Exhibit 10.2


INTELLECTUAL PROPERTY SECURITY AGREEMENT


          This Intellectual Property Security Agreement (this “IP Agreement”) is made as of the Effective Date by and between Timeline, Inc. (“Grantor”), and Silicon Valley Bank, a California banking corporation (“Bank”).


RECITALS


          A.          Bank will make advances to Grantor (“Advances”) as described in the Accounts Receivable Financing Agreement (the “Financing Agreement”), but only if Grantor grants Bank a security interest in its Copyrights, Trademarks, Patents, and Mask Works.  Defined terms used but not defined herein shall have the same meanings as in the Financing Agreement.


          B.          Pursuant to the terms of the Financing Agreement, Grantor has granted to Bank a security interest in all of Grantor’s right title and interest, whether presently existing or hereafter acquired in, to and under all of the Collateral.


          NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged and intending to be legally bound, as collateral security for the prompt and complete payment when due of Grantor’s Indebtedness under the Financing Agreement, Grantor hereby represents, warrants, covenants and agrees as follows:


          1.          Grant of Security Interest.  As collateral security for the prompt and complete payment and performance of all of Grantor’s present or future Indebtedness, obligations and liabilities to Bank, Grantor hereby grants a security interest in all of Grantor’s right, title and interest in, to and under its Intellectual Property Collateral (all of which shall collectively be called the “Intellectual Property Collateral”), including, without limitation, the following:


                       (a)          Any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held, including without limitation those set forth on Exhibit A attached hereto (collectively, the “Copyrights”);


                       (b)          Any and all trade secrets, and any and all intellectual property rights in computer software and computer software products now or hereafter existing, created, acquired or held;


                       (c)          Any and all design rights that may be available to Grantor now or hereafter existing, created, acquired or held;


                       (d)          All patents, patent applications and like protections including, without limitation, improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same, including without limitation the patents and patent applications set forth on Exhibit B attached hereto (collectively, the “Patents”);


                       (e)          Any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Grantor connected with and symbolized by such trademarks, including without limitation those set forth on Exhibit C attached hereto (collectively, the “Trademarks”)


                      (f)          All mask works or similar rights available for the protection of semiconductor chips, now owned or hereafter acquired, including, without limitation those set forth on Exhibit D attached hereto (collectively, the  “Mask Works”);


                       (g)          Any and all claims for damages by way of past, present and future infringements of any of the rights included above, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the intellectual property rights identified above;








                        (h)          All licenses or other rights to use any of the Copyrights, Patents, Trademarks, or Mask Works and all license fees and royalties arising from such use to the extent permitted by such license or rights;


                       (i)          All amendments, extensions, renewals and extensions of any of the Copyrights, Trademarks, Patents, or Mask Works; and


                       (j)          All proceeds and products of the foregoing, including without limitation all payments under insurance or any indemnity or warranty payable in respect of any of the foregoing.


          2.          Authorization and Request.  Grantor authorizes and requests that the Register of Copyrights and the Commissioner of Patents and Trademarks record this IP Agreement.


          3.          Covenants and Warranties.  Grantor represents, warrants, covenants and agrees as follows:


                       (a)          Grantor is now the sole owner of the Intellectual Property Collateral, except for non-exclusive licenses granted by Grantor to its customers in the ordinary course of business.


                       (b)          Performance of this IP Agreement does not conflict with or result in a breach of any IP Agreement to which Grantor is bound, except to the extent that certain intellectual property agreements prohibit the assignment of the rights thereunder to a third party without the licensor’s or other party’s consent and this IP Agreement constitutes a security interest.


