EXHIBIT 10.1
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            EMPLOYMENT AGREEMENT dated as of November 26, 2004, between
NETWORK-1 SECURITY SOLUTIONS, INC., a Delaware corporation with its principal
office located at 445 Park Avenue, Suite 1028, New York, New York 10022 (the
"COMPANY"), and COREY M. HOROWITZ residing at 1085 Park Avenue, New York, New
York 10128 (the "EXECUTIVE").

            The Company desires to enter into this Agreement in order to assure
itself of the continued services of Executive, and Executive desires to accept
continued employment with the Company, upon the terms and conditions hereinafter
set forth.

            NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties agree as follows:

            SECTION 1. EMPLOYMENT. The Company hereby employs Executive, and
Executive hereby accepts employment by the Company, upon the terms and
conditions hereinafter set forth.

            SECTION 2. TERM. The employment of Executive hereunder shall be for
a period commencing on November 26, 2004 (the "COMMENCEMENT DATE") and ending on
the second anniversary of the Commencement Date (the "TERM") or such earlier
date upon which the employment of the Executive shall terminate in accordance
with the provisions hereof. The period commencing on the Commencement Date and
ending on the date of termination of Executive's employment hereunder shall be
called the "TERM OF EMPLOYMENT" for Executive, and the date on which the
Executive's employment hereunder shall terminate shall be called the
"TERMINATION DATE."

            SECTION 3. DUTIES. During the Term of Employment, Executive shall be
employed as Chairman and Chief Executive Officer of the Company and will act in
accordance with, and be subject to the policies and procedures as may be duly
adopted by the Board of Directors (the "BOARD") from time to time. Executive
shall perform such duties as are consistent therewith as the Board shall
designate. Executive will be responsible for the management and operations of
all aspects of the Company's business, including licensing of the Company's
patents, patent acquisitions, and finance and administration. Executive will
also have direct and exclusive responsibility, subject to Board of Directors
policies and resolutions as noted above, for all current and future budget and
staff, and profit and loss accountability for the Company in its entirety.
Executive shall use his best efforts to perform well and faithfully the
foregoing duties and responsibilities. In addition, Executive shall continue to
serve as Chairman of the Board and shall be nominated during the Term of
Employment on an annual basis as a director (subject to election by the
stockholders of the Company). On the Termination Date, if Executive is no longer
employed by the Company, he agrees to submit his resignation as a Board member
if requested by the Company. For purposes of this Agreement, so long as
Executive shall serve as a member of the Board, any references herein to
decisions or determinations to be made by the Board with respect to Executive
(including, without limitation, matters relating to compensation and
termination) shall be made by a majority of the then members of the Board
excluding Executive, who shall recuse himself and abstain from voting with
respect to any such matters.
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            SECTION 4. TIME TO BE DEVOTED TO EMPLOYMENT. During the Term of
Employment, Executive shall devote substantially all of his business time,
attention and energies to the business of the Company except that Executive
shall be permitted to conduct other business activities so long as such
activities do not, in the reasonable judgment of the Board, conflict or
interfere with the duties of Executive hereunder, whether or not such activity
is pursued for gain, profit or other pecuniary advantage.

            SECTION 5. COMPENSATION.

            (a) The Company shall pay to Executive an initial annual base salary
of $250,000 (the "BASE SALARY") during the first year of the Term of Employment,
payable in such installments (but not less often than monthly) as is generally
the policy of the Company with respect to its executive officers. The Base
Salary shall be increased by 10% on the one year anniversary of the Commencement
Date.

            (b) (i) In addition to the Base Salary set forth in paragraph 5(a)
above, during the Term of Employment, Executive shall receive incentive
compensation ("BONUS COMPENSATION") in an amount equal to 5% of the Company's
royalties or other payments actually received from licensing its patented
technologies whether payable to the Company in the form of cash or securities
(the "ROYALTY BONUS COMPENSATION"). The Royalty Bonus Compensation shall be paid
to Executive within ten (10) days of the Company's actual receipt of the
royalties. In addition, during the Term of Employment, Executive shall also be
entitled to Bonus Compensation equal to 5% of the gross proceeds from (i) the
sale of any of the Company's patents, and (ii) the merger of the Company with or
into another corporation or entity with the result that the then existing
stockholders of the Company hold less than 50% of the combined voting power of
the then outstanding securities of the surviving entity in such transaction (the
"Merger"); provided, that, at the time of the Merger substantially all of the
assets of the Company (exclusive of cash) shall consist of the Company's patents
and license agreements with respect to the patents. For purposes hereof, gross
proceeds from a Merger shall include the total proceeds and other consideration
paid or received in connection with the Merger including cash, securities or
other assets. Such Bonus Compensation shall be paid within ten (10) days of the
closing of any such transaction.

            (ii) The Royalty Bonus Compensation shall continue to be paid to
Executive for a period of five (5) years following the Term of Employment with
respect to licenses entered into by the Company with third parties during the
Term of Employment, provided, that, Executive's employment has not been
terminated by the Company for Cause as defined in Section 9(a) hereof or
terminated by Executive without Good Reason as defined in Section 10 hereof.

            SECTION 6. EQUITY.

            (a) The Company recognizes that equity participation in the Company
through the grant of options is essential to induce Executive to agree to
provide the services pursuant to this Agreement. Accordingly, on the
Commencement Date the Company shall grant to Executive five (5) year stock
options to purchase an aggregate of 1,500,000 shares of the Company's Common
Stock (the "OPTIONS"). The Options shall consist of (i) an incentive stock
option, issued under the Company's Stock Option Plan, to purchase 400,000 shares
of Common Stock (the "ISO Option")

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and an option to purchase 1,100,000 shares of Common Stock (the "Non-Plan
Option"). The exercise price per share of the ISO Option shall equal 110% of the
fair market value of the Company's Common Stock on the date of grant and the
exercise price of the Non-Plan Option shall be $.25 per share. The form of
Options are attached as EXHIBIT A hereto. The ISO Option shall vest 50% on the
date of grant and 50% on the first anniversary from the date of grant. The
Non-Plan Option shall vest on the date of issuance. Following the issuance of
the Options, when aggregated with the prior options and warrants owned by
Executive and CMH Capital Management Corp. ("CMH"), an entity owned by
Executive, Executive's ownership in the Company represented by all options and
warrants owned by him and CMH (exclusive of ownership of common stock) as of the
date hereof will be equal to 23.07% of the Company's outstanding securities on a
fully diluted basis (assuming the exercise and conversion of all outstanding
options, warrants and convertible securities but excluding warrants to purchase
up to 1,352,048 shares of Common Stock which expire on December 22, 2004;
provided, that the expiration date of such warrants are not extended by the
Company (the "DERIVATIVE OWNERSHIP PERCENTAGE"). A list of all options and
warrants owned by Executive and CMH including the Options issued pursuant to
this Section 6(a), together with the Company's outstanding securities on a fully
diluted basis is attached as EXHIBIT B. The Company agrees to file an amendment
to the Company's Registration Statement on Form S-8 within ninety (90) days of
the Commencement Date to register the shares underlying all options and warrants
owned by Executive and CMH (including the Options) issued pursuant to this
Section 6(a) (as hereof).

            (b) At anytime during the period ended December 31, 2005, in the
event that the Company completes a financing (either a single transaction or
series of transactions) consisting of the issuance of common stock or any other
securities convertible or exercisable into common stock, Executive shall receive
(at the closing of such financing) from the Company, at the same price as the
securities issued in the financing, such number of additional options to
purchase Common Stock so that Executive maintains his Derivative Ownership
Percentage. Such additional options to be issued to Executive shall immediately
vest on the date of grant and shall contain substantially the same provisions as
the Options issued pursuant to Section 6(a) hereof.

            SECTION 7. BUSINESS EXPENSES; BENEFITS.

