Exhibit 10.1

 

ICORIA, INC.

 

SECURITIES PURCHASE AGREEMENT

 

October 19, 2004

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TABLE OF CONTENTS

 

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1.    Agreement to Sell and Purchase    1 2.    Fees and Warrant    2 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    3      4.4    Authorization;
Binding Obligations    4      4.5    Liabilities    5      4.6    Agreements;
Action    5      4.7    Obligations to Related Parties    5      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    8      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    10      4.18    Valid Offering    10      4.19    Full Disclosure
   11      4.20    Insurance    11      4.21    SEC Reports    11      4.22   
Listing    11      4.23    No Integrated Offering    11      4.24    Stop
Transfer    12      4.25    Dilution    12 5.    Representations and Warranties
of the Purchaser    12      5.1    No Shorting    12      5.2    Requisite Power
and Authority    13      5.3    Investment Representations    13      5.4   
Purchaser Bears Economic Risk    13      5.5    Acquisition for Own Account   
14      5.6    Purchaser Can Protect Its Interest    14      5.7    Accredited
Investor    14      5.8    Legends    14 6.    Covenants of the Company    15  
   6.1    Stop-Orders    15

 

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     6.2    Listing    15      6.3    Market Regulations    15      6.4   
Reporting Requirements    15      6.5    Use of Funds    16      6.6    Access
to Facilities    16      6.7    Taxes    16      6.8    Insurance    16      6.9
   Intellectual Property    17      6.10    Properties    18      6.11   
Confidentiality    18      6.12    Required Approvals    18      6.13   
Reissuance of Securities    19      6.14    Opinion    19      6.15    Margin
Stock    19      6.16    Financing Right of First Refusal    19 7.    Covenants
of the Purchaser    19      7.1    Confidentiality    19      7.2    Non-Public
Information    20 8.    Covenants of the Company and Purchaser Regarding
Indemnification    20      8.1    Company Indemnification    20      8.2   
Purchaser’s Indemnification    20 9.    Conversion of Convertible Note    20  
   9.1    Mechanics of Conversion    20 10.    Registration Rights.    22     
10.1    Registration Rights Granted    22      10.2    Offering Restrictions   
22 11.    Miscellaneous    22      11.1    Governing Law    22      11.2   
Survival    22      11.3    Successors    22      11.4    Entire Agreement    23
     11.5    Severability    23      11.6    Amendment and Waiver    23     
11.7    Delays or Omissions    23      11.8    Notices    23      11.9   
Attorneys’ Fees    24      11.10    Titles and Subtitles    24      11.11   
Facsimile Signatures; Counterparts    25      11.12    Broker’s Fees    25     
11.13    Construction    25

 

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LIST OF SCHEDULES

 

Capitalization and Voting Rights

   Schedule 4.3

Agreements; Action

   Schedule 4.6

Obligations to Related Parties

   Schedule 4.7

Changes

   Schedule 4.8

Tax Returns and Payments

   Schedule 4.13

Employees

   Schedule 4.14

Registration Rights and Voting Rights

   Schedule 4.15

Environmental and Safety Laws

   Schedule 4.17

Broker’s Fees

   Schedule 11.12

 

LIST OF EXHIBITS     

Form of Convertible Term Note

   Exhibit A

Form of Warrant

   Exhibit B

Form of Opinion

   Exhibit C

Form of Escrow Agreement

   Exhibit D

 

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SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into
as of October 19, 2004, by and between Icoria, Inc., a Delaware 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 a Convertible
Term Note (the “Note”) in the aggregate principal amount of Five Million Dollars
($5,000,000), which Note is convertible into shares of the Company’s common
stock, $0.01 par value per share (the “Common Stock”) at an initial fixed
conversion price of $0.53 per share of Common Stock (“Fixed Conversion Price”);

 

WHEREAS, the Company wishes to issue warrants to the Purchaser to purchase up to
1,650,943 shares of the Company’s Common Stock (subject to adjustment as set
forth therein) in connection with Purchaser’s purchase of the Note;

 

WHEREAS, Purchaser desires to purchase the Note and the Warrants (as defined in
Section 2) on the terms and conditions set forth herein, said Note and Warrants
are further evidenced by separate agreements and additional documents, the
Securities Purchase Agreement, the Funds Escrow Agreement, the Registration
Rights Agreement and the Master Security Agreement, associated with this
Agreement (the “Related Agreements” or the “Documents” or the “Other
Agreements”); and

 

WHEREAS, the Company desires to issue and sell the Note and Warrants 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 a Note in the aggregate principal amount of $5,000,000
convertible in accordance with the terms thereof into shares of the Company’s
Common Stock in accordance with the terms of the Note and this Agreement. The
Note purchased on the Closing Date shall be known as the “Offering.” A form of
the Note is annexed hereto as Exhibit A. The Note will mature on the Maturity
Date (as defined in the Note). Collectively, the Note and Warrant and Common
Stock issuable in payment of the Note, upon conversion of the Note and upon
exercise of the Warrant are referred to as the “Securities.”

