**Exhibit 10.4**

 

THIS WARRANTAND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOTBEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATESECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OFTHIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THEABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAIDACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSELREASONABLY SATISFACTORY TO TIME AMERICA, INC. THAT SUCH REGISTRATION IS NOTREQUIRED.

 

Right to Purchase 140,000 Shares of Common Stock ofTIME AMERICA, INC. (subject to adjustment as provided herein)

 

**COMMON STOCK PURCHASE WARRANT**

** **
| No. |   |   | Issue Date: January 3, 2006 |
|-----|--------|--------|-----------------------------|

 

TIME AMERICA,INC. a corporation organized under the laws of the State of Nevada, herebycertifies that, for value received, LAURUS MASTER FUND, LTD., or assigns (the “Holder”),is entitled, subject to the terms set forth below, to purchase from the Company(as defined herein) from and after the Issue Date of this Warrant and at anytime or from time to time before 5:00 p.m., New York time, through the close ofbusiness January 1, 2013 (the “Expiration Date”), up to One Hundred FortyThousand (140,000) fully paid and nonassessable shares of Common Stock (ashereinafter defined), $0.005 par value per share, at the applicable ExercisePrice per share (as defined below).  Thenumber and character of such shares of Common Stock and the applicable ExercisePrice per share are subject to adjustment as provided herein.

 

As used hereinthe following terms, unless the context otherwise requires, have the followingrespective meanings:

 

(a)           The term “Company”shall include Time America, Inc., a Nevada corporation and any person or entitywhich shall succeed, or assume the obligations of, Time America, Inc., a Nevadacorporation, hereunder.

 

(b)           The term “CommonStock” includes (i) the Company’s Common Stock, par value $0.005 per share; and(ii) any other securities into which or for which any of the securitiesdescribed in (b)(i) may be converted or exchanged pursuant to a plan ofrecapitalization, reorganization, merger, sale of assets or otherwise.

 

(c)           The term “OtherSecurities” refers to any stock (other than Common Stock) and other securitiesof the Company or any other person (corporate or otherwise) which the holder ofthe Warrant at any time shall be entitled to receive, or shall have received,on the exercise of the Warrant, in lieu of or in addition to Common Stock, or

 

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which at anytime shall be issuable or shall have been issued in exchange for or inreplacement of Common Stock or Other Securities pursuant to Section 4 orotherwise.

 

(d)           The “Exercise Price”applicable under this Warrant shall be a price of $.65.

 

# 1.             Exercise of Warrant.

 

1.1           Number of Shares Issuable uponExercise.  From and after the datehereof through and including the Expiration Date, the Holder shall be entitledto receive, upon exercise of this Warrant in whole or in part, by delivery ofan original or fax copy of an exercise notice in the form attached hereto asExhibit A (the “Exercise Notice”), shares of Common Stock of the Company,subject to adjustment pursuant to Section 5.

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## 1.2           Fair Market Value. For purposes hereof, the “Fair Market Value” of a share of Common Stockas of a particular date (the “Determination Date”) shall mean:

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### (a)           Ifthe Company’s Common Stock is traded on the American Stock Exchange or anothernational exchange or is quoted on the National or SmallCap Market of The NasdaqStock Market, Inc.(“Nasdaq”), then the closing or last sale price,respectively, reported for the last business day immediately preceding theDetermination Date.

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### (b)           Ifthe Company’s Common Stock is not traded on the American Stock Exchange oranother national exchange or on the Nasdaq but is traded on the NASD Over TheCounter Bulletin Board, then the mean of the average of the closing bid andasked prices reported for the last business day immediately preceding theDetermination Date.

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### (c)           Exceptas provided in clause (d) below, if the Company’s Common Stock is not publiclytraded, then as the Holder and the Company agree or in the absence of agreementby arbitration in accordance with the rules then in effect of the AmericanArbitration Association, before a single arbitrator to be chosen from a panelof persons qualified by education and training to pass on the matter to bedecided.

