EXHIBIT
10.31





SECOND
AMENDED AND RESTATED SECURITY AGREEMENT








For value received, and in
consideration of one or more loans, letters of credit or other financial
accommodations extended by JPMorgan Chase Bank, N.A. or
any of its subsidiaries or affiliates (the “Bank”), to Avistar Communications
Corporation, a Delaware corporation (the “Grantor”), the
Grantor and the Bank agree as follows:





1.  Definitions.





“Account Control
Agreement” shall mean a deposit or securities account control agreement
or other similar agreement with any party acting as a financial intermediary or
securities intermediary (including, without limitation, affiliates of the Bank)
and shall specifically include any master deposit or securities account control
agreement among the Bank and any of its affiliates, as amended from time to
time.





“Collateral” means all
personal property of the Grantor whether presently existing or hereafter created
or acquired, and wherever located (including but not limited to:
(i) accounts (including health-care-insurance receivables), chattel paper,
deposit accounts, documents (including negotiable documents), equipment, general
intangibles, goods (including fixtures), instruments (including promissory
notes), inventory (including all goods held for sale or lease or to be furnished
under a contract of service, and including returns and repossessions),
investment property (including securities and securities entitlements), letter
of credit rights, money, and all of Grantor’s books and records with respect to
any of the foregoing, and the computers and equipment containing said books and
records; (ii) all claims, demands, causes and choses in action in respect of any
of the foregoing and all accessions and additions thereto; and (iii) any and all
cash and non-cash proceeds and products of any of the foregoing, including
without limitation, any and all proceeds of any insurance, indemnity,
instruments, warranty or guaranty payable to such Grantor from time to time with
respect to the Collateral and any and all other amounts from time to time paid
or payable under or in connection with any of the Collateral) other than
(x) any of the outstanding capital stock of any subsidiary of the Grantor
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 or (y) any
restricted money market accounts maintained by the Grantor with Comerica Bank –
California to the extent the same secures the Grantor’s obligations with respect
to the letter of credit in the amount of $145,200 issued by such bank to Clemons
Properties Partners L.P. or (z) the Borrower’s right to receive royalties
or other funds or assets under the Sony Patent License Agreement, and the
Borrower’s rights to enforce payment or delivery of such royalties or other
funds or assets.





“Convertible Notes”
means the “Notes” (as defined in, and issued pursuant to, the Convertible Note
Purchase Agreement).





“Convertible Note Collateral
Agent” means the “Collateral Agent” (as defined in the Convertible Note
Purchase Agreement).





“Convertible Note
Investors” means the “Investors” (as defined in the Convertible Note
Purchase Agreement).





“Convertible Note Purchase
Agreement” means the Convertible Note Purchase Agreement dated January 4,
2008 by the Borrower and the purchasers parties thereto with respect to the
Borrower‘s sale of its 4.5% convertible subordinated secured promissory
notes.





“Convertible Note Security
Agreement” means the Security Agreement dated January 4, 2008 by the
Borrower, the investors parties thereto and the “Collateral Agent” (as defined
therein), delivered by the Borrower as security for the Borrower’s obligations
under the Convertible Notes.








“Default” shall mean
each “Event of Default” (as defined in the Note).





“Liabilities” means
indebtedness, obligations and liabilities of any kind of the Grantor to the
Bank, now or in the future, absolute or contingent, direct or indirect, joint or
several, due or not due, arising by operation of law or otherwise, and costs and
expenses incurred by the Bank in connection with the Collateral, this Agreement
or the Note.





“Note” means the
Amended and Restated Revolving Promissory Note (Libor/Prime) dated as of
December 22, 2008 by the Grantor in favor of the Bank in the maximum
principal amount of $10,000,000, as amended , restated or otherwise modified
from time to time.





