Document:

exv10w10

 

Exhibit 10.10

THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS NOTE AND THE
COMMON SHARES 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 UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
ICORIA, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

SECURED CONVERTIBLE TERM NOTE

     FOR VALUE RECEIVED, ICORIA, INC., a Delaware corporation (the “Borrower”), hereby promises to
pay 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, Fax: 345-949-8080 (the “Holder”) or
its registered assigns or successors in interest, on order, the sum of Five Million Dollars
($5,000,000), together with any accrued and unpaid interest hereon, on October 19, 2007 (the
“Maturity Date”) if not sooner paid.

     Capitalized terms used herein without definition shall have the meanings ascribed to such
terms in that certain Securities Purchase Agreement dated as of the date hereof between the
Borrower and the Holder (as amended, modified or supplemented from time to time, the “Purchase
Agreement”).

The following terms shall apply to this Note:

ARTICLE I

INTEREST & AMORTIZATION

     1.1(a) Interest Rate. Subject to Sections 4.11 and 5.6 hereof, interest payable on
this Note shall accrue at a rate per annum (the “Interest Rate”) equal to the “prime rate”
published in The Wall Street Journal from time to time, plus two and one-half percent
(2.50%). The prime rate shall be increased or decreased as the case may be for each increase or
decrease in the prime rate in an amount equal to such increase or decrease in the prime rate; each
change to be effective as of the day of the change in such rate. Subject to Section 1.1(b) hereof,
the Interest Rate shall not be less than seven percent (7.0%). Interest shall be (i) calculated on
the basis of a 360 day year, and (ii) payable monthly, in arrears, commencing on November 1, 2004
and on the first business day of each consecutive calendar month thereafter until the Maturity
Date (and on the Maturity Date), whether by acceleration or otherwise (each, a “Repayment Date”).

1.1 (b) Interest Rate Adjustment. The Interest Rate shall be calculated on the last
business day of each month hereafter until the Maturity Date (each a “Determination Date”) and
shall be subject to adjustment as set forth herein. If (i) the Borrower shall have registered the
shares of the Borrower’s common stock underlying each of the conversion of the Note and that
certain warrant issued to

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Holder on a registration statement declared effective by the Securities
and Exchange Commission (the “SEC”), and (ii) the closing price (the “Market Price”) of the Common Stock as reported by
Bloomberg, L.P. on the Principal Market (as defined below) for the five (5) trading days
immediately preceding a Determination Date exceeds the then applicable Fixed Conversion Price by at
least twenty five percent (25%), the Interest Rate for the succeeding calendar month shall
automatically be reduced by 140 basis points (140 b.p.) (1.40%) for each incremental twenty five
percent (25%) increase in the Market Price of the Common Stock above the then applicable Fixed
Conversion Price. Notwithstanding the foregoing (and anything to the contrary contained in herein),
in no event shall the Interest Rate be less than zero percent (0%).

For Example

	 	 	 	 	 	 	 
	Date	 	Market Price	 	Fixed Conversion Price	 	Premium
	10/25

	 	$0.65
	 	$0.50
	 	30%
	10/26

	 	$0.66
	 	$0.50
	 	32%
	10/27

	 	$0.64
	 	$0.50
	 	28%
	10/28

	 	$0.65
	 	$0.50
	 	30%
	10/29

	 	$0.67
	 	$0.50
	 	34%

Determination Date: November 1

Since the premium above the Fixed Conversion Price is greater than or equal to 25% for the five
days prior to November 1, the Interest Rate will be reduce by 1.40% to Prime plus 1.10% (Prime
plus 2.50% less 1.40%) effective November 1.

On December 1, the same calculation will occur. If the premium above the Fixed Conversion Price for
the 5 trading days prior to December 1 is still greater than or equal to 25%, the Interest Rate
will remain Prime plus 1.10%. However, if the premium for any of the five trading days prior to
December 1, was less than 25%, the Interest Rate will revert back to Prime + 2.50%.

     1.2 Minimum Monthly Principal Payments. Amortizing payments of the aggregate
principal amount outstanding under this Note at any time (the “Principal Amount”) shall begin on
May 1, 2005 and shall recur on the first business day of each succeeding month thereafter until the
Maturity Date (each, an “Amortization Date”). Subject to Article 3 below, beginning on the first
Amortization Date, the Borrower shall make monthly payments to the Holder on each Repayment Date,
each in the amount of $161,290.32, together with any accrued and unpaid interest to date on such
portion of the Principal Amount plus any and all other amounts which are then owing under this
Note, the Purchase Agreement or any other Related Agreement but have not been paid (collectively,
the “Monthly Amount”). Any Principal Amount that remains outstanding on the Maturity Date shall be
due and payable on the Maturity Date.

