Document:

Exhibit 10.4

ASPYRA, INC.

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS
AGREEMENT is made as of March 26, 2008, by and among ASPYRA, INC., a California corporation (the “Company” or “Issuer”), with
headquarters located at 26115-A Mureau Road, Calabasas, California 91302, and
the purchasers (collectively, the “Purchasers”
and each a “Purchaser”) who are parties to
that certain Securities Purchase Agreement dated as of March 26, 2008 (the
“Purchase Agreement”), with regard to
the following:

 

RECITALS

 

                WHEREAS, the Company and the Purchasers are parties to the
Purchase Agreement;

 

                WHEREAS, as a condition of the obligations of, and an
inducement to, the parties to consummate the purchase by the Purchasers of the
Notes and Warrants (each as defined in the Purchase Agreement), contemplated by
the Purchase Agreement, this Agreement will be executed and delivered;

 

                NOW, THEREFORE, in consideration of their respective
promises contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and
Purchasers hereby agree as follows:

 

                Any capitalized
terms not defined herein will have the meaning set forth in the Purchase
Agreement.

 

ARTICLE I

 

COMPLIANCE WITH THE SECURITIES ACT; REGISTRATION OF SHARES;

 

Section 1.1            Registration Procedures and
Expenses.  The Company
will:

 

1.1.1       subject to receipt of necessary
information from each Purchaser, including all information set forth in Schedule 1 attached hereto, use
commercially reasonable efforts to prepare and file with the U.S. Securities
and Exchange Commission (the “SEC”), within
sixty (60) days after the Closing (the “Filing Date Deadline”),
a registration statement (the “Registration Statement”)
on Form S-1 (or such appropriate form as is available to the Company) to
enable the resale of all of the  shares
of  Common Stock issuable upon conversion
of the Notes and exercise of  the
Warrants by the Purchasers and the placement agent under the Purchase Agreement
(collectively, the “Registrable Shares”)
on a delayed or continuous basis under Rule 415 of the Securities Act
until the earlier of: (1) the date on which all such shares have been
resold or otherwise transferred pursuant to the Registration Statement; (2) the
date on which all such shares are transferred in compliance with Rule 144
under the Securities Act or may be sold or transferred pursuant to Rule 144
under the Securities Act (or any other similar provisions then in force)
without any volume or manner of sale restrictions thereunder (the “Rule 144 Eligibility Date”); or (3) the date on
which all such shares cease to be outstanding 

 

 

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(whether as a result of redemption,
repurchase and cancellation or otherwise); provided, however, that, with
respect to the Registration Statement to be filed pursuant to this Section 1.1.1
(the “Initial Registration  Statement”) and any other registration Statement, the
Company will not be liable to the Purchasers or placement agent for any
liquidated damages for any Effectiveness Failure pursuant to Section 1.5
if (A) such Effectiveness Failure is the result of any delay in
effectiveness of the Registration Statement relating to the SEC’s not
permitting the registration under Rule 415 of the Securities Act of any
number of shares of Common Stock in excess of thirty percent (30%) of the
Company’s public float and (B) the Company is using its best efforts to
promptly file an amendment to the Registration Statement which would enable the
registration of up to thirty percent (30%) of the Company’s public float.  Prior to the filing of the Registration
Statement, the Company will furnish to each purchaser a copy of the “Selling
Shareholder” section of the Registration Statement and to one counsel for the
Purchasers (as designated by the Collateral Agent) a copy of the Registration
Statement, which documents will be subject to their review.  If the Company has not received any comments
thereto within three (3) days of delivery, then such documents will be
deemed approved by the relevant parties;

 

1.1.2       use commercially reasonable efforts,
subject to receipt of necessary information from each Purchaser, including the
information set forth in Schedule 1
attached hereto, to cause the Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing thereof but
within 90 days after the date on which the Company files the Registration
Statement with the SEC (120 days if the Registration Statement is reviewed by
the SEC) (the “Effective Date Deadline”);
provided, however, that if the Company is notified by the SEC that the
Registration Statement will not be reviewed or is no longer subject to further
review and comments, the Effective Date Deadline will be the fifth trading day
on the American Stock Exchange following the date on which the Company is so
notified subject to any reasonable delay which Issuer and Issuer’s counsel in
their sole discretion deem necessary in connection with the disclosure of
material nonpublic information;

 

1.1.3       use commercially reasonable efforts to
prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus, in the form first filed with the
Commission pursuant to Rule 424(b) of the Regulations, or filed as
part of the Registration Statement at the time of effectiveness if no Rule 424(b) filing
is required (the “Prospectus”) used in connection
therewith and take all such other actions as may be necessary to keep the
Registration Statement current and effective for a period (the “Registration Period”) not exceeding, with respect to the
Purchasers’ Common Stock, the earlier of (i) the second anniversary of the
Closing Date (but with respect to Common Stock that is issuable upon exercise
of the Warrants, the foregoing date will be the second anniversary of the date
the related Warrant was exercised), (ii) the Rule 144 Eligibility
Date, and (iii) such time as all Common Stock held by the Purchasers have
been sold (A) pursuant to a registration statement, (B) to or through
a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (C) in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof
so that all transfer restrictions and restrictive legends with respect thereto,
if any, are removed upon the consummation of such sale;

 

1.1.4       promptly furnish to each
Purchaser with respect to the Common Stock registered under the Registration
Statement such reasonable number of copies of the Prospectus, including any
supplements to or amendments of the Prospectus, in order to facilitate the
public sale or other disposition of all or any of the Common Stock by the
Purchasers;

 

 

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1.1.5       promptly take such action as
may be necessary to qualify, or obtain, an exemption for the Common Stock under
such of the state securities laws of United States jurisdictions as will be
necessary to qualify, or obtain an exemption for, the sale of the Common Stock
in states specified in writing by the Purchasers; but the Company will not be
required to qualify to do business or consent to service of process in any
jurisdiction in which it is not now so qualified or has not so consented;

 

1.1.6       bear all expenses actually
incurred in connection with the registration of the Common Stock pursuant to
the Registration Statement, regardless of whether a Registration Statement
becomes effective, including without limitation: (i) all registration and
filing fees and expenses (including filings made with the NASD); (ii) fees
and expenses of compliance with federal securities and state “blue sky” or
securities laws; (iii) expenses of printing (including printing
certificates for the Common Stock and Prospectuses); and (iv) all fees and
disbursements of counsel of the Company and independent certified public
accountants of the Company; but each Purchaser will be responsible for paying
the fees and disbursements for such Purchaser’s respective counsel (with the
exception of those reasonable and necessary fees and expenses actually incurred
by one counsel for the Purchaser’s in connection with the review of the
Registration Statement up to a total of $2,500), the underwriting commissions
or brokerage fees, and taxes of any kind (including, without limitation,
transfer taxes) applicable to any disposition, sale or transfer of such
Purchaser’s Common Stock, and the Company will, in any event, bear its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties); and

 

1.1.7       advise the Purchasers,
within two (2) business days by e-mail, fax or other type of
communication, and, if requested by such person, confirm such advice in
writing: (i) after it will receive notice or obtain knowledge of the
issuance of any stop order by the SEC delaying or suspending the effectiveness
of the Registration Statement or of the initiation or threat of any proceeding
for that purpose, or any other order issued by any state securities commission
or other regulatory authority suspending the qualification or exemption from
qualification of such Common Stock under state securities or “blue sky” laws;
and it will promptly use its commercially reasonable efforts to prevent the
issuance of any stop order or other order or to obtain its withdrawal at the
earliest possible moment if such stop order or other order should be issued;
and (ii) when the Prospectus or any supplements to or amendments of the
Prospectus have been filed, and, with respect to the Registration Statement or
any post-effective amendment thereto, when the same has become effective.

