Exhibit 10.28


 


EXHIBIT B


 


SECURITY AGREEMENT


 


THIS SECURITY
AGREEMENT is made and executed as of the 16th day of April 2004, by and between
TIME AMERICA, INC., a Nevada corporation (hereinafter called “Debtor”) and
Frances L. Simek (hereinafter called “Secured Party”).  Capitalized terms used but not otherwise
defined herein shall have the meaning assigned to such terms in that certain
Note Purchase Agreement dated as of April 16, 2004 (the “Note Purchase
Agreement”).


 


WITNESSETH:


 


In order to
secure the due and timely payment of all of the Secured Indebtedness (as
hereinafter defined), including the due and timely performance by Debtor of all
of the covenants, agreements and undertakings of Debtor made herein, Debtor
hereby grants to Secured Party a continuous and continuing security interest in
all of the following property now owned or at any time hereafter acquired by
us, or in which we now have or at any time in the future may acquire any right,
title or interest (the “Collateral”): 
all accounts, inventory, equipment, goods, documents, instruments
(including, without limitation, promissory notes), contract rights, general
intangibles (including, without limitation, payment intangibles and an absolute
right to license on terms no less favorable than those currently in effect
among our affiliates, but not own intellectual property), chattel paper,
supporting obligations, investment property, letter-of-credit rights,
trademarks and tradestyles in which we now have or hereafter may acquire any
right, title or interest, all proceeds and products thereof (including, without
limitation, proceeds of insurance) and all additions, accessions and
substitutions thereto or therefore. In the event Debtor wishes to finance the
acquisition of any hereafter acquired equipment and has obtained a commitment
from a financing source to finance such equipment from an unrelated third
party, Secured Party agrees to release its security interest on such hereafter
acquired equipment so financed by such third party financing source.


 


ARTICLE I


 


SECURED INDEBTEDNESS


 


1.1           This Security Agreement
is made to provide collateral and security for the payment and performance by
Debtor of all of the following:


 


(a)           Debtor’s
Note, dated as of even date herewith, issued pursuant to the Note Purchase
Agreement, payable to the order of Secured Party with interest and with a final
maturity date of April 1, 2009 together with any and all extensions, renewals,
modifications, substitutions and changes in form thereof (collectively, the
“Notes”);


 


(b)           The
amount of all reasonable expenditures made and obligations incurred by Secured
Party in attempting to remedy any material default on the part of Debtor in
respect of this Security Agreement or the Notes;


 

















 


(c)           The
amount of all expenditures made and obligations incurred by Secured Party in
attempting to collect any Secured Indebtedness or to enforce any right or
remedy for realizing upon any Collateral for any Secured Indebtedness; and


 


(d)           Interest
on all amounts expended by Secured Party for any of the purposes specified in
(b) and (c) next hereinabove at an annual rate of interest equal to 18% per
annum.


 


(All of the foregoing is
referred to herein as the “Secured Indebtedness”.)


 


ARTICLE II


 


REPRESENTATIONS


 


Debtor
represents to Secured Party as follows:


 


2.1           Debtor is duly
organized and existing under the laws of the State of Nevada.


 


2.2           The execution, delivery
and performance of this Security Agreement are within Debtor’s corporate
powers, have been duly authorized and are not in contravention of law
applicable to Debtor or the powers of Debtor’s charter, bylaws or other
incorporation papers or of any indenture agreement or undertaking to which
Debtor is a party or by which it is bound.


 


2.3           Debtor is the owner of
the Collateral and has good right and authority to grant a security interest in
the Collateral.


 


2.4           There are no presently
outstanding liens, security interests or encumbrances in or on the Collateral
or the proceeds (except those list in 2.5), nor any financing statements
covering the Collateral or the proceeds thereof, except for the security
interest granted in this Security Agreement and the financing statements
executed pursuant hereto.


