**Exhibit10.26**

 

**TIME AMERICA, INC.**

 

**NOTE PURCHASE AGREEMENT**

 

This NOTE PURCHASEAGREEMENT (“Agreement”) is dated as of April 16, 2004, by and among TimeAmerica, Inc., a Nevada corporation (the “Company”), and Frances L.Simek (the “Investor”).

 

**WITNESSETH:**

 

**WHEREAS**, the Company desires to sell andissue to the Investor, and the Investor desires to purchase from the Company,$500,000 in original principal amount of a Promissory Note, in the identicalform and substance of **Exhibit A** attached hereto, on the termsand conditions set forth herein (the “Note”), to bear interest (computedon the basis of a 360-day year and actual days elapsed) from the date ofissuance at the rate of fifteen percent (15.0%) per annum;

 

**WHEREAS,**the Note will be secured by all of the Company’s assets, which securityinterest shall be evidenced by a Security Agreement (the “Security Agreement”),in substantially the form and substance of **Exhibit B** attached hereto;

 

**NOW, THEREFORE,** in consideration of theforegoing premises and the covenants contained herein and other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto agree as follows:

 

Certain Definitions.  As used in this Agreement, the followingterms shall have the following respective meanings:

 

“Closing” and “ClosingDate” shall have the meanings ascribed to such terms in Section 1.3 herein.

 

“Holder” and “Holders”shall include an Investor or Investors, respectively, and any transferee of theNotes which have been transferred in compliance thereof.

 

“Maturity Date” shallmean May 1, 2009, the date upon which the Notes mature and the principalthereof and all interest thereon becomes due and payable.

 

 “Regulation D” shall mean Regulation D aspromulgated pursuant to the Securities Act, and as subsequently amended.

 

**ARTICLE I**

 

**Purchase and Sale of the Notes**

 

Section 1.1  Purchase and Sale.  Upon the following terms and conditions, theCompany shall issue and sell to the Investor, and the Investor shall purchase fromthe Company, the aggregate principal amount $500,000.

 

----

 

Section 1.2  Purchase Price.  The purchase price for the Note shall be100% of the principal amount thereof (the “Note Purchase Price”).

 

Section 1.3  The Closing.  (a) The closing of the purchase and sale of the Note, shall take place byfacsimile transmission of signature pages to each of the documents contemplatedby this Agreement, and the satisfaction or waiver of the other conditions setforth in Article V hereof. The date on which the Closing occurs is referred toherein as the “Closing Date.”

 

(b)                                 Onthe Closing Date, the Company shall deliver to the Investor the Note, and anexecuted counterpart of this Agreement and the Security Agreement, and suchInvestor shall deliver to the Company the purchase price for the Note purchasedby such Investor hereunder by wire transfer in immediately available funds toan account designated in writing prior to the Closing Date by the Company andexecuted counterparts of this Agreement and the Security Agreement.  In addition, each party shall deliver alldocuments, instruments and writings required to be delivered by such partypursuant to this Agreement at or prior to the Closing Date.

 

**ARTICLE II**

 

**Representations and Warranties**

 

Section 2.1  Representations and Warranties of theCompany.  The Company hereby makesthe following representations and warranties to the Investor from and as of thedate hereof through the Closing Date:

 

(a)                                  Organizationand Qualification; Material Adverse Effect.  The Company is a corporation duly organized, validly existing andin good standing under the laws of the State of Nevada.  Except for the Company’s wholly ownedsubsidiary, Time America, Inc., there are no other corporations or otherentities (including partnerships, limited liability companies and jointventures) in which the Company directly or indirectly owns at least a majorityof the voting power represented by the outstanding capital stock or othervoting securities or interests having voting power under ordinary circumstancesto elect a majority of the directors or similar members of the governing body,or otherwise to direct the management and policies, of such corporation orentity.  The Company has the requisitecorporate power to own its properties and to carry on its business as now beingconducted.  The Company is dulyqualified as a foreign corporation to do business and is in good standing inevery jurisdiction in which the nature of the business conducted or propertyowned by it makes such qualification necessary other than those in which thefailure so to qualify would not, individually or in the aggregate, have aMaterial Adverse Effect.  “MaterialAdverse Effect” means any adverse effect on the business, operations,properties, or financial condition of the entity with respect to which suchterm is used and which is material to such entity and other entitiescontrolling or controlled by such entity, taken as a whole, and any materialadverse effect on the transactions contemplated under the Agreement or anyother agreement or document contemplated hereby.

