Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Destiny Media Technologies, Inc. - Exhibit 10.1

 

 

DESTINY MEDIA TECHNOLOGIES, INC. 

AMENDED 1999 STOCK OPTION PLAN 

  

  

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DESTINY MEDIA TECHNOLOGIES INC. 

1999 STOCK OPTION PLAN 

As Adopted October 12, 1999 and Amended on November 3, 2000 

 1. PURPOSE. The purpose of this Plan is to provide incentives
  to attract, retain and motivate eligible persons whose present and potential
  contributions are important to the success of the Company, its Parent and Subsidiaries,
  by offering them an opportunity to participate in the Company's future performance
  through awards of Options. Capitalized terms not defined in the text are defined
  in Section 21. This Plan is intended to be an employee benefit plan within the
  meaning of Rule 405 of Regulation C promulgated under the Securities Act. 

2. SHARES SUBJECT TO THE PLAN.

2.1 Number of Shares Available.

 Subject to Sections 2.2 and 16, the total number of Shares
  reserved and available for grant and issuance pursuant to this Plan will be
  3,750,000 Shares. Shares that are subject to issuance upon exercise of an Option
  but cease to be subject to such Option for any reason other than exercise of
  such Option will be available for grant and issuance in connection with future
  Options under this Plan. At all times the Company will reserve and keep available
  a sufficient number of Shares as will be required to satisfy the requirements
  of all outstanding Options granted under this Plan. 

2.2 Adjustment of Shares.

 In the event that the number of outstanding shares of the
  Company's common stock is changed by a stock dividend, recapitalization, stock
  split, reverse stock split, subdivision, combination, reclassification or similar
  change in the capital structure of the Company without consideration, then 

	 	(a)	the number of Shares reserved for issuance under this Plan;
      and
	 	 	 
	 	(b)	the Exercise Prices of and number of Shares subject to outstanding
      Options,

 will be proportionately adjusted, subject to any required
  action by the Board or the shareholders of the Company and compliance with applicable
  securities laws; provided, however, that fractions of a Share will not be issued
  but will either be paid in cash at the Fair Market Value of such fraction of
  a Share or will be rounded down to the nearest whole Share, as determined by
  the Committee in its discretion. 

3. ELIGIBILITY.

 ISOs (as defined in Section 5 below) may be granted only to
  employees (including officers and directors who are also employees) of the Company
  or of a Parent or Subsidiary of the Company. NQSOs (as defined in Section 5
  below) may be granted to employees, officers, directors and consultants of the
  Company or of any Parent or Subsidiary of the Company; provided that any such
  consultant (a) is a natural person or an alter ego entity of the natural person
  providing the services; (b) renders bona fide services that are not in connection
  with the offer and sale of the Company's securities in a capital-raising transaction;
  and (c) does not directly or indirectly promote or maintain a market for the
  Company's securities. A person may be granted more than one Option under this
  Plan. 

4. ADMINISTRATION.

4.1 Committee Authority.

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 This Plan will be administered by the Committee or the Board
  acting as the Committee. If no Committee is appointed, then the Board will act
  as the Committee. Subject to the general purposes, terms and conditions of this
  Plan, and to the direction of the Board, the Committee has full power to implement
  and carry out this Plan. Without limitation, the Committee has the authority
  to: 

	 	(a)	construe and interpret this Plan, any
        Stock Option Agreement or Exercise Agreement (each as defined in Section
        5 below) and any other agreement or document executed pursuant to this
        Plan;

	 	(b)	prescribe, amend and rescind rules and regulations relating
      to this Plan;
	 	(c)	select persons to receive Options;
	 	(d)	determine the form and terms of Options;
	 	(e)	determine the number of Shares or other consideration subject
      to Options;
	 	(f)	determine whether Options will be granted
        singly, in combination with, in tandem with, in replacement of, or as
        alternatives to, any Options granted under this Plan or any awards under
        any other incentive or compensation plan of the Company or any Parent
        or Subsidiary of the Company;

	 	(g)	grant waivers of Plan or Option conditions;
	 	(h)	determine the vesting and exercisability of Options;
	 	(i)	 correct any defect, supply any omission,
        or reconcile any inconsistency in this Plan, any Option or any Stock Option
        Agreement or Exercise Agreement (each as defined in Section 5 below);
      

	 	(j)	 determine whether an Option has been earned; and
	 	(k)	make all other determinations necessary or advisable for
      the administration of this Plan.

4.2 Committee Discretion.

 Any determination made by the Committee with respect to any
  Option will be made in its sole discretion at the time of grant of the Option
  or, unless in contravention of any express term of this Plan or Option, and
  subject to Section 5.9, at any later time, and such determination will be final
  and binding on the Company and on all persons having an interest in any Option
  under this Plan. The Committee may delegate to one or more officers of the Company
  the authority to grant Options under this Plan. 

5. OPTIONS.

 The Committee may grant Options to eligible persons and will
  determine whether such Options will be Incentive Stock Options within the meaning
  of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the number of
  Shares subject to the Option, the Exercise Price of the Option, the period during
  which the Option may be exercised, and all other terms and conditions of the
  Option, subject to the following: 

5.1 Form of Option Grant.

 Each Option granted under this Plan will be evidenced by an
  Agreement which will expressly identify the Option as an ISO or an NQSO ("Stock
  Option Agreement"), and will be in such form and contain such provisions (which
  need not be the same for each Participant) as the Committee may from time to
  time approve, and which will comply with and be subject to the terms and conditions
  of this Plan. 

5.2 Date of Grant.

 The date of grant of an Option will be the date on which the
  Committee makes the determination to grant such Option, unless otherwise specified
  by the Committee. The Stock Option Agreement and a copy of this Plan will be
  delivered to the Participant within a reasonable time after the granting of
  the Option. 

