Document:

Exhibit
10.3

 

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

 

SECURED
NON-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 (such
other companies together with the Parent, each a “Company” and collectively, the “Companies”), jointly and severally, promises to pay to LAURUS
MASTER FUND, LTD., c/o M&C Corporate Services Limited, P.O. Box 309
GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman
Islands, Fax: 345-949-8080 (the “Holder”)
or its registered assigns or successors in interest, the sum of One Million
Five Hundred Thousand Dollars ($1,500,000), without duplication of any amounts
owing by the Companies to the Holder under the Minimum Borrowing Notes (as
defined in the Security Agreement referred to below), or, if different, the
aggregate principal amount of all Loans (as defined in the Security Agreement
referred to below), together with any accrued and unpaid interest hereon, on January 3,
2008 (the “Maturity Date”) if not
sooner  indefeasibly paid in full.

 

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

 

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

 

ARTICLE I

CONTRACT RATE

 

1.1           Contract
Rate.  Subject to Sections 3.2 and
4.10, interest payable on the outstanding principal amount of this Note (the “Principal Amount”) shall accrue at a rate
per annum equal to the “prime rate” published in The Wall Street Journal
from time to time (the “Prime Rate”),
plus two percent (2.0%) (the “Contract Rate”).  The Contract Rate shall be increased or
decreased as the case may be for each increase or decrease in the Prime Rate in
an amount equal to such increase or decrease in the Prime Rate; each change to
be effective as of the day of the change in the Prime Rate.  The Contract Rate shall not at any time be
less than seven and one quarter percent (7.25%).  Interest shall be (i) calculated on the
basis of a 360 day year, and (ii) payable monthly, in arrears, commencing
on February 1, 2006 on the first business day of each consecutive calendar
month thereafter through and including the Maturity Date, and on the Maturity
Date, whether by acceleration or otherwise.

 

 

ARTICLE II

[INTENTIONALLY OMITTED]

 

ARTICLE III

EVENTS OF DEFAULT AND DEFAULT RELATED PROVISIONS

 

3.1           Events
of Default.  The occurrence of an
Event of Default under the Security Agreement shall constitute an event of
default (“Event of Default”)
hereunder.

 

3.2           Default
Interest.  Following the occurrence
and during the continuance of an Event of Default, the Companies shall, jointly
and severally, pay additional interest on the outstanding principal balance of
this Note in an amount equal to four percent (4.0%) per annum, and all
outstanding Obligations, excluding unpaid interest, shall continue to accrue
interest at such additional interest rate from the date of such Event of Default
until the date such Event of Default is cured or waived.

 

3.3           Default
Payment.  Following the occurrence
and 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 the
Security Agreement and the other Ancillary Agreements and all obligations and
liabilities of each Company under the Security Agreement and the other
Ancillary Agreements, to require the Companies, jointly and severally, to make
a Default Payment (“Default Payment”).  The Default Payment shall be one hundred
twenty-five percent (125%) of the outstanding principal amount of the Note,
plus accrued but unpaid interest, all other fees then remaining unpaid, and all
other amounts payable hereunder.  The Default
Payment shall be applied first to any fees due and payable to the Holder
pursuant to the Notes, the Security Agreement and/or the Ancillary Agreements,
then to accrued and unpaid interest due on the Notes and then to the
outstanding principal balance of the Notes. 
The Default Payment shall be due and payable immediately on the date
that the Holder has exercised its rights pursuant to this Section 3.3.

 

ARTICLE IV

MISCELLANEOUS

 

4.1           [Intentionally
Omitted].

 

4.2           Cumulative
Remedies.  The remedies under this
Note shall be cumulative.

 

4.3           Failure
or Indulgence Not Waiver.  No failure
or delay on the part of the Holder hereof in the exercise of any power, right
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other right, power or privilege.  All rights and remedies existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise
available.

 

4.4           Notices.  Any notice herein required or permitted to be
given shall be in writing and shall be deemed effective given (a) upon
personal delivery to the party notified, (b) when sent by confirmed telex
or 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 by
registered or

 

2

 

certified mail, return
receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt.  All
communications shall be sent to the respective Company at the address provided
for such Company in the Security Agreement executed in connection herewith, and
to the Holder at the address provided in the Security Agreement for the Holder,
with a copy to John E. Tucker, Esq., 825 Third Avenue, 14th
Floor, New York, New York 10022, facsimile number (212) 541-4434, or at such
other address as the respective Company or the Holder may designate by ten days
advance written notice to the other parties hereto.  A Notice of Conversion shall be deemed given
when made to the Parent pursuant to the Purchase Agreement.