 

(b)                                 Authorization;Enforcement.  (i)  The Company has the requisite corporatepower and authority to enter into and perform this Agreement,  the Note and the Security

 

2

----

 

Agreement in accordance with the terms hereof, (ii) the execution anddelivery of this Agreement and the Security Agreement by the Company and theconsummation by it of the transactions contemplated hereby and thereby,including the issuance of the Notes in accordance with the terms of thisAgreement, have been duly authorized by all necessary action, and no furtherconsent or authorization of the Company is required, (iii) this Agreement hasbeen duly executed and delivered by the Company, and (iv) each of thisAgreement, the Security Agreement, and the Notes constitutes the valid andbinding obligation of the Company enforceable against the Company in accordancewith its terms, except as the enforceability thereof may be limited by bankruptcy,insolvency, reorganization or similar laws relating to the enforcement ofcreditors’ rights generally and by general principles of equity.

 

(c)                                  No Conflicts.  Theexecution, delivery and performance of this Agreement, the Security Agreement,and the Notes by the Company and the consummation by the Company of thetransactions contemplated hereby and thereby do not and will not (i) result ina violation of the organizational documents, as amended, of the Company or (ii)conflict with, or constitute a default (or an event which with notice or lapseof time or both would become a default) under, or give to others any rights oftermination, amendment, acceleration or cancellation of, any agreement,indenture, patent, patent license or instrument to which the Company is aparty, or result in a violation of any Federal, state, local or foreign law,rule, regulation, order, judgment or decree (including Federal and statesecurities laws and regulations) applicable to the Company or by which anyproperty or asset of the Company is bound (except for such conflicts, defaults,terminations, amendments, accelerations, cancellations and violations as wouldnot, individually or in the aggregate, have a Material Adverse Effect);provided that, for purposes of such representation as to Federal, state, localor foreign law, rule or regulation, no representation is made herein withrespect to any of the same applicable solely to the Investors and not to theCompany.  The business of the Companyhas not been, is not now being conducted in violation of any law, ordinance orregulation of any governmental entity, except for violations which eithersingly or in the aggregate do not and will not have a Material AdverseEffect.  The Company is not requiredunder Federal, state, local or foreign law, rule or regulation to obtain anyconsent, authorization or order of, or to make any filing or registration with,any court or governmental agency in order for it to execute, deliver or performany of its obligations under this Agreement, the Security Agreement, or theNotes, provided that, for purposes of the representation made in this sentence,the Company is assuming and relying upon the accuracy of the relevantrepresentations and agreements of the Investors herein.

 

(d)                                 NoUndisclosed Liabilities.  TheCompany does not have any liabilities or obligations not disclosed in theCompany’s most recent financial statements, as filed with the Commission, otherthan those liabilities incurred in the ordinary course of its business since December31, 2003, or liabilities or obligations, individually or in the aggregate,which do not or would not have a Material Adverse Effect on the Company.

 

(e)                                  No General Solicitation.  Neitherthe Company nor, to the Company’s knowledge, any of its affiliates or anyperson acting on its or their behalf has engaged in any form of generalsolicitation or general advertising (within the meaning of Regulation D) inconnection with the offer or sale of the Securities.

 

3

----

 

(f)                                    NoLitigation.  No litigation or claim(including those for unpaid taxes) against the Company is pending or, to theCompany’s knowledge, threatened, and no other event has occurred, which ifdetermined adversely would have a Material Adverse Effect on the Company, orwould materially adversely effect the transactions contemplated hereby.

 

(g)                                 Brokers.  The Company has taken no action that wouldgive rise to any claim by any person for brokerage commissions, finder’s feesor similar payments by the Company relating to this Agreement or thetransactions contemplated hereby or thereby.

** **

**ARTICLE III**

 

**Covenants**

 

Section 3.1  Replacement Certificates.  The certificate(s) representing the Notesheld by any Investor (or then holder) may be exchanged by such Investor (orsuch holder) at any time and from time to time for certificates with differentdenominations representing an equal amount of Notes as reasonably requested bysuch Investor upon surrendering the same. No service charge will be made for such registration, transfer orexchange.

