MASTER SECURITY AGREEMENT



 Exhibit 10.2 
  
 ICORIA, INC. 
 SECURITY AGREEMENT 
  

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

  
 Date: October 19, 2004 
  
 To Whom It May Concern: 
  
 1. To secure the payment of all Obligations (as hereafter defined), Icoria, Inc., a Delaware corporation (the
“Assignor”), hereby assigns and grants to Laurus a continuing security interest in all equipment and fixed assets listed on Schedule 1.A to this agreement in which the Assignor now has or hereafter may acquire any right, title or interest
in and to, and all additions Assignor may put on Schedule 1.A in the future, accessions, substitutions thereto or therefor, and all proceeds and products thereof (including, without limitation, proceeds of insurance)) (the “Collateral”).
Except as otherwise defined herein, all capitalized terms used herein shall have the meaning provided such terms in the Securities Purchase Agreement referred to below. 
  
 2. The term “Obligations” as used herein shall mean and include all debts, liabilities and obligations owing by
the Assignor to Laurus arising under, out of, or in connection with: (i) that certain Securities Purchase Agreement dated as of the date hereof by and between the Company and Laurus (the “Securities Purchase Agreement”) and (ii) the
Related Agreements referred to in the Securities Purchase Agreement, as each may be amended, modified, restated or supplemented from time to time, are collectively referred to herein as the “Documents”), or any documents, instruments or
agreements relating to or executed in connection with the Documents or any documents, instruments or agreements referred to therein or otherwise, or any other indebtedness, obligations or liabilities of the Assignor to Laurus, whether now existing
or hereafter arising, direct or indirect, liquidated or unliquidated, absolute or contingent, due or not due and whether under, pursuant to or evidenced by a note, agreement, guaranty, instrument, or otherwise in each case, irrespective of the
genuineness, validity, regularity or enforceability of 







 such Obligations or of any instrument evidencing any of the Obligations or of any collateral therefor or of the existence
or extent of such collateral, and irrespective of the allowability, allowance or disallowance of any or all of the Obligations in any case commenced by or against the Assignor under Title 11, United States Code, including, without limitation,
obligations or indebtedness of the Assignor for post-petition interest, fees, costs and charges that would have accrued or been added to the Obligations but for the commencement of such case. 
  
 3. The Assignor hereby represents, warrants and covenants to Laurus that:

  
 (a) it is a corporation, partnership or
limited liability company, as the case may be, validly existing, in good standing and organized under the laws of the State of Delaware, and it will provide Laurus thirty (30) days’ prior written notice of any change in its jurisdiction of
organization; 
  
 (b) its legal name, as set
forth in its Certificate of Incorporation (or equivalent organizational document) as amended through the date hereof, is Icoria, Inc. and it will provide Laurus thirty (30) days’ prior written notice of any change in its legal name; 

 
 (c) its Employer Identification Number (“EIN”)
is 56-2047837, and it will provide Laurus thirty (30) days’ prior written notice of any change in its EIN; 
  
 (d) it is the lawful owner of the Collateral and it has the sole right to grant a security interest therein and will defend the Collateral
against all claims and demands of all persons and entities; 
  
 (e) it will keep the Collateral owned by it free and clear of all attachments, levies, taxes, liens, security interests and encumbrances of every kind and nature (“Encumbrances”), except (i) Encumbrances set
forth on Schedule B hereto, (ii) Encumbrances securing the Obligations and (iii) to the extent said Encumbrance does not secure indebtedness in excess of $100,000 and such Encumbrance is removed or otherwise released within ten (10) days of the
creation thereof; 
  
 (f) it will at its own cost
and expense keep the Collateral in good state of repair (ordinary wear and tear excepted) and will not waste or destroy the same or any part thereof other than ordinary course discarding of items no longer used or useful in its business; 

 
 (g) it will not without Laurus’ prior written
consent, and which such consent will not be unreasonably withheld, sell, exchange, lease or otherwise dispose of the Collateral, whether by sale, lease or otherwise, except for the sale of inventory in the ordinary course of business and for the
disposition or transfer in the ordinary course of business during any fiscal year of obsolete and worn-out equipment or equipment no longer necessary for its ongoing needs, having an aggregate fair market value of not more than $100,000 and only to
the extent that: 
  
 (i) the proceeds of any such
disposition are used to acquire replacement Collateral which is subject to Laurus’ first priority perfected security interest or are used to repay Obligations or to pay general corporate expenses; and 
  

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 (ii) following the occurrence of an Event of Default which continues to exist, the
proceeds of which are remitted to Laurus, to be held as cash collateral for the Obligations; 
  
 (iii) Notwithstanding anything contained in this Section 3(g) to the contrary, the Company may upon five (5) days prior written notice to
Laurus (which such notice shall contain reasonable detail regarding the Collateral to be sold) effect sales of Collateral in the ordinary course of business consistent with past practice, not to exceed $200,000 per instance or $600,000 in the
aggregate during any twelve (12) month period, and such proceeds may be retained by the Company for working capital purposes. 
  
