exhibit10-24.htm


    
       

      
              

                  Exhibit
            10.24      
    

      

    

     

    SECURITY
      AGREEMENT

     

    This
      Security Agreement, dated as of January 4, 2008 (this “Security
      Agreement”), among, Avistar Communications Corporation, a Delaware
      corporation (the "Company"), the investors listed on
Schedule 1 hereto (collectively, the “Investors” and
      each an “Investor”) and Collateral Agent (as defined in
Section 6 below).

     

    RECITALS

     

    A.           Company
      and the Investors have entered into a Convertible Note Purchase Agreement,
      dated
      as of the date hereof (the “Purchase Agreement”), pursuant to
      which the Company has issued 4.5% Convertible Subordinated Secured Notes Due
      2010, dated as of the date hereof (as amended, modified or otherwise
      supplemented from time to time, each a “Note” and collectively,
      the “Notes”) in favor of the Investors.

     

    B.           In
      order to induce each Investor to purchase the Notes, Company has agreed to
      enter
      into this Security Agreement and to grant Collateral Agent, for the benefit
      of
      itself and the Investors, 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 Collateral Agent and the Investors
      as
      follows:

     

    1.  Security
      Interest.

     

    (a)  Grant
      of Security Interest.  As security for the Obligations, Company
      hereby grants to Collateral Agent, for the benefit of the Investors and itself
      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 $145,200
      issued by such bank to Clemmons Properties Partners L.P.

     

    (c)  Priority.  Company
      and the Collateral Agent each acknowledge and agree that Baldwin Enterprises,
      Inc.’s security interest in the Royalty Payments shall be senior in priority to
      the security interest in favor of the Investors (other than Baldwin Enterprises,
      Inc.), as provided in the Intercreditor Agreement of even date herewith among
      the Investors, as amended, modified or otherwise supplemented from time to
      time.

     

    2.  General
      Representations and Warranties.  Company represents
      and warrants to Collateral Agent and the Investors that:

     

    (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,
      Collateral Agent 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 Collateral Agent 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 Collateral Agent, (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 Collateral Agent 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;
      providedthat 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, the Collateral Agent and the Investors,
      to
      perfect the first priority security interest in such deposit account granted
      herein.

     

    4.  Authorized
      Action by Collateral Agent.  Company hereby irrevocably
      appoints Collateral Agent as its attorney-in-fact (which appointment is coupled
      with an interest) and agrees that Collateral Agent may perform (but Collateral
      Agent 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, deposit, 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 Collateral Agent 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 Collateral Agent upon demand
      for any reasonable costs and expenses, including attorneys' fees, Collateral
      Agent 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
      Collateral Agent gives to the safekeeping of its own property of like kind
      shall
      constitute reasonable care of the Collateral when in Collateral Agent's
      possession; provided, however, that Collateral Agent 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,
      Collateral Agent, with the consent of the holders of more than 50% of the
      principal amount of the outstanding Notes, 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 Collateral Agent
      and
      the Investors at a place to be designated by Collateral Agent and the Investors;
      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 Collateral Agent and the Investors deem
      appropriate.  Company hereby agrees that ten (10) days' notice of any
      intended sale or disposition of any Collateral is reasonable.  In
      furtherance of Collateral Agent's rights hereunder, Company hereby grants to
      Collateral Agent an irrevocable, non-exclusive license, exercisable without
      royalty or other payment by Collateral Agent, 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 Collateral Agent
      at
      the time of, or received by Collateral Agent after, the occurrence of an Event
      of Default) shall be paid to and applied as follows:

     

    (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 Collateral Agent;

     

    (ii)  Second,
      to the payment to each Investor of the amount then owing or unpaid on such
      Investor’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 its Pro Rata
      Share
      of the amount remaining to be distributed (to be applied first to accrued
      interest and second to outstanding principal);

     

    (iii)  Third,
      to the payment of other amounts then payable to each Investor under any of
      the
      Transaction Documents, and in case such proceeds shall be insufficient to pay
      in
      full the whole amount so due, owing or unpaid under such Transaction Documents,
      then its Pro Rata Share of the amount remaining to be distributed;
      and

     

    (iv)  Fourth,
      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.

     

    For
      purposes of this Security Agreement, the term “Pro Rata Share” shall mean, when
      calculating a Investor’s portion of any distribution or amount, that
      distribution or amount (expressed as a percentage) equal to a fraction (i)
      the
      numerator of which is the then outstanding principal amount of such Investor’s
      Note and (ii) the denominator of which is the then aggregate outstanding
      principal amount of all Notes issued under the Purchase Agreement.  In
      the event that a Investor receives payments or distributions in excess of its
      Pro Rata Share, then such Investor shall hold in trust all such excess payments
      or distributions for the benefit of the other Investors and shall pay such
      amounts held in trust to such other Investors upon demand by such
      Investors.