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2. Fees and Warrant. On the Closing Date:

 

(a) The Company will issue and deliver to the Purchaser (i) a warrant to
purchase up to 825,471 shares of Common Stock within two years after the Closing
Date in connection with the Offering, in the form of Exhibit B-1 hereto (as
amended, modified or supplemented from time to time, the “Two-Year Warrant”),
and (ii) a warrant to purchase up to 825,472 shares of Common Stock within five
years after the Closing Date in connection with the Offering, in the form of
Exhibit B-2 hereto (as amended, modified or supplemented from time to time, the
“Five-Year Warrant”; the Two-Year Warrant and the Five-Year Warrant are
collectively referred to herein as the “Warrant”). The Warrant must be delivered
on the Closing Date. All the representations, covenants, warranties,
undertakings, and indemnification, and other rights made or granted to or for
the benefit of the Purchaser by the Company are hereby also made and granted in
respect of the Warrant and shares of the Company’s Common Stock issuable upon
exercise of the Warrant (the “Warrant Shares”).

 

(b) Subject to the terms of Section 2(d) below, the Company shall pay to Laurus
Capital Management, LLC, manager of Purchaser a $175,000 closing payment, which
is an amount equal to three and one-half percent (3.50%) of the aggregate
principal amount of the Note. The foregoing fee is referred to herein as the
“Closing Payment.”

 

(c) The Company shall reimburse the Purchaser for its reasonable expenses
(including legal fees and expenses) incurred in connection with the preparation
and negotiation of this Agreement and the Related Agreements (as hereinafter
defined), and 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 be $39,500 for such expenses referred to in
this Section 2(c).

 

(d) The Closing Payment and the expenses referred to in the preceding clause (c)
(net of the $15,000 and other deposit(s) previously paid by the Company) shall
be paid at closing out of funds held pursuant to the Escrow Agreement (as
defined below) and a disbursement letter (the “Disbursement Letter”).

 

3. Closing, Delivery and Payment.

 

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

 

3.2 Delivery. Pursuant to the Escrow Agreement, at the Closing on the Closing
Date, the Company will deliver to the Purchaser, among other things, a Note in
the form attached as Exhibit A representing the principal amount of $5,000,000
and the Two-Year Warrant and the Five-Year Warrant, each in the Purchaser’s name
representing an aggregate of 1,650,943 underlying shares of Common Stock and the
Purchaser will deliver to the Company, among other things, the amounts set forth
in the Disbursement Letter by wire transfer.

 

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4. Representations and Warranties of the Company. The Company hereby represents
and warrants to the Purchaser as follows. The representations and warranties are
supplemented by, and subject to, the Company’s filings under the Securities
Exchange Act of 1934 made prior to the date of this Agreement, collectively, the
(“Exchange Act Filings”) copies of which have been provided to the Purchaser.
Such information previously disclosed in the Exchange Act Filings is not
reproduced in the Schedules attached hereto. The disclosures contained herein
focus exclusively on the events and occurrences that arose during the time
period from the June 30, 2004 quarterly report on Form 10-Q, filed August 16,
2004, through the date of this agreement.

 

4.1 Organization, Good Standing and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware. The Company has the corporate power and authority to own and operate
its properties and assets, to execute and deliver this (i) this Agreement, (ii)
the Note, the Two-Year Warrant and the Five-Year Warrant to be issued in
connection with this Agreement, (iii) the Security Agreement dated as of the
date hereof between the Company and the Purchaser, (iv) the Registration Rights
Agreement relating to the Securities 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 Escrow Agreement dated as of
the date hereof among the Company, the Purchaser and the escrow agent referred
to therein, substantially in the form of Exhibit D hereto (as amended, modified
or supplemented from time to time, the “Escrow Agreement”) and (vi) all other
agreements related to this Agreement and the Note and referred to herein (the
preceding clauses (ii) through (vi), collectively, the “Related Agreements”), to
issue and sell the Note and the shares of Common Stock issuable upon conversion
of the 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. The Company is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions, except for those jurisdictions in
which the failure to do so has not had, 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 (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 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 September 30, 2004,
consists of 105,000,000 shares, of which 100,000,000 are shares of Common Stock,
par value $0.01 per share, 36,323,274 shares of which are issued and
outstanding, and 5,000,000 are shares of preferred stock, par value $0.01 per
share, of which no shares of preferred stock are issued and outstanding.

