Exhibit 10.2


 


SECURITY AGREEMENT


 


SECURITY AGREEMENT (this “Agreement”), dated
as of January 28, 2008 by and among Aspyra, Inc., a California
corporation (“Company”), and the secured parties signatory hereto and their
respective endorsees, transferees and assigns (collectively, the “Secured Party”).


 


W
I T N E S S E T H:


 


WHEREAS,
pursuant to a Loan Purchase Agreement, dated the date hereof, between Company
and the Secured Party (the “Purchase Agreement”), Company has agreed to issue
to the Secured Party and the Secured Party has agreed to purchase from Company
certain of Company’s Secured Promissory Notes, due July 28, 2008 (the “Notes”);
and


 


WHEREAS,
in order to induce the Secured Party to purchase the Notes, Company has agreed
to execute and deliver to the Secured Party this Agreement for the benefit of
the Secured Party and to grant to it a security interest in certain property of
the Company to secure the prompt payment, performance and discharge in full of
all of Company’s obligations under the Notes, subject to Western Commercial
Bank’s security interest in the Collateral, as defined below.


 


NOW, THEREFORE,
in consideration of the agreements herein contained and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:


 


1.             Certain Definitions.  As used in this Agreement, the following
terms shall have the meanings set forth in this Section 1.  Terms used but not otherwise defined in this
Agreement that are defined in Article 9 of the UCC (such as “general
intangibles” and “proceeds”) shall have the respective meanings given such
terms in Article 9 of the UCC.


 


(a)           “Collateral” means the collateral in
which the Secured Party is granted a security interest by this Agreement and
which shall include the following, whether presently owned or existing or
hereafter acquired or coming into existence, and all additions and accessions
thereto and all substitutions and replacements thereof, and all proceeds,
products and accounts thereof, including, without limitation, all proceeds from
the sale or transfer of the Collateral and of insurance covering the same and
of any tort claims in connection therewith:


 


(i)            All Goods of the Company,
including, without limitations, all machinery, equipment, computers, motor
vehicles, trucks, tanks, boats, ships, appliances, furniture, special and
general tools, fixtures, test and quality control devices and other equipment
of every kind and nature and wherever situated, together with all documents of
title and documents representing the same, all additions and accessions
thereto, replacements therefor, all parts therefor, and all substitutes for any
of the foregoing and all other items used and useful in connection with the
Company’s businesses and all improvements thereto (collectively, the “Equipment”); and


 


(ii)           All Inventory of the Company; and


 

















 


(iii)          All of the Company’s contract rights and general
intangibles, including, without limitation, all partnership interests, stock or
other securities, licenses, distribution and other agreements, computer
software development rights, leases, franchises, customer lists, quality
control procedures, grants and rights, goodwill, trademarks, service marks,
trade styles, trade names, patents, patent applications, copyrights, deposit
accounts, and income tax refunds (collectively, the “General Intangibles”); and


 


(iv)          All Receivables of the Company including all insurance
proceeds, and rights to refunds or indemnification whatsoever owing, together
with all instruments, all documents of title representing any of the foregoing,
all rights in any merchandising, goods, equipment, motor vehicles and trucks
which any of the same may represent, and all right, title, security and
guaranties with respect to each Receivable, including any right of stoppage in
transit;


 


(v)           All of the Company’s documents, instruments and chattel
paper, files, records, books of account, business papers, computer programs and
the products and proceeds of all of the foregoing Collateral set forth in
clauses (i)-(iv) above;


 


(vi)          All of the capital stock of any corporation owned by the
Company.


 


(b)           “Company” shall mean, collectively,
Company and the wholly owned subsidiary of Company.


 


(c)           “Obligations” means all of the Company’s
obligations under this Agreement and the Notes, in each case, whether now or
hereafter existing, voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with
others, and whether or not from time to time decreased or extinguished and
later decreased, created or incurred, and all or any portion of such
obligations or liabilities that are paid, to the extent all or any part of such
payment is avoided or recovered directly or indirectly from the Secured Party
as a preference, fraudulent transfer or otherwise as such obligations may be
amended, supplemented, converted, extended or modified from time to time.