            (a) The Company shall reimburse Executive, in accordance with the
practice from time to time for executive officers of the Company, for all
reasonable and necessary expenses and other disbursements incurred by Executive
for or on behalf of the Company in the performance of Executive's duties
hereunder. Executive shall provide such appropriate documentation of expenses
and disbursements as may from time to time be required by the Company.

            (b) During the Term of Employment, Executive shall be entitled to
four (4) weeks vacation per year.

            (c) During the Term of Employment, Executive shall be entitled to
participate in the group health, life, dental and disability insurance benefits,
and retirement plan benefits made available from time to time for its executive
officers and other employees.

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            SECTION 8. INVOLUNTARY TERMINATION.

            (a) If Executive is incapacitated or disabled to the extent he
cannot perform his duties under this Agreement for twelve (12) consecutive
weeks, or for a cumulative total of six (6) months in any calendar year (such
condition being hereinafter referred to as a "DISABILITY"), the Term of
Employment and employment of the Executive under this Agreement shall cease
(such termination, as well as a termination under Section 8(b), being
hereinafter referred to as an "INVOLUNTARY TERMINATION") and Executive shall be
entitled to receive the benefits payable under any disability policy maintained
by the Company on his behalf and in accordance with Section 11(b) hereof.

            (b) If Executive dies during the Term of Employment, the Term of
Employment and Executive's employment hereunder shall cease as of the date of
the Executive's death and Executive shall be entitled to receive the benefits
payable in accordance with Section 11 (b) hereof.

            SECTION 9. TERMINATION BY THE COMPANY.

            (a) TERMINATION FOR CAUSE. The Company may terminate the Term of
Employment and the employment of the Executive hereunder at any time for Cause
(as hereinafter defined) (such termination being referred to herein as a
"TERMINATION FOR CAUSE") by giving Executive written notice of such termination,
effective immediately upon the giving of such notice to Executive. As used in
this Agreement, "CAUSE" means the Executive's (a) commission of an act (i)
constituting a felony or (ii) involving fraud, moral turpitude, 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, (b) repeated failure to be reasonably available to perform his duties
(other than as a result of illness or incapacity), which, if curable, shall not
have been cured within 30 days of written notice thereof from the Company, (c)
repeated failure to follow the lawful directions of the Board, which, if
curable, shall not have been cured within 30 days of written notice thereof from
the Company, or (d) material breach of the terms and provisions of this
Agreement or any agreement with the Company which, if curable, shall not have
been cured within 30 days of written notice thereof from the Company.

            (b) TERMINATION OTHER THAN FOR CAUSE. The Company may terminate the
Term of Employment and the employment of Executive hereunder at any time other
than for Cause as defined in Section 9(a) above (such termination shall be
defined as a "TERMINATION OTHER THAN FOR CAUSE") by giving Executive written
notice of such termination, which notice shall be effective thirty (30) days
after the giving of such notice or such later date set forth therein.

            SECTION 10. TERMINATION BY EXECUTIVE. If at any time during the Term
of Employment, Executive elects to terminate Executive's employment with the
Company (other than for "GOOD REASON", as defined below), then the Company's
obligations to Executive under this Agreement shall be as set forth in Section
11(e) hereof and such termination by Executive shall constitute a breach of this
Agreement. If Executive elects to terminate Executive's employment with the
Company for Good Reason, then the Company shall pay Executive the amounts set
forth in Section 11(d) hereof. For the purpose of this Section, "Good Reason"
means (i) any material diminution of duties inconsistent with Executive's title,
authority, duties and responsibilities as

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Chairman and Chief Executive Officer; (ii) any reduction of or failure to pay
Executive compensation provided for herein, which non-payment continues for a
period of thirty (30) days following written notice to the Company by Executive
of such non-payment, except to the extent Executive consents in writing to any
reduction, deferral or waiver of compensation; (iii) any relocation of the
principal location of Executive's employment more than 75 miles from the
Corporation's current headquarters in New York, New York without Executive's
prior written consent; or (iv) any material violation by the Company of its
obligations under this Agreement that is not cured (if curable) within thirty
(30) days after receipt of notice thereof.

            SECTION 11. EFFECT OF TERMINATION.

            (a) Upon the termination of the Term of Employment and Executive's
employment hereunder due to a Termination for Cause (as defined in Section 9(a)
above), Executive shall not have any further rights or claims against the
Company under this Agreement, except the right to receive (i) the unpaid
portion, if any, of (a) the Base Salary provided for in Section 5(a), computed
on a pro rata basis through the Termination Date and (b) Bonus Compensation
provided for in Section 5(b) earned prior to the Termination Date, (ii) any
unpaid accrued benefits of Executive, (iii) reimbursement for any expenses for
which Executive shall not have been reimbursed as provided in Section 7(a), and
(iv) Executive's rights under the vested portion of any options or warrants
issued to Executive and CMH by the Company including the Options issued in
accordance with Section 6(a) hereof, (collectively, the "AGGREGATE DERIVATIVE
SECURITIES").

            (b) Upon the termination of Executive's employment hereunder due to
an Involuntary Termination, neither Executive nor his beneficiary or estate
shall have any further rights or claims against the Company under this Agreement
except the right to receive (i) the amounts set forth in Section 11(a), (ii)
Bonus Compensation in accordance with Section 5(b)(ii), and (iii) the additional
vesting of all of the Aggregate Derivative Securities that would have vested
twelve (12) months from the date of Involuntary Termination.

            (c) Upon the termination of Executive's employment upon a
Termination Other Than for Cause (as defined in Section 9(b) above), neither
Executive nor his beneficiary nor his estate shall have any rights or claims
against the Company except to receive (i) the amounts set forth in 11(b), and
(ii) a severance equal to twelve (12) months Base Salary as in effect at the
time of the Termination Other Than for Cause, such sum to be paid in a lump sum
payment upon termination.

            (d) Upon the termination of Executive's employment by Executive for
Good Reason (as defined in Section 10 above), neither Executive nor his
beneficiary or estate shall have any further rights or claims against the
Company under this Agreement, except the right to receive the amounts set forth
in Section 11(c).

            (e) Upon the termination of Executive's employment by Executive
(other than for Good Reason), neither Executive nor his beneficiary or estate
shall have any further rights or claims against the Company under this
Agreement, except the right to receive the amounts set forth in Section 11(a).

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            SECTION 12. INSURANCE. The Company may, for its own benefit, in its
sole discretion, and at its sole cost and expense, maintain "key-man" life and
disability insurance policies covering Executive. Executive will cooperate with
the Company and provide such information or other assistance as the Company may
reasonably request in connection with the Company's obtaining and maintaining
such policies.

            SECTION 13. DISCLOSURE OF INFORMATION. Executive will not, either
during the Term of Employment or at any time thereafter, divulge, publish,
communicate, furnish or make accessible to anyone (other than in furtherance of
the purposes of the Company) any knowledge or information with respect to the
Company's confidential, secret or proprietary information or assets, or with
respect to any other confidential, secret or proprietary aspects of the
business, activities or intellectual property of the Company including, without
limitation, (a) patents and related intellectual property, terms of patent
acquisition contracts or licensing arrangements, or other technical data
pertaining to the Company's patents and intellectual property (whether or not
subject to patent, trademark or copyright protection) or (b) business strategies
and plans including, but not limited to, potential patent acquisitions; except
as such items set forth in clauses (a) and (b) above may already be in the
public domain through no fault of Executive (all of the foregoing items set
forth in clauses (a) and (b) being referred to herein collectively as
"CONFIDENTIAL PROPERTY") or except as otherwise required by law. In the event
that Executive becomes legally compelled to disclose any Confidential Property,
Executive shall advise the Company as soon as practicable so that the Company
may seek a protective order or other appropriate remedy. In addition, Executive
agrees to cooperate in the Company's effort, at the Company's expense, to obtain
a protective order or other appropriate remedy. Upon the termination of the Term
of Employment, Executive shall return to the Company all property (including
Confidential Property) of the Company (or any subsidiary or affiliate thereof)
then in the possession of Executive and all books, records, computer tapes or
discs and all other material containing non-public information concerning the
business or affairs of the Company or any subsidiary or affiliate thereof.

