Contract analysis

Section 1.1 — Defined Terms As used in this Security Agreement, the following terms shall have the meanings set forth below: "Administrative Agent" means Pinnacle Venture Lending Corp., a Delaware corporation, in its capacity as administrative agent under the Credit Agreement, and its successors and assigns in such capacity. "Bridge Priority Collateral" means all Collateral other than the Ridgeline Priority Collatera

Section 1.2 — UCC Terms Terms used in this Security Agreement that are defined in the UCC and that are not otherwise defined herein shall have the meanings ascribed to them in the UCC as in effect from time to time. Without limiting the generality of the foregoing, the following UCC-defined terms shall have the meanings set forth in the applicable provisions of the UCC: "account," "chattel paper," "commercial tort cl

Section 1.3 — Rules of Construction Unless the context otherwise requires: (a) references herein to the Credit Agreement, the Intercreditor Agreement, and any other agreement or instrument shall be deemed to include all amendments, restatements, supplements, and other modifications thereto; (b) capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Credit

ARTICLE II — GRANT OF SECURITY INTEREST

Section 2.1 — Grant The Grantor hereby grants to the Collateral Agent, for the ratable benefit of the Secured Parties, a continuing first-priority security interest in and lien upon all right, title, and interest of the Grantor in and to the following property, whether now owned or existing or hereafter acquired or arising and wherever located (collectively, the "Collateral"): (a) all Accounts, including, without lim

Section 2.2 — Excluded Property Notwithstanding the provisions of Section 2.1, the Collateral shall not include the following (collectively, "Excluded Property"): (a) any property to the extent that the granting of a security interest therein would violate any applicable law, rule, or regulation, or the terms of any contract, lease, license, or other agreement to which the Grantor is a party, in each case, after givi

Section 2.3 — Security for Secured Obligations The Collateral secures the prompt and complete payment, performance, and observance of all Secured Obligations, including, without limitation, all principal, interest, fees, costs, expenses, and indemnification obligations arising under the Credit Agreement, this Security Agreement, the IP Security Agreement, the Warrant Agreements, and each other Transaction Document.

Section 2.4 — Continuing Security Interest The security interest granted hereunder is a continuing security interest and shall remain in full force and effect until the Termination Date (as defined in Section 9.1). The security interest shall not be affected by the repayment and re-borrowing of any portion of the Secured Obligations, and shall continue to secure all Secured Obligations until the Termination Date rega

ARTICLE III — REPRESENTATIONS AND WARRANTIES OF THE GRANTOR The Grantor hereby represents and warrants to the Collateral Agent and each of the Secured Parties as follows:

Section 3.1 — Organization and Existence The Grantor is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Grantor is duly qualified to do business and is in good standing in the State of California and in each other jurisdiction where the nature of its business or the ownership of its properties requires such qualification, except where the failure to be

Section 3.2 — Authorization; No Conflict The execution, delivery, and performance of this Security Agreement have been duly authorized by all necessary corporate action of the Grantor, including, without limitation, by resolutions duly adopted by the board of directors of the Grantor, as certified in the Officer's Certificate delivered to the Collateral Agent and the Administrative Agent on the date hereof. This Secu

Section 3.3 — Ownership of Collateral The Grantor is the sole legal and beneficial owner of the Collateral, free and clear of all liens, security interests, claims, and encumbrances, except for Permitted Liens. As of the date hereof, the following existing lien exists on the Collateral: Ridgeline Capital Partners LLC holds a first-priority lien on the Ridgeline Priority Collateral, securing Three Million Two Hundred

Section 3.4 — Perfection Upon (a) the filing of UCC-1 financing statements with the Delaware Secretary of State (as the jurisdiction of the Grantor's incorporation) and the California Secretary of State (as a protective filing), (b) the delivery of fully executed deposit account control agreements ("DACAs") for the operating account (Acct **7834) and the payroll account (Acct **2091) at First Basin National Bank, (c)

