-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B8E28BKkhUyQAs8rY5hTa4wtsz+kxV8LJ4VE9/3cryuD8fOCTSlVGWYi80ODiFjY M2AK63Abj0Ozj2vLxt7xHw== 0000930413-04-005009.txt : 20041029 0000930413-04-005009.hdr.sgml : 20041029 20041029172006 ACCESSION NUMBER: 0000930413-04-005009 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20041026 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041029 DATE AS OF CHANGE: 20041029 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRONT PORCH DIGITAL INC CENTRAL INDEX KEY: 0001025707 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 860793960 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-32913 FILM NUMBER: 041107449 BUSINESS ADDRESS: STREET 1: 1810 CHAPEL AVE W STREET 2: SUITE 130 CITY: CHERRY HILL STATE: NJ ZIP: 08002 BUSINESS PHONE: 8566333500 MAIL ADDRESS: STREET 1: 1810 CHAPEL AVE W STREET 2: SUITE 130 CITY: CHERRY HILL STATE: NJ ZIP: 08002 FORMER COMPANY: FORMER CONFORMED NAME: EMPIRE COMMUNICATIONS CORP DATE OF NAME CHANGE: 19980327 FORMER COMPANY: FORMER CONFORMED NAME: LITIGATION ECONOMICS INC DATE OF NAME CHANGE: 19961022 8-K 1 c34230.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 --------------------- DATE OF REPORT: OCTOBER 26, 2004 (Date of earliest event reported) INCENTRA SOLUTIONS, INC. (Exact name of Registrant as specified in its charter) NEVADA (State or other jurisdiction of incorporation) 333-16031 86-0793960 (Commission File No.) (I.R.S. Employer Identification No.) 1140 PEARL STREET BOULDER, COLORADO 80302 (Address of principal executive offices; zip code) (303) 440-7930 (Registrant's telephone number, including area code) FRONT PORCH DIGITAL INC. (Former Name or Former Address, if changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (SEE General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13-4(e) under the Exchange Act (17 CFR 240.13e-4(c)) SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. (a) On October 26, 2004, the registrant entered into an Amendment and Waiver, dated as of October 25, 2004 (the "Amendment and Waiver"), with Laurus Master Fund, Ltd., a Cayman Islands company ("Laurus"). The Amendment and Waiver amends the Securities Purchase Agreement (the "Securities Purchase Agreement"), the Secured Convertible Term Note (the "Term Note"), the Common Stock Purchase Warrant (the "Warrant"), the Master Security Agreement (the "Master Security Agreement") and the Registration Rights Agreement (the "Registration Rights Agreement" and together with the Securities Purchase Agreement, the Term Note, the Warrant, the Master Security Agreement and the Registration Rights Agreement, the "Loan Documents"), each originally executed by such parties on May 13, 2004, and waives certain events of default under certain of the Loan Documents Pursuant to the Amendment and Waiver, the parties agreed to reduce the "Fixed Conversion Price" set forth in the Term Note from $0.50 to $0.30 per share and to amend the Master Security Agreement to provide for a "Lockbox Deposit Account" to be maintained by the registrant and its subsidiaries under the Master Security Agreement. Laurus further agreed to (i) release to the registrant $2,987,981.06, which represented all funds then remaining in a restricted account (less outstanding interest and fees accruing on the Non-Amortizing Principal (as such term is defined in the Securities Purchase Agreement) amount of the Term Note); (ii) postpone the monthly principal payments due and payable by the registrant under the Term Note on November 1, 2004, December 1, 2004, January 1, 2005 and February 1, 2005 until the maturity date of the Term Note; (iii) waive certain events of default, and all fees and default interest rates applicable to such events of default, under Section 4.1(b) of the Term Note and Section 4(a) of the Master Security Agreement that were triggered by the registrant's failure to cause certain of its subsidiaries to be joined as a party to the Master Security Agreement; (iv) extend the time certain of the registrant's subsidiaries have to be joined as a party to the Master Security Agreement; (v) waive all fees and default interest arising from the registrant's failure to pay the liquidated damages set forth in the Registration Statement and further waive any liquidated damages due and payable to Laurus by registrant. In consideration of the waivers set forth in (v) above, the registrant agreed to issue Laurus an immediately exercisable seven-year warrant to purchase 500,000 shares of the registrant's common stock at an exercise price of $0.50 per share (the "Additional Warrant") and further agreed to amend its registration statement on Form SB-2 to include the Additional Warrant and the additional shares of common stock issuable to Laurus upon conversion of the Term Note due to the adjustment of the "Fixed Conversion Price" referenced above. (b) As described above, on October 26, 2004, the registrant issued Laurus a Common Stock Purchase Warrant, dated October 25, 2004, to purchase 500,000 shares of the registrant's common stock, at an exercise price of $0.50 per share, at any time on or prior to October 25, 2011. There is no material relationship between the registrant and Laurus other than that created under the Loan Documents, the Amendment and Waiver and the Additional Warrant. SECTION 5 - CORPORATE GOVERNANCE AND MANAGEMENT ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR. (a) On October 22, 2004, the registrant filed with the Secretary of State of the State of Nevada a Certificate of Amendment (the "Amendment") to its Articles of Incorporation. The Amendment, which became effective on October 25, 2004, (i) changed