            SECTION 14. RIGHT TO INVENTIONS. (a) Executive shall promptly
disclose, grant and assign to the Company for its sole use and benefit any and
all marks, designs, logos, inventions, improvements, technical information and
suggestions relating in any way to the business conducted by the Company, which
he may develop or which may be acquired by Executive during the Term of
Employment (whether or not during usual working hours), together with all
trademarks, patent applications, letters, patent, copyrights and reissues
thereof that may at any time be granted for or upon any such mark, design, logo,
invention, improvement or technical information (collectively, "INVENTIONS"). In
connection therewith, Executive shall (at the Company's sole cost and expense)
take all actions reasonably necessary or desirable to assign and/or confirm the
assignment of any Invention to the Company.

            (b) To the extent any of the rights, title and interest in and to
Inventions cannot be assigned by Executive to the Company, Executive hereby
grants to the Company an exclusive, royalty-free, transferable, irrevocable,
worldwide license (with rights to sublicense through multiple tiers of
sublicensees) to practice such non-assignable rights, title and interest. To the
extent any of the rights, title and interest in and to Inventions can be neither
assigned nor licensed by Executive to the Company, Executive hereby irrevocably
waives and agrees never to assert such non-assignable and non-licensable rights,
title and interest against the Company or any of the Company's

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successors in interest to such non-assignable and non-licensable rights.
Executive hereby grants to the Company or the Company's designees a royalty
free, irrevocable, worldwide license (with rights to sublicense through multiple
tiers of sublicensees) to practice all applicable patent, copyright, moral
right, mask work, trade secret and other intellectual property rights relating
to any prior inventions which Executive incorporates, or permits to be
incorporated, in any Inventions. Notwithstanding the foregoing, Executive agrees
that he will not incorporate, or permit to be incorporated, any prior inventions
of Executive in any Inventions without the Company's prior written consent.

            SECTION 15. FUTURE INNOVATIONS. Executive recognizes that Inventions
or Confidential Property relating to his activities while working for the
Company and conceived, reduced to practice, created, derived, developed, or made
by Executive, alone or with others, within three (3) months after termination of
his employment may have been conceived, reduced to practice, created, derived,
developed, or made, as applicable, in significant part while employed by the
Company. Accordingly, Executive agrees that such Inventions or Confidential
Property shall be presumed to have been conceived, reduced to practice, created,
derived, developed, or made, as applicable, during his employment with the
Company and are to be promptly assigned to the Company unless and until
Executive has established the contrary by written evidence satisfying the clear
and convincing standard of proof.

            SECTION 16. COOPERATION IN PERFECTING RIGHTS TO PROPRIETARY
INFORMATION AND INNOVATIONS.

            (a) Executive agrees to perform, during and after his employment,
all acts deemed necessary or desirable by the Company to permit and assist the
Company (during any period after Executive's termination of employment with the
Company, subject to Executive's obligations to his then employer, if any), at
the Company's expense, in obtaining and enforcing the full benefits, enjoyment,
rights and title throughout the world in the Inventions or Confidential Property
assigned or licensed to, or whose rights are irrevocably waived and shall not be
asserted against, the Company under this Agreement. Such acts may include, but
are not limited to, execution of documents and assistance or cooperation (i) in
the filing, prosecution, registration, and memorialization of assignment of any
applicable patents, copyrights, mask work, or other applications, (ii) in the
enforcement of any applicable patents, copyrights, mask work, moral rights,
trade secrets, or other proprietary rights, and (iii) in other legal proceedings
related to the Inventions or Confidential Property.

            (b) In the event that the Company is unable (after reasonable
efforts) to secure Executive's signature to any document required to file,
prosecute, register, or memorialize the assignment of any patent, copyright,
mask work or other applications or to enforce any patent, copyright, mask work,
moral right, trade secret or other proprietary right under any Inventions
(including derivative works, improvements, renewals, extensions, continuations,
divisionals, continuations in part, continuing patent applications, reissues,
and reexaminations thereof), Executive hereby irrevocably designates and
appoints the Company and the Company's duly authorized officers and agents as
his agents and attorneys-in-fact to act for and on his behalf and instead of
him, (i) to execute, file, prosecute, register and memorialize the assignment of
any such application, (ii) to execute and file any documentation required for
such enforcement, and (iii) to do

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all other lawfully permitted acts to further the filing, prosecution,
registration, memorialization of assignment, issuance, and enforcement of
patents, copyrights, mask works, moral rights, trade secrets or other rights
under Inventions, all with the same legal force and effect as if executed by
Executive.

            SECTION 17. RESTRICTIVE COVENANT.

            (a) The Company is in the business of pursuing licensing
opportunities related to its patented technologies with third parties who the
Company believes are infringing its patents and intellectual property or who may
require a license for future products, and which business strategy may require
the Company to commence patent infringement lawsuits against third parties (the
"BUSINESS"). Executive acknowledges and recognizes that the Business may be
conducted throughout the world, and Executive further acknowledges and
recognizes the highly competitive nature of the Company's Business. Accordingly,
in consideration of the premises contained herein, the consideration to be
received hereunder and the Options granted to Executive in accordance with
Section 6 hereof, Executive shall not, during the Non-Competition Period (as
defined below): (i) directly or indirectly engage, whether or not such
engagement shall be as a partner, stockholder, officer, director, affiliate or
other participant, in any Competitive Business (as defined below), or represent
in any way any Competitive Business, whether or not such engagement or
representation shall be for profit, (ii) interfere with, disrupt or attempt to
disrupt the relationship, contractual or otherwise, between the Company and any
other person or entity, including, without limitation, any customer, supplier,
employee or consultant of the Company, (iii) induce any employee of the Company
to terminate his employment with the Company or to engage in any Competitive
Business in any manner described in the foregoing clause (i), or (iv)
affirmatively assist or induce any other person or entity to engage in any
Competitive Business in any manner described in the foregoing clause (i).
Anything contained in this Section 17 to the contrary notwithstanding, an
investment by Executive in any publicly traded company in which Executive and
his affiliates exercise no operational or strategic control and which
constitutes less than 5% of the capital of such entity shall not constitute a
breach of this Section 17.

            (b) As used herein, "Non-Competition Period" shall mean the period
commencing on the date hereof and terminating on the Termination Date; provided,
however, that (i) if the Term of Employment shall have been Terminated Other
Than For Cause by the Company pursuant to Section 9(b) hereof, then the
"Non-Competition Period" shall mean the period commencing on the date hereof and
ending twelve (12) months thereafter; provided Executive is paid the twelve (12)
months Base Salary as provided in Section 11(c) hereof and (ii) if the Term of
Employment shall have been terminated for Cause by the Company pursuant to
Section 9(a) hereof or without Good Reason pursuant to Section 10 hereof, then
the "Non-Competition Period" shall mean the period commencing on the date hereof
and ending on the second anniversary of the Termination Date. "Competitive
Business" shall mean any entity throughout the world (i) utilizing or pursuing
licensing opportunities related to patented technologies competitive with the
Company's patents, (ii) any entity in which the Company has acquired patents
from and/or entered into a license agreement or similar arrangement relating to
the Company's patented technologies and (iii) any entity engaged in a business
competitive with any business then engaged in by the Company; provided, that,
Executive may render services for (either as an employee or independent
consultant) for any entity under (i), (ii), or (iii) above in this Section 17(b)
so long as his duties and

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responsibilities for entities have nothing to do with any business directly or
indirectly related to the Company's patents.

