Document:

exv10w2

 

Exhibit 10.2

IP BROKERAGE AGREEMENT

This IP Brokerage Agreement (the “Agreement”), effective as of March 13, 2008 (“Effective Date”),
is made by and between ipCapital Group, Inc., a Delaware corporation having a mailing address of
400 Cornerstone Drive, Suite 325, Williston, VT 05495-4046 (“ipCG”), and VirnetX, Inc., a Delaware
corporation having an office at 5615 Scotts Valley Drive, Suite 110, Scotts Valley, CA 95066
(“Client”).

1. PRELIMINARY STATEMENT

ipCG provides intellectual property strategic planning, development, assessment, implementation,
and management services to a variety of business clients. ipCG has developed extensive knowledge
and experience in defining opportunities for its clients in building the value of their businesses
using intellectual property. Client desires to engage ipCG to present Client with one or more
Candidates that may be seeking intellectual property owned by Client, for the purpose of exploiting
such intellectual property. ipCG is willing to enter into such an engagement.

In view of the foregoing, ipCG and Client desire to enter into the present Agreement, and in
consideration of the mutual promises and covenants contained herein, the parties agree as set forth
herein.

2. DEFINITIONS

2.1 “IP Rights” shall mean the legal rights in any copyrights, patents, trademarks, trade secrets,
know-how, or other intellectual property.

2.2 “Candidate” shall mean any entity, natural person, or group of entities or natural persons
presented to Client by ipCG during the term of this Agreement, that is seeking IP Rights from
Client. For the purposes of determining when Success Fee(s) are payable under this Agreement, when
a Candidate is other than a natural person, entities owned by, or holding direct or indirect
ownership interest in, a Candidate which is a party to the IP Agreement, including parent,
subsidiary, and sister entities (e.g., two divisions of a parent corporation) of such Candidate,
shall not be considered a Candidate.

2.3 “IP Agreement” shall mean any contract or agreement (including settlements entered into in
connection with any litigation, actual or threatened), and amendments to any such contract or
agreement between Client (or a Client affiliate) and any Candidate, including, but not limited to,
rights to make, have made, use, sell, offer for sale, import or license others to make, have made,
use, sell, offer for sale, or import products or use processes in connection with any of the
foregoing, that are covered by or use the IP Rights. The rights can include but are not limited to
(1) exclusive or non-exclusive patent and/or technology licenses, (2) covenants not to sue, (3)
settlement agreements, (4) partial or total assignments of intellectual property in the IP Rights
and (5) corporate merger or acquisition where the primary purpose is the acquisition of IP Rights.

 

 

2.4 “Success Fee” shall have the meaning ascribed in Section 4.1.

2.5 “Target Technology” shall mean the technical subject matter identified in Attachment A.

2.6 “Additional Services” include, but are not limited to, patent mapping, invention development,
strategic inventing, strategic planning, patent scoring, due diligence, market analysis, IP
valuation, and litigation support.

3. BROKERAGE SERVICES

3.1 ipCG shall use commercially reasonable efforts to introduce Client to five Candidates mutually
agreed upon by ipCG and Client in writing (the “Mutually Agreed Candidates”), which are interested
in seeking IP Rights relating to the Target Technology from Client, whether by assignment, license
or otherwise.

3.2 Once Client and a Mutually Agreed Candidate have agreed in principle to enter into an IP
Agreement, and at Client’s request, ipCG shall use commercially reasonable efforts, to assist
Client in negotiating the IP Agreement, including i) assisting Client in developing terms and
conditions for the IP Agreement; ii) reviewing and providing feedback relative to drafts of the IP
Agreement prepared by Client’s counsel; iii) assisting Client in negotiating deal terms; and iv)
assisting Client in closing the IP Agreement. ipCG is not a law firm and shall have no obligation
to provide legal services under this Agreement.

3.3 Client agrees that ipCG shall be Client’s exclusive broker for IP Rights relating to the Target
Technology with respect to the Mutually Agreed Candidates during the term of this Agreement.
Client shall notify ipCG of any inquiries made to Client by Mutually Agreed Candidates, or by
Client to Mutually Agreed Candidates, in either case during the term of this Agreement concerning
assigning, licensing or otherwise exploiting IP Rights relating to the Target Technology.

