Document:

ex_10-31.htm

     

    
      
        

      

    EXHIBIT
10.31

    

    SECOND
AMENDED AND RESTATED SECURITY AGREEMENT

    

    

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

    

    1. Definitions.

    

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

    

    “Collateral” means all
personal property of the Grantor whether presently existing or hereafter created
or acquired, and wherever located (including but not limited to:
(i) accounts (including health-care-insurance receivables), chattel paper,
deposit accounts, documents (including negotiable documents), equipment, general
intangibles, goods (including fixtures), instruments (including promissory
notes), inventory (including all goods held for sale or lease or to be furnished
under a contract of service, and including returns and repossessions),
investment property (including securities and securities entitlements), letter
of credit rights, money, and all of Grantor’s books and records with respect to
any of the foregoing, and the computers and equipment containing said books and
records; (ii) all claims, demands, causes and choses in action in respect of any
of the foregoing and all accessions and additions thereto; and (iii) any and all
cash and non-cash proceeds and products of any of the foregoing, including
without limitation, any and all proceeds of any insurance, indemnity,
instruments, warranty or guaranty payable to such Grantor from time to time with
respect to the Collateral and any and all other amounts from time to time paid
or payable under or in connection with any of the Collateral) other than
(x) any of the outstanding capital stock of any subsidiary of the Grantor
that is a Controlled Foreign Corporation (as defined in the Internal Revenue
Code of 1986, as amended, in excess of 65% of the voting power of all classes of
capital Stock of such Controlled Foreign Corporation entitled to vote or (y) any
restricted money market accounts maintained by the Grantor with Comerica Bank –
California to the extent the same secures the Grantor’s obligations with respect
to the letter of credit in the amount of $145,200 issued by such bank to Clemons
Properties Partners L.P. or (z) the Borrower’s right to receive royalties
or other funds or assets under the Sony Patent License Agreement, and the
Borrower’s rights to enforce payment or delivery of such royalties or other
funds or assets.

    

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

    

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

    

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

    

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

    

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

    

    

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

    

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

    

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

    

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

    

    “Sony Patent License
Agreement” means Patent License Agreement dated July 17, 2006, as
amended, by the Borrower and Sony Computer Entertainment, Inc., as amended,
modified, supplemented or extended from time to time, or as any provision
thereof may be waived, and any patent license agreement executed by Borrower and
Sony Computer Entertainment, Inc. in substitution or replacement
therefor.

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    5. Remedies.

    

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

    

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

    

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

    

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

    

    

    6. Jurisdiction.

    

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

    

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

    

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

    

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

    

    9. Miscellaneous.

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    The
rest of this page is intentionally blank.

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

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

    

    

    ACCEPTED:

    

    JPMorgan
Chase Bank, N.A.

    

    

    

    By:           
/s/ Nancy A.
Sheppard                                                      

                Nancy
A. Sheppard

                Managing
Director

    

    

    Address
for notices to the Bank:

    

    JPMorgan
Chase Bank, N.A.

    Private
Bank Credit

    Attn: Arn Welles

    345 Park
Avenue, Floor 04

    New York,
NY 10154-0004

    Telecopier:  (212)
464-2531

    Telephone:  (212)
464-1883

    

    With a
courtesy copy to

    

    JPMorgan
Chase Bank, N.A.

    Attn:  Nancy
A. Sheppard

    560
Mission Street, 19th
floor

    San
Francisco, CA 94105

    Telecopier:  (415)
315-8272

    Telephone:  (415)
315-8285

    

    Avistar
Communications Corporation

    

    

    

    By:           /s/ Simon
Moss                                                      

    Name:
Simon Moss

    Title:
Chief Executive Officer

    

    

    

    By:           /s/ Robert
Habig                                                      

    Name:
Robert Habig

    Title:
Chief Financial Officer

    

    

    Address
for Notices to the Grantor:

    

    Attn:  Robert
Habig

    Avistar
Communications Corporation

    1875 S.
Grant Street, 10th
Floor

    San
Mateo, CA 94402

    Telecopier:  (650)
525-1360

    Telephone:  (650)
525-3310

    

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              State
      of _________

            	
              )

            

    

    ) ss.:

    
      	
              County
      of ________

            	
              )

            

    

    

