Exhibit 10.12


 


[GRAPHIC]


 


VIA
FEDERAL EXPRESS


 


September
5, 2006


 


Vikram
Jog

Expression Diagnostics, Inc.

701 Gateway Blvd., Suite 100

S. San Francisco, CA 94080


 


RE:
Execution Documents for File


 


Dear
Vikram:


 


Enclosed
for your files are the following documents:


 


1.         Growth Capital Loan and
Security Agreement (original)


2.         Warrant Agreement,
TriplePoint (original copy)


3.         Warrant Agreement, Leader
(original copy)


4.         Warrant Purchase
Agreement with payment, Leader (original)


5.         Deposit Account Control
Agreement, Comerica (original)


6.         Account Control
Agreement, UBS (original)


 


Please
do not hesitate to call with any questions.


 


	
  Sincerely,

  
	
   

  
	
  /s/ Kevin W. Thorne

  	
   

  
	
  Kevin
  W. Thorne 

  VP Compliance & Legal Administration

  



 


enclosure


 


cc:
Leader Lending, LLC (w/o enclosures)


 


 


 


	
  TriplePoint
  Capital

  	
   

  	
  2420 Sand Hill Road, Suite
  101

  	
   

  	
  Menlo Park, CA 94025

  
	
  www.TriplePointCapital.com

  	
   

  	
  main:
  (650) 854-2090

  	
   

  	
  fax:
  (650) 854-2094

  



 

















 


GROWTH CAPITAL LOAN AND SECURITY AGREEMENT


 


THIS
GROWTH CAPITAL LOAN AND SECURITY AGREEMENT (this “Agreement”)
is made and dated as of July 26, 2006 (the
“Closing Date”) and is entered into by and between TRIPLEPOINT CAPITAL
LLC, a Delaware limited liability company (as a “TriplePoint” or “Lender” and
in its capacity as “Agent” for Lenders), LEADER LENDING, LLC a Delaware company
(“Leader Lending” or “Lender”), and EXPRESSION DIAGNOSTICS, INC., a Delaware
corporation (“Borrower”). TriplePoint and Leader Lending are sometimes
referred to individually as a “Lender” and collectively as the “Lenders”. The
Lenders and the Borrower are sometimes referred to as the Parties.


 


RECITALS


 


WHEREAS,
Borrower has requested Lenders make available to Borrower a
loan or loans in an aggregate principal amount of up to Ten Million Five Hundred Thousand and No/100 Dollars
($10,500,000.00) (the “Loan” or “Loans”); and


 


WHEREAS,
Lenders are willing to make the Loan on the terms and
conditions set forth in this Agreement.


 


AGREEMENT


 


NOW,
THEREFORE, in consideration of the premises and the mutual
agreements contained herein, Borrower and Lenders hereby agree as follows:


 


SECTION
1.         DEFINITIONS
AND RULES OF CONSTRUCTION


 


1.1.              Unless otherwise
defined herein, the following capitalized terms shall have the following
meanings (such meanings being equally applicable to both the singular and
plural form of the terms defined):


 


“Account”
means any “account,” as such term is defined in the UCC, now
owned or hereafter acquired by Borrower or in which Borrower now holds or
hereafter acquires any interest and, in any event, shall include all accounts
receivable, book debts, rights to payment and other forms of obligations now
owned or hereafter received or acquired by or belonging or owing to Borrower
(including under any trade name, style or division thereof), whether or not
arising out of goods or software sold or services rendered by Borrower or from
any other transaction (including any such obligation that may be characterized
as an account or contract right under the UCC), and all of Borrower’s rights
in, to and under all purchase orders or receipts now owned or hereafter
acquired by it for goods or services, and all of Borrower’s rights to any goods
represented by any of the foregoing (including unpaid seller’s rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods), and all monies due or to become due
to Borrower under all purchase orders and contracts for the sale of goods or
the performance of services or both by Borrower or in connection with any other
transaction (whether or not yet earned by performance on the part of Borrower),
now in existence or hereafter occurring, including the right to receive the
proceeds of said purchase orders and contracts, and all collateral security and
guarantees of any kind given by any Person with respect to any of the
foregoing.


 


“Advance”
means any funds advanced or loaned by Lender to or for the
benefit of Borrower.


 


“Advance
Date” means the funding date of any Advance.


 


“Advance
Request” means a request for an Advance submitted by Borrower
to the Agent in substantially the form of Exhibit
A hereto.


 


“Agent”
means TriplePoint, not in its individual capacity, but solely
in its capacity as agent on behalf of and for the benefit of Lenders, and any
successor agent appointed hereunder.


 


“Agreement”
means this Growth Capital Loan and Security Agreement, as the
same may from time to time be amended, modified, supplemented or restated from
time to time in accordance with the terms hereof.


 


“Borrower”
has the meaning given to it in the preamble to this
Agreement.


 


“Cash”
means all cash, money, currency, and liquid funds, wherever
held, in which Borrower now or hereafter acquires any right, title, or
interest.


 


“Chattel
Paper” means any “chattel paper,” as such term is defined in
the UCC, now owned or hereafter acquired by Borrower or in which Borrower now
holds or hereafter acquires any interest.


 

















 


“Closing
Date” means the date of this Agreement as stated on the first
page.


 


“Collateral”
has the meaning given to it in Section 3.


 


“Commitment
Percentage” means fifty percent (50%) for TriplePoint and
fifty percent (50%) for Leader Lending.


 


“Commitment
Termination Date” means the first to occur of (i) December 31, 2006 or (ii) the occurrence
and continuation of an Event of Default.


 


“Copyrights”
means all of the following property, now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest: (i) all copyrights, whether registered or unregistered, held pursuant
to the laws of the United States, any State thereof, or of any other country;
(ii) all registrations, applications and recordings in the United States
Copyright Office or in any similar office or agency of the United States, of
any State thereof, or of any other country; (iii) all continuations, renewals
or extensions thereof; and (iv) all registrations to be issued under any
pending applications.


 


“Copyright
License” means any written agreement granting any right to
use any Copyright or Copyright registration, now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest.


 


“Default
Rate” has the meaning given to it in Section 2.14.


 


“Deposit
Accounts” means any “deposit accounts,” as such term is
defined in the UCC, and includes any checking account, savings account, or
certificate of deposit now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest.


 


“Documents”
means any “documents,” as such term is defined in the UCC,
now owned or hereafter acquired by Borrower or in which Borrower now holds or
hereafter acquires any interest.


 


“End
Term Payment” means four percent of (4%) of the principal
amount of each Advance as evidenced by the Notes.


 


“Equipment”
means any “equipment,” as such term is defined in the UCC,
and any and all additions, upgrades, substitutions, and replacements of the
foregoing, together with all attachments, components, parts, accessions, and
accessories installed thereon or affixed thereto, now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest.


 


“Event
of Default” has the meaning given to it in Section 9.


 


“Excluded
Agreements” means (i) the Warrant Agreement dated July 26,
2006 between Borrower and Lender issued in connection with this Agreement; and
(ii) stock purchase agreement, options, or warrants to acquire, or agreements
governing the rights of, any capital stock or other equity security, or any
common stock, preferred stock, or equity security issued to or purchased by
Lender or its nominee or assignee; and (iii) any guaranty of the Secured
Obligations executed by any person other than Borrower; and (iv) any other
agreement by and between Lender and Borrower.


 


“Facility
Fee” has the meaning given to it in Section 2.17.


 


“Financial
Statements” has the meaning given to it in Section 7.1.


 


“Fixtures”
means any “fixtures,” as such term is defined in the UCC,
together with all right, title and interest of Borrower in and to all
extensions, improvements, betterments, accessions, renewals, substitutes, and
replacements of, and all additions and appurtenances to any of the foregoing
property, and all conversions of the security constituted thereby, immediately
upon any acquisition or release thereof or any such conversion, as the case may
be, now owned or hereafter acquired by Borrower or in which Borrower now holds
or hereafter acquires any interest.


 


“GAAP”
means generally accepted accounting principles in the United
States of America, as in effect from time to time.


 


“General
Intangibles” means any “general intangibles,” as such term is
defined in the UCC, and, in any event, shall include all right, title and
interest which Borrower may now or hereafter have in or under any rights to
payment; payment intangibles; software (other than source codes developed by
Borrower); proprietary or confidential


 


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information (other than
Intellectual Property); business records and materials (other than Intellectual
Property); customer lists; interests in partnerships, joint ventures, business
associations, corporations, and limited liability companies; permits; claims in
or under insurance policies (including unearned premiums and retrospective
premium adjustments); and rights to receive tax refunds and other payments and
rights of indemnification now owned or hereafter acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest.


 


“Goods”
means any “goods,” as such term is defined in the UCC, now
owned or hereafter acquired by Borrower or in which Borrower now holds or
hereafter acquires any interest.


 


“Initial
Public Offering” means the initial firm commitment
underwritten offering of Borrower’s common stock pursuant to a registration
statement under the Securities Act of 1933 filed with and declared effective by
the Securities and Exchange Commission.


 


“Instruments”
means any “instrument,” as such term is defined in the UCC,
now owned or hereafter acquired by Borrower or in which Borrower now holds or
hereafter acquires any interest.


 


“Intellectual
Property” means all Copyrights; Trademarks; Patents;
Licenses; source codes developed by Borrower; secrets, inventions (whether or
not patented or patentable); technical information, procedures; processes,
designs, knowledge, and know-how; data bases; models; drawings; websites,
domain names, and URL’s, and applications therefore and reissues, extensions,
or renewals thereof; and goodwill associated with any of the foregoing;
together with rights to sue for past, present and future infringement of
Intellectual Property and the goodwill associated therewith.


 


“Inventory”
means any “inventory,” as such term is defined in the UCC,
now owned or hereafter acquired by Borrower or in which Borrower now holds or
hereafter acquires any interest, and, in any event, shall include all Goods and
personal property that are held by or on behalf of Borrower for sale or lease
or are furnished or are to be furnished under a contract of service, or that
constitute raw materials, work in process or materials used or consumed or to
be used or consumed in Borrower’s business, or the processing, packaging,
promotion, delivery or shipping of the same, and all finished goods, whether or
not the same is in transit or in the constructive, actual or exclusive
possession of Borrower or is held by others for Borrower’s account, including
all property covered by purchase orders and contracts with suppliers and all
Goods billed and held by suppliers and all such property that may be in the
possession or custody of any carriers, forwarding agents, truckers,
warehousemen, vendors, selling agents or other Persons.


 


“Investment”
is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance or
capital contribution to any Person.


 


“Investment
Property” means all “investment property,” as such term is
defined in the UCC, and includes any certificated security, uncertificated
security, money market funds, bonds, mutual funds, and U.S. Treasury bills or
notes, now owned or hereafter acquired by Borrower or in which Borrower now
holds or hereafter acquires any interest.


 


“Lender”
has the meaning given to it in the preamble to this
Agreement.


 


“Letter
of Credit Rights” means any “letter of credit rights,” as
such term is defined in the UCC, now owned or hereafter acquired by Borrower or
in which Borrower now holds or hereafter acquires any interest, including any
right to payment or performance under any letter of credit.


 


“License”
means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest
and any renewals or extensions thereof.


 


“Lien”
means any mortgage, deed of trust, pledge, hypothecation,
assignment for security, security interest, encumbrance, levy, lien or charge
of any kind, whether voluntarily incurred or arising by operation of law or
otherwise, against any property, any conditional sale or other title retention
agreement, any lease in the nature of a security interest, and the filing of
any financing statement (other than a precautionary financing statement with
respect to a lease that is not in the nature of a security interest) under the
UCC or comparable law of any jurisdiction.


 


“Loan”
or “Loans” has
the meaning given to it in the recitals to this Agreement.


 


“Loan
Documents” means this Agreement, the Notes, all UCC Financing
Statements, and any other documents executed in connection with the Secured
Obligations or the transactions contemplated hereby, including


 


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those documents described
on the Schedule of Documents, as the same may from time to time be amended,
modified, supplemented or restated; provided, that the Loan Documents
shall not include any of the Excluded Agreements.


 


“Maturity
Date” means, with respect to each Advance, the Maturity Date
as set forth in the applicable Note.


 


“Maximum
Loan Amount” means Ten
Million Five Hundred Thousand and No/100 Dollars ($10,500,000.00).


 


“Maximum
Rate” shall have the meaning assigned to such term in Section 2.12.


 


“Merger”
means any (i) reorganization, consolidation or merger (or
similar transaction or series of related transactions) of Borrower or any
subsidiary of Borrower with or into any other Person, or sale or exchange of
outstanding shares in which the holders of Borrower’s outstanding shares
immediately before consummation of such transaction or series of related
transactions do not, immediately after consummation of such transaction or
series of related transactions, retain shares representing at least 50.0% of
the voting power of the surviving entity of such transaction or series of
related transactions (or the parent of such surviving entity if such surviving
entity is wholly owned by such parent), in each case without regard to whether
Borrower is the surviving entity, (ii) sale of all or substantially all of the
assets of Borrower, or (iii) acquisition by Borrower of all or substantially
all of the capital stock of another Person or the acquisition by Borrower of
all or substantially all of the assets of another Person in excess of $500,000.


 


“Note”
or Notes” means
the Promissory Notes prepared by Agent in substantially the form attached
hereto as Exhibit B-1 and Exhibit B-2, which
are executed and delivered by Borrower to evidence Advances, as the same may be
amended, restated, modified or supplemented from time to time.


 


“Patent
License” means any written agreement granting any right with
respect to any invention on which a Patent is in existence or a Patent
application is pending, in which agreement Borrower now holds or hereafter
acquires any interest.


 


“Patents”
means all of the following property, now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest: (a) all letters patent of, or rights corresponding thereto, in the
United States or in any other county, all registrations and recordings thereof,
and all applications for letters patent of, or rights corresponding thereto, in
the United States or any other country, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof or any other country;
(b) all reissues, continuations, continuations-in-part or extensions thereof;
(c) all petty patents, divisionals, and patents of addition; and (d) all
patents to be issued under any such applications.


 


“Payment
Date” has the meaning given to it in Section 2.4.


 


“Permitted
Indebtedness” shall mean: (i) Indebtedness of Borrower in
favor of Lenders arising under this Loan Agreement or any other Transaction
Document; (ii) Indebtedness existing at Closing and disclosed on Schedule 2;
(iii) Indebtedness secured by a lien described in clause (vi)(A) of the defined
term “Permitted Liens,” provided (A) such Indebtedness at the time incurred
does not exceed the lesser of the cost or fair market value of the equipment
financed with such Indebtedness, (B) such Indebtedness does not exceed $250,000
in the aggregate at any given time, and (C) the holder of such Indebtedness
agrees to waive any rights of set off such holder may have with respect to such
Indebtedness in the deposit or investment accounts of Borrower and its
Subsidiaries on terms reasonably satisfactory to Agent; (iv) Subordinated Debt;
(v) Indebtedness incurred for the acquisition of supplies or inventory on
normal trade credit; (vi) other Indebtedness in an aggregate outstanding
principal amount not to exceed $250,000 at any time, (vii) Indebtedness of any
Subsidiary of Borrower to another Subsidiary of Borrower, (viii) Indebtedness
of any Subsidiary of Borrower to Borrower in an aggregate principal amount at
any time outstanding not to exceed $250,000 and (ix) extensions, refinancings,
modifications, amendments and restatements of any item of Permitted
Indebtedness (i) through (viii) above.


 


“Permitted
Investments” shall mean: (i) Investments existing on the
Closing Date; (ii) (A) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency or any State thereof
maturing within one (1) year from the date of acquisition thereof, (B)
commercial paper maturing no more than one (1) year from the date of creation
thereof and currently having rating of at least A-2 or P-2 from either Standard
& Poor’s Corporation or Moody’s Investors Service, Inc., and (C)
certificates of deposit maturing no more than one (1) year from the date of investment
therein; (iii) temporary advances to cover incidental expenses in the ordinary
course of business; (iv) investments in joint ventures, strategic alliances,
licensing and


 


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similar arrangements in
Borrower’s ordinary course of business and which do not require Borrower to
assume or otherwise become liable for the obligations of any third party not
directly related to or arising out of such arrangement or require Borrower to
transfer ownership of non-cash assets to such joint venture or other entity;
(v) Investments consisting of (A) travel advances, employee relocation loans
and other employee loans and advances in the ordinary course of business not to
exceed $50,000 and (B) non-cash loans to employees, officers or directors
relating to the purchase of equity securities of Borrower pursuant to employee
stock purchase plans or arrangements approved by Borrower’s board of directors;
(vi) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of business; (vii) Investments consisting of
notes receivable or, prepaid royalties and other credit obligations to
customers and suppliers who are not Affiliates, in the ordinary course of
business; (viii) investments pursuant to Borrower’s investment policy which has
been reviewed by Agent, and (ix) other Investments in an amount not to exceed
$250,000.


 


“Permitted
Liens” means any and all of the following: (i) Liens in favor
of Lenders; (ii) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent, thereafter payable without penalty or
being contested in good faith by appropriate proceedings, provided that
Borrower maintains adequate reserves therefore in accordance with GAAP; (iii)
Liens securing claims or demands of materialmen, artisans, mechanics, carriers,
warehousemen, landlords and other like Persons arising in the ordinary course
of Borrower’s business and imposed without action of such parties, provided
that the payment thereof is not yet required or is being contested in good
faith, provided provision is made for the payment thereof if subsequently found
payable; (iv) leases or subleases and licenses or sublicenses granted in the
ordinary course of Borrower’s business; (v) Liens arising from judgments,
decrees or attachments in circumstances which do not constitute an Event of
Default hereunder; (vi) purchase money liens (a) on Equipment acquired or held
by Borrower incurred for financing the acquisition of the Equipment, or (b)
existing on Equipment when acquired, if, in either case (a) or (b), the lien is
confined to the Equipment and proceeds of the Equipment, (vii) the following
deposits, to the extent made in the ordinary course of business: deposits under
worker’s compensation, unemployment insurance, social security and other
similar laws, or to secure the performance of bids, tenders or contracts (other
than for the repayment of borrowed money) or to secure indemnity, performance
or other similar bonds for the performance of bids, tenders or contracts (other
than for the repayment of borrowed money) or to secure statutory obligations
(other than liens arising under ERISA or environmental liens) or surety or
appeal bonds, or to secure indemnity, performance or other similar bonds,
(viii) Liens on insurance proceeds in favor of insurance companies granted
solely as security for financed premiums; (ix) bankers’ liens, rights of setoff
and similar Liens incurred on deposit or securities accounts made in the
ordinary course of business; and (x) Liens incurred in connection with the
extension, renewal or refinancing of the indebtedness secured by Liens of the
type described in clauses (i) through (ix) above, provided that any extension,
renewal or replacement Lien shall be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness being extended,
renewed or refinanced (as may have been reduced by any payment thereon) does
not increase.


 


“Person”
means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited liability
company, institution, public benefit corporation, other entity or government
(whether federal, state, county, city, municipal, local, foreign, or otherwise,
including any instrumentality, division, agency, body or department thereof).


 


“Pro
Rata” means, as to any allocation among the Lenders
hereunder, an allocation based on the Lenders’ Commitment Percentage. Any
reference in this Agreement to an allocation between or sharing by the Lenders
of any right, interest or obligation “ratably,” “proportionally” or in similar
terms shall be based on the respective Commitment Percentage.


 


“Proceeds”
means “proceeds,” as such term is defined in the UCC and, in
any event, shall include (a) any and all Accounts, Chattel Paper, Instruments,
Cash, proceeds of letters of credit, Letter of Credit Rights, Supporting
Obligations, or other proceeds payable to Borrower from time to time in respect
of the Collateral, (b) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to Borrower from time to time with respect to any
of the Collateral, (c) any and all payments (in any form whatsoever) made or
due and payable to Borrower from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any part
of the Collateral by any governmental authority (or any Person acting under
color of governmental authority), (d) the proceeds, damages, or recovery based
on any claim of Borrower against third parties (i) for past, present or future
infringement of any Copyright, Copyright License, Patent or Patent License or
(ii) for past, present or future infringement or dilution of any Trademark or
Trademark License or for injury to the goodwill associated with any


 


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Trademark, Trademark
registration or Trademark licensed under any Trademark License, and (e) any and
all other amounts from time to time paid or payable under or in connection with
any of the Collateral.


 


“Receivables”
means (i) all of Borrower’s Accounts, Instruments, Documents,
Chattel Paper, Supporting Obligations, letters of credit, proceeds of any
letter of credit, and Letter of Credit Rights, and (ii) all customer lists,
software, and business records related thereto.


 


“Requisite
Lenders” means one or more Lenders having an aggregate
Commitment Percentage in excess of 50%.


 


“Schedule
of Documents” means the Schedule of Documents attached hereto
as Schedule 1 or such other
Schedule of Documents as Lenders shall deliver to Borrower as of the Closing
Date which is reasonably satisfactory to Borrower.


 


“Secured
Obligations” means Borrower’s obligation to repay to Lenders
the Loans and all Advances (whether or not evidenced by any Note), together
with all principal, interest, fees, costs, professional fees and expenses, or
other liabilities or obligations for monetary amounts owed by Borrower to
Lenders, including the indemnity and insurance obligations in Section 6 hereof and including such amounts
as may accrue or be incurred before or after default or workout or the
commencement of any liquidation, dissolution, bankruptcy, receivership or
reorganization by or against Borrower, whether due or to become due, matured or
unmatured, liquidated or unliquidated, contingent or non-contingent, and all
covenants and duties of any kind or nature, present or future, arising under
this Agreement, the Notes, or any of the other Loan Documents, as the same may
from time to time be amended, modified, supplemented or restated, whether or
not such obligations are partially or fully secured by the value of Collateral;
provided, that the Secured Obligations shall not include any
indebtedness or obligations of Borrower arising under or in connection with the
Excluded Agreements.


 


“Supporting
Obligations” means any “supporting obligations,” as such term
is defined in the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest.


 


“Total
Liabilities” is on any day, obligations that should, under
GAAP, be classified as liabilities on Borrower’s consolidated balance sheet.


 


“Trademark
License” means any written agreement granting any right to
use any Trademark or Trademark registration, now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest.


 


“Trademarks”
means all of the following property, now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest: (a) all trademarks, tradenames, corporate names, business names,
trade styles, service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or appear, and
designs of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and any applications in connection
therewith, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, and (b) all reissues, extensions or renewals thereof.


 


“UCC”
means the Uniform Commercial Code as the same is, from time to time, in effect
in the State of California; provided, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Secured Party’s Lien on any
Collateral is governed by the Uniform Commercial Code as the same is, from time
to time, in effect in a jurisdiction other than the State of California, then
the term “UCC” shall mean the Uniform Commercial Code as in effect, from time
to time, in such other jurisdiction solely for purposes of the provisions
thereof relating to such attachment, perfection, priority or remedies and for purposes
of definitions related to such provisions. Unless otherwise defined herein or
in the other Loan Documents, terms that are defined in the UCC and used herein
or in the other Loan Documents shall, unless the context indicates otherwise,
have the meanings given to them in the UCC.


 


“Warrant
Agreement” means those agreements entered into in connection
with the Loan, substantially in the form of Exhibit
C hereto, pursuant to which Borrower grants Lenders the right to
purchase that number of shares of Preferred Stock of Borrower as more
particularly set forth therein.


 


1.2.              Unless otherwise
specified, all references in this Agreement or any Annex or Schedule hereto to
a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule” shall refer to the
corresponding Section, subsection,


 


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Exhibit, Annex, or
Schedule in or to this Agreement. The terms “herein,” “hereof” and “hereunder”
and other words of similar import refer to this Agreement as a whole, including
all Exhibits, Annexes and Schedules, and not to any particular Section,
subsection or other subdivision.


 


1.3.              Wherever from the
context it appears appropriate, each term stated in either the singular or
plural shall include the singular and the plural, and pronouns stated in the
masculine, feminine or neuter gender shall include the masculine, feminine and
neuter genders. The words “including,” “includes” and “include” shall be deemed
to be followed by the words “without limitation,” the word “or” is not exclusive;
references to Persons include their respective successors and assigns (to the
extent and only to the extent permitted by this Agreement and the Loan
Documents) or, in the case of governmental Persons, Persons succeeding to the
relevant functions of such Persons; and all references to statutes and related
regulations shall include any amendments of the same and any successor statutes
and regulations. Unless otherwise specifically provided herein, any accounting
term used in this Agreement or the other Loan Documents shall have the meaning
customarily given such term in accordance with GAAP, and all financial
computations hereunder shall be computed in accordance with GAAP, consistently
applied.


 


SECTION
2.          THE
LOANS; INTEREST RATE; PAYMENT; FEES


 


2.1.              Commitment.
From the  Closing Date through the
Commitment Termination Date, each Lender, severally and jointly, agrees to make
Advances to Borrower in an aggregate original principal amount not to exceed
its respective Commitment Percentage of the Maximum Loan Amount, for the
purposes and upon the terms and subject to the conditions contained in this
Agreement, the Notes, and the other Loan Documents. Notwithstanding anything to
the contrary in this Agreement or the other Loan Documents, Lenders’ obligations
to fund the Loans and make advances shall automatically expire on the
Commitment Termination Date.


 


2.2.              Commitment Amount.
The Loan shall be available in two parts consisting of (i) Nine Million Five Hundred Thousand and No/100 Dollars
($9,500,000.00) available upon the Closing Date (“Part I”); and (ii)
One Million and No/100 Dollars
($1,000,000.00) available upon the written request of Borrower and
formal approval of Lenders (“Part II”).


 


2.3.              Minimum Advances.
There shall be no Minimum Advance Amounts. The Loan shall be drawn down in one
or more Advances as follows (i) a minimum of fifty percent (50%) of the
available amounts on or before September 15, 2006; and (ii) the remainder in
one or more Advances on or before December 31, 2006.


 


2.4.              Notes Evidencing
Loans. Borrower promises to execute and deliver to Agent for each Advance
two Notes, one Note for each Lender, based upon the respective Lender’s
Commitment Percentage totaling the original principal amount of each Advance.
The principal balance of each Advance shall bear interest thereon from the
Advance Date, precomputed at the rate of the Prime Rate plus two percent (2%)
based upon a year consisting of twelve (12) months of thirty (30) days each.
Prime Rate shall be determined the day before any Advance and as published in
the Wall Street Journal. Each Advance shall be due and payable in monthly installments of consisting of interest only
payments until December 31, 2006 followed by thirty (30) monthly installments
of equal principal and interest. Each monthly installment shall be
due and payable on the last day of each month through the last payment date
(unless that date falls on a weekend or national holiday in which event such
payment shall be due on the previous business day) (each, a “Payment Date”).
The first payment date for each Advance will be the last day of the month in
which the Advance was funded. Each Advance shall be repaid in full, together
with all interest accrued thereon, on the Maturity Date for said Advance,
whether or not the Advance is evidenced by a Note. Amounts repaid on any Loan
shall not be reborrowed. All of the Advances, Loans, and other Secured
Obligations arising under this Agreement and the other Loan Documents shall
constitute one general obligation of Borrower secured by all of the Collateral.