 

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(b) Except as disclosed on Schedule 4.3, another Schedule to this Agreement or
in any Exchange Act Filings, other than: (i) the shares reserved for issuance
under the Company’s stock option plans; and (ii) shares which may be issued
pursuant to this Agreement and the Related Agreements, 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, another Schedule to this
Agreement or in any Exchange Act Filings, neither the offer, issuance or sale of
any of the Note or 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, its officers and directors necessary for the authorization of this
Agreement and the Related Agreements, the performance of all obligations of the
Company hereunder and under the Related Agreements at the Closing and, the
authorization, sale, issuance and delivery of the Note and Warrant has been
taken or will be taken prior to the Closing. This Agreement and the Related
Agreements, when executed and delivered and to the extent it is a party thereto,
will be valid and binding obligations of the Company 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) general principles of equity that restrict the availability of equitable or
legal remedies.

 

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The sale of the Note and the subsequent conversion of the 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. The Company does not have any contingent liabilities in excess
of $200,000, except current liabilities incurred in the ordinary course of
business and liabilities disclosed in any Exchange Act Filings.

 

4.6 Agreements; Action. Except as set forth on Schedule 4.6 or as disclosed in
any Exchange Act Filings:

 

(a) There are no agreements, understandings, instruments, contracts, proposed
transactions, judgments, orders, writs or decrees to which the Company is a
party or to its knowledge by which it is bound which may involve: (i)
obligations (contingent or otherwise) of, or payments to, the Company in excess
of $200,000 (other than obligations of, or payments to, the Company arising from
purchase or sale 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 June 30, 2004, the Company has not: (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 $200,000 or, in the case of indebtedness and/or
liabilities individually less than $200,000, in excess of $300,000 in the
aggregate; (iii) made any loans or advances to any person not in excess,
individually or in the aggregate, of $200,000, other than ordinary advances for
travel expenses; or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory 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 or in
any Exchange Act filings, there are no obligations of the Company to officers,
directors, ten percent (10%) or greater stockholders or employees of the Company
other than:

 

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

 

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

 

(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 any Exchange Act
Filings, none of the officers, directors or, to the best of the Company’s
knowledge, key employees or ten percent (10%) or greater stockholders of the
Company or any members of their immediate families, are indebted to the Company,
individually or in the aggregate, in excess of $200,000 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 or in any
Exchange Act Filings, the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.

 

4.8 Changes. Since June 30, 2004, except as disclosed in any Exchange Act
Filings or in Schedule 4.8 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, which,
individually or in the aggregate, has had or could reasonably be expected to
have, a Material Adverse Effect;

 

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

 

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

 

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

 

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

 

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(f) any direct or indirect material loans made by the Company to any
stockholder, employee, officer or director of the Company, 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;

 

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

 

(i) any labor organization activity related to the Company;

 

(j) any debt, obligation or liability incurred, assumed or guaranteed by the
Company, 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;

 

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

 

(n) any arrangement or commitment by the Company 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 or in any Exchange Act Filings, the Company has good and marketable title to
its 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; 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 are in good operating condition and repair
and are reasonably fit and usable for the purposes for which they are being
used. Except as set forth on Schedule 4.9 or in any Exchange Act Filings, the
Company is in compliance with all material terms of each lease to which it is a
party or is otherwise bound.

 

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4.10 Intellectual Property.

 

(a) Except as disclosed in any Exchange Act Filings, the Company 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 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) Except as disclosed in any Exchange Act Filings, the Company has not
received any communications alleging that the Company 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 aware
of any basis therefor.

 

(c) Except as disclosed in any Exchange Act Filings, 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, except for inventions, trade secrets or proprietary information
that have been rightfully assigned to the Company.

 

4.11 Compliance with Other Instruments. Except as disclosed in any Exchange Act
Filings, the Company is not 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 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
Note 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 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 or as disclosed in
any Exchange Act Filings, there is no action, suit, proceeding or investigation
pending or, to the Company’s knowledge, currently threatened against the Company
that prevents the Company from entering into this Agreement or the 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 could result in
any

 

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change in the current equity ownership of the Company, nor is the Company aware
that there is any basis to assert any of the foregoing. The Company is not 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 currently pending or which the
Company intends to initiate.

 

4.13 Tax Returns and Payments. The Company 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 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 or as disclosed in any Exchange Act Filings, the Company has not 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 or as disclosed in any
Exchange Act Filings, the Company has no 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. Except as
disclosed in the Exchange Act Filings or on Schedule 4.14, the Company is not 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 compensation plan or agreement. To the
Company’s knowledge, no employee of the Company, nor any consultant with whom
the Company 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 because of the nature of the business to be conducted by the Company;
and to the Company’s knowledge the continued employment by the Company of its
present employees, and the performance of the Company’s contracts with its
independent contractors, will not result in any such violation. The Company is
not 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. The Company has not received
any notice alleging that any such violation has occurred. Except for employees
who have a current effective employment agreement with the Company, no employee
of the Company has been granted the right to continued employment by the Company
or to any material compensation following termination of employment with the
Company. Except as set forth on Schedule 4.14 or as disclosed in any Exchange
Act Filings, 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,
nor does the Company have a present intention to terminate the employment of any
officer, key employee or group of employees.