 


2.5           The address of Debtor’s
place of business is correctly set forth at the beginning of this Security
Agreement.


 


ARTICLE III


 


COVENANTS


 


So long as the
Secured Indebtedness or any part thereof remains unpaid, Debtor, for itself,
its successors and assigns, covenants and agrees with Secured Party, its
successors and assigns, as follows:


 


3.1           Debtor shall make
prompt payment, as the same becomes due, of all the Secured Indebtedness in
accordance with the terms and provisions of the agreements evidencing such
Indebtedness.


 


3.2           Debtor shall maintain
its corporate existence and pay all necessary corporate franchise and license
taxes, fees and charges.


 


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3.3           Debtor shall pay all
reasonable expenses and reimburse Secured Party for any reasonable
expenditures, including reasonable attorneys’ fees and legal expenses, in
connection with Secured Party’s exercise of any of its rights and remedies
under Article IV or Secured Party’s protection of the Collateral and its
security interest therein.


 


3.4           Debtor shall at all
times keep accurate and complete records of the Collateral and its proceeds.


 


3.5           Debtor agrees to
execute such documents and perform all acts and things which Secured Party may
deem necessary to perfect and continue to perfect the security interest created
by this Security Agreement, to protect the Collateral and to enforce the
security interest, including the execution and filing of financing statements,
which appointment as attorney-in-fact is irrevocable and coupled with an
interest.


 


3.6           Notwithstanding the
security interest in proceeds granted herein, Debtor shall not sell, lend,
rent, lease or otherwise dispose of the equipment forming a part of the
Collateral, except for dispositions made in the ordinary course of business
consistent with past practice, or any interest therein, and Debtor shall keep
such Collateral free from unpaid charges, including taxes, and from liens,
encumbrances and security interests other than that of Secured Party and will
warrant and defend the Collateral against the claims and demands of all other
persons, except the holders of the security interests described herein.


 


3.7           Debtor shall pay before
delinquency all taxes and assessments upon the Collateral or for its use or
operation.


 


3.8           Debtor shall insure the
Collateral constituting Goods (as defined in Article 9 of the Arizona Uniform
Commercial Code) with companies acceptable to Secured Party against such
casualties and in such amounts as Secured Party shall require.


 


3.9           The Collateral
constituting Goods will be properly maintained in good condition and will not
be misused or abused, wasted or allowed to deteriorate, except for the ordinary
wear and tear of its intended primary use.


 


3.10         If Debtor shall default
in paying when due any tax, assessment or charge levied upon the Collateral or
any part thereof or if Debtor fails to maintain the Collateral as above
provided, Secured Party may at its option and without waiver of any right
hereunder, pay such tax, assessment or charge, or take whatever action is
necessary to maintain the Collateral and in each such case the amount paid in
respect thereof shall be payable to Secured Party forthwith with interest at
18% per annum until paid and shall become part of the indebtedness secured by
this Security Agreement.


 


3.11         The equipment forming a
part of the Collateral will be used in the business of Debtor and shall remain
in Debtor’s possession or control at all times.


 


3.12         Debtor shall provided
notice to Secured Party within ten days after changing the address of its
principal place of business.


 


3.13         If
the Collateral is evidenced by promissory notes, trade acceptances or other


 


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instruments for the payment of
money, Debtor will, at the request of Secured Party, immediately deliver them
to Secured Party, appropriately endorsed to Secured Party’s order, Debtor
waives presentment, demand, notice of dishonor, protest and notice of protest.


