www.EXFILE.com 888.775-4789 NETWORK-1 SECURITY - FORM 424B3
NETWORK-1
SECURITY SOLUTIONS, INC.
Filed
Pursuant to Rule 424(b)(3)
Registration
No. 333-14370
PROSPECTUS
SUPPLEMENT NO. 2
(To
Prospectus dated September 30, 2008)
This is a
prospectus supplement to our prospectus dated September 30, 2008 (the
“Prospectus”) relating to the resale from time to time by selling stockholders
of up to 9,655,949 shares of our common stock, including shares issuable upon
exercise of outstanding warrants and options. On December 19,
2008, we filed with the Securities and Exchange Commission a Current Report on
Form 8-K. The text of the Current Report on Form 8-K is attached to
and a part of this supplement.
This
prospectus supplement should be read in conjunction with the Prospectus and may
not be delivered or utilized without the Prospectus. This prospectus
supplement is qualified by reference to the Prospectus, except to the extent
that the information provided by this prospectus supplement supersedes the
information contained in the Prospectus.
The
securities offered by the Prospectus involve a high degree of
risk. You should carefully consider the “Risk Factors” referenced on
page 5 of the Prospectus in determining whether to purchase the common
stock.
The date
of this prospectus supplement is December 19, 2008.
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_______________________
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): December 18, 2008
Network-1
Security Solutions, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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1-14896
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11-3027591
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(State
or other jurisdiction
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(Commission
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(IRS
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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445
Park Avenue, Suite 1028, New York,
New York 10022
(Address
of principal executive offices)
Registrant’s
telephone number, including area code: (212) 829-5700
(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))
Item 1.01 Entry
into a Material Definitive Agreement
On
December 18, 2008, the Registrant and David C. Kahn entered into an agreement
(the “Agreement”) pursuant to which Mr. Kahn agreed to continue to serve as
Chief Financial Officer of the Registrant through December 31,
2010. In consideration for his services, Mr. Kahn will be compensated
at the rate of $7,292 per month for the period through December 31, 2009
and $7,657 per month for the year ended December 31, 2010. Mr.
Kahn was also issued a five year option (the “Option”) to purchase 100,000
shares of the Registrant’s common stock at an exercise price of $0.54 per
share. The option vested 40,000 shares on the date of grant and the
balance of 60,000 shares will vest on a quarterly basis in equal amounts of
7,500 shares beginning March 31, 2009 through December 31,
2010. Upon a “Change in Control” (as defined) all of the unvested
shares underlying the Option shall become 100% vested and immediately
exercisable. The Agreement further provides that the Registrant may
terminate the Agreement at any time for any reason. In the event Mr.
Kahn’s employment is terminated without “Good Cause” (as defined), he will be
entitled to accelerated vesting of all unvested shares underlying the Option and
the lesser of (i) six months base monthly compensation or (ii) the remaining
balance of the monthly compensation payable through December 31,
2010.
Item
9.01 Financial Statements and Exhibits
(c) Exhibits
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Exhibit
No.
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Description |
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10.1
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Agreement,
dated December 18, 2008, between the Registrant and David C.
Kahn.
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SIGNATURE
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.
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NETWORK-1
SECURITY SOLUTIONS, INC. |
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Dated: December 19,
2008
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By:
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/s/ David
Kahn |
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Name: David
Kahn |
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Title: Chief
Financial Officer
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EXHIBIT 10.1
Network-1
Security Solutions, Inc.
445
Park Avenue, Suite 1028
New
York, N.Y. 10022
December
18, 2008
Mr. David
Kahn
380
Hempstead Avenue, Suite 5
West
Hempstead, New York 10017
Dear
David:
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, 2010. In consideration
thereof, you shall receive the following compensation (the
“Compensation”):
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(i)
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$7292
per month from January 1, 2009 through December 31, 2009;
and
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(ii)
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$7657
per month from January 1, 2010 through December 31,
2010.
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Subject
to your execution of this letter agreement, the Company’s Board of Directors has
approved the issuance to you of options (the “Option”) to purchase 100,000
shares of common stock, at an exercise price equal to the closing price of the
Company’s common stock on the date hereof. The Option shall vest as
follows: 40,000 shares underlying the Option shall vest immediately
on grant and the balance of 60,000 shares shall vest on a quarterly basis in
equal amounts of 7,500 shares beginning March 31, 2009 through
December 31, 2010. Notwithstanding the foregoing, upon 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.
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 continue to 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
understand that your relationship with the Company will continue to 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 services are 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 Compensation or (ii) the remaining balance of the
Compensation payable to you through December 31, 2010. 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.
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.
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Sincerely,
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/s/ Corey
M. Horowitz |
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Corey
M. Horowitz,
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Chairman
and CEO
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Agreed
and Accepted:
/s/ David C.
Kahn_______________
David C.
Kahn, CPA