3.4 ipCG reserves the right to present any Candidate to parties other than Client.

3.5 Client, at ipCG’s discretion, may engage ipCG under this Agreement to perform one or more
Additional Services. Client will provide mutually agreeable compensation to ipCG for such
Additional Services, as negotiated by the parties. For clarity, Client and ipCG acknowledge that
they are concurrently entering into a separate Engagement Letter for Strategic Intellectual
Property Licensing and Training (the “Engagement Letter”), which are Additional Services that are
critical to Client’s willingness to enter into this Agreement.

3.6 Client agrees by signing this agreement that it is recognized that ipCG may find that a simple
introduction of the Target Technology to a Mutually Agreed Candidate may be enough to obtain
results from the Mutually Agreed Candidate and / or the Client also recognizes that ipCG may have
to spend significant time to track down a viable opportunity that obtains results, and that in
either of these cases, the Success Fee shall be granted to ipCG independent of the effort ipCG
makes.

4. ipCG SUCCESS FEE

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4.1 If, at any time during the term of this Agreement or prior to the 3rd anniversary of the date
of termination of this Agreement, Client enters into an IP Agreement relating to IP Rights with a
Mutually Agreed Candidate, then except as otherwise provided in this Agreement, Client will pay
ipCG the following success fee (the “Success Fee”):

4.1.1 10% of the royalties, fees and other consideration, including non-cash consideration, paid
over the life of the IP Agreement, payable to ipCG within thirty (30) days of receipt of each
payment, up to a maximum aggregate amount of $2,000,000 per Mutually Agreed Candidate or
$10,000,000 in the aggregate to be paid as Success Fees to ipCG with respect to any and all IP
Agreements or otherwise to ipCG by Client hereunder.

4.2 Client agrees that it shall take no action to delay closing of an IP Agreement beyond the
three-year period primarily for the purpose of avoiding payment of a Success Fee, nor shall it
avoid taking any action primarily for the purpose of delaying closing beyond the three-year period
to avoid payment of a Success Fee.

4. 3 ipCG acknowledges and agrees that Client may decide, in its sole discretion, whether or not to
enter into an IP Agreement concerning any given IP Rights and there is a possibility that no
Success Fee or other compensation will be earned by ipCG under this Agreement.

4.4 Client shall keep accurate records sufficient to permit determination of the payments due
hereunder and shall make such records available for examination by a third-party auditor designated
by ipCG and reasonably acceptable to Client, following reasonable advance notice and under
conditions of confidentiality during regular business hours. Audits may be performed covering no
more than the four most recently reported consecutive quarters preceding the audit and may be
performed no more than once in any calendar year. ipCG’s failure to inspect shall not constitute a
waiver of ipCG’s right to object to the accuracy of payments made under this Agreement. Before
beginning any audit, ipCG agrees that the third-party auditors shall be required to sign a
confidentiality agreement provided by Client that restricts the auditors from disclosing to any
third party any and all records and other information provided by Client. Each party shall be
responsible for its own costs and expenses that it incurs in the course of the audit and ipCG shall
be responsible for the costs and expenses charged by the third-party auditors.

5. CLIENT DUTIES

5.1 Client will, upon request, promptly provide all information and documentation reasonably deemed
necessary or desirable by ipCG in connection with performing its services under this Agreement.
Client understands and agrees that ipCG intends to use the information and documentation furnished
by Client without making an independent investigation into the accuracy of the information and
documentation.

5.2 Client agrees to promptly notify ipCG of any matters affecting ipCG’s ability to provide its
services under this Agreement including, but not limited to, loss of any portion of the IP Rights
and the existence of potentially interfering rights owned by others.

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6. TERMINATION AND CONSEQUENCES OF TERMINATION

6.1 Either party shall have the right to terminate this Agreement for convenience at any time
following the one-year anniversary of the Effective Date of the Agreement, with sixty (60) days
written notice to the other party.

6.2 Either party shall have the right to terminate this Agreement if the other party breaches any
material obligation hereunder or under the Engagement Letter by providing written notice of such
breach to the other party and affording said other party a forty-five (45) day cure period. Such
termination shall become automatically effective unless such other party shall have remedied the
breach prior to the expiration of the forty-five (45) day cure period.

