Exhibit 10.4
TIME AMERICA, INC.
SECURITY AGREEMENT
To:
Laurus Master Fund, Ltd.
c/o Ironshore Corporate Services, Ltd.
P.O. Box 1234 G.T
Queensgate House
South Church Street
Grand Cayman, Cayman Islands
Gentlemen:
1.
TO SECURE THE PAYMENT OF ALL
OBLIGATIONS (AS HEREAFTER DEFINED), WE HEREBY GRANT TO YOU A 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 WE
WISH TO FINANCE THE ACQUISITION OF ANY HEREAFTER ACQUIRED EQUIPMENT AND HAVE
OBTAINED A COMMITMENT FROM A FINANCING SOURCE TO FINANCE SUCH EQUIPMENT FROM AN
UNRELATED THIRD PARTY, YOU AGREE TO RELEASE YOUR SECURITY INTEREST ON SUCH
HEREAFTER ACQUIRED EQUIPMENT SO FINANCED BY SUCH THIRD PARTY FINANCING SOURCE.
2.
THE TERM "OBLIGATIONS" AS USED HEREIN
SHALL MEAN AND INCLUDE ALL DEBTS, LIABILITIES AND OBLIGATIONS OWING BY US TO YOU
WHETHER ARISING UNDER, OUT OF, OR IN CONNECTION WITH THAT CERTAIN SECURED
CONVERTIBLE TERM NOTE DATED AS OF THE DATE HEREOF MADE BY
US IN FAVOR OF LAURUS
MASTER FUND, LTD. (THE "TERM NOTE").
LAURUS SHALL RELEASE ITS SECURITY INTEREST
IN THE COLLATERAL ONLY UPON FULL SATISFACTION OF ALL THE OBLIGATIONS SPECIFIED
HEREUNDER.
This Agreement, the Term Note, that certain Securities Purchase Agreement dated
as of the date hereof by and between the undersigned and Laurus (the "Securities
Purchase Agreement"), the Warrant dated as of the date hereof made by the
undersigned in favor of Laurus in connection with the Term Note (the "Term Note
Warrant"), that certain Registration Rights Agreement dated as of the date
hereof by and between the undersigned and Laurus in connection with the Term
Note (the "Term Note Registration Rights Agreement"), as each may be amended,
modified, restated or supplemented from time to time, are collectively referred
to herein as the "Documents".
3.
We hereby represent, warrant and
covenant to you that:
(A)
WE ARE A COMPANY VALIDLY EXISTING, IN GOOD
STANDING AND FORMED UNDER THE LAWS OF THE STATE OF NEVADA AND WE WILL PROVIDE
YOU THIRTY (30) DAYS' PRIOR WRITTEN NOTICE OF ANY CHANGE IN OUR STATE OF
FORMATION;
(B)
OUR LEGAL NAME IS TIME AMERICA, INC., AS SET
FORTH IN OUR CERTIFICATE OF INCORPORATION AS AMENDED THROUGH THE DATE HEREOF;
(C)
WE HAVE NO OTHER SUBSIDIARIES, EXCEPT FOR
TIME AMERICA, INC., AN ARIZONA CORPORATION;
(D)
WE ARE THE LAWFUL