Exhibit 10.3

SVB Securities

Securities Account Control Agreement

Customer:

TIMELINE. INC.

 

 

Creditor:

SILICON VALLEY BANK

 

 

Date:

SEPTEMBER 17,.2004

 

This Securities Account Control Agreement entered into as of the above date
(this “Agreement”) is among SVB Securities, (“SVBS”), Bane of America
BrokerDealer Services, a division of Banc of America Securities LLC (“BA-BDS” or
“Clearing Broker”), the Customer identifed above (“Customer”), and the Creditor
identified above (“Creditor”).

Recitals

          A.          Customer has established a securities account or
securities accounts (“Account”) with and/or through SVBS and BA-BDS pursuant to
a SVB Securities Client Agreement (“Client Agreement”). The account number and
title for the Account (or Accounts) are identified in Exhibit A to this
Agreement. SVBS acts as the introducing broker. BA-BDS acts as the clearing
broker. Both SVBS and Clearing Broker are securities intermediaries pursuant to
Article 8 of the California Uniform Commercial Code (“CUCC”). Customer maintains
in the Account securities, financial assets and other investment property as
defined under Article 8 and 9 of the CUCC (collectively, the “Securities”).

          B.          Pursuant to a security agreement or similar agreement
identified in Exhibit A hereto (the “Security Agreement”), Customer has granted
to Creditor a security interest in certain personal property of Customer,
including without limitation (i) the Account; (ii) the Securities, (iii) all
dividends and distributions, whether payable in cash, securities, or other
property, in respect of the Securities, (iv) all of Customer’s rights in respect
of the Securities and Account, and (iv) all products, proceeds and revenues of
and from any of the foregoing personal property in sections (i) through (iv)
(collectively, the “Collateral”).

          C.          SVBS, Clearing Broker, Customer and Creditor are entering
into this Agreement in order to perfect Creditor’s security interest in the
Collateral and the Account by means of control pursuant to Article 8 of the
CUCC.

Agreement

          The parties hereto hereby agree as follows:

          1.          Defined Terms.  All terms used in this Agreement which are
defined in the CUCC but are not otherwise defined herein shall have the meanings
assigned to such terms in the CUCC, as in effect as of the date of this
Agreement. While in the Account, all property credited to the Securities will be
treated as financial assets under Article 8 of the CUCC. By this Agreement,
Customer grants to Creditor “control” over the Securities within the meaning of
Section 8106 of the CUCC.

          2.          The Securities.  SVBS and Clearing Broker represent to
Creditor that, on behalf of Customer, Customer maintains the Securities in the
Account.

          3.          Acknowledgement of Security Interest.  SVBS and Clearing
Broker hereby acknowledge the security interest granted in the Collateral to
Creditor by Customer. Creditor hereby acknowledges the security interest granted
in the Collateral to SVBS and Clearing Broker by Customer pursuant to the Client
Agreement.

          4.          Other Control Agreements.  SVBS represents and warrants
that, other than any account control agreement listed in Exhibit A hereto, SVBS
has executed no other account control agreement with any other party and SVBS is
not presently obligated to accept any entitlement order from any person other
than the Customer with respect to the Collateral. Clearing Broker represents and
warrants that, other than any account control agreement listed in Exhibit A
hereto, Clearing Broker has executed no other account control agreement with any
other party and Clearing Broker is not presently obligated to accept any
entitlement order from any person other than the Customer with respect to the
Collateral.

          5.          Future Control Agreements.  Customer covenants and agrees
that it will not enter an account control agreement with any other party without
Creditor’s prior written consent. SVBS agrees that it will not enter into a
control agreement with any other party with respect to the Account without
Creditor’s prior written consent. Clearing Broker agrees that it will not enter
into a control agreement with any other party with respect to the Account
without Creditor’s prior written consent.

