EXHIBIT 10.24

Execution Copy

 
SECURITY AGREEMENT
 
This Security Agreement, dated as of March 29, 2011 (this “Security Agreement”),
is executed by Avistar Communications Corporation, a Delaware corporation
(together with its successors and assigns, “Company”), in favor of The Gerald J.
Burnett and Marjorie J. Burnett Revocable Trust for the benefit of Gerald J.
Burnett and Marjorie J. Burnett (“Secured Party”).
 
RECITALS
 
A.           Company and Secured Party have entered into a Convertible Note
Purchase Agreement, dated as of the date hereof (the “Purchase Agreement”),
pursuant to which the Company has issued a 4.5% Convertible Subordinated Secured
Note Due 2013, dated as of the date hereof (as amended, modified or otherwise
supplemented from time to time, the “Note”) in favor of Secured Party.
 
B.           In order to induce Secured Party to purchase the Note, Company has
agreed to enter into this Security Agreement and to grant Secured Party, the
security interest in the Collateral described below.
 
AGREEMENT
 
NOW, THEREFORE, in consideration of the above recitals and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Company hereby agrees with Secured Party as follows:
 
1. Security Interest.
 
(a) Grant of Security Interest.  As security for the Obligations, Company hereby
pledges to Secured Party and grants to Secured Party a security interest in all
of its right, title and interest in and to the property described in Attachment
1 hereto, whether now owned or hereafter acquired or arising and wherever
located (collectively, the “Collateral”).
 
(b) Exclusions.  Notwithstanding the foregoing or anything else contained herein
to the contrary, “Collateral” shall not include (i) any application for a
trademark (including, without limitation, intent-to-use trademark or service
applications and any goodwill associated therewith) that would otherwise be
deemed invalidated, cancelled or abandoned due to the grant of a Lien thereon
unless and until such time as the grant of such Lien will not affect the
validity of such trademark; (ii) any of the outstanding capital stock of any
subsidiary of Company that is a controlled foreign corporation (as defined in
the Internal Revenue Code of 1986, as amended) in excess of 65% of the voting
power of all classes of capital stock of such Controlled Foreign Corporation
entitled to vote; (iii) any property subject to Permitted Liens if the granting
of a Lien hereunder in such property is prohibited by or would constitute a
default under any agreement or document governing such property, provided that
upon the termination or lapsing of any such prohibition, such property shall
automatically be part of the Collateral; or (iv) any restricted money market
accounts maintained by the Company with Comerica Bank – California to the extent
the same secures the Company’s obligations with respect to the letter of credit
in the amount of $48,400 issued by such bank to Clemmons Properties Partners
L.P.
 
2. General Representations and Warranties.  Company represents and warrants to
Secured Party that:
 
 
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(a) Company is the owner of the Collateral (or, in the case of after-acquired
Collateral, at the time Company acquires rights in the Collateral, will be the
owner thereof) and that no other Person has (or, in the case of after-acquired
Collateral, at the time Company acquires rights therein, will have) any right,
title, claim or interest (by way of Lien or otherwise) in, against or to the
Collateral, other than Permitted Liens;
 
(b) upon the filing of UCC-1 financing statements in the appropriate filing
offices, Secured Party has (or in the case of after-acquired Collateral, at the
time Company acquires rights therein, will have) a perfected security interest
in the Collateral to the extent that a security interest in the Collateral can
be perfected by such filing, except for Permitted Liens;
 
(c) all Inventory has been (or, in the case of hereafter produced Inventory,
will be) produced in compliance with applicable laws, including the Fair Labor
Standards Act; and
 
(d) all accounts receivable and payment intangibles are genuine and enforceable
against the party obligated to pay the same.
 
