**Exhibit10.12**

 

EXECUTION COPY

 

**STOCK PURCHASE AGREEMENT**

** **

Avistar Communications Corporation555 Twin Dolphin Drive, Suite 360Redwood Shores, CA  94065

 

The undersigned (the “**Investor**”),hereby confirms its agreement with you as follows:

 

1.                                       ThisStock Purchase Agreement (the “**Agreement**”)is made as of the date set forth below between Avistar CommunicationsCorporation, a Delaware corporation (the “**Company**”),and the Investor.

 

2.                                       TheCompany has authorized the sale and issuance of up to 3,333,333 Shares (the “**Shares**”) of common stock of the Company,$0.001 par value (the “**Common Stock**”),to certain investors in a private placement (the “**Offering**”).

 

3.                                       TheCompany and the Investor agree that the Investor will purchase from the Companyand the Company will issue and sell to the Investor 3,000,000 Shares at apurchase price of $1.20 per Share, for an aggregate purchase price of$3,600,000.00, pursuant to the Terms and Conditions for Purchase of Sharesattached hereto as Annex I and incorporated herein by this reference as iffully set forth herein.  Unlessotherwise requested by the Investor in Exhibit A to Annex I,certificates representing the Shares purchased by the Investor will beregistered in the Investor’s name and address as set forth below.

 

4.                                       TheInvestor represents that, except as set forth below, (a) it has had noposition, office or other material relationship within the past three yearswith the Company or its affiliates, and (b) it has no direct or indirectaffiliation or association with any National Association of Securities Dealers,Inc. (“**NASD**”) member.  Exceptions:

 

**NONE**

 

(If no exceptions, write “none.”  If left blank, response will be deemed to be“none.”)

 

5.                                       TheInvestor represents that it holds 559,100 shares of the Common Stock as of thedate hereof, which it acquired in “brokers transactions” as such transactionsare defined in Rule 144 promulgated under the Securities Act of 1933, asamended.

 

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Please confirm that the foregoing correctly sets forththe agreement between us by signing in the space provided below for thatpurpose.

 
|                                   | **Dated as of**:  March 23, 2004                  |
|----------------------------------------|--------------------------------------------------------|
|                                   |                                                   |
|                                   | **Fuller & Thaler Behavioral  Finance Fund, Ltd.** |
|                                   | **Fuller & Thaler Avalanche Fund,  L.P.**          |
|                                   |                                                   |
|                                   | “INVESTOR”                                   |
|                                   |                                                   |
|                                   | By:                                                    |   /s/ Brendan MacMillan |
|                                   |                                                   |
|                                   | Print Name:                                            | Brendan MacMillan |   |
|                                   |                                                   |
|                                   | Title:                                                 | Portfolio Manager |   |
|                                   |                                                   |
|                                   | Address:                                               |
|                                   |                                                   |
|                                   |                                                   |
|                                   |                                                   |
| AGREED AND ACCEPTED:                   |                                                   |
|                                   |                                                   |
| **Avistar Communications Corporation** |                                                   |
|                                   |                                                   |
|                                   |                                                   |
| By:                                    | /s/ Gerald J. Burnett                                  |   |   |
| Name: Gerald J. Burnett                |                                                   |
| Title: Chief Executive Officer         |                                                   |
|                                   |                                                   |
|                                   |                                                   |
| By:                                    | /s/ Robert J. Habig                                    |   |   |
| Name:  Robert  J. Habig           |                                                   |
| Title:  Chief  Financial Officer  |                                                   |
|                                        |                                                        |  |  |  |  |  |  |  |

 

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**ANNEX I**

**TERMS AND CONDITIONS FORPURCHASE OF SHARES**

** **

# **1.****                                     ****Agreement to Sell and Purchasethe Shares; Subscription Date**.  At the Closing (as defined in Section 2),Avistar Communications Corporation (the “**Company**”)will sell to the Investor named in the Stock Purchase Agreement dated March 23,2004 to which this Annex I is attached (the “**Stock Purchase Agreement**”), and the Investor will purchasefrom the Company, upon the terms and conditions hereinafter set forth, thenumber of Shares, (the “**Shares**”)set forth in paragraph 3 of the Stock Purchase Agreement to which theseTerms and Conditions for Purchase of Shares are attached as Annex I (this“**Annex**” and, together with theStock Purchase Agreement, this “**Agreement**”)and at the purchase price set forth in such paragraph.  Terms used but not otherwise defined in thisAnnex shall have the meanings set forth in the Stock Purchase Agreement.

#  

# **2.****                                     ****Delivery of the Shares at Closing**.  Thecompletion of the purchase and sale of the Shares (the “**Closing**”) shall occur at a place and time,no later than March 31, 2004 (the “**ClosingDate**”), to be specified by the Company and the Investor.  By mutual agreement, the Closing can beconducted by phone, fax, and e-mail, with delivery of stock certificates withinfive business days thereafter.  At theClosing, the Company shall agree to deliver to the Investor one or more stockcertificates representing the number of Shares set forth on the signature pagehereto, each such certificate to be registered in the name of the Investor or,if so indicated on the Securities Certificate Questionnaire attached hereto as Exhibit A,in the name of a nominee designated by the Investor.  In addition, on or prior to the Closing Date, the Company shallcause counsel to the Company to deliver to the Investor a legal opinion in theform attached hereto as Exhibit D.

#  

The Company’s obligation to issue and sell the Sharesto the Investor shall be subject to the following conditions, any one or moreof which may be waived by the Company: (a) receipt by the Company of thepurchase price for the Shares being purchased hereunder as set forth on thesignature page hereto; (b) the representations and warranties made by theInvestor being true and correct in all material respects on and as of suchClosing with the same effect as though such representations and warranties hadbeen made on and as of the date of such Closing and the fulfillment of thoseundertakings of the Investor to be fulfilled on or prior to the Closing;(c) the sale and issuance of the Shares by the Company to the Investorshall not require approval by the stockholders of the Company under theMarketplace Rules of the Nasdaq Stock Market or Delaware General CorporationLaw; and (d) the absence of any order, writ, injunction, judgment ordecree that questions the validity of the Agreement or the right of the Companyto enter into the Agreement or to consummate the transactions contemplatedhereby and thereby.

 

The Investor’s obligation to purchase the Shares shallbe subject to the following conditions, any one or more of which may be waivedby the Investor: (a) the delivery to the Investor by counsel to theCompany of a legal opinion in the form attached hereto as Exhibit D;(b) the representations and warranties of the Company contained inSection 3 being true and correct in all material respects on and as ofsuch Closing with the same effect as though such representations and warrantieshad been made on and as of the date of such Closing; (c) the absence ofany order, writ, injunction, judgment or decree that questions the validity ofthe Agreement or the right of the Company to enter into such Agreement or toconsummate the transactions contemplated hereby and thereby; and (d) thedelivery to the Investor by the Secretary or Assistant Secretary of the Companyof a certificate stating that the condition specified in part (b) of thisparagraph has been fulfilled.

