Document:

Exhibit 10.5

 

REGISTRATION RIGHTS AGREEMENT

 

This
Registration Rights Agreement (this “Agreement”) is made and entered into as of
January 3, 2006, by and between TIME AMERICA, INC., a Nevada corporation (the
“Company”), and Laurus Master Fund, Ltd., a Cayman Islands company (the
“Purchaser”).

 

This Agreement
is made pursuant to the Security and Purchase Agreement, dated as of the date
hereof, by and among the Purchaser, the Company and various subsidiaries of the
Company (as amended, modified or supplemented from time to time, the “Security
Agreement”), and pursuant to the Grant Shares, the Secured Convertible Term
Note and the Warrants referred to therein.

 

The Company
and the Purchaser hereby agree as follows:

 

1.             Definitions.  Capitalized terms used and not otherwise
defined herein that are defined in the Security Agreement shall have the
meanings given such terms in the Security Agreement.  As used in this Agreement, the following
terms shall have the following meanings:

 

“Commission” means the Securities and
Exchange Commission.

 

“Common Stock” means shares of the
Company’s common stock, par value $0.005 per share.

 

“Effectiveness Date”
means, (i) with respect to the Registration Statement required to be filed in
connection with the Secured Convertible Term Note issued on the date hereof
under the Security Agreement and the Warrants issued on the date hereof, a date
no later than one hundred eighty (180) days following the date hereof and (ii)
with respect to each additional Registration Statement required to be filed
hereunder (if any), a date no later than thirty (30) days following the
applicable Filing Date.

 

“Effectiveness Period” shall have the
meaning set forth in Section 2(a).

 

“Exchange Act” means the Securities
Exchange Act of 1934, as amended, and any successor statute.

 

“Filing Date” means,
with respect to (1) the Registration Statement which is required to be filed in
connection with the shares of Common Stock issuable upon conversion of the
Secured Convertible Term Note made on the date hereof, the date which is sixty
(60) days after the date hereof, (2) the Registration Statement required to be
filed in connection with the Grant Shares, the date which is sixty (60) days
after the issuance of such Warrant, (3) the Registration Statement required to
be filed in connection with the shares of Common Stock issuable to the Holder
upon exercise of a Warrant, the date which is sixty (60) days after the
issuance of such Warrant, and (4) the Registration Statement required to be
filed in connection with the shares of Common Stock issuable to the Holder as a
result of adjustments to the Fixed Conversion Price or the Exercise Price, as
the case may be, made pursuant to Section 3.5 of the Secured Convertible Term
Note, Section 5 of the Warrant or otherwise, thirty (30) days after the
occurrence of such event or the date of the adjustment of the Fixed Conversion
Price or Exercise Price, as the case may be.

 

 

“Grant Shares” has the meaning set forth in
the Security Agreement.

 

“Holder” or “Holders” means the Purchaser or any of its affiliates or
transferees to the extent any of them hold Registrable Securities.

 

“Indemnified Party” shall have the meaning
set forth in Section 5(c).

 

“Indemnifying Party” shall have the meaning
set forth in Section 5(c).

 

“Proceeding” means an action, claim, suit,
investigation or proceeding (including, without limitation, an investigation or
partial proceeding, such as a deposition), whether commenced or threatened.

 

“Prospectus” means the prospectus included
in the Registration Statement (including, without limitation, a prospectus that
includes any information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by the Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective amendments,
and all material incorporated by reference or deemed to be incorporated by
reference in such Prospectus.

 

“Registrable Securities” means the Grant
Shares and the shares of Common Stock issuable upon the conversion of the
Secured Convertible Term Note in whole or in part and upon exercise of the
Warrants.

 

“Registration Statement” means each
registration statement required to be filed hereunder, including the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.

 

“Rule 144” means Rule 144 promulgated by
the Commission pursuant to the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.

 

“Rule 415” means Rule 415 promulgated by
the Commission pursuant to the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.

 

“Rule 424” means Rule 424 promulgated by
the Commission pursuant to the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.

 

“Secured Convertible Term Note” has the
meaning set forth in the Security Agreement.

 

2

 

“Securities Act” means the Securities Act
of 1933, as amended, and any successor statute.

 

“Security Agreement”
has the meaning given to such term in the Preamble hereto.

 

“Trading Market” means any of the NASD OTC
Bulletin Board, NASDAQ SmallCap Market, the Nasdaq National Market, the
American Stock Exchange or the New York Stock Exchange.

 

“Warrants” means the Common Stock purchase
warrants issued in connection with the Security Agreement, whether on the date
thereof or thereafter.

 

2.             Registration.

 

(a)           On
or prior to the Filing Date the Company shall prepare and file with the
Commission a Registration Statement covering the Registrable Securities for an
offering to be made on a continuous basis pursuant to Rule 415.  The Registration Statement shall be on Form
S-1, Form SB-2 or Form S-3 (except if the Company is not then eligible to
register for resale the Registrable Securities on such Forms, in which case
such registration shall be on another appropriate form in accordance
herewith).  The Company shall cause the
Registration Statement to become effective and remain effective as provided
herein.  The Company shall use its best
efforts to cause the Registration Statement to be declared effective under the
Securities Act as promptly as possible after the filing thereof, but in any
event no later than the Effectiveness Date. 
The Company shall use its reasonable commercial efforts to keep the
Registration Statement continuously effective under the Securities Act until
the date which is the earlier date of when (i) all Registrable Securities have
been sold or (ii) all Registrable Securities may be sold immediately without
registration under the Securities Act and without volume restrictions pursuant
to Rule 144(k), as determined by the counsel to the Company pursuant to a
written opinion letter to such effect, addressed and acceptable to the
Company’s transfer agent and the affected Holders (the  “Effectiveness Period”).

 

 (b)          Within three business days of the Effectiveness Date, the
Company shall cause its counsel to issue a blanket opinion in the form attached
hereto as Exhibit A, to the transfer agent stating that the shares are subject
to an effective registration statement and can be reissued free of restrictive
legend upon notice of a sale by the Purchaser and confirmation by the Purchaser
that it has complied with the prospectus delivery requirements, provided that
the Company has not advised the transfer agent orally or in writing that the opinion
has been withdrawn. Copies of the blanket opinion required by this Section 2(b)
shall be delivered to the Purchaser within the time frame set forth above.

