EXHIBIT 10.23
 
 
TABLE OF CONTENTS
 
Page
 
1.
AGREEMENT TO PURCHASE AND SELL STOCK
1

 
 
(a)
Authorization
1

 
(b)
Agreement to Purchase and Sell Securities
1

 
(c)
Use of Proceeds
1

 
2.
CLOSING
1

 
 
(a)
Closing
1

 
(b)
Delivery
2

 
3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2

 
 
(a)
Organization Good Standing and Qualification
2

 
(b)
Capitalization
2

 
(c)
Subsidiaries
3

 
(d)
Due Authorization
3

 
(e)
Valid Issuance of Stock
3

 
(f)
Governmental Consents
3

 
(g)
Non-Contravention
4

 
(h)
Litigation
4

 
(i)
Compliance with Law and Charter Documents
4

 
(j)
SEC Documents
4

 
(k)
Absence of Certain Changes Since Balance Sheet Date
5

 
(l)
Intellectual Property
5

 
(m)
Registration Rights
6

 
(n)
Title to Property and Assets
6

 
(o)
Taxes
6

 
(p)
Insurance
6

 
(q)
Broker’s or Finder’s Fee
6

 
(r)
Foreign Corrupt Practices
6

 
(s)
Employee Benefit Plans
7

 
(t)
Environmental Compliance
7

 
(u)
Tax Returns and Payments
7

 
4.
REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE PURCHASER
7

 
 
(a)
Power and Authority
7

 
(b)
Authorization
8

 
(c)
Litigation
8

 
(d)
Purchase for Own Account
8

 
(e)
Investment Experience
8

 
(f)
Accredited Purchaser Status
8

 
(g)
Reliance Upon Purchaser’s Representations
8

 
(h)
Receipt of Information
8

 
(i)
HSR Compliance
9

 
(j)
Forms 13D or 13G
9

 
(k)
Reporting Obligations Pursuant to Section 16
9

 
 
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TABLE OF CONTENTS
(Continued)
Page
 
5.
REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT
9

 
 
(a)
Certain Definitions
9

 
(b)
Company Registration
11

 
(c)
Expenses of Registration
12

 
(d)
Registration Procedures
12

 
(e)
Indemnification
13

 
(f)
Information by Holder
15

 
(g)
Restrictions on Transfer
15

 
(h)
Rule 144 Reporting
16

 
(i)
Delay of Registration
16

 
(j)
Transfer or Assignment of Registration Rights
16

 
(k)
Termination of Registration Rights
16

 
6.
COVENANTS
16

 
 
(a)
Satisfaction of Conditions
16

 
(b)
Form D; Blue Sky Laws
17

 
(c)
Expenses
17

 
(d)
Listing of Conversion Shares
17

 
(e)
Forms 13D or 13G
17

 
(f)
Reporting Obligations Pursuant to Section 16
17

 
(g)
Restricted Securities
17

 
(h)
Legends
18

 
(i)
Material Confidential Information
18

 
(j)
Market-Standoff
19

 
7.
CONDITIONS TO THE PURCHASER’S OBLIGATIONS AT CLOSING
19

 
 
(a)
Representations and Warranties True
20

 
(b)
Performance
20

 
(c)
Compliance Certificate
20

 
(d)
Opinion of Company Counsel
20

 
(e)
Absence of Litigation
20

 
(f)
Proceedings and Documents
20

 
(g)
Consents
20

 
(h)
Delivery of the Note
20

 
(i)
UCC-1 Filings
20

 
(j)
Other Actions
21

 
 
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TABLE OF CONTENTS
(Continued)
Page
 
8.
CONDITIONS TO THE COMPANY’S OBLIGATIONS AT CLOSING
21

 
 
(a)
Representations and Warranties True
21

 
(b)
Performance
21

 
(c)
Securities Exemptions
21

 
(d)
Payment of Purchase Price
21

 
(e)
Proceedings and Documents
21

 
(f)
Purchaser Questionnaires
21

 
(g)
Absence of Litigation
21

 
(h)
Other Actions
22

 
9.
RIGHT OF FIRST REFUSAL
24

 
 
10.
MISCELLANEOUS
24

 
 
(a)
Successors and Assigns
24

 
(b)
Governing Law
24

 
(c)
Counterparts
24

 
(d)
Headings
24

 
(e)
Notices
24

 
(f)
Amendments and Waivers
24

 
(g)
Severability
24

 
(h)
Entire Agreement
24

 
(i)
Further Assurances
25

 
(j)
Meaning of Include and Including and Beneficial Ownership
25

 
(k)
Stock Splits, Dividends and other Similar Events
25

 
Schedule A – Schedule of Purchasers
Schedule B – Company Disclosure Schedule
Schedule C – Purchaser’s Disclosure Schedule
Schedule D – Notice and Waiver/Election of Right of First Refusal

Exhibit A – Form of 4.5% Convertible Subordinated Secured Note Due 2013
Exhibit B – Form of Legal Opinion
Exhibit C – Purchaser Questionnaire

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Execution Copy

 
AVISTAR COMMUNICATIONS CORPORATION

CONVERTIBLE NOTE PURCHASE AGREEMENT

 

Dated as of March 29, 2011
 

 
 

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AVISTAR COMMUNICATIONS CORPORATION
CONVERTIBLE NOTE PURCHASE AGREEMENT
 
 
This Convertible Note Purchase Agreement (this “Agreement”) is made and entered
into as of March 29, 2011 by and between Avistar Communications Corporation, a
Delaware corporation (the “Company”), and the purchaser listed on Schedule A
attached hereto (the “Purchaser”).
 
RECITALS
 
WHEREAS, the Company desires to sell to the Purchaser, and the Purchaser desires
to purchase from the Company, a convertible subordinated secured promissory note
on the terms and conditions set forth in this Agreement;
 
WHEREAS, the Company’s obligations under the convertible subordinated secured
note will be secured pursuant to the terms of a Security Agreement among the
Company and the Purchaser of even date herewith (the “Security Agreement”); and
 
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
 
1. AGREEMENT TO PURCHASE AND SELL STOCK
 
(a) Authorization.  The Board of Directors of the Company has authorized the
issuance, pursuant to the terms and conditions of this Agreement, of up to
$3,000,000 in aggregate principal amount of a 4.5% convertible subordinated
secured promissory note due 2013 in the form attached hereto as Exhibit A (the
“Note”).
       
    (b) Agreement to Purchase and Sell Securities.  Subject to the terms and
conditions of this Agreement, the Purchaser agrees to purchase, and the Company
agrees to sell and issue to the Purchaser, at the Closing (as defined below), a
Note in the initial principal amount set forth opposite the Purchaser’s name on
Schedule A attached hereto.  The purchase price of the Note shall be the
principal amount set forth on Schedule A.
 
                (c) Use of Proceeds.  The Company intends to utilize the net
proceeds from the sale of the Note for general corporate purposes and, at the
Company’s option, to repay the Company’s obligations, if any, to JPMorgan Chase
Bank, N.A. under the Company’s revolving line of credit with such bank.
 
2. CLOSING
 
(a) Closing.  The purchase and sale of the Note shall take place, upon the
satisfaction of the closing conditions set forth in Sections 7 and 8 hereof, at
the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650
Page Mill Road, Palo Alto, California, at 10:00 a.m. California time, as soon as
practicable but in any event, subject to applicable law, no later than two (2)
business days after the last of the conditions set forth in Sections 7 and 8
hereof has been satisfied, or at such other time and place as the Company and
the Purchaser mutually agree upon (which time and place are referred to in this
Agreement as the “Closing”).  The date of such Closing is referred to herein as
the “Closing Date.”
 
 
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       (b) Delivery.  At the Closing or promptly thereafter, the Company shall
issue to the Purchaser, against delivery of payment of the amount set forth
opposite the Purchaser’s name on Schedule A, a signed original Note issued in
the name of the Purchaser, with the initial principal amount set forth opposite
the Purchaser’s name on Schedule A and bearing the legend set forth in
Section 6(h) herein and such other legends as may be contemplated by this
Agreement.  Closing documents may be delivered by facsimile.
 
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company hereby represents
and warrants to Purchaser that the statements in this Section 3 are true and
correct, except as set forth in the Company Disclosure Schedule attached hereto
as Schedule B (the “Disclosure Schedule”) and delivered to the Purchaser
concurrently herewith:
 
       (a) Organization Good Standing and Qualification.  The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all corporate power and authority required to
(a) carry on its business as presently conducted and (b) enter into this
Agreement and the other agreements, instruments and documents contemplated
hereby, and to consummate the transactions contemplated hereby and thereby.  The
Company is qualified to do business and is in good standing in each jurisdiction
in which the failure to so qualify would have a Material Adverse Effect on the
Company.  As used in this Agreement, “Material Adverse Effect” means a material
adverse effect on, or a material adverse change in, the business, operations,
prospects, financial condition or results of operations of the applicable party
and its subsidiaries, taken as a whole.
 