6.3 Upon any termination of this Agreement, the provisions of Sections 4, 7, 8 and 9 shall survive
and continue in full force and effect, except to the extent they expire of their own accord, and
except that Section 4 shall not survive in the event Client terminates this Agreement pursuant to
Section 6.2.

7. CONFIDENTIALITY

7.1 Confidential Information shall include the terms and conditions of this Agreement, the terms
and conditions of any and all agreements between a Candidate and Client, the fact that Client is
considering entering into, may enter into, or has entered into any IP Agreement with a Candidate,
any and all agreements between a Candidate and other third parties involving the IP Rights and any
actions taken by Client to enforce the IP Rights or any licensing or other agreements resulting
therefrom, any patent applications, any information pertaining to patent applications, and any
information identified by either of the parties to this Agreement as “confidential,” but shall
specifically exclude the following information (except that the terms and conditions hereof shall
always be kept confidential and shall not be subject to the following exceptions):

(a) which as shown by written records, was in the non-disclosing party’s possession prior to
receipt from the disclosing party; or

(b) which, is at the time of disclosure, or thereafter becomes a part of the public domain
through no act or omission by the non-disclosing party; or

(c) which is thereafter lawfully disclosed to the non-disclosing party by a third party which
did not acquire the information under an obligation of confidentiality from or through the
disclosing party; or

(d) which is, subsequent to disclosure, independently developed by the non-disclosing party
without reference to the Confidential Information of the disclosing party.

7.2 The party receiving Confidential Information (the “Recipient”) may only use such Confidential
Information in furtherance of the purposes of this Agreement and may only disclose such
Confidential Information, on a need-to-know basis, to: (a) its employees; (b) employees of its
parent and subsidiary companies or affiliates; (c) its legal counsel; and (d) anyone else with
Discloser’s prior written consent. Before disclosure to any such party, Recipient will have an

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agreement in place requiring the party to treat Confidential Information in accordance with the use
and disclosure restrictions contained in this Agreement. Recipient may disclose Confidential
Information to the extent required by law; provided, however, that Recipient must give the
disclosing party prior written notice and make a reasonable effort to obtain a protective order.

7.3 Recipient shall protect the disclosed Confidential Information by using the same degree of
care, but no less than a reasonable degree of care, to prevent the unauthorized use, dissemination,
or publication of the Confidential Information, as Recipient uses to protect its own confidential
information of a like nature.

7.4 No license under any patent, copyright, trade secret, trademark or other intellectual property
right, whether by implication, estoppel or otherwise, is granted by either party under this
Agreement.

7.5 A disclosing party can require the return of its Confidential Information by sending a written
notice to the Recipient. The Recipient will have thirty (30) days after receipt of the written
notice to return the Confidential Information to the disclosing party.

8. WARRANTIES AND DISCLAIMER OF WARRANTIES

8.1 ipCG warrants that all services it provides under this Agreement will be provided in a
professional manner and that it is skilled in providing such services.

8.2 Each party disclosing Confidential Information warrants that it has the right to make the
disclosures under this Agreement.

8.3 Neither party warrants the completeness or accuracy of any Confidential Information which it
may disclose under this Agreement.

8.4 THESE WARRANTIES ARE EXCLUSIVE AND OFFERED IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING THE IMPLIED WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.

9. LIMITATION OF LIABILITY

9.1 NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL,
INDIRECT OR EXEMPLARY DAMAGES ARISING OUT OF THIS AGREEMENT, INCLUDING LOST PROFITS OR COSTS OF
COVER, LOSS OF USE OR BUSINESS INTERRUPTION OR THE LIKE, REGARDLESS OF WHETHER THE PARTY WAS
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

9.2 IPCG’S TOTAL, CUMULATIVE LIABILITY UNDER THIS AGREEMENT SHALL NOT EXCEED THE TOTAL OF ALL
AMOUNTS PAID TO IPCG BY VIRNETX HEREUNDER OR UNDER ANY SEPARATE ENGAGEMENT LETTERS OR OTHERWISE
FROM TIME TO TIME, INCLUDING ANY PAYMENTS OF SUCCESS FEES ONCE THEY HAVE ACTUALLY BEEN PAID TO
IPCG.