 

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# **3.****                                     ****Representations, Warranties andCovenants of the Company**.  Except as otherwise described in theCompany’s Annual Report on Form 10—K for the year ended December 31, 2003(and any amendments thereto filed prior to the date hereof); the Company’sProxy Statement for its 2003 Annual Meeting of Shareholders; the Company’sQuarterly Reports on Form 10—Q for the quarters ended March 31, 2003,June 30, 2003, and September 30, 2003; and the Company’s CurrentReports on Form 8—K filed since January 1, 2003 (collectively, the “**SEC Reports**” or the “**Reports**”), or any press releases issued bythe Company since January 1, 2003, the Company hereby represents and warrantsto, and covenants with, the Investor as of the date hereof and the Closing Date,as follows:

#  

## **3.1****                               Organization**.  Each of the Company and its Subsidiaries (asdefined in Rule 405 under the Securities Act of 1933, as amended (the “**Securities Act**”)) is duly incorporated andvalidly existing in good standing under the laws of the jurisdiction of itsorganization.  Each of the Company andits Subsidiaries has full power and authority to own, operate and occupy itsproperties and to conduct its business as presently conducted and is registeredor qualified to do business and in good standing in each jurisdiction in whichit owns or leases property or transacts business and where the failure to be soqualified would have a material adverse effect upon the Company and itsSubsidiaries taken as a whole, or the business, financial condition, properties,operations or assets of the Company and its Subsidiaries taken as a whole, orthe Company’s ability to perform its obligations under the Agreements (“**Material Adverse Effect**”), and noproceeding has been instituted in any such jurisdiction revoking, limiting orcurtailing, or seeking to revoke, limit or curtail, such power and authority orqualification, which proceeding is reasonably likely to result in a MaterialAdverse Effect.

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## **3.2****                               Due Authorization**.  The Company has all requisite power and authorityto execute, deliver and perform its obligations under the Agreement, and theAgreement has been duly authorized and validly executed and delivered by theCompany and constitute legal, valid and binding agreements of the Companyenforceable against the Company in accordance with their terms, except asrights to indemnity and contribution may be limited by state or federalsecurities laws or the public policy underlying such laws, except asenforceability may be limited by applicable bankruptcy, insolvency,reorganization, moratorium or similar laws affecting creditors’ and contractingparties’ rights generally and except as enforceability may be subject togeneral principles of equity (regardless of whether such enforceability isconsidered in a proceeding in equity or at law).

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## **3.3****                               Non—Contravention**.  The execution and delivery of the Agreement,the issuance and sale of the Shares to be sold by the Company under theAgreement, the fulfillment of the terms of the Agreement and the consummationof the transactions contemplated thereby will not (A) result in conflictwith or constitute a violation of, or default (with the passage of time orotherwise) under, (i) any bond, debenture, note or other evidence ofindebtedness, or any lease, contract, indenture, mortgage, deed of trust, loanagreement, joint venture or other agreement or instrument to which the Companyor any of its Subsidiaries is a party or by which the Company or any of itsSubsidiaries or their respective properties are bound, where such conflict,violation or default is reasonably expected to result in a Material AdverseEffect; or (ii) the certificate of incorporation, bylaws or otherorganizational documents of the Company or any of its Subsidiaries, or(iii) any law, administrative regulation, ordinance or order of any courtor governmental agency, arbitration panel or authority binding upon the Companyor any of its Subsidiaries or their respective properties, where such conflict,violation or default is reasonably likely to result in a Material AdverseEffect or (B) result in (x) the creation or imposition of any lien,encumbrance, claim, security interest or restriction whatsoever upon any of theproperties or assets of the Company or any of its Subsidiaries which is reasonablylikely to result in a Material Adverse Effect or (y) an acceleration ofindebtedness pursuant to any obligation, agreement or condition contained inany bond, debenture, note or any other evidence of indebtedness or any

 

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## indenture,mortgage, deed of trust or any other agreement or instrument to which theCompany or any of its Subsidiaries is a party or by which any of them is boundor to which any of the property or assets of the Company or any of itsSubsidiaries is subject which is reasonably likely to result in a MaterialAdverse Effect.  No consent, approval,authorization or other order of, or registration, qualification or filing with,any regulatory body, administrative agency, or other governmental body in theUnited States is required for the execution and delivery of the Agreement bythe Company and the valid issuance and sale of the Shares by the Companypursuant to the Agreement, other than such as have been made or obtained, andexcept for any filings required to be made under federal or state securitieslaws, which the Company covenants to do in a timely manner.

##  

## **3.4****                               Capitalization**.  The authorized and outstanding capital stockof the Company as of December 31, 2003 is as described in the ConsolidatedBalance Sheet as at December 31, 2003 of the Company included in theCompany’s Annual Report on Form 10-K for the year ended December 31,2003.  The Shares to be sold pursuant tothe Agreement have been duly authorized, and when issued and paid for in accordancewith the terms of the Agreement, will be duly and validly issued, fully paidand nonassessable and free and clear of all pledges, liens and encumbrances(other than restrictions on transfer under state and/or federal securities lawsas set forth herein or as otherwise required by such laws at the time atransfer is proposed).  The outstandingShares of capital stock of the Company have been duly and validly issued andare fully paid and nonassessable, have been issued in compliance with theregistration requirements of federal and state securities laws or exemptionstherefrom, and were not issued in violation of any preemptive rights or similarrights to subscribe for or purchase Shares, other than such rights as are dulyand validly waived.  Except for optionsissued under the Company’s stock option plans, and rights under the Company’sEmployee Stock Purchase Plan, there are no outstanding rights (including,without limitation, preemptive rights), warrants or options to acquire, orinstruments convertible into or exchangeable for, any unissued Shares ofcapital stock or other equity interest in the Company or any of itsSubsidiaries, or any contract, commitment, agreement, understanding orarrangement of any kind, in either case to which the Company or any of itsSubsidiaries is a party and providing for the issuance or sale of any capitalstock of the Company or any of its Subsidiaries, any such convertible orexchangeable Shares or any such rights, warrants or options.

##  

## **3.5****                               Legal Proceedings**.  Except as set forth in the SEC Reports,there is no legal or governmental proceeding pending, or to the knowledge ofthe Company, threatened, to which the Company or any of its Subsidiaries is aparty or of which the business or property of the Company or any of itsSubsidiaries is subject which is reasonably likely to result in a MaterialAdverse Effect; nor, to the knowledge of the Company, is there any reasonablebasis therefor.  Neither the Company norany Subsidiary is a party to the provisions of any injunction, judgment, decreeor order of any court, regulatory body, administrative agency or othergovernment body which has had or could reasonably be expected to have aMaterial Adverse Effect.

##  

## **3.6****                               No Violations**.  Neither the Company nor any of its Subsidiariesis (a) in violation of its certificate of incorporation, bylaws or otherorganizational documents, or (b) in violation of any law, administrativeregulation, ordinance or order of any court or governmental agency, arbitrationpanel or authority applicable to the Company or any of its Subsidiaries, whichviolation(s), individually or in the aggregate, is reasonably likely to have aMaterial Adverse Effect; nor is the Company or any of its Subsidiaries indefault (and there exists no condition which, with the passage of time orotherwise, would constitute a default) in the performance of any bond,debenture, note or any other evidence of indebtedness or any indenture,mortgage, deed of trust or any other material agreement or instrument to whichthe Company or any of its Subsidiaries is a party or by which the Company orany of its Subsidiaries is bound or by which

 

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## theproperty of the Company or any of its Subsidiaries is bound, which default isreasonably likely to have a Material Adverse Effect.

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## **3.7****                               Governmental Permits, Etc**.  Each of the Company and its Subsidiaries hasall necessary franchises, licenses, certificates and other authorizations fromany foreign, federal, state or local government or governmental agency,department or body that are currently necessary for the operation of thebusiness of the Company and its Subsidiaries as currently conducted, exceptwhere the failure to currently possess such franchises, licenses, certificatesand other authorizations is not reasonably expected to have a Material AdverseEffect, and the Company has not received any notice of proceedings relating tothe revocation or modification of any such permit or any circumstance whichwould lead it to believe that such proceedings are reasonably likely which,individually or in the aggregate, if the subject of an unfavorable decision,ruling or finding, could reasonably be expected to have a Material AdverseEffect.

