Exhibit 10.1


 


November 5, 2008


 


Rodney W. Schutt


 


Re: Terms of Employment


 


Dear Rodney:


 


The purpose of this letter agreement (this “Agreement”) is to set forth the terms of your employment with
Aspyra Inc. (the “Company”).  By signing this Agreement, you represent and
warrant to the Company that you are under no contractual commitments
inconsistent with your obligations to the Company hereunder.  This letter may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.  The execution of this letter may be by actual
or facsimile signature.


 


Commencement Date. 
Your employment with the Company shall commence November 17, 2008
(the “Commencement Date”).


 


Title and Duties. 
In connection with your continued employment with the Company,
you will serve as the Chief Executive Officer of the Company and will have
duties and responsibilities typically associated with such title, together with
such other duties and responsibilities consistent with your position as
reasonably assigned to you from time to time by the Board of Directors (the “Board”) of Aspyra Inc. 
During your employment with the Company, you will report to the Board.


 


Appointment to the Board of Directors.  You will be appointed to the Board of
Directors of Aspyra and will hold the term of office until the Company’s next
Annual Shareholders Meeting at which time you will need to go through the
nomination process and be re-elected by shareholder vote.


 


Conduct During Employment. 
As a condition of your employment with the Company, you agree to observe
and comply with all of the rules, regulations, policies and procedures
established by the Company from time to time and all applicable laws, rules and
regulations imposed by any governmental regulatory authority from time to
time.  Without limiting the foregoing,
you agree that during your employment with the Company, you agree to
devote your full business time, attention, skill and best efforts to the performance
of your employment duties and you are not to engage in any other business or
occupation.


 


Base Salary. 
Your annual base salary shall be $225,000, subject to increase as may be approved by the Board from time to
time.  Your base salary will be
payable in accordance with the Company’s regular payroll practices.


 

















 


Annual Bonus.  During your employment with the Company,
effective November 17th, 2008, you will be eligible to receive
an annual bonus of $275,000.  The actual
annual bonus amount will be based upon achievement of Company net cash flow
from operations and revenue targets, in each case, established by the Board for
the fiscal year to which the annual bonus relates, with 50% of such annual
bonus payable in respect of achievement of the annual net cash flow from
operations target, and the remaining 50% payable in respect of achievement of
the annual revenue target.  At 110%
achievement of said targets you will be paid 120% of your bonus, at 125%
achievement of targets you will be paid 150% of your bonus and at 150%
achievement of targets you will receive 200% of your target quarterly
bonus.  At less than 100% achievement of
targets you will receive a prorated portion of your bonus based on the
percentage achieved


 


Your annual bonus, if any, will be payable in quarterly installments of
up to 85% of the portion of the bonus earned in that quarter based on
achievement of each quarters portion of the annual targets and will be paid by
the 15th day of the month following quarter close, with any remaining bonus
payable at the end of the Company’s fiscal year based on achievement of the
annual targets, and will be subject to your continued employment with the
Company in good standing through the applicable payment date; provided, however,
that in the event of your termination of employment by reason of your death,
permanent disability, by the Company other than for Cause (as defined below) or
by you for Good Reason, the Company shall pay you any unpaid annual bonus in
respect of any fiscal year that has ended prior to the fiscal year in which
such termination occurs, which amount shall be paid at such time annual bonuses
are paid to other similarly situated employees of the Company, but in no event
later than one day prior to the date that is 30 days  following of the last day of fiscal year in
which such termination occurred.


 


Stock Options.  As an incentive for joining the Company, you
will receive 375,000 incentive stock options at the closing market price on November 17th,
2008, which will be the date approved by Aspyra’s Board of Directors pursuant
to the Company’s amended stock option plan which is subject to approval by the
shareholders at the next Annual Shareholders Meeting.  The options will vest at a rate of 25% annually beginning one year
after grant date until fully vested.  The
options will have a five year term. 
In the event that your employment is terminated by the Company other
than for Cause or by you for Good Reason within six months of a change in
control, as defined below, all unvested stock options granted to you will vest
immediately.  Your performance will be
evaluated periodically and based on the evaluation you will be eligible to
receive an additional 250,000 incentive stock options over the next 24 months.


 


For purposes of this Agreement:


 


“Cause” shall mean (i) your act or
acts of personal dishonesty, gross negligence or willful misconduct in the
course of your employment with the Company; (ii) your engagement in
conduct that results, or could be reasonably expected to result, in material
injury to the reputation or business of the Company or its subsidiaries; (iii) your
misappropriation of the assets or business opportunities of the Company or its
subsidiaries; (iv) act or acts of embezzlement or fraud committed by you,
at your direction, or with your prior personal knowledge; (v) your
conviction by a court of competent jurisdiction of, or pleading “guilty” or 


 


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“no contest” to, (x) a felony, or (y) any other criminal
charge (other than minor traffic violations) that has, or could be reasonably
expected to have, an adverse impact on the performance of your duties to the
Company; or (vi) your failure to follow the lawful directions of the Board
or its permitted designee; provided,
however, that with respect to any
Cause termination relying on clause (i), (ii) or (vi) above, you will
be given not less than ten (10) days’ written notice by the Board of the
Company’s intention to terminate you for Cause, such notice to state in detail
the particular act or acts or failure or failures to act that constitute the
grounds on which the proposed termination for Cause is based, and such
termination shall be effective at the expiration of such ten (10) day
notice period unless only if you have not fully cured such act or acts or
failure or failures to act that give rise to Cause during such period.


