EXHIBIT 99.2
FALCONSTOR SOFTWARE, INC. LOCK-UP AGREEMENT
As of October 18, 2002
To Whom It May Concern:
Pursuant to an Agreement and Plan of Merger and Reorganization,
dated as of May 4, 2001 (the "Agreement"), Empire Acquisition Corp., a wholly
owned subsidiary of Network Peripherals Inc. ("NPI"), merged with and into
FalconStor, Inc. (the "Merger"), with the surviving entity called FalconStor
Software, Inc. (the "Company"). To induce NPI to enter into the Agreement, the
undersigned, during the period that commenced on August 22, 2001 and ends on
August 22, 2002 (the "Lock-Up Period"):
(i) agreed not to, directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be
similarly bound) any securities received by the undersigned
in connection with the Merger; and
(ii) acknowledged that following August 22, 2001, the Company's
Board of Directors may, in its sole discretion, release any
or all of the shares held by the undersigned from the
obligations of this letter prior to the expiration of the
Lock-Up Period.
Effective January 7, 2002, certain shareholders, including the
undersigned, agreed to extend the Lock-Up Period until and including April 30,
2003 (the "Lock-Up Extension").
As set forth in the attached letter, the Board of Directors believes
it would be beneficial for all stockholders who have shares that are currently
subject to the Lock-Up to extend the Lock-Up Extension until April 30, 2004. In
consideration for your agreement, the Board of Directors of the Company will,
each calendar quarter through April 30, 2004, release a portion of your
remaining stock subject to the lock-up on the following schedule:
Quarter Number of Shares Released
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Fourth Quarter 2002 5,000
First Quarter 2003 10,000
Second Quarter 2003 10,000
Third Quarter 2003 10,000
Fourth Quarter 2003 10,000
First Quarter 2004 15,000
Second Quarter 2004 20,000
The Board of Directors will send a written notice of each release. Once the
shares are released from the lock-up, such shares will remain free from the
terms of the lock-up whether or not you agree to sell such shares during the
quarter.
By executing this letter, you agree to extend the Lock-Up Extension
(the "Second Lock-Up Extension") until and including April 30, 2004, and you
acknowledge the beneficial benefits to you of this extension and the quarterly
releases of your locked-up stock.
The Second Lock-Up Extension will not be effective unless certain
stockholders identified by the Company's Board of Directors agree to the Second
Lock-Up Extension. We will send you written notice of the effectiveness of the
Second Lock-Up Extension.
In order to facilitate an orderly sale of stock subject to the
lock-up, if the Board of Directors decided to release any shares before the
expiration of the Lock-Up Extension, you agreed to use either HD Brous & Co.,
Inc., Ladenberg, Thalman & Co., Inc., Wien Securities Corp. or Janney Montgomery
Scott LLC. Through April 30, 2004, shares released, including the quarterly
releases set forth above, must be made through one of these broker-dealers. If
you wish to continue to use the broker-dealer you selected when you agreed to
the Lock-Up Extension, you do not have to re-select a broker-dealer.
If you wish to change to one of the other broker-dealers listed
above, or if any of the other information you provided when you agreed to the
Lock-Up Extension has changed, please note the change in the annexed form.
PLEASE RETURN THIS SIGNED LETTER BY FAX TO THE ATTENTION OF SETH
HOROWITZ, THE COMPANY'S GENERAL COUNSEL, AT (631) 777-2551 BY 11 A.M., E.D.T.,
ON TUESDAY, OCTOBER 22, 2002. PLEASE ALSO MAIL THE SIGNED LETTER TO:
FALCONSTOR SOFTWARE, INC.
125 BAYLIS ROAD
MELVILLE, NY 11747
ATTN: SETH HOROWITZ
The undersigned hereby represents and warrants that the undersigned
has full power and authority to execute this letter and enter the agreements set
forth herein, and that, upon request, the undersigned will execute any
additional documents necessary or desirable in connection with the enforcement
hereof.
All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and any obligations of the
undersigned shall be binding upon the heirs, personal representatives,
successors, and assigns of the undersigned.
Very truly yours,
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Stockholder's Signature
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Print Name
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Name and Address
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Social Security or Taxpayer Identification No.
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Broker choice (if you are already a registered broker-
dealer, please provide the name of your brokerage firm):
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E-mail address:
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Facsimile number:
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Telephone No. (Day):
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Telephone No. (Night):
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Cellular Telephone No.
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FalconStor Software (FALC)
Filed: 25 Oct 02, 12:00am