proceeds  of the sale of the Warrant
for general working capital and general business purposes of the Company and its
Subsidiaries.

            6.6  ACCESS  TO  FACILITIES.  Each of the  Company  and  each of its
Subsidiaries will permit any representatives designated by the Purchaser (or any
successor of the Purchaser),  upon reasonable  notice and during normal business
hours,  at such person's  expense and  accompanied  by a  representative  of the
Company, to:

            (a) visit and inspect any of the properties of the Company or any of
      its Subsidiaries;

            (b) examine the corporate  and  financial  records of the Company or
      any of its  Subsidiaries  (unless  such  examination  is not  permitted by
      federal,  state or local law or by  contract)  and make copies  thereof or
      extracts therefrom; and

            (c) discuss the affairs, finances and accounts of the Company or any
      of  its  Subsidiaries   with  the  directors,   officers  and  independent
      accountants of the Company or any of its Subsidiaries.

Notwithstanding  the foregoing,  neither the Company nor any of its Subsidiaries
will provide any material,  non-public  information to the Purchaser  unless the
Purchaser  signs  a  confidentiality   agreement  and  otherwise  complies  with
Regulation FD, under the federal securities laws.

            6.7 TAXES.  Each of the  Company and each of its  Subsidiaries  will
promptly pay and  discharge,  or cause to be paid and  discharged,  when due and
payable,  all  lawful  taxes,  assessments  and  governmental  charges or levies
imposed  upon the income,  profits,  property or business of the Company and its
Subsidiaries;  provided, however, that any such tax, assessment,  charge or levy
need not be paid if the validity  thereof  shall  currently be contested in good
faith by appropriate proceedings and if the Company and/or such Subsidiary shall
have set  aside  on its  books  adequate  reserves  with  respect  thereto,  and
provided,  further,  that the  Company  and its  Subsidiaries  will pay all such
taxes,  assessments,  charges  or  levies  forthwith  upon the  commencement  of
proceedings to foreclose any lien which may have attached as security therefor.

            6.8 INSURANCE.  Each of the Company and its  Subsidiaries  will keep
its assets which are of an insurable  character insured by financially sound and
reputable  insurers  against loss or damage by fire,  explosion  and other risks
customarily  insured against by companies in similar business similarly situated
as the Company and its  Subsidiaries;  and the Company and its Subsidiaries will
maintain, with financially sound and reputable insurers, insurance against other
hazards and risks and liability to persons and property to the extent and in the
manner  which the Company  reasonably  believes is  customary  for  companies in
similar business  similarly  situated as the Company and its Subsidiaries and to
the extent available on commercially  reasonable  terms. The Company and each of
its Subsidiaries  will jointly and severally bear the full risk of loss from any
loss  of any  nature  whatsoever  with  respect  to the  assets  pledged  to the
Purchaser as

                                       17
<PAGE>

security for its obligations hereunder and under the Related Agreements.  At the
Company's  and each of its  Subsidiaries'  joint and several cost and expense in
amounts and with carriers  reasonably  acceptable to Purchaser,  the Company and
each of its  Subsidiaries  shall  (i)  keep  all its  insurable  properties  and
properties  in which it has an  interest  insured  against  the hazards of fire,
flood,  sprinkler leakage,  those hazards covered by extended coverage insurance
and such other  hazards,  and for such  amounts,  as is customary in the case of
companies  engaged in  businesses  similar to the  Company's  or the  respective
Subsidiary's including business interruption insurance; (ii) maintain public and
product  liability  insurance  against  claims  for  personal  injury,  death or
property damage suffered by others, in each case consistent with past practices;
(iii)  maintain all such worker's  compensation  or similar  insurance as may be
required under the laws of any state or jurisdiction in which the Company or the
respective Subsidiary is engaged in business; and (iv) furnish Purchase with (x)
copies of all policies and evidence of the maintenance of such policies at least
thirty  (30) days  before any  expiration  date,  (y)  excepting  the  Company's
workers'  compensation policy,  endorsements to such polices naming Purchaser as
"co insured" or "additional  insured" and appropriate loss payable  endorsements
in form and substance satisfactory to Purchaser, naming Purchaser as loss payee,
an (z)  evidence  that as to  Purchaser  the  insurance  coverage  shall  not be
impaired or  invalidated  by any act or neglect of the Company or any Subsidiary
and the insurer  will  provide  Purchaser  with at least thirty (30) days notice
prior to  cancellation.  The  Company and each  Subsidiary  shall  instruct  the
insurance carriers that in the event of any loss thereunder,  the carriers shall
make payment for such loss to the Company  and/or the  Subsidiary  and Purchaser
jointly.  In the event that as of the date of receipt of each loss recovery upon
any such  insurance,  the  Purchaser  has not  declared an Event of Default with
respect to this  Agreement  or any of the Related  Agreements,  then the Company
and/or such Subsidiary shall be permitted to direct the application of such loss
recovery proceeds toward investment in property,  plant and equipment that would
comprise  "Collateral"  secured by Purchaser's  security  interest pursuant to a
security  agreement,  with any  surplus  funds to be applied by the  Company for
working capital  purposes.  In the event that Purchaser has properly declared an
Event  of  Default  with  respect  to  this  Agreement  or any  of  the  Related
Agreements,  then  all  loss  recoveries  received  by  Purchaser  upon any such
insurance  thereafter may be applied to the obligations of the Company hereunder
and under the Related Agreements,  in such order as the Purchaser may determine.
Any surplus  (following  satisfaction  of all Company  obligations to Purchaser)
shall  be paid by  Purchaser  to the  Company  or  applied  as may be  otherwise
required  by law.  Any  deficiency  thereon  shall be paid by the Company or the
Subsidiary, as applicable, to Purchaser, on demand.

            6.9  INTELLECTUAL  PROPERTY.  Each of the  Company  and  each of its
material  Subsidiaries  shall  maintain in full force and effect its  existence,
rights and  franchises  and all licenses  and other  rights to use  Intellectual
Property owned or possessed by it and  reasonably  deemed to be necessary to the
conduct of its business.

            6.10  PROPERTIES.  Each of the Company and each of its  Subsidiaries
will keep its properties in good repair, working order and condition, reasonable
wear and tear  excepted,  and from  time to time  make all  needful  and  proper
repairs, renewals, replacements, additions and improvements thereto; and each of
the  Company  and each of its  Subsidiaries  will at all times  comply with each
provision  of all  leases  to which it is a party  or  under  which it  occupies
property if the breach of such provision  could,  either  individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

                                       18
<PAGE>

            6.11 CONFIDENTIALITY.  The Company agrees that it will not disclose,
and will not  include in any  public  announcement,  the name of the  Purchaser,
unless  expressly agreed to by the Purchaser or unless and until such disclosure
is required by law or applicable regulation, and then only to the extent of such
requirement. Notwithstanding the foregoing, the Company may disclose Purchaser's
identity and the terms of this Agreement to its current and prospective debt and
equity financing sources.