5.3 Exercise Period.

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 Options may be exercisable immediately (subject to repurchase
  pursuant to Section 10 of this Plan) or may be exercisable within the times
  or upon the events determined by the Committee as set forth in the Stock Option
  Agreement governing such Option; provided, however, that no Option will be exercisable
  after the expiration of ten (10) years from the date the Option is granted;
  and provided further that no ISO granted to a person who directly or by attribution
  owns more than ten percent (10%) of the total combined voting power of all classes
  of stock of the Company or of any Parent or Subsidiary of the Company ("Ten
  Percent Shareholder") will be exercisable after the expiration of five (5) years
  from the date the ISO is granted. The Committee may provide for Options to become
  exercisable at one time or from time to time, periodically or otherwise, in
  such number of Shares or percentage of Shares as the Committee determines. Subject
  to earlier termination of the Option as provided herein, each Participant who
  is not an officer, director or consultant of the Company or of a Parent or Subsidiary
  of the Company shall have the right to exercise an Option granted hereunder
  at the rate of at least twenty percent (20%) per year over five (5) years from
  the date such Option is granted. 

5.4 Exercise Price.

 The Exercise Price of an Option will be determined by the
  Committee when the Option is granted and may not be less than 85% of the Fair
  Market Value of the Shares on the date of grant; provided that 

	 	(i)	 the Exercise Price of an ISO will not be less than 100% of the Fair Market
      Value of the Shares on the date of grant; and
	 	 	 
	 	(ii)	the Exercise Price of any Option granted to a Ten
        Percent Shareholder will not be less than 110% of the Fair Market Value
        of the Shares on the date of grant.

 Payment for the Shares purchased must be made in accordance with Section 6
  of this Plan. 

5.5 Method of Exercise.

 Options may be exercised only by delivery to the Company of
  a written stock option exercise agreement (the "Exercise Agreement") in a form
  approved by the Committee (which need not be the same for each Participant),
  stating the number of Shares being purchased, the restrictions imposed on the
  Shares purchased under such Exercise Agreement, if any, and such representations
  and agreements regarding Participant's investment intent and access to information
  and other matters, if any, as may be required or desirable by the Company to
  comply with applicable securities laws, together with payment in full of the
  Exercise Price, and any applicable taxes, for the number of Shares being purchased.

5.6 Termination.

 Subject to earlier termination pursuant to Sections 16 or
  17 and notwithstanding the exercise periods set forth in the Stock Option Agreement,
  exercise of an Option will always be subject to the following:

	 	(a)	 If the Participant is Terminated for any reason
        except death, Disability or Cause, then the Participant may exercise such
        Participant's Options, only to the extent that such Options are exercisable
        on the Termination Date and such Options must be exercised by the Participant,
        if at all, as to all or some of the Vested Shares calculated as of the
        Termination Date within three (3) months after the Termination Date (or
        within such shorter time period, not less than thirty (30) days after
        the Termination Date, or such longer time period not exceeding five (5)
        years after the Termination Date as may be determined by the Committee
        with any exercise after three (3) months after the Termination Date deemed
        to be an NQSO), but in any event, no later than the expiration date of
        the Options. 

	 	 	 
	 	(b) 	If the Participant is Terminated because of Participant's
        death or Disability (or the Participant dies within three (3) months after
        Participant's Termination other than for 

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	 	 	Cause), then Participant's
        Options may be exercised, only to the extent that such Options are exercisable
        by Participant on the Termination Date and must be exercised by Participant
        (or Participant's legal representative or authorized assignee), as to
        all of some of the Vested Shares calculated as of the Termination Date
        if at all, within twelve (12) months after the Termination Date (or within
        such shorter time period, not less than six (6) months after the Termination
        Date, or such longer time period not exceeding five (5) years after the
        Termination Date as may be determined by the Committee, with any exercise
        after 

          

	 	 	(A) 	three (3) months after the Termination Date when
        the Termination is for any reason other than the Participant's death or
        disability, within the meaning of Code Section 22(e)(3), or 

          

	 	 	(B) 	twelve (12) months after the Termination Date when
        the Termination is because of Participant's disability, within the meaning
        of Code Section 22(e) (3), deemed to be an NQSO), but in any event no
        later than the expiration date of the Options. 

          

	 	(c) 	If the Participant is terminated
        for Cause, then Participant's Options shall expire on such Participant's
        Termination Date, or at such later time and on such conditions as are
        determined by the Committee. 

5.7 Limitations on Exercise. 

 The Committee may specify a reasonable minimum number of Shares
  that may be purchased on exercise of an Option, provided that such minimum number
  will not prevent Participant from exercising the Option for the full number
  of Shares for which it is then exercisable. 

 5.8 Limitations on ISOs. 

 The aggregate Fair Market Value (determined as of the date
  of grant) of Shares with respect to which ISOs are exercisable for the first
  time by a Participant during any calendar year (under this Plan or under any
  other incentive stock option plan of the Company or any Parent or Subsidiary
  of the Company) will not exceed $100,000. If the Fair Market Value of Shares
  on the date of grant with respect to which ISOs are exercisable for the first
  time by a Participant during any calendar year exceeds $100,000, then the Options
  for the first $100,000 worth of Shares to become exercisable in such calendar
  year will be ISOs and the Options for the amount in excess of $100,000 that
  become exercisable in that calendar year will be NQSOs. In the event that the
  Code or the regulations promulgated thereunder are amended after the Effective
  Date (as defined in Section 17 below) to provide for a different limit on the
  Fair Market Value of Shares permitted to be subject to ISOs, then such different
  limit will be automatically incorporated herein and will apply to any Options
  granted after the effective date of such amendment. 

 5.9 Modification, Extension or Renewal. 

 The Committee may modify, extend or renew outstanding Options
  and authorize the grant of new Options in substitution therefor, provided that
  any such action may not, without the written consent of a Participant, impair
  any of such Participant's rights under any Option previously granted. Any outstanding
  ISO that is modified, extended, renewed or otherwise altered will be treated
  in accordance with Section 424(h) of the Code. Subject to Section 5.10, the
  Committee may reduce the Exercise Price of outstanding Options without the consent
  of Participants affected by a written notice to them; provided, however, that
  the Exercise Price may not be reduced below the minimum Exercise Price that
  would be permitted under Section 5.4 of this Plan for Options granted on the
  date the action is taken to reduce the Exercise Price. 

5.10 No Disqualification.

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Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section
422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code.