 


(d)           “UCC” means the Uniform Commercial Code,
as currently in effect in the State of California.


 


2.             Grant of Security Interest.  As an inducement for the Secured Party to
purchase the Notes and to secure the complete and timely payment, performance
and discharge in full, as the case may be, of all of the Obligations, the
Company hereby, unconditionally and irrevocably, pledges, grants and
hypothecates to the Secured Party, a continuing security interest in, a right
to possession and disposition of and a right of set-off against, in each case
to the fullest extent permitted by law, all of the Company’s right, title and
interest of whatsoever kind and nature in and to the Collateral, subject to
Western Commercial Bank’s security interest in the Collateral  (the “Security
Interest”).


 


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3.             Representations, Warranties,
Covenants and Agreements of the Company.  The Company
represents and warrants to, and covenants and agrees with, the Secured Party as
follows:


 


(a)           The Company has the requisite
corporate power and authority to enter into this Agreement and otherwise to
carry out its obligations thereunder. 
The execution, delivery and performance by the Company of this Agreement
and the filings contemplated therein have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company.  This Agreement constitutes a
legal, valid and binding obligation of the Company enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor’s rights generally.


 


(b)           This Agreement creates in favor
of the Secured Party a valid security interest in the Collateral securing the
payment and performance of the Obligations and, upon making the filings
described in the immediately following sentence, a security interest in such
Collateral, subject to a senior security interest held by Western Commercial
Bank.  Except for the filing of financing
statements on Form UCC-1 under the UCC with the jurisdictions indicated on
Schedule I, attached hereto, no authorization or approval of or filing
with or notice to any governmental authority or regulatory body is required
either: (i) for the grant by the Debtor, or the effectiveness of, the
Security Interest granted hereby or for the execution, delivery and performance
of this Agreement by the Debtor; or (ii) for the perfection of or exercise
by the Secured Party of its rights and remedies hereunder.


 


(c)           The Company is the sole owner of
the Collateral (except for non-exclusive licenses granted by the Company in the
ordinary course of business), free and clear of any liens, security interests,
encumbrances, rights or claims, and is fully authorized to grant the Security
Interest in and to pledge the Collateral. 
There is not on file in any governmental or regulatory authority, agency
or recording office an effective financing statement, security agreement,
license or transfer or any notice of any of the foregoing (other than those
that have been filed in favor of the Secured Party pursuant to this Agreement)
covering or affecting any of the Collateral. 
So long as this Agreement shall be in effect, the Company shall not
execute and shall not knowingly permit to be on file in any such office or
agency any such financing statement or other document or instrument (except to
the extent filed or recorded in favor of the Secured Party pursuant to the
terms of this Agreement).


 


(d)           No part of the Collateral has
been judged invalid or unenforceable.  No
written claim has been received that any Collateral or the Company’s use of any
Collateral violates the rights of any third party. There has been no adverse
decision to the Company’s claim of ownership rights in or exclusive rights to
use the Collateral in any jurisdiction or to the Company’s right to keep and
maintain such Collateral in full force and effect, and there is no proceeding
involving said rights pending or, to the best knowledge of the Company,
threatened before any court, judicial body, administrative or regulatory
agency, arbitrator or other governmental authority.


 


(e)           This Agreement creates in favor
of the Secured Party a valid security interest in the Collateral securing the
payment and performance of the Obligations.


 


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(f)            On the date of execution of this
Agreement, the Company will deliver to the Secured Party one or more executed
UCC financing statements on Form-1 with respect to the Security Interest,
pursuant to the jurisdictions attached hereto.


 


(g)           The execution, delivery and
performance of this Agreement does not conflict with or cause a breach or
default, or an event that with or without the passage of time or notice, shall
constitute a breach or default, under any agreement to which the Company is a party
or by which the Company is bound.  No
consent (including, without limitation, from stock holders or creditors of the
Company) is required for the Company to enter into and perform its obligations
hereunder.