##  

## **3.8****                               Financial Statements**.  The consolidated financial statements of theCompany and the related notes contained in the SEC Reports present fairly, inaccordance with generally accepted accounting principles, the consolidatedfinancial position of the Company and its Subsidiaries as of the dates indicated,and the results of their operations, cash flows and the changes instockholders’ equity for the periods therein specified, subject, in the case ofunaudited financial statements for interim periods, to normal year-end auditadjustments.  Such consolidatedfinancial statements (including the related notes) have been prepared inaccordance with generally accepted accounting principles applied on aconsistent basis throughout the periods therein specified, except thatunaudited financial statements may not contain all footnotes required bygenerally accepted accounting principles.

##  

## **3.9****                               No Material Adverse Change**.  Since December 31, 2003, there has notbeen (i) a change that has had or is reasonably likely to have a MaterialAdverse Effect, (ii) any debt, obligation or liability, direct orcontingent, that is material to the Company or any of its Subsidiariesconsidered as one enterprise, incurred by the Company or any of itsSubsidiaries, except obligations incurred in the ordinary course of business,(iii) any dividend or distribution of any kind declared, paid or made onthe capital stock of the Company or any of its Subsidiaries, or (iv) anyloss or damage (whether or not insured) to the physical property of the Companyor any of its Subsidiaries which has been sustained and which has resulted in aMaterial Adverse Effect.  Except asdisclosed in the Company’s SEC Reports and except for liens and securityinterests granted in connection with the Company’s credit facilities and liensgranted in the ordinary course of business, since December 31, 2003, theCompany has not (i) mortgaged, pledged or subjected to lien, charge,security interest or other encumbrance any of its assets, tangible orintangible, (ii) waived any material debt owed to the Company, or (iii) satisfiedor discharged any material lien, claim or encumbrance or paid any obligationother than in the ordinary course of business.

##  

## **3.10****                        Nasdaq Compliance**.  The Company’s Common Stock is registeredpursuant to Section 12(g) of the Securities Exchange Act of 1934, asamended (the “**Exchange Act**”), andis listed on the Nasdaq SmallCap Market (the “**NasdaqStock Market**”), and the Company has taken no action designed to, orwhich to its knowledge is reasonably likely to have the effect of, terminatingthe registration of the Common Stock under the Exchange Act or delisting theCommon Stock from the Nasdaq Stock Market.

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## **3.11****                        Reporting Status**.  The Company has made all filings requiredunder the Exchange Act on a timely basis during the 12 months preceding thedate of this Agreement, and all of those documents complied in all materialrespects with the SEC’s requirements as of their respective filing dates, andthe information contained therein as of the respective dates thereof did notcontain an untrue statement of a

 

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## materialfact or omit to state a material fact required to be stated therein ornecessary to make the statements therein in light of the circumstances underwhich they were made not misleading.

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## **3.12****                        Accountants**.  KPMG LLP, who expressed its opinion withrespect to the consolidated financial statements contained in the Company’sAnnual Report on Form 10-K for the year ended December 31, 2003, hasadvised the Company that it is, and to the best knowledge of the Company it is,an independent accountant as required by the Securities Act and the rules andregulations promulgated thereunder (the “**Rulesand Regulations**”).

##  

## **3.13****                        Contracts**.  Except for matters which are not reasonablylikely to have a Material Adverse Effect, the contracts listed as exhibits tothe SEC Reports, other than those contracts that are substantially or fullyperformed or expired by their terms, are in full force and effect on the datehereof, and none of the Company, its Subsidiaries nor, to the Company’sknowledge, any other party to such contracts, is in material breach of ordefault under any of such contracts.

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## **3.14****                        Taxes**.  Except for matters which are not reasonably expected to have aMaterial Adverse Effect, the Company has filed all necessary federal, state andforeign income and franchise tax returns and has paid or accrued all taxesshown as due thereon, and the Company has no knowledge of a tax deficiencywhich has been asserted or threatened against the Company.

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## **3.15****                        Transfer Taxes**.  On the Closing Date, all stock transfer orother taxes (other than income taxes) which are required to be paid inconnection with the sale and transfer of the Shares hereunder will be, or willhave been, fully paid or provided for by the Company and the Company will havecomplied with all laws imposing such taxes.

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## **3.16****                        Investment Company**.  The Company is not an “**investment company**” or an “**affiliated person**” of, or “**promoter**” or “**principal underwriter**” for an investment company, within themeaning of the Investment Company Act of 1940, as amended.

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## **3.17****                        Insurance**.  The Company and its Subsidiaries maintaininsurance of the types and in the amounts that the Company reasonably believesis adequate for the businesses of the Company and its subsidiaries, including,but not limited to, insurance covering real and personal property owned orleased by the Company and its Subsidiaries against theft, damage, destruction,acts of vandalism and all other risks customarily insured against by similarly situatedcompanies, all of which insurance is in full force and effect.

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## **3.18****                        Offering Materials**.  The Company has not in the past nor will ithereafter take any action to sell, offer for sale or solicit offers to buy anyShares of the Company which would bring the offer or sale of the Shares ascontemplated by this Agreement within the provisions of Section 5 of theSecurities Act without the availability of an exception from the registrationrequirements contained therein.  Basedin part upon the representations and warranties of the Investor contained inSection 4 of the Agreement, the offer, sale and issuance of the Shares ascontemplated by this Agreement are exempt from the registration requirements ofthe Securities Act, and from the registration or qualification requirements ofthe laws of any applicable state or U.S. jurisdiction which has not or will notbe obtained.

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## **3.19****                        Listing**.  The Company shall comply with all requirements of the NASD withrespect to the issuance of the Shares and shall use its commercially reasonableefforts to have the Shares listed on the Nasdaq Stock Market on or before thefirst date that the Registration Statement (as defined in Section 6.1) isdeclared effective by the SEC.

 

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## **3.20****                        Books and Records**.  The books, records and accounts of theCompany and the Subsidiaries accurately and fairly reflect, in reasonabledetail, the transactions in, and dispositions of, the assets of, and theoperations of, the Company and the Subsidiaries.  The Company maintains a system of internal accounting controlssufficient to provide reasonable assurances that (i) transactions areexecuted in accordance with management’s general or specific authorizations,(ii) transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accountingprinciples and to maintain asset accountability, (iii) access to assets ispermitted only in accordance with management’s general or specific authorizationand (iv) the recorded accountability for assets is compared with theexisting assets at reasonable intervals and appropriate action is taken withrespect to any differences.

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## **3.21****                        Compliance with Environmental Laws**.  Except as disclosed in the SEC Reports andexcept for matters which are not reasonably likely to have a Material AdverseEffect, (i) the Company is not in violation of any applicable statute, lawor regulation relating to the environment or occupational health and safety,and, (ii) to the Company’s knowledge, no material expenditures are or willbe required in order to comply with any such existing statute, law orregulation relating to the environment or occupational health and safety.  To the Company’s knowledge, the Company doesnot have any material liability to any governmental authority or other thirdparty arising under or as a result of any such past or existing statute, law orregulation relating to the environment or occupational health and safety.

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## **3.22****                        Properties**.  The Company has good and marketable title toall the properties and assets reflected as owned in the financial statementsincluded in the SEC Reports, subject to no lien, mortgage, pledge, charge orencumbrance of any kind except (i) those, if any, reflected in the financialstatements included in the SEC Reports, (ii) those imposed by its lenders,including parties to the Company’s acquisitions; or (iii) those which arenot material in amount and do not adversely affect the use of such property bythe Company and its subsidiaries.  TheCompany holds its leased properties under valid and binding leases, with suchexceptions as are not materially significant in relation to the business of theCompany.  Except as disclosed in the SECReports, the Company owns or leases all such properties as are necessary to itsoperations as now conducted or as proposed to be conducted in the SEC Reports.

