exhibit10-23.htm


          

              Exhibit
        10.23      
    


    


     

    AVISTAR
      COMMUNICATIONS CORPORATION

    


    


    CONVERTIBLE
      NOTE PURCHASE AGREEMENT

    


     

    


    


    Dated
      as of January 4, 2008

     

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

              

                  Exhibit
            10.23      
    

      

    

     

    


     

    AVISTAR
      COMMUNICATIONS CORPORATION

    CONVERTIBLE
      NOTE PURCHASE AGREEMENT

     

     

    This
      Convertible Note Purchase Agreement (this “Agreement”) is made and
      entered into as of January 4, 2008 by and between Avistar Communications
      Corporation, a Delaware corporation (the “Company”), and each of the
      purchasers listed on Schedule A attached hereto (collectively, the
“Purchasers” and each individually, a “Purchaser”).

     

    RECITALS

     

    WHEREAS,
      the Company desires to sell to the Purchasers, and the Purchasers desire to
      purchase from the Company, certain convertible subordinated secured promissory
      notes on the terms and conditions set forth in this Agreement;

     

    WHEREAS,
      the Company’s obligations under the convertible subordinated secured notes will
      be secured pursuant to the terms of a Security Agreement among the Company
      and
      the Purchasers 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 $7,000,000 in aggregate
      principal amount of 4.5% convertible subordinated secured promissory notes
      due
      2010 in the form attached hereto as Exhibit A (each individually a
“Note” and collectively the “Notes”).

     

    (b)  Agreement
      to Purchase and Sell Securities

     

    . 
      Subject to the terms and conditions of this Agreement, each Purchaser severally
      agrees to purchase, and the Company agrees to sell and issue to each Purchaser,
      at the Closing (as defined below), a Note in the initial principal amount set
      forth opposite such Purchaser’s name on Schedule A attached
      hereto.  The purchase price of each Note shall be the principal amount
      of such Note as set forth on Schedule A.

     

    (c)  Use
      of
      Proceeds

     

    . 
      The Company intends to utilize the net proceeds from the sale of the Notes
      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 Notes 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 Purchasers 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.”

    

     

    (b)  Delivery. 
      At the Closing or promptly thereafter, the Company shall issue to each
      Purchaser, against delivery of payment of the amount set forth opposite such
      Purchaser’s name on Schedule A, a signed original Note issued in the name
      of each Purchaser, with the initial principal amount set forth opposite such
      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 each 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 Purchasers 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 19, 2007, the authorized stock of the Company consisted of
      (i) 250,000,000 shares of Common Stock, of which 34,495,932 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 19, 2007, the Company had also reserved (net of exercises and
      purchases): (i) 10,316,898 shares of Common Stock for issuance upon
      exercise of options granted under the Company’s 2000 Stock Option Plan;
      (ii) 480,150 shares of Common Stock for issuance upon exercise of options
      granted under the Company’s 1997 Stock Option Plan; (iii) 1,301,967 shares
      of Common Stock for issuance to employees of the Company under the Company’s


     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        
Employee
        Stock Purchase Plan; and (iv) 1,102,750 shares of Common Stock for issuance
        upon exercise of options granted under the Company’s 2000 Director Option Plan
        (the 1997 Stock Option Plan, together with the 2000 Stock Option Plan and
        the
        2000 Director Option Plan, 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 Employee
        Stock Purchase Plan, and (ii) shares of Common Stock reserved for future
        issuance pursuant to the Company’s Stock Option Plans and 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.

    

     

    (c)  Subsidiaries. 
      Except for Avistar Financial Corporation and 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 Notes and the Security Agreement
      (collectively, the “Transaction Documents”) and the authorization,
      issuance, reservation for issuance and delivery of all of the Notes being sold
      under this Agreement and the shares of Common Stock issuable upon conversion
      of
      the Notes (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 Notes, upon payment therefor by the Purchasers in accordance with this
      Agreement, and the Conversion Shares, upon their issuance in accordance with
      the
      Notes, 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 Notes and the Conversion Shares to the
      Purchasers, 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 notification form with The Nasdaq Stock
      Market, Inc. (“Nasdaq”), 

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    (iii) the
      filing of a Form D with respect to the Notes as required by
      Regulation D promulgated under the Securities Act, and (iv) such
      additional post-Closing filings as may be required to comply with applicable
      state and federal securities laws.

