Exhibit 10.5

SECURITY AGREEMENT

SECURITY AGREEMENT, dated as of August 12, 2005 between VirnetX Inc., a Delaware
corporation (the “Debtor”), and Science Applications International Corporation,
a Delaware corporation (the “Secured Party”).

WHEREAS, the Debtor is obligated to pay the Secured Party certain amounts
pursuant to a Patent License and Assignment Agreement, between the parties,
dated August 12, 2005 (the “Patent License and Assignment Agreement”); and

WHEREAS, to secure its payment obligations under the Patent License and
Assignment Agreement the Debtor wishes to grant a security interest in favor of
the Secured Party as herein provided;

NOW, THEREFORE, in consideration of the promises contained herein and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

1.

Definitions.  As used in this Agreement:

1.1

All terms defined in the Uniform Commercial Code of the State of California
shall have the definitions ascribed to them in such Uniform Commercial Code;
provided that, if a term is defined in Article 9 of the Uniform Commercial Code
of the State of California differently than in another Article of the Uniform
Commercial Code of the State of California, the term has the meaning specified
in Article 9.

1.2

The term “Obligations” means all of the indebtedness, obligations and
liabilities of the Debtor to the Secured Party, whether direct or indirect,
joint or several, absolute or contingent, due or to become due, now existing or
hereafter arising under or in respect of (i) the Patent License and Assignment
Agreement, including without limitation the payment obligations under the
license set out in Section 2 of the Patent License and Assignment Agreement, the
assignment set out in Section 4 of the Patent License and Assignment Agreement,
the license grant post reversion set out in Section 5 of the Patent License and
Assignment Agreement and the action or proceeding recovery payments set out in
Section 6.3 of the Patent License and Assignment Agreement, or (ii) this
Agreement.

2.

Grant of Security Interest.  The Debtor hereby grants to the Secured Party, to
secure the payment and performance in full of all of the Obligations, a security
interest in and pledges and assigns to the Secured Party the following
properties, assets and rights of the Debtor, wherever located, whether now owned
or hereafter acquired or arising, and all proceeds and products thereof (all of
the same being hereinafter called the “Collateral”):

(a)

all copyrights, trademarks, patents and patent applications (both domestic or
foreign) and other intellectual property described on Schedule II and all
modifications, improvements and exclusive licenses relating to any of the
foregoing, all rights to sue for past, present or future infringement thereof,
all rights arising therefrom and pertaining thereto and all reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof and all
know-how related to the assets described on Schedule II; for sake of clarity,
the foregoing does not include know-how that is not related to the assets
described on Schedule II;

(b)

all cash and non-cash proceeds resulting from a transfer, sale or exclusive
license of any and all of the foregoing Collateral, all cash and non-cash
proceeds of infringement suits relating to any and all of the foregoing
Collateral, and, to the extent not otherwise included, all payments under
insurance (whether or not Secured Party is the loss payee thereof) or any
indemnity, warranty or guaranty payable with respect to the foregoing
Collateral; and

(c)

any other intellectual property rights assigned to Debtor by SAIC pursuant to
the Patent License and Assignment Agreement.  

3.

Authorization to File Financing Statements.  The Debtor hereby irrevocably
authorizes the Secured Party at any time and from time to time to file in any
filing office in any Uniform Commercial Code jurisdiction or with any other
state or federal governmental agency or body which the Secured Lender deems
appropriate any initial financing statements and amendments thereto that (a)
identify the Collateral and (b) provide any other information required by part 5
of Article 9 of the Uniform Commercial Code of the State of California, or such
other jurisdiction, for the sufficiency or filing office acceptance of any
financing statement or amendment.

4.

