Exhibit 10.1


 


NOTE
PURCHASE AGREEMENT


 


NOTE PURCHASE AGREEMENT (this “Agreement”),
dated as of January 28, 2008, by and between ASPYRA, INC., a California
corporation (the “Company”), and each of the
entities whose names appear on the signature pages hereof.  Such entities are each referred to herein as
an “Investor” and, collectively, as the “Investors”.


 


A.            The Company wishes to sell to each Investor, and
each Investor wishes to purchase, upon the terms and subject to the
conditions set forth in this Agreement, a Secured Promissory Note, which shall
accrue interest at the rate of the London Interbank Offered Rate (“LIBOR”) plus
2.5% per annum, adjusted per rata, in the form attached hereto as Exhibit A (a “Note” and, collectively with the
other Notes issued hereunder, the “Notes”).


 


B.            The Company’s obligations under the Notes,
including without limitation its obligation to make payments of principal
thereof and interest thereon, are secured
by the assets of the Company, subject to a senior security interest held by
Western Commercial Bank, pursuant to the terms of a Security Agreement in the
form attached hereto as Exhibit B
(the “Security Agreement”).


 


In consideration of the mutual promises made
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the
Company and each Investor hereby agree as follows:


 


1.             PURCHASE AND SALE OF NOTES.


 


1.1           Closing.


 


Upon the terms and subject to the satisfaction or waiver of the
conditions set forth herein, the Company agrees to sell and each Investor
agrees to purchase a Note with a principal amount equal to the amount set forth
below such Investor’s name on the signature pages hereof.  The date on which the closing of such
purchase and sale occurs (the “Closing”) is
hereinafter referred to as the “Closing Date”.
The Closing will be deemed to occur at the offices of Sichenzia Ross Friedman
Ference LLP, 61 Broadway, 32nd Fl., New York, NY 10006, or such
other place as the parties mutually agree upon, when (A) this Agreement
and the other Transaction Documents (as defined below) have been executed and
delivered by the Company and each Investor, (B) each of the conditions to
the Closing described in this Agreement has been satisfied or waived as
specified therein and (C) payment of each Investor’s Purchase Price (as
defined below) payable with respect to the Note being purchased by such
Investor at the Closing has been made by wire transfer of immediately available
funds.  At the Closing, the Company shall
deliver to each Investor a duly executed instrument representing the Note
purchased by such Investor at the Closing.


 


1.2           Certain Definitions.  When
used herein, the following terms shall have the respective meanings indicated:


 

















 


“Affiliate”
means, as to any Person (the “subject Person”),
any other Person (a) that directly or indirectly through one or more
intermediaries controls or is controlled by, or is under direct or indirect
common control with, the subject Person, (b) that directly or indirectly
beneficially owns or holds ten percent (10%) or more of any class of voting
equity of the subject Person, or (c) ten percent (10%) or more of the
voting equity of which is directly or indirectly beneficially owned or held by
the subject Person. For the purposes of this definition, “control”
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, through representation on such Person’s board
of directors or other management committee or group, by contract or otherwise.


 


“Board of Directors”
means the Company’s board of directors.


 


“Business Day”
means any day other than a Saturday, a
Sunday or a day on which the Principal Market is closed or on which banks in
the City of New York are required or authorized by law to be closed.


 


“Closing”
and “Closing Date” have the respective
meanings specified in Section 1.1
of this Agreement.


 


“Commission”
means the Securities and Exchange Commission, and any successor regulatory
agency.


 


“Common
Stock” means the common stock of the Company, no par value per
share.


 


“Company
Subsidiary” means the Subsidiary of the Company.


 


“Disclosure
Documents” means all SEC Documents filed with the Commission at
least three (3) Business Days prior to the Execution Date.


 


“Environmental Law”
means any federal, state, provincial, local or foreign law, statute, code or
ordinance, principle of common law, rule or regulation, as well as any
Permit, order, decree, judgment or injunction issued, promulgated, approved or
entered thereunder, relating to pollution or the protection, cleanup or
restoration of the environment or natural resources, or to the public health or
safety, or otherwise governing the generation, use, handling, collection,
treatment, storage, transportation, recovery, recycling, discharge or disposal
of hazardous materials.


 


“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations and published interpretations thereunder.


 


“Event of Default”
has the meaning specified in the Notes.


 


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“Exchange Act”
means the Securities Exchange Act of 1934, as amended (or any successor act),
and the rules and regulations promulgated thereunder (or respective
successors thereto).


 


“Execution Date”
means the date of this Agreement.


 


“GAAP” means
U.S. generally accepted accounting principles, applied on a consistent
basis.  Accounting principles are applied
on a “consistent basis” when the accounting principles applied in a current
period are comparable in all material respects to those accounting principles
applied in a preceding period.


 


“Governmental Authority”
means any nation or government, any state, provincial or political subdivision
thereof and any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government, including, without
limitation, any stock exchange, securities market or self-regulatory
organization.


 


“Governmental Requirement”
means any law, statute, code, ordinance, order, rule, regulation, judgment,
decree, injunction, franchise, license or other directive or requirement of any
federal, state, county, municipal, parish, provincial or other Governmental
Authority or any department, commission, board, court, agency or any other
instrumentality of any of them.