            6.12  REQUIRED  APPROVALS.  (I) For so long as  twenty-five  percent
(25%) of the principal amount of the Notes is outstanding,  the Company, without
the  prior  written  consent  of  the  Purchaser  (which  consent  shall  not be
unreasonably withheld), shall not:

            (a) directly or indirectly declare or pay any dividends,  other than
      dividends paid to the Company or any of its wholly owned Subsidiaries;

            (b)  liquidate,  dissolve  or effect a material  reorganization  (it
      being understood that in no event shall the Company dissolve, liquidate or
      merge with any other person or entity (unless the Company is the surviving
      entity);

            (c) become  subject to  (including,  without  limitation,  by way of
      amendment to or modification  of) any agreement or instrument which by its
      terms would (under any circumstances) restrict the Company's or any of its
      Subsidiaries right to perform the provisions of this Agreement,  any other
      Related Agreement or any of the agreements contemplated hereby or thereby;
      and/or

            (d) (i)  create,  incur,  assume  or  suffer  to exist  any  secured
      indebtedness  (exclusive  of trade debt and debt  incurred  to finance the
      purchase of equipment (not in excess of five percent (5%) per annum of the
      fair market value of the  Company's  assets)  other than (x) the Company's
      indebtedness to Laurus,  (y)  indebtedness  set forth on SCHEDULE  6.12(C)
      attached   hereto  and  made  a  part  hereof  and  any   refinancings  or
      replacements  thereof on terms no less favorable to the Purchaser than the
      indebtedness  being  refinanced or replaced,  and (z) any debt incurred in
      connection with the purchase of assets in the ordinary course of business,
      or any refinancings or replacements  thereof on terms no less favorable to
      the Purchaser than the indebtedness being refinanced or replaced;  or (ii)
      cancel any debt owning to it in excess of $250,000 in the aggregate during
      any 12 month period; and/or

      (II) The Company  shall not, and shall not permit any of its  Subsidiaries
to:

            (a)   create or acquire any Subsidiary  after the date hereof unless
                  (i)  such  Subsidiary  is a  wholly-owned  Subsidiary  of  the
                  Company  and (ii) such  Subsidiary  becomes  party to the 2004
                  Master Security Agreement,  the 2006 Security  Agreement,  the
                  2006 Stock Pledge Agreement and the 2006 Subsidiary  Guarantee
                  (either by executing a counterpart thereof or an assumption or
                  joinder  agreement  in  respect  thereof)  and,  to the extent
                  required by the  Purchaser,  satisfies  each condition of this
                  Agreement  and the Related  Agreements  as if such  Subsidiary
                  were a Subsidiary on the Closing Date; and/or

                                       19
<PAGE>

            (b)   (i) make  investments  in, make any loans or  advances  to, or
                  transfer assets to, Front Porch Digital International,  SAS or
                  (ii) permit any  Subsidiary to make  investments  in, make any
                  loans or  advances  to, or  transfer  assets to,  Front  Porch
                  Digital  International,  SAS (the "French Subsidiary"),  other
                  than,  in the case of each of the  foregoing  clauses  (i) and
                  (ii), (a) immaterial investments, loans, advances and/or asset
                  transfers  made in the  ordinary  course of  business  and (b)
                  payments to the French Subsidiary to pay operating expenses of
                  the  French  Subsidiary  incurred  in the  ordinary  course of
                  business and  consistent  with past  practices,  in an amount,
                  taken in the aggregate  for the Company and its  Subsidiaries,
                  not to exceed $_______ in any fiscal quarter of the Company .

            6.13  REISSUANCE  OF  SECURITIES.  The  Company  agrees  to  reissue
certificates  representing  the  Securities  without  the  legends  set forth in
Section 5.7 above at such time as:

            (a) the holder  thereof is permitted  to dispose of such  Securities
      pursuant to Rule 144(k) under the Securities Act; or

            (b) upon resale subject to an effective registration statement after
      such Securities are registered under the Securities Act.

The Company  agrees to  cooperate  with the  Purchaser  in  connection  with all
resales  pursuant  to Rule 144(d) and Rule  144(k) and  provide  legal  opinions
necessary  to allow such resales  provided  the Company and its counsel  receive
reasonably  requested  representations from the selling Purchaser and broker, if
any.

            6.14 OPINION.  On the Closing Date,  the Company will deliver to the
Purchaser an opinion in substantially the form attached hereto as Exhibit C. The
Company will provide, at the Company's expense, such other legal opinions in the
future as are reasonably  necessary for the conversion of the  Convertible  Note
and exercise of the Warrant.

            6.15 MARGIN  STOCK.  The Company will not permit any of the proceeds
of the Notes or the Warrant to be used  directly or  indirectly to "purchase" or
"carry"  "margin  stock" or to repay  indebtedness  incurred  to  "purchase"  or
"carry"  "margin  stock"  within the  respective  meanings of each of the quoted
terms under Regulation U of the Board of Governors of the Federal Reserve System
as now and from time to time hereafter in effect.

            6.16 [Intentionally Deleted]

            6.17  NOTICE  OF  DEFAULT.  The  Company  shall  from  time  to time
diligently review its obligations  hereunder and under the Related Agreements to
confirm its  compliance in all material  respects with its duties  hereunder and
thereunder, and shall promptly notify the Purchaser of any event or circumstance
that has  resulted  in,  or could  reasonably  be  expected  to result  in,  the
occurrence  of any  default or Event of  Default  (as  defined  in either  Note)
hereunder or  thereunder.  For purposes of this Section 6.17, the term "default"
shall mean an event or condition  the  occurrence of which is, or with the lapse
of time or the giving of notice or both would be, an Event of Default.

                                       20
<PAGE>

      7. COVENANTS OF THE PURCHASER. The Purchaser covenants and agrees with the
Company as follows:

            7.1 CONFIDENTIALITY. The Purchaser agrees that it will not disclose,
and will not include in any public announcement, the name of the Company, unless
expressly  agreed to by the  Company  or unless  and until  such  disclosure  is
required by law or  applicable  regulation,  and then only to the extent of such
requirement.

            7.2 NON-PUBLIC  INFORMATION.  The Purchaser agrees not to effect any
sales in the  shares  of the  Company's  Common  Stock  while in  possession  of
material,  non-public  information  regarding  the  Company if such sales  would
violate applicable securities law.

            7.3  LIMITATION  ON  ACQUISITION  OF  COMMON  STOCK OF THE  COMPANY.
Notwithstanding  anything  to the  contrary  contained  in this  Agreement,  any
Related  Agreement or any  document,  instrument  or  agreement  entered into in
connection  with any other  transactions  between the Purchaser and the Company,
the  Purchaser  may  not  acquire  stock  in  the  Company  (including,  without
limitation,  pursuant  to a contract to  purchase,  by  exercising  an option or
warrant,  by  converting  any other  security or  instrument,  by  acquiring  or
exercising  any  other  right to  acquire,  shares  of  stock or other  security
convertible  into  shares  of  stock  in the  Company,  or  otherwise,  and such
contracts,   options,  warrants,   conversion  or  other  rights  shall  not  be
enforceable or exercisable) to the extent such stock acquisition would cause any
interest  (including any original issue discount)  payable by the Company to the
Purchaser not to qualify as "portfolio  interest"  within the meaning of Section
881(c)(2) of the Code, by reason of Section  881(c)(3) of the Code,  taking into
account the constructive  ownership rules under Section 871(h)(3)(C) of the Code
(the "Stock Acquisition Limitation").

      8. COVENANTS OF THE COMPANY AND PURCHASER REGARDING INDEMNIFICATION.

            8.1 COMPANY INDEMNIFICATION.  The Company agrees to indemnify,  hold
harmless,  reimburse and defend the Purchaser, each of the Purchaser's officers,
directors,  agents,  affiliates,  control persons,  and principal  shareholders,
against  any  claim,  cost,  expense,  liability,  obligation,  loss  or  damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the
Purchaser   which   results,   arises  out  of  or  is  based   upon:   (i)  any
misrepresentation  by the  Company or any of its  Subsidiaries  or breach of any
warranty by the Company or any of its Subsidiaries in this Agreement,  any other
Related Agreement or in any exhibits or schedules attached hereto or thereto; or
(ii) any breach or default in performance by Company or any of its  Subsidiaries
of any  covenant or  undertaking  to be  performed  by the Company or any of its
Subsidiaries hereunder, under any other Related Agreement or any other agreement
entered  into  by the  Company  and/or  any of its  Subsidiaries  and  Purchaser
relating hereto or thereto.