6. PAYMENT FOR SHARE PURCHASES.

 6.1 Payment. Payment for Shares purchased pursuant to this Plan may be made
  in cash (by check) or, where expressly approved for the Participant by the Committee
  and where permitted by law:

	 	(a) 	by cancellation of indebtedness
        of the Company to the Participant;

          

	 	(b) 	by surrender of shares that:
        either (A) have been owned by the Participant for more than six (6) months
        and have been paid for within the meaning of SEC Rule 144 (and, if such
        shares were purchased from the Company by use of a promissory note, such
        note has been fully paid with respect to such shares) or (B) were obtained
        by the Participant in the public market and (2) are clear of all liens,
        claims, encumbrances or security interests;

          

	 	(c) 	by tender of a full recourse
        promissory note having such terms as may be approved by the Committee
        and bearing interest at a rate sufficient to avoid imputation of income
        under Sections 483 and 1274 of the Code; provided, however, that Participants
        who are not employees or directors of the Company will not be entitled
        to purchase Shares with a promissory note unless the note is adequately
        secured by collateral other than the Shares. 

          

	 	(d) 	by waiver of compensation
        due or accrued to the Participant for services rendered; 

          

	 	(e) 	provided that a public market
        for the Company's stock exists: 

          

	 	 	(1) 	through a "same day sale" commitment from the Participant
        and a broker-dealer that is a member of the National Association of Securities
        Dealers (an "NASD Dealer") whereby the Participant irrevocably elects
        to exercise the Option and to sell a portion of the Shares so purchased
        to pay for the Exercise Price, and whereby the NASD Dealer irrevocably
        commits upon receipt of such Shares to forward the Exercise Price directly
        to the Company; or 

          

	 	 	(2) 	through a "margin" commitment from the Participant
        and an NASD Dealer whereby the Participant irrevocably elects to exercise
        the Option and to pledge the Shares so purchased to the NASD Dealer in
        a margin account as security for a loan from the NASD Dealer in the amount
        of the Exercise Price, and whereby the NASD Dealer irrevocably commits
        upon receipt of such Shares to forward the Exercise Price directly to
        the Company; or 

          

	 	(f) 	by any combination of the foregoing. 

6.2 Loan Guarantees. 

 The Committee may help the Participant pay for Shares purchased
  under this Plan by authorizing a guarantee by the Company of a third-party loan
  to the Participant, provided that no such financial assistance will be granted
  to any director or executive officer of the Company. 

 7. WITHHOLDING TAXES. 

 7.1 Withholding Generally. Whenever Shares are to be issued
  in satisfaction of Options granted under this Plan, the Company may require
  the Participant to remit to the Company an amount sufficient to 

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 satisfy federal, state and local withholding tax requirements
  prior to the delivery of any certificate or certificates for such Shares. Whenever,
  under this Plan, payments in satisfaction of Options are to be made in cash,
  such payment will be net of an amount sufficient to satisfy federal, state,
  and local withholding tax requirements. 

 7.2 Stock Withholding. 

 When, under applicable tax laws, the Participant incurs tax
  liability in connection with the exercise or vesting of any Option that is subject
  to tax withholding and the Participant is obligated to pay the Company the amount
  required to be withheld, the Committee may in its sole discretion allow the
  Participant to satisfy the minimum withholding tax obligation by electing to
  have the Company withhold from the Shares to be issued that number of Shares
  having a Fair Market Value equal to the minimum amount required to be withheld,
  determined on the date that the amount of tax to be withheld is to be determined.
  All elections by a Participant to have Shares withheld for this purpose will
  be made in accordance with the requirements established by the Committee and
  be in writing in a form acceptable to the Committee. 

 8. PRIVILEGES OF STOCK OWNERSHIP. 

 No Participant will have any of the rights of a shareholder
  with respect to any Shares until the Shares are issued to the Participant. After
  Shares are issued to the Participant, the Participant will be a shareholder
  and have all the rights of a shareholder with respect to such Shares, including
  the right to vote and receive all dividends or other distributions made or paid
  with respect to such Shares; provided, that the Participant will have no right
  to retain such stock dividends or stock distributions with respect to Unvested
  Shares that are repurchased pursuant to Section 10. The Company will comply
  with the laws of Colorado with respect to the voting rights of common stock.

 9. TRANSFERABILITY. 

 Options granted under this Plan, and any interest therein,
  will not be transferable or assignable by Participant, and may not be made subject
  to execution, attachment or similar process, otherwise than by will or by the
  laws of descent and distribution. During the lifetime of the Participant an
  Option will be exercisable only by the Participant or Participant's legal representative
  and any elections with respect to an Option may be made only by the Participant
  or Participant's legal representative. 

 10. RESTRICTIONS ON SHARES. 

 At the discretion of the Committee, the Company may reserve
  to itself and/or its assignee(s) in the Stock Option Agreement a right to repurchase
  Unvested Shares held by a Participant following such Participant's Termination
  at any time within ninety (90) days after Participant's Termination Date (or
  in the case of securities issued upon exercise of an Option after the Participant's
  Termination Date, within ninety (90) days after the date of such exercise) for
  cash and/or cancellation of purchase money indebtedness, at the Participant's
  Exercise Price, provided, that to the extent the Participant is not an officer,
  director or consultant of the Company or of a Parent or Subsidiary of the Company
  such right to repurchase Unvested Shares lapses at the rate of at least twenty
  percent (20%) per year over five (5) years from the date of grant of the Option.

 11. CERTIFICATES. 

 All certificates for Shares or other securities delivered
  under this Plan will be subject to such stock transfer orders, legends and other
  restrictions as the Committee may deem necessary or advisable, including restrictions
  under any applicable federal, state or foreign securities law, or any rules,
  regulations and other requirements of the SEC or any stock exchange or automated
  quotation system upon which the Shares may be listed or quoted. 

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12. ESCROW; PLEDGE OF SHARES.

 To enforce any restrictions on a Participant's Shares, the
  Committee may require the Participant to deposit all certificates representing
  Shares, together with stock powers or other instruments of transfer approved
  by the Committee, appropriately endorsed in blank, with the Company or an agent
  designated by the Company to hold in escrow until such restrictions have lapsed
  or terminated, and the Committee may cause a legend or legends referencing such
  restrictions to be placed on the certificates. Any Participant who is permitted
  to execute a promissory note as partial or full consideration for the purchase
  of Shares under this Plan will be required to pledge and deposit with the Company
  all or part of the Shares so purchased as collateral to secure the payment of
  Participant's obligation to the Company under the promissory note; provided,
  however, that the Committee may require or accept other or additional forms
  of collateral to secure the payment of such obligation and, in any event, the
  Company will have full recourse against the Participant under the promissory
  note notwithstanding any pledge of the Participant's Shares or other collateral.
  In connection with any pledge of the Shares, Participant will be required to
  execute and deliver a written pledge agreement in such form as the Committee
  will from time to time approve. The Shares purchased with the promissory note
  may be released from the pledge on a pro rata basis as the promissory note is
  paid. 