          6.          Limitation on SVBS’ and Clearing Broker’s Rights in the
Collateral. SVBS and Clearing Broker will not attempt to assert control and does
not claim and will not accept any security or other interest in any part of the
Collateral, and SVBS and Clearing Broker will not exercise, enforce or attempt
to enforce on their own behalves any right of setoff against the Collateral, or
otherwise charge or deduct from the Collateral on SVBS’ or Clearing Broker’s
behalves any amount whatsoever, other than for: security interests, liens,
encumbrances, claims or rights of setoff for the payment of any amounts owed by
Customer to SVBS and/or Clearing Broker arising in connection with SVBS’ and
Clearing Broker’s customary fees and commissions pursuant to their agreement
with Customer or for the payment for financial assets and securities purchased
for the Account (the “Account Claims”). Customer and Creditor hereby acknowledge
that any security interests, liens, encumbrances, claims or rights of setoff for
the payment of any amounts owed by Customer to SVBS and Clearing Broker arising
in connection with the Account Claims shall at all times be prior to the rights
of Creditor in the Collateral and Securities whether or not Creditor sends to
SVBS a Notice of Exclusive Control described below.

          7.          Agreement for Control.

          (a)         SVBS and Clearing Broker will comply with all entitlement
orders (including requests to withdraw Collateral from the Account) originated
by Customer with respect to the Collateral, or any portion of the Collateral,
without further consent by Creditor until such time as SVBS receives from
Creditor (in accordance with Section 17 below) a written notice to SVBS that
Creditor is thereby exercising exclusive control over the Account (a “Notice of
Exclusive Control.”). The Notice of Exclusive Control must be in the form set
forth in Exhibit B hereto. SVBS or Clearing Broker have no obligation whatsoever
to confirm that Creditor is entitled to send a Notice of Exclusive Control in
connection with the Account or that the Creditor’s representative who signs any
Notice of Exclusive Control is authorized to do so. SVBS and Clearing Broker
(upon instruction from SVBS) will, upon SVBS’ receipt of such Notice of
Exclusive Control, proceed in accordance with the remainder of this Section 7
even if Creditor’s instructions are contrary to any instructions or demands that
Customer may give to SVBS or Clearing Broker. After SVBS receives a Notice of
Exclusive Control and has had reasonable opportunity to comply with it, but no
later than two (2) Business Days (“Business Days” means days which SVBS is open
to the public for business and are measured in 24 hour increments) after receipt
of the Notice of Exclusive Control (in accordance with Section 17 below), SVBS
and Customer agree that SVBS and Clearing Broker will: (i) cease complying with
entitlement orders or other directions concerning the Account and Collateral
that are originated by Customer or its representatives until such time as SVBS
receives a written notice from Creditor rescinding the Notice of Exclusive
Control; and (ii) comply with the entitlement orders and instructions provided
to SVBS by Creditor without investigating:  the reason for any action taken by
Creditor; the amount of any obligations of Customer to Creditor; the validity of
any of Creditor’s agreements with Customer; or the existence of any defaults
under such agreements.

          (b)         Notwithstanding the foregoing, Creditor agrees that upon
receipt of Creditor’s Notice of Exclusive Control, SVBS and Clearing Broker may
take all steps necessary to satisfy or settle any Account Claims, may respond as
required pursuant to the terms of any other account control agreement with
respect to which SVBS believes it previously received a Notice of Exclusive
Control or similar notice, and may respond as required by law to any court or
government order, writ or other legal process received by SVBS or Clearing
Broker. Creditor also agrees that, before SVBS’ receipt of Creditor’s Notice of
Exclusive Control, SVBS and Clearing Broker may be required to and may respond
to (i) Notices of Exclusive Control or similar notices sent to SVBS by other
parties and (ii) a writ or other similar legal process served on SVBS or
Clearing Broker in connection with the Account and Collateral. SVBS and Clearing
Broker agree to use good faith efforts to promptly notify Creditor if any other
party delivers to SVBS a notice of exclusive control or any party other than
Creditor or SVBS asserts a claim against the Collateral by means of a writ or
other similar legal process, but failure to provide such notice does not
constitute a breach of this Agreement. Customer expressly agrees that SVBS,
Clearing Broker and Creditor may act in accordance with the terms of this
Section 7.