 


2.5.              Procedures for
Borrowing.


 


(a)   In
order to obtain an Advance, Borrower shall complete, sign and deliver an
Advance Request to the Agent. Each Advance Request shall identify an Advance
Date that is at least ten (10) business days after the date such Advance
Request is received by the Agent.


 


(b)   Upon
receipt of an Advance Request, Agent shall use reasonable efforts to provide
Lenders with a copy of the Advance Request via facsimile, electronic mail or
overnight mail, deliverable one business day following delivery by Borrower to
Agent of the Advance Request.


 


(c)   As
soon as possible by not later than two (2) business days after receipt of the
Advance Request Agent shall (i) prepare the Notes in favor of each Lender with
respect to the  Pro-Rata share of
the


 


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amount requested; (ii)
transmit copies of the Notes to the respective Lender; and (iii) transmit such
Notes to Borrower.


 


(d)  Upon
receipt by Agent of such Notes duly executed and delivered by Borrower, Agent
shall forward the executed Notes to the Lenders. Each Lender shall be
responsible for verifying the amounts (including the Loan amount, payment
amounts and any other amounts) specified for such Lender; provided, that
Agent’s calculation shall be presumed correct unless rebutted by any Lender or
Borrower prior to the Advance Date. Agent shall not be liable for any error in
calculating a Lender’s Loan amount.


 


2.6.              Disbursement of
Loan Proceeds. Lenders shall fund the Advance in the manner requested by
the Advance Request provided that each of the conditions precedent to such
Advance is satisfied as of the requested Advance Date. All the terms,
conditions, and covenants of this Agreement shall apply to all Advances whether
or not each Advance is evidenced by a Note. Borrower agrees that Agent and
Lenders may rely on any notice or Advance Request given by any Person they
reasonably believe to be an authorized representative of Borrower without the
necessity of independent investigation.


 


2.7.              Several
Obligations. The failure of any Lender to make available its Commitment
Percentage of such Advance shall not relieve the other Lender of its
obligation, if any, to make available its Commitment Percentage of such Advance.
No Lender shall be responsible for the failure of the other Lender to make
available its Commitment Percentage of an Advance.


 


2.8.              Pro Rata
Treatment Among Lenders. Except as otherwise provided herein:


 


(a)   each
Advance from the Lenders hereunder will be made by them based upon their
respective Commitment Percentage;


 


(b)   each
scheduled payment of principal and/or interest, in each case if timely paid by
Borrower, shall be paid to the Lenders according to the amortization schedule
provided for in each Lender’s Note evidencing such Advance (in the event such
scheduled payment is less than the aggregate amount due to be paid to all
Lenders under their Notes, but prior to any acceleration of the Notes, such
payments shall be allocated Pro Rata among the Lenders in proportion to the
regular installment amounts provided in the Notes); and


 


(c)   all
End Term Payments shall be allocated Pro Rata among the Lenders.


 


If any payment under
clause (b) or (c) of this Section 2.8 is not paid Pro Rata among the Lenders,
whether as a result of Borrower’s failure to make a particular payment to one
or more Lenders while paying other Lenders, or otherwise, then each Lender that
has actually received a payment in excess of its Pro Rata share shall promptly
purchase from each Lender who received no payment or payment less than its Pro
Rata share a participation in the Loans held by such Lender in such amount, and
make such other adjustments from time to time as shall be equitable, to the end
that all Lenders shall share in such payments pro rata in the aforesaid manner.
If prior to all Secured Obligations having been satisfied in full, any action
to realize upon the Collateral is taken, then all proceeds of the Collateral
and any other payments or distributions received on account of the Loans shall
be distributed Pro Rata among the Lenders.


 


2.9.              Sharing of
Payments and Set-Off Among Lenders. Borrower hereby agrees that, in
addition to (and without limitation of) any right of set-off, banker’s lien or
counterclaim a Lender may otherwise have, each Lender shall be entitled, at its
option, to offset balances held by it at any of its offices against any
principal of or interest on any of its Loans hereunder, or any fee payable to
it, that is not paid when due (regardless of whether such balances are then due
to Borrower), in which case it shall promptly notify Borrower and the other
Lenders thereof, provided that its failure to give such notice shall not affect
the validity thereof. If a Lender shall effect payment of any principal of or
interest on Loans held by it under this Agreement through the exercise of any
right of set-off, banker’s lien, counterclaim or similar right, it shall
promptly purchase from the other Lenders participations in the corresponding
Loans held by the other Lenders in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all the
Lenders shall share the benefit of such payment Pro Rata. To such end, all the
Lenders shall make appropriate adjustments among themselves (by the resale of
participations sold or other-wise) if such payment is rescinded or must
otherwise be restored. Borrower agrees that any Lender so purchasing a
participation in the Loans held by the other Lenders may exercise all rights of
set-off, banker’s lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans in the
amount of such participation. Nothing contained herein shall require any Lender
to exercise any such right or shall affect the right of


 


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any Lender to exercise
and retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of Borrower.


 


2.10.            Lender’s Records.
Principal, interest, End Term Payments and all other sums owed under any Loan
Document, and any payments or credits with respect thereto, shall be evidenced
by entries in records maintained by each Lender for such purpose. Absent
manifest error, a Lender’s records shall be conclusive evidence thereof.


 


2.11.            Prepayment by
Borrower. Borrower shall have the option at any time to prepay all Notes or
Advances, by paying the relevant principal amount together with all interest,
fees and expenses accrued and unpaid as of the date of such prepayment as if
the date of such prepayment occurred on the next scheduled monthly payment date
per the respective Notes and including any End Term Payment.


 


2.12.            Maximum Rate of
Interest. Notwithstanding any provision in this Agreement, the Notes, or
any other Loan Document, it is the parties’ intent not to contract for, charge
or receive interest at a rate that is greater than the maximum rate permissible
by law that a court of competent jurisdiction shall deem applicable hereto (which
under the laws of the State of California shall be deemed to be the laws
relating to permissible rates of interest on commercial loans) (the “Maximum
Rate” If a court of competent jurisdiction shall finally determine that
Borrower has actually paid to Lender an amount of interest in excess of the
amount that would have been payable if all of the Secured Obligations had at
all times borne interest at the Maximum Rate, then such excess interest
actually paid by Borrower shall be applied as follows: first, to the
payment of principal outstanding on the Notes; second, after all
principal is repaid, to the payment of Lender’s accrued interest, costs,
expenses, professional fees and any other Secured Obligations; and third,
after all Secured Obligations are repaid, the excess (if any) shall be refunded
to Borrower.


 


2.13.            Compound Interest.
In the event any interest is not paid when due hereunder, delinquent interest
shall be added to principal and shall bear interest on interest, compounded at
the rate set forth in Section 2.4 and
Section 2.14.


 


2.14.            Default Interest.
Upon and during the continuation of an Event of Default hereunder, all Secured
Obligations, including principal, interest, compounded interest, and
professional fees, shall bear interest at a rate per annum equal to the rate
set forth in the Notes three percent (3%) per annum (“Default Rate”).


 


2.15.            Intentionally
omitted.


 


2.16.            Method of Payment.
Payments are due electronically by automatic debit through Automated Clearing
House (ACH) payment on or before the last day of each month. Borrower agrees to
complete an electronic funds transfer/automatic debit Authorization form for
each Lender if Borrower intends to pay by automatic debit through ACH payment.


 


2.17.            Facility Fees.
A Facility Fee of $95,000 (1% of Part I) is due upon the Closing Date. Upon the
availability of Part II, a Facility Fee of $10,000 (1% of Part II) shall be
due.


 


SECTION
3.         SECURITY
INTEREST


 


As security for
the prompt, complete and indefeasible payment when due (whether on the Payment
Dates or otherwise) of all the Secured Obligations (other than inchoate
indemnity obligations) and in order to induce Lenders to make the Loan upon the
terms and subject to the conditions of this Agreement, the Notes, and the other
Loan Documents, Borrower hereby grants to Lenders and Agent, on behalf of and
for the benefit of itself and Lenders a security interest in and Lien upon all
of Borrower’s right, title and interest in, to and under each of the following,
whether now owned or hereafter acquired and wherever located (collectively, the
“Collateral”):


 


(a)   All
Receivables;


 


(b)   All
Equipment;


 


(c)   All
Fixtures;


 


(d)   All
General Intangibles;


 


(e)   All
Intellectual Property;


 


(f)   All
Inventory;


 


(g)   All
Investment Property;


 


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(h)   All
Deposit Accounts;


 


(i)   All
Cash;


 


(j)   All
Goods and all personal property of Borrower, whether tangible or intangible and
whether now or hereafter owned or existing, leased, consigned by or to, or acquired
by, Borrower and wherever located, as more particularly set forth in Exhibit D attached hereto; and


 


(k)   To
the extent not otherwise included, all Proceeds of each of the foregoing and
all accessions to, substitutions and replacements for, and rents, profits and
products of each of the foregoing.


 


Notwithstanding the
above, Collateral excludes (i) any letters of credit of Borrower to the extent
that a grant of a security interest therein would constitute a violation of the
terms thereof and in any case such letters of credit shall not exceed $250,000
in the aggregate and (ii) Intellectual Property currently held or hereafter
obtained, but includes proceeds of Intellectual Property (including but not
limited to all rights to payment or General Intangibles arising from the
proceeds); provided, however, other than non-exclusive licenses
or exclusive licenses with respect to geographic area, fields of use,
customized products for specific customers and time-based exclusivity given in
the ordinary course of Borrower’s business, in the event Borrower transfers,
sells, assigns, grants a security interest in, hypothecates, permits or suffers
to exist any Lien, or otherwise transfer any interest in or encumber any
portion of the Intellectual Property, either voluntarily or involuntarily,
without Lenders’ prior written consent, Lenders’ security interest shall
include (and shall be deemed to have included from the date of this Agreement)
all Intellectual Property.


 


Borrower may enter into
accounts receivable and inventory financing up to Ten Million and No/Dollars
($10,000,000) with a bank of Borrower’s preference upon receipt and review by
Lenders of said accounts receivable and inventory financing loan documentation
and execution of an intercreditor agreement between Lenders and the accounts
receivable and inventory financing provider, with terms reasonably acceptable
to Lenders. Such financing may be secured solely by the underlying receivables,
inventory and proceeds thereof.


 


SECTION
4.         CONDITIONS
PRECEDENT TO LOAN


 


The obligations of
Lenders to make Loans hereunder are subject to the satisfaction by Borrower of
the following conditions:


 


4.1.              Advance Date.
The Advance Date for any installment shall occur on or before the Commitment
Termination Date. No Advance Requests shall be accepted after the Commitment
Termination Date.


 


4.2.              Conditions to
Closing. Borrower, on or prior to the Closing Date, shall have delivered to
Agent the following:


 


(a)   executed
originals of this Agreement, the Loan Documents, and all other documents and
instruments reasonably required by Lenders to effectuate the transactions
contemplated hereby or to create and perfect the Liens of Lenders with respect
to all Collateral, including those documents listed on the Schedule of Documents,
in all cases in form and substance reasonably acceptable to Lenders;


 


(b)   certified
copy of resolutions of Borrower’s board of directors evidencing approval of (i)
the Loans and other transactions evidenced by the Loan Documents; and (ii) the
Warrant Agreement and transactions evidenced thereby;


 


(c)   certified
copies of the Articles or Certificate of Incorporation and the Bylaws, as
amended through the Closing Date, of Borrower;


 


(d)   a
certificate of good standing for Borrower from its state of incorporation and
similar certificates from all other jurisdictions in which it does business;


 


(e)   payment
of the Facility Fee for Part I of the Loans; and


 


(f)   such
other documents as Agent or Lenders may reasonably request.


 


4.3.              Conditions to All
Loans. On each Advance Date:


 


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(a)   Agent
shall have received (i) an Advance Request for the relevant Advance as required
by Section 2.5, duly executed by
Borrower’s authorized signatory, (ii) the duly executed Notes evidencing such
Advance, and (iii) any other documents Agent or Lenders may reasonably request.


 


(b)   The
representations and warranties set forth in this Section 4 and in Section 5 and
in the Warrant Agreements shall be true and correct in all material respects on
and as of the Advance Date with the same effect as though made on and as of
such date, except to the extent such representations and warranties expressly
relate to an earlier date.


 


(c)   Borrower
shall be in compliance with all the terms and provisions set forth herein and
in each other Loan Document on its part to be observed or performed, and at the
time of and immediately after such Advance no Event of Default shall have
occurred and be continuing.


 


(d)   Each
Advance Request shall be deemed to constitute a representation and warranty by
Borrower on the relevant Advance Date as to the matters specified in paragraphs (b) and (c) of this Section 4.3 and in Sections
4.5, and 4.6 hereof,
and as to the matters set forth in the Advance Request.


 


(e)   Borrower
shall have taken or caused to be taken such actions requested by Agent to grant
Agent, on behalf of and for the benefit of itself and Lenders a first priority
(and when the requisite financing statements are properly filed) perfected Lien
in the Collateral, subject only to Permitted Liens. Such actions shall include
the delivery to Agent of all appropriate financing statements, assignments,
notices, and control agreements, executed by Borrower, as to the Collateral
granted by Borrower for all jurisdictions as may be necessary or desirable to
perfect or obtain the priority of Lender’s Lien in such Collateral.


 


(f)   No
fact or condition exists that would (or would, with the passage of time, the
giving of notice, or both) constitute an Event of Default under this Agreement
or any of the Loan Documents.


 


(g)   No
event that has had or could reasonably be expected to have a material adverse
effect upon (i) Borrower’s business, operations, properties, assets or
financial condition, (ii) Borrower’s ability to perform the Secured Obligations
in accordance with the terms of the Loan Documents or Lenders’ ability to
enforce any of their rights and remedies with respect to the Secured
Obligations in accordance with the terms of the Loan Documents, or (iii) the
Collateral or Lenders’ liens on the Collateral or the priority of such liens.


 


SECTION
5.         REPRESENTATIONS
AND WARRANTIES OF BORROWER


 


Borrower
represents, warrants and agrees that:


 


5.1.              Title.
Borrower owns all right, title and interest in and to the Collateral, free of
all Liens whatsoever, except for Permitted Liens.


 


5.2.              Granting of Lien.
Borrower has the full power and authority to, and does hereby grant and convey
to Lenders, a Lien in the Collateral as security for the Secured Obligations,
free of all Liens other than Permitted Liens, and shall execute such UCC
financing statements, notices, assignments, and control agreements, in
connection herewith as Lenders may reasonably request to perfect and obtain the
priority of Lenders’ Lien on the Collateral. Except for Permitted Liens, no
other Lien has been created by Borrower or is known by Borrower to exist with
respect to any Collateral. Borrower hereby authorizes Lenders to file such UCC
financing statements required to perfect and obtain the priority of Lenders’
Lien on the Collateral.


 


5.3.              Due Organization.
Borrower is a corporation duly organized, legally existing and in good standing
under the laws of the State of Delaware with
corporate organization number 2982485 and
is duly qualified as a foreign corporation in all jurisdictions in which the
nature of its business or location of its properties require such
qualifications and where the failure to be qualified would have a material
adverse effect upon (i) Borrower’s business, operations, properties, assets or
financial condition, (ii) Borrower’s ability to perform the Secured Obligations
in accordance with the terms of the Loan Documents or Lenders’ ability to
enforce any of their rights and remedies with respect to the Secured Obligations
in accordance with the terms of the Loan Documents, or (iii) the Collateral or
Lenders’ liens on the Collateral or the priority of such liens.


 


5.4.              Authorization,
Validity and Enforceability. Borrower’s execution, delivery and performance
of the Notes, this Agreement, all financing statements, and all other Loan
Documents, and Borrower’s execution of any Warrant Agreement then in effect,
(i) have been duly authorized by all necessary corporate action of Borrower,
and (ii)


 


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will not result in the
creation or imposition of any Lien upon the Collateral, other than Permitted
Liens and the Liens created by this Agreement and the other Loan Documents. The
individual or individuals executing the Loan Documents are duly authorized to
do so, and the Loan Documents constitute legal, valid and binding obligations
of Borrower, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization or other similar laws generally
affecting the enforcement of the rights of creditors and general principles of
equity.


 


5.5.              No Conflict.
This Agreement and the other Loan Documents do not violate any provisions of
Borrower’s Articles or Certificate of Incorporation, bylaws or any contract,
agreement, law, regulation, order, injunction, judgment, decree or writ to
which Borrower is subject. The execution, delivery and performance of this
Agreement and the other Loan Documents do not require the consent or approval
of any other Person, including any regulatory authority or governmental body of
the United States or any State thereof or any political subdivision of the
United States or any State thereof, except any such consents which are already
received.


 


5.6.              No Material
Adverse Effect. No event that has had or could reasonably be expected to
have a material adverse effect upon (i) Borrower’s business, operations,
properties, prospects, assets or condition (financial or otherwise), (ii)
Borrower’s ability to perform the Secured Obligations in accordance with the
terms of the Loan Documents or Lenders’ ability to enforce any of their rights
and remedies with respect to the Secured Obligations in accordance with the
terms of the Loan Documents, or (iii) the Collateral or Lenders’ liens on the
Collateral or the priority of such liens.


 


5.7.              No Litigation,
Claims or Proceedings. There are no actions, suits or proceedings at law or
in equity or by or before any governmental authority now pending or, to the
knowledge of Borrower, threatened against or affecting Borrower or any
business, property or rights of Borrower (i) which involve any Loan Document or
(ii) as to which there is a reasonable possibility of an adverse determination
and which, if adversely determined, could, individually or in the aggregate,
result in a material adverse effect upon (a) Borrower’s business, operations,
properties, assets or financial condition, (b) Borrower’s ability to perform
the Secured Obligations in accordance with the terms of the Loan Documents or
Lenders’ ability to enforce any of their rights and remedies with respect to
the Secured Obligations in accordance with the terms of the Loan Documents, or
(c) the Collateral or Lenders’ liens on the Collateral or the priority of such
liens.


 


5.8.              Compliance with
Applicable Laws. Borrower is not in violation of any law, rule or
regulation, or in default with respect to any judgment, writ, injunction or
decree of any governmental authority, where such violation or default could
result in a material adverse effect upon (i) Borrower’s business, operations,
properties, assets or financial condition, (ii) Borrower’s ability to perform
the Secured Obligations in accordance with the terms of the Loan Documents or
Lenders’ ability to enforce any of their rights and remedies with respect to
the Secured Obligations in accordance with the terms of the Loan Documents, or
(iii) the Collateral or Lenders’ liens on the Collateral or the priority of
such liens.


 


5.9.              Other Agreements.
Borrower is not a party to any agreement or instrument or subject to any
corporate restriction that has resulted or could result in a material adverse
effect upon (i) Borrower’s business, operations, properties, assets or
financial condition, (ii) Borrower’s ability to perform the Secured Obligations
in accordance with the terms of the Loan Documents or Lenders’ ability to
enforce any of their rights and remedies with respect to the Secured
Obligations in accordance with the terms of the Loan Documents, or (iii) the
Collateral or Lenders’ liens on the Collateral or the priority of such liens.


 


5.10.            No Other Defaults.
Borrower is not in default in any manner under any provision of any indenture
or other agreement or instrument evidencing indebtedness, or any other material
agreement or instrument to which it is a party or by which it or any of its
properties or assets are or may be bound, in each case where such default could
result in a material adverse effect upon (i) Borrower’s business, operations,
properties, assets or financial condition, (ii) Borrower’s ability to perform
the Secured Obligations in accordance with the terms of the Loan Documents or
Lenders’ ability to enforce any of their rights and remedies with respect to
the Secured Obligations in accordance with the terms of the Loan Documents, or
(iii) the Collateral or Lenders’ liens on the Collateral or the priority of
such liens.


 


5.11.            Information Correct.
No information, report, Advance Request, financial statement, exhibit or
schedule furnished by or on behalf of Borrower to Lender in connection with the
negotiation of any Loan Document or included therein or delivered pursuant
thereto contained, contains or will contain any material misstatement of fact
or omitted, omits or will omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were,
are or will be made, not misleading.


 


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5.12.            Taxes. Borrower
has filed and will file all federal, state and local tax returns that it is
required to file. Subject to Section 7.10 hereof,
Borrower has duly paid or fully reserved for all material taxes or installments
thereof (including any interest or penalties) as and when due, which have or
may become due pursuant to such returns. Borrower has paid or fully reserved
for any material tax assessment received by Borrower for the three (3) years
preceding the Closing Date, if any (including any taxes being contested in good
faith and by appropriate proceedings).


 


5.13.            Borrower
Information. Borrower’s present name, former names (if any), locations, and
other information are correctly set forth in Exhibit
D, attached hereto.


 


SECTION
6.         INSURANCE;
INDEMNIFICATION


 


6.1.              Insurance.


 


(a)   So
long as there are any Secured Obligations outstanding, Borrower shall cause to
be carried and maintained commercial general liability insurance, on an
occurrence form, against risks customarily insured against in Borrower’s line
of business. Such risks shall include the risks of bodily injury, including
death, property damage, personal injury, advertising injury, and contractual
liability per the terms of the indemnification agreement found in Section 6.2. Borrower must maintain a
minimum of $1,000,000 of commercial general liability insurance for each occurrence.
So long as there are any Secured Obligations outstanding, Borrower shall also
cause to be carried and maintained insurance upon the Collateral, insuring
against all risks of physical loss or damage howsoever caused, including the
perils of fire, windstorm, and flood, in an amount not less than the full
replacement cost of the Collateral. Borrower shall also carry and maintain a
fidelity insurance policy in an amount not less than Two Hundred Fifty Thousand Dollars ($250,000) as a policy
limit.


 


(b)   Borrower
shall deliver to certificates of insurance, which evidence Borrower’s
compliance with its insurance obligations in Section
6.1(a) and the obligations contained in this Section 6.1(b). Borrower’s insurance
certificate shall state Agent, on behalf of Lenders as additional insured for
commercial general liability, an additional insured and a loss payee for all
risk property damage insurance, and a loss payee for fidelity insurance.
Attached to the certificates of insurance will be additional insured endorsements
for liability and lender’s loss payable endorsements for all risk property
damage insurance and fidelity.


 


(c)   The
certificates of insurance will state that the coverage evidenced is primary and
non-contributory to any insurance or self-insurance of Agent or Lenders, and
will further state that a waiver of subrogation in favor of Lenders has been
agreed to. All certificates of insurance will provide for a minimum of thirty
(30) days advance written notice to Agent of cancellation or any other change
adverse to Lenders’ interests. Any failure of Agent and/or Lenders to
scrutinize such insurance certificates for compliance is not a waiver of any of
Lenders’ rights, all of which are reserved.


 


6.2.              Indemnification.
Borrower shall and does hereby indemnify and hold Agent and Lenders, their
officers, directors, employees, agents, attorneys, representatives and
shareholders harmless from and against any and all claims, costs, expenses,
damages and liabilities (including such claims, costs, expenses, damages and
liabilities based on liability in tort, including strict liability in tort),
including reasonable attorneys’ fees and disbursements and other costs of
investigation or defense (including those incurred upon any appeal), that may
be instituted or asserted against or incurred by Lenders or any such Person as
the result of credit having been extended, suspended or terminated under this
Agreement and the other Loan Documents or the administration of such credit, or
in connection with or arising out of the transactions contemplated hereunder
and thereunder, or any actions or failures to act in connection therewith, or
arising out of the disposition or utilization of the Collateral, excluding in
all cases claims resulting from Lenders’ gross negligence or willful
misconduct. Borrower will pay, and save each Lender harmless from any
liabilities with respect to or resulting from any delay in paying any excise,
sales or similar taxes (excluding taxes imposed on or measured by the net
income of Lender) that may be payable or determined to be payable with respect
to any of the Collateral or this Agreement.


 


SECTION
7.         COVENANTS
OF BORROWER


 


Borrower covenants
and agrees as follows at all times while any of the Secured Obligations (other
than inchoate indemnity obligations) remain outstanding:


 


7.1.              Financial
Statements; Compliance Certificates. Borrower shall furnish to Agent and
Lenders in form and detail satisfactory to Agent the financial statements
listed hereinafter (the “Financial Statements”):


 


13

















 


(a)   as
soon as practicable (and in any event within thirty (30) days) after the end of
each month, unaudited interim financial statements as of the end of such month
(prepared on a consolidated and consolidating basis, if applicable), including
balance sheet and related statements of income and cash flows accompanied by a
report detailing any material contingencies (including the commencement of any
material litigation by or against Borrower);


 


(b)   as
soon as practicable (and in any event within one hundred eighty (180) days)
after the end of each fiscal year, unqualified (except with respect to going
concern or other similar qualifications) audited financial statements as of the
end of such year (prepared on a consolidated and consolidating basis, if
applicable), including balance sheet and related statements of income and cash
flows, each prepared in accordance with GAAP and setting forth in comparative
form the corresponding figures for the preceding fiscal year, certified by a
firm of independent certified public accountants selected by Borrower and
reasonably acceptable to Lenders, accompanied by any management report from
such accountants;


 


(c)   promptly
after the sending or filing thereof, as the case may be, copies of any proxy
statements, financial statements or reports that Borrower has made available to
its shareholders and copies of any regular, periodic and special reports or
registration statements that Borrower files with the Securities and Exchange
Commission or any governmental authority that may be substituted therefore, or
any national securities exchange;


 


(d)   promptly,
all financial presentations made to the Board of Directors or similar documents
after said presentation; and


 


(e)   promptly,
any additional information, financial or otherwise (including tax returns and
names of principal creditors), requested by Lenders as Lenders reasonably
believe necessary to evaluate the Collateral or Borrower’s continuing ability
to meet its financial obligations.


 


7.2.              Records; Access.
Borrower shall permit any authorized representative of Agent and/or Lenders and
their attorneys and accountants on reasonable notice to inspect, examine and
make copies and abstracts of the books of account and records of Borrower at
reasonable times during normal business hours. In addition, such representative
of Agent and/or Lenders and their attorneys and accountants shall have the
right to meet with management and officers of Borrower to discuss such books of
account and records. In addition, Agent and/or Lenders shall be entitled at
reasonable times and intervals to consult with and advise the management and
officers of Borrower concerning significant business issues affecting Borrower.
Such consultations shall not unreasonably interfere with Borrower’s business
operations. The parties intend that the rights granted Agent and Lenders shall
constitute “management rights” within the meaning of 29 C.F.R Section
2510.3-101(d)(3)(ii), but that any advice, recommendations or participation by
Agent and Lenders with respect to any business issues shall not be deemed to
give Agent or Lenders, nor be deemed an exercise by Agent or Lenders of,
control over Borrower’s management or policies.