 

3.             Registration Procedures.  If and whenever the Company is required by
the provisions hereof to effect the registration of any Registrable Securities
under the Securities Act, the Company will, as expeditiously as possible:

 

(a)           prepare
and file with the Commission the Registration Statement with respect to such
Registrable Securities, respond as promptly as possible to any comments

 

3

 

received from the Commission, and use its best efforts to cause the
Registration Statement to become and remain effective for the Effectiveness
Period with respect thereto, and promptly provide to the Purchaser copies of
all filings and Commission letters of comment relating thereto;

 

(b)           prepare
and file with the Commission such amendments and supplements to the
Registration Statement and the Prospectus used in connection therewith as may
be necessary to comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities covered by the Registration
Statement and to keep such Registration Statement effective until the expiration
of the Effectiveness Period;

 

(c)           furnish
to the Purchaser such number of copies of the Registration Statement and the
Prospectus included therein (including each preliminary Prospectus) as the
Purchaser reasonably may request to facilitate the public sale or disposition
of the Registrable Securities covered by the Registration Statement;

 

(d)           use
its best efforts to register or qualify the Purchaser’s Registrable Securities
covered by the Registration Statement under the securities or “blue sky” laws
of such jurisdictions within the United States as the Purchaser may reasonably
request, provided, however, that the Company shall not for any such purpose be
required to qualify generally to transact business as a foreign corporation in
any jurisdiction where it is not so qualified or to consent to general service
of process in any such jurisdiction;

 

(e)           list
the Registrable Securities covered by the Registration Statement with any
securities exchange on which the Common Stock of the Company is then listed;

 

(f)            immediately
notify the Purchaser at any time when a Prospectus relating thereto is required
to be delivered under the Securities Act, of the happening of any event of
which the Company has knowledge as a result of which the Prospectus contained
in such Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing; and

 

(g)           make
available for inspection by the Purchaser and any attorney, accountant or other
agent retained by the Purchaser, all publicly available, non-confidential
financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company’s officers, to supply all publicly
available, non-confidential information reasonably requested by the attorney,
accountant or agent of the Purchaser.

 

4.             Registration Expenses.  All expenses relating to the Company’s
compliance with Sections 2 and 3 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including reasonable counsel fees) incurred in connection with complying with
state securities or “blue sky” laws, fees of the NASD, transfer taxes, fees of
transfer agents and registrars, fees of, and disbursements incurred by, one
counsel for the

 

4

 

Holders (upon prior
agreement by the parties and to the extent such counsel is required due to
Company’s failure to meet any of its obligations hereunder), are called
“Registration Expenses”. All selling commissions applicable to the sale of
Registrable Securities, including any fees and disbursements of any special
counsel to the Holders beyond those included in Registration Expenses, are
called “Selling Expenses.”  The Company
shall only be responsible for all Registration Expenses.

 

5.             Indemnification.

 

(a)           In
the event of a registration of any Registrable Securities under the Securities
Act pursuant to this Agreement, the Company will indemnify and hold harmless
the Purchaser, and its officers, directors and each other person, if any, who
controls the Purchaser within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which the
Purchaser, or such persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any Registration
Statement under which such Registrable Securities were registered under the
Securities Act pursuant to this Agreement, any preliminary Prospectus or final
Prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Purchaser, and each such person
for any reasonable legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case if and
to the extent that any such loss, claim, damage or liability arises out of
Purchaser’s failure to comply with the prospectus delivery requirements under
the Securities Act or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with
information furnished by or on behalf of the Purchaser or any such person in
writing specifically for use in any such document.

 

(b)           In
the event of a registration of the Registrable Securities under the Securities
Act pursuant to this Agreement, the Purchaser will indemnify and hold harmless
the Company, and its officers, directors and each other person, if any, who
controls the Company within the meaning of the Securities Act, against all
losses, claims, damages or liabilities, joint or several, to which the Company
or such persons may become subject under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact which was furnished in writing by the Purchaser to the
Company expressly for use in (and such information is contained in) the
Registration Statement under which such Registrable Securities were registered
under the Securities Act pursuant to this Agreement, any preliminary Prospectus
or final Prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and each such
person for any reasonable

 

5

 

legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action,
provided, however, that the Purchaser will be liable in any such case if and
only to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished in writing to
the Company by or on behalf of the Purchaser specifically for use in any such
document.  Notwithstanding the provisions
of this paragraph, the Purchaser shall not be required to indemnify any person
or entity in excess of the amount of the aggregate net proceeds received by the
Purchaser in respect of Registrable Securities in connection with any such
registration under the Securities Act.

 

(c)           Promptly
after receipt by a party entitled to claim indemnification hereunder (an
“Indemnified Party”) of notice of the commencement of any action, such
Indemnified Party shall, if a claim for indemnification in respect thereof is
to be made against a party hereto obligated to indemnify such Indemnified Party
(an “Indemnifying Party”), notify the Indemnifying Party in writing thereof,
but the omission so to notify the Indemnifying Party shall not relieve it from
any liability which it may have to such Indemnified Party other than under this
Section 5(c) and shall only relieve it from any liability which it may have to
such Indemnified Party under this Section 5(c) if and to the extent the
Indemnifying Party is prejudiced by such omission. In case any such action
shall be brought against any Indemnified Party and it shall notify the Indemnifying
Party of the commencement thereof, the Indemnifying Party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel satisfactory to such Indemnified Party, and, after
notice from the Indemnifying Party to such Indemnified Party of its election so
to assume and undertake the defense thereof, the Indemnifying Party shall not
be liable to such Indemnified Party under this Section 5(c) for any legal
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof; if the Indemnified Party retains its own counsel, then the
Indemnified Party shall pay all reasonable fees, costs and expenses of such
counsel, provided, however, that, if the defendants in any such action include
both the indemnified party and the Indemnifying Party and the Indemnified Party
shall have reasonably concluded that there may be reasonable defenses available
to it which are different from or additional to those available to the Indemnifying
Party or if the interests of the Indemnified Party reasonably may be deemed to
conflict with the interests of the Indemnifying Party, the Indemnified Party
shall have the right to select one separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
reasonable expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the Indemnifying Party as
incurred.

 

(d)           In
order to provide for just and equitable contribution in the event of joint
liability under the Securities Act in any case in which either (i) the
Purchaser, or any officer, director or controlling person of the Purchaser,
makes a claim for indemnification pursuant to this Section 5 but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be enforced in such
case notwithstanding the fact that this Section 5 provides for indemnification
in such

 

6

 

case, or (ii) contribution under the Securities Act may be required on
the part of the Purchaser or such officer, director or controlling person of
the Purchaser in circumstances for which indemnification is provided under this
Section 5; then, and in each such case, the Company and the Purchaser will
contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion so that
the Purchaser is responsible only for the portion represented by the percentage
that the public offering price of its securities offered by the Registration
Statement bears to the public offering price of all securities offered by such
Registration Statement, provided, however, that, in any such case, (A) the
Purchaser will not be required to contribute any amount in excess of the public
offering price of all such securities offered by it pursuant to such
Registration Statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the Act) will be
entitled to contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.