“Permitted Liens”
means: (i) liens for unpaid taxes, assessments, or other governmental
charges or levies that either (a) are not yet delinquent or (b) are
being contested in good faith by appropriate proceedings and for which Grantor
maintains adequate reserves, (ii) judgment liens that do not constitute a
Default, (iii) liens listed on the Borrower’s September 30, 2006 form
10Q, (iii)  the interests of lessors and licensors under leases and
licenses in the ordinary course of business, (iv)  purchase money liens or
the interests of lessors under capital leases to the extent that such liens or
interests secure purchase money indebtedness and so long as (a) such lien
attaches only to the asset purchased or acquired and the proceeds thereof and
(b) such lien only secures the indebtedness that was incurred to acquire the
asset purchased or acquired or any refinancing indebtedness in respect thereof,
(v)  liens arising by operation of law in favor of warehousemen, landlords,
carriers, mechanics, materialmen, laborers, or suppliers, incurred in the
ordinary course of Grantor’s business and not in connection with the borrowing
of money, and which liens either (a) are for sums not yet delinquent or
(b) are being contested in good faith by appropriate proceedings and for
which Grantor maintains adequate reserves, (vi) liens on amounts deposited
in connection with obtaining worker’s compensation or other unemployment
insurance, (vii) liens on amounts deposited in connection with the making
or entering into of bids, tenders, or leases in the ordinary course of business
and not in connection with the borrowing of money, (viii) liens on amounts
deposited as security for surety or appeal bonds in connection with obtaining
such bonds in the ordinary course of business, (ix) liens arising by virtue
of any contractual, statutory or common law provision relating to banker’s
liens, rights of set-off or similar rights and remedies as to deposits of cash
and securities in favor of banks, other depository institutions and brokerage
firms, (x) liens on insurance proceeds securing the payment of financed
insurance premiums and (xi) liens in favor of customs and revenue authorities
arising as a matter of law to secure payments of custom duties in connection
with the importation of goods and (xii) liens in favor of one or more
Convertible Note Investors or the Convertible Note Collateral Agent for the
benefit of one or more Convertible Notes Investors granted by the Borrower under
the Convertible Note Security Agreement.





“Sony Patent License
Agreement” means Patent License Agreement dated July 17, 2006, as
amended, by the Borrower 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 Borrower and
Sony Computer Entertainment, Inc. in substitution or replacement
therefor.





“UCC” means the
Uniform Commercial Code in effect in the State of New York.  Unless
the context otherwise requires, all terms used in this Agreement which are
defined in the UCC will have the meanings stated in the UCC.





2.  Grant of Security
Interest.As security for the payment of all the Liabilities,
the Grantor pledges and grants to the Bank a security interest in and right of
setoff against, the Collateral.





3.  Agreements,
Representations and Warranties of the Grantor and Rights of the
Bank.





(a)  The
Grantor represents and warrants that:the Grantor is the sole
owner of the Collateral and the Collateral is free of all encumbrances except
for (i) the security interest in favor of the Bank created by this Agreement and
for (ii) Permitted Liens.





(b)  The
Grantor irrevocably authorizes the Bank to exercise the rights granted to the
Bank herein, at its option, for its own benefit, either in its own name or in
the name of the Grantor, and appoints the Bank as its attorney-in-fact to take
all action permitted under this Agreement.





(c)  Without
the prior written consent of the Bank, the Grantor agrees not to sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect
to, any Collateral (other than (i) sales of inventory, (ii) grants of
non-exclusive licenses or similar arrangements for the use of property of the
Grantor, in each case in the ordinary course of business, (iii) sales,
assignments, transfers, exchanges or other dispositions for fair value in the
ordinary course of business), nor will the Grantor create, incur or permit to
exist any pledge, lien, mortgage, hypothecation, security interest, encumbrance,
option or any other charge with respect to any of the Collateral, or any
interest therein, or any proceeds thereof, except for (i) the lien and security
interest provided for by this Agreement, (ii) as otherwise provided herein or in
the Note or (iii) Permitted Liens.





(d)  The
Grantor will not change jurisdiction of its incorporation or organization (by
migratory merger or otherwise) except upon 30 days’ prior written notice to the
Bank.





(e)  The Bank
may, in its name, or in the name of the Grantor:  (i) execute and file
financing statements under the UCC or any other filings or notices necessary or
desirable to create, perfect or preserve its security interest, all without
notice (except as required by applicable law and not waivable) and without
liability except to account for property actually received by it; (ii) demand,
sue for, collect or receive any money or property at any time payable or
receivable on account of or in exchange for, or make any compromise or
settlement deemed desirable with respect to, any item of the
Collateral  (but shall be under no obligation to do so); (iii) make
any notification (to the issuer of any certificate or security, or otherwise, or
take any other action in connection with the perfection or preservation of its
security interest  or any enforcement of remedies, and retain any
documents evidencing the title of the Grantor to any item of the Collateral; and
(iv) issue entitlement orders with respect to any of the
Collateral.





