Document:

ASSIGNMENT AND ASSUMPTION
                              OF
                      PURCHASE AGREEMENT

      THIS  ASSIGNMENT made and entered into this 11th day  of
March,  2008, by and between AEI Real Estate Fund XVII Limited
Partnership, a Minnesota Limited Partnership, ("Assignor") and
AEI  Real  Estate Fund XVIII Limited Partnership, a  Minnesota
Limited Partnership ("Assignee");

     WITNESSETH, that:

      WHEREAS,  on  the 14th day of February,  2008,  Assignor
entered  into  a  Purchase  and Sale  Agreement   (hereinafter
referred  to  as  the "Agreement") for that  certain  property
located at 4885 Cherry Bottom Road, Columbus, OH 43230   which
is  more  particularly described within  the  Agreement,  (the
"Property)   with   Stratford   Investment   Company   Limited
Partnership, an Ohio limited partnership, as Buyer; and

      WHEREAS, Assignor desires to assign to Assignee  all  of
Assignor's  rights, title and interest in, to  and  under  the
Agreement  regarding  the  Property and  Assignee  desires  to
assume all of Assignor's rights, title and interest in, to and
under  the  Agreement  regarding the Property  as  hereinafter
provided;

     NOW, THEREFORE, for One Dollar ($1.00) and other good and
valuable   consideration,   receipt   of   which   is   hereby
acknowledged,  it  is  hereby agreed between  the  parties  as
follows:

   1. Assignor assigns all of its rights, title and interest
      in, to and under the Agreement regarding the Property to
      Assignee in the proportions set forth above, to have and to
      hold the same unto the Assignee, its successors and assigns;

   2. Assignee hereby assumes all rights, promises, covenants,
      conditions and obligations under the Agreement regarding the
      Property to be performed by the Assignor thereunder, and
      agrees to be bound for all of the obligations of Assignor
      under the Agreement;

All  other terms and conditions of the Agreement shall  remain
unchanged and continue in full force and effect.

ASSIGNOR:

AEI Real Estate Fund XVII Limited Partnership
a Minnesota Limited Partnership

By:  AEI Fund Management XVII, Inc.,
     its corporate  general partner

By:  /s/ Robert P Johnson
         Robert P. Johnson, President

ASSIGNEE:

AEI Real Estate Fund XVIII Limited Partnership
a Minnesota limited partnership

By:  AEI Fund Management XVIII, Inc.,
     a Minnesota corporation, its  corporate general partner

By:  /s/ Robert P Johnson
         Robert P. Johnson, President

               REAL ESTATE PURCHASE CONTRACT

                                   Date: February 13, 2008

1.   PROPERTY DESCRIPTION: The undersigned Buyer offers to
purchase from the Seller through Broker(s) the following
described real estate including, without limitation, all
improvements, fixtures, appurtenant rights, privileges, and
easements located in the County of Franklin, and the State of
Ohio known as: 4885 Cherry Bottom Road, Columbus, Ohio 43230,
as legally described on Exhibit "A" attached hereto and
incorporated herein by reference (the "Property").

2.   PRICE AND TERMS: The purchase price is: One Million Seven
Hundred Twenty Thousand Dollars ($1,720,000.00). Payable as
follows: cash at closing.

3.   ADDITIONAL TERMS: This agreement is contingent upon
Buyer's Attorney's review and approval of current lease within
twenty-one (21) days after the Effective Date (as defined in
Section 14 below). Seller represents and warrants that as of
the Effective Date, the Lease (as defined in Section 5 below)
is the only lease in effect with respect to the Property, and
Seller has furnished Buyer with true, accurate and complete
copies of the Lease, and any amendments thereto. Seller
represents that it owns no personality within the Property.
Seller covenants that there will be no changes to the Lease
after Effective Date. Seller's right, title and interest in and
to the Lease, as lessor, shall be assigned to Buyer at closing
pursuant to an instrument in form and substance reasonably
acceptable to Buyer, and acknowledged in writing by Tenant (as
defined in Section 5 below).