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9.3 THE LIMITATIONS OF SECTION 9.1 AND 9.2 WILL APPLY, REGARDLESS OF WHETHER A CLAIM OR ACTION
SOUNDS IN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY, CONTRIBUTION, INDEMNITY OR ANY OTHER LEGAL
THEORY.

10. INDEMNIFICATION

10.1 ipCG hereby agrees that Client, its affiliated entities, and their respective officers,
directors, investors, employees, and agents (together, the “Client Indemnitees”) shall be held
harmless and be indemnified by ipCG for any liability, loss, damages or expenses (including
reasonable attorney’s fees) suffered by the Client Indemnitees by virtue of any acts or omissions
or alleged acts or omissions arising out of ipCG’s activities with, for, or on behalf of Candidate
relating to IP Rights ipCG introduced to Client hereunder. Notwithstanding the above, ipCG shall
have no duty to indemnify the Client for any liability, loss, damages or expenses (including
attorney’s fees) to the extent such damages arise out of the Client’s intentional or willful
misconduct, misrepresentation, fraud or its willful breach of this Agreement or the law.

10.2 Client hereby agrees that ipCG, its affiliated entities, and their respective officers,
directors, investors, employees, and agents (together, the “ipCG Indemnitees”) shall be held
harmless and be indemnified by Client for any liability, loss, damages or expenses (including
reasonable attorney’s fees) suffered by the ipCG Indemnitees by virtue of any acts or omissions or
alleged acts or omissions arising out of Client’s activities with Candidate relating to IP Rights
ipCG introduced to Client hereunder and/or Client’s or Candidate’s enforcement or other
commercialization of IP Rights whether through litigation or otherwise. Notwithstanding the above,
the Client shall have no duty to indemnify ipCG for any liability, loss, damages or expenses
(including attorney’s fees) to the extent such damages arise out of ipCG’s intentional or willful
misconduct, misrepresentation, fraud or its willful breach of this Agreement or the law.

11. MISCELLANEOUS

11.1 This Agreement, the Engagement Letter, the NDA (as defined in the Engagement Letter) and the
Common Interest Agreement (as defined in the Engagement Letter) set forth the entire understanding
between ipCG and Client and supersede all previous understandings, agreements, communications, and
representations, whether written or oral, concerning the subject mater to which such agreements
relate.

11.2 ipCG and Client are independent contractors. Neither Client nor ipCG nor their respective
employees, members, consultants, contractors or agents are agents, fiduciaries, employees or joint
venturers of the other party, nor do they have any authority to bind the other party by contract or
otherwise to any obligation.

11.3 Although ipCG retains and employs attorneys, neither ipCG nor its attorneys are rendering
legal services to the Client as part of this Agreement. When a party is concerned about a legal
matter or issue, or the legal effect of any document, including, without limitation, this Agreement
or the IP Agreement, it will consult with its own attorneys for advice or opinions. Each party
agrees to be liable for, and to pay, its own legal expenses.

11.4 If any provision of this Agreement is held by a court of competent jurisdiction to be illegal,
invalid, or unenforceable, that provision shall be limited or eliminated to the minimum

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extent necessary so that this Agreement shall otherwise remain in full force and effect and
enforceable.

11.5 This Agreement shall be governed exclusively in accordance with the laws of the State of New
York, without regard to the conflict-of-law principles thereof. All disputes under this Agreement
shall be resolved by the courts of the State of New York, including the United States courts within
New York, and the parties consent to the jurisdiction of such courts and agree to accept service of
process by mail.

11.6 Notwithstanding anything to the contrary in this Agreement, enforcement of the IP Rights
against infringers, and the granting to third parties of licenses or releases under the IP Rights,
shall be within the sole discretion and control of the owner of the IP Rights.

11.7 The failure of any party to seek redress for violation of or to insist upon the strict
performance of any covenant or condition of this Agreement shall not prevent a subsequent act,
which would have originally constituted a violation, from having the effect of an original
violation.

11.8 The rights and remedies provided by this Agreement are cumulative and the use of any one right
or remedy by any party shall not preclude or waive the right not to use any or all other remedies.
Such rights and remedies are given in addition to any other rights the parties may have by law,
statute, ordinance or otherwise.

11.9 None of the provisions of this Agreement shall be for the benefit of or enforceable by any
creditors of any party hereto. The Agreement is entered into among the parties for the exclusive
benefit of the parties and their successors and assigns. Except and only to the extent provided by
applicable statute, no such creditor or third party shall have any rights under the Agreement.