the registrant's name from "Front Porch Digital Inc." to "Incentra Solutions, Inc." and (ii) increased the total number of authorized shares of common stock the registrant may issue from 150,000,000 shares to 200,000,000 shares. The proposed Amendment was previously disclosed in a Schedule 14C Information Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934 filed with the Securities and Exchange Commission on October 4, 2004. SECTION 8 - OTHER EVENTS ITEM 8.01 OTHER EVENTS. On October 28, 2004, the registrant issued a press release announcing (i) the execution of the Amendment and Waiver, (ii) its name change to "Incentra Solutions, Inc.", (iii) a change in the CUSIP number for its common stock and (iv) a change in the ticker symbol under which its common stock will be trading under on NASDAQ's "Over-the-Counter" Bulletin Board. A copy of the press release is attached hereto as Exhibit 99.1. SECTION 9 - FINANCIAL STATEMENT AND EXHIBITS ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. Number Documents ------ --------- 10.1 Securities Purchase Agreement, dated as of May 13, 2004, by and between the registrant and Laurus Master Fund, Ltd. (incorporated by reference to Exhibit 10.1 filed with the registrant's Quarterly Report on Form 10-QSB for the period ended March 31, 2004, filed on May 17, 2004). 2 10.2 Secured Convertible Term Note, dated as of May 13, 2004, made by the registrant in favor of Laurus Master Fund, Ltd. (incorporated by reference to Exhibit 10.2 filed with the registrant's Quarterly Report on Form 10-QSB for the period ended March 31, 2004, filed on May 17, 2004). 10.3 Master Security Agreement, dated May 13, 2004, by and between the Company and Laurus Master Fund, Ltd. (incorporated by reference to Exhibit 10.3 filed with the registrant's Quarterly Report on Form 10-QSB for the period ended March 31, 2004, filed on May 17, 2004). 10.4 Registration Rights Agreement, dated as of May 13, 2004, by and between the Company and Laurus Master Fund, Ltd. (incorporated by reference to Exhibit 10.4 filed with the registrant's Quarterly Report on Form 10-QSB for the period ended March 31, 2004, filed on May 17, 2004). 10.5 Common Stock Purchase Warrant, dated May 13, 2004, issued by the Company in favor of Laurus Master Fund, Ltd. (incorporated by reference to Exhibit 10.5 filed with the registrant's Quarterly Report on Form 10-QSB for the period ended March 31, 2004, filed on May 17, 2004). 10.6 Amendment and Waiver, dated as of October 25, 2004, between the registrant and Laurus Master Fund, Ltd. 10.7 Common Stock Purchase Warrant, dated October 25, 2004, issued by the registrant in favor of Laurus Master Fund, Ltd. 99.1 Press release of Incentra Solutions, Inc. dated October 28, 2004, announcing (i) the execution of the Amendment and Waiver, (ii) its name change to "Incentra Solutions, Inc.", (iii) a change in the CUSIP number for its common stock and (iv) a change in the ticker symbol under which its common stock will be trading under on NASDAQ's "Over-the-Counter" Bulletin Board. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. INCENTRA SOLUTIONS, INC. Date: October 29, 2004 By: /s/ THOMAS P. SWEENEY III ------------------------------- Thomas P. Sweeney III Chief Executive Officer EX-10.6 2 c34230_ex10-6.txt EXHIBIT 10.6 AMENDMENT AND WAIVER This Amendment and Waiver (this "AMENDMENT"), dated as of October 25, 2004, is entered into by and between FRONT PORCH DIGITAL, INC., a Nevada corporation (the "COMPANY"), and LAURUS MASTER FUND, LTD., a Cayman Islands company ("LAURUS"), for the purpose of amending the terms of (i) the Securities Purchase Agreement, dated as of May 13, 2004, by and between the Company and Laurus (as amended, modified or supplemented from time to time, the "SECURITIES PURCHASE AGREEMENT"), (ii) the Secured Convertible Term Note, dated May 13, 2004 (as amended, modified or supplemented from time to time, the "TERM NOTE") issued by the Company pursuant to the Securities Purchase Agreement, (iii) the Common Stock Purchase Warrant, dated May 13, 2004 (as amended, modified or supplemented from time to time, the "WARRANT") issued by the Company pursuant to the Securities Purchase Agreement, and (iv) the Registration Rights Agreement by and between the Company and Laurus, dated as of May 13, 2004 (as amended, modified or supplemented from time to time, the "REGISTRATION RIGHTS AGREEMENT" and, together with the Securities Purchase Agreement, the Term Note and the Warrant, the "LOAN DOCUMENTS"). Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Securities Purchase Agreement. WHEREAS, on August 12, 2004 the Company created Front Porch Merger Corp., a Delaware corporation ("Merger Corp"), which was subsequently merged into ManagedStorage International, Inc., a Delaware Corporation ("MSI"), in a transaction in which MSI became a wholly owned subsidiary of the Company; and WHEREAS, Neither Merger Corp nor MSI was joined as a party to the Master Security Agreement within the thirty (30) day period required by Section 6.12(e)(ii) of the Securities Purchase Agreement (such failure, the "MSI Non Joinder"); and WHEREAS, the Company has failed to maintain the effectiveness of the registration statement required to be filed by it under the Registration Right Agreement as set forth in Section 2(b)(iii) thereof, and the Company pursuant to Section 2(b) thereof, therefore owes Laurus a total of $89,000 in liquidated damages (the "Liquidated Damages") as of the date hereof; the Liquidated Damages have not been paid by the Company to Laurus when due; and WHEREAS, the Company and Laurus have agreed to make certain changes to the Loan Documents as set forth herein; NOW, THEREFORE, in consideration of the above, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Section 2.1(a) of the Term Note is hereby amended by deleting the last sentence thereof and inserting the following in lieu thereof: "For purposes hereof, the "FIXED CONVERSION PRICE" means $0.30 (subject to adjustments as provided herein)." 