Exhibit 10.1


 





SEPARATION AND TRANSITION AGREEMENT
AND GENERAL RELEASE


In return for the
mutual promises in this Separation and Transition Agreement and General Release (the “Agreement”), FALCONSTOR SOFTWARE,
INC. (the “Company”), 823 Congress Ave, Suite 1300, Austin, Texas 78701, its predecessor companies, and its and their
respective stockholders, affiliates, subsidiaries, divisions, successors and assigns and the current and former employees, officers,
directors and agents thereof (collectively referred to throughout this Agreement as “Employer”), and PATRICK MCCLAIN,
his heirs, executors, administrators, successors, and assigns (collectively referred to throughout this Agreement as “You”),
agree as follows:


1.
Transition and Resignation. Effective April 9, 2018, you have resigned from your position as Chief Financial Officer
of the Company. You shall resign from your employment with the Company effective August 31, 2018 (the “Termination Date”).
Between April 9, 2018 and the Termination Date, you agree to assist the Company in the transition (the “Transition Period”).
The Company shall continue to pay You your current annual base salary during the Transition Period.


2.
Time to Return and Legal Review. You understand and agree that You have until May 2, 2018 to sign and return this
Agreement. You are advised to consult with an attorney, at your own expense, before signing. By signing, You acknowledge that Company
has advised You to consult with an attorney before signing, at your own expense, and that You have had enough time to do so. You
further understand that if You do not sign and return this Agreement by May 2, 2018, Company shall have no obligation to make any
payments or provide any benefits to You under this Agreement.


3.
Revocation.
You may revoke (cancel) this Agreement for a period of seven (7) calendar days after the day You sign this Agreement. Any revocation
within this period must be submitted, in writing, to the Company’s Director of Human Resources, and state, “I
hereby revoke my acceptance of our Agreement.” The revocation must be personally delivered to the Company’s Director
of Human Resources or a person he designates, or mailed to the Company’s Director of Human Resources and received within
seven (7) calendar days of your signing of this Agreement. This Agreement shall not become effective or enforceable until the revocation
period has expired without revocation by You. If the last day of the revocation period is a Saturday, Sunday, or legal holiday
in New York, then the revocation period shall not expire until the next following day which is not a Saturday, Sunday, or legal
holiday.


4.
Duty of Confidentiality. You expressly agree and confirm that You will comply with all of the terms and provisions
of the Confidentiality, Proprietary Information and Invention Agreement between You and the Company (the “Confidentiality
Agreement”). A copy will be provided to You upon request.



    	 



     


    




5.
Return of Company Property; Expenses. You represent and warrant that, You have returned to Company all property belonging
to Company, including but not limited to keycard, master and office keys, computer equipment, files, records, computer access codes,
cell phones, beepers, personal digital assistants (such as BlackBerry or iPhone), memoranda, letters, files, computer software,
business plans, instruction manuals and any other property whether furnished to You by the Company or which You have prepared or
helped to prepare in conjunction with Your employment with Company. You further agree to return to Company any such property You
find in Your possession after the date You sign and deliver this Agreement to Company. You will submit a final expense report by
August 31, 2018.


6.
Nondisparagement and References. You understand and agree that You will not disparage Company or any other “Released
Party” (as defined in Paragraph 11) or encourage or induce others to disparage Company or any other Released Party. If the
Company receives an inquiry regarding You from a prospective employer, the Employer agrees to confirm the positions You held, the
date You were employed by the Company, and that You resigned to pursue other opportunities . Nothing in this Agreement shall be
construed to prevent You, the Company or any Released Party from providing truthful and accurate testimony in any civil, criminal
or regulatory proceeding. Subject to your obligations under the Confidentiality Agreement, nothing in this Agreement shall be construed
to prevent You from providing factual information to a prospective employer that you resigned to pursue other opportunities.


7.
Consideration. In consideration for (i) Your signing and returning this Agreement, (ii) Your agreement to assist
the Company with the transition until August 