 


“Good Reason” shall mean, without your
prior consent, (i) a material diminution in your title, duties, or
responsibilities, (ii) a reduction in your base salary or target annual
bonus, or (iii) the failure of the Company to pay any compensation
hereunder when due; provided, however, no resignation for Good Reason hereunder shall be
effective unless you have provided providing the Company with not less than ten
(10) days’ written notice setting forth in reasonable specificity the
condition that constitutes Good Reason, which written notice, to be effective,
must be provided to the Company within sixty (60) days of the occurrence of
such condition, and the Company shall have failed to fully cure the applicable
condition within such ten (10) day notice period.  Notwithstanding the foregoing, in the event
that the Board reasonably believes that you may have engaged in conduct that
could constitute Cause hereunder, the Board may, in its sole and absolute
discretion, suspend you from performing your duties hereunder, and in no event
shall any such suspension constitute an event pursuant to which you may
terminate employment with Good Reason; provided,
that no such suspension shall alter the Company’s obligations under this
Agreement during such period of suspension.


 


“Change in Control,” shall mean, (i) a
merger or consolidation of Aspyra with any other entity, other than (a) a
merger or consolidation which would result in the voting securities of Aspyra
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of Aspyra, at least
50% of the combined voting power of the voting securities of Aspyra or such
surviving entity outstanding immediately after such merger or consolidation, or
(b) a merger or consolidation effected to implement a recapitalization of
Aspyra (or similar transaction) in which no person or entity acquires more than
fifty percent (50%) of the combined voting power of Aspyra’s then outstanding
securities, (ii) the sale or disposition by Aspyra of more than one-third
(1/3rd) of all of Aspyra’s assets other than to an affiliate or subsidiary; (iii) in
any twelve (12) month period, any person or entity becoming the “beneficial
owner” (as defined in Rule 13d-3 under the Security Exchange Act of 1934,
as amended), directly or indirectly, of securities of Aspyra representing Fifty
Percent (50%) or more of the combined voting power of Aspyra’s then outstanding
securities, or (iv) in any twelve (12) month period, if there is a change
in the majority of the Board of Directors of Aspyra (the “Board”) without the
consent of the pre-existing directors.  
The foregoing notwithstanding, a “Change in Control” shall not include
any transaction or series of related transactions (i) that the Board
determines are primarily for the purpose of providing financing for Aspyra or (ii) immediately
following which, in the judgment of the Board, the holders (or their
affiliates) of Aspyra’s capital stock immediately prior to such transaction or
series of transactions continue to have control in any entity which owns all or
substantially all of the assets of Aspyra.


 


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Benefits.  You will be eligible to participate in
health, insurance, retirement and other benefits provided to other similarly
situated employees of the Company.  The
Company expressly reserves the right to change the benefit plans and programs
it offers to its employees at any time.


 


Reimbursement of Expenses.  Aspyra will reimburse you for all reasonable
and customary business related expenses in accordance with our standard
policies and procedures.


 


Housing and Travel Stipend.  For a period of six months from your
commencement date the company will provide suitable living accommodations near
the Company’s headquarters in Calabasas CA, up to four round trip plane fares
per month at market rates to and from your home in Memphis TN, and reimburse
you for the use of a rental car while in California.  At conclusion of the six month period, if
employee’s house has not sold in Memphis Tennessee, the Company agrees to
revisit additional options to provide suitable living accommodations.


 


Relocation Costs.
The Company will reimburse you for the cost of your realtor commission, up to a
maximum of 6% realtor commission rate, on the sale of your home.  The realtor commission will be paid ratably
over a period of 6 months and in the event of termination other than for cause
will be paid in full within 15 calendars days of termination. The Company will
also reimburse you for ordinary and necessary expenses in connection with your
relocation in an amount not to exceed Twenty Thousand Dollars ($20,000.00).


