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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 28, 2007
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Network-1 Security Solutions, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-14896 11-3027591
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
445 Park Avenue, Suite 1028, New York, New York 10022
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(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 829-5700
N/A
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (SEE General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On February 28, 2007, the Registrant entered into an Employment
Agreement with Corey M. Horowitz pursuant to which Mr. Horowitz continued to
serve as the Registrant's Chairman and Chief Executive Officer for a two year
term at an annual base salary of $288,750 for the first year, increasing by 5%
for the second year. In connection with his employment agreement, Mr. Horowitz
was issued a five (5) year option to purchase 375,000 shares of the Registrant's
common stock at an exercise price of $1.46 per share, which vests in equal
quarterly amounts of 93,750 shares beginning March 31, 2007 through December 31,
2007, subject to acceleration upon a change of control. The Registrant also
agreed to issue to Mr. Horowitz on the one year anniversary date (February 28,
2008) an additional five (5) year option to purchase a minimum of 375,000 shares
of common stock at an exercise price equal to the closing price of the common
stock on the date of grant (provided, that, Mr. Horowitz's employment has not
been terminated "For Cause" (as defined) by the Registrant or without Good Cause
(as defined) by Mr. Horowitz), which option will similarly vest in equal
quarterly amounts over a one year period subject to acceleration upon a change
of control. In addition to the aforementioned option grants, the Registrant
extended for an additional three (3) years the expiration dates of all options
and warrants (an aggregate of 2,620,000 shares) expiring in the calendar year
2007 and 2008 owned by Mr. Horowitz and CMH Capital Management Corp. ("CMH"), an
affiliate.
Under the terms of his Employment Agreement, Mr. Horowitz shall
receive bonus compensation in an amount equal to 5% of the Registrant's
royalties or other payments (before deduction of payments to third parties
including, but not limited to, legal fees and expenses and third party license
fees) received from licensing its patented technologies (including patents
currently owned and acquired or licensed on an exclusive basis during the period
in which Mr. Horowitz continues to serve as an executive officer of the
Registrant) (the "Royalty Bonus Compensation"). Mr. Horowitz shall also receive
bonus compensation, during the term of his employment, equal to 5% of the gross
proceeds from (i) the sale of any of the Registrant's patents or (ii) the
Registrant's merger with or into another corporation or entity. The Royalty
Bonus Compensation shall continue to be paid to Mr. Horowitz for the life of
each of the Registrant's patents with respect to licenses entered into with
third parties during Mr. Horowitz's term of employment or at anytime thereafter,
whether Mr. Horowitz is employed by the Registrant or not, provided, that, Mr.
Horowitz's employment has not been terminated by the Registrant "For Cause" (as
defined) or terminated by Mr. Horowitz without "Good Reason" (as defined). In
the event that Mr. Horowitz's employment is terminated by the Registrant "Other
Than For Cause" (as defined) or by Mr. Horowitz for "Good Reason" (as defined),
Mr. Horowitz shall be entitled to a lump sum severance payment of 12 months base
salary.
In connection with his Employment Agreement, Mr. Horowitz has agreed
not to compete with the Registrant as follows: (i) during the term of the
agreement and for a period of 12 months thereafter if his employment is
terminated "Other Than For Cause" (as defined) provided he is paid his 12 month
base salary severance amount and (ii) for a period of two years from the
termination date, if terminated "For Cause" by the Registrant or "Without Good
Reason" by Mr. Horowitz. In accordance with his employment agreement, Mr.
Horowitz also has certain anti-dilution rights which provide that if at any time
during the period ended December 31, 2008, in the event that the Registrant
completes an offering of its common stock or any securities convertible or
exercisable into common stock (exclusive of securities issued upon exercise of
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outstanding options, warrants or other convertible securities), Mr. Horowitz
shall receive from the Registrant, at the same price as the securities issued in
the financing, such number of additional options to purchase common stock so
that he maintains the same derivative ownership percentage (21.47%) of the
Registrant based upon options and warrants owned by Mr. Horowitz and CMH
(exclusive of their ownership of shares of common stock) as of the time of
execution of the employment agreement; provided, that, the aforementioned
anti-dilution protection shall be afforded to Mr. Horowitz up to a maximum
future financing(s) of $2.5 million.
ITEM 9.01 FINANCIAL STATEMENTS ARE EXHIBITS
Exhibit Number Description
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10.1 Employment Agreement, dated February 28, 2007, between
the Registrant and Corey M. Horowitz (including exhibits).
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NETWORK-1 SECURITY SOLUTIONS, INC.
Dated: March 6, 2007 By: /s/ Corey M. Horowitz
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Name: Corey M. Horowitz
Title: Chairman & Chief Executive Officer
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EXHIBIT INDEX
Exhibit No. Description
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10.1 Employment Agreement, dated February 28, 2007, between the
Registrant and Corey M. Horowitz (including exhibits).
4