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

    

    

    ____________________________________

    Notary Public

    

    

    
      	
              State
      of _________

            	
              )

            

    

    ) ss.:

    
      	
              County
      of ________

            	
              )

            

    

    

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

    

    

    ____________________________________

    Notary Publicex_10-32.htm

     

    
      
        

      

    EXHIBIT
10.32

    

    AMENDED
AND RESTATED GUARANTY

    

    AMENDED AND RESTATED GUARANTY
dated as of December 22, 2008 made by the undersigned (individually, or if
more than one, collectively, the “Guarantor”) in favor
of JPMorgan Chase Bank, N.A., and/or any of its subsidiaries or affiliates
(individually or collectively, as the context may require, the “Bank”).

    

    PRELIMINARY
STATEMENTS:  The Bank has entered, or may from time to time
enter, into agreements or arrangements with Avistar Communications Corporation,
a Delaware corporation (the “Borrower”), providing
for credit extensions or financial accommodation to the Borrower of any kind
whatsoever including, without limitation, the making of loans, advances or
overdrafts, whether or not secured, discount or purchase of notes, securities or
other instruments or property, creation of acceptances, issuance or confirmation
of letters of credit, guaranties or indemnities, entering into foreign exchange
or precious metals contracts or interest rate or currency swap or protection
agreements, entering into any other derivative transactions under any ISDA
Master Agreement or similar agreements between the Bank and the Borrower, or any
other kind of lease, contract or agreement under which the Borrower may be
indebted to the Bank in any manner (all of the foregoing agreements or
arrangements being the “Facilities” and any
writing or record evidencing, supporting, securing, or delivered in connection
with a Facility, including but not limited to this Guaranty, and including as
may subsequently be renewed, extended, amended,  modified, substituted
and/or replaced, being a “Facility
Document”).

    

    THEREFORE, in order to induce
the Bank to extend credit or give financial accommodation under the Facilities,
the Guarantor agrees (and if more than one, jointly and severally agrees) as
follows:

    

    Amendment
and Restatement.  This Guaranty amends and restates in its
entirety the Guaranty dated as of December 23, 2006, as amended, by which the
Guarantors, jointly and severally, guaranteed, among other things, the
Borrower’s obligations to the Bank under that certain Revolving Credit
Promissory Note (Libor/Prime) dated as of December 23, 2006 to the order of the
Bank in a maximum principal amount of $10,000,000 (as amended by the first and
second amendments thereto, the “Original
Note”).

    

    Guaranty
of Payments.  For value received and in consideration of the
Facilities extended by the Bank the Guarantor unconditionally and irrevocably
guarantees to the Bank (a) performance and observance of every agreement and
condition contained in any Facility Document to be performed or observed by the
Borrower, and (b) payment of all sums now owing or which may in the future be
owing by the Borrower under the Facilities, when the same are due and payable,
whether on demand, at stated maturity, by acceleration or otherwise, and whether
for principal, interest, fees, expenses, indemnification or otherwise (the
“Liabilities”).  The
Liabilities include, without limitation, interest accruing after the
commencement of a proceeding under bankruptcy, insolvency or similar laws of any
jurisdiction at the rate or rates provided in the Facility
Documents.

    This Guaranty is a guaranty of payment
and performance and not of collection only.  The Bank shall not be
required to exhaust any right or remedy or take any action against the Borrower
or any other person or entity or any collateral.  The Guarantor agrees
that, as between the Guarantor and the Bank, the Liabilities may be declared to
be due and payable for the purposes of this Guaranty notwithstanding any stay,
injunction or other prohibition which may prevent, delay or vitiate any
declaration as regards the Borrower and that in the event of a declaration or
attempted declaration, the Liabilities shall immediately become due and payable
by the Guarantor for the purposes of this Guaranty.

    

    The Guarantor shall pay the Liabilities
by the seventh (7th) day on which commercial banks are not authorized or
required to close in New York City (a “Banking Day”) after
the Bank’s demand for payment thereof (or if such demand is accompanied by
notice from the Bank, or the Bank thereafter delivers notice, that the value of
collateral securing the Liabilities is less than the amount of the Liabilities,
on the second (2nd)
Banking Day after delivery of such notice) (the “Due
Date”).  Upon the Bank’s making demand for payment of the
Liabilities but prior to the Due Date, the Guarantor shall have the right (but
not the obligation) to execute and deliver to the Bank a note sale agreement
substantially in the form of Exhibit A hereto (the
“Loan Sale
Agreement”) together with payment of the “Note Purchase Price”
(as defined therein) in immediately available funds, whereupon the obligations
of the Guarantor hereunder shall terminate (but subject to reinstatement as
provided below).