 

4.5           Amendment
Provision.  The term “Note” and all
references thereto, as used throughout this instrument, shall mean this
instrument as originally executed, or if later amended or supplemented, then as
so amended or supplemented, and any successor instrument as such successor
instrument may be amended or supplemented.

 

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

 

4.7           Cost
of Collection.  In case of any Event
of Default under this Note, the Companies shall, jointly and severally, pay the
Holder the Holder’s reasonable costs of collection, including reasonable
attorneys’ fees.

 

4.8           Governing
Law, Jurisdiction and Waiver of Jury Trial.

 

(a)           THIS
NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.

 

(b)           EACH
COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN
THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR 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 SECURITY
AGREEMENT OR ANY OF THE OTHER ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING OUT
OF OR RELATED TO THIS NOTE, THE SECURITY AGREEMENT OR ANY OF THE OTHER
ANCILLARY AGREEMENTS; PROVIDED, THAT EACH COMPANY ACKNOWLEDGES THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE
OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER  PROVIDED,
THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER
FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO
COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR
THE OBLIGATIONS, OR TO ENFORCE

 

3

 

A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF THE HOLDER.  EACH
COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH COMPANY HEREBY WAIVES ANY
OBJECTION 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, COMPLAINT
AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF
SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN THE SECURITY
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER
OF THE COMPANY’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID

 

(c)           EACH
COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS.  THEREFORE, TO ACHIEVE
THE 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, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT,
OR OTHERWISE BETWEEN THE HOLDER, AND/OR ANY COMPANY ARISING OUT OF, CONNECTED
WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS NOTE, THE SECURITY AGREEMENT, ANY OTHER ANCILLARY
AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

 

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

 

4.10         Maximum
Payments.  Nothing contained herein
shall be deemed to establish or require the payment of a rate of interest or
other charges in excess of the maximum permitted by applicable law.  In the event that the rate of interest
required to be paid or other charges hereunder exceed the maximum rate
permitted by such law, any payments in excess of such maximum rate shall be
credited against amounts owed by the Companies to the Holder and thus refunded
to the Companies.

 

4.11         Security
Interest.  The Holder has been
granted a security interest (i) in certain assets of the Companies as more
fully described in the March 2004 Security Agreement, the March 2004
Subsidiary Security Agreement and the June 2005 Security Agreement and (ii) pursuant
to 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 and
the Companies, as amended and restated, amended, restated, modified or
supplemented from time to time.

 

4

 

4.12         Construction.  Each party acknowledges that its legal
counsel participated in the preparation of this Note and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against
the drafting party shall not be applied in the interpretation of this Note to
favor any party against the other.

 

4.13         Registered
Obligation. This Note is intended to be a registered obligation within the
meaning of Treasury Regulation Section 1.871-14(c)(1)(i) and the
Company (or its agent) shall register this Note (and thereafter shall maintain
such registration) as to both principal and any stated interest.  Notwithstanding any document, instrument or
agreement relating to this Note to the contrary, transfer of this Note (or the
right to any payments of principal or stated interest thereunder) may only be
effected by (i) surrender of this Note and either the reissuance by the
Company of this Note to the new holder or the issuance by the Company of a new
instrument to the new holder, or (ii) transfer through a book entry system
maintained by the Company (or its agent), within the meaning of Treasury
Regulation Section 1.871-14(c)(1)(i)(B).

 

[Balance of page intentionally
left blank; signature page follows]

 

5

 

IN WITNESS WHEREOF,
each Company has caused this Secured Non-Convertible Revolving Note to be
signed 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:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

6

 

EXHIBIT A

 

OTHER
COMPANIES

 

Time America, Inc., an Arizona
corporation

 

NetEdge Devices, LLC, an Arizona limited
liability companyExhibit 10.4

 

THIS WARRANT
AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO TIME AMERICA, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.