3. Covenants Relating to Collateral.  Company hereby agrees:
 
(a) to perform all acts that may be necessary to maintain, preserve, protect and
perfect the Collateral, the Lien granted to Secured Party therein and the
perfection and priority of such Lien, except for Permitted Liens;
 
(b) not to use or permit any Collateral to be used (i) in violation in any
material respect of any applicable law, rule or regulation, or (ii) in violation
of any policy of insurance covering the Collateral;
 
(c) to pay promptly when due all taxes and other governmental charges, all Liens
and all other charges now or hereafter imposed upon or affecting any Collateral;
 
(d) without written notice to Secured Party, (i) not to change Company’s name or
its chief executive office, (ii) not to change Company’s state of incorporation;
 
(e) to procure, execute and deliver from time to time any endorsements,
assignments, financing statements and other writings reasonably deemed necessary
or appropriate by Secured Party to perfect, maintain and protect its Lien
hereunder and the priority thereof; and
 
(f) not to sell or otherwise dispose of or transfer any Collateral or right or
interest therein, and to keep the Collateral free of all Liens except Permitted
Liens; provided that Company may sell, lease, transfer, license or otherwise
dispose of any of the Collateral (excluding Royalty Payments) in the ordinary
course of business, including, without limitation, (i) the sale of inventory,
(ii) dispositions of worn-out or obsolete equipment, (iii) licenses and similar
arrangements for the use of the property of Company, and (iv) transfers of
property and assets for fair value.
 
(g) that notwithstanding anything in this Security Agreement, within twenty (20)
days of the date hereof, Company shall have (i) notified Sony Corporation and
Sony Computer Entertainment, Inc., with acknowledgement thereof from each of
them, to direct all Royalty Payments to a deposit account established for the
sole purpose of receiving such Royalty Payments and (ii) established such
deposit account and entered into an account control agreement, in form and
substance reasonably satisfactory to Company and Secured Party, to perfect the
first priority security interest in such deposit account granted herein.
 
 
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4. Authorized Action by Secured Party.  Company hereby irrevocably appoints
Secured Party as its attorney-in-fact (which appointment is coupled with an
interest) and agrees that Secured Party may perform (but Secured Party shall not
be obligated to and shall incur no liability to Company or any third party for
failure so to do) any act which Company is obligated by this Security Agreement
to perform, and to exercise such rights and powers as Company might exercise
with respect to the Collateral, including the right to (a) collect by legal
proceedings or otherwise and endorse, receive and receipt for all dividends,
interest, payments, proceeds and other sums and property now or hereafter
payable on or on account of the Collateral; (b) enter into any extension,
reorganization, deposit, merger, consolidation or other agreement pertaining to,
or deposit, surrender, accept, hold or apply other property in exchange for the
Collateral; (c) make any compromise or settlement, and take any action it deems
advisable, with respect to the Collateral; (d) insure, process and preserve the
Collateral; (e) pay any indebtedness of Company relating to the Collateral; and
(f) file UCC financing statements and execute other documents, instruments and
agreements required hereunder; provided, however, that Secured Party shall not
exercise any such powers granted pursuant to subsections (a) through (e) prior
to the occurrence of an Event of Default and shall only exercise such powers
during the continuance of an Event of Default.  Company agrees to reimburse
Secured Party upon demand for any reasonable costs and expenses, including
attorneys' fees, Secured Party may incur while acting as Company's
attorney-in-fact hereunder, all of which costs and expenses are included in the
Obligations.  It is further agreed and understood between the parties hereto
that such care as Secured Party gives to the safekeeping of its own property of
like kind shall constitute reasonable care of the Collateral when in Secured
Party 's possession; provided, however, that Secured Party shall not be required
to make any presentment, demand or protest, or give any notice and need not take
any action to preserve any rights against any prior party or any other person in
connection with the Obligations or with respect to the Collateral.
 
5. Default and Remedies.
 
(a) Default.  Company shall be deemed in default under this Security Agreement
(i) if any representation or warranty of the Company contained herein shall
prove to be untrue in any material respect, (ii) if the Company shall breach any
covenant or obligation contained in Section 3(d), 3(f) or 3(g) of this Security
Agreement, (iii) if the Company shall breach any other covenant or obligations
contained in this Security Agreement (other than any covenant or obligation
specified in Section 5(a)(ii) of this Security Agreement) and such breach shall
continue for a period of 20 days after written notice of such breach from the
holders of more than 50% in aggregate principal amount of the outstanding Notes,
or (iv) upon the occurrence and during the continuance of an Event of Default
(as defined in the Notes).
 