 


ARTICLE IV


 


ASSIGNMENT OF PAYMENTS;

CERTAIN POWERS OF SECURED PARTY


 


Subject to the provisions of the Subordination Agreement, Debtor hereby
authorizes and directs each issuer and each account debtor and each other
person or entity obligated to make payment in respect of any of the intangible
property constituting Collateral (each issuer and each such account debtor and
other person or entity being herein called a “Collateral Obligor”) to pay over
to Secured Party (on behalf of all of the holders of the Notes), its officers,
agents or assigns, upon demand by Secured Party, all or any part of the
Collateral without making any inquiries as to the status or balance of the
Secured Indebtedness and without any notice to or further consent of
Debtor.  To facilitate the rights of
Secured Party hereunder, Debtor hereby authorizes Secured Party, its officers,
employees, agents or assigns upon the occurrence of a default hereunder, and at
any time thereafter:


 


(a)           to notify Collateral Obligors of the
security interest in the respective Collateral created hereunder and to collect
all or any part of the Collateral without further notice to or further consent
by Debtor, and Debtor hereby constitutes and appoints Secured Party the true
and lawful attorney of Debtor (such agency being coupled with an interest),
irrevocably, with power of substitution, in the name of Debtor or in its own
name or otherwise, to take any of the actions described in the following
clauses (b), (c), (d), (e) and (f);


 


(b)           to ask, demand, collect, receive, receipt
for, sue for, compound and give acquittance for any and all amounts which may
be or become due or payable under the Collateral and to settle and/or adjust
all disputes and/or claims directly with any Collateral Obligor and to
compromise, extend the time for payment arrange for payment in installments,
otherwise modify the terms of, or release, any of the Collateral, on such terms
and conditions as Secured Party may determine (without thereby incurring
responsibility to or discharging or otherwise affecting the liability of Debtor
to Secured Party under this Security Agreement or otherwise);


 


(c)           to direct delivery of, receive, open and
dispose of all mail addressed to Debtor and to execute, sign, endorse, transfer
and deliver (in the name of Debtor or in its own name or otherwise) any and all
receipts or other orders for the payment of money drawn on the Collateral and
all notes, acceptances, commercial paper, drafts, checks, money orders and
other instruments given in payment or in part payment thereof and all invoices,
freight and express bills and bills of lading, storage receipts, warehouse
receipts and other instruments and documents in respect of any of the
Collateral and any other documents necessary to evidence, perfect and realize
upon the security interests and obligations of this Security Agreement;


 


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(d)           in its discretion to file any claim or take
any other action or proceeding which Secured Party may deem necessary or
appropriate to protect and preserve the rights, titles and interests of Secured
Party hereunder;


 


(e)           to sign the name of Debtor to financing
statements, drafts against Collateral Obligors, assignments or verifications of
any of the Collateral and notices to Collateral Obligors.


 


Secured Party hereby agrees that any action taken by a Secured Party
hereunder shall be taken on behalf of all Holders of the Notes and any amounts
collected shall be paid over to each Holder in accordance with the terms of the
Notes and the Note Purchase Agreement. 
Unless and until a default hereunder shall have occurred, Debtor shall be
entitled, except as herein provided and subject to the terms of any other loan
document, receive and retain all distributions on the Collateral or any part
thereof.


 


The powers conferred on Secured Party pursuant to this Article IV are
conferred solely to protect Secured Party’s interest in the Collateral and
shall not impose any duty or obligation on Secured Party to perform any of the
powers herein conferred.


 


ARTICLE V


 


REMEDIES IN EVENT OF DEFAULT


 


5.1           The term “default” as
used in this Security Agreement shall mean the occurrence of any event of
default as defined in the Note or the occurrence of any of the following
events:


 


(a)           The
failure of Debtor to make due and punctual payment of the Secured Indebtedness
secured hereby, principal or interest, or any part thereof, as the same shall
become due and payable, whether at the scheduled due date, maturity or when
accelerated pursuant to any power to accelerate held by Secured Party.


 


(b)           The
failure of Debtor punctually and properly to observe, keep or perform any
covenant, agreement or condition relating to the Secured Indebtedness or herein
required to be observed, kept or performed, if such failure continues for
thirty (30) days after written notice and demand by Secured Party for the
performance of such covenant, agreement or condition.