 

6.             Representations and Warranties.

 

(a)           The
Common Stock of the Company is registered pursuant to Section 12(b) or 12(g) of
the Exchange Act and, except with respect to certain matters which the Company
has disclosed to the Purchaser on Schedule 12(u) to the Security
Agreement, the Company has timely filed all proxy statements, reports,
schedules, forms, statements and other documents required to be filed by it
under the Exchange Act.  The Company has
filed (i) its Annual Report on Form 10-KSB for its fiscal year ended June 30,
2005 and (ii) its Quarterly Report on Form 10-QSB for the fiscal quarter ended
September 30, 2005 and all Current Reports on Form 8-K that the Company was
required to file in its fiscal year 2005 (collectively, the “SEC
Reports”).  Each SEC Report was, at the
time of its filing, in substantial compliance with the requirements of its
respective form and none of the SEC Reports, nor the financial statements (and
the notes thereto) included in the SEC Reports, as of their respective filing
dates, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.  The financial statements of
the Company included in the SEC Reports comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission or other applicable rules and regulations with
respect thereto.  Such financial
statements have been prepared in accordance with generally accepted accounting
principles (“GAAP”) applied on a consistent basis during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed) and fairly present
in all material respects the financial condition, the results of operations and
the cash flows of the Company and its subsidiaries, on a consolidated basis, as
of, and for, the periods presented in each such SEC Report.

 

(b)           The
Common Stock is listed for trading on the National Association of Securities
Dealers, Inc. Over the Counter Bulletin Board (“NASD OTCBB”) and satisfies all
requirements for the continuation of such listing.  The Company has not received any notice that
its Common Stock will be delisted from the NASD OTCBB (except for prior

 

7

 

notices which have been fully remedied) or that the Common Stock does
not meet all requirements for the continuation of such listing.

 

(c)           Neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales of any security or
solicited any offers to buy any security under circumstances that would cause
the offering of the Securities pursuant to the Security Agreement to be
integrated with prior offerings by the Company for purposes of the Securities
Act which would prevent the Company from selling the Common Stock pursuant to
Rule 506 under the Securities Act, or any applicable exchange-related
stockholder approval provisions, nor will the Company or any of its affiliates
or subsidiaries take any action or steps that would cause the offering of the
Securities to be integrated with other offerings.

 

(d)           The
Warrants, each Note and the shares of Common Stock which the Purchaser may
acquire pursuant to the Warrants and the Secured Convertible Term Note are all
restricted securities under the Securities Act as of the date of this
Agreement.  The Company will not issue
any stop transfer order or other order impeding the sale and delivery of any of
the Registrable Securities at such time as such Registrable Securities are
registered for public sale or an exemption from registration is available,
except as required by federal or state securities laws.

 

(e)           The
Company understands the nature of the Registrable Securities issuable upon the
conversion of the Secured Convertible Term Note and the exercise of the Warrant
and recognizes that the issuance of such Registrable Securities may have a
potential dilutive effect.  The Company
specifically acknowledges that its obligation to issue the Registrable
Securities is binding upon the Company and enforceable regardless of the
dilution such issuance may have on the ownership interests of other
shareholders of the Company.

 

(f)            Except
for agreements made in the ordinary course of business, there is no agreement
that has not been filed with the Commission as an exhibit to a registration
statement or to a form required to be filed by the Company under the Exchange
Act, the breach of which could reasonably be expected to have a material and
adverse effect on the Company and its subsidiaries, or would prohibit or
otherwise interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement in any material respect.

 

(g)           The
Company will at all times have authorized and reserved a sufficient number of
shares of Common Stock for the issuance of the Grant Share, for the full
conversion of the Secured Convertible Term Note and the exercise of the
Warrants.

 

7.             Miscellaneous.

 

(a)           Remedies.  In the event of a breach by the Company or by
a Holder, of any of their respective obligations under this Agreement, each
Holder or the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and

 

8

 

under this Agreement, including recovery of damages, will be entitled
to specific performance of its rights under this Agreement.

 

(b)           No
Piggyback on Registrations.  Except
as and to the extent specified in Schedule 7(b) hereto or provided that the
Holders give their consent, neither the Company nor any of its security holders
(other than the Holders in such capacity pursuant hereto) may include
securities of the Company in any Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right for inclusion of shares in the
Registration Statement to any of its security holders. Except as and to the
extent specified in Schedule 7(b) hereto, the Company has not previously
entered into any agreement granting any registration rights with respect to any
of its securities to any Person that have not been fully satisfied.

 

(c)           Compliance.  Each Holder covenants and agrees that it will
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.

 

(d)           Discontinued
Disposition.  Each Holder agrees by
its acquisition of such Registrable Securities that, upon receipt of a notice
from the Company of the occurrence of a Discontinuation Event (as defined
below), such Holder will forthwith discontinue disposition of such Registrable
Securities under the applicable Registration Statement until such Holder’s
receipt of the copies of the supplemented Prospectus and/or amended
Registration Statement or until it is advised in writing (the “Advice”) by the
Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus
or Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph. 
For purposes of this Section 7(d), a “Discontinuation Event” shall mean
(i) when the Commission notifies the Company whether there will be a “review”
of such Registration Statement and whenever the Commission comments in writing
on such Registration Statement (the Company shall provide true and complete
copies thereof and all written responses thereto to each of the Holders); (ii)
any request by the Commission or any other Federal or state governmental
authority for amendments or supplements to such Registration Statement or
Prospectus or for additional information; (iii) the issuance by the Commission
of any stop order suspending the effectiveness of such Registration Statement
covering any or all of the Registrable Securities or the initiation of any Proceedings
for that purpose; (iv) the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; and/or (v) the
occurrence of any event or passage of time that makes the financial statements
included in such Registration Statement ineligible for inclusion therein or any
statement made in such Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to such Registration Statement,
Prospectus or other documents so that, in the case of such Registration
Statement or Prospectus, as the case may be, it will not contain any untrue
statement of a

 

9

 

material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

(e)           Piggy-Back
Registrations.  If at any time there
is not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of
such determination and, if within fifteen days after receipt of such notice,
any such Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered to the extent the Company may do so without
violating registration rights of others which exist as of the date of this
Agreement, subject to customary underwriter cutbacks applicable to all holders
of registration rights and subject to obtaining any required the consent of any
selling stockholder(s) to such inclusion under such registration statement.

 

(f)            Amendments
and Waivers.  The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and the Holders of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of certain Holders and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of at least a majority of the
Registrable Securities to which such waiver or consent relates; provided,
however, that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.

 

(g)           Notices.  Any notice or request hereunder may be given
to the Company or the Purchaser at the respective addresses set forth below or
as may hereafter be specified in a notice designated as a change of address
under this Section 7(g).  Any notice or
request hereunder shall be given by registered or certified mail, return
receipt requested, hand delivery, overnight mail, Federal Express or other
national overnight next day carrier (collectively, “Courier”) or telecopy
(confirmed by mail).  Notices and
requests shall be, in the case of those by hand delivery, deemed to have been
given when delivered to any party to whom it is addressed, in the case of those
by mail or overnight mail, deemed to have been given three (3) business days
after the date when deposited in the mail or with the overnight mail carrier,
in the case of a Courier, the next business day following timely delivery of
the package with the Courier, and, in the case of a telecopy, when
confirmed.  The address for such notices
and communications shall be as follows:

 

10

 

	
  If to the Company:

  	
   

  	
  Time
  America, Inc.