 (h) it will insure the Collateral in Laurus’ name against loss or damage by fire, theft, burglary, pilferage, loss in transit and
such other hazards as Laurus shall specify in amounts, not to exceed the fair market value of the Collateral, unless specifically agreed to by the Assignor, and under policies by insurers acceptable to Laurus and all premiums thereon shall be paid
by the Assignor and the proof of such policies delivered to Laurus. If the Assignor fails to do so, Laurus may procure such insurance and the cost thereof shall be promptly reimbursed by the Assignor and shall constitute Obligations; 
  
 (i) it will at all reasonable times, with sufficient notice
and compliance with procedures set forth by the Assignor, including showing proof of Laurus’ or Laurus’ representatives’ insurance coverage for such an on-site inspection, allow Laurus or Laurus’ representatives free access to
and the right of inspection of the Collateral; and 
  
 (j) the Assignor hereby indemnifies and saves Laurus harmless, from all loss, costs, damage, liability and/or expense, including reasonable attorneys’ fees, that Laurus may sustain or incur to enforce payment, performance or
fulfillment of any of the Obligations and/or in the enforcement of this Security Agreement or in the prosecution or defense of any action or proceeding either against the Assignor or Laurus concerning any matter growing out of or in connection with
this Security Agreement, and/or any of the Obligations and/or any of the Collateral except to the extent caused by Laurus’ own gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and
nonappealable decision). 
  
 4. The occurrence of any of the
following events or conditions shall constitute an “Event of Default” (after the passage of any applicable cure period) under this Security Agreement: 
  
 (a) any covenant, warranty, representation or statement made or furnished to Laurus by the Assignor or on
the Assignor’s behalf was breached in any material respect or false in any material respect when made or furnished, as the case may be, and, in the case of a covenant, shall not be cured for a period of fifteen (15) business days; 

 

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 (b) the loss, theft, substantial damage, destruction, sale or encumbrance to or of any of
the Collateral or the making of any levy, seizure or attachment thereof or thereon except to the extent: 
  
 (i) such loss is covered by insurance proceeds which are used to replace the item or repay Laurus; or 
  
 (ii) said levy, seizure or attachment does not secure
indebtedness in excess of $200,000 and such levy, seizure or attachment has not been removed or otherwise released within thirty (30) days of the creation or the assertion thereof; 
  
 (c) the Assignor shall cease operations, dissolve, terminate our business existence, make an assignment for
the benefit of creditors, suffer the appointment of a receiver, trustee, liquidator or custodian of all or any part of the Assignor’s property; 
  
 (d) any proceedings under any bankruptcy or insolvency law shall be commenced by or against the Assignor; 
  
 (e) the Assignor shall repudiate, purport to revoke or fail
to perform any of its obligations under the Note (after passage of applicable cure period, if any); or 
  
 (f) an Event of Default (or similar term) shall have occurred under and as defined in the Securities Purchase Agreement or any other
Document (after the passage of any applicable cure period). 
  
 5.
Upon the occurrence of any Event of Default and at any time thereafter, Laurus may declare all Obligations immediately due and payable and Laurus shall have the remedies of a secured party provided in the Uniform Commercial Code as in effect in the
State of New York, this Master Security Agreement and other applicable law. Upon the occurrence of any Event of Default and at any time thereafter, Laurus will have the right to take possession of the Collateral and to maintain such possession on
the Assignor’s premises or to remove the Collateral or any part thereof to such other premises as Laurus may desire. Upon the occurrence of an Event of Default and Laurus’ request, the Assignor shall assemble the Collateral and make it
available to Laurus for marketing in place and, if sold, the shipping costs will be initially paid by Laurus and subsequently subtracted from the proceeds. If any notification of intended disposition of any Collateral is required by law, such
notification, if mailed, shall be deemed properly and reasonably given if mailed at least ten (10) days before such disposition, postage prepaid, addressed to the Assignor either at the Assignor’s address shown herein or at any address
appearing on Laurus’ records for the Assignor. Any proceeds of any disposition of any of the Collateral shall be applied by Laurus to the payment of all expenses in connection with the sale of the Collateral, including reasonable
attorneys’ fees and other legal expenses and disbursements and the reasonable expense of retaking, holding, preparing for sale, selling, and the like, and any balance of such proceeds may be applied by Laurus toward the payment of the
Obligations in such order of application as Laurus may elect, and the Assignor shall be liable for any deficiency. 
  