 


“Intellectual Property”
means the collective reference to all existing rights, priorities and
privileges relating to intellectual property, whether arising under United States,
multinational or foreign laws or otherwise, including, without limitation, (i) all
copyrights arising under the laws of the United States, any other country or
any political subdivision thereof, whether registered or unregistered and
whether published or unpublished, all registrations and recordings thereof, and
all applications in connection therewith, including, without limitation, all
registrations, recordings and applications in the United States Copyright
Office, (ii) all letters patent of the United States, any other country or
any political subdivision thereof, all reissues and extensions thereof, and all
applications for letters patent of the United States or any other country and
all divisions, continuations and continuations-in-part thereof, (iii) all
trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade dress, service marks, logos, domain names and
other source or business identifiers, and all goodwill associated therewith,
now existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, and all common law rights related thereto, (iv) all
trade secrets arising under the laws of the United States, any other country or
any political subdivision thereof, (v) all rights to obtain any reissues,
renewals or extensions of the foregoing, (vi) all licenses for any of the
foregoing, and (vii) all causes of action for infringement of the
foregoing.


 


“Investor Party”
has the meaning specified in 4.6 of this
Agreement.


 


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“Key Employee”
has the meaning specified in Section 3.12
of this Agreement.


 


“Lien”
means, with respect to any Property, any lien, mortgage, pledge, hypothecation,
assignment, security interest, charge, easement or other encumbrance.


 


“Material
Adverse Effect” means an effect that is material and adverse to
(i) the consolidated business, properties, assets, operations, results of
operations, financial condition, credit worthiness or prospects of the Company
and the Company Subsidiary taken as a whole, (ii) the ability of the
Company or any Company Subsidiary to perform its material obligations under
this Agreement or the other Transaction Documents or (iii) the rights and
benefits to which an Investor is entitled under this Agreement or any of the
other Transaction Documents.


 


“Material Contracts”
means, as to the Company and the Company Subsidiary, any agreement required
pursuant to Item 601 of Regulation S-B or Item 601 of Regulation S-K, as
applicable, promulgated under the Securities Act to be filed as an exhibit to
any report, schedule, registration
statement or definitive proxy statement filed or required to be filed by the
Company with the Commission under the Exchange Act or any rule or
regulation promulgated thereunder, and any and all material amendments,
modifications, supplements, renewals or restatements thereof.


 


“New Securities”
means, any Common Stock or Common Stock Equivalents that the Company proposes
to offer or sell for cash consideration at any time during the period from the
Closing Date through the later of the first anniversary of the Effective Date
or two years from the Closing Date, (the latter shall mean the “Subsequent Financing”).


 


“Pension Plan”
means an employee pension benefit plan (as defined in ERISA) maintained by the
Company for employees of the Company or any of its Affiliates.


 


 “Person” means any individual,
corporation, trust, association, company, partnership, joint venture, limited
liability company, joint stock company, Governmental Authority or other entity.


 


“Principal Market”
means the American Stock Exchange or the principal exchange, market or
quotation system on which the Common Stock is then listed, traded or quoted.


 


“Property”
means property and/or assets of all kinds, whether real, personal or mixed,
tangible or intangible (including, without limitation, all rights relating
thereto).


 


“Purchase Price”
means, with respect to the Notes purchased at the Closing, the original
principal amount of the Note purchased at the Closing.


 


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“SEC
Documents” means all reports, schedules, registration statements
and definitive proxy statements filed (or required to be filed) by the Company
with the Commission.


 


“Securities Act”
has the meaning specified in the recitals of this Agreement.


 


“Subsidiary”
means, with respect to any Person, any corporation or other entity of which at
least a majority of the outstanding shares of stock or other ownership
interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors (or Persons performing similar functions) of such
corporation or entity (regardless of whether or not at the time, in the case of
a corporation, stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any contingency)
is at the time directly or indirectly owned or controlled by such Person or one
or more of its Subsidiary or by such Person and one or more of its Subsidiary.


 


“Termination
Date” means the first date on which there are no Notes
outstanding.


 


“Transaction
Documents” means (i) this Agreement, (ii) the Notes, (iii) the
Security Agreement, and (iv) all other agreements, documents and other
instruments executed and delivered by or on behalf of the Company or any of its
officers at the Closing.


 


1.3           Other Definitional
Provisions.  All definitions
contained in this Agreement are equally applicable to the singular and plural
forms of the terms defined.  The words “hereof”,
“herein” and “hereunder” and words of similar import contained in this
Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement.


 


2.             REPRESENTATIONS AND WARRANTIES OF
EACH INVESTOR.


 


Each Investor (with respect to itself only) hereby represents and
warrants to the Company and agrees with the Company that, as of the Execution
Date:


 


2.1           Authorization; Enforceability. 
Such Investor is duly and validly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization as set forth below such Investor’s name on the signature page hereof
with the requisite corporate power and authority to purchase the Note to be
purchased by it hereunder and to execute, deliver and to consummate the
transactions contemplated by, this
Agreement and the other Transaction Documents to which it is a party and
otherwise to carry out its obligations thereunder. This Agreement constitutes, and upon execution and delivery thereof,
each other Transaction Document to which such Investor is a party will
constitute, such Investor’s valid and legally binding obligation, enforceable
in accordance with its terms, subject to (i) applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws of general application relating to or affecting the enforcement of
creditors’ rights generally and (ii) general principles of equity.