 

1.1.8       In the event of an
underwritten offering of Registrable (an “Underwritten Offering”),
the Company and each participating Purchaser (each a “Participating
Holder”),  will negotiate in
good faith and enter into reasonable and customary agreements (including
underwriting agreements in reasonable and customary form, which may include, in
the case of an underwritten offering on a firm commitment basis, customary
“lock-up” obligations) and take such other actions (including using its best
efforts to make such road show presentations (but in no event will the Company
be required to incur travel and lodging expenses in excess of $20,000 in
connection with all road shows attended by Company management in any twelve
month 

 

 

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period) and otherwise engage in such reasonable marketing support in
connection with any such underwritten offering, including the obligation to
make its executive officers available for such purpose if so requested by the
managing underwriter for such offering) as are reasonably requested by the
managing underwriter in order to expedite or facilitate the sale of such
Registrable Shares. The representations, warranties and covenants of the
Company in any underwriting agreement which are made to or for the benefit of
any underwriters, to the extent applicable, will also be made to and for the
benefit of the Participating Holders. No Participating Holder will be required
to make any representations or warranties in the underwriting agreement except,
if applicable, with respect to such Participating Holder’s organization, good
standing, authority, title to Registrable Shares, lack of conflict of such sale
with such Participating Holder’s material agreements and organizational
documents, and, with respect to written information relating to such
Participating Holder, that such Participating Holder has furnished in writing
expressly for inclusion in such Registration Statement.

 

1.1.8.1    The Company will make available for inspection by each Participating
Holder, any underwriter participating in any disposition pursuant to a
Registration Statement, and any attorney, accountant or other agent retained by
such Participating Holder or any such underwriter (collectively, the “Inspectors”), all financial and other records, pertinent
corporate documents and properties of the Company and any of its subsidiaries
(collectively, the “Records”) as
will be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the officers, directors and employees of the Company
to supply all information reasonably requested by any such Inspector in
connection with such registration.

 

1.1.8.2    The Company
will, in connection with any registration of an Underwritten Offering of
Registrable Shares hereunder, use best efforts to furnish to each Participating
Holder and to the managing underwriter, if any, a signed counterpart, addressed
to such Participating Holder and the managing underwriter, if any, of (a) an
opinion or opinions of counsel to the Company and (b) a comfort letter or
comfort letters from the Company’s independent public accountants pursuant to
Statement on Auditing Standards No. 72 (or any successor thereto), each in
customary form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as each such Participating
Holder and the managing underwriter, if any, reasonably requests.

 

1.1.9  In the event the SEC does
not permit the Issuer to register all of the shares on the Initial Registration
Statement, the Company shall use its best efforts to file subsequent
Registration Statements (each, a “Subsequent Registration
Statement”) to register the Registrable Shares that were not
registered in the Initial Registration Statement as promptly as possible and in
a manner permitted by the SEC.  For
purposes of this Section 1.5, “Filing Date Deadline”
means with respect to each Subsequent Registration Statement filed pursuant
hereto, the later of (i) sixty (60) days after the date when 75% of the
Registrable Shares that were included in the Initial Registration Statement (or
any subsequent Registration Statement) have been sold and (ii) six (6) months
following the Effective Date of the Initial Registration Statement or any
Subsequent Registration Statement, as applicable, or such earlier date as
permitted by the SEC.  For purposes of
this Section 1.5, “Effective Date Deadline”
means with respect to each Subsequent Registration Statement filed pursuant to
this Agreement, the earlier of (A) the ninetieth (90th) day
following the filing date of such Registration Statement (or in the event such
Registration Statement is reviewed by the SEC, the one hundred twentieth (120th)
day 

 

 

4

 

 

following such filing date) or (B) the date which is the fifth
trading day on the American Stock Exchange following the date on which the
Company is so notified subject to any reasonable delay which Issuer and
Issuer’s counsel in their sole discretion deem necessary in connection with the
disclosure of material nonpublic information.

 

1.10    If, for any reason, the SEC
requires that the number of Registrable Shares to be registered for resale
pursuant to any Registration Statement be reduced, the Issuer shall give
written notice to all persons then holding Registrable Shares and such
reduction shall be accomplished as follows:

 

First, 100% of the number of shares of Common Stock issuable upon the
conversion of convertible notes included in such Registration Statement shall
be reduced (such reduction allocated pro rata among the holders thereof) until
the reduction required by the SEC is effected.

 

Second, if the exclusion of the number of shares of Common Stock
pursuant to the paragraph immediately above is insufficient to meet the
reduction required by the SEC, then up to 100% of the shares of Common Stock
issuable upon exercise of the warrants shall be excluded until the reduction
required by the SEC is effected.

 

Notwithstanding
the foregoing, if within ten (10) days after the notice referred to in the
first clause of this Section 1.10 is given any Purchaser gives written
notice to the Issuer that such person desires that the reduction as to its
allocated shares be effected against shares of Common Stock issuable upon
exercise of warrants rather than upon conversion of convertible notes, the
Issuer shall effect such reduction as to such person in accordance with the
person’s instructions.

 

Section 1.2            Transfer of Shares; Suspension.

 

1.2.1       No Purchaser will effect any
disposition of the Securities or its right to purchase the Common Stock that
would constitute a sale within the meaning of the Securities Act, except as
contemplated in the Registration Statement or in accordance with the Securities
Act, and each Purchaser will promptly notify the Company of any changes in the
information set forth in the Registration Statement regarding such Purchaser or
its plan of distribution.

 

1.2.2       Except in the event that
clause 1.2.3 below applies, the Company will, at all times during the
Registration Period, promptly (i) prepare and file from time to time with
the SEC a post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that such Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein not misleading, and so that, as thereafter delivered to purchasers of
the Common Stock being sold thereunder, such Prospectus will not contain an untrue
statement of a material fact or 

 

 

5

 

 

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; (ii) provide the Purchasers with
copies of any documents filed pursuant to clause 1.2.2(i); and (iii) inform
the Purchasers that the Company has complied with its obligations in Section 1.2.2(i) (or
that, if the Company has filed a post-effective amendment to the Registration
Statement which has not yet been declared effective, the Company will notify
the Purchasers to that effect, will use its commercially reasonable  efforts to secure the effectiveness of such
post-effective amendment as promptly as possible and will promptly notify the
Purchasers pursuant to Section 1.2.2(iii) hereof when the amendment
has become effective).

 

1.2.3       Subject to clause 1.2.4 below, in the
event of (i) any request by the SEC or any other federal or state governmental
authority during the period of effectiveness of the Registration Statement for
amendments or supplements to a Registration Statement or related Prospectus or
for additional information, (ii) the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any proceedings
for that purpose, (iii) the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Common Stock for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, or (iv) any
event or circumstance which necessitates the making of any changes in the
Registration Statement or Prospectus, or any document incorporated or deemed to
be incorporated therein by reference, so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and that in the case of the Prospectus, it
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, then the Company will
deliver a notice in writing to the Purchasers (the “Suspension
Notice”) to the effect of the foregoing and, upon receipt of such
Suspension Notice, the Purchasers will refrain from selling any Common Stock
pursuant to the Registration Statement (a “Suspension”)
until the Purchasers’ receipt of copies of a supplemented or amended Prospectus
prepared and filed by the Company, or until it is advised in writing by the
Company that the current Prospectus may be used.  In the event of any Suspension, the Company
will use its commercially reasonable efforts, consistent with the best
interests of the Company and its shareholders, to cause the use of the
Prospectus so suspended to be resumed as soon as reasonably practicable after
the delivery of a Suspension Notice to the Purchasers.