Section 3.5 — Deposit Accounts Set forth on Schedule 2 hereto is a complete and accurate list of all deposit accounts maintained by the Grantor as of the date hereof, including the name of each depository institution, the account number, the type of account, and the branch location. As of the date hereof, the Grantor maintains the following deposit accounts: (a) First Basin National Bank, operating account, Acct **78

Section 3.6 — Intellectual Property The Grantor owns fourteen (14) issued United States patents and has seven (7) pending PCT applications, all of which are listed on Schedule 5 hereto and on Exhibit A to the IP Security Agreement. All such intellectual property is duly and validly assigned to the Grantor and is free and clear of all liens, security interests, claims, and encumbrances other than Permitted Liens. The

Section 3.7 — Exact Legal Name; Jurisdiction; Identification Numbers The full and exact legal name of the Grantor, as set forth in its certificate of incorporation filed with the Secretary of State of the State of Delaware, is "Genome Dx Therapeutics Inc." The Grantor's jurisdiction of organization is the State of Delaware. The Grantor's Employer Identification Number (EIN) is 82-4917263. The Grantor's Delaware file

Section 3.8 — Location of Equipment and Tangible Collateral All tangible Collateral, including all Equipment, is located at the Grantor's chief executive office and headquarters at 450 Genome Way, Suite 300, South San Francisco, California 94080, as more particularly described on Schedule 4 hereto. As of the date hereof, no material tangible Collateral is located at any other location. The Grantor does not maintain a

Section 3.9 — Existing Indebtedness and Liens As of the date hereof, the following indebtedness and liens exist with respect to the Collateral: Three Million Two Hundred Thousand Dollars ($3,200,000) is outstanding under the equipment financing facility with Ridgeline Capital Partners LLC, secured by a first-priority lien on the Ridgeline Priority Collateral only, with a maturity date of December 2027. No other liens

Section 3.10 — No Financing Statements No effective UCC financing statement, fixture filing, or other public filing or recording is on file in any jurisdiction covering any of the Collateral, or naming the Grantor as debtor, other than (a) UCC financing statements filed by or on behalf of Ridgeline Capital Partners LLC with respect to the Ridgeline Priority Collateral, and (b) the UCC financing statements being filed

ARTICLE IV — COVENANTS OF THE GRANTOR The Grantor hereby covenants and agrees with the Collateral Agent and each of the Secured Parties as follows:

Section 4.1 — Defense of Collateral The Grantor shall defend the Collateral against all claims and demands of all persons at any time claiming any interest in the Collateral adverse to the Collateral Agent or any Secured Party. The Grantor shall promptly notify the Collateral Agent and the Administrative Agent in writing of any claim, action, or proceeding affecting or relating to the Collateral that could reasonably

Section 4.2 — Further Assurances; Perfection The Grantor shall, at its own cost and expense, promptly execute and deliver all further instruments, documents, and agreements, and take all further action, that the Collateral Agent may from time to time reasonably request in order to: (a) perfect and protect the security interest created or intended to be created hereby, and the first-priority status thereof (subject to

Section 4.3 — Changes in Name, Jurisdiction, or Structure The Grantor shall provide at least thirty (30) days' prior written notice to the Collateral Agent and the Administrative Agent before: (a) changing its legal name; (b) changing its jurisdiction of organization or incorporation; (c) changing its organizational identification number or Employer Identification Number; (d) changing the location of its chief execut

Section 4.4 — Maintenance of Collateral The Grantor shall maintain and preserve all tangible Collateral in good working order and condition (ordinary wear and tear excepted) and shall make all necessary repairs, renewals, and replacements thereof. The Grantor shall not permit any tangible Collateral to be wasted, destroyed, or materially impaired, except in the ordinary course of business and except for dispositions

Section 4.5 — Insurance The Grantor shall maintain insurance policies covering the Collateral as required by Section [applicable section] of the Credit Agreement, including, without limitation: (a) directors and officers liability insurance maintained with Sentinel Specialty Insurance Co. (or another insurer reasonably acceptable to the Administrative Agent), with a policy limit of not less than Ten Million Dollars (