 


7.3.              Collateral;
Financing Statements. Borrower shall from time to time execute, deliver and
file, alone or with Agent for the benefit of Lenders, any financing statements,
security agreements, assignments, notices, control agreements, or other
documents reasonably requested by Agent or Lenders to perfect or give priority
to Agent, for the benefit of Lenders’ Lien on the Collateral. Borrower shall
from time to time procure any instruments or documents as may be requested by
Agent, and take all further action that may be necessary or desirable, or that
Agent may reasonably request, to carry out more effectively the provisions and
purposes of this Agreement or any other Loan Document or to confirm, perfect,
preserve and protect the Liens granted hereby and thereby. In addition, and for
such purposes only, Borrower hereby authorizes Agent on behalf of Lenders to
execute and deliver on behalf of Borrower and to file such financing
statements, assignments, notices, control agreements, security agreements and
other documents without the signature of Borrower either in Agents’ name or in
the name of Lender as agent and attorney-in-fact for Borrower. The parties
agree that a carbon, facsimile, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement and may be filed in any
appropriate office in lieu thereof.


 


7.4.              Title.
Borrower shall protect and defend Borrower’s title to the Collateral and
Lenders’ Lien thereon against all Persons claiming any interest adverse to
Borrower or Lenders. Borrower shall at all times keep the Collateral and all
property and assets used in Borrower’s business or in which Borrower now or
hereafter holds any interest free and clear from any legal process or Liens
whatsoever (except for Permitted Liens), and shall give Agent immediate written
notice of any legal process affecting any portion in excess of $250,000 of the
Collateral or any Liens thereon (except for Permitted Liens).


 


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7.5.              Payments;
Receivables. Without Lenders’ prior written consent, Borrower shall not,
unless in the ordinary course of Borrower’s business and consistent with past
practices (a) grant any material extension of the time of payment of any of the
Receivables or General Intangibles, (b) to any material extent, compromise,
compound or settle the same for less than the full amount thereof, (c) release,
wholly or partly, any Person liable for the payment thereof, or (d) allow any
credit or discount whatsoever thereon other than trade discounts granted by
Borrower in the ordinary course of business of Borrower.


 


7.6.              Good Condition.
Borrower shall maintain and protect its material properties, assets and
facilities, including its Equipment and Fixtures, in good order and working
repair and condition (taking into consideration ordinary wear and tear) and
from time to time make or cause to be made all necessary and proper repairs,
renewals and replacements thereto and shall competently manage and care for its
property in accordance with prudent industry practices.


 


7.7.              Merger. Borrower
shall provide Agent at least twenty (20) days written notice of any proposed
Merger prior to the closing date, which notice shall include all reasonably
necessary documentation or agreements in connection with any such proposed
Merger.


 


7.8.              Declaration of
Dividend; Transfers. Borrower shall not, without the prior written consent
of Lenders, (i) declare or pay any cash dividend or make a distribution on, or
repurchase or redeem, any class of stock, other than pursuant to employee
repurchase plans upon an employee’s death or termination of employment, or (ii)
transfer, sell, lease, lend or in any other manner convey any equitable,
beneficial or legal interest in any portion of the assets of Borrower (except
(a) Inventory sold in the normal course of business, (b) of non-exclusive
licenses or exclusive licenses with respect to scope or geographic area and
similar arrangements for the use of the property of Borrower in the ordinary
course of business, (c) of worn-out, surplus or obsolete Equipment or (d)
transfers otherwise explicitly permitted pursuant to any provision hereof.


 


7.9.              Records
Inspection. Upon the request of Agent and/or Lenders, Borrower shall,
during normal business hours, make the Inventory, Equipment, other Collateral,
and books and records concerning Collateral (including software and in Borrower’s
business) available to Agent and/or Lenders for inspection at the place where
it is normally located and shall make Borrower’s log and maintenance records
pertaining to the Inventory and Equipment available to Agent and/or Lender for
inspection. Borrower shall take all action necessary to maintain such books,
records, logs, and maintenance records in a correct and complete fashion.


 


7.10.            Location.
Borrower shall not relocate its chief executive office or its principal place
of business or any item of the Collateral exceeding $250,000 in the aggregate
(other than sale of Inventory in the ordinary course of business) unless
Borrower shall have given Lenders no less than thirty (30) days prior written
notice of such relocation and such relocation shall be within the continental
United States. In the event the Collateral to be relocated does not exceed
$250,000 in the aggregate, Borrower agrees to provide notice of the location of
the Collateral promptly upon relocation but in no event later than forty-five
(45) days after relocation.


 


7.11.            Assignment.
Borrower acknowledges and understands that Lenders individually or together as
the case may be, may sell and assign all or part of their interest hereunder
and under the Note(s) and Loan Documents to any person or entity (an “Assignee”).
After such assignment the term “Lender” or “Lenders” as the case may be as used
in the Loan Documents shall mean and include such Assignee, and such Assignee
shall be vested with all rights, powers and remedies of Lenders hereunder with
respect to the interest so assigned; but with respect to any such interest not
so transferred, the Lenders shall retain all rights, powers and remedies hereby
given. No such assignment by Lenders shall relieve Borrower of any of its
obligations hereunder. The Lenders agree that in the event of any transfer by
them of the Note(s), they will endorse thereon a notation as to the portion of
the principal of the Note(s), which shall have been paid at the time of such
transfer and as to the date to which interest shall have been last paid
thereon.


 


7.12.            Other Financing.
Borrower shall not incur any indebtedness without the prior written consent of
Lenders other than indebtedness evidenced by this Agreement and Permitted
Indebtedness.


 


7.13.            Liens and
Encumbrances. Other than non-exclusive licenses given in the ordinary
course of Borrower’s business, Borrower will not transfer, sell, assign, grant
a security interest in, hypothecate, permit or suffer to exist any Lien, or
otherwise transfer any interest in or encumber any portion of Borrower’s
assets, including without limitation Intellectual Property, either voluntarily
or involuntarily, without Lenders’ prior written consent. In addition, Borrower
will not enter into any agreement with any other person that restricts Borrower’s
ability to transfer, sell, assign, grant a security interest in, hypothecate,
permit or suffer to exist any Lien, or otherwise transfer any interest in or
encumber any portion of the Intellectual Property.


 


15

















 


7.14.            Investments.
Other than Permitted Investments, Borrower will not make, or permit any
subsidiary to make, any loan or advance to any Person, or purchase or otherwise
acquire, or permit any subsidiary to purchase or otherwise acquire, any capital
stock, assets, obligations, or other securities of, make any capital
contribution to, or otherwise invest in or acquire any interest in any Person,
or participate as a partner or joint venturer with any other Person.


 


SECTION
8.         MERGER


 


8.1.              Merger.


 


(a)   Upon
proper notice of a Merger, Lenders may choose to either (i) allow this
Agreement and the relevant Notes to be assigned to and assumed by the acquirer
or successor entity, or (ii) terminate this Agreement and all relevant Notes.
Lenders will provide their decision within ten (10) days of receiving all
necessary documentation, agreements and other additional material Lenders may
have requested.


 


(b)   In
the event Lenders allow this Agreement and the relevant Notes to be assigned,
Borrower and the acquirer or successor entity will sign the assignment
documentation provided by Lenders. If Lenders elect to terminate this Agreement
and the relevant Notes, then Borrower shall pay Lenders all the remaining
outstanding principal amounts, all accrued interest, any other outstanding fees
including without limitation End Term Payments and late fees.


 


SECTION
9.         EVENTS
OF DEFAULT


 


9.1.              The occurrence of
any one or more of the following events (herein called “Events of Default”)
shall constitute a breach and default under this Loan Agreement, the Notes, the
Warrant and the other Loan Documents:


 


(a)   Borrower
defaults in the payment of any principal, interest or other Secured Obligation
involving the payment of money under this Agreement, the Notes or any of the
other Loan Documents, and such default continues for more than five (5) days
after the due date thereof; or


 


(b)   Borrower
breaches or defaults in the performance of any covenant or Secured Obligation
under this Agreement, the Notes or any of the other Loan Documents, and such
default continues for more than twenty (20) days after the earlier of (i) a
Lender has given notice of such default to Borrower, or (ii) Borrower’s actual
knowledge of such default; or


 


(c)   Any
representation or warranty made by Borrower in any Loan Document or in the
Warrant Agreement shall have been false or misleading in any material respect
when made; or


 


(d)   Borrower
(i) shall make an assignment for the benefit of creditors, or (ii) shall admit
in writing its inability to pay its debts as they become due, or its inability
to pay or perform under the Loan Documents or the Excluded Agreements; or (iii)
shall file a voluntary petition in bankruptcy, or (iv) shall file any petition,
answer, or document seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation pertinent to such circumstances,
or (v) shall seek or consent to or acquiesce in the appointment of any trustee,
receiver, or liquidator of Borrower or of all or any substantial part (i.e.,
33-1/3% or more) of the assets or property of Borrower; or (vi) shall cease
operations on a material portion of its business, or terminate substantially
all of its employees; or (vii) Borrower or its directors or majority
shareholders shall take any action initiating any of the foregoing actions
described in clauses (i) through (vi); or


 


(e)   Either
(i) forty-five (45) days shall have expired after the commencement of an
involuntary action against Borrower seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, without such action being
dismissed or all orders or proceedings thereunder affecting the operations or
the business of Borrower being stayed; or (ii) a stay of any such order or
proceedings shall thereafter be set aside and the action setting it aside shall
not be timely appealed; or (iii) Borrower shall file any answer admitting or
not contesting the material allegations of a petition filed against Borrower in
any such proceedings; or (iv) the court in which such proceedings are pending
shall enter a decree or order granting the relief sought in any such
proceedings; or


 


(f)   Forty-five
(45) days shall have expired after the appointment, without the consent or
acquiescence of Borrower, of any trustee, receiver or liquidator of Borrower or
of all or any substantial part of the properties of Borrower without such
appointment being vacated; or


 


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(g)   The
occurrence of any default under any Excluded Agreement, or under any warrant
agreement, security lease, equipment schedule, any note or agreement for
borrowed money, or any other agreement between Borrower and Lenders (other than
any default embodied in or covered by any other clause of this Section 9) and such default continues for
more than twenty (20) days after the earlier of (i) a Lender has given notice
of such default to Borrower, or (ii) Borrower has actual knowledge of such
default; or


 


(h)   The
occurrence of any default (other than any default embodied in or covered by any
other clause of this Section 9) under
any lease, loan, or other agreement or obligation of Borrower involving any
obligation which aggregates more than $250,000, or which default would have a
material adverse effect upon (i) Borrower’s business, operations, properties,
assets or financial condition, (ii) Borrower’s ability to perform the Secured
Obligations in accordance with the terms of the Loan Documents or Lenders’
ability to enforce any of their rights and remedies with respect to the Secured
Obligations in accordance with the terms of the Loan Documents, or (iii) the
Collateral or Lenders’ liens on the Collateral or the priority of such liens;
or


 


(i)   The
entry of any judgment or arbitration award against Borrower involving an award
in excess of $250,000 (that is not adequately covered by insurance by a solvent
insurance carrier that has confirmed coverage in writing) or that would have a
material adverse effect upon (i) Borrower’s business, operations, properties,
assets or financial condition, (ii) Borrower’s ability to perform the Secured
Obligations in accordance with the terms of the Loan Documents or Lenders’
ability to enforce any of their rights and remedies with respect to the Secured
Obligations in accordance with the terms of the Loan Documents, or (iii) the
Collateral or Lenders’ liens on the Collateral or the priority of such liens
that has not been bonded or stayed on appeal within thirty (30) days.


 


SECTION
10.       REMEDIES


 


10.1.            Upon the occurrence of
any one or more Events of Default, (i) Lenders’ commitment to make any Advances
shall automatically expire, and (ii) Lenders’ obligation to permit the Loans
and Secured Obligations to remain outstanding shall automatically expire, and
(iii) the Agent, at the request of Lenders may, on behalf of Lenders, at either
Lender’s option (subject to the provisions in Section 12), accelerate and
demand payment of all or any part of the Secured Obligations and declare them
to be immediately due and payable (provided, that upon the occurrence of
an Event of Default of the type described in Sections
9.1(d) or 9.1(e), the
Notes and all of the Secured Obligations shall automatically be accelerated and
made due and payable, in each case without any further notice or act). Upon and
after an Event of Default, the unpaid principal of and accrued interest on the
Notes and Advances and all outstanding Secured Obligations, including all
professional fees and expenses, shall thereafter bear interest at the Default
Rate. Agent or Lenders may exercise all rights and remedies with respect to the
Collateral under the Loan Documents or otherwise available to the Agent or
Lenders under the UCC and other applicable law, including the right to release,
hold, sell, lease, liquidate, collect, realize upon, or otherwise dispose of all
or any part of the Collateral and the right to occupy, utilize, process and
commingle the Collateral. All Lenders’ rights and remedies shall be cumulative
and not exclusive.


 


10.2.            Upon the occurrence
and during the continuance of any Event of Default, Agent may, at any time or
from time to time, apply, collect, liquidate, sell in one or more sales, lease
or otherwise dispose of, any or all of the Collateral, in its then condition or
following any commercially reasonable preparation or processing, in such order
as Lenders may elect. Any such sale may be made either at public or private
sale at its place of business or elsewhere. Borrower agrees that any such
public or private sale may occur upon five (5) calendar days’ prior written
notice to Borrower. Agent may require Borrower to assemble the Collateral and
make it available to Agent at a place designated by Agent that is reasonably
convenient to Agent and Borrower. The proceeds of any sale, disposition or
other realization upon all or any part of the Collateral shall be applied by
Lenders in the following order of priorities:


 


First,
to Agent and Lenders in an amount sufficient to pay in full Agent and Lenders’
costs and professionals’ and advisors’ fees and expenses as described in Section 12.15 hereof;


 


Second,
to Lenders in an amount equal to the then unpaid amount of the Secured
Obligations (including principal, interest, and the Default Rate interest), in
such order and priority as Lenders may choose in its sole discretion; and


 


17

















 


Finally,
after the full, final, and indefeasible payment in Cash of all of the Secured
Obligations, to any creditor holding a junior Lien on the Collateral, or to
Borrower or its representatives or as a court of competent jurisdiction may
direct.


 


Agent and/or Lenders
shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it complies with the obligations of a
secured party under the UCC.


 


SECTION
11.       INVESTMENT
RIGHT


 


11.1.            Each Lender at Lenders’
sole option may purchase all or any portion of its Commitment Percentage of
Five Hundred Thousand and No/Dollars ($500,000) of Borrower’s stock (“Next
Round Stock”) offered in Borrower’s next round of equity financing (“Next Round”)
on the same terms and conditions as other investors. Borrower agrees to provide
Lenders with thirty (30) days prior written notice of the proposed date of the
Next Round, which notice shall include the terms, conditions and pricing of the
Next Round. In the event one Lender elects to purchase less than its Commitment
Percentage, the other Lender may increase its Commitment Percentage to include
the difference. Notwithstanding the foregoing, Next Round shall not include an
initial public offering of Borrower’s securities.


 


SECTION
12.       AGENT;
ASSIGNMENTS AND PARTICIPATIONS; CERTAIN INTERLENDER PROVISIONS


 


12.1.            Appointment.
Each Lender irrevocably appoints TriplePoint Capital LLC as Agent of such
Lender under this Agreement and the other Loan Documents and authorizes Agent
to take such action on such Lender’s behalf and to exercise such powers
hereunder as are specifically delegated to Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. Agent shall have only
those duties which are specified in this Agreement and it may perform such
duties by or through its agents, representatives or employees. Agent shall have
no duties, except those expressly set forth in this Agreement and the other
Loan Documents, and no implied covenants, responsibilities, duties, obligations
or liabilities shall be read into this Agreement or the other Loan Documents or
otherwise exist against Agent.


 


12.2.            Immunity.
Neither Agent nor its officers, directors, employees, agents, attorneys-in-fact
or affiliates shall be (a) liable for any waiver, consent or approval given or
any action taken or omitted to be given or taken by Agent or by such Person
under or in connection with this Agreement or the other the Loan Documents or
(b) responsible for the consequences of any oversight or error in judgment by
Agent or such Person whatsoever, except for Agent’s or such Person’s own gross
negligence or willful misconduct. Agent shall not be responsible for (v) the
execution, validity, enforceability, effectiveness or genuineness of this
Agreement or the other Loan Documents, (w) the collectibility of any amounts
owing under this Agreement, the Notes or the other Loan Documents, (x) the
value, sufficiency, enforceability or collectibility of any Collateral security
therefore, (y) the failure by Borrower to perform its Obligations hereunder or
under any of the other Loan Documents or (z) the truth, accuracy and
completeness of the recitals, statements, representations or warranties made by
Borrower or any officer or agent thereof contained in this Agreement, the other
Loan Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by Agent or any Lender in
connection with, this Agreement or the other Loan Documents, whether delivered
by Agent to any Lender or by or on behalf of Borrower to any Lender. Agent
shall not have any duty or obligation (1) to ascertain or to inquire as to the
observance or performance of any of the conditions, covenants or agreements in this
Agreement or the other Loan Documents or in any document, instrument or
agreement at any time constituting, or intended to constitute, collateral
security therefore, (2) to ascertain or inquire as to whether any notice,
consent, waiver or request delivered to them shall have been duly authorized or
is genuine, accurate and complete, or (3) to inspect the Properties or Records
of Borrower. In performing its duties on behalf of Lenders, Agent shall
exercise the same care which it would exercise in dealing with loans made for
its own account. Agent shall not be responsible for insuring the Collateral or
for the payment of any taxes, assessments, charges or any other charges or
Liens of any nature whatsoever upon the Collateral or otherwise for the
maintenance of the Collateral, except in the event Agent enters into possession
of a part or all of the Collateral, in which event Agent shall preserve the
part in its possession. Neither Agent nor any of its officers, directors,
employees, attorneys, representatives or agents shall be liable to Lenders for
any action taken or omitted hereunder or under any of the other Loan Documents
or in connection herewith or therewith unless caused by its or their gross
negligence or willful misconduct. No provision of this Agreement or of any
other Loan Document shall be deemed to impose any duty or obligation on Agent
to perform any act or to exercise any power in any jurisdiction in which it
shall be illegal, or shall be deemed to impose any duty or obligation on Agent
to perform any act or exercise any right or power if such performance or
exercise (i) would subject


 


18

















 


Agent to a tax in a
jurisdiction where it is not then subject to a tax or (ii) would require Agent
to qualify to do business in any jurisdiction where it is not so qualified.


 


12.3.            Reliance by Agent.


 


(a)   Agent
may consult with counsel, and any opinion or legal advice of such counsel shall
be full and complete authorization and protection in respect of any action
taken, not taken or suffered by Agent hereunder or under any Loan Documents in
accordance therewith. Agent shall have the right at any time to seek
instructions concerning the administration of the Collateral from any court of
competent jurisdiction.


 


(b)   Agent
may rely, and shall be fully protected in relying, acting, or refraining to
act, upon any resolution, statement, certificate, instrument, opinion, report,
notice request, consent, order, bond or other paper or document that it has no
reason to believe to be other than genuine and to have been signed or presented
by the proper party or parties or, in the case of facsimiles, to have been sent
by the proper party or parties. In the absence of its gross negligence or
willful misconduct, Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to Agent and conforming to the requirements
of this Agreement or any of the other Loan Documents.


 


(c)   Agent
shall be entitled to fail or refuse, and shall be fully protected in failing or
refusing, to take any action under this Agreement or the other Loan Documents
unless (i) it first shall receive such advice or concurrence of Requisite
Lenders as it deems appropriate, or (ii) it first shall be indemnified to its
satisfaction by Lenders against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. In
all cases Agent shall be fully protected in acting, or in refraining from
acting, under this Agreement or the Loan Documents in accordance with a request
of Requisite Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all Lenders. Without prejudice to the
generality of anything in this Article 9,  no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
under this Agreement or under any of the other Loan Documents in accordance
with the instructions of Requisite Lenders.


 


12.4.            No Responsibility
for Investigation. Each Lender expressly acknowledges that neither Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it. Each Lender agrees
that it will make its own independent investigation of the financial condition
and affairs of Borrower in connection with the making of Loans pursuant to the
Agreement and has made and shall continue to make its own appraisal of the
creditworthiness of Borrower. Neither Agent nor any Lender shall have any duty
or responsibility either initially or on a continuing basis to make any such
investigation or any such appraisal on behalf of all Lenders or to provide the
other Lenders with any credit or other information with respect thereto,
whether coming into its possession before the date hereof or any time or times
thereafter, and shall further have no responsibility with respect to the
accuracy of or the completeness of the information provided to Lenders by
Borrower. Except for notices, reports and other documents expressly required to
be furnished to Lenders by Agent hereunder, Agent shall have no obligation or
liability to provide any Lender with any credit or other information concerning
the business, operations, property, financial and other condition or
creditworthiness of Borrower which may come into the possession of Agent or any
of its officers, directors, employees, attorneys-in-fact or affiliates.


 


12.5.            Delegation of
Duties. Agent may execute any of the powers hereof and perform any duty
hereunder either directly or by or through agents or attorneys-in-fact. Agent
may utilize the services of such agents and attorneys-in-fact as Agent in its
sole discretion reasonably determines, and all fees and expenses of such agents
and attorneys-in-fact shall be paid by Borrower on demand. Agent shall be
entitled to advice of counsel concerning all matters pertaining to such powers
and duties. Agent shall not be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it, if the selection of such agents
or attorneys-in-fact was done without gross negligence or willful misconduct.


 


12.6.            Events of Default;
Conditions to All Loans. Unless the officers of Agent acting in their
capacity as officers of Agent on Borrower’s account have actual knowledge
thereof or have been notified in writing thereof by Lenders, Agent shall not be
required to ascertain or inquire as to the existence or possible existence of
any Event of Default. Agent shall take such action with respect to such Event
of Default as shall be directed by Requisite Lenders or if no Requisite
Lenders, as directed by the aggrieved Lender; provided, that unless and
until Agent shall have received


 


19

















 


such directions, Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Event of Default as it deems advisable in the
best interests of the Lenders. Lenders agree that prior to directing Agent to
take any action in an Event of Default, Lenders are obligated to meet and
discuss such actions to be taken by the Agent. In the event either Lender shall
determine the conditions under Section 4.3, Conditions to All Loans,
have not been satisfied then no Advance shall be made by either Lender until
such time as both Lenders mutually agree the conditions have been satisfied or
Lenders have executed a written waiver allowing one Lender or the other to make
an Advance.


 


12.7.            Right to Indemnity.
Each Lender severally, but not jointly, agrees (a) to indemnify and hold Agent
(and any Person acting on behalf of Agent) harmless from and against and (b)
promptly upon receipt by such Lender of Agent’s statement, to reimburse Agent,
according to such Lender’s Commitment Percentage, to the extent Agent shall not
otherwise have been reimbursed by Borrower on account of, and for, any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including, without limitation, the reasonable fees and
disbursements of counsel and other advisors actually incurred) or disbursements
of any kind of nature whatsoever with respect to Agent’s performance of its
duties under this Agreement and the Loan Documents; provided, that no
Lender shall be liable for the payment to Agent of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from Agent’s gross
negligence or willful misconduct, and nothing in the foregoing is intended to
limit the obligation of Borrower to reimburse Agent for any amounts incurred by
Agent. Such reimbursement shall not in any respect release Borrower from any
liability or obligation. If any indemnity furnished to Agent for any purpose
shall, in the opinion of Agent, be insufficient or become impaired, Agent may
call for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished. Agent’s right
to indemnification shall survive termination of this Agreement.


 


12.8.            The Agent. The
agency hereby created shall in no way impair or affect any of the rights and
powers of, or impose any duties or obligations upon, Agent in its individual
capacity. Agent shall have the same rights and powers under this Agreement as
any other Lender and may exercise or refrain from exercising the same as though
it were not Agent, and Agent, and its affiliates may accept deposits from, lend
money to, and generally engage in any kind of business with Borrower or any
Affiliate of Borrower as if it were not Agent hereunder. The term “Lender” or “Lenders”
or any similar term shall unless the context clearly indicates otherwise
include Agent in its individual capacity.


 


12.9.            Resignation and
Appointment of Successor Agent. Agent may resign at any time by giving
thirty (30) days’ prior written notice thereof to Lenders and Borrower. In
addition, if Agent become insolvent or commits any act or omission constituting
gross negligence or willful misconduct of its duties as Agent hereunder, then
Requisite Lenders shall have the right to replace Agent. In all cases, the
Agent shall continue to serve until a successor Agent shall have been selected
and approved pursuant to this Section 12.9.
Upon any such resignation or removal of Agent, Requisite Lenders shall have the
right to appoint a successor Agent from among the Lenders. If no successor
Agent shall have been so appointed by Requisite Lenders and accepted such
appointment within 30 days after the retiring Agent’s giving of notice of
resignation, then the retiring Agent may, on behalf of Lenders, appoint a
successor Agent, and which successor Agent (if not also a Lender), if no Event
of Default shall have occurred and be continuing, shall be reasonably
satisfactory to Borrower. Upon the acceptance of any appointment as an Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent’s resignation
hereunder as Agent, the provisions of this Agreement shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement.


 


12.10.          Lenders’
Representations Regarding IRS Withholding; Delivery of Tax Forms. To the
extent Agent may hold from time to time payments for the account of Lenders,
each Lender represents and agrees as follows:


 


(a)   It
is entitled to receive any payments under the Loan Documents to which it is a
party without the withholding of any tax, and will furnish to Agent such forms,
certifications, statements and other documents as Agent may request from time
to time to evidence such Lender’s exemption from the withholding of any tax
imposed by any jurisdiction or to enable Agent to comply with any applicable
laws or regulations relating thereto.


 


(b)   Without
limiting the effect of the foregoing, if it is not created or organized under
the laws of the United States or any state thereof, it further represents and
warrants (i) that it is engaged in the conduct of a business within the United
States and that the payments made hereunder are or are reasonably


 


20

















 


expected to be
effectively connected with the conduct of that trade or business and are or
will be includible in its gross income; or (ii) if it is not engaged in a U.S.
trade or business with which such payments are effectively connected, it is
entitled to the benefits of a tax convention which exempts the income from U.S.
withholding tax and that it has satisfied all requirements to qualify for the
exemption from tax.


 


(c)   It
will, immediately upon the request of Agent, furnish to Agent Form 4224 or Form
1001 of the Internal Revenue Service, or such other forms, certifications,
statements or documents, duly executed and completed by it as evidence of its
exemption from the withholding of U.S. tax with respect thereto. If it
determines that, as a result of any change in applicable law, regulation, or
treaty or in any official application or interpretation thereof, it ceases to
qualify for exemption from any tax imposed by any jurisdiction with respect to
payments made hereunder, it shall promptly notify Agent of such fact and Agent
may, but shall not be required to withhold the amount of any such applicable
tax from amounts paid to it hereunder. Agent shall not be obligated to make any
payments hereunder to it in respect of its Loan until it shall have furnished
to Agent the requested form, certification, statement or document and may
withhold the amount of such applicable tax from amounts paid to it Lender hereunder.


 


(d)   It
shall reimburse, indemnify and hold Agent harmless for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
upon, incurred by or asserted against Agent due to its reliance upon the
representation hereby made that it is exempt from withholding of tax. Unless
Agent receives written notice to the contrary, it shall be deemed to have made
the representations contained in this Section
12.9 in each of its subsequent tax years.