 

1.2.4       Notwithstanding clause 1.2.3, the Company
may on two occasions only suspend sales pursuant to the Registration Statement
for a period of up to thirty (30) days if the Company furnishes to the holders
of the Common Stock a certificate signed by the Company’s Chief Executive
Officer stating that in the good faith judgment of the Company’s Board of
Directors, (i) the offering would interfere in any material respect with
any acquisition, corporate reorganization or other material transaction under
consideration by the Company or (ii) there is some other material
development relating to the condition (financial or other) of the Company that
has not been disclosed to the general public and as to which it is in the
Company’s best interests not to disclose such development; but the Company may
not so suspend sales more than twice in any calendar year without the written
consent of the Collateral Agent.

 

 

6

 

 

1.2.5       In the event of a sale of
Common Stock by any Purchaser under the Registration Statement, such Purchaser
must also deliver to the Company’s transfer agent, with a copy to the Company,
a Certificate of Subsequent Sale substantially in the form attached hereto as Exhibit A,
so that the Common Stock may be properly transferred.

 

Section 1.3            Indemnification.  For the purpose of this Section 1.3, the
term “Registration Statement” will
include any preliminary or final prospectus, exhibit, supplement or amendment
included in or relating to the Registration Statement and the term “Rules and Regulations” means the rules and
regulations promulgated under the Securities Act.

 

1.3.1       Indemnification by the
Company.  The Company will indemnify and
hold harmless the Purchasers and each person, if any, who controls the
Purchasers within the meaning of the Securities Act, against any losses,
claims, damages, liabilities or expenses to which the Purchasers or such
controlling persons may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof
as contemplated below) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, including the Prospectus, financial statements and
schedules, and all other documents filed as a part thereof, as amended at the
time of effectiveness of the Registration Statement, including any information
deemed to be a part thereof as of the time of effectiveness pursuant to
paragraph (b) of Rule 430A, or pursuant to Rule 434 of the Rules and
Regulations, or the Prospectus or any amendment or supplement thereto, or (ii) the
omission or alleged omission to state in any of them a material fact required
to be stated therein or necessary to make the statements in any of them (in the
case of the Prospectus only, in light of the circumstances under which they
were made), not misleading, and will reimburse the Purchasers and each such
controlling person for any legal and other expenses as such expenses are
reasonably incurred by the Purchasers or such controlling persons in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; but the Company will not be liable
in any such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon (i) an untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement, the Prospectus or any amendment or supplement of the Registration
Statement or Prospectus in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Purchasers expressly for use in
the Registration Statement or the Prospectus (each a “Purchaser
Misstatement”), or  (ii) any
untrue statement or omission of a material fact in any Prospectus that is
corrected in any subsequent Prospectus that was delivered to the Purchasers
before the pertinent sale or sales by the Purchasers.

 

1.3.2       Indemnification by a
Purchaser.  The
applicable Purchaser will jointly and severally indemnify and hold harmless the
Company, each of its directors, each of its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of the Securities Act, against any losses, claims, damages, liabilities or
expenses to which the Company, each of its directors, each of its officers who
sign the Registration Statement or controlling person may become subject, under
the Securities Act, the Exchange Act, or any other federal or state statutory
law or regulation insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of 

 

 

7

 

 

or are based upon the inaccuracy of any representation or warranty made
by such Purchaser in this Agreement, the Prospectus, or any amendment or
supplement to the Registration Statement or Prospectus, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of the Prospectus
only, in light of the circumstances under which they were made), not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Purchaser expressly for use
therein; and such Purchaser will reimburse the Company, each of its directors,
each of its officers who signed the Registration Statement or controlling
person for any legal and other expense reasonably incurred by the Company, each
of its directors, each of its officers who signed the Registration Statement or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action for which such person is entitled to be indemnified in accordance with
this Section 1.3.2.

 

1.3.3       Indemnification Procedure.

 

1.3.3.1    Promptly after receipt by an indemnified party under
this Section 1.3 of notice of the threat or commencement of any action,
such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section 1.3, promptly notify the
indemnifying party in writing of the claim; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party for contribution or otherwise under the indemnity
agreement contained in this Section 1.3 except to the extent it is
materially prejudiced as a result of such failure.

 

1.3.3.2    In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek indemnity
from an indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with all other
indemnifying parties similarly notified, to assume the defense thereof; but if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party will have reasonably concluded
that there may be a conflict between the positions of the indemnifying party
and the indemnified party in conducting the defense of any such action or that
there may be legal defenses available to it or other indemnified parties that
are different from or additional to those available to the indemnifying party,
the indemnified party or parties will have the right to select separate counsel
to assume such legal defenses and to otherwise participate in the defense of
such action on behalf of such indemnified party or parties.  Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of
such action, the indemnifying party will not be liable to such indemnified
party under this Section 1.4 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
unless:

 

(1)           the
indemnified party will have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the preceding
sentence (it being understood, however, that the indemnifying party will not be
liable for the expenses of more than one separate counsel, approved by such
indemnifying party representing all of the indemnified parties who are parties
to such action), or

 

 

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(2)           the
indemnifying party will not have counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of action, in each of which cases the reasonable
fees and expenses of counsel will be at the expense of the indemnifying party.

 

1.3.4       Contribution.

 

1.3.4.1    If a claim for indemnification under this Section 1.3
is unavailable to an indemnified party (by reason of public policy or
otherwise), then each indemnifying party, in lieu of indemnifying such
indemnified party, will contribute to the amount paid or payable by such
indemnified party as a result of any losses, claims, damages, liabilities or
expenses referred to in this Agreement, in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified party in
connection with the actions, statements or omissions that resulted in such
losses, claims, damages, liabilities or expenses as well as any other relevant
equitable considerations.  The relative
fault of such indemnifying party and indemnified party will be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission of a material fact, has been taken or made by, or relates to
information supplied by, such indemnifying party or indemnified party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission.  The amount paid or payable by a party as a
result of any losses, claims, damages, liabilities or expenses will be deemed
to include, subject to the limitations set forth in this Section 1.3, any
reasonable attorneys’ or other reasonable fees or expenses incurred by such
party in connection with any proceeding to the extent such party would have
been indemnified for such fees or expenses if the indemnification provided for
in this Section was available to such party in accordance with its terms.

 

1.3.4.2    No party to this Agreement guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any other party to
this Agreement who was not guilty of such fraudulent misrepresentation.

 

Section 1.4            Termination of Conditions and
Obligations.  The
restrictions imposed by Article I upon the transferability of the Common
Stock will cease and terminate as to any particular number of the Common Stock
upon the passage of two (2) years from the Closing of the Purchase
Agreement, but with respect to the Common Stock that are issuable upon exercise
of the Warrants, the foregoing date will be the second anniversary of the date
the relevant Warrant was exercised, or at such time as an opinion of counsel
satisfactory in form and substance to the Company will have been rendered to
the effect that such conditions are not necessary in order to comply with the
Securities Act.