 


(h)           The Company hereby agrees to
defend the Security Interest against any and all persons, subject to any
currently existing senior security interests. 
The Company shall safeguard and protect all Collateral for the account
of the Secured Party.  At the request of
the Secured Party, the Company will sign and deliver to the Secured Party at
any time or from time to time one or more financing statements pursuant to the
UCC (or any other applicable statute) in form reasonably satisfactory to the
Secured Party and will pay the cost of filing the same in all public offices
wherever filing is, or is deemed by the Secured Party to be, necessary or
desirable to effect the rights and obligations provided for herein. Without
limiting the generality of the foregoing, the Company shall pay all fees, taxes
and other amounts necessary to maintain the Collateral and the Security
Interest hereunder, and the Company shall obtain and furnish to the Secured
Party from time to time, upon demand, such releases and/or subordinations of
claims and liens which may be required to maintain the priority of the Security
Interest hereunder.


 


(i)            The Company will not transfer,
pledge, hypothecate, encumber, license (except for non-exclusive licenses
granted by the Company in the ordinary course of business), sell or otherwise
dispose of any of the Collateral without the prior written consent of the
Secured Party.


 


(j)            The Company shall keep and
preserve its Equipment, Inventory and other tangible Collateral in good
condition, repair and order and shall not operate or locate any such Collateral
(or cause to be operated or located) in any area excluded from insurance
coverage.


 


(k)           The Company shall, within ten (10) days
of obtaining knowledge thereof, advise the Secured Party promptly, in
sufficient detail, of any substantial change in the Collateral, and of the
occurrence of any event which would have a material adverse effect on the value
of the Collateral or on the Secured Party’s security interest therein.


 


(l)            The Company shall promptly
execute and deliver to the Secured Party such further deeds, mortgages,
assignments, security agreements, financing statements or other instruments,
documents, certificates and assurances and take such further action as the
Secured Party may from time to time request and may in its sole discretion deem
necessary to perfect, protect or enforce its security interest in the
Collateral including, without limitation, the execution and delivery of a
separate security agreement with respect to the Company’s intellectual property
(“Intellectual Property Security Agreement”) in which the Secured Party has
been granted a security interest hereunder, substantially in a form acceptable
to the Secured 


 


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Party, which Intellectual Property Security
Agreement, other than as stated therein, shall be subject to all of the terms
and conditions hereof.


 


(m)          The Company shall permit the
Secured Party and its representatives and agents to inspect the Collateral at
any time, and to make copies of records pertaining to the Collateral as may be
requested by the Secured Party from time to time.


 


(n)           The Company will take all steps
reasonably necessary to diligently pursue and seek to preserve, enforce and
collect any rights, claims, causes of action and accounts receivable in respect
of the Collateral.


 


(o)           The Company shall promptly
notify the Secured Party in sufficient detail upon becoming aware of any
attachment, garnishment, execution or other legal process levied against any
Collateral and of any other information received by the Company that may
materially affect the value of the Collateral, the Security Interest or the
rights and remedies of the Secured Party hereunder.


 


(p)           All information heretofore,
herein or hereafter supplied to the Secured Party by or on behalf of the Company
with respect to the Collateral is accurate and complete in all material
respects as of the date furnished.


 


4.             Defaults.  The following events shall be “Events of
Default”:


 


(a)           The occurrence of an Event of Default (as defined in the
Notes) under the Notes;


 


(b)           Any representation or warranty of the Company in this
Agreement shall prove to have been incorrect in any material respect when made;


 


(c)           The failure by the Company to observe or perform any of its
obligations hereunder for ten (10) days after receipt by the Company of
notice of such failure from the Secured Party; and


 


5.             Rights and Remedies Upon Default.  Upon occurrence of any Event of Default and
at any time thereafter, the Secured Party shall have the right to exercise all
of the remedies conferred hereunder and under the Notes, and the Secured Party
shall have all the rights and remedies of a secured party under the UCC and/or
any other applicable law (including the Uniform Commercial Code of any
jurisdiction in which any Collateral is then located).  Without limitation, the Secured Party shall
have the following rights and powers:


 


(a)           Subject to any senior security interests as described
herein, the Secured Party shall have the right to take possession of the
Collateral and, for that purpose, enter, with the aid and assistance of any
person, any premises where the Collateral, or any part thereof, is or may be
placed and remove the same, and the Company shall assemble the Collateral and
make it available to the Secured Party at places which the Secured Party shall
reasonably select, whether at the Company’s premises or elsewhere, and make
available to the Secured Party, without rent, all of the Company’s respective
premises and facilities for the purpose of the Secured Party taking possession
of, removing or putting the Collateral in saleable or disposable form.