 

Right to Purchase 140,000 Shares of Common Stock of

TIME 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, hereby
certifies 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 any
time or from time to time before 5:00 p.m., New York time, through the close of
business January 1, 2013 (the “Expiration Date”), up to One Hundred Forty
Thousand (140,000) fully paid and nonassessable shares of Common Stock (as
hereinafter defined), $0.005 par value per share, at the applicable Exercise
Price per share (as defined below).  The
number and character of such shares of Common Stock and the applicable Exercise
Price per share are subject to adjustment as provided herein.

 

As used herein
the following terms, unless the context otherwise requires, have the following
respective meanings:

 

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

 

(b)           The term “Common
Stock” 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 securities
described in (b)(i) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.

 

(c)           The term “Other
Securities” refers to any stock (other than Common Stock) and other securities
of the Company or any other person (corporate or otherwise) which the holder of
the 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

 

 

which at any
time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to Section 4 or
otherwise.

 

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

 

1.             Exercise of Warrant.

 

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

 

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

 

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

 

(b)           If
the Company’s Common Stock is not traded on the American Stock Exchange or
another national exchange or on the Nasdaq but is traded on the NASD Over The
Counter Bulletin Board, then the mean of the average of the closing bid and
asked prices reported for the last business day immediately preceding the
Determination Date.

 

(c)           Except
as provided in clause (d) below, if the Company’s Common Stock is not publicly
traded, then as the Holder and the Company agree or in the absence of agreement
by arbitration in accordance with the rules then in effect of the American
Arbitration Association, before a single arbitrator to be chosen from a panel
of persons qualified by education and training to pass on the matter to be
decided.

 

(d)           If
the 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 to
the Company’s charter, then all amounts to be payable per share to holders of
the 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 in
respect of the Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common Stock then
issuable upon exercise of the Warrant are outstanding at the Determination
Date.

 

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

 

2

 

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

 

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

 

2.             Procedure for Exercise.

 

2.1           Delivery of Stock Certificates, Etc., on Exercise.  The Company agrees that the shares of Common
Stock purchased upon exercise of this Warrant shall be deemed to be issued to
the Holder as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been surrendered and payment made for
such shares in accordance herewith.  As
soon as practicable after the exercise of this Warrant in full or in part, and
in any event within three (3) business days thereafter, the Company at its
expense (including the payment by it of any applicable issue taxes) will cause
to 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 in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.

 

2.2           Exercise. 
Payment may be made either (i) in cash or by certified or official bank
check payable to the order of the Company equal to the applicable aggregate
Exercise Price, (ii) by delivery of the Warrant, or shares of Common Stock
and/or Common Stock receivable upon exercise of the Warrant in accordance with
Section (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 such
exercise number shall be adjusted to reflect any adjustment in the total number
of 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 duly
authorized, validly issued, fully-paid and non-assessable shares of Common
Stock (or Other Securities) determined as provided herein.

 

(b)           Notwithstanding any provisions herein to the contrary, if
the Fair Market Value of one share of Common Stock is greater than the Exercise
Price (at the date of calculation as set forth below), in lieu of exercising
this Warrant for cash, the Holder may elect to receive shares equal to the
value (as determined below) of this Warrant (or the portion thereof being
exercised) by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Exercise Notice in which event the Company
shall issue to the Holder a number of shares of Common Stock computed using the
following formula:

 

3

 

	
  X=Y

  	
  (A-B)

  
	
   

  	
  A

  

 

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

 

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

 

A =                         the Fair
Market Value of one share of the Company’s Common Stock (at the date of such
calculation)

 

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

 

3.             [Intentionally Deleted]

 

4.             Effect of Reorganization, Etc.; Adjustment of
Exercise Price.

 

4.1           Reorganization, Consolidation, Merger, Etc.  In case at any time or from time to time, the
Company shall (a) effect a reorganization, (b) consolidate with or merge into
any other person, or (c) transfer all or substantially all of its properties or
assets to any other person under any plan or arrangement contemplating the
dissolution of the Company, then, in each such case, as a condition to the
consummation of such a transaction, proper and adequate provision shall be made
by the Company whereby the Holder of this Warrant, on the exercise hereof as
provided in Section 1 at any time after the consummation of such
reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock (or
Other Securities) issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder had so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 5.