    

    Notwithstanding anything to the
contrary set forth herein, for purposes of this Guaranty the Facilities of the
Borrower guaranteed shall be limited to those arising under and in connection
with the Amended and Restated Revolving Promissory Note (Libor/Prime) dated as
of December 10, 2008 by the Borrower in favor of the Bank in the maximum
principal amount of $10,000,000, as amended, restated or otherwise modified from
time to time (the “New
Note”) or any other “Facility Document”
(as defined in the Note), together with every renewal, extension, amendment,
modification, substitution and/or replacement thereof, each of which together
with this Guaranty and any other writing or record evidencing, supporting,
securing or delivered in connection with the foregoing shall be considered a
Facility Document for purposes of this Guaranty.

    

    Guaranty
Absolute.  The Guarantor guarantees that the Liabilities shall
be performed and paid strictly in accordance with the terms of the
Facilities.  The liability of the Guarantor under this Guaranty is
absolute and unconditional irrespective of:  (a) any change in the
amount, time, manner or place of payment of, or in any other term of, all or any
of the Facility Documents or Liabilities, or any other amendment or waiver of or
any consent to departure from any of the terms of any Facility Document or
Liability; (b) any release or amendment or waiver of, or consent to departure
from, any other guaranty or support document, or any exchange, release or
non-perfection of any collateral (any change in the value of any collateral or
failure of the Bank to monitor the value of any collateral), for all or any of
the Facility Documents or Liabilities; (c) any present or future law, regulation
or order of any jurisdiction (whether of right or in fact) or of any agency
thereof purporting to reduce, amend, restructure or otherwise affect any term of
any Facility Document or Liability; (d) without being limited by the foregoing,
any lack of validity or enforceability of any Facility Document or Liability;
and (e) any other defense, setoff or counterclaim whatsoever (in any case,
whether based on contract, tort or any other theory) with respect to the
Facility Documents or the transactions contemplated thereby which might
constitute a legal or equitable defense available to, or discharge of, the
Borrower or a guarantor.

    

    Guaranty
Irrevocable.  This Guaranty is a continuing guaranty of all
Liabilities now or hereafter existing under the Facilities and shall remain in
full force and effect until payment in full of all Liabilities and other amounts
payable under this Guaranty and until the Facilities are no longer in effect or,
if earlier, when the Guarantor has given the Bank written notice that this
Guaranty has been revoked; provided that any
notice under this Section shall not release the Guarantor from any Liability,
absolute or contingent, existing prior to such notice.  Such notice
shall be effective only after the Bank’s actual receipt of the notice at its
address set forth below, and the Bank shall have had a reasonable time to act
upon such notice at each of its offices or departments responsible for the
Facilities.

    

    Reinstatement.  This
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time (i) any payment of any of the Liabilities is rescinded or must
otherwise be returned by the Bank on the insolvency, bankruptcy or
reorganization of the Borrower or otherwise, all as though the payment had not
been made or (ii)  the Loan Sale Agreement  shall be held invalid
or unenforceable in whole or in any part..

    

    Subrogation.  The
Guarantor shall not exercise any rights against the Borrower which it may
acquire by way of subrogation, by any payment made under this Guaranty or
otherwise, until all the Liabilities have been paid in full and the Facilities
are no longer in effect.  If any amount is paid to the Guarantor on
account of subrogation rights under this Guaranty at any time when all the
Liabilities have not been paid in full, the amount shall be held in trust for
the benefit of the Bank and shall be promptly paid to the Bank to be credited
and applied to the Liabilities, whether matured or unmatured or absolute or
contingent, in accordance with the terms of the Facilities.