 


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(b)           Subject to any senior security interests as described
herein, the Secured Party shall have the right to operate the business of the
Company using the Collateral and shall have the right to assign, sell, lease or
otherwise dispose of and deliver all or any part of the Collateral, at public
or private sale or otherwise, either with or without special conditions or
stipulations, for cash or on credit or for future delivery, in such parcel or
parcels and at such time or times and at such place or places, and upon such
terms and conditions as the Secured Party may deem commercially reasonable, all
without (except as shall be required by applicable statute and cannot be
waived) advertisement or demand upon or notice to the Company or right of
redemption of the Company, which are hereby expressly waived.  Upon each such sale, lease, assignment or
other transfer of Collateral, the Secured Party may, unless prohibited by
applicable law which cannot be waived, purchase all or any part of the
Collateral being sold, free from and discharged of all trusts, claims, right of
redemption and equities of the Company, which are hereby waived and released.


 


6.             Applications of Proceeds.  The proceeds of any such sale, lease or other
disposition of the Collateral hereunder shall be applied first, to the expenses
of retaking, holding, storing, processing and preparing for sale, selling, and
the like (including, without limitation, any taxes, fees and other costs
incurred in connection therewith) of the Collateral, to the reasonable
attorneys’ fees and expenses incurred by the Secured Party in enforcing its
rights hereunder and in connection with collecting, storing and disposing of
the Collateral, and then to satisfaction of the Obligations, and to the payment
of any other amounts required by applicable law, after which the Secured Party
shall pay to the Company any surplus proceeds.


 


7.             Costs and Expenses.           The Company agrees to pay all
out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements,
continuation statements, partial releases and/or termination statements related
thereto or any expenses of any searches reasonably required by the Secured
Party.  The Company shall also pay all
other claims and charges which in the reasonable opinion of the Secured Party
might prejudice, imperil or otherwise affect the Collateral or the Security
Interest therein.


 


8.             Responsibility for Collateral.  The Company assumes all liabilities and
responsibility in connection with all Collateral, and the obligations of the
Company hereunder or under the Notes shall in no way be affected or diminished
by reason of the loss, destruction, damage or theft of any of the Collateral or
its unavailability for any reason.


 


9.             Term of Agreement.  This Agreement and the Security Interest
shall terminate on the date on which all payments under the Notes have been
made in full and all other Obligations have been paid or discharged.  Upon such termination, the Secured Party, at
the request and at the expense of the Company, will join in executing any
termination statement with respect to any financing statement executed and
filed pursuant to this Agreement.


 


10.           Power of Attorney; Further
Assurances.


 


(a)           Subject to any senior security interests as described
herein, the Company hereby irrevocably appoints the Secured Party as the
Company’s attorney-in-fact, with full authority in the place and stead of the
Company and in the name of the Company, from time to 


 


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time in the Secured Party’s discretion, to
take any action and to execute any instrument which the Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including
the filing, in its sole discretion, of one or more financing or continuation
statements and amendments thereto, relative to any of the Collateral without
the signature of the Company where permitted by law.


 


(b)           The Company shall execute such additional agreements and
documents necessary or advisable to accomplish the purposes of this Agreement,
including without limitation pledge agreements relating to the capital stock
included as Collateral pursuant to Section 1(a)(vi) above.


 


11.           Notices.  All notices, requests, demands and other
communications hereunder shall be in writing, with copies to all the other
parties hereto, and shall be deemed to have been duly given when (i) if
delivered by hand, upon receipt, (ii) if sent by facsimile, upon receipt
of proof of sending thereof, (iii) if sent by nationally recognized
overnight delivery service (receipt requested), the next business day or (iv) if
mailed by first-class registered or certified mail, return receipt requested,
postage prepaid, four days after posting in the U.S. mails, in each case if
delivered to the following addresses:


 


	
  If to the Company:

  	
  Aspyra, Inc.