 13. EXCHANGE AND BUYOUT OF OPTIONS. 

 The Committee may, at any time or from time to time, authorize
  the Company, with the consent of the respective Participants, to issue new Options
  in exchange for the surrender and cancellation of any or all outstanding Options.
  The Committee may at any time buy from a Participant an Option previously granted
  with payment in cash, shares of common stock of the Company (including restricted
  stock) or other consideration, based on such terms and conditions as the Committee
  and the Participant may agree. 

 14. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. 

 This Plan is intended to comply with the laws of Colorado.
  Any provision of this Plan which is inconsistent those laws shall, without further
  act or amendment by the Company or the Board, be reformed to comply with the
  requirements of those laws. An Option will not be effective unless such Option
  is in compliance with all applicable federal and state securities laws, rules
  and regulations of any governmental body, and the requirements of any stock
  exchange or automated quotation system upon which the Shares may then be listed
  or quoted, as they are in effect on the date of grant of the Option and also
  on the date of exercise or other issuance. Notwithstanding any other provision
  in this Plan, the Company will have no obligation to issue or deliver certificates
  for Shares under this Plan prior to

	 	(a) 	obtaining any approvals from governmental agencies
        that the Company determines are necessary or advisable, and/or 

          

	 	(b) 	compliance with any exemption, completion of any registration
        or other qualification of such Shares under any state or federal law or
        ruling of any governmental body that the Company determines to be necessary
        or advisable. The Company will be under no obligation to register the
        Shares with the SEC or to effect compliance with the exemption, registration,
        qualification or listing requirements of any state securities laws, stock
        exchange or automated quotation system, and the Company will have no liability
        for any inability or failure to do so.

 15. NO OBLIGATION TO EMPLOY. 

 Nothing in this Plan or any Option granted under this Plan
  will confer or be deemed to confer on any Participant any right to continue
  in the employ of, or to continue any other relationship with, the Company or
  any Parent or Subsidiary of the Company or limit in any way the right of the
  Company or any Parent or Subsidiary of the Company to terminate Participant's
  employment or other relationship at any time, with or without cause. 

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16. CORPORATE TRANSACTIONS.

16.1 Assumption or Replacement of Options by Successor.

 In the event of (a) a dissolution or liquidation of the Company,
  (b) a merger or consolidation in which the Company is not the surviving corporation,
  (c) a merger in which the Company is the surviving corporation but after which
  the shareholders of the Company immediately prior to such merger (other than
  any shareholder which merges with the Company in such merger, or which owns
  or controls another corporation which merges, with the Company in such merger)
  cease to own their shares or other equity interests in the Company, or (d) the
  sale of all or substantially all of the assets of the Company, any or all outstanding
  Options may be assumed, converted or replaced by the successor or acquiring
  corporation (if any), which assumption, conversion or replacement will be binding
  on all Participants. In the alternative, the successor or acquiring corporation
  may substitute equivalent Options or provide substantially similar consideration
  to Participants as was provided to shareholders (after taking into account the
  existing provisions of the Options). The successor or acquiring corporation
  may also issue, in place of outstanding Shares of the Company held by the Participant,
  substantially similar shares or other property subject to repurchase restrictions
  and other provisions no less favorable to the Participant than those which applied
  to such outstanding Shares immediately prior to such transaction described in
  this Subsection 16.1. In the event such successor or acquiring corporation (if
  any) refuses to assume or substitute Options, as provided above, pursuant to
  a transaction described in this Subsection 16.1, then notwithstanding any other
  provision in this Plan to the contrary, such Options will expire on such transaction
  at such time and on such conditions as the Board will determine. 

 16.2 Other Treatment of Options. 

 Subject to any greater rights granted to Participants under
  the foregoing provisions of this Section 16, in the event of the occurrence
  of any transaction described in subsection 16.1, any outstanding Options will
  be treated as provided in the applicable agreement or plan of merger, consolidation,
  dissolution, liquidation or sale of assets. 

 16.3 Assumption of Options by the Company. 

 The Company, from time to time, also may substitute or assume
  outstanding options granted by another company, whether in connection with an
  acquisition of such other company or otherwise, by either (a) granting an Option
  under this Plan in substitution of such other company's option, or (b) assuming
  such option as if it had been granted under this Plan if the terms of such assumed
  option could be applied to an Option granted under this Plan. Such substitution
  or assumption will be permissible if the holder of the substituted or assumed
  option would have been eligible to be granted an Option under this Plan if the
  other company had applied the rules of this Plan to such grant. In the event
  the Company assumes an option granted by another company, the terms and conditions
  of such option will remain unchanged (except that the exercise price and the
  number and nature of shares issuable upon exercise of any such option will be
  adjusted appropriately pursuant to Section 424(a) of the Code). In the event
  the Company elects to grant a new Option rather than assuming an existing option,
  such new Option may be granted with a similarly adjusted Exercise Price. 

 17. ADOPTION AND SHAREHOLDER APPROVAL. 

 This Plan will become effective on the date that it is adopted
  by the Board (the "Effective Date"). This Plan will be approved by the shareholders
  of the Company (excluding Shares issued pursuant to this Plan), consistent with
  applicable laws, within twelve (12) months before or after the Effective Date.
  Upon the Effective Date, the Board may grant Options pursuant to this Plan;
  provided, however, that: (a) no Option may be exercised prior to initial shareholder
  approval of this Plan, and (b) no Option granted pursuant to 

9

 an increase in the number of Shares approved by the Board
  shall be exercised prior to the time such increase has been approved by the
  shareholders of the Company. In the event that initial shareholder approval
  is not obtained within twelve (12) months before or after this Plan is adopted
  by the Board, all Options granted hereunder will be canceled. 