Other Actions.  To further the attachment, perfection and first priority
(subject only to Permitted Liens) of, and the ability of the Secured Party to
enforce, the Secured Party’s security interest in the Collateral, and without
limitation on the Debtor’s other obligations in this Agreement, the Debtor
agrees, in each case at the Debtor’s expense, at the request and option of the
Secured Party, to take any and all actions the Secured Party may determine to be
necessary or useful for the attachment, perfection and first priority (subject
only to Permitted Liens) of, and the ability of the Secured Party to enforce,
the Secured Party’s security interest in any and all of the Collateral,
including, without limitation, (a) executing, delivering and, where appropriate,
filing financing statements and amendments relating thereto under the Uniform
Commercial Code, to the extent, if any, that the Debtor’s signature thereon is
required therefor, (b) causing the Secured Party’s name to be noted as Secured
Party on any certificate of title for a titled good if such notation is a
condition to attachment, perfection or priority of, or ability of the Secured
Party to enforce, the Secured Party’s security interest in such Collateral, (c)
complying with any provision of any statute, regulation or treaty of the United
States as to any Collateral if compliance with such provision is a condition to
attachment, perfection or priority of, or ability of the Secured Party to
enforce, the Secured Party’s security interest in such Collateral, (d) obtaining
governmental and other third party waivers, consents and approvals in form and
substance satisfactory to Secured Party, including, without limitation, any
consent of any licensor, lessor or other person obligated on Collateral, (e)
obtaining waivers from mortgagees and landlords in form and substance
satisfactory to the Secured Party and (f) taking all actions under any earlier
versions of the Uniform Commercial Code or under any other law, as reasonably
determined by the Secured Party to be applicable in any relevant Uniform
Commercial Code or other jurisdiction, including, without limitation, any
foreign jurisdiction.

5.

Representations and Warranties Concerning Debtor’s Legal Status.  The Debtor
represents and warrants to the Secured Party as follows: (a) the Debtor’s exact
legal name is that indicated on the signature page hereof, (b) the Debtor is an
organization of the type, and is organized in the jurisdiction set forth in
Schedule I hereto, (c) Schedule I accurately sets forth the Debtor’s
organizational identification number or accurately states that the Debtor has
none, (d) Schedule I accurately sets forth the Debtor’s place of business or, if
more than one, its chief executive office, as well as the Debtor’s mailing
address, if different, and (e) all other information set forth on Schedules I
and II pertaining to the Debtor is accurate and complete.  

6.

Covenants Concerning Debtor’s Legal Status.  The Debtor covenants with the
Secured Party as follows:  (a) without providing at least 30 days’ prior written
notice to the Secured Party, the Debtor will not change its name, its place of
business or, if more than one, chef executive office, or its mailing address or
organizational identification number if it has one, (b) if the Debtor does not
have an organizational identification number and later obtains one, the Debtor
shall forthwith notify the Secured Party of such organizational identification
number, and (c) the Debtor will not change its type of organization,
jurisdiction of organization or other legal structure.

7.

Representations and Warranties Concerning Collateral, etc.  The Debtor further
represents and warrants to the Secured Party as follows: (a) upon consummation
of the Assignment (as defined in the Patent License and Assignment Agreement),
the Debtor will be the owner of the Collateral, free from any right or claim or
any person or any adverse lien, security interest or other encumbrance, except
for the security interest created by this Agreement (“Permitted Liens”) and (b)
Schedule II sets forth a true and correct list of all United States registered
copyrights and copyright registrations, applications for copyright
registrations, patents and patent applications or registrations, and trademarks,
trademark registrations and applications to be acquired by Debtor under the
Patent License and Assignment Agreement and under the Professional Services
Agreement entered into by Debtor and Secured Party, dated August 12, 2005 and
attached hereto as Exhibit A.

8.