            (c) Executive understands that the foregoing restrictions may limit
his ability to earn a livelihood in a business similar to the business of the
Company, but he nevertheless believes that he has received and will receive
sufficient consideration and other benefits as an employee of the Company and as
otherwise provided hereunder and pursuant to other agreements between the
Company and Executive to justify clearly such restrictions which, in any event
(given his education, skills and ability), Executive does not believe would
prevent him from earning a living.

            SECTION 18. ENFORCEMENT; SEVERABILITY; ETC. It is the desire and
intent of the parties that the provisions of this Agreement shall be enforced to
the fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated to be invalid or unenforceable,
such provision shall be deemed amended to (a) delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made or (b) otherwise to render it enforceable in
such jurisdiction.

            SECTION 19. REMEDIES. Executive acknowledges and understands that
the provisions of this Agreement are of a special and unique nature, the loss of
which cannot be adequately compensated for in damages by an action at law, and
that the breach or threatened breach of the provisions of this Agreement would
cause the Company irreparable harm. In the event of a breach or threatened
breach by Executive of the provisions of this Agreement, the Company shall be
entitled to an injunction restraining him from such breach. Nothing contained in
this Agreement shall be construed as prohibiting the Company from or limiting
the Company in pursuing any other remedies available for any breach or
threatened breach of this Agreement.

            SECTION 20. NOTICES. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given and delivered if personally delivered or if sent
by a nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:

if to the Company, to:         Network-1 Security Solutions, Inc.
                               445 Park Avenue, Suite 1028
                               New York, New York 10022
                               Telecopier: 917-322-2105
                               Telephone:  (212) 829-5700

with copies to:                Olshan Grundman Frome Rosenzweig & Wolosky LLP
                               505 Park Avenue, 16th Floor
                               New York, New York 10022
                               Telecopier: (212) 980-7177
                               Telephone: (212) 451-2306
                               Attention: Sam Schwartz, Esq.

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if to Executive, to:           Corey M. Horowitz
                               1085 Park Avenue
                               New York, New York
                               Telephone: (212) 831-9333

or to such other address as the party to whom notice is to be given may have
furnished to the other party or parties in writing in accordance herewith. Any
such notice or communication shall be deemed to have been received (a) in the
case of personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (c) in the case of telecopy transmission, when received, and (d) in
the case of mailing, on the third business day following that on which the piece
of mail containing such communication is posted.

            SECTION 21. BINDING AGREEMENT; BENEFIT. The provisions of this
Agreement will be binding upon, and will inure to the benefit of, the respective
heirs, legal representatives, successors and assigns of the parties.

            SECTION 22. GOVERNING LAW. This Agreement will be governed by,
construed and enforced in accordance with, the laws of the State of New York
without giving effect to principles of conflicts of laws.

            SECTION 23. WAIVER OF BREACH. The waiver by either party of a breach
of any provision of this Agreement must be in writing and shall not operate or
be construed as a waiver of any other breach.

            SECTION 24. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements or understandings, whether written or
oral, between the parties with respect thereto including, without limitation,
the letter agreement, dated December 22, 2003, between the Company and
Executive. This Agreement may be amended only by an agreement in writing signed
by the parties.

            SECTION 25. SURVIVAL OF PROVISIONS. Neither the termination of this
Agreement, nor of Executive's employment hereunder, shall terminate or affect in
any manner any provisions of this Agreement that is intended by its terms to
survive such termination, including, without limitation, the provisions of
Sections 11, 13, 14, 15, 16 and 17.

            SECTION 26. HEADINGS. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

            SECTION 27. ASSIGNMENT. This Agreement is personal in its nature and
the parties shall not, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder.

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            SECTION 28. GENDER. Any reference to the masculine gender shall be
deemed to include the feminine and neuter genders unless the context otherwise
requires.

            SECTION 29. COUNTERPARTS. This Agreement may be executed in
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.

            IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Employment Agreement as of the date first written above.

                                      NETWORK-1 SECURITY SOLUTIONS, INC.


                                      By: /s/David C. Kahn
                                          ----------------------------------
                                          David C. Kahn, Chief Financial Officer


                                          /s/Corey M. Horowitz
                                          ----------------------------------
                                          Corey M. Horowitz


















                                       11
<PAGE>

                                    EXHIBIT A

                             STOCK OPTION AGREEMENT

          STOCK OPTION AGREEMENT, dated as of November __, 2004, (this "Stock
Option Agreement") by and between Network-1 Security Solutions, Inc., a Delaware
corporation with principal executive offices a 445 Park Avenue, Suite 1028, New
York, New York 10022 ("Network-1"), and Corey M. Horowitz, residing at 1085 Park
Avenue, New York, New York 10128 ("Horowitz").

          WHEREAS, Network-1 and Horowitz propose to enter into a Employment
Agreement of even date herewith (the "Employment Agreement") which provides for
the continued employment of Horowitz as Chairman and Chief Executive Officer of
Network-1 for a two (2) year term;

          WHEREAS, as part of the Employment Agreement, Network-1 shall issue
options to purchase up to an aggregate of 1,500,000 shares of Common Stock which
shall include this Option to purchase 1,100,000 shares of Common Stock and
incentive stock options to purchase 400,000 shares of Common Stock issued under
the Company's' Stock Option Plan.

          NOW THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein and in
the Employment Agreement, and intending to be legally bound hereby, the parties
hereto agree as follows:

     1.   Grant of Option.

          Network-1 hereby grants to Horowitz an irrevocable option (the
"Option") to purchase, out of its authorized but unissued shares of Common
Stock, 1,100,000 shares of Common Stock (the shares of Common Stock purchased or
purchasable pursuant to the Option, subject to adjustment as set forth herein,
being referred to as the "Option Shares"), at an exercise price per share equal
to $.25 (such exercise price, subject to adjustment as set forth herein, being
referred to as the "Exercise Price", or in the aggregate, the "Aggregate
Exercise Price"). Horowitz and/or his transferees or assigns are hereinafter
referred to as "Holder".

     2.   Term and Exercise of Option.

          The Option granted hereby may be exercised in whole or in part at any
time from the date hereof through November 26, 2014 (the "Expiration Date") by
Holder's presentation of this Option, with the Exercise Form attached hereto
duly executed, at Network-1's office (or such office or agent of Network-1 as it
may designate in writing to the Holder hereof by notice pursuant to Section 13
hereof), specifying the number of Option Shares as to which the Option is being
exercised.

     3.   Issuance of Option Shares; Cashless Exercise

          (a) Upon surrender of the Option and payment of the Exercise Price as
provided herein, Network-1 shall issue and deliver with all reasonable dispatch
the certificate(s) for the Option Shares to or upon the written order of the
Holder and in such name or names as the Holder may designate. Such
certificate(s) shall represent the number of Option Shares

<PAGE>

issuable upon the exercise of the Option, together with a cash amount in respect
of any fraction of a share otherwise issuable upon such exercise.

          (b) In lieu of paying the Aggregate Exercise Price in cash and/or upon
exercise of the Option, the Holder may elect a "cashless exercise" in which
event the Holder will receive upon exercise a reduced number of Option Shares
equal to (i) the number of Option Shares that would be issuable pursuant to the
Option upon payment of the Aggregate Exercise Price minus (ii) the number of
Option Shares that have an aggregate Market Price (as defined below) equal to
the Aggregate Exercise Price.

          (c) Unless otherwise provided herein, for purposes of any computations
made in this Stock Option Agreement, "Market Price" per share of shares of
Common Stock on any date shall be: (i) if the shares of Common Stock are listed
or admitted for trading on any national securities exchange, the last reported
sales price as reported on such national securities exchange; (ii) if the shares
of Common Stock are not listed or admitted for trading on any national
securities exchange, the average of the last reported closing bid and asked
quotation for the shares of Common Stock as reported on the Nasdaq Stock
Market's National Market ("NNM") or Nasdaq Stock Market's Small Cap Market
("NSM") or a comparable service if NNM or NSM are not reporting such
information; (iii) if the shares of Common Stock are not listed or admitted for
trading on any national securities exchange, NNM or NSM or a comparable system,
the average of the last reported bid and asked quotation for the shares of
Common Stock as quoted by a market maker in the shares of Common Stock (or if
there is more than one market maker, the bid and asked quotation shall be
obtained from two market makers and the average of the lowest bid and highest
asked quotation shall be the "Market Price"); or (iv) if the shares of Common
Stock are not listed or admitted for trading on any national securities exchange
or NNM or quoted by NSM and there is no market maker in the shares of Common
Stock, the fair market value of such shares as determined in good faith by the
Board of Directors of Network-1.