 

Section 1.5            Registration Default. (a) If
the Registration Statement covering 
the  Registrable Shares required
to be filed by  the  Company pursuant  to  Section 1.1
is not for any reason (other than through the sole fault of one or more
Purchaser(s) and/or the placement agent) 

 

 

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either (i) filed on or prior to the Filing Date Deadline or (ii) declared
effective  by  the 
SEC  by  the Effective Date Deadline or (iii) if
such effectiveness is not continuously maintained or the Registration is
suspended (with the exception of a suspension as a result of the occurrence of
such events as set forth in Sections 1.2.3, 1.2.4 or 2.2 or to correct a
Purchaser Misstatement) (an “Unexcused Suspension”),
then the Company shall make the payments to each Purchaser as provided in the
next sentence as liquidated damages and not 
as a  penalty. The amount to be
paid by the Company to a Purchaser as “liquidated damages” shall  be determined as of each Computation Date (as
defined below), and such  amount shall be
equal to 1.5% (the “Liquidated Damage Rate”)
of such Purchaser’s Subscription Price, for the period from (x) in the
case of a failure to file the Registration Statement by the Filing Date
Deadline (a “Filing Failure”), the day
immediately following the Filing Date Deadline to the first Computation Date
with respect to a Filing Failure, and for each 30-day period after a
Computation Date with respect to a Filing Date Deadline to the next successive
Computation Date thereafter, (y) in the case of a failure of the
Registration Statement to be declared effective by the SEC by the Effective
Date Deadline (an “Effectiveness Failure”)
the period from the day immediately following the Effective Date Deadline to
the first Computation Date with respective to an Effectiveness Failure and for
each 30-day period after a Computation Date with respect to an Effectiveness
Failure to the next successive Computation Date with respect to such
Effectiveness Failure and (z) in the case of an Unexcused Suspension, the
period from the first day of such Unexcused Suspension to the first Computation
Date with respect to such Unexcused Suspension 
and for each 30-day period after a Computation Date with respect to such
Unexcused Suspension to the next successive Computation Date with respect to
such Unexcused Suspension.  In each case,
the liquidated damages shall be calculated on a pro rata basis to the date on
which the Registration Statement is filed or declared effective by the SEC or in
the case of an Unexcused Suspension, the first date the Unexcused Suspension is
no longer in effect (the “Periodic Amount”;
provided, however that in no event will the Company be required to make
payments of liquidated damages to any Purchaser pursuant to this Section 1.5
in excess of 12% of such Purchaser’s
Subscription Price (the “Liquidated Damages Cap”).  The full Periodic Amount shall be paid by the
Company in cash.

 

(b) As 
used in Section 1.5(a), “Computation Date” means such date which is
30  days 
after either (i) the first date of Filing Failure, (ii) the
first date of such Effectiveness Failure or (iii) the first date of an
Unexcused Suspension, as the case may be, and each date which is 30 days after
the previous applicable Computation Date until such Registration Statement has
been filed, declared effective or, the effectiveness of the Registration
Statement is no longer subject to an Unexcused Suspension, as the case may be,
and in each case subject to the Liquidated Damage Cap.

 

ARTICLE II

MISCELLANEOUS

 

Section 2.1            Governing Law; Forum; Jury Trial
Waiver.  THIS
AGREEMENT IS GOVERNED BY NEW YORK LAW. 
FEDERAL AND STATE COURTS WITHIN THE STATE OF NEW YORK WILL HAVE
JURISDICTION OVER ALL DISPUTES BETWEEN AND AMONG THE PARTIES HERETO ARISING OUT
OF OR RELATING TO THIS AGREEMENT AND THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS
CONTEMPLATED HEREBY.  THE PARTIES HEREBY
CONSENT TO, AND WAIVE ANY OBJECTIONS TO, PERSONAL JURISDICTION AND VENUE IN
SUCH COURTS OR THAT ANY LITIGATION COMMENCED IN SUCH COURTS IS BROUGHT IN AN
INCONVENIENT FORUM.  EACH PARTY HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED
IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION
DOCUMENTS.

 

 

10

 

 

Section 2.2            Force Majeure.   Notwithstanding anything to the contrary in
this Agreement, the Company will not be liable to the Purchasers for failure or
delay in fulfilling its obligations hereunder to the extent such failure is
caused by or arises out of an act of Force Majeure.  For purposes of this Agreement, “Force
Majeure” means acts of government or
state (including any change in any law, regulation or interpretation of any
existing law or regulation), acts of God, civil commotion, epidemic, fire,
flood, industrial action or organised protests by third parties, natural
disaster, war, failure of the Company’s systems, damage to or failure of any
third party’s computer equipment, software or other systems utilized in the
Company’s business or any other event beyond the reasonable control of the
Company which prevents its performance hereunder during the period of such
occurrence.

 

Section 2.3            Counterparts.  This Agreement may be executed in two or more
counterparts, including, without limitation, by facsimile transmission, all of
which counterparts will be considered one and the same agreement and will
become effective when counterparts have been signed by each party and delivered
to each other party.  In the event any
signature page is delivered by facsimile transmission, the party using
such means of delivery will cause additional original executed signature pages to
be delivered to the other parties as soon as practicable thereafter.

 

Section 2.4            Headings.  The headings of this Agreement are for
convenience of reference and will not form part of, or affect the
interpretation of, this Agreement.

 

Section 2.5            Severability.  If any provision of this Agreement will be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability will not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.

 

Section 2.6            Entire Agreement; Amendments.  This Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
maters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor any Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters.  No provision of this Agreement may be waived
other than by an instrument in writing signed by the party to be charged with
enforcement and no provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and each Purchaser.

 

Section 2.7            Notices.  Notices will be delivered in accordance with
the Purchase Agreement.

 

 

11

 

Section 2.8            Successors and Assigns.  This Agreement will be binding upon and inure
to the benefit of the parties and their successors and assigns.  The Company may not assign this Agreement nor
any of its rights or obligations hereunder without the prior written consent of
each Purchaser.  No Purchaser may assign
this Agreement nor any of its rights or obligations hereunder without the prior
written consent of the Company.  Notwithstanding
the foregoing, each Purchaser may assign its rights and obligations hereunder
to any of its “affiliates,” as that term is defined under the Securities Act,
without the consent of the Company so long as such affiliate is an accredited
investor (within the meaning of Regulation D under the Securities Act) and
agrees in writing to be bound by this Agreement.  This provision will not limit each Purchaser’s
right to transfer the Securities pursuant to the terms of this Agreement or to
assign such Purchaser’s rights hereunder to any such transferee.  In that regard, if a Purchaser sells all or
part of its Common Shares to someone that acquires the shares subject to
restrictions on transferability (other than restrictions, if any, arising out
of the transferee’s status as an affiliate of the Company), such Purchaser will
be permitted to assign its rights hereunder, in whole or in part, to such
transferee.

 

Section 2.9            Third Party Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.

 

Section 2.10         Termination
of this Agreement Notwithstanding anything to the contrary herein, and
other than with respect to the indemnification and contribution obligations
hereunder, each party’s obligations and agreements under this Agreement shall
terminate on the earliest to occur of (i) the date as of which the Holders
may sell all of the Registrable Shares held by them without restriction
pursuant to Rule 144 (or successor thereto) promulgated under the
Securities Act (“Rule 144”), or (ii) the date on which the Purchasers
shall have sold all of the Registrable Shares. Notwithstanding anything to the
contrary herein or in the Purchase Agreement the Company shall not have to file
more than two registration statements pursuant to this Agreement or the
Purchase Agreement. Notwithstanding anything to the contrary herein or in the
Purchase Agreement, Registrable Shares shall not include any shares of the
Issuer’s Common Stock (whether such shares are issuable upon conversion of the
Notes or exercise of the Warrants or otherwise) that may be sold pursuant to Rule 144.

