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Exhibit
99.1
MASTER SECURITY
AGREEMENT
dated as of
November 28, 2007 (“Agreement”)
THIS AGREEMENT is between General
Electric Capital Corporation (together with its successors and
assigns, if any, “Secured Party”) and Icagen,
Inc. (“Debtor”). Secured Party has an office at 83
Wooster Heights Road, Danbury, CT 06810. Debtor is a corporation
organized and existing under the laws of the state of DE
(“the State”). Debtor’s mailing address is
P.O. Box 14487, Durham, NC 27703 and chief place of business
is 4222 Emperor Blvd., Ste. 350, Durham County, Durham, NC
27703 .
1. CREATION OF SECURITY
INTEREST.
Debtor grants to Secured Party, its
successors and assigns, a security interest in and against all
property listed on any collateral schedule now or in the future
annexed to or made a part of this Agreement (“Collateral
Schedule”), and in and against all additions, attachments,
accessories and accessions to such property, all substitutions,
replacements or exchanges therefor, and all insurance and/or other
proceeds thereof (all such property is individually and
collectively called the “Collateral”). This security
interest is given to secure the payment and performance of all
debts, obligations and liabilities of any kind whatsoever of Debtor
to Secured Party, now existing or arising in the future, including
but not limited to the payment and performance of certain
Promissory Notes from time to time identified on any Collateral
Schedule (collectively “Notes” and each a
“Note”), and any renewals, extensions and modifications
of such debts, obligations and liabilities (such Notes, debts,
obligations and liabilities are called the
“Indebtedness”).
2. REPRESENTATIONS, WARRANTIES AND
COVENANTS OF DEBTOR.
Debtor represents, warrants and
covenants as of the date of this Agreement and as of the date of
each Collateral Schedule that:
(a) Debtor’s exact legal name is
as set forth in the preamble of this Agreement and Debtor is, and
will remain, duly organized, existing and in good standing under
the laws of the State set forth in the preamble of this Agreement,
has its chief executive offices at the location specified in the
preamble, and is, and will remain, duly qualified and licensed in
every jurisdiction wherever necessary to carry on its business and
operations;
(b) Debtor has adequate power and
capacity to enter into, and to perform its obligations under this
Agreement, each Note and any other documents evidencing, or given
in connection with, any of the Indebtedness (all of the foregoing
are called the “Debt Documents”);
(c) This Agreement and the other Debt
Documents have been duly authorized, executed and delivered by
Debtor and constitute legal, valid and binding agreements
enforceable in accordance with their terms, except to the extent
that the enforcement of remedies may be limited under applicable
bankruptcy and insolvency laws;
(d) No approval, consent or withholding
of objections is required from any governmental authority or
instrumentality with respect to the entry into, or performance by
Debtor of any of the Debt Documents, except any already
obtained;
(e) The entry into, and performance by,
Debtor of the Debt Documents will not (i) violate any of the
organizational documents of Debtor or any judgment, order, law or
regulation applicable to Debtor, or (ii) result in any breach
of or constitute a default under any contract to which Debtor is a
party, or result in the creation of any lien, claim or encumbrance
on any of Debtor’s property (except for liens in favor of
Secured Party) pursuant to any indenture, mortgage, deed of trust,
bank loan, credit agreement, or other agreement or instrument to
which Debtor is a party;
(f) There are no suits or proceedings
pending in court or before any commission, board or other
administrative agency against or affecting Debtor which could, in
the aggregate, have a material adverse effect on Debtor, its
business or operations, or its ability to perform its obligations
under the Debt Documents, nor does Debtor have reason to believe
that any such suits or proceedings are threatened;
(g) All financial statements delivered
to Secured Party in connection with the Indebtedness have been
prepared in accordance with generally accepted accounting
principles, and since the date of the most recent financial
statement, there has been no material adverse change in Debtors
financial condition;
(h) The Collateral is not, and will not
be, used by Debtor for personal, family or household
purposes;
(i) The Collateral is, and will remain,
in good condition and repair and Debtor will not be negligent in
its care and use;
(j) Debtor is, and will remain, the sole
and lawful owner, and in possession of, the Collateral, and has the
