Security Agreement Among The Company, Baldwin Enterprises, Inc., As Collateral Agent, And The Purcha

Exhibit 10.24





SECURITY AGREEMENT



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



RECITALS



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



B. In order to induce each Investor to purchase the Notes, Company has agreed to enter into this Security Agreement and to grant Collateral Agent, for the benefit of itself and the Investors, the security interest in the Collateral described below.



AGREEMENT



NOW, THEREFORE, in consideration of the above recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Company hereby agrees with Collateral Agent and the Investors as follows:



1. Security Interest.



(a) Grant of Security Interest. As security for the Obligations, Company hereby grants to Collateral Agent, for the benefit of the Investors and itself a security interest in all of its right, title and interest in and to the property described in Attachment 1 hereto, whether now owned or hereafter acquired or arising and wherever located (collectively, the " Collateral ").



(b) Exclusions. Notwithstanding the foregoing or anything else contained herein to the contrary, "Collateral" shall not include (i) any application for a trademark (including, without limitation, intent-to-use trademark or service applications and any goodwill associated therewith) that would otherwise be deemed invalidated, cancelled or abandoned due to the grant of a Lien thereon unless and until such time as the grant of such Lien will not affect the validity of such trademark; (ii) any of the outstanding capital stock of any subsidiary of Company that is a controlled foreign corporation (as defined in the Internal Revenue Code of 1986, as amended) in excess of 65% of the voting power of all classes of capital stock of such Controlled Foreign Corporation entitled to vote; (iii) any property subject to Permitted Liens if the granting of a Lien hereunder in such property is prohibited by or would constitute a default under any agreement or document governing such property, provided that upon the termination or lapsing of any such prohibition, such property shall automatically be part of the Collateral; or (iv) any restricted money market accounts maintained by the Company with Comerica Bank ? California to the extent the same secures the Company's obligations with respect to the letter of credit in the amount of $145,200 issued by such bank to Clemmons Properties Partners L.P.



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



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



(a) Company is the owner of the Collateral (or, in the case of after-acquired Collateral, at the time Company acquires rights in the Collateral, will be the owner thereof) and that no other Person has (or, in the case of after-acquired Collateral, at the time Company acquires rights therein, will have) any right, title, claim or interest (by way of Lien or otherwise) in, against or to the Collateral, other than Permitted Liens;



(b) upon the filing of UCC-1 financing statements in the appropriate filing offices, Collateral Agent has (or in the case of after-acquired Collateral, at the time Company acquires rights therein, will have) a perfected security interest in the Collateral to the extent that a security interest in the Collateral can be perfected by such filing, except for Permitted Liens;



(c) all Inventory has been (or, in the case of hereafter produced Inventory, will be) produced in compliance with applicable laws, including the Fair Labor Standards Act; and



(d) all accounts receivable and payment intangibles are genuine and enforceable against the party obligated to pay the same.



3. Covenants Relating to Collateral. Company hereby agrees:



(a) to perform all acts that may be necessary to maintain, preserve, protect and perfect the Collateral, the Lien granted to Collateral Agent therein and the perfection and priority of such Lien, except for Permitted Liens;



(b) not to use or permit any Collateral to be used (i) in violation in any material respect of any applicable law, rule or regulation, or (ii) in violation of any policy of insurance covering the Collateral;



(c) to pay promptly when due all taxes and other governmental charges, all Liens and all other charges now or hereafter imposed upon or affecting any Collateral;



(d) without written notice to Collateral Agent, (i) not to change Company's name or its chief executive office, (ii) not to change Company ?s state of incorporation;



(e) to procure, execute and deliver from time to time any endorsements, assignments, financing statements and other writings reasonably deemed necessary or appropriate by Collateral Agent to perfect, maintain and protect its Lien hereunder and the priority thereof; and



(f) not to sell or otherwise dispose of or transfer any Collateral or right or interest therein, and to keep the Collateral free of all Liens except Permitted Liens; providedthat Company may sell, lease, transfer, license or otherwise dispose of any of the Collateral (excluding Royalty Payments) in the ordinary course of business, including, without limitation, (i) the sale of inventory, (ii) dispositions of worn-out or obsolete equipment, (iii) licenses and similar arrangements for the use of the property of Company, and (iv) transfers of property and assets for fair value.