 


(c)           Any
material representation made in this Security Agreement shall prove to be
untrue, and shall not be cured within fifteen (15) days after the discovery
thereof.


 


(d)           Debtor
declares itself insolvent or is determined to be insolvent by a court of competent
jurisdiction, or makes an assignment for the benefit of creditors.


 


(e)           A
receiver is appointed for all or substantially all of the properties of Debtor
or of the Collateral or any part thereof.


 


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(f)            Debtor
is adjudicated a bankrupt or requests, either by way of petition or answer,
that Debtor be adjudicated a bankrupt or that Debtor be allowed or granted any
composition, rearrangement, extension, reorganization or other relief under any
bankruptcy law or under any other law for the relief of debtors now or
hereafter existing; and such judgment is nor vacated within ninety (90) days
thereof.


 


(g)           The
dissolution or other termination of Debtor.


 


5.2           Upon the occurrence of
a default and pursuant to the terms of that certain Subordination Agreement
dated as of March 22, 2004, by and among the Debtor, the Secured Party, Joseph
L. Simek and Laurus Master Fund, Ltd. (the “Subordination Agreement”), Secured
Party shall have the option, with or without notice, of declaring all the
Secured Indebtedness in its entirety to be immediately due and payable.


 


5.3           Upon the occurrence of
a default and pursuant to the provisions of the Subordination Agreement,
Secured Party may exercise its right of enforcement under the Uniform
Commercial Code in force in the State of Arizona at the date of this Security
Agreement.  In conjunction with,
addition to or substitution for those rights and remedies:


 


(a)           Secured
Party may enter upon Debtor’s premises to take possession of, assemble and
collect the Collateral or to render it unusable; and


 


(b)           Secured
Party may require Debtor to assemble the Collateral and make it available at a
place Secured Party designates which is mutually convenient to allow Secured
Party to take possession or dispose of the Collateral; and


 


(c)           Secured
Party may waive any default or remedy any default in any reasonable manner
without waiving the default remedied and without waiving any other prior or
subsequent default; and


 


(d)           Written
notice mailed to Debtor at its address set forth at the beginning of this
Security Agreement ten (10) days prior to the date of public sale of the
Collateral or prior to the date after which private sale of the Collateral will
be made shall constitute reasonable notice.


 


5.4           Also upon the
occurrence of a default and pursuant to the provisions of the Subordination
Agreement, Secured Party may at any time, whether before or after any
revocation of such power and authority or the maturity of any of the Secured
Indebtedness, (i) notify any parties obligated on any of the Accounts, notes
receivable, contracts or General Intangibles to make payment to Secured Party
of any amounts due or to become due thereunder and enforce collection of any
such Accounts, notes receivable, contracts or General Intangibles by suit or
otherwise and surrender, release or exchange all or any part thereof, or
compromise or extend or renew for any period (whether or not longer than the
original period) any obligations thereunder or evidenced thereby; (ii) Debtor
will, at its own expense, notify any parties obligated on any of the Accounts,
notes receivable, contracts or General Intangibles to make payment to the
Secured Party of any amounts due or to become due thereunder; and (iii) Secured
Party is authorized to endorse, in the name of Debtor, any item howsoever
received by Secured Party, representing any payment on or other proceeds of any
of the Collateral.  In each instance in
which Secured Party


 


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may elect hereunder to effect
direct collection of any one or more Accounts, notes receivable, contracts or
General Intangibles, Secured Party is also entitled to take possession of all
books and records of Debtor relating to the Debtor’s Accounts, notes receivable,
contracts or General Intangibles and Debtor will not in any manner take or
suffer any action to be taken to hinder, delay or interfere with the Secured
Party’s attempts to effect collection.


 


5.5           In addition to the
above, Secured Party shall have and may exercise, pursuant to the provisions of
the Subordination Agreement, all other rights conferred by law or under this
Security Agreement and may resort to any remedy existing at law or in equity
for the collection of the Secured Indebtedness and for the enforcement of the
covenants and agreements contained herein and the resort to any remedy shall
not prevent the concurrent or subsequent employment of any other appropriate
remedy or remedies.