 


2.2           No
Conflicts.  The execution and
performance of this Agreement and the other Transaction Documents to which it
is a party do not conflict in any material respect with any 


 


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agreement to which such Investor is a party
or is bound, any court order or judgment applicable to such Investor, or the
constituent documents of such Investor.


 


2.3           Fees. Such Investor has not agreed to pay any compensation or other fee,
cost or related expenditure to any underwriter, broker, agent or other
representative in connection with the transactions contemplated hereby.


 


2.4.          Accredited Investor. As the date hereof, the Investor warrants
that it is either: (i) an “accredited investor” as defined in Rule 501(a)(1),
(a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a
“qualified institutional buyer” as defined in Rule 144A(a) under the
Securities Act.  Such Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act.


 


2.5.          Restricted Securities. The Notes or underlying
securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of any underlying Securities
to the Transaction Documents, the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act.  As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement.


 


The Purchasers agree to the imprinting, so long as is required by this Section 2.5,
of a legend on any of the Securities in the following form:


 


NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THESE SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION OF
THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.


 


3.             REPRESENTATIONS AND WARRANTIES OF
THE COMPANY.  Except as set forth in the SEC Documents, the
Company hereby represents and warrants to each Investor and agrees with each
Investor that, as of the Execution Date:


 


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3.1           Organization, Good Standing and
Qualification.  Each of the Company
and the Company Subsidiary  is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite power
and authority to carry on its business as now conducted.  Each of the Company and the Company
Subsidiary is duly qualified to transact business and is in good standing in
each jurisdiction in which it conducts business except where the failure so to
qualify has not had or would not reasonably be expected to have a Material
Adverse Effect.


 


3.2           Authorization; Consents.  The Company has the requisite corporate power
and authority to enter into and perform its obligations under the Transaction
Documents. Each Company Subsidiary has the requisite power and authority to
enter into and perform its obligations under the Security Agreement. All
corporate action on the part of the Company by its officers, directors and
stockholders necessary for the authorization, execution and delivery of, and
the performance by the Company of its obligations under, the Transaction
Documents has been taken, and no further consent or authorization of the
Company, its Board of Directors, stockholders, any Governmental Authority or
any other Person is required (pursuant to any rule of the Principal Market
or otherwise).  All corporate action
on the part of each Company Subsidiary by its officers, directors,
stockholders, members or governors necessary for the authorization, execution
and delivery of, and the performance by such Company Subsidiary of its
obligations under the Security Agreement has been taken.  The Board of Directors has determined
that the sale and issuance of the Notes, and the consummation of the other
transactions contemplated hereby and by the other Transaction Documents, are in
the best interests of the Company.


 


3.3           Enforcement.  This Agreement has been duly executed and
delivered by the Company, and at the Closing, each of the Company and the
Company Subsidiary will have duly executed and delivered each of the other
Transaction Documents to which such entity is a party.  This Agreement constitutes, and at the
Closing, each of the other Transaction Documents to which the Company or any of
the Company Subsidiary is a party will constitute, the valid and legally
binding obligations of the Company and the Company Subsidiary, enforceable
against the Company and the Company Subsidiary in accordance with their
respective terms, subject to (i) applicable bankruptcy, insolvency,
fraudulent transfer, moratorium, reorganization or other similar laws of
general application relating to or affecting the enforcement of creditors’
rights generally and (ii) general principles of equity.


 


3.4           Disclosure Documents; Agreements;
Financial Statements; Other Information. 
The Company is subject to the reporting requirements of the Exchange Act
and the Company has filed with the Commission all SEC Documents that the
Company was required to file with the Commission on or after December 31,
2006.  The Company is not aware of any
event occurring or expected to occur on or prior to the Closing Date that would
require the filing of, or with respect to which the Company intends to file, a Form 8-K
after the Closing.  Each SEC Document
filed on or after December 31, 2006, as of the date of the filing thereof
with the Commission (or if amended or superseded by a filing prior to the
Execution Date, then on the date of such amending or superseding filing),
complied in all material respects with the requirements of the Securities Act
or Exchange Act, as applicable, and the rules and regulations promulgated
thereunder and, as of the date of such filing (or if amended or superseded by a
filing prior to the Execution Date, then on the


 


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date of such filing), such SEC Document (including all exhibits and
schedules thereto and documents incorporated by reference therein) did not,
contain an untrue statement of material fact or omit 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.  To the best of the Company’s knowledge, all
documents required to be filed as exhibits to the SEC Documents filed on or
after December 31, 2006 have been filed as required.  Except as set forth in the Disclosure
Documents, the Company has no liabilities, contingent or otherwise, other than
liabilities incurred in the ordinary course of business which, under GAAP, are
not required to be reflected in the financial statements included in the
Disclosure Documents and which, individually or in the aggregate, are not
material to the consolidated business or financial condition of the Company and
the Company Subsidiary taken as a whole. 
As of their respective dates, the financial statements of the Company
included in the SEC Documents filed on or after December 31, 2006 complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the Commission with respect
thereto. Such financial statements have been prepared in accordance with GAAP
consistently applied at the times and 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 exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company as of
the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end adjustments).  The Company will
prepare the financial statements to be included in any reports, schedules,
registration statements and definitive proxy statements that the Company is
required to file or files with the Commission after the date hereof in
accordance with GAAP (except in the case of unaudited interim statements, to
the extent they may exclude footnotes or may be condensed or summary statements).