 


12.11.          Assignments and
Participations in Loans.


 


(a)   Each
Lender may assign its rights and delegate its obligations under this Agreement
to an assignee and the assignee shall have, to the extent of such assignment,
the same rights, benefits and obligations as it would if it were a Lender
hereunder. The assigning Lender shall be relieved to its obligations hereunder
with respect to its Commitment or assigned portion thereof, however, the assigning
Lender must still act as agent on behalf of the assignee. Borrower hereby
acknowledges and agrees that any assignment will give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be
considered to be a “Lender.”


 


(b)   Each
Lender may sell participations in all or any part of any Loans made by it to
another Person; provided, that all amounts payable by Borrower hereunder
shall be determined as if that Lender had not sold such participation and the
holder of any such participation shall not be entitled to require such Lender
to take or omit to take any action hereunder except action directly affecting
(i) any reduction in the principal amount, interest rate or fees payable with
respect to any Loan in which such holder participates; (ii) any extension of
the Commitment Termination Date or the date fixed for any payment of principal
or interest due from Borrower with respect to any Loan in which such holder
participates; and (iii) any release of substantially all of the Collateral
(other than in accordance with the terms of the Loan Documents).


 


(c)   Except
as otherwise provided in this subsection, no Lender shall, as between Borrower
and that Lender, be relieved of any of its obligations hereunder as a result of
any sale, assignment, transfer or negotiation of, or granting of participation
in, all of any part of the Loans, the Notes or other Obligations owed to such
Lender. Each Lender may furnish any information concerning Borrower in such
Lender’s possession from time to time to assignees and participants (including
prospective assignees and participants), subject to the confidentiality
provisions hereof.


 


(d)   Notwithstanding
anything to the contrary herein, each Lender shall be entitled to assign its
rights and delegate its obligations under this Agreement, or sell
participations in all or any part of any Loans made by it and its Commitment,
to any affiliate of such Lender, without the prior written consent of Borrower.


 


12.12.          Effect of Section 12.
Notwithstanding anything to the contrary in Section
12, the rights and obligations of Borrower shall not be affected by
any provision that relates to the relationship between Lenders and between
Agent and Lenders that is included in this Section
12.


 


21

















 


SECTION 13.       MISCELLANEOUS


 


13.1.            Continuation of
Security Interest. This is a continuing Agreement and the grant of a Lien
hereunder shall remain in full force and effect and all of the rights, powers
and remedies of Agent for itself or on behalf of Lenders hereunder shall
continue to exist until the Secured Obligations (other than inchoate indemnity
obligations) are fully, finally, and indefeasibly paid in Cash and until Agent
has executed a written termination statement. Agent shall execute a termination
statement within a reasonable time after the full, final, and indefeasible
payment in Cash of the Secured Obligations (other than inchoate indemnity
obligations) hereunder, reassigning to Borrower, without recourse, the
Collateral and all rights conveyed hereby and returning possession of the
Collateral to Borrower. The rights, powers and remedies of Agent for itself or
on behalf of Lenders hereunder shall be in addition to all rights, powers and
remedies given by statute or rule of law and are cumulative. The exercise of
any one or more of the rights, powers and remedies provided herein shall not be
construed as a waiver of or election of remedies with respect to any other
rights, powers and remedies of Agent and/or Lenders.


 


13.2.            Severability.
Whenever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under such law,
such provision shall be ineffective only to the extent and duration of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.


 


13.3.            Notice. Except
as otherwise provided herein, all notices and service of process required,
contemplated, or permitted under the Loan Documents or with respect to the
subject matter hereof shall be in writing, and shall be deemed to have been
validly served, given, delivered, and received upon the earlier of: (i) the first
business day after transmission by facsimile or hand delivery or deposit with
an overnight express service or overnight mail delivery service; or (ii) the
third calendar day after deposit in the United States mails, with proper first
class postage prepaid (provided, that any Advance Request shall not be
deemed received until Lenders’ actual receipt thereof), and shall be addressed
to the party to be notified as follows:


 


	
  (a)  If to Lenders:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TriplePoint Capital LLC 

  Attn: Sajal Srivastava, COO 

  2420 Sand Hill Road, Suite 101 

  Menlo Park, CA 94025 

  Facsimile: (650) 854-2094

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Leader Lending, LLC

  Attn: Robert Molke

  311 California Street, Suite 420

  San Francisco, CA 94111

  Facsimile: (415) 956-8233

  
	
   

  	
   

  	
   

  
	
  (b)  If to
  Agent:

  	
   

  	
   

  
	
   

  	
   

  	
  TriplePoint Capital LLC 

  Attn: Sajal Srivastava, COO 

  2420 Sand Hill Road, Suite 101 

  Menlo Park, CA 94025 

  Facsimile: (650) 854-2094

  
	
   

  	
   

  	
   

  
	
  (c)  If to
  Borrower:

  	
   

  	
   

  
	
   

  	
   

  	
  Expression Diagnostics, Inc. 

  Attn: Vikram Jog, CFO 

  701 Gateway Blvd., Suite 100 

  South San Francisco, CA 94080 

  Facsimile: (650) 624-0125

  



 


or to such other address
as each party may designate for itself by like notice.


 


22

















 


13.4.            Entire Agreement;
Amendments. This Agreement, the Notes, and the other Loan Documents
constitute the entire agreement and understanding of the parties hereto in
respect of the subject matter hereof and thereof, and supersede and replace in
their entirety any prior proposals, term sheets, letters, negotiations or other
documents or agreements, whether written or oral, with respect to the subject
matter hereof or thereof. None of the terms of this Agreement, the Notes or any
of the other Loan Documents may be amended except by an instrument executed by
each of the parties hereto.


 


13.5.            Headings. The
various headings in this Agreement are inserted for convenience only and shall
not affect the meaning or interpretation of this Agreement or any provisions
hereof.


 


13.6.            No Waiver. No
action taken by Lenders or Borrower will be deemed to constitute a waiver of
compliance with any representation, warranty or covenant in this Agreement, the
Notes or the other Loan Documents. The waiver by Lenders of a breach of any
provision of this Agreement, the Notes or the other Loan Documents will not
operate or be construed as a waiver of any subsequent breach.


 


13.7.            Survival.
Except as otherwise expressly stated in this Agreement, all obligations, duties
and liabilities of Borrower shall terminate upon the indefeasible satisfaction
of all Secured Obligations, except for those obligations, duties and
liabilities set forth in the sections 6.2 “Indemnification”, and 13 “Miscellaneous”,
excluding section 13.1.


 


13.8.            Successors and
Assigns. The provisions of this Agreement and the other Loan Documents
shall inure to the benefit of and be binding on Borrower and its permitted
assigns (if any). Borrower shall not assign its obligations under this
Agreement, the Notes or any of the other Loan Documents without Lenders’
express prior written consent, and any such attempted assignment shall be void
and of no effect. Lenders may assign, transfer, or endorse its rights hereunder
and under the other Loan Documents as set forth in Section 7.12 hereof without prior notice to Borrower, and all
of such rights shall inure to the benefit of Lender’s successors and assigns;
provided, that so long as an Event of Default has not occurred, in no event may
Lenders assign any portion of their rights to a competitor of Borrower.


 


13.9.            Governing Law.
This Agreement, the Notes and the other Loan Documents have been negotiated and
delivered to Lenders in the State of California, and shall have been accepted
by Lenders in the State of California. Payment to Lenders by Borrower of the
Secured Obligations is due in the State of California. This Agreement, the
Notes and the other Loan Documents shall be governed by, and construed and
enforced in accordance with, the laws of the State of California, excluding
conflict of laws principles that would cause the application of laws of any
other jurisdiction.


 


13.10.          Consent To
Jurisdiction And Venue. All judicial proceedings arising in or under or
related to this Agreement, the Notes or any of the other Loan Documents may be
brought in any state or federal court of competent jurisdiction located in the
State of California. By execution and delivery of this Agreement, each party
hereto generally and unconditionally: (a) consents to personal jurisdiction in
San Mateo County, State of California; (b) waives any objection as to
jurisdiction or venue in San Mateo County, State of California; (c) agrees not
to assert any defense based on lack of jurisdiction or venue in the aforesaid
courts; and (d) irrevocably agrees to be bound by any judgment rendered thereby
in connection with this Agreement, the Notes or the other Loan Documents.
Service of process on any party hereto in any action arising out of or relating
to this Agreement shall be effective if given in accordance with the
requirements for notice set forth in Section
13.3, and shall be deemed effective and received as set forth in Section 13.3. Nothing herein shall affect
the right to serve process in any other manner permitted by law or shall limit
the right of either party to bring proceedings in the courts of any other
jurisdiction.


 


13.11.          Mutual Waiver Of Jury
Trial. Because disputes arising in connection with complex financial
transactions are most quickly and economically resolved by an experienced and
expert person and the parties wish applicable state and federal laws to apply
(rather than arbitration rules), the parties desire that their disputes be
resolved by a judge applying such applicable laws. EACH OF BORROWER, AGENT AND
LENDERS SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE
OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER
CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST AGENT AND/OR
LENDERS OR THEIR ASSIGNEE OR BY AGENT AND/OR LENDERS OR THEIR ASSIGNEE AGAINST
BORROWER. IN THE EVENT THE JURY WAIVER IN THIS IS UNENFORCEABLE FOR ANY REASON,
THE PARTIES WILL RESOLVE ALL DISPUTES ARISING OUT OF THIS AGREEMENT OR ANY
RELATIONSHIP BETWEEN LENDERS, AGENT AND/OR BORROWER BY JUDICIAL REFERENCE
PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 638 ET


 


23

















 


SEQ, SUCH REFERENCE
PROCEEDING TO BE CONDUCTED WITHOUT A JURY BEFORE A MUTUALLY ACCEPTABLE REFEREE
OR, IF THERE IS NO AGREEMENT ON THE REFEREE, A REFEREE APPOINTED BY THE
PRESIDING JUDGE OF THE CALIFORNIA SUPERIOR COURT FOR SAN MATEO COUNTY. THIS SECTION
SHALL NOT PROHIBIT ANY PARTY FROM SEEKING ANY JUDICIAL PREJUDGMENT REMEDY OR
EXERCISING ANY NONJUDICIAL REMEDY IN ACCORDANCE WITH THE UNIFORM COMMERCIAL
CODE OR OTHER APPLICABLE LAW. This waiver extends to all such Claims, including
Claims that involve Persons other than Borrower, Agent and Lenders; Claims that
arise out of or are in any way connected to the relationship between Borrower,
Agent and Lenders; and any Claims for damages, breach of contract, specific
performance, or any equitable or legal relief of any kind, arising out of this
Agreement, any other Loan Document or any of the Excluded Agreements,


 


13.12.          Professional Fees.
Borrower promises to pay any and all reasonable professional fees and expenses
incurred by Agent and Lenders after Closing Date in connection with or related
to: the Loans; the collection, or enforcement of the Loans; amendment or
modification of the Loan Agreements; any waiver, consent, release, or
termination under the Loan Agreements; the protection, preservation, sale,
lease, liquidation, or disposition of Collateral or the exercise of remedies
with respect to the Collateral; or any legal, litigation, administrative,
arbitration, or out of court proceeding in connection with or related to the
Borrower or the Collateral, and any appeal or review thereof; and any
bankruptcy, restructuring, reorganization, assignment for the benefit of
creditors, workout, foreclosure, or other action related to Borrower, the
Collateral, the Loan Documents, or the Excluded Agreements, including
representing Agent and Lenders in any adversary proceeding or contested matter
commenced or continued by or on behalf of Borrower’s estate, and any appeal or
review thereof. Agent and Lenders’ professional fees and expenses shall include
fees or expenses for Agent and Lenders’ attorneys, accountants, auctioneers,
liquidators, appraisers, investment advisors, environmental and management
consultants, or experts engaged by the Agent and Lenders in connection with the
foregoing. The Borrower’s promise to pay all of Agent and Lenders’ reasonable
professional fees and expenses is part of the Secured Obligations under this
Agreement.


 


13.13.          Confidentiality.
Lenders acknowledges that certain items of Collateral, including, but not
limited to trade secrets, source codes, customer lists and certain other items
of Intellectual Property, and any Financial Statements provided pursuant to
hereto shall constitute proprietary and confidential information of the
Borrower (the “Confidential Information”). Accordingly, Agent and Lenders agree
that any Confidential Information it may obtain in the course of acquiring,
administering, perfecting or foreclosing Agent and Lenders’ security interest
in the Collateral shall be received in the strictest confidence and shall not be
disclosed to any other person or entity in any manner whatsoever, in whole or
in part, without the prior written consent of the Borrower, except that Agent
and Lenders may disclose any such information: (a) to its own directors,
officers, employees, accountants, counsel and other professional advisors and
to its affiliates if Agent and Lenders in their sole discretion determines that
any such party should have access to such information; (b) if such information
is generally available to the public; (c) if required or appropriate in any
report, statement or testimony submitted to any governmental authority having
or claiming to have jurisdiction over Lenders; (d) if required or appropriate
in response to any summons or subpoena or in connection with any litigation, to
the extent permitted or deemed advisable by Agent and Lenders’ counsel; (e) to
comply with any legal requirement or law applicable to Agent and Lenders; (f)
to the extent reasonably necessary in connection with the exercise of any right
or remedy under any Loan Document, including Agent and Lenders’ sale, lease, or
other disposition of Collateral after default, which Collateral constitutes or
is reasonably related to Confidential Information; (g) to any participant or
assignee of Agent and Lenders or any prospective participant or assignee,
provided that such participant or assignee or prospective participant or
assignee agrees in writing to be bound by this Section prior to disclosure; or
(h) otherwise with the prior consent of Borrower; provided, however, that any
disclosure made in violation of this Agreement shall not affect the obligations
of Borrower or any of its affiliates or any guarantor under this Agreement or
the other Loan Documents.


 


13.14.          Revival of Secured
Obligations. This Agreement and the Loan Documents shall remain in full
force and effect and continue to be effective if any petition is filed by or
against Borrower for liquidation or reorganization, if Borrower becomes
insolvent or makes an assignment for the benefit of creditors, if a receiver or
trustee is appointed for all or any significant part of Borrower’s assets, or
if any payment or transfer of Collateral is recovered from Agent or Lenders.
The Loan Documents and the Secured Obligations and Collateral security shall continue
to be effective, or shall be revived or reinstated, as the case may be, if at
any time payment and performance of the Secured Obligations or any transfer of
Collateral to Agent or Lenders, or any part thereof is rescinded, avoided or
avoidable, reduced in amount, or must otherwise be restored or returned by, or
is recovered from, Agent or Lenders or by any obligee of the Secured
Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or
otherwise,


 


24

















 


all as though such
payment, performance, or transfer of Collateral had not been made. In the event
that any payment, or any part thereof, is rescinded, reduced, avoided,
avoidable, restored, returned, or recovered, the Loan Documents and the Secured
Obligations shall be deemed, without any further action or documentation, to
have been revived and reinstated except to the extent of the full, final, and
indefeasible payment to Lenders in Cash.


 


13.15.          Counterparts.
This Agreement and any amendments, waivers, consents or supplements hereto may
be executed in any number of counterparts, and by different parties hereto in
separate counterparts, each of which when so delivered shall be deemed an
original, but all of which counterparts shall constitute but one and the same
instrument.


 


(SIGNATURES TO
FOLLOW.)


 


25

















 


IN
WITNESS WHEREOF, Borrower, Agent and Lender have duly
executed and delivered this Agreement as of the day and year first above
written.


 


 


	
  BORROWER:

  	
   

  	
  EXPRESSION
  DIAGNOSTICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
  /s/ Vikram Jog

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print Name:

  	
  VIKRAM JOG

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  CFO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LENDERS:

  	
   

  	
  TRIPLEPOINT
  CAPITAL LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
  /s/ Sajaz Srivastava

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print Name:

  	
  SAJAZ SRIVASTAVA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  COO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LEADER
  LENDING, LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
  /s/ Robert W. Molke

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print Name:

  	
  Robert W. Molke

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AGENT:

  	
   

  	
  TRIPLEPOINT
  CAPITAL LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
  /s/ Sajaz Srivastava

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print Name:

  	
  SAJAZ SRIVASTAVA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  COO

  	
   

  



 


26

















 


Table of
Exhibits and Schedules


 


	
  Exhibit A:

  	
   

  	
  Advance Request

  
	
   

  	
   

  	
   

  
	
  Exhibit B:

  	
   

  	
  Promissory Note

  
	
   

  	
   

  	
   

  
	
  Exhibit C:

  	
   

  	
  Warrant Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit D:

  	
   

  	
  Name, Locations, and Other Information for Borrower

  
	
   

  	
   

  	
   

  
	
  Schedule 1:

  	
   

  	
  Schedule of Documents

  



 


27

















 


EXHIBIT A


 


ADVANCE REQUEST


 


	
  To Agent:

  	
   

  	
  Date:

  	
   

  	
   

  



 


TRIPLEPOINT CAPITAL LLC

2420 Sand Hill Road Ste 101

Menlo Park, CA 94062

Attention: Customer Administrations

Fax (650) 854-2094


 


Borrower                        hereby
requests from Lenders an Advance in the amount of                        Dollars
($                        )
on                         ,
                        (the
“Advance Date”) pursuant to the Loan and Security Agreement between
Borrower and Lender (the “Agreement”). Borrower acknowledges each Lender
will Advance its Commitment Percentage per the Agreement which will be
evidenced by separate Notes.


 


Please:


 


	
  (a)

  	
   

  	
  Issue a check payable to Borrower 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  or

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Wire Funds to Borrower’s account 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bank:

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ABA Number:

  	
   

  	
   

  
	
   

  	
   

  	
  Account Number:

  	
   

  	
   

  
	
   

  	
   

  	
  Account Name:

  	
   

  	
   

  



 


Borrower hereby
represents that:


 


•         No
event has occurred which individually or together with any other event would
have a material adverse effect upon Borrower’s business, operations,
properties, assets or financial condition;


 


•         The
representations, covenants and warranties set forth in the Loan Agreement and
respective Warrant Agreements are and shall be true and correct in all material
respects on and as of the Advance Date with the same effect as though made on
and as of such date, except to the extent such representations and warranties
expressly relate to an earlier date;


 


•         Borrower
is in compliance with all the terms and provisions set forth in any document
related to the Loan Agreement on its part to be observed or performed;


 


•         As
of the Advance Date, no fact or condition exists that would (or would, with the
passage of time, the giving of notice, or both) constitute an event of default
under the Loan Agreement; and


 


•         Borrower
understands and acknowledges that Lenders have the right to review the
financial information supporting the above representations and based upon such
review, if Lender feels that an event has occurred which would have a material
adverse effect upon Borrower’s business, operations, properties, assets or
financial condition, Lender may in its reasonable discretion decline to fund
the requested Advance.


 


Borrower hereby
represents and warrants to Lenders that Borrower’s current name and
organizational status is as follows:


 


28

















 


	
  Name:

  	
   

  
	
   

  	
   

  
	
  Type of organization:

  	
   

  
	
  (corporation, limited partnership, or limited
  liability company)

  
	
   

  
	
  State of organization:

  	
   

  
	
   

  	
   

  
	
  Organization file
  number:

  	
   

  



 


Borrower hereby
represents and warrants to Lenders that the street addresses, cities, states
and postal codes of its current locations are as follows:


 


	
  Chief Executive Office:

  
	
   

  
	
   

  
	
   

  
	
  Principal Place of Business:

  
	
   

  
	
   

  
	
   

  
	
  Locations of Collateral:

  
	
   

  
	
   

  



 


Executed this         day
of                          ,               by:


 


	
   

  	
   

  	
  (BORROWER:
  [

  	
  ])

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SIGNATURE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TITLE:

  	
   

  	
   

  



 


 


	
  PRINT NAME: 

  	
   

  	
   

  	
   

  	
   

  



 


 


29

















 


EXHIBIT B-1


 


PROMISSORY NOTE


 


	
  $ 

  	
   

  	
  Advance Date: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Maturity Date: 

  	
   

  	
   

  



 


FOR
VALUE RECEIVED, Expression Diagnostics, Inc. a Delaware
corporation (the “Borrower”) hereby promises to pay to the order of
TriplePoint Capital LLC a Delaware company or the holder of this Note (the “Lender”)
at 2420 Sand Hill Road, Suite 101 Menlo Park, CA 94025 or such other place of
payment as the holder of this Promissory Note (this “Note”) may specify
from time to time in writing, in lawful money of the United States of America,
the principal amount of                    
and 00/100 Dollars ($                   )
together with interest at                    
percent (        %) per annum from the
date of this Note to maturity of each installment on the principal hereof
remaining from time to time unpaid, such principal and interest to be paid in                    
(         ) monthly installments
as follows: (i) interest only payments of $                   each
commencing on                    and
on the last day of each month to and including December 31, 2006; and (ii)
thirty (30) equal monthly principal and interest payments of $                   commencing
on                    and
on the last day of each month to and including                    .
In addition to the Borrower’s final payment, Borrower shall pay an End Term
Payment equal to $                   .
Interest shall be computed on the basis of a year consisting of twelve months
of thirty days each. Any payments made under this Note shall not be available
for reborrowing.


 


This Promissory Note is
the Note referred to in, and is executed and delivered in connection with, that
certain Growth Capital Loan and Security Agreement dated                    ,
2006 by and between Borrower, Lender and Leader Lending, LLC (as the same may
from time to time be amended, modified or supplemented in accordance with its
terms, the “Loan Agreement”), and is entitled to the benefit and security
of the Loan Agreement and the other Loan Documents (as defined in the Loan
Agreement), to which reference is made for a statement of all of the terms and
conditions thereof. All terms defined in the Loan Agreement shall have the same
definitions when used herein, unless otherwise defined herein.


 


The Borrower waives
presentment and demand for payment, notice of dishonor, protest and notice of
protest under the UCC or any applicable law.


 


This Note has been
negotiated and delivered to Lender and is payable in the State of California.
This Note shall be governed by and construed and enforced in accordance with,
the laws of the State of California, excluding any conflicts of law rules or
principles that would cause the application of the laws of any other
jurisdiction.


 


 


	
   

  	
   

  	
  BORROWER:
  EXPRESSION DIAGNOSTICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  



 


30

















 


EXHIBIT B-2


 


PROMISSORY NOTE


 


	
  $ 

  	
   

  	
  Advance Date: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Maturity Date: 

  	
   

  	
   

  



 


FOR
VALUE RECEIVED, Expression Diagnostics, Inc. a Delaware
corporation (the “Borrower”) hereby promises to pay to the order of
Leader Lending, LLC a Delaware company or the holder of this Note (the “Lender”)
at                   or
such other place of payment as the holder of this Promissory Note (this “Note”)
may specify from time to time in writing, in lawful money of the United States
of America, the principal amount of                   and
00/100 Dollars ($                  )
together with interest at                   percent
(         %) per annum from the
date of this Note to maturity of each installment on the principal hereof
remaining from time to time unpaid, such principal and interest to be paid in                   (        )
monthly installments as follows: (i) interest only payments of $                  each
commencing on                   and
on the last day of each month to and including December 31, 2006; and (ii)
thirty (30) equal monthly principal and interest payments of $                  
commencing on                   and
on the last day of each month to and including                   .
In addition to the Borrower’s final payment, Borrower shall pay an End Term
Payment equal to $                  .
Interest shall be computed on the basis of a year consisting of twelve months
of thirty days each. Any payments made under this Note shall not be available
for reborrowing.


 


This Promissory Note is
the Note referred to in, and is executed and delivered in connection with, that
certain Growth Capital Loan and Security Agreement dated                   ,
2006 by and between Borrower, Lender and TriplePoint Capital LLC (as the same
may from time to time be amended, modified or supplemented in accordance with
its terms, the “Loan Agreement”), and is entitled to the benefit and
security of the Loan Agreement and the other Loan Documents (as defined in the
Loan Agreement), to which reference is made for a statement of all of the terms
and conditions thereof. All terms defined in the Loan Agreement shall have the
same definitions when used herein, unless otherwise defined herein.


 


The Borrower waives
presentment and demand for payment, notice of dishonor, protest and notice of
protest under the UCC or any applicable law.


 


This Note has been negotiated
and delivered to Lender and is payable in the State of California. This Note
shall be governed by and construed and enforced in accordance with, the laws of
the State of California, excluding any conflicts of law rules or principles
that would cause the application of the laws of any other jurisdiction.


 


	
   

  	
   

  	
  BORROWER:
  EXPRESSION DIAGNOSTICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  



 


31

















 


EXHIBIT C


 


WARRANT AGREEMENT


 


32

















 


THIS WARRANT AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANTS HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AS AMENDED (THE “1933_ACT”), OR ANY
STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT, OR ANY APPLICABLE STATE
SECURITIES LAWS.


 


Warrant
No. 


 


WARRANT AGREEMENT


 


To Purchase Shares of the Series E
Preferred Stock of Expression Diagnostics, Inc.


 


Dated as of July 26, 2006 (the “Effective
Date”)


 


WHEREAS,  Expression Diagnostics, Inc., a Delaware
corporation (the “Company”), has entered into a Growth Capital Loan and
Security Agreement dated as of July 26, 2006 (the “Loan Agreement”) with
[LENDER] the “Warrantholder”);


 


WHEREAS,
the Company desires to grant to Warrantholder, in
consideration for the financial accommodations provided for in the Loan
Agreement, the right to purchase shares of its Series E Preferred Stock;


 


NOW,
THEREFORE, in consideration of the Warrantholder executing
and delivering the Loan Agreement and providing the financial accommodations
contemplated therein, and in consideration of the mutual covenants and
agreements contained herein, the Company and Warrantholder agree as follows:


 


SECTION
1.         GRANT
OF THE RIGHT TO PURCHASE PREFERRED STOCK.


 


For value
received, the Company hereby grants to Warrantholder, and the Warrantholder is
entitled upon the terms and subject to the conditions hereinafter set forth, to
subscribe to and to purchase from the Company that number of fully paid and
non-assessable shares of the Company’s Series E Preferred Stock (the “Preferred
Stock”) equal to [          ]
Dollars ($          ) divided
by a purchase price per share equal to the lesser of (a) $4.63 or (b) the next
round of equity financing preferred stock price per share (the “Exercise
Price”)


 


Upon the
availability of Part II under the Loan Agreement the Company hereby grants to
Warrantholder, and the Warrantholder is entitled upon the terms and subject to
the conditions hereinafter set forth, to subscribe to and to purchase from the
Company that number of fully paid and non-assessable shares of the Preferred
Stock equal to [          ]
Dollars ($          ) divided
by the Exercise Price.


 


Notwithstanding the
above, in the event this Warrant Agreement is exercised prior to the next round
of equity financing, the Exercise Price shall be equal to $4.63.


 


The number and Exercise
Price of such shares are subject to adjustment as provided in Section 4.


 


SECTION
2.         TERM
OF THE WARRANT AGREEMENT.