 18. TERM OF PLAN/GOVERNING LAW. 

 Unless earlier terminated as provided herein, this Plan will
  terminate ten (10) years from the Effective Date or, if earlier, the date of
  shareholder approval. This Plan and all agreements hereunder shall be governed
  by and construed in accordance with the laws of the State of Colorado. 

 19. AMENDMENT OR TERMINATION OF PLAN. 

 Subject to Section 5.9, the Board may at any time terminate
  or amend this Plan in any respect, including without limitation amendment of
  any form of Stock Option Agreement or instrument to be executed pursuant to
  this Plan; provided, however, that the Board will not, without the approval
  of the shareholders of the Company, amend this Plan in any manner that requires
  such shareholder approval pursuant to the laws of Colorado as such provisions
  apply to ISO plans. 

 20. NONEXCLUSIVITY OF THE PLAN. 

 Neither the adoption of this Plan by the Board, the submission
  of this Plan to the shareholders of the Company for approval, nor any provision
  of this Plan will be construed as creating any limitations on the power of the
  Board to adopt such additional compensation arrangements as it may deem desirable,
  including, without limitation, the granting of stock options or any other equity
  awards outside of this Plan, and such arrangements may be either generally applicable
  or applicable only in specific cases. 

 21. DEFINITIONS. 

 As used in this Plan, the following terms will have the following
  meanings: 

 "Board" means the Board of Directors of the Company. 

 "Cause" means Termination because of (i) any willful material
  violation by the Participant of any law or regulation applicable to the business
  of the Company or a Parent or Subsidiary of the Company, the Participant's conviction
  for or guilty plea to, a felony or a crime involving moral turpitude or any
  willful perpetration by the Participant of a common law fraud, (ii) the Participant's
  commission of an act of personal dishonesty which involves a personal profit
  in connection with the Company or any other entity having a business relationship
  with the Company, (iii) any material breach by the Participant of any material
  provision of any agreement or understanding between the Company or a Parent
  or Subsidiary of the Company and the Participant regarding the terms of the
  Participant's service as an employee, director or consultant to the Company
  or a Parent or Subsidiary of the Company, including without limitation, the
  willful and continued failure or refusal of the Participant to perform the material
  duties required of such Participant as an employee, director or consultant of
  the Company or a Parent or Subsidiary of the Company, other than as a result
  of having a Disability, or a breach of any applicable invention assignment and
  confidentiality agreement or similar agreement between the Company or a Parent
  or Subsidiary of the Company and the Participant, (iv) Participant's intentional
  disregard of the policies of the Company or a Parent or Subsidiary of the Company
  so as to cause loss, damage or injury to the property, reputation or employees
  of the Company or a Parent or Subsidiary of the Company, or (v) any other misconduct
  by the Participant which is materially injurious to the financial condition
  or business reputation of, or is otherwise materially injurious to, the Company
  or a Parent or Subsidiary of the Company. 

 "Code" means the Internal Revenue Code of 1986, as amended.

10

 "Committee" means the committee appointed by the Board to
  administer this Plan, or if no committee is appointed, the Board. "Company"
  means Destiny Media Technologies Inc., a Colorado corporation, or any successor
  corporation. 

 "Disability" means a disability, whether temporary or permanent,
  partial or total, as determined by the Committee. 

 "Exercise Price" means the price at which a holder of an Option
  may purchase the Shares issuable upon exercise of the Option. 

 "Fair Market Value" means, as of any date, the value of a
  share of the Company's common stock determined as follows:

	 	(a) 	if such common stock is then quoted on the Nasdaq
        National Market, its closing price on the Nasdaq National Market on the
        date of determination as reported in The Wall Street Journal; 

          

	 	(b) 	if such common stock is publicly traded and is then
        listed on a national securities exchange, its closing price on the date
        of determination on the principal national securities exchange on which
        the common stock is listed or admitted to trading as reported in The Wall
        Street Journal;

          

	 	(c) 	if such common stock is publicly traded but is not
        listed on the Nasdaq National Market nor listed or admitted to trading
        on a national securities exchange, the average of the closing bid and
        asked prices on the date of determination as reported by The Wall Street
        Journal (or, if not so reported, as otherwise reported by any newspaper
        or other source as the Board may determine); or 

          

	 	(d) 	if none of the foregoing is applicable, by the Committee
        in good faith.

"Option" means an award of an option to purchase Shares pursuant
  to Section 5. 

 "Parent" means any corporation (other than the Company) in
  an unbroken chain of corporations ending with the Company if each of such corporations
  other than the Company owns stock possessing 50% or more of the total combined
  voting power of all classes of stock in one of the other corporations in such
  chain. 

 "Participant" means a person who receives an Option under
  this Plan. 

 "Plan" means this Destiny Media Technologies Inc. 1999 Stock
  Option Plan, as amended from time to time. 

 "SEC" means the Securities and Exchange Commission. 

 "Securities Act" means the Securities Act of 1933, as amended.

 "Shares" means shares of the Company's common stock reserved
  for issuance under this Plan, as adjusted pursuant to Sections 2 and 16, and
  any successor security. 

 "Subsidiary" or "Subsidiaries" means any corporation or corporations
  (other than the Company) in an unbroken chain of corporations beginning with
  the Company if each of the corporations other than the last corporation in the
  unbroken chain owns stock possessing 50% or more of the total combined voting
  power of all classes of stock in one of the other corporations in such chain.

 "Termination" or "Terminated" means, for purposes of this
  Plan with respect to a Participant, that the Participant has for any reason
  ceased to provide services as an employee, officer, director or consultant to
  the Company or a Parent or Subsidiary of the Company. A Participant will not
  be deemed to have ceased to provide services in the case of (i) sick leave,
  (ii) military leave, or (iii) any other leave of absence approved by the Committee,
  provided that such leave is for a period of not more than ninety (90) 

11

 days, unless reinstatement (or, in the case of an employee
  with an ISO, reemployment) upon the expiration of such leave is guaranteed by
  contract or statute or unless provided otherwise pursuant to formal policy adopted
  from time to time by the Company and issued and promulgated in writing. In the
  case of any Participant on (i) sick leave, (ii) military leave or (iii) an approved
  leave of absence, the Committee may make such provisions respecting suspension
  of vesting of the Option while the Participant is on leave from the Company
  or a Parent or Subsidiary of the Company as the Committee may deem appropriate,
  except that in no event may an Option be exercised after the expiration of the
  term set forth in the Stock Option Agreement. The Committee will have sole discretion
  to determine whether a Participant has ceased to provide services and the effective
  date on which the Participant ceased to provide services (the "Termination Date").