          8.          Customer Waiver and Authorization.  Customer hereby waives
any rights that Customer may have under the Client Agreement to the extent such
rights are inconsistent with the provisions of this Agreement, and hereby
authorizes SVBS and Clearing Broker to comply with all instructions and
entitlement orders delivered by Creditor to SVBS in accordance with the terms of
this Agreement.

          9.          Amendments to and Termination of Client Agreement.  SVBS,
Clearing Broker and Customer shall not amend, supplement or otherwise modify the
Client Agreement insofar as it pertains to the Collateral without prior written
notice to Creditor. Customer may not terminate the Client Agreement insofar as
it pertains to the Collateral without consent of Creditor. SVBS and Clearing
Broker agree to use good faith efforts to notify Creditor if SVBS or Clearing
Broker terminate the Client Agreement, but SVBS’ or Clearing Broker’s failure to
notify Creditor shall not be a breach of this Agreement.

          10.        Termination of this Agreement.  Creditor may terminate this
Agreement by giving SVBS and Customer written notice of termination; provided
that, by giving such notice, Creditor acknowledges that it will thereby be
confirming that, as of the termination date, it will no longer have a perfected
security interest in the Account and Securities in the Collateral which is
perfected by control via this Agreement, although Creditor may continue to have
a perfected security interest in the Account by other means. SVBS and Clearing
Broker may terminate this Agreement by giving Creditor and Customer 30 days
prior written notice of termination (unless a shorter notice period is mandated
by applicable law). Customer may only terminate this Agreement with the written
consent of Creditor; provided that, by giving such notice with Creditor’s
written consent, both Customer and Creditor acknowledge that they will thereby
be confirming that, as of the termination date, Creditor will no longer have a
perfected security interest in the Collateral which is perfected by control
pursuant to this Agreement, although Creditor may continue to have a perfected
security interest in the Collateral by other means.

          11.        Delivery of Account Statements.  SVBS and Clearing Broker
are hereby authorized by Customer and agree to send to Creditor at its address
for notices set forth below Creditor’s signature block at the end of this
Agreement, concurrently with the sending thereof to Customer, duplicate copies
of any and all monthly statements or reports issued or sent to Customer with
respect to the Collateral and the Account. Until this Agreement is terminated,
Customer authorizes SVBS to disclose to Creditor at Creditor’s request any
information concerning Customer’s Account and the Securities in the Account,
including but not limited to the identity of any other party with which Customer
and SVBS and Clearing Broker have executed account control agreements or similar
agreements.

          12.        Responsibility of SVBS, Clearing Broker and Creditor.  This
Agreement does not create any obligation or duty on the part of SVBS, Clearing
Broker or Creditor other than those expressly set forth herein.

          13.        No Waiver.  Any forbearance or failure or delay by SVBS,
Clearing Broker or Creditor in exercising any right hereunder shall not be
deemed a waiver thereof and any single or partial exercise of any right shall
not preclude the further exercise thereof.

          14.        Amendments.  This Agreement and all exhibits attached
hereto may be amended only in writing signed by all parties hereto.

          15.        Governing Law.  Notwithstanding the terms of any other
agreement, the parties hereto agree that this Agreement shall be governed under
and in accordance with the laws of the State of California.  All parties hereto
each submit to the exclusive jurisdiction of the State and Federal courts in
Santa Clara County, California.

          16.        Integration Provision.  This Agreement constitutes the
entire agreement among SVBS, Clearing Broker, Customer and Creditor with respect
to Creditor’s control over the Collateral and Securities and matters
specifically set forth herein, and all prior communications, whether verbal or
written, between any of the parties hereto with respect to the subject matter
hereof shall be of no further effect or evidentiary value.