       (b) Capitalization.  The capitalization of the Company, without giving
effect to the transactions contemplated by this Agreement, is as follows.  As of
December 31, 2010, the authorized stock of the Company consisted of
(i) 250,000,000 shares of Common Stock, of which 39,121,360 shares were issued
and outstanding; and (ii) 10,000,000 shares of Preferred Stock, none of which
were issued and outstanding.  All such shares of Common Stock and Preferred
Stock have been duly authorized, and all such issued and outstanding shares of
Common Stock have been validly issued, and are fully paid and nonassessable.  No
such outstanding shares of Common Stock were issued in violation of any
pre-emptive rights.
 
        As of December 31, 2010, the Company had also reserved (net of exercises
and purchases): (i) 2,914,209 shares of Common Stock for issuance upon exercise
of options granted under the Company’s 2000 Stock Option Plan; (ii) 1,148,660
shares of Common Stock for issuance to employees of the Company under the
Company’s 2010 Employee Stock Purchase Plan; (iii) 6,878,108 shares of Common
Stock for issuance upon exercise of options and vesting of restricted stock
units granted under the Company’s 2009 Equity Incentive Plan; (iv) 2,746,474
shares of Common Stock available for future grants of options, restricted stock
units, restricted stock etc under the Company’s 2009 Equity Incentive Plan; and
(v) 607,500 shares of Common Stock for issuance upon exercise of options granted
under the Company’s 2000 Director Option Plan (the 2000 Stock Option Plan, the
2009 Equity Incentive Plan and the 2000 Director Option Plan, collectively, the
“Company’s Stock Option Plans”).  All shares of Common Stock subject to issuance
as aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable.  Except as provided in this
Agreement, and except for the (i) shares of Common Stock subject to outstanding
options issued under the Company’s Stock Option Plans and 2010 Employee Stock
Purchase Plan, and (ii) shares of Common Stock reserved for future issuance
pursuant to the Company’s Stock Option Plans and 2010 Employee Stock Purchase
Plan, there are no other equity securities, options, warrants, calls, rights,
commitments or agreements of any character to which the Company is a party or by
which it is bound obligating the Company to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of the capital stock of the Company or obligating the Company to grant,
extend or enter into any such equity security, option, warrant, call, right,
commitment or agreement.
 
 
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       (c) Subsidiaries.  Except for Avistar Systems U.K. Limited, the Company
does not have any subsidiaries, nor does the Company own any capital stock,
assets comprising the business of, obligations of, or any other interest
(including any equity or partnership interest) in, or any outstanding loan or
advance to or from, any person or entity.
 
       (d) Due Authorization.  All corporate actions on the part of the Company
necessary for the authorization, execution, delivery of, and the performance of
all obligations of the Company under this Agreement, the Note and the Security
Agreement (collectively, the “Transaction Documents”) and the authorization,
issuance, reservation for issuance and delivery of the Note being sold under
this Agreement and the shares of Common Stock issuable upon conversion of the
Note (the “Conversion Shares”) have been taken, and the Transaction Documents
constitute the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with their terms, except (a) as may be limited
by (i) applicable bankruptcy, insolvency, reorganization or others laws of
general application relating to or affecting the enforcement of creditors’
rights generally and (ii) the effect of rules of law governing the availability
of equitable remedies and (b) as rights to indemnity or contribution may be
limited under federal or state securities laws or by principles of public policy
thereunder.
 
       (e) Valid Issuance of Stock.  The Note, upon payment therefor by the
Purchaser in accordance with this Agreement, and the Conversion Shares, upon
their issuance in accordance with the Note, will be duly authorized, validly
issued, fully paid and non-assessable.
 
       (f) Governmental Consents.  No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, or
notice to, any federal, state or local governmental authority on the part of the
Company is required in connection with the issuance of the Note and the
Conversion Shares to the Purchaser, or the consummation of the other
transactions contemplated by this Agreement, except (i) such filings as have
been made prior to the date hereof, (ii) the filing of a Form D with respect to
the Note as required by Regulation D promulgated under the Securities Act, and
(iii) such additional post-Closing filings as may be required to comply with
applicable state and federal securities laws.
 
 
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       (g) Non-Contravention.  The execution, delivery and performance of this
Agreement by the Company, and the consummation by the Company of the
transactions contemplated hereby (including issuance of the Note and the
Conversion Shares), do not: (i) contravene or conflict with the Amended and
Restated Certificate of Incorporation or Bylaws of the Company, each as amended;
(ii) constitute a material violation of any provision of any federal, state,
local or foreign law binding upon or applicable to the Company; or
(iii) constitute a default or require any consent under, give rise to any right
of termination, cancellation or acceleration of, or to a loss of any material
benefit to which the Company is entitled under, or result in the creation or
imposition of any lien, claim or encumbrance on any assets of the Company under,
any material contract to which the Company is a party or any material permit,
license or similar right relating to the Company or by which the Company may be
bound or affected.
 
       (h) Litigation.  There is no action, suit, proceeding, claim, arbitration
or investigation (“Action”) pending or, to the Company’s knowledge, threatened:
(a) against the Company, its activities, properties or assets, or any officer,
director or employee of the Company in connection with such officer’s,
director’s or employee’s relationship with, or actions taken on behalf of, the
Company, that, if determined adversely to the Company, is reasonably likely to
have a Material Adverse Effect on the Company, or (b) that seeks to prevent,
enjoin, alter or delay the transactions contemplated by this Agreement
(including issuance of the Note and the Conversion Shares).  The Company is not
a party to or subject to the provisions of, any order, writ, injunction,
judgment or decree of any court or government agency or instrumentality that is
reasonably likely to have a Material Adverse Effect on the Company.  No Action
by the Company is currently pending nor does the Company intend to initiate any
Action that is reasonably likely to have a Material Adverse Effect on the
Company.
 
       (i) Compliance with Law and Charter Documents.  The Company is not in
violation or default of any provisions of its Amended and Restated Certificate
of Incorporation or Bylaws.  The Company has complied in all respects and is in
compliance with all applicable statutes, laws, rules, regulations and orders of
the United States of America and all states thereof, foreign countries and other
governmental bodies and agencies having jurisdiction over the Company’s business
or properties, including without limitation, laws, rules, regulations or orders
relating to the export or import of goods as technology, except for any instance
of non-compliance that has not had, and would not reasonably be expected to
have, a Material Adverse Effect on the Company.
 
       (j) SEC Documents. 
 
(1) Reports.  The Company has made available to the Purchaser prior to the date
hereof a draft copy of its Annual Report on Form 10-K for the fiscal year ended
December 31, 2010 and copies of its quarterly report on Form 10-Q for the fiscal
quarter ended September 30, 2010, its Current Reports on Form 8-K filed since
such report on Form 10-Q (the Form 10-K, Form 10-Q and Form 8-Ks are
collectively referred to herein as the “SEC Documents”).  Each of the SEC
Documents, as of the respective date thereof (or if amended or superseded by a
filing prior to the Closing Date, then on the date of such filing), did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
 
 
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(2) Financial Statements.  The financial statements of the Company in the SEC
Documents present fairly, in accordance with generally accepted accounting
principles (“GAAP”), the financial position of the Company as of the dates
indicated, and the results of its operations and cash flows for the period
therein specified, subject, in the case of unaudited financial statements for
interim periods, to normal year-end audit adjustments.
 
       (k) Absence of Certain Changes Since Balance Sheet Date.  Since
December 31, 2010, the business and operations of the Company have been
conducted in the ordinary course consistent with past practice, and there has
not been:
 
(i) any declaration, setting aside or payment of any dividend or other
distribution of the assets of the Company with respect to any shares of capital
stock of the Company or any repurchase, redemption or other acquisition by the
Company or any subsidiary of the Company of any outstanding shares of the
Company’s capital stock, other than the repurchase of Common Stock acquired upon
the exercise of stock options from former employees or consultants of the
Company pursuant to existing contractual agreements;
 
(ii) any damage, destruction or loss, whether or not covered by insurance,
except for such occurrences, individually and collectively, that have not had,
and would not reasonably be expected to have, a Material Adverse Effect on the
Company;
 
(iii) any waiver by the Company of a valuable right or of a material debt owed
to it;
 
(iv) any change by the Company in its accounting principles, methods or
practices or in the manner it keeps its accounting books and records, except any
such change required by a change in GAAP or by the SEC; or
 
(v) any other event or condition of any character, except for such events and
conditions that have not resulted, and are not expected to result, either
individually or collectively, in a Material Adverse Effect on the Company.
 