 "Unvested Shares" means "Unvested Shares" as defined in Section
  2.2 of the Stock Option Agreement. 

 "Vested Shares" means "Vested Shares" as defined in Section
  2.2 of the Stock Option Agreement. 

12EXHIBIT 10.10
                                                                   -------------

               PATENTS PURCHASE, ASSIGNMENT AND LICENSE AGREEMENT

            This Patents Purchase, Assignment and License Agreement, entered
into on November 18, 2003 ("Effective Date"), is by and between MERLOT
COMMUNICATIONS, INC., with a principal place of business at 4 Berkshire
Boulevard, Bethel, Connecticut ("Seller"), and NETWORK-1 SECURITY SOLUTIONS,
INC., with a principal place of business at 445 Park Avenue, Suite 1028, New
York, New York, its successors and assigns ("Buyer").

            WHEREAS, Seller represents that it owns all right, title, and
interest to, and wishes to sell and assign to Buyer all right, title and
interest in and to, the inventions, patents and patent applications specified on
Exhibit A annexed hereto and incorporated herein by reference (each of which
shall individually be referred to as a "Patent" and collectively as the
"Patents"), under the terms and conditions set forth herein; and

            WHEREAS, Buyer wishes to purchase the Patents and accept such
assignment.

            NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:

            1. Assignment of Patents

                  a. Seller hereby assigns to Buyer, and Buyer hereby accepts,
all of Seller's right, title and interest in and to, the Patents (including any
reissues, continuations-in-part, revisions, extensions, and reexaminations
thereof), all related documentation, including, without limitation, all related
copyrights, if any, and the exclusive right to enforce the Patents in the United
States and throughout the world in the sole name of Buyer, its successors or
assigns, including all rights to profits and damages

<PAGE>

by reason of past infringement by any party or parties, including the right to
sue and collect same for Buyer's and Buyer's successors and assigns own use and
benefit, free and clear of any and all liens, encumbrances, or third party
claims. Seller shall execute the form of Assignment for each of the Patents
annexed hereto as Exhibit B simultaneously with Seller's execution hereof.

                  b. Other than the rights expressly set forth herein, Seller
shall hereinafter have no further or continuing interest in the Patents. In
addition, Seller represents that it has no interest in any other patent or
technology related to the Patents.

                  c. Upon the closing hereof, Seller shall provide to Buyer the
original certificates reflecting the registrations of the Patents, as well as
all files in Seller's possession or under its control regarding the technology
embodied in the Patents including, without limitation, its work, design,
engineering and search files for each Patent, all of Seller's files regarding
the prosecution of the Patents, and all documentation, including without
limitation, instruction manuals, relating to the Patents.

                  d. Seller appoints Buyer and Buyer's successors and assigns as
its attorney-in-fact to act in Seller's name and place to execute, deliver and
record any document or instrument of assignment or conveyance necessary to
perfect, grant and confirm the rights granted in paragraph 1(a) hereof, and
Seller conveys to the Buyer the right to make application in, prosecute, receive
and enforce in its own behalf and name the Patents.

                  e. Seller further agrees at any time to execute and to deliver
upon request of the Buyer, at Buyer's expense, such additional documents, if
any, as are necessary or desirable to secure patent protection on said
inventions, discoveries and

                                        2
<PAGE>

applications throughout all countries of the world (including, without
limitation, all documents relating to any reexaminations or reissuances), and
otherwise to do the necessary to give full effect to and to perfect the rights
of the Buyer to the Patents under this Agreement, including the execution,
delivery and procurement of any and all further documents evidencing this
assignment, transfer and sale as reasonably may be necessary or desirable.

                  f. Seller hereby covenants that no assignment, sale, agreement
or encumbrance has been or will be made or entered into by Seller which would
conflict with this assignment.

                  g. Seller further covenants that Buyer will, upon its request
and at its expense, be provided promptly with all pertinent facts and documents
relating to said invention and said Patents and legal equivalents as may be
known and accessible to Seller and will testify at Buyer's expense as to the
same in any interference, litigation or proceeding related thereto.

            2. Payments to Seller

                  a. Upon the execution hereof, Buyer shall pay or cause to be
paid to Seller the sum of One Hundred Thousand ($100,000) Dollars.

                  b. In addition to the sum set forth is paragraph 2(a) above,
for the term of each Patent Buyer shall pay Seller Twenty Percent (20%) of the
Net Income (as defined below) realized by Buyer from the sale or licensing of
the Patent, which shall be separately calculated for each Patent which comprises
the Patents, after the first Four Million ($4,000,000) Dollars of Net Income
realized by Buyer from the sale or licensing of each Patent.

                                        3
<PAGE>

                  c. For purposes of this Agreement, "Net Income" shall be
defined as gross income received from the licensing or sale of any Patent, less
the costs and expenses incurred by Buyer in licensing, selling, developing,
enforcing, and protecting said Patent. Buyer may not include its general
overhead in the calculation of "Net Income."

                  d. For the avoidance of doubt, there shall be no minimum
amounts due to Seller, nor is Buyer obligated to invest in, develop, or make any
use of the Patents. Notwithstanding the foregoing, during the first year after
the Closing, Buyer will incur a minimum of $200,000 in expenses in connection
with the development of the Patents, which shall include all expenses incurred
by Buyer in connection with the acquisition of rights hereunder.

                  e. Buyer shall make payment of Net Income to Seller on a
quarterly basis as follows: No later than forty five (45) days after the end of
each calendar quarter in which any payment is due to Seller, Buyer shall submit
to Seller a written report which shall include a written statement of Buyer's
Net Income during such quarterly period for each Patent, and showing a
calculation of the payment due based thereon. Each Quarterly Report shall be
accompanied by the remittance to Seller of the payment shown to be due on the
report.

                  f. Seller shall have the right to audit the books and records
of Buyer relating to Seller's Net Income upon reasonable advance notice to Buyer
at the place such books and records are normally maintained during normal
business hours not more than one time per year. Seller shall keep all
information to which it has access in any such audit strictly confidential.