     

    6.  Collateral
      Agent.

     

    (a)  Appointment.  The
      Investors hereby appoint Baldwin Enterprises, Inc. as collateral agent for
      the
      Investors under this Security Agreement (in such capacity, the
“Collateral Agent”) to serve from the date hereof until the
      termination of the Security Agreement.

     

    (b)  Powers
      and Duties of Collateral Agent, Indemnity by Investors.

     

    (i)  Each
      Investor hereby irrevocably authorizes the Collateral Agent to take such action
      and to exercise such powers hereunder as provided herein or as requested in
      writing by the Investors holding more than 50% in principal amount of the
      outstanding Notes in accordance with the terms hereof, together with such powers
      as are reasonably incidental thereto.  Collateral Agent may execute
      any of its duties hereunder by or through agents or employees and shall be
      entitled to request and act in reliance upon the advise of counsel concerning
      all matters pertaining to its duties hereunder and shall not be liable for
      any
      action taken or omitted to be taken by it in good faith in accordance
      therewith.

     

    (ii)  Neither
      the Collateral Agent nor any of its directors, officers or employees shall
      be
      liable or responsible to any Investor or to Company for any action taken or
      omitted to be taken by Collateral Agent or any other such person hereunder
      or
      under any related agreement, instrument or document, except in the case of
      gross
      negligence or willful misconduct on the part of the Collateral Agent, nor shall
      the Collateral Agent or any of its directors, officers or employees be liable
      or
      responsible for (i) the validity, effectiveness, sufficiency,
      enforceability or enforcement of the Notes, this Security Agreement or any
      instrument or document delivered hereunder or relating hereto; (ii) the
      title of Company to any of the Collateral or the freedom of any of the
      Collateral from any prior or other liens or security interests; (iii) the
      determination, verification or enforcement of Company’s compliance with any of
      the terms and conditions of this Security Agreement; (iv) the failure by
      Company to deliver any instrument  or document required to be
      delivered pursuant to the terms hereof; or (v) the receipt, disbursement,
      waiver, extension or other handling of payments or proceeds made or received
      with respect to the collateral, the servicing of the Collateral or the
      enforcement or the collection of any amounts owing with respect to the
      Collateral.

     

    (iii)  In
      the
      case of this Security Agreement and the transactions contemplated hereby and
      any
      related document relating to any of the Collateral, each of the Investors agrees
      to pay to the Collateral Agent, on demand, its Pro Rata Share of all fees and
      all expenses incurred in connection with the operation and enforcement of this
      Security Agreement, the Notes or any related agreement to the extent that such
      fees or expenses have not been paid by Company.  In the case of this
      Security Agreement  and each instrument and document relating to any
      of the Collateral, each of the Investors and the Company hereby agrees to hold
      the Collateral Agent harmless, and to indemnify the Collateral Agent from and
      against any and all loss, damage, expense or liability which may be incurred
      by
      the Collateral Agent under this Security Agreement and the transactions
      contemplated hereby and any related agreement or other instrument or document,
      as the case may be, unless such liability shall be caused by the willful
      misconduct or gross negligence of the Collateral Agent.

     

    7.  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 Collateral Agent and the Investors 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
      the
      Collateral Agent for the benefit of the Investors; (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 the Collateral
      Agent for the benefit of the Investors, (n) Liens that are junior in priority
      to
      the Lien in favor of the Collateral Agent for the benefit of the Investors
      to
      secure indebtedness that is expressly subordinated to the Obligations hereunder,
      (o) such other Liens as are consented to in writing by the Collateral Agent
      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 $145,200 issued by such bank to Clemmons Properties Partners
      L.P.

     

    “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
      Notes.

     

    “Transaction
      Documents” shall mean this Security Agreement, each of the Notes 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.

     

    8.  Miscellaneous.

     

    (a)  Notices.  Except
      as otherwise provided herein, all notices, requests, demands, consents,
      instructions or other communications to or upon Company, Investors or Collateral
      Agent 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
      Collateral Agent hereby authorizes Company to file any UCC termination
      statements necessary to effect such termination and Collateral Agent 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 Collateral Agent'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 Collateral Agent (at the direction of, and with the
      consent of, holders of more than 50% of the principal amount of the outstanding
      Notes).  Each waiver or consent under any provision hereof shall be
      effective only in the specific instances for the purpose for which
      given.

     

    (e)  Assignments.  This
      Security Agreement shall be binding upon and inure to the benefit of Collateral
      Agent 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 Collateral
      Agent.

     

    (f)  Cumulative
      Rights, etc.  The rights, powers and remedies of Collateral Agent
      under this Security Agreement shall be in addition to all rights, powers and
      remedies given to Collateral Agent 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 Collateral Agent’s
      rights hereunder.  Company waives any right to require Collateral
      Agent to proceed against any person or entity or to exhaust any Collateral
      or to
      pursue any remedy in Collateral Agent'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, Investors, Collateral
      Agent 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, Investors or Collateral Agent.

