SECURITY AGREEMENT

Exhibit 10.20

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (“Agreement”) is made and entered into as of February 28, 2003, by Applied Precision, LLC, a Delaware limited liability company (“Borrower”), for the benefit of Lakeside Management Financial, LLC (“Lender”).

R E C I T A L S:

A. Concurrently with the execution hereof, Borrower has executed and delivered to Lender a Secured Promissory Note in the original principal amount of $522,215 (the “Note”) to evidence a loan in such amount made by Lender to Borrower (the “Loan”).

B. Borrower wishes to grant to Lender a security interest in all its assets as security for all the Secured Obligations (as defined below), which security interest will be subordinate in certain respects to the security interest of Silicon Valley Bank (the “Bank”) pursuant to that certain Mutual Subordination Agreement dated as of even date herewith, between Lender and the Bank (the “Intercreditor Agreement”).

NOW, THEREFORE, in order to induce Lender to make the Loan, Borrower agrees as follows:

ARTICLE I.    DEFINITIONS

The terms “Account,” “Chattel Paper,” “Deposit Account,” “Document,” “Electronic Chattel Paper,” “Equipment,” “Financial Assets,” “General Intangible,” “Goods,” “Health-Care-Insurance Receivables,” “Instrument,” “Inventory,” “Investment Property,” “Letter of Credit Rights,” “Payment Intangible” and “Supporting Obligation,” shall have the meanings defined in the Uniform Commercial Code as enacted in Washington, as amended from time to time.

When used in this Agreement, the following terms shall have the following meanings:

“Account Debtor” means the party who is obligated on or under any Account, Chattel Paper or General Intangible.

“Collateral” means all property, real, personal and mixed, tangible and intangible, wherever located, now owned or hereafter acquired by Borrower, or in which Borrower has or later obtains an interest, and all products, profits, rents and proceeds of such property, including but not limited to Accounts, Chattel Paper (including Electronic Chattel Paper), Deposit Accounts, Documents, Equipment, Financial Assets, General Intangibles (including Payment Intangibles), Goods, Health-Care-Insurance Receivables, Instruments, Inventory,

-1-

Investment Property, Letter of Credit Rights, Supporting Obligations, Patents, Copyrights and Trademarks, all claims for tax refund, whether now existing or hereafter arising, of Borrower against any city, county, state or federal government or any agency or authority or other subdivision thereof, and the proceeds thereof and all of Borrower’s drawings, designs, blueprints and sketches, used or usable in connection with Borrower’s business; all customer lists, ledger and account cards, computer tapes, discs and printouts, and books and records of Borrower; and any and all other properties and assets of Borrower of whatever nature, tangible or intangible, wherever located and whether now or hereafter existing.

“Copyrights” means any copyrights, rights and interests in copyrights, works protectable by copyrights, copyright registrations and copyright applications, including, without limitation, the copyright registrations and the applications listed on Schedule I attached hereto, and all renewals of any of the foregoing, all income, royalties, damages and payments now and hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present and future infringements of any of the foregoing and the right to sue for past, present and future infringements of any of the foregoing.

“Credit Agreement” means the Loan and Security Agreement among Borrower, Applied Precision Holdings, LLC and Silicon Valley Bank dated as of September 30, 2002, as amended from time to time.

“Event of Default” is defined in Section 6.1 hereof.

“Patents” means any patents and patent applications, including, without limitation, the inventions and improvements described and claimed therein, all patentable inventions and those patents and patent applications listed on Schedule II attached hereto, and the reissues, divisions, continuations, renewals, extensions and continuations-in-part of any of the foregoing, and all income, royalties, damages and payments now or hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present and future infringements of any of the foregoing and the right to sue for past, present and future infringements of any of the foregoing.