            8.2 PURCHASER'S INDEMNIFICATION. Purchaser agrees to indemnify, hold
harmless,  reimburse and defend the Company and each of the Company's  officers,
directors,  agents, affiliates,  control persons and principal shareholders,  at
all times  against any claim,  cost,  expense,  liability,  obligation,  loss or
damage (including  reasonable legal fees) of any nature,  incurred by or imposed
upon  the  Company  which  results,  arises  out of or is  based  upon:  (i) any
misrepresentation  by  Purchaser  or breach of any warranty by Purchaser in this
Agreement or any Related  Agreement  or in any  exhibits or  schedules  attached
hereto; or (ii) any breach or default

                                       21
<PAGE>

in  performance  by Purchaser of any covenant or  undertaking to be performed by
Purchaser hereunder,  under any Related Agreement or any other agreement entered
into by the Company and Purchaser relating hereto or thereto.

            8.3 PROCEDURES.  The procedures and limitations set forth in Section
10.2(c) and (d) shall apply to the  indemnifications  set forth in Sections  8.1
and 8.2 above.

      9. Registration Rights.

            9.1 REGISTRATION RIGHTS GRANTED.  At the Closing,  the Company shall
grant  registration  rights to the Purchaser  pursuant to a Registration  Rights
Agreement dated as of even date herewith between the Company and the Purchaser.

            9.2 OFFERING RESTRICTIONS. Except as previously disclosed in the SEC
Reports or in the  Exchange Act Filings,  or stock or stock  options  granted to
employees or directors of the Company (these exceptions  hereinafter referred to
as the "Excepted  Issuances"),  neither the Company nor any of its  Subsidiaries
will  issue any  securities  with a  continuously  variable/floating  conversion
feature  which  are or could be (by  conversion  or  registration)  free-trading
securities (i.e. common stock subject to a registration  statement) prior to the
full  repayment or conversion of the Notes (as  applicable)  (together  with all
accrued and unpaid interest and fees related thereto) (the "Exclusion Period").

      10. MISCELLANEOUS.

            10.1  GOVERNING  LAW(a).   THIS  AGREEMENT  AND  THE  OTHER  RELATED
      AGREEMENTS  SHALL BE GOVERNED BY AND  CONSTRUED AND ENFORCED IN ACCORDANCE
      WITH THE LAWS OF THE STATE OF NEW YORK  APPLICABLE  TO CONTRACTS  MADE AND
      PERFORMED  IN SUCH STATE,  WITHOUT  REGARD TO  PRINCIPLES  OF CONFLICTS OF
      LAWS.

            (b) THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
      COURTS  LOCATED  IN THE  COUNTY OF NEW YORK,  STATE OF NEW YORK SHALL HAVE
      EXCLUSIVE  JURISDICTION  TO HEAR AND  DETERMINE  ANY  CLAIMS  OR  DISPUTES
      BETWEEN THE  COMPANY,  ON THE ONE HAND,  AND THE  PURCHASER,  ON THE OTHER
      HAND,  PERTAINING TO THIS AGREEMENT OR ANY OF THE RELATED AGREEMENTS OR TO
      ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER
      RELATED  AGREEMENTS;   PROVIDED,   THAT  THE  PURCHASER  AND  THE  COMPANY
      ACKNOWLEDGE  THAT ANY APPEALS  FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
      COURT LOCATED  OUTSIDE OF THE COUNTY OF NEW YORK,  STATE OF NEW YORK;  AND
      FURTHER  PROVIDED,  THAT,  NOTHING  IN THIS  AGREEMENT  SHALL BE DEEMED OR
      OPERATE TO PRECLUDE THE PURCHASER FROM BRINGING SUIT OR TAKING OTHER LEGAL
      ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON
      THE COLLATERAL (AS DEFINED IN THE MASTER SECURITY  AGREEMENT) OR ANY OTHER
      SECURITY FOR

                                       22
<PAGE>

      THE  OBLIGATIONS  (AS  DEFINED IN THE MASTER  SECURITY  AGREEMENT),  OR TO
      ENFORCE A JUDGMENT  OR OTHER COURT  ORDER IN FAVOR OF THE  PURCHASER.  THE
      COMPANY  EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
      ANY ACTION OR SUIT  COMMENCED  IN ANY SUCH COURT,  AND THE COMPANY  HEREBY
      WAIVES  ANY  OBJECTION  THAT IT MAY  HAVE  BASED  UPON  LACK  OF  PERSONAL
      JURISDICTION,  IMPROPER VENUE OR FORUM NON CONVENIENS.  THE COMPANY HEREBY
      WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED
      IN ANY SUCH  ACTION  OR SUIT AND  AGREES  THAT  SERVICE  OF SUCH  SUMMONS,
      COMPLAINT AND OTHER  PROCESS MAY BE MADE BY  REGISTERED OR CERTIFIED  MAIL
      ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN SECTION 11.9 AND THAT
      SERVICE  SO MADE  SHALL  BE  DEEMED  COMPLETED  UPON  THE  EARLIER  OF THE
      COMPANY'S  ACTUAL  RECEIPT  THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
      U.S. MAILS, PROPER POSTAGE PREPAID.

      (c) THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING
      SUCH APPLICABLE  LAWS.  THEREFORE,  TO ACHIEVE THE BEST COMBINATION OF THE
      BENEFITS OF THE JUDICIAL  SYSTEM AND OF  ARBITRATION,  THE PARTIES  HERETO
      WAIVE  ALL  RIGHTS TO TRIAL BY JURY IN ANY  ACTION,  SUIT,  OR  PROCEEDING
      BROUGHT TO RESOLVE ANY  DISPUTE,  WHETHER  ARISING IN CONTRACT,  TORT,  OR
      OTHERWISE  BETWEEN  THE  PURCHASER  AND/OR  THE  COMPANY  ARISING  OUT OF,
      CONNECTED  WITH,  RELATED OR  INCIDENTAL TO THE  RELATIONSHIP  ESTABLISHED
      BETWEEN  THEM  IN  CONNECTION  WITH  THIS  AGREEMENT,  ANY  OTHER  RELATED
      AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

            10.2  SURVIVAL.  The  representations,   warranties,  covenants  and
agreements made herein shall survive any investigation made by the Purchaser and
the  closing of the  transactions  contemplated  hereby to the  extent  provided
therein.  All statements as to factual  matters  contained in any certificate or
other  instrument  delivered by or on behalf of the Company  pursuant  hereto in
connection  with the  transactions  contemplated  hereby  shall be  deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.

            10.3 SUCCESSORS.  Except as otherwise expressly provided herein, the
provisions  hereof  shall  inure to the  benefit  of, and be binding  upon,  the
successors,  heirs, executors and administrators of the parties hereto and shall
inure to the benefit of and be  enforceable by each person who shall be a holder
of the  Securities  from time to time,  other than the  holders of Common  Stock
which  has been  sold by the  Purchaser  pursuant  to Rule  144 or an  effective
registration  statement.  The  Purchaser  shall not be  permitted  to assign its
rights  hereunder or under any Related  Agreement to a competitor of the Company
unless an Event of Default  (as  defined  in either  Note) has  occurred  and is
continuing.

            10.4 ENTIRE AGREEMENT.  This Agreement, the Related Agreements,  the
exhibits  and  schedules  hereto and thereto and the other  documents  delivered
pursuant hereto constitute

                                       23
<PAGE>

the full and entire  understanding and agreement between the parties with regard
to the subjects hereof and no party shall be liable or bound to any other in any
manner by any  representations,  warranties,  covenants and agreements except as
specifically set forth herein and therein.

            10.5  SEVERABILITY.  In case any provision of the Agreement shall be
invalid, illegal or unenforceable,  the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

            10.6 AMENDMENT AND WAIVER.

            (a) This  Agreement may be amended or modified only upon the written
      consent of the Company and the Purchaser.

            (b) The  obligations  of the Company and the rights of the Purchaser
      under this  Agreement  may be waived only with the written  consent of the
      Purchaser.

            (c) The  obligations  of the Purchaser and the rights of the Company
      under this  Agreement  may be waived only with the written  consent of the
      Company.