(b) Remedies.  Upon the occurrence and during the continuance of any such Event
of Default, Secured Party, shall have the rights of a secured creditor under the
UCC, all rights granted by this Security Agreement and by law, including,
without limitation, the right to:  (a) require Company to assemble the
Collateral and make it available to Secured Party at a place to be designated by
Secured Party; and (b) prior to the disposition of the Collateral, store,
process, repair or recondition it or otherwise prepare it for disposition in any
manner and to the extent Secured Party deem appropriate.  Company hereby agrees
that ten (10) days’ notice of any intended sale or disposition of any Collateral
is reasonable.  In furtherance of Secured Party’s rights hereunder, Company
hereby grants to Secured Party an irrevocable, non-exclusive license,
exercisable without royalty or other payment by Secured Party, and only in
connection with the exercise of remedies hereunder, to use, license or
sublicense any patent, trademark, trade name, copyright or other intellectual
property in which Company now or hereafter has any right, title or interest
together with the right of access to all media in which any of the foregoing may
be recorded or stored.
 
(c) Application of Collateral Proceeds.  The proceeds and/or avails of the
Collateral, or any part thereof, and the proceeds and the avails of any remedy
hereunder (as well as any other amounts of any kind held by Secured Party at the
time of, or received by Secured Party after, the occurrence of an Event of
Default) shall be paid to and applied as follows:
 
 
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(i) First, to the payment of reasonable costs and expenses, including all
amounts expended to preserve the value of the Collateral, of foreclosure or
suit, if any, and of such sale and the exercise of any other rights or remedies,
and of all proper fees, expenses, liability and advances, including reasonable
legal expenses and attorneys’ fees, incurred or made hereunder by Secured Party;
 
(ii) Second, to the payment to Secured Party of the amount then owing or unpaid
on Secured Party’s Note, and in case such proceeds shall be insufficient to pay
in full the whole amount so due, owing or unpaid upon such Note, then the amount
remaining to be distributed (to be applied first to accrued interest and second
to outstanding principal); and
 
(iii) Third, to the payment of the surplus, if any, to Company, its successors
and assigns, or to whomsoever may be lawfully entitled to receive the same.
 
6. Definitions and Interpretation.  When used in this Security Agreement, the
following terms have the following respective meanings:
 
“Collateral” has the meaning given to that term in Section 1 hereof.
 
“Lien” shall mean, with respect to any property, any security interest,
mortgage, pledge, lien, claim, charge or other encumbrance in, of, or on such
property.
 
“Obligations” means all loans, advances, debts, liabilities and obligations,
howsoever arising, owed by Company to Secured Party of every kind and
description (whether or not evidenced by any note or instrument and whether or
not for the payment of money), now existing or hereafter arising under or
pursuant to the terms of the Notes and the other Transaction Documents,
including, all interest, fees, charges, expenses, attorneys’ fees and costs and
accountants’ fees and costs chargeable to and payable by Company hereunder and
thereunder, in each case, whether direct or indirect, absolute or contingent,
due or to become due, and whether or not arising after the commencement of a
proceeding under Title 11 of the United States Code (11 U.S.C. Section 101 et
seq.), as amended from time to time (including post-petition interest) and
whether or not allowed or allowable as a claim in any such proceeding.
 
