EXHIBIT 4.3
FALCONSTOR SOFTWARE, INC.
2000 STOCK OPTION PLAN, AS AMENDED
1. PURPOSE OF THE PLAN.
This 2000 Stock Option Plan, as amended (the "Plan") is intended as
an incentive, to retain in the employ of and as directors, employees,
consultants and advisors to FALCONSTOR SOFTWARE, INC., a Delaware corporation
(the "Company") and any Subsidiary of the Company, within the meaning of Section
424(f) of the United States Internal Revenue Code of 1986, as amended (the
"Code") or any entities affiliated with the Company who were formed or whose
principal place of business is Taiwan ("Affiliate"), persons of training,
experience and ability, to attract new employees, directors, consultants and
advisors whose services are considered valuable, to encourage the sense of
proprietorship and to stimulate the active interest of such persons in the
development and financial success of the Company and its Subsidiaries.
It is further intended that certain options granted pursuant to the
Plan shall constitute incentive stock options within the meaning of Section 422
of the Code (the "Incentive Options") while certain other options granted
pursuant to the Plan shall be nonqualified stock options (the "Nonqualified
Options"). Incentive Options and Nonqualified Options are hereinafter referred
to collectively as "Options."
In all cases, the terms, provisions, conditions and limitations of
the Plan shall be construed and interpreted consistent with the Company's intent
as stated in this Section 1.
2. ADMINISTRATION OF THE PLAN.
The Board of Directors of the Company (the "Board") may appoint and
maintain as administrator of the Plan a Committee (the "Committee") consisting
of two or more directors that shall serve at the pleasure of the Board. Until
such a Committee is appointed, the Board shall have the full power and authority
to take any and all actions hereunder. The Committee, subject to Sections 3 and
5 hereof, shall have full power and authority to designate recipients of
Options, to determine the terms and conditions of respective Option agreements
(which need not be identical) and to interpret the provisions and supervise the
administration of the Plan. The Committee shall have the authority, without
limitation, to designate which Options granted under the Plan shall be Incentive
Options and which shall be Nonqualified Options. To the extent any Option does
not qualify as an Incentive Option, it shall constitute a separate Nonqualified
Option.
Subject to the provisions of the Plan, the Committee and/or Board
shall interpret the Plan and all Options granted under the Plan, shall make such
rules as it deems necessary for the proper administration of the Plan, shall
make all other determinations necessary or advisable for the administration of
the Plan and shall correct any defects or supply any omission or reconcile any
inconsistency in the Plan or in any Options granted under the Plan in the manner
and to the extent that the Committee or Board deems desirable to carry into
effect the Plan or any Options. The act or determination of a majority of the
Committee or Board shall be the act or determination of the Committee or Board,
as applicable, and any decision reduced to writing and signed by all of the
members of the Committee or the Board shall be fully effective as if it had been
made by a majority at a meeting duly held. Subject to the provisions of the
Plan, any action taken or determination made by the Committee and/or Board
pursuant to this and the other Sections of the Plan shall be conclusive on all
parties.
Until a Committee is appointed, or in the event that for any reason
the Committee is unable to act, or if there shall be no such Committee, then the
Plan shall be administered by the Board, and references herein to the Committee
(except in the proviso to this sentence) shall be deemed to be references to the
Board.
3. DESIGNATION OF OPTIONEES.
The persons eligible for participation in the Plan as recipients of
Options (the "Optionees") shall include employees, officers and directors of,
and consultants and advisors to, the Company or any Subsidiary; provided that
Incentive Options may only be granted to employees of the Company and the
Subsidiaries. In selecting Optionees, and in determining the number of shares to
be covered by each Option granted to Optionees, the Committee may consider the
office or position held by the Optionee or the Optionee's relationship to the
Company, the Optionee's degree of responsibility for and contribution to the
growth and success of the Company or any Subsidiary, the Optionee's length of
service, age, promotions, potential and any other factors that the Committee may
consider relevant. An Optionee who has been granted an Option hereunder may be
granted an additional Option or Options, if the Committee shall so determine.
4. STOCK RESERVED FOR THE PLAN.
Subject to adjustment as provided in Section 7 hereof, a total of
14,162,296 shares of the Company's Common Stock, $.001 par value per share (the
"Stock"), shall be subject to the Plan. The shares of Stock subject to the Plan
shall consist of unissued shares or previously issued shares held by any
Subsidiary or Affiliate of the Company, and such amount of shares of Stock shall
be and is hereby reserved for such purpose. Any of such shares of Stock that may
remain unsold and that are not subject to outstanding Options at the termination
of the Plan shall cease to be reserved for the purposes of the Plan, but until
termination of the Plan the Company shall at all times reserve a sufficient
number of shares of Stock to meet the requirements of the Plan. Should any
Option expire or be canceled prior to its exercise in full or should the number
of shares of Stock to be delivered upon the exercise in full of an Option be
reduced for any reason, the shares of Stock theretofore subject to such Option
may be subject to future Options under the Plan.
