**Exhibit10.3**

 

**THIS NOTE HAS NOT BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.  THIS NOTE MAY NOT BE SOLD, OFFERED FORSALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATIONSTATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIESLAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO TIME AMERICA, INC.THAT SUCH REGISTRATION IS NOT REQUIRED.**

 

**SECUREDNON-CONVERTIBLE REVOLVING NOTE**

 

FOR VALUE RECEIVED, each of TIME AMERICA,INC., a Nevada corporation (the “**Parent**”),and the other companies listed on Exhibit A attached hereto (suchother companies together with the Parent, each a “**Company**” and collectively, the “**Companies**”), jointly and severally, promises to pay to LAURUSMASTER FUND, LTD., c/o M&C Corporate Services Limited, P.O. Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, CaymanIslands, Fax: 345-949-8080 (the “**Holder**”)or its registered assigns or successors in interest, the sum of One MillionFive Hundred Thousand Dollars ($1,500,000), without duplication of any amountsowing by the Companies to the Holder under the Minimum Borrowing Notes (asdefined in the Security Agreement referred to below), or, if different, theaggregate principal amount of all Loans (as defined in the Security Agreementreferred to below), together with any accrued and unpaid interest hereon, on January 3,2008 (the “**Maturity Date**”) if notsooner  indefeasibly paid in full.

 

Capitalized terms used herein without definitionshall have the meanings ascribed to such terms in the Security and PurchaseAgreement among the Companies and the Holder dated as of the date hereof (asamended, modified and/or supplemented from time to time, the “**Security Agreement**”).

 

The following terms shall apply to thisSecured Non-Convertible Revolving Note (this “**Note**”):

 

**ARTICLE ICONTRACT RATE**

 

1.1           ContractRate.  Subject to Sections 3.2 and4.10, interest payable on the outstanding principal amount of this Note (the “**Principal Amount**”) shall accrue at a rateper annum equal to the “prime rate” published in The Wall Street Journalfrom time to time (the “**Prime Rate**”),plus two percent (2.0%) (the “**Contract Rate**”).  The Contract Rate shall be increased ordecreased as the case may be for each increase or decrease in the Prime Rate inan amount equal to such increase or decrease in the Prime Rate; each change tobe effective as of the day of the change in the Prime Rate.  The Contract Rate shall not at any time beless than seven and one quarter percent (7.25%).  Interest shall be (i) calculated on thebasis of a 360 day year, and (ii) payable monthly, in arrears, commencingon February 1, 2006 on the first business day of each consecutive calendarmonth thereafter through and including the Maturity Date, and on the MaturityDate, whether by acceleration or otherwise.

 

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**ARTICLE II[INTENTIONALLY OMITTED]**

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# **ARTICLE IIIEVENTS OF DEFAULT AND DEFAULT RELATED PROVISIONS**

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## 3.1           Eventsof Default.  The occurrence of anEvent of Default under the Security Agreement shall constitute an event ofdefault (“**Event of Default**”)hereunder.

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## 3.2           DefaultInterest.  Following the occurrenceand during the continuance of an Event of Default, the Companies shall, jointlyand severally, pay additional interest on the outstanding principal balance ofthis Note in an amount equal to four percent (4.0%) per annum, and alloutstanding Obligations, excluding unpaid interest, shall continue to accrueinterest at such additional interest rate from the date of such Event of Defaultuntil the date such Event of Default is cured or waived.

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## 3.3           DefaultPayment.  Following the occurrenceand during the continuance of an Event of Default, the Holder, at its option,may elect, in addition to all rights and remedies of the Holder under theSecurity Agreement and the other Ancillary Agreements and all obligations andliabilities of each Company under the Security Agreement and the otherAncillary Agreements, to require the Companies, jointly and severally, to makea Default Payment (“**Default Payment**”).  The Default Payment shall be one hundredtwenty-five percent (125%) of the outstanding principal amount of the Note,plus accrued but unpaid interest, all other fees then remaining unpaid, and allother amounts payable hereunder.  The DefaultPayment shall be applied first to any fees due and payable to the Holderpursuant to the Notes, the Security Agreement and/or the Ancillary Agreements,then to accrued and unpaid interest due on the Notes and then to theoutstanding principal balance of the Notes. The Default Payment shall be due and payable immediately on the datethat the Holder has exercised its rights pursuant to this Section 3.3.