                                        4
<PAGE>

                  g. Subject to the notice requirements set forth in paragraph 3
below, Seller may sell, transfer or assign its right to receive payments as set
forth in this paragraph 2 to any third party.

            3. Notice of Intention To Transfer Rights. Each of the parties
hereto shall provide the other with no less then 30 days advance notice prior to
entering into any binding agreement for the sale, transfer, or assignment of any
of its rights hereunder which may be sold, transferred, or assigned. This shall
not apply to Buyer's licensing of any Patent rights on a nonexclusive basis.

            4. License To Seller.

                  a. Buyer hereby grants to Seller, upon and subject to all the
terms and conditions of this Agreement, a nonexclusive, royalty free, license
for the term of each Patent to use the inventions, technologies and rights
embodied by the Patents in the development, manufacture, sale and offer for sale
of its own branded products for sale directly or indirectly (including through
authorized resellers) to end users.

                  b. Unless agreed to otherwise in writing by the Buyer and the
Seller, upon the sale of all or substantially all of the assets of Seller or
upon the acquisition of at least a controlling interest in Seller by any third
party which would itself or which has any affiliated entity which would, but for
the investment, require a license from the Buyer, the license granted in
paragraph 4(a) above shall automatically become a royalty bearing license
without further notice and without the need for any affirmative action by Buyer
or Seller, other than the negotiation of the royalty rate as set forth herein.
The royalty for such license shall be a commercially reasonable rate, which rate
shall be negotiated by Buyer and Seller in good faith.

                                        5
<PAGE>

                  c. Seller may not sell, transfer or sublicense any of the
rights licensed to it under this Agreement, except in connection with the
development, manufacture, sale or offer for sale of its products.

            5. Buyer's Right To Terminate Payments To Seller . Commencing with
January 1, 2007 through March 31, 2007, and from each January 1 through March 31
thereafter, Buyer shall have the option to terminate Seller's right to receive
payments on Net Income for each Patent as set forth in section 2(b) above by
notifying Seller that it wishes to do so in writing by no later than March 31
each year (the "Notice"), and agreeing to pay Seller the greater of: (i) two
times the payments Seller would otherwise be due from Net Income for the twelve
(12) months immediately following the notice for that Patent, such payment to be
made in four (4) quarterly installments together with the regularly scheduled
payments under section 2 hereof during such twelve (12) month period; and (ii)
$3 million plus an additional 10% added at the beginning of each year starting
on the fourth year (January 1, 2008) after the closing hereof for each Patent.
For clarification, payments will continue during the notice year, but will be
credited against the final purchase price and the cash alternative referred to
in (ii) above shall be the applicable amount for the year in which the Notice is
given by the Buyer. After the payment of all amounts owed hereunder, Buyer will
have no further obligation to make payments as set forth in paragraph 2(b)
above, to provide reports as set forth in paragraph 2(e) above, to provide the
notice required by paragraph 3 above, or to meet with Seller as required by
paragraph 7 below.

            6. Support By Seller. Seller shall provide Buyer reasonable access
to and assistance from Seller's employees and independent contractors as
requested by

                                        6
<PAGE>

Buyer at the sole cost and expense of Buyer to assist Buyer in creating or
filing enhancements to the Patents or any Patent, or in licensing or enforcing
the Patents or any Patent.

            7. Regular Updates. The parties agree that they shall regularly
meet, either in person or telephonically, on dates and at times to be mutually
agreed upon but no less then at one time per calendar quarter to discuss the
status of the Patents, and Buyer's licensing and enforcement efforts.

            8. Confidential Information. The parties hereto shall regard and
preserve as confidential all Confidential Information (defined below) related to
the business of the other party, except that information which is public
knowledge, which may be obtained by it from any source as a result of this
Agreement, or otherwise. The parties agree that they shall not and they shall
cause their employees, representatives, agents and licensees not to divulge,
furnish or make accessible to anyone such Confidential Information, except as
may be necessary from time to time in performance of their duties hereunder on a
limited "need to know" basis. This provision shall survive the termination of
this Agreement. "Confidential Information" shall be written information marked
confidential and oral information designated confidential and confirmed as such
in writing delivered not later than ten (10) days after such disclosure, and
shall include this Agreement, customer/account lists, and marketing plans,
whether or not marked as confidential or confirmed as such in writing.

            9. Choice of Law and Jurisdiction. This Agreement shall be deemed to
have been made and delivered in New York City and will be governed as to
validity,

                                        7
<PAGE>

interpretation, construction, effect and in all other respects by the internal
laws of the State of New York without giving effect the conflict of laws.

            10. Arbitration. Any controversy or claim arising under or in
relation to this Agreement, or the breach thereof, or the relations between
Buyer and Seller shall be submitted to arbitration by a panel of three
arbitrators (unless the amount in dispute is less than Twenty-Five Thousand
Dollars ($25,000) in which case there shall be only one arbitrator) in the City
of New York, New York, administered by the American Arbitration Association
under the then applicable Commercial Rules, and judgment on the award rendered
by the arbitrator(s) may be entered in any court having jurisdiction thereof;
provided however, that the arbitrator(s) shall be bound by the laws of the State
of New York and, regarding any questions related thereto, the trademark statutes
of the United States of America, and shall have no power to extend this
Agreement beyond its termination date, nor to order reinstatement or other
continuation of the parties' relationship after termination, nor to award
punitive, consequential, multiple, incidental or any other damages in excess of
the economic damages actually sustained by the claimant. If, and only if, the
arbitrator(s) shall determine that either party's position in arbitration was
not maintained in good faith, then the arbitrators shall award the other party a
reasonable attorney's fee.