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## **3.23****                        Compliance**.  The Company has not been advised, and has noreason to believe, that it is conducting its business in violation of applicablelaws, rules and regulations of the jurisdictions in which it is conductingbusiness, except where such violation(s) would not have a Material AdverseEffect.

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## **3.24****                        Labor Matters**.  No labor dispute with the employees of theCompany exists other than those that have arisen in the ordinary course ofbusiness or, to the knowledge of the Company, is imminent or reasonably likely.

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## **3.25****                        Other Governmental Proceedings**.  To the Company’s knowledge, there are norulemaking or similar proceedings before federal, state, local or foreigngovernment bodies that involve or affect the Company, and which ruling orproceeding, if the subject of an action unfavorable to the Company, wouldreasonably be likely to have a Material Adverse Effect.

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# **4.****                                     ****Representations, Warranties andCovenants of the Investor**.

#  

## **4.1****                               Investor Knowledge and Status**.  The Investor represents and warrants to, andcovenants with, the Company that: (i) the Investor is an “**accredited investor**” as defined inRegulation D under the Securities Act and has requested, received,reviewed and considered all information it deemed relevant in making aninformed decision to purchase the Shares; (ii) the Investor understandsthat the Shares

 

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## are “**restricted securities**” and the offer andsale thereof have not been registered under the Securities Act and is acquiringthe number of Shares set forth on the signature page hereto in the ordinarycourse of its business and for its own account for investment only, has nopresent intention of distributing any of such Shares and has no arrangement orunderstanding with any other persons regarding the distribution of such Shares(this representation and warranty not limiting the Investor’s right to sellShares pursuant to the Registration Statement, referenced in Section 6, orotherwise); (iii) the Investor will not, directly or indirectly, offer,sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy,purchase or otherwise acquire or take a pledge of) any of the Shares except incompliance with the Securities Act, applicable state securities laws and therespective rules and regulations promulgated thereunder; (iv) the Investorhas answered all questions on the signature page hereto and the InvestorQuestionnaire attached hereto as Exhibit B for use in preparationof the Registration Statement and the answers thereto are true and correct asof the date hereof and will be true and correct as of the Closing Date; and(v) the Investor will notify the Company immediately of any change in anyof such information until such time as the Investor has sold all of its Sharesor until the Company is no longer required to keep the Registration Statementeffective.  Investor understands thatthe issuance of the Shares to the Investor has not been registered under theSecurities Act, or registered or qualified under any state securities law inreliance on specific exemptions therefrom, which exemptions may depend upon,among other things, the bona fide nature of the Investor’s investment intent asexpressed herein.  No person isauthorized to provide any representation which is inconsistent or in additionto those herein or in the SEC Reports. The Investor acknowledges that it has not received or relied on any suchrepresentations.

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## **4.2****                               International Actions**.  The Investor acknowledges, represents andagrees that no action has been or will be taken in any jurisdiction outside theUnited States by the Company that would permit an offering of the Shares, orpossession or distribution of offering materials in connection with the issueof the Shares, in any jurisdiction outside the United States.  If the Investor is located outside theUnited States, it has or will take all actions, subject to the limitations andrepresentations set forth in Section 4 hereof, necessary for the sale ofthe Shares to comply with all applicable laws and regulations in each foreignjurisdiction in which it purchases, offers, sells or delivers Shares or has inits possession or distributes any offering material, in all cases at its ownexpense.

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## **4.3****                               Registration Required**.  The Investor hereby covenants with theCompany not to make any sale of the Shares without complying with theprovisions of this Agreement, including Section 6.2 hereof, and withouteffectively causing the prospectus delivery requirement under the SecuritiesAct to be satisfied (unless the Investor is selling such Shares in atransaction not subject to the prospectus delivery requirement), and theInvestor acknowledges that the certificates evidencing the Shares will beimprinted with a legend that prohibits their transfer except in accordancetherewith.  The Investor acknowledgesthat as set forth in, and subject to the provisions of, Section 6.2, theremay occasionally be times when the Company, based on the advice of its counsel,determines that it must suspend the use of the Prospectus forming a part of theRegistration Statement until such time as an amendment to the RegistrationStatement has been filed by the Company and declared effective by the SEC oruntil the Company has amended or supplemented such Prospectus.

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## **4.4****                               Power and Authority**.  The Investor further represents and warrantsto, and covenants with, the Company that (i) the Investor has full right,power, authority and capacity to enter into this Agreement and to consummatethe transactions contemplated hereby and has taken all necessary action toauthorize the execution, delivery and performance of this Agreement, and(ii) this Agreement constitutes a valid and binding obligation of theInvestor enforceable against the Investor in accordance with its terms, exceptas enforceability may be limited by applicable bankruptcy, insolvency,reorganization, moratorium or similar laws affecting creditors’ and contractingparties’ rights generally and except as enforceability may be

 

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## subjectto general principles of equity (regardless of whether such enforceability isconsidered in a proceeding in equity or at law) and except as theindemnification agreements of the Investors herein may be legallyunenforceable.

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## **4.5****                               No Tax or Legal Advice**.  The Investor understands that nothing inthis Agreement, or any other materials presented to the Investor in connectionwith the purchase and sale of the Shares by the Company, its officers,directors, agents, attorneys or advisors, constitutes legal, tax or investmentadvice.  The Investor has consulted suchlegal, tax and investment advisors as it, in its sole discretion, has deemednecessary or appropriate in connection with its purchase of Shares.

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## **4.6****                               Investment Experience**.  The Investor understands that the purchaseof the Shares involves substantial risk. The Investor has experience as an investor in securities of companiesand acknowledges that it is able to fend for itself, can bear the economic riskof its investment in the Shares and has such knowledge and experience infinancial or business matters that it is capable of evaluating the merits andrisks of this investment in the Shares and protecting its own interests inconnection with this investment.

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## **4.7****                               Receipt of Information**.  The Investor has had an opportunity to askquestions and receive answers from the Company regarding the terms andconditions of the issuance and sale of the Shares and the business, properties,prospects and financial condition of the Company and to obtain any additionalinformation requested and has received and considered all information it deemsrelevant to make an informed decision to purchase the Shares.

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## **4.8****                               HSR Compliance**.

##  

#### **(i)****                                   **TheInvestor is its own “**ultimate parent entity**”as defined in the Hart—Scott—Rodino Antitrust Improvements Act of 1976, asamended (the “**HSR Act**”).

####  

#### **(ii)****                               **TheInvestor will hold less than $50,000,000 in voting securities of the Companyfollowing execution of this Agreement, as valued under the HSR Act.

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## **4.9****                               Forms 13D or 13G**.  The Investor will timely file with the SECand amend any reports regarding its ownership of the Company’s Common Stockrequired by Section 13(d) or Section 13(g) of the Exchange Act andthe rules and regulations promulgated thereunder.