 


3.5           Due
Authorization; Valid Issuance.  The
Notes are duly authorized and, when issued, sold and delivered in accordance
with the terms of this Agreement, will be duly and validly issued, free and
clear of any Liens imposed by or through the Company.


 


3.6           No
Conflict; No Violation.  Neither the
Company nor any Company Subsidiary is in violation of any provisions of its
charter, bylaws or any other governing document.  Neither the Company nor any Company Subsidiary
is in violation of or in default (and no event has occurred which, with notice
or lapse of time or both, would constitute a default) under any provision of
any instrument or contract to which it is a party or by which it or any of its
Property is bound, or in violation of any provision of any Governmental
Requirement applicable to the Company or any Company Subsidiary.  The execution, delivery and performance of
this Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby will not result in any violation
of any provisions of the Company’s or any Company Subsidiary’s charter, bylaws
or any other governing document or in a default under any provision of any
instrument or contract to which the Company or Company Subsidiary is a party or
by which it or any of its Property is bound, or in violation of any provision
of any Governmental Requirement applicable to the Company or Company Subsidiary
or be in conflict with or constitute, with or without the passage of time and
giving of notice, either a default under any such provision, instrument or
contract or an event which results in the creation of any Lien upon any assets
of the Company or of any Company Subsidiary or the triggering of any preemptive
rights or rights of first refusal or first offer.


 


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3.7           Fees.  The Company is not obligated to pay any
brokers, finders or financial advisory fees or commissions to any underwriter,
broker, agent or other representative in connection with the transactions
contemplated hereby. The Company will indemnify and hold harmless such Investor
from and against any claim by any person or entity alleging that such Investor
is obligated to pay any such compensation, fee, cost or related expenditure in
connection with the transactions contemplated hereby.


 


3.8           Foreign
Corrupt Practices.  Neither the
Company, any Company Subsidiary nor, to the knowledge of the Company, any
director, officer, agent, employee or other person acting on behalf of the
Company or any Company Subsidiary, has (i) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity, (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee, or (iii) violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or made
any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.


 


3.9           Employee
Matters.  There is no strike, labor
dispute or union organization activities pending or, to the knowledge of the
Company, threatened between the Company or any Company Subsidiary and any of
their employees.  Other than as set forth
in the Disclosure Documents, no employees of the Company or any Company
Subsidiary belong to any union or collective bargaining unit. The Company and
each Company Subsidiary has complied in all material respects with all
applicable federal and state equal opportunity and other laws related to
employment.


 


3.10         Environment.  Except
as disclosed in the Disclosure Documents, the Company and the Company
Subsidiary have no liabilities under any Environmental Law, nor, to the Company’s
knowledge, do any factors exist that are reasonably likely to give rise to any
such liability, affecting any of the properties owned or leased by the Company
or any Company Subsidiary that, individually or in the aggregate, has had or would reasonably be expected to have a
Material Adverse Effect.  Neither the
Company nor any Company Subsidiary has violated any Environmental Law
applicable to it now or previously in effect, other than such violations or
infringements that, individually or in the aggregate, have not had and would
not reasonably be expected to have a Material Adverse Effect.


 


3.11         ERISA.  The Company does not maintain or contribute
to, or have any obligation under, any Pension Plan.  The Company is in compliance in all material
respects with the presently applicable provisions of ERISA and the United
States Internal Revenue Code of 1986, as amended, with respect to each Pension
Plan except in any such case for any such matters that, individually or in the
aggregate, have not had, and would not reasonably be expected to have, a Material
Adverse Effect.


 


3.12         Transfer Taxes.
No transfer or other taxes (other than income taxes) are required to be paid in
connection with the issuance and sale of any of the Notes.


 


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4.             COVENANTS OF THE COMPANY AND EACH
INVESTOR.


 


4.1           Filings and Disclosure Reports.  The
Company agrees with each Investor that the Company will:


 


(a)           on or prior to 8:30 a.m. (eastern time) on the second Business Day
following the Execution Date, if required,
issue a press release disclosing the material terms of this Agreement and the
other Transaction Documents and the transactions contemplated hereby and
thereby, and


 


(b)           if required, on or prior to 5:00 p.m. (eastern time) on the fourth
Business Day following the Execution Date, file with the Commission a Current Report on Form 8-K disclosing
the material terms of and including as exhibits this Agreement and the other
Transaction Documents and the transactions contemplated hereby and thereby; provided, however, that each Investor shall have a
reasonable opportunity to review and comment on any such press release, if
required, or Form 8-K prior to the issuance or filing thereof; and provided, further, that if the Company fails to issue a
press release disclosing the material terms of this Agreement and the other
Transaction Documents within the time frames described herein, if required to
be filed, any Investor may issue a press release disclosing such information
subject to notice to, and consent by, the Company, which consent shall not be
unreasonably withheld.  Thereafter, the
Company shall timely file any filings and notices required by the Commission or
applicable law with respect to the transactions contemplated hereby.