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ARTICLE II

CONVERSION REPAYMENT

2.1 (a) Payment of Monthly Amount in Cash or Common Stock. If the Monthly Amount (or a
portion thereof of such Monthly Amount if such portion of the Monthly Amount would have been
converted into shares of Common Stock but for Section 3.2) is required to be paid in cash pursuant
to Section 2.1(b), then the Borrower shall pay the Holder an amount equal to 100% of the Monthly
Amount due and owing to the Holder on the Repayment Date in cash. If such repayment in cash is
required, in whole or part, the underlying data as reported by Bloomberg, L.P., used to support
such calculations, will be provided to the Borrower upon request. If the Monthly Amount (or a
portion of such Monthly Amount if not all of the Monthly Amount may be converted into shares of
Common Stock pursuant to Section 3.2) is required to be paid in shares of Common Stock pursuant to
Section 2.1(b), the number of such shares to be issued by the Borrower to the Holder on such
Repayment Date (in respect of such portion of the Monthly Amount converted into in shares of Common
Stock pursuant to Section 2.1(b)), shall be the number determined by dividing (x) the portion of
the Monthly Amount converted into shares of Common Stock, by (y) the then applicable Fixed
Conversion Price. For purposes hereof, the initial “Fixed Conversion Price” means $0.53 which
has been determined on the date of this Note as an amount equal to 110% of the average closing
price for ten (10) trading days immediately prior to the date of this Note. .

(b) Monthly Amount Conversion Guidelines. Subject to Sections 2.1(a), 2.2, and 3.2 hereof,
the Holder shall convert into shares of Common Stock all or a portion of the Monthly Amount due on
each Repayment Date according to the following guidelines (the “Conversion Criteria”): (i) the
average closing price of the Common Stock as reported by Bloomberg, L.P. on the Principal Market
for the six (6) trading days immediately preceding such Repayment Date shall be greater than or
equal to 110% of the Fixed Conversion Price and (ii) the amount of such conversion does not exceed
twenty five percent (25%) of the aggregate dollar trading volume of the Common Stock for the twenty
two (22) day trading period immediately preceding the applicable Repayment Date. If the
Conversion Criteria are not met, the Holder shall convert only such part of the Monthly Amount that
meets the Conversion Criteria. Any part of the Monthly Amount due on a Repayment Date that the
Holder has not been able to convert into shares of Common Stock due to failure to meet the
Conversion Criteria, shall be paid by the Borrower in cash at the rate of 100% of the Monthly
Amount otherwise due on such Repayment Date, within six (6) business days of the applicable
Repayment Date.

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For Example,

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Date	 	Shares Traded	 	Market Price	 	Daily Dollar Volume
	11/01

	 	 	70,000	 	 	$	0.65	 	 	 	45,500	 
	11/02

	 	 	50,000	 	 	$	0.63	 	 	 	31,500	 
	11/03

	 	 	80,000	 	 	$	0.65	 	 	 	52,000	 
	11/04

	 	 	100,000	 	 	$	0.67	 	 	 	67,000	 
	11/05

	 	 	70,000	 	 	$	0.65	 	 	 	45,500	 
	11/08

	 	 	50,000	 	 	$	0.63	 	 	 	31,500	 
	11/09

	 	 	80,000	 	 	$	0.62	 	 	 	49,600	 
	11/10

	 	 	100,000	 	 	$	0.63	 	 	 	63,000	 
	11/11

	 	 	70,000	 	 	$	0.65	 	 	 	45,500	 
	11/12

	 	 	50,000	 	 	$	0.67	 	 	 	33,500	 
	11/15

	 	 	80,000	 	 	$	0.65	 	 	 	52,000	 
	11/18

	 	 	100,000	 	 	$	0.63	 	 	 	63,000	 
	11/19

	 	 	70,000	 	 	$	0.62	 	 	 	43,400	 
	11/20

	 	 	50,000	 	 	$	0.63	 	 	 	31,500	 
	11/21

	 	 	80,000	 	 	$	0.65	 	 	 	52,000	 
	11/22

	 	 	100,000	 	 	$	0.67	 	 	 	67,000	 
	11/25

	 	 	70,000	 	 	$	0.65	 	 	 	45,500	 
	11/26

	 	 	50,000	 	 	$	0.63	 	 	 	31,500	 
	11/27

	 	 	80,000	 	 	$	0.62	 	 	 	49,600	 
	11/28

	 	 	100,000	 	 	$	0.65	 	 	 	65,000	 
	11/29

	 	 	100,000	 	 	$	0.70	 	 	 	70,000	 
	11/30

	 	 	100,000	 	 	$	0.60	 	 	 	60,000	 
	 

	 	 	1,700,000	 	 	 	 	 	 	$	1,095,100	 

Repayment Date: December 1

Aggregate dollar trading volume of the ICOR common stock during the 22 trading days prior to
December 1 equals $1,095,100.