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### (d)           Ifthe Determination Date is the date of a liquidation, dissolution or winding up,or any event deemed to be a liquidation, dissolution or winding up pursuant tothe Company’s charter, then all amounts to be payable per share to holders ofthe Common Stock pursuant to the charter in the event of such liquidation,dissolution or winding up, plus all other amounts to be payable per share inrespect of the Common Stock in liquidation under the charter, assuming for thepurposes of this clause (d) that all of the shares of Common Stock thenissuable upon exercise of the Warrant are outstanding at the DeterminationDate.

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## 1.3           Company Acknowledgment.  The Company will, at the time of the exerciseof the Warrant, upon the request of the holder hereof acknowledge in writingits continuing obligation to afford to such holder any rights to which suchholder shall continue to be entitled after such exercise in accordance with theprovisions of this Warrant. If the holder

 

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## shall fail to make any such request, suchfailure shall not affect the continuing obligation of the Company to afford tosuch holder any such rights.

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## 1.4           Trustee for Warrant Holders.  In the event that a bank or trust companyshall have been appointed as trustee for the holders of the Warrant pursuant toSubsection 3.2, such bank or trust company shall have all the powers and dutiesof a warrant agent (as hereinafter described) and shall accept, in its own namefor the account of the Company or such successor person as may be entitledthereto, all amounts otherwise payable to the Company or such successor, as thecase may be, on exercise of this Warrant pursuant to this Section 1.

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# 2.             Procedure for Exercise.

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## 2.1           Delivery of Stock Certificates, Etc., on Exercise.  The Company agrees that the shares of CommonStock purchased upon exercise of this Warrant shall be deemed to be issued tothe Holder as the record owner of such shares as of the close of business onthe date on which this Warrant shall have been surrendered and payment made forsuch shares in accordance herewith.  Assoon as practicable after the exercise of this Warrant in full or in part, andin any event within three (3) business days thereafter, the Company at itsexpense (including the payment by it of any applicable issue taxes) will causeto be issued in the name of and delivered to the Holder, or as such Holder(upon payment by such Holder of any applicable transfer taxes) may direct incompliance with applicable securities laws, a certificate or certificates forthe number of duly and validly issued, fully paid and nonassessable shares ofCommon Stock (or Other Securities) to which such Holder shall be entitled onsuch exercise, plus, in lieu of any fractional share to which such holder wouldotherwise be entitled, cash equal to such fraction multiplied by the then FairMarket Value of one full share, together with any other stock or othersecurities and property (including cash, where applicable) to which such Holderis entitled upon such exercise pursuant to Section 1 or otherwise.

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## 2.2           Exercise. Payment may be made either (i) in cash or by certified or official bankcheck payable to the order of the Company equal to the applicable aggregateExercise Price, (ii) by delivery of the Warrant, or shares of Common Stockand/or Common Stock receivable upon exercise of the Warrant in accordance withSection (b) below, or (iii) by a combination of any of the foregoing methods,for the number of Common Shares specified in such Exercise Notice (as suchexercise number shall be adjusted to reflect any adjustment in the total numberof shares of Common Stock issuable to the Holder per the terms of this Warrant)and the Holder shall thereupon be entitled to receive the number of dulyauthorized, validly issued, fully-paid and non-assessable shares of CommonStock (or Other Securities) determined as provided herein.