 


Except as
otherwise provided for herein, the term of this Warrant Agreement and the right
to purchase Preferred Stock as granted herein shall commence on the Effective
Date and shall be exercisable until and including July 26, 2016.


 


SECTION
3.         EXERCISE
OF THE PURCHASE RIGHTS.


 


(a)   Exercise. The purchase rights set forth in
this Warrant Agreement are exercisable by the Warrantholder, in whole or in
part, at any time, or from time to time, prior to the expiration of the term
set forth in Section 2, by
tendering to the Company at its principal office a notice of exercise in the
form attached hereto as Exhibit I
(the “Notice of Exercise”), duly completed and executed. Promptly
upon receipt of the Notice of Exercise and the payment of the “Purchase Price”
(as defined below) in accordance with the terms set forth below, and in no
event later than twenty-one (21) days thereafter, the Company shall issue to
the Warrantholder a certificate for the number of shares of Preferred Stock
purchased and shall execute the acknowledgment of exercise in the form


 

















 


attached hereto as Exhibit II  (the “Acknowledgement of
Exercise”) indicating the number of shares which remain subject to future
purchases, if any. As used herein, “Purchase Price” means, with respect
to any exercise of this Warrant Agreement, an amount equal to the Exercise
Price as of the relevant time multiplied by the number of shares of Preferred
Stock requested to be exercised under this Warrant Agreement pursuant to such
exercise.


 


The Purchase Price
may be paid at the Warrantholder’s election either (i) by cash or check, or
(ii) by surrender of Warrants (“Net Issuance”) as determined below. If
the Warrantholder elects the Net Issuance method, the Company will issue
Preferred Stock in accordance with the following formula:


 


	
   

  	
   

  	
   

  	
   

  	
  X =

  	
  Y(A-B)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Where:

  	
   

  	
  X =

  	
   

  	
  the number of shares of Preferred Stock to be issued
  to the Warrantholder.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Y =

  	
   

  	
  the number of shares of Preferred Stock requested to
  be exercised under this Warrant Agreement.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A =

  	
   

  	
  the fair market value of one (1) share of Preferred
  Stock at the time of issuance of such shares of Preferred Stock.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B =

  	
   

  	
  the Exercise Price.

  



 


For purposes of
the above calculation, current fair market value of Preferred Stock shall mean
with respect to each share of Preferred Stock:


 


(i)            if the exercise is in
connection with the Company’s initial public offering of the Company’s Common
Stock pursuant to a registration statement under the 1933 Act, which public
offering has been declared effective by the Securities and Exchange Commission
(“SEC”) (an “Initial Public Offering”), then the fair market
value per share shall be the product of (x) the initial “Price to Public” of
the Common Stock specified in the final prospectus with respect to the offering
and (y) the number of shares of Common Stock into which each share of Preferred
Stock is convertible at the time of such exercise;


 


(ii)           if the exercise is
after, and not in connection with an Initial Public Offering, and:


 


(A)   if
the Company’s Common Stock is traded on a securities exchange, the fair market
value shall be deemed to be the product of (x) the average of the closing
prices over a five (5) day period ending three days before the day the current
fair market value of the securities is being determined and (y) the number of
shares of Common Stock into which each share of Preferred Stock is convertible
at the time of such exercise; or


 


(B)   if
the Company’s Common Stock is actively traded over-the-counter, the fair market
value shall be deemed to be the product of (x) the average of the closing bid
and asked prices quoted on the NASDAQ system (or similar system) over the five
(5) day period ending three days before the day the current fair market value
of the securities is being determined and (y) the number of shares of Common
Stock into which each share of Preferred Stock is convertible at the time of
such exercise;


 


(iii)          if at any time the
Common Stock is not listed on any securities exchange or quoted in the NASDAQ
National Market or the over-the-counter market, the current fair market value
of Preferred Stock shall be the product of (x) the highest price per share
which the Company could obtain from a willing buyer (not a current employee or
director) for shares of Common Stock sold by the Company, from authorized but
unissued shares, as determined in good faith by its Board of Directors and (y)
the number of shares of Common Stock into which each share of Preferred Stock
is convertible at the time of such exercise, unless the Company shall become
subject to a Merger Event pursuant to which the Company is not the surviving
party, in which case the fair market value of Preferred Stock shall be deemed
to be the per share value received by the holders of the Company’s Preferred
Stock on a common equivalent basis pursuant to such Merger Event.


 


Upon partial
exercise by either cash or Net Issuance, the Company shall promptly issue an
amended Warrant Agreement representing the remaining number of shares
purchasable hereunder. All other terms and


 


2

















 


conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof.


 


(b)   Exercise Prior to Expiration. To the extent
this Warrant Agreement is not previously exercised as to all Preferred Stock
subject hereto, and if the fair market value of one share of the Preferred
Stock is greater than the Exercise Price then in effect, this Warrant Agreement
shall be deemed automatically exercised pursuant to Section 3(a) (even if not surrendered) immediately before its
expiration. For purposes of such automatic exercise, the fair market value of
one share of the Preferred Stock upon such expiration shall be determined
pursuant to Section 3(a). To the
extent this Warrant Agreement or any portion thereof is deemed automatically
exercised pursuant to this Section 3(b),  the Company agrees to promptly notify the
Warrantholder of the number of shares of Preferred Stock, if any, the
Warrantholder is to receive by reason of such automatic exercise.


 


SECTION
4.         ADJUSTMENT
RIGHTS.


 


The Exercise Price
and the number of shares of Preferred Stock purchasable hereunder are subject
to adjustment, as follows:


 


(a)   Merger Event. If at any time there shall be
a (i) reorganization, consolidation or merger (or similar transaction or series
of related transactions) of Company or any subsidiary of Company with or into
any other person or sale or exchange of outstanding shares in which the holders
of Company’s outstanding shares immediately before consummation of such
transaction or series of related transactions do not, immediately after
consummation of such transaction or series of related transactions, retain
shares representing at least 50.0% of the voting power of the surviving entity
of such transaction or series of related transactions (or the parent of such
surviving entity if such surviving entity is wholly owned by such parent), in
each case without regard to whether Company is the surviving entity, (ii) sale
of all or substantially all of the assets of Company or (iii) acquisition by
Company of all or substantially all of the capital stock or assets of another
person or the acquisition by Company of all or substantially all of the assets
of another Person in excess of $500,000 (each of these foregoing events shall
be referred to as a “Merger Event”), then, as a part of such Merger
Event, lawful provision shall be made so that the Warrantholder shall
thereafter be entitled to receive, upon exercise of this Warrant Agreement, the
number of shares of preferred stock or other securities or property of the
successor corporation resulting from such Merger Event, equivalent in value to
that which would have been issuable if Warrantholder had exercised this Warrant
Agreement immediately prior to the Merger Event. In any such case, appropriate
adjustment (as determined in good faith by the Company’s Board of Directors)
shall be made in the application of the provisions of this Warrant Agreement
with respect to the rights and interests of the Warrantholder after the Merger
Event to the end that the provisions of this Warrant Agreement (including
adjustments of the Exercise Price and number of shares of Preferred Stock
purchasable) shall be applicable to the greatest extent possible. Without
limiting the foregoing, in connection with any Merger Event, upon the closing
thereof, the successor or surviving entity shall assume the obligations of this
Warrant Agreement.


 


(b)   Reclassification of Shares. Except as set
forth in Section 4(a),  if the Company at any time shall, by
combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of
any other class or classes, this Warrant Agreement shall thereafter represent
the right to acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the securities which were
subject to the purchase rights under this Warrant Agreement immediately prior
to such combination, reclassification, exchange, subdivision or other change.


 


(c)   Subdivision or Combination of Shares. If
the Company at any time shall combine or subdivide its Preferred Stock, (i) in
the case of a subdivision, the Exercise Price shall be proportionately
decreased, and the number of shares of Preferred Stock issuable upon exercise
of this Warrant Agreement shall be proportionately increased, or (ii) in the
case of a combination, the Exercise Price shall be proportionately increased,
and the number of shares of Preferred Stock issuable upon the exercise of this
Warrant Agreement shall be proportionately decreased.


 


(d)   Stock Dividends. If the Company at any time
while this Warrant is outstanding and unexpired shall:


 


(i)   pay
a dividend with respect to the Preferred Stock payable in Preferred Stock, then
the Exercise Price shall be adjusted, from and after the date of determination
of shareholders entitled to receive such dividend or distribution, to that
price determined by multiplying the Exercise Price in effect


 


3

















 


immediately prior to such
date of determination by a fraction (A) the numerator of which shall be the
total number of shares of Preferred Stock outstanding immediately prior to such
dividend or distribution, and (B) the denominator of which shall be the total
number of shares of Preferred Stock outstanding immediately after such dividend
or distribution; or


 


(ii)   make
any other distribution with respect to Preferred Stock (or stock into which the
Preferred Stock is convertible), except any distribution specifically provided
for in any other clause of this Section 8,
then, in each such case, provision shall be made by the Company such that the
holder of this Warrant shall receive upon exercise or conversion of this
Warrant a proportionate share of any such dividend or distribution as though it
were the holder of the Preferred Stock (or other stock for which the Preferred
Stock is convertible) as of the record date fixed for the determination of the
shareholders of the Company entitled to receive such dividend or distribution.


 


(e)   Reserved.


 


(f)   Antidilution Rights. Additional
antidilution rights applicable to the Preferred Stock purchasable hereunder are
as set forth in the Company’s Certificate of Incorporation as amended through
the Effective Date (the “Charter”) and shall be applicable with respect
to the Preferred Stock issuable hereunder. Without limiting the foregoing, the
Exercise Price, the number of shares of Preferred Stock issuable upon exercise
of this Warrant, Agreement and/or the number of shares of Common Stock issuable
upon conversion of the Preferred Stock, shall be subject to adjustment, from
time to time, as provided in the Charter. The Company shall promptly provide
the Warrantholder with any restatement, amendment, modification or waiver of
the Charter; provided, that no such amendment, modification or waiver
shall impair or reduce the antidilution rights applicable to the Preferred
Stock as of the date hereof unless such amendment, modification or waiver
affects the rights of Warrantholder with respect to the Preferred Stock in the
same manner as it affects all other holders of Preferred Stock. To the extent
the Company provides notice to all existing Series E Preferred stockholders,
the Company shall provide Warrantholder with prior written notice of any
issuance of its stock or other equity security to occur after the Effective
Date of this Warrant Agreement, which notice shall include (a) the price at
which such stock or security is to be sold, (b) the number of shares to be
issued, and (c) such other information as necessary for Warrantholder to
determine if a dilutive event has occurred. For the avoidance of doubt, there
shall be no duplicate anti-dilution adjustment pursuant to this subsection (f), the forgoing subsection (d) and the Company’s Charter.


 


(g)   Notice of Adjustments. If: (i) the Company
shall declare any dividend or distribution upon its stock, whether in cash,
property, stock or other securities; (ii) the Company shall offer for
subscription prorata to the holders of any class of its Preferred Stock or
other convertible stock any additional shares of stock of any class or other
rights; (iii) there shall be any Merger Event; (iv) there shall be an Initial
Public Offering; or (iv) there shall be any voluntary dissolution, liquidation
or winding up of the Company; then, in connection with each such event, the
Company shall send to the Warrantholder: (A) at least twenty (20) days’ prior written
notice of the date on which the books of the Company shall close or a record
shall be taken for such dividend, distribution, subscription rights (for
subscription rights notice only need be provided to the extent the Company
provides notice to all existing Series E Preferred stockholders) (specifying
the date on which the holders of Preferred Stock shall be entitled thereto) or
for determining rights to vote in respect of such Merger Event, dissolution,
liquidation or winding up; (B) in the case of any such Merger Event,
dissolution, liquidation or winding up, at least twenty (20) days’ prior
written notice of the date when the same shall take place (and specifying the
date on which the holders of Preferred Stock shall be entitled to exchange
their Preferred Stock for securities or other property deliverable upon such
Merger Event, dissolution, liquidation or winding up); and (C) in the case of
an Initial Public Offering, the Company shall give the Warrantholder at least
thirty (30) days’ written notice prior to the effective date thereof.


 


Each such written
notice shall set forth, in reasonable detail, (i) the event requiring the
notice, and (ii) if any adjustment is required to be made, (A) the amount of
such adjustment, (B) the method by which such adjustment was calculated, (C)
the adjusted Exercise Price (if the Exercise Price has been adjusted), and (D)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, or by
reputable overnight courier with all charges prepaid, addressed to the
Warrantholder at the address for Warrantholder set forth in the registry
referred to in Section 7.


 


4

















 


(h)   Timely Notice. Failure to
timely provide such notice required by subsection
(g) above shall entitle Warrantholder to retain the benefit of the
applicable notice period notwithstanding anything to the contrary contained in
any insufficient notice received by Warrantholder.


 


SECTION
5.         REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE COMPANY.


 


(a)   Reservation of Preferred Stock. The
Preferred Stock issuable upon exercise of the Warrantholder’s rights has been
duly and validly reserved and, when issued in accordance with the provisions of
this Warrant Agreement, will be validly issued, fully paid and non-assessable,
and will be free of any taxes, liens, charges or encumbrances of any nature
whatsoever; provided, that the Preferred Stock issuable pursuant to this
Warrant Agreement may be subject to restrictions on transfer under state and/or
federal securities laws. The Company has made available to the Warrantholder
true, correct and complete copies of its Charter and Bylaws, as amended. The
issuance of certificates for shares of Preferred Stock upon exercise of this
Warrant Agreement shall be made without charge to the Warrantholder for any
issuance tax in respect thereof, or other cost incurred by the Company in
connection with such exercise and the related issuance of shares of Preferred
Stock; provided, that the Company shall not be required to pay any tax
which may be payable in respect of any transfer and the issuance and delivery
of any certificate in a name other than that of the Warrantholder.


 


(b)   Due Authority. The execution and
delivery by the Company of this Warrant Agreement and the performance of all
obligations of the Company hereunder, including the issuance to Warrantholder
of the right to acquire the shares of Preferred Stock, have been duly
authorized by all necessary corporate action on the part of the Company. The
Loan Documents and this Warrant Agreement: (1) are not inconsistent with the
Company’s Charter or Bylaws; (2) do not contravene any law or governmental
rule, regulation or order applicable to it; and (3) do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it is
bound. The Loan Documents and this Warrant Agreement constitute legal, valid
and binding agreements of the Company, enforceable in accordance with their
respective terms.


 


(c) Consents and Approvals. No consent or
approval of, giving of notice to, registration with, or taking of any other
action in respect of any state, federal or other governmental authority or
agency is required with respect to the execution, delivery and performance by
the Company of its obligations under this Warrant Agreement, except for the
filing of notices pursuant to Regulation D under the 1933 Act and any filing
required by applicable state securities law, which filings will be effective by
the time required thereby.


 


(d)   Issued Securities. All issued and
outstanding shares of Common Stock, Preferred Stock or any other securities of
the Company have been duly authorized and validly issued and are fully paid and
nonassessable. All outstanding shares of Common Stock, Preferred Stock and any
other securities were issued in full compliance with all federal and state
securities laws. In addition, as of the date immediately preceding the date of
this Warrant Agreement:


 


(i)            The authorized capital
of the Company consists of (A) 30,000,000 shares of Common Stock, of which
3,038,047 shares are issued and outstanding, and (B) 20,485,094 shares of
Preferred Stock, of which 19,106,475 shares are issued and outstanding and are
convertible into 19,379,904 shares of Common Stock at.


 


(ii)           The Company has
reserved 4,203,860 shares of Common Stock for issuance under its 1998 Stock
Plan, under which 1,143,680 options are outstanding at an average price of
$0.47 per share. The Company has outstanding warrants exercisable for an
aggregate 601,348 shares of its Series D Preferred Stock. There are no other
options, warrants, conversion privileges or other rights presently outstanding
to purchase or otherwise acquire any authorized but unissued shares of the
Company’s capital stock or other securities of the Company.


 


(iii)          Except as set forth in
the Company’s Investors’ Rights Agreement no shareholder of the Company has
preemptive rights to purchase new issuances of the Company’s capital stock.


 


(e)                Other Commitments to Register Securities. Except
as set forth in this Warrant Agreement and as set forth in the Company’s
Investors’ Rights Agreement, the Company is not, pursuant to the terms of any
other


 


5

















 


agreement currently in existence, under any obligation to
register under the 1933 Act any of its presently outstanding securities or any
of its securities which may hereafter be issued.


 


(f)                Exempt Transaction. Subject to the
accuracy of the Warrantholder’s representations in Section 6,
the issuance of the Preferred Stock upon exercise of this Warrant Agreement
will constitute a transaction exempt from (i) the registration requirements of
Section 5 of the 1933 Act, in reliance upon Section 4(2) thereof, and (ii) the
qualification requirements of the applicable state securities laws.


 


(g)                Compliance with Rule 144. If the
Warrantholder proposes to sell Preferred Stock issuable upon the exercise of
this Warrant Agreement in compliance with Rule 144 promulgated by the SEC,
then, upon Warrantholder’s written request to the Company, the Company shall
furnish to the Warrantholder, within ten days after receipt of such request, a
written statement confirming the Company’s compliance with the filing
requirements of the SEC as set forth in such Rule, as such Rule may be amended
from time to time.


 


SECTION
6.         REPRESENTATIONS
AND COVENANTS OF THE WARRANTHOLDER.


 


This Warrant
Agreement has been entered into by the Company in reliance upon the following
representations and covenants of the Warrantholder:


 


(a)   Investment Purpose. The right to acquire
Preferred Stock or the Preferred Stock issuable upon exercise of the Warrantholder’s
rights contained herein will be acquired for investment and not with a view to
the sale or distribution of any part thereof, and the Warrantholder has no
present intention of selling or engaging in any public distribution of the same
except pursuant to a registration or exemption.


 


(b)   Private Issue. The Warrantholder
understands (i) that the Preferred Stock issuable upon exercise of this Warrant
Agreement is not registered under the 1933 Act or qualified under applicable
state securities laws on the ground that the issuance contemplated by this
Warrant Agreement will be exempt from the registration and qualifications
requirements thereof, and (ii) that the Company’s reliance on such exemption is
predicated on the representations set forth in this Section 10.


 


(c)   Disposition of Warrantholder’s Rights. In
no event will the Warrantholder make a disposition of any of its rights to
acquire Preferred Stock or Preferred Stock issuable upon exercise of such
rights unless and until (i) it shall have notified the Company of the proposed
disposition, and (ii) if requested by the Company, it shall have furnished the
Company with an opinion of counsel (which counsel may either be inside or
outside counsel to the Warrantholder) satisfactory to the Company and its
counsel to the effect that (A) appropriate action necessary for compliance with
the 1933 Act has been taken, or (B) an exemption from the registration
requirements of the 1933 Act is available. Notwithstanding the foregoing, the
restrictions imposed upon the transferability of any of its rights to acquire
Preferred Stock or Preferred Stock issuable on the exercise of such rights do
not apply to transfers from the beneficial owner of any of the aforementioned
securities to its nominee or from such nominee to its beneficial owner, and
shall terminate as to any particular share of Preferred Stock when (1) such
security shall have been effectively registered under the 1933 Act and sold by
the holder thereof in accordance with such registration or (2) such security
shall have been sold without registration in compliance with Rule 144 under the
1933 Act, or (3) a letter shall have been issued to the Warrantholder at its
request by the staff of the SEC or a ruling shall have been issued to the
Warrantholder at its request by such Commission stating that no action shall be
recommended by such staff or taken by such Commission, as the case may be, if
such security is transferred without registration under the 1933 Act in
accordance with the conditions set forth in such letter or ruling and such
letter or ruling specifies that no subsequent restrictions on transfer are
required. Whenever the restrictions imposed hereunder shall terminate, as
hereinabove provided, the Warrantholder or holder of a share of Preferred Stock
then outstanding as to which such restrictions have terminated shall be
entitled to receive from the Company, without expense to such holder, one or
more new certificates for this Warrant Agreement or for such shares of
Preferred Stock not bearing any restrictive legend.


 


(d)   Financial Risk. The Warrantholder has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of its investment, and has the ability to bear
the economic risks of its investment.


 


6

















 


(e)   Risk of No Registration. The
Warrantholder understands that if the Company does not register with the SEC
pursuant to Section 12 of the 1934 Act (the “1934 Act”), or file reports
pursuant to Section 15(d) of the 1934 Act, or if a registration statement
covering the securities under the 1933 Act is not in effect when it desires to
sell (i) the rights to purchase Preferred Stock pursuant to this Warrant
Agreement or (ii) the Preferred Stock issuable upon exercise of the right to
purchase, it may be required to hold such securities for an indefinite period.
The Warrantholder also understands that any sale of (A) its rights hereunder to
purchase Preferred Stock or (B) Preferred Stock issued or issuable hereunder
which might be made by it in reliance upon Rule 144 under the 1933 Act may be
made only in accordance with the terms and conditions of that Rule.


 


(f)   Accredited Investor. Warrantholder
is an “accredited investor” within the meaning of the Securities and Exchange
Rule 501 of Regulation D, as presently in effect.


 


SECTION
7.         TRANSFERS.


 


Subject to the
terms and conditions contained in Section 6, this
Warrant Agreement and all rights hereunder are transferable in whole or in part
by the Warrantholder and any successor transferee, provided, that, in no
event shall the number of transfers of the rights and interests in all of the
Warrants exceed three (3) transfers. The transfer shall be recorded on the
books of the Company upon receipt by the Company of a notice of transfer in the
form attached hereto as Exhibit III (the
“Transfer Notice”), at its principal offices and the payment to the
Company of all transfer taxes and other governmental charges imposed on such
transfer.


 


SECTION
8.         MISCELLANEOUS.


 


(a)   Effective Date. The
provisions of this Warrant Agreement shall be construed and shall be given
effect in all respects as if it had been executed and delivered by the Company
on the date hereof. This Warrant Agreement shall be binding upon any successors
or assigns of the Company.


 


(b)   Attorney’s Fees. In any
litigation, arbitration or court proceeding between the Company and the
Warrantholder relating hereto, the prevailing party shall be entitled to
attorneys’ fees and expenses and all costs of proceedings incurred in enforcing
this Warrant Agreement.


 


(c)   Governing Law. This
Warrant Agreement shall be governed by and construed for all purposes under and
in accordance with the laws of the State of California.


 


(d)   Consent to Jurisdiction and Venue. All
judicial proceedings arising in or under or related to this Warrant Agreement
may be brought in any state or federal court of competent jurisdiction located
in the State of California. By execution and delivery of this agreement, each party
hereto generally and unconditionally: (a) consents to personal jurisdiction in
San Mateo County, State of California; (b) waives any objection as to
jurisdiction or venue in San Mateo County, State of California; (c) agrees not
to assert any defense based on lack of jurisdiction or venue in the aforesaid
courts; and (d) irrevocably agrees to be bound by any judgment rendered thereby
in connection with this Warrant Agreement. Service of process on any party
hereto in any action arising out of or relating to this agreement shall be
effective if given in accordance with the requirements for notice set forth in
this Section, and shall be deemed effective and received as set forth therein.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of either party to bring proceedings
in the courts of any other jurisdiction.


 


(e)   Mutual Waiver of Jury Trial. Because
disputes arising in connection with complex financial transactions are most
quickly and economically resolved by an experienced and expert person and The
Parties wish applicable state and federal laws to apply (rather than
arbitration rules), The Parties desire that their disputes be resolved by a
judge applying such applicable laws. EACH OF THE PARTIES SPECIFICALLY WAIVES
ANY RIGHT THEY MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM,
CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”)
ASSERTED BY THE COMPANY AGAINST THE WARRANTHOLDER OR THE WARRANTHOLDER’S
ASSIGNEE OR BY WARRANTHOLDER OR WARRANTHOLDER’S ASSIGNEE AGAINST THE COMPANY.
This waiver extends to all such Claims, including Claims that involve Persons
other than the Company and Warrantholder; Claims that arise out of or are in
any way connected to the relationship between the Company and Warrantholder;
and any Claims for damages, breach of contract, specific performance, or any
equitable or legal relief of any kind, arising out of this Warrant Agreement.


 


7

















 


(f)   Counterparts. This
Warrant Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.


 


(g)   Notices. Any notice
required or permitted hereunder shall be given in writing and shall be deemed
effectively given (i) upon personal delivery, (ii) upon facsimile transmission
(provided that the original is sent by personal delivery, mail or overnight
courier as provided herein), (iii) three (3) days after deposit in the United
States mail, by registered or certified mail, or (iv) one business day after
deposit with a reputable overnight courier with all charges prepaid, in each
case addressed to Warrantholder or the Company at the address set forth below
the Parties respective signatures to this Warrant Agreement (or such other
address of the Parties may designate by written notice to each other).


 


(h)   Remedies. In the event of
any default hereunder, the non-defaulting party may proceed to protect and
enforce its rights either by suit in equity and/or by action at law, including
but not limited to an action for damages as a result of any such default,
and/or an action for specific performance for any default where Warrantholder
will not have an adequate remedy at law and where damages will not be readily
ascertainable. The Company expressly agrees that it shall not oppose an
application by the Warrantholder or any other person entitled to the benefit of
this Agreement requiring specific performance of any or all provisions hereof
or enjoining the Company from continuing to commit any such breach of this
Agreement.


 


(i)   No Impairment of Rights. The
Company will not, by amendment of its Charter or through any other means, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant Agreement, but will at all times in good faith assist in the carrying
out of all such terms and in the taking of all such actions as may be necessary
or appropriate in order to protect the rights of the Warrantholder against
impairment.


 


(j)   Survival. The
representations, warranties, covenants and conditions of the respective parties
contained herein or made pursuant to this Warrant Agreement shall survive the
execution and delivery of this Warrant Agreement.


 


(k)   Severability. In the
event any one or more of the provisions of this Warrant Agreement shall for any
reason be held invalid, illegal or unenforceable, the remaining provisions of
this Warrant Agreement shall be unimpaired, and the invalid, illegal or
unenforceable provision shall be replaced by a mutually acceptable valid, legal
and enforceable provision, which comes closest to the intention of the parties
underlying the invalid, illegal or unenforceable provision.


 


(l)   Amendments. Any provision
of this Warrant Agreement may be amended by a written instrument signed by the
Company and by the Warrantholder.


 


(m)   Facsimile Signatures. This
Warrant Agreement may be executed and delivered by facsimile and upon such
deliver the facsimile signature will be deemed to have the same effect as if
the original signature had been delivered to the other party.


 


(n)   Additional Documents. The
Company, upon execution of this Warrant Agreement, shall provide the
Warrantholder with certified resolutions with, respect to the representations,
warranties and covenants set forth in Section
5. The Company shall also supply such other documents as the
Warrantholder may from time to time reasonably request.


 


[Remainder of Page Intentionally Left
Blank]


 


8

















 


IN
WITNESS WHEREOF, the Parties hereto have caused this Warrant
Agreement to be executed by its officers thereunto duly authorized as of the
Effective Date.


