EXHIBIT 10.1
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August 4, 2005
Mr. Xxxxx Xxxx
000 Xxxxxxxxx Xxxxxx, Xxxxx 0
Xxxx Xxxxxxxxx, Xxx Xxxx 00000
Dear Xxxxx:
On behalf of Network-1 Security Solutions, Inc. (the "Company"),
this letter summarizes the terms upon which the Company will continue to retain
your services as Chief Financial Officer of the Company.
The Company has agreed to use your services through the year ending
December 31, 2006. In consideration thereof, you shall receive the following
compensation (the "Compensation"):
(i) $6000 per month for the period from the date of this letter
through December 31, 2005; and
(ii) $6300 per month from January 1, 2006 through December 31,
2006.
Subject to the approval of the Company's Board of Directors, you
will also receive options (the "Option") to purchase 75,000 shraes of common
stock, under the Company's Stock Option Plan, at an exercise price equal to $.80
per share. The Option shall vest as follows: 30,000 shares underlying the Option
shall vest immediately and the balance shall vest on a quarterly basis in equal
amounts through December 31, 2006. Notwithstanding the foregoing, upoon a Change
in Control of the Company (as defined below) all of the unvested shares
underlying the Option shall become immediately exercisable and shall become
one-hundred percent (100%) vested.
Xxxxx Xxxx
August 4, 2005
Page 2
For purposes of this letter agreement, a "Change in Control" shall
mean, with respect to the Company, the occurrence of any of the following
events:
(i) the shareholders of the Company approve a merger or
consolidation of the Company with any other entity, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent more than fifty
pecent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation, (ii) the shareholders of the Company approve a plan of
complete liquidation of the Company, (iii) the Company consummates the sale or
disposition of all or substantially all of its assets (other than to a
subsidiary or subsidiaries) or (iv) any other event deemed to constitute a
"Change of Control" by the Board of Directors of the Company.
As Chief Financial Officer of the Company you will be responsible,
among other things, for the maintenance of the books and records of the Company,
the preparation of tax returns and financial statements for the Board of
Directors of the Company and for required financial filings with the Securities
and Exchange Commission including certifications required to be signed by you as
Chief Financial Officer. You will also be required to sign the Company's
standard work for hire non-competition, nondisclosure, and confidentiality
agreement.
You understand that your relationship with the Company will be as
an independent contractor and not as an employee. The Company may terminate this
letter agreement and your services at any time for any reason. However, in the
event your employment is terminated without "Good Cause" (as defined below), you
shall be entitled to receive the accelerated vesting of all remaining unvested
shares underlying the Option and the lesser of (i) six months month's
Compensation or (ii) the remaining balance of the Compensation payable to you
through December 31, 2006. A termination for "Good Cause" shall be defined as
follows: (i) commission of an act constituting a felony or involving fraud,
moral terpitude, theft or dishonesty which is not a felony and which materially
adversely affects the Company or could reasonably be expected to materially
adversely affect the Company, (ii) failure to perform your duties as Chief
Financial Officer which, if curable, shall not have been cured with 10 days
written notice from the Company, (iii) failure to follow the lawful directions
of the Board of Directors of the Company, which, if curable, shall not have been
cured within 10 days written notice from the Company, or (iv) your material
breach of the terms of this letter agreement.
Xxxxx Xxxx
August 4, 2005
Page 3
It is a great pleasure to have you continue to serve Network-1
Security Solutions, Inc. I fully expect that you will continue to make a major
contribution to the Company's success. Kindly execute below to confirm your
agreement to the terms set forth herein.
Sincerely,
/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx,
Chairman and CEO
Agreed and Accepted:
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx, CPA
Dated: August 4, 2005