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## (b)           Notwithstanding any provisions herein to the contrary, ifthe Fair Market Value of one share of Common Stock is greater than the ExercisePrice (at the date of calculation as set forth below), in lieu of exercisingthis Warrant for cash, the Holder may elect to receive shares equal to thevalue (as determined below) of this Warrant (or the portion thereof beingexercised) by surrender of this Warrant at the principal office of the Companytogether with the properly endorsed Exercise Notice in which event the Companyshall issue to the Holder a number of shares of Common Stock computed using thefollowing formula:

 

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| X=Y    | (A-B) |
|--------|-------|
|   | A     |

 

Where X =             the number of sharesof Common Stock to be issued to the Holder

 

Y =                          thenumber of shares of Common Stock purchasable under the Warrant or, if only aportion of the Warrant is being exercised, the portion of the Warrant beingexercised (at the date of such calculation)

 

A =                         the FairMarket Value of one share of the Company’s Common Stock (at the date of suchcalculation)

 

B =                          ExercisePrice (as adjusted to the date of such calculation)

 

# 3.             [Intentionally Deleted]

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# 4.             Effect of Reorganization, Etc.; Adjustment ofExercise Price.

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## 4.1           Reorganization, Consolidation, Merger, Etc.  In case at any time or from time to time, theCompany shall (a) effect a reorganization, (b) consolidate with or merge intoany other person, or (c) transfer all or substantially all of its properties orassets to any other person under any plan or arrangement contemplating thedissolution of the Company, then, in each such case, as a condition to theconsummation of such a transaction, proper and adequate provision shall be madeby the Company whereby the Holder of this Warrant, on the exercise hereof asprovided in Section 1 at any time after the consummation of suchreorganization, consolidation or merger or the effective date of suchdissolution, as the case may be, shall receive, in lieu of the Common Stock (orOther Securities) issuable on such exercise prior to such consummation or sucheffective date, the stock and other securities and property (including cash) towhich such Holder would have been entitled upon such consummation or inconnection with such dissolution, as the case may be, if such Holder had soexercised this Warrant, immediately prior thereto, all subject to furtheradjustment thereafter as provided in Section 5.

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## 4.2           Dissolution. In the event of any dissolution of the Company following the transfer ofall or substantially all of its properties or assets, the Company, concurrentlywith any distributions made to holders of its Common Stock, shall at itsexpense deliver or cause to be delivered to the Holder the stock and othersecurities and property (including cash, where applicable) receivable by theHolder of the Warrant pursuant to Section 4.1, or, if the Holder shall soinstruct the Company, to a bank or trust company specified by the Holder andhaving its principal office in New York, NY as trustee for the Holder of the Warrant(the “Trustee”).

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## 4.3           Continuation of Terms.  Upon any reorganization, consolidation,merger or transfer (and any dissolution following any transfer) referred to inthis Section 4, this Warrant shall continue in full force and effect and theterms hereof shall be applicable to the shares of stock and other securitiesand property receivable on the exercise of this Warrant after the consummationof such reorganization, consolidation or merger or the effective date ofdissolution following any such transfer, as the case may be, and shall bebinding upon the issuer of any such stock or other securities, including, inthe case of any such transfer, the person

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## acquiring all or substantially all of the propertiesor assets of the Company, whether or not such person shall have expresslyassumed the terms of this Warrant as provided in Section 5.  In the event this Warrant does not continuein full force and effect after the consummation of the transactions describedin this Section 4, then the Company’s securities and property (including cash,where applicable) receivable by the Holders of the Warrant will be delivered toHolder or the Trustee as contemplated by Section 4.2.

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# 5.             Extraordinary Events RegardingCommon Stock.  In the event that theCompany shall (a) issue additional shares of the Common Stock as a dividend orother distribution on outstanding Common Stock, (b) subdivide its outstandingshares of Common Stock, or (c) combine its outstanding shares of the CommonStock into a smaller number of shares of the Common Stock, then, in each suchevent, the Exercise Price shall, simultaneously with the happening of suchevent, be adjusted by multiplying the then Exercise Price by a fraction, thenumerator of which shall be the number of shares of Common Stock outstandingimmediately prior to such event and the denominator of which shall be thenumber of shares of Common Stock outstanding immediately after such event, andthe product so obtained shall thereafter be the Exercise Price then in effect.The Exercise Price, as so adjusted, shall be readjusted in the same manner uponthe happening of any successive event or events described herein in thisSection 5.  The number of shares ofCommon Stock that the holder of this Warrant shall thereafter, on the exercisehereof as provided in Section 1, be entitled to receive shall be increased to anumber determined by multiplying the number of shares of Common Stock thatwould otherwise (but for the provisions of this Section 5) be issuable on suchexercise by a fraction of which (a) the numerator is the Exercise Price thatwould otherwise (but for the provisions of this Section 5) be in effect, and(b) the denominator is the Exercise Price in effect on the date of suchexercise.