11.10 This Agreement may be executed in counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same instrument. One or more copies of this Agreement
may be executed but it shall not be necessary, in making proof of the existence of this Agreement,
to provide more than one original copy.

11.11 Any amendment to this Agreement shall be made in writing and signed by all parties.

11.12 ipCG and Client each represents that it has the full right and authority to enter into this
Agreement.

11.13 ipCG acknowledges and agrees that Client may assign any of its rights under this Agreement or
in the IP Rights to an entity affiliated with Client.

11.14 All notices and other communications provided for herein shall be in writing and delivered
personally, or mailed by prepaid First Class US Mail, or delivered by a recognized national
overnight courier service, to:

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	For ipCG:

	 	For Client:
	President (currently, Robert McDonald)

	 	President (currently, Kendall Larsen)
	400 Cornerstone Drive, Suite 325

	 	5615 Scotts Valley Drive, Suite 110
	Williston, VT 05495-4046

	 	Scotts Valley, CA 95066
	Telephone: 802-872-3200

	 	Telephone: 831-438-8700
	Facsimile: 802-288-9468

	 	Facsimile: 831-438-3078

If delivered personally, the notice or other communication shall be deemed to have been made at the
time of delivery. If mailed by prepaid First Class US Mail, the notice or other communication
shall be deemed to have been made five (5) days after the date of mailing. If delivered by a
recognized overnight courier service, the notice or other communication shall be deemed to have
been made one (1) day after delivery to the courier service. A party may change the address to
which notice is to be sent hereunder by written notice to the other party in accordance with the
provisions of this Section 11.14.

11.15 The headings in this Agreement are provided for convenience only and shall not have any
bearing on the interpretation or meaning of any term or condition of this Agreement.

11.16 The terms and conditions of this Agreement are between ipCG and Client only. There are no
third party beneficiaries of any of the terms or conditions hereunder.

IN WITNESS WHEREOF, this Agreement has been executed by duly authorized representatives of the
parties on the dates below.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Signed on behalf of:	 	 	 	Signed on behalf of:
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	ipCapital Group, Inc.	 	 	 	VirnetX, Inc.
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Robert McDonald	 	 	 	By:	 	/s/ Kendall Larsen
	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Robert McDonald
	 	 	 	 	 	Name:
	 	Kendall Larsen
	 

	 	Title:
	 	President
	 	 	 	 	 	Title:
	 	President
	 

	 	Date:
	 	March 12, 2008
	 	 	 	 	 	Date:
	 	March 13, 2008

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Attachment A

Description of Target Technology: Secure real-time communications solutions, based on seamless
authentication and automatic encryption via a domain name (DNS) look-up.

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Attachment B

Candidates Previously Identified or Contacted:

10exv10w3

 

Exhibit 10.3

March 12, 2008

Kendall Larsen

President & CEO

VirnetX Holding Corporation

5615 Scotts Valley Drive, Suite 110

Scotts Valley, CA 95066

Via Email: Kendall_Larsen@VirnetX.com

			
	Re.:	 	Engagement Letter for Strategic Intellectual Property Licensing and Training

Kendall:

Thank you very much for the opportunity to provide you and the VirnetX team with this Engagement
Letter outlining the terms by which ipCapital Group (ipCG®) will support VirnetX’s
intellectual property (IP) licensing efforts.

Work steps include:

			
	Step 1:	 	Licensing Training

ipCG will develop and facilitate a one-day training course, or the
equivalent duration of training over the course of the engagement,
in the use of the ipLicensing and ipValue Model tools and provide
reasonable post-training support by phone. In addition, ipCG will
lead the VirnetX licensing team through the process of creating a
customized licensing pitch for an identified target licensee.

			
	Step 2:	 	Develop a Licensing Map

ipCG will work with VirnetX to develop a Licensing Map (graphical representation of the
market and technology space on which to map the relevant IP for the purposes of
licensing). This Licensing Map will allow VirnetX to better communicate what its IP
covers and compare it to the IP of a target licensee.