 

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4.15 Registration Rights and Voting Rights. Except as set forth on Schedule 4.15
and except as disclosed in Exchange Act Filings, the Company is presently not
under any obligation, and has not granted any rights, to register any of the
Company’s 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 has entered into any agreement with respect to the voting of equity
securities of the Company.

 

4.16 Compliance with Laws; Permits. The Company is not 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 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. The Company 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.

 

4.17 Environmental and Safety Laws. The Company is not 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 or as disclosed in any
Exchange Act Filings, no Hazardous Materials (as defined below) are used or have
been used, stored, or disposed of by the Company or, to the Company’s knowledge,
by any other person or entity on any property owned, leased or used by the
Company. 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 Company will take all steps
necessary to secure an exemption from the registration requirements of the
Securities Act of 1933, as amended (the “Securities Act”), for the offer and
sale of the Securities and will take the steps to register or qualify (or secure
an exemption from registration and qualification) under the registration, permit
or qualification requirements of all applicable state securities laws.

 

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4.19 Full Disclosure. The Company has provided, furnished or provided access to
the Purchaser regarding all information requested by the Purchaser in connection
with its decision to purchase the Note and Warrant, including all information
the Company believes is reasonably necessary to make such investment decision.
Neither this Agreement, the Related Agreements, nor the exhibits and schedules
hereto and thereto, when incorporated with the Exchange Act Filings, nor any
other document delivered by the Company 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 were based on the Company’s experience in the industry and on
assumptions of fact and opinion as to future events which the Company, at the
date of the issuance of such projections or estimates, believed to be
reasonable.

 

4.20 Insurance. The Company 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 in the same or similar
business.

 

4.21 SEC Reports. Except as set forth on Schedule 4.21 or in the Exchange Act
Filings, 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 the Purchaser with copies of:
(i) its Annual Report on Form 10-K for the fiscal year ended December 31, 2003;
and (ii) its Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, 2004 and June 30, 2004 and the Form 8-K filings which it has made during the
fiscal year 2004 to date (collectively, the “SEC Reports”). Except as set forth
on Schedule 4.21, each SEC Report was, at the time of its filing, in substantial
compliance with the requirements of its respective form and none of the SEC
Reports, nor the financial statements (and the notes thereto) included in the
SEC Reports, as of their respective filing dates, 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 Nasdaq
National Market (“Nasdaq National”) and satisfies all requirements for the
continuation of such listing, except as disclosed in any Exchange Act Filings.

 

4.23 No Integrated Offering. Neither the Company, nor any of its 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 Related Agreement 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.

 

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4.24 Stop Transfer. The Securities are restricted securities as of the date of
this Agreement. The Company will not 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 if any material misrepresentation has occurred in
connection with the Purchaser’s representations and warranties in connection
with their investment in the Securities or as required by the National
Association of Securities Dealers, state and federal securities laws.

 

4.25 Dilution. Except as set forth in paragraph 4.24, the Company specifically
acknowledges that its obligation to issue the shares of Common Stock upon
conversion of the 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, the Company has not 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 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 to the Purchaser, to the extent that they are within the Company’s
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. The Company agrees to provide the Purchaser any
additional information regarding the Company 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 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, 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.

 

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. The Purchaser or any of its affiliates and investment partners
have not in the past or present, and will not in the future by themselves or
cause any person or entity, to directly engage in “short sales” of the Company’s
Common Stock as long as the Note shall be outstanding.

 

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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 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 of 1933, as amended (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 Note 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 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 business, management and financial affairs and the terms
and conditions of the Offering, the Note, 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. Purchaser further warrants that it is purchasing the
securities in accordance with all of the requirements set forth under Regulation
D of the Securities Act and the Rules promulgated thereunder. Purchaser will
cooperate with the Company in supplying any information requested by the Company
pursuant to any filing required to secure an exemption from registration at
either state or federal law.

 

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.

 

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5.5 Acquisition for Own Account. The Purchaser is acquiring the Note 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. The Purchaser represents that 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 Note,
the Warrant and the Securities and to protect its own interests in connection
with the transactions contemplated in this Agreement, and the Related
Agreements. Further, the Purchaser is aware of no publication of any
advertisement in connection with the transactions contemplated in the Agreement
or the Related Agreements.

 

5.7 Accredited Investor. Purchaser represents that it is an accredited investor
within the meaning of Regulation D under the Securities Act.

 

5.8 Legends.

 

(a) The 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 ICORIA, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

(b) 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
ICORIA, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

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(c) 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
ICORIA, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

6. Covenants of the Company. The Company covenants and agrees with the Purchaser
as follows:

 

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 Note and upon the exercise of the
Warrant on the Nasdaq National Market, the Nasdaq Small Cap, or the Over the
Counter Bulletin Board (the “Principal Market”) (subject to official notice of
issuance) and shall maintain such status so long as any other shares of Common
Stock shall be so quoted on such Principal Market. It is expressly understood
that movement between any exchange or quotation service set forth herein is
permissible and shall not be a breach of this or any other covenant contained
herein or in the Related Agreements. The Company will maintain the quotation of
its Common Stock on the Principal Market, and 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”), such
exchanges or quotation services, as applicable.