                       (c)          During the term of this IP Agreement, Grantor will not transfer or otherwise encumber any interest in the Intellectual Property Collateral, except for non-exclusive licenses granted by Grantor in the ordinary course of business or as set forth in this IP Agreement;


                       (d)          To its knowledge, each of the Patents is valid and enforceable, and no part of the Intellectual Property Collateral has been judged invalid or unenforceable, in whole or in part, and no claim has been made that any part of the Intellectual Property Collateral violates the rights of any third party;


                       (e)          Grantor shall promptly advise Bank of any material adverse change in the composition of the Collateral, including but not limited to any subsequent ownership right of the Grantor in or to any Trademark, Patent, Copyright, or Mask Work specified in this IP Agreement;


                       (f)          Grantor shall (i) protect, defend and maintain the validity and enforceability of the Trademarks, Patents, Copyrights, and Mask Works, (ii) use its best efforts to detect infringements of the Trademarks, Patents, Copyrights, and Mask Works and promptly advise Bank in writing of material infringements detected and (iii) not allow any Trademarks, Patents, Copyrights, or Mask Works to be abandoned, forfeited or dedicated to the public without the written consent of Bank, which shall not be unreasonably withheld, unless Grantor determines that reasonable business practices suggest that abandonment is appropriate;


                       (g)          Grantor shall not register any Copyrights or Mask Works with the United States Copyright Office unless it: (i) has given at least fifteen (15) days’ prior notice to Bank of its intent to register such Copyrights or Mask Works and has provided Bank with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (ii) executes a security agreement or such other documents as Bank may reasonably request in order to maintain the perfection and priority of Bank’s security interest in the Copyrights proposed to be registered with the United States Copyright Office; and (iii) records such security documents with the United States Copyright Office contemporaneously with filing the Copyright application(s) with
the United States Copyright Office.  Grantor shall promptly provide to Bank a copy of the Copyright application(s) filed with the United States Copyright Office, together with evidence of the recording of the security documents necessary for Bank to maintain the perfection and priority of its security interest in such Copyrights or Mask Works.  Grantor shall provide written notice to Bank of any application filed by Grantor in the United States Patent Trademark Office for a patent or to register a trademark or service mark within 30 days of any such filing;


                       (h)          This IP Agreement creates, and in the case of after acquired Intellectual Property Collateral, this IP Agreement will create at the time Grantor first has rights in such after acquired Intellectual Property Collateral, in favor of Bank a valid and perfected first priority security interest in the Intellectual Property Collateral in the United States securing the payment and performance of the obligations evidenced by the Note and the Financing Agreement upon making the filings referred to in clause (i) below;








                       (i)          To its knowledge, except for, and upon, the filing with the United States Patent and Trademark office with respect to the Patents and Trademarks and the Register of Copyrights with respect to the Copyrights and Mask Works necessary to perfect the security interests created hereunder and except as has been already made or obtained, no authorization, approval or other action by, and no notice to or filing with, any U.S. governmental authority of U.S. regulatory body is required either (i) for the grant by Grantor of the security interest granted hereby or for the execution, delivery or performance of this IP Agreement by Grantor in the U.S. or (ii) for the perfection in the United States or the exercise by Bank of its rights and remedies thereunder;


                       (j)          All information heretofore, herein or hereafter supplied to Bank by or on behalf of Grantor with respect to the Intellectual Property Collateral is accurate and complete in all material respects.


                       (k)         Grantor shall not enter into any agreement that would materially impair or conflict with Grantor’s obligations hereunder without Bank’s prior written consent, which consent shall not be unreasonably withheld.  Grantor shall not permit the inclusion in any material contract to which it becomes a party of any provisions that could or might in any way prevent the creation of a security interest in Grantor’s rights and interest in any property included within the definition of the Intellectual property Collateral acquired under such contracts, except that certain contracts may contain anti-assignment provisions that could in effect prohibit the creation of a security interest in such contracts.


                       (l)          Upon any executive officer of Grantor obtaining actual knowledge thereof, Grantor will promptly notify Bank in writing of any event that materially adversely affects the value of any material Intellectual Property Collateral, the ability of Grantor to dispose of any material Intellectual Property Collateral of the rights and remedies of Bank in relation thereto, including the levy of any legal process against any of the Intellectual Property Collateral.


          4.          Bank’s Rights.  Bank shall have the right, but not the obligation, to take, at Grantor’s sole expense, any actions that Grantor is required under this IP Agreement to take but which Grantor fails to take, after fifteen (15) days’ notice to Grantor.  Grantor shall reimburse and indemnify Bank for all reasonable costs and reasonable expenses incurred in the reasonable exercise of its rights under this section 4.