     

    (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 Notes 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 Notes 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 Purchasers prior to the date hereof copies
      of
      its Annual Report on Form 10-K for the fiscal year ended December 31, 2006,
      its quarterly report on Form 10-Q for the fiscal quarter ended
      September 30, 2007, its Current Reports on Form 8-K filed since such
      report on Form 10-Q and its Proxy Statement on 

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        
Schedule 14A
        for its 2007 Annual Meeting of Stockholders filed by the Company with the
        SEC
        (the Form 10-K, Form 10-Q, Form 8-Ks and Schedule 14A 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.

    

     

    (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 September 30, 2007, 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 

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        
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.

    

     

    (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 Amended and Restated Security Agreement between
      the
      Company and JPMorgan Chase Bank, N.A. dated December 17, 2007, 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. 
      Except as set forth in the engagement letter between the Company and RBC Capital
      Markets dated June 7, 2007 as amended on September 26, 2007, 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 

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        
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.

    

     

    (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.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    4.  REPRESENTATIONS,
      WARRANTIES AND CERTAIN AGREEMENTS OF THE PURCHASERS. 
      Each Purchaser hereby represents and warrants to the Company severally and
      not
      jointly, and agrees that:

     

    (a)  Power
      and Authority. 
      Such Purchaser has all requisite authority, including in the case of
      non-individual Purchasers, 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.

     

    (b)  Authorization. 
      With respect to non-individual Purchasers, the execution of this Agreement
      has
      been duly authorized by all necessary trustee, corporate, membership or
      partnership action on the part of such Purchaser.  This Agreement
      constitutes such 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 such 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 such Purchaser is being acquired for investment
      for
      such 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 such Purchaser has no present intention of selling, granting any
      participation in, or otherwise distributing the same.  With respect to
      any Purchaser that is not a natural person, such 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 such 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. 
      Such Purchaser understands that the purchase of the Note involves substantial
      risk.  Such 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. 
      Such Purchaser is an “accredited investor” within the meaning of Regulation D
      promulgated under the Securities Act.

     

    (g)  Reliance
      Upon Purchaser’s Representations. 
      Such Purchaser understands that the issuance and sale of the Note to it and
      the
      issuance of Common Stock to 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 

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        
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 such Purchaser’s
        representations set forth herein.

    

     

    (h)  Receipt
      of Information. 
      Such 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.

     

    (i)  HSR
      Compliance. 

     

    (i)  Such
      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)  Such
      Purchaser will hold less than $50,000,000 in voting securities of the Company
      following execution of this Agreement and conversion of the Notes and conversion
      of the Note, as valued under the HSR Act.

     

    (j)  Forms
      13D or 13G. 
      Such 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 such Purchaser is required to
      file such SEC reports regarding its ownership of the Company’s Common Stock,
      such Purchaser will fully and accurately reflect the purchase of the Note by
      such Purchaser.

     

    (k)  Reporting
      Obligations Pursuant to Section 16. 
      Such 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 such Purchaser and, in the case of
      non-individual Purchasers, their officers, directors, employees or affiliates,
      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 any Purchaser who holds Registrable Securities and 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.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    (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.

     

    (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 Notes 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.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    (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

     

    (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 any 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 

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        
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.

    

     

    (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;

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    (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;

     

    (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 

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        
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).

    

     

    (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 its 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
      other such Holder, and each of their officers, directors, and partners, and
      each
      person controlling such other 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

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        
 “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 providedfurther 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.

    

     

    (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 

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        
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).

    

     

    (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. 

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    (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.

     

    (b)  Form
      D; Blue Sky Laws. 
      The Company agrees to file a Form D with respect to the Notes as required under
      Regulation D and to provide upon request a copy thereof to each 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 Notes and the Conversion Shares for sale to the
      Purchasers 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 each 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. 
      Each 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. 
      Each 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 such 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. 
      No Purchaser may sell, offer to sell, assign, pledge, hypothecate or otherwise
      transfer any of the Notes or the Conversion Shares unless (i) pursuant to
      an effective registration statement under the Securities Act, (ii) such
      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 Notes
      or the Conversion Shares, as applicable, may be made without registration under
      the Securities Act, or (iii) such 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 Notes 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, such Purchaser may transfer (without restriction and without the
      need
      for an opinion of counsel) the Notes and the Conversion Shares to its Affiliates
      (as such term is defined in Rule 405 promulgated by the SEC under the


     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        
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).