  8840 East Chaparral Road, Suite 100

  Scottsdale, Arizona 85250

  Attention: Craig J. Smith

  Facsimile: (480) 967-5444

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Gregory R.
  Hall, Esq.

  Squire, Sanders & Dempsey L.L.P.

  Two Renaissance Square

  40 North Central Avenue, Suite 2700

  Phoenix, Arizona 85004

  Facsimile: (602) 253-8129

  
	
   

  	
   

  	
   

  
	
  If to a Purchaser:

  	
   

  	
  Laurus
  Master Fund, Ltd.

  c/o

  M&C Corporate Services Limited

  P.O. Box 309 GT, Ugland House, South Church Street

  Grand Cayman, Cayman Islands

  Facsimile: 345-949-8080

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  John E.
  Tucker, Esq.

  825 Third Avenue — 14th Floor

  New York, New York 10022

  Facsimile: (212) 541-4434

  
	
  If to any other Person who is

  	
   

  	
   

  
	
  then the registered Holder:

  	
   

  	
  To the
  address of such Holder as it appears in the stock transfer books of the
  Company

  

 

or such other
address as may be designated in writing hereafter in accordance with this
Section 7(g) by such Person.

 

(h)           Successors
and Assigns.  This Agreement shall
inure to the benefit of and be binding upon the successors and permitted
assigns of each of the parties and shall inure to the benefit of each Holder.
The Company may not assign its rights or obligations hereunder without the
prior written consent of each Holder. 
Each Holder may assign their respective rights hereunder in the manner
and to the Persons as permitted under the Secured Convertible Term Note and the
Security Agreement with the prior written consent of the Company, which consent
shall not be unreasonably withheld.

 

(i)            Execution
and Counterparts.  This Agreement may
be executed in any number of counterparts, each of which when so executed shall
be deemed to be an original and, all of which taken together shall constitute
one and the same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding obligation
of the party executing (or on whose behalf such

 

11

 

signature is executed) the same with the same force and effect as if
such facsimile signature were the original thereof.

 

(j)            Governing
Law.  All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all Proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement
shall be commenced exclusively in the state and federal courts sitting in the
City of New York, Borough of Manhattan. Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting
in the City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any Proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such Proceeding is
improper.  Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating
to this Agreement or the transactions contemplated hereby. If either party
shall commence a Proceeding to enforce any provisions of a Transaction
Document, then the prevailing party in such Proceeding shall be reimbursed by
the other party for its reasonable attorneys fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such
Proceeding.

 

(k)           Cumulative
Remedies.  The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.

 

(l)            Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

 

(m)          Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

12

 

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS]

 

13

 

IN WITNESS
WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above. 

 

	
  TIME AMERICA, INC., A NEVADA

  CORPORATION

  	
   

  	
  LAURUS MASTER FUND, LTD.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
						

 

14

 

EXHIBIT A

 

[           ,
2005]

 

 

[              Stock
Transfer
  & Trust Company

[Address]

 Attn:[                         ]

 

	
  Re:

  	
   

  	
  Time America, Inc. Registration Statement on Form [SB-2]

  

 

 

Ladies and Gentlemen:

 

As counsel to Time America, Inc., a Nevada corporation (the “Company”),
we have been requested to render our opinion to you in connection with the
resale by the individuals or entitles listed on Schedule A attached hereto (the
“Selling Stockholders”), of an aggregate of [amount] shares (the “Shares”) of
the Company’s Common Stock.

 

A Registration Statement on Form [SB-2] under the Securities Act of
1933, as amended (the “Act”), with respect to the resale of the Shares was
declared effective by the Securities and Exchange Commission on [date].  Enclosed is the Prospectus dated [date].  We understand that the Shares are to be
offered and sold in the manner described in the Prospectus.

 

Based upon the foregoing, upon request by the Selling Stockholders at
any time while the registration statement remains effective, it is our opinion
that the Shares have been registered for resale under the Act and new
certificates evidencing the Shares upon their transfer or re-registration by
the Selling Stockholders may be issued without restrictive legend.  We will advise you if the registration
statement is not available or effective at any point in the future.

 

Very truly
yours,

 

[Company
counsel]

 

 

Schedule A

 

	
  Selling Stockholder

  	
   

  	
  R/N/O

  	
   

  	
  Shares

  Being Offered

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

TIME
AMERICA, INC.

 

DISCLOSURE
SCHEDULES

 

TO

 

REGISTRATION
RIGHTS AGREEMENT

 

2

 

SCHEDULE 7(b)

 

PIGGY-BACK REGISTRATION RIGHTS

 

NONE.

 

3Exhibit 10.6

 

AMENDED
AND RESTATED

SUBORDINATION
AGREEMENT

 

This AMENDED AND RESTATED  SUBORDINATION AGREEMENT (this “Amended and Restated Agreement”) is
made as of the 30 day of January 3, 2006, by and among JOSEPH L. SIMEK (“Mr. Simek”), FRANCES L. SIMEK (“Mrs. Simek” and together with Mr. Simek,
the “Subordinated Lenders”),
TIME AMERICA, INC., a Nevada corporation (“Time America-Nevada”), TIME AMERICA, INC., an Arizona
corporation (“Time America-Arizona”)
NETEDGE DEVICES, LLC, an Arizona limited liability company (“NetEdge” and, together with Time
America-Nevada and Time America-Arizona and each of their respective
subsidiaries acqiured or formed after the date hereof, “Borrower”) and LAURUS MASTER FUND,
LTD., a Cayman Islands company (“Senior
Lender”).

 

PRELIMINARY
STATEMENTS:

 

WHEREAS, Subordinated Lenders, Borrower, and
Senior Lender entered into a Subordination Agreement, dated March 22, 2004
(the “Agreement”), wherein each Subordinated Lender agreed to
subordinate payment and performance of all Subordinated Debt (as defined in the
Agreement) to the Senior Debt (as defined in the Agreement);

 

WHEREAS, the Agreement was amended by that
certain First Amendment to Subordination Agreement, dated as of April 15,
2004, by and among each Subordinated Lender, Borrower, and Senior Lender;

 

WHEREAS, the Agreement was further amended by
that certain Second Amendment to Subordination Agreement, dated in November 2004,
by and among each Subordinated Lender, Borrower, and Senior Lender;

 

WHEREAS, the Agreement was further amended
and restated on July 23, 2005, by and among each Subordinated Lender,
Borrower, and Senior Lender;

 

WHEREAS, Borrower and Senior Lender intend to enter into a Security and
Purchase Agreement, dated as of January 3, 2006 (as amended, modified or
supplemented from time to time, the “Security Agreement”), whereby
Senior Lender has agreed to make available to Borrower revolving loans of up to
$1,500,000, subject to Borrower’s eligible accounts receivable and certain
other conditions set forth in the Security Agreement, as well as a term loan in
the initial principal amount of $2,000,000; and 

 

WHEREAS, as a condition to the closing of the transactions contemplated
under the Security Agreement, Senior Lender requires that payment and
performance of all Subordinated Debt be subordinated to the Senior Debt (as
such term is modified by this Amended and Restated Agreement) to the extent and
on the terms and conditions set forth herein and that Subordinated Lenders
amend and restate the Subordination Agreement to evidence such subordination.