2. Laurus hereby agrees that in consideration of the adjustment of the Fixed Conversion Price set forth in Section 1 hereof, on the date hereof, Laurus will (i) direct the North Fork Bank to release to the Company, by wire transfer of immediately available funds, all funds currently remaining in the restricted account at North Fork Bank (less outstanding interest and fees accruing on the Non-Amortizing Principal amount of the Term Note to the date of release), totaling $2,987,981.06 (the "Released Funds") and (ii) postpone the payment of Monthly Principal Amounts due and payable by the Company each of November 1, 2004, December 1, 2004, January 1, 2005 and February 1, 2005 (collectively, the "Postponed Monthly Principal Payments"), which such Postponed Monthly Principal Payments shall become due and payable on the Maturity Date. In connection therewith, Section 1.2 of the Term Note shall be amended by deleting the period at the end of the last sentence thereof, inserting a semicolon and adding the following immediately after the semicolon: "and provided further that, following a release of an amount of funds from the Restricted Account (as defined in the Master Security Agreement, dated as of May 13, 2004) (other than with respect to a release that occurs as a result of a conversion of any non-amortizing Principal Amount) (a "RELEASE AMOUNT") each Monthly Principal Amount due on any Repayment Date, commencing on March 1, 2005, following any such release shall be increased by an amount equal to (x) such Release Amount divided by (y) the sum of (I) the number of Repayment Dates remaining until the Maturity Date plus (II) one (1)." 3. The Company and Laurus agree that on the date hereof certain Events of Default have occurred and are continuing (beyond any applicable cure or grace period) and Laurus hereby (i) waives the Events of Default under Section 4.1(b) of the Note and Section 4(a) of the Master Security Agreement triggered by the MSI Non Joinder and all fees and default interest rates otherwise applicable to such Events of Default, and (ii) extends the time the Company shall have to comply with Section 6.12(e)(ii) of the Securities Purchase Agreement (as such Section relates to MSI) by causing MSI to execute and deliver the Joinder Agreement attached hereto as Exhibit 2, on or before November 30, 2004; 4. The Company and Laurus agree that on the date hereof an Event of Default has occurred and is continuing (beyond any applicable cure or grace period) under Section 4.1(b) of the Note relating to the failure by the Company to pay to Laurus the Liquidated Damages as set forth in the Registration Rights Agreement. Laurus hereby (i) waives such Event of Default and all fees and default interest rates otherwise applicable to such Event of Default; and (ii) hereby further waives any Liquidated Damages due and payable to Laurus by the Company up to and including the date hereof. In consideration of the waivers in this Section 4, the Company will, on the date hereof, issue a seven year warrant to Laurus to purchase 500,000 shares of the common stock of the Company with an exercise price of $0.50 per share (the "Additional Warrant"), such Additional Warrant to be in the form attached hereto as Exhibit 3. The Company further agrees to amend its Registration Statement, initially filed on the Filing Date (as defined in the Registration Rights Agreement), to include the Additional Warrant and additional shares of the Company's common stock issuable to Laurus upon conversion of the Term Note due to the adjustment of the Fixed Conversion Price set forth in Section 1 hereof, such amendment to be filed on or before November 30, 2004 and to be made effective by the Securities and Exchange commission no later than January 15, 2005. The provisions of Section 2 of the Registration Rights Agreement regarding liquidated damages will resume on December 1, 2004 with respect to the filing of the registration statement, and will resume on January 16, 2005 with respect to the effectiveness of the registration statement. 5. Section 4(b) of the Master Security Agreement is hereby deleted in its entirety, and the following inserted in its stead: "the occurrence of an Event of Default as defined in the Note." 6. Section 1 of the Master Security Agreement is hereby amended to add the words "and Lockbox Deposit Accounts" immediately following the words "referred to in the Restricted Account Agreement)" contained in such Section 1. 