 

[signatures on following pages]

 

 

12

 

 

Signature Page for Registration Rights Agreement

 

IN WITNESS WHEREOF, the undersigned Purchaser
and the Company have caused this Agreement to be duly executed as of the date
first above written.

 

	
  COMPANY:

  
	
   

  
	
  ASPYRA, INC.

  
	
   

  
	
  By:

  	
  /s/ James Zierick

  	
   

  
	
  Name: 

  	
  James Zierick

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  
	
  Date:

  	
  March 26, 2008

  	
   

  
	
   

  
	
   

  
	
  PURCHASER:

  
	
   

  	
   

  
	
   

  	
   

  

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  

 

 

13

 

 

Schedule 1

to

Registration Rights Agreement

 

REGISTRATION STATEMENT QUESTIONNAIRE

 

To:          Aspyra, Inc.

                26115-A Mureau
Road

                Calabasas,
California 91302

                Attention:  
                 Facsimile:

 

Reference is made to the Registration Rights Agreement (the “Agreement”), made between Aspyra, Inc., a California
corporation (the “Company”), and the Purchasers
noted therein.

 

The undersigned hereby furnishes to the Company the following
information for use by the Company in connection with the preparation of the
Registration Statement contemplated by Section 1.1.2 of the Agreement.

 

(1)           Name and Contact
Information:

 

	
  Full legal name of record holder:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address of record holder:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Social Security Number or Taxpayer

  	
   

  	
   

  	
   

  
	
  Identification number of record holder:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Identity of beneficial owner (if

  	
   

  	
   

  	
   

  
	
  Different than record holder):

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name of contact person:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Telephone number of contact person:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fax number of contact person:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  E-mail address of contact person:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

1

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (2)

  	
   

  	
  Beneficial Ownership of Common Stock:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Number of Common Stock owned by Selling Shareholder (including shares
  issuable upon exercise of Note or 

  
	
  conversion of Warrant):

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Number of Common Stock requested to be registered:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (3)

  	
   

  	
  Beneficial Ownership of Other Securities of the
  Company Owned by the Selling Shareholder:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Except as set forth below
  in this Item (3), the undersigned is not the beneficial or registered owner
  of any securities of the Company other than the Common Stock listed above in
  Item (2)(a).

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Type and amount of other
  securities beneficially owned by the Selling Shareholder:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (4)

  	
   

  	
  Relationships with the Company:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Except as set forth below,
  neither the undersigned nor any of its affiliates, officers, directors or
  principal equity holders (5% or more) has held any position or office or has
  had any other material relationship with the Company (or its predecessors or
  affiliates) during the past three years.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  State any exceptions here:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (5)

  	
   

  	
  Selling Shareholder Affiliations:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Is the Selling Shareholder a registered
  broker-dealer?

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Is the Selling Shareholder an affiliate of a
  registered broker-dealer(s)? (For purposes of this response, an “affiliate”
  of, or person “affiliated” with, a specified person, is a person that
  directly, or indirectly through one or more intermediaries, controls or is
  controlled by, or is under common control with, the person specified.)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
										

 

 

2

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
  If the answer to Item (5)(b) is yes, identify
  the registered broker-dealer(s) and describe the nature of the
  affiliation(s):

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)

  	
  If the answer to Item (5)(b) is yes, did the
  Selling Shareholder acquire the Common Stock in the ordinary course of
  business (if not, please explain)?

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e)

  	
  If the answer to Item (5)(b) is yes, did the
  Selling Shareholder, at the time of purchase of the Common Stock, have any
  agreements, plans or understandings, directly or indirectly, with any person
  to distribute the Common Stock (if yes, please explain)?

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (6)

  	
   

  	
  Voting or Investment Control over the Common
  Stock:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If the Selling Shareholder
  is not a natural person, please identify the natural person or persons who
  have voting or investment control over the Common Stock listed in Item
  (2) above:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

                Pursuant to the
Agreement, the undersigned acknowledges that the Company may, by notice to the
Placement Agent, suspend or withdraw the Registration Statement and require
that the undersigned immediately cease sales of Common Stock pursuant to the
Registration Statement under certain circumstances described in the Agreement.
At any time that such notice has been given, the undersigned may not sell
Common Stock pursuant to the Registration Statement.

 

                By signing below,
the undersigned consents to the disclosure of the information contained herein
in its answers to Items (1) through (6) above and the inclusion of
such information in the Registration Statement, any amendments thereto and the
related prospectus. The undersigned understands that such information will be
relied upon by the Company in connection with the preparation or amendment of
the Registration Statement and the related prospectus.

 

                The undersigned
has reviewed the answers to the above questions and affirms that the same are
true, complete and accurate. THE UNDERSIGNED AGREES TO NOTIFY THE COMPANY
IMMEDIATELY OF ANY CHANGES IN THE FOREGOING INFORMATION.

 

	
  Dated:                         ,
  2008

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature of Record Holder

  
	
   

  	
   

  	
  (Please sign your name in exactly the same Manner as the
  certificate(s) for the shares being Registered)

  
	
   

  	
   

  	
   

  

 

 

3

 

 

Exhibit A

 

CERTIFICATE OF SUBSEQUENT SALE

 

Name and address of Transfer Agent

 

RE:                              Sale of Shares
of Common Stock of Aspyra, Inc. (the “Company”)
pursuant to the Company’s Prospectus dated
                          
(the “Prospectus”)

 

Ladies and Gentlemen:

 

                The undersigned
hereby certifies, in connection with the sale of shares of Common Stock of the
Company included in the table of Selling Stockholders in the Prospectus, that
the undersigned has sold the shares pursuant to the Prospectus and in a manner
described under the caption “Plan of Distribution” in the Prospectus and that
such sale complies with all applicable securities laws, including, without
limitation, the Prospectus delivery requirements of the Securities Act of 1933,
as amended.

 

	
  Selling Stockholder (the beneficial owner):

  	
   

  	
   

  
	
  Record Holder (e.g., if held in name of nominee):

  	
   

  	
   

  
	
  Restricted Stock Certificate No.(s):

  	
   

  	
   

  
	
  Number of Shares Sold:

  	
   

  	
   

  
	
  Date of Sale:

  	
   

  	
   

  
							

 

                In the event that
you receive a stock certificate(s) representing more shares of Common
Stock than have been sold by the undersigned, then you should return to the
undersigned a newly issued certificate for such excess shares in the name of
the Record Holder and BEARING A RESTRICTIVE LEGEND.  Further, you should place a stop transfer on
your records with regard to such certificate.

 

	
  Very truly yours,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  
	
  Print Name:

  	
   

  
	
  Title:

  	
   

  
	
  cc:

  	
   

  
			

 

 

1Exhibit 10.5

 

SECURITY AGREEMENT

 

THIS AGREEMENT is made as of March 26, 2008 between ASPYRA, INC., as debtor, a California corporation (“Debtor”), and Jay Weil, as
collateral agent (“Collateral Agent”)
for the secured parties (“Secured Parties”)
pursuant to that certain Securities Purchase Agreement (the “Purchase Agreement”) dated as of the date hereof among
Debtor, Collateral Agent and Secured Parties.