Covenants Concerning Collateral, etc.  The Debtor further covenants with the
Secured Party as follows: (a) the Debtor shall not pledge, mortgage or create,
or suffer to exist any right of any person in or claim by any person to the
Collateral, or any security interest, lien or encumbrance in the Collateral in
favor of any person, other than the Secured Party except for Permitted Liens,
(b) the Debtor will pay promptly when due all taxes, assessments, governmental
charges and levies upon the Collateral or incurred in connection with the use or
operation of such Collateral or incurred in connection with this Agreement, (c)
the Debtor will not sell or otherwise dispose, or offer to sell or otherwise
dispose, of the Collateral or any interest therein except for sales and leases
of inventory and licenses of general intangibles in the ordinary course of
business and assignments or sublicenses to Subsidiaries as provided for in the
Patent License and Assignment Agreement, (d) the Debtor will not register with
the United States Copyright Office (or apply for such registration of) any of
the Debtor’s maskworks, computer software or other copyrights that would
infringe or contribute to the infringement of the Collateral, unless the Debtor
has provided Secured Party not less than 30 days prior written notice of the
commencement of such registration/application and the Debtor has executed and
delivered to Secured party such security agreement(s) and other documentation
(in form and substance reasonably satisfactory to Secured Party) which Secured
Party in its good faith business judgment may require for filing with the United
States Copyright Office with respect to such registration or application, (e)
the Debtor will identify to Secured Party in writing any and all patents or
trademarks that would infringe or contribute to the infringement of the
Collateral and that are registered (or the subject of any application for
registration) with that United States Patent and Trademark Office that the
Debtor acquires in the future, promptly upon such acquisition; and, upon Secured
Party’s request therefore, the Debtor shall promptly execute and deliver to
Secured Party such security agreements(s) and other documentation (in form and
substance reasonably satisfactory to Secured Party) which Secured Party in its
good faith business judgment may require for filing with the United States
Patent and Trademark Office with respect to such registrations or applications.

9.

Collateral Protection Expenses; Preservation of Collateral.  

9.1

Expenses Incurred by Secured Party.  In the Secured Party’s discretion, if the
Debtor fails to do so, the Secured Party may discharge taxes and other
encumbrances at any time levied or placed on any of the Collateral, maintain any
of the Collateral, make repairs thereto and pay any necessary filing fees or
insurance premiums.  The Debtor agrees to reimburse the Secured Party on demand
for all expenditures so made.  The Secured Party shall have no obligation to the
Debtor to make any such expenditures, nor shall the making thereof be construed
as the waiver or cure of any Event of Default.

9.2

Secured Party’s Obligations and Duties.  Anything herein to the contrary
notwithstanding, the Debtor shall remain obligated and liable under each
contract or agreement comprised in the Collateral to be observed or performed by
the Debtor thereunder.  The Secured Party shall not have any obligation or
liability under any such contract or agreement by reason of or arising out of
this Agreement or the receipt by the Secured Party of any payment relating to
any of the Collateral, nor shall the Secured Party be obligated in any manner to
perform any of the obligations of the Debtor under or pursuant to any such
contract or agreement, to make inquiry as to the nature or sufficiency of any
payment received by the Secured Party in respect of the Collateral or as to the
sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to the Secured Party or to which the Secured Party may be entitled at
any time or times.  The Secured Party’s sole duty with respect to the custody,
safe keeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the Uniform Commercial Code of the State of California or
otherwise, shall be to deal with such Collateral in the same manner as the
Secured Party deals with similar property for its own account.

10.

Power of Attorney.

10.1

Appointment and Powers of Secured Party.  The Debtor hereby irrevocably
constitutes and appoints the Secured Party and any officer or agent thereof,
with full power of substitution, as its true and lawful attorneys-in-fact with
full irrevocable power and authority in the place and stead of the Debtor or in
the Secured Party’s own name, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments that may be necessary or useful to accomplish the
purposes of this Agreement and, without limiting the generality of the
foregoing, hereby gives such attorneys the power and right, on behalf of the
Debtor, without notice to or assent by the Debtor, to do the following:  