       (l) Intellectual Property.  The Company owns or possesses adequate rights
to use all patents, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names, copyrights or other information
(collectively, “Intellectual Property”), which are necessary to conduct its
businesses as currently conducted, except where the failure to currently own or
possess would not result, either individually or in the aggregate, in a Material
Adverse Effect on the Company.  The Company has not received any notice of, and
has no knowledge of, any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
reasonably be expected to have a Material Adverse Effect on the Company, and to
the Company’s knowledge, none of the patent rights owned or licensed by the
Company are unenforceable or invalid.  The Company has entered into proprietary
rights agreements with its key employees to protect its Intellectual
Property.  The Company has not received notice that any of its employees is
infringing the proprietary rights of others.  Section 3(l) of the Disclosure
Schedule contains a complete and accurate list of the registered patents,
trademarks, copyrights and domain names owned by the Company and their
respective expiration dates, if applicable.
 
 
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       (m)  Registration Rights.  Except as contemplated by Section 5 herein,
the Company is not currently subject to any agreement providing any person or
entity any rights (including piggyback registration rights) to have any
securities of the Company registered with the SEC or registered or qualified
with any other governmental authority.
 
       (n) Title to Property and Assets.  Except as set forth in the Fourth
Amended and Restated Security Agreement between the Company and JPMorgan Chase
Bank, N.A. dated January 11, 2010, the properties and assets of the Company are
owned by the Company free and clear of all mortgages, deeds of trust, liens,
charges, encumbrances and security interests except for statutory liens for the
payment of current taxes that are not yet delinquent and for which adequate
reserves have been created and liens, encumbrances and security interests that
arise in the ordinary course of business and do not in any material respect
affect the properties and assets of the Company.  With respect to the property
and assets it leases, the Company is in compliance with such leases in all
material respects.
 
       (o) Taxes.  The Company has filed all necessary federal, state, and
foreign income and franchise tax returns due prior to the date hereof or
requested available extensions thereof and has paid or accrued all taxes shown
as due thereon, and the Company has no knowledge of any material tax deficiency
which has been or might be asserted or threatened against it.
 
       (p) Insurance.  The Company maintains and will continue to maintain
insurance of the types and in the amounts that the Company reasonably believes
is prudent and adequate for its business, all of which insurance is in full
force and effect.
 
       (q) Broker’s or Finder’s Fee.  No agent, broker, person or firm acting on
behalf of the Company or any of the Company’s subsidiaries is, or will be,
entitled to any fee, commission or brokers or finder’s fees from any of the
parties hereto, or from any person controlling, controlled by, or under common
control with any of the parties hereto, in connection with this Agreement or any
of the transactions contemplated hereby.
 
       (r) Foreign Corrupt Practices.  Neither the Company nor any director,
officer, employee, agent or other person acting on behalf of the Company, nor
any subsidiary of the Company, has, in the course of that person’s actions for,
or on behalf of, the Company, (a) used any corporate assets for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity, (b) made any direct or indirect unlawful payment to any
foreign or domestic governmental official or employee, (c) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, or
(d) made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic governmental official or employee.
 
 
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       (s) Employee Benefit Plans.  Each employee benefit plan, within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”), that is maintained, administered or contributed to by the
Company or any of its affiliates for employees or former employees of the
Company and its affiliates has been maintained in compliance with its terms and
the requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Internal Revenue Code of 1986, as
amended (the “Code”); no prohibited transaction, within the meaning of Section
406 of ERISA or Section 4975 of the Code, has occurred with respect to any such
plan, excluding transactions effected pursuant to a statutory or administrative
exemption; and for each such plan that is subject to the funding rules of
Section 412 of the Code or Section 302 of ERISA, no “accumulated funding
deficiency” as defined in Section 412 of the Code has been incurred, whether or
not waived, and the fair market value of the assets of each such plan (excluding
for these purposes accrued but unpaid contributions) exceeds the present value
of all benefits accrued under such plan determined using reasonable actuarial
assumptions.
 
       (t) Environmental Compliance.  The Company has operated its business in
material compliance with all applicable foreign, federal, state or local laws
relating to the protection of human health and the environment (“Environmental
Laws”).  The Company has all the material permits required under applicable
Environmental Laws for the conduct of its business and for the operations on, in
or at it places of businesss (the “Environmental Permits”) and the Company is in
material compliance with the terms and conditions of all such Environmental
Permits.  There exists no environmental condition that requires reporting,
investigation, assessment, cleanup, remediation or any other type of response
action pursuant to any Environmental Law or that could be the basis for any
material liability of the Company pursuant to any Environmental Law.
 
       (u) Tax Returns and Payments.  The Company has timely filed all tax
returns and reports (federal, state and local) as required by law. These returns
and reports are true and correct in all material respects. The Company has paid
all taxes and other assessments due, except those contested by it in good faith.
None of the Company’s federal income tax returns and none of its state income or
franchise tax or sales or use tax returns has ever been audited by governmental
authorities. The Company has made adequate provisions on its books of account
for all taxes, assessments, and governmental charges with respect to its
business, properties, and operations. The Company has withheld or collected from
each payment made to each of its employees, the amount of all taxes, including,
but not limited to, federal income taxes, Federal Insurance Contribution Act
taxes and Federal Unemployment Tax Act taxes required to be withheld or
collected therefrom, and has paid the same to the proper tax receiving officers
or authorized depositaries.
 
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE PURCHASER.  The
Purchaser hereby represents and warrants to the Company, and agrees that:
 
       (a) Power and Authority.  The Purchaser has all requisite authority,
including all trustee, corporate, membership or partnership power and authority
required to enter into this Agreement and the other agreements, instruments and
documents contemplated hereby, and to consummate the transactions contemplated
hereby and thereby.
 
 
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       (b) Authorization. The execution of this Agreement has been duly
authorized by all necessary trustee, corporate, membership or partnership action
on the part of the Purchaser.  This Agreement constitutes the Purchaser’s legal,
valid and binding obligation, enforceable in accordance with its terms, except
(a) as may be limited by (i) applicable bankruptcy, insolvency, reorganization
or other laws of general application relating to or affecting the enforcement of
creditors’ rights generally and (ii) the effect of rules of law governing the
availability of equitable remedies and (b) as rights to indemnity or
contribution may be limited under federal or state securities laws or by
principles of public policy thereunder.
 
       (c) Litigation.  There is no Action pending against the Purchaser that
seeks to prevent, enjoin, alter or delay the transactions contemplated by this
Agreement.
 
       (d) Purchase for Own Account.  The Note being acquired by the Purchaser
is being acquired for investment for the Purchaser’s own account, not as a
nominee or agent, and not with a view to the public resale or distribution
thereof within the meaning of the Securities Act, and the Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same.  The Purchaser also represents that it has not been
formed for the specific purpose of acquiring the Note and that, as of the date
hereof, and except as disclosed in the Purchaser’s public filings with the SEC
or in Schedule C to this Agreement, it is not the beneficial owner of any shares
of Common Stock of the Company.
 
       (e) Investment Experience.  The Purchaser understands that the purchase
of the Note involves substantial risk.  The Purchaser has experience as an
investor in securities of companies and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment in the Note and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of this investment in the Note and protecting
its own interests in connection with this investment.
 
       (f) Accredited Purchaser Status.  The Purchaser is an “accredited
investor” within the meaning of Regulation D promulgated under the Securities
Act.
 
       (g) Reliance Upon Purchaser’s Representations.  The Purchaser understands
that the issuance and sale of the Note to it and the issuance of Common Stock to
the Purchaser in the event of conversion of the Note will not be registered
under the Securities Act on the ground that such issuance and sale will be
exempt from registration under the Securities Act pursuant to Regulation D
promulgated under the Securities Act and/or Section 4(2) of the Securities Act,
and that the Company’s reliance on such exemptions is based on the Purchaser’s
representations set forth herein.
 
       (h) Receipt of Information.  The Purchaser has had an opportunity review
the SEC Documents and to ask questions and receive answers from the Company
regarding the terms and conditions of the issuance and sale of the Note and the
Conversion Shares and the business, properties, prospects and financial
condition of the Company and to obtain any additional information requested and
has received and considered all information it deems relevant to make an
informed decision to purchase the Note.
 
 
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       (i) HSR Compliance. 
 