 


4.2           Existence and Compliance.  The
Company agrees that it will, and will cause each Company Subsidiary to, while
any Investor holds any Notes:


 


(a)           maintain its corporate existence in good
standing;


 


(b)           comply
with all Governmental Requirements applicable to the operation of its business,
except for instances of noncompliance that are immaterial;


 


(c)           comply with all
agreements, documents and instruments binding on it or affecting its Properties
or business, including, without limitation, all Material Contracts, except for
instances of noncompliance that are immaterial;


 


(d)           timely file with the Commission all reports required to be filed
pursuant to the Exchange Act and refrain from terminating its status as an
issuer required by the Exchange Act to file reports thereunder even if the
Exchange Act or the rules or regulations thereunder would permit such
termination; and


 


(f)            ensure
that the Common Stock is at all times quoted on the Principal Market.


 


4.3           Notice of Event of
Default.  Upon the occurrence of an
Event of Default, the Company shall (i) notify the Investors of the nature
of such Event of Default as soon as practicable (but in no event later than one
Business Day after the Company becomes aware of such Event of Default), and (ii) not
later than two Business Days after delivering such notice to 


 


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the Investors, issue a press
release disclosing such Event of Default and take such other actions as may be
necessary to ensure that none of the Investors are in the possession of
material, nonpublic information as a result of receiving such notice from the
Company.


 


4.4           Existing Secured Lenders; Effectiveness of the
Security Document.  The Investors acknowledge that their security
interest are subject to the security interests of Western Commercial Bank. The
Company and the Investors hereby agree that the Security Document (as defined
below) shall be deemed executed, delivered and in effect, without any further
action by any party, effective as of the date (the “Release
Date”) hereof. As used herein, the term “Security
Document” means the Security Agreement.


 


4.5.          Automatic Exchange. 
Notwithstanding anything contained herein to the contrary, if at any
time from and after the date hereof until termination of the Transaction
Documents, the Company proposes to offer and sell New Securities in a
Subsequent Financing with gross proceeds of at least $1,000,000, the Note held
by Investor shall automatically convert for securities of the same type issued
in such Subsequent Financing (such exchange to be made at the same time as the
closing of such Subsequent Financing), on the same terms and conditions as the
Subsequent Financing, based on the outstanding Principal amount of the Notes,
and accrued and unpaid Interest.  By way
of example, if the Company undertakes a Subsequent Financing of convertible
debentures and warrants,  Investor shall
participate in such Subsequent Financing and use the exchange of the Notes as
consideration, on a dollar for dollar basis, in lieu of cash consideration. The
Company shall provide prior written notice of any such Subsequent Financing in
the manner set forth in this Section.


 


CONDITIONS TO CLOSING.


 


4.1           Conditions to Investors’ Obligations at the
Closing.  Each Investor’s obligations to effect the
Closing, including without limitation its obligation to purchase its Note at
the Closing, are conditioned upon the fulfillment (or waiver by such Investor
in its sole and absolute discretion) of each of the following events as of the
Closing Date, and the Company shall use commercially reasonable efforts to
cause each of such conditions to be satisfied:


 


4.1.1                        the representations and warranties of the Company
set forth in this Agreement and in the other Transaction Documents shall be
true and correct in all material respects as of such date as if made on such
date (except that to the extent that any such representation or warranty
relates to a particular date, such representation or warranty shall be true and
correct in all material respects as of that particular date);


 


4.1.2                        the Company shall have complied with or performed
in all material respects all of the agreements, obligations and conditions set
forth in this Agreement and in the other Transaction Documents that are
required to be complied with or performed by the Company on or before the Closing;


 


4.1.3                        the Company shall have executed and delivered to
such Investor the Note being purchased by such Investor at the Closing;


 


11

















 


4.1.4                        the Company shall have delivered to such Investor
resolutions passed by its Board of Directors to authorize the transactions
contemplated hereby and by the other Transaction Documents;


 


5.1.5                        there shall have occurred no material adverse
change in the Company’s consolidated business or financial condition since the
date of the Company’s most recent financial statements contained in the
Disclosure Documents;


 


5.1.6                        there shall be no injunction, restraining
order or decree of any nature of any court or Governmental Authority of
competent jurisdiction that is in effect that restrains or prohibits the
consummation of the transactions contemplated hereby and by the other
Transaction Documents


 


5.1.7                        the
Company shall have obtained all necessary waivers from Western Commercial Bank
with respect to its Senior Secured Loan permitting it to enter into the
Transaction Documents; and


 


5.1.8.                       the
Company shall have paid the expenses described in 6.8
of this Agreement.