sole right and lawful authority to grant the security interest
described in this Agreement;
(k) The Collateral is, and will remain,
free and clear of all liens, claims and encumbrances of any kind
whatsoever, except for (i) liens in favor of Secured Party,
(ii) liens for taxes not yet due or for taxes being contested
in good faith and which do not involve, in the judgment of Secured
Party, any risk of the sale, forfeiture or loss of any of the
Collateral and with respect to which adequate reserves have been
set aside for the payment thereof in accordance with GAAP, and
(iii) inchoate materialmen’s, mechanic’s,
repairmen’s and similar liens arising by operation of law in
the normal course of business for amounts which are not delinquent
(all of such liens are called “Permitted Liens”);
and
(l) Debtor is and will remain in full
compliance with all laws and regulations applicable to it
including, without limitation, (i) ensuring that no person who
owns a controlling interest in or otherwise controls Debtor is or
shall be (Y) listed on the Specially Designated Nationals and
Blocked Person List maintained by the Office of Foreign Assets
Control (“OFAC”), Department of the Treasury, and/or
any other similar lists maintained by OFAC pursuant to any
authorizing statute, Executive Order or regulation or (Z) a
person designated under Section 1(b), (c) or (d) of
Executive Order No. 13224 (September 23, 2001), any related
enabling legislation or any other similar Executive Orders, and
(ii) compliance with all applicable Bank Secrecy Act
(“BSA”) laws, regulations and government guidance on
BSA compliance and on the prevention and detection of money
laundering violations.
3. COLLATERAL.
(a) Until the declaration of any
default, Debtor shall remain in possession of the Collateral;
except that Secured Party shall have the right to possess
(i) any chattel paper or instrument that constitutes a part of
the Collateral, and (ii) any other Collateral in which Secured
Party’s security interest may be perfected only by
possession. Secured Party may inspect any of the Collateral during
normal business hours after giving Debtor reasonable prior notice.
If Secured Party asks,
Debtor will promptly notify Secured
Party in writing of the location of any Collateral.
(b) Debtor shall (i) use the
Collateral only in its trade or business, (ii) maintain all of
the Collateral in good operating order and repair, normal wear and
tear excepted, (iii) use and maintain the Collateral only in
compliance with manufacturers recommendations and all applicable
laws, and (iv) keep all of the Collateral free and clear of
all liens, claims and encumbrances (except for Permitted
Liens).
(c) Secured Party does not authorize and
Debtor agrees it shall not without prior written consent of the
Secured Party (i) part with possession of any of the
Collateral (except to Secured Party or for maintenance and repair),
(ii) remove any of the Collateral from the continental United
States, or (iii) sell, rent, lease, mortgage, license, grant a
security interest in or otherwise transfer or encumber (except for
Permitted Liens) any of the Collateral.
(d) Debtor shall pay promptly when due
all taxes, license fees, assessments and public and private charges
levied or assessed on any of the Collateral, on its use, or on this
Agreement or any of the other Debt Documents. At its option,
Secured Party may discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on the Collateral
and may pay for the maintenance, insurance and preservation of the
Collateral and effect compliance with the terms of this Agreement
or any of the other Debt Documents. Debtor agrees to reimburse
Secured Party, on demand, all reasonable costs and expenses
incurred by Secured Party in connection with such payment or
performance and agrees that such reimbursement obligation shall
constitute Indebtedness.
(e) Debtor shall, at all times, keep
accurate and complete records of the Collateral, and Secured Party
shall have the right to inspect and make copies of all of
Debtor’s books and records relating to the Collateral during
normal business hours, after giving Debtor reasonable prior written
notice.
(f) Debtor agrees and acknowledges that
any third person who may at any time possess all or any portion of
the Collateral shall be deemed to hold, and shall hold, the
Collateral as the agent of, and as pledge holder for, Secured
Party. Secured Party may at any time give notice to any third
person described in the preceding sentence that such third person
is holding the Collateral as the agent of, and as pledge holder
for, the Secured Party.
4. INSURANCE.
(a) Debtor shall at all times bear the
entire risk of any loss, theft, damage to, or destruction of, any
of the Collateral from any cause whatsoever.