          5.          Inspection Rights.  Grantor hereby grants to Bank and its employees, representatives and agents the right to visit, during reasonable hours upon prior reasonable written notice to Grantor, and any of Grantor’s plants and facilities that manufacture, install or store products (or that have done so during the prior six-month period) that are sold utilizing any of the Intellectual Property Collateral, and to inspect the products and quality control records relating thereto upon reasonable written notice to Grantor and as often as may be reasonably requested, but not more than one (1) in every six (6) months; provided, however, nothing herein shall entitle Bank access to Grantor’s trade secrets and other proprietary information.


          6.          Further Assurances; Attorney in Fact.


                       (a)          On a continuing basis, Grantor will, subject to any prior licenses, encumbrances and restrictions and prospective licenses, make, execute, acknowledge and deliver, and file and record in the proper filing and recording places in the United States, all such instruments, including appropriate financing and continuation statements and collateral agreements and filings with the United States Patent and Trademarks Office and the Register of Copyrights, and take all such action as may reasonably be deemed necessary or advisable, or as requested by Bank, to perfect Bank’s security interest in all Copyrights, Patents, Trademarks, and Mask Works and otherwise to carry out the intent and purposes of this IP Agreement, or for assuring and confirming to Bank the grant or
perfection of a security interest in all Intellectual Property Collateral.


                       (b)          Grantor hereby irrevocably appoints Bank as Grantor’s attorney-in-fact, with full authority in the place and stead of Grantor and in the name of Grantor, Bank or otherwise, from time to time in Bank’s discretion, upon Grantor’s failure or inability to do so, to take any action and to execute any instrument which Bank may deem necessary or advisable to accomplish the purposes of this IP Agreement, including:


                                      (i)          To modify, in its sole discretion, this IP Agreement without first obtaining Grantor’s approval of or signature to such modification by amending Exhibit A, Exhibit B, Exhibit C, and Exhibit D hereof, as appropriate, to include reference to any right, title or interest in any
Copyrights, Patents, Trademarks or Mask Works in which Grantor no longer has or claims any right, title or interest; and









                                      (ii)          To file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to any of the Intellectual Property Collateral without the signature of Grantor where permitted by law.


          7.          Events of Default.  The occurrence of any of the following shall constitute an Event of Default under this IP Agreement:


                       (a)          An Event of Default occurs under the Financing Agreement; or


                       (b)          Grantor breaches any warranty or agreement made by Grantor in this IP Agreement. 


          8.          Remedies.  Upon the occurrence and continuance of an Event of Default, Bank shall have the right to exercise all the remedies of a secured party under the California Uniform Commercial Code, including without limitation the right to require Grantor to assemble the Intellectual Property Collateral and any tangible property in which Bank has a security interest and to make it available to Bank at a place designated by Bank.  Bank shall have a nonexclusive, royalty free license to use the Copyrights, Patents, Trademarks, and Mask Works to the extent reasonably necessary to permit Bank to exercise its rights and remedies upon the occurrence of an Event of Default.  Grantor will pay any expenses (including reasonable attorney’s fees) incurred by Bank in connection with the exercise of any of Bank’s rights hereunder,
including without limitation any expense incurred in disposing of the Intellectual Property Collateral.  All of Bank’s rights and remedies with respect to the Intellectual Property Collateral shall be cumulative.


          9.          Indemnity.  Grantor agrees to defend, indemnify and hold harmless Bank and its officers, employees, and agents against:  (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this IP Agreement, and (b) all losses or expenses in any way suffered, incurred, or paid by Bank as a result of or in any way arising out of, following or consequential to transactions between Bank and Grantor, whether under this IP Agreement or otherwise (including without limitation, reasonable attorneys fees and reasonable expenses), except for losses arising from or out of Bank’s gross negligence or willful misconduct.  


          10.          Reassignment.  At such time as Grantor shall completely satisfy all of the obligations secured hereunder, Bank shall execute and deliver to Grantor all deed, assignments, and other instruments as may be necessary or proper to reinvest in Grantor full title to the property assigned hereunder, subject to any disposition thereof which may have been made by Bank pursuant hereto.