Given the premium above the Fixed Conversion Price is greater than 10% for the six trading days
prior to December 1, Laurus will convert into common stock an amount that equals the Monthly Amount
due. However, this amount will be limited to 25% of the aggregate dollar trading volume of
$1,095,000 or $273,775. Therefore, if the Monthly Amount due was $300,000, Laurus would not have to
convert more than $273,775 and the Company would have to pay in cash the remaining $26,225.

     2.2 No Effective Registration. Notwithstanding anything to the contrary herein, none
of the Borrower’s obligations to the Holder may be converted into Common Stock unless (i)
either (x) an effective current Registration Statement (as defined in the Registration Rights
Agreement)

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covering
the shares of Common Stock to be issued in connection with satisfaction of such obligations exists or (y) an exemption from registration of the Common Stock is available to
pursuant to Rule 144 of the Securities Act and (ii) no Event of Default hereunder exists and is
continuing, unless such Event of Default is cured within any applicable cure period or is
otherwise waived in writing by the Holder in whole or in part at the Holder’s option.

     2.3 Optional Redemption in Cash. The Borrower will have the option of prepaying this
Note (“Optional Redemption”) by paying to the Holder a sum of money equal to (i) in the event such
prepayment occurs prior to the one year anniversary of the Closing Date, one hundred twenty percent
(120%) of the principal amount of this Note then outstanding, (ii) in the event such prepayment
occurs on or after the one year anniversary of the Closing Date and prior to the two year
anniversary of the Closing Date, one hundred fifteen percent (115%) of the principal amount of this
Note then outstanding and (iii) in the event such prepayment occurs after the two year anniversary
of the Closing Date, one hundred ten percent (110%) of the principal amount of this Note then
outstanding, in each case, together with accrued but unpaid interest thereon and any and all other
sums due, accrued or payable to the Holder arising under this Note, the Purchase Agreement, or any
Related Agreement (the “Redemption Amount”) outstanding on the Redemption Payment Date (as defined
below). The Borrower shall deliver to the Holder a written notice of redemption specifying the date
for such Optional Redemption (the “Redemption Payment Date”), which date shall be seven (7)
business days after the date of the Notice of Redemption (the “Redemption Period”). A Notice of
Redemption shall not be effective with respect to any portion of this Note for which the Holder has
a pending conversion pursuant to Section 3.1, or for conversions pursuant to Section 3.1 during the
Redemption Period. The Redemption Amount shall be determined as if such Holder’s conversion had
been completed immediately prior to the date of the Notice of Redemption. On the Redemption Payment
Date, the Redemption Amount must be paid in good funds to the Holder. In the event the Borrower
fails to pay the Redemption Amount on the Redemption Payment Date as set forth herein, then such
Redemption Notice will be null and void.

ARTICLE III

CONVERSION RIGHTS

	3.1.	 	Holder’s Conversion. The Holder shall have the right, but not the
obligation to convert the then outstanding principal of this Note (in excess of the
amounts set forth in Section 2.1(b) hereof), together with interest and fees due
hereon, into shares of Common Stock subject to the terms and conditions set forth in
this Article III. The Holder will give notice of such conversion by delivery to the
Borrower of a written notice of conversion not less than one (1) business day prior to
the date upon which such conversion shall occur. The shares of Common Stock to be
issued upon such conversion are herein referred to as the “Conversion Shares.”

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     3.2 Conversion Limitation. Notwithstanding anything contained herein to the contrary,
the Holder shall not convert pursuant to the terms of this Note an amount that would be convertible
into that number of Conversion Shares which would exceed the difference between 4.99% of the
outstanding shares of Common Stock of the Borrower and the number of shares of Common Stock
beneficially owned by such Holder or issuable upon exercise of warrants held by such Holder. The
Holder shall not take a long position in the Borrower’s Common Stock for the purpose, or any other
reason, that would result in the Holder’s inability to convert this Note into Common Stock because
of the limitations contained in this provision. For the purposes of the immediately
preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of
the Exchange Act and Regulation 13d-3 thereunder. The Holder may void the Conversion Share
limitation described in this Section 3.2 upon 75 days prior notice to the Borrower or upon an Event
of Default, without any notice requirement beyond any applicable grace period.