4.   CONTINGENCIES:

  a. Environmental Inspection: For a period not to exceed
twenty-one (21) days after the Effective Date, Seller agrees to
permit Buyer, Buyers' lender and the qualified professional
environmental consultant of either of them, subject to the
rights and approval of the Tenant, to enter the Property to
conduct, at the expense of the Buyer, an environmental site
assessment. Buyer agrees to indemnify and hold Seller harmless
from any injury or damage caused by such inspections. If such
assessment is obtained and the consultant recommends further
inspection to determine the extent of suspected contamination
or recommends remedial action, Buyer, at Buyer's option, may
notify Seller in writing, within the above-specified period,
that the contract is null and void, and the Buyer's earnest
money deposit shall be immediately refunded to Buyer and
neither party shall have any further rights or obligations
under this contract.

b. Property Inspection: Buyer, at Buyer's expense, shall have
twenty-one (21) days after the Effective Date to have Property
and all improvements, fixtures, and equipment inspected.
Seller shall cooperate in making the Property reasonably
available for such inspections(s) subject to the rights and
approval of the Tenant. Buyer agrees to indemnify and hold
Seller harmless from any injury or damage caused by such
inspection(s). If Buyer

  is not satisfied with the condition of the Property as
  disclosed by such inspections, Buyer may terminate this
  contract by delivering written notice of such termination to
  Seller within the above specified period that the contract is
  null and void, and the Buyer's earnest money deposit shall be
  immediately refunded to Buyer and neither party shall have any
  further rights or obligations under this contract, except
  Buyer's indemnity of Seller set forth above, which shall
  survive the termination hereof.

  c.   Other Contingencies: None.

  d.   If Buyer does not give written notice to Seller within the
  time frames set forth above that the contingencies have been
  satisfied or that Buyer wishes to terminate this transaction,
  then the above contingencies are deemed to have been waived.

5.   FIXTURES AND EQUIPMENT: The Property to be transferred at
closing shall include fixtures owned by Seller including, but not
limited to: built-in appliances, heating, ventilating, air
conditioning (HVAC) and humidifying equipment and their control
apparatus, attached floor coverings and any attached wall
coverings, window coverings and awnings, internal wire for
communication system, telecommunication wiring and cables, garage
door openers and controls, whether now in or on the property or
in storage, security systems and controls, smoke alarms, all
exterior landscaping and the following: Subject to the rights of
Tenant, Kindercare Learning Center ("Tenant") pursuant to that
certain lease dated July 28, 1992 ("the "Lease").

6.   DAMAGE OR DESTRUCTION OF PROPERTY: Risk or loss to the
Property and appurtenances shall be borne by Seller until
closing. If any party of the Property covered by this contract is
substantially damaged or destroyed before this transaction is
closed, Seller shall give a written notice to Buyer that the
damage or destruction has occurred. Such notice must include all
pertinent information regarding insurance policies and claims
covering the Property that has been damaged or destroyed. The
written notice shall be delivered within forty-eight (48) hours
from discovery of the event causing the damage or destruction.
Buyer may (a) proceed with the transaction and be entitled to all
insurance proceeds, if any, payable to Seller under all policies
covering the Property, or (b) rescind the contract, by giving
written notice to Seller within ten (10) calendar days after
Seller has delivered written notice to Buyer of such damage or
destruction and thereby release all parties from liability, in
which case, the earnest money deposit shall be returned to Buyer
pursuant to paragraph 14. Failure by Buyer to so notify Seller
shall constitute an election to proceed with the transaction.

7.   CONDITION OF IMPROVEMENTS: Seller agrees that upon delivery
of deed, the improvements constituting part of the real estate
shall be in the same condition as that on the day of this offer,
reasonable wear and tear excepted and damage accepted by Buyer
under Paragraph 6.

8.   EVIDENCE OF TITLE: Buyer shall obtain an owner's title
commitment and policy in the amount of the purchase price. The
title evidence shall be from a nationally recognized title
insurance company (the "Title Company") designated by Buyer,
certified to within thirty (30) days prior to closing with
endorsement not before 8:00 a.m. on the business day prior to the
date of closing, all in accordance with the standards of the
Columbus Bar Association, and shall show title in fee simple free
and clear of all liens and encumbrances except: (a) those created
by or assumed by Buyer; (b) those specifically set forth in this
contract; (c) zoning ordinances; (d) legal highways and (e)
covenants, restrictions, conditions, and easements of record that
do not unreasonably interfere with present lawful use. Seller
shall pay the cost of the owner's title