     

    (i)  Entire
      Agreement.  This Security Agreement taken together with the other
      Transaction Documents constitute and contain the entire agreement of Company,
      Investors and Collateral Agent 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/
      Robert Habig

    Name:
      Robert
      Habig                                                                    

    Title:
      CFO                                                                    


    
      
              

                  [Signature
            page to Avistar Communications Corporation Security
            Agreement]      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    AGREED:

     

    BALDWIN
      ENTERPRISES, INC.,

    as
      Collateral Agent

     

    By: /s/
      Joseph A.
      Orlando                                                                               

    Name:
      Joseph A.
      Orlando                                                                

    Title:
      Vice
      President                                                                

    


     

    INVESTORS:

     

    BALDWIN
      ENTERPRISES, INC.

     

    


     

    By:
      /s/ Joseph A.
      Orlando                                                                           

     

    Name:
      Joseph A.
      Orlando                                                                           

     

    Title:
      Vice
      President                                                                           


    
      
              

                  [Signature
            page to Avistar Communications Corporation Security
            Agreement]      
      

                  
      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

    THE
      GERARD J. BURNETT AND MARJORIE J.

     

    BURNETT
      REVOCABLE TRUST FOR THE BENEFIT

     

    OF
      GERALD J. AND MARJORIE J. BURNETT

     

    By:
      /s/ G.J.
      Burnett                                                                                     

     

    Name:
      Gerald J.
      Burnett                                                                                                

     

    Title:
      Trustee                                                                                     

    


    


    HEINRICHS
      REVOCABLE TRUST

     

    By:
      /s/ R. Stephen
      Heinrichs                                                                                                

     

    Name:
      R. Stephen
      Heinrichs                                                                                                

     

    Title:
      Trustee                                                                                     

     

    


    THE
      CAMPBELL FAMILY 2001 TRUST DATED 2/07/01

     

    By:
      /s/ William L.
      Campbell                                                                                                

     

    Name:
      William L.
      Campbell                                                                                                

     

    Title:
      Trustee                                                                                     

    


    


     

    /s/
      Simon
      Moss                                                                                     

    SIMON
      MOSS

     

    /s/
      Craig
      Heimark                                                                                     

    CRAIG
      HEIMARK

     

    /s/
      Darren
      Innes                                                                                     

    DARREN
      INNES

     

    


    WS
      INVESTMENT COMPANY, LLC (2007A)

    


     

    By:
      /s/ James A.
      Terranova                                                                                     

     

    Name:
      James A.
      Terranova                                                                                     

     

    Title:                                                                                     

    


     

    WS
      INVESTMENT COMPANY, LLC (2007D)

     

    By:
      /s/ James A.
      Terranova                                                                                     

     

    Name:
      James A.
      Terranova                                                                                     

     

    Title:                                                                                     

     

    


     

    


     

    



    
      
              

                  [Signature
            page to Avistar Communications Corporation Security
            Agreement]      
      

                  
      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

    SCHEDULE
      1

     

    INVESTORS

     

    


    
      	
              Baldwin
                Enterprises, Inc.

              315
                Park Avenue South

              New
                York, NY 10010

               

            
	
              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

               

            
	
              Heinrichs
                Revocable Trust

              c/o
                Avistar Communications Corp.

              1875
                South Grant St

              10th
                Floor

              San
                Mateo CA US 94402

               

            
	
              The
                Campbell Family 2001 Trust dated 2/07/01

              c/o
                Avistar Communications Corp.

              1875
                South Grant St

              10th
                Floor

              San
                Mateo CA US 94402

               

            
	
              Simon
                Moss

              c/o
                Avistar Communications Corp.

              1875
                South Grant St

              10th
                Floor

              San
                Mateo CA US 94402

            
	
              Craig
                Heimark

              c/o
                Avistar Communications Corp.

              1875
                South Grant St

              10th
                Floor

              San
                Mateo CA US 94402

               

            
	
              Darren
                Innes

              c/o
                Avistar Communications Corp.

              Boston
                House

              3rd
                Floor

              63-64
                New Broad Street

              London
                EC2M 1JJ

              United
                Kingdom

               

            
	
              WS
                Investment Company, LLC (2007A)

              650
                Page Mill Rd.

              Palo
                Alto, CA 94304

               

            
	
              WS
                Investment Company, LLC (2007C)

              650
                Page Mill Rd.

              Palo
                Alto, CA 94304

            
	
               

              Robert
                P. Latta and Jeanette Dyal Latta,

              TTEES
                for the Latta Family Trust

              U/D/T
                dated 6/10/97

              c/o
                Wilson Sonsini Goodrich & Rosati

              650
                Page Mill Road

              Palo
                Alto,
                California  94304

            


    


    
      
              

                  Avistar
            -
            Security Agreement -
            (Execution)_(PALIB2_4097523_8).DOC      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

    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.