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# 6.             Certificate as to Adjustments.  In each case of any adjustment orreadjustment in the shares of Common Stock (or Other Securities) issuable onthe exercise of the Warrant, the Company at its expense will promptly cause itsChief Financial Officer or other appropriate designee to compute suchadjustment or readjustment in accordance with the terms of the Warrant andprepare a certificate setting forth such adjustment or readjustment and showingin detail the facts upon which such adjustment or readjustment is based,including a statement of (a) the consideration received or receivable by theCompany for any additional shares of Common Stock (or Other Securities) issuedor sold or deemed to have been issued or sold, (b) the number of shares of CommonStock (or Other Securities) outstanding or deemed to be outstanding, and (c)the Exercise Price and the number of shares of Common Stock to be received uponexercise of this Warrant, in effect immediately prior to such adjustment orreadjustment and as adjusted or readjusted as provided in this Warrant.  The Company will forthwith mail a copy ofeach such certificate to the holder of the Warrant and any Warrant agent of theCompany (appointed pursuant to Section 12 hereof).

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# 7.             Reservation of Stock, Etc.,Issuable on Exercise of Warrant.  TheCompany will at all times reserve and keep available, solely for issuance anddelivery on the exercise of the Warrant, shares of Common Stock (or OtherSecurities) from time to time issuable on the exercise of the Warrant.

 

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# 8.             Assignment; Exchange of Warrant.  Subject to compliance with applicablesecurities laws, this Warrant, and the rights evidenced hereby, may betransferred by any registered holder hereof (a “Transferor”) in whole or inpart.  On the surrender for exchange ofthis Warrant, with the Transferor’s endorsement in the form of Exhibit Battached hereto (the “Transferor Endorsement Form”) and together with evidencereasonably satisfactory to the Company demonstrating compliance with applicablesecurities laws, which shall include, without limitation, a legal opinion fromthe Transferor’s counsel that such transfer is exempt from the registrationrequirements of applicable securities laws, the Company at its expense but withpayment by the Transferor of any applicable transfer taxes) will issue anddeliver to or on the order of the Transferor thereof a new Warrant of liketenor, in the name of the Transferor and/or the transferee(s) specified in suchTransferor Endorsement Form (each a “Transferee”), calling in the aggregate onthe face or faces thereof for the number of shares of Common Stock called foron the face or faces of the Warrant so surrendered by the Transferor.

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# 9.             Replacement of Warrant.  On receipt of evidence reasonablysatisfactory to the Company of the loss, theft, destruction or mutilation ofthis Warrant and, in the case of any such loss, theft or destruction of thisWarrant, on delivery of an indemnity agreement or security reasonably satisfactoryin form and amount to the Company or, in the case of any such mutilation, onsurrender and cancellation of this Warrant, the Company at its expense willexecute and deliver, in lieu thereof, a new Warrant of like tenor.

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# 10.           Registration Rights.  The Holder of this Warrant has been grantedcertain registration rights by the Company. These registration rights are set forth in a Registration RightsAgreement entered into by the Company and Purchaser dated as of even date ofthis Warrant.

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# 11.           Maximum Exercise.  Notwithstanding anything contained herein tothe contrary, the Holder shall not be entitled to exercise this Warrant inconnection with that number of shares of Common Stock which would exceed thedifference between (i) 4.99% of the issued and outstanding shares of CommonStock and (ii) the number of shares of Common Stock beneficially owned by theHolder.  For purposes of the immediatelypreceding sentence, beneficial ownership shall be determined in accordance withSection 13(d) of the Securities Exchange Act of 1934, as amended, andRegulation 13d-3 thereunder.  Thelimitation described in the first sentence of this Section 11 shallautomatically become null and void following notice to the Company upon theoccurrence and during the continuance of an Event of Default (as defined in theSecurity Agreement), or upon 75 days prior notice to the Company.