5. TERMS AND CONDITIONS OF OPTIONS.
Options granted under the Plan shall be subject to the following
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) OPTION PRICE. The purchase price of each share of Stock
purchasable under an Incentive Option shall be determined by the Committee or
the Board at the time of grant, but shall not be less than 100% of the Fair
Market Value (as defined below) of such share of Stock on the date the Option is
granted; provided, however, that with respect to an Optionee who, at the time
such Incentive Option is granted, owns (within the meaning of Section 424(d) of
the Code) more than 10% of the total combined voting power of all classes of
stock of the Company or of any Subsidiary, the purchase price per share of Stock
shall be at least 110% of the Fair Market Value per share of Stock on the date
of grant. The purchase price of each share of Stock purchasable under a
Nonqualified Option shall not be less than 80% of the Fair Market Value of such
share of Stock on the date the Option is granted. The exercise price for each
Option shall be subject to adjustment as provided in Section 7 below. "Fair
Market Value" means the closing price of publicly traded shares of Stock on the
principal securities exchange on which shares of Stock are listed (if the shares
of Stock are so listed), or on the NASDAQ Stock Market (if the shares of Stock
are regularly quoted on the NASDAQ Stock Market), or, if not so listed or
regularly quoted, the mean between the closing bid and asked prices of publicly
traded shares of Stock in the over-the-counter market, or, if such bid and asked
prices shall not be available, as reported by any nationally recognized
quotation service selected by the Company, or as determined by the Committee in
a manner consistent with the provisions of the Code. Anything in this Section
5(a) to the contrary notwithstanding, in no event shall the purchase price of a
share of Stock be less than the minimum price permitted under the rules and
policies of any national securities exchange on which the shares of Stock are
listed.
(b) OPTION TERM. The term of each Option shall be fixed by the
Committee, but no Option shall be exercisable more than ten years after the date
such Option is granted and in the case of an Incentive Option granted to an
Optionee who, at the time such Incentive Option is granted, owns (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or of any Subsidiary, no
such Incentive Option shall be exercisable more than five years after the date
such Incentive Option is granted.
(c) EXERCISABILITY; LOCK-UP. Subject to Section 5(j) hereof, Options
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at the time of grant. Unless
otherwise determined by the Committee or Board at grant, each Optionee will
agree that if so requested by the Company or any representative of the
underwriters (the "Managing Underwriter") in connection with a registration of
the offering of any equity securities of the Company under the Securities Act of
1933, as amended (the "Securities Act"), the Optionee shall not sell or
otherwise transfer any Stock or other securities of the Company during the
180-day period (or such longer period as may be requested in writing by the
Managing Underwriter and agreed to in writing by the Company) (the "Market
Standoff Period") following the effective date of a registration statement of
the Company filed under the Securities Act, provided, however, that such
restriction shall apply only to the first registration statement of the Company
to become effective under the Securities Act that includes securities to be sold
on behalf of the Company to the public in an underwritten public offering under
the Securities Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such Market Standoff Period.
(d) METHOD OF EXERCISE. Options to the extent then exercisable may
be exercised in whole or in part at any time during the option period, by giving
written notice to the Company specifying the number of shares of Stock to be
purchased, accompanied by payment in full of the purchase price, in cash, or by
check or such other instrument as may be acceptable to the Committee. As
determined by the Committee, in its sole discretion, at or after grant, payment
in full or in part may be made at the election of the Optionee (i) in the form
of Stock owned by the Optionee (based on the Fair Market Value of the Stock on
the trading day before the Option is exercised) which is not the subject of any
pledge or security interest, (ii) in the form of shares of Stock withheld by the
Company from the shares of Stock otherwise to be received with such withheld
shares of Stock having a Fair Market Value on the date of exercise equal to the
exercise price of the Option, or (iii) by a combination of the forgoing,
provided that the combined value of all cash and cash equivalents and the Fair
Market Value of any shares surrendered to the Company is at least equal to such
exercise price and except with respect to (ii) above, such method of payment
will not cause a disqualifying disposition of all or a portion of the Stock
received upon exercise of an Incentive Option. Not withstanding the foregoing,
an Optionee may not take any actions which are prohibited by the Sarbanes-Oxley
Act of 2002 and the rules and regulations promulgated by the Securities and
Exchange Commission or any other agency thereunder. An Optionee shall have the
right to dividends and other rights of a stockholder with respect to shares of
Stock purchased upon exercise of an Option at such time as the Optionee has
given written notice of exercise and has paid in full for such shares and (ii)
has satisfied such conditions that may be imposed by the Company with respect to
the withholding of taxes.