    

     

    (h)  Legends. 
      Each Purchaser agrees that Notes 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, each Purchaser agrees that the Company may place stop transfer orders
      with its transfer agents with respect to the Notes 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 Purchasers’ decision-making with respect to their
      acquisition or conversion of the Notes the Company may furnish to the Purchasers
      and their officers, directors, employees and agents, if applicable (collectively
      referred to as “Purchasers andAgents”) financial and other
      information which has not theretofore been made available to the public
      (“Material Confidential Information”).  The Purchasers 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 Purchasers 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 Purchasers
      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 Purchasers agree 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
      Purchasers’ holdings of the Notes, the conversion of the Notes, and monitoring
      of the Purchasers’ holding of the Conversion Shares.  The Purchasers
      also agree that the Purchasers and 

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        
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 Purchasers’ representatives who need to know such
        information for the purpose of monitoring the Purchasers’ investment in the
        Notes and the Conversion Shares, in which case it is understood that the
        Purchasers’ representatives, directors, officers, employees, agents and
        advisors, if applicable, shall be informed by the Purchasers of the confidential
        nature of such information and shall be directed by the Purchasers to treat
        such
        information confidentially.  In the event that the Purchasers 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
        Purchasers 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, each Purchaser agrees to furnish only
        that portion of the Material Confidential Information which such Purchaser
        is
        legally required to furnish and, where appropriate, to exercise the Purchasers’
and Agents’ reasonable efforts to obtain assurances that confidential treatment
        will be accorded such Material Confidential Information.

    

     

    (j)  Market-Standoff. 
      Subject to the rights of each Purchaser set forth in Section 5, if requested
      by
      the Company and an underwriter of Common Stock (or other securities) of the
      Company, each 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 such 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).

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

    7.  CONDITIONS
      TO THE PURCHASER’S OBLIGATIONS AT CLOSING. 
      The obligations of each 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.

     

    (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 such 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. 
      Such 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 A.

     

    (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 Purchasers and to the
      Purchasers’ 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
      JP
      Morgan Chase Bank, N.A. in form and substance reasonably satisfactory to the
      Purchasers.

     

    (h)  Delivery
      of the Notes. 
      The Company shall have delivered to each Purchaser, against delivery of payment
      of the amount set forth opposite such Purchaser’s name on Schedule A, a
      signed original Note issued in the name of each Purchaser, with the initial
      principal amount set forth opposite such Purchaser’s name on Schedule
      A.

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

    (i)  UCC-1
      Filings. 
      UCC-1 financing statements evidencing the security interests granted to the
      Purchasers pursuant to the Security Agreement, in form and substance reasonably
      satisfactory to the Purchasers, shall have been filed with the Secretary of
      State for the State of Delaware.

     

    (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 Purchasers in connection with the transactions
      contemplated hereby.

     

    8.  CONDITIONS
      TO THE COMPANY’S OBLIGATIONS AT CLOSING. 
      The obligations of the Company to the Purchasers 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 Purchasers 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 Purchasers 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 Notes to the Purchasers pursuant to this Agreement
      and
      the issuance of the Conversion Shares pursuant to the Notes 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 Purchasers 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. 
      Each Purchaser shall have executed and delivered to the Company a Purchaser
      Questionnaire, in the form attached hereto as Exhibit C, pursuant to
      which each Purchaser shall provide information necessary to confirm such
      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


     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        
Closing,
        shall have been instituted before any court, arbitrator or governmental body,
        agency or official and shall be pending.

    

     

    (h)  Other
      Actions. 
      The Purchasers 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 each Purchaser who purchases $3,000,000 or more in
      aggregate principal amount of Notes pursuant to this Agreement (the
“Significant Purchasers”), 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. A Significant 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 Notes purchased by
      such
      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 all
      Notes).  Significant Purchasers who have not converted all or part of
      their Note to Common Stock prior to the issuance of New Securities 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
      Notes
      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;

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    (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;

     

    (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 Significant Purchasers; 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 each Significant 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. Each Significant Purchaser shall have twenty
      (20) days after any such notice is mailed or delivered to agree to purchase
      such
      Significant Purchaser’s 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 a Significant 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 Significant Purchasers’
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
      Significant Purchasers 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 Significant Purchasers
      in
      the manner provided in this Section 9.

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

    (iv)  The
      right
      of first refusal granted under this Agreement shall expire upon the third
      anniversary of the date of this Agreement.

     

    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 holders of Notes representing at least a majority of the total aggregate
      principal amount of Notes then outstanding (excluding any of such shares that
      have been sold in a transaction in which registration rights are not assigned
      in
      accordance with this Agreement or sold to the public pursuant to SEC
      Rule 144 or otherwise).  Any amendment or waiver effected in
      accordance with this Section 10(f) will be binding upon the Purchasers, 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.