			
	Step 3:	 	Identify the Relevant Competitive IP and Map it onto the Licensing Map

ipCG will conduct an examination and analysis of the competitive patents and applications
in VirnetX’s IP Space. The competitive IP will be mapped onto the Licensing Map as a
means to analyze the competitive environment. In addition, the relevant IP portfolio of a
target licensee and the boundaries of what its IP covers and what VirnetX’s IP covers can
be communicated to a target licensee. This analysis will allow ipCG to identify target
licensees, as well as structure and support an IP story for a target licensee about the
licensing value of VirnetX’s portfolio.

 

 

			
	Step 4:	 	Invent-Around

ipCG will conduct and facilitate an Invent-Around session related to the core patents to
be licensed. Prior to the session, ipCG will review VirnetX’s relevant patents and any
background reading on the technology that VirnetX provides. ipCG will conduct a
facilitated session with VirnetX technologists. The session will begin with ipCG
extracting inventions around the technology from the inventors’ heads that are not
contained in the current patents. The group will go through the patents’ claims
one-by-one and seek to identify what a competitor could do to weaken VirnetX’s patent
protection by inventing-around them, on-top-of them, underneath-them, and so on.
Following the session, ipCG will review the inventions with VirnetX to identify which
inventions, if any, patent counsel should file in a Provisional Patent application, or be
protected using other appropriate means.

			
	 	 	The Invent-Around session generates a number of recommendations and ideas/inventions.
ipCG agrees to cooperate with VirnetX in making assignment of rights for the entire
interests in such inventions, and in the filing of patent applications for VirnetX’s
exclusive ownership.For clarity, ipCG agrees and acknowledges that (1) the Invent-Around
Session is subject to the Common Interest Agreement between ipCG and VirnetX, as well and
(2) ipCG and its employees hereby assign to VirnetX all inventions generated in connection
with this Agreement and engagement. This agreement conveys no rights to ipCG, with respect
to any of VirnetX’s patents, trade secrets, know-how, or other intellectual property.

			
	Step 5:	 	Determine the Potential Licensing Value Range of the IP portfolio to a Target
Licensee

ipCG will develop a risk-adjusted financial model, ipValue Model, that will estimate a
potential licensing value range of VirnetX’s IP for the target licensee, based on inputs
from VirnetX. The Licensing Pricing Model brings together the market and business
drivers, as found in many financial models, with a unique IP perspective, in order to
estimate the potential licensing value for a target licensee. This value assessment is
critical to understanding the key drivers for the value of VirnetX’s technology,
determining a fair price for the IP license, and justifying the proposed price to the
target licensee.

			
		 	Note: The ipValue Model will not be a formal valuation opinion.

			
	Step 6:	 	Develop a Means to Communicate the Technical Depth, Breadth, Power, and Value of
VirnetX’s IP Portfolio to a Target Licensee

Demonstrate to licensees how the IP will address business, technical, legal, and marketing
issues that are important to their companies. A clear approach will achieve consensus
sooner and increase the value of the transaction to all participants. ipCG will develop a
presentation (ipStorySM) that communicates the technical depth, breadth, power,
and value of VirnetX’s IP portfolio to a target licensee. The presentation will be
suitable for clearly describing to the target licensee what VirnetX’s IP covers and what
its business value is to the target licensee. The presentation will be based on ipCG’s

 

 

			
		 	proven ipStory framework and links the IP for license to the technologies it protects, the
products it enables, the market drivers/needs it addresses, and the business objectives it
helps achieve. The ipStory will also outline the deal structure and build the value of the
portfolio using findings from the ipValue Model.

			
		 	The ipStory presentation can generally be adapted to different target licensees with
minimal effort.

			
	Step 7:	 	Lead and/or Participate in Presentation of the ipStory and Negotiations with a Target
Licensee

ipCG will provide direct support to Client by playing an active role in licensing
negotiations with target licensees to assist in closing licensing deals. ipCG has had
great success in assisting clients close licensing deals, both large and small, and we are
pleased to provide references upon request.