            11. Notices. Notices to either party shall be in writing and shall
be deemed delivered when served in person or within three (3) business days
after being deposited in the mail, first class certified mail, postage prepaid
return receipt requested or one (1) business day after being dispatched by a one
day express courier service addressed as follows:

                                        8
<PAGE>

                            to:  Seller

                                 George Conant
                                 Chief Executive Officer
                                 Merlot Communications, Inc.
                                 4 Berkshire Blvd., Berkshire Corporate Park
                                 Bethel, CT 06801

                            to:  Buyer

                                 Sam Schwartz, Esq.
                                 Olshan Grundman Frome Rosenzweig & Wolosky LLP
                                 505 Park Avenue
                                 New York, New York 10022

            12. Miscellaneous

                  a. Waiver of Rights. The failure of a party to insist upon
strict adherence to any provision of this Agreement on any occasion shall not be
considered or deemed to be a waiver nor considered or deemed to deprive that
party of the right thereafter to insist upon strict adherence to that provision
or any other provision of this Agreement. Any waiver must be in writing.

                  b. Currency. All calculations and payments required under this
Agreement shall be in United States Dollars.

                  c. Complete Agreement & No Oral Modification. This Agreement
is a complete statement of all agreements among the parties with respect to the
subject matter hereof. Any amendment, modification, alteration or change must be
in writing signed by the parties.

                  d. Warranties of Fitness. The parties each warrant the
following: (1) that the delivery of this Agreement has been duly authorized; (2)
that the execution and delivery of this Agreement does not contravene any
contract or commitment to which it is a party or by which it is bound; and (3)
that it is not a party to

                                        9
<PAGE>

any suit, action, administrative proceeding, or investigation which, if
successful, would have a material, adverse effect on its properties, financial
conditions or business.

                  e. Construction and Headings. This Agreement's terms and
conditions were freely negotiated. The language shall be interpreted without
regard to any rule, law or presumption requiring the language to be construed,
interpreted or applied for or against either party. The headings contained in
this Agreement are for convenience of reference only and shall not limit or
otherwise affect any of the terms or provisions of this Agreement.

                  f. Independent Parties. The parties hereto acknowledge that
the relationship created between them by this Agreement is that of independent
contractors. As a result of this Agreement, no agency relationship or
association or partnership is created between them. Neither party is authorized
to and shall not incur any liability for the other. Neither party may become
directly, indirectly or contingently liable for nor shall it hold itself out as
having authority to represent or act for the other in any capacity whatsoever.
The relationship between the parties shall not be construed as a co-partnership
or joint venture or that of agent and principal.

                  g. Severability. In the event that any part of this Agreement
should be declared illegal for any reason by any legally constituted court or
government authority, the remaining portions shall not be invalidated on account
thereof and shall remain in full force and effect provided, however, that if as
a result of a declaration of illegality of a party of this Agreement the
essential purposes of this Agreement cannot be fulfilled, the Agreement shall
terminate forthwith, and all provisions of this Agreement relating to or
governing termination thereof shall come into effect.

                                       10
<PAGE>

                  h. Entire Agreement. This Agreement constitutes the entire
agreement and understanding between Buyer and Seller, and supersedes and cancels
any and all previous negotiations, representations, undertakings, understanding
and agreements heretofore made between them with respect to the subject matter
hereof.

                  i. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

                  j. Use of Counsel. The parties hereto represent that they have
each consulted with counsel of their own choosing in connection with the
negotiation and execution of this Agreement or have knowingly chosen not to do
so.

            IN WITNESS WHEREOF, the parties hereto are duly authorized to and do
hereby execute this Agreement as of the Effective Date.

MERLOT COMMUNICATIONS, INC.

By:  /s/George Conant
    ---------------------
Name: George Conant
Title:  President
Date:  November 18, 2003

NETWORK-1 SECURITY SOLUTIONS, INC.

By:  /s/Edward James
    ---------------------
Name:  Edward James
Title:  Interim Chief Executive Officer
Date:  November 18, 2003

                                       11
<PAGE>

                                    EXHIBIT A

1. 6,577,631: Communication switching module for the transmission and control of
audio, video, and computer data over a single network fabric

2. 6,574,242: Method for the transmission and control of audio, video, and
computer data over a single network fabric

3. 6,570,890: Method for the transmission and control of audio, video, and
computer data over a single network fabric using Ethernet packets

4. 6,539,011: Method for initializing and allocating bandwidth in a permanent
virtual connection for the transmission and control of audio, video, and
computer data over a single network fabric

5. 6,218,930: Apparatus and method for remotely powering access equipment over a
10/100 switched Ethernet network

6. 6,215,789: Local area network for the transmission and control of audio,
video, and computer data

                                       12
<PAGE>

                                    EXHIBIT B

                                   ASSIGNMENT

            WHEREAS, Merlot Communications Inc. ("Assignor"), a Delaware
corporation with an office at 4 Berkshire, Blvd., Berkshire Corporate Park,
Bethel, CT 06801, owns or has rights to United Status Patent No. [          ],
issued [         ].

            WHEREAS, Network-1 Security Solutions, Inc. ("Assignee"), a Delaware
corporation with a headquarters mailing address at 445 Park Avenue, Suite 1028,
New York, N.Y. 10022, wishes to acquire full rights and ownership of United
Status Patent No. [          ], issued [          ]

            NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor grants, conveys, assigns
and transfers to the Assignee and the Assignee's successors and assigns,
Assignor's entire right, title and interest in and to United States Patent No
[           ], including all corresponding applications such as continuations,
continuations-in-part, divisionals, provisionals, renewals, revivals, reissues,
reexaminations, extensions, and foreign counterparts thereof, along with the
subject matter of any and all claims which may be obtained in the
aforementioned, in the United States and every foreign country, including all
rights to profits and damages by reason of past infringement by any party or
parties, either the right to sue and collect same for Assignee's, and Assignee's
successors and assigns own use and benefit.

            UPON SAID CONSIDERATION, Assignor appoints Assignee and Assignee's
successors and assigns as its attorney-in-fact to act in Assignor's name and
place to execute, deliver and record any document or instrument of assignment or
conveyance necessary to perfect, grant and confirm the rights granted herein,
and Assignor conveys to the Assignee the right to make application in,
prosecute, receive and enforce in its own behalf and name United States Patent
No.[          ] , Issued [           ].

            IN WITNESS WHEREOF, Assignor has caused its Assignment to be duly
executed by one of its officers on the date shown below.

MERLOT COMMUNICATIONS INC.                      NETWORK-1 SECURITY
                                                SOLUTIONS, INC.

-------------------------                       -------------------------
BY                                              BY
-------------------------                       -------------------------
GEORGE CONANT                                   COREY M. HOROWITZ
PRESIDENT AND CEO

DATE:                                           DATE:
      ------------                                    ------------

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