          At no time shall the beneficial ownership exceed 19.99% of the issued and outstanding Common
Stock. Notwithstanding anything contained herein to the contrary, the number of shares of Common
Stock issuable by the Borrower and acquirable by the Holder at a price below $0.49 per share
pursuant to the terms of this Note, the Purchase Agreement or any Related Agreement, shall not
exceed an aggregate of shares of the Borrower’s Common Stock (subject to appropriate adjustment for
stock splits, stock dividends, or other similar recapitalizations affecting the Common Stock) (the
“Maximum Common Stock Issuance”), unless the issuance of shares hereunder in excess of the Maximum
Common Stock Issuance shall first be approved by the Borrower’s shareholders. If at any point in
time and from time to time the number of shares of Common Stock issued pursuant to the terms of
this Note, the Purchase Agreement or any Related Agreement, together with the number of shares of
Common Stock that would then be issuable by the Borrower to the Holder in the event of a conversion
or exercise pursuant to the terms of this Note, the Purchase Agreement or any Related Agreement,
would exceed the Maximum Common Stock Issuance but for this Section 3.2, the Holder’s actions shall
be stayed, and Borrower shall promptly call a shareholders meeting within (90) ninety days of
Holder’s notice to Borrower of such an event to solicit shareholder approval for the issuance of
the shares of Common Stock hereunder in excess of the Maximum Common Stock Issuance.

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     3.3 Mechanics of Holder’s Conversion. (a) Holder shall give notice of such
future Conversions under Section 3.1 hereof by delivering an executed and completed notice of
conversion (“Notice of Conversion”) to the Borrower and such Notice of Conversion shall provide a
breakdown in reasonable detail of the Principal Amount, accrued interest and fees being converted.
On each Conversion Date (as hereinafter defined) and in accordance with its Notice of Conversion,
the Holder shall make the appropriate reduction to the Principal Amount, accrued interest and fees
as entered in its records and shall provide written notice thereof to the Borrower within seven (7)
business days after the Conversion Date. Each date on which a Notice of Conversion is delivered or
telecopied to the Borrower in accordance with the provisions hereof shall be deemed a Conversion
Date (the “Conversion Date”). A form of Notice of Conversion to be employed by the Holder is
annexed hereto as Exhibit A.

     (b) Pursuant to the terms of the Notice of Conversion, the Borrower 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 Borrower 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 Holder’s designated broker with the Depository Trust Corporation
(“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”) system within three (3) business
days after receipt by the Borrower of the Notice of Conversion (the “Delivery Date”). In the case
of the exercise of the conversion rights set forth herein the conversion privilege shall be deemed
to have been exercised and the Conversion Shares issuable upon such conversion shall be deemed to
have been issued upon the date of receipt by the Borrower of the Notice of Conversion. The Holder
shall be treated for all purposes as the record holder of such Common Stock, unless the Holder
provides the Borrower written instructions to the contrary.

     3.4 Conversion Mechanics.

     (a) The number of shares of Common Stock to be issued upon each conversion of this Note shall
be determined by dividing that portion of the principal and interest and fees to be converted, if
any, by the then applicable Fixed Conversion Price. In the event of any conversions of outstanding
principal amount under this Note in part pursuant to this Article III, such conversions shall be
deemed to constitute conversions of outstanding principal amount applying to Monthly Amounts for
the remaining Repayment Dates in chronological order.

     (b) The Fixed Conversion Price and number and kind of shares or other securities to be issued
upon conversion is subject to adjustment from time to time upon the occurrence of certain events,
as follows:

     A. Stock Splits, Combinations and Dividends. If the shares of Common Stock are
subdivided or combined into a greater or smaller number of shares of Common Stock, or if a dividend
is paid on the Common Stock in shares of Common Stock, the Fixed Conversion Price or

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the Conversion Price, as the case may be, shall be proportionately reduced in case of subdivision
of shares or stock dividend or proportionately increased in the case of combination of shares, in
each such case by the ratio which the total number of shares of Common Stock outstanding
immediately after such event bears to the total number of shares of Common Stock outstanding
immediately prior to such event.

     B. During the period the conversion right exists, the Borrower will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of
Common Stock upon the full conversion of this Note. The Borrower represents that upon issuance,
such shares will be duly and validly issued, fully paid and non-assessable. The Borrower agrees
that its issuance of this Note shall constitute full authority to its officers, agents, and
transfer agents who are charged with the duty of executing and issuing stock certificates to
execute and issue the necessary certificates for shares of Common Stock upon the conversion of this
Note.