 


5.6           The rights granted
hereunder are cumulative of any and all other security now or hereafter held by
Secured Party or other holder for payment of the Secured Indebtedness and
Secured Party may resort to any security now or hereafter existing for the
payment of such indebtedness in such portions and in such order as may seem
best to Secured Party in its sole and uncontrolled discretion.  No failure on the part of Secured Party to
exercise and no delay in exercising any right, power or remedy hereunder shall
operate as a waiver thereof nor shall any single or partial exercise by Secured
Party of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any right, power or remedy.


 


ARTICLE VI


 


MISCELLANEOUS


 


6.1           When all of the Secured
Indebtedness has been paid in full and all obligations and liabilities of
Debtor hereunder shall have been performed and discharged, then and in that
case only the security interests evidenced hereby or provided for herein shall
terminate and shall be released at the expense of Debtor and the Collateral
then held as such by Secured Party shall become free and clear of such security
interests.  In such event, Secured Party
shall execute such instruments, including, but not limited to, Termination
Statements, necessary to give effect to this Section 6.1.


 


6.2           No modification or
waiver of any provision of this Security Agreement nor consent to any departure
by Debtor therefrom shall in any event be effective unless the same shall be in
writing and signed by Secured Party and then such waiver or consent shall be
effective only in the specific instances, for the purpose for which given and
to the extent therein specified.  No
notice to nor demand on Debtor in any case shall of itself entitle Debtor to
any other or further notice or demand in similar or other circumstances.


 


6.3           Secured Party may enter
upon Debtor’s premises at any reasonable time to inspect the Collateral and
Debtor’s books and records pertaining to the Collateral or its proceeds and
Debtor shall assist Secured Party in whatever way necessary to make any such
inspection.


 


6.4           Secured Party may at
any time notify the account debtors or obligors of any accounts, chattel paper,
negotiable instruments or other evidences of indebtedness remitted by Debtor to
Secured Party as proceeds to pay Secured Party directly.


 


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6.5           Secured Party may, by
any employee or employees Secured Party may designate, execute, sign, endorse,
transfer or deliver in the name of Debtor, notes, checks, drafts or other instruments,
for the payment of money and receipts, certificates of origin, applications for
certificates of title or any other documents necessary to evidence, perfect and
realize upon the security interests and obligations of this Security Agreement.


 


6.6           Secured Party may
assign this Security Agreement so that the assignee shall be entitled to the
rights and remedies of Secured Party hereunder and in the event of such
assignment, Debtor will assert no claims or defenses it may have against the
assignee except those granted in this Security Agreement.


 


6.7           All notices and
communications provided for herein shall be delivered or mailed, registered or
certified, postage prepaid, addressed to the parties hereto at their addresses
set forth at the beginning of this Security Agreement, or such other address as
any party hereto shall hereafter designate by written notice to the other
party.


 


6.8           A determination that
any provision of this Security Agreement is unenforceable or invalid shall not
affect the validity or enforceability of any other provision.


 


6.9           Unless the context
clearly indicates otherwise, “Debtor” and “Secured Party” as used in this
Security Agreement include the respective successors and assigns of those
parties.


 


6.10         The law governing this
Security Agreement shall be that of the State of Arizona in force at the date
of this Security Agreement.


 


IN WITNESS
WHEREOF, this Security Agreement has been duly executed as of the date first
above written.


 


 


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  TIME
  AMERICA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas
  S. Bednarik

  	
   

  
	
   

  	
  Name: Thomas
  S. Bednarik

  
	
   

  	
  Title:
  President and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INVESTOR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Frances
  L. Simek

  	
   

  
	
   

  	
  Name:
  Frances L. Simek

  
					



 


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