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# 12.           Warrant Agent.  The Company may, by written notice to theeach Holder of the Warrant, appoint an agent for the purpose of issuing CommonStock (or Other Securities) on the exercise of this Warrant pursuant to Section1, exchanging this Warrant pursuant to Section 8, and replacing this Warrantpursuant to Section 9, or any of the foregoing, and thereafter any suchissuance, exchange or replacement, as the case may be, shall be made at suchoffice by such agent.

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# 13.           Transfer on the Company’s Books.  Until this Warrant is transferred on thebooks of the Company, the Company may treat the registered holder hereof as theabsolute owner hereof for all purposes, notwithstanding any notice to thecontrary.

 

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# 14.           Notices, Etc.  All notices and other communications from theCompany to the Holder of this Warrant shall be mailed by first class registeredor certified mail, postage prepaid, at such address as may have been furnishedto the Company in writing by such Holder or, until any such Holder furnishes tothe Company an address, then to, and at the address of, the last Holder of thisWarrant who has so furnished an address to the Company.

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# 15.           Miscellaneous.  This Warrant and any term hereof may bechanged, waived, discharged or terminated only by an instrument in writingsigned by the party against which enforcement of such change, waiver, dischargeor termination is sought. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED INACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLESOF CONFLICTS OF LAWS.  ANY ACTION BROUGHTCONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS WARRANT SHALL BE BROUGHT ONLYIN THE STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATEOF NEW YORK; PROVIDED, HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE THISPROVISION AND BRING AN ACTION OUTSIDE THE STATE OF NEW YORK.  The Company agrees to submit to thejurisdiction of such courts and waive trial by jury.  The prevailing party shall be entitled torecover from the other party its reasonable attorney’s fees and costs.  In the event that any provision of thisWarrant is invalid or unenforceable under any applicable statute or rule oflaw, then such provision shall be deemed inoperative to the extent that it mayconflict therewith and shall be deemed modified to conform to such statute orrule of law.  Any such provision whichmay prove invalid or unenforceable under any law shall not affect the validityor enforceability of any other provision of this Warrant.  The headings in this Warrant are for purposesof reference only, and shall not limit or otherwise affect any of the termshereof.  The invalidity orunenforceability of any provision hereof shall in no way affect the validity orenforceability of any other provision. The Company acknowledges that legal counsel participated in thepreparation of this Warrant and, therefore, stipulates that the rule ofconstruction that ambiguities are to be resolved against the drafting partyshall not be applied in the interpretation of this Warrant to favor any partyagainst the other party.

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**[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;SIGNATURE PAGE FOLLOWS.]**

 

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IN WITNESSWHEREOF, the Company has executed this Warrant as of the date first writtenabove. 

 
| ** ** | ** ** | **TIME AMERICA, INC. , A NEVADA  CORPORATION** |
|------------|------------|------------------------------------------------|
|       |       |                                           |
| WITNESS:   |       |                                           |
|       |       | By:                                            |   |
|       |       | Name:                                          |   |
|       |       | Title:                                         |   |

 

 

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**EXHIBIT A**

 

**FORM OF SUBSCRIPTION**(To Be Signed Only On Exercise Of Warrant)

 
| To:        |   | Time  America, Inc.                  |
|------------|--------|--------------------------------------|
|       |   | 8840 East  Chaparral Road, Suite 100 |
|       |   | Scottsdale,  Arizona 85250           |
| Attention: |   | Corporate  Secretary                 |

 