 

 

AGREEMENTS:

 

NOW THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained, and for other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Borrower, the
Subordinated Lenders and Senior Lender hereby agree as follows:

 

1.                                       Definitions.
The following terms shall have the meanings specified below. Any reference to
any renewal, extension, replacement or other modification of any of the Senior
Loan Documents that may be contained in the definitions of the Senior Loan
Documents set forth below shall not be deemed to waive any consent of any
respective Subordinated Lender to the extent such consent is required under Section 4(b) below
or otherwise limit in any way any respective Subordinated Lender’s rights under
Section 4(b). Any reference to any renewal, extension, replacement or
other modification of any of the Subordinated Loan Documents that may be
contained in the definitions of the Subordinated Loan Documents set forth below
shall not be deemed to waive any consent of the Senior Lender to the extent
such consent is required under Section 6 below or otherwise limit in any
way Senior Lender’s rights under Section 6.

 

“Agreement”
shall have the meaning assigned to such term in the Preliminary Statements of
this Agreement.

 

“Borrower” shall
have the meaning assigned to such term in the first paragraph of this
Agreement.

 

“Collateral” means
all assets now or hereafter securing or intended to secure the payment and
performance of the Senior Debt and the Subordinated Debt including without
limitation all assets covered by any of the Senior Loan Security Documents and
the Subordinated Loan Security Documents.

 

“Paid in Full” or “Payment
in Full” means, with respect to the payment of the Senior Debt, that
the Senior Debt has been fully, finally and indefeasibly paid in cash and all
of the financing arrangements and commitments between Borrower and Senior
Lender have been terminated.

 

“Permitted Subordinated Lender
Actions” means any lawful action taken by any Subordinated
Lender pursuant to their respective Subordinated Loan Security Documents or
applicable law in order to enforce payment of the Subordinated Debt and their
rights against the Collateral, but only to the extent such action is permitted
pursuant to Section 2.2(b) of this Agreement.

 

“Secured Convertible Term Note” means
that certain Secured Convertible Term Note issued as of January 3, 2006
pursuant to the Security Agreement by the Borrower to the Senior Lender, in the
face amount of $2,000,000, together with all amendments, extensions,
modifications, substitutions or renewals thereof.

 

“Secured Non-Convertible Revolving Note”
means the Secured Non-Convertible Revolving Note
issued as of January 3, 2006 pursuant to the Security Agreement by the

 

2

 

Borrower to the Senior Lender in the face
amount of $1,500,000), together with, in each case, all amendments, extensions,
modifications, substitutions, or renewals thereof.

 

“Security Agreement” shall
have the meaning set forth in the Preliminary Statements hereto.

 

“Senior Debt”
means the debt evidenced by the Secured Convertible Term Note, Secured
Non-Convertible Revolving Note, the Security Agreement and the Ancillary
Agreements (as defined in the Security Agreement), including without limitation
all principal, interest, fees, expenses, premiums and penalties incurred in
connection therewith.

 

“Senior Lender”
shall have the meaning assigned to such term in the first paragraph of this
Agreement.

 

“Senior Loan Documents”
means any and all documents, instruments or agreements now or hereafter
evidencing, securing or executed in connection with the Senior Debt including,
without limitation, the Security Agreement, the Secured Convertible Term Note,
the Secured Non-Convertible Revolving Note, the Senior Loan Security Documents
and any other instruments or agreements now or hereafter executed in connection
therewith, as any such documents may be restated, amended, supplemented or
otherwise modified from time to time.

 

“Senior Loan Security Documents”
means, singly and collectively any documents, instruments or agreements now or
hereafter securing, or intended to secure, the Senior Debt, including without
limitation, the Security Agreement, the Security Documents (as defined in the
Security Agreement), the Amended and Restated Stock Pledge Agreement, the Grant
of Security Interest in Patents and Trademarks, and any security agreement
entered into in connection with the execution of the Security Agreement. 

 

“Subordinated Debt”
means the amounts owing on the Subordinated Notes and any other loans,
obligations or indebtedness hereafter provided by any Subordinated Lender to
Borrower, however evidenced.

 

“Subordinated Notes” mean (i) that certain Promissory
Note issued by Borrower to Mrs. Simek, on September 4, 2001, in the
aggregate principal amount of $500,000, (ii) that certain promissory note
issued by Borrower to Mr. Simek on March 31, 2001, in the aggregate
principal amount of $400,000, (iii) that certain Promissory Note issued by
Borrower to Mr. Simek on November 2, 2001, in the aggregate principal
amount of $200,000, (iv) that certain Promissory Note issued by Borrower
to Mrs. Simek, on April 15, 2004, in the aggregate principal amount
of $500,000, (v) that certain Revolving Promissory Note in the aggregate
principal amount of $500,000 issued by Borrower to Mrs. Simek pursuant to
the Credit Agreement, each together with all extensions, modifications,
substitutions or renewals thereof and (vi) each other promissory note (if
any) issued by the Borrower to any Subordinated Lender.

 

 “Subordinated Lenders” shall have the meaning assigned to
such term in the first paragraph of this Agreement.

 

3

 

“Subordinated Loan Documents”
means the Subordinated Notes, the Subordinated Loan Security Documents, and all
other documents and instruments now or hereafter evidencing, securing or
executed in connection with the Subordinated Debt.

 

“Subordinated Loan Security
Documents” means, singly and collectively any documents,
instruments or agreements now or hereafter securing, or intended to secure, the
Subordinated Debt.

 

2.                                       Subordination.

 

2.1                                 Payments
on Subordinated Debt. Except as otherwise provided in this Agreement, each
of the Subordinated Lenders agrees that it will not ask for, demand, sue for,
or take or receive from Borrower or any successor or assign of Borrower,
including a receiver, trustee or debtor in possession, whether by setoff or in
any other manner, the whole or any part of the Subordinated Debt, unless
and until all of the Senior Debt shall have been Paid in Full. Notwithstanding
the foregoing sentence to the contrary, so long as (i) Senior Lender has
received all payments then due and owing under the Senior Loan Documents; and (ii) Senior
Lender has not delivered to the Subordinated Lenders written notice of the
occurrence of an event of default under the Senior Loan Documents, then,
Borrower may pay to the Subordinated Lenders, and the Subordinated Lenders
may accept and retain from Borrower payments of principal and interest on
the Subordinated Debt (the “Permitted
Payments”). If Permitted Payments are suspended, in the case of
an event of default under the Senior Loan Documents, such Permitted Payments may be
resumed only after such an event of default is cured or waived or after the
Senior Debt is Paid in Full.