(i) The Purchaser is its own “ultimate parent entity” as defined in the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR
Act”).
 
(ii) The Purchaser will hold less than $50,000,000 in voting securities of the
Company following execution of this Agreement and conversion of the Note, as
valued under the HSR Act.
 
       (j) Forms 13D or 13G.  The Purchaser has filed or will file promptly with
the SEC any reports regarding its ownership of the Company’s Common Stock as
required by Section 13(d) or Section 13(g) of the Exchange Act and the rules and
regulations promulgated thereunder.  If the Purchaser is required to file such
SEC reports regarding its ownership of the Company’s Common Stock, the Purchaser
will fully and accurately reflect the purchase of the Note by the Purchaser.
 
       (k) Reporting Obligations Pursuant to Section 16.  The Purchaser has
filed or will file promptly with the SEC any reports required to be filed
pursuant to Section 16(a) of the Exchange Act and the rules and regulations
promulgated thereunder by the Purchaser within the time such filings are
required to be made.
 
5. REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT. 
 
       (a) Certain Definitions.  As used in this Agreement, the following terms
shall have the meanings set forth below:
 
(i) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended,
or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
 
(ii) “Holder” shall mean the Purchaser or any holder of Registrable Securities
to whom the registration rights conferred by this Agreement have been duly and
validly transferred in accordance with Section 5(j) of this Agreement.
 
(iii) “Indemnified Party” shall have the meaning set forth in Section
5(e)(iii) hereto.
 
(iv) “Indemnifying Party” shall have the meaning set forth in Section
5(e)(iii) hereto.
 
 
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(v) “Other Selling Stockholders” shall mean persons other than Holders who, by
virtue of agreements with the Company, are entitled to include their Other
Shares in certain registrations hereunder.
 
(vi) “Other Shares” shall mean shares of Common Stock, other than Registrable
Securities (as defined below), (including shares of Common Stock issuable upon
conversion of shares of any currently unissued series of Preferred Stock of the
Company) with respect to which registration rights have been or will be granted.
 
(vii) “Registrable Securities” shall mean (i) shares of Common Stock issued or
issuable upon conversion of the Note issued pursuant to this Agreement and
(ii) any Common Stock issued as a dividend or other distribution with respect to
or in exchange for or in replacement of the shares referenced in (i) above;
provided, however, that Registrable Securities shall not include any shares of
Common Stock described in clause (i) or (ii) above which have previously been
registered or which have been sold to the public either pursuant to a
registration statement or Rule 144, or which have been sold in a private
transaction in which the transferor’s rights under this Agreement are not
validly assigned in accordance with this Agreement.
 
(viii) The terms “register,” “registered” and “registration” shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
 
(ix) “Registration Expenses” shall mean all expenses incurred in effecting any
registration pursuant to this Agreement, including, without limitation, all
registration, qualification, and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, fees and disbursements of a
single law firm acting as counsel for the Holders, Blue Sky fees and expenses,
and expenses of any regular or special audits incident to or required by any
such registration, but shall not include Selling Expenses, fees and
disbursements of other counsel for the Holders and the compensation of regular
employees of the Company, which shall be paid in any event by the Company.
 
(x) “Restricted Securities” shall mean any Registrable Securities required to
bear the legend set forth in Section 6(h) hereof.
 
(xi) “Rule 144” shall mean Rule 144 as promulgated by the SEC under the
Securities Act, as such Rule may be amended from time to time, or any similar
successor rule that may be promulgated by the SEC.
 
(xii) “Rule 145” shall mean Rule 145 as promulgated by the SEC under the
Securities Act, as such Rule may be amended from time to time, or any similar
successor rule that may be promulgated by the SEC
 
 
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(xiii) “Rule 415” shall mean Rule 415 as promulgated by the SEC under the
Securities Act, as such Rule may be amended from time to time, or any similar
successor rule that may be promulgated by the SEC.
 
(xiv) “Selling Expenses” shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of Registrable
Securities and fees and disbursements of counsel for any Holder other than the
single counsel representing all Holders pursuant to subsection (ix) above.
 
        (b) Company Registration. 
 
(i) Company Registration.  If the Company shall determine to register any of its
securities either for its own account or the account of a security holder or
holders, other than a registration relating solely to employee benefit plans, a
registration relating to a corporate reorganization or other Rule 145
transaction, or a registration on any registration form that does not permit
secondary sales, the Company will:
 
(1) promptly give written notice of the proposed registration to all Holders;
and
 
(2) use its commercially reasonable efforts to include in such registration (and
any related qualification under Blue Sky laws or other compliance), except as
set forth in Section 5(b)(ii) below, and in any underwriting involved therein,
all of such Registrable Securities as are specified in a written request or
requests made by any Holder or Holders received by the Company within twenty
(20) days after such written notice from the Company is mailed or
delivered.  Such written request may specify all or a part of a Holder’s
Registrable Securities.
 
(ii) Underwriting.  If the registration of which the Company gives notice is for
a registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to
Section 5(b)(i).  In such event, the right of the Holder to registration
pursuant to this Section 5 shall be conditioned upon such Holder’s participation
in such underwriting and the inclusion of such Holder’s Registrable Securities
in the underwriting to the extent provided herein.  All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the Other Selling Stockholders, if any, distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected by the Company.  Notwithstanding any other provision of this
Section 5(b), if the underwriters advise the Company in writing that marketing
factors require a limitation on the number of shares to be underwritten, the
underwriters may (subject to the limitations set forth below) exclude all
Registrable Securities from, or limit the number of Registrable Securities to be
included in, the registration and underwriting.  The Company shall so advise all
holders of securities requesting registration, and the number of shares of
securities that are entitled to be included in the registration and underwriting
shall be allocated, as follows: (i) first, to the Company for securities being
sold for its own account; (ii) second, to the Holders requesting to include
Registrable Securities in such registration statement based on the pro rata
percentage of Registrable Securities held by such persons, assuming conversion;
and (iii) third, to the holders requesting to include Other Shares in such
registration statement based on the pro rata percentage of Other Shares held by
such persons.  The Registrable Securities, Other Shares or other securities so
excluded shall also be withdrawn from such registration.  If a person who has
requested inclusion in such registration as provided above does not agree to the
terms of any such underwriting, such person shall also be excluded therefrom by
written notice from the Company or the underwriter.  If shares are so withdrawn
from the registration and if the number of shares of Registrable Securities and
Other Shares to be included in such registration was previously reduced as a
result of marketing factors, the Company shall then offer to all persons who
have retained the right to include securities in the registration the right to
include additional securities in the registration in an aggregate amount equal
to the number of shares so withdrawn, with such shares to be allocated among the
persons requesting additional inclusion, in the manner set forth above.
 
 
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(iii) Right to Terminate Registration.  The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 5(b)
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration.
 
       (c) Expenses of Registration.  All Registration Expenses incurred in
connection with registrations pursuant to this Section 5 shall be borne by the
Company.  All Selling Expenses relating to securities registered on behalf of
the Holders shall be borne by the holders of securities included in such
registration pro rata among each other on the basis of the number of Registrable
Securities and Other Shares so registered.
 
       (d) Registration Procedures.  In the case of each registration effected
by the Company pursuant to this Section 5, the Company will keep each Holder
advised in writing as to the initiation of each registration and as to the
completion thereof.  At its expense, the Company will use its commercially
reasonable efforts to:
 
(i) Keep such registration effective for a period ending on the earlier of the
date which is one hundred and twenty (120) days from the effective date of the
registration statement or such time as the Holder or Holders have completed the
distribution described in the registration statement relating thereto;
 
(ii) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement for the period set forth in subsection (i) above;
 
(iii) Furnish such number of prospectuses, including any preliminary
prospectuses, and other documents incident thereto, including any amendment of
or supplement to the prospectus, as a Holder from time to time may reasonably
request;
 
 
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(iv) Use its reasonable efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
such jurisdiction as shall be reasonably requested by the Holders; provided,
that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions;
 
(v) Notify each seller of Registrable Securities covered by such registration
statement at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or incomplete in light of the circumstances then existing, and
following such notification promptly prepare and furnish to such seller a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include an 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 or incomplete
in light of the circumstances then existing;
 
(vi) Cause all such Registrable Securities registered pursuant hereunder to be
listed on each securities exchange or automated quotation system such as the
Nasdaq on which similar securities issued by the Company are then listed, if
any; and
 
(vii) In connection with any underwritten offering pursuant to a registration
statement filed pursuant to this Section 5, enter into an underwriting agreement
in form reasonably necessary to effect the offer and sale of Common Stock,
provided such underwriting agreement contains reasonable and customary
provisions, and provided further, that each Holder participating in such
underwriting shall also enter into and perform its obligations under such an
agreement.
 