(g) that notwithstanding anything in this Security Agreement, within twenty (20) days of the date hereof, Company shall have (i) notified Sony Corporation and Sony Computer Entertainment, Inc., with acknowledgement thereof from each of them, to direct all Royalty Payments to a deposit account established for the sole purpose of receiving such Royalty Payments and (ii) established such deposit account and entered into an account control agreement, in form and substance reasonably satisfactory to Company, the Collateral Agent and the Investors, to perfect the first priority security interest in such deposit account granted herein.



4. Authorized Action by Collateral Agent. Company hereby irrevocably appoints Collateral Agent as its attorney-in-fact (which appointment is coupled with an interest) and agrees that Collateral Agent may perform (but Collateral Agent shall not be obligated to and shall incur no liability to Company or any third party for failure so to do) any act which Company is obligated by this Security Agreement to perform, and to exercise such rights and powers as Company might exercise with respect to the Collateral, including the right to (a) collect by legal proceedings or otherwise and endorse, receive and receipt for all dividends, interest, payments, proceeds and other sums and property now or hereafter payable on or on account of the Collateral; (b) enter into any extension, deposit, or other agreement pertaining to, or deposit, surrender, accept, hold or apply other property in exchange for the Collateral; (c) make any compromise or settlement, and take any action it deems advisable, with respect to the Collateral; (d) insure, process and preserve the Collateral; (e) pay any indebtedness of Company relating to the Collateral; and (f) file UCC financing statements and execute other documents, instruments and agreements required hereunder; provided , however , that Collateral Agent shall not exercise any such powers granted pursuant to subsections (a) through (e) prior to the occurrence of an Event of Default and shall only exercise such powers during the continuance of an Event of Default. Company agrees to reimburse Collateral Agent upon demand for any reasonable costs and expenses, including attorneys' fees, Collateral Agent may incur while acting as Company's attorney-in-fact hereunder, all of which costs and expenses are included in the Obligations. It is further agreed and understood between the parties hereto that such care as Collateral Agent gives to the safekeeping of its own property of like kind shall constitute reasonable care of the Collateral when in Collateral Agent's possession; provided , however , that Collateral Agent shall not be required to make any presentment, demand or protest, or give any notice and need not take any action to preserve any rights against any prior party or any other person in connection with the Obligations or with respect to the Collateral.



5. Default and Remedies.



(a) Default. Company shall be deemed in default under this Security Agreement (i) if any representation or warranty of the Company contained herein shall prove to be untrue in any material respect, (ii) if the Company shall breach any covenant or obligation contained in Section 3(d), 3(f) or 3(g) of this Security Agreement, (iii) if the Company shall breach any other covenant or obligations contained in this Security Agreement (other than any covenant or obligation specified in Section 5(a)(ii) of this Security Agreement) and such breach shall continue for a period of 20 days after written notice of such breach from the holders of more than 50% in aggregate principal amount of the outstanding Notes, or (iv) upon the occurrence and during the continuance of an Event of Default (as defined in the Notes).



(b) Remedies. Upon the occurrence and during the continuance of any such Event of Default, Collateral Agent, with the consent of the holders of more than 50% of the principal amount of the outstanding Notes, shall have the rights of a secured creditor under the UCC, all rights granted by this Security Agreement and by law, including, without limitation, the right to: (a) require Company to assemble the Collateral and make it available to Collateral Agent and the Investors at a place to be designated by Collateral Agent and the Investors; and (b) prior to the disposition of the Collateral, store, process, repair or recondition it or otherwise prepare it for disposition in any manner and to the extent Collateral Agent and the Investors deem appropriate. Company hereby agrees that ten (10) days' notice of any intended sale or disposition of any Collateral is reasonable. In furtherance of Collateral Agent's rights hereunder, Company hereby grants to Collateral Agent an irrevocable, non-exclusive license, exercisable without royalty or other payment by Collateral Agent, and only in connection with the exercise of remedies hereunder, to use, license or sublicense any patent, trademark, trade name, copyright or other intellectual property in which Company now or hereafter has any right, title or interest together with the right of access to all media in which any of the foregoing may be recorded or stored.



(c) Application of Collateral Proceeds. The proceeds and/or avails of the Collateral, or any part thereof, and the proceeds and the avails of any remedy hereunder (as well as any other amounts of any kind held by Collateral Agent at the time of, or received by Collateral Agent after, the occurrence of an Event of Default) shall be paid to and applied as follows:



(i) First , to the payment of reasonable costs and expenses, including all amounts expended to prese ...