 

**ARTICLE IVMISCELLANEOUS**

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## 4.1           [IntentionallyOmitted].

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## 4.2           CumulativeRemedies.  The remedies under thisNote shall be cumulative.

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## 4.3           Failureor Indulgence Not Waiver.  No failureor delay on the part of the Holder hereof in the exercise of any power, rightor privilege hereunder shall operate as a waiver thereof, nor shall any singleor partial exercise of any such power, right or privilege preclude other orfurther exercise thereof or of any other right, power or privilege.  All rights and remedies existing hereunderare cumulative to, and not exclusive of, any rights or remedies otherwiseavailable.

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## 4.4           Notices.  Any notice herein required or permitted to begiven shall be in writing and shall be deemed effective given (a) uponpersonal delivery to the party notified, (b) when sent by confirmed telexor facsimile if sent during normal business hours of the recipient, if not,then on the next business day, (c) five days after having been sent byregistered or

 

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## certified mail, returnreceipt requested, postage prepaid, or (d) one day after deposit with anationally recognized overnight courier, specifying next day delivery, withwritten verification of receipt.  Allcommunications shall be sent to the respective Company at the address providedfor such Company in the Security Agreement executed in connection herewith, andto the Holder at the address provided in the Security Agreement for the Holder,with a copy to John E. Tucker, Esq., 825 Third Avenue, 14thFloor, New York, New York 10022, facsimile number (212) 541-4434, or at suchother address as the respective Company or the Holder may designate by ten daysadvance written notice to the other parties hereto.  A Notice of Conversion shall be deemed givenwhen made to the Parent pursuant to the Purchase Agreement.

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## 4.5           AmendmentProvision.  The term “Note” and allreferences thereto, as used throughout this instrument, shall mean thisinstrument as originally executed, or if later amended or supplemented, then asso amended or supplemented, and any successor instrument as such successorinstrument may be amended or supplemented.

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## 4.6           Assignability.  This Note shall be binding upon each Companyand its successors and assigns, and shall inure to the benefit of the Holderand its successors and assigns, and may be assigned by the Holder in accordancewith the requirements of the Security Agreement.  No Company may not assign any of itsobligations under this Note without the prior written consent of the Holder,any such purported assignment without such consent being null and void.

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## 4.7           Costof Collection.  In case of any Eventof Default under this Note, the Companies shall, jointly and severally, pay theHolder the Holder’s reasonable costs of collection, including reasonableattorneys’ fees.

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## 4.8           GoverningLaw, Jurisdiction and Waiver of Jury Trial.

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#### (a)           THISNOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THELAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OFLAW.

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#### (b)           EACHCOMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED INTHE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TOHEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY COMPANY, ON THE ONE HAND,AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO THIS NOTE, THE SECURITYAGREEMENT OR ANY OF THE OTHER ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING OUTOF OR RELATED TO THIS NOTE, THE SECURITY AGREEMENT OR ANY OF THE OTHERANCILLARY AGREEMENTS; PROVIDED, THAT EACH COMPANY ACKNOWLEDGES THAT ANYAPPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDEOF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHERPROVIDED,THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDERFROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TOCOLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FORTHE OBLIGATIONS, OR TO ENFORCE

 

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#### A JUDGMENT OR OTHER COURTORDER IN FAVOR OF THE HOLDER.  EACHCOMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANYACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH COMPANY HEREBY WAIVES ANYOBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,IMPROPER VENUE OR FORUM NON CONVENIENS. EACH COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINTAND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OFSUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED ORCERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN THE SECURITYAGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIEROF THE COMPANY’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT INTHE U.S. MAILS, PROPER POSTAGE PREPAID

