Exhibit 10.13

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.

SECURED TERM NOTE

          FOR VALUE RECEIVED, INCENTRA SOLUTIONS, INC., a Nevada Corporation
(the “Company”), promises to pay to CALLIOPE CAPITAL CORPORATION, 874 Walker
Road, Suite C, Dover, DE 19904, Fax: 914-949-9618 (the “Holder”) or its
registered assigns or successors in interest, the sum of Twelve Million Dollars
($12,000,000), together with any accrued and unpaid interest hereon, on July 31,
2010 (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”).

          The following terms shall apply to this Note:

ARTICLE I
CONTRACT RATE AND AMORTIZATION

          1.1 Contract Rate. Subject to Sections 2.2 and 3.9, 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 ten percent (10.0%). Interest shall be (i) calculated on the
basis of a 360 day year, and (ii) payable monthly, in arrears, commencing on
August 1, 2007, 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.

          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 in cash by the Company on February 1, 2008 and on the first business day of
each succeeding month

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thereafter through and including the Maturity Date (each, an “Amortization
Date”). 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 $285,714.28 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.

          1.4 Optional Prepayment. The Company may prepay this Note at any time,
in whole or in part, without penalty or premium.

ARTICLE II
EVENTS OF DEFAULT

          2.1 Events of Default. The occurrence of any of the following events
set forth in this Section 2.1 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 obligations of the Company or any of its
Subsidiaries under the Purchase Agreement or any Related 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.

               (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 Security Agreement dated as of February 6, 2006, by and
among the Company, certain subsidiaries of the Company and Laurus Master Fund,
Ltd. (“Laurus”) (as amended, modified or supplemented from time to time, 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 Laurus (as amended,
modified or supplemented from time to time, the “2004 Securities Purchase
Agreement”) and/or any Related Agreement referred to in

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the 2004 Securities Purchase Agreement, as amended, modified or supplemented
from time to time) and/or (iii) that certain Securities Purchase Agreement,
dated as of March 31, 2006, by and between the Company and Laurus (as amended,
modified or supplemented from time to time, the “2006 Securities Purchase
Agreement”) and/or any Related Agreement referred to in the 2006 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 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

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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

          2.2 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.

          2.3 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.

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ARTICLE III
MISCELLANEOUS

          3.1 Cumulative Remedies. The remedies under this Note shall be
cumulative.

          3.2 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.

          3.3 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 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.

          3.4 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.

          3.5 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.

          3.6 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.

          3.7 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.

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               (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 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.

          3.8 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.

          3.9 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

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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.

          3.10 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 Master Security Agreement and (ii) in the equity
interests of the Company’s Subsidiaries pursuant to the Stock Pledge Agreement.
The obligations of the Company under this Note are guaranteed by certain
Subsidiaries of the Company pursuant to the Subsidiary Guarantee.

          3.11 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 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]

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          IN WITNESS WHEREOF, the Company has caused this Secured Term Note to
be signed in its name effective as of this 31st day of July, 2007.

 

 

 

 

INCENTRA SOLUTIONS, INC.

 

 

 

 

By:

 

 

 

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     Name: Matthew G. Richman

 

     Title: Senior Vice President, Chief Corporate Development Officer &
Treasurer

 

 

 

WITNESS:

 

 

 

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