     C. Subject to the provisions of this Section 3.4, if the Borrower shall at any time prior to
the conversion or repayment in full of the Principal Amount issue any shares of Common Stock or
securities convertible into Common Stock            to a person other than the Holder (except (i)
pursuant to Subsections A or B above; (ii) pursuant to options, warrants, or other obligations to
issue shares outstanding on the date hereof as disclosed to Holder in writing; or (iii) pursuant to
options that may be issued under any employee incentive stock option and/or any qualified stock
option plan adopted by the Borrower) for a consideration per share (the “Offer Price”) less than
the Fixed Conversion Price in effect at the time of such issuance, then the Fixed Conversion Price
shall be immediately reset pursuant to the formula below. For purposes hereof, the issuance of any
security of the Borrower convertible into or exercisable or exchangeable for Common Stock shall
result in an adjustment to the Fixed Conversion Price at the time of issuance of such securities.

          If the Corporation issues any additional shares pursuant to Section 3.4 above then, and
thereafter successively upon each such issue, the Fixed Conversion Price shall be adjusted by
multiplying the then applicable Fixed Conversion Price by the following fraction:

	 	 	 
	 	A + B
	 
	 	(A + B) + [((C – D) x B) / C]
	 

                 A = Total amount of shares convertible pursuant to this Note.

                 B = Actual shares sold in the offering

                 C = Fixed Conversion Price

                 D = Offer Price per share

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     D. Reclassification, etc. If the Borrower at any time shall, by reclassification or
otherwise, change the Common Stock into the same or a different number of securities of any class
or classes, this Note, as to the unpaid Principal Amount and accrued interest thereon, shall
thereafter be deemed to evidence the right to purchase an adjusted number of such securities and
kind of securities as would have been issuable as the result of such change with respect to the
Common Stock immediately prior to such reclassification or other change.

     E. To the extent there are fractional shares, or dollar values smaller that one (1) cent,
they shall be rounded to the nearest share or cent. 

     3.5 Issuance of New Note. Upon any partial conversion of this Note, a new Note
containing the same date and provisions of this Note shall, at the request of the Holder, be issued
by the Borrower to the Holder for the principal balance of this Note and interest which shall not
have been converted or paid. Subject to the provisions of Article IV, the Borrower will pay no
costs, fees or any other consideration to the Holder for the production and issuance of a new Note.

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     3.6 Mandatory Conversion. Notwithstanding anything herein to the contrary, subject to
the conversion limitations set forth in Section 3.2, if, after the date a registration statement
covering the resale of the Conversion Shares is declared effective, and so long as such
registration statement remains effective, (A) the closing price for any ten (10) consecutive
trading days (a “Conversion Period”) exceeds 400% of the then effective Fixed Conversion Price,
which as of the date of this Agreement is $2.12, the Holder will, within ten (10) trading days of
any such Conversion Period, convert all or part of the then outstanding Principal Amount of this
Note plus all accrued, but unpaid interest thereon. The Holder shall only be required to effect
such a conversion referred to in the immediately preceding sentence if each of the following shall
be true: (i) there is an effective registration statement pursuant to which the Holder is permitted
to utilize the prospectus thereunder to resell all of the Conversion Shares issued to the Holder
(or such Conversion Shares are eligible under Rule 144 of the Securities Act); (ii) there is a
sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock for
the issuance of all the Conversion Shares as are issuable to the Holder upon such conversion of
this Note pursuant to this Section 3.6 and (iii) the amount of this Note to be so converted
pursuant to this Section 3.6 (when combined with the amount of any other promissory note issued by
the Borrower to the Holder required to be similarly manditorily converted) does not exceed 25% of
the aggregate dollar trading volume of the Common Stock during the Conversion Period. There shall
be only one Conversion Period during any 30 trading day period.