##  

## **4.10****                        Material Confidential Information**.  In connection with the Investor’sdecision-making with respect to its acquisition of the Shares, the Company mayfurnish to the Investor and its officers, directors, employees and agents, ifapplicable (collectively referred to as “**Investorand its Agents**”) financial and other information which has nottheretofore been made available to the public (“**Material Confidential Information**”).  The Investor and its Agents shall treat all such MaterialConfidential Information in accordance with the provisions of this Agreementand agree to take or abstain from taking certain other actions herein set forth.  The term “**MaterialConfidential Information**” does not include information which(i) was already in the Investor and its Agents’ possession prior to thedisclosure by the Company of the Material Confidential Information, providedthat such information is not known by the Investor and its Agents to be subjectto another confidentiality agreement with or other obligation of secrecy to theCompany or another party, (ii) becomes generally available to the publicother than as a result of disclosure by the Investor and its Agents or (iii) becomesavailable to the Investor and its Agents on a non-confidential basis from asource other than the Company or its advisors, provided that such source is notknown to the Investor and its Agents to be bound by a confidentiality agreementwith or other obligation of secrecy to the Company or

 

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## anotherparty.  The Investor agrees that theCompany’s Material Confidential Information will be used solely for thepurposes of evaluating its investment in the Shares.  The Investor also agrees that the Investor and its Agents willnot disclose any of the Company’s Material Confidential Information now orhereafter received or obtained from the Company or its representatives to anythird party or otherwise use or permit the use of the Material ConfidentialInformation, except as required by applicable law or legal process, without theprior written consent of the Company; provided, however, that any such MaterialConfidential Information of the Company may be disclosed to such of theInvestor’s representatives who need to know such information for the purpose ofevaluating the Investor’s investment in the Shares, in which case it isunderstood that the Investor’s representatives, directors, officers, employees,agents and advisors, if applicable, shall be informed by the Investor of theconfidential nature of such information and shall be directed by the Investorto treat such information confidentially. In the event that the Investor and its Agents or any of their representativesbecomes legally compelled (by deposition, interrogatory, request for documents,subpoena, civil investigative demand, other demand or rules and regulationsunder the federal securities laws or similar process) to disclose any of theMaterial Confidential Information, the Investor and its Agents shall providethe Company with prompt prior written notice of such requirement prior to suchdisclosure.  In the event that aprotective order or other remedy is not obtained, or that the Company waives compliancewith the provisions hereof, the Investor agrees to furnish only that portion ofthe Material Confidential Information which the Investor is legally required tofurnish and, where appropriate, to exercise the Investor’s and its Agents’reasonable efforts to obtain assurances that confidential treatment will beaccorded such Material Confidential Information.  The Investor further agrees that it will not engage in any openmarket sales or purchases of the Company’s Common Stock, including the Shares,while it is in possession of any Material Confidential Information.

##  

# **5.****                                     ****Survival of Representations,Warranties and Agreements**.  Notwithstanding any investigation made byany party to this Agreement, all covenants, agreements, representations andwarranties made by the Company and the Investor herein shall survive theexecution of this Agreement, the delivery to the Investor of the Shares beingpurchased and the payment therefor; provided however that the representationsand warranties contained herein shall expire on the second anniversary of theClosing Date.

#  

# **6.****                                     ****Registration of the Shares;Compliance with the Securities Act**.

 

## **6.1****                               Registration Procedures and Expenses**.  (a) At anytime after the Closing Dateand prior to the date that all of the Investor’s Shares may be resold withoutregistration pursuant to Rule 144(k) or any other rule of similar effect, theInvestor may request that the Company register all of the Investor’s Shares forresale under the Securities Act by delivery of a written notice to the Company(the date of receipt of such notice by the Company, the “**Request Date**”).  Upon receipt of such written registration request, the Companyshall:

##  

#### **(i)****                                   **subjectto receipt of necessary information from the Investor, prepare and file withthe SEC, as soon as practicable, but in no event later than 30 business daysafter the Request Date, a registration statement on Form S-3 (exceptif the Company is not then eligible to register for resale the Shares onForm S-3, in which case such registration shall be on anotherappropriate form in accordance with the Securities Act and the rulespromulgated thereunder) (the “**RegistrationStatement**”) to enable the resale of the Shares by the Investor fromtime to time through the automated quotation system of the Nasdaq Stock Marketor in privately-negotiated transactions; provided, however, that the Companyshall not be obligated to have any special audit conducted or file any reportsrequired to be filed by it under the Exchange Act prior to the time suchreports would otherwise be required to be filed;

 

D-9

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#### **(ii)****                               **useits commercially reasonable efforts, subject to receipt of necessaryinformation from the Investors, to cause the Registration Statement to becomeeffective as soon as practicable thereafter, subject to backlog or other delayat or by the SEC, delay at or by the Company’s independent accountants, ordelay caused by any other matter beyond the control of the Company;

####  

#### **(iii)****                           **useits commercially reasonable efforts to prepare and file with the SEC suchamendments and supplements to the Registration Statement and the Prospectusused in connection therewith as may be necessary to keep the RegistrationStatement current and effective for a period not exceeding, with respect toeach Investor’s Shares purchased hereunder, the earliest of (A) the firstanniversary of the date the Registration Statement was first declared effectiveby the SEC, (B) the date on which the Investor may sell all Shares then heldby the Investor without restriction by volume limitations pursuant to Rule144(k) of the Securities Act or (C) such time as all Shares purchased bysuch Investor in the Offering have been sold pursuant to a registrationstatement;

####  

#### **(iv)****                              **furnishto the Investor with respect to the Shares registered for resale under theRegistration Statement up to 20 copies of the Registration Statement,Prospectuses (including supplemental prospectuses) and preliminary versions ofthe Prospectus filed with the Securities and Exchange Commission (“**Preliminary Prospectuses**”) in conformitywith the requirements of the Securities Act and such other documents as theInvestor may reasonably request, in order to facilitate the public sale orother disposition of all or any of the Shares by the Investor, provided,however, that unless waived by the Company in writing, the obligation of theCompany to deliver copies of Prospectuses or Preliminary Prospectuses to theInvestor shall be subject to the receipt by the Company of reasonable assurancesfrom the Investor that the Investor will comply with the applicable provisionsof the Securities Act and of such other Shares or blue sky laws as may beapplicable in connection with any use of such Prospectuses or PreliminaryProspectuses;

####  

#### **(v)****                                  **filedocuments required of the Company, if any, for normal blue sky clearance in(A) in all U.S. jurisdictions in which any of the Shares originally sold,and (B) in states specified in writing by the Investor, provided, however,that, as to clause (B) the Company shall not be required to qualify to dobusiness or consent to service of process in any jurisdiction in which it isnot now so qualified or has not so consented;

####  

#### **(vi)****                              **bearall reasonable expenses (other than underwriting discounts and commissions, ifany) including the reasonable fees and expenses of a single counsel to theInvestors, in connection with the procedures in paragraph (i) through (v)of this Section 6.1 and the registration of the resale of the Sharespursuant to the Registration Statement; and

####  

#### **(vii)****                          **advisethe Investor, promptly after it shall receive notice or obtain knowledge of theissuance of any stop order by the SEC delaying or suspending the effectivenessof the Registration Statement or of the initiation of any proceeding for that purpose;and promptly use its commercially reasonable efforts to prevent the issuance ofany stop order or to obtain its withdrawal at the earliest possible moment ifsuch stop order should be issued.

####  

### **(b)****                                 **Witha view to making available to the Investor the benefits of Rule 144 (orits successor rule) and any other rule or regulation of the SEC that may at anytime permit the Investor to sell Shares to the public without registration, theCompany covenants and agrees to: (i) make and keep public information available, as those terms areunderstood and defined in Rule 144, until the earlier of (A) suchdate as all of the Investor’s Shares may be resold pursuant to Rule 144(k)or any other rule of similar effect, (B) such date as all of theInvestor’s Shares shall have been resold, or (C) such date as theRegistration

 

D-10

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### Statementhas been filed, declared effective and ceased to be effective  in accordance with Section 6.1(a)(iii);(ii) file with the SEC in a timely manner all reports and other documentsrequired of the Company under the Securities Act and under the Exchange Act;and (iii) furnish to the Investor upon request, as long as the Investorowns any Shares, (A) a copy of the Company’s most recent Annual Report onForm 10-K or Quarterly Report on Form 10-Q, and(B) such other information as may be reasonably requested in order toavail the Investor of any rule or regulation of the SEC that permits theselling of any such Shares without registration.