(b) Debtor agrees to keep the Collateral
insured against loss or damage by fire and extended coverage
perils, theft, burglary, and for any or all Collateral which are
vehicles, for risk of loss by collision, and if requested by
Secured Party, against such other risks as Secured Party may
reasonably require. The insurance coverage shall be in an amount no
less than the full replacement value of the Collateral, and
deductible amounts, insurers and policies shall be acceptable to
Secured Party. Debtor shall deliver to Secured Party policies or
certificates of insurance evidencing such coverage. Each policy
shall name Secured Party as additional insured and lender’s
loss payee, shall provide for coverage to Secured Party regardless
of the breach by Debtor of any warranty or representation made
therein, shall not be subject to co-insurance, and shall provide
that coverage may not be canceled or altered by the insurer except
upon thirty (30) days prior written notice to Secured Party.
Debtor appoints Secured Party as its attorney-in-fact to make proof
of loss, claim for insurance and adjustments with insurers, and to
receive payment of and execute or endorse all documents, checks or
drafts in connection with insurance payments. Secured Party shall
not act as Debtor’s attorney-in-fact unless Debtor is in
default. Proceeds of insurance shall be applied, at the option of
Secured Party, to repair or replace the Collateral or to reduce any
of the Indebtedness.
5. REPORTS.
(a) Debtor shall promptly notify Secured
Party of (i) any change in the name of Debtor, (ii) any
change in the state of its incorporation, organization or
registration, (iii) any relocation of its chief executive
offices, (iv) any relocation of any of the Collateral,
(v) any of the Collateral being lost, stolen, missing,
destroyed, materially damaged or worn out, or (vi) any lien,
claim or encumbrance other than Permitted Liens attaching to or
being made against any of the Collateral.
(b) Debtor will deliver to Secured Party
financial statements as follows. If Debtor is a privately held
company, then Debtor agrees to provide monthly financial
statements, certified by Debtor’s president or chief
financial officer including a balance sheet, statement of
operations and cash flow statement within 30 days of each month end
and its complete audited annual financial statements, certified by
a recognized firm of certified public accountants, within 120 days
of fiscal year end or at such time as Debtor’s Board of
Directors receives the audit. If Debtor is a publicly held company,
then Debtor agrees to provide to Secured Party or make available on
Debtor’s website quarterly unaudited statements and annual
audited statements, certified by a recognized firm of certified
public accountants, within 10 days after the statements are
provided to the Securities and Exchange Commission
(“SEC”). All such statements are to be prepared using
generally accepted accounting principles (“GAAP”) and,
if Debtor is a publicly held company, are to be in compliance with
SEC requirements.
6. FURTHER ASSURANCES.
(a) Debtor shall, upon request of
Secured Party, furnish to Secured Party such further information,
execute and deliver to Secured Party such documents and instruments
(including, without limitation, Uniform Commercial Code financing
statements) and shall do such other acts and things as Secured
Party may at any time reasonably request relating to the perfection
or protection of the security interest created by this Agreement or
for the purpose of carrying out the intent of this Agreement.
Without limiting the foregoing, Debtor shall cooperate and do all
acts deemed necessary or advisable by Secured Party to continue in
Secured Party a perfected first security interest in the
Collateral, and shall obtain and furnish to Secured Party any
subordinations, releases, landlord waivers, lessor waivers,
mortgagee waivers, or control agreements, and similar documents as
may be from time to time requested by, and in form and substance
satisfactory to, Secured Party.
(b) Debtor authorizes Secured Party to
file a financing statement and amendments thereto describing the
Collateral and containing any other information required by the
applicable Uniform Commercial Code. Debtor irrevocably grants to
Secured Party the power to sign Debtor’s name and generally
to act on behalf of Debtor to execute and file applications for
title, transfers of title, financing statements, notices of lien
and other documents pertaining to any or all of the Collateral;
this power is coupled with Secured Party’s interest in the
Collateral. Debtor shall, if any certificate of title be required
or permitted by law for any of the Collateral, obtain and promptly
deliver to Secured Party such certificate showing the lien of this
Agreement with respect to the Collateral.