       (e) Indemnification. 
 
(i) To the extent permitted by law, the Company will indemnify and hold harmless
each Holder, each of its officers, directors and partners, legal counsel, and
accountants and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, with respect to which registration,
qualification, or compliance has been effected pursuant to this Section 5, and
each underwriter, if any, and each person who controls within the meaning of
Section 15 of the Securities Act any underwriter, against all expenses, claims,
losses, damages, and liabilities (or actions, proceedings, or settlements in
respect thereof) arising out of or based on: (i) any untrue statement (or
alleged untrue statement) of a material fact contained or incorporated by
reference in any prospectus, offering circular, or other document (including any
related registration statement, notification, or the like) incident to any such
registration, qualification, or compliance, (ii) any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (iii) any violation
(or alleged violation) by the Company of the Securities Act, any state
securities laws or any rule or regulation thereunder applicable to the Company
and relating to action or inaction required of the Company in connection with
any offering covered by such registration, qualification, or compliance, and the
Company will reimburse each such Holder, each of its officers, directors,
partners, legal counsel, and accountants and each person controlling such
Holder, each such underwriter, and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating and defending or settling any such claim, loss,
damage, liability, or action; provided that the Company will not be liable in
any such case to the extent that any such claim, loss, damage, liability, or
action arises out of or is based on any untrue statement or omission based upon
written information furnished to the Company by such Holder, any of such
Holder’s officers, directors, partners, legal counsel or accountants, or any
person controlling such Holder, such underwriter or any person who controls any
such underwriter and stated to be specifically for use therein; and provided,
further that, the indemnity agreement contained in this Section 5(e)(i) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld).
 
 
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(ii) To the extent permitted by law, each Holder will, if Registrable Securities
held by such Holder are included in the securities as to which such
registration, qualification, or compliance is being effected, indemnify and hold
harmless the Company, each of such Holder’s directors, officers, partners, legal
counsel, and accountants and each underwriter, if any, of the Company’s
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, each such Holder, and each of their officers, directors, and
partners, and each person controlling such Holder, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on: (i) any untrue statement (or alleged untrue statement) of a material fact
contained or incorporated by reference in any such registration statement,
prospectus, offering circular, or other document, or (ii) any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company and such Holders, directors, officers, partners, legal counsel, and
accountants, persons, underwriters, or control persons for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability, or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular, or other document in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Holder and stated to be specifically for use therein; provided, however,
that the obligations of such Holder hereunder shall not apply to amounts paid in
settlement of any such claims, losses, damages, or liabilities (or actions in
respect thereof) if such settlement is effected without the consent of such
Holder (which consent shall not be unreasonably withheld); and provided that in
no event shall any indemnity under this Section 5(e) exceed the net proceeds
from the offering received by such Holder.
 
(iii) Each party entitled to indemnification under this Section 5(e) (the
“Indemnified Party”) shall give notice to the party required to provide
indemnification (the “Indemnifying Party”) promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
be unreasonably withheld), and the Indemnified Party may participate in such
defense at such party’s expense; and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 5(e), to the extent
such failure is not prejudicial.  No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement that does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.  Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
 
 
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(iv) If the indemnification provided for in this Section 5(e) is held by a court
of competent jurisdiction to be unavailable to an Indemnified Party with respect
to any loss, liability, claim, damage, or expense referred to herein, then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such loss, liability, claim, damage, or expense in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Party on the
one hand and of the Indemnified Party on the other in connection with the
statements or omissions that resulted in such loss, liability, claim, damage, or
expense as well as any other relevant equitable considerations.  The relative
fault of the Indemnifying Party and of the Indemnified Party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the Indemnifying Party or by the Indemnified Party and
the parties’ relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.
 
(v) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
 
       (f) Information by Holder.  Each Holder of Registrable Securities shall
furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in connection with any registration,
qualification, or compliance referred to in this Section 5.
 
       (g) Restrictions on Transfer.  The holder of each certificate
representing Registrable Securities by acceptance thereof agrees to comply in
all respects with the provisions of this Section 5(g).  Each Holder agrees not
to make any sale, assignment, transfer, pledge or other disposition of all or
any portion of the Restricted Securities, unless and until (x) the transferee
thereof has agreed in writing for the benefit of the Company to take and hold
such Restricted Securities subject to, and to be bound by, the terms and
conditions set forth in this Agreement, including, without limitation, this
Section 5, and (y) such transfer complies in all respects with Section 6(g).
 
 
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       (h) Rule 144 Reporting.  With a view to making available the benefits of
certain rules and regulations of the SEC that may permit the sale of the
Restricted Securities to the public without registration, the Company agrees to
use its commercially reasonable efforts to:
 
(i) Make and keep public information regarding the Company available as those
terms are understood and defined in Rule 144 under the Securities Act;
 
(ii) File with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
 
(iii) So long as a Holder owns any Restricted Securities, furnish to the Holder
forthwith upon written request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 and of the Securities Act
and the Exchange Act, a copy of the most recent annual or quarterly report of
the Company, and such other reports and documents so filed as a Holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing a Holder to sell any such securities without registration.
 
       (i) Delay of Registration.  No Holder shall have any right to take any
action to restrain, enjoin, or otherwise delay any registration as the result of
any controversy that might arise with respect to the interpretation or
implementation of this Section 5.
 
       (j) Transfer or Assignment of Registration Rights.  The rights to cause
the Company to register securities granted to a Holder by the Company under this
Section 5 may be transferred or assigned by a Holder only to a transferee or
assignee of not less than 100,000 shares of Registrable Securities (as presently
constituted and subject to subsequent adjustments for stock splits, stock
dividends, reverse stock splits, and the like); provided that (i) such transfer
or assignment of Registrable Securities is effected in accordance with the terms
of Section 5(g) hereof and applicable securities laws, (ii) the Company is given
written notice prior to said transfer or assignment, stating the name and
address of the transferee or assignee and identifying the securities with
respect to which such registration rights are intended to be transferred or
assigned and (iii) the transferee or assignee of such rights assumes in writing
the obligations of such Holder under this Agreement, including without
limitation the obligations set forth in Section 5(g).
 
       (k) Termination of Registration Rights.  The right of any Holder to
request registration or inclusion in any registration pursuant to this Section 5
shall terminate on the earlier of (i) such date on which all shares of
Registrable Securities held by such Holder may immediately be sold under Rule
144 during any ninety (90)-day period, and (ii) three (3) years after the
Closing Date.
 
6. COVENANTS. 
 
       (a) Satisfaction of Conditions.  The parties shall use their best efforts
to satisfy in a timely manner each of the conditions set forth in Section 7 and
Section 8 of this Agreement.
 
 
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       (b) Form D; Blue Sky Laws.  The Company agrees to file a Form D with
respect to the Note as required under Regulation D and to provide upon request a
copy thereof to the Purchaser promptly after such filing.  The Company shall, on
or before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Note and the Conversion Shares for sale to
the Purchaser pursuant to this Agreement and under the Securities Act, the
Exchange Act and applicable securities or Blue Sky laws of the states of the
United States or obtain exemption therefrom, and shall provide upon request
evidence of any such action so taken to the Purchaser on or prior to the Closing
Date.
 
       (c) Expenses.  All fees, costs and expenses (including attorneys’ fees
and expenses) incurred by any party hereto in connection with the preparation,
negotiation and execution of this Agreement and the exhibits and schedules
hereto and the consummation of the transactions contemplated hereby and thereby
(including the costs associated with any filings with, or compliance with any of
the requirements of, any governmental authorities), shall be the sole and
exclusive responsibility of such party.
 
       (d) Listing of Conversion Shares.  The Company shall use its best efforts
to cause the Conversion Shares to be authorized for quotation or listing on the
Nasdaq or such other automated quotation system or securities exchange on which
similar securities issued by the Company are then listed, if any.
 
       (e) Forms 13D or 13G.  The Purchaser shall, when and as required, file
with the SEC any reports regarding its ownership of the Company’s Common Stock
as required by Section 13(d) or Section 13(g) of the Exchange Act and the rules
and regulations promulgated thereunder.
 
       (f) Reporting Obligations Pursuant to Section 16.  The Purchaser shall,
when and as required, file with the SEC any reports required to be filed
pursuant to Section 16(a) of the Exchange Act, and the rules and regulations
promulgated thereunder, by the Purchaser, its officers, directors, employees or
Affiliates within the time such filings are required to be made and to provide
the Company with a copy of all such filings promptly thereafter.
 