            10.7 DELAYS OR OMISSIONS.  It is agreed that no delay or omission to
exercise  any right,  power or remedy  accruing  to any party,  upon any breach,
default or  noncompliance  by another party under this  Agreement or the Related
Agreements,  shall  impair  any such  right,  power or  remedy,  nor shall it be
construed to be a waiver of any such breach,  default or  noncompliance,  or any
acquiescence  therein, or of or in any similar breach,  default or noncompliance
thereafter occurring.  All remedies,  either under this Agreement or the Related
Agreements,  by law or otherwise  afforded to any party, shall be cumulative and
not alternative.

            10.8 NOTICES.  All notices required or permitted  hereunder shall be
in writing and shall be deemed effectively given:

            (a) upon personal delivery to the party to be notified;

            (b) when sent by confirmed  facsimile if sent during normal business
      hours of the recipient, if not, then on the next business day;

            (c) three (3) business  days after having been sent by registered or
      certified mail, return receipt requested, postage prepaid; or

            (d) one (1) day after deposit with a nationally recognized overnight
      courier,  specifying  next day  delivery,  with  written  verification  of
      receipt.

All communications shall be sent as follows:

      IF TO THE COMPANY, TO:        Incentra Solutions, Inc.
                                    1140 Pearl Street
                                    Boulder, Colorado  80302
                                    Attention: Chief Financial Officer
                                    Facsimile: (303) 449-9584

                                       24
<PAGE>

      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:      Laurus Master Fund, Ltd.
                                    c/o M&C Corporate Services Limited
                                    P.O. Box 309 GT
                                    Ugland House
                                    George Town
                                    South Church Street
                                    Grand Cayman, Cayman Islands
                                    Facsimile: 345-949-8080

      WITH A COPY TO:               John E. Tucker, Esq.
                                    825 Third Avenue, 14th Floor
                                    New York, New York 10022
                                    Facsimile: 212-541-4434

or at such  other  address as the  Company or the  Purchaser  may  designate  by
written notice to the other parties hereto given in accordance herewith.

            10.9  TITLES  AND   SUBTITLES.   The  titles  of  the  sections  and
subsections of this Agreement are for  convenience of reference only and are not
to be considered in construing this Agreement.

            10.10  FACSIMILE  SIGNATURES;  COUNTERPARTS.  This  Agreement may be
executed by  facsimile  signatures  and in any number of  counterparts,  each of
which shall be an  original,  but all of which  together  shall  constitute  one
instrument.

            10.11 BROKER'S  FEES.  Except as set forth on Schedule 10.11 hereof,
each party hereto  represents  and warrants  that no agent,  broker,  investment
banker,  person or firm acting on behalf of or under the authority of such party
hereto is or will be  entitled  to any  broker's  or  finder's  fee or any other
commission   directly  or  indirectly  in  connection   with  the   transactions
contemplated  herein.  Each party hereto  further agrees to indemnify each other
party for any  claims,  losses or  expenses  incurred  by such other  party as a
result of the representation in this Section 10.11 being untrue.

            10.12  CONSTRUCTION.  Each party acknowledges that its legal counsel
participated  in the  preparation of this  Agreement and the Related  Agreements
and, therefore, stipulates that the rule of construction that ambiguities are to
be  resolved   against  the   drafting   party  shall  not  be  applied  in  the
interpretation of this Agreement to favor any party against the other.

                                       25
<PAGE>

                  10.13 Proxy. For good and valuable  consideration,  receipt of
which is hereby  acknowledged,  the Purchaser,  hereby appoints the Company (the
"Proxy Holder"), with a mailing address set forth in Section 29, with full power
of  substitution,  as proxy,  to vote all shares of Common Stock of the Company,
now or in the future owned by the  Purchaser  (including  shares  acquired  upon
conversion  of any  convertible  security  or  exercise of any option or warrant
(other  than the  Warrant))  but not  including  those  shares of  Common  Stock
issuable upon conversion of the Warrant (the "Shares").

            This proxy is  irrevocable  and coupled with an  interest.  Upon the
sale or other  transfer  of the  Shares,  in whole or in part,  this proxy shall
automatically  terminate (x) with respect to such sold or transferred  Shares at
the time of such sale and/or  transfer and (y) with respect to all Shares in the
case of an assignment, at the time of such assignment, in each case, without any
further action required by any person.

            The Purchaser  shall use its best efforts to forward to Proxy Holder
within two (2) business days following the Purchaser's  receipt thereof,  at the
address  for Proxy  Holder set forth in Section  10.8,  copies of all  materials
received by the Purchaser  relating,  in each case, to the  solicitation  of the
vote of shareholders of the Company.

            This proxy shall  remain in effect with respect to the Shares of the
Company during the period commencing on the date hereof and continuing until the
earlier of (a) payment in full of all obligations  and liabilities  owing by the
Company to Purchaser (as the same may be amended, restated, extended or modified
from time to time) and (b) the occurrence and  continuance of a default or event
of default under any document,  instrument or agreement between the Company and,
or made by the Company in favor of, the Purchaser.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                       26
<PAGE>

      IN WITNESS  WHEREOF,  the parties  hereto  have  executed  the  SECURITIES
PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASER:

INCENTRA SOLUTIONS, INC.                   LAURUS MASTER FUND, LTD.

By:    /s/ Thomas P. Sweeney III           By:    /s/ David Grin
       ------------------------------             ------------------------------
Name:  Thomas P. Sweeney III               Name:  David Grin
       ------------------------------             ------------------------------
Title: Chief Executive Officer             Title: Managing Partner
       ------------------------------             ------------------------------

                                       27THIS NOTE AND THE COMMON SHARES  ISSUABLE UPON  CONVERSION OF THIS NOTE HAVE NOT
BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED,  OR ANY STATE
SECURITIES  LAWS.  THIS NOTE AND THE COMMON SHARES  ISSUABLE UPON  CONVERSION OF
THIS NOTE MAY NOT BE SOLD,  OFFERED  FOR SALE,  PLEDGED OR  HYPOTHECATED  IN THE
ABSENCE OF AN  EFFECTIVE  REGISTRATION  STATEMENT AS TO THIS NOTE 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.

                          SECURED CONVERTIBLE TERM NOTE

            FOR VALUE RECEIVED,  INCENTRA SOLUTIONS,  INC., a Nevada Corporation
(the "COMPANY"),  promises to pay to LAURUS MASTER FUND, LTD., c/o M&C Corporate
Services  Limited,  P.O. Box 309 GT, Ugland House,  South Church Street,  George
Town,  Grand Cayman,  Cayman Islands,  Fax:  345-949-8080  (the "HOLDER") or its
registered  assigns or  successors  in  interest,  the sum of One  Million  Five
Hundred  Thousand  Dollars  ($1,500,000),  together  with any accrued and unpaid
interest hereon, on March 31, 2009 (the "MATURITY DATE") if not sooner paid.

            Capitalized  terms used  herein  without  definition  shall have the
meanings ascribed to such terms in that certain  Securities  Purchase  Agreement
dated as of the date  hereof by and  between  the  Company  and the  Holder  (as
amended,   modified  and/or  supplemented  from  time  to  time,  the  "PURCHASE
AGREEMENT").  For the  avoidance of doubt the Company and the Holder  understand
and agree that this Secured  Convertible Term Note (this "NOTE") is being issued
by the Company  together with that certain  Non-Convertible  Note referred to in
the Purchase Agreement as part of the same financing transaction.

            The following terms shall apply to this Note:

                                    ARTICLE I
                         CONTRACT RATE AND AMORTIZATION

            1.1  CONTRACT  RATE.  Subject  to  Sections  4.2 and 5.10,  interest
payable  on the  outstanding  principal  amount  of this  Note  (the  "PRINCIPAL
AMOUNT") shall accrue at a rate per annum equal to the "prime rate" published in
THE WALL STREET JOURNAL from time to time (the "PRIME  RATE"),  plus two percent
(2.0%) (the "CONTRACT RATE").  The Contract Rate shall be increased or decreased
as the case may be for each  increase or decrease in the Prime Rate in an amount
equal to such  increase  or  decrease  in the  Prime  Rate;  each  change  to be
effective as of the day of the change in the Prime Rate. The Contract Rate shall
not at any  time be  less  than  nine  percent  (9.0%).  Interest  shall  be (i)
calculated on the basis of a 360 day year, and (ii) payable monthly, in arrears,
commencing  on May 1,  2006,  on the  first  business  day of  each  consecutive
calendar  month  thereafter  through and including the Maturity Date, and on the
Maturity Date, whether by acceleration or otherwise.