 


4.2           Conditions
to Company’s Obligations at the Closing. 
The Company’s obligations to effect the Closing with an Investor are
conditioned upon the fulfillment (or waiver by the Company in its sole and
absolute discretion) of each of the following events as of the Closing Date:


 


4.2.1                        the representations and warranties of such
Investor set forth in this Agreement and in the other Transaction Documents to
which it is a party shall be true and correct in all material respects as of
such date as if made on such date (except that to the extent that any such
representation or warranty relates to a particular date, such representation or
warranty shall be true and correct in all material respects as of that date);


 


4.2.2                        such Investor shall have complied with or
performed all of the agreements, obligations and conditions set forth in this
Agreement that are required to be complied with or performed by such Investor on or before the Closing;


 


5.2.3                        there shall be no injunction, restraining
order or decree of any nature of any court or Governmental Authority of
competent jurisdiction that is in effect that restrains or prohibits the
consummation of the transactions contemplated hereby and by the other
Transaction Documents;


 


12

















 


5.2.4                        such
Investor shall have executed each Transaction Document to which it is a party
and shall have delivered the same to the Company; and


 


5.2.5                        such
Investor shall have tendered the Purchase Price for the Note being purchased by
it at the  Closing by wire transfer
of immediately available funds pursuant to the wiring instructions set forth on
Exhibit D.


 


5.             MISCELLANEOUS.


 


6.1           Survival; Severability.  The
representations, warranties, covenants and indemnities made by the parties
herein and in the other Transaction Documents shall survive the Closing
notwithstanding any due diligence investigation made by or on behalf of the
party seeking to rely thereon. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that
in such case the parties shall negotiate in good faith to replace such
provision with a new provision which is not illegal, unenforceable or void, as
long as such new provision does not materially change the economic benefits of
this Agreement to the parties.


 


5.2           No Reliance.  Each party acknowledges that (i) it
has such knowledge in business and financial matters as to be fully capable of
evaluating this Agreement, the other Transaction Documents and the transactions
contemplated hereby and thereby, (ii) it is not relying on any advice or
representation of any other party in connection with entering into this
Agreement, the other Transaction Documents or such transactions (other than the
representations made in this Agreement or the other Transaction Documents), (iii) it
has not received from any other party any assurance or guarantee as to the
merits (whether legal, regulatory, tax, financial or otherwise) of entering
into this Agreement or the other Transaction Documents or the performance of
its obligations hereunder and thereunder, and (iv) it has consulted with
its own legal, regulatory, tax, business, investment, financial and accounting
advisors to the extent that it has deemed necessary, and has entered into this
Agreement and the other Transaction Documents based on its own independent
judgment and, if applicable, on the advice of such advisors, and not on any
view (whether written or oral) expressed by any other party.


 


5.3           Governing Law; Jurisdiction.  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 


 


13

















 


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.


 


6.4           Successors and Assigns.  The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the
parties.  Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and permitted assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. An Investor may assign its
rights and obligations hereunder in connection with any sale or transfer of the
Notes in accordance with the terms hereof and of the other Transaction
Documents, as long as, as a condition precedent to such transfer, the
transferee executes an acknowledgment agreeing to be bound by the applicable
provisions of this Agreement, in which case the term “Investor” shall be deemed
to refer to such transferee as though such transferee were an original
signatory hereto.  The Company may not
assign its rights or obligations under this Agreement.


 


5.5           Counterparts.  This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original, and
all of which together shall constitute one and the same instrument.  This Agreement may be executed and delivered
by facsimile transmission.


 


5.6           Headings.  The headings used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.


 


5.7           Notices.  Any notice, demand or
request required or permitted to be given by the Company or the Investor
pursuant to the terms of this Agreement shall be in writing and shall be deemed
delivered (i) when delivered personally or by verifiable facsimile transmission,
unless such delivery is made on a day that is not a Business Day, in which case
such delivery will be deemed to be made on the next succeeding Business Day, (ii) on
the next Business Day after timely delivery to an overnight courier and (iii) on
the Business Day actually received if deposited in the U.S. mail (certified or
registered mail, return receipt requested, postage prepaid), addressed as
follows:


 


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

  



 


14

















 


and if to any Investor, to such address for
such Investor as shall appear on the signature page hereof executed by
such Investor, or as shall be designated by such Investor in writing to the
Company in accordance with this Section 6.7.


 


5.8           Expenses.  The Company and each Investor
shall pay all costs and expenses that it incurs in connection with the
negotiation, execution, delivery and performance of this Agreement or the other
Transaction Documents.


 


5.9           Entire Agreement; Amendments.  This
Agreement and the other Transaction Documents constitute the entire agreement
between the parties with regard to the subject matter hereof and thereof,
superseding all prior agreements or understandings, whether written or oral,
between or among the parties.  No
amendment, modification or other change to this Agreement or waiver of any
agreement or other obligation of the parties under this Agreement may be made
or given unless such amendment, modification or waiver is set forth in writing
and is signed by the Company and by the holders of a majority of the aggregate
principal of the Notes then outstanding.   Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.


 


[Signature Pages to Follow]


 


15

















 


IN WITNESS WHEREOF, the
undersigned have executed this Agreement as of the date first-above written.


 


	
  ASPYRA, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ James R. Helms

  	
   

  
	
   

  	
  James R Helms

  
	
   

  	
  Chief
  Operating Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  INVESTORS:

  	
   

  
	
   

  	
   

  
	
  TITAB, LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Bradford G. Peters

  	
   

  
	
   

  	
  Managing Member

  
	
   

  	
   

  
	
  Principal Amount of Note Purchased at
  Closing:

  	
  $200,000.00

  
	
   

  	
   

  
	
   

  	
   

  
	
  C. IAN SYM-SMITH

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ C. I. Sym-Smith

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Principal Amount of Note Purchased at
  Closing:

  	
  $100,000.00

  
							



 


16

















 


EXHIBIT A


 


FORM OF SECURED PROMISSORY
NOTE


 


ASPYRA, INC.