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

    (h)  Entire
      Agreement. 
      This Agreement, the Notes 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.

     

    (i)  Further
      Assurances. 
      From and after the date of this Agreement upon the request of the Company or
      the
      Purchasers, the Company and the Purchasers 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.]

     

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

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

     

    AVISTAR
      COMMUNICATIONS CORPORATION

     

    By:                                                                    /s/
      Robert Habig

     

    Name:
      Robert
      Habig                                                                    

     

    Title:
      CFO                                                                    

     

     

    



    
      
              

                  [Avistar
            Convertible Note Purchase
            Agreement]      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

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

     

    PURCHASERS:                                                                           BALDWIN
      ENTERPRISES, INC.

     

    By:
      /s/ Joseph A.
      Orlando                                                                    

     

    Name:
      Joseph A.
      Orlando                                                                    

     

    Title:
      Vice
      President                                                                    


    
      
              

                  [Avistar
            Convertible Note Purchase
            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:                                                                    

     

    


     

    



    
      
              

                  [Avistar
            Convertible Note Purchase
            Agreement]      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

    Schedule
      A

     

    Schedule
      of Purchasers

     

    


    
      	
              
                Name
                  of Purchaser

                 

              

            	
              
                Initial
                  Principal Amount and Purchase Price of Note

                 

              

            
	
              Baldwin
                Enterprises, Inc.

              315
                Park Avenue South

              New
                York, NY 10010

               

            	
              $4,000,000.00

            
	
              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

               

            	
              $1,540,000.00

            
	
              Heinrichs
                Revocable Trust

              c/o
                Avistar Communications Corp.

              1875
                South Grant St

              10th
                Floor

              San
                Mateo CA US 94402

               

            	
              $1,000,000.00

            
	
              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

               

            	
              $100,000.00

            
	
              Simon
                Moss

              c/o
                Avistar Communications Corp.

              1875
                South Grant St

              10th
                Floor

              San
                Mateo CA US 94402

               

            	
              $50,000.00

            
	
              Craig
                Heimark

              c/o
                Avistar Communications Corp.

              1875
                South Grant St

              10th
                Floor

              San
                Mateo CA US 94402

               

            	
              $200,000.00

            
	
              Darren
                Innes

              c/o
                Avistar Communications Corp.

              Boston
                House

              3rd
                Floor

              63-64
                New Broad Street

              London
                EC2M 1JJ

              United
                Kingdom

               

            	
              $59,980.00

            
	
              WS
                Investment Company, LLC (2007A)

              650
                Page Mill Rd.

              Palo
                Alto, CA 94304

               

            	
              $40,000.00

            
	
              WS
                Investment Company, LLC (2007D)

              650
                Page Mill Rd.

              Palo
                Alto, CA 94304

            	
              $10,000.00

            
	 	 
	
              TOTAL

            	
              
                 

                $6,999,980.00

              

            


    

     

    


     

    



    
      
              

                  [Avistar
            Convertible Note Purchase
            Agreement]      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

    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 January __, 2008 (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 Purchasers shall
      be obligated to maintain and protect such confidential information.

    


    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    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.

    


    Under
      the
      Employment Agreement between Avistar Communications Corporation and Simon Moss
      effective July 16, 2007, 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.

    


    3(k)
      (v): On December 7, 2007, the Company received a deficiency letter from
      The Nasdaq Stock Market indicating that the Company does not comply with
      Marketplace Rule 4310(c)(4), which requires the Company to have a minimum bid
      price of $1.00 for continued listing.  Subject to the additional
      listing compliance issue discussed below, the Company may be provided 180
      calendar days, or until June 4, 2008, to regain compliance.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    On
      December 13, 2007, the Company received a notice from The Nasdaq Stock Market
      stating that Avistar had not regained compliance with Nasdaq Marketplace Rule
      4310(c)(3) and, as a result, the Company’s securities are subject to de-listing
      from The Nasdaq Capital Market unless the Company appealed the Nasdaq Staff’s
      determination to a Nasdaq Listing Qualifications Panel.  The Company
      requested a hearing before the Panel to appeal the Nasdaq Staff’s determination,
      and that appeal has been scheduled for January 24, 2008. A de-listing of the
      Company’s common stock has been stayed, pending the hearing.  The
      Listing Qualifications Panel would have authority to grant the Company a further
      extension of time in which to regain compliance with the Marketplace Rules,
      though there can be no assurance that the Panel will grant a further extension
      of time.