<PAGE>

            1.2 CONTRACT RATE PAYMENTS. The Contract Rate shall be calculated on
the last business day of each calendar month hereafter (other than for increases
or decreases in the Prime Rate which shall be calculated and become effective in
accordance with the terms of Section 1.1) until the Maturity Date.

            1.3  PRINCIPAL  PAYMENTS.   Amortizing  payments  of  the  aggregate
principal  amount  outstanding  under  this  Note at any  time  (the  "PRINCIPAL
AMOUNT")  shall be made by the  Company  on  August  1,  2006  and on the  first
business day of each  succeeding  month  thereafter  through and  including  the
Maturity  Date (each,  an  "AMORTIZATION  DATE").  Subject to Article III below,
commencing  on the first  Amortization  Date,  the  Company  shall make  monthly
payments  to the  Holder on each  Amortization  Date,  each such  payment in the
amount of $46,875  together with any accrued and unpaid interest on such portion
of the  Principal  Amount plus any and all other unpaid  amounts  which are then
owing under this Note, the Purchase Agreement and/or any other Related Agreement
(collectively,  the "MONTHLY AMOUNT"). Any outstanding Principal Amount together
with any accrued and unpaid  interest and any and all other unpaid amounts which
are then  owing by the  Company to the Holder  under  this  Note,  the  Purchase
Agreement  and/or any other  Related  Agreement  shall be due and payable on the
Maturity Date.

                                   ARTICLE II
                            CONVERSION AND REDEMPTION

            2.1 PAYMENT OF MONTHLY AMOUNT.

                  (a) PAYMENT IN CASH OR COMMON STOCK. If the Monthly Amount (or
a  portion  of such  Monthly  Amount  if not all of the  Monthly  Amount  may be
converted into shares of Common Stock pursuant to Section 3.2) is required to be
paid in cash pursuant to Section  2.1(b),  then the Company shall pay the Holder
an amount in cash equal to 100% of the Monthly  Amount (or such  portion of such
Monthly  Amount  to be  paid  in  cash)  due  and  owing  to the  Holder  on the
Amortization Date. If the Monthly Amount (or a portion of such Monthly Amount if
not all of the  Monthly  Amount may be  converted  into  shares of Common  Stock
pursuant  to  Section  3.2) is  required  to be paid in shares  of Common  Stock
pursuant  to  Section  2.1(b),  the  number  of such  shares to be issued by the
Company to the Holder on such  Amortization  Date (in respect of such portion of
the Monthly  Amount  converted  into shares of Common Stock  pursuant to Section
2.1(b)),  shall be the number  determined  by  dividing  (i) the  portion of the
Monthly  Amount  converted  into  shares  of  Common  Stock,  by (ii)  the  then
applicable Fixed Conversion  Price. For purposes hereof,  subject to Section 3.6
hereof, the initial "FIXED CONVERSION PRICE" means $1.40.

                  (b) MONTHLY AMOUNT CONVERSION CONDITIONS.  Subject to Sections
2.1(a),  2.2,  and 3.2 hereof,  the Holder  shall  convert into shares of Common
Stock all or a portion of the Monthly  Amount due on each  Amortization  Date if
the following  conditions  (the  "CONVERSION  CRITERIA") are satisfied:  (i) the
average closing price of the Common Stock as reported by Bloomberg,  L.P. on the
Principal  Market  for the five (5)  trading  days  immediately  preceding  such
Amortization Date shall be greater than or equal to 110% of the Fixed Conversion
Price and (ii) the  amount of such  conversion  does not exceed  twenty  percent
(20%) of the aggregate  dollar trading volume of the Common Stock for the period
of twenty-two (22) trading days immediately preceding such Amortization Date. If
subsection (i) of the Conversion

                                       2
<PAGE>

Criteria is met but subsection (ii) of the Conversion  Criteria is not met as to
the entire  Monthly  Amount,  the  Holder  shall  convert  only such part of the
Monthly  Amount  that meets  subsection  (ii) of the  Conversion  Criteria.  Any
portion of the Monthly  Amount due on an  Amortization  Date that the Holder has
not been able to convert  into shares of Common Stock due to the failure to meet
the  Conversion  Criteria,  shall be paid in cash by the  Company at the rate of
100% of the Monthly Amount otherwise due on such Amortization Date, within three
(3) business days of such Amortization Date.

            2.2  NO  EFFECTIVE  REGISTRATION.  Notwithstanding  anything  to the
contrary  herein,  none  of  the  Company's  obligations  to the  Holder  may be
converted  into  Common  Stock  unless  (a)  either  (i)  an  effective  current
Registration  Statement  (as  defined  in  the  Registration  Rights  Agreement)
covering the shares of Common Stock to be issued in connection with satisfaction
of such obligations  exists or (ii) an exemption from registration for resale of
all of the Common Stock issued and issuable is available pursuant to Rule 144 of
the Securities Act and (b) no Event of Default (as  hereinafter  defined) exists
and is  continuing,  unless such Event of Default is cured within any applicable
cure period or otherwise waived in writing by the Holder.

            2.3 OPTIONAL  REDEMPTION  IN CASH.  The Company may prepay this Note
("OPTIONAL  REDEMPTION")  by  paying to the  Holder a sum of money  equal to one
hundred ten percent  (110%) of the  Principal  Amount  outstanding  at such time
together  with  accrued but unpaid  interest  thereon and any and all other sums
due,  accrued or payable to the Holder  arising  under this Note,  the  Purchase
Agreement or any other Related Agreement (the "REDEMPTION  AMOUNT")  outstanding
on the Redemption  Payment Date (as defined below). The Company shall deliver to
the  Holder  a  written  notice  of  redemption  (the  "NOTICE  OF  REDEMPTION")
specifying  the date for  such  Optional  Redemption  (the  "REDEMPTION  PAYMENT
DATE"), which date shall be seven (7) business days after the date of the Notice
of Redemption (the  "REDEMPTION  PERIOD").  A Notice of Redemption  shall not be
effective  with  respect  to any  portion  of this Note for which the Holder has
previously  delivered a Notice of  Conversion  (as  hereinafter  defined) or for
conversions  elected to be made by the Holder pursuant to Article III during the
Redemption  Period. The Redemption Amount shall be determined as if the Holder's
conversion  elections had been  completed  immediately  prior to the date of the
Notice of Redemption. On the Redemption Payment Date, the Redemption Amount must
be paid in good funds to the Holder.  In the event the Company  fails to pay the
Redemption Amount on the Redemption Payment Date as set forth herein,  then such
Redemption Notice will be null and void.

                                   ARTICLE III
                           HOLDER'S CONVERSION RIGHTS

            3.1  OPTIONAL  CONVERSION.  Subject  to the  terms set forth in this
Article III, the Holder shall have the right, but not the obligation, to convert
all or any portion of the issued and outstanding Principal Amount and/or accrued
interest  and fees due and payable into fully paid and  nonassessable  shares of
Common  Stock at the Fixed  Conversion  Price.  The shares of Common Stock to be
issued upon such conversion are herein referred to as, the "CONVERSION SHARES."