7. Section 3 of the Master Security Agreement is hereby amended to delete the period after the last sentence of Section 3(j) and insert a semicolon after such sentence and to add the following immediately following Section 3(j) thereof: "(k) On or before November 30, 2004, the Assignor shall (x) irrevocably direct all of its present and future Account Debtors (as defined below) and other persons obligated to make payments constituting Collateral to make such payments directly to the lockboxes maintained by such Assignor (the "Lockboxes") with Wells Fargo Bank, N.A. or such other financial institution accepted by Laurus in writing as may be selected by the Assignor (the "Lockbox Bank") (each such direction pursuant to this clause (x), a "Direction Notice") and (y) provide Laurus with copies of each Direction Notice, each of which shall be agreed to and acknowledged by the respective Account Debtor. Upon receipt of such payments, the Lockbox Bank has agreed to deposit the proceeds of such payments in that certain deposit account maintained at the Lockbox Bank and evidenced by the account name of ManagedStorage International, Inc. and the account number of 4121059398, or such other deposit accepted by Laurus in writing (the "Lockbox Deposit Account"). On or prior to November 30, 2004, the Assignor shall and shall cause the Lockbox Bank to enter into all such documentation acceptable to Laurus pursuant to which, among other things, the Lockbox Bank agrees to, following notification by Laurus (which notification Laurus shall only give following the occurrence and during the continuance of an Event of Default), comply only with the instructions or other directions of Laurus concerning the Lockbox and the Lockbox Deposit Account. All of Assignor's invoices, account statements and other written or oral communications directing, instructing, demanding or requesting payment of any Account of any such Assignor or any other amount constituting Collateral shall conspicuously direct that all payments be made to the Lockbox or such other address as Laurus may direct in writing. If, notwithstanding the instructions to Account Debtors, any Assignor receives any payments, such Assignor shall immediately remit such payments to the Lockbox Deposit Account in their original form with all necessary endorsements. Until so remitted, the Assignor shall hold all such payments in trust for and as the property of Laurus and shall not commingle such payments with any of its other funds or property. For the purposes hereof, (x) "Accounts" shall mean all "accounts", as such term is defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof, now owned or hereafter acquired by any Assignor and (y) "Account Debtor" shall mean any person or entity who is or may be obligated with respect to, or on account of, an Account." 8. Each amendment set forth herein shall be effective as of the date hereof following (i) the execution and delivery of same by each of the Company and Laurus, (ii) the execution and delivery of the Additional Warrant to Laurus. 9. Except as specifically set forth in this Amendment, there are no other amendments to the Loan Documents, and all of the other forms, terms and provisions of the Loan Documents remain in full force and effect. 10. The Company hereby represents and warrants to Laurus that as of the date hereof all representations, warranties and covenants made by Company in connection with the Loan Documents are true, correct and complete and all of Company's and its Subsidiaries' covenant requirements have been met. 11. This Amendment shall be binding upon the parties hereto and their respective successors and permitted assigns and shall inure to the benefit of and be enforceable by each of the parties hereto and its successors and permitted assigns. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. This Amendment may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument. IN WITNESS WHEREOF, each of the Company and Laurus has caused this Amendment to the Loan Documents to be signed in its name effective as of this 25th day of October, 2004. FRONT PORCH DIGITAL, INC. By: /s/ MATTHEW RICHMAN ---------------------------------------- Name: Matthew Richman Title: Senior Vice President - Corporate Development and Treasurer LAURUS MASTER FUND, LTD. By: /s/ DAVID GRIN ---------------------------------------- Name: David Grin Title: Managing Partner EX-10.7 3 c34230_ex10-7.txt EXHIBIT 10.7 THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK 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 UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO FRONT PORCH DIGITAL, INC. THAT SUCH REGISTRATION IS NOT REQUIRED. RIGHT TO PURCHASE UP TO 500,000 SHARES OF COMMON STOCK OF FRONT PORCH DIGITAL, INC. (SUBJECT TO ADJUSTMENT AS PROVIDED HEREIN) COMMON STOCK PURCHASE WARRANT No. _________________ Issue Date: October 25, 2004 FRONT PORCH DIGITAL, INC., a corporation organized under the laws of the State of Nevada ("FPDI"), hereby certifies that, for value received, LAURUS MASTER FUND, LTD., or assigns (the "Holder"), is entitled, subject to the terms set forth below, to purchase from the Company (as defined herein) from and after the Issue Date of this Warrant and at any time or from time to time before 5:00 p.m., New York time, through the close of business October 25, 2011 (the "Expiration Date"), up to 500,000 fully paid and nonassessable shares of Common Stock (as hereinafter defined), at the applicable Exercise Price (as defined below) per share. The number and character of such shares of Common Stock and the applicable Exercise Price per share are subject to adjustment as provided herein. As used herein the following terms, unless the context otherwise requires, have the following respective meanings: (a) The term "Company" shall include FPDI and any corporation which shall succeed, or assume the obligations of, FPDI hereunder. (b) The term "Common Stock" includes (i) the Company's Common Stock, par value $0.001 per share; and (ii) any other securities into which or for which any of the securities described in (a) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise. (c) The term "Other Securities" refers to any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the Holder of this Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 4 or otherwise. (d) The "Exercise Price" applicable under this Warrant shall be $0.50. 1. Exercise of Warrant. 