       (g) Restricted Securities.  The Purchaser may not sell, offer to sell,
assign, pledge, hypothecate or otherwise transfer any of the Note or the
Conversion Shares unless (i) pursuant to an effective registration statement
under the Securities Act, (ii) the Purchaser provides the Company with an
opinion of counsel, in a generally acceptable form, to the effect that a sale,
assignment or transfer of the Note or the Conversion Shares, as applicable, may
be made without registration under the Securities Act, or (iii) the Purchaser
provides the Company with an opinion of counsel that (A) the Purchaser is or is
not an “affiliate” for purposes of Rule 144, and (B) the Note or the Conversion
Shares, as applicable, can be sold pursuant to Rule 144 under the Securities
Act.  Notwithstanding anything to the contrary contained in this Agreement, the
Purchaser may transfer (without restriction and without the need for an opinion
of counsel) the Note and the Conversion Shares to its Affiliates (as such term
is defined in Rule 405 promulgated by the SEC under the Securities Act; provided
that such Affiliate is an “accredited investor” under Regulation D and such
Affiliate agrees to be bound by the terms and conditions of this Agreement (and
any such Affiliate will following any such transfer be considered a “Purchaser”
hereunder for all purposes).
 
 
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       (h) Legends.  The Purchaser agrees that Note and the certificates for the
Conversion Shares shall bear the following legend:
 
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS OR AN EXEMPTION THEREFROM.”
 
In addition, the Purchaser agrees that the Company may place stop transfer
orders with its transfer agents with respect to the Note and the Conversion
Shares.  The appropriate portion of the legend and the stop transfer orders will
be removed promptly upon delivery to the Company of such satisfactory evidence
as described in Section 6(g) or otherwise as reasonably may be required by the
Company that such legend or stop orders are not required to ensure compliance
with the Securities Act.
 
       (i) Material Confidential Information. 
 
(i) In connection with the Purchaser’s decision-making with respect to their
acquisition or conversion of the Note the Company may furnish to the Purchaser
and its officers, directors, employees and agents, if applicable (collectively
referred to as “Purchaser and Agents”) financial and other information which has
not theretofore been made available to the public (“Material Confidential
Information”).  The Purchaser and Agents shall treat all such Material
Confidential Information in accordance with the provisions of this Agreement and
agree to take or abstain from taking certain other actions herein set
forth.  The term “Material Confidential Information” does not include
information which (i) was already in the Purchasers’ or Agents’ possession prior
to the disclosure by the Company of the Material Confidential Information,
provided that such information is not known by the Purchaser and Agents to be
subject to another confidentiality agreement with or other obligation of secrecy
to the Company or another party, (ii) becomes generally available to the public
other than as a result of disclosure by the Purchasers or Agents or (iii)
becomes available to Purchaser and Agents on a non-confidential basis from a
source other than the Company or its advisors, provided that such source is not
known to the Purchasers or Agents to be bound by a confidentiality agreement
with or other obligation of secrecy to the Company or another party.  The
Purchaser agrees that the Company’s Material Confidential Information,
including, without limitation, the Company’s financial condition and the
progress and conduct of the Company’s business and operations, will be used
solely for the purpose of monitoring the Purchaser’s holdings of the Note, the
conversion of the Note, and monitoring of the Purchaser’s holding of the
Conversion Shares.  The Purchaser also agrees that the Purchaser and Agents will
not disclose any of the Company’s Material Confidential Information now or
hereafter received or obtained from the Company or its representatives to any
third party or otherwise use or permit the use of the Material Confidential
Information, except as permitted herein or as required by applicable law or
legal process, without the prior written consent of the Company; provided,
however, that any such Material Confidential Information of the Company may be
disclosed to such of the Purchaser’s representatives who need to know such
information for the purpose of monitoring the Purchaser’s investment in the Note
and the Conversion Shares, in which case it is understood that the Purchaser’s
representatives, directors, officers, employees, agents and advisors, if
applicable, shall be informed by the Purchaser of the confidential nature of
such information and shall be directed by the Purchaser to treat such
information confidentially.  In the event that the Purchaser and Agents or any
of their representatives becomes legally compelled (by deposition,
interrogatory, request for documents, subpoena, civil investigative demand,
other demand or rules and regulations under the federal securities laws or
similar process) to disclose any of the Material Confidential Information, the
Purchaser and Agents shall provide the Company with prompt prior written notice
of such requirement prior to such disclosure.  In the event that a protective
order or other remedy is not obtained, or that the Company waives compliance
with the provisions hereof, Purchaser agrees to furnish only that portion of the
Material Confidential Information which Purchaser is legally required to furnish
and, where appropriate, to exercise the Purchaser’s and Agents’ reasonable
efforts to obtain assurances that confidential treatment will be accorded such
Material Confidential Information.
 
 
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       (j) Market-Standoff.  Subject to the rights of the Purchaser set forth in
Section 5, if requested by the Company and an underwriter of Common Stock (or
other securities) of the Company, the Purchaser shall not sell or otherwise
transfer, make any short sale of, grant any option for the purchase of, or enter
into any hedging or similar transaction with the same economic effect as a sale,
of any Common Stock (or other securities) of the Company held by the Purchaser
(other than those included in the registration) during the ninety (90)  day
period following the effective date of a registration statement of the Company
filed under the Securities Act (or such other period as may be requested by the
Company or an underwriter to accommodate regulatory restrictions on (i) the
publication or other distribution of research reports and (ii) analyst
recommendations and opinions, including, but not limited to, the restrictions
contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor
provisions or amendments thereto), provided that: all officers and directors of
the Company and holders of at least one percent (1%) of the Company’s voting
securities are bound by and have entered into similar agreements.  The
obligations described in this Section 6(j) shall not apply to a registration
relating solely to employee benefit plans on Form S-l or Form S-8 or similar
forms that may be promulgated in the future, or a registration relating solely
to a transaction on Form S-4 or similar forms that may be promulgated in the
future. The Company may impose stop-transfer instructions and may stamp each
such certificate with the second legend with respect to the shares of Common
Stock (or other securities) subject to the foregoing restriction until the end
of such ninety (90) day (or other) period. Each Holder agrees to execute a
market standoff agreement with said underwriters in customary form consistent
with the provisions of this Section 6(j).
 
7. CONDITIONS TO THE PURCHASER’S OBLIGATIONS AT CLOSING.  The obligations of the
Purchaser under Sections 1 and 2 of this Agreement are subject to the
fulfillment or waiver, at or before the Closing, of each of the following
conditions:
 
       (a) Representations and Warranties True.  Except as set forth in the
Disclosure Schedule, each of the representations and warranties of the Company
contained in Section 3 shall be true and correct in all material respects on and
as of the date hereof and on and as of the date of the Closing, with the same
effect as though such representations and warranties had been made as of the
Closing.
 
 
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       (b) Performance.  The Company shall have performed and complied in all
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the Closing and shall have obtained all approvals, consents and
qualifications necessary to complete the purchase and sale described herein.
 
       (c) Compliance Certificate.  The Company will have delivered to the
Purchaser at the Closing a certificate signed on its behalf by its Chief
Financial Officer certifying that the conditions specified in Sections 7(a) and
7(b) hereof have been fulfilled.
 
       (d) Opinion of Company Counsel. The Purchaser will have received an
opinion on behalf of the Company, dated as of the date of the Closing, from
Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel to the
Company, in the form attached as Exhibit B.
 
       (e) Absence of Litigation.  No proceeding challenging this Agreement or
the transactions contemplated hereby, or seeking to prohibit, alter, prevent or
materially delay the Closing, shall have been instituted before any court,
arbitrator or governmental body, agency or official and shall be pending.
 
       (f) Proceedings and Documents  All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto will be reasonably satisfactory in form and substance to the
Purchaser and to the Purchaser’s legal counsel, and the Purchaser will have
received all such counterpart originals and certified or other copies of such
documents as it may reasonably request.
 
       (g) Consents.  The Company shall have obtained any and all consents,
permits and waivers necessary or appropriate for the performance by the Company
of its obligations pursuant to the Transaction Documents, including the consent
and waiver of JPMorgan Chase Bank, N.A. in form and substance reasonably
satisfactory to the Purchaser.
 
       (h) Delivery of the Note.  The Company shall have delivered to the
Purchaser, against delivery of payment of the amount set forth opposite the
Purchaser’s name on Schedule A, a signed original Note issued in the name of the
Purchaser, with the initial principal amount set forth opposite the Purchaser’s
name on Schedule A.
 