Section 4.6 — Deposit Accounts The Grantor shall not establish, maintain, or open any new deposit account or securities account without the prior written consent of the Collateral Agent (such consent not to be unreasonably withheld or delayed), and promptly upon the opening of any such account (and in any event within ten (10) business days thereof), the Grantor shall deliver to the Collateral Agent a fully executed

Section 4.7 — Intellectual Property The Grantor shall: (a) maintain and preserve all of its intellectual Property in full force and effect and take all commercially reasonable actions necessary to protect, defend, and maintain the validity and enforceability thereof; (b) not abandon, assign, sell, transfer, license (except non-exclusive licenses in the ordinary course of business), or permit to lapse any intellectual

Section 4.8 — No Liens The Grantor shall not create, incur, assume, or permit to exist any lien, security interest, claim, or encumbrance on or with respect to any of the Collateral, other than (a) the security interest granted hereunder in favor of the Collateral Agent for the benefit of the Secured Parties, (b) Permitted Liens, and (c) the liens of Ridgeline Capital Partners LLC on the Ridgeline Priority Collateral

Section 4.9 — No Disposition of Collateral The Grantor shall not sell, lease, license, transfer, assign, or otherwise dispose of, or grant any option or other right with respect to, any Collateral, except: (a) dispositions of inventory in the ordinary course of business (to the extent the Grantor holds any inventory from time to time); (b) dispositions of worn-out, surplus, or obsolete Equipment, so long as the aggre

Section 4.10 — Compliance with Intercreditor Agreement The Grantor shall comply in all material respects with all of its obligations under the Intercreditor Agreement, including, without limitation, all covenants, agreements, and restrictions applicable to the Grantor thereunder. The Grantor acknowledges and agrees that, as between the Secured Parties and Ridgeline Capital Partners LLC, the relative priority of their

Section 4.11 — Books and Records The Grantor shall maintain complete and accurate books and records relating to the Collateral and the financial condition and operations of the Grantor, in accordance with generally accepted accounting principles consistently applied. The Grantor shall permit representatives of the Collateral Agent and the Administrative Agent (including, without limitation, independent accountants, c

ARTICLE V — DEPOSIT ACCOUNT CONTROL

Section 5.1 — Control Agreements As a condition to the effectiveness of this Security Agreement and the obligation of the Lenders to make advances under the Credit Agreement, the Grantor shall deliver to the Collateral Agent, on or prior to the date hereof, fully executed deposit account control agreements ("DACAs") for each of the following deposit accounts: (a) First Basin National Bank, operating account, Acct **7

Section 5.2 — Rights Under Control Agreements Until the occurrence of an Activation Event (as defined in the applicable DACA, which shall include, at a minimum, the occurrence and continuance of an Event of Default under the Credit Agreement), the Grantor shall be permitted to use and direct the disposition of funds in its deposit accounts in the ordinary course of business, without the consent of or notice to the Co

Section 5.3 — Springing Control Each DACA shall provide for "springing" control, whereby the Collateral Agent's right to assume exclusive dominion and control over the applicable deposit account is activated only upon delivery by the Collateral Agent of a notice of exclusive control (in the form specified in the applicable DACA) to First Basin National Bank, which notice of exclusive control shall be delivered by the

ARTICLE VI — RIGHTS AND REMEDIES

Section 6.1 — Rights Upon Event of Default Upon the occurrence and during the continuance of an Event of Default (as defined in the Credit Agreement), the Collateral Agent may (and, upon the written direction of the Administrative Agent acting at the direction of the Required Lenders, shall) exercise any and all rights and remedies available to the Collateral Agent under this Security Agreement, the Credit Agreement,

Section 6.2 — Sale of Collateral The Collateral Agent may sell the Collateral, or any part thereof, at one or more public or private sales, upon not less than ten (10) days' prior written notice to the Grantor (or such shorter period as may be permitted by applicable law), which the Grantor agrees is commercially reasonable notice. The Collateral Agent may purchase all or any portion of the Collateral at any public s