 

6.3 Market Regulations. The Company shall notify the SEC, NASD and applicable
state authorities, in accordance with their requirements, 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 use all commercially reasonable
efforts to 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.

 

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6.5 Use of Funds-Guideline. The Company agrees that the proceeds of (x) the sale
of the Note shall be generally utilized pursuant to the following guideline. The
funds will be used: (i) to repay in full all existing indebtedness owed by the
Company to GE Capital, pursuant to the Master Security Agreement No. 7237 and to
terminate such credit facility, (ii) generally for capital expenditures to be
made by the Company and its Subsidiaries (subject to fluctuation in market
prices) in an aggregate amount of $1,600,000, (iii) generally for the purchase
of chemical libraries and outsourced studies (subject to fluctuation in market
prices) in an aggregate amount of $1,200,000, (iv) for expenses incurred in
connection with the transactions contemplated by this Agreement and the Related
Agreements and (v) for general working capital purposes of the Company and its
Subsidiaries and (y) the sale of the Warrant shall be utilized for general
working capital purposes.

 

6.6 Access to Facilities. The Company 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, while covered by
Purchaser’s or their successor’s own insurance for such an on-site investigation
and accompanied by a representative of the Company, to:

 

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

 

(b) examine the corporate and financial records of the Company (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 with the
directors, officers and independent accountants of the Company .

 

Notwithstanding the foregoing, the Company will not provide any material,
non-public information to the Purchaser (or any successor of the Purchaser)
unless the Purchaser (or any successor of the Purchaser) signs a confidentiality
agreement and otherwise complies with Regulation FD, under the federal
securities laws.

 

6.7 Taxes. The Company 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; 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 shall have set aside on its books
adequate reserves with respect thereto, and provided, further, that the Company
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. The Company 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

 

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situated as the Company; and the Company 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 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 security for its obligations hereunder and
under the Related Agreements. At the Company’s own cost and expense in amounts
and with carriers reasonably acceptable to Purchaser, the Company and each of
the 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 insurance against claims for
personal injury, death or property damage suffered by others in such amounts as
is customary in the industry in which the Company operates its business; (iii)
Intentionally Deleted; (iv) 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 Subsidiary is engaged in business; and (v) furnish
Purchaser with (x) 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 policies 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,
and (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
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 its security
agreement, with any surplus funds to be applied toward payment of the
obligations of the Company to Purchaser. 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. The Company shall maintain in full force and effect
its corporate 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.

 

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6.10 Properties. The Company 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 the Company 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 reasonably be expected to have a
Material Adverse Effect.

 

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.
The Company may disclose Purchaser’s identity and the terms of this Agreement to
its current and prospective debt and equity financing sources and as required by
law or applicable regulation.

 

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

 

(a) (i) directly or indirectly declare or pay any dividends, other than
dividends paid to the Parent or any of its wholly-owned Subsidiaries, (ii) issue
any preferred stock that is mandatorily redeemable prior to October 19, 2007, or
(iii) redeem any of its preferred stock or other equity interests during before
the Maturity Date ;

 

(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 or the successor
entity expressly assumes all of the duties and obligations of the Company and
its Subsidiaries under this Agreement and Related Agreements);

 

(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) materially restrict the Company’s right to perform the provisions
of this Agreement or any of the agreements contemplated thereby;

 

(d) materially alter or change the scope of business of the Company, unless such
change in scope is consistent with past practice;

 

(e) (i) create, incur, assume or suffer to exist any indebtedness, exclusive of
trade debt, debt subordinated to or on collateral other than the security
provided by the Related Agreements and debt incurred to finance the purchase of
equipment (not in excess of ten percent (10%) of the fair market value of the
Company’s and its Subsidiaries’ assets) whether secured or unsecured other than
(x) the Company’s indebtedness to the Purchaser, (y) indebtedness set forth on
Schedule 6.12(e) attached hereto and made a part hereof and any refinancings or
replacements thereof on terms no less favorable to the Purchaser than the debt
being refinanced or replaced, and (z) any indebtedness incurred in connection
with the purchase of assets in the ordinary course of business, and any
refinancings or replacements thereof on terms no less favorable to the

 

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Purchaser than the indebtedness being refinanced or replaced; (ii) cancel any
indebtedness owing to it in excess of $200,000 in the aggregate during any 12
month period; (iii) assume, guarantee, endorse or otherwise become directly or
contingently liable in connection with any obligations of any other Person,
except the endorsement of negotiable instruments by the Company for deposit or
collection or similar transactions in the ordinary course of business; and

 

(f) (i) make investments in, make any loans or advances to, or transfer assets
to, any of its Subsidiaries, other than any immaterial investments, loans,
advances and/or asset transfers made in the ordinary course of business or (ii)
create or acquire any Subsidiary without the prior written consent of the
Purchaser, which shall not be unreasonably withheld.