          (d) Certificates representing the Option Shares shall be deemed to
have been issued and the person so designated to be named therein shall be
deemed to have become a holder of record of such Option Shares as of the date of
the surrender of the Option and payment of the Aggregate Exercise Price as
provided herein; notwithstanding that the transfer books for the Option Shares
or other classes of stock purchasable upon the exercise of the Option shall then
be closed or the certificate(s) for the Option Shares in respect of which the
Option is then exercised shall not then have been actually delivered to the
Holder. As soon as practicable after each such exercise of the Option, Network-1
shall issue and deliver the certificate(s) for the Option Shares issuable upon
such exercise, registered as requested. In the event that only a portion of the
Option is exercised at any time prior to the close of business on the Expiration
Date, a new option shall be issued to the Holder for the remaining number of
Option Shares purchasable pursuant hereto. Network-1 shall cancel the Option
when they are surrendered upon exercise.

          (e) Prior to due presentment for registration of transfer of the
Option, Network-1 shall deem and treat the Holder as the absolute owner of the
Option (notwithstanding any notation of ownership or other writing on this
Option Agreement made by anyone other than Network-1) for the purpose of any
exercise hereof or any distribution to the Holder and for all other purposes,
and Network-1 shall not be affected by any notice to the contrary.

                                        2
<PAGE>

     4.   Lost, Stolen, or Mutilated Option

          In case this Option shall be mutilated, lost, stolen or destroyed,
Network-1 shall issue and deliver, in exchange and substitution for and upon
cancellation of the mutilated Option, or in lieu of and substitution for the
Option lost, stolen or destroyed, a new Option of like tenor and representing an
equivalent number of Option Shares purchasable upon exercise, but only upon
receipt of evidence reasonably satisfactory to Network-1 of such mutilation,
loss, theft or destruction of such Option and reasonable indemnity, if
requested, also reasonably satisfactory to Network-1. No bond or other security
shall be required from Holder in connection with the replacement by Network-1 of
a lost, stolen or mutilated warrant certificate.

     5.   Rights Upon Expiration

          Unless the Option is surrendered and payment made for the Option
Shares as herein provided before the close of business on the Expiration Date,
this Option will become wholly void and all rights evidenced hereby will
terminate after such time.

     6.   Exchange of Option

          This Option may be exchanged for a number of Options of the same tenor
as this Option for the purchase in the aggregate of the same number of Option
Shares of Network-1 as are purchasable upon the exercise of this Option, upon
surrender hereof at the office of Network-1 with written instructions as to the
denominations of the Options to be issued in exchange.

     7.   Adjustment for Certain Events

          (a) In case Network-1 shall at any time after the date hereof (i)
declare a dividend on its shares of Common Stock payable in shares of
Network-1's capital stock (whether in shares of Common Stock or of capital stock
of any other class), (ii) subdivide its outstanding shares of Common Stock,
(iii) reverse split its outstanding shares of Common Stock into a smaller number
of shares, or (iv) issue any shares of Network-1's capital stock in a
reclassification of shares of Common Stock (including any such reclassification
in connection with a consolidation or merger in which Network-1 is the
continuing corporation), then, in each case, the Exercise Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, reverse split or reclassification, and/or the number and kind of
shares of capital stock issuable upon exercise of the Option on such date, shall
be proportionately adjusted so that the holder of the Option exercised after
such time shall be entitled to receive the aggregate number and kind of
securities which, if such Option had been exercised immediately prior to such
date, such Holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, reverse split or
reclassification. Such adjustment shall be made successively whenever any event
listed above shall occur.

          (b) In case Network-1 shall fix a record date for the making of a
distribution to all holders Common Stock (including any such distribution made
in connection with a consolidation or merger in which Network-1 is the
continuing corporation) of evidences of indebtedness or assets (other than cash
dividends or cash distributions payable out of earnings, consolidated earnings,
if Network-1 shall have one or more subsidiaries, or earned surplus, or

                                        3
<PAGE>

dividends payable in Common Stock) or rights, options or warrants to subscribe
for or purchase Common Stock, then, in each case, the Exercise Price to be in
effect after such record date shall be determined by multiplying the Exercise
Price in effect immediately prior to such record date by a fraction, of which
the numerator shall be the current Market Price for one share of Common Stock on
such record date less the fair market value of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights,
options or warrants applicable to one share of Common Stock, and of which the
denominator shall be the current Market Price for one share of Common Stock. In
the event that Network-1 and the Holder cannot agree as to such fair market
value, such determination of fair market value shall be made by an appraiser who
shall be mutually selected by Network-1 and the Holder, and the reasonable costs
of such appraiser shall be borne by Network-1. Such adjustment shall be made
successively whenever such a record date is fixed, and in the event that such
distribution is not so made, the Exercise Price shall again be adjusted to be
the Exercise Price which would then be in effect if such record date had not
been fixed.

          (c) No adjustment in the Exercise Price shall be required unless such
adjustment would require a decrease of at least one cent ($0.01) in such price;
provided, however, that any adjustment which by reason of this Section 7(c) is
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 7 shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the case may be,
but in no event shall Network-1 be obligated to issue fractional shares of
Common Stock or fractional portions of any securities issuable upon the exercise
of the Option.

          (d) In the event that at any time, as a result of an adjustment made
pursuant to Section 7 hereof, the Holder of the Option thereafter exercised
shall become entitled to receive any shares of capital stock, options, warrants
or other securities of Network-1 other than the shares of Common Stock,
thereafter the number of such other shares of capital stock, options, warrants
or other securities so receivable upon exercise of this Option shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of Common Stock
contained in this Section 7, and the provisions of this Option Agreement with
respect to the shares of Common Stock shall apply, to the extent applicable, on
like terms to any such other shares of capital stock, options or warrants or
other securities.

          (e) Upon each adjustment of the Exercise Price as a result of
calculations made in this Section 7, the Option outstanding immediately prior to
the making of such adjustment shall thereafter evidence the right to purchase,
at the adjusted Exercise Price, that number of Option Shares (calculated to the
nearest hundredth), obtained by (i) multiplying the number of Option Shares
purchasable upon exercise of the Option immediately prior to such adjustment of
the Exercise Price by the Exercise Price in effect immediately prior to such
adjustment and (ii) dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment of the Exercise Price.

          (f) In case of any capital reorganization of Network-1 or of any
reclassification of shares of Common Stock (other than as a result of
subdivision or combination) or in case of the consolidation of Network-1 with,
or the merger of Network-1 into, any other corporation (other than a
consolidation or merger in which Network-1 is the continuing

                                        4
<PAGE>

corporation) or of the sale of the properties and assets of Network-1 as, or
substantially as, an entirety, the Option shall, after such reorganization,
reclassification, consolidation, merger or sale, be exercisable, upon the terms
and conditions specified herein, for the number of shares of Common Stock or
other capital stock, options or warrants or other securities or property to
which a Holder (at the time of such reorganization, reclassification,
consolidation, merger or sale) upon exercise of such Option would have been
entitled upon such reorganization, reclassification, consolidation, merger or
sale; and in any such case, if necessary, the provisions set forth in this
Section 7(f) with respect to the rights and interests thereafter of the Holder
shall be appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to any shares of Common Stock or other capital stock or options,
warrants or other securities or property thereafter deliverable upon the
exercise of the Option. The subdivision, reverse split or combination of shares
of Common Stock at any time outstanding into a greater or lesser number of
shares shall not be deemed to be a reclassification of the Common Stock for the
purposes of this Section 7(f).