    



    
      
              

                  [Avistar
            Convertible Note Purchase
            Agreement]      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


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

    


    


    
      	
              Country

            	
              Number

            	
              Title

            	
              Expiration*

            
	
              US

            	
              5,617,539

            	
              MULTIMEDIA
                COLLABORATION SYSTEM WITH SEPARATE DATA NETWORK AND A/V NETWORK CONTROLLED
                BY INFORMATION TRANSMITTING ON THE DATA NETWORK

            	
              6/7/2016

            
	
              GB

            	
              2,296,620

            	
              METHODS
                AND SYSTEMS FOR MULTIMEDIA COMMUNICATIONS VIA PUBLIC TELEPHONE
                NETWORKS

            	
              10/3/2014

            
	
              US

            	
              5,689,641

            	
              MULTIMEDIA
                COLLABORATION SYSTEM ARRANGEMENT FOR ROUTING COMPRESSED AV SIGNAL
                THROUGH
                A PARTICIPANT SITE WITHOUT DECOMPRESSING THE AV SIGNAL

            	
              11/18/20014

            
	
              GB

            	
              2,308,526

            	
              METHODS
                AND SYSTEMS FOR MULTIMEDIA COMMUNICATIONS VIA PUBLIC TELEPHONE
                NETWORKS.

            	
              10/11/2015

            
	
              US

            	
              5,751,338

            	
              METHODS
                AND SYSTEMS FOR MULTIMEDIA COMMUNICATIONS VIA PUBLIC TELEPHONE
                NETWORKS

            	
              5/12/2015

            
	
              US

            	
              5,758,079

            	
              CALL
                CONTROL IN VIDEO CONFERENCING ALLOWING ACCEPTANCE AND IDENTIFICATION
                OF
                PARTICIPANTS IN A NEW INCOMING CALL DURING AN ACTIVE
                TELECONFERENCE

            	
              10/1/2013

            
	
              GB

            	
              2,282,506

            	
              TELECONFERENCING
                SYSTEM

            	
              5/27/2014

            
	
              GB

            	
              2,319,135

            	
              TELECONFERENCING
                SYSTEM

            	
              5/27/2014

            
	
              GB

            	
              2,319,136

            	
              TELECONFERENCING
                SYSTEM

            	
              5/27/2014

            
	
              GB

            	
              2,319,137

            	
              TELECONFERENCING
                SYSTEM

            	
              5/27/2014

            
	
              GB

            	
              2,319,138

            	
              TELECONFERENCING
                SYSTEM

            	
              5/27/2014

            
	
              US

            	
              5,802,294

            	
              TELECONFERENCING
                SYSTEM IN WHICH LOCATION VIDEO MOSAIC GENERATOR SENDS COMBINED LOCAL
                PARTICIPANTS IMAGES TO SECOND LOCATION VIDEO MOSAIC GENERATOR FOR
                DISPLAYING COMBINED IMAGES

            	
              6/7/2016

            
	
              CA

            	
              2,204,442

            	
              MULTIMEDIA
                COLLABORATION SYSTEM WITH SEPARATE DATA NETWORK AND A/V NETWORK CONTROLLED
                BY INFORMATION TRANSMITTING ON THE DATA NETWORK

            	
              3/16/2014

            
	
              US

            	
              5,854,893

            	
              SYSTEM
                FOR TELECONFERENCING IN WHICH COLLABORATION TYPES AND PARTICIPANTS
                BY
                NAMES OR ICONS ARE SELECTED BY A PARTICIPANT OF THE
                TELECONFERENCE

            	
              10/1/2013

            
	
              US

            	
              5,867,654

            	
              TWO
                MONITOR VIDEOCONFERENCING HARDWARE

            	
              10/1/2013

            
	
              US

            	
              5,884,039

            	
              SYSTEM
                FOR PROVIDING A DIRECTORY OF AV DEVICES AND CAPABILITIES AND CALL
                PROCESSING SUCH THAT EACH PARTICIPANT PARTICIPATES TO THE EXTENT
                OF
                CAPABILITIES AVAILABLE

            	
              10/1/2013

            
	
              SG

            	
              53,410

            	
              PUBLIC
                DIGITAL TELEPHONE NETWORK AND TELEPHONE UTP LOOP PLANT CARRYING AUDIO,
                VIDEO, AND DATA

            	
              10/4/2015

            
	