          11.         Course of Dealing.  No course of dealing, nor any failure to exercise, nor any delay in exercising any right, power or privilege hereunder shall operate as a waiver thereof.


          12.          Attorneys’ Fees.  If any action relating to this IP Agreement is brought by either party hereto against the other party, the prevailing party shall be entitled to recover reasonable attorneys’ fees, costs and disbursements.


          13.          Amendments.  This IP Agreement may be amended only by a written instrument signed by both parties hereto.


          14.          Counterparts.  This IP Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute the same instrument.


          15.          Law and Jurisdiction.  This IP Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard for choice of law provisions.  Grantor and Bank consent to the nonexclusive jurisdiction of any state or federal court located in Santa Clara County, California.


          16.          Confidentiality.  In handling any confidential information, Bank shall exercise the same degree of care that it exercises with respect to its own proprietary information of the same types to maintain the confidentiality of any non-public information thereby received or received pursuant to this IP Agreement except that the disclosure of this information may be made (i) to the affiliates of the Bank, (ii) to prospective transferee or purchasers of an interest in the obligations secured hereby, provided that they have entered into comparable confidentiality agreement in favor of








Grantor and have deliver a copy to Grantor, (iii) as required by law, regulation, rule or order, subpoena judicial order or similar order and (iv) as may be required in connection with the examination, audit or similar investigation of Bank.


          IN WITNESS WHEREOF, the parties hereto have executed this IP Agreement on the day and year first above written.

	
      Address of Grantor:

    	
       GRANTOR:

    
	
        

    	
        

    	
       

    
	
       3055 112th Avenue NE, Suite 106

    	
       TIMELINE, INC.

    
	
       Seattle, WA 98004

    	
       

    	
        

    
	
        

    	
       By:

    	
       /s/ CHARLES
        R. OSENBAUGH

    
	
       

    	
        

    	
      

    
	
        

    	
       Name:

    	
       Charles R. Osenbaugh

    
	
       

    	
       Title:

    	
       President

    










Exhibit “A” attached to that certain Intellectual Property Security Agreement.


EXHIBIT “A”


COPYRIGHTS


SCHEDULE A - ISSUED COPYRIGHTS

	
  
COPYRIGHT 
   DESCRIPTION
  	
  
 
  	
  
REGISTRATION
   NUMBER
  	
   
 	
  
DATE OF
   ISSUANCE
  	
   
 
	
  


  	
   
 	
  


  	
   
 	
  


  	
   
 
	
   
 	
   
 	
   
 	
   
 	
   
 	
   
 
	
   
 	
   
 	
   
 	
   
 	
   
 	
   
 



SCHEDULE B - PENDING COPYRIGHT APPLICATIONS

	

  
COPYRIGHT 
   DESCRIPTION
  	
  
 
  	
  
APPLICATION
   NUMBER
  	
   
 	
  
DATE OF
   FILING
  	
   
 	
  
CREATION
  	
   
 	
  
FIRST DATE
   OF PUBLIC
   DISTRIBUTION
  	
   
 
	
  


  	
   
 	
  


  	
   
 	
  


  	
   
 	
  


  	
   
 	
  


  	
   
  
	
   
 	
   
 	
   
 	
   
 	
   
 	
   
 	
   
 	
   
 	
   
 	
   
 




SCHEDULE C - UNREGISTERED COPYRIGHTS (Where No Copyright Application is Pending)

	

  COPYRIGHT
   DESCRIPTION
  	
   
 	
  
DATE OF
   CREATION
  	
   
 	
  
FIRST DATE
   OF
   DISTRIBUTION
  	
   
 	
  
ORIGINAL
   AUTHOR OR
   OWNER OF
   COPYRIGHT
   (IF DIFFERENT
   FROM GRANTOR)
  	
   
 	
  
DATE AND
   RECORDATION
   NUMBER OF
   IP AGREEMENT TO
   OWNER OF
   GRANTOR (IF
   ORIGINAL AUTHOR
   OR OWNER OF
   COPYRIGHT IS
   DIFFERENT FROM
   GRANTOR)
  	
   
 
	
  


  	
   
 	
  


  	
   
 	
  


  	
   
 	
  


  	
   
 	
  


  	
  
 
  
	
   
 	
   
 	
   
 	
   
 	
   
 	
   
 	
   
 	
   
 	
   
 	
   
 









Exhibit “B” attached to that certain Intellectual Property Security Agreement.