The Grantor agrees that it will not
file or permit to be filed any termination statement with respect to the
Collateral or any financing or like statement with respect to the Collateral in
which the Bank is not named as the sole secured party except in connection with
Permitted Liens or consent or be a party to any Account Control Agreement with
respect to any Collateral to which the Bank is not a party.  At the
request of the Bank the Grantor agrees to do all other things which the Bank may
deem necessary or advisable in order to perfect and preserve its security
interest, perfection and operational control and to give effect to the rights
granted to the Bank under this Agreement or enable the Bank to comply with any
applicable laws or regulations.  Notwithstanding the foregoing, the
Bank does not assume any duty with respect to the Collateral and is not required
to take any action to collect, preserve or protect its or the Grantor’s rights
in any item of the Collateral.  The Grantor releases the Bank and
agrees to hold the Bank harmless from any claims, causes of action and demands
at any time arising with respect to this Agreement, the use or disposition of
any item of the Collateral or any action taken or omitted to be taken by the
Bank with respect thereto, except, in each case, for claims, causes of action
and demands arising from (i) Bank’s gross negligence or willful misconduct or
(ii) Bank’s obligations as a secured party under this Agreement or under
applicable law.





4.  Currency Conversion.For calculation
purposes, any currency in which the Collateral is denominated (the “Collateral Currency”)
will be converted into the currency of the Liabilities (the “Liability Currency”)
at the spot rate of exchange for the purchase of the Liability Currency with the
Collateral Currency quoted by the Bank at such place as the Bank deems
appropriate (or, if no such rate is quoted on any relevant date, estimated by
the Bank on the basis of the Bank’s last quoted spot rate) or another prevailing
rate that the Bank deems more appropriate.





5.  Remedies.





Upon the occurrence and during the
continuance of a Default, the Bank will have the rights and remedies under the
UCC and the other rights granted to the Bank under this Agreement and may
exercise its rights without regard to any premium or penalty from liquidation of
any Collateral and without regard to the Grantor’s basis or holding period for
any Collateral.





The Bank may sell in the Borough of
Manhattan, New York City, or elsewhere, in one or more sales or parcels, at the
price as the Bank deems best, for cash or on credit or for other property, for
immediate or future delivery, any item of the Collateral, at any broker’s board
or at public or private sale, in any reasonable manner permissible under the UCC
(except that, to the extent permissible under the UCC, the Grantor waives any
requirements of the UCC) and the Bank or anyone else may be the purchaser of the
Collateral and hold it free from any claim or right including, without
limitation, any equity of redemption of the Grantor, which right the Grantor
expressly waives.





The Bank may also, in its sole
discretion: (i) convert any part of the Collateral Currency into the Liability
Currency;  (ii) hold any monies or proceeds representing the
Collateral in a cash collateral account in the Liability Currency or other
currency that the Bank reasonably selects; (iii) invest such monies or proceeds
on behalf of the Grantor; and (iv) apply any portion of the Collateral, first,
to all costs and expenses of the Bank, second, to the payment of interest on the
Liabilities and any fees or commissions to which the Bank may be entitled,
third, to the payment of principal of the Liabilities, whether or not then due,
and fourth, to the Grantor.





The Grantor will pay to the Bank all
expenses (including attorneys’ fees and legal expenses incurred by the Bank and
the allocated costs of its in-house counsel) in connection with the exercise of
any of the Bank’s rights or obligations under this Agreement or the
Note.  The Grantor will take any action requested by the Bank to allow
it to sell or dispose of the Collateral.  Notwithstanding that the
Bank may continue to hold Collateral and regardless of the value of the
Collateral, the Grantor will remain liable for the payment in full of any unpaid
balance of the Liabilities.








6.  Jurisdiction.





To the maximum extent not prohibited by
applicable law, the Grantor hereby irrevocably: (i) submits to the jurisdiction
of any New York state or United States federal court sitting in New York City
over any action or proceeding arising out of this Agreement;(ii) agrees that all
claims in respect of such action or proceeding may be held and determined in
such New York state or federal court;  (iii) agrees that any action or
proceeding brought against the Bank may be brought only in a New York state or
United States federal court sitting in New York county;  (iv) consents
to the service of process in any such action or proceeding in either of said
courts by mailing thereof by the Bank by registered or certified mail, postage
prepaid, to the Grantor at its address specified on the signature page hereof,
or at the Grantor’s most recent mailing address as set forth in the records of
the Bank; and (v) waives any defense on the basis of inconvenient
forum.





The Grantor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in any other jurisdiction by suit or proceeding in such
state.  Nothing herein shall affect the right of the Bank to serve
legal process in any other manner permitted by law or affect the right of the
Bank to bring any action or proceeding against the Grantor or its property in
the courts of any other jurisdiction.