###  

### **(c)****                                 **Itshall be a condition precedent to the obligations of the Company to take anyaction pursuant to this Section 6.1 that the Investor shall furnish to theCompany such information regarding itself, the Shares to be sold by theInvestor, and the intended method of disposition of such Shares as shall berequired to effect the registration of the resale of the Shares.

###  

### **(d)****                                 **Notwithstandingthe foregoing paragraphs of this Section 6.1, if, in the good faithjudgment of the Board of Directors of the Company (the “**Board**”) and reflected in a formalresolution of the Board, the effectiveness of the Registration Statementcovering the Shares would be detrimental to the Company, and the Boardconcludes, as a result, that it is in the best interests of the Company todefer the Company’s request that the Registration Statement be declaredeffective at such time, then the Company may defer its request that theRegistration Statement be declared effective; provided, however, that theCompany may not defer effectiveness of the Registration Statement pursuant tothis paragraph 6.1(d) for more than thirty (30) consecutive days.

###  

## **6.2****                               Transfer of Shares After Registration;Suspension**.

##  

### **(a)****                                 **TheInvestor agrees that it will not effect any disposition of the Shares or itsright to purchase the Shares that would constitute a sale within the meaning ofthe Securities Act other than transactions exempt from the registrationrequirements of the Securities Act, except as contemplated in the RegistrationStatement referred to in Section 6.1 and as described below, and that itwill promptly notify the Company of any changes in the information set forth inthe Registration Statement regarding the Investor or its plan of distribution.

###  

### **(b)****                                 **Exceptin the event that paragraph (c) below applies, the Company shall:(i) if deemed necessary by the Company, prepare and file from time to timewith the SEC a post-effective amendment to the Registration Statement or asupplement to the related Prospectus or a supplement or amendment to any documentincorporated therein by reference or file any other required document so thatsuch Registration Statement will not contain an untrue statement of a materialfact or omit to state a material fact required to be stated therein ornecessary to make the statements therein not misleading, and so that, asthereafter delivered to purchasers of the Shares being sold thereunder, suchProspectus will not contain an untrue statement of a material fact or omit tostate a material fact required to be stated therein or necessary to make thestatements therein, in light of the circumstances under which they were made,not misleading; (ii) provide the Investor copies of any documents filedpursuant to Section 6.2(b)(i); and (iii) upon request, inform eachInvestor who so requests that the Company has complied with its obligations inSection 6.2(b)(i) (or that, if the Company has filed a post-effectiveamendment to the Registration Statement which has not yet been declaredeffective, the Company will notify the Investor to that effect, will use itscommercially reasonable efforts to secure the effectiveness of suchpost-effective amendment as promptly as possible and will promptly notify theInvestor pursuant to Section 6.2(b)(i) hereof when the amendment hasbecome effective).

 

D-11

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### **(c)****                                 **Subjectto paragraph (d) below, in the event: (i) of any request by the SEC or anyother federal or state governmental authority during the period ofeffectiveness of the Registration Statement for amendments or supplements to aRegistration Statement or related Prospectus or for additional information;(ii) of the issuance by the SEC or any other federal or state governmentalauthority of any stop order suspending the effectiveness of a RegistrationStatement or the initiation of any proceedings for that purpose; (iii) ofthe receipt by the Company of any notification with respect to the suspensionof the qualification or exemption from qualification of any of the Shares forsale in any jurisdiction or the initiation of any proceeding for such purpose;(iv) of any event or circumstance which necessitates the making of anychanges in the Registration Statement or Prospectus, or any documentincorporated or deemed to be incorporated therein by reference, so that, in thecase of the Registration Statement, it will not contain any untrue statement ofa material fact or any omission to state a material fact required to be statedtherein or necessary to make the statements therein not misleading, and that inthe case of the Prospectus, it will not contain any untrue statement of amaterial fact or any omission to state a material fact required to be statedtherein or necessary to make the statements therein, in the light of thecircumstances under which they were made, not misleading; or (v) if, inthe good faith judgment of the Board and reflected in a formal resolution ofthe Board, the continued effectiveness of the Registration Statement coveringthe Shares would be detrimental to the Company, and the Board concludes, as aresult, that it is in the best interests of the Company to suspend theeffectiveness of such Registration Statement at such time, then the Companyshall promptly deliver a certificate in writing to the Investor (the “**Suspension Notice**”) to the effect of theforegoing and, upon receipt of such Suspension Notice, the Investor willrefrain from selling any Shares pursuant to the Registration Statement (a “**Suspension**”) until the Investor’s receiptof copies of a supplemented or amended Prospectus prepared and filed by theCompany, or until it is advised in writing by the Company that the currentProspectus may be used, and has received copies of any additional orsupplemental filings that are incorporated or deemed incorporated by referencein any such Prospectus.  In the event ofany Suspension, the Company will use its commercially reasonable efforts tocause the use of the Prospectus so suspended to be resumed within 30 days afterdelivery of a Suspension Notice to the Investors.  In addition to and without limiting any other remedies(including, without limitation, at law or at equity) available to the Investor,the Investor shall be entitled to specific performance in the event that theCompany fails to comply with the provisions of this Section 6.2(c).

###  

### **(d)****                                 **Notwithstandingthe foregoing paragraphs of this Section 6.2, the Company shall use itscommercially reasonable efforts to ensure that the Investor shall not beprohibited from selling Shares under the Registration Statement as a result ofSuspensions on more than two occasions of not more than 60 days in any twelvemonth period.

###  

### **(e)****                                 **Providedthat a Suspension is not then in effect the Investor may sell Shares under theRegistration Statement, provided that it arranges for delivery of a currentProspectus to the transferee of such Shares. Upon receipt of a request therefor, the Company will provide an adequatenumber of current Prospectuses to the Investor and to any other partiesrequiring such Prospectuses.

###  

### **(f)****                                   **Inthe event of a sale of Shares by the Investor, unless such requirement iswaived by the Company in writing, the Investor must also deliver to theCompany’s transfer agent, with a copy to the Company, a Certificate ofSubsequent Sale substantially in the form attached hereto as Exhibit C,so that the Shares may be properly transferred.

 

D-12

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## **6.3****                               Indemnification**.  For the purpose of this Section 6.3:

 

### **(a)****                                 **theterm “**Selling Stockholder**” shallinclude the Investor and each person, if any, who controls the Investor withinthe meaning of Section 15 of the Securities Act or Section 20 of theExchange Act;

###  

### **(b)****                                 **theterm “**Registration Statement**”shall include any Preliminary Prospectus, final Prospectus, exhibit, supplementor amendment included in or relating to, and any document incorporated byreference in, the Registration Statement (or deemed to be a part thereof)referred to in Section 6.1; and

###  

### **(c)****                                 **theterm “**untrue statement**” shallinclude any untrue statement or alleged untrue statement of a material fact, orany omission or alleged omission to state in the Registration Statement amaterial fact required to be stated therein or necessary to make the statementstherein, in the light of the circumstances under which they were made, notmisleading.