Section 6.3 — Application of Proceeds Proceeds received by the Collateral Agent from any sale, collection, or other disposition of the Collateral shall be applied in the following order of priority: First, to the payment of all costs and expenses incurred by the Collateral Agent in connection with such sale, collection, or disposition, or otherwise in connection with the exercise of any rights or remedies hereunder,

Section 6.4 — Deficiency If the Proceeds of any sale, collection, or other disposition of the Collateral are insufficient to pay all of the Secured Obligations in full, the Grantor shall remain liable for any deficiency remaining after the application of such Proceeds, and the Collateral Agent and the Secured Parties shall retain all rights and remedies available at law or in equity to collect such deficiency.

Section 6.5 — Remedies Cumulative All rights and remedies of the Collateral Agent and the Secured Parties under this Security Agreement, the Credit Agreement, the UCC, and applicable law are cumulative and non-exclusive, and may be exercised singly or concurrently. The exercise of any one right or remedy shall not be deemed to be an election of such right or remedy to the exclusion of any other right or remedy, and s

Section 6.6 — Waiver of Certain Rights To the fullest extent permitted by applicable law, the Grantor hereby waives (a) any right to require the Collateral Agent or any Secured Party to proceed against any other person or to exhaust any other security or Collateral before enforcing the security interest granted hereunder, (b) any right to require the Collateral Agent or any Secured Party to pursue any particular reme

ARTICLE VII — THE COLLATERAL AGENT

Section 7.1 — Appointment and Authority The Collateral Agent has been appointed by the Secured Parties and acts for the ratable benefit of the Secured Parties in accordance with the terms of this Security Agreement and the Credit Agreement. Pacific Fiduciary Services Inc. hereby accepts its appointment as Collateral Agent hereunder and agrees to act in such capacity subject to the terms and conditions set forth herei

Section 7.2 — Standard of Care The Collateral Agent shall exercise the same degree of care in the custody, safekeeping, and preservation of the Collateral in its possession or control as the Collateral Agent exercises with respect to its own property of a similar nature, but in no event less than reasonable care. Except as expressly set forth in this Security Agreement, the Collateral Agent shall have no obligation t

Section 7.3 — Reliance The Collateral Agent shall be entitled to rely upon, and shall be fully protected in relying upon, any notice, certificate, instrument, opinion, request, direction, consent, or other document or communication believed by it in good faith to be genuine and to have been signed, sent, or presented by the proper person or persons, and the Collateral Agent shall have no duty to make any independent

Section 7.4 — Delegation The Collateral Agent may perform any and all of its duties and exercise any and all of its rights hereunder through one or more agents, attorneys-in-fact, sub-agents, or other delegates appointed by the Collateral Agent. Any such delegation shall not relieve the Collateral Agent of its obligations hereunder, except that the Collateral Agent shall not be responsible for the negligence or misco

Section 7.5 — Resignation and Replacement The Collateral Agent may resign from its duties hereunder at any time upon not less than thirty (30) days' prior written notice to the Grantor and the Administrative Agent. Upon the effective date of such resignation, the Administrative Agent shall appoint a successor Collateral Agent, which successor shall be reasonably acceptable to the Grantor (so long as no Event of Defau

Section 7.6 — Indemnification of Collateral Agent The Grantor shall indemnify, defend, and hold harmless the Collateral Agent and its directors, officers, employees, agents, and representatives (each, an "Indemnified Agent Party") from and against any and all losses, claims, damages, liabilities, costs, and expenses (including, without limitation, reasonable attorneys' fees and expenses) arising out of or in connecti

ARTICLE VIII — POWER OF ATTORNEY

Section 8.1 — Irrevocable Power of Attorney The Grantor hereby irrevocably constitutes and appoints the Collateral Agent and any officer, employee, or agent thereof, with full power of substitution, as the Grantor's true and lawful attorney-in-fact, with full irrevocable power and authority in the place and stead of the Grantor and in the name of the Grantor or in its own name, from time to time in the Collateral Age