 

FOR VALUE
RECEIVED, Debtor
hereby represents, warrants, covenants and agrees as follows:

 

1.             Security
Interest.   (a) To secure
its obligations under the Notes (as defined in the Purchase Agreement), Debtor
hereby grants to Secured Parties, pari passu, a
present and continuing security interest (the “Security Interest”), which is
junior to the security interest held by Western Commercial Bank in all of
Debtor’s right, title and interest in, to and under all its property (the “Collateral”), whether now owned or existing or hereafter
acquired or arising and wheresoever located, including, without limitation:

 

(i) all of Debtor’s software, including all
source code, object code and documentation, and lexicon databases together,
including all trade secrets, copyrights and other property rights therein;

 

(ii) all of Debtor’s patents and patent
applications, and all continuations, divisions, re-issues and renewals thereof,
in whole or in part, together with any patents that may be issued with respect
thereto;

 

(iii) all of Debtor’s trademarks, service marks and
applications for trademarks and service marks, including, but not limited to,
the  trademarks and applications to
register trademarks listed on Exhibit A
attached hereto and made a part hereof, all common law rights in the trade
marks, service marks and trade names subject to such registrations, all
statutory rights that may attach to any registrations thereof and any related
renewals, and all related good will;

 

(iv) all of Debtor’s copyrights and copyright
applications,;

 

(v) the right to sue for past, present and future
infringement or misappropriation of trade secrets, copyrights, patents,
trademarks and service marks, and all rights corresponding thereto throughout
the world;

 

(vi) all products and proceeds of the foregoing,
including the right to receive license fees, royalties and other payments in
respect thereof, the proceeds of any infringement suits, and so forth;

 

 

(vii) all
equipment (including all machinery, tools and furniture), all inventory
(including all merchandise, raw materials, work in process, finished goods and
supplies), motor vehicles and goods, 
(the “Tangible Collateral”);

 

viii) all
accounts, accounts receivable, rights to the payment of money, payment
intangibles, other receivables, contract rights, contracts, leases, chattel
paper, electronic chattel paper, commercial tort claims, insurance refund
claims and other insurance claims and proceeds, and general intangibles of
Debtor, including, without limitation, all tax refund claims, goodwill, going
concern value, blueprints, designs, computer programs, software, service marks,
inventions, trade names, customer lists, product lines and research and
development, all of Debtor’s rights under all present and further
authorizations, permits, licenses and franchises heretofore or hereafter
granted to Debtor for the operation of Debtor’s business (including, to the
maximum extent permitted by law, all rights incident to appurtenant to such
licenses and permits, including, without limitation, the right to receive all
proceeds derived from or in connection with the sale, assignment or transfer of
such licenses and permits;

 

(ix) all
instruments, documents of title, letters of credit, rights to proceeds of
letters of credit, letter of credit rights, supporting obligations of every
kind and description, policies and certificates of insurance, securities,
securities entitlements, investment property, partnership interests, membership
interests in limited liability companies (including, without limitation, all of
Debtors’ right, title and interest in and to all limited liability companies
and partnerships and to any successor business entities, and the right to
receive all payments and distributions due or to become due under all related
partnership agreements, operation agreements, and other constituent documents
governing or establishing such business entities), bank deposits, deposit
accounts, checking accounts, certificates of deposit and cash;

 

(x) all
accessions, additions or improvements to, and all proceeds and products of, all
of the foregoing, including proceeds of insurance; and

 

(x) all
books, records, documents, computer tapes and discs relating to all of the
foregoing.

 

(b) All
Collateral consisting of accounts, contract rights, chattel paper, general
intangibles and other Collateral described in subparagraph (viii) above
arising from the sale, delivery or provision of goods and/or services are
sometimes hereinafter collectively called the “Customer
Receivables.”

 

(c) Debtor
hereby acknowledges and agrees that the description of Collateral contained in
this Security Agreement covers, and is intended to cover, all assets of
Debtor.  For avoidance of doubt, it is
expressly understood and agreed that, to the extent that the Uniform Commercial
Code (“UCC”) is revised subsequent to the
date hereof such that the definition of any of the foregoing terms included in
the description of Collateral is changed, the parties agree that any property
which is included in such changed definitions which would not otherwise be
included in the foregoing grant on the date hereof be included in such grant
immediately upon the effective date of such revision, it being the intention of
the parties hereto that the description of Collateral set forth herein be
construed to include the broadest possible range of property and assets and all
tangible and intangible personal property and fixtures of Debtor of every kind
and description.

 

2

 

2.             Collateral Agent.  The rights of Secured Parties in the
Collateral will be exercisable by Collateral Agent as agent for Secured Parties
pursuant to the Purchase Agreement.  In
such capacity, from time to time and at any time, Collateral Agent may in its
sole discretion take any and all actions, exercise any and all rights and
remedies, give any and all waivers and forbearances, and make any and all
determinations and elections that Secured Parties are entitled to exercise
under this Agreement and the Notes. 
Debtor will be entitled to rely solely on the actions of Collateral
Agent as binding all Secured Parties.

 

3.             Other
Matters.

 

(a) Perfection.  From time to time and at any time, Debtor
will execute such financing statements, assignments, notices of assignments,
registrations of the collateral assignment of its patents, trademarks and
copyrights, and such other filings, notices and any other documents and do such
other acts as Collateral Agent may reasonably request for the purpose of
perfecting, confirming, continuing, enforcing and/or protecting the security
interest of Secured Parties in the Collateral. 
Debtor will furnish to Collateral Agent promptly upon request such
information as may be necessary to complete such financing statements, filings
and other documents.  From time to time
and at any time, Collateral Agent may file any and all such documents with the
appropriate registries as necessary to perfect, confirm, continue, enforce or
protect the security interest of Secured Parties in the Collateral.  Debtor hereby appoints Collateral Agent as
its attorney in fact with the power and authority to execute and deliver in
Debtor’s name any of the foregoing financing statements, assignments, notices
of assignments and other documents that Debtor refuses or is unable to so
execute and deliver.  This power of
attorney is coupled with an interest and is irrevocable.

 

(b) Obligations of Collateral Agent.  In addition to those duties and powers of
Collateral Agent pursuant to the Purchase Agreement, upon payment in full of
all outstanding amounts due under the Notes, Collateral Agent will promptly
terminate all financing statements, filings and other documents referenced in Section 3(a) hereof,
and execute and deliver to Debtor such termination statements, releases,
re-assignments and other instruments as necessary to re-vest in Debtor full
title to the Collateral and to remove all liens and security interests of
Secured Parties therein.  Collateral
Agent hereby appoints Debtor as its attorney in fact with the power and
authority to execute and deliver in the name of Collateral Agent and/or Secured
Parties any of the foregoing termination statements, releases, re-assignments
and other instruments that Collateral Agent and/or Secured Parties refuse or
are unable to so execute and deliver. 
This power of attorney is coupled with an interest and is irrevocable.

 

(c) Rights and Remedies of Secured Parties.  The rights and remedies of Secured Parties
with respect to the security interest granted hereby are in addition to those
set forth in the Notes, and those which are now or hereafter available to
Secured Parties as a matter of law or equity. 
Each right, power and remedy of Secured Parties provided for herein or
in the Notes, or now or hereafter existing at law or in equity, will be
cumulative and concurrent and will be in addition to every right, power or
remedy provided for herein and the exercise by Secured Parties of any one or
more of the rights, powers or remedies provided for in this Agreement or the Notes,
or now or hereafter existing at law or in equity, will not preclude the
simultaneous or later exercise by any person, including Secured Parties, of any
or all other rights, powers or remedies.