 


 


	
  COMPANY:

  	
   

  	
  EXPRESSION
  DIAGNOSTICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notice Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attn: Vikram Jog, CFO

  701 Gateway Blvd., Suite 100 

  S. San Francisco, CA 94080

  Facsimile: (650) 624-0125

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WARRANTHOLDER:

  	
   

  	
  [LENDER]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notice Address:

  
						



 


9

















 


EXHIBIT I


 


NOTICE OF EXERCISE


 


To:                                   .


 


(1)       The undersigned
Warrantholder hereby elects to purchase [                ]
shares of the Series       Preferred Stock of                 pursuant
to the terms of the Warrant Agreement dated the [      ]
day of [             ,
         ]
(the “Warrant Agreement”) between                 
and the Warrantholder, and tenders here payment of the purchase price for such
shares in full, together with all applicable transfer taxes, if any.


 


(2)       Method of Exercise (Please
initial the applicable blank):


 


a.                                The
undersigned elects to exercise this Warrant Agreement by means of a cash
payment, and gives the Company full payment for the purchase price of the
shares being purchased, together with all applicable transfer taxes, if any.


 


b.                               The
undersigned elects to exercise this Warrant Agreement by means of the Net
Issuance Exercise method of Section 3 of the Warrant Agreement.


 


(3)       In exercising its rights to
purchase the Series      Preferred Stock of                 the
undersigned hereby confirms and acknowledges the investment representations and
warranties made in Section 6 of the Warrant Agreement.


 


(4)       Please issue a certificate
or certificates representing said shares of Series       Preferred
Stock in the name of the undersigned or in such other name as is specified
below.


 


	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WARRANTHOLDER:

  	
  [LENDER]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  	
   

  



 


10

















 


EXHIBIT II


 


ACKNOWLEDGMENT OF EXERCISE


 


The undersigned                 hereby
acknowledge receipt of the “Notice of Exercise” from [LENDER], to purchase [            ]
shares of the Series                 Preferred
Stock of                 pursuant
to the terms of the Warrant Agreement, and further acknowledges that [                ]
shares remain subject to purchase under the terms of the Warrant Agreement.


 


 


	
  COMPANY:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  



 


11

















 


EXHIBIT III


 


TRANSFER NOTICE


 


(To
transfer or assign the foregoing Warrant Agreement execute this form and supply
required information. Do not use this form to purchase shares.)


 


FOR
VALUE RECEIVED, the foregoing Warrant Agreement and all
rights evidenced thereby are hereby transferred and assigned to


 


	
   

  	
   

  
	
  (Please
  Print)

  
	
   

  
	
  Whose
  address is  

  
	
   

  
	
   

  



 


	
   

  	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Holder’s Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Holder’s Address:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  	
   

  
								



 


	
  NOTE:

  	
   

  	
  The signature to this Transfer Notice must
  correspond with the name as it appears on the face of the Warrant Agreement,
  without alteration or enlargement or any change whatever. Officers of
  corporations and those acting in a fiduciary or other representative capacity
  should file proper evidence of authority to assign the foregoing Warrant
  Agreement.

  	
   

  



 


 


12

















 


EXHIBIT D(1)


 


NAME, LOCATIONS, AND OTHER INFORMATION FOR BORROWER


 


1.         Borrower hereby
represents and warrants to Lender that Borrower’s current name and
organizational status on the Closing Date is as follows:


 


 


	
  Name:

  
	
   

  	
   

  
	
  Type of organization:  

  
	
  (corporation, limited partnership, or limited
  liability company)

  
	
   

  
	
  State of organization:  

  
	
   

  
	
  Organization file number:

  	
   

  
			



 


2.         Borrower hereby
represents and warrants to Lender that for five (5) years prior to the Closing
Date, Borrower did not do business under any other name or organization or form
except the following:


 


	
  Name:

  	
   

  
	
   

  	
   

  
	
  Used
  during dates of:  

  	
   

  
	
   

  	
   

  
	
  Type
  of Organization:  

  	
   

  
	
   

  	
   

  
	
  State
  of organization:  

  	
   

  
	
   

  	
   

  
	
  Organization
  file Number:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
   

  	
   

  
	
  Used
  during dates of:

  	
   

  
	
   

  	
   

  
	
  Type
  of Organization:

  	
   

  
	
   

  	
   

  
	
  State
  of organization:

  	
   

  
	
   

  	
   

  
	
  Organization
  file Number:

  	
   

  



 






(1) Borrower to complete,
delivery to Lender


 


33

















 


3.         Borrower’s fiscal year
ends on                      .


 


4.         Borrower’s federal employer
tax identification number is                         .


 


5.         Borrower hereby
represents and warrants to Lender that the street addresses, cities, states and
postal codes of its current locations as of the Closing Date are:


 


	
  Chief
  Executive Office:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Principal
  Place of Business:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Locations
  of Collateral:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


34





















 


SCHEDULE I


 


SCHEDULE OF DOCUMENTS


 


35


















SCHEDULE OF DOCUMENTS


 


TriplePoint Capital LLC – Leader Lending/ Expression
Diagnostics, Inc.


 


$10,500,000
Growth Capital Senior Credit Facility

(Part I: $9,500,000; Part II: $1,000,000)


 


July 26,
2006

(the “Closing Date”)


 


Key


 


	
  TriplePoint
  Capital/Leader Lending

  Expression Diagnostics, Inc.

  Kevin Thorne

  John Hale, Cooley

  Robert Boudreu/David Crawford, WSGR

  	
   

  	
  Lender (Us)

  Borrower (You)

  TriplePoint counsel

  Leader Lending counsel

  Your counsel

  



 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Resp.

  	
   

  	
  Status

  
	
  1.

  	
   

  	
  PRE-CLOSING DUE DILIGENCE DOCUMENTS AND REQUIREMENTS

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.

  	
   

  	
  Proposal Letter and Term Sheet by and between
  Borrower and Lender dated May 16, 2006, together with evidence of payment of
  deposit (if any).

  	
   

  	
  Lender

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.2.

  	
   

  	
  Borrower’s Legal Due Diligence Information Sheet.

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.3.

  	
   

  	
  Preferred Stock Purchase Agreement for the latest
  round of private equity financing of Borrower.

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.4.

  	
   

  	
  Registration/Investor Rights Agreement of the most
  recent date by and between Borrower and Borrower’s stockholders.

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.5.

  	
   

  	
  Capitalization Table which shall include authorized
  and outstanding preferred and common stock and any options and warrants which
  may have been issued.

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.6.

  	
   

  	
  Borrower’s most recent Business Plan/Presentation

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.7.

  	
   

  	
  Search of UCC records by computer for all
  jurisdictions where Borrower has operations or assets, including any
  jurisdiction where collateral is located, where the principal place of business
  is located and the state of incorporation.

  	
   

  	
  Lender

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  CORPORATE EXISTENCE AND AUTHORIZATION

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.1.

  	
   

  	
  Certificate of recent date of the Secretary of State
  of the State of Delaware listing and attaching certified copies of all
  charter documents of Borrower on file in that office.

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.2.

  	
   

  	
  Copy of Borrower’s Bylaws.

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.3.

  	
   

  	
  Certificate of recent date of the Secretary of State
  of the State of Delaware as to the good standing and legal existence of
  Borrower, and where available, a certificate of tax good standing.

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.4.

  	
   

  	
  Certificates of recent date of the Secretaries of
  the following States as to the qualification of Borrower as a foreign
  corporation in said States, and where available, a certificate of tax good
  standing:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  2.4.1. All States

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.5.

  	
   

  	
  Certificate of the Secretary of Borrower dated the Closing Date attaching and certifying (i)
  resolutions of the board of directors and stockholders, (ii) Section 228
  notice (Delaware corps), (iii) by-laws, (iv) incumbency and signatures of
  officers, (v) due execution of documents, and (vi) no change in charter and
  in good standing.

  	
   

  	
  Borrower

  	
   

  	
  XX

  
											



 


1

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Resp.

  	
   

  	
  Status

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.6.

  	
   

  	
  Consent(s) authorizing Borrower to enter into the
  Credit Facility with Lender

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.7.

  	
   

  	
  Certificate of Designation or Certificate of
  Determination filed with Secretary of State of Delaware, if required.

  	
   

  	
  Borrower

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.8.

  	
   

  	
  [Certificate of the Secretary of
  State of [          ], certifying the attached [           ] Amended and Restated Certificate of Incorporation
  of Borrower, as amended by the Certificate of Amendment thereto (the “Amended
  Charter”). [If Necessary]]

  	
   

  	
  Borrower

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.9.

  	
   

  	
  [Action by unanimous written
  consent of Board of Directors approving the Borrower’s Amended Charter. [If Necessary]]

  	
   

  	
  Borrower

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.10.

  	
   

  	
  [Action by written consent of
  Stockholders approving the Borrower’s Amended Charter. [If Necessary]]

  	
   

  	
  Borrower

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  BASIC  AGREEMENTS

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1.

  	
   

  	
  Growth Capital Loan and Security Agreement dated as
  of the Closing Date by and between Borrower and Lender (the “Loan
  Agreement”).

  	
   

  	
  Lender

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Exhibits

  Exhibit A

  Exhibit B-l, B-2

  Exhibit C

  Exhibit D

  	
  

  Advance Request 

  Promissory Notes

  Warrant 

  Name, Location, Other Information

  	
   

  	
  

  Lender

  Lender

  Borrower

  Lender

  	
   

  	
  

  XX

  XX

  XX

  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule I - Schedule of Documents

  	
   

  	
  Lender

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule II - Indebtedness as of closing

  	
   

  	
  Borrower

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.2.

  	
   

  	
  Promissory Note.

  	
   

  	
  Lender

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.3.

  	
   

  	
  Warrant Agreements dated as of the Closing Date by
  and between Borrower and Lenders (the “Warrant Agreement”).

  	
   

  	
  Lender

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.4.

  	
   

  	
  Account Control Agreement(s): Comerica, Bank of
  America, UBS

  	
   

  	
  Lender

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.5.

  	
   

  	
  Intercreditor Agreement(s): Comerica

  	
   

  	
  Lender

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.6.

  	
   

  	
  ACH Payment Forms

  	
   

  	
  Borrower

  	
   

  	
  In Process

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.7.

  	
   

  	
  Warrant Purchase Agreement (Leader)

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  CLOSING DOCUMENTS AND REQUIREMENTS

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.1.

  	
   

  	
  UCC-1 Financing Statements:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  4.1.1. State of Incorporation.

  	
   

  	
  Lender

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.2.

  	
   

  	
  Certificates of Insurance, including evidence of
  additional insurance:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  4.2.1. General liability.

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  4.2.2. All risk—property damage.

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  4.2.3. Fidelity.

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.3.      Borrower’s
  endorsements to Lender for all of Borrower’s insurance policies:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  4.3.1. Loss payee for general liability insurance.

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  4.3.2. Form 438 BFU lender’s loss payable
  endorsement for all risk—property damage.

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  4.3.3. Lender’s loss payable endorsement for
  fidelity insurance.

  	
   

  	
  Borrower

  	
   

  	
  XX

  
												



 


2

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Resp.

  	
   

  	
  Status

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.4.

  	
   

  	
  Check made payable to Lender in amount of $95,000 which
  represents the Facility Fee for Part I pursuant to the Loan Agreement, if not
  previously paid.

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.5.

  	
   

  	
  Check made payable to Lender for Lender’s
  pre-Closing Date legal fees and expenses, in amount not to exceed Ten
  Thousand Dollars ($10,000).

  	
   

  	
  Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.6.

  	
   

  	
  Copies of all necessary UCC termination statements
  or releases which are required in order for Lender to obtain perfection and
  priority of its security interest in the Collateral.

  	
   

  	
  Lender & Borrower

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.7.

  	
   

  	
  Open Items Letter signed by Lender’s Counsel and by
  Borrower or Borrower’s Counsel, if required.

  	
   

  	
  Lender & Borrower

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  POST-CLOSING DOCUMENTS AND REQUIREMENTS

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.1.

  	
   

  	
  Search UCC records in all relevant jurisdictions to
  verify that all UCC Financing Statements were filed and properly recorded and
  that no intervening Liens were filed by other creditors.

  	
   

  	
  Lender

  	
   

  	
  XX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.2.

  	
   

  	
  Obtain first Advance Request from Borrower and have
  Borrower execute first Promissory Note.

  	
   

  	
  Borrower

  	
   

  	
  In Process

  
										



 


3

















 


THIS WARRANT AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANTS HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AS AMENDED (THE “1933 ACT”), OR ANY
STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT, OR ANY APPLICABLE STATE
SECURITIES LAWS.


 


Warrant
No. 443-W-01


 


WARRANT AGREEMENT


 


To Purchase Shares of the Series E Preferred Stock of
Expression Diagnostics, Inc.


 


Dated as of July 26, 2006 (the “Effective
Date”)


 


WHEREAS,
Expression Diagnostics, Inc., a Delaware corporation (the “Company”),
has entered into a Growth Capital Loan and Security Agreement dated as of July
26, 2006 (the “Loan Agreement”) with TriplePoint  Capital LLC, a
Delaware company (the “Warrantholder”);


 


WHEREAS,
the Company desires to grant to Warrantholder, in
consideration for the financial accommodations provided for in the Loan
Agreement, the right to purchase shares of its Series E Preferred Stock;


 


NOW,
THEREFORE, in consideration of the Warrantholder executing
and delivering the Loan Agreement and providing the financial accommodations
contemplated therein, and in consideration of the mutual covenants and
agreements contained herein, the Company and Warrantholder agree as follows:


 


SECTION
1.      GRANT OF THE RIGHT TO PURCHASE PREFERRED
STOCK.


 


For value
received, the Company hereby grants to Warrantholder, and the Warrantholder is
entitled upon the terms and subject to the conditions hereinafter set forth, to
subscribe to and to purchase from the Company that number of fully paid and
non-assessable shares of the Company’s Series E Preferred Stock (the “Preferred
Stock”) equal to Two Hundred Eighty Thousand Dollars ($280,000) divided by
a purchase price per share equal to the lesser of (a) $4.63 or (b) the next
round of equity financing preferred stock price per share (the “Exercise
Price”)


 


Upon the
availability of Part II under the Loan Agreement the Company hereby grants to
Warrantholder, and the Warrantholder is entitled upon the terms and subject to
the conditions hereinafter set forth, to subscribe to and to purchase from the
Company that number of fully paid and non-assessable shares of the Preferred
Stock equal to Twenty-Five Thousand Dollars ($25,000) divided by the Exercise
Price.


 


Notwithstanding the above,
in the event this Warrant Agreement is exercised prior to the next round of
equity financing, the Exercise Price shall be equal to $4.63.


 


The number and Exercise
Price of such shares are subject to adjustment as provided in Section 4.


 


SECTION
2.      TERM OF THE WARRANT AGREEMENT.


 


Except as
otherwise provided for herein, the term of this Warrant Agreement and the right
to purchase Preferred Stock as granted herein shall commence on the Effective
Date and shall be exercisable until and including July 26, 2016.


 


SECTION
3.      EXERCISE OF THE PURCHASE RIGHTS.


 


(a)  Exercise.
The purchase rights set forth in this Warrant Agreement are
exercisable by the Warrantholder, in whole or in part, at any time, or from
time to time, prior to the expiration of the term set forth in Section 2,
by tendering to the Company at its principal office a notice of
exercise in the form attached hereto as Exhibit
I  (the “Notice of Exercise”), duly completed and
executed. Promptly upon receipt of the Notice of Exercise and the payment of
the “Purchase Price” (as defined below) in accordance with the terms set forth
below, and in no event later than twenty-one (21) days thereafter, the Company
shall issue to the Warrantholder a certificate for the number of shares of
Preferred Stock purchased and shall execute the acknowledgment of exercise in
the form


 

















 


attached hereto as Exhibit II  (the “Acknowledgment of
Exercise”) indicating the number of shares which remain subject to future
purchases, if any. As used herein, “Purchase Price” means, with respect
to any exercise of this Warrant Agreement, an amount equal to the Exercise
Price as of the relevant time multiplied by the number of shares of Preferred
Stock requested to be exercised under this Warrant Agreement pursuant to such
exercise.


 


The Purchase Price
may be paid at the Warrantholder’s election either (i) by cash or check, or
(ii) by surrender of Warrants (“Net Issuance”) as determined below. If
the Warrantholder elects the Net Issuance method, the Company will issue Preferred
Stock in accordance with the following formula:


 


	
   

  	
   

  	
   

  	
   

  	
  X = 

  	
  Y(A-B)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Where:

  	
   

  	
  X =

  	
   

  	
  the number of shares of
  Preferred Stock to be issued to the Warrantholder.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Y =

  	
   

  	
  the number of shares of
  Preferred Stock requested to be exercised under this Warrant Agreement.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A =

  	
   

  	
  the fair market value
  of one (1) share of Preferred Stock at the time of issuance of such shares of
  Preferred Stock.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B =

  	
   

  	
  the Exercise Price.

  



 


For purposes of
the above calculation, current fair market value of Preferred Stock shall mean
with respect to each share of Preferred Stock:


 


(i)        if the exercise is in connection with
the Company’s initial public offering of the Company’s Common Stock pursuant to
a registration statement under the 1933 Act, which public offering has been
declared effective by the Securities and Exchange Commission (“SEC”) (an
“Initial Public Offering”), then the fair market value per share shall
be the product of (x) the initial “Price to Public” of the Common Stock
specified in the final prospectus with respect to the offering and (y) the
number of shares of Common Stock into which each share of Preferred Stock is
convertible at the time of such exercise;


 


(ii)       if the exercise is after, and not in
connection with an Initial Public Offering, and:


 


(A)  if
the Company’s Common Stock is traded on a securities exchange, the fair market
value shall be deemed to be the product of (x) the average of the closing
prices over a five (5) day period ending three days before the day the current
fair market value of the securities is being determined and (y) the number of
shares of Common Stock into which each share of Preferred Stock is convertible
at the time of such exercise; or


 


(B)  if
the Company’s Common Stock is actively traded over-the-counter, the fair market
value shall be deemed to be the product of (x) the average of the closing bid
and asked prices quoted on the NASDAQ system (or similar system) over the five
(5) day period ending three days before the day the current fair market value
of the securities is being determined and (y) the number of shares of Common
Stock into which each share of Preferred Stock is convertible at the time of
such exercise;


 


(iii)      if at any time the Common Stock is not
listed on any securities exchange or quoted in the NASDAQ National Market or
the over-the-counter market, the current fair market value of Preferred Stock
shall be the product of (x) the highest price per share which the Company could
obtain from a willing buyer (not a current employee or director) for shares of
Common Stock sold by the Company, from authorized but unissued shares, as
determined in good faith by its Board of Directors and (y) the number of shares
of Common Stock into which each share of Preferred Stock is convertible at the time
of such exercise, unless the Company shall become subject to a Merger Event
pursuant to which the Company is not the surviving party, in which case the
fair market value of Preferred Stock shall be deemed to be the per share value
received by the holders of the Company’s Preferred Stock on a common equivalent
basis pursuant to such Merger Event.


 


Upon partial
exercise by either cash or Net issuance, the Company shall promptly issue an
amended Warrant Agreement representing the remaining number of shares purchasable
hereunder. All other terms and


 


2

















 


conditions of such
amended Warrant Agreement shall be identical to those contained herein,
including, but not limited to the Effective Date hereof.


 


(b)  Exercise Prior to Expiration.  To the extent this Warrant Agreement is
not previously exercised as to all Preferred Stock subject hereto, and if the
fair market value of one share of the Preferred Stock is greater than the
Exercise Price then in effect, this Warrant Agreement shall be deemed
automatically exercised pursuant to Section
3(a) (even if not surrendered) immediately before its expiration.
For purposes of such automatic exercise, the fair market value of one share of
the Preferred Stock upon such expiration shall be determined pursuant to Section 3(a). To the extent this Warrant
Agreement or any portion thereof is deemed automatically exercised pursuant to
this Section 3(b), the Company
agrees to promptly notify the Warrantholder of the number of shares of
Preferred Stock, if any, the Warrantholder is to receive by reason of such
automatic exercise.


 


SECTION
4.      ADJUSTMENT RIGHTS.


 


The Exercise Price
and the number of shares of Preferred Stock purchasable hereunder are subject
to adjustment, as follows:


 


(a)  Merger Event.  If at any time there shall be a (i) reorganization,
consolidation or merger (or similar transaction or series of related
transactions) of Company or any subsidiary of Company with or into any other
person or sale or exchange of outstanding shares in which the holders of
Company’s outstanding shares immediately before consummation of such
transaction or series of related transactions do not, immediately after
consummation of such transaction or series of related transactions, retain shares
representing at least 50.0% of the voting power of the surviving entity of such
transaction or series of related transactions (or the parent of such surviving
entity if such surviving entity is wholly owned by such parent), in each case
without regard to whether Company is the surviving entity, (ii) sale of all or
substantially all of the assets of Company or (iii) acquisition by Company of
all or substantially all of the capital stock or assets of another person or
the acquisition by Company of all or substantially all of the assets of another
Person in excess of $500,000 (each of these foregoing events shall be referred
to as a “Merger Event”), then, as a part of such Merger Event, lawful
provision shall be made so that the Warrantholder shall thereafter be entitled
to receive, upon exercise of this Warrant Agreement, the number of shares of
preferred stock or other securities or property of the successor corporation
resulting from such Merger Event, equivalent in value to that which would have
been issuable if Warrantholder had exercised this Warrant Agreement immediately
prior to the Merger Event. In any such case, appropriate adjustment (as
determined in good faith by the Company’s Board of Directors) shall be made in
the application of the provisions of this Warrant Agreement with respect to the
rights and interests of the Warrantholder after the Merger Event to the end
that the provisions of this Warrant Agreement (including adjustments of the
Exercise Price and number of shares of Preferred Stock purchasable) shall be
applicable to the greatest extent possible. Without limiting the foregoing, in
connection with any Merger Event, upon the closing thereof, the successor or
surviving entity shall assume the obligations of this Warrant Agreement.


 


(b)  Reclassification of Shares.  Except as set forth in Section 4(a), if the Company at any time
shall, by combination, reclassification, exchange or subdivision of securities
or otherwise, change any of the securities as to which purchase rights under
this Warrant Agreement exist into the same or a different number of securities
of any other class or classes, this Warrant Agreement shall thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities which
were subject to the purchase rights under this Warrant Agreement immediately
prior to such combination, reclassification, exchange, subdivision or other
change.


 


(c)  Subdivision or Combination of Shares.  If the Company at any time shall combine
or subdivide its Preferred Stock, (i) in the case of a subdivision, the
Exercise Price shall be proportionately decreased, and the number of shares of
Preferred Stock issuable upon exercise of this Warrant Agreement shall be
proportionately increased, or (ii) in the case of a combination, the Exercise
Price shall be proportionately increased, and the number of shares of Preferred
Stock issuable upon the exercise of this Warrant Agreement shall be
proportionately decreased.


 


(d)  Stock Dividends. If the Company at any time
while this Warrant is outstanding and unexpired shall:


 


(i)        pay a dividend with respect to the
Preferred Stock payable in Preferred Stock, then the Exercise Price shall be
adjusted, from and after the date of determination of shareholders entitled to
receive such dividend or distribution, to that price determined by multiplying
the Exercise Price in effect


 


3

















 


immediately prior to such
date of determination by a fraction (A) the numerator of which shall be the
total number of shares of Preferred Stock outstanding immediately prior to such
dividend or distribution, and (B) the denominator of which shall be the total
number of shares of Preferred Stock outstanding immediately after such dividend
or distribution; or


 


(ii)       make any other distribution with respect
to Preferred Stock (or stock into which the Preferred Stock is convertible),
except any distribution specifically provided for in any other clause of this Section 8, then, in each such case,
provision shall be made by the Company such that the holder of this Warrant
shall receive upon exercise or conversion of this Warrant a proportionate share
of any such dividend or distribution as though it were the holder of the
Preferred Stock (or other stock for which the Preferred Stock is convertible)
as of the record date fixed for the determination of the shareholders of the
Company entitled to receive such dividend or distribution.


 


(e)       Reserved.


 


(f)        Antidilution
Rights. Additional antidilution rights applicable to the Preferred
Stock purchasable hereunder are as set forth in the Company’s Certificate of
Incorporation as amended through the Effective Date (the “Charter”) and
shall be applicable with respect to the Preferred Stock issuable hereunder.
Without limiting the foregoing, the Exercise Price, the number of shares of
Preferred Stock issuable upon exercise of this Warrant, Agreement and/or the
number of shares of Common Stock issuable upon conversion of the Preferred
Stock, shall be subject to adjustment, from time to time, as provided in the
Charter. The Company shall promptly provide the Warrantholder with any
restatement, amendment, modification or waiver of the Charter; provided,
that no such amendment, modification or waiver shall impair or reduce the
antidilution rights applicable to the Preferred Stock as of the date hereof
unless such amendment, modification or waiver affects the rights of
Warrantholder with respect to the Preferred Stock in the same manner as it
affects all other holders of Preferred Stock. To the extent the Company
provides notice to all existing Series E Preferred stockholders, the Company
shall provide Warrantholder with prior written notice of any issuance of its
stock or other equity security to occur after the Effective Date of this
Warrant Agreement, which notice shall include (a) the price at which such stock
or security is to be sold, (b) the number of shares to be issued, and (c) such
other information as necessary for Warrantholder to determine if a dilutive
event has occurred. For the avoidance of doubt, there shall be no duplicate
anti-dilution adjustment pursuant to this subsection
(f), the forgoing subsection (d) and
the Company’s Charter.


 


(g)  Notice of Adjustments.  If: (i) the Company shall declare any
dividend or distribution upon its stock, whether in cash, property, stock or
other securities; (ii) the Company shall offer for subscription prorata to the
holders of any class of its Preferred Stock or other convertible stock any
additional shares of stock of any class or other rights; (iii) there shall be
any Merger Event; (iv) there shall be an Initial Public Offering; or (iv) there
shall be any voluntary dissolution, liquidation or winding up of the Company;
then, in connection with each such event, the Company shall send to the
Warrantholder: (A) at least twenty (20) days’ prior written notice of the date
on which the books of the Company shall close or a record shall be taken for
such dividend, distribution, subscription rights (for subscription rights
notice only need be provided to the extent the Company provides notice to all
existing Series E Preferred stockholders) (specifying the date on which the
holders of Preferred Stock shall be entitled thereto) or for determining rights
to vote in respect of such Merger Event, dissolution, liquidation or winding
up; (B) in the case of any such Merger Event, dissolution, liquidation or
winding up, at least twenty (20) days’ prior written notice of the date when
the same shall take place (and specifying the date on which the holders of
Preferred Stock shall be entitled to exchange their Preferred Stock for
securities or other property deliverable upon such Merger Event, dissolution,
liquidation or winding up); and (C) in the case of an Initial Public Offering,
the Company shall give the Warrantholder at least thirty (30) days’ written
notice prior to the effective date thereof.