    

    Subordination.  Without
limiting the Bank’s rights under any other agreement, any liabilities owed by
the Borrower to the Guarantor in connection with any extension of credit or
financial accommodation by the Guarantor to or for the account of the Borrower,
including but not limited to interest accruing at the agreed contract rate after
the commencement of a bankruptcy or similar proceeding, are hereby subordinated
to the Liabilities, and such liabilities of the Borrower to the Guarantor, if
the Bank so requests, shall be collected, enforced and received by the Guarantor
as trustee for the Bank and shall be paid over to the Bank on account of the
Liabilities but without reducing or affecting in any manner the liability of the
Guarantor under the other provisions of this Guaranty.

    

    Representations
and Warranties.  The Guarantor represents and warrants
that:

    

    (a)           this
Guaranty constitutes the legal, valid and binding obligation of the Guarantor,
enforceable against the Guarantor in accordance with its terms, except as the
enforcement hereof and thereof may be limited by bankruptcy, insolvency, or
other similar laws affecting the enforcement of creditors’ rights generally and
subject to the applicability of general principles of equity;

    (b)           the
execution, delivery and performance by the Guarantor of this Guaranty and all
other documents contemplated hereby or thereby, do not and will not (i) conflict
with or constitute a breach of, or default under, or require any consent under,
or result in the creation of any lien, charge or encumbrance upon the property
or assets of the Guarantor pursuant to any other agreement or instrument (other
than any pledge of or security interest granted in any collateral pursuant to
any Facility Document) to which the Guarantor is a party or is bound or by which
its properties may be bound or affected; or (ii) violate any provision of any
law, rule, regulation (including, without limitation, Regulation U of the
Federal Reserve Board), order, writ, judgment, injunction, decree, determination
or award presently in effect having applicability to the Guarantor;

    (c)           no
consent, approval or authorization of, or registration, declaration or filing
with, any governmental authority or other person or entity is required as a
condition to or in connection with the due and valid execution, delivery and
performance by the Guarantor of this Guaranty;

    (d)           there
are no actions, suits, investigations or proceedings pending or threatened at
law, in equity, in arbitration or by or before any other authority involving or
affecting:  (i)  the Guarantor that, if adversely
determined, are likely to have a material adverse effect on the prospects or
condition of the Guarantor; (ii) any material part of the assets or properties
of the Guarantor or any part of the collateral (if any) under any Facility
Document; or (iii) any of the transactions contemplated in this
Guaranty.  There are currently no material judgments entered against
the Guarantor and the Guarantor is not in default with respect to any judgment,
writ, injunction, order, decree or consent of any court or other judicial
authority, which default is likely to have or has had a material adverse effect
on the prospects or condition of the Guarantor;

    (e)           in
executing and delivering this Guaranty, the Guarantor has (i) without reliance
on the Bank or any information received from the Bank and based upon such
documents and information it deems appropriate, made an independent
investigation of the transactions contemplated hereby and the Borrower, the
Borrower’s business, assets, operations, prospects and condition, financial or
otherwise, and any circumstances which may bear upon such transactions, the
Borrower or the obligations and risks undertaken herein with respect to the
Liabilities; (ii) adequate means to obtain from the Borrower on a continuing
basis information concerning the Borrower and the Bank has no duty to provide to
the Guarantor any such information; (iii) full and complete access to the
Facility Documents and any other documents executed in connection with the
Facility Documents; (iv) not relied and will not rely upon any representations
or warranties of the Bank not embodied herein or any acts heretofore or
hereafter taken by the Bank (including but not limited to any review by the Bank
of the affairs of the Borrower), and (v) determined that this Guaranty will
benefit the Guarantor directly or indirectly;

    (f)           in
the event that the Guarantor is a partnership, limited liability partnership,
corporation or limited liability company, the Guarantor also represents and
warrants (i) that it is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, (ii)
that it has all requisite power and authority to execute, deliver and perform
its obligations under this Guaranty, and (iii) that the execution, delivery and
performance of this Guaranty is in furtherance of its organizational purposes,
and has been presented to and approved by its partners, directors, shareholders
or members, as applicable; and

    (g)           in
the event that the Guarantor is a trust, the Guarantor also represents and
warrants that (i) it is a duly constituted and validly existing trust, (ii) the
Guarantor has delivered to the Bank a true, complete and accurate copy of the
agreement pursuant to which it has been organized and all amendments and
modifications thereto, and (iii) the trustees of the Guarantor signing this
Guaranty have the legal capacity and full power and authority to execute,
deliver, and perform their obligations under, and to bind the Guarantor to
perform its obligations under, this Guaranty, and to execute and deliver any and
all documents and instruments in connection herewith.