              US

            	
              5,896,500

            	
              SYSTEM
                FOR CALL REQUEST WHICH RESULTS IN FIRST AND SECOND CALL HANDLE DEFINING
                CALL STATE CONSISTING OF ACTIVE OR HOLD FOR ITS RESPECTIVE AV
                DEVICE

            	
              10/1/2013

            
	
              US

            	
              5,915,091

            	
              SYNCHRONIZATION
                IN VIDEO CONFERENCING

            	
              6/11/2016

            
	
              US

            	
              5,978,835

            	
              MULTIMEDIA
                MAIL, CONFERENCE RECORDING AND DOCUMENTS IN VIDEO
                CONFERENCING

            	
              10/1/2013

            
	
              CH

            	
              690,154

            	
              FASCICULE
                DU BREVET

            	
              9/28/2014

            
	
              CA

            	
              2,173,204

            	
              MULTIMEDIA
                COLLABORATION SYSTEM

            	
              3/16/2014

            
	
              US

            	
              6,081,291

            	
              METHODS
                AND SYSTEMS FOR MULTIMEDIA COMMUNICATION VIA PUBLIC TELEPHONE
                NETWORKS

            	
              12/30/2014

            
	
              CA

            	
              2,208,987

            	
              METHODS
                AND SYSTEMS FOR MULTIMEDIA COMMUNICATION VIA PUBLIC TELEPHONE
                NETWORKS

            	
              10/4/2015

            
	
              EP-DE

            	
              898,424

            	
              MULTIMEDIA
                COLLABORATION SYSTEM

            	
              3/16/2014

            
	
              EP-FR

            	
              898,424

            	
              MULTIMEDIA
                COLLABORATION SYSTEM

            	
              3/16/2014

            
	
              EP-GB

            	
              898,424

            	
              MULTIMEDIA
                COLLABORATION SYSTEM

            	
              3/16/2014

            
	
              CA

            	
              2,296,182

            	
              CALL
                CONTROL IN VIDEO CONFERENCING ALLOWING ACCEPTANCE AND IDENTIFICATION
                OF
                PARTICIPANTS IN A NEW INCOMING CALL DURING AN ACTIVE
                TELECONFERENCE

            	
              10/3/2014

            
	
              EP-DE

            	
              721,726

            	
              VIDEOCONFERENCE
                SIGNAL SWITCHING WITHOUT DECOMPRESSION

            	
              10/3/2014

            
	
              EP-FR

            	
              721,726

            	
              VIDEOCONFERENCE
                SIGNAL SWITCHING WITHOUT DECOMPRESSION

            	
              10/3/2014

            
	
              EP-GB

            	
              721,726

            	
              VIDEOCONFERENCE
                SIGNAL SWITCHING WITHOUT DECOMPRESSION

            	
              10/3/2014

            
	
              CA

            	
              2,173,209

            	
              MULTIMEDIA
                COLLABORATION SYSTEM

            	
              10/3/2014

            
	
              US

            	
              6,212,547

            	
              UTP
                based video and data conferencing

            	
              10/1/2013

            
	
              US

            	
              6,237,025

            	
              MULTIMEDIA
                COLLABORATION SYSTEM

            	
              10/1/2013

            
	
              CA

            	
              2,296,181

            	
              SYSTEM
                FOR PROVIDING A DIRECTORY OF AV DEVICES AND CAPABILITIES AND CALL
                PROCESSING SUCH THAT EACH PARTICIPANT PARTICIPATES TO THE EXTENT
                OF
                CAPABILITIES AVAILABLE

            	
              10/3/2014

            
	
              CA

            	
              2,296,185

            	
              SYSTEM
                FOR CALL REQUEST WHICH RESULTS IN FIRST AND SECOND CALL HANDLE DEFINING
                CALL STATE CONSISTING OF ACTIVE OR HOLD FOR ITS RESPECTIVE AV
                DEVICE

            	
              10/3/2014

            
	
              CA

            	
              2,296,187

            	
              SYNCHRONIZATION
                IN VIDEO CONFERENCING

            	
              10/3/2014

            
	
              CA

            	
              2,296,189

            	
              SYSTEM
                FOR TELECONFERENCING IN WHICH COLLABORATION TYPES AND PARTICIPANTS
                BY
                NAMES OR ICONS ARE SELECTED BY A PARTICIPANT OF THE
                TELECONFERENCE

            	
              10/3/2014

            
	
              EP-DE

            	
              912,056

            	
              SYNCHRONIZATION
                IN A MULTIMEDIA SYSTEM

            	
              10/3/2014

            
	