          17.        Notices.

          (a)         Any notice, other than a Notice of Exclusive Control, or
other communication provided for or allowed hereunder shall be in writing and
shall be considered to have been validly given (a) when actually received by the
recipient at the address or facsimile number, if delivered personally (whether
by messenger, air courier service or otherwise) or sent by facsimile to the
address or facsimile number identified below the signature of the applicable
party’s signature below and addressed to the addressee identified below the
signature of the applicable party’s signature below; or (b) 72 hours after being
deposited in the United States mail, registered or certified, postage prepaid,
return receipt requested, if sent to the address and addressee as set forth
below the signature of the applicable party hereto. The addresses to which
notices or other communications are to be given may be changed from time to time
by notice served as provided herein.

          (b)         A Notice of Exclusive Control shall be in writing, must be
in the form set forth in Exhibit B hereto, must be delivered to the address
listed below SVBS’ signature block at the end of this Agreement, must be
delivered to SVBS via hand delivery, messenger, overnight delivery or facsimile
and shall be considered to have been validly given when actually received,
except that a facsimile will be considered to have been validly given only when
acknowledged in writing by SVBS (SVBS agrees that it will use its good faith
effort to promptly acknowledge receipt of such facsimile). Creditor acknowledges
that SVBS may not be able to respond to a Notice of Exclusive Control pursuant
to section 7 above, and Creditor agrees that SVBS will not be held liable for
any failure to respond to a Notice of Exclusive Control, if the Creditor does
not deliver the Notice of Exclusive Control as set forth in this Section 17 or
to the address listed below SVBS’ signature block at the end of this Agreement.

          18.        Indemnification and Hold Harmless of SVBS and Clearing
Broker by Customer.  Customer hereby agrees to indemnify and hold harmless SVBS
and Clearing Broker, and their respective affiliates and their respective
directors, officers, agents and employees (each, an “Indemnified Person”)
against any and all claims, causes of action, liabilities, lawsuits, demands and
damages (each, a “Claim”) asserted by Creditor or any other party, including
without limitation, any and all court costs and reasonable attorneys’ fees, in
any way related to or arising out of or in connection with this Agreement or any
action taken or not taken pursuant hereto, including any claims arising as a
result of SVBS’ and Clearing Broker’s adherence (or alleged failure of
adherence) to the foregoing instructions including, without limitation, Claims
that allegedly result from SVBS’ and/or Clearing Broker’s ceasing, based on this
Agreement, to permit withdrawals of or from the Collateral or resulting from
SVBS’ and/or Clearing Broker’s paying over or delivering all or any part of the
Collateral pursuant to the directions of Creditor; provided that no Indemnified
Person shall be entitled to be indemnified

to the extent that such Claims arise from the Indemnified Person’s own gross
negligence or willful misconduct. Customer agrees that SVBS and/or Clearing
Broker shall not be liable for delays or errors occurring by reason of
circumstances beyond the control of SVBS or Clearing Broker, including, without
limitation, acts of civil, military, or banking authorities, national
emergencies, market disorder, labor difficulties, fire, flood or other
catastrophes, acts of God, terrorism, insurrection, war, riots, failure of
transportation or equipment, or failure of vendors, communication or power
supply. Clearing Broker shall have no responsibility or liability under this
Agreement to Customer for any acts or omissions by SVBS, its officers, employees
or agents; and SVBS shall have no responsibility or liability under this
Agreement to Customer for any acts or omissions by Clearing Broker, its
officers, employees or agents.