    

    Defaults.    Each
of the following is an event of default hereunder:

    (a)           The
Guarantor (i) shall fail to pay when due any of its indebtedness
(including, but not limited to, indebtedness for borrowed money) or any interest
or premium thereon in an aggregate amount of at least five hundred thousand
dollars ($500,000) or (ii) the Guarantor shall default or otherwise fail to
perform any agreement to which the Guarantor is party or by which it is bound
which results in the holder(s) of indebtedness having the right, whether or not
exercised, to accelerate the maturity thereof in an aggregate amount of at least
five hundred thousand dollars ($500,000);

    (b)           (i) the
Guarantor is involved in a proceeding which may result in a forfeiture of all or
a substantial part of the Guarantor’s assets or (ii) a final,
non-appealable judgment is entered against the Guarantor for the payment of in
an aggregate amount of at least two million
dollars ($2,000,000);

    (c)           there
is, in the opinion of the Bank, a material adverse change in the business,
prospects or financial condition of the Guarantor;

    (d)           without
the prior written consent of the Bank, the Guarantor incurs or permits to exist
(i) any debt for borrowed money other than debt for borrowed money owing to
the Bank or listed on the Guarantor’s financial statement dated April 20
2006 (the “Financial
Statement”) and any refinancing of such debt or (ii) other debt to the
extent that the total amount thereof when added together with the total amount
of the Borrower’s guarantees and contingent liabilities referred to in
clause (ii) of the immediately following paragraph (e) is less than or
equal to
seven million dollars ($7,000,000); and

    (e)           the Guarantor
guarantees or otherwise becomes contingently liable for the debts or other
obligations of any entity other than (i) any such guaranty or contingent
obligation shown on the Financial Statement and
(ii) guarantees and contingent obligations incurred after the date of the
Financial Statement to the extent that the total amount thereof when added
together with the total amount of debt referred to in clause (ii) of the
immediately preceding paragraph (d) is less than or equal to seven million
dollars ($7,000,000).

    

    Remedies
Generally.  The rights, powers and remedies granted to the Bank
in this Guaranty are cumulative and in addition to any rights, powers and
remedies to which the Bank may be entitled either by operation of law or in
equity or pursuant to any other document or instrument delivered or from time to
time to be delivered to the Bank in connection with the Facilities.

    

    Setoff.  The
Guarantor agrees that, in addition to (and without limitation of) any right of
setoff, banker’s lien or counterclaim the Bank may otherwise have, the Bank
shall be entitled, at its option, to offset balances (general or special, time
or demand, provisional or final) held by it for the account of the Guarantor at
any of the Bank’s offices, in U.S. dollars or in any other currency, against any
amount payable by the Guarantor under this Guaranty which is not paid when due
(regardless of whether such balances are then due to the Guarantor), in which
case it shall promptly notify the Guarantor thereof; provided that the
Bank’s failure to give such notice shall not affect the validity
thereof.

    

    Formalities.  The
Guarantor waives presentment, notice of dishonor, protest, notice of acceptance
of this Guaranty or incurrence of any Liability and to the extent not prohibited
by applicable law any other formality with respect to any of the Liabilities or
this Guaranty.

    

    Amendments
and Waivers.  No amendment or waiver of any provision of this
Guaranty, nor consent to any departure by the Guarantor therefrom, shall be
effective unless it is in writing and signed by the Bank, and then the waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.  No failure on the part of the Bank to
exercise, and no delay in exercising, any right under this Guaranty shall
operate as a waiver or preclude any other or further exercise thereof or the
exercise of any other right.

    

    Expenses.  The
Guarantor shall reimburse the Bank on demand for all costs, expenses and charges
(including without limitation fees and charges of external legal counsel for the
Bank and costs allocated by its internal legal department) incurred by the Bank
in connection with the preparation, performance or enforcement of this
Guaranty.  The obligations of the Guarantor under this Section shall
survive the termination of this Guaranty.