“Secured Obligations” means all obligations and liabilities of every nature of Borrower now or hereafter existing under or arising out of or in connection with the Note and this Agreement, whether for principal, interest (including without limitation interest that, but for the filing of a petition in bankruptcy with respect to Borrower, would accrue on such obligations), fees, expenses, indemnities or otherwise, whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owned with others, and whether or not from time to time decreased or extinguished and later increased, created, or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from Lender as a preference, fraudulent transfer, or otherwise, all attorneys’ fees and other costs and expenses incurred by Lender in connection with the enforcement of the

-2-

rights and remedies reserved in the Note and this Agreement, through all appeals, and all obligations of every nature of Borrower now or hereafter existing under this Agreement.

“Trademark” means (a) any trademark, trade name, corporate name, company name, business name, fictitious business name, trade style, service mark, logo or other source or business identifier, including, without limitation, any of the aforementioned items referred to in Schedule III attached hereto, and the goodwill associated therewith, now existing or hereafter adopted or acquired, any registration or recording thereof, and any application in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States or of any state thereof or any other country or any political subdivision thereof, or otherwise, and (b) all renewals thereof.

ARTICLE II.    GRANT OF SECURITY INTEREST

As security for the payment and satisfaction of the Secured Obligations, Borrower hereby grants to Lender a continuing security interest in and assigns to Lender all of Borrower’s right, title and interest in the Collateral and all products, profits, rents and proceeds thereof.

Lender acknowledges the liens and security interests and other rights granted hereunder are subject to the Intercreditor Agreement.

ARTICLE III.    COVENANTS OF BORROWER

Borrower shall fully perform each of the covenants set forth below.

(a) Borrower shall pay to Lender, as and when due and in full, all amounts payable by Borrower pursuant to the Note; and

(b) Borrower shall pay and reimburse Lender for other Secured Obligations including reasonable attorneys’ fees and legal expenses incurred in connection with the exercise by Lender of any of its rights or remedies under this Agreement or the Note.

Borrower shall fully perform in a timely fashion every covenant, agreement and obligation set forth in the this Agreement and the Note.

-3-

Upon the written request of Lender, Borrower will promptly execute and deliver such further instruments and documents and take such further actions as Lender may deem desirable to obtain the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, filing of any financing statement under the Uniform Commercial Code, execution of assignments of General Intangibles, delivery of appropriate stock or bond powers, transfer of Collateral (other than Inventory, Accounts and Equipment) to Lender’s possession if necessary to perfect Lender’s security interest therein. Borrower hereby authorizes Lender to file any such financing statement without the signature of Borrower to the extent permitted by applicable law, and to file a copy of this Agreement in lieu of a financing statement.

Borrower shall pay to Lender all costs of filing this Agreement with the U.S. Patent and Trademark Office and any financing, continuation or termination statement with respect to the security interests granted herein.

Borrower shall keep and maintain at its own cost and expense satisfactory and complete records of the Collateral including but not limited to a record of all payments received and all credits granted with respect to the Collateral and all other dealings with the Collateral. Borrower shall deliver and turn over to Lender all books and records pertaining to the Collateral at any time after the occurrence and during the continuation of an Event of Default, if so demanded by Lender.

Borrower will furnish to Lender from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Lender may reasonably request, all in reasonable detail.

Borrower will advise Lender promptly in reasonable detail at its address set forth in Section 7.9 hereof (a) of any lien (other than liens created hereby or permitted under the Credit Agreement) on or claim asserted against any of the Collateral; (b) of the occurrence of any other event that could reasonably be expected to have a material adverse effect on the Collateral or on the liens created hereunder; and (c) of any notice provided to Silicon Valley Bank pursuant to the SVB Credit Agreement referred to in the Note.

-4-

Borrower will not (a) change its state of organization, (b) change the location of its chief executive office/chief place of business or remove its books and records from the location specified in this Agreement, (c) permit any of the Inventory or Equipment to be kept at locations other than those identified to Lender, or (d) change its name, identity or structure to such an extent that any financing statement filed by Lender in connection with this Agreement would become ineffective or seriously misleading, unless it shall have given Lender at least thirty (30) days’ prior written notice thereof.