1.1 Number of Shares Issuable upon Exercise. From and after the date hereof through and including the Expiration Date, the Holder shall be entitled to receive, upon exercise of this Warrant in whole or in part, by delivery of an original or fax copy of an exercise notice in the form attached hereto as Exhibit A (the "Exercise Notice") up to 500,000 shares of Common Stock of the Company, subject to adjustment pursuant to Section 4. 1.2 Fair Market Value. For purposes hereof, the "Fair Market Value" of a share of Common Stock as of a particular date (the "Determination Date") shall mean: (a) If the Company's Common Stock is traded on the American Stock Exchange or another national exchange or is quoted on the National or SmallCap Market of The Nasdaq Stock Market, Inc. ("Nasdaq"), then the closing or last sale price, respectively, reported for the last business day immediately preceding the Determination Date. (b) If the Company's Common Stock is not traded on the American Stock Exchange or another national exchange or on the Nasdaq but is traded on the National Association of Securities Dealers, Inc. Over-the-Counter Bulletin Board, then the mean of the average of the closing bid and asked prices reported for the last business day immediately preceding the Determination Date. (c) Except as provided in clause (d) below, if the Company's Common Stock is not publicly traded, then as the Holder and the Company agree or in the absence of agreement by arbitration in accordance with the rules then in effect of the American Arbitration Association, before a single arbitrator to be chosen from a panel of persons qualified by education and training to pass on the matter to be decided. (d) If the Determination Date is the date of a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution or winding up pursuant to the Company's charter, then all amounts to be payable per share to holders of the Common Stock pursuant to the charter in the event of such liquidation, dissolution or winding up, plus all other amounts to be payable per share in respect of the Common Stock in liquidation under the charter, assuming for the purposes of this clause (d) that all of the shares of Common Stock then issuable upon exercise of the Warrant are outstanding at the Determination Date. 1.3 COMPANY ACKNOWLEDGMENT. The Company will, at the time of the exercise of this Warrant, upon the request of the Holder hereof, acknowledge in writing 7 its continuing obligation to afford to such Holder any rights to which such Holder shall continue to be entitled after such exercise in accordance with the provisions of this Warrant. If the Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such Holder any such rights. 1.4 TRUSTEE FOR WARRANT HOLDERS. In the event that a bank or trust company shall have been appointed as trustee for the Holder of this Warrant pursuant to Subsection 3.2, such bank or trust company shall have all the powers and duties of a warrant agent (as hereinafter described) and shall accept, in its own name for the account of the Company or such successor person as may be entitled thereto, all amounts otherwise payable to the Company or such successor, as the case may be, on exercise of this Warrant pursuant to this Section 1. 2. PROCEDURE FOR EXERCISE. 2.1 DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. The Company agrees that the shares of Common Stock purchased upon exercise of this Warrant shall be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares in accordance herewith. As soon as practicable after the exercise of this Warrant in full or in part, and in any event within three (3) business days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the Holder, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct in compliance with applicable securities laws, a certificate or certificates for the number of duly and validly issued, fully paid and nonassessable shares of Common Stock (or Other Securities) to which such Holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such Holder would otherwise be entitled, cash equal to such fraction multiplied by the then Fair Market Value of one full share, together with any other stock or other securities and property (including cash, where applicable) to which such Holder is entitled upon such exercise pursuant to Section 1 or otherwise. 2.2 EXERCISE. Payment may be made either (i) in cash or by certified or official bank check payable to the order of the Company equal to the applicable aggregate Exercise Price, (ii) by delivery of this Warrant, or shares of Common Stock and/or Common Stock receivable upon exercise of this Warrant in accordance with Section (b) below, or (iii) by a combination of any of the foregoing methods, for the number of Common Shares specified in such Exercise Notice (as such exercise number shall be adjusted to reflect any adjustment in the total number of shares of Common Stock issuable to the Holder per the terms of this Warrant); provided, however, that if at the time of delivery of an Exercise Notice the shares of Common Stock to be issued upon payment of the Exercise Price have been registered under the Securities Act of 1933, as amended (the "Securities Act"), and are covered by an effective registration statement under the Securities Act, payment of the Exercise Price may only be made pursuant to clause (i) above and may not be made pursuant to clause (ii) or (iii) above. Upon receipt 8 by the Company of an Exercise Notice and proper payment of the aggregate Exercise Price, the Holder shall thereupon be entitled to receive the number of duly authorized, validly issued, fully-paid and