EXHIBIT “B”


PATENTS

	
  
PATENT
   DESCRIPTION
  	
   
 	
  
DOCKET NO.
  	
   
 	
  
COUNTRY
  	
   
 	
  
SERIAL NO.
  	
   
 	
  
FILING   DATE
  	
   
 	
  
STATUS
  	
   
 
	
  


  	
   
  	
  


  	
  
 
  	
  


  	
  
 
  	
  


  	
  
 
  	
  


  	
  
 
  	
  


  	
  
 
  
	
  
E/Data Retrieval Method
  	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  
	
  And Apparatus With
  	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  
	
  
Multiple Source Capability
  	
  
 
  	
   
 	
  
 
  	
  
USA
  	
  
 
  	
  
6,631,382
  	
  
 
  	
  
07/31/2000
  	
  
 
  	
  
Filed
  	
  
 
  
	
   
  	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  
	
  
Modularized Data Retrieval
  	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  
	
  
Method And Apparatus
  	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  
	
  With Multiple Source
  	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  
	
  
Capability
  	
  
 
  	
   
 	
  
 
  	
  
USA
  	
  
 
  	
  
6,625,671
  	
  
 
  	
  
12/08/2000
  	
  
 
  	
  
Filed
  	
  
 
  
	
   
  	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  
	
  
E/Data Retrieval Method
  	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  
	
  
And Apparatus With
  	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  
	
  Multiple Source Capability
  	
  
 
  	
   
 	
  
 
  	
  
USA
  	
  
 
  	
  
6,026,392
  	
  
 
  	
  
06/29/1998
  	
  
 
  	
  
Filed
  	
  
 
  
	
  
 
  	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  
	
  E/ Data Retrieval Method
  	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  
	
  
And Apparatus With
  	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  
	
  
Multiple Source Capability
  	
  
 
  	
   
 	
  
 
  	
  
USA
  	
  
 
  	
  
6,023,694
  	
  
 
  	
  
06/29/1998
  	
  
 
  	
  
Filed
  	
  
 
  
	
   
  	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  
	
  
E/Data Retrieval Method
  	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  
	
  
And Apparatus With
  	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  
	
  Multiple Source Capability;
  	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  	
   
 	
  
 
  
	
  
Computer-Implemented Method
  	
  
 
  	
   
 	
  
 
  	
  
USA
  	
  
 
  	
  
5,802,511
  	
  
 
  	
  
09/01/1998
  	
  
 
  	
  
Filed
  	
  
 
  









Exhibit “C” attached to that certain Intellectual Property Security Agreement.


EXHIBIT “C”


TRADEMARKS

	
  
TRADEMARK
   DESCRIPTION
  	
   
 	
  
COUNTRY
  	
   
 	
  
SERIAL NO.
  	
   
 	
  
REG. NO
  	
   
 	
  
STATUS
  	
  
 
  
	
  


  	
   
 	
  


  	
   
 	
  


  	
   
 	
  


  	
   
 	
  


  	
  
 
  
	
  Timeline
  	
   
 	
  
USA
  	
   
 	
  
74-143,338
  	
   
 	
  
1,673,332
  	
   
 	
  
Renewed
  	
  
 
  
	
  
T Stylized Letters
  	
   
 	
  
USA
  	
   
 	
  
75-155,898
  	
   
 	
  
2,140,219
  	
   
 	
  
Registered
  	
  
 
  










Exhibit “D” attached to that certain Intellectual Property Security Agreement.


EXHIBIT “D”


MASK WORKS


	
  
MASK WORK
   DESCRIPTION
  	
   
 	
  
COUNTRY
  	
   
 	
  
SERIAL NO.
  	
   
 	
  
REG. NO
  	
   
 	
  
STATUS