 


SECURED
PROMISSORY NOTE


 


THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF (I) AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR (II) AN
OPINION OF COMPANY COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.


 


THIS NOTE DOES NOT REQUIRE PHYSICAL SURRENDER HEREOF IN ORDER TO EFFECT
A PARTIAL PAYMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE MAY BE
LESS THAN THE PRINCIPAL AMOUNT SHOWN BELOW.


 


	
   

  	
   

  	
  $

  



 


Issue Date:  January 28, 2008


 


FOR VALUE RECEIVED, ASPYRA, INC.,  a
California corporation  (the “Company”), hereby promises to pay to
the order of
                          
or its permitted successors or assigns (the “Holder”)
the principal amount of
                                              
Dollars
($                ),
together with accrued and unpaid interest thereon, on or before July 28,
2008 (such date, the “Maturity Date”).


 


The Company shall have the right to prepay any
part of this Note prior to the Maturity Date.


 


The Company has issued this Note pursuant to
a Note Purchase Agreement, dated as of the date hereof (the “Note Purchase Agreement”). The Notes
issued by the Company pursuant to the Note Purchase Agreement, including this
Note, are collectively referred to herein as the “Notes”.


 


The Company’s
obligations under the Notes, including, without limitation, its obligation to
make payments of interest thereon, are guaranteed by the Company’s subsidiary
and secured by the assets and properties of the Company and its subsidiary, subject to a senior security interest held by
Western Commercial Bank.  The
following terms shall apply to this Note:


 


1.             DEFINITIONS.


 


“Event of Default”
means the occurrence of any of the following events:


 

















 


(i)            a Liquidation Event
occurs or is publicly announced;


 


(ii)           the Company fails
to make any payment of principal on this Note in full as and when such payment
is due, or the Company fails to make any payment of interest on this Note in
full as and when such payment is due, provided that the Company shall not have
been able to cure such non-payment within five (5) Business Days after
such due date;


 


(iii)          other than a breach
described in clause (ii) above, the
Company or any Company Subsidiary breaches or provides notice of its intent to
breach any material term or condition of this Note or any other Transaction
Document, provided that such breach is not cured within ten (10) Business
Days following written notice thereof from the Holder;


 


(iv)          any representation
or warranty made by the Company or any Company Subsidiary in this Note or any
other Transaction Document was inaccurate or misleading in any material respect
as of the date such representation or warranty was made; or


 


(v)           a default occurs or
is declared and is not cured within the applicable grace period (if any) with
respect to any instrument that evidences Debt of the Company or any Company
Subsidiary, the effect of which default is to cause, or permit the holder or
holders of such indebtedness to cause, such indebtedness to become due prior to
its stated maturity solely to the extent that the principal amount of any such
indebtedness exceeds, individually or in the aggregate, $1,000,000.


 


“Interest”
has the meaning set forth in Section 2(a) of
this Note.


 


“Issue Date”
means the “Issue Date” as set forth on the front page of this Note.


 


“Liquidation Event” means
where (i) the Company or any Company Subsidiary shall make a general
assignment for the benefit of creditors or consent to the appointment of a
receiver, liquidator, custodian, or similar official of all or substantially
all of its properties, or any such official is placed in control of such
properties, or the Company or any Company Subsidiary shall commence any action
or proceeding or take advantage of or file under any federal or state
insolvency statute, including, without limitation, the United States Bankruptcy
Code, seeking to have an order for relief entered with respect to it or seeking
adjudication as a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution, administration, a voluntary
arrangement, or other relief with respect to it or its debts; or (ii) there
shall be commenced against the Company or any Company Subsidiary any action or
proceeding of the nature referred to in clause (i) above
or seeking issuance of a warrant of attachment, execution, distraint, or
similar process against all or any substantial part of its property, which
results in the entry of an order for relief which remains undismissed,
undischarged or unbonded for a period of sixty (60) days; or (iii) there
is initiated the dissolution or other winding up of the Company or any material Company Subsidiary,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy proceedings; or (iv) there is initiated any assignment for the
benefit of creditors or any marshalling of the material assets or material
liabilities of the Company or any Company
Subsidiary.


 


“Maturity Date”
has the meaning set forth in the preamble to this Note.


 


2

















 


“Scheduled Interest Payment
Date” means March 1, 2008 and the first Business Day of
each calendar month thereafter until the date on which the entire principal
amount of this Note is paid in full, whether on the Maturity Date or otherwise.


 


All definitions contained in this Note are equally applicable to the
singular and plural forms of the terms defined. 
The words “hereof”, “herein” and “hereunder” and words of similar import
refer to this Note as a whole and not to any particular provision of this Note.


 


Any capitalized term used but not defined herein has the meaning
specified in the Note Purchase Agreement.