non-assessable shares of Common Stock (or Other Securities) determined as provided herein. Notwithstanding any provisions herein to the contrary, if the Fair Market Value of one share of Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant for cash, the Holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being exercised) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Exercise Notice, in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula: X=Y (A-B) --------- A Where X = the number of shares of Common Stock to be issued to the Holder Y = the number of shares of Common Stock purchasable under this Warrant or, if only a portion of this Warrant is being exercised, the portion of this Warrant being exercised (at the date of such calculation) A = the Fair Market Value of one share of the Company's Common Stock (at the date of such calculation) B = the Exercise Price (as adjusted to the date of such calculation) 3. EFFECT OF REORGANIZATION, ETC.; ADJUSTMENT OF EXERCISE PRICE. 3.1 REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case at any time or from time to time, the Company shall (a) effect a reorganization, (b) consolidate with or merge into any other person, or (c) transfer all or substantially all of its properties or assets to any other person under any plan or arrangement contemplating the dissolution of the Company, then, in each such case, as a condition to the consummation of such a transaction, proper and adequate provision shall be made by the Company whereby the Holder of this Warrant, on the exercise hereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation or merger or the effective date of such dissolution, as the case may be, shall receive, in lieu of the Common Stock (or Other Securities) issuable on such exercise prior to such consummation or such effective date, the stock and other securities and property (including cash) to which such Holder would have been entitled upon such consummation or in connection with such dissolution, as the case may be, if such Holder had so exercised this Warrant, immediately prior thereto, all subject to further adjustment thereafter as provided in Section 4. 3.2 DISSOLUTION. In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, concurrently with any distributions made to holders of its Common Stock, shall at its expense deliver 9 or cause to be delivered to the Holder the stock and other securities and property (including cash, where applicable) receivable by the Holder of this Warrant pursuant to Section 3.1, or, if the Holder shall so instruct the Company, to a bank or trust company specified by the Holder and having its principal office in New York, NY as trustee for the Holder of this Warrant (the "Trustee"). 3.3 CONTINUATION OF TERMS. Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this Section 3, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 4. In the event this Warrant does not continue in full force and effect after the consummation of the transactions described in this Section 3, then the Company's securities and property (including cash, where applicable) receivable by the Holders of the Warrant will be delivered to Holder or the Trustee as contemplated by Section 3.2. 4. EXTRAORDINARY EVENTS REGARDING COMMON STOCK. In the event that the Company shall (a) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Exercise Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Exercise Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Exercise Price then in effect. The Exercise Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 4. The number of shares of Common Stock that the Holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive shall be increased to a number determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions of this Section 4) be issuable on such exercise by a fraction of which (a) the numerator is the Exercise Price that would otherwise (but for the provisions of this Section 4) be in effect, and (b) the denominator is the Exercise Price in effect on the date of such exercise. 5. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable on the exercise of this Warrant, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in 10 detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Exercise Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the Holder of this Warrant and any Warrant agent of the Company (appointed pursuant to Section 11 hereof). 6. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANT. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of this Warrant, shares of Common Stock (or Other Securities) from time to time issuable on the exercise of this Warrant. 7. ASSIGNMENT; EXCHANGE OF WARRANT. Subject to compliance with applicable securities laws, this Warrant, and the rights evidenced hereby, may be transferred by any registered holder hereof (a "Transferor") in whole or in part. On the surrender for exchange of this Warrant, with the Transferor's endorsement in the form of Exhibit B attached hereto (the "Transferor Endorsement Form") and together with evidence reasonably satisfactory to the Company demonstrating compliance with applicable securities laws, which shall include, without limitation, the provision of a legal opinion from the Transferor's counsel that such transfer is exempt from the registration requirements of applicable securities laws, and with payment by the Transferor of any applicable transfer taxes) will issue and deliver to or on the order of the Transferor thereof a new Warrant of like tenor, in the name of the Transferor and/or the transferee(s) specified in such Transferor Endorsement Form (each a "Transferee"), calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant so surrendered by the Transferor. 