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#### (c)           EACHCOMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCHAPPLICABLE LAWS.  THEREFORE, TO ACHIEVETHE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION,EACH COMPANY HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, ORPROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT,OR OTHERWISE BETWEEN THE HOLDER, AND/OR ANY COMPANY ARISING OUT OF, CONNECTEDWITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM INCONNECTION WITH THIS NOTE, THE SECURITY AGREEMENT, ANY OTHER ANCILLARYAGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

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## 4.9           Severability.  In the event that any provision of this Noteis invalid or unenforceable under any applicable statute or rule of law,then such provision shall be deemed inoperative to the extent that it mayconflict therewith and shall be deemed modified to conform with such statute orrule of law.  Any such provisionwhich may prove invalid or unenforceable under any law shall not affect thevalidity or enforceability of any other provision of this Note.

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## 4.10         MaximumPayments.  Nothing contained hereinshall be deemed to establish or require the payment of a rate of interest orother charges in excess of the maximum permitted by applicable law.  In the event that the rate of interestrequired to be paid or other charges hereunder exceed the maximum ratepermitted by such law, any payments in excess of such maximum rate shall becredited against amounts owed by the Companies to the Holder and thus refundedto the Companies.

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## 4.11         SecurityInterest.  The Holder has beengranted a security interest (i) in certain assets of the Companies as morefully described in the March 2004 Security Agreement, the March 2004Subsidiary Security Agreement and the June 2005 Security Agreement and (ii) pursuantto that certain Amended and Restated Stock Pledge Agreement dated as of March 22,2004 and amended and restated as of June 23, 2005, among the Holder andthe Companies, as amended and restated, amended, restated, modified orsupplemented from time to time.

 

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## 4.12         Construction.  Each party acknowledges that its legalcounsel participated in the preparation of this Note and, therefore, stipulatesthat the rule of construction that ambiguities are to be resolved againstthe drafting party shall not be applied in the interpretation of this Note tofavor any party against the other.

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## 4.13         RegisteredObligation. This Note is intended to be a registered obligation within themeaning of Treasury Regulation Section 1.871-14(c)(1)(i) and theCompany (or its agent) shall register this Note (and thereafter shall maintainsuch registration) as to both principal and any stated interest.  Notwithstanding any document, instrument oragreement relating to this Note to the contrary, transfer of this Note (or theright to any payments of principal or stated interest thereunder) may only beeffected by (i) surrender of this Note and either the reissuance by theCompany of this Note to the new holder or the issuance by the Company of a newinstrument to the new holder, or (ii) transfer through a book entry systemmaintained by the Company (or its agent), within the meaning of TreasuryRegulation Section 1.871-14(c)(1)(i)(B).

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** **

**IN WITNESS WHEREOF**,each Company has caused this Secured Non-Convertible Revolving Note to besigned in its name effective as of this 3th day of January 2006.

 
| ** ** | **TIME AMERICA, INC. a Nevada corporation**                     |   |
|------------|-----------------------------------------------------------------|--------|
|       |                                                            |   |
|       | By:                                                             |   |   |
|       | Name:                                                           |
|       | Title:                                                          |
|       |                                                            |   |
| WITNESS:   |                                                            |   |
|       |                                                            |   |
|       |                                                            |   |   |
|       |                                                            |   |
|       | **TIME AMERICA, INC., an Arizona corporation**                  |   |
|       |                                                            |   |
|       | By:                                                             |   |   |
|       | Name:                                                           |
|       | Title:                                                          |
|       |                                                            |   |
| WITNESS:   |                                                            |   |
|       |                                                            |   |
|       |                                                            |   |   |
|       |                                                            |   |
|       |                                                            |   |
|       | **NETEDGE DEVICES, LLC, an Arizona limited  liability company** |
|       |                                                            |   |
|       | By:                                                             |   |   |
|       | Name:                                                           |
|       | Title:                                                          |
|       |                                                            |   |
| WITNESS:   |                                                            |   |
|       |                                                            |   |
|       |                                                            |   |   |
|            |                                                                 |        |  |  |  |

 

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**EXHIBIT A**

 

**OTHERCOMPANIES**

 

Time America, Inc., an Arizonacorporation

 

NetEdge Devices, LLC, an Arizona limitedliability company

 

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