Under the scope of this engagement, ipCG will perform the services described in the table below
entitled “Professional Services and Fees” (hereinafter referred to as “Services”) in accordance
with the following terms and conditions:

1. Professional Services and Fees

	 	 	 	 	 
	Professional Services	 	Fees
	Step 1:

	 	Licensing Training	 	 
	Step 2:

	 	Develop Licensing Map	 	 
	Step 3:

	 	Identify and Map Relevant IP of the Target
Licensee	 	 
	Step 4:

	 	Invent-Around	 	 
	Step 5:

	 	Determine Potential Licensing Value Range of the
IP Portfolio for a Target Licensee	 	 
	Step 6:

	 	Develop a Means to Communicate the Licensing
Value of the IP Portfolio to a Target Licensee	 	 
	Step 7:

	 	Lead and/or Participate in Presentation of the
ipStory and Negotiations with a Target Licensee	 	 
	 
	Total

	 	 	 	$75,000 + 10% Success Fee1
	 

Should VirnetX request additional meetings, reports, analyses, or services outside the scope of the
Services, the scope of such services and fees will be mutually agreed upon in writing between ipCG
and VirnetX.

2. Timing & Delivery. Work can begin upon acceptance of the terms in this engagement
letter. ipCG and VirnetX shall mutually agree upon a project schedule.

 

			
	1	 	For clarity and to avoid duplication, the 10% Success
Fee referred to herein is the “Success Fee” referenced in the IP Brokerage
Agreement between VirnetX and ipCG entered into concurrently herewith.

 

 

3. Resources. John Cronin and Douglas Roth will facilitate the Services with VirnetX and
provide guidance and support within the scope of the project. Additional company resources will be
utilized as required. ipCG will work in a close, collaborative manner with VirnetX to execute the
Services. Because of the highly interactive nature of this work, the availability of VirnetX’s
management and key technical personnel will be critical to the completion of the project. VirnetX
agrees to provide ipCG with its full assistance and cooperation including, but not limited to,
providing all information as may be necessary or reasonable for ipCG to discharge its duties under
this engagement letter and making the appropriate VirnetX personnel available to enable ipCG to
obtain such VirnetX information.

4. Compensation. The aggregate fee for Services is $75,000 (“Contract Total”). In
addition, VirnetX will pay ipCG a Success Fee, as defined in and governed by the terms of the March
___, 2008 IP Brokerage Agreement (the “IP Brokerage Agreement”). VirnetX agrees to pay ipCG 25% of
the Contract Total upon execution of this engagement letter. This prepayment will be applied to
the final invoice(s). VirnetX agrees to pay the balance of the Contract Total within ten (10) days
from receipt of the invoice for Services, together with all reasonable out of pocket expenses
estimated at 15% — 20% of fees; provided that ipCG shall obtain VirnetX’s approval prior to
incurring any expenses of more than $1,000 individually or $10,000 in the aggregate. VirnetX shall
pay all charges and fees in U.S. Dollars.

5. Confidential Nature. ipCG and VirnetX agree that the terms and conditions of the Mutual
Non-Disclosure Agreement executed or intended to be executed by ipCG and VirnetX simultaneously
herewith (“NDA”), shall govern and control the manner in which Confidential Information is
protected. The term Confidential Information shall have the meaning set forth in the NDA.

6. Independent Contactor. The parties are and shall be independent contractors to one
another, and nothing herein shall be deemed to cause these services to create an agency,
partnership, or joint venture between the parties. Further, nothing in this engagement letter
shall be interpreted or construed as creating or establishing the relationship of employer and
employee between VirnetX and either ipCG or any employee of ipCG.

7. Warranty. The services are warranted to conform substantially to the services described
in Section 1 entitled “Professional Services and Fees.” As the exclusive remedy for any breach of
this warranty, ipCG shall reperform Services at no cost to VirnetX necessary to remedy or avoid any
condition that results in the services not performing as warranted above. This warranty is
conditioned upon receipt by ipCG of VirnetX’s written notice of all claimed breaches within sixty
(60) days of the date of delivery of the services. VIRNETX ACKNOWLEDGES THAT NO EXPRESS WARRANTIES
HAVE BEEN MADE BY IPCG EXCEPT FOR THE LIMITED WARRANTY MADE IN THIS PARAGRAPH. THIS LIMITED
WARRANTY AND THE ASSOCIATED LIMITED REMEDY IS PROVIDED BY IPCG IN LIEU OF ALL OTHER WARRANTIES AND
REMEDIES RELATED TO PERFORMANCE OF THE SERVICES. IPCG DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING

 

 

IMPLIED WARRANTIES OF TITLE, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