    

    Assignment.  This
Guaranty shall immediately be binding on, and shall inure to the benefit of the
Guarantor, the Bank and their respective heirs, successors and assigns; provided that the
Guarantor may not assign or transfer its rights or obligations under this
Guaranty.

    

    Captions.  The
headings and captions in this Guaranty are for convenience only and shall not
affect the interpretation or construction of this Guaranty.

    

    Governing
Law, Waiver of Jury Trial, Etc.  THIS GUARANTY SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES, AND WITH THE LAWS OF THE UNITED
STATES OF AMERICA AS APPLICABLE.  THE GUARANTOR CONSENTS TO THE
NONEXCLUSIVE JURISDICTION AND VENUE OF THE STATE OR FEDERAL COURTS LOCATED IN
THE CITY OF NEW YORK.  SERVICE OF PROCESS BY THE BANK IN CONNECTION
WITH ANY SUCH DISPUTE SHALL BE BINDING ON THE GUARANTOR IF SENT TO THE GUARANTOR
BY REGISTERED MAIL AT THE ADDRESS SPECIFIED BELOW OR AS OTHERWISE SPECIFIED BY
THE GUARANTOR FROM TIME TO TIME.  THE GUARANTOR WAIVES ANY RIGHT THE
GUARANTOR MAY HAVE TO JURY TRIAL IN ANY ACTION RELATED TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY AND FURTHER WAIVES ANY RIGHT TO INTERPOSE ANY
COUNTERCLAIM RELATED TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY IN
ANY SUCH ACTION.  TO THE EXTENT THAT THE GUARANTOR HAS OR HEREAFTER
MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL
PROCESS (WHETHER FROM SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OF A JUDGMENT, EXECUTION OR OTHERWISE), THE
GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS GUARANTY.

    

    

    Integration;
Effectiveness.  This Guaranty alone sets forth the entire
understanding of the Guarantor and the Bank relating to the guarantee of the
Liabilities and constitutes the entire contract between the parties relating to
the subject matter hereof and supersedes any and all previous agreements and
understandings, oral or written, relating to the subject matter
hereof.  This Guaranty shall become effective when it shall have been
executed and delivered by the Guarantor to the Bank.  Delivery of an
executed signature page of this Guaranty by telecopy shall be effective as
delivery of a manually executed signature page of this Guaranty.

    

    The
rest of this page is intentionally blank.

    

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed and
delivered as of the date first above written.

    

    

    Address
for notices to the Bank:

    

    JPMorgan
Chase Bank, N.A.

    Private
Bank Credit

    Attn: Arn Welles

    345 Park
Avenue, Floor 04

    New York,
NY 10154-0004

    Telecopier:  (212)
464-2531

    Telephone:  (212)
464-1883

    

    With a
courtesy copy to

    

    JPMorgan
Chase Bank, N.A.

    Attn:  Nancy
A. Sheppard

    560
Mission Street, 19th
floor

    San
Francisco, CA 94105

    Telecopier:  (415)
315-8272

    Telephone:  (415)
315-8285

    

    

    /s/
Gerald J. Burnett

    Gerald
J. Burnett

    

    Address
for notices:

    202
Camino Al Lago

    Atherton,
CA 94027

    Telecopier:  (650)
322-2060

    Telephone:  (650)
322-2060

    

    

    Gerald
J. Burnett and Marjorie J. Burnett , as Trustee for

    The
Gerald J. Burnett and Marjorie J. Burnett Revocable Trust

    

    

    By:           /s/
Gerald J. Burnett

    Gerald J. Burnett

    

    By:           /s/
Marjorie J. Burnett

    Marjorie J. Burnett

    

    

    

    Address
for notices:

    c/o
Gerald J. Burnett

    202
Camino Al Lago

    Atherton,
CA 94027

    Telecopier:  (650)
322-2060

    Telephone:  (650)
322-2060

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              State
      of _________

            	
              )

            

    

    ) ss.:

    
      	
              County
      of ________

            	
              )

            

    

    

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

    

    ____________________________________

    Notary Public

    
      	
              State
      of _________

            	
              )

            

    

    ) ss.:

    
      	
              County
      of ________

            	
              )

            

    

    

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

    

    ____________________________________

    Notary Public

    

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
A

    

    FORM OF
NOTE SALE AGREEMENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}]]