 

6.13 Reissuance of Securities. The Company agrees to reissue certificates
representing the Securities without the legends set forth in Section 5.8 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 acceptable to the Purchaser from the Company’s legal counsel. 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 Note and exercise
of the Warrant.

 

6.15 Margin Stock. The Company will not permit any of the proceeds of the Note
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 The Company will not, and will not permit its Subsidiaries to, agree,
directly or indirectly, to any restriction with any person or entity which
limits the ability of the Purchaser to consummate an additional financing with
the Company or any of its Subsidiaries.

 

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.

 

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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.

 

8. Covenants of the Company and Purchaser Regarding Indemnification.

 

8.1 Company Indemnification. The Company agrees to indemnify, hold harmless,
reimburse and defend Purchaser, each of Purchaser’s officers, directors, agents,
affiliates, control persons, and principal shareholders, against any forseeable:
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
Company or breach of any warranty by Company in this Agreement, any Related
Agreement or in any exhibits or schedules attached hereto or thereto; or (ii)
any breach or default in performance by Company of any covenant or undertaking
to be performed by Company hereunder, or any other agreement entered into by the
Company and Purchaser relating hereto.

 

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 in any
exhibits or schedules attached hereto or any Related Agreement; or (ii) any
breach or default in performance by Purchaser of any covenant or undertaking to
be performed by Purchaser hereunder, or any other agreement entered into by the
Company and Purchaser relating hereto.

 

9. Conversion of Convertible Note.

 

9.1 Mechanics of Conversion.

 

(a) Provided the Purchaser has notified the Company of the Purchaser’s intention
to sell the Note Shares and the Note Shares are included in an effective
registration statement or are otherwise exempt from registration when sold: (i)
Upon the conversion of the Note or part thereof, the Company shall, at its own
cost and expense, take all necessary action (including the issuance of an
opinion of counsel reasonably acceptable to the Purchaser following a request by
the Purchaser) to assure that the Company’s transfer agent shall issue shares of
the Company’s Common Stock in the name of the Purchaser (or its nominee) or such
other persons as designated by the Purchaser in accordance with Section 9.1(b)
hereof and in such denominations to be specified representing the number of Note
Shares issuable upon such conversion; and (ii) The Company warrants that no
instructions other than these instructions have been or will be given to the
transfer agent of the Company’s Common Stock and that after the Effectiveness
Date (as defined in the Registration Rights Agreement) the Note Shares

 

20

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issued will be freely transferable subject to the prospectus delivery
requirements of the Securities Act and the provisions of this Agreement, and
will not contain a legend restricting the resale or transferability of the Note
Shares.

 

(b) Purchaser will give notice of its decision to exercise its right to convert
the Note or part thereof by telecopying or otherwise delivering an executed and
completed notice of the number of shares to be converted to the Company (the
“Notice of Conversion”). The Purchaser will surrender the Note previous to the
Purchaser receiving a credit to the account of the Purchaser’s prime broker
through the DWAC system (as defined below), representing the Note Shares or
until the Note has been fully satisfied. Each date on which a Notice of
Conversion is telecopied or delivered to the Company in accordance with the
provisions hereof shall be deemed a “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 three (3) business days 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 Purchaser’s prime broker
with the Depository Trust Company (“DTC”) through its Deposit Withdrawal Agent
Commission (“DWAC”) system within three (3) business days after the creation and
delivery of the opinion of counsel to the transfer agent pursuant to the
Company’s Notice of Conversion (the “Delivery Date”).

 

(c) The Company understands that a delay in the delivery of the Note Shares in
the form required pursuant to Section 9 hereof beyond the Delivery Date could
result in economic loss to the Purchaser. In the event that the Company fails to
direct its transfer agent to deliver the Note Shares to the Purchaser via the
DWAC system within the time frame set forth in Section 9.1(b) above and the Note
Shares are not delivered to the Purchaser by the Delivery Date, and is not cured
within two (2) business days after the Delivery Date, as compensation to the
Purchaser for such loss, the Company agrees to pay late payments to the
Purchaser for late issuance of the Note Shares in the form required pursuant to
Section 9 hereof upon conversion of the Note in the amount equal to the greater
of: (i) $500 per business day after the Delivery Date, including the period for
cure. Notwithstanding the foregoing, the Company will not owe the Purchaser any
late payments if the delay in the delivery of the Note Shares beyond the
Delivery Date is solely out of the control of the Company and the Company is
actively trying to cure the cause of the delay, or the Company cures within the
two (2) business days following the Delivery Date. The Company shall pay any
payments incurred under this Section in immediately available funds upon demand.

 

Nothing contained herein or in any document referred to herein or delivered in
connection herewith 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 or dividends required to
be paid or other charges hereunder exceed the maximum amount permitted by such
law, any payments in excess of such maximum shall be credited against amounts
owed by the Company to a Purchaser and thus refunded to the Company.