For Example,

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Shares	 	 	 	 	 	 	 
	Date	 	Traded	 	 	Market Price	 	 	Daily Dollar Volume	 
	10/18
	 	 	100,000	 	 	$	0.63	 	 	 	63,000	 
	10/19
	 	 	70,000	 	 	$	0.62	 	 	 	43,400	 
	10/20
	 	 	50,000	 	 	$	0.63	 	 	 	31,500	 
	10/21
	 	 	80,000	 	 	$	0.65	 	 	 	52,000	 
	10/22
	 	 	100,000	 	 	$	0.67	 	 	 	67,000	 
	10/25
	 	 	70,000	 	 	$	0.65	 	 	 	45,500	 
	10/26
	 	 	50,000	 	 	$	0.63	 	 	 	31,500	 
	10/27
	 	 	80,000	 	 	$	0.62	 	 	 	49,600	 
	10/28
	 	 	100,000	 	 	$	0.65	 	 	 	65,000	 
	10/29
	 	 	100,000	 	 	$	0.70	 	 	 	70,000	 
	TOTAL
	 	 	800,000	 	 	 	 	 	 	$	518,500	 
	 
	 	 	 	 	 	 	 	 	 	 	@ 25.00% = $129,625	 

Determination Date: November 11

If the premium above the Fixed Conversion Price is greater than or equal to 400% for a consecutive
10-day period, the holder is required within 10 days of such period to convert all or part of the
outstanding principal and accrued interest but limited to 25% of the cumulative daily dollar volume

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traded during such period.

ARTICLE IV

EVENTS OF DEFAULT

     Upon the occurrence and continuance of an Event of Default beyond any applicable grace period,
the Holder may make all sums of principal, interest and other fees then remaining unpaid hereon and
all other amounts payable hereunder immediately due and payable. In the event of such an
acceleration, the amount due and owing to the Holder shall be, one hundred twenty five (125%) of
the then outstanding principal amount of this Note, in each case, plus accrued and unpaid interest
and fees, if any (the “Default Payment”). The Default Payment shall be applied first to any fees
due and payable to Holder pursuant to the Note or the Related Agreements, then to accrued and
unpaid interest due on the Note and then to outstanding principal balance of the Note.

     The occurrence of any of the following events set forth in Sections 4.1 through 4.10,
inclusive, is an “Event of Default”:

     4.1 Failure to Pay Principal, Interest or other Fees. The Borrower fails to pay when
due any installment of principal, interest or other fees hereon in accordance herewith, or the
Borrower fails to pay when due any amount due under any other promissory note issued by Borrower,
and in any such case, such failure shall continue for a period of five (5) business days
following the date upon which any such payment was due.

     4.2 Breach of Covenant. The Borrower breaches any covenant or any other term or
condition of this Note, the Purchase Agreement or any Related Agreement in any material respect,
and, in any such case, such breach, continues for a period of fifteen (15) days after the
occurrence thereof.

     4.3 Breach of Representations and Warranties. Any representation or warranty made by
the Borrower in this Note, the Purchase Agreement or in any Related Agreement shall, in any such
case, be false or misleading in any material respect on the date that such representation or
warranty was made or deemed made.

     4.4 Receiver or Trustee. The Borrower shall make an assignment for the benefit of
creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a
substantial part of its property or business; or such a receiver or trustee shall otherwise be
appointed.

     4.5 Judgments. Any money judgment, writ or similar final process shall be entered or
filed against the Borrower or any of its property or other assets for more than $200,000, and shall
remain unvacated, unbonded or unstayed for a period of sixty (60) days.

     4.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or
other proceedings or relief under any bankruptcy law or any law for the relief of debtors shall be

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instituted by or against the Borrower.

     4.7 Stop Trade. An SEC stop trade order or Principal Market trading suspension, so
long as a change of quotation among markets is not considered a “trading suspension”, of the Common
Stock shall be in effect for six (6) consecutive days or six (6) days during a period of ten (10)
consecutive days, excluding in all cases a suspension of all trading on a Principal Market,
provided that the Borrower shall not have been able to cure such trading suspension within
thirty (30) days of the notice thereof or list the Common Stock on another Principal Market within
sixty (60) days of such notice. The “Principal Market” for the Common Stock shall include the OTC
Bulletin Board, Nasdaq SmallCap Market, Nasdaq National Market System, American Stock Exchange, or
New York Stock Exchange (whichever of the foregoing is at the time the principal trading exchange
or market for the Common Stock). It is expressly understood that movement between any exchange or
quotation service set forth herein is permissible and shall not be an Event of Default under this
or any Related Agreements.

     4.8 Failure to Deliver Common Stock or Replacement Note. The Borrower shall fail
(i) to timely deliver Common Stock to the Holder pursuant to and in the form required by this Note,
and Section 9 of the Purchase Agreement, if such failure to timely deliver Common Stock shall not
be cured within two (2) business days or (ii) to deliver a replacement Note to Holder within seven
(7) business days following the required date of such issuance pursuant to this Note, the Purchase
Agreement or any Related Agreement (to the extent required under such agreements).