 

Section 3.2  Subordination.  Investor subordinates to the obligations ofthe Company under any Senior Indebtedness: (a) indebtedness of the Company toInvestor under this Note, including, without limitation, all rights ofsubrogation, indemnification, reimbursement or contribution (collectively, the“Subordinated Indebtedness”); and (b) all liens, security interests,claims and right of any kind that Investor may now have or hereafter acquireagainst the Company and/or the property of the Company which secure, resultfrom or otherwise pertain to the Subordinated Indebtedness.  For purposes of this Note, the term “SeniorIndebtedness” shall mean indebtedness of the Company and indebtednessguaranteed by the Company for (i) money borrowed from banks or other lendinginstitutions whether outstanding on the date of this Note or thereafterincurred, and (ii) any other indebtedness or obligation of the Company, whetheroutstanding on the date of this Note or thereafter created, incurred, assumedor guaranteed, which is evidenced by a note or other similar instrument, unlessby the terms of such note or other instrument it is provided that suchindebtedness is not superior in right of payment to this Note.

 

**ARTICLE IV**

 

**Conditions**

 

Section 4.1  Conditions Precedent to the Obligation ofthe Company to Issue and Sell the Notes. The obligation hereunder of the Company to issue and sell the Notes tothe Investor is subject to the satisfaction, at or before the Closing Date, ofeach of the conditions set forth below. These conditions are for the Company’s sole benefit and may be waived bythe Company at any time in its sole discretion.

 

(a)                                  Accuracyof the Investor’s Representations and Warranties.  The representations and warranties of the Investor shall be trueand correct in all material respects as

 

4

----

 

of the date when made and as of the Closing Date as though made at thattime (except for representations and warranties that speak as of a particulardate, which shall be true and correct in all material respects as of such otherdate), and except that all representations and warranties that by their termsare qualified by reference to “materiality” or to a “Material Adverse Effect”shall be, or have been, true and correct in all respects.

 

(b)                                 Performanceby the Investors.  Each Investorshall have performed all agreements and satisfied all conditions requiredhereby to be performed or satisfied by such Investor at or prior to the ClosingDate.

 

(c)                                  NoInjunction.  No statute, rule,regulation, executive order, decree, ruling or injunction shall have beenenacted, entered, promulgated or endorsed by any court or governmentalauthority of competent jurisdiction which prohibits the consummation of any ofthe transactions contemplated by this Agreement.

 

(d)                                 Approvals.The Company’s Board of Directors shall have approved the transactionscontemplated by this Agreement.

 

Section 4.2  Conditions Precedent to the Obligation ofthe Investor to Purchase the Notes. The obligation hereunder of the Investor to acquire and pay for theNotes is subject to the satisfaction, at or before the Closing Date, of each ofthe conditions set forth below.  Theseconditions are for the Investor’s sole benefit and may be waived by theInvestor at any time in its sole discretion.

 

(a)                                  Accuracyof the Company’s Representations and Warranties.  The representation and warranties of the Company shall be trueand correct in all material respects as of the date when made and as of theClosing Date as though made at that time (except for representations andwarranties that speak as of a particular date which shall be true and correctin all material respects as of such other date), and except that allrepresentations and warranties that by their terms are qualified by referenceto “materiality” or to a “Material Adverse Effect” shall be, or have been, trueand correct in all respects.

 

(b)                                 Performanceby the Company.  The Company shallhave performed all agreements and satisfied all conditions required to beperformed or satisfied by the Company at or prior to the Closing Date.

 

(c)                                  NoInjunction.  No statute, rule,regulation, executive order, decree, ruling or injunction shall have beenenacted, entered, promulgated or endorsed by any court or governmentalauthority or competent jurisdiction which prohibits the consummation of any ofthe transactions contemplated by this Agreement.

 

**ARTICLE V**

 

**Termination**

 

Section 5.1  Termination by Mutual Consent.  This Agreement may be terminated at any timeprior to the Closing Date by the mutual written consent of the Company and theInvestor.