          19.        Indemnification and Hold Harmless of SVBS and Clearing
Broker by Creditor. Creditor hereby agrees to indemnify Indemnified Persons
against any and all Claims asserted by Customer or any other party (including,
without limitation, any and all court costs and reasonable attorneys’ fees)
arising directly out of SVBS’ and/or Clearing Broker’s adherence or failure of
adherence to Creditor’s instructions in its Notice of Exclusive Control,
including, without limitation, any Claim that arises directly out of SVBS’
and/or Clearing Broker’s ceasing, based on this Agreement, to permit withdrawals
of or from the Collateral or resulting from SVBS’ and/or Clearing Broker’s
paying over or delivering all or any part of the Collateral pursuant to
Creditor’s instructions in its Notice of Exclusive Control; provided, that no
Indemnified Person shall be entitled to be indemnified (a) to the extent that
such Claim results from an Indemnified Person’s gross negligence or willful
misconduct; or (b) for any special, indirect, consequential or punitive damages
asserted by Customer if the waiver in Section 21 of this Agreement is
enforceable. Creditor agrees that it will not hold Indemnified Persons liable
for any Claim arising out of or relating to any Indemnified Person’s performance
or failure of performance under this Agreement other than those Claims that
result directly from the acts or omissions of the Indemnified Person which are
deemed gross negligence or willful misconduct by a civil court or other similar
judicial body. Clearing Broker shall have no responsibility or liability under
this Agreement to Creditor for any acts or omissions by SVBS, its officers,
employees or agents; and SVBS shall have no responsibility or liability under
this Agreement to Creditor for any acts or omissions by Clearing Broker, its
officers, employees or agents.

          20.        Jury Trial Waiver.  CUSTOMER, CREDITOR, SVBS AND CLEARING
BROKER EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
ARISING OUT OF OR BASED UPON THIS AGREEMENT, OR ANY CONTEMPLATED TRANSACTION,
INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR ALL PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS
REVIEWED THIS WAIVER WITH ITS COUNSEL.

          21.        Waiver.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED
IN THIS AGREEMENT OR ANYWHERE ELSE, CUSTOMER WAIVES AND AGREES THAT IT SHALL NOT
SEEK FROM SVBS, CLEARING BROKER OR CREDITOR UNDER ANY THEORY OF LIABILITY
(INCLUDING WITHOUT LIMITATION ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES.

          22.        Unpaid Account Claims.  Before Creditor exercises exclusive
control over the Account, SVBS and/or Clearing Broker may, in the ordinary
course of business, debit from the Account any unpaid Account Claims. After
Creditor exercises exclusive control over the Account, if (a) funds are not
available in the Account to pay SVBS and/or Clearing Broker for any Account
Claims, and (b) Customer fails to pay such Account Claims within fifteen (15)
Business days of SVBS’ and/or Clearing Broker’s written demand therefore,
Creditor will pay to SVBS and/or Clearing Broker, within ten (10) Business days
of a written demand by SVBS and/or Clearing Broker, any amounts owed for an
Account Claim and that is not paid in full by Customer up to the amount of the
proceeds received by Creditor from the Account.

          23.        Attorneys’ Fees, Costs and Expenses. In any action or
proceeding between Customer and SVBS, between Customer and Clearing Broker,
between Creditor and SVBS, or between Creditor and Clearing Broker, arising out
of this Agreement, the prevailing party will be entitled to recover its
reasonable attorneys’ fees and other costs and expenses incurred, in addition to
any other relief to which it may be entitled, whether or not a lawsuit is filed.

          24.        No Conflict.  To the extent that the terms or conditions of
this Agreement are inconsistent with the Client Agreement or any other document,
instrument or agreement between SVBS, Clearing Broker and Customer, the terms
and conditions of this Agreement shall prevail.

          25.        Successors. The terms of this Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and to each party’s
respective successors or heirs and personal representatives. The parties may
assign this Agreement and any rights under the Agreement only if that party’s
successor or assign assume all obligations under this Agreement.

          26.        Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, are an original, and all taken together, are
one Agreement.

          27.        Survival. Sections 15 and 18 through 25 shall survive the
termination of this Agreement.

          [The rest of this page intentionally left blank)

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.