              EP-FR

            	
              912,056

            	
              SYNCHRONIZATION
                IN A MULTIMEDIA SYSTEM

            	
              10/3/2014

            
	
              EP-GB

            	
              912,056

            	
              SYNCHRONIZATION
                IN A MULTIMEDIA SYSTEM

            	
              10/3/2014

            
	
              US

            	
              6,343,314

            	
              REMOTE
                PARTICIPANT HOLD AND DISCONNECT DURING VIDEOCONFERENCING

            	
              10/1/2013

            
	
              US

            	
              6,351,762

            	
              METHOD
                AND SYSTEM FOR LOG-IN-BASED VIDEO AND MULTIMEDIA CALLS

            	
              10/1/2013

            
	
              EP-DE

            	
              899,953

            	
              PARTICIPANT
                LOCATION  IN MULTIMEDIA COLLABORATION SYSTEM

            	
              10/3/2014

            
	
              EP-FR

            	
              899,953

            	
              PARTICIPANT
                LOCATION  IN MULTIMEDIA COLLABORATION SYSTEM

            	
              10/3/2014

            
	
              EP-GB

            	
              899,953

            	
              PARTICIPANT
                LOCATION  IN MULTIMEDIA COLLABORATION SYSTEM

            	
              10/3/2014

            
	
              US

            	
              6,426,769

            	
              HIGH-QUALITY
                SWITCHED ANALOG VIDEO COMMUNICATIONS OVER UNSHIELDED TWISTED
                PAIR

            	
              10/1/2013

            
	
              US

            	
              6,437,818

            	
              VIDEO
                CONFERENCING ON EXISTING UTP INFRASTRUCTURE

            	
              10/1/2013

            
	
              CA

            	
              2,297,940

            	
              TWO
                MONITOR VIDEOCONFERENCING HARDWARE

            	
              3/16/2014

            
	
              EP-DE

            	
              721,725

            	
              MULTIMEDIA
                COLLABORATION SYSTEM

            	
              3/16/2014

            
	
              EP-FR

            	
              721,725

            	
              MULTIMEDIA
                COLLABORATION SYSTEM

            	
              3/16/2014

            
	
              EP-GB

            	
              721,725

            	
              MULTIMEDIA
                COLLABORATION SYSTEM

            	
              3/16/2014

            
	
              EP-DE

            	
              912,055

            	
              MULTIMEDIA
                COLLABORATION SYSTEM

            	
              3/16/2014

            
	
              EP-FR

            	
              912,055

            	
              MULTIMEDIA
                COLLABORATION SYSTEM

            	
              3/16/2014

            
	
              EP-GB

            	
              912,055

            	
              MULTIMEDIA
                COLLABORATION SYSTEM

            	
              3/16/2014

            
	
              EP-DE

            	
              899,952

            	
              CALL
                DETECTION & HANDLING IN MULTIMEDIA COLLABORATION
                SYSTEM

            	
              10/3/2014

            
	
              EP-FR

            	
              899,952

            	
              CALL
                DETECTION & HANDLING IN MULTIMEDIA COLLABORATION
                SYSTEM

            	
              10/3/2014

            
	
              EP-GB

            	
              899,952

            	
              CALL
                DETECTION & HANDLING IN MULTIMEDIA COLLABORATION
                SYSTEM

            	
              10/3/2014

            
	
              US

            	
              6,583,806

            	
              VIDEOCONFERENCING
                HARDWARE

            	
              10/1/2013

            
	
              US

            	
              6,594,688

            	
              DEDICATED
                ECHO CANCELER FOR A WORKSTATION

            	
              10/1/2013

            
	
              EP-DE

            	
              899,954

            	
              MULTIMEDIA
                MAIL IN A TELECONFERENCING SYSTEM

            	
              10/3/2014

            
	
              EP-FR

            	
              899,954

            	
              MULTIMEDIA
                MAIL IN A TELECONFERENCING SYSTEM

            	
              10/3/2014

            
	
              EP-GB

            	
              899,954

            	
              MULTIMEDIA
                MAIL IN A TELECONFERENCING SYSTEM

            	
              10/3/2014

            
	
              EP-GB

            	
              801,858

            	
              PUBLIC
                DIGITAL TELEPHONE NETWORK AND TELEPHONE UTP LOOP PLANT CARRYING AUDIO,
                VIDEO, AND DATA

            	
              10/4/2015

            
	
              US

            	
              6,789,105

            	
              MULTIPLE-EDITOR
                AUTHORING OF MULTIMEDIA DOCUMENTS INCLUDING REAL-TIME VIDEO AND
                TIME-INSENSITIVE MEDIA