                                       3
<PAGE>

      3.2  CONVERSION  LIMITATION.   Notwithstanding   anything  herein  to  the
contrary,  in no event  shall the Holder be  entitled  to convert any portion of
this Note in excess of that portion of this Note upon  exercise of which the sum
of (1) the number of shares of Common Stock beneficially owned by the Holder and
its  Affiliates  (other  than  shares  of  Common  Stock  which  may  be  deemed
beneficially owned through the ownership of the unconverted portion of this Note
or the  unexercised or  unconverted  portion of any other security of the Holder
subject to a limitation on  conversion  analogous to the  limitations  contained
herein)  and (2) the  number  of  shares  of  Common  Stock  issuable  upon  the
conversion  of the portion of this Note with respect to which the  determination
of this  proviso is being made,  would  result in  beneficial  ownership  by the
Holder  and  its  Affiliates  of any  amount  greater  than  4.99%  of the  then
outstanding  shares  of  Common  Stock  (whether  or  not,  at the  time of such
conversion,  the Holder and its Affiliates  beneficially  own more than 4.99% of
the  then  outstanding  shares  of  Common  Stock).  As used  herein,  the  term
"AFFILIATE" means any person or entity that,  directly or indirectly through one
or more intermediaries,  controls or is controlled by or is under common control
with a person or entity,  as such terms are used in and construed under Rule 144
under the  Securities  Act. For purposes of the proviso to the second  preceding
sentence,  beneficial  ownership  shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended,  and Regulations 13D-G
thereunder,  except as  otherwise  provided in clause (1) of such  proviso.  The
limitations  set forth herein (x) may be waived by the Holder upon  provision of
no less than  sixty-one  (61) days  prior  notice to the  Company  and (y) shall
automatically  become null and void (i) following notice to the Company upon the
occurrence  and  during the  continuance  of an Event of  Default,  or (ii) upon
receipt by the Holder of a Notice of Redemption.

                                       4
<PAGE>

            3.3 MECHANICS OF HOLDER'S  CONVERSION.  In the event that the Holder
elects to convert this Note into Common  Stock,  the Holder shall give notice of
such election by  delivering  an executed and completed  notice of conversion in
substantially the form of Exhibit A hereto  (appropriate  completed) ("NOTICE OF
CONVERSION")  to the  Company  and such  Notice of  Conversion  shall  provide a
breakdown in reasonable  detail of the Principal  Amount,  accrued  interest and
fees that are being converted.  On each Conversion Date (as hereinafter defined)
and in  accordance  with its Notice of  Conversion,  the  Holder  shall make the
appropriate  reduction to the  Principal  Amount,  accrued  interest and fees as
entered in its records and shall provide  written  notice thereof to the Company
within two (2) business  days after the  Conversion  Date.  Each date on which a
Notice of  Conversion  is delivered or  telecopied  to the Company in accordance
with the provisions  hereof shall be deemed a Conversion  Date (the  "CONVERSION
DATE").  Pursuant to the terms of the Notice of  Conversion,  the  Company  will
issue  instructions  to the transfer agent  accompanied by an opinion of counsel
within two (2)  business  day of the date of the  delivery to the Company of the
Notice  of  Conversion  and shall  cause  the  transfer  agent to  transmit  the
certificates  representing the Conversion  Shares to the Holder by crediting the
account of the Holder's  designated broker with the Depository Trust Corporation
("DTC") through its Deposit  Withdrawal Agent Commission  ("DWAC") system within
three (3) business days after receipt by the Company of the Notice of Conversion
(the "DELIVERY  DATE"). In the case of the exercise of the conversion rights set
forth herein the conversion privilege shall be deemed to have been exercised and
the Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Company of the Notice of Conversion.  The
Holder shall be treated for all purposes as the record holder of the  Conversion
Shares,  unless the Holder  provides  the Company  written  instructions  to the
contrary.

            3.4  LATE  PAYMENTS.  The  Company  understands  that a delay in the
delivery of the Conversion  Shares in the form required pursuant to this Article
beyond the  Delivery  Date  could  result in  economic  loss to the  Holder.  As
compensation  to the Holder for such loss,  in addition to all other  rights and
remedies which the Holder may have under this Note, applicable law or otherwise,
the  Company  shall pay late  payments  to the Holder for any late  issuance  of
Conversion  Shares  in the  form  required  pursuant  to  this  Article  II upon
conversion  of this Note, in the amount equal to $500 per business day after the
Delivery Date.  The Company shall make any payments  incurred under this Section
in immediately available funds upon demand.

            3.5 CONVERSION MECHANICS. The number of shares of Common Stock to be
issued upon each  conversion  of this Note shall be  determined by dividing that
portion of the principal  and interest and fees to be converted,  if any, by the
then  applicable  Fixed  Conversion  Price. In the event of any conversions of a
portion of the outstanding  Principal  Amount pursuant to this Article III, such
conversions  shall  be  deemed  to  constitute  conversions  of the  outstanding
Principal  Amount  applying to Monthly  Amounts for the  remaining  Amortization
Dates in chronological order.

            3.6 ADJUSTMENT PROVISIONS. The Fixed Conversion Price and number and
kind of  shares or other  securities  to be issued  upon  conversion  determined
pursuant to this Note shall be subject to adjustment  from time to time upon the
occurrence  of  certain  events  during the period  that this  conversion  right
remains outstanding, as follows:

                                       5
<PAGE>

                  (a)  RECLASSIFICATION.  If the Company at any time  shall,  by
reclassification  or  otherwise,  change  the  Common  Stock  into the same or a
different  number of  securities  of any class or classes,  this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
to evidence the right to purchase an adjusted number of such securities and kind
of  securities  as would have been  issuable  as the result of such  change with
respect to the Common Stock (i) immediately prior to or (ii) immediately  after,
such reclassification or other change at the sole election of the Holder.

                  (b) STOCK SPLITS, COMBINATIONS AND DIVIDENDS. If the shares of
Common  Stock are  subdivided  or combined  into a greater or smaller  number of
shares of Common  Stock,  or if a dividend  is paid on the  Common  Stock or any
preferred  stock  issued by the  Company  in shares of Common  Stock,  the Fixed
Conversion  Price shall be  proportionately  reduced in case of  subdivision  of
shares or stock dividend or proportionately increased in the case of combination
of shares,  in each such case by the ratio  which the total  number of shares of
Common Stock outstanding  immediately after such event bears to the total number
of shares of Common Stock outstanding immediately prior to such event.

            3.7  RESERVATION OF SHARES.  During the period the conversion  right
exists, the Company will reserve from its authorized and unissued Common Stock a
sufficient  number of shares to provide for the  issuance of  Conversion  Shares
upon the full  conversion of this Note and the Warrant.  The Company  represents
that upon issuance, the Conversion Shares will be duly and validly issued, fully
paid and non-assessable. The Company agrees that its issuance of this Note shall
constitute full authority to its officers,  agents,  and transfer agents who are
charged with the duty of executing and issuing stock certificates to execute and
issue the necessary  certificates for the Conversion  Shares upon the conversion
of this Note.

            3.8 REGISTRATION  RIGHTS.  The Holder has been granted  registration
rights with respect to the  Conversion  Shares as set forth in the  Registration
Rights Agreement.

            3.9 ISSUANCE OF NEW NOTE. Upon any partial  conversion of this Note,
a new Note  containing the same date and  provisions of this Note shall,  at the
request of the Holder,  be issued by the Company to the Holder for the principal
balance of this Note and interest  which shall not have been  converted or paid.
Subject to the  provisions of Article IV of this Note, the Company shall not pay
any costs, fees or any other  consideration to the Holder for the production and
issuance of a new Note.

                                   ARTICLE IV
                                EVENTS OF DEFAULT

            4.1 EVENTS OF DEFAULT. The occurrence of any of the following events
set forth in this Section 4.1 shall  constitute  an event of default  ("EVENT OF
DEFAULT") hereunder:

                  (a)  FAILURE  TO PAY.  The  Company  fails to pay when due any
installment of principal,  interest or other fees hereon in accordance herewith,
or the Company fails to pay any of the other  Obligations  (under and as defined
in the Master Security  Agreement) when due, and, in any such case, such failure
shall  continue for a period of five (5) days  following the date upon which any
such payment was due.

                                       6
<PAGE>

                  (b) BREACH OF COVENANT. The Company or any of its Subsidiaries
breaches  any  covenant  or any  other  term or  condition  of this  Note in any
material respect and such breach, if subject to cure,  continues for a period of
fifteen (15) days after the occurrence thereof.