CUSTOMER:

Timeline, Inc.

 

By:  /s/ Charles R. Osenbaugh

 

Name:  Charles R. Osenbaugh

 

Title:  President

 

 

 

Address for Notices:

 

3055 112th Avenue N.E., Ste. 106

 

Bellevue, WA  98004

 

Telephone: 

425-822-3140

 

Facsimile:

425-822-1120

 

 

 

CREDITOR:

Silicon Valley Bank.

 

By:  /s/ Paul Heimstra

 

Name:  Paul Heimstra

 

Title:  Vice President

 

 

 

Address for Notices:

 

3003 Tasman Drive

 

Santa Clara, CA  95054

 

Telephone: 

425-576-2070

 

Facsimile:

425-827-5998

 

 

 

SVBS:

SVB Securities

 

By:

 

Name: 

 

Title:  Operations Manager

 

 

 

Address for Notices:

 

SVB Securities

 

3003 Tasman Drive

 

Mail Sort HG250

 

Santa Clara, CA  95054

 

Telephone: 

408-654-7256

 

Facsimile:

408-496-2407

 

 

 

CLEARING BROKER:

Banc of America Securities LLC

 

By: 

 

Name: 

 

Title:

SVB Securities
Securities Account Control Agreement
Exhibit A

1.

Account Title and Number:

 

 

 

Account Title:    TIMELINE. INC.

 

 

 

Account Number:   886-02973

 

 

2.

“Security Agreement” (This section to be completed by Creditor):

 

 

 

THAT CERTAIN ACCOUNTS RECEIVABLE FINANCING AGREEMENT DATED SEPTEMBER 16, 2004,
AS MAY BE AMENDED AND MODIFIED FROM TIME TO TIME.

 

 

3.

Account Control Agreements Previously Executed by SVB Securities and Clearing
Broker with other Parties Asserting an Interest in the Account (This Section to
be completed by SVBS):

SVB Securities Securities Account Control
Agreement
Exhibit B Notice of Exclusive
Control

To:

SVB Securities (“SVBS”)

From:

(“Creditor”)

Re:

(“Customer”)

Date:

                             

Pursuant to the Securities Account Control Agreement dated               
(“Agreement”) entered among SVBS, Clearing Broker (as defined in the Agreement)
Customer and Creditor, Creditor hereby notifies SVBS of Creditor’s exercise of
Creditor’s rights under the Agreement and directs SVBS to cease complying with
trading instructions or any entitlement orders originated by Customer or its
agents.

Creditor understands and agrees that SVBS and Clearing Broker shall have no duty
or obligation whatsoever of any kind or character to determine the validity of
Creditor’s exercise of its rights under the Agreement or the certification
above, to determine if SVBS and/or Clearing Broker is/are obligated to take
further instructions from Customer, or to determine whether Creditor has a right
to all or part of the Collateral. Creditor hereby agrees to indemnify and hold
harmless SVBS and Clearing Broker, their respective affiliates, and their
respective directors, officers, employees and agents pursuant to the terms of
Section 19 of the Agreement.

Creditor agrees that upon receipt of Creditor’s Notice of Exclusive Control,
SVBS and Clearing Broker may exercise their rights and remedies as permitted
under the Agreement.

Creditor hereby certifies that the person executing this Notice of Exclusive
Control is an officer, representative or agent of Creditor authorized to act on
the behalf of Creditor and to make the representations and agreements contained
in this Notice of Exclusive Control.

CREDITOR:

 

--------------------------------------------------------------------------------

 

 

 

 

By

 

 

 

--------------------------------------------------------------------------------

 

Title:

 

 

ACKNOWLEDGED BY:

SVB SECURITIES

(for facsimile only)

 

 

 

By

 

 

 

--------------------------------------------------------------------------------

 

Name:

 

Title:

 

Date:

 

Time:

 

 

SVBS Form Dated October 22, 2002

 

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