policy in the amount of the purchase price; provided that Buyer
shall pay any additional costs incurred in connection with
mortgage title insurance issued for the protection of Buyer's
lender, and any endorsements thereto that the Buyer of lender may
require. If Buyer desires a survey, Buyer shall pay the cost
thereof. If title to all or part of real estate is unmarketable,
as determined by Ohio law with reference to the Ohio State Bar
Association's Standards of Title Examination, or is subject to
liens, encumbrances, easements, conditions, restrictions, or
encroachments other than those excepted in this contract, Seller
may, but shall not be obligated to, within thirty (30) days after
a written notice thereof, remedy or remove any such defect, lien,
encumbrance, easement, condition, restriction, or encroachment or
obtain title insurance without exception therefore. In the event
Seller is unwilling or unable to remedy or insure against the
defect within the thirty (30) day period, Buyer may declare this
contract null and void, and the Buyer's earnest money deposit
shall be immediately refunded to Buyer and neither party shall
have any further rights or obligations under this contract,
except for Buyer's indemnity set forth in Section 4(b) above. At
closing, Seller shall sign such affidavits or certifications with
respect to off-record title matters as may be required by the
Title Company in order to deliver the title policy in the form
required by this contract, in accordance with the community
custom.

9. TAXES AND ASSESSMENTS; PRORATIONS:

a.   Because the Property is subject to a net lease, the parties
acknowledge that there shall be no need for a real estate tax
proration. However, Seller warrants that all real estate taxes
and installments of special assessments due and payable in all
years prior to the year of Closing have been paid in full. Unpaid
real estate taxes and unpaid levied and pending special
assessments existing on the date of Closing shall be the
responsibility of Buyer, pro-rated, however, to the date of
closing for the period prior to closing, which shall be the
responsibility of Seller if Tenant shall not pay the same. Buyer
shall likewise pay all taxes due and payable in the year after
Closing and any unpaid installments of special assessments
payable therewith and thereafter, if such unpaid levied and
pending special assessments and real estate taxes are not paid by
any tenant of the Property.

b.   All income, including rent and all operating expenses from
the Property, if any, that are not paid by the Tenant, shall be
prorated between the parties and adjusted by them as of the date
of Closing. Seller shall be entitled to all income earned, and
shall be responsible for all expenses incurred, prior to the date
of Closing. Buyer shall be entitled to all income earned and
shall be responsible for all operating expenses of the property
incurred on and after the date of Closing.

  10. BUYER'S EXAMINATION: BUYER IS RELYING SOLELY UPON BUYER'S
     OWN EXAMINATION OF THE PROPERTY AND INSPECTIONS HEREIN, IF
     ANY, CONCERNING PHYSICAL CONDITION, CHARACTER, AND
     SUITABILITY FOR BUYER'S INTENDED USE. BUYER IS NOT RELYING
     UPON ANY REPRESENTATIONS BY SELLER, EXCEPT FOR THOSE MADE
     DIRECTLY TO THE BUYER IN WRITING.

11. EARNEST MONEY DEPOSIT: Buyer has deposited with Title Company
the sum receipted for below.

     Upon acceptance of this Contract by Seller, Title Company
shall sign where indicated below to acknowledge receipt of the
sum of $10,000 at acceptance by cash or check, which shall be
held, deposited, and disbursed pursuant to paragraph 14. A copy
of this Contract countersigned by Title Company, along with an
insured closing services protection letter from a national title
insurance company addressed to Seller, shall be furnished to
Seller within two (2) business days following acceptance by
Seller. Seller shall have no obligations under this Contract
until these items are furnished to Seller.

Title Company
Professional Closing Title
Agency, Inc. 3205 East
Dublin Granville Road
Columbus, Ohio 43231

By /s/ Jeff Niday, Date: February  19, 2008
       Jeff Niday, President

     11.1 If no contract is entered into, then upon Buyer's
written request, the earnest money deposit shall be returned to
Buyer.