7.  Waiver of Jury
Trial.  THE UNDERSIGNED AND THE BANK EACH WAIVE ANY RIGHT TO
JURY TRIAL.





8.  Notices.Unless otherwise agreed
in writing, notices may be given to the Bank and the Grantor at their telecopier
numbers (confirmed by telephone to their telephone numbers) or addresses listed
on the signature page of this Agreement, or such other telecopier (and
telephone) number or addresses communicated in writing by either party to the
other.  Notices to the Bank are effective on receipt.





9.  Miscellaneous.





(a)  This
Agreement shall be binding on the Grantor and its successors and assigns and
shall inure to the benefit of the Bank and its successors and assigns, except
that the Grantor may not delegate any of its obligations hereunder without the
prior written consent of the Bank.





(b)  No
amendment or waiver of any provision of this Agreement nor consent to any
departure by the Grantor will be effective unless it is in writing and signed by
the Grantor and the Bank and will be effective only in that specific instance
and for that specific purpose.  No failure on the part of the Bank to
exercise, and no delay in exercising, any right will operate as a waiver or
preclude any other or further exercise or the exercise of any other
right.





(c)  The
rights and remedies in this Agreement are cumulative and not exclusive of any
rights and remedies which the Bank may have under law or under other agreements
or arrangements with the Grantor or any other party (including, without
limitation, any Account Control Agreement).





(d)  The
provisions of this Agreement are intended to be severable.  If for any
reason any provision of this Agreement is not valid or enforceable in whole or
in part in any jurisdiction, that provision will, as to that jurisdiction, be
ineffective to the extent of that invalidity or unenforceability without in any
manner affecting the validity or enforceability in any other jurisdiction or the
remaining provisions of this Agreement.





(e)  The
Grantor hereby waives presentment, notice of dishonor and protest of all
instruments included in or evidencing the Liabilities or the Collateral and any
other notices and demands, whether or not relating to those
instruments.





(f)  This
Agreement is governed by and construed according to the law of the State of New
York, without regard to the conflict of laws principles, and with the laws of
the United States of America as applicable.





(g)  This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument.





(h)  This
Agreement supersedes in its entirety the Amended and Restated Security Agreement
dated December 23, 2006, as amended, by the Grantor and the Bank.





(i)  If the
Bank shall receive any payment of royalties or other funds payable to the
Borrower under the Sony Patent License Agreement, the Bank, upon notice from the
Convertible Note Collateral Agent accompanied by evidence reasonably
satisfactory to the Bank that such payment was made pursuant to the Sony Patent
License Agreement, shall pay promptly to or at the direction of the Convertible
Note Collateral Agent the amount thereof (without interest).





The
rest of this page is intentionally blank.





IN
WITNESS WHEREOF, the Grantor has signed this Agreement as of December 22,
2008.








ACCEPTED:





JPMorgan
Chase Bank, N.A.











By:           
/s/ Nancy A.
Sheppard


Nancy
A. Sheppard


Managing
Director








Address
for notices to the Bank:





JPMorgan
Chase Bank, N.A.


Private
Bank Credit


Attn:Arn Welles


345 Park
Avenue, Floor 04


New York,
NY 10154-0004


Telecopier:  (212)
464-2531


Telephone:  (212)
464-1883





With a
courtesy copy to





JPMorgan
Chase Bank, N.A.


Attn:  Nancy
A. Sheppard


560
Mission Street, 19th
floor


San
Francisco, CA 94105


Telecopier:  (415)
315-8272


Telephone:  (415)
315-8285





Avistar
Communications Corporation











By:           /s/ Simon
Moss


Name:
Simon Moss


Title:
Chief Executive Officer











By:           /s/ Robert
Habig


Name:
Robert Habig


Title:
Chief Financial Officer








Address
for Notices to the Grantor:





Attn:  Robert
Habig


Avistar
Communications Corporation


1875 S.
Grant Street, 10th
Floor


San
Mateo, CA 94402


Telecopier:  (650)
525-1360


Telephone:  (650)
525-3310
















State
      of _________
            )


) ss.:


County
      of ________
            )





On the ____ day of December in the year
2008, before me, the undersigned, personally appeared _____________________________,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her capacity, and that
by his/her signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument.








____________________________________


Notary Public








State
      of _________
            )


) ss.:


County
      of ________
            )





On the ____ day of December in the year
2008, before me, the undersigned, personally appeared _____________________________,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her capacity, and that
by his/her signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument.








____________________________________


Notary Public