                  (c)   BREACH   OF   REPRESENTATIONS   AND   WARRANTIES.    Any
representation, warranty or statement made or furnished by the Company or any of
its  Subsidiaries  in this Note,  the Purchase  Agreement  or any other  Related
Agreement  shall at any time be false or misleading  in any material  respect on
the date as of which made or deemed made.

                  (d) DEFAULT  UNDER OTHER  AGREEMENTS.  The  occurrence  of any
default  (or  similar  term)  in the  observance  or  performance  of any  other
agreement or condition relating to any indebtedness or contingent  obligation of
the  Company or any of its  Subsidiaries  (including,  without  limitation,  the
indebtedness  evidenced by (i) the 2006 Security  Agreement and/or any Ancillary
Agreement  referred to in the 2006 Security  Agreement  and/or (ii) that certain
Securities  Purchase  Agreement,  dated as of May 13,  2004,  by and between the
Company and the Purchaser  (as amended,  modified or  supplemented  from time to
time, the "2004 Securities  Purchase  Agreement")  and/or any Related  Agreement
referred to in the 2004 Securities Purchase Agreement,  as amended,  modified or
supplemented  from time to time),  in each case,  beyond the period of grace (if
any),  the effect of which default is to cause,  or permit the holder or holders
of  such  indebtedness  or  beneficiary  or  beneficiaries  of  such  contingent
obligation  to  cause,  such  indebtedness  to become  due  prior to its  stated
maturity or such contingent obligation to become payable;

                  (e) BANKRUPTCY.  The Company or any of its Subsidiaries  shall
(i) apply for,  consent to or suffer to exist the  appointment of, or the taking
of possession by, a receiver,  custodian,  trustee or liquidator of itself or of
all or a substantial  part of its property,  (ii) make a general  assignment for
the benefit of  creditors,  (iii)  commence a  voluntary  case under the federal
bankruptcy laws (as now or hereafter in effect),  (iv) be adjudicated a bankrupt
or  insolvent,  (v) file a petition  seeking to take  advantage of any other law
providing for the relief of debtors, (vi) acquiesce to, without challenge within
ten (10) days of the filing thereof, or failure to have dismissed, within thirty
(30) days,  any petition  filed  against it in any  involuntary  case under such
bankruptcy  laws,  or (vii) take any action for the purpose of effecting  any of
the foregoing;

                  (f) JUDGMENTS.  Attachments or levies in excess of $250,000 in
the aggregate are made upon the Company or any of its  Subsidiary's  assets or a
judgment is rendered  against the  Company's  property  involving a liability of
more than  $250,000  which shall not have been  vacated,  discharged,  stayed or
bonded within ninety (90) days from the entry thereof;

                  (g) INSOLVENCY.  The Company or any of its Subsidiaries  shall
admit in writing its inability, or be generally unable, to pay its debts as they
become due or cease operations of its present business;

                  (h) CHANGE OF CONTROL.  A Change of Control (as defined below)
shall occur with respect to the  Company,  unless  Holder  shall have  expressly
consented to such Change of Control in writing. A "Change of Control" shall mean
any event or circumstance as a result of

                                       7
<PAGE>

which (i) any  "Person" or "group" (as such terms are defined in Sections  13(d)
and 14(d) of the Exchange Act, as in effect on the date hereof),  other than the
Holder,  is or becomes the  "beneficial  owner" (as defined in Rules 13(d)-3 and
13(d)-5 under the Exchange  Act),  directly or  indirectly,  of 35% or more on a
fully  diluted  basis of the then  outstanding  voting  equity  interest  of the
Company (other than a "Person" or "group" that  beneficially owns 35% or more of
such  outstanding  voting  equity  interests of the Company on the date hereof),
(ii) the Board of Directors of the Company  shall cease to consist of a majority
of the Company's  board of directors on the date hereof (or directors  appointed
by a majority  of the board of  directors  in effect  immediately  prior to such
appointment)  or  (iii)  the  Company  or  any  of its  Subsidiaries  merges  or
consolidates with, or sells all or substantially all of its assets to, any other
person or entity;

                  (i)  INDICTMENT;  PROCEEDINGS.  The  indictment  or threatened
indictment of the Company or any of its Subsidiaries or any executive officer of
the  Company  or  any  of  its  Subsidiaries  under  any  criminal  statute,  or
commencement or threatened  commencement of criminal or civil proceeding against
the Company or any of its  Subsidiaries or any executive  officer of the Company
or any of its Subsidiaries  pursuant to which statute or proceeding penalties or
remedies  sought or available  include  forfeiture of any of the property of the
Company or any of its Subsidiaries;

                  (j) THE  PURCHASE  AGREEMENT  AND RELATED  AGREEMENTS.  (i) An
Event of Default  shall occur under and as defined in the Purchase  Agreement or
any Related Agreement,  (ii) the Company or any of its Subsidiaries shall breach
any term or provision of the Purchase  Agreement or any other Related  Agreement
in any  material  respect  and  such  breach,  if  capable  of  cure,  continues
unremedied for a period of fifteen (15) days after the occurrence thereof, (iii)
the Company or any of its  Subsidiaries  attempts to terminate,  challenges  the
validity  of, or its  liability  under,  the  Purchase  Agreement or any Related
Agreement,  (iv) any  proceeding  shall be brought to  challenge  the  validity,
binding  effect of the Purchase  Agreement  or any Related  Agreement or (v) the
Purchase  Agreement or any Related  Agreement ceases to be a valid,  binding and
enforceable  obligation of the Company or any of its Subsidiaries (to the extent
such persons or entities are a party thereto);

                  (k) STOP TRADE.  An SEC stop trade order or  Principal  Market
trading  suspension  of the  Common  Stock  shall  be in  effect  for  five  (5)
consecutive days or five (5) days during a period of ten (10) consecutive  days,
excluding  in all cases a  suspension  of all  trading  on a  Principal  Market,
provided  that  the  Company  shall  not have  been  able to cure  such  trading
suspension  within  thirty  (30) days of the  notice  thereof or list the Common
Stock on another Principal Market within sixty (60) days of such notice; or

                  (l) FAILURE TO DELIVER COMMON STOCK OR  REPLACEMENT  NOTE. The
Company's  failure to deliver Common Stock to the Holder  pursuant to and in the
form  required by this Note and the Purchase  Agreement  and, if such failure to
deliver  Common  Stock shall not be cured  within two (2)  business  days or the
Company is  required to issue a  replacement  Note to the Holder and the Company
shall fail to deliver such replacement Note within seven (7) business days.

                                       8
<PAGE>

            4.2  DEFAULT  INTEREST.  Following  the  occurrence  and  during the
continuance of an Event of Default, the Company shall pay additional interest on
this Note in an amount equal to one and one half percent  (1.5%) per month,  and
all  outstanding  obligations  under this Note, the Purchase  Agreement and each
other Related  Agreement,  including unpaid  interest,  shall continue to accrue
interest at such additional interest rate from the date of such Event of Default
until the date such Event of Default is cured or waived.

            4.3  DEFAULT  PAYMENT.  Following  the  occurrence  and  during  the
continuance  of an Event of  Default,  the  Holder,  at its  option,  may demand
repayment in full of all  obligations  and  liabilities  owing by Company to the
Holder  under  this  Note,  the  Purchase  Agreement  and/or  any other  Related
Agreement and/or may elect, in addition to all rights and remedies of the Holder
under  the  Purchase   Agreement  and  the  other  Related  Agreements  and  all
obligations and liabilities of the Company under the Purchase  Agreement and the
other  Related  Agreements,  to require  the  Company to make a Default  Payment
("DEFAULT  PAYMENT").  The  Default  Payment  shall  be 125% of the  outstanding
principal amount of the Note, plus accrued but unpaid  interest,  all other fees
then remaining  unpaid,  and all other amounts  payable  hereunder.  The Default
Payment  shall  be  applied  first to any fees  due and  payable  to the  Holder
pursuant  to this  Note,  the  Purchase  Agreement,  and/or  the  other  Related
Agreements, then to accrued and unpaid interest due on this Note and then to the
outstanding principal balance of this Note. The Default Payment shall be due and
payable  immediately  on the date  that the  Holder  has  exercised  its  rights
pursuant to this Section 4.3.