          (g) In any case in which this Section 7 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, Network-1 may elect to defer until the occurrence of such event
issuing to the Holder, if such Holder exercised any portion of this Option after
such record date, shares of capital stock or other securities of Network-1, if
any, issuable upon such exercise over and above the shares of Common Stock or
other securities issuable, on the basis of the Exercise Price in effect prior to
such adjustment; provided, however, that Network-1 shall deliver to the holder a
due bill or other appropriate instrument evidencing such Holder's right to
receive such shares of Common Stock or other securities upon the occurrence of
the event requiring such adjustment.

     8.   Fractional Shares

          Upon exercise of the Option, Network-1 shall not be required to issue
fractional shares of Common Stock or other capital stock. In lieu of such
fractional shares, the Holder shall receive an amount in cash equal to the same
fraction of the (i) current Market Price of one whole share of Common Stock if
clause (i), (ii) or (iii) in the definition of Market Price in Section 3(c)
hereof is applicable or (ii) book value of one whole shares of Common Stock as
reported in Network-1's most recent audited financial statements if clause (iv)
in the definition of Market Price in Section 3 above is applicable. All
calculations under Section 7 shall be made to the nearest cent.

     9.   Securities Act Legend

          The Holder shall not be entitled to any rights of a stockholder of
Network-1 with respect to any Option Shares purchasable upon the exercise of
this Option, including voting, dividend or dissolution rights, until such Option
Shares have been paid for in full. As soon as practicable after such exercise,
Network-1 shall deliver a certificate or certificates for the securities
issuable upon such exercise, all of which shall be fully paid and nonassessable,
to the person or persons entitled to receive the same; provided, however, that,
if the Option Shares are not registered under the Securities Act, such
certificate or certificates delivered to the Holder of the surrendered Option
shall bear a legend reading substantially as follows:

                                        5
<PAGE>

          "These securities have not been registered under the Securities Act of
1933, as amended, or the securities laws of any state and may not be sold or
transferred in the absence of such registration or any exemption therefrom under
such Act and laws, if applicable. Network-1, prior to permitting a transfer of
these securities, may require an opinion of counsel or other assurances
satisfactory to it as to compliance with or exemption from such Act and laws."

     10.  Transfer

          All or a portion of this Option may be transferred, sold or assigned
by Holder without the consent of Network-1 provided, that, Holder provides
Network-1 with evidence reasonably satisfactory to it that such transfer is not
in violation of the Securities Act of 1933, as amended (the "Act"). With respect
to any such transfer, sale or assignment, Holder shall execute and deliver to
Network-1 the Form of Assignment attached hereto.

     11.  Taxes; Expenses

          Network-1 shall pay all taxes and expenses that may be payable in
connection with the preparation, issuance and delivery of Options Shares under
this Stock Option Agreement.

     12.  Notice of Adjustment

          (a) Upon any adjustment of the Exercise Price pursuant to Section 7
hereof, Network-1, within 30 calendar days thereafter, shall have on file for
inspection by the Holder a certificate of the Board of Directors of Network-1
setting forth the Exercise Price after such adjustment, the method of
calculation thereof in reasonable detail, the facts upon which such calculations
were based and the number of Option Shares issuable upon exercise of the Option
after such adjustment in the Exercise Price, which certificate shall be
conclusive evidence of the correctness of the matters set forth therein.

          (b) In case:

          (i) Network-1 shall authorize the issuance to all holders of shares of
Common Stock of rights, options, warrants or other securities to subscribe for
or purchase capital stock of Network-1 or of any other subscription rights,
options, warrants or other securities; or

          (ii) Network-1 shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets; or

          (iii) of any consolidation or merger to which Network-1 is a party and
for which approval of any stockholders of Network-1 is required, of the
conveyance or transfer of the properties and assets of Network-1 substantially
as an entirety or of any capital reorganization or any reclassification of the
shares of Common Stock (; or

          (iv) of the voluntary or involuntary dissolution, liquidation or
winding up of Network-1; or

                                       6
<PAGE>

          (v) Network-1 proposes to take any other action which would require an
adjustment of the Exercise Price pursuant to Section 7 above;

then, in each such case, Network-1 shall give to the Holder at its address
appearing below at least 20 calendar days prior to the applicable record date
hereinafter specified in (A), (B), or (C) below, by first class mail, postage
prepaid, a written notice stating (A) the date as of which the holders of record
of shares of Common Stock entitled to receive any such rights, options, warrants
or distribution are to be determined or (B) the date on which any such
consolidation, merger, conveyance, transfer, reorganization, reclassification,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of record of shares of Common Stock
shall be entitled to exchange such shares for securities or other property, if
any, deliverable upon such consolidation, merger, conveyance, transfer,
reorganization, reclassification, dissolution, liquidation or winding up or (C)
the date of such action which would require an adjustment of the Exercise Price.
The failure to give the notice required by this Section 12 or any defect therein
shall not affect the legality or validity of any such issuance, distribution,
consolidation, merger, conveyance, transfer, reorganization, reclassification,
dissolution, liquidation, winding up or other action or the vote upon any such
action.

          Except as provided herein, nothing contained herein shall be construed
as conferring upon Holder the right to vote on any matter submitted to the
stockholders of Network-1 for their vote or to receive notice of meetings of
stockholders or the election of directors of Network-1 or any other proceedings
of Network-1, or any rights whatsoever as a stockholder of Network-1.

     13.  Notices

          Any notice, request, demand or other communication pursuant to the
terms of this Stock Option Agreement shall be in writing and shall be
sufficiently given or made when delivered or mailed by first class or registered
mail, postage-prepaid, to the following addresses:

If to Network-1:

                      Network-1 Security Solutions, Inc.
                      445 Park Avenue, Suite 1028
                      New York, New York 10022

with a copy to:

                      Olshan Grundman Frome Rosenzweig & Wolosky, LLP
                      Park Avenue Tower
                      65 East 55th Street
                      New York, NY  10022
                      Attn:  Sam Schwartz, Esq.

                                        7
<PAGE>

If to Holder:

                      Corey M. Horowitz.
                      1085 Park Avenue
                      New York, New York  10128

     14.  Miscellaneous

          (a) Waiver. At any time the parties hereto may (a) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein by the other party or (c) waive compliance with any of the
agreements or conditions contained herein. No failure on the part of any party
to exercise any power, right, privilege or remedy under this Stock Option
Agreement, and no delay on the part of any party in exercising any power, right,
privilege or remedy under this Stock Option Agreement, shall operate as a waiver
of such power, right, privilege or remedy; and no single or partial exercise of
any such power, right, privilege or remedy shall preclude any other or further
exercise thereof or of any other power, right, privilege or remedy. No party
shall be deemed to have waived any claim arising out of this Stock Option
Agreement, or any power, right, privilege or remedy under this Stock Option
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.

          (b) Entire Agreement. Except as otherwise set forth in this Stock
Option Agreement and the other documents referred to herein, collectively
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein and supersede all prior agreements and
understandings, oral and written, with respect thereto.

          (c) Binding Effect; Benefit. This Stock Option Agreement shall inure
to the benefit of and be binding upon the parties hereto and nothing in this
Stock Option Agreement, expressed or implied, is intended to confer on any
person or entity other than the parties hereto or their respective successors
and permitted assigns, any rights, remedies, obligations or liabilities under or
by reason of this Stock Option Agreement.

          (d) Amendment and Modification. Subject to applicable law, this Stock
Option Agreement may only be amended, modified and supplemented by a written
agreement duly executed the parties hereto.

          (e) Further Actions. Network-1 shall use its best efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated hereunder and to
carry out the interest and purposes of this Stock Option Agreement, including,
without limitation, using its reasonable best efforts to obtain all

                                        8
<PAGE>

licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental entities.