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 6. If the Assignor defaults in the performance or fulfillment of any of the terms, conditions, promises,
covenants, provisions or warranties on the Assignor’s part to be performed or fulfilled under or pursuant to this Security Agreement, Laurus may, at its option while waiving its right to enforce this Security Agreement according to its terms,
immediately or at any time thereafter and without notice to the Assignor, perform or fulfill the same or cause the performance or fulfillment of the same for the Assignor’s account and at the Assignor’s cost and expense, and the cost and
expense thereof (including reasonable attorneys’ fees) shall be added to the Obligations and shall be payable within seven business days with interest thereon at the highest rate permitted by law. 
  
 7. The Assignor hereby appoints Laurus, any of Laurus’ officers,
employees or any other person or entity whom Laurus may designate as our attorney, with power to execute such documents in our behalf and to supply any omitted information and correct patent errors in any documents executed by the Assignor or on our
behalf; to file financing statements against the Assignor covering the Collateral; to sign the Assignor’s name on public records; and to do all other things Laurus deems necessary to carry out this Security Agreement. The Assignor hereby
ratifies and approve all acts of the attorney and neither Laurus nor the attorney will be liable for any acts of commission or omission, nor for any error of judgment or mistake of fact or law other than their gross negligence or willful misconduct
(as determined by a court of competent jurisdiction in a final and non-appealable decision). This power being coupled with an interest, is irrevocable so long as any Obligations remains unpaid. 
  
 8. No delay or failure on Laurus’ part in exercising any right,
privilege or option hereunder shall operate as a waiver of such or of any other right, privilege, remedy or option, and no waiver whatever shall be valid unless in writing, signed by Laurus and then only to the extent therein set forth, and no
waiver by Laurus of any default shall operate as a waiver of any other default or of the same default on a future occasion. Laurus’ books and records containing entries with respect to the Obligations shall be admissible in evidence in any
action or proceeding, shall be binding upon the Assignor for the purpose of establishing the items therein set forth and shall constitute prima facie proof thereof. Laurus shall have the right to enforce any one or more of the remedies available to
Laurus, successively, alternately or concurrently. The Assignor agrees to join with Laurus in executing financing statements or other instruments to the extent required by the Uniform Commercial Code in form satisfactory to Laurus and in executing
such other documents or instruments as may be required or deemed necessary by Laurus for purposes of affecting or continuing Laurus’ security interest in the Collateral. 
  
 9. This Security Agreement shall be governed by and construed in accordance with the laws of the State of New York and
cannot be terminated orally. All of the rights, remedies, options, privileges and elections given to Laurus hereunder shall inure to the benefit of Laurus’ successors and assigns. The term “Laurus” as herein used shall include Laurus,
any parent of Laurus, any of Laurus’ subsidiaries and any co-subsidiaries of Laurus’ parent, whether now existing or hereafter created or acquired, and all of the terms, conditions, promises, covenants, provisions and warranties of this
Security Agreement shall inure to the benefit of each of the foregoing, and shall bind the representatives, successors and assigns of the Assignor. Each of Laurus and the Assignor hereby (a) waives any and all right to trial by jury in litigation
relating to this Security Agreement and the transactions contemplated hereby and the Assignor hereby agrees not to assert any counterclaim in such litigation, (b) submit to the nonexclusive 
  

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 jurisdiction of any New York State court sitting in the borough of Manhattan, the city of New York and (c) waive any
objection the Assignor or Laurus may have as to the bringing or maintaining of such action with any such court. 
  
 10. All notices from Laurus to the Assignor shall be sufficiently given if mailed or delivered to the Assignor at its address set forth in the Securities
Purchase Agreement and the Security Agreement, as applicable. 
  

			
	Very truly yours,
	
	ICORIA, INC.
		
	By:	 	 /s/ Philip R. Alfano


	Name:	 	Philip R. Alfano
	Title	 	Vice President, Finance, and CFO


  

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	ACKNOWLEDGED:
	
	LAURUS MASTER FUND, LTD.
		
	By:	 	 /s/ Eugene Grin


	Name:	 	Eugene Grin
	Title:	 	Director

  

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 Schedule 1.A 
  
 See attached list 
  
 Schedule B 
  
 See attached list 
  

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