###  

### **(d)**

 

#### **(i)****                                   **TheCompany agrees to indemnify and hold harmless each Selling Stockholder from andagainst any losses, claims, damages or liabilities to which such SellingStockholder may become subject (under the Securities Act or otherwise) insofaras such losses, claims, damages or liabilities (or actions or proceedings inrespect thereof) arise out of, or are based upon (i) any untrue statementof a material fact contained in the Registration Statement, or (ii) anyfailure by the Company to fulfill any undertaking included in the RegistrationStatement, and the Company will promptly reimburse such Selling Stockholder forany reasonable legal or other expenses reasonably incurred in investigating,defending or preparing to defend any such action, proceeding or claim,provided, however, that the Company shall not be liable in any such case to theextent that such loss, claim, damage or liability arises out of, or is basedupon, an untrue statement made in such Registration Statement in reliance uponand in conformity with written information furnished to the Company by or onbehalf of such Selling Stockholder specifically for use in preparation of theRegistration Statement or any statement or omission in any Prospectus that iscorrected in any subsequent Prospectus that was delivered to the Investor atleast one business day prior to the pertinent sale or sales by the Investor.

####  

#### **(ii)****                               **TheInvestor agrees to indemnify and hold harmless the Company (and each person, ifany, who controls the Company within the meaning of Section 15 of theSecurities Act, each officer of the Company who signs the RegistrationStatement and each director of the Company) from and against any losses,claims, damages or liabilities to which the Company (or any such officer,director or controlling person) may become subject (under the Securities Act orotherwise), insofar as such losses, claims, damages or liabilities (or actionsor proceedings in respect thereof) arise out of, or are based upon, any untruestatement of a material fact contained in the Registration Statement if suchuntrue statement was made in reliance upon and in conformity with writteninformation furnished by or on behalf of the Investor specifically for use inpreparation of the Registration Statement, and the Investor will promptlyreimburse the Company (or such officer, director or controlling person), as thecase may be, for any legal or other expenses reasonably incurred ininvestigating, defending or preparing to defend any such action, proceeding orclaim; provided further, however, that the aggregate obligation to indemnifyand contribute under this Section 6.3 shall be limited to the net amountof the proceeds received by the Investor from the sale of the Shares pursuantto the Registration Statement.

 

D-13

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#### **(iii)****                           **Promptlyafter receipt by any indemnified person of a notice of a claim or the beginningof any action in respect of which indemnity is to be sought against anindemnifying person pursuant to this Section 6.3, such indemnified personshall notify the indemnifying person in writing of such claim or of thecommencement of such action, but the omission to so notify the indemnifyingparty will not relieve it from any liability which it may have to anyindemnified party under this Section 6.3 (except to the extent that suchomission materially and adversely affects the indemnifying party’s ability todefend such action) or from any liability otherwise than under thisSection 6.3.  Subject to the provisionshereinafter stated, in case any such action shall be brought against anindemnified person, the indemnifying person shall be entitled to participatetherein, and, to the extent that it shall elect by written notice delivered tothe indemnified party promptly after receiving the aforesaid notice from suchindemnified party, shall be entitled to assume the defense thereof, withcounsel reasonably satisfactory to such indemnified person.  After notice from the indemnifying person tosuch indemnified person of its election to assume the defense thereof (unlessit has failed to assume the defense thereof and appoint counsel reasonablysatisfactory to the indemnified party), such indemnifying person shall not beliable to such indemnified person for any legal expenses subsequently incurredby such indemnified person in connection with the defense thereof, provided,however, that if there exists or shall exist a conflict of interest that wouldmake it inappropriate, in the reasonable opinion of counsel to the indemnifiedperson, for the same counsel to represent both the indemnified person and suchindemnifying person or any affiliate or associate thereof, the indemnifiedperson shall be entitled to retain its own counsel at the expense of suchindemnifying person; provided, however, that no indemnifying person shall beresponsible for the fees and expenses of more than one separate counsel for allindemnified persons.  In no event shallany indemnifying person be liable in respect of any amounts paid in settlementof any action unless the indemnifying person shall have approved the terms ofsuch settlement; provided that such consent shall not be unreasonably withheldor delayed.  No indemnifying personshall, without the prior written consent of the indemnified person, effect anysettlement of any pending or threatened proceeding in respect of which anyindemnified person is or could reasonably have been a party and indemnificationcould have been sought hereunder by such indemnified person, unless such settlementincludes an unconditional release of such indemnified person from all liabilityon claims that are the subject matter of such proceeding.

####  

#### **(iv)****                              **Ifthe indemnification provided for in this Section 6.3 is unavailable to orinsufficient to hold harmless an indemnified party under subsection (i) or (ii)above in respect of any losses, claims, damages or liabilities (or actions orproceedings in respect thereof) referred to therein, then each indemnifyingparty shall contribute to the amount paid or payable by such indemnified partyas a result of such losses, claims, damages or liabilities (or actions inrespect thereof) in such proportion as is appropriate to reflect the relativefault of the Company on the one hand and the Investor on the other in connectionwith the statements or omissions or other matters which resulted in suchlosses, claims, damages or liabilities (or actions in respect thereof), as wellas any other relevant equitable considerations.  The relative fault shall be determined by reference to, amongother things, in the case of an untrue statement, whether the untrue statementrelates to information supplied by the Company on the one hand or the Investoron the other and the parties’ relative intent, knowledge, access to informationand opportunity to correct or prevent such untrue statement.  The Company and the Investor, or Investorsif there are more than one, agree that it would not be just and equitable ifcontribution pursuant to this subsection (iv) were determined by pro rataallocation (even if the Investors were treated as one entity for such purpose)or by any other method of allocation which does not take into account theequitable considerations referred to above in this subsection (iv).  The amount paid or payable by an indemnifiedparty as a result of the losses, claims, damages or liabilities (or actions inrespect thereof) referred to above in this subsection (iv) shall be deemedto include any legal or other expenses reasonably incurred by such indemnifiedparty in connection with investigating or defending any such action orclaim.  Notwithstanding the provisionsof this subsection (iv), the Investor shall not be required to indemnifyand contribute an aggregate amount in excess of the amount by which the netamount received

 

D-14

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#### by theInvestor from the sale of the Shares to which such loss relates exceeds theamount of any damages which the Investor has otherwise been required to pay byreason of such untrue statement.  Noperson guilty of fraudulent misrepresentation (within the meaning ofSection 11(f) of the Securities Act) shall be entitled to contributionfrom any person who was not guilty of such fraudulent misrepresentation.  The Investors’ obligations in this subsectionto contribute are several in proportion to their sales of Shares to which suchloss relates and not joint.

####  

#### **(v)****                                  **Theparties to this Agreement hereby acknowledge that they are sophisticatedbusiness persons who were represented by counsel during the negotiationsregarding the provisions hereof including, without limitation, the provisionsof this Section 6.3, and are fully informed regarding saidprovisions.  They further acknowledgethat the provisions of this Section 6.3 fairly allocate the risks in lightof the ability of the parties to investigate the Company and its business inorder to assure that adequate disclosure is made in the Registration Statementas required by the Securities Act and the Exchange Act.

####  

## **6.4****                               Termination of Conditions and Obligations**.  The conditions precedent imposed bySection 4 or this Section 6 upon the transferability of the Sharesshall cease and terminate as to any particular number of the Shares when suchShares shall have been effectively registered under the Securities Act and soldor otherwise disposed of in accordance with the intended method of dispositionset forth in the Registration Statement covering such Shares or at such time asan opinion of counsel satisfactory to the Company shall have been rendered tothe effect that such conditions are not necessary in order to comply with theSecurities Act.