 

2.2                                 Subordinated
Lenders’ Liens.

 

(a)                                  Notwithstanding
the date, manner or order of perfection or attachment of the security interests
and liens granted by Borrower to Senior Lender or any Subordinated Lender, and
notwithstanding the usual application of the priority provisions of the UCC or
any other applicable law or judicial decision, or whether Senior Lender or any
Subordinated Lender holds possession of all or any part of the Collateral,
Senior Lender shall have a first and prior continuing security interest in and
lien on the Collateral, and Subordinated Lender shall have a security interest
therein subordinate in priority to the lien and security interest held by
Senior Lender. Senior Lender and the Subordinated Lenders nevertheless, each
agree to make such filings and recordings in the public records to evidence the
priorities made herein as the other may reasonably request.

 

(b)                                 Each
Subordinated Lender agrees that such Subordinated Lender will not without
Senior Lender’s written permission and in concert with and at the direction of
Senior Lender:  (a) commence any
action or proceeding or otherwise take action against Borrower to recover all
or any portion of the Subordinated Debt, including any action to foreclose or
realize upon any Collateral securing the Subordinated Debt; or (b) commence,
or join with any creditor, other than Senior Lender, in commencing, directly or
indirectly, or cause Borrower to commence, or assist Borrower in commencing,
any proceeding under any bankruptcy, insolvency, reorganization, receivership
or similar laws for arrangement of debts of Borrower.

 

4

 

(c)                                  Except
as provided in Section 2.2(b) above and subject at all times to
Senior Lender’s prior and superior lien in the Collateral, in the event any
payment or distribution to any Subordinated Lender is made from any of the
Collateral upon or with respect to any of the Subordinated Debt, other than any
payments of principal and interest which such Subordinated Lender is permitted
to accept and retain hereunder, prior to the time all of the Senior Debt shall
have been fully, finally and indefeasibly paid, such Subordinated Lender shall
receive and hold the same in trust, as trustee, for the benefit of Senior
Lender and shall immediately deliver the same to Senior Lender in precisely the
form received for application against the Senior Debt, whether due or not
due, and, until so delivered, the same shall be held in trust by such
Subordinated Lender as the property of Senior Lender.

 

(d)                                 The
provisions of this Agreement are applicable regardless of whether the security
interest and/or lien of Senior Lender in the Collateral is not perfected or is
voidable for any reason.

 

2.3                                 Payments
Held in Trust. In the event that any Subordinated Lender shall receive any
payment, or security for payment, on the Subordinated Debt which such
Subordinated Lender is not entitled to receive or accept under the provisions
of this Section 2, such Subordinated Lender will hold any such amount or
security so received as trustee of an express trust for the sole and exclusive
benefit of Senior Lender, and such Subordinated Lender will forthwith assign
and turn over the same to Senior Lender, in the form received, properly
endorsed and assigned, to be applied to payment of or held by Senior Lender, as
security for the Senior Debt, as the case may be. In the event of any
failure by such Subordinated Lender to make any such endorsement or assignment,
Senior Lender is hereby irrevocably authorized, as attorney-in-fact for the
respective Subordinated Lender, to make the same. 

 

3.                                       Further
Limitations on Actions of Subordinated Lenders.

 

3.1                                 Other
than Permitted Subordinated Lender Actions (which Subordinated Lenders may take
at any time, but only to the extent permitted by this Agreement and the
Subordinated Loan Documents and applicable law), until Senior Lender has received
Payment in Full of all Senior Debt, no Subordinated Lender shall enforce or
exercise, or seek to enforce or exercise, any right of acceleration or demand,
or commence any other action or proceeding (including without limitation the
initiation of any legal proceedings) to collect all or any part of the
Subordinated Debt.

 

3.2                                 Senior
Lender hereby approves the execution and delivery of the Subordinated Loan
Documents as the same exist as of the date hereof and acknowledges that such
execution and delivery shall not constitute an event of default under the
Senior Loan Documents.

 

3.3                                 Subordinated
Lender hereby approves the execution and delivery of the Senior Loan Documents
as the same exist as of the date hereof and acknowledges that such execution
and delivery shall not constitute an event of default under the Subordinated
Loan Documents.

 

5

 

4.                                       Continuing
Subordination. 

 

The subordination effected by
this Agreement is a continuing subordination and may not be modified or
terminated by any Subordinated Lender or any other holder of any Subordinated
Debt until all of the Senior Debt shall have been Paid in Full. At any time and
from time to time, without the consent of or notice to the Subordinated Lenders
or any other holder of any Subordinated Debt, and without impairing or
affecting the obligations of any of them hereunder:

 

4.1                                 Senior
Lender may exercise or refrain from exercising any rights or remedies
against Borrower subject to each respective Subordinated Lender’s rights
pursuant to Section 2.2(b) of this Agreement;

 

4.2                                 The
Senior Loan Documents may be revised, amended or otherwise modified for
the purpose of adding or changing any provisions thereof or changing in any
manner the rights of Senior Lender and/or Borrower;

 

4.3                                 The
terms of this Agreement shall continue in full force and effect in the event
that all or any portion of the Senior Debt is refunded, refinanced, or extended
and the term “Senior Debt” shall include any Senior Debt which is refunded,
refinanced or extended on one or more occasions, and in any such case, the
terms “Security Agreement” and “Senior Loan Documents” and the like as used
herein shall refer to the agreements and instruments executed in connection
with any such refunding, refinancing or extension;

 

4.4                                 The
maturity of the Senior Debt may be accelerated after the occurrence of an
event of default and any Collateral or any other rights of Senior Lender may be
exchanged, sold, surrendered, released or otherwise dealt with in any lawful
manner; and

 

4.5                                 Any
person liable in any manner for payment of all or any part of the Senior
Debt may be released.

 

Notwithstanding the occurrence of any of the foregoing, the provisions
of this Agreement shall remain in full force and effect.

