VIRNETX EXHIBIT 2005
`Mangrove v. VirnetX
`Trial IPR2015-01047
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`Elifitlr Edition
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`John Downes
`Editor, Beating 1119 Dow
`Former Vice President, AVCO Financial Services, Inc.
`Office for Economic Development, City of New York
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`Jordan Elliot Goodman
`Financial Analyst, NBC News at Sunrise
`Author, Everyone 's Money Book
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`Creator, The Money Answers Program
`Former Wall Street Correspondent,
`MONEY Magazine, Time Warner Incorporated
`Former Business News Commentator,
`Mutual Broadcasting System
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`PUT GUARANTEE LETTER
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`482
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`PUT GUARANTEE LETTER letter from a bank certifying that the per-
`son wiiting a put option on an underlying security or index instrument
`has sufficient funds on deposit at the bank to cover the exercise price of
`the put if needed. On a short put, the obligation is to pay the aggregate
`exercise price. There are two forms, as required under New York Stock
`Exchange Rule 431: the market index option deposit letter for index
`options, and the equity/Treasmy option deposit letter for security options.
`PUT OPTION
`Bonds: bondholder’s right to redeem a bond before maturity. See also
`PUT BOND.
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`Options: contract that grants the right to sell at a specified price a spe.
`cific number of shares by a certain date. The put option buyer gains this
`right in return for payment of an OPTION PREMIUM. The put option seller
`grants this right in return for receiving this premium. For instance, a
`buyer of an XYZ May 70 put has the right to sell 100 shares of XYZ at
`$70 to the put seller at any time until the contract expires in May. A put
`option buyer hopes the stock will drop in price, while the put Option
`seller (called a writer) hopes the stock will remain stable, rise, or drop
`by an amount less than his or her profit on the premium.
`PUT T0 SELLER phrase used when a PUT OPTION is exercised. The
`OPTION WRITER is obligated to buy the underlying shares at the agreed
`upon price. If an XYZ June 40 put were “put to seller,” for instance,
`the writer would have to buy 100 shares of XYZ at $40 a share from
`the put holder even though the current market price of XYZ may be
`far less than $40 a share.
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`PYRAMIDING
`In general: form of business expansion that makes extensive use of
`financial LEVERAGE to build complex corporate structures.
`Fraud: scheme that builds on nonexistent values, often in geometric
`progression, such as a chain letter, now outlawed by mail fraud legis-
`lation. A famous example was the Ponzi scheme, perpetrated by
`Charles Ponzi in the late 1920s. Investors were paid “earnings” out of
`money received from new investors until the scheme collapsed.
`Investments: using unrealized profits from one securities or commodi-
`ties POSITION as COLLATERAL to buy further positions with funds borrowed
`from a broker. This use of leverage creates increased profits in a BULL
`MARKET, and causes MARGIN CALLS and large losses in a BEAR MARKET.
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`Marketing: legal marketing strategy whereby additional distributor
`ships are sold side—by—side with consumer products in order to multiply
`market reach and maximize profits to the sales organization.
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