  
	
   

  	
  26115-A Mureau Road

  
	
   

  	
  Calabasas, CA 91302

  
	
   

  	
  Attn: Anahita Villafane, Chief Financial Officer, Secretary

  
	
   

  	
  Tel:

  
	
   

  	
  Fax:

  
	
   

  	
   

  
	
   

  	
  with a copy (which shall not
  constitute notice) to:

  
	
   

  	
   

  
	
   

  	
  Sichenzia Ross Friedman Ference LLP

  
	
   

  	
  61 Broadway, 32nd Floor

  
	
   

  	
  New York, New York 10006

  
	
   

  	
  Attn:Darrin Ocasio, Esq.

  
	
   

  	
  Tel:

  	
  212-930-9700

  
	
   

  	
  Fax:

  	
  212-930-9725

  
	
   

  	
   

  
	
   

  	
   

  
	
  If to the Secured Party:

  	
   

  
	
   

  	
   

  
	
   

  	
  Attention:

  
	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
  With a copy to:

  	
   

  
	
   

  	
   

  
	
   

  	
  Attention:

  
	
   

  	
  Facsimile:

  



 


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12.           Other Security.  To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Secured Party shall have the right, in its sole discretion, to pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured Party’s rights and
remedies hereunder.


 


13.           Miscellaneous.


 


(a)           No course of dealing between the Company and the Secured
Party, nor any failure to exercise, nor any delay in exercising, on the part of
the Secured Party, any right, power or privilege hereunder or under the Notes
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.


 


(b)           All of the rights and remedies of the Secured Party with
respect to the Collateral, whether established hereby or by the Notes or by any
other agreements, instruments or documents or by law shall be cumulative and
may be exercised singly or concurrently.


 


(c)           This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and is intended to supersede
all prior negotiations, understandings and agreements with respect
thereto.  Except as specifically set
forth in this Agreement, no provision of this Agreement may be modified or
amended except by a written agreement specifically referring to this Agreement
and signed by the parties hereto.


 


(d)           In the event that any provision of this Agreement is held to
be invalid, prohibited or unenforceable in any jurisdiction for any reason,
unless such provision is narrowed by judicial construction, this Agreement
shall, as to such jurisdiction, be construed as if such invalid, prohibited or
unenforceable provision had been more narrowly drawn so as not to be invalid,
prohibited or unenforceable.  If,
notwithstanding the foregoing, any provision of this Agreement is held to be
invalid, prohibited or unenforceable in any jurisdiction, such provision, as to
such jurisdiction, shall be ineffective to the extent of such invalidity,
prohibition or unenforceability without invalidating the remaining portion of
such provision or the other provisions of this Agreement and without affecting
the validity or enforceability of such provision or the other provisions of
this Agreement in any other jurisdiction.


 


(e)           No waiver of any breach or default or any right under this
Agreement shall be considered valid unless in writing and signed by the party
giving such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default or right, whether of the same or similar nature or
otherwise.


 


(f)            This Agreement shall be binding
upon and inure to the benefit of each party hereto and its successors and
assigns.


 


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(g)           Each party shall take such further action and execute and
deliver such further documents as may be necessary or appropriate in order to
carry out the provisions and purposes of this Agreement.


 


(h)           This Agreement shall be governed by
and construed under the laws of the State of New York applicable to contracts
made and to be performed entirely within the State of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City and County of New York for the adjudication
of any dispute hereunder or any other Transaction Document or in connection
herewith or therewith or with any transaction contemplated hereby or thereby,
and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof 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.


 


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


 


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IN WITNESS WHEREOF, the parties hereto have
caused this Security Agreement to be duly executed on the day and year first
above written.


 


	
   

  	
  ASPYRA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
       /s/ James R.
  Helms

  	
   

  
	
   

  	
   

  	
  James R Helms

  
	
   

  	
   

  	
  Chief Operating Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SECURED PARTIES:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TITAB, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
       /s/ Bradford
  G. Peters

  	
   

  
	
   

  	
   

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  C. IAN SYM-SMITH

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ C. I. Sym-Smith

  	
   

  
					



 

















 


Schedule I


 


 


Jurisdictions