          (f) Applicable Law. This Stock Option Agreement and the legal
relations between the parties hereto shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to the
conflicts of laws rules thereof.

          (g) Dispute Resolution. The parties hereto will use their best efforts
to resolve by mutual agreement any disputes, controversies or differences that
may arise from, under, out of or in connection with this Agreement. If any such
disputes, controversies or differences cannot be settled between the parties
hereto, they will be finally settled by final and binding arbitration to be
conducted by an arbitration tribunal in New York City, New York, pursuant to the
rules of the American Arbitration Association. The arbitration tribunal will
consist of three arbitrators. The decision or award of the arbitration tribunal
will be final, and judgment upon such decision or award may be entered in any
competent court or application may be made to any competent court for judicial
acceptance of such decision or award and an order of enforcement. In the event
of any procedural matter not covered by the aforesaid rules, the procedural law
of New York will govern. The prevailing party in arbitration shall be entitled
to receive a reasonable sum for its attorneys' fees and all other reasonable
costs and expenses incurred in such action or suit.

          (h) Severability. Any term or provision of this Stock Option Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the parties hereto agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration or area of the term or provision, to delete specific words
or phrases or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Stock Option Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.

          (i) Non-exclusivity. The rights and remedies of Network-1 and Holder
under this Stock Option Agreement are not exclusive of or limited by any other
rights or remedies which either of them may have, whether at law, in equity, by
contract or otherwise, all of which shall be cumulative and not alternative.

                                        9
<PAGE>


          IN WITNESS WHEREOF, an authorized officer of Network-1 has signed and
delivered this Option as of the date first written above.

                                     NETWORK-1 SECURITY SOLUTIONS, INC.



                                     By: ___________________________


























                                       10
<PAGE>

                              ELECTION TO EXERCISE

(To be executed by the registered holder if such holder desires to exercise the
within Option)

To:    NETWORK-1 SECURITY SOLUTIONS, INC.
       445 Park Avenue, Suite 1028
       New York, New York  10022

The undersigned hereby (1) irrevocably elects to exercise its right to exercise
_____ shares of Common Stock covered by the within Option, (2) makes payment in
full of the Exercise Price by enclosure of a certified check or (3) elects a
cashless exercise, (4) requests that certificates for such shares be issued in
the name of:

Please print name, address and Social Security or Tax Identification Number:

________________________________________________

________________________________________________

________________________________________________

and (5) if said number of shares shall not be all the shares evidenced by the
within Option, requests that a new Option Agreement for the balance of the
shares covered by the within Option be registered in the name of, and delivered
to:

Please print name and address:

________________________________________________

________________________________________________

________________________________________________

In lieu of receipt of a fractional shares of Common Stock, the undersigned will
receive a check representing payment therefor.

Dated:  _____________________

                                             By: ______________________________

                                                 ______________________________


                                       11
<PAGE>

                               FORM OF ASSIGNMENT

          FOR VALUE RECEIVED ___________________ , hereby sells, assigns and
transfers to ________________ (Social Security or I.D. No._______________ ) the
within Option, or that portion of this Option purchasable for ________ shares of
Common Stock together with all rights, title and interest therein, and does
hereby irrevocably constitute and appoint ______________ attorney to transfer
such Option on the register of Network-1 Security Solutions, Inc., with full
power and substitution.

                                             _________________________________
                                                        (Signature)

Dated: ___________, 20__

Signature Guaranteed:

____________________














                                       12

<PAGE>



                                    EXHIBIT A

                       NETWORK-1 SECURITY SOLUTIONS, INC.

                             INCENTIVE STOCK OPTION





                                         Date of Grant: November __, 2004



To:  Corey M. Horowitz
     1085 Park Avenue
     New York, New York  10128


          You are hereby granted an option (the "Option"), effective as of the
date hereof, to purchase 400,000 shares of Common Stock, par value $.01 per
share ("Common Stock"), of Network-1 Security Solutions, Inc. (the "Company") at
an exercise price of $.68 per share (the "Exercise Price") pursuant to the
Company's Stock Option Plan, as amended (the "Plan"). Your Exercise Price is
intended to equal at least the fair market value of the Company's Common Stock
as of the date hereof; provided, however, that if, at the time this Option is
granted, you own stock possessing more than 10% of the total combined voting
power of all shares of stock of the Company or any parent or subsidiary (an
"Affiliate") of the Company (a "10% Shareholder"), your Exercise Price is
intended to be at least 110% of the fair market value of the Company's Common
Stock as of the date hereof.

          Your Option shall vest over a one (1) year period as follows: (i)
200,000 shares on the date hereof; and (ii) 200,000 shares on the one year
anniversary from the date hereof.

          In the event of (i) a "change of control" (as hereinafter defined) of
the Company occurs at any time prior to the Expiration Date (as hereinafter
defined), your Option may, from and after such date, and notwithstanding the
second paragraph of this Option, be exercised for up to 100% of the total number
of shares then subject to the Option minus the number of shares previously
purchased upon exercise of the Option (as adjusted for any changes in the
outstanding Common Stock by reason of a stock dividend, stock split, combination
of shares, recapitalization, merger, consolidation, transfer of assets,
reorganization, conversion or what the Compensation Committee or Board of
Directors deems in its sole discretion to be similar circumstances).

          A "Change of Control" shall be deemed to have occurred upon the
happening 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

<PAGE>

consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent more than fifty
percent (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, or the shareholders of the Company approve a plan of complete
liquidation of the Company or consummate the sale or disposition by the Company
of all or substantially all of the Company's assets (other than to a subsidiary
or subsidiaries) or (ii) any other event deemed to constitute a "Change of
Control" by the Board of Directors of the Company.

          In lieu of paying the Exercise Price in cash and/or upon exercise of
the Option, you may elect a "cashless exercise" in which event you will receive
upon exercise a reduced number of shares equal to (i) the number of shares that
would be issuable pursuant to this Option upon payment of the Exercise Price
minus (ii) the number of shares that have an aggregate Market Price (as defined
below) equal to the Exercise Price.

          For purposes of this Option "Market Price" per share of Common Stock
on any date shall be: (i) if the Common Stock is listed or admitted for trading
on any national securities exchange, the last reported sales price as reported
on such national securities exchange; (ii) if the Common Stock is not listed or
admitted for trading on any national securities exchange, the last reported
closing price for the Common Stock as reported on the Nasdaq Stock Market's
National Market ("NNM") or Nasdaq Stock Market's Small Cap Market ("NSM") or a
similar service if NNM or NSM are not reporting such information; (iii) if the
Common Stock is not listed or admitted for trading on any national securities
exchange, NNM or NSM or a similar service, the average of the last reported bid
and asked quotation for the Common Stock as quoted by a market maker in the
Common Stock (or if there is more than one market maker, the bid and asked
quotation shall be obtained from two market makers and the average of the lowest
bid and highest asked quotation shall be the "Market Price"); or (iv) if the
Common Stock is not listed or admitted for trading on any national securities
exchange or NNM or quoted by NSM and there is no market maker in the Common
Stock, the fair market value of such shares as determined in good faith by the
Board of Directors of the Company.

          The shares subject to this Option shall be adjusted for any change in
the outstanding shares of the Common Stock of the Company by reason of a stock
dividend, stock split, combination of shares, recapitalization, merger,
consolidation, transfer of assets, reorganization, conversion or what the
Compensation Committee deems in its sole discretion to be similar circumstances.
No fractional shares shall be issued or delivered.

          This Option shall terminate and is not exercisable after the
expiration of five years from the date of its grant (five years from the date of
grant rather than ten years from the time of the grant, because you are a 10%
Shareholder), except if terminated earlier as hereinafter provided (the
"Expiration Date").

          You may exercise your option as set forth in Section 7 of the Plan.