       (i) UCC-1 Filings.  UCC-1 financing statements evidencing the security
interests granted to the Purchaser pursuant to the Security Agreement, in form
and substance reasonably satisfactory to the Purchaser, shall have been filed
with the Secretary of State for the State of Delaware.
 
 
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       (j) Other Actions.  The Company shall have executed such certificates,
agreements, instruments and other documents, and taken such other actions as
shall be customary or reasonably requested by the Purchaser in connection with
the transactions contemplated hereby.
 
8. CONDITIONS TO THE COMPANY’S OBLIGATIONS AT CLOSING.  The obligations of the
Company to the Purchaser under Sections 1 and 2 of this Agreement are subject to
the fulfillment or waiver, on or before the Closing, of each of the following
conditions:
 
       (a) Representations and Warranties True.  The representations and
warranties of the Purchaser contained in Section 4 shall be true and correct in
all material respects on and as of the date hereof, and on and as of the date of
the Closing with the same effect as though such representations and warranties
had been made as of the Closing.
 
       (b) Performance.  The Purchaser shall have performed and complied in all
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by them on or
before the Closing and shall have obtained all approvals, consents and
qualifications necessary to complete the purchase and sale described herein.
 
       (c) Securities Exemptions.  The offer and sale of the Note to the
Purchaser pursuant to this Agreement and the issuance of the Conversion Shares
pursuant to the Note shall be exempt from the registration requirements of the
Securities Act and the registration and/or qualification requirements of all
applicable state securities laws.
   
       (d) Payment of Purchase Price.  The Purchaser shall have delivered to the
Company same day funds in full payment of the purchase price as specified in
Section 1(b).
 
       (e) Proceedings and Documents.  All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto will be reasonably satisfactory in form and substance to the
Company and to the Company’s legal counsel, and the Company will have received
all such counterpart originals and certified or other copies of such documents
as it may reasonably request.
 
       (f) Purchaser Questionnaires.  Unless waived by the Company, the
Purchaser shall have executed and delivered to the Company a Purchaser
Questionnaire, in the form attached hereto as Exhibit C, pursuant to which the
Purchaser shall provide information necessary to confirm the Purchaser’s status
as an “accredited investor” (as such term is defined in Rule 501 promulgated
under the Securities Act).
 
       (g) Absence of Litigation.  No proceeding challenging this Agreement or
the transactions contemplated hereby, or seeking to prohibit, alter, prevent or
materially delay the Closing, shall have been instituted before any court,
arbitrator or governmental body, agency or official and shall be pending.
 
 
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       (h) Other Actions.  The Purchaser shall have executed such certificates,
agreements, instruments and other documents, and taken such other actions as
shall be customary or reasonably requested by the Company in connection with the
transactions contemplated hereby.
 
9. RIGHT OF FIRST REFUSAL
 
The Company hereby grants to the Purchaser because it purchased the aggregate
principal amount of $3,000,000 pursuant to this Agreement, the right of first
refusal to purchase its pro rata share of New Securities (as defined in this
Section 9) which the Company may, from time to time, propose to sell and issue
after the date of this Agreement. The Purchaser’s pro rata share, for purposes
of this right of first refusal, is equal to the ratio of (a) the number of
shares of Common Stock issued upon conversion of the Note purchased by the
Purchaser, as determined immediately prior to the issuance of New Securities, to
(b) the total number of shares of Common Stock outstanding immediately prior to
the issuance of New Securities (assuming full conversion of the Note).  If the
Purchaser has not converted all or part of its Note to Common Stock prior to the
issuance of New Securities, it shall not be entitled to any right of first
refusal pursuant to this Section 9 with respect to such New Securities.
 
       (i) “New Securities” shall mean any capital stock (including Common Stock
and/or Preferred Stock) of the Company whether now authorized or not, and
rights, convertible securities, options or warrants to purchase such capital
stock, and securities of any type whatsoever that are, or may become,
exercisable or convertible into capital stock; provided that the term “New
Securities” does not include:
 
(1) the Note and the Conversion Shares;
 
(2) securities issued or issuable to officers, employees, directors,
consultants, placement agents, and other service providers of the Company (or
any subsidiary) pursuant to stock grants, option plans, purchase plans,
agreements or other employee stock incentive programs or arrangements approved
by the Board of Directors of the Company;
 
(3) securities issued pursuant to the conversion or exercise of options,
warrants or any other convertible or exercisable securities outstanding as of
this date of this Agreement;
 
(4) securities issued or issuable as a dividend or distribution on Preferred
Stock or Common Stock of the Company or pursuant to any stock split or
recapitalization of the Company;
 
(5) securities offered pursuant to a bona fide, firmly underwritten public
offering pursuant to a registration statement filed under the Securities Act;
 
(6) securities issued or issuable pursuant to the acquisition of another
corporation by the Company by merger, purchase of substantially all of the
assets or other reorganization or to a joint venture agreement, provided, that
such issuances are approved by the Board of Directors of the Company;
 
 
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(7) securities issued or issuable to banks, equipment lessors or other financial
institutions pursuant to a commercial leasing or debt financing transaction
approved by the Board of Directors of the Company;
 
(8) securities issued or issuable in connection with sponsored research,
collaboration, technology license, development, OEM, marketing or other similar
agreements or strategic partnerships approved by the Board of Directors of the
Company;
 
(9) securities issued to suppliers or third party service providers in
connection with the provision of goods or services pursuant to transactions
approved by the Board of Directors of the Company;
 
(10) securities of the Company which are otherwise excluded by the affirmative
vote or consent of the Purchaser; and
 
(11) any right, option or warrant to acquire any security convertible into the
securities excluded from the definition of New Securities pursuant to
subsections (1) through (10) above.
 
(ii) In the event the Company proposes to undertake an issuance of New
Securities, it shall give the Purchaser written notice of its intention,
describing the type of New Securities, and their price and the general terms
upon which the Company proposes to issue the same. The Purchaser shall have
twenty (20) days after any such notice is mailed or delivered to agree to
purchase its pro rata share of such New Securities for the price and upon the
terms specified in the notice by giving written notice to the Company, in
substantially the form attached hereto as Schedule D, and stating therein the
quantity of New Securities to be purchased.
 
(iii) In the event the Purchaser fails to exercise fully its right of first
refusal within said twenty (20) day period (the “Election Period”), the Company
shall have ninety (90) days thereafter to sell or enter into an agreement
(pursuant to which the sale of New Securities covered thereby shall be closed,
if at all, within ninety (90) days from the date of said agreement) to sell that
portion of the New Securities with respect to which the Purchaser’s right of
first refusal option set forth in this Section 9 was not exercised, at a price
and upon terms no more favorable to the purchasers thereof than specified in the
Company’s notice to the Purchaser delivered pursuant to this Section 9.  In the
event the Company has not sold within such ninety (90) day period following the
Election Period, or such ninety (90) day period following the date of said
agreement, the Company shall not thereafter issue or sell any New Securities,
without first again offering such securities to the Purchaser in the manner
provided in this Section 9.
 
(iv) The right of first refusal granted under this Agreement shall expire upon
the third anniversary of the date of this Agreement.
 
 
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10. MISCELLANEOUS. 
 
       (a) Successors and Assigns.  The terms and conditions of this Agreement
will inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties.
 
       (b) Governing Law.  This Agreement will be governed by and construed
under the internal laws of the State of New York, without reference to
principles of conflict of laws or choice of laws.
 
       (c) Counterparts.  This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
 
       (d) Headings.  The headings and captions used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Agreement.  All references in this Agreement to sections, paragraphs,
exhibits and schedules will, unless otherwise provided, refer to sections and
paragraphs hereof and exhibits and schedules attached hereto, all of which
exhibits and schedules are incorporated herein by this reference.
 
       (e) Notices.  Any notice required or permitted under this Agreement shall
be given in writing, shall be effective when received, and shall in any event be
deemed received and effectively given upon personal delivery to the party to be
notified or three (3) business days after deposit with the United States Post
Office, by registered or certified mail, postage prepaid, or one (1) business
day after deposit with a nationally recognized courier service such as Federal
Express for next business day delivery under circumstances in which such service
guarantees next business day delivery, or one (1) business day after facsimile
with copy delivered by registered or certified mail, in any case, postage
prepaid and addressed to the party to be notified at the address indicated for
such party on the signature pages hereto or on Schedule A or at such other
address as the Purchaser or the Company may designate by giving at least ten
(10) days advance written notice pursuant to this Section 10(e).
 
       (f) Amendments and Waivers.  This Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Purchaser.  Any amendment or waiver
effected in accordance with this Section 10(f) will be binding upon the
Purchaser, the Company and their respective successors and assigns.
 