(e) NON-TRANSFERABILITY OF OPTIONS. Options are not transferable and
may be exercised solely by the Optionee during his lifetime or after his death
by the person or persons entitled thereto under his will or the laws of descent
and distribution. The Committee, in its sole discretion, may permit a transfer
of a Nonqualified Option to (i) a trust for the benefit of the Optionee or (ii)
a member of the Optionee's immediate family (or a trust for his or her benefit).
Any attempt to transfer, assign, pledge or otherwise dispose of, or to subject
to execution, attachment or similar process, any Option contrary to the
provisions hereof shall be void and ineffective and shall give no right to the
purported transferee.
(f) TERMINATION BY DEATH. Unless otherwise determined by the
Committee at grant, if any Optionee's employment with or service to the Company
or any Subsidiary or Affiliate terminates by reason of death, the Option may
thereafter be exercised, to the extent then exercisable (or on such accelerated
basis as the Committee shall determine at or after grant), by the legal
representative of the estate or by the legatee of the Optionee under the will of
the Optionee, for a period of one year after the date of such death or until the
expiration of the stated term of such Option as provided under the Plan,
whichever period is shorter.
(g) TERMINATION BY REASON OF DISABILITY. Unless otherwise determined
by the Committee at grant, if any Optionee's employment with or service to the
Company or any Subsidiary or Affiliate terminates by reason of total and
permanent disability, any Option held by such Optionee may thereafter be
exercised, to the extent it was exercisable at the time of termination due to
Disability (or on such accelerated basis as the Committee shall determine at or
after grant), but may not be exercised after three months after the date of such
termination of employment or service or the expiration of the stated term of
such Option, whichever period is shorter; provided, however, that, if the
Optionee dies within such three month period, any unexercised Option held by
such Optionee shall thereafter be exercisable to the extent to which it was
exercisable at the time of death for a period of one year after the date of such
death or for the stated term of such Option, whichever period is shorter.
(h) TERMINATION BY REASON OF RETIREMENT. Unless otherwise determined
by the Committee at grant, if any Optionee's employment with or service to the
Company or any Subsidiary or Affiliate terminates by reason of Normal or Early
Retirement (as such terms are defined below), any Option held by such Optionee
may thereafter be exercised to the extent it was exercisable at the time of such
Retirement (or on such accelerated basis as the Committee shall determine at or
after grant), but may not be exercised after three months after the date of such
termination of employment or service or the expiration of the stated term of
such Option, whichever period is shorter; provided, however, that, if the
Optionee dies within such three month period, any unexercised Option held by
such Optionee shall thereafter be exercisable, to the extent to which it was
exercisable at the time of death, for a period of one year after the date of
such death or for the stated term of such Option, whichever period is shorter.
For purposes of this paragraph (h) "Normal Retirement" shall mean
retirement from active employment with the Company or any Subsidiary or
Affiliate on or after the normal retirement date specified in the applicable
Company or Subsidiary pension plan or if no such pension plan, age 65, and
"Early Retirement" shall mean retirement from active employment with the Company
or any Subsidiary or Affiliate pursuant to the early retirement provisions of
the applicable Company or Subsidiary pension plan or if no such pension plan,
age 55.
(i) OTHER TERMINATION. Unless otherwise determined by the Committee
at grant, if any Optionee's employment with or service to the Company or any
Subsidiary or Affiliate terminates for any reason other than death, Disability
or Normal or Early Retirement, the Option shall thereupon terminate, except that
the portion of any Option that was exercisable on the date of such termination
of employment or service may be exercised for the lesser of 30 days after the
date of termination or the balance of such Option's term if the Optionee's
employment or service with the Company or any Subsidiary or Affiliate is
terminated by the Company or such Subsidiary without cause (the determination as
to whether termination was for cause to be made by the Committee). The transfer
of an Optionee from the employ of or service to the Company to the employ of or
service to a Subsidiary or Affiliate, or vice versa, or from one Subsidiary or
Affiliate to another, shall not be deemed to constitute a termination of
employment or service for purposes of the Plan.
(j) LIMIT ON VALUE OF INCENTIVE OPTION. The aggregate Fair Market
Value, determined as of the date the Incentive Option is granted, of Stock for
which Incentive Options are exercisable for the first time by any Optionee
during any calendar year under the Plan (and/or any other stock option plans of
the Company or any Subsidiary) shall not exceed $100,000.
(k) TRANSFER OF INCENTIVE OPTION SHARES. The stock option agreement
evidencing any Incentive Options granted under this Plan shall provide that if
the Optionee makes a disposition, within the meaning of Section 424(c) of the
Code and regulations promulgated thereunder, of any share or shares of Stock
issued to him upon exercise of an Incentive Option granted under the Plan within
the two-year period commencing on the day after the date of the grant of such
Incentive Option or within a one-year period commencing on the day after the
date of transfer of the share or shares to him pursuant to the exercise of such
Incentive Option, he shall, within 10 days after such disposition, notify the
Company thereof and immediately deliver to the Company any amount of United
States federal, state and local income tax withholding required by law.