 


Each such written notice
shall set forth, in reasonable detail, (i) the event requiring the notice, and
(ii) if any adjustment is required to be made, (A) the amount of such
adjustment, (B) the method by which such adjustment was calculated, (C) the
adjusted Exercise Price (if the Exercise Price has been adjusted), and (D) the
number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, or by
reputable overnight courier with all charges prepaid, addressed to the
Warrantholder at the address for Warrantholder set forth in the registry
referred to in Section 7.


 


 


4

















 


(h)  Timely Notice. Failure to
timely provide such notice required by subsection
(g) above shall entitle Warrantholder to retain the benefit of the
applicable notice period notwithstanding anything to the contrary contained in
any insufficient notice received by Warrantholder.


 


SECTION
5.      REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE COMPANY.


 


(a)  Reservation of Preferred Stock.
The Preferred Stock issuable upon exercise of the Warrantholder’s rights has
been duly and validly reserved and, when issued in accordance with the
provisions of this Warrant Agreement, will be validly issued, fully paid and
non-assessable, and will be free of any taxes, liens, charges or encumbrances
of any nature whatsoever; provided, that the Preferred Stock issuable
pursuant to this Warrant Agreement may be subject to restrictions on transfer
under state and/or federal securities laws. The Company has made available to
the Warrantholder true, correct and complete copies of its Charter and Bylaws,
as amended. The issuance of certificates for shares of Preferred Stock upon
exercise of this Warrant Agreement shall be made without charge to the
Warrantholder for any issuance tax in respect thereof, or other cost incurred
by the Company in connection with such exercise and the related issuance of
shares of Preferred Stock; provided, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer and the
issuance and delivery of any certificate in a name other than that of the
Warrantholder.


 


(b)  Due Authority.  The execution and delivery by the Company
of this Warrant Agreement and the performance of all obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire the
shares of Preferred Stock, have been duly authorized by all necessary corporate
action on the part of the Company. The Loan Documents and this Warrant
Agreement: (1) are not inconsistent with the Company’s Charter or Bylaws; (2)
do not contravene any law or governmental rule, regulation or order applicable
to it; and (3) do not and will not contravene any provision of, or constitute a
default under, any indenture, mortgage, contract or other instrument to which
it is a party or by which it is bound. The Loan Documents and this Warrant
Agreement constitute legal, valid and binding agreements of the Company,
enforceable in accordance with their respective terms.


 


(c)  Consents and Approvals.  No consent or approval of, giving of
notice to, registration with, or taking of any other action in respect of any
state, federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant Agreement, except for the filing of notices
pursuant to Regulation D under the 1933 Act and any filing required by
applicable state securities law, which filings will be effective by the time
required thereby.


 


(d)  Issued Securities.  All issued and outstanding shares of
Common Stock, Preferred Stock or any other securities of the Company have been
duly authorized and validly issued and are fully paid and nonassessable. All
outstanding shares of Common Stock, Preferred Stock and any other securities
were issued in full compliance with all federal and state securities laws. In
addition, as of the date immediately preceding the date of this Warrant
Agreement:


 


(i)        The authorized capital of the Company
consists of (A) 30,000,000 shares of Common Stock, of which 3,038,047 shares
are issued and outstanding, and (B) 20,485,094 shares of Preferred Stock, of
which 19,106,475 shares are issued and outstanding and are convertible into
19,379,904 shares of Common Stock at.


 


(ii)       The Company has reserved 4,203,860 shares
of Common Stock for issuance under its 1998 Stock Plan, under which 1,143,680
options are outstanding at an average price of $0.47 per share. The Company has
outstanding warrants exercisable for an aggregate 601,348 shares of its Series
D Preferred Stock. There are no other options, warrants, conversion privileges
or other rights presently outstanding to purchase or otherwise acquire any
authorized but unissued shares of the Company’s capital stock or other
securities of the Company.


 


(iii)      Except as set forth in the Company’s
Investors’ Rights Agreement no shareholder of the Company has preemptive rights
to purchase new issuances of the Company’s capital stock.


 


(e)       Other
Commitments to Register Securities. Except as set forth in this
Warrant Agreement and as set forth in the Company’s Investors’ Rights
Agreement, the Company is not, pursuant to the terms of any other


 


5

















 


agreement currently in
existence, under any obligation to register under the 1933 Act any of its
presently outstanding securities or any of its securities which may hereafter
be issued.


 


(f)        Exempt
Transaction.  Subject
to the accuracy of the Warrantholder’s representations in Section 6, the issuance of the Preferred
Stock upon exercise of this Warrant Agreement will constitute a transaction
exempt from (i) the registration requirements of Section 5 of the 1933 Act, in
reliance upon Section 4(2) thereof, and (ii) the qualification requirements of
the applicable state securities laws.


 


(g)       Compliance
with Rule 144.  If
the Warrantholder proposes to sell Preferred Stock issuable upon the exercise
of this Warrant Agreement in compliance with Rule 144 promulgated by the SEC,
then, upon Warrantholder’s written request to the Company, the Company shall
furnish to the Warrantholder, within ten days after receipt of such request, a
written statement confirming the Company’s compliance with the filing
requirements of the SEC as set forth in such Rule, as such Rule may be amended
from time to time.


 


SECTION
6.      REPRESENTATIONS AND COVENANTS OF THE
WARRANTHOLDER.


 


This Warrant
Agreement has been entered into by the Company in reliance upon the following
representations and covenants of the Warrantholder:


 


(a)  Investment Purpose. The right to acquire
Preferred Stock or the Preferred Stock issuable upon exercise of the
Warrantholder’s rights contained herein will be acquired for investment and not
with a view to the sale or distribution of any part thereof, and the
Warrantholder has no present intention of selling or engaging in any public
distribution of the same except pursuant to a registration or exemption.


 


(b)  Private Issue.  The Warrantholder understands (i) that the Preferred Stock
issuable upon exercise of this Warrant Agreement is not registered under the
1933 Act or qualified under applicable state securities laws on the ground that
the issuance contemplated by this Warrant Agreement will be exempt from the
registration and qualifications requirements thereof, and (ii) that the
Company’s reliance on such exemption is predicated on the representations set
forth in this Section 10.


 


(c)  Disposition of Warrantholder’s Rights.  In no event will the Warrantholder make a
disposition of any of its rights to acquire Preferred Stock or Preferred Stock
issuable upon exercise of such rights unless and until (i) it shall have
notified the Company of the proposed disposition, and (ii) if requested by the
Company, it shall have furnished the Company with an opinion of counsel (which
counsel may either be inside or outside counsel to the Warrantholder)
satisfactory to the Company and its counsel to the effect that (A) appropriate
action necessary for compliance with the 1933 Act has been taken, or (B) an
exemption from the registration requirements of the 1933 Act is available.
Notwithstanding the foregoing, the restrictions imposed upon the
transferability of any of its rights to acquire Preferred Stock or Preferred
Stock issuable on the exercise of such rights do not apply to transfers from the
beneficial owner of any of the aforementioned securities to its nominee or from
such nominee to its beneficial owner, and shall terminate as to any particular
share of Preferred Stock when (1) such security shall have been effectively
registered under the 1933 Act and sold by the holder thereof in accordance with
such registration or (2) such security shall have been sold without
registration in compliance with Rule 144 under the 1933 Act, or (3) a letter
shall have been issued to the Warrantholder at its request by the staff of
the  SEC or a ruling shall have been
issued to the Warrantholder at its request by such Commission stating that no
action shall be recommended by such staff or taken by such Commission, as the
case may be, if such security is transferred without registration under the
1933 Act in accordance with the conditions set forth in such letter or ruling
and such letter or ruling specifies that no subsequent restrictions on transfer
are required. Whenever the restrictions imposed hereunder shall terminate, as
hereinabove provided, the Warrantholder or holder of a share of Preferred Stock
then outstanding as to which such restrictions have terminated shall be
entitled to receive from the Company, without expense to such holder, one or
more new certificates for this Warrant Agreement or for such shares of
Preferred Stock not bearing any restrictive legend.


 


(d)  Financial Risk.  The Warrantholder has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.


 


(e)  Risk of No Registration.  The Warrantholder understands that if the
Company does not register with the SEC pursuant to Section 12 of the 1934 Act
(the “1934 Act”), or file reports pursuant to Section 15(d) of the


 


6

















 


1934 Act, or if a
registration statement covering the securities under the 1933 Act is not in
effect when it desires to sell (i) the rights to purchase Preferred Stock
pursuant to this Warrant Agreement or (ii) the Preferred Stock issuable upon
exercise of the right to purchase, it may be required to hold such securities
for an indefinite period. The Warrantholder also understands that any sale of
(A) its rights hereunder to purchase Preferred Stock or (B) Preferred Stock
issued or issuable hereunder which might be made by it in reliance upon Rule
144 under the 1933 Act may be made only in accordance with the terms and
conditions of that Rule.


 


(f)  Accredited Investor. Warrantholder is an
“accredited investor” within the meaning of the Securities and Exchange Rule
501 of Regulation D, as presently in effect.


 


SECTION
7.      TRANSFERS.


 


Subject to the
terms and conditions contained in Section 6,
this Warrant Agreement and all rights hereunder are transferable in whole or in
part by the Warrantholder and any successor transferee, provided, that,
in no event shall the number of transfers of the rights and interests in all of
the Warrants exceed three (3) transfers. The transfer shall be recorded on the
books of the Company upon receipt by the Company of a notice of transfer in the
form attached hereto as Exhibit III (the
“Transfer Notice”), at its principal offices and the payment to the
Company of all transfer taxes and other governmental charges imposed on such
transfer.


 


SECTION
8.      MISCELLANEOUS.


 


(a)  Effective Date. The provisions of this
Warrant Agreement shall be construed and shall be given effect in all respects
as if it had been executed and delivered by the Company on the date hereof.
This Warrant Agreement shall be binding upon any successors or assigns of the
Company.


 


(b)  Attorney’s Fees. In any litigation,
arbitration or court proceeding between the Company and the Warrantholder relating
hereto, the prevailing party shall be entitled to attorneys’ fees and expenses
and all costs of proceedings incurred in enforcing this Warrant Agreement.


 


(c)  Governing Law. This Warrant Agreement shall
be governed by and construed for all purposes under and in accordance with the
laws of the State of California.


 


(d)  Consent to Jurisdiction and Venue. All
judicial proceedings arising in or under or related to this Warrant Agreement
may be brought in any state or federal court of competent jurisdiction located
in the State of California. By execution and delivery of this agreement, each
party hereto generally and unconditionally: (a) consents to personal
jurisdiction in San Mateo County, State of California; (b) waives any objection
as to jurisdiction or venue in San Mateo County, State of California; (c)
agrees not to assert any defense based on lack of jurisdiction or venue in the
aforesaid courts; and (d) irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Warrant Agreement. Service of process
on any party hereto in any action arising out of or relating to this agreement
shall be effective if given in accordance with the requirements for notice set
forth in this Section, and shall be deemed effective and received as set forth
therein. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of either party to bring
proceedings in the courts of any other jurisdiction.


 


(e)  Mutual Waiver of Jury Trial. Because
disputes arising in connection with complex financial transactions are most
quickly and economically resolved by an experienced and expert person and The
Parties wish applicable state and federal laws to apply (rather than
arbitration rules), The Parties desire that their disputes be resolved by a
judge applying such applicable laws. EACH OF THE PARTIES SPECIFICALLY WAIVES
ANY RIGHT THEY MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM,
CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY,
“CLAIMS”) ASSERTED BY THE COMPANY AGAINST THE WARRANTHOLDER OR THE
WARRANTHOLDER’S ASSIGNEE OR BY WARRANTHOLDER OR WARRANTHOLDER’S ASSIGNEE
AGAINST THE COMPANY. This waiver extends to all such Claims, including Claims
that involve Persons other than the Company and Warrantholder; Claims that
arise out of or are in any way connected to the relationship between the
Company and Warrantholder; and any Claims for damages, breach of contract,
specific performance, or any equitable or legal relief of any kind, arising out
of this Warrant Agreement.


 


(f)  Counterparts. This Warrant Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.


 


7

















 


(g)  Notices. Any notice required or permitted
hereunder shall be given in writing and shall be deemed effectively given (i)
upon personal delivery, (ii) upon facsimile transmission (provided that the
original is sent by personal delivery, mail or overnight courier as provided
herein), (iii) three (3) days after deposit in the United States mail, by
registered or certified mail, or (iv) one business day after deposit with a
reputable overnight courier with all charges prepaid, in each case addressed to
Warrantholder or the Company at the address set forth below the Parties
respective signatures to this Warrant Agreement (or such other address of the
Parties may designate by written notice to each other).


 


(h)  Remedies. In the event of any default
hereunder, the non-defaulting party may proceed to protect and enforce its
rights either by suit in equity and/or by action at law, including but not
limited to an action for damages as a result of any such default, and/or an
action for specific performance for any default where Warrantholder will not
have an adequate remedy at law and where damages will not be readily
ascertainable. The Company expressly agrees that it shall not oppose an
application by the Warrantholder or any other person entitled to the benefit of
this Agreement requiring specific performance of any or all provisions hereof
or enjoining the Company from continuing to commit any such breach of this
Agreement.


 


(i)  No Impairment of Rights. The Company will
not, by amendment of its Charter or through any other means, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant
Agreement, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of the Warrantholder against
impairment.


 


(j)  Survival. The representations, warranties,
covenants and conditions of the respective parties contained herein or made
pursuant to this Warrant Agreement shall survive the execution and delivery of
this Warrant Agreement.


 


(k)  Severability. In the event any one or more
of the provisions of this Warrant Agreement shall for any reason be held
invalid, illegal or unenforceable, the remaining provisions of this Warrant
Agreement shall be unimpaired, and the invalid, illegal or unenforceable
provision shall be replaced by a mutually acceptable valid, legal and
enforceable provision, which comes closest to the intention of the parties
underlying the invalid, illegal or unenforceable provision.


 


(l)  Amendments. Any provision of this Warrant
Agreement may be amended by a written instrument signed by the Company and by
the Warrantholder.


 


(m)  Facsimile Signatures. This Warrant
Agreement may be executed and delivered by facsimile and upon such deliver the
facsimile signature will be deemed to have the same effect as if the original
signature had been delivered to the other party.


 


(n)  Additional Documents. The Company, upon
execution of this Warrant Agreement, shall provide the Warrantholder with
certified resolutions with respect to the representations, warranties and
covenants set forth in Section 5.
The Company shall also supply such other documents as the Warrantholder may
from time to time reasonably request.


 


[Remainder of Page Intentionally Left Blank]


 


8





















 


IN
WITNESS WHEREOF, the Parties hereto have caused this Warrant
Agreement to be executed by its officers thereunto duly authorized as of the
Effective Date.


 


 


	
  COMPANY:

  	
   

  	
  EXPRESSION
  DIAGNOSTICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Vikram Jog

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  CFO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notice Address:

  
	
   

  	
   

  	
   

  	
  Attn: Vikram Jog, CFO

  701 Gateway Blvd., Suite 100

  S. San Francisco, CA 94080

  Facsimile: (650) 624-0125

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WARRANTHOLDER:     TRIPLEPOINT CAPITAL
  LLC

  
	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Sajal Srivastava

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  COO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notice Address:

  
	
   

  	
   

  	
   

  	
  Attn: Sajal Srivastava,
  COO

  2420 Sand Hill Road, #101

  Menlo Park, CA 94025 

  Facsimile: (650) 854-2094

  
						



 


9

















 


EXHIBIT I


 


NOTICE OF EXERCISE


 


To:                                     .


 


(1)                     The
undersigned Warrantholder hereby elects to purchase [                ]
shares of the Series      Preferred Stock of                 
pursuant to the terms of the Warrant Agreement dated the [    ]
day of [                 ,
       ] (the “Warrant Agreement”) between                 
and the Warrantholder, and tenders here payment of the purchase price for such
shares in full, together with all applicable transfer taxes, if any.


 


(2)                     Method of
Exercise (Please initial the applicable blank):


 


a.                              
The undersigned elects to exercise this Warrant Agreement by means of a cash
payment, and gives the Company full payment for the purchase price of the
shares being purchased, together with all applicable transfer taxes, if any.


 


b.                              
The undersigned elects to exercise this Warrant Agreement by means of the Net
Issuance Exercise method of Section 3 of the Warrant Agreement.


 


(3)                     In  exercising its rights to purchase the Series      
Preferred Stock of                 
the undersigned hereby confirms and acknowledges the investment representations
and warranties made in Section 6 of the Warrant Agreement.


 


(4)                     Please issue
a certificate or certificates representing said shares of Series       
Preferred Stock in the name of the undersigned or in such other name as is
specified below.


 


 


	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WARRANTHOLDER:

  	
  TRIPLEPOINT
  CAPITAL LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  



 


10

















 


EXHIBIT II


 


ACKNOWLEDGMENT OF EXERCISE


 


The undersigned               
hereby acknowledge receipt of the “Notice of Exercise” from TRIPLEPOINT CAPITAL
LLC, to purchase [              ]
shares of the Series          Preferred
Stock of               
pursuant to the terms of the Warrant Agreement, and further acknowledges that [          ]
shares remain subject to purchase under the terms of the Warrant Agreement.


 


 


	
  COMPANY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
						



 


11

















 


EXHIBIT III


 


TRANSFER NOTICE


 


(To
transfer or assign the foregoing Warrant Agreement execute this form and supply
required information. Do not use this form to purchase shares.)


 


FOR
VALUE RECEIVED, the foregoing Warrant Agreement and all
rights evidenced thereby are hereby transferred and assigned to


 


 


	
   

  	
   

  
	
  (Please
  Print)

  
	
   

  
	
  whose
  address is

  



 


 


	
   

  	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Holder’s
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Holder’s
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  
							



 


	
  NOTE:

  	
   

  	
  The signature to this Transfer Notice must
  correspond with the name as it appears on the face of the Warrant Agreement,
  without alteration or enlargement or any change whatever. Officers of
  corporations and those acting in a fiduciary or other representative capacity
  should file proper evidence of authority to assign the foregoing Warrant
  Agreement.

  



 


12

















 


THIS WARRANT AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANTS HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AS AMENDED (THE “1933 ACT”), OR ANY
STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT, OR ANY APPLICABLE STATE
SECURITIES LAWS.


 


Warrant
No. 


 


WARRANT AGREEMENT


 


To Purchase Shares of the Series E
Preferred Stock of Expression Diagnostics, Inc.


 


Dated as of July 26, 2006 (the “Effective
Date”)


 


WHEREAS,
Expression Diagnostics, Inc., a Delaware corporation (the “Company”),
has entered into a Growth Capital Loan and Security Agreement dated as of July
26, 2006 (the “Loan Agreement”) with Leader Equity, LLC, a Delaware
company (the “Warrantholder”);


 


WHEREAS,  the Company desires to grant to
Warrantholder, in consideration for the financial accommodations provided for
in the Loan Agreement, the right to purchase shares of its Series E Preferred
Stock;


 


NOW,
THEREFORE,  in
consideration of the Warrantholder executing and delivering the Loan Agreement
and providing the financial accommodations contemplated therein, and in consideration
of the mutual covenants and agreements contained herein, the Company and
Warrantholder agree as follows:


 


SECTION
1.      GRANT OF THE RIGHT TO PURCHASE PREFERRED
STOCK.


 


For value
received, the Company hereby grants to Warrantholder, and the Warrantholder is
entitled upon the terms and subject to the conditions hereinafter set forth, to
subscribe to and to purchase from the Company that number of fully paid and
non-assessable shares of the Company’s Series E Preferred Stock (the “Preferred
Stock”) equal to Two Hundred Eighty Thousand Dollars ($280,000) divided by
a purchase price per share equal to the lesser of (a) $4.63 or (b) the next
round of equity financing preferred stock price per share (the “Exercise
Price”)


 


Upon the
availability of Part II under the Loan Agreement the Company hereby grants to
Warrantholder, and the Warrantholder is entitled upon the terms and subject to
the conditions hereinafter set forth, to subscribe to and to purchase from the
Company that number of fully paid and non-assessable shares of the Preferred
Stock equal to Twenty-Five Thousand Dollars ($25,000) divided by the Exercise
Price.


 


Notwithstanding the
above, in the event this Warrant Agreement is exercised prior to the next round
of equity financing, the Exercise Price shall be equal to $4.63.


 


The number and Exercise
Price of such shares are subject to adjustment as provided in Section 4.


 


SECTION
2.      TERM OF THE WARRANT AGREEMENT.


 


Except as
otherwise provided for herein, the term of this Warrant Agreement and the right
to purchase Preferred Stock as granted herein shall commence on the Effective
Date and shall be exercisable until and including July 26, 2016.


 


SECTION
3.      EXERCISE OF THE PURCHASE RIGHTS.


 


(a)  Exercise. The purchase rights set forth in
this Warrant Agreement are exercisable by the Warrantholder, in whole or in
part, at any time, or from time to time, prior to the expiration of the term
set forth in Section 2, by
tendering to the Company at its principal office a notice of exercise in the
form attached hereto as Exhibit I
(the “Notice of Exercise”), duly completed and executed. Promptly
upon receipt of the Notice of Exercise and the payment of the “Purchase Price”
(as defined below) in accordance with the terms set forth below, and in no
event later than twenty-one (21) days thereafter, the Company shall issue to
the Warrantholder a certificate for the number of shares of Preferred Stock
purchased and shall execute the acknowledgment of exercise in the form


 

















 


attached hereto as Exhibit II  (the “Acknowledgment of
Exercise”) indicating the number of shares which remain subject to future
purchases, if any. As used herein, “Purchase Price” means, with respect
to any exercise of this Warrant Agreement, an amount equal to the Exercise
Price as of the relevant time multiplied by the number of shares of Preferred
Stock requested to be exercised under this Warrant Agreement pursuant to such
exercise.


 


The Purchase Price
may be paid at the Warrantholder’s election either (i) by cash or check, or
(ii) by surrender of Warrants (“Net Issuance”) as determined below. If
the Warrantholder elects the Net Issuance method, the Company will issue
Preferred Stock in accordance with the following formula:


 


	
   

  	
   

  	
   

  	
   

  	
  X = 

  	
  Y(A-B)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Where:

  	
   

  	
  X =

  	
   

  	
  the number of shares of
  Preferred Stock to be issued to the Warrantholder.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Y =

  	
   

  	
  the number of shares of
  Preferred Stock requested to be exercised under this Warrant Agreement.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A =

  	
   

  	
  the fair market value
  of one (1) share of Preferred Stock at the time of issuance of such shares of
  Preferred Stock.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B =

  	
   

  	
  the Exercise Price.

  



 


For purposes of
the above calculation, current fair market value of Preferred Stock shall mean
with respect to each share of Preferred Stock:


 


(i)        if the exercise is in connection with
the Company’s initial public offering of the Company’s Common Stock pursuant to
a registration statement under the 1933 Act, which public offering has been
declared effective by the Securities and Exchange Commission (“SEC”) (an
“Initial Public Offering”), then the fair market value per share shall
be the product of (x) the initial “Price to Public” of the Common Stock
specified in the final prospectus with respect to the offering and (y) the
number of shares of Common Stock into which each share of Preferred Stock is
convertible at the time of such exercise;


 


(ii)       if the exercise is after, and not in
connection with an Initial Public Offering, and:


 


(A)  if
the Company’s Common Stock is traded on a securities exchange, the fair market
value shall be deemed to be the product of (x) the average of the closing
prices over a five (5) day period ending three days before the day the current
fair market value of the securities is being determined and (y) the number of
shares of Common Stock into which each share of Preferred Stock is convertible
at the time of such exercise; or


 


(B)  if
the Company’s Common Stock is actively traded over-the-counter, the fair market
value shall be deemed to be the product of (x) the average of the closing bid
and asked prices quoted on the NASDAQ system (or similar system) over the five
(5) day period ending three days before the day the current fair market value
of the securities is being determined and (y) the number of shares of Common
Stock into which each share of Preferred Stock is convertible at the time of
such exercise;


 


(iii)      if at any time the Common Stock is not
listed on any securities exchange or quoted in the NASDAQ National Market or
the over-the-counter market, the current fair market value of Preferred Stock
shall be the product of (x) the highest price per share which the Company could
obtain from a willing buyer (not a current employee or director) for shares of
Common Stock sold by the Company, from authorized but unissued shares, as
determined in good faith by its Board of Directors and (y) the number of shares
of Common Stock into which each share of Preferred Stock is convertible at the
time of such exercise, unless the Company shall become subject to a Merger
Event pursuant to which the Company is not the surviving party, in which case
the fair market value of Preferred Stock shall be deemed to be the per share
value received by the holders of the Company’s Preferred Stock on a common
equivalent basis pursuant to such Merger Event.


 


Upon partial
exercise by either cash or Net Issuance, the Company shall promptly issue an
amended Warrant Agreement representing the remaining number of shares
purchasable hereunder. All other terms and


 


2

















 


conditions of such
amended Warrant Agreement shall be identical to those contained herein,
including, but not limited to the Effective Date hereof.


 


(b)  Exercise Prior to Expiration.  To the extent this Warrant Agreement is
not previously exercised as to all Preferred Stock subject hereto, and if the
fair market value of one share of the Preferred Stock is greater than the
Exercise Price then in effect, this Warrant Agreement shall be deemed
automatically exercised pursuant to Section
3(a) (even if not surrendered) immediately before its expiration.
For purposes of such automatic exercise, the fair market value of one share of
the Preferred Stock upon such expiration shall be determined pursuant to Section 3(a). To the extent this Warrant
Agreement or any portion thereof is deemed automatically exercised pursuant to
this Section 3(b),  the Company agrees to promptly notify the
Warrantholder of the number of shares of Preferred Stock, if any, the
Warrantholder is to receive by reason of such automatic exercise.


 


SECTION
4.      ADJUSTMENT RIGHTS.


 


The Exercise Price
and the number of shares of Preferred Stock purchasable hereunder are subject
to adjustment, as follows:


 


(a)  Merger Event. If at any time there shall be
a (i) reorganization, consolidation or merger (or similar transaction or series
of related transactions) of Company or any subsidiary of Company with or into
any other person or sale or exchange of outstanding shares in which the holders
of Company’s outstanding shares immediately before consummation of such transaction
or series of related transactions do not, immediately after consummation of
such transaction or series of related transactions, retain shares representing
at least 50.0% of the voting power of the surviving entity of such transaction
or series of related transactions (or the parent of such surviving entity if
such surviving entity is wholly owned by such parent), in each case without
regard to whether Company is the surviving entity, (ii) sale of all or
substantially all of the assets of Company or (iii) acquisition by Company of
all or substantially all of the capital stock or assets of another person or
the acquisition by Company of all or substantially all of the assets of another
Person in excess of $500,000 (each of these foregoing events shall be referred
to as a “Merger Event”), then, as a part of such Merger Event, lawful
provision shall be made so that the Warrantholder shall thereafter be entitled
to receive, upon exercise of this Warrant Agreement, the number of shares of
preferred stock or other securities or property of the successor corporation
resulting from such Merger Event, equivalent in value to that which would have
been issuable if Warrantholder had exercised this Warrant Agreement immediately
prior to the Merger Event. In any such case, appropriate adjustment (as
determined in good faith by the Company’s Board of Directors) shall be made in
the application of the provisions of this Warrant Agreement with respect to the
rights and interests of the Warrantholder after the Merger Event to the end
that the provisions of this Warrant Agreement (including adjustments of the
Exercise Price and number of shares of Preferred Stock purchasable) shall be
applicable to the greatest extent possible. Without limiting the foregoing, in
connection with any Merger Event, upon the closing thereof, the successor or
surviving entity shall assume the obligations of this Warrant Agreement.