 

21

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10. Registration Rights.

 

10.1 Registration Rights Granted. The Company hereby grants registration rights
to the Purchaser pursuant to a Registration Rights Agreement dated as of even
date herewith between the Company and the Purchaser.

 

10.2 Offering Restrictions. Except as previously disclosed 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”),
the Company will not 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 Note (together with all accrued
and unpaid interest and fees related thereto.

 

11. Miscellaneous.

 

11.1 Governing Law. THIS AGREEMENT AND EACH RELATED AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT BY EITHER PARTY
AGAINST THE OTHER CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND
EACH RELATED AGREEMENT SHALL BE BROUGHT ONLY IN THE STATE COURTS OF NEW YORK OR
IN THE FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK. BOTH PARTIES AND THE
INDIVIDUALS EXECUTING THIS AGREEMENT AND THE RELATED AGREEMENTS 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 AGREEMENT OR ANY RELATED AGREEMENT
DELIVERED IN CONNECTION HEREWITH 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 AGREEMENT OR ANY RELATED
AGREEMENT.

 

11.2 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.

 

11.3 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. Purchaser may not assign its rights hereunder to a competitor of the
Company.

 

22

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11.4 Entire Agreement. This Agreement, the Related Agreements, the exhibits and
schedules hereto and thereto and the other documents delivered pursuant hereto
constitute 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.

 

11.5 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.

 

11.6 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.

 

11.7 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.

 

11.8 Notices. All notices required or permitted hereunder (other than as
expressly set forth herein) 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) five (5) 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.

 

23

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All communications shall be sent as follows:

 

If to the Company, to:   

Icoria, Inc.

108 T.W. Alexander Drive, Research Triangle Park,

North Carolina 27709

     Attention:                   

Barry Buzogany

General Counsel

     Telephone:      (919) 425-3000      Facsimile:      919-425-2915      with
a copy to: Neil Aronson, Esq.      Mintz Levin Cohn Ferris Glovsky & Popeo PC  
  

Telephone (617)-542-6000

Facsimile: 617-542-2241

If to the Purchaser, to:   

Laurus Master Fund, Ltd.

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, NY 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.

 

11.9 Attorneys’ Fees. In the event that any suit or action is instituted to
enforce any provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including, without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.

 

11.10 Titles and Subtitles. The titles of the sections and subsections of the
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.

 

24

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11.11 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.

 

11.12 Broker’s Fees. Except as set forth on Schedule 11.12 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 11.12 being untrue.

 

11.13 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.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

25

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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: ICORIA, INC.   LAURUS MASTER FUND, LTD. By:  

/s/ Philip R. Alfano

  By:   /s/ Eugene Grin Name:  

Philip R. Alfano

  Name:   Eugene Grin Title:   Vice President, Finance and CFO   Title:  
Director

 

26

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EXHIBIT A

 

FORM OF CONVERTIBLE NOTE

 

A-1

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

EXHIBIT B

 

FORM OF WARRANT

 

B-1

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

EXHIBIT C

 

FORM OF OPINION

 

C-1

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

EXHIBIT D

 

FORM OF ESCROW AGREEMENT

 

D-2

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

SCHEDULES

 

(Any Schedule Not Listed Has Been Intentionally Omitted)

 

SCHEDULE 4.3

 

CAPITALIZATION AND VOTING RIGHTS

 

Stonegate Securities, Inc.

 

Placement Agency Agreement, dated July 14, 2004, by and between Paradigm
Genetics, Inc., a Delaware corporation, and Stonegate Securities, Inc., a Texas
corporation.

 

TissueInformatics.Inc. Merger

 

On March 11, 2004, Paradigm Genetics, Inc. (now “Icoria, Inc.”) completed its
acquisition of TissueInformatics.Inc, a Delaware corporation. TissueInformatics
merged with and into Paradigm with Paradigm continuing as the surviving
corporation pursuant to the terms of an Agreement and Plan of Merger among
Paradigm, TissueInformatics and TVM V Life Science Ventures GmbH & Co., KG dated
January 29, 2004 and as amended on March 10, 2004.

 

The transaction is more fully disclosed in reports filed pursuant to the
Securities Exchange Act of 1934. See specifically, Form 8-K filed March 24, 2004
and the Form 10-K filed March 30, 2004.

 

Future Amendments and Additions to Employee Stock/Option Plans

 

Pursuant to recent stockholder vote, additions to existing and additional stock
plans will be registered. See definitive proxy statement filed March 31, 2004.

 

C-3

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SCHEDULE 4.6

 

AGREEMENTS; ACTION

 

GE Prepayment

 

GE Healthcare Financial Services payoff letter dated October 15, 2004.

 

Stonegate Securities, Inc.

 

Placement Agency Agreement, dated July 14, 2004, by and between Paradigm
Genetics, Inc., a Delaware corporation, and Stonegate Securities, Inc., a Texas
corporation.