                                        2
<PAGE>

          If the Company's Common Stock has not been registered under Section 12
of the Securities Exchange Act of 1934, the exercise of your Option will not be
effective unless and until you execute and deliver to the Company a Stock
Restriction Agreement, in the form on file in the office of the Secretary of the
Company.

          Your Option will, to the extent not previously exercised by you,
terminate one (1) year after the date on which your employment by the Company or
Affiliate of the Company is terminated, whether such termination is voluntary or
not, whether by reason of disability as defined in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder, or death. After the date your employment is terminated, as
aforesaid, you may exercise this Option only for the number of shares which you
had a right to purchase and did not purchase on the date your employment
terminated. If you are employed by an Affiliate of the Company, your employment
shall be deemed to have terminated on the date your employer ceases to be an
Affiliate of the Company, unless you are on that date transferred to the Company
or another Affiliate of the Company. Your employment shall not be deemed to have
terminated if you are transferred from the Company to an Affiliate, or vice
versa, or from one Affiliate to another Affiliate.

          If you die while employed by the Company or an Affiliate of the
Company, your legatee(s), distributee(s), executor(s) or administrator(s), as
the case may be, may, at any time within one (1) year after the date of your
death, exercise the Option as to any shares which you had a right to purchase
and did not purchase during your lifetime. If your employment with the Company,
or an Affiliate is terminated by reason of your becoming disabled (within the
meaning of Section 22(e)(3) of the Code and the regulations thereunder), you or
your legal guardian or custodian may at any time within one (1) year after the
date of such termination, exercise the Option as to any shares which you had a
right to purchase and did not purchase prior to such termination. Your legatee,
distributee, executor, administrator, guardian or custodian must present proof
of his authority satisfactory to the Company prior to being allowed to exercise
this Option.

          This Option is not transferable otherwise than to an affiliated entity
or by will or the laws of descent and distribution, and is exercisable during
your lifetime only by you, including, for this purpose, your legal guardian or
custodian in the event of disability. Until the Option Price has been paid in
full pursuant to due exercise of this Option and the purchased shares are
delivered to you, you do not have any rights as a shareholder of the Company.
The Company reserves the right not to deliver to you the shares purchased by
virtue of the exercise of this Option during any period of time in which the
Company deems, in its sole discretion, that such delivery would violate a
federal, state, local or securities exchange rule, regulation or law.

          The following paragraph shall be applicable if, on the date of
exercise of this Option, the Common Stock to be purchased pursuant to such
exercise has not been registered under the Securities Act of 1933, as amended,
and under applicable state securities laws, and shall continue to be applicable
for so long as such registration has not occurred:

                                        3
<PAGE>

          You hereby agree, warrant and represent that you will acquire the
Common Stock to be issued hereunder for your own account for investment purposes
only, and not with a view to, or in connection with, any resale or other
distribution of any of such shares, except as hereafter permitted. You further
agree that you will not at any time make any offer, sale, transfer, pledge or
other disposition of such Common Stock to be issued hereunder without an
effective registration statement under the Securities Act of 1933, as amended,
and under any applicable state securities laws or an opinion of counsel
acceptable to the Company to the effect that the proposed transaction will be
exempt from such registration. You shall execute such instruments,
representations, acknowledgements and agreements as the Company may, in its sole
discretion, deem advisable to avoid any violation of federal, state, local or
securities exchange rule, regulation or law; (b) The certificates for Common
Stock to be issued to you hereunder shall bear the following legend:

                    "The shares represented by this certificate have not been
          registered under the Securities Act of 1933, as amended, or under
          applicable state securities laws. The shares have been acquired for
          investment and may not be offered, sold, transferred, pledged or
          otherwise disposed of without an effective registration statement
          under the Securities Act of 1933, as amended, and under any applicable
          state securities laws or an opinion of counsel acceptable to the
          Company that the proposed transaction will be exempt from such
          registration."

          The foregoing legend shall be removed upon registration of the
legended shares under the Securities Act of 1933, as amended, and under any
applicable state laws or upon receipt of any opinion of counsel acceptable to
the Company that said registration is no longer required.

          The sole purpose of the agreements, warranties, representations and
legend set forth in the two immediately preceding paragraphs is to prevent
violations of the Securities Act of 1933, as amended, and any applicable state
securities laws.

          It is the intention of the Company and you that this option shall, if
possible, be an "Incentive Stock Option" as that term is used in Section 422 of
the Code and the regulations thereunder. In the event this Option is in any way
inconsistent with the legal requirements of the Code or the regulations
thereunder for an "Incentive Stock Option" this Option shall be deemed
automatically amended as of the date hereof to conform to such legal
requirements, if such conformity may be achieved by amendment.

          This Option shall be subject to the terms of the Plan in effect on the
date this Option is granted, which terms are hereby incorporated herein by
reference and made a part hereof. In the event of any conflict between the terms
of this Option and the terms of the Plan in effect on the date of this Option,
the terms of the Plan shall govern. This Option constitutes the entire
understanding between the Company and you with respect to the subject matter
hereof and no amendment, modification or waiver of this Option, in whole or in
part, shall be binding upon the Company unless in writing and signed by an

                                        4
<PAGE>

appropriate officer of the Company. This Option and the performances of the
parties hereunder shall be construed in accordance with and governed by the laws
of the State of New York without regard to principles of conflict of law.

          Please sign the copy of this Option and return it to the Company,
thereby indicating your understanding of and agreement with its terms and
conditions.

                                        NETWORK-1 SECURITY SOLUTIONS, INC.



                                        By: _______________________________
                                            David Kahn
                                            Chief Financial Officer


























                                        5

<PAGE>

                                    EXHIBIT B



                    Calculation of CMH Derivative Percentage
                    ----------------------------------------

Common Stock                                                          15,012,572

Warrants (issued in Preferred E financing)                               500,000

Other Warrants                                                           878,686

Options under Stock Option Plan                                        3,272,370

Total Fully Diluted (excluding 1,352,048 Warrants issued
in Preferred D financing)                                             19,663,628

CMH/Corey Horowitz Options/Warrants                                    4,538,345

CMH Derivative Percentage                                                 23.08%

                List of CMH/Corey Network-1 Options and Warrants
                ------------------------------------------------

<TABLE><CAPTION>
Owner/Type   Date of Grant       Number            Vested       Exercise Price      Expiration
----------   -------------       ------            ------       --------------      ----------
<S>            <C>               <C>              <C>               <C>              <C>   <C>
Corey/Option   10/20/98           20,000           20,000            $6.00            10/20/08

Corey/Option    6/22/99           10,000           10,000             3.75             6/22/09

Corey/Option   10/25/99            7,500            7,500             4.25            10/25/09

Corey/Warrant  12/12/99           85,220           85,220             1.00            12/12/04

Corey/Option    9/19/00            5,000            5,000             5.50             9/19/10

Corey/Option    1/19/01           10,625                0(1)        3.0625             1/19/11

CMH/Warrant     7/11/01          300,000          300,000             0.70             7/11/11

CMH/Warrant    10/08/01          250,000          250,000             1.48            10/08/07

CMH/Option      4/18/02          750,000          500,000(2)          1.20             4/18/07

Corey/Option   12/22/03        1,084,782          434,782(3)          0.23            12/22/08

Corey/Option   12/22/03          515,218          515,218             0.13            12/22/08

Corey/Option   11/26/04        1,100,000        1,100,000             0.25            11/26/04

Corey/Option   11/26/04          400,000          200,000             0.68            11/26/09
             ----------------------------
                      Total    4,538,345
</TABLE>
--------
1.     50% will vest if the stock price reaches $10 and 50% if the stock price
       reaches $15.
2.     an additional 250,000 will vest on 4/18/05.
3.     an additional 250,000 will vest on 12/22/04, 200,000 on 12/22/05 and
       200,000 on 12/22/06.
4.     an additional 200,000 will vest on 11/26/05.