 


2.             INTEREST; MATURITY; AUTOMATIC EXCHANGE.


 


(a)           Interest Payments.  This Note shall bear interest on the unpaid
principal amount hereof (“Interest”)
at an annual rate equal to the interest rate of the London Interbank Offered
Rate (“LIBOR”)
plus 2.5% per annum, adjusted per rata, computed on the basis of a 360-day year
and calculated using the actual number of days elapsed since the Issue Date or
the date on which Interest was most recently paid, as the case may be, and if
not timely paid as provided herein, compounded monthly.  The Company shall pay accrued Interest in
arrears (i) on each Scheduled Interest Payment Date and (ii) on any
date on which the entire or any portion of the principal amount of this Note is
paid.


 


(b)           Maturity.  The outstanding principal amount of this Note
plus all accrued and unpaid Interest hereon, plus all other amounts due
hereunder, shall be paid in full on the Maturity Date.


 


(c)           Automatic
Exchange. This Note shall automatically exchange into the next round of
financing pursuant to Section 4.5 of the Note Purchase Agreement.


 


3.             MISCELLANEOUS.


 


(a)           Successors and
Assigns.  The terms and conditions of this Note shall inure to the benefit of and be binding
upon the respective successors and permitted assigns of the Company and the
Holder. The Company may not assign its rights or obligations under this Note except as specifically required or permitted
pursuant to the terms hereof.


 


(b)           Governing Law.  This Note shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within the
State of New York.


 


(c)           Notices.
Any notice, demand or request required or permitted to be given by the Company
or the Holder pursuant to the terms of this Note shall be in writing and shall
be deemed delivered (i) when delivered personally or by verifiable
facsimile transmission, unless such delivery is made on a day that is not a
Business Day, in which case such delivery will be deemed to be made


 


3

















 


on the next succeeding Business
Day, (ii) on the next Business Day after timely delivery to an overnight
courier and (iii) on the Business Day actually received if deposited in
the U.S. mail (certified or registered mail, return receipt requested, postage
prepaid), addressed as follows:


 


	
   

  	
  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

  



 


and if to the Holder, to such address for the
Holder as shall appear on the signature page of the Note Purchase
Agreement executed by the Holder, or as shall be designated by the Holder in
writing to the Company in accordance this Section 3(c).


 


(d)           Amendments.  No (i) amendment to this Note or (ii) waiver
of any agreement or other obligation of the Company under this Note may be made
or given except pursuant to a written instrument executed by the Company and by
the holders of a majority of the aggregate principal of the Notes then
outstanding, it being understood that upon the satisfaction of the preceding
condition, this and each other Note (including any Note held by a holder
thereof that did not execute the instrument specified in the preceding clause)
shall be deemed to incorporate any amendment, modification, change or waiver
effected thereby as of the effective date thereof.  Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.


 


(e)           Failure
to Exercise Rights not Waiver.  No
failure or delay on the part of the Holder in the exercise of any power, right
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or privilege preclude any other or
further exercise thereof. All rights and remedies of the Holder hereunder are
cumulative and not exclusive of any rights or remedies otherwise available. In
the event that the Company does not pay any amount under this Note when such
amount becomes due, the Company shall bear all costs incurred by the Holder in
collecting such amount, including without limitation reasonable legal fees and
expenses.


 


(f)            Transfer of Note.  The Holder may sell, transfer or otherwise
dispose of all or any part of this Note (including without limitation pursuant
to a pledge) to any person or entity as long


 


4

















 


as such sale, transfer or
disposition is made in accordance with the applicable provisions of the Note
Purchase Agreement.  From and after the
date of any such sale, transfer or disposition, the transferee hereof shall be
deemed to be the holder of a Note in the principal amount acquired by such
transferee, and the Company shall, as promptly as practicable and at the
Company’s cost and expense, issue and deliver to such transferee a new Note
identical in all respects to this Note, in the name of such transferee. The
Company shall be entitled to treat the original Holder as the holder of this
entire Note unless and until it receives written notice of the sale, transfer
or disposition hereof.


 


(g)           Lost or Stolen
Note.  Upon receipt by the Company of
evidence of the loss, theft, destruction or mutilation of this Note, and (in
the case of loss, theft or destruction) of indemnity or security reasonably
satisfactory to the Company, and upon surrender and cancellation of the Note,
if mutilated, the Company shall at the Company’s cost and expense execute and
deliver to the Holder a new Note identical in all respects to this Note.


 


(h)           Usury.  This Note is subject to the
express condition that at no time shall the Company be obligated or required to
pay interest hereunder at a rate which could subject the Holder to either civil
or criminal liability as a result of being in excess of the maximum interest
rate which the Company is permitted by applicable law to contract or agree to
pay.  If by the terms of this Note, the Company is at any time required or
obligated to pay interest hereunder at a rate in excess of such maximum rate,
the rate of interest under this Note shall be deemed to be immediately reduced
to such maximum rate and the interest payable shall be computed at such maximum
rate and all prior interest payments in excess of such maximum rate shall be
applied and shall be deemed to have been payments in reduction of the principal
balance of this Note.


 


[Signature Page to
Follow]


 


5

















 


IN WITNESS
WHEREOF, the Company has caused this Note to be signed in its name by its duly
authorized officer on the date first above written.


 


	
  ASPYRA, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  James R Helms

  	 

	
   

  	
  Chief Operating Officer

  	 

					



 


6