8. REPLACEMENT OF WARRANT. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of this Warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor. 9. REGISTRATION RIGHTS. The Holder of this Warrant has been granted certain registration rights by the Company. These registration rights are set forth in a Registration Rights Agreement dated as of even date of this Warrant entered into by the Company and the initial Holder of this Warrant. 10. MAXIMUM EXERCISE. The Holder shall not be entitled to exercise this Warrant on an exercise date, in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on such exercise date, and (ii) the number of shares of Common Stock 11 issuable upon the exercise of this Warrant with respect to which the determination of this proviso is being made on such exercise date, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock of the Company on such date. For the purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Notwithstanding the foregoing, the restriction described in this paragraph may be revoked upon 75 days prior notice from the Holder to the Company and is automatically null and void upon an Event of Default under the Note. 11. WARRANT AGENT. The Company may, by written notice to the Holder of this Warrant, appoint an agent for the purpose of issuing Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section 7, and replacing this Warrant pursuant to Section 8, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent. 12. TRANSFER ON THE COMPANY'S BOOKS. Until this Warrant is transferred on the books of the Company, the Company may treat the registered Holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. 13. NOTICES, ETC. All notices and other communications from the Company to the Holder of this Warrant shall be mailed by first class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company in writing by such Holder or, until any such Holder furnishes to the Company an address, then to, and at the address of, the last Holder of this Warrant who has so furnished an address to the Company. 14. MISCELLANEOUS. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be governed by and construed in accordance with the laws of State of New York without regard to principles of conflicts of laws. Any action brought concerning the transactions contemplated by this Warrant shall be brought only in the state courts of New York or in the federal courts located in the state of New York; provided, however, that the Holder may choose to waive this provision and bring an action outside the State of New York. The individuals executing this Warrant on behalf of the Company agree to submit to the jurisdiction of such courts and waive trial by jury. In the event that any provision of this Warrant 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 Warrant. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision hereof. The Company acknowledges that legal counsel participated in the preparation of this Warrant and, therefore, stipulates that the rule of 12 construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Warrant to favor any party against the other party. [BALANCE OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS.] 13 IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above. FRONT PORCH DIGITAL, INC. WITNESS: /s/ MINDY BOATRIGHT By: /s/ MATTHEW RICHMAN ------------------------- ---------------------------------- Name: Matthew Richman Title: Senior Vice President - Corporate Development and Treasurer 14 EXHIBIT A FORM OF SUBSCRIPTION (To Be Signed Only On Exercise Of Warrant) TO: Front Porch Digital, Inc. 1140 Pearl Street Boulder, CO 80302 Attention: Chief Financial Officer The undersigned, pursuant to the provisions set forth in the attached Warrant (No.____), hereby irrevocably elects to purchase (check applicable box): ____________ _______ shares of the Common Stock covered by such Warrant; or ____________ the maximum number of shares of Common Stock covered by such Warrant pursuant to the cashless exercise procedure set forth in Section 2. The undersigned herewith makes payment of the full Exercise Price for such shares at the price per share provided for in such Warrant, which is $___________. Such payment takes the form of (check applicable box or boxes): ____________ $__________ in lawful money of the United States; and/or ____________ the cancellation of such portion of the attached Warrant as is exercisable for a total of _______ shares of Common Stock (using a Fair Market Value of $_______ per share for purposes of this calculation); and/or ____________ the cancellation of such number of shares of Common Stock as is necessary, in accordance with the formula set forth in Section 2.2, to exercise this Warrant with respect to the maximum number of shares of Common Stock purchasable pursuant to the cashless exercise procedure set forth in Section 2. The undersigned requests that the certificates for such shares be issued in the name of, and delivered to ________________________________ whose address is - ---------------------------------------------------------------------------. The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Common Stock under the Securities Act of 1933, as amended (the "Securities Act") or pursuant to an exemption from registration under the Securities Act. Dated: ---------------------------- ----------------------------------------- (Signature must conform to name of holder as specified on the face of the Warrant) Address: -------------------------------- -------------------------------- EXHIBIT B FORM OF TRANSFEROR ENDORSEMENT (To Be Signed Only On Transfer Of Warrant) For value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading "Transferees" the right represented by the within Warrant to purchase the percentage and number of shares of Common Stock of Front Porch Digital, Inc. into which the within Warrant relates specified under the headings "Percentage Transferred" and "Number Transferred," respectively, opposite the name(s) of such person(s) and appoints each such person Attorney to transfer its respective right on the books of Front Porch Digital, Inc. with full power of substitution in the premises.