(a)

upon the occurrence and during the continuance of an Event of Default, generally
to sell, transfer, pledge, make any agreement with respect to or otherwise
dispose of or deal with any of the Collateral in such manner as is consistent
with the Uniform Commercial Code of the State of California and as fully and
completely as though the Secured Party were the absolute owner thereof for all
purposes, and to do, at the Debtor’s expense, at any time, or from time to time,
all acts and things which the Secured Party deems necessary or useful to
protect, preserve or realize upon the Collateral and the Secured Party’s
security interest therein, in order to effect the intent of this Agreement, all
at least as fully and effectively as the Debtor might do, including, without
limitation, (i) the filing and prosecuting of registration and transfer
applications with the appropriate federal, state, local or other agencies or
authorities with respect to trademarks, copyrights and patentable inventions and
processes, (ii) upon written notice to the Debtor, the exercise of voting rights
with respect to voting securities, which rights may be exercised, if the Secured
Party so elects, with a view to causing the liquidation of assets of the issuer
of any such securities, and (iii) the execution, delivery and recording, in
connection with any sale or other disposition of any Collateral, of the
endorsements, assignments or other instruments of conveyance or transfer with
respect to such Collateral; and

(b)

to the extent that the Debtor’s authorization given in Section 3 is not
sufficient, to file such financing statements with respect hereto, with or
without the Debtor’s signature, or a photocopy of this Agreement in substitution
for a financing statement, as the Secured Party may deem appropriate and to
execute in the Debtor’s name such financing statements and amendments thereto
and continuation statements which may require the Debtor’s signature.

10.2

Ratification by Debtor.  To the extent permitted by law, the Debtor hereby
ratifies all that such attorneys shall lawfully do or cause to be done by virtue
hereof.  This power of attorney is a power coupled with an interest and is
irrevocable.

10.3

No Duty on Secured Party.  The powers conferred on the Secured Party hereunder
are solely to protect its interests in the Collateral and shall not impose any
duty upon it to exercise any such powers.  The Secured Party shall be
accountable only for the amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Debtor for any act or failure to
act, except for the Secured Party’s own gross negligence or willful misconduct.

11.

Rights and Remedies.  If an Event of Default shall have occurred and be
continuing, the Secured Party, without any other notice to or demand upon the
Debtor have in any jurisdiction in which enforcement hereof is sought, in
addition to all other rights and remedies, the rights and remedies of a Secured
Party under the Uniform Commercial Code of the State of California and any
additional rights and remedies which may be provided to a Secured Party in any
jurisdiction in which Collateral is located, including, without limitation, the
right to take possession of the Collateral, and for that purpose the Secured
Party may, so far as the Debtor can give authority therefor, enter upon any
premises on which the Collateral may be situated and remove the same therefrom.
 The Secured Party may in its discretion require the Debtor to assemble all or
any part of the Collateral at such location or locations within the
jurisdiction(s) of the Debtor’s principal office(s) or at such other locations
as the Secured Party may reasonably designate.  Unless the Collateral is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, the Secured Party shall give to the Debtor at least
five Business Days prior written notice of the time and place of any public sale
of Collateral or of the time after which any private sale or any other intended
disposition is to be made.  The Debtor hereby acknowledges that five Business
Days prior written notice of such sale or sales shall be reasonable notice.  In
addition, the Debtor waives any and all rights that it may have to a judicial
hearing in advance of the enforcement of any of the Secured Party’s rights and
remedies hereunder, including, without limitation, its right following an Event
of Default to take immediate possession of the Collateral and to exercise its
rights and remedies with respect thereto.

12.