(l) LIMIT ON GRANTS. No Optionee shall be granted, in total, Options
to purchase more than 15% of the shares of Stock reserved for the Plan.
6. TERM OF PLAN.
No Option shall be granted pursuant to the Plan on or after May 1,
2010, but Options theretofore granted may extend beyond that date.
7. CAPITAL CHANGE OF THE COMPANY.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure
affecting the Stock, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares reserved for issuance under the Plan
and in the number and option price of shares subject to outstanding Options
granted under the Plan, to the end that after such event each Optionee's
proportionate interest shall be maintained as immediately before the occurrence
of such event.
8. PURCHASE FOR INVESTMENT.
Unless the Options and shares covered by the Plan have been
registered under the Securities Act, or the Company has determined that such
registration is unnecessary, each person exercising an Option under the Plan may
be required by the Company to give a representation in writing that he is
acquiring the shares for his own account for investment and not with a view to,
or for sale in connection with, the distribution of any part thereof.
9. TAXES.
The Company may make such provisions as it may deem appropriate,
consistent with applicable law, in connection with any Options granted under the
Plan with respect to the withholding of any taxes or any other tax matters.
10. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on May 1, 2000, as approved by the Board
and by majority vote of the Company's stockholders as of such date.
11. AMENDMENT AND TERMINATION.
The Board may amend, suspend, or terminate the Plan, except that no
amendment shall be made that would impair the rights of any Optionee under any
Option theretofore granted without the Optionee's consent, and except that no
amendment shall be made which, without the approval of the stockholders of the
Company would:
(a) materially increase the number of shares that may be issued
under the Plan, except as is provided in Section 7;
(b) materially increase the benefits accruing to the Optionees under
the Plan;
(c) materially modify the requirements as to eligibility for
participation in the Plan;
(d) decrease the exercise price of an Incentive Option to less than
100% of the Fair Market Value per share of Stock on the date of grant thereof or
the exercise price of a Nonqualified Option to less than 80% of the Fair Market
Value per share of Stock on the date of grant thereof; or
(e) extend the term of any Option beyond that provided for in
Section 5(b).
The Committee may amend the terms of any Option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Optionee without the Optionee's consent. The Committee may also substitute
new Options for previously granted Options, including options granted under
other plans applicable to the participant and previously granted Options having
higher option prices, upon such terms as the Committee may deem appropriate.
12. GOVERNMENT REGULATIONS.
The Plan, and the grant and exercise of Options hereunder, and the
obligation of the Company to sell and deliver shares under such Options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies, national securities exchanges and interdealer
quotation systems as may be required.
13. GENERAL PROVISIONS.
(a) CERTIFICATES. All certificates for shares of Stock delivered
under the Plan shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, or other
securities commission having jurisdiction, any applicable Federal or state
securities law, any stock exchange or interdealer quotation system upon which
the Stock is then listed or traded and the Committee may cause a legend or
legends to be placed on any such certificates to make appropriate reference to
such restrictions.
(b) EMPLOYMENT MATTERS. The adoption of the Plan shall not confer
upon any Optionee of the Company or any Subsidiary or Affiliate any right to
continued employment or, in the case of an Optionee who is a director, continued
service as a director, with the Company or a Subsidiary or Affiliate, as the
case may be, nor shall it interfere in any way with the right of the Company or
any Subsidiary or Affiliate to terminate the employment of any of its employees,
the service of any of its directors or the retention of any of its consultants
or advisors at any time.
(c) LIMITATION OF LIABILITY. No member of the Board or the
Committee, or any officer or employee of the Company acting on behalf of the
Board or the Committee, shall be personally liable for any action, determination
or interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.
(d) REGISTRATION OF STOCK. Notwithstanding any other provision in
the Plan, no Option may be exercised unless and until the Stock to be issued
upon the exercise thereof has been registered under the Securities Act and
applicable state securities laws, or are, in the opinion of counsel to the
Company, exempt from such registration in the United States. The Company shall
not be under any obligation to register under applicable federal or state
securities laws any Stock to be issued upon the exercise of an Option granted
hereunder in order to permit the exercise of an Option and the issuance and sale
of the Stock subject to such Option, although the Company may in its sole
discretion register such Stock at such time as the Company shall determine. If
the Company chooses to comply with such an exemption from registration, the
Stock issued under the Plan may, at the direction of the Committee, bear an
appropriate restrictive legend restricting the transfer or pledge of the Stock
represented thereby, and the Committee may also give appropriate stop transfer
instructions with respect to such Stock to the Company's transfer agent.
FALCONSTOR SOFTWARE, INC.