                                    ARTICLE V
                                  MISCELLANEOUS

            5.1 CONVERSION  PRIVILEGES.  The conversion  privileges set forth in
Article  III shall  remain in full  force and effect  immediately  from the date
hereof  until the date this Note is  indefeasibly  paid in full and  irrevocably
terminated.

            5.2  CUMULATIVE  REMEDIES.  The  remedies  under  this Note shall be
cumulative.

            5.3 FAILURE OR  INDULGENCE  NOT  WAIVER.  No failure or delay on the
part of the  Holder  hereof in the  exercise  of any power,  right or  privilege
hereunder  shall  operate as a waiver  thereof,  nor shall any single or partial
exercise  of any  such  power,  right or  privilege  preclude  other or  further
exercise  thereof  or of any other  right,  power or  privilege.  All rights and
remedies existing  hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.

            5.4  NOTICES.  Any notice  herein  required or permitted to be given
shall be in writing and shall be deemed  effectively  given:  (a) upon  personal
delivery to the party notified, (b) when sent by confirmed telex or facsimile if
sent during normal  business  hours of the  recipient,  if not, then on the next
business  day, (c) five days after having been sent by  registered  or certified
mail, return receipt  requested,  postage prepaid,  or (d) one day after deposit
with a nationally  recognized  overnight courier,  specifying next day delivery,
with written  verification of receipt.  All communications  shall be sent to the
Company at the address provided in the Purchase Agreement executed in connection
herewith,  and to the Holder at the address  provided in the Purchase  Agreement
for such Holder,  with a copy to John E. Tucker,  Esq.,  825 Third

                                       9
<PAGE>

Avenue,  14th Floor, New York, New York 10022,  facsimile number (212) 541-4434,
or at such other  address as the Company or the Holder may designate by ten days
advance written notice to the other parties hereto. A Notice of Conversion shall
be deemed given when made to the Company pursuant to the Purchase Agreement.

            5.5 AMENDMENT PROVISION. The term "Note" and all references thereto,
as used  throughout  this  instrument,  shall mean this instrument as originally
executed,  or  if  later  amended  or  supplemented,   then  as  so  amended  or
supplemented,  and any successor  instrument as such successor instrument may be
amended or supplemented.

            5.6  ASSIGNABILITY.  This Note shall be binding upon the Company and
its successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with the
requirements  of the Purchase  Agreement.  The Company may not assign any of its
obligations under this Note without the prior written consent of the Holder, any
such purported assignment without such consent being null and void.

            5.7 COST OF  COLLECTION.  In case of any Event of Default under this
Note, the Company shall pay the Holder reasonable costs of collection, including
reasonable attorneys' fees.

            5.8 GOVERNING LAW, JURISDICTION AND WAIVER OF JURY TRIAL.

                  (a) THIS NOTE SHALL BE GOVERNED BY AND  CONSTRUED AND ENFORCED
IN  ACCORDANCE  WITH  THE LAWS OF THE  STATE  OF NEW  YORK,  WITHOUT  REGARD  TO
PRINCIPLES OF CONFLICTS OF LAW.

                  (b) THE COMPANY  HEREBY  CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS  LOCATED IN THE COUNTY OF NEW YORK,  STATE OF NEW YORK SHALL HAVE
EXCLUSIVE  JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE
COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND,  PERTAINING TO THIS
NOTE OR ANY OF THE OTHER RELATED  AGREEMENTS OR TO ANY MATTER  ARISING OUT OF OR
RELATED  TO THIS  NOTE OR ANY OF THE  RELATED  AGREEMENTS;  PROVIDED,  THAT  THE
COMPANY  ACKNOWLEDGES 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 NOTE  SHALL BE DEEMED OR  OPERATE  TO
PRECLUDE THE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION  TO COLLECT THE  OBLIGATIONS,  TO REALIZE ON THE  COLLATERAL OR ANY
OTHER  SECURITY  FOR THE  OBLIGATIONS,  OR TO ENFORCE A JUDGMENT  OR OTHER COURT
ORDER IN FAVOR OF THE HOLDER.  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 WHICH IT MAY HAVE BASED UPON LACK OF
PERSONAL  JURISDICTION,  IMPROPER  VENUE OR FORUM NON  CONVENIENS.  THE  COMPANY
HEREBY WAIVES PERSONAL SERVICE OF THE

                                       10
<PAGE>

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 THE PURCHASE  AGREEMENT  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  COMPANY  DESIRES  THAT ITS  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 COMPANY HERETO
WAIVES 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
HOLDER AND THE COMPANY ARISING OUT OF, CONNECTED WITH,  RELATED OR INCIDENTAL TO
THE  RELATIONSHIP  ESTABLISHED  BETWEEN THEM IN CONNECTION  WITH THIS NOTE,  ANY
OTHER RELATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

            5.9  SEVERABILITY.  In the event that any  provision of this Note is
invalid or unenforceable  under any applicable statute or rule of law, then such
provision  shall  be  deemed  inoperative  to the  extent  that it may  conflict
therewith  and shall be deemed  modified to conform with such statute or rule of
law. Any such provision which may prove invalid or  unenforceable  under any law
shall not affect the validity or  enforceability  of any other provision of this
Note.

            5.10 MAXIMUM  PAYMENTS.  Nothing contained herein shall be deemed to
establish  or require  the  payment of a rate of  interest  or other  charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest  required to be paid or other charges hereunder exceed the maximum rate
permitted  by such law,  any  payments in excess of such  maximum  rate shall be
credited  against amounts owed by the Company to the Holder and thus refunded to
the Company.

            5.11 SECURITY INTEREST AND GUARANTEE.  The Holder has been granted a
security  interest (i) in certain assets of the Company and its  Subsidiaries as
more fully described in the 2004 Master Security Agreement and the 2006 Security
Agreement  and  (ii) in the  equity  interests  of the  Companies'  Subsidiaries
pursuant to the 2006 Stock  Pledge  Agreement.  The  obligations  of the Company
under this Note are guaranteed by certain  Subsidiaries of the Company  pursuant
to the 2006 Subsidiary Guarantee.

            5.12  CONSTRUCTION.  Each party  acknowledges that its legal counsel
participated in the preparation of this Note 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 Note to favor any party
against the other.

            5.13 REGISTERED OBLIGATION. This Note is intended to be a registered
obligation within the meaning of Treasury  Regulation Section  1.871-14(c)(1)(i)
and the Company (or its agent) shall  register this Note (and  thereafter  shall
maintain such registration) as to both principal

                                       11
<PAGE>

and any stated interest.  Notwithstanding any document,  instrument or agreement
relating  to this Note to the  contrary,  transfer of this Note (or the right to
any payments of principal or stated interest thereunder) may only be effected by
(i) surrender of this Note and either the reissuance by the Company of this Note
to the new holder or the issuance by the Company of a new  instrument to the new
holder,  or (ii) transfer through a book entry system  maintained by the Company
(or  its   agent),   within  the   meaning  of   Treasury   Regulation   Section
1.871-14(c)(1)(i)(B).

       [Balance of page intentionally left blank; signature page follows]

                                       12
<PAGE>

            IN WITNESS WHEREOF,  the Company has caused this Secured Convertible
Term Note to be signed in its name effective as of this 31st day of March, 2006.

                                             INCENTRA SOLUTIONS, INC.

                                             By: /s/ Thomas P. Sweeney III
                                                 -------------------------------
                                                 Name:  Thomas P. Sweeney III
                                                 Title: Chief Executive Officer

WITNESS:

--------------------------------

                                       13

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