 


(b)  Reclassification of Shares.  Except as set forth in Section 4(a),  if the Company at any time shall, by combination,
reclassification, exchange or subdivision of securities or otherwise, change
any of the securities as to which purchase rights under this Warrant Agreement
exist into the same or a different number of securities of any other class or
classes, this Warrant Agreement shall thereafter represent the right to acquire
such number and kind of securities as would have been issuable as the result of
such change with respect to the securities which were subject to the purchase
rights under this Warrant Agreement immediately prior to such combination,
reclassification, exchange, subdivision or other change.


 


(c)  Subdivision or Combination of Shares. If
the Company at any time shall combine or subdivide its Preferred Stock, (i) in
the case of a subdivision, the Exercise Price shall be proportionately
decreased, and the number of shares of Preferred Stock issuable upon exercise
of this Warrant Agreement shall be proportionately increased, or (ii) in the
case of a combination, the Exercise Price shall be proportionately increased,
and the number of shares of Preferred Stock issuable upon the exercise of this
Warrant Agreement shall be proportionately decreased.


 


(d)  Stock Dividends. If the Company at any time
while this Warrant is outstanding and unexpired shall:


 


(i)        pay a dividend with respect to the
Preferred Stock payable in Preferred Stock, then the Exercise Price shall be
adjusted, from and after the date of determination of shareholders entitled to
receive such dividend or distribution, to that price determined by multiplying
the Exercise Price in effect


 


3

















 


immediately prior to such
date of determination by a fraction (A) the numerator of which shall be the
total number of shares of Preferred Stock outstanding immediately prior to such
dividend or distribution, and (B) the denominator of which shall be the total
number of shares of Preferred Stock outstanding immediately after such dividend
or distribution; or


 


(ii)       make any other distribution with respect
to Preferred Stock (or stock into which the Preferred Stock is convertible),
except any distribution specifically provided for in any other clause of this Section 8, then, in each such case,
provision shall be made by the Company such that the holder of this Warrant shall
receive upon exercise or conversion of this Warrant a proportionate share of
any such dividend or distribution as though it were the holder of the Preferred
Stock (or other stock for which the Preferred Stock is convertible) as of the
record date fixed for the determination of the shareholders of the Company
entitled to receive such dividend or distribution.


 


(e)   Reserved.


 


(f)   Antidilution Rights.
Additional antidilution rights applicable to the Preferred Stock purchasable
hereunder are as set forth in the Company’s Certificate of Incorporation as
amended through the Effective Date (the “Charter”) and shall be
applicable with respect to the Preferred Stock issuable hereunder. Without
limiting the foregoing, the Exercise Price, the number of shares of Preferred
Stock issuable upon exercise of this Warrant, Agreement and/or the number of
shares of Common Stock issuable upon conversion of the Preferred Stock, shall
be subject to adjustment, from time to time, as provided in the Charter. The
Company shall promptly provide the Warrantholder with any restatement,
amendment, modification or waiver of the Charter; provided, that no such
amendment, modification or waiver shall impair or reduce the antidilution
rights applicable to the Preferred Stock as of the date hereof unless such
amendment, modification or waiver affects the rights of Warrantholder with
respect to the Preferred Stock in the same manner as it affects all other
holders of Preferred Stock. To the extent the Company provides notice to all existing
Series E Preferred stockholders, the Company shall provide Warrantholder with
prior written notice of any issuance of its stock or other equity security to
occur after the Effective Date of this Warrant Agreement, which notice shall
include (a) the price at which such stock or security is to be sold, (b) the
number of shares to be issued, and (c) such other information as necessary for
Warrantholder to determine if a dilutive event has occurred. For the avoidance
of doubt, there shall be no duplicate anti-dilution adjustment pursuant to this
subsection (f), the forgoing subsection (d) and the Company’s Charter.


 


(g)    Notice of Adjustments. If: (i) the Company
shall declare any dividend or distribution upon its stock, whether in cash,
property, stock or other securities; (ii) the Company shall offer for
subscription prorata to the holders of any class of its Preferred Stock or
other convertible stock any additional shares of stock of any class or other
rights; (iii) there shall be any Merger Event; (iv) there shall be an Initial
Public Offering; or (iv) there shall be any voluntary dissolution, liquidation
or winding up of the Company; then, in connection with each such event, the
Company shall send to the Warrantholder: (A) at least twenty (20) days’ prior
written notice of the date on which the books of the Company shall close or a
record shall be taken for such dividend, distribution, subscription rights (for
subscription rights notice only need be provided to the extent the Company
provides notice to all existing Series E Preferred stockholders) (specifying
the date on which the holders of Preferred Stock shall be entitled thereto) or
for determining rights to vote in respect of such Merger Event, dissolution,
liquidation or winding up; (B) in the case of any such Merger Event,
dissolution, liquidation or winding up, at least twenty (20) days’ prior
written notice of the date when the same shall take place (and specifying the
date on which the holders of Preferred Stock shall be entitled to exchange their
Preferred Stock for securities or other property deliverable upon such Merger
Event, dissolution, liquidation or winding up); and (C) in the case of an
Initial Public Offering, the Company shall give the Warrantholder at least
thirty (30) days’ written notice prior to the effective date thereof.


 


Each such written
notice shall set forth, in reasonable detail, (i) the event requiring the
notice, and (ii) if any adjustment is required to be made, (A) the amount of
such adjustment, (B) the method by which such adjustment was calculated, (C)
the adjusted Exercise Price (if the Exercise Price has been adjusted), and (D)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, or by
reputable overnight courier with all charges prepaid, addressed to the
Warrantholder at the address for Warrantholder set forth in the registry
referred to in Section 7.


 


4

















 


(h)  Timely Notice.  Failure to timely provide such notice
required by subsection (g) above
shall entitle Warrantholder to retain the benefit of the applicable notice
period notwithstanding anything to the contrary contained in any insufficient
notice received by Warrantholder.


 


SECTION
5.      REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE COMPANY.


 


(a)  Reservation of Preferred Stock.
The Preferred Stock issuable upon exercise of the Warrantholder’s rights has
been duly and validly reserved and, when issued in accordance with the
provisions of this Warrant Agreement, will be validly issued, fully paid and
non-assessable, and will be free of any taxes, liens, charges or encumbrances
of any nature whatsoever; provided, that the Preferred Stock issuable
pursuant to this Warrant Agreement may be subject to restrictions on transfer
under state and/or federal securities laws. The Company has made available to
the Warrantholder true, correct and complete copies of its Charter and Bylaws,
as amended. The issuance of certificates for shares of Preferred Stock upon
exercise of this Warrant Agreement shall be made without charge to the
Warrantholder for any issuance tax in respect thereof, or other cost incurred
by the Company in connection with such exercise and the related issuance of shares
of Preferred Stock; provided, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer and the issuance
and delivery of any certificate in a name other than that of the Warrantholder.


 


(b)  Due Authority. The execution and
delivery by the Company of this Warrant Agreement and the performance of all
obligations of the Company hereunder, including the issuance to Warrantholder
of the right to acquire the shares of Preferred Stock, have been duly
authorized by all necessary corporate action on the part of the Company. The
Loan Documents and this Warrant Agreement: (1) are not inconsistent with the
Company’s Charter or Bylaws; (2) do not contravene any law or governmental
rule, regulation or order applicable to it; and (3) do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it is
bound. The Loan Documents and this Warrant Agreement constitute legal, valid
and binding agreements of the Company, enforceable in accordance with their
respective terms.


 


(c)  Consents and Approvals. No consent or
approval of, giving of notice to, registration with, or taking of any other
action in respect of any state, federal or other governmental authority or
agency is required with respect to the execution, delivery and performance by
the Company of its obligations under this Warrant Agreement, except for the
filing of notices pursuant to Regulation D under the 1933 Act and any filing
required by applicable state securities law, which filings will be effective by
the time required thereby.


 


(d)  Issued Securities. All issued and
outstanding shares of Common Stock, Preferred Stock or any other securities of
the Company have been duly authorized and validly issued and are fully paid and
nonassessable. All outstanding shares of Common Stock, Preferred Stock and any
other securities were issued in full compliance with all federal and state
securities laws. In addition, as of the date immediately preceding the date of
this Warrant Agreement:


 


(i)        The authorized capital of the Company
consists of (A) 30,000,000 shares of Common Stock, of which 3,038,047 shares
are issued and outstanding, and (B) 20,485,094 shares of Preferred Stock, of
which 19,106,475 shares are issued and outstanding and are convertible into
19,379,904 shares of Common Stock at.


 


(ii)       The Company has reserved 4,203,860 shares
of Common Stock for issuance under its 1998 Stock Plan, under which 1,143,680
options are outstanding at an average price of $0.47 per share. The Company has
outstanding warrants exercisable for an aggregate 601,348 shares of its Series
D Preferred Stock. There are no other options, warrants, conversion privileges
or other rights presently outstanding to purchase or otherwise acquire any
authorized but unissued shares of the Company’s capital stock or other
securities of the Company.


 


(iii)      Except as set forth in the Company’s
Investors’ Rights Agreement no shareholder of the Company has preemptive rights
to purchase new issuances of the Company’s capital stock.


 


(e)       Other
Commitments to Register Securities. Except as set forth in this
Warrant Agreement and as set forth in the Company’s Investors’ Rights
Agreement, the Company is not, pursuant to the terms of any other


 


5

















 


agreement currently in
existence, under any obligation to register under the 1933 Act any of its
presently outstanding securities or any of its securities which may hereafter
be issued.


 


(f)        Exempt
Transaction. Subject to the accuracy of the Warrantholder’s
representations in Section 6, the
issuance of the Preferred Stock upon exercise of this Warrant Agreement will
constitute a transaction exempt from (i) the registration requirements of
Section 5 of the 1933 Act, in reliance upon Section 4(2) thereof, and (ii) the
qualification requirements of the applicable state securities laws.


 


(g)       Compliance
with Rule 144. If the Warrantholder proposes to sell Preferred
Stock issuable upon the exercise of this Warrant Agreement in compliance with
Rule 144 promulgated by the SEC, then, upon Warrantholder’s written request to
the Company, the Company shall furnish to the Warrantholder, within ten days
after receipt of such request, a written statement confirming the Company’s
compliance with the filing requirements of the SEC as set forth in such Rule,
as such Rule may be amended from time to time.


 


SECTION
6.      REPRESENTATIONS AND COVENANTS OF THE
WARRANTHOLDER.


 


This Warrant
Agreement has been entered into by the Company in reliance upon the following
representations and covenants of the Warrantholder:


 


(a)  Investment Purpose. The right to acquire
Preferred Stock or the Preferred Stock issuable upon exercise of the
Warrantholder’s rights contained herein will be acquired for investment and not
with a view to the sale or distribution of any part thereof, and the
Warrantholder has no present intention of selling or engaging in any public
distribution of the same except pursuant to a registration or exemption.


 


(b)  Private Issue. The Warrantholder
understands (i) that the Preferred Stock issuable upon exercise of this Warrant
Agreement is not registered under the 1933 Act or qualified under applicable
state securities laws on the ground that the issuance contemplated by this
Warrant Agreement will be exempt from the registration and qualifications
requirements thereof, and (ii) that the Company’s reliance on such exemption is
predicated on the representations set forth in this Section 10.


 


(c)  Disposition of Warrantholder’s Rights.  In no event will the Warrantholder make a
disposition of any of its rights to acquire Preferred Stock or Preferred Stock
issuable upon exercise of such rights unless and until (i) it shall have
notified the Company of the proposed disposition, and (ii) if requested by the
Company, it shall have furnished the Company with an opinion of counsel (which
counsel may either be inside or outside counsel to the Warrantholder)
satisfactory to the Company and its counsel to the effect that (A) appropriate
action necessary for compliance with the 1933 Act has been taken, or (B) an
exemption from the registration requirements of the 1933 Act is available.
Notwithstanding the foregoing, the restrictions imposed upon the transferability
of any of its rights to acquire Preferred Stock or Preferred Stock issuable on
the exercise of such rights do not apply to transfers from the beneficial owner
of any of the aforementioned securities to its nominee or from such nominee to
its beneficial owner, and shall terminate as to any particular share of
Preferred Stock when (1) such security shall have been effectively registered
under the 1933 Act and sold by the holder thereof in accordance with such
registration or (2) such security shall have been sold without registration in
compliance with Rule 144 under the 1933 Act, or (3) a letter shall have been
issued to the Warrantholder at its request by the staff of the SEC or a ruling
shall have been issued to the Warrantholder at its request by such Commission
stating that no action shall be recommended by such staff or taken by such
Commission, as the case may be, if such security is transferred without
registration under the 1933 Act in accordance with the conditions set forth in
such letter or ruling and such letter or ruling specifies that no subsequent
restrictions on transfer are required. Whenever the restrictions imposed
hereunder shall terminate, as hereinabove provided, the Warrantholder or holder
of a share of Preferred Stock then outstanding as to which such restrictions
have terminated shall be entitled to receive from the Company, without expense
to such holder, one or more new certificates for this Warrant Agreement or for
such shares of Preferred Stock not bearing any restrictive legend.


 


(d)  Financial Risk. The Warrantholder has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of its investment, and has the ability to bear
the economic risks of its investment.


 


(e)  Risk of No Registration. The Warrantholder
understands that if the Company does not register with the SEC pursuant to
Section 12 of the 1934 Act (the “1934 Act”), or file reports pursuant to
Section 15(d) of the


 


6

















 


1934 Act, or if a
registration statement covering the securities under the 1933 Act is not in
effect when it desires to sell (i) the rights to purchase Preferred Stock
pursuant to this Warrant Agreement or (ii) the Preferred Stock issuable upon
exercise of the right to purchase, it may be required to hold such securities
for an indefinite period. The Warrantholder also understands that any sale of
(A) its rights hereunder to purchase Preferred Stock or (B) Preferred Stock
issued or issuable hereunder which might be made by it in reliance upon Rule
144 under the 1933 Act may be made only in accordance with the terms and
conditions of that Rule.


 


(f)  Accredited Investor. Warrantholder is an
“accredited investor” within the meaning of the Securities and Exchange Rule
501 of Regulation D, as presently in effect.


 


SECTION
7.      TRANSFERS.


 


Subject to the
terms and conditions contained in Section 6,
this Warrant Agreement and all rights hereunder are transferable in whole or in
part by the Warrantholder and any successor transferee, provided, that,
in no event shall the number of transfers of the rights and interests in all of
the Warrants exceed three (3) transfers. The transfer shall be recorded on the
books of the Company upon receipt by the Company of a notice of transfer in the
form attached hereto as Exhibit III (the
“Transfer Notice”), at its principal offices and the payment to the
Company of all transfer taxes and other governmental charges imposed on such
transfer.


 


SECTION
8.      MISCELLANEOUS.


 


(a)  Effective Date. The provisions of this
Warrant Agreement shall be construed and shall be given effect in all respects
as if it had been executed and delivered by the Company on the date hereof.
This Warrant Agreement shall be binding upon any successors or assigns of the
Company.


 


(b)  Attorney’s Fees. In any litigation,
arbitration or court proceeding between the Company and the Warrantholder
relating hereto, the prevailing party shall be entitled to attorneys’ fees and
expenses and all costs of proceedings incurred in enforcing this Warrant
Agreement.


 


(c)  Governing Law. This Warrant Agreement shall
be governed by and construed for all purposes under and in accordance with the
laws of the State of California.


 


(d)  Consent to Jurisdiction and Venue. All
judicial proceedings arising in or under or related to this Warrant Agreement
may be brought in any state or federal court of competent jurisdiction located
in the State of California. By execution and delivery of this agreement, each
party hereto generally and unconditionally: (a) consents to personal
jurisdiction in San Mateo County, State of California; (b) waives any objection
as to jurisdiction or venue in San Mateo County, State of California; (c)
agrees not to assert any defense based on lack of jurisdiction or venue in the
aforesaid courts; and (d) irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Warrant Agreement. Service of process
on any party hereto in any action arising out of or relating to this agreement
shall be effective if given in accordance with the requirements for notice set
forth in this Section, and shall be deemed effective and received as set forth
therein. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of either party to bring
proceedings in the courts of any other jurisdiction


 


(e)  Mutual Waiver of Jury Trial. Because
disputes arising in connection with complex financial transactions are most
quickly and economically resolved by an experienced and expert person and The
Parties wish applicable state and federal laws to apply (rather than
arbitration rules), The Parties desire that their disputes be resolved by a
judge applying such applicable laws. EACH OF THE PARTIES SPECIFICALLY WAIVES
ANY RIGHT THEY MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM,
CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY,
“CLAIMS”) ASSERTED BY THE COMPANY AGAINST THE WARRANTHOLDER OR THE
WARRANTHOLDER’S ASSIGNEE OR BY WARRANTHOLDER OR WARRANTHOLDER’S ASSIGNEE
AGAINST THE COMPANY. This waiver extends to all such Claims, including Claims
that involve Persons other than the Company and Warrantholder; Claims that
arise out of or are in any way connected to the relationship between the
Company and Warrantholder; and any Claims for damages, breach of contract,
specific performance, or any equitable or legal relief of any kind, arising out
of this Warrant Agreement.


 


(f)  Counterparts. This Warrant Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.


 


7

















 


(g)  Notices. Any notice required or
permitted hereunder shall be given in writing and shall be deemed effectively
given (i) upon personal delivery, (ii) upon facsimile transmission (provided
that the original is sent by personal delivery, mail or overnight courier as
provided herein), (iii) three (3) days after deposit in the United States mail,
by registered or certified mail, or (iv) one business day after deposit with a
reputable overnight courier with all charges prepaid, in each case addressed to
Warrantholder or the Company at the address set forth below the Parties
respective signatures to this Warrant Agreement (or such other address of the
Parties may designate by written notice to each other).


 


(h)  Remedies. In the event of any default
hereunder, the non-defaulting party may proceed to protect and enforce its
rights either by suit in equity and/or by action at law, including but not
limited to an action for damages as a result of any such default, and/or an
action for specific performance for any default where Warrantholder will not
have an adequate remedy at law and where damages will not be readily
ascertainable. The Company expressly agrees that it shall not oppose an
application by the Warrantholder or any other person entitled to the benefit of
this Agreement requiring specific performance of any or all provisions hereof
or enjoining the Company from continuing to commit any such breach of this
Agreement.


 


(i)  No Impairment of Rights. The Company will
not, by amendment of its Charter or through any other means, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant
Agreement, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of the Warrantholder against
impairment.


 


(j)  Survival. The representations, warranties,
covenants and conditions of the respective parties contained herein or made
pursuant to this Warrant Agreement shall survive the execution and delivery of
this Warrant Agreement.


 


(k)  Severability. In the event any one or more
of the provisions of this Warrant Agreement shall for any reason be held
invalid, illegal or unenforceable, the remaining provisions of this Warrant
Agreement shall be unimpaired, and the invalid, illegal or unenforceable
provision shall be replaced by a mutually acceptable valid, legal and
enforceable provision, which comes closest to the intention of the parties
underlying the invalid, illegal or unenforceable provision.


 


(l)  Amendments. Any provision of this Warrant
Agreement may be amended by a written instrument signed by the Company and by
the Warrantholder.


 


(m)  Facsimile Signatures. This Warrant
Agreement may be executed and delivered by facsimile and upon such deliver the
facsimile signature will be deemed to have the same effect as if the original
signature had been delivered to the other party.


 


(n)  Additional Documents. The Company, upon
execution of this Warrant Agreement, shall provide the Warrantholder with
certified resolutions with respect to the representations, warranties and
covenants set forth in Section 5.  The Company shall also supply such other
documents as the Warrantholder may from time to time reasonably request.


 


[Remainder of Page Intentionally Left Blank]


 


8





















 


IN
WITNESS WHEREOF, the Parties hereto have caused this Warrant
Agreement to be executed by its officers thereunto duly authorized as of the
Effective Date.


 


 


	
  COMPANY:

  	
   

  	
  EXPRESSION
  DIAGNOSTICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Vikram Jog

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  CFO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notice Address:

  
	
   

  	
   

  	
   

  	
  Attn: Vikram Jog, CFO

  701 Gateway Blvd., Suite 100

  S. San Francisco, CA 94080

  Facsimile: (650) 624-0125

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WARRANTHOLDER:   LEADER EQUITY, LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert Molke

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notice Address:

  	
   

  
	
   

  	
   

  	
   

  	
  Attn: Robert Molke 

  311 California Street, Suite 420

  San Francisco, CA 94111

  Facsimile: (415) 956-8233

  
								



 


9

















 


EXHIBIT 1


 


NOTICE OF EXERCISE


 


To:                           .


 


(1)                     The
undersigned Warrantholder hereby elects to purchase [                ]
shares of the Series       Preferred Stock of                      
pursuant to the terms of the Warrant Agreement dated the [   ]
day of [       ,             ]
(the “Warrant Agreement”) between                  
and the Warrantholder, and tenders here payment of the purchase price for such
shares in full, together with all applicable transfer taxes, if any.


 


(2)                     Method of
Exercise (Please initial the applicable blank):


 


a.                                   
The undersigned elects to exercise this Warrant Agreement by means of a cash
payment, and gives the Company full payment for the purchase price of the
shares being purchased, together with all applicable transfer taxes, if any.


 


b.                                   
The undersigned elects to exercise this Warrant Agreement by means of the Net
Issuance Exercise method of Section 3 of the Warrant Agreement.


 


(3)                     In exercising
its rights to purchase the Series                
Preferred Stock of                 
the undersigned hereby confirms and acknowledges the investment representations
and warranties made in Section 6 of the Warrant Agreement.


 


(4)                     Please issue
a certificate or certificates representing said shares of Series                  
Preferred Stock in the name of the undersigned or in such other name as is
specified below.


 


 


	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address)

  



 


 


	
  WARRANTHOLDER:
                 LEADER
  EQUITY, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  



 


10

















 


EXHIBIT II


 


ACKNOWLEDGMENT OF EXERCISE


 


The undersigned               
hereby acknowledge receipt of the “Notice of Exercise” from LEADER LENDING,
LLC, to purchase [    ] shares of the Series          
Preferred Stock of               
pursuant to the terms of the Warrant Agreement, and further acknowledges that [            ]
shares remain subject to purchase under the terms of the Warrant Agreement.


 


 


	
  COMPANY:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
						



 


11

















 


EXHIBIT III


 


TRANSFER NOTICE


 


(To
transfer or assign the foregoing Warrant Agreement execute this form and supply
required information. Do not use this form to purchase shares.)


 


FOR
VALUE RECEIVED, the foregoing Warrant Agreement and all
rights evidenced thereby are hereby transferred and assigned to


 


	
   

  	
   

  
	
  (Please
  Print)

  
	
   

  



whose
address is 


 


 


 


 


	
   

  	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Holder’s
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Holder’s
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature
  Guaranteed:

  	
   

  	
   

  
						



 


	
  NOTE:

  	
   

  	
  The signature to this
  Transfer Notice must correspond with the name as it appears on the face of
  the Warrant Agreement, without alteration or enlargement or any change
  whatever. Officers of corporations and those acting in a fiduciary or other representative
  capacity should file proper evidence of authority to assign the foregoing
  Warrant Agreement.

  



 


12





















 


WARRANT PURCHASE AGREEMENT


 


This Warrant Purchase Agreement (this “Agreement”) is made
and entered into as of July 26, 2006, by and between EXPRESSION DIAGNOSTICS,
INC., a Delaware corporation (the “Company”), and LEADER EQUITY, LLC
(“Purchaser”).


 


The Company
desires to sell and the Purchaser desires to purchase a warrant substantially
in the form attached hereto as Exhibit A (the “Warrant”) to purchase up to 60,475
shares of the Company’s Series A Preferred Stock (the “Warrant Shares”), on
the terms and conditions set forth herein.


 


In consideration
of the mutual promises contained herein, the parties hereto agree as follows:


 


1.         Purchase of Warrant. Subject to
the terms and conditions of this Agreement, the Purchaser agrees to purchase
the Warrant from the Company and the Company agrees to sell and issue the
Warrant to the Purchaser for an aggregate purchase price of $2,129 which the
parties agree is the fair market value of the Warrant. Such purchase and sale
shall take place at the Closing (as defined in the Loan and Security Agreement
between the parties dated as of July 26, 2006). At the Closing the Company will
issue and deliver the Warrant to the Purchaser, against payment of the purchase
price thereof by check or wire transfer.


 


2.         Representations of Purchaser. In
connection with the purchase of the Warrant, the Purchaser hereby makes each of
the representations and warranties specified in clauses (1) through (4) of
Section 8(a) of the Warrant. The Purchaser also represents and warrants to the
Company that (a) it has full power and authority to enter into and perform this
Agreement in accordance with its terms, and it was not organized for the
specific purpose of acquiring the Warrant, and (b) this Agreement has been duly
executed and delivered by it and constitutes the legal, valid and binding
obligations of it, enforceable in accordance with the terms of this Agreement.


 


3.         Legends. The Purchaser
acknowledges and understands that the instruments evidencing the Warrant and
any certificates evidencing the Warrant Shares shall bear the legends as
specified in the Warrant (and any other legends required under state or federal
securities laws in the opinion of legal counsel for the Company).


 


4.         General Provisions.


 


(a)       This Agreement represents the entire
agreement between the Company and Purchaser regarding the subject matter
hereof, supersedes all prior agreements and understandings, and may only be
amended in writing signed by the Company and the Purchaser.


 


(b)       This Agreement shall bind and benefit the
successors, assigns, heirs, executors and administrators of the parties.


 


(c)       This Agreement shall be governed in all
respects by the laws of the State of Delaware.


 

















 


(d)       The Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute an instrument.


 


(e)       All representations and warranties made
in this Agreement and the Warrant shall survive the execution and delivery
hereof or thereof.


 


IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the day and year
first set forth above.


 


	
  COMPANY

  	
   

  	
  PURCHASER

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXPRESSION DIAGNOSTICS, INC.

  a Delaware corporation

  	
   

  	
  LEADER
  EQUITY, LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Vikram Jog

  	
   

  	
  By:

  	
  /s/ Robert W. Molke

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  VIKRAM JOG

  	
   

  	
  Name:

  	
  Robert W. Molke

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  CFO

  	
   

  	
  Title:

  	
  Managing Director, CFO

  	
   

  
								



 


2

















 


EXHIBIT A


 


FORM OF WARRANT


 


3