 

5

----

 

Section 5.2  Other Termination.  This Agreement may be terminated by anauthorized representative of the Company or by the Investor at any time if theClosing Date shall not have occurred by the fifth business day following thedate of this Agreement; provided, however, that the right to terminate thisAgreement under Section 5.2 shall not be available to any party whose failureto fulfill any obligation under this Agreement has been the cause of, orresulted in, the failure of the Closing Date to have occurred on or prior tosuch date.

 

**ARTICLE VI**

 

**Miscellaneous**

 

Section 6.1  Stamp Taxes; Agent Fees.  The Company shall pay all stamp and othertaxes and duties levied in connection with the issuance of the Notes pursuanthereto.

 

Section 6.2  Specific Enforcement; Consent toJurisdiction.

 

(a)                                  TheCompany and the Investor acknowledge and agree that irreparable damage wouldoccur in the event that any of the provisions of this Agreement were notperformed in accordance with their specific terms or were otherwisebreached.  It is accordingly agreed thatthe parties shall be entitled to an injunction or injunctions to prevent orcure breaches of the provisions of this Agreement and to enforce specificallythe terms and provisions hereof, this being in addition to any other remedy towhich any of them may be entitled by law or equity.

 

(b)                                 TheCompany and the Investor (i) hereby irrevocably submit to the exclusivejurisdiction of the United States District Court, the Arizona State courts andother courts of the United States sitting in Maricopa County, Arizona for thepurposes of any suit, action or proceeding arising out of or relating to thisAgreement and (ii) hereby waives, and agrees not to assert in any such suit,action or proceeding, any claim that it is not personally subject to thejurisdiction of such court, that the suit, action or proceeding is brought inan inconvenient forum or that the venue of the suit, action or proceeding isimproper.  The Company and the Investorconsent to process being served in any such suit, action or proceeding bymailing a copy thereof to such party at the address in effect for notices to itunder this Agreement and agrees that such service shall constitute good andsufficient service of process and notice thereof.  Nothing in this paragraph shall affect or limit any right toserve process in any other manner permitted by law.

 

Section 6.3  Entire Agreement; Amendment.  This Agreement together with the agreementsand documents executed in connection herewith, contains the entireunderstanding of the parties with respect to the matters covered hereby and,except as specifically set forth herein, neither the Company nor the Investormakes any representation, warranty, covenant or undertaking with respect tosuch matters.  No provision of thisAgreement may be waived or amended other than by a written instrument signed bythe party against whom enforcement of any such amendment or waiver is sought.

 

Section 6.4  Notices.  Any notices, consents, waivers or other communications requiredor permitted to be given under the terms of this Agreement must be in writingand will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, whensent by facsimile (provided confirmation of transmission is mechanically orelectronically

 

6

----

 

generated and kept on file by the sending party); or (iii) one businessday after deposit with a nationally recognized overnight delivery service, ineach case properly addressed to the party to receive the same.  The addresses and facsimile numbers for suchcommunications shall be:

 
| to the Company:  |   | Time america,  Inc.                   |
|------------------|--------|---------------------------------------|
|             |   | 51 West Third  Street                 |
|             |   | Suite 310                             |
|             |   | Tempe,  Arizona  85281           |
|             |   | Telephone:  480-296-0400         |
|             |   | Facsimile:  480-296-0444              |
|             |   | Attn:                                 | Craig J. Smith |
|             |   |                                  | Chief Financial  Officer |
|             |   |                                  |
| with copies to:  |   | Squire, Sanders  & Dempsey L.L.P. |
|             |   | Two Renaissance  Square               |
|             |   | 40 North Central  Avenue, Suite 2700  |
|             |   | Phoenix,  Arizona  85004-4498    |
|             |   | Telephone:  602-528-4134         |
|             |   | Facsimile:  602-253-8129         |
|             |   | Attn:                                 | Gregory R. Hall,  Esq. |
|             |   |                                  |
| to the Investor: |   |                                  |
|             |   |                                  |
|             |   |                                  |
|             |   |                                  |
|             |   |                                  |

 

Any party hereto may fromtime to time change its address for notices by giving at least five (5) dayswritten notice of such changed address to the other parties hereto.  Written confirmation of receipt (A) given bythe recipient of such notice, consent, waiver or other communication, (B)mechanically or electronically generated by the sender’s facsimile machinecontaining the time, date, recipient facsimile number and an image of the firstpage of such transmission or (C) provided by a nationally recognized overnightdelivery service shall be rebuttable evidence of personal service, receipt byfacsimile or receipt from a nationally recognized overnight delivery service inaccordance with clause (i), (ii) or (iii) above.