     4.9 Default Under Related Agreements or Other Agreements. The occurrence and
continuance of any Event of Default, without cure within the time period set forth in the Related
Agreements or Other Agreements. (as defined in the Purchase Agreement or any Related Agreement) or
any event of default (or similar term) of any indebtedness permitted under Section 6.12(e) of the
Securities Purchase Agreement in excess of $200,000.

     4.10 Change in Control. There shall be a change in control in the record or beneficial
ownership of an aggregate of more than forty percent (40%) of the outstanding Common Stock, in one
or more transactions with third parties, compared to the ownership of then outstanding shares of
Common Stock, without the prior written consent of Holder, which consent shall not be unreasonably
withheld. No such prior written consent shall be required in the sale of the Borrower’s equity
securities in a public offering, nor will such consent be required with respect to issuances to the
Holder. A change of control will not be deemed to occur merely through the purchase and sale of
any beneficial owners’ then current interest. The centralization of investment for the purpose of
obtaining control over the Company must be present for this provision to be a Event of Default. No
Event of Default will occur in the event the Company shall dissolve, liquidate or merge with any
other person or entity the Company is the surviving entity, or when the successor entity is solvent
and expressly assumes all of the duties and obligations of the Company and its Subsidiaries under
this Agreement and Related Agreements.

DEFAULT RELATED PROVISIONS

12

 

     4.11 Default Interest Rate. Following the occurrence and during the continuance of an
Event of Default, if not cured within the appropriate time, the Borrower shall pay additional
interest on this Note in an amount equal to one percent (1.0%) per month, and all outstanding
obligations under this Note, including unpaid interest, shall continue to accrue such additional
interest from the date of such Event of Default until the date such Event of Default is cured or
waived.

     4.12 Conversion Privileges. The conversion privileges set forth in Article III shall
remain in full force and effect immediately from the date hereof and until this Note is paid in
full.

     4.13 Cumulative Remedies. The remedies under this Note shall be cumulative during
the longest timeline of any relevant period of cure and then only to the extent those Defaults
remain outstanding.

ARTICLE V

MISCELLANEOUS

     5.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder
hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

     5.2 Notices. Any notice herein required or permitted to be given shall be in writing
and shall be deemed effectively given: (a) upon personal delivery to the party notified, (b) when
sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not,
then on the next business day, (c) five days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written verification of receipt.
All communications shall be sent to the Borrower at the address provided in the Purchase Agreement
executed in connection herewith, and to the Holder at the address provided in the Purchase
Agreement for such Holder, with a copy to John E. Tucker, Esq., 825 Third Avenue, 14th
Floor, New York, New York 10022, facsimile number (212) 541-4434, or at such other address as the
Borrower or the Holder may designate by ten days advance written notice to the other parties
hereto. A Notice of Conversion shall be deemed given when made to the Borrower pursuant to the
Purchase Agreement.

     5.3 Amendment Provision. The term “Note” and all reference thereto, as used
throughout this instrument, shall mean this instrument as originally executed, or if later amended
or supplemented, then as so amended or supplemented, and any successor instrument issued pursuant
to Section 3.5 hereof, as it may be amended or supplemented.

     5.4 Assignability. This Note shall be binding upon the Borrower and its successors
and assigns, and shall inure to the benefit of the Holder and its successors and assigns, and may
be assigned by the Holder in accordance with the requirements of the Purchase Agreement and with
notice, a legal opinion or such other evidence that the Borrower deems appropriate to determine
that

13

 

the transfer is occurring pursuant to an exemption from registration. This Note shall not be
assigned by the Borrower without the consent of the Holder.

     5.5 Governing Law. This Note 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 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 individual signing this Note on behalf of the Borrower
agree to submit to the jurisdiction of such courts. The prevailing party shall be entitled to
recover from the other party its reasonable attorney’s fees and costs. In the event that any
provision of this Note is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such provision which may
prove invalid or unenforceable under any law shall not affect the validity or unenforceability of
any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude
the Holder from bringing suit or taking other legal action against the Borrower in any other
jurisdiction to collect on the Borrower’s obligations to Holder, to realize on any collateral or
any other security for such obligations, or to enforce a judgment or other court in favor of the
Holder.

     5.6 Maximum Payments. Nothing contained herein shall be deemed to establish or
require the payment of a rate of interest or other charges in excess of the maximum permitted by
applicable law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be
credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

     5.7 Security Interest. The holder of this Note has been granted a security interest
in certain assets of the Borrower more fully described in a Master Security Agreement dated as of
the date hereof.