     11.2 Upon acceptance of this contract by both parties in
writing, the Title Company shall deposit the earnest money
deposit in its trust account. Subject to collection by the Title
Company's depository, the earnest money deposit is to be
disbursed as follows:

     a.The earnest money deposit shall be applied on the purchase
price when the transaction is closed or returned to Buyer if this
agreement is terminated.

     b.If any written contingency is not satisfied or waived, if
Seller fails or refuses to perform, or if Buyer fails or refuses
to perform, the earnest money deposit shall be returned or paid
as follows:

     c.The party requesting the return or payment of the earnest
money deposit shall submit a written request, specifying the
contingency that has not been satisfied or waived or the reason
for the request, to the Title Company holding the earnest money
deposit. Within forty-eight (48) hours (excluding weekends and
legal holidays) after receiving the request to return or pay the
earnest money deposit, the Title Company shall advise the other
party in writing that the earnest money deposit shall be returned
or paid in accordance with the request, unless the other party
delivers written objection to the Title Company within two (2)
business days after delivery of the written notice by the Title
Company.

     d. If Title Company does not receive any written objection from
the  other  party within the two (2) day period, then  the  Title
Company  shall  deliver the earnest money deposit  to  the  party
requesting payment.

     e. If the Title Company does receive a written objection from
the other party within the two (2) business day period, then the
Title  Company is required to and shall retain the earnest money
deposit  until (i) Buyer and Seller have settled the dispute  in
writing,  (ii)  disposition has been ordered by  a  final  court
order,  or  (iii) the Title Company deposits the amount  with  a
court pursuant to applicable court procedures.

     11.3 The return of the earnest money deposit shall in no
way prejudice the rights of the Seller or the Buyer in any
action for damages or specific performance.

12.  CLOSING: This contract shall be performed and this
transaction closed on or before March 14, 2008 unless the parties
agree in writing to an extension. Buyer is entitled to possession
at closing unless otherwise specified. At the time Seller
delivers possession, the Property will be in the same condition
as the date of acceptance of this contract, except as provided in
the Damage or Destruction of Property, Paragraph #6, normal wear
and tear excepted. Seller shall convey to Buyer title as
described in paragraph #8 to the real estate in fee simple by
transferrable and recordable limited or special warranty deed (or
appropriate fiduciary deed if Seller is a fiduciary), with
release of dower, if any.

Unless otherwise expressly provided in this contract, the costs
of closing will be allocated between the Buyer and Seller in
accordance with local custom, as determined by the Title Company.
The Title Company shall prepare a closing statement to be signed
by the Buyer and Seller.

13.  MISCELLANEOUS: This contract constitutes the entire
agreement and no oral or implied agreement exists. Any amendments
to this contract shall be in writing, signed by Buyer and Seller
and copies provided to them. This contract shall be binding upon
the parties, their heirs, administrators, executors, successors
and assigns. If this contract involves Seller financing, it may
not be assigned. Time is of the essence of all provisions of this
contract. All provisions of this contract shall survive the
closing.

14.   DURATION OF OFFER AND ACCEPTANCE: This offer shall be  open
for  acceptance  through  Noon (12:00  p.m.),  February  8,  2008
Columbus, Ohio Time. The "Effective Date" shall be the  later  of
(a)  the date Buyer executes this contract or (b) the date Seller
executes this contract.

15.   BROKER'S ACKNOWLEDGEMENT: Seller and Buyer acknowledge that
  there are no other Broker(s) involved in this transaction except
  as follows: Seller shall pay a three percent (3%) commission to
  Todd  Schiff (Agent) of The Robert Weiler Company (Broker) upon
  closing of the sale of the Property. For purposes of this Section
  15,  "closing"  shall be defined as receipt by  Seller  of  the
  proceeds of the sale of the Property.

16.  SIGNATURES: Only original manual signatures or facsimile
signatures (which include both faxes and PDF documents sent by e-
mail) shall be valid for purposes of this contract and any
amendments or any notices to be delivered in connection with this
contract. Only original, manually signed documents shall be valid
for deeds or other documents to be delivered at closing. This
Section 16 cannot be waived except by a manually signed agreement
of the parties.