 

5.                                       No
Modification of Subordinated Debt. 

 

Until the Senior Debt shall
have been Paid in Full, neither Borrower nor any Subordinated Lender shall
amend, modify or terminate the Subordinated Notes, or any other Subordinated
Loan Document (as the same exist on the date hereof) without the prior written
consent of Senior Lender, which consent shall not be unreasonably withheld; and
any such purported amendment, modification or termination without such consent
shall be ineffective; this prohibition includes, but not by way of limitation,
any acceleration of the amortization schedule of the Subordinated Debt and
any increase in the rate of interest that accrues thereon. Notwithstanding the
foregoing, any Subordinated Lender may agree to amend their respective Subordinated
Loan Documents without Senior Lender’s consent to (i) reduce the interest
rate, (ii) extend the maturity of any principal amount or interest due
thereunder, or (iii) waive or otherwise delete any provision thereof with
respect to such Subordinated Lender’s rights thereunder, provided  that
a copy of any such amendment shall be provided to Senior Lender
contemporaneously with the execution thereof. Any reference to any renewal,
extension,

 

6

 

replacement or other modification of any of
the Subordinated Loan Documents that may be contained in the definition of
any of the Subordinated Loan Documents set forth in this Agreement shall not be
deemed to waive the consent required by this Section 5 or otherwise limit
in any way Senior Lender’s rights under this Section 5.

 

6.                                       Senior
Debt and Subordinated Debt Default and Default Notices.

 

6.1                                 If
an event of default shall occur under or within the meaning of any of the
Senior Loan Documents, a default and event of default shall occur under the
Subordinated Lender Documents. The Senior Lender shall use its reasonable best
effort to provide to the Subordinated Lender any notice of an “event of default”
under the Senior Loan Documents which Senior Lender sends to Borrower at the
address set forth in Section 13 below.

 

6.2                                 If
a default or event of default shall occur under or within the meaning of any of
the Subordinated Lender Documents, an event of default shall occur under the
Senior Loan Documents. Any notice of “default” or “event of default” under the
Subordinated Loan Documents which any respective Subordinated Lender sends to
Borrower shall also be simultaneously sent to Senior Lender (and its counsel)
at the addresses set forth in Section 13 below.

 

7.                                       Bankruptcy
Financing Issues. 

 

This Agreement shall continue
in full force and effect after the filing of any petition for relief by or
against Borrower under the United States Bankruptcy Code (the “Code”) and all converted or succeeding
cases in respect thereof (all references herein to Borrower being deemed to
apply to Borrower as debtor-in-possession and to a trustee for Borrower), and
shall apply with full force and effect with respect to all Collateral acquired
by Borrower, and to all Senior Debt and Subordinated Debt incurred by Borrower,
subsequent to such filing. If Borrower shall become subject to a proceeding
under the Code, and if the Senior Lender shall desire to permit the use of cash
collateral by Borrower or to provide post-petition financing from the Senior
Lender to Borrower, each Subordinated Lender agrees as follows:  (a) no notice need be provided to any
respective Subordinated Lender for such use of cash collateral or such
post-petition financing; and (b) no objection will be raised by the Subordinated
Lenders to any such use of cash collateral or such post-petition financing from
the Senior Lender. No objection will be raised by the Subordinated Lenders to
the Senior Lender’s motion for relief from automatic stay in any such
proceeding to foreclose on, sell or otherwise realize upon the Collateral. In
case of any assignment by Borrower for the benefit of creditors, and in case of
the appointment of any receiver for Borrower or Borrower’s business or assets,
and in case of any dissolution or other winding up of the affairs of Borrower,
or of Borrower’s business, and in all such cases respectively, the officer of
Borrower and any assignee, trustee in bankruptcy, receiver, and other person or
persons in charge, are hereby directed to pay to Senior Lender the full amount
of Senior Lender’s claims against Borrower before making any payment to any
Subordinated Lender, and so far as may be necessary for that purpose, the
Subordinated Lenders hereby transfer and assign to Senior Lender all their
rights to any payment or distribution which might otherwise be coming to it. Senior
Lender is hereby irrevocably constituted and appointed the attorney-in-fact of
the Subordinated Lenders to file any and all proofs of claim and any other
documents and to take all other action, either in the name of Senior Lender or
any Subordinated

 

7

 

Lender, which in the opinion of Senior Lender
is necessary or desirable to enable Senior Lender to obtain all such payments.

 

8.                                       Transfers:
Binding Effect.

 

8.1                                 Subject
to Section 8.2 below, Senior Lender shall have the right to sell, assign,
transfer or otherwise dispose of any of the Senior Debt, or any interest
therein, from time to time, without the prior consent of any other party hereto.

 

8.2                                 This
Agreement shall extend to and bind the respective successors, assigns, and
transferees of the parties hereto and shall inure to the benefit of any such
successor, assignee or transferee but shall not otherwise create any rights or
benefits for any third party.

 

9.                                       Headings.
The headings in this Agreement are for convenience of reference only and shall
not after or otherwise affect the meaning hereof.

 

10.                                 Conflicts
with Senior or Subordinated Loan Documents. Notwithstanding any term or
provision of the Senior Loan Documents or the Subordinated Loan Documents or
any other agreement to which Borrower, Senior Lender or the Subordinated
Lenders are a party or by which any of them is bound, in the event that any
term or provision of any such instrument or agreement conflicts or is
inconsistent with the terms and provisions of this Agreement, until such time
as the Senior Debt shall have been Paid in Full, the terms and provisions of
this Agreement shall control.

 

11.                                 Governing
Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
SUCH STATE’S PRINCIPLES OF CONFLICT OF LAWS.

 

12.                                 Waivers:
Amendments, Etc. Neither this Agreement nor any of the terms hereof may be
amended, waived, discharged or terminated unless such amendment, waiver,
discharge or termination is in writing signed by each of Senior Lender and each
Subordinated Lender.

 

13.                                 Notice.
Any notices or other communications required or permitted to be given hereunder
must be given in writing and (i) personally delivered or (ii) mailed
by prepaid certified or registered mail or by Federal Express or similar
courier service, to the party to whom such notice of communication is directed,
to the address of such party as follows:

 

(a)                                  Mrs. Simek:

 

Mrs. Frances L. Simek

860 Vega Lane

Medford, WI  54451

 

with a copy to:

 

Robert W. Zimmerman, Esq.

Mallery & Zimmerman, S.C.

 

8

 

101 Grand Avenue

PO Box 479

Wausau, WI

 

(b)                                 Mr. Simek:

 

Mr. Joseph Simek

860 Vega Lane

Medford, WI  54451

 

with a copy to:

 

Robert W. Zimmerman, Esq.

Mallery & Zimmerman, S.C.

101 Grand Avenue

PO Box 479

Wausau, WI

 

(c)                                  Senior
Lender:

 

Laurus Master Fund, Ltd.

c/o Laurus Capital Management, LLC

825 Third Avenue, 14th Floor

New York, NY 
10022

Facsimile: 
(212) 541-5800

 

with a copy to:

 

John E. Tucker, Esq.

c/o Laurus Capital Management, LLC

825 Third Avenue, 14th Floor

New York, NY 
10022

Facsimile: 
(212) 541-4434

 

(d)                                 Borrower:

 

Time America, Inc.