8. VIRNETX AGREES THAT IPCG’S AGGREGATE MONETARY LIABILITY FOR ALL CAUSES (REGARDLESS OF THE FORM
OF ACTION) UNDER OR RELATING TO THIS AGREEMENT, WHETHER PRIOR OR SUBSEQUENT TO ITS EXECUTION OR
TERMINATION, SHALL IN NO EVENT EXCEED THE TOTAL OF ALL AMOUNTS PAID TO IPCG BY VIRNETX HEREUNDER OR
UNDER ANY SEPARATE IP BROKERAGE AGREEMENTS OR OTHERWISE FROM TIME TO TIME, INCLUDING ANY PAYMENTS
OF SUCCESS FEES ONCE THEY HAVE ACTUALLY BEEN PAID TO IPCG. VIRNETX WILL INDEMNIFY AND HOLD
HARMLESS IPCG AND ITS PERSONNEL FROM ANY CLAIMS, LIABILITIES, COSTS, AND EXPENSES THAT ARISE, FOR
ANY REASON, RELATED TO THE DELIVERY OF THE SERVICES PURSUANT TO THIS AGREEMENT. NOTWITHSTANDING
THE ABOVE, THE CLIENT SHALL HAVE NO DUTY TO INDEMNIFY IPCG OR ITS PERSONNEL FOR ANY LIABILITY,
LOSS, DAMAGES OR EXPENSES (INCLUDING ATTORNEY’S FEES) TO THE EXTENT SUCH DAMAGES ARISE OUT OF
IPCG’S OR ITS PERSONNEL’S INTENTIONAL OR WILLFUL MISCONDUCT, MISREPRESENTATION, FRAUD OR ITS
WILLFUL BREACH OF THIS AGREEMENT OR THE LAW.

9. Taxes. All charges for the sale or delivery of services purchased or licensed pursuant
to this engagement letter, unless otherwise noted, are exclusive of applicable taxes. Excluding
taxes on ipCG’s income, VirnetX agrees to pay any current or future applicable tax which ipCG may
be required to pay or collect and which is imposed on the sale or delivery or services purchased or
licensed in this engagement letter. Such taxes may include, but are not limited to, state and
local privilege, excise, sales, services, withholding, and use. VirnetX’s obligation to pay taxes
includes any interest. To the extent ipCG has not collected and remitted any applicable tax for
VirnetX in reliance upon an erroneous representation of VirnetX as to its tax status, VirnetX’s
obligation to pay taxes shall include any penalties imposed by any taxing authorities.

10. Entire Agreement. This engagement letter, the NDA and that certain Common Interest
Agreement between ipCG and VirnetX dated 1-25-2008 (the “Common Interest Agreement”), and the IP
Brokerage Agreement, reflect the entire agreement between ipCG and VirnetX related to the subject
matter of such agreements. These Agreements replace and supersede any previous proposals,
correspondence, and understandings, whether written or oral. The agreements of ipCG and VirnetX
contained in this letter shall survive the completion of the Services or termination of this
letter. In the event of any inconsistency between the NDA and this letter, the terms of the NDA
will govern unless this letter specifically references a paragraph of the NDA and expressly states
that such paragraph is intended to be amended by this engagement letter. Subject to the preceding
sentence, any terms or conditions in this engagement letter which conflict with NDA shall have no
force or effect.

 

 

11. Governing Law; Jurisdiction & Venue. This Agreement shall be governed exclusively in
accordance with the laws of the State of New York, without regard to the conflict-of-law principles
thereof. All disputes under this Agreement shall be resolved by the courts of the State of New
York, including the United States courts within New York, and the parties consent to the
jurisdiction of such courts and agree to accept service of process by mail.

Please confirm your agreement with the foregoing by signing a copy of this letter and returning it
to ipCG. We are pleased to have this opportunity to be of service to you.

	 	 	 	 	 
	ipCapital Group, Inc.

 	 
	By:  	/s/ Robert McDonald
 	 
	 	Name:  	Robert McDonald 	 
	 	Title:  	President
 	 
	 	Date:  	March 12, 2008 	 
	 

 

 

VirnetX agrees to, accepts, and acknowledges the foregoing terms and conditions pursuant to which
ipCapital Group, Inc. will provide services to VirnetX.

	 	 	 	 	 
	 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 	Date:

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