Exhibit 10.2
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. (F/K/A
FRONT PORCH DIGITAL INC.) THAT SUCH REGISTRATION IS NOT REQUIRED.
SECURED REVOLVING NOTE
FOR VALUE RECEIVED, each of INCENTRA SOLUTIONS, INC., a Nevada
Corporation (the "PARENT"), and the other companies listed on EXHIBIT A attached
hereto (such other companies together with the Parent, each a "COMPANY" and
collectively, the "COMPANIES"), jointly and severally, promises to pay to LAURUS
MASTER FUND, LTD., c/o M&C Corporate Services Limited, X.X. Xxx 000 XX, Xxxxxx
House, South Church Street, Xxxxxx Town, Grand Cayman, Cayman Islands, Fax:
000-000-0000 (the "HOLDER") or its registered assigns or successors in interest,
the sum of Ten Million Dollars ($10,000,000), or, if different, the aggregate
principal amount of all Loans (as defined in the Security Agreement referred to
below, together with any accrued and unpaid interest hereon, on February 6, 2009
(the "MATURITY DATE") if not sooner indefeasibly paid in full.
Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in the Security Agreement among the Companies
and the Holder dated as of the date hereof (as amended, modified and/or
supplemented from time to time, the "SECURITY AGREEMENT").
The following terms shall apply to this Secured Revolving Note
(this "NOTE"):
ARTICLE I
CONTRACT RATE
1.1 CONTRACT RATE. Subject to Sections 3.2 and 4.10,
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
one percent (1.0%) (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 seven percent (7.0%). Interest shall be (i)
calculated on the basis of a 360 day year, and (ii) payable monthly, in arrears,
commencing on March 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.
ARTICLE II
[INTENTIONALLY OMITTED]
ARTICLE III
EVENTS OF DEFAULT AND DEFAULT RELATED PROVISIONS
3.1 EVENTS OF DEFAULT. The occurrence of an Event of Default
under the Security Agreement shall constitute an event of default ("EVENT OF
DEFAULT") hereunder.
3.2 DEFAULT INTEREST. Following the occurrence and during
the continuance of an Event of Default beyond any applicable grace period, the
Companies shall, jointly and severally, pay additional interest on the
outstanding principal balance of this Note in an amount equal to one and one
half percent (1.5%) per month, and all outstanding Obligations, 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.
3.3 DEFAULT PAYMENT. Following the occurrence and during the
continuance of an Event of Default beyond any applicable grace period, the
Holder, at its option, within five (5) days after written notice from Holder to
Borrower, may elect, in addition to all rights and remedies of the Holder under
the Security Agreement and the other Ancillary Agreements and all obligations
and liabilities of each Company under the Security Agreement and the other
Ancillary Agreements, to require the Companies, jointly and severally, to make a
Default Payment ("DEFAULT PAYMENT"). The Default Payment shall be one hundred
twenty five percent (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 the Notes, the Security Agreement
and/or the Ancillary Agreements, then to accrued and unpaid interest due on the
Notes and then to the outstanding principal balance of the Notes. The Default
Payment shall be due and payable immediately on the date that the Holder has
exercised its rights pursuant to this Section 3.3.
ARTICLE IV
MISCELLANEOUS
4.1 INTENTIONALLY OMITTED.
4.2 CUMULATIVE REMEDIES. The remedies under this Note shall
be cumulative.
4.3 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.
4.4 NOTICES. Any notice herein required or permitted to be
given shall be in writing and shall be deemed effective given (a) upon personal
delivery to the party notified, (b)
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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 respective Company at the
address provided for such Company in the Security Agreement executed in
connection herewith, and to the Holder at the address provided in the Security
Agreement for the Holder, with a copy to Xxxx X. Xxxxxx, Esq., 000 Xxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, facsimile number (000) 000-0000, or at
such other address as the respective Company or the Holder may designate by ten
days advance written notice to the other parties hereto.
4.5 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.
4.6 ASSIGNABILITY. This Note shall be binding upon each
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 Security Agreement. No Company may
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.
4.7 COST OF COLLECTION. In case of any Event of Default
under this Note, the Companies shall, jointly and severally, pay the Holder the
Holder's reasonable costs of collection, including reasonable attorneys' fees.
4.8 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) EACH 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 ANY COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND,
PERTAINING TO THIS NOTE, THE SECURITY AGREEMENT OR ANY OF THE OTHER ANCILLARY
AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE, THE SECURITY
AGREEMENT OR ANY OF THE OTHER ANCILLARY AGREEMENTS PROVIDED, THAT EACH 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
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OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF THE HOLDER. EACH COMPANY EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND EACH COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH 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 SECURITY 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) EACH 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, EACH
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/OR ANY COMPANY ARISING OUT OF, CONNECTED WITH,
RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION
WITH THIS NOTE, THE SECURITY AGREEMENT, ANY OTHER ANCILLARY AGREEMENT OR THE
TRANSACTIONS RELATED HERETO OR THERETO.
4.9 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.
4.10 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 Companies to the Holder and thus
refunded to the Companies.
4.11 SECURITY INTEREST AND GUARANTEE. The Holder has been
granted a security interest (i) in certain assets of the Companies as more fully
described in the Security Agreement and (ii) pursuant to the Stock Pledge
Agreement dated as of the date hereof. The obligations of the Companies under
this Note are guaranteed by certain Subsidiaries of the Companies pursuant to
the Subsidiary Guaranty dated as of the date hereof.
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4.12 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.
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IN WITNESS WHEREOF, each Company has caused this Secured
Revolving Note to be signed in its name effective as of this 6th day of February
2006.
INCENTRA SOLUTIONS, INC.
(F/K/A FRONT PORCH DIGITAL, INC.)
By: /s/ Xxxxxx X. Xxxxxxx, III
------------------------------------
Name: Xxxxxx X. Xxxxxxx, III
Title: Chairman and CEO
WITNESS:
----------------------------------
PWI TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx, III
------------------------------------
Name: Xxxxxx X. Xxxxxxx, III
Title: Chairman and CEO
WITNESS:
----------------------------------
INCENTRA SOLUTIONS OF CALIFORNIA, INC.
By: /s/ Xxxxxx X. Xxxxxxx, III
------------------------------------
Name: Xxxxxx X. Xxxxxxx, III
Title: Chairman and CEO
WITNESS:
----------------------------------
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MANAGEDSTORAGE INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxxx, III
------------------------------------
Name: Xxxxxx X. Xxxxxxx, III
Title: Chairman and CEO
WITNESS:
----------------------------------
INCENTRA SOLUTIONS INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxxx, III
------------------------------------
Name: Xxxxxx X. Xxxxxxx, III
Title: Chairman and CEO
WITNESS:
----------------------------------
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EXHIBIT A
OTHER COMPANIES
PWI Technologies, Inc., a Washington corporation
Incentra Solutions of California, Inc., a Delaware corporation
ManagedStorage International, Inc, a Delaware corporation
Incentra Solutions International, Inc.