     5.8 Construction. Each party acknowledges that its legal counsel participated in the
preparation of this Note and, therefore, stipulates that the rule of construction that ambiguities
are to be resolved against the drafting party shall not be applied in the interpretation of this
Note to favor any party against the other.

     5.9 Cost of Collection. If default is made in the payment of this Note, the Borrower
shall pay to Holder reasonable costs of collection, including reasonable attorney’s fees.

[Balance of page intentionally left blank; signature page follows.]

14

 

     IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in its name effective as of
this 19th day of October, 2004.

	 	 	 	 	 	 	 
	 	 	Icoria, Inc.
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 
	WITNESS:
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 

15

 

EXHIBIT A

NOTICE OF CONVERSION

(To be executed by the Holder in order to convert all or part of the Note into Common Stock

[Name and Address of Holder]

The Undersigned hereby converts $                     of the principal due on [specify applicable Repayment
Date] under the Convertible Term Note issued by Icoria, Inc. dated [Month]                     , 2004 by delivery of
Shares of Common Stock of Icoria, Inc. on and subject to the conditions set forth in Article III of
such Note.

	 	 	 	 	 	 	 
	1.

	 	Date of Conversion
	 	 

	 	 
	 
	 	 	 	 	 	 
	2.

	 	Shares To Be Delivered:	 	 	 	 
	 

	 	 	 	 

	 	 

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

16exv10w11

 

December 2, 2005

Clinical Data Sales & Service, Inc.

2 Thurber Boulevard

Smithfield, Rhode Island 02917

     Re: Seventh Amendment

Gentlemen:

     Clinical Data Sales & Service, Inc., a Delaware corporation (“Borrower”) and LaSalle Business
Credit, LLC, a Delaware limited liability company, (“Lender”) have entered into that certain Loan
and Security Agreement dated March 31, 2003 (the “Security Agreement”). From time to time
thereafter, Borrower and Lender may have executed various amendments (each an “Amendment” and
collectively the “Amendments”) to the Security Agreement (the Security Agreement and the Amendments
hereinafter are referred to, collectively, as the “Agreement”). Borrower and Lender now desire to
further amend the Agreement as provided herein, subject to the terms and conditions hereinafter set
forth.

     NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and
agreements set forth herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:

     1. The Agreement hereby is amended as follows:

     (a) Subparagraph (4)(c)(v) of the Agreement is deleted in its entirety and the following
is substituted in its place:

	 	(v)	 	Transaction Fee: Borrower shall pay to Lender a transaction
fee of One Thousand Five Hundred and No/100 Dollars ($1,500.00) with respect
to internal costs and expenses (in addition to any reimbursable out-of-pocket
costs and expenses of Lender, which fee shall be fully earned and payable on
the date of this Amendment.

 

 

Clinical Data Sales & Service, Inc.

2 Thurber Boulevard

Smithfield, Rhode Island 02917

	 	 	 	 	 	 	 	 	 
	 

	 	(b)
	 	 	(9).	(1)	 	CONSENT TO INTERCOMPANY LOANS: Borrower has requested that
Bank consent to its making intercompany loans to Borrower’s affiliate, Genaissance
Pharmaceuticals, Inc., a Delaware corporation (“Genaissance”). 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Without limitation of the provisions contained in subparagraph
13(i) of the Agreement, LaSalle hereby grants its consent to Borrower’s
making intercompany loans to Genaissance up to $1,500,000.00 in the
aggreagate, subject to the receipt by Bank of copies of the executed
notes and related documents between Borrower and Genaissance, which
shall be in form and substance satisfactory to Bank.

     2. This Amendment shall not become effective until fully executed by all parties hereto.

     3. Except as expressly amended hereby and by any other supplemental documents or instruments
executed by either party hereto in order to effectuate the transactions contemplated hereby, the
Agreement thereto hereby is ratified and confirmed by the parties hereto and remain in full force
and effect in accordance with the terms thereof.

	 	 	 	 	 	 	 	 	 
	 	 	LASALLE BUSINESS CREDIT, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By	 	/s/ Dan Laren	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Title	 	Assistant Vice President	 	 
	 

	 	 	 	 	 	 	 	 

 

 

Clinical Data Sales & Service, Inc.

2 Thurber Boulevard

Smithfield, Rhode Island 02917

ACKNOWLEDGED AND AGREED TO

this
2nd day of December, 2005:

CLINICAL DATA SALES & SERVICE, INC.

	 	 	 	 	 	 	 
	By	 	/s/ Mark D. Shooman	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Title

	 	 	 	VP, Treasurer and Assistant
Secretary

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