“Permitted Liens” means (a) Liens for taxes not yet delinquent or Liens for
taxes being contested in good faith and by appropriate proceedings for which
adequate reserves have been established; (b) Liens in respect of property or
assets imposed by law which were incurred in the ordinary course of business,
such as carriers’, warehousemen’s, materialmen’s and mechanics’ Liens and other
similar Liens arising in the ordinary course of business which are not
delinquent or remain payable without penalty or which are being contested in
good faith and by appropriate proceedings; (c) Liens incurred or deposits made
in the ordinary course of business in connection with workers’ compensation,
unemployment insurance and other types of social security, and other Liens to
secure the performance of tenders, statutory obligations, contract bids,
government contracts, performance and return of money bonds and other similar
obligations, incurred in the ordinary course of business, whether pursuant to
statutory requirements, common law or consensual arrangements; (d) Liens in
favor of Secured Party; (e) Liens upon any equipment acquired or held by Company
or any of its Subsidiaries to secure the purchase price of such equipment or
indebtedness incurred solely for the purpose of financing the acquisition of
such equipment, so long as such Lien extends only to the equipment financed, and
any accessions, replacements, substitutions and proceeds (including insurance
proceeds) thereof or thereto; (f) Liens arising from judgments, decrees or
attachments in circumstances not constituting an Event of Default; (g) Liens in
favor of customs and revenue authorities arising as a matter of law to secure
payments of customs duties in connection with the importation of goods,
(h) Liens which constitute rights of setoff of a customary nature or banker’s
liens, whether arising by law or by contract; (i) Liens on insurance proceeds in
favor of insurance companies granted solely as security for financed premiums;
(j) leases or subleases and licenses or sublicenses granted in the ordinary
course of Company’s business; (k) Liens existing as of the date hereof; (l)
Liens to secure Senior Indebtedness, (m) other Liens on the Company’s property,
including, its intellectual property, securing borrowed money in a principal
amount not to exceed $1,000,000, provided that such Liens are junior to, or pari
passu in priority to the Lien in favor of Secured Party, (n) Liens that are
junior in priority to the Lien in favor of Secured Party to secure indebtedness
that is expressly subordinated to the Obligations hereunder, (o) such other
Liens as are consented to in writing by Secured Party and (p) Liens with respect
to any restricted money market accounts maintained by the Company with Comerica
Bank – California or its successor to the extent the same secures the Company’s
obligations with respect to the letter of credit in the amount of $48,400 issued
by such bank to Clemmons Properties Partners L.P.
 
 
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“Royalty Payments” means the Company’s right, title and interest in the
royalties or other funds or assets under that certain Patent License Agreement,
dated July 17, 2006, by and among, the Company, Sony Corporation and Sony
Computer Entertainment, Inc., as amended, modified, supplemented or extended
from time to time, or as any provision thereof may be waived, and any patent
license agreement executed by the parties or their respective affiliates in
substitution or replacement therefor, and the Company’s rights to enforce
payment or delivery of such royalties or other funds or assets.
 
“Senior Indebtedness” shall have the meaning given to such term in the Note.
 
“Transaction Documents” shall mean this Security Agreement, the Note issued
under the Purchase Agreement, and the Purchase Agreement.
 
“UCC” means the Uniform Commercial Code as in effect in the State of New York
from time to time.
 
All capitalized terms not otherwise defined herein shall have the respective
meanings given in the Notes. Unless otherwise defined herein, all terms defined
in the UCC have the respective meanings given to those terms in the UCC.
 
7. Miscellaneous.
 
(a) Notices.  Except as otherwise provided herein, all notices, requests,
demands, consents, instructions or other communications to or upon Company or
Secured Party under this Security Agreement shall be made in the manner provided
in the Purchase Agreement.
 
(b) Termination of Security Interest.  Upon the payment in full of all
Obligations, the security interest granted herein shall terminate and all rights
to the Collateral shall revert to Company.  Upon such termination Secured Party
hereby authorizes Company to file any UCC termination statements necessary to
effect such termination and Secured Party will execute and deliver to Company
any additional documents or instruments as Company shall reasonably request to
evidence such termination.
 
(c) Nonwaiver.  No failure or delay on Secured Party’s part in exercising any
right hereunder shall operate as a waiver thereof or of any other right nor
shall any single or partial exercise of any such right preclude any other
further exercise thereof or of any other right.
 
(d) Amendments and Waivers.  This Security Agreement may not be amended or
modified, nor may any of its terms be waived, except by written instruments
signed by Company and Secured Party (at the direction of, and with the consent
of, the holder of the Note).  Each waiver or consent under any provision hereof
shall be effective only in the specific instances for the purpose for which
given.
 