17.   TAX  FREE  EXCHANGE: Each party acknowledges  that  it  may
desire  to  have its acquisition or disposition of  the  property
qualify  for  tax  deferral under Section 1031  of  the  Internal
Revenue Code of 1986, as amended. Accordingly, each party  agrees
to cooperate with the other, at no expense to the other party, in
all  reasonable respects, to have the acquisition or  disposition
of  the Property qualify for such tax-deferred treatment. No such
tax-deferred exchange shall delay the Closing. This contract  may
be  assigned,  without consent of the other party to  any  entity
which  is  employed for the purpose of consummating  a  tax  free
exchange.

Buyer hereby makes the foregoing offer this  13  day of February,
2008.

Strafford Investment Company
Limited Partnership (Buyer)

By:   /s/ Patrick Kelly
Name:     Patrick Kelly
Title:    Agent

(Buyer)
Address c/o Donald W. Kelley &
Associates 250 East Broad
Street, Suite 1100
Columbus, Ohio 43215
Phone (614) 228-5775
Fax (614) 228-1098

Name of Buyer's
Attorney: William Baldwin
Vorys, Sater, Seymour and Pease LLP
221 East 4th Street, Suite 2000
Cincinnati, Ohio
45202 (513) 723-8595 (phone)
(513) 852-7812 (fax)
wdbaldwin@vorys.com

Seller hereby makes the foregoing offer this 14 day of February, 2008.
AEI Real Estate Fund XVII Limited Partnership,

By: AEI Fund Management XVII, Inc., its general partner
BY /s/ Robert P Johnson:
       Robert P Johnson, President

ALL PARTIES TO THIS CONTRACT MUST BE PROVIDED WITH A COPY.

                            EXHIBIT

                    "A" Legal Description:

    The legal description of this property, commonly known as
4885 Cherry Bottom Rd. Columbus, Ohio 43230; Parcel ID # 600-
214693-00 is as follows:

                          MORSE ROAD
                          Lot 9-11-12
                           .84 Acre
                       600-0004h-003-01

                          EXHIBIT "A"

                     DESCRIPTION OF 0.840
                        ACRES FOR
                        CHILDRENS WORLD
                        March 30, 1989,

   Situated  in the State of Ohio, County of Franklin,  City  of
Columbus,  Quarter  Township 4, Township  2,  Range  17,  United
States Military Lands, being 0.840 Acres of land out of the
11.456-acre tract  granted  to Scioto Valley Land Co.  Ltd.  as
recorded in Official Record Volume  12099  H  16, Franklin County
Recorder's Office. Said 0.840 acre tract being more particularly
described as follows:

    Beginning at the southeasterly corner of the above mentioned
11,456-acre tract and the northeasterly corner of the 4.203-acre
tract as described in a deed to Faith Covenant Church, of record
in Official Record Volume 12043 A 15, and in the westerly right-
of-way line of Cherry Bottom Road, as described in a deed to the
City of Columbus and recorded in OB 3465, page 792; thence N  84
52'06"W.,  along  the northerly line of said 4.203  acre  tract,
248.79 feet to an iron pin; thence N 5 07'54"E., 147.00 feet  to
an  iron  pin; thence 5 84 52'06"E., 80.00 feet to an iron  pin;
thence N 79 43'42"E., 137.05 feet to an iron pin in the westerly
right-of-way  line  of  Cherry Bottom  Road;  thence  along  the
westerly line of Cherry Bottom Road, 5 3 34'46"E., 82.00 feet to
an  iron  pin;  thence continuing along said right-of-way  line,
5 8 11146"E., 105.18 feet to the place of beginning,  containing
0.840  acres, more or less, subject to any easements and rights-
of-way of record.

 This  description  prepared  from an  actual  field  survey  by
Burgess  &  Nipple,  Limited, Howard R.  Somerville,  Registered
Surveyor No. 4265.

/s/ Howard R Somervill
HowardR Somerville
Registered Surveyor No. 4265           [state of Ohio seal]exv10w1

 

Exhibit 10.1

AMENDMENT NO. 2

TO

PATENT LICENSE AND ASSIGNMENT AGREEMENT

     This Amendment No. 2 to Patent License and Assignment Agreement (“Amendment No. 2”) is entered
into as of March 12, 2008 (the “Second Amendment Effective Date”) by and between Science
Applications International Corporation (“SAIC”), a Delaware corporation, and VirnetX Inc.
(“VirnetX”), a Delaware corporation, herein individually referred to as a “Party” and collectively
referred to as the “Parties.”