 

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

 

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

 

4

 

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

 

5.             Extraordinary Events Regarding
Common Stock.  In the event that the
Company shall (a) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Exercise Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Exercise Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after such event, and
the 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 upon
the happening of any successive event or events described herein in this
Section 5.  The number of shares of
Common Stock that the holder of this Warrant shall thereafter, on the exercise
hereof as provided in Section 1, be entitled to receive shall be increased to a
number determined by multiplying the number of shares of Common Stock that
would otherwise (but for the provisions of this Section 5) be issuable on such
exercise by a fraction of which (a) the numerator is the Exercise Price that
would 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 such
exercise.

 

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

 

7.             Reservation of Stock, Etc.,
Issuable on Exercise of Warrant.  The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of the Warrant, shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of the Warrant.

 

5

 

8.             Assignment; Exchange of Warrant.  Subject to compliance with applicable
securities laws, this Warrant, and the rights evidenced hereby, may be
transferred by any registered holder hereof (a “Transferor”) in whole or in
part.  On the surrender for exchange of
this Warrant, with the Transferor’s endorsement in the form of Exhibit B
attached hereto (the “Transferor Endorsement Form”) and together with evidence
reasonably satisfactory to the Company demonstrating compliance with applicable
securities laws, which shall include, without limitation, a legal opinion from
the Transferor’s counsel that such transfer is exempt from the registration
requirements of applicable securities laws, the Company at its expense but with
payment by the Transferor of any applicable transfer taxes) will issue and
deliver to or on the order of the Transferor thereof a new Warrant of like
tenor, in the name of the Transferor and/or the transferee(s) specified in such
Transferor Endorsement Form (each a “Transferee”), calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock called for
on the face or faces of the Warrant so surrendered by the Transferor.

 

9.             Replacement of Warrant.  On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably satisfactory
in form and amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of this Warrant, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant of like tenor.

 

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

 

11.           Maximum Exercise.  Notwithstanding anything contained herein to
the contrary, the Holder shall not be entitled to exercise this Warrant in
connection with that number of shares of Common Stock which would exceed the
difference between (i) 4.99% of the issued and outstanding shares of Common
Stock and (ii) the number of shares of Common Stock beneficially owned by the
Holder.  For purposes of the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulation 13d-3 thereunder.  The
limitation described in the first sentence of this Section 11 shall
automatically become null and void following notice to the Company upon the
occurrence and during the continuance of an Event of Default (as defined in the
Security Agreement), or upon 75 days prior notice to the Company.

 

12.           Warrant Agent.  The Company may, by written notice to the
each Holder of the Warrant, appoint an agent for the purpose of issuing Common
Stock (or Other Securities) on the exercise of this Warrant pursuant to Section
1, exchanging this Warrant pursuant to Section 8, and replacing this Warrant
pursuant to Section 9, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such agent.

 

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

 

6

 

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

 

15.           Miscellaneous.  This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.  ANY ACTION BROUGHT
CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS WARRANT SHALL BE BROUGHT ONLY
IN THE STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE
OF NEW YORK; PROVIDED, HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE THIS
PROVISION AND BRING AN ACTION OUTSIDE THE STATE OF NEW YORK.  The Company agrees to submit to the
jurisdiction of such courts and waive trial by jury.  The prevailing party shall be entitled to
recover from the other party its reasonable attorney’s fees and costs.  In the event that any provision of this
Warrant is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform to such statute or
rule of law.  Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of this Warrant.  The headings in this Warrant are for purposes
of reference only, and shall not limit or otherwise affect any of the terms
hereof.  The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision. 
The Company acknowledges that legal counsel participated in the
preparation of this Warrant and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Warrant to favor any party
against the other party.

 

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS.]

 

7

 

IN WITNESS
WHEREOF, the Company has executed this Warrant as of the date first written
above. 

 

	
   

  	
   

  	
  TIME AMERICA, INC. , A NEVADA

  CORPORATION

  
	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

8

 

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 for
such shares at the price per share provided for in such Warrant, which is $
        .  Such payment takes the form of (check
applicable 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.

  
	
   

  
	
   

  

 

The
undersigned requests that the certificates for such shares be issued in the
name of, and delivered to                                                                                    
whose address is                                                                    
                                                                                                                                                                                               .

 

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

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature must conform to name of holder as specified on the face of
  the Warrant)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

A-1

 

EXHIBIT B

 

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

 

For value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “Transferees” the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of Time America, Inc. into which the within Warrant relates specified
under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such
person 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)

  	
   

  

 

B-1

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