Exhibit 99.2
Amendments to 1994 Outside Directors Stock Option Plan
Article 4 and Section 6(a) of the FalconStor Software, Inc. 1994 Outside
Directors Stock Option Plan shall read in its entirety as follows:
4. Shares Subject to Option. Options shall be for the purchase of
shares of authorized but unissued common stock or treasury shares of common
stock of the Company (the "Stock"), subject to adjustment as provided in
paragraph 8. The maximum number of shares of Stock which may be issued under the
Plan shall be Five Hundred Thousand (500,000) shares. In the event that any
outstanding Option for any reason expires or is terminated and/or shares of
Stock subject to repurchase are repurchased by the Company, the shares allocable
to the unexercised portion of such Option, or such repurchased shares, may again
be subject to an Option grant.
6. Terms, Conditions and Form of Options. Options granted pursuant
to the Plan shall be evidenced by written agreements specifying the number of
shares of Stock covered thereby (the "Option Agreement"), which written
agreement may incorporate all or any of the terms of the Plan by reference and
shall comply with and be subject to the following terms and conditions:
(a) Automatic Grant of Options. Subject to execution by an
Outside Director of an appropriate Option Agreement, options shall be granted
automatically and without further action of the Board, as follows:
(1) Each person who is newly elected or appointed as an
Outside Director after the Annual Meeting of Stockholders of the
Company held in 2002 (the "2002 Annual Meeting") shall be granted
an Option on the day of such initial election or appointment to
purchase Fifty Thousand (50,000) shares of Stock. In addition,
each person who was appointed as an Outside Director on August
22, 2001 was granted an option to purchase Fifteen Thousand
(15,000) shares of stock on August 22, 2001 and upon stockholder
approval of the amendments to the Plan at the 2002 Annual Meeting
will be granted an option to purchase an additional Thirty-Five
Thousand (35,000) shares of Stock.
(2) On the date of each Annual Meeting of Stockholders of
FalconStor Software, Inc. occurring on or after the date of the
2002 Annual Meeting, each Outside Director shall be granted an
Option to purchase Ten Thousand (10,000) shares of Stock.
(3) Notwithstanding the foregoing, any person may elect not
to receive an Option to be granted pursuant to this paragraph
6(a) by delivering written notice of such election to the Board
no later than the day prior to the date on which such Option
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would otherwise be granted. A person do declining an Option shall
receive no payment or other consideration in lieu of such
declined Option. A person who has declined an Option may revoke
such election by delivering written notice of such revocation to
the Board no later than the day prior to the date on which such
Option would be granted pursuant to paragraph 6(a).
(4) Notwithstanding any other provision of the Plan to the
contrary, no Option shall be granted to any individual on a day
when he or she is no longer serving as an Outside Director of the
Company.