RECITALS

     WHEREAS, the Parties entered into a Patent License and Assignment Agreement dated as of August
12, 2005 (“Original Agreement”);

     WHEREAS, the Parties entered into an Amendment No. 1 to Patent License and Assignment
Agreement dated as of November 2, 2006 (“Amendment No. 1”);

     WHEREAS, by operation of Amendment No. 1, SAIC conveyed all right, title, and interest in the
SAIC Patents Rights (defined in Section 1.36 and Recital No. 1 of the Original Agreement) to
VirnetX;

     WHEREAS, by operation of Amendment No. 1 and Section 4.2 of the Original Agreement, VirnetX
conveyed back to SAIC an exclusive, royalty free, fully paid, perpetual, worldwide, irrevocable,
sublicensable and transferable right and license under the SAIC Patent Rights outside the Field of
Use (defined in Section 1.10 of the Original Agreement);

     WHEREAS, subsequent to the Original Agreement and Amendment No. 1, VirnetX has sued Microsoft
Corporation (“Microsoft”) alleging infringement of three patents included within the SAIC Patent
Rights;

     WHEREAS, Microsoft has indicated that it intends to argue that SAIC is an indispensable party
to VirnetX’s lawsuit against Microsoft;

     WHEREAS, the law governing indispensable parties in patent infringement actions has continued
to develop and has been clarified since the Parties’ entered the Original Agreement and Amendment
No. 1;

     WHEREAS, the Parties believed as of November 2, 2006 that together the Original Agreement and
Amendment No. 1 conveyed all substantial rights in the SAIC Patent Rights to VirnetX and continue
to so believe;

     WHEREAS, the Parties wish to avoid time consuming, expensive and unnecessary litigation
regarding VirnetX’s standing to sue Microsoft for infringement of the three asserted patents;

 

 

     WHEREAS, SAIC is willing for good and valuable consideration to relinquish its exclusive
license to practice the SAIC Patent Rights outside the Field of Use;

     WHEREAS, VirnetX is willing to convey to SAIC a non-exclusive, royalty free, fully paid,
perpetual, worldwide, irrevocable, sublicensable and transferable license under the SAIC Patent
Rights outside the Field of Use; and

     WHEREAS, the Parties wish to enter this Amendment No. 2 in order to amend certain provisions
of the Original Agreement and of Amendment No. 1 to facilitate VirnetX’s enforcement of the SAIC
Patent Rights against Microsoft.

AGREEMENT

     NOW, THEREFORE, in consideration of the mutual promises made herein and for other good and
valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Parties
agree to amend the Original Agreement and Amendment No. 1 as follows:

     1. Definitions. Unless otherwise defined herein, terms used in this Amendment No. 2
shall have the meanings given them in the Original Agreement and Amendment No. 1. Terms not
defined by the Parties in the Original Agreement, Amendment No. 1 or in this Amendment No. 2, shall
have their plain and ordinary meaning.

     2. SAIC Relinquishment Of Its Exclusive License To Practice The SAIC Patent Rights Outside
The Field Of Use. Effective upon the execution of Amendment No. 2 by the Parties, SAIC hereby
relinquishes the exclusive grant back license provided to it by VirnetX pursuant to Section 4.2 of
the Original Agreement and Section 2 of Amendment No. 1, as well as any right to obtain such
exclusive license in the future. In addition, SAIC confirms that VirnetX has the sole and
exclusive right to enforce the SAIC Patent Rights outside the Field of Use for past, present and
future infringement, including, without limitation, the right to sue for injunction, damages and
otherwise, and the right to collect damages and fees.

     3. VirnetX Grant Of A Non-Exclusive License To SAIC To Practice The SAIC Patent Rights
Outside The Field Of Use. Effective upon the execution of Amendment No. 2 by the Parties, in
consideration of the additional exclusive rights obtained by VirnetX from SAIC to practice and
license the SAIC Patent Rights outside the Field of Use, VirnetX hereby grants SAIC a nonexclusive,
royalty free, fully paid, perpetual, worldwide, irrevocable, sublicensable and transferable right
and license under the SAIC Patent Rights outside the Field of Use permitting SAIC and its assignees
to make, have made, import, use, offer for sale, and sell products and services covered by, and to
make improvements to, the SAIC Patent Rights outside the Field of Use.