 

TissueInformatics.Inc. Merger

 

On March 11, 2004, Paradigm Genetics, Inc. (now “Icoria, Inc.”) completed its
acquisition of TissueInformatics.Inc, a Delaware corporation. TissueInformatics
merged with and into Paradigm with Paradigm continuing as the surviving
corporation pursuant to the terms of an Agreement and Plan of Merger among
Paradigm, TissueInformatics and TVM V Life Science Ventures GmbH & Co., KG dated
January 29, 2004 and as amended on March 10, 2004.

 

The transaction is more fully disclosed in reports filed pursuant to the
Securities Exchange Act of 1934. See specifically, Form 8-K filed March 24, 2004
and the Form 10-K filed March 30, 2004.

 

Silicon Valley Bank

 

Intercreditor Agreement between Silicon Valley Bank and Laurus Master Fund
regarding Silicon Valley Bank Loan and Security Agreement of July 10, 2003.

 

C-4

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SCHEDULE 4.7

 

OBLIGATIONS TO RELATED PARTIES

 

TissueInformatics.Inc. Merger

 

On March 11, 2004, Paradigm Genetics, Inc. (now “Icoria, Inc.”) completed its
acquisition of TissueInformatics.Inc, a Delaware corporation. TissueInformatics
merged with and into Paradigm with Paradigm continuing as the surviving
corporation pursuant to the terms of an Agreement and Plan of Merger among
Paradigm, TissueInformatics and TVM V Life Science Ventures GmbH & Co., KG dated
January 29, 2004 and as amended on March 10, 2004.

 

The transaction is more fully disclosed in reports filed pursuant to the
Securities Exchange Act of 1934. See specifically, Form 8-K filed March 24, 2004
and the Form 10-K filed March 30, 2004.

 

SCHEDULE 4.8

 

CHANGES

 

Routine IP Practice

 

Our routine practice in developing compounds and conducting research on behalf
of third parties requires us to assign certain intellectual property rights to
those third parties. This is more fully described in our reports pursuant to the
Securities Exchange Act of 1934.

 

SCHEDULE 4.13

 

TAX RETURNS AND PAYMENTS

 

TissueInformatics.Inc. Merger

 

There are outstanding tax filings due to merger. We anticipate making such
filings forthwith and that the cost will be primarily that of the process of
filing.

 

C-5

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SCHEDULE 4.14

 

EMPLOYEES

 

Future Amendments and Additions to Employee Stock/Option Plans

 

Pursuant to recent stockholder vote, additions to existing and additional stock
plans will be registered. See definitive proxy statement filed March 31, 2004.

 

SCHEDULE 4.15

 

REGISTRATION RIGHTS AND VOTING RIGHTS

 

Stonegate Securities, Inc.

 

Placement Agency Agreement, dated July 14, 2004, by and between Paradigm
Genetics, Inc., a Delaware corporation, and Stonegate Securities, Inc., a Texas
corporation.

 

TissueInformatics.Inc. Merger

 

On March 11, 2004, Paradigm Genetics, Inc. (now “Icoria, Inc.”) completed its
acquisition of TissueInformatics.Inc, a Delaware corporation. TissueInformatics
merged with and into Paradigm with Paradigm continuing as the surviving
corporation pursuant to the terms of an Agreement and Plan of Merger among
Paradigm, TissueInformatics and TVM V Life Science Ventures GmbH & Co., KG dated
January 29, 2004 and as amended on March 10, 2004.

 

The transaction is more fully disclosed in reports filed pursuant to the
Securities Exchange Act of 1934. See specifically, Form 8-K filed March 24, 2004
and the Form 10-K filed March 30, 2004.

 

C-6

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SCHEDULE 4.17

 

ENVIRONMENTAL AND SAFETY LAWS

 

Environmental

 

From time to time regulators review our facilities for our management of
hazardous materials, including radioactive material, when issues are raised we
attempt to comply with regulators’ findings in a swift and thorough manner. We
have not used radioactive material in our operations since September of 2003. We
still maintain certain licensure for the use of certain radioactive material in
case a future project should require it.

 

As disclosed in our reports filed pursuant to the Securities Exchange Act of
1934:

 

Environmental Regulation

 

Our research and development activities involve the controlled use of hazardous
materials and chemicals. We are subject to federal, state and local laws and
regulations governing the use, storage, handling and disposal of such materials
and certain waste products. The risk of accidental contamination or injury from
these materials cannot be eliminated. In the event of an accident, we could be
held liable for any damages that result, and any liability could exceed our
resources.

 

SCHEDULE 11.12

 

BROKER’S FEES

 

Stonegate Securities, Inc.

 

Placement Agency Agreement, dated July 14, 2004, by and between Paradigm
Genetics, Inc., a Delaware corporation, and Stonegate Securities, Inc., a Texas
corporation.

 

C-7