51 West Third Street

Suite 310

Tempe, Arizona  85281

Telephone:  480-967-5800

Attn:   Thomas S. Bednarik

President and Chief Executive Officer

 

with copies to:

 

9

 

Squire, Sanders & Dempsey L.L.P.

Two Renaissance Square

40 North Central Avenue, Suite 2700

Phoenix, Arizona  85004-4498

Telephone:  602-528-4134

Facsimile: 
602-253-8129

Attn:   Gregory R. Hall, Esq.

 

Any such notice or other communication shall be deemed to have been
given (whether actually received or not) on the day it is mailed or personally
delivered as aforesaid. Any party may change its address for purposes of
this Agreement by giving notice of such change to the other parties pursuant to
this Section 13.

 

14.                                 Multiple
Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
agreement, and any of the parties hereto may execute this Agreement by
signing any such counterpart.

 

15.                                 Further
Assurances. Each of the parties hereto hereby agree to promptly execute and
deliver to the other parties hereto any and all such further instruments and
documents and to take such further action as such other parties may at any
time reasonably request in order to fully effect the purposes of this
Agreement.

 

16.                                 Reliance
by Senior Lender; Waiver of Notices; No Representations by Senior Lender;
Management of Credit Facilities by Senior Lender. All of the Senior Debt
shall be deemed to have been made or incurred in reliance upon this Agreement. Each
Subordinated Lender expressly waives all notice of the acceptance by Senior
Lender of the provisions of this Agreement and all other notices not
specifically required pursuant to the terms of this Agreement. Each
Subordinated Lender agrees that Senior Lender has not made any representation
or warranty with respect to the due execution, legality, validity, completeness
or enforceability of any of the Senior Loan Documents, the perfection or
priority or any security interest or lien securing any or all of the Senior
Debt or the collectibility of any of the Senior Debt. Senior Lender shall be
entitled to manage and supervise its credit facilities with Borrower in
accordance with applicable law and its usual business practices (subject to the
provisions of this Agreement), modified from time to time as it deems
appropriate under the circumstances, and Senior Lender shall have no liability
to any Subordinated Lender for any loss, claim or damage allegedly suffered by
any Subordinated Lender in any proceeding by Senior Lender to foreclose or
otherwise enforce any of its security interests in and/or liens on any of the
Collateral.

 

17.                                 Financial
Condition of Borrower. Each Subordinated Lender hereby assumes
responsibility for keeping itself informed of the financial condition of
Borrower and any and all guarantors of the Subordinated Debt and of all other
circumstances bearing upon the risk of nonpayment of the Subordinated Debt that
diligent inquiry would reveal and each Subordinated Lender hereby agrees that
Senior Lender shall have no duty to advise any Subordinated Lender of any
information regarding such condition or any such circumstances.

 

10

 

18.                                 Miscellaneous.

 

18.1                           Every
word herein importing the singular number shall also be construed to extend to
and include the plural number also and vice versa.

 

18.2                           In the
event that any term or provision of this Agreement or the application thereof
to any person or circumstance shall, to any extent, be held invalid or
unenforceable, the remainder of this Agreement or the application of such term
or provision to persons or circumstances than those to which it is held invalid
or unenforceable, shall be valid and enforceable to the fullest extent permitted
by law.

 

18.3                           This
Agreement and all covenants, agreements, representations and warranties made
herein shall survive and continue in full force and effect until such time as
all of the Senior Debt has been indefeasibly Paid in Full.

 

18.4                           The
parties acknowledge that each party and its respective counsel have reviewed
and revised this Agreement and agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
apply in the interpretation of this Agreement.

 

18.5                           Neither
Senior Lender nor any Subordinated Lender shall be deemed to have waived any of
their respective rights or remedies under this Agreement unless such waiver is
in writing and signed by the party to be charged. No delay or omission on the part of
any party in exercising any such right or remedy shall operate as a waiver of
any such right or remedy or any other right or remedy. A waiver on any one
occasion shall not be construed as bar to or a waiver of the same right or
remedy on any future occasion. Without limiting the generality of the
foregoing, Senior Lender’s acquiescence in the payment of any sum to any
Subordinated Lender in contravention of the terms of this Agreement shall not
constitute a waiver of the right of Senior Lender to require prompt performance
of any and all of the covenants contained in this Agreement.

 

18.6                           Time is
of the essence with respect to the payment, performance and observance of each
of the covenants of each of the parties to this Agreement.

 

18.7                           Each party
hereto acknowledges that to the extent that no adequate remedy at law exists
for breach of its obligations under this Agreement in the event any party fails
to comply with its obligations hereunder, the other party shall have the right
to obtain specific performance of the obligations of such defaulting party,
injunctive relief or such other equitable relief as may be available.

 

18.8                           The
failure of any party to perform any of the terms, covenants or conditions
set forth in this Agreement shall not alter, or be deemed to alter, in any way
the subordination provisions hereof or the relative priorities established
hereby.

 

19.                                 NO
REFINANCING COMMITMENT. Borrower and Subordinated Lenders each hereby
acknowledge and agree that notwithstanding any references herein to the
refunding, refinancing or extension of the Senior Debt, the Senior Lender has
not impliedly or expressly committed to provide any such refunding, refinancing
or extension nor have any terms of any

 

11

 

such refunding, refinancing or extension been
in any way agreed to. Borrower and Senior Lender hereby acknowledge and agree
that notwithstanding any references herein to the refinancing or extension of
the Subordinated Debt, no Subordinated Lender has impliedly or expressly
committed to provide such refinancing or extension, nor has any terms of any
such refinancing or extension been in any way agreed to.

 

20.                                 FINAL
AGREEMENT. THIS WRITTEN SUBORDINATION AGREEMENT, THE SENIOR LOAN DOCUMENTS
AND THE SUBORDINATED LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES. 

 

21.                                 WAIVER
OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED UPON THIS AGREEMENT OR THE SENIOR LOAN DOCUMENTS OR ARISING
OUT OF, UNDER, OR IN CONNECTION WITH THE TRANSACTIONS OF WHICH THIS AGREEMENT
IS A PART, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
ORAL OR WRITTEN). OR ACTIONS BY ANY PARTY. THIS MUTUAL WAIVER IS GIVEN AS A
MATERIAL INDUCEMENT FOR THE PARTIES TO EXECUTE THIS AGREEMENT.

 

[Signatures on following page]

 

12

 

IN WITNESS WHEREOF, the parties hereto by their duly authorized
representatives have executed this Agreement as an instrument under seal as of
the date first above written.

 

	
   

  	
  SUBORDINATED LENDERS:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FRANCES L. SIMEK

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JOSEPH L. SIMEK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SENIOR LENDER:

  
	
   

  	
   

  
	
   

  	
  LAURUS MASTER FUND, LTD., a Cayman Islands 

  company,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  TIME AMERICA, INC., a Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TIME AMERICA, INC., an Arizona corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NETEDGE DEVICES, LLC, an Arizona limited

  liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

13

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