(c) Debtor shall indemnify and defend
the Secured Party, its successors and assigns, and their respective
directors, officers and employees, from and against all claims,
actions and suits (including, without limitation, reasonable
related attorneys’ fees) of any kind whatsoever arising,
directly or indirectly, in connection with any of the Collateral,
this agreement, any other Debt Document, and the transactions
contemplated hereby or thereby, except for claims, actions or suits
arising from the gross negligence or willful misconduct of Secured
Party or its successors or assigns and their respective directors,
officers and employees as determined by final judgment of a court
of competent jurisdiction.
7. DEFAULT AND
REMEDIES.
(a) Debtor shall be in default under
this Agreement and each of the other Debt Documents if:
(i) Debtor breaches its obligation to
pay when due any installment or other amount due or coming due
under any of the Debt Documents and fails to cure the breach within
ten (10) days;
(ii) Debtor, without the prior written
consent of Secured Party, attempts to or does sell, rent, lease,
license, mortgage, grant a security interest in, or otherwise
transfer or encumber (except for Permitted Liens) any of the
Collateral;
(iii) Debtor breaches any of its
insurance obligations under Section 4;
(iv) Debtor breaches any of its other
obligations under any of the Debt Documents and fails to cure that
breach within thirty (30) days after written notice from
Secured Party;
(v) Any warranty, representation or
statement made by Debtor in any of the Debt Documents or otherwise
in connection with any of the Indebtedness shall be false or
misleading in any material respect;
(vi) Any of the Collateral is subjected
to attachment, execution, levy, seizure or confiscation in any
legal proceeding or otherwise, or if any legal or administrative
proceeding is commenced against Debtor or any of the Collateral,
which in the good faith judgment of Secured Party subjects any of
the Collateral to a material risk of attachment, execution, levy,
seizure or confiscation and no bond is posted or protective order
obtained to negate such risk;
(vii) Debtor or any guarantor or other
obligor for any of the Indebtedness (collectively
“Guarantor”) dissolves, terminates its existence,
becomes insolvent or ceases to do business as a going
concern;
(viii) If Debtor or any Guarantor is a
natural person, Debtor or any such Guarantor dies or becomes
incompetent;
(ix) A receiver is appointed for all or
of any part of the property of Debtor or any Guarantor, or Debtor
or any Guarantor makes any assignment for the benefit of
creditors;
(x) Debtor or any Guarantor files a
petition under any bankruptcy, insolvency or similar law, or any
such petition is filed against Debtor or any Guarantor and is not
dismissed within forty-five (45) days;
(xi) Debtor’s improper filing of
an amendment or termination statement relating to a filed financing
statement describing the Collateral;
(xii) There is a material adverse change
in the Debtor’s financial condition as reasonably determined
solely by Secured Party;
(xiii) Any Guarantor revokes or attempts
to revoke its guaranty of any of the Indebtedness or fails to
observe or perform any covenant, condition or agreement to be
performed under any guaranty or other related document to which it
is a party;
(xiv) Debtor defaults under any other
material obligation for (A) borrowed money, (B) the
deferred purchase price of property or (C) payments due under
any lease agreement. For purposes of this subsection
(xiv) material shall be deemed to mean any obligation in
excess of $ 100,000.
(xv) At any time during the term of this
Agreement Debtor experiences a change of control such that any
person or entity acquires either more than 50% of the voting stock
of Debtor or all or substantially all of Debtor’s assets, in
either case, without Secured Party’s prior written consent.
Notwithstanding the foregoing, Debtor shall not be deemed to have
experienced a change of control as a result of, or in connection
with, any equity financing or equity investment in Debtor where a
majority of Debtor’s pre-investment Board of Directors
continues in office.
(b) If Debtor is in default, the Secured
Party, at its option, may declare any or all of the Indebtedness to
be immediately due and payable, without demand or notice to Debtor
or any Guarantor. The accelerated obligations and liabilities shall
bear interest (both before and after any judgment) until paid in
full at the lower of eighteen percent (18%) per annum or the
maximum rate not prohibited by applicable law.
(c) After default, Secured Party shall
have all of the rights and remedies of a Secured Party under the
Uniform Commercial Code, and under a
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