 


Termination. 
The nature of your employment at the Company is and will continue
to be “at will,” meaning that either we or you may terminate your employment at
any time, with or without notice, with or without Cause or Good Reason, and for
any reason or for no reason.  Any
statement or representation to the contrary is ineffective unless put into a
writing executed on behalf of the Board or its designee.  Although the Company expressly reserves the
right to terminate your employment at any time and for any reason, should the
Company terminate your employment other than for Cause (and other than by
reason of your death or permanent disability), or you resign your employment
for Good Reason, in either case, the Company will offer to provide you
severance benefits of: (i) continuation of your base salary, and any
earned but unpaid Quarterly Performance Bonus, payable in accordance with the
Company’s regular payroll practices, for a period of six  (6) months following the date of such
termination (the  “Severance Period”); and (ii) continuation
of your health benefits during the Severance Period (or through such earlier
date that you are eligible, as a result of subsequent employment or service, to
receive health benefits), at the same cost to you as applicable to active
employees during the Severance Period (acknowledging that the Company may
require you to elect your COBRA continuation benefit so that it may provide
such benefit) and all costs up to $750 per month will be covered by the Company
or reimbursed in full to employee for a period of six months.  The provision of any severance benefits
described in this paragraph shall be subject to your execution and delivery of
a general release in favor of the Company and its


 


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affiliates, in a form provided by the Company within ten (10) business
days following your termination (with the Company’s failure to deliver such
release within the applicable time period constituting a waiver of such
requirement), which release may provide for a period to consider such release
not to exceed 45 days from the date such release is delivered to you.  .  Each
installment described in this paragraph (and all other payments to be made in
installments as a result of this Agreement) shall be deemed to be a separate payment
for purposes of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”).


 


Taxes.  The Company may withhold from any payments
made under this Agreement all applicable taxes, including but not limited to
income, employment, and social insurance taxes, as shall be required by law.  You acknowledge and represent that the
Company has not provided any tax advice to you in connection with this
Agreement and have been advised by the Company to seek tax advice from your own
tax advisors regarding this Agreement and payments and benefits that may be
made to you pursuant to this Agreement, including specifically, the application
of the provisions of Section 409A of the Code to such payments.  While the payments and benefits provided
hereunder are intended to be structured in a manner to avoid the implication of
any penalty taxes under Section 409A of the Code, in no event whatsoever
shall the Parent or any of its affiliates (including, without limitation, the
Company) be liable for any additional tax, interest or penalties that may be
imposed on you as a result of Section 409A of the Code or any damages for
failing to comply with Section 409A of the Code (other than for
withholding obligations or other obligations applicable to employers, if any,
under Section 409A of the Code).


 


Entire Agreement. 
This Agreement forms the complete and exclusive statement of your
employment with the Company.  It
supersedes any other representations or promises made to you by anyone, whether
oral or written, and it can only be modified in a written agreement signed by a
properly authorized officer of the Company. 
If you accept this offer, the terms described in this letter constitute
the complete agreement on terms of your employment.


 


Governing Law. This letter agreement will
be governed by the internal laws of the State of California.


 


Successors and
Assigns.  This
Agreement shall inure to the benefit of the Company and its respective
successors and assigns.  Neither this
Agreement nor any of the rights, obligations, or interests arising hereunder
may be assigned by the Company without your prior written consent (which shall
not be unreasonably withheld, delayed, or conditioned), to a person or entity
other than an affiliate or parent entity of the Company, or their respective
successors; provided, however,
that in the event of the merger or consolidation, or transfer or sale of all or
substantially all of the assets, of the Company with or to any other individual
or entity, this Agreement shall, subject to the provisions hereof, be binding
upon and inure to the benefit of such successor, and such successor shall
discharge and perform all the promises, covenants, duties, and obligations of
the Company hereunder, it being agreed that in such circumstances, your consent
will not be required in connection therewith. 
Your rights and obligations under this Agreement shall not be
transferable by you by assignment or otherwise, without the prior written
consent of the Company; provided, however, that if you die, all amounts then payable to you
hereunder shall be paid in accordance with the terms of this Agreement to your
devisee, legatee, or other designee, or if there be no such designee, to your
estate.


 


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Survival.  The provisions of this Agreement shall
survive any termination of your employment to the extent necessary to give
effect thereto.


 


Independent Legal Advice.  You expressly
acknowledge that you have had the opportunity to obtain independent legal
advice about this Agreement prior to execution. 
To the extent that you have failed to obtain independent legal advice,
you acknowledge that such failure will not be used by you as a defense to the
enforcement of this Agreement.


 


Eligibility and right to work in the United
States.  In
compliance with the Immigration Control and Reform Act, this offer of
employment is contingent upon your showing proof within three days of
commencing work of eligibility and right to work in the United States.  Proof is comprised of original documents that
establish your identity and your eligibility to work in this country.


 


If you agree with the terms and conditions of your continued employment
as set forth herein, please sign the enclosed copy of this letter in the space
indicated and return it to the Company. 
Your signature will acknowledge that you have read, understand and agree
to the terms and conditions of this Agreement.


 


	
  Sincerely,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Aspyra Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
    /s/
  John Mutch

  	
   

  
	
  By: John
  Mutch

  	
   

  
	
  Title: Chairman of the Board of Directors

  	
   

  
	
   

  	
   

  
	
  Acknowledged and Agreed as of this 12th day
  of November,
  2008:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   /s/ Rodney W. Schutt

  	
   

  
	
   

  	
  Rodney W. Schutt

  	
   

  



 


 


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