     4. Further Consideration For SAIC’s Transfer Of License Rights Outside The Field Of
Use. In further consideration of the additional rights obtained by VirnetX from SAIC to
practice and license the SAIC Patent Rights outside the Field of Use, subject to Section 6 below,
Section 7.1 of the Original Agreement is hereby amended and restated as follows:

2

 

VirnetX shall pay
SAIC royalties in the amount of (i) fifteen percent (15%) of all non-license Revenues (as defined
in the Original Agreement, but as used throughout this Amendment No. 2, such term shall expressly
not include any M&A Entities Recovery, Other Entities Recovery or Acquisition Proceeds (each as
defined in Amendment No. 1)) generated by VirnetX in practicing the SAIC Patent Rights in the Field
of Use, (ii) fifteen percent (15%) of all license Revenues received by VirnetX pursuant to a
license that VirnetX grants in the Field of Use, (iii) fifteen percent (15%) of all non-license
Revenues generated by VirnetX in practicing the SAIC Patent Rights outside the Field of Use, and
(iv) fifty percent (50%) of all license Revenues received by VirnetX pursuant to a license that
VirnetX grants outside the Field of Use. For clarity, in the case of a license that grants rights
both inside and outside the Field of Use, VirnetX shall make a good faith apportionment of the
license Revenues between payments received for activities within the Field of Use and activities
outside the Field of Use and pay the applicable royalty rate on such apportioned Revenues. In
addition, in the case of bundled fees received by VirnetX allocable to both non-license Revenues
generated by VirnetX in practicing the SAIC Patent Rights and license Revenues received by VirnetX
pursuant to a license that VirnetX grants, VirnetX shall make a good faith apportionment of the
non-license and license Revenues and pay the applicable royalty with respect to such apportioned
Revenues. Notwithstanding the foregoing, VirnetX shall not be obligated to pay any additional
amounts pursuant to clauses (i) or (ii) above once the aggregate payments by VirnetX to SAIC are
equal to the Maximum Amount (as defined in the Original Agreement); provided that royalty payments
due SAIC pursuant to clauses (iii) and (iv) above shall not be included for purposes of determining
whether the Minimum Royalty of Section 7.2 of the Original Agreement or whether the Maximum Amount
of Section 7.3 of the Original Agreement have been satisfied, and shall not be subject to any
minimum or maximum payments, but shall be subject to the payment, reporting and audit requirements
of Sections 7.4, 7.5 and 7.6 of the Original Agreement.

     5. Enforcement Of The SAIC Patent Rights. Notwithstanding anything else in the
Original Agreement or Amendment No. 1 to the contrary, from and after the Second Amendment
Effective Date, VirnetX shall have the sole right to enforce the SAIC Patent Rights both inside and
outside the Field of Use. VirnetX shall take commercially reasonable steps to enforce the SAIC
Patent Rights and to protect SAIC’s interest in receiving the bargained-for consideration. VirnetX
shall have no obligation to practice the SAIC Patent Rights outside the Field of Use or to seek
licensees of the SAIC Patent Rights outside the Field of Use, but VirnetX shall be obligated to use
commercially reasonable efforts to prevent infringement of the SAIC Patent Rights outside the Field
of Use.

     6. Allocation Of Certain Proceeds. Notwithstanding anything else herein to the
contrary, allocation between VirnetX and SAIC of any M&A Entities Recovery, any Other Entities
Recovery and any Acquisition Proceeds shall be governed exclusively by Sections 4, 5, 6 and 7 of
Amendment No. 1.

     7. Arbitration Of Disputes Regarding VirnetX’s Payment Obligations. Any disputes
between VirnetX and SAIC regarding any claim, controversy or dispute arising under or related to
this Amendment No. 2 shall be addressed and resolved in accordance with Section 13 of the Original
Agreement. VirnetX and SAIC agree that Section 13 of the Original Agreement

3

 

may be used to seek
specific performance of VirnetX’s obligation to use commercially reasonable effort to prevent
infringement of the SAIC Patent Rights outside the Field of Use.