            	
              10/1/2013

            
	
              US

            	
              6,816,904

            	
              NETWORKED
                VIDEO MULTIMEDIA STORAGE SERVER ENVIRONMENT

            	
              11/4/2018

            
	
              CA

            	
              2,318,395

            	
              MULTIFUNCTION
                VIDEO COMMUNICATIONS SERVICE DEVICE

            	
              1/27/2019

            
	
              US

            	
              6,898,620

            	
              MULTIPLEXING
                VIDEO AND CONTROL SIGNALS ONTO UTP

            	
              5/22/2018

            
	
              US

            	
              6,959,322

            	
              UTP
                BASED VIDEO CONFERENCING

            	
              11/11/2013

            
	
              US

            	
              6,972,786

            	
              MULTIMEDIA
                SERVICES USING CENTRAL OFFICE

            	
              12/30/2014

            
	
              US

            	
              7,054,904

            	
              MARKING
                AND SEARCHING

            	
              5/4/2015

            
	
              US

            	
              7,185,054

            	
              PARTICIPANT
                DISPLAY AND SELECTION IN VIDEO CONFERENCE CALLS

            	
              11/4/2014

            
	
              GB

            	
              1,029,273

            	
              VIDEO
                STORAGE SERVER

            	
              11/4/2018

            
	
              FR

            	
              1,029,273

            	
              VIDEO
                STORAGE SERVER

            	
              11/4/2018

            
	
              DE

            	
              1,029,273

            	
              VIDEO
                STORAGE SERVER

            	
              11/4/2018

            
	
              US

            	
              7,152,093

            	
              SYSTEM
                FOR REAL-TIME COMMUNICATION BETWEEN PLURAL USERS

            	
              12/5/2013

            
	
              US

            	
              7,206,809

            	
              METHOD
                FOR REAL-TIME COMMUNICATION BETWEEN PLURAL USERS

            	
              11/14/2013

            
	
              GB

            	
              1,307,038

            	
              CALL
                DETECTION & HANDLING IN MULTIMEDIA COLLABORATION
                SYSTEM

            	
              10/3/2014

            
	
              FR

            	
              1,307,038

            	
              CALL
                DETECTION & HANDLING IN MULTIMEDIA COLLABORATION
                SYSTEM

            	
              10/3/2014

            
	
              DE

            	
              1,307,038

            	
              CALL
                DETECTION & HANDLING IN MULTIMEDIA COLLABORATION
                SYSTEM

            	
              10/3/2014

            
	
              GB

            	
              2,296,620

            	
              METHOD
                AND SYSTEM FOR MULTIMEDIA COMMUNICATION VIA PUBLIC TELEPHONE
                NETWORKS

            	
              10/11/2015

            
	 	
               

            	
              *
                Expiration dates obtained from Computer Patent Annuities (CPA), Liberation
                House, Castle Street, St Helier, JE1 1BL, Jersey. CPA has been managing
                CPI/Avistar patent renewals since 1999.

            	
               

            


    

    


    


    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 $145,200 issued by such bank to Clemmons Properties
      Partners L.P.

    


    3(o)
      and (u) The Company is currently undergoing a sales and use tax audit
      by the State of California, which has resulted in a preliminary estimate for
      sales and uses taxes due for the years ended December 31, 2005, 2006 and 2007,
      of $38,000.  The Company does not expect the final results of the
      audit to have a Material Adverse Effect on the Company.

    


    



    
      
              

                  [Avistar
            Convertible Note Purchase
            Agreement]      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

    Schedule
      C

     

    Purchasers’
      Disclosure Schedule

     

    


     

    Section
      4(d)

     

    The
      following Purchasers beneficially own the shares listed opposite their
      names:

     

    


    
      	
              Name

            	
              Shares
                Owned

            
	
               

              Gerald
                Burnett             

              William
                Campbell          
                   

              R.
                Stephen
                Heinrichs          
                 

              Craig
                Heimark           
                   

               

            	
              14,213,627

                 948,262

              5,286,460

                  80,088

            
	 	 
	 	 


    

     

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

    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 January 4, 2008 (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.


    
      
              

                  [Avistar
            Convertible Note Purchase
            Agreement]      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Exhibit A

     

    Form
      of
      Convertible Subordinated Secured Note Due 2010


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

    Exhibit B

     

    Form
      of
      Legal Opinion


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

    Exhibit C

     

    Purchaser
      Questionnaire