Standards for Exercising Rights and Remedies.  To the extent that applicable law
imposes duties on the Secured Party to exercise remedies in a commercially
reasonable manner, the Debtor acknowledges and agrees that it is not
commercially unreasonable for the Secured Party (a) to fail to incur expenses
reasonably deemed significant by the Secured Party to prepare Collateral for
disposition or otherwise to fail to complete raw material or work in process
into finished goods or other finished products for disposition, (b) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or third
party consents for the collection or disposition of Collateral to be collected
or disposed of, (c) to fail to exercise collection remedies against account
debtors or other persons obligated on Collateral or to fail to remove liens or
encumbrances on or any adverse claims against Collateral, (d) to exercise
collection remedies against account debtors and other persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (f) to contact other persons, whether or not in the
same business as the Debtor, for expressions of interest in acquiring all or any
portion of the Collateral, (g) to hire one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the Collateral is of a
specialized nature, (h) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and
sellers of assets, (i) to dispose of assets in wholesale rather than retail
markets, (j) to disclaim disposition warranties, (k) to purchase insurance or
credit enhancements to insure the Secured Party against risks of loss,
collection or disposition of Collateral or to provide to the Secured Party a
guaranteed return from the collection or disposition of Collateral, or (1) to
the extent deemed appropriate by the Secured Party, to obtain the services of
other brokers, investment bankers, consultants and other professionals to assist
the Secured Party in the collection or disposition of any of the Collateral.
 The Debtor acknowledges that the purpose of this Section 12 is to provide
non-exhaustive indications of what actions or omissions by the Secured Party
would fulfill the Secured Party’s duties under the Uniform Commercial Code or
other law of the State of California or any other relevant jurisdiction in the
Secured Party’s exercise of remedies against the Collateral and that other
actions or omissions by the Secured Party shall not be deemed to fail to fulfill
such duties solely on account of not being indicated in this Section 12.
 Without limitation upon the foregoing, nothing contained in this Section 12
shall be construed to grant any rights to the Debtor or to impose any duties on
the Secured Party that would not have been granted or imposed by this Agreement
or by applicable law in the absence of this Section 12.

13.

No Waiver by Secured Party, etc.  The Secured Party shall not be deemed to have
waived any of its rights or remedies in respect of the Obligations or the
Collateral unless such waiver shall be in writing and signed by the Secured
Party.  No delay or omission on the part of the Secured Party in exercising any
right or remedy shall operate as a waiver of such right or remedy or any other
right or remedy.  A waiver on any one occasion shall not be construed as a bar
to or waiver of any right or remedy on any future occasion.  All rights and
remedies of the Secured Party with respect to the Obligations or the Collateral,
whether evidenced hereby or by any other instrument or papers, shall be
cumulative and may be exercised singularly, alternatively, successively or
concurrently at such time or at such times as the Secured Party deems expedient.

14.

Suretyship Waivers by Debtor.  The Debtor waives demand, notice, protest, notice
of acceptance of this Agreement, notice of loans made, credit extended,
Collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description.  With respect to both the
Obligations and the Collateral, the Debtor assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Secured Party may deem advisable.  The Secured Party
shall have no duty as to the collection or protection of the Collateral or any
income therefrom, the preservation of rights against prior parties, or the
preservation of any rights pertaining thereto beyond the safe custody thereof as
set forth in Section 9.2.  The Debtor further waives any and all other
suretyship defenses.

15.

Marshalling.  The Secured Party shall not be required to marshal any present or
future collateral security (including but not limited to the Collateral) for, or
other assurances of payment of, the Obligations or any of them or to resort to
such collateral security or other assurances of payment in any particular order,
and all of its rights and remedies hereunder and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights and remedies, however existing or arising.  To the extent that
it lawfully may, the Debtor hereby agrees that it will not invoke any law
relating to the marshalling of collateral which might cause delay in or impede
the enforcement of the Secured Party’s rights and remedies under this Agreement
or under any other instrument creating or evidencing any of the Obligations or
under which any of the Obligations is outstanding or by which any of the
Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, the Debtor hereby irrevocably waives the benefits
of all such laws.

16.

Proceeds of Dispositions; Expenses.  The Debtor shall pay to the Secured Party
on demand any and all expenses, including without limitation reasonable
attorneys’ fees and disbursements, incurred or paid by the Secured Party in
protecting, preserving or enforcing the Secured Party’s rights and remedies
under or in respect of any of the Obligations or any of the Collateral.  After
deducting all of such expenses, the residue of any proceeds of collection or
sale or other disposition of the Collateral shall, to the extent actually
received in cash, be applied to the payment of the Obligations in such order or
preference as the Secured Party may determine, proper allowance and provision
being made for any Obligations not then due.  Upon the final payment and
satisfaction in full of all of the Obligations and after making any payments
required by Sections 9-608(a)(l)(C) or 9-615(a)(3) of the Uniform Commercial
Code of the State of California, any excess shall be returned to the Debtor.  In
the absence of final payment and satisfaction in full of all of the Obligations,
the Debtor shall remain liable for any deficiency.  