     8. SAIC Review Rights. Notwithstanding anything else in the Original Agreement or
Amendment No. 1 to the contrary, VirnetX shall give SAIC reasonable notice in accordance with
Section 16.1 of the Original Agreement of any proposed license or assignment of the SAIC Patent
Rights (other than to a VirnetX subsidiary as provided in Section 14.3 of the Original Agreement)
and any proposed settlement of an action to enforce the SAIC Patent Rights. SAIC may object to the
proposed license, assignment or settlement solely on the ground that it unreasonably diminishes the
bargained-for consideration agreed by the parties, and SAIC may so object within three business
days of receiving notice in accordance with Section 16.1 of the Original Agreement. VirnetX may
request SAIC’s consent to any proposed license, assignment or settlement and such consent shall not
be unreasonably withheld.

     9. Modification Of Sections 1.31 And 12 Of The Original Agreement. VirnetX and SAIC
agree to the following modifications of the Original Agreement.

	 	a.	 	Subsection (iii) of Section 1.31 is deleted.
	 
	 	b.	 	Section 12.2.1 is deleted.
	 
	 	c.	 	Section 12.2.2 is deleted.
	 
	 	d.	 	Section 12.2.5 is deleted.
	 
	 	e.	 	Section 12.2.6 is deleted.
	 
	 	f.	 	Section 12.2.8 is deleted.
	 
	 	g.	 	Section 12.2.9 is deleted.

     10. SAIC Security Interest In The SAIC Patent Rights. The Security Agreement dated
August 12, 2005 between VirnetX and SAIC remains in effect and continues to apply with full force
and effect to the SAIC Patent Rights.

     11. No Other Changes. Except as expressly modified hereby, the Original Agreement and
Amendment No. 1 remain in full force and effect.

     12. Miscellaneous Provisions.

          (a) Entire Agreement. This Amendment No. 2 constitutes the Parties’ entire agreement
and understanding with respect to modification of the Original Agreement and
Amendment No. 1, supersedes and replaces any and all prior or contemporaneous proposals,
agreements, understandings, commitments or representations of any kind, whether written or oral,
relating to the Parties’ modification of the Original Agreement and Amendment No. 1.

4

 

          (b) Conflicting Provisions. This Amendment No. 2, Amendment No. 1 and the Original
Agreement are intended to be read and construed in harmony with each other except as expressly
provided. In the event that any provision of the Original Agreement or Amendment No. 1 conflicts
with this Amendment No. 2, then this Amendment No. 2 shall be deemed to control, and such
conflicting provision, to the extent it conflicts, shall be deemed removed and replaced with the
governing provision herein.

          (c) Multiple Copies Or Counterparts Of This Agreement. This Amendment No. 2 may be
executed in one or more counterparts, each of which will be deemed an original, but all of which
together constitute one and the same instrument and is binding upon the Parties. This Amendment
No. 2 shall not be effective until the execution and delivery between the Parties of at least one
complete set of the counterparts.

          (d) Governing Law. This Amendment No. 2 shall be governed by and construed in
accordance with the laws of the State of California in all respects without giving effect to the
principles of conflicts of law thereof.

          (e) Remaining Miscellaneous Provisions and Disputes. The Parties agree that the
remaining Miscellaneous Provisions of the Original Agreement shall be applicable to this Amendment
No. 2 and are hereby incorporated by reference herein as if restated in their entirety herein with
references to the “Agreement” amended to mean this Amendment No. 2. The Parties further agree, to
the extent necessary, Section 13 (Disputes) of the Original Agreement shall be applicable to this
Amendment No. 2 and is hereby incorporated by reference herein as if restated in its entirety
herein with references to the “Agreement” amended to mean this Amendment No. 2.

     IN WITNESS WHEREOF, the Parties have executed this Amendment No. 2 as of the Second Amendment
Effective Date.

	 	 	 	 	 
	 	VIRNETX INC.

 	 
	 	By:  	/s/ Kendall Larsen
 	 
	 	 	Name:  	Kendall Larsen 	 
	 	 	Title:  	President & CEO 	 
	 

	 	 	 	 	 
	 	SCIENCE APPLICATIONS

INTERNATIONAL CORPORATION

 	 
	 	By:  	/s/ Pamela J. Bumann
 	 
	 	 	Name:  	Pamela J. Bumann 	 
	 	 	Title:  	Technology Commercialization 	 
	 

5

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