 

3

 

4.             Use of
Collateral.  Unless an
Event of Default has occurred and is continuing under any Note:

 

(a) Debtor may deal
in the Collateral in the ordinary course of business, including the payment of
expenses incurred in the ordinary course of the Debtor’s business and the
repayment of any loans listed on Schedule 4.1, but in no event may Debtor transfer
or assign (i) all or substantially all of its rights in the Collateral to
any other person (including a subsidiary or affiliate of Debtor) or (ii) any
rights in all or any portion of the Collateral to any subsidiary of affiliate
of Debtor, in each case without the prior written consent of Collateral Agent.  Debtor may grant licenses to third parties
for the use of, and/or sublicense of, all or any part of the Collateral, on a
non-exclusive basis or exclusive basis, but in no event shall any such
exclusive license have a term of more than one year unless Debtor first obtains
the prior written consent of Collateral Agent. 
Licenses may be granted for up-front or recurring license fees, or for
other consideration, for such periods of time as Debtor deems appropriate (including
license terms that extend beyond the maturity of any Note), and on such other
terms and conditions as Debtor deems appropriate, and all such licenses,
sublicenses and other grants of rights will survive any repossession of or
foreclosure on the Collateral by Collateral Agent;

 

(b) the proceeds of
Debtor’s licensing and other dealings in the Collateral may be used by Debtor
for any proper corporate purposes; and

 

(c) Debtor may grant one or more third parties a
security interest in some or all of the Collateral in connection with a purchase
money security interest retained by a seller of goods or services.  Provided that it has first obtained the
written consent of Collateral Agent, Debtor may grant one or more third parties
other types of security interests in some or all of the Collateral to third
parties, however, all such interests must be junior and subordinated to the
security interest of Secured Parties and such junior secured parties may not
take any action with respect to the Collateral without the prior written
consent of Collateral Agent.

 

5.             Events of Default. (a) Debtor will be in default under this Agreement upon the
occurrence of any one of the following events (each, an “Event of
Default”):

 

(i) default
by Debtor in the due observance or performance of any material covenant or
agreement contained herein or material breach by Debtor of any material
representation or warranty herein contained and Debtor fails to cure such
default within thirty (30) days following written demand by Collateral Agent;
or

 

(ii) any
event of default under the Notes occurs; or

 

(iii) default
by Debtor in the payment when due of the principal of, or interest on, any
other indebtedness of Debtor to any Secured Party and Debtor fails to cure such
default within thirty (30) days following written demand by Collateral Agent.

 

4

 

(b) If Debtor defaults under
this Agreement or any Note and the commercial value of the Collateral exceeds
the outstanding amounts due to Secured Parties, then Collateral Agent will act
in good faith in a commercially reasonable manner in disposing of or otherwise
dealing in the Collateral in order not to prejudice the interests of Debtor’s
other secured creditors, unsecured creditors and shareholders.

 

6.             Remedies Upon Event of Default.  If any Event of Default will have occurred
and be continuing, Collateral Agent may exercise all the rights and remedies of
a Secured Party under the Purchase Agreement and the UCC (whether or not the
UCC is in effect in the jurisdiction where such rights and remedies are
exercised) and, in addition, Collateral Agent may, without being required to
give any notice, except as herein provided or as may be required by mandatory
provisions of law, (i) apply the cash, if any, then held by it as
Collateral in the manner specified in Section 8, and (ii) if there
will be no such cash or if such cash will be insufficient to pay all the
obligations in full, sell the Collateral, or any part thereof, at public or
private sale or at any broker’s board or on any securities exchange, for cash,
upon credit or for future delivery, and at such price or prices as Collateral
Agent may deem satisfactory. Collateral Agent may require Debtor to assemble
all or any part of the Collateral and make it available to Collateral Agent at
a place to be designated by Collateral Agent which is reasonably
convenient.  Collateral Agent and any
Secured Party may be the purchaser of any or all of the Collateral so sold at
any public sale (or, if the Collateral is of a type customarily sold in a recognized
market or is of a type which is the subject of widely distributed standard
price quotations, at any private sale) and thereafter hold the same,
absolutely, free from any right or claim of whatsoever kind. Upon any such sale
Collateral Agent will have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold. 
Each purchaser at any such sale will hold the Collateral so sold
absolutely, free from any claim or right of whatsoever kind, including any
equity or right of redemption of Debtor. 
Debtor, to the extent permitted by law, hereby specifically waives all
rights of redemption, stay or appraisal which it has or may have under any rule of
law or statute now existing or hereafter adopted.  At any such sale the Collateral may be sold
in one lot as an entirety or in separate parcels, as Collateral Agent may
determine.  Collateral Agent will not be
obligated to make such sale pursuant to any such notice.  Collateral Agent  may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from time to time
by announcement at the time and place fixed for the sale, and such sale may be
made at any time or place to which the same may be adjourned.  In case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by Collateral Agent  until the
selling price is paid by the purchaser thereof, but Collateral Agent will not
incur any liability in case of the failure of such purchaser to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral
may again be sold upon like notice. 
Collateral Agent,  instead of
exercising the power of sale herein conferred upon it, may proceed by a suit or
suits at law or in equity to foreclose the security interests and sell the
Collateral, or any portion thereof, under a judgment or decree of a court or
courts of competent jurisdiction.

 

7.             Right of
Collateral Agent to Use and Operate Tangible Collateral, Etc.  Upon the occurrence of an Event of Default,
to the extent permitted by law, Collateral Agent will have the right and power
to take possession of all or any part of the Tangible Collateral, and to
exclude Debtor and all persons claiming under Debtor wholly or partly
therefrom, and thereafter to hold, store, and/or use, operate, manage and
control the same.  Upon any such taking
of 

 

5

 

possession,
Collateral Agent may, from time to time, at the expense of Debtor, make all
such repairs, replacements, alterations, additions and improvements to and of
the Tangible Collateral as Collateral Agent may deem proper.  In such case, Collateral Agent will have the
right to manage and control the Tangible Collateral and to carry on the
business and to exercise all rights and powers of Debtor in respect thereto as
Collateral Agent will deem best, including the right to enter into any and all
such agreements with respect to the leasing and/or operation of the Tangible
Collateral and any part thereof as Collateral Agent may see fit; and the
Secured Party will be entitled to collect and receive all rents, issues,
profits, fees, revenues and other income of the same and every part
thereof.  Such rents, issues, profits,
fees, revenues and other income will be applied to pay the expenses of holding
and operating the Tangible Collateral and of conducting the business thereof,
and of all maintenance, repairs, replacements, alterations, additions and
improvements, and to make all payments which Collateral Agent may be required
or may elect to make, if any, for taxes, assessments, insurance and other
charges upon the Tangible Collateral or any part thereof, and all other
payments which Collateral Agent may be required or authorized to make under any
provision of this Security Agreement (including legal costs and attorney’s
fees).  The remainder of such rents,
issues, profits, fees, revenues and other income will be applied to the payment
of the obligations in such order or priority as Collateral Agent will determine
(subject to the provisions of Section 8 hereof) and, unless otherwise
provided by law or by a court of competent jurisdiction, any surplus will be
paid over to Debtor.