17.

Overdue Amounts.  Until paid, all amounts due and payable by the Debtor
hereunder shall be a debt secured by the Collateral and shall bear, whether
before or after judgment, interest at the rate of interest for overdue principal
set forth in the Patent License and Assignment Agreement.

18.

Termination of Security Interest.  Upon satisfaction of the Debtor’s obligation
to pay the Maximum Amount (as such term is defined in the Patent License and
Assignment Agreement) pursuant to the Patent License and Assignment Agreement,
the security interest granted herein shall terminate and all rights to the
Collateral shall revert to the Debtor.  Upon any such termination, the Secured
Party shall authenticate and deliver to the Debtor such documents as the Debtor
may reasonably request to evidence such termination.

19.

Governing Law.  This Agreement shall be governed by, and construed in accordance
with, the laws of the State of California.

20.

Waiver of Jury Trial.  THE DEBTOR WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT
TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT, ANY RIGHTS, REMEDIES, OBLIGATIONS, OR DUTIES HEREUNDER, OR THE
PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF.  Except as prohibited by law, the
Debtor waives any right which it may have to claim or recover in any litigation
referred to in the preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages.  The Debtor (i) certifies that neither the Secured Party nor any
representative, agent or attorney of the Secured Party has represented,
expressly or otherwise, that the Secured Party would not, in the event of
litigation, seek to enforce the foregoing waivers or other waivers contained in
this Agreement, and (ii) acknowledges that the Secured Party is relying upon,
among other things, the waivers and certifications contained in this Section 20.

21.

Miscellaneous.  The headings of each section of this Agreement are for
convenience only and shall not define or limit the provisions thereof.  This
Agreement and all rights and obligations hereunder shall be binding upon the
Debtor and its respective successors and assigns, and shall inure to the benefit
of the Secured Party and its successors and assigns.  If any term of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity of
all other terms hereof shall in no way be affected thereby, and this Agreement
shall be construed and be enforceable as if such invalid, illegal or
unenforceable term had not been included herein.  The Debtor acknowledges
receipt of a copy of this Agreement.

[THIS SPACE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, intending to be legally bound, the Debtor has caused this
Agreement to be duly executed as of the date first above written.

 

VirnetX Inc.

 

By /s/ Kendall Larsen

 

Its President and CEO

 

Accepted:

 

Science Applications International Corporation

 

By /s/ Pamela J. Bumann

 

Its Senior Vice President

1

SCHEDULE I

1.

Organizational Information.

Jurisdiction
of Organization

Type of Organization

Organizational Identification Number

Delaware

Corporation

Not applicable

2.

Mailing Address.

Kendall Larsen
President
VirnetX Inc.
157 Provincetown Ct.
Aptos, California  95003
Tel. No.

831-685-0117
Fax No.

831-685-0117

3.

Location of Chief Executive Office.

Kendall Larsen
President
VirnetX Inc.
157 Provincetown Ct.
Aptos, California  95003
Tel. No.

831-685-0117
Fax No.

831-685-0117

4.

Other Names.

(a)

All other names, including, without limitation, trade names or similar
appellations, used by the Debtor, or any other business or organization to which
the Debtor became the successor by merger, consolidation, acquisition, change in
form, nature or jurisdiction of organization or otherwise, now or at any time
during the past five years.

NONE

(b)

For each other business or organization to which the Debtor became the successor
by merger, consolidation, acquisition of assets, change in form, nature or
jurisdiction of organization or otherwise, now or at any time during the past
five years, the:

NONE

Jurisdiction
of Organization

Type of Organization

Organizational Identification Number

   

1.

Other Current Locations.