 
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(e) Assignments.  This Security Agreement shall be binding upon and inure to the
benefit of Secured Party and Company and their respective successors and
assigns; provided, however, that Company may not sell, assign or delegate rights
and obligations hereunder without the prior written consent of Secured Party.
 
(f) Cumulative Rights, etc.  The rights, powers and remedies of Secured Party
under this Security Agreement shall be in addition to all rights, powers and
remedies given to Secured Party by virtue of any applicable law, rule or
regulation of any governmental authority, any Transaction Document or any other
agreement, all of which rights, powers, and remedies shall be cumulative and may
be exercised successively or concurrently without impairing Secured Party’s
rights hereunder.  Company waives any right to require Secured Party to proceed
against any person or entity or to exhaust any Collateral or to pursue any
remedy in Secured Party’s power.
 
(g) Partial Invalidity.  If at any time any provision of this Security Agreement
is or becomes illegal, invalid or unenforceable in any respect under the law or
any jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Security Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.
 
(h) Construction.  Each of this Security Agreement and the other Transaction
Documents is the result of negotiations among, and has been reviewed by,
Company, Secured Party and their respective counsel.  Accordingly, this Security
Agreement and the other Transaction Documents shall be deemed to be the product
of all parties hereto, and no ambiguity shall be construed in favor of or
against Company or Secured Party.
 
(i) Entire Agreement.  This Security Agreement taken together with the other
Transaction Documents constitute and contain the entire agreement of Company and
Secured Party and supersede any and all prior agreements, negotiations,
correspondence, understandings and communications among the parties, whether
written or oral, respecting the subject matter hereof.
 
(j) Other Interpretive Provisions.   References in this Security Agreement and
each of the other Transaction Documents to any document, instrument or agreement
(a) includes all exhibits, schedules and other attachments thereto, (b) includes
all documents, instruments or agreements issued or executed in replacement
thereof, and (c) means such document, instrument or agreement, or replacement or
predecessor thereto, as amended, modified and supplemented from time to time and
in effect at any given time.  The words “hereof,” “herein” and “hereunder” and
words of similar import when used in this Security Agreement or any other
Transaction Document refer to this Security Agreement or such other Transaction
Document, as the case may be, as a whole and not to any particular provision of
this Security Agreement or such other Transaction Document, as the case may
be.  The words “include” and “including” and words of similar import when used
in this Security Agreement or any other Transaction Document shall not be
construed to be limiting or exclusive.
 
(k) Governing Law.  This Security Agreement shall be governed by and construed
in accordance with the laws of the State of New York without reference to
conflicts of law rules (except to the extent governed by the UCC).
 
(l) Counterparts. This Security Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall be deemed to constitute one instrument.
 
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IN WITNESS WHEREOF, Company has caused this Security Agreement to be executed as
of the day 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        
   

                                                        

[Signature page to Avistar Communications Corporation Security Agreement]
 
 

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SECURED PARTY:
 
 

  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            

 
 
[Signature page to Avistar Communications Corporation Security Agreement]
 
 

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ATTACHMENT 1
 
TO SECURITY AGREEMENT
 
All right, title, interest, claims and demands of Company in and to the
following property:
 
(i) All Accounts, including, without limitation, the Royalty Payments;
 
(ii) All Chattel Paper;
 
(iii) All Commercial Tort Claims;
 
(iv) All Deposit Accounts and cash;
 
(v) All Documents;
 
(vi) All Equipment;
 
(vii) All General Intangibles;
 
(viii) All Goods;
 
(ix) All Instruments;
 
(x) All Inventory;
 
(xi) All Investment Property;
 
(xii) All Letter-of-Credit Rights
 
(xiii) To the extent not otherwise included, all Proceeds and products of any
and all of the foregoing, and all accessions to, substitutions and replacements
for, and rents and profits of each of the foregoing.
 
All capitalized terms used in this Attachment 1 and not otherwise defined herein
or in the Security Agreement, shall have the respective meanings given to such
terms in the Uniform Commercial Code of the State of New York as in effect from
time to time.

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