 

8.             Application of
Collateral and Proceeds.  The proceeds of any sale of, or
other realization upon, all or any part of the Collateral will be applied in
the following order of priorities:

 

(i)            first, to pay the expenses of such
sale or other realization, including those reasonable expenses, liabilities and
advances actually incurred or made by Collateral Agent and its agent and
counsel in connection therewith, and any other unreimbursed expenses of which
Collateral Agent is to be reimbursed pursuant to Section 9 as determined
in its sole discretion;

 

(ii)           second, to the payment of the
obligations in such other manner as Collateral Agent, in its sole discretion,
will determine; and

 

(iii)          finally, to pay to Debtor, or its
successors or assigns, or to a court of competent jurisdiction, or as directed
by a court of competent jurisdiction, any surplus then remaining from such
proceeds.

 

9.             Expenses;
Secured Parties’ Lien.  Debtor will promptly upon demand
pay to Collateral Agent:

 

(a)           the amount of any taxes which the
Secured Parties may have been required to pay by reason of the security
interests herein (including any applicable transfer taxes) or to free any of
the Collateral from any lien thereon; and

 

(b)           the amount of any and all reasonable
out-of-pocket expenses, including the reasonable fees and disbursements of Collateral
Agent’s counsel and of any agents not regularly in its employ, which Collateral
Agent may actually incur in connection with (x) the preparation and
administration of this Agreement, (y) the collection, sale or total
disposition of any of the Collateral, (z) the exercise by Collateral Agent
of any of the powers conferred upon it hereunder, or (aa) any default on Debtor’s
part hereunder.

 

6

 

10.          Covenants of
Debtor.  Debtor hereby covenants and agrees
that Debtor will:

 

(a)           defend the Collateral against all
claims and demands of all persons at any time claiming any interest therein;

 

(b)           provide Collateral Agent with
immediate written notice of (i) any change in the chief executive officer
of Debtor or the office where Debtor maintains its books and records pertaining
to the Customer Receivables, or (ii) the movement or location of
Collateral (outside the ordinary course of business) to or at any address other
than as set forth above;

 

(c)           promptly pay any and all taxes,
assessments and governmental charges upon the Collateral prior to the date
penalties are attached thereto, except to the extent that such taxes,
assessments and charges shall be contested in good faith by Debtor;

 

(d)           immediately notify Collateral Agent
of any event causing a substantial loss or diminution in the value of all or
any material part of the Collateral and the amount or an estimate of the amount
of such loss or diminution; and

 

(e)           keep its records concerning the
Collateral, including the Customer Receivables and all chattel paper included
in the Customer Receivables, at its principal office or at such other place or
places of business as the Secured Party may approve in writing, or if in
electronic form will ensure that it is available at its principal office.  Debtor will hold and preserve such records
and chattel paper and, provided reasonable notice has been given to Debtor,
will permit representatives of the Secured Party at any time during normal
business hours to examine and inspect the Collateral and to make abstracts from
such records and chattel paper and will furnish to the Secured Party such
information and reports regarding the Collateral as the Secured Party may from
time to time reasonably request.

 

11.          Collections with Respect to Customer Receivables.
 Debtor
will, at its expense, and subject at all times to Collateral Agent’s right to
give directions and instructions:

 

(a)           endeavor to collect or cause to be
collected from customers indebted on Customer Receivables, as and when due, any
and all amounts, including interest, owing under or on account of each Customer
Receivables; and

 

(b)           take or cause to be taken such
appropriate action to repossess goods, the sale or rental of which gave rise to
any Customer Receivables, or to enforce any rights or liens under Customer
Receivables, as Debtor or Collateral Agent may deem proper, and in the name of
Debtor, or Collateral Agent , as Collateral Agent  may deem proper;

 

provided
that (x) Debtor will use its best judgment to protect the interests of the
Secured Parties and (y) Debtor shall not be required under this Section 11
to take any action which would be contrary to any applicable law or court
order.  Debtor shall, at the request
of  Collateral Agent 

 

7

 

following
the occurrence of any Event of Default (as defined in Section 5 above),
notify the account debtors of the security interests of the Secured Parties in
any of the Customer Receivables and Collateral Agent may also notify such
account debtors of such security interests. 
Collateral Agent will have full power at any time after such notice to
collect, compromise, endorse, sell or otherwise deal with any or all
outstanding Customer Receivables or the proceeds thereof in the name of either
Collateral Agent or Debtor.  In the event
that, after notice to any account debtors to pay Collateral Agent on behalf of
the Secured Parties, Debtor receives any payment on a Customer Receivable, any
such payments shall be held by Debtor in trust for Collateral Agent and
immediately turned over to Collateral Agent as aforesaid.

 

12.          Interpretation. 
This Agreement will be interpreted in accordance with, and subject to
the provisions of, the Purchase Agreement applicable to all Transaction
Documents (as such term is defined therein). 
Without limiting the foregoing, this Agreement is governed by New York
law.

 

13.          Termination of
this Agreement.  This Agreement
and the  Security Interest shall
terminate immediately on the satisfaction of 75% or more of the Note (as
defined in the Purchase Agreement, whether by conversion or repayment) and the
Collateral Agent shall immediately thereafter 
return to the Company any Collateral directly or indirectly in its
possession or control.

 

[signatures on following page]

 

8

 

[signature page for Security Agreement]

 

SIGNED
AND DELIVERED as
of the date first above written.

 

	
   

  	
  ASPYRA,
  INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  James Zierick

  	
   

  
	
   

  	
  Name:

  	
  James
  Zierick

  	
   

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  COLLATERAL
  AGENT:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jay Weil

  	
   

  
	
   

  	
  Name:

  	
  Jay
  Weil

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

EXHIBIT  A

 

TRADEMARKS AND TRADEMARK APPLICATIONS

 

	
   

  	
   

  	
  Serial #

  	
   

  	
  Reg. #

  	
   

  	
  Mark

  
	
  1

  	
   

  	
  78763848

  	
   

  	
  N/A

  	
   

  	
  ASPYRA
  EXTENDING YOUR REACH

  
	
  2

  	
   

  	
  78666294

  	
   

  	
  3245496

  	
   

  	
  ASPYRA

  
	
  3

  	
   

  	
  76110418

  	
   

  	
  2764775

  	
   

  	
  CYBERPATH

  
	
  4

  	
   

  	
  75742707

  	
   

  	
  2625559

  	
   

  	
  XYMED.COM

  
	
  5

  	
   

  	
  75594808

  	
   

  	
  2386421

  	
   

  	
  IMAGEWEB

  
	
  6

  	
   

  	
  75463890

  	
   

  	
  2390771

  	
   

  	
  MEDVIEW

  
	
  7

  	
   

  	
  75101266

  	
   

  	
  2063089

  	
   

  	
  CYBERPRINT

  
	
  8

  	
   

  	
  75101264

  	
   

  	
  2120960

  	
   

  	
  CYBERRAD

  
	
  9

  	
   

  	
  75101263

  	
   

  	
  2336956

  	
   

  	
  CYBERMED

  
	
  10

  	
   

  	
  75084391

  	
   

  	
  2177228

  	
   

  	
  CYBERLINK

  
	
  11

  	
   

  	
  74672541

  	
   

  	
  2036480

  	
   

  	
  CYBERMATE

  
	
  12

  	
   

  	
  73469850

  	
   

  	
  1320485

  	
   

  	
  CYBERLAB

  
	
  13

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  WEBGATEWAY

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