NONE

(a)

The following are all other locations in the U.S.  in which the Debtor maintains
any books or records relating to any of the Collateral consisting of accounts,
instruments, chattel paper, general intangibles or mobile goods:

Street

County

State

   

(b)

The following are all other places of business of the Debtor in the U.S.:

Street

County

State

   

(c)

The following are all other locations in the U.S.  where any of the Collateral
consisting of inventory or equipment is located:

Street

County

State

   

(d)

The following are the names and addresses of all persons or entities other than
the Debtor, such as lessees, consignees, warehousemen or purchasers of chattel
paper, which have possession or are intended to have possession of any of the
Collateral consisting of instruments, chattel paper, inventory or equipment:

Name

Mailing Address

County

State

    

1.

Prior Locations.

NONE

(a)

Set forth below is the information required by Section 5(a) or 5(b) with respect
to each location or place of business previously maintained by the Debtor at any
time during the past five years in a state in which the Debtor has previously
maintained a location or place of business at any time during the past four
months:

Street

County

State

   

(b)

Set forth below is the information required by Section 5(c) or 5(d) with respect
to each other location at which, or other person or entity with which, any of
the Collateral consisting of inventory or equipment has been previously held at
any time during the past twelve months:  

Name

Mailing Address

County

State

    

1.

Commercial Tort Claims.

NONE

S-1

SCHEDULE II

Patents, Patent Applications and Ordered IP

1.

SAIC Patent Rights:

Country

Patent/Application No.

Filing Date

Title

Docket Nos.

JP

JP Application No.
2000-580354

10/29/99

An Agile Network Protocol For Secure Communications With Assured System
Availability

SAIC 98-10-JAP
BW 000479.00042

CA

CA Application No.
2,349,520

10/29/99

An Agile Network Protocol For Secure Communications With Assured System
Availability

SAIC 98-10-CAN
BW 000479.00043

AU

AU Application No.
16003/00

10/29/99

An Agile Network Protocol For Secure Communications With Assured System
Availability

SAIC 98-10-AUS
BW 000479.00046

EU

EPO Application No.
99 958693.6

10/29/99

An Agile Network Protocol For Secure Communications With Assured System
Availability

SAIC 98-10-EPO
BW 000479.00047

US

U.S.  Application No.
09/429,643

10/29/99

An Agile Network Protocol For Secure Communications With Assured System
Availability

SAIC 98-10-US
BW 000479.84602

US

U.S.  Application No.
10/401,551

3/31/03

An Agile Network Protocol For Secure Communications With Assured System
Availability

SAIC 98-10-DIV
BW 000479.00102

JP

JP Application No.
2000-580350

10/29/99

An Agile Network Protocol For Secure Communications With Assured System
Availability

SAIC 98-10-JAP2
BW 000479.00040

CA

CA Application No.
2,349,519

10/29/99

An Agile Network Protocol For Secure Communications With Assured System
Availability

SAIC 98-10-CAN2
BW 000479.00041

AU

AU Application No.
14553/00

10/29/99

An Agile Network Protocol For Secure Communications With Assured System
Availability

SAIC 98-10-AUS2
BW 000479.00048

EU

EPO Application No.
99 971606.1

10/29/99

An Agile Network Protocol For Secure Communications With Assured System
Availability

SAIC 98-10-EPO-2
BW 000479.00049

US

U.S.  Patent No.
6,502,135

2/15/00

Agile Network Protocol for Secure Communications with Assured System
Availability

SAIC 10003
BW 000479.85672

EU

EPO Application No.
01 910528.7

2/15/00

Improvements to an Agile Network Protocol for Secure Communications with Assured
System Availability

SAIC 10003-EPO
BW 000479.00080

JP

JP Application No.
2001-560062

2/15/00

Improvements to an Agile Network Protocol for Secure Communications with Assured
System Availability

SAIC 10003-JAP
BW 000479.00081

US

U.S.  Patent No.
6,618,761

2/26/02

Agile Network Protocol For Secure Communications With Assured System
Availability

SAIC 10003-DIV
BW 000479.00067

US

U.S.  Patent No.
6,907,473

3/31/03

Improvements to an Agile Network Protocol For Secure Communications With Assured
System Availability