Percentage Number Transferees Address Transferred Transferred - ----------- ------- ----------- ----------- - -------------------------------------- ----------------------------------- ----------------- ---------------- - -------------------------------------- ----------------------------------- ----------------- ---------------- - -------------------------------------- ----------------------------------- ----------------- ---------------- - -------------------------------------- ----------------------------------- ----------------- ----------------
Dated: ------------------------- -------------------------------------------- (Signature must conform to name of holder as specified on the face of the Warrant) Address: ------------------------------------ ------------------------------------ SIGNED IN THE PRESENCE OF: -------------------------------------------- (Name) ACCEPTED AND AGREED: [TRANSFEREE] - --------------------------------------- (Name) EX-99.1 4 c34230_ex99-1.txt EXHIBIT 99.1 NEWS RELEASE FOR OCTOBER 28, 2004 Contact: Allen & Caron Inc. Incentra Solutions, Inc. Jill Bertotti (investors) Thomas P. Sweeney III, Chairman & CEO jill@allencaron.com (303) 449-8279 Len Hall (financial media) len@allencaron.com (949) 474-4300 FRONT PORCH DIGITAL EFFECTS NAME CHANGE TO INCENTRA SOLUTIONS INC. NEW STOCK SYMBOL, CUSIP NUMBER BOULDER, CO, OCTOBER 28, 2004 - Front Porch Digital, Inc. (OTCBB: FPDI) today announced that it changed its name to Incentra Solutions, Inc. (www.incentrasolutions.com) on October 25, 2004, and that, effective at the opening of trading on Friday, October 29, 2004, the Company's Over the Counter Bulletin Board trading symbol will change to "ICEN." On October 27, 2004, the Company also received a new CUSIP identification number (#45326F108) for its common stock. Chairman and CEO, Thomas P. Sweeney, commented, "The Company changed its name to better reflect the recently combined businesses of Front Porch and ManagedStorage International. We believe we are now well positioned to accelerate penetration of existing markets and to expand into related markets." To support this strategy, the Company announced that it has amended its funding agreement with Laurus Funds to release to the Company approximately $3 million of previously restricted funds for general corporate use. The Company will maintain its divisional brands in Front Porch Digital Broadcast & Media Services and ManagedStorage International (MSI). Sweeney remains Chairman and CEO of Incentra Solutions, Inc. and President of ManagedStorage International. Michael Knaisch continues to serve as President of the Front Porch Digital Broadcast & Media Services group. Holders of common stock certificates that desire to exchange their certificates for certificates that have the new corporate name and CUSIP number may do so by mailing the certificates to the Company's transfer agent, Interwest Transfer Company, Inc., at 1981 East Murray Holladay Road, Suite 100, P.O. Box 17136, Salt Lake City, UT 84117 to the attention of Catherine Leaututu. Holders of common stock in brokerage accounts should contact their stockbrokers. Any costs associated with the exchange will be the responsibility of the shareholder. ABOUT INCENTRA SOLUTIONS, INC. Incentra Solutions Inc. (www.incentrasolutions.com, OTCBB:ICEN) is a provider of storage management solutions to broadcasters, enterprises and managed service providers worldwide. The company's Broadcast & Media Division, Front Porch Digital (www.fpdigital.com), provides digital archive management and transcoding solutions and the company's ManagedStorage International (www.MSIservice.com) division provides outsourced storage management hardware and services facilitated by its GridWorks online storage resource management tool. INCENTRA SOLUTIONS FORWARD-LOOKING STATEMENTS CERTAIN INFORMATION DISCUSSED IN THIS PRESS RELEASE MAY CONSTITUTE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND THE FEDERAL SECURITIES LAWS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE BASED UPON REASONABLE ASSUMPTIONS AT THE TIME MADE, IT CAN GIVE NO ASSURANCE THAT ITS EXPECTATIONS WILL BE ACHIEVED. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS ARE INHERENTLY SUBJECT TO UNPREDICTABLE AND UNANTICIPATED RISKS, TRENDS AND UNCERTAINTIES SUCH AS THE COMPANY'S INABILITY TO ACCURATELY FORECAST ITS OPERATING RESULTS; THE COMPANY'S POTENTIAL INABILITY TO ACHIEVE PROFITABILITY OR GENERATE POSITIVE CASH FLOW; THE AVAILABILITY OF FINANCING; AND OTHER RISKS ASSOCIATED WITH THE COMPANY'S BUSINESS. FOR FURTHER INFORMATION ON FACTORS WHICH COULD IMPACT THE COMPANY AND THE STATEMENTS CONTAINED HEREIN, REFERENCE SHOULD BE MADE TO THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING ANNUAL REPORTS ON FORM 10-KSB, QUARTERLY REPORTS ON FORM 10-QSB AND CURRENT REPORTS ON FORM 8-K. THE COMPANY ASSUMES NO OBLIGATION TO UPDATE OR SUPPLEMENT FORWARD-LOOKING STATEMENTS THAT BECOME UNTRUE BECAUSE OF SUBSEQUENT EVENTS. # # # # 2 -----END PRIVACY-ENHANCED MESSAGE-----