##  

## **6.5****                               Information Available**.  So long as the Registration Statement iseffective covering the resale of Shares owned by the Investor, the Company willmake available to the Investor through the Company’s EDGAR filings or bydelivery on request:

##  

### **(a)****                                 **assoon as practicable after it is available, one copy of (i) its AnnualReport to Stockholders (which Annual Report shall contain financial statementsaudited in accordance with generally accepted accounting principles by anational firm of certified public accountants), (ii) if not included insubstance in the Annual Report to Shareholders, its Annual Report on Form 10-K(the foregoing, in each case, excluding exhibits) and (iii) its QuarterlyReports on 10-Q;

###  

### **(b)****                                 **uponthe reasonable request of the Investor, all other information that is madeavailable to stockholders; and

###  

### **(c)****                                 **uponthe reasonable request of the Investor, up to 20 copies of the Prospectuses tosupply to any other party requiring such Prospectuses; and the Company, uponthe reasonable request of the Investor, will meet with the Investor or arepresentative thereof at the Company’s headquarters to discuss all informationrelevant for disclosure in the Registration Statement covering the Shares andwill otherwise reasonably cooperate with the Investor conducting aninvestigation for the purpose of reducing or eliminating the Investor’sexposure to liability under the Securities Act, including the reasonable productionof information at the Company’s headquarters; provided, that the Company shallnot be required to disclose any confidential information to or meet at itsheadquarters with the Investor until and unless the Investor shall have enteredinto a confidentiality agreement in form and substance reasonably satisfactoryto the Company with the Company with respect thereto.

###  

### D-15

### 

###  

## **6.6****                               Transfer or Assignment of Registration Rights**.  The rights to cause the Company to registerthe Shares issued to the Investor by the Company under this Section 6 maybe transferred or assigned by the Investor only to a transferee or assignee ofnot less than 500,000 Shares (as presently constituted and subject tosubsequent adjustments for stock splits, stock dividends, reverse stock splits,and the like) in a transaction exempt from the registration requirements of theSecurities Act which would result in the transferee or assignee holding“restricted securities” within the meaning of Rule 144 under theSecurities Act; provided that (i) such transfer or assignment ofShares is effected in accordance with applicable securities laws, (ii) theCompany is given written notice prior to said transfer or assignment, statingthe name and address of the transferee or assignee and identifying thesecurities with respect to which such registration rights are intended to betransferred or assigned and (iii) the transferee or assignee of suchrights assumes in writing the obligations of the Investor under this Agreementwith respect to the Shares.

##  

## **6.7****                               Termination of Registration Rights**.  The right of the Investor to requestregistration pursuant to this Section 6 shall terminate on the earlier of(i) such date on which all the Shares held by the Investor may immediatelybe sold under Rule 144 during any ninety (90)-day period, and(ii) two (2) years after the Closing Date.

##  

# **7.****                                     ****Notices**.  Allnotices, requests, consents and other communications hereunder shall be inwriting, shall be delivered by facsimile or mailed (A) if within domesticUnited States by first-class registered or certified airmail, or nationallyrecognized overnight express courier, postage prepaid, or (B) if deliveredto or from outside the United States, by International Federal Express (orcomparable service) and shall be deemed given (i) if delivered byfirst-class registered or certified mail domestic, four (4) business daysafter so mailed, (ii) if delivered by nationally recognized overnightcarrier, one (1) business day after so mailed, (iii) if delivered byinternational Federal Express (or comparable service), two (2) businessdays after so mailed, (iv) if delivered by facsimile, upon electricconfirmation of receipt if confirmation is before 4:00 p.m. local time of therecipient on a business day and, if not, then the next business day, and shallbe delivered as addressed as follows:

#  

### **(a)****                                 **ifto the Company, to:

###  

| Avistar Communications Corporation         |
|--------------------------------------------|
| 555 Twin Dolphin Drive, Suite 360          |
| Redwood Shores, CA   94065            |
| Attention:                                 | Chief Financial Officer |
| Telephone:                                 | (650) 610-2910 |
| Fax:                                       | (650) 610-2901 |
|                                       |
| with a copy mailed or faxed to:            |
|                                       |
| Wilson Sonsini Goodrich & Rosati. P.C. |
| 650 Page Mill Road                         |
| Palo Alto, CA   94304                 |
| Attention:                                 | Robert P. Latta |
| Telephone:                                 | (650) 320-4646 |
| Fax:                                       | (650) 496-4367 |

 

### **(b)****                                 **ifto the Investor, at its address on the signature page hereto, or at such otheraddress or addresses as may have been furnished to the Company in writing.

#  

D-16

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# **8.****                                     ****Changes**.  ThisAgreement may not be modified or amended except pursuant to an instrument inwriting signed by the Company and the Investor.

 

# **9.****                                     ****Headings**.  Theheadings of the various sections of this Agreement have been inserted forconvenience of reference only and shall not be deemed to be part of thisAgreement.

#  

# **10.****                              ****Severability**.  In caseany provision contained in this Agreement should be invalid, illegal orunenforceable in any respect, the validity, legality and enforceability of theremaining provisions contained herein shall not in any way be affected orimpaired thereby.

#  

# **11.****                              ****Governing Law**.  ThisAgreement shall be governed by, and construed in accordance with, the internallaws of the State of Delaware, without giving effect to the principles ofconflicts of law.

#  

# **12.****                              ****Counterparts**.  ThisAgreement may be executed in two or more counterparts, each of which shallconstitute an original, but all of which, when taken together, shall constitutebut one instrument, and shall become effective when one or more counterpartshave been signed by each party hereto and delivered to the other parties.

#  

# **13.****                              ****Expenses**.  Allfees, costs and expenses (including attorneys’ fees and expenses) incurred byany party hereto in connection with the preparation, negotiation and executionof this Agreement and the exhibits and schedules hereto and the consummation ofthe transactions contemplated hereby and thereby (including the costsassociated with any filings with, or compliance with any of the requirementsof, any governmental authorities), shall be the sole and exclusiveresponsibility of such party.

#  

# **14.****                              ****Confidential Disclosure Agreement**. Notwithstanding any provision of this Agreement to the contrary, anyconfidential disclosure agreement previously executed by the Company and theInvestor in connection with the transactions contemplated by this Agreementshall remain in full force and effect in accordance with its terms followingthe execution of this Agreement and the consummation of the transactionscontemplated hereby.

#  

# **15.****                              ****Successors and Assigns**.  Exceptas otherwise expressly provided herein, the provisions hereof shall inure tothe benefit of, and be binding upon, the successors, assigns, heirs, executorsand administrators of the parties hereto and, subject to Section 6.6,shall inure to the benefit of and be enforceable by each person who shall be aholder of the Shares from time to time.

#  

# **16.****                              ****Further Assurances**.  Eachparty agrees to cooperate fully with the other parties and to execute suchfurther instruments, documents and agreements and to give such further writtenassurance as may be reasonably requested by any other party to evidence andreflect the transactions described herein and contemplated hereby and to carryinto effect the intents and purposes of this Agreement.

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# **17.****                              ****Entire Agreement**.  ThisAgreement supersedes all prior oral or written agreements between the Companyand the Investor (except as noted in Section 14 above) with respect to thematters discussed herein and therein. This Agreement and the schedules and exhibits hereto contain the entireunderstanding of the parties with respect to the matters discussed herein andtherein and, except as specifically set forth herein or therein, neither theCompany nor the Investors makes any representation, warranty, covenant or undertakingwith respect to such matters.  TheCompany has not, directly or indirectly, made any agreements with the Investorrelating to the terms or conditions of the purchase of the Shares except as setforth in this Agreement.

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# D-17

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