The undersigned,pursuant to the provisions set forth in the attached Warrant (No.       ),hereby irrevocably elects to purchase (check applicable box):

 
| o      |   |                                                                                          | shares of the Common Stock covered by such Warrant; or |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|
|   |   |                                                                                                                                       |
| o      |   | the maximum  number of shares of Common Stock covered by such Warrant pursuant to the  cashless exercise procedure set forth in Section 2. |
|   |

 

The undersigned herewith makes payment of the full Exercise Price forsuch shares at the price per share provided for in such Warrant, which is $        .  Such payment takes the form of (checkapplicable box or boxes):

 
| o      |   | $                                                                                                                                                                                                                                                 |  in lawful money of the United  States; and/or |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                          |
| o      |   | the cancellation of such portion of the attached Warrant as is  exercisable for a total of         shares  of Common Stock (using a Fair Market Value of $       per share for purposes of this calculation); and/or                    |
|   |
|   |   |                                                                                                                                                                                                                                                                                                          |
| o      |   | the cancellation of such number of shares of Common Stock as is  necessary, in accordance with the formula set forth in Section 2.2, to  exercise this Warrant with respect to the maximum number of shares of Common  Stock purchasable pursuant to the cashless exercise procedure set forth in  Section 2. |
|   |
|   |

 

Theundersigned requests that the certificates for such shares be issued in thename of, and delivered to                                                                                    whose address is                                                                                                                                                                                                                                                                   .

 

The undersigned represents and warrants that all offers and sales bythe undersigned of the securities issuable upon exercise of the within Warrantshall be made pursuant to registration of the Common Stock under the SecuritiesAct of 1933, as amended (the “Securities Act”) or pursuant to an exemption fromregistration under the Securities Act.

 
| Dated: |   |                                                                                |   |
|--------|--------|-------------------------------------------------------------------------------------|--------|
|   |   | (Signature must conform to name of holder as specified on the face of  the Warrant) |
|   |   |                                                                                |
|   |   | Address:                                                                            |   |
|   |   |                                                                                |   |

 

A-1

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** **

**EXHIBIT B**

 

**FORM OF TRANSFEROR ENDORSEMENT**(To Be Signed Only On Transfer Of Warrant)

 

For valuereceived, the undersigned hereby sells, assigns, and transfers unto theperson(s) named below under the heading “Transferees” the right represented bythe within Warrant to purchase the percentage and number of shares of CommonStock of Time America, Inc. into which the within Warrant relates specifiedunder the headings “Percentage Transferred” and “Number Transferred,”respectively, opposite the name(s) of such person(s) and appoints each suchperson Attorney to transfer its respective right on the books of Time America,Inc. with full power of substitution in the premises.

 
| **Transferees** | ** ** | **Address** | ** ** | **Percentage  Transferred** | ** ** | **Number  Transferred** |
|-----------------|------------|-------------|------------|-----------------------------|------------|-------------------------|
|            |       |        |       |                        |       |                    |
|            |       |        |       |                        |       |                    |
|            |       |        |       |                        |       |                    |
|            |       |        |       |                        |       |                    |
|            |       |        |       |                        |       |                    |
|            |       |        |       |                        |       |                    |
|            |       |        |       |                        |       |                    |
|            |       |        |       |                        |       |                    |

 
| Dated: |   |                                                                                |   |   |
|--------|--------|-------------------------------------------------------------------------------------|--------|--------|
|   |   | (Signature must conform to name of holder as specified on the face of  the Warrant) |
|   |   |                                                                                |
|   |   | Address:                                                                            |   |
|   |   |                                                                                |   |
|        |        |                                                                                     |        |        |  |

 

 

 
|                  | SIGNED IN  THE PRESENCE OF: |
|-----------------------|-----------------------------|
|                  |                        |
|                  |                        |
|                  | (Name)                      |
| ACCEPTED AND  AGREED: |                        |
| [TRANSFEREE]          |                        |
|                  |                        |
|                  |                        |
|                  |                        |
| (Name)                |                        |

 

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