       (g) Severability.  If any provision of this Agreement is held to be
unenforceable under applicable law, such provision will be excluded from this
Agreement and the balance of this Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its terms.
 
       (h) Entire Agreement.  This Agreement, the Note and the Security
Agreement together with all exhibits and schedules hereto and thereto
constitutes the entire agreement and understanding of the parties with respect
to the subject matter hereof and supersedes any and all prior negotiations,
correspondence, agreements, understandings, duties or obligations between the
parties with respect to the subject matter hereof.
 
 
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       (i) Further Assurances.  From and after the date of this Agreement upon
the request of the Company or the Purchaser, the Company and the Purchaser will
execute and deliver such instruments, documents or other writings, and take such
other actions, as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the intent and purposes of this Agreement.
 
       (j) Meaning of Include and Including and Beneficial Ownership.  Whenever
in this Agreement the word “include” or “including” is used, it shall be deemed
to mean “include, without limitation” or “including, without limitation,” as the
case may be, and the language following “include” or “including” shall not be
deemed to set forth an exhaustive list.  For purposes of this Agreement,
“beneficial owner,” “beneficially own” and similar words shall have the meaning
ascribed to “beneficial owner” in Rule 13d-3 under the Exchange Act.
 
       (k) Stock Splits, Dividends and other Similar Events.  The provisions of
this Agreement (including the number of shares of Common Stock and other
securities described herein) shall be appropriately adjusted to reflect any
stock split, stock dividend, reorganization or other similar event that may
occur with respect to the Company after the date hereof.
 
[The balance of this page is left blank intentionally.]
 
 
 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
 

  AVISTAR COMMUNICATIONS CORPORATION          
 
By:
/s/ Elias MurrayMetzger      Name: Elias MurrayMetzger       Title: Chief
Financial Officer, Chief Administrative Officer and Corporate Secretary         
 

 
 

[Avistar Convertible Note Purchase Agreement]
 
 

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  THE GERALD J. BURNETT AND MARJORIE J. BURNETT REVOCABLE TRUST FOR THE BENEFIT
OF GERALD J. AND MARJORIE J. BURNETT          
 
By:
/s/ Gerald J. Burnett, Marjorie J. Burnett             Name:  Gerald J.
Burnett, Marjorie J. Burnett      Title:  Trustees           

                                            
 
 
[Avistar Convertible Note Purchase Agreement]
 
 

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Schedule A
 
Schedule of Purchasers
 

Name of Purchaser
 
Initial Principal Amount and Purchase Price of Note
 
The Gerald J. Burnett and Marjorie J. Burnett Revocable Trust for the benefit of
Gerald J. and Marjorie J. Burnett
c/o Avistar Communications Corp.
1875 South Grant St
10th Floor
San Mateo CA US 94402
 
$3,000,000.00
   
TOTAL
 
$3,000,000.00

 

 

 
 

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Schedule B
 
Company Disclosure Schedule

This Disclosure Schedule is made and given pursuant to Section 3 of the
Convertible Note Purchase Agreement, dated as of March 29, 2011 (the
“Agreement”), among Avistar Communications Corporation (the “Company”) and the
Purchasers listed on Schedule A thereto.  All capitalized terms used but not
defined herein shall have the meanings as defined in the Agreement, unless
otherwise provided.  The section numbers below correspond to the section numbers
of the representations and warranties in the Agreement; provided, however, that
any information disclosed herein under any section number shall be deemed to be
disclosed and incorporated into any other section number under the Agreement
where such disclosure would be readily apparent.

The information contained herein is disclosed solely for the purposes of the
Agreement, and no information contained herein shall be deemed to be an
admission by any party hereto to any third party of any matter whatsoever,
including without limitation, any violation of law or breach of any
agreement.  The information contained in this Disclosure Schedule is
confidential, proprietary information of the Company, and the Purchaser shall be
obligated to maintain and protect such confidential information.

 
 

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3(g)

Under the Lease Agreement among the Registrant and Crossroads Associates and
Clocktower Associates dated December 1, 2006, the Company may not make an
assignment or hypothecation without prior written consent.

Under the Company’s Form of Indemnification Agreement, a change in control
changes the method of attorney selection in the case of indemnification of the
individual by the Company.

Under the Settlement Agreement among the Registrant, Collaboration Properties,
Inc. and Polycom, Inc. dated November 12, 2004, the Company may not make an
assignment unless in connection with a disposition of all assets.

Under the Patent Cross-License Agreement Among the Company, Collaboration
Properties, Inc. and Polycom, Inc. dated November 12, 2004, the Company may not
make an assignment without prior written consent.

Under the Patent License Agreement dated May 15, 2006 among the Registrant,
Collaboration Properties, Inc., Sony Corporation and Sony Computer
Entertainment, Inc., any transfer of certain patents is subject to the granted
license as well as the covenant not to sue contained in the agreement.

Under the Patent License Agreement dated February 15, 2007 by and among the
Registrant, Collaboration Properties, Inc., Tandberg ASA, Tandberg Telecom AS,
and Tandberg, Inc., any assignee must agree in writing to become subject to that
agreement.

Under the Patent License Agreement dated May 15, 2007 by and among the
Registrant, Avistar Systems (UK) Limited, and Radvision LTD., an assignment may
only occur upon the transfer of all assets and written notice.

Patent License Agreement between Avistar Communications Corporation and
International Business Machines Corporation dated September 9, 2008, an
assignment may only occur if such assignment is made subject to the terms of the
Patent License Agreement.

Employment Agreement between Avistar Communications Corporation and Robert Kirk
dated July 14, 2009, a change in control would cause 50% of the options granted
to accelerate and become fully vested.

3(h) Litigation has been used in the past and may be considered in the future to
enforce the Company’s rights pertaining to its intellectual property
portfolio.  The entry into litigation to enforce these rights may have a
Material Adverse Effect on the Company.

 
 

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3(l) See attached table for a listing of trademarks and patents.

Patent #
US
Foreign
Patent Title
Filing Date
Priority Date
App #
Family
CA 2,318,395
 
CA
Multifunction Communication Service Device
07/29/99
01/27/98
2,318,395
“Lensless Cam I”
US 7,738,492
US
 
Network Communication Bandwidth Management
08/25/08
02/08/08
12/198,085
“Bandwidth Manager I”
               

3(n) Avistar has granted a security interest to Comerica Bank- California in
certain restricted money market accounts maintained by the Company with Comerica
Bank – California to secure the Company’s obligations with respect to a letter
of credit in the amount of $48,400 issued by such bank to Clemmons Properties
Partners L.P.

 
 

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Schedule C
 
Purchaser’s Disclosure Schedule
 

 
Section 4(d)
 
The Purchaser beneficially owns 16,414,700 shares of the Company’s Common Stock.

 
 

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Schedule D
 
NOTICE AND WAIVER/ELECTION OF
RIGHT OF FIRST REFUSAL
 
I do hereby waive or exercise, as indicated below, my rights of first refusal
under the Convertible Note Purchase Agreement dated as of March 29, 2011 (the
“Agreement”):
 
1. Waiver of 20 Days’ Notice Period in Which to Exercise Right of First Refusal:
(please check only one)
 
 
(   )
WAIVE in full the 20-day notice period provided to exercise my right of first
refusal granted under the Agreement.

 
 
(   )
DO NOT WAIVE the notice period described above.

 
2. Issuance and Sale of New Securities:  (please check only one)
 
 
(   )
WAIVE in full the right of first refusal granted under the Agreement with
respect to the issuance of the New Securities.

 
 
(   )
ELECT TO PARTICIPATE in $__________ in New Securities proposed to be issued by
Avistar Communications Corporation, representing less than my pro rata portion
of the aggregate of $__________ in New Securities being offered in the
financing.

 
 
 (   )
ELECT TO PARTICIPATE in my full pro rata portion of the aggregate of
$____________ in New Securities being made available in the financing.

 
Date: ___________,
20__                                                             
                ______________________________________
Signature of Stockholder or Authorized
Signatory
 
                                ______________________________

Title, if applicable
 
This is neither a commitment to purchase nor a commitment to issue the New
Securities described above. Such issuance can only be made by way of definitive
documentation related to such issuance. Avistar will supply you with such
definitive documentation upon request or if you indicate that you would like to
exercise your first offer rights in whole or in part.

 
 

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Exhibit A
 
Form of Convertible Subordinated Secured Note Due 2013

 
 

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Exhibit B
 
Form of Legal Opinion

 
 

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Exhibit C
 
Purchaser Questionnaire

 
 

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