SAIC 10003-DIV-1
BW 00049.00101

US

U.S.  Patent No.
6,834,310

2/26/02

Preventing Packet Flooding of a Computer on a Computer Network

SAIC 10003-DIV-2
000479.00068

US

U.S.  Application No.
10/259,494

9/30/02

Establishment of a Secure Communication Link Based on a Domain Name Service
(DNS) Request

SAIC 10003-DIV-3
BW 000479.00082

EU

EPO Application No.
01 932629.7

4/26/00

Improvements to an Agile Network Protocol for Secure Communications with Assured
System Availability

SAIC 10006-EPO
BW 000479.00085

JP

JP Application No.
2001-583006

4/26/00

Improvements to an Agile Network Protocol for Secure Communications with Assured
System Availability

SAIC 10006-JAP
BW 000479.00086

US

U.S.  Patent No.
6,839,759

11/7/03

Method for Establishing Secure Communications Link Between Computers of Virtual
Private Network Without User Entering Any Cryptographic Information

SAIC 10006-Cont
BW 000479.00110

EU

EPO Application No.
01 932628.9

4/26/00

Improvements to an Agile Network Protocol for Secure Communications with Assured
System Availability

SAIC 10007-EPO
BW 000479.00087

JP

JP Application No.
2001-501144

4/26/00

Improvements to an Agile Network Protocol for Secure Communications with Assured
System Availability

SAIC 10007-JAP
000479.00088

US

U.S.  Application No.
10/714,849

11/18/03

An Agile Network Protocol for Secure Communications Using Secured Domain Names

SAIC 10007-Cont
000479.00111

EU

EPO Application No.
05 102086.5-2413

3/16/05

Improvements to an Agile Network Protocol for Secure Communications with Assured
System Availability

SAIC 10007-EPO-DIV
BW 000479.00145

US

U.S.  Application No.
09/874,258

6/6/01

Third Party VPN Certification

SAIC 10101-US
BW 000479.00032

EU

EPO Application No.
02 718836.6

1/17/02

Third Party VPN Certification

SAIC 10101-EPO
BW 000479.00108

US

U.S.  Application No.
10/702,486

11/7/03

Method for Establishing Secure Communication Link Between Computers of Virtual
Private Network

SAIC 10006-DIV(1)
BW 000479.00112

US

U.S.  Patent No.
6,826,616

11/7/03

Method for Establishing Secure Communication Link Between Computers of Virtual
Private Network

SAIC 10006-DIV (2)
BW 000479.00113

2.

Licensee Improvements:  Any improvements for which Licensee (or any of its
sublicensees) files a patent application or obtains the issuance of any patents
that come within the scope of the claims in the patents and patent applications
set forth in Schedule II(1) (SAIC Patent Rights).

3.

Ordered IP:  All Intellectual Property developed by SAIC pursuant to the
Professional Services Agreement entered into by Debtor and Secured Party, dated
August 12, 2005 and attached hereto as Exhibit A.  Intellectual Property for
purposes of this Schedule II, Section 3 shall have the meaning set out in
Section 7(i) of the Professional Services Agreement.

S-2

December 28, 2005

Mike Lachuk
Deputy General Counsel
SAIC
10260 Campus Pt Drive
Mailstop: F3
San Diego, CA  92121

Dear Mike,

Pursuant to Section 6 of the Patent License and Assignment Agreement, dated
August 12, 2005, between Science Applications International Corporation and
VirnetX Inc.  (the “Agreement”), we hereby inform you that we have become aware
of Microsoft Corporation’s Live Communications Server 2005, with associated
Service Pack 1 (SP1), SDK, Microsoft Office Communication 2005, Groove Networks
Virtual Office, Groove Networks Workspace and all FrontBridge Technologies
Product and Service Offerings which may infringe the SAIC Patent Rights (as such
term is defined in the Agreement).  Please call me at 650-642-4838 to discuss
this matter further.  We look forward to working with you to resolve this as
soon as possible.

/s/ Kendall Larsen

 

Kendall Larsen

 

CEO and Co-Founder

 

VirnetX Inc.

 

157 Provincetown Ct

 

Aptos Ca.  95003