(a) Borrower (either itself or through licensees) will (i) continue to use each Trademark material to its business in order to maintain such Trademark in full force free from any claim of abandonment for nonuse, (ii) employ such Trademark with the appropriate notice of registration, (iii) not adopt or use any mark that is confusingly similar to or a colorable imitation of such Trademark unless Lender shall obtain a perfected security interest in such mark pursuant to this Agreement and (iv) not (and not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any Trademark may become invalidated.

(b) Borrower will notify Lender immediately if it knows, or has reason to know, of (i) any application or registration relating to any Trademark, Copyright or Patent material to its business that may become abandoned or dedicated or (ii) any adverse determination or development (including but not limited to the institution of, or any adverse determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court or tribunal in any country) regarding Borrower’s ownership of any material Trademark, Copyright or Patent or its right to register, keep or maintain the same.

(c) Whenever Borrower, either by itself or through any Lender, employee, licensee or designee, shall file an application for the registration of any material Trademark, Copyright or Patent with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, Borrower shall report such filing to Lender within five (5) business days after the last day of the calendar month in which such filing occurs. Borrower shall execute and deliver to Lender all agreements, instruments, powers of attorney, documents and papers that Lender may request to evidence Lender’s security interest in any Trademark, Copyright or Patents and in the goodwill and general intangibles of Borrower relating to or represented by such Trademark, Copyright or Patent. Borrower hereby constitutes Lender its attorney-in-fact to execute and file all such writings for the foregoing purposes, including pursuant to Section 3.3, with all acts of such attorney being hereby ratified and confirmed; and such power, being coupled with an interest, is irrevocable until all Secured Obligations are paid in full.

-5-

(d) Borrower will take all reasonable and necessary steps, including but not limited to all reasonable and necessary steps in any proceeding before the United States Patent and Trademark Office, United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue each application, to obtain the relevant registration, and to maintain each registration of material Trademarks, Copyrights and Patents, including but not limited to filing applications for renewal, affidavits of use and affidavits of incontestability.

(e) If any Trademark, Copyright or Patent that is included in the Collateral is infringed, misappropriated or diluted by a third party, Borrower shall promptly notify Lender after it learns thereof and shall take such action as Borrower reasonably deems appropriate under the circumstances to protect such Trademark, Copyright or Patent.

Borrower agrees to maintain commercially reasonable insurance policies to insure the Collateral against all hazards. If Borrower fails to obtain such insurance, Lender shall have the right, but not the obligation, to obtain either insurance covering both Borrower’s and Lender’s interest in the Collateral or insurance covering only Lender’s interest in the Collateral. Borrower agrees to pay any premium charged for such insurance. Any unpaid insurance premium advanced by Lender shall be secured under the terms of this Agreement. Lender will not have any liability whatsoever for any loss which may occur by reason of the omission or lack of coverage of any such insurance. Borrower hereby assigns to Lender the right to receive proceeds of such insurance to the full amount of the Secured Obligations and hereby directs any insurer to pay all proceeds directly to Lender, and authorizes Lender to endorse any draft. In Lender’s discretion, Lender may apply any insurance proceeds either toward repair of the property or reduction of the balance of the Secured Obligations.

Except with respect to liens permitted by the Credit Agreement, Borrower will not create, permit or suffer to exist, and will defend the Collateral against and take such other action as is necessary to remove, any lien on the Collateral except as contemplated by the Credit Agreement, and will defend the right, title and interest of Lender in and to the Collateral and in and to all proceeds thereof against the claims and demands of all persons whatsoever. Except as permitted by the Credit Agreement, Borrower will not sell, assign, transfer or otherwise convey an interest in the Collateral.

Borrower will pay promptly before delinquent all property and other taxes, assessments, and governmental charges or levies imposed upon, and all claims (including claims for labor, materials, and supplies) against, the Collateral, and all income and other taxes imposed upon Borrower, except to the extent the validity thereof is being contested diligently and in good faith by proper proceedings by Borrower.

-6-

ARTICLE IV.  &nbs