 

Section 6.5  Indemnity.  Each party shall indemnify, defend and hold harmless each otherparty against any loss, cost or damages (including reasonable attorney’s fees)incurred as a result of such parties’ breach of any representation, warranty,covenant or agreement in this Agreement.

 

Section 6.6  Waivers.  No waiver by any party of any default with respect to anyprovision, condition or requirement of this Agreement shall be deemed to be acontinuing waiver in the future or a waiver of any other provision, conditionor requirement hereof, nor shall any

 

7

----

 

delay or omission of any party to exercise any right hereunder in anymanner impair the exercise of any such right accruing to it thereafter.

 

Section 6.7  Headings.  The headings herein are for convenience only, do not constitute apart of this Agreement and shall not be deemed to limit or affect any of theprovisions hereof.

 

Section 6.8  Successors and Assigns.  Except as otherwise provided herein, thisAgreement shall be binding upon and inure to the benefit of the parties andtheir successors and permitted assigns. The parties hereto may amend this Agreement without notice to or theconsent of any third party.  The Companymay not assign this Agreement or any rights or obligations hereunder withoutthe prior written consent of the Investor, except that the Company may assignthis Agreement in connection with a merger, consolidation, business combinationor the sale of all or substantially all of its assets provided that the Companyis not released from any of its obligations hereunder, such successor ininterest or assignee assumes all obligations of the Company hereunder, andappropriate adjustment of the provisions contained in this Agreement, and theNotes is made, in form and substance satisfactory to the Investor, to place theInvestor in substantially the same position as they would have been but forsuch assignment.  The Investor may notassign this Agreement (in whole or in part) or any rights or obligationshereunder without the Company’s prior written consent (which consent may bewithheld for any reason in their sole discretion).

 

Section 6.9  No Third Party Beneficiaries.  This Agreement is intended for the benefitof the parties hereto and their respective permitted successors and assigns andis not for the benefit of, nor may any provision hereof be enforced by, anyother person.

 

Section 6.10  Governing Law.  This Agreement shall be governed by andconstrued and enforced in accordance with the internal laws of the State ofArizona without regard to such State’s principles of conflict of laws.

 

Section 6.11  Survival.  The representations and warranties and the agreements andcovenants of the Company and each Investor contained herein shall survive theClosing.

 

Section 6.12  Execution.  This Agreement may be executed in two or more counterparts, allof which shall be considered one and the same agreement, it being understoodthat all parties need not sign the same counterpart.

 

Section 6.13  Publicity.   The Company agrees that it will not include in any publicannouncement the name of any Investor without its consent, unless and untilsuch disclosure is required by law or applicable regulation, and then only tothe extent of such requirement.

 

Section 6.14  Severability. The parties acknowledgeand agree that all representations, warranties, covenants and agreements of theInvestors hereunder are several and not joint, that no Investor shall have anyresponsibility or liability for the representations,  agreements, acts or omissions of any other Investor, and that anyrights granted to “Investors” hereunder shall be enforceable by each Investorhereunder.

 

8

----

 

Section 7.15  Expenses.  Each party shall pay its own expenses incident to the preparationand performance of this Agreement and the documents provided for herein.

 

9

----

 

**IN WITNESS WHEREOF**, the parties hereto havecaused this Agreement to be duly executed as of the date first above written.

 
|   | TIME AMERICA,  INC. |
|--------|---------------------|
|   |                |
|   |                |
|   | By:                 | /s/ Thomas S.  Bednarik |   |
|   |                | Name: | Thomas S.  Bednarik |
|   |                | Title: | President and  Chief Executive Officer |
|   |                |
|   |                |
|   | INVESTOR:           |
|   |                |
|   |                |
|   | By:                 | /s/ Frances  Simek |   |
|   |                | Frances Simek |
|        |                     |  |  |  |  |

 

10

----

 

**EXHIBITSAND SCHEDULES**

 
| Exhibit A |   | Form of Notes              |
|-----------|--------|----------------------------|
|      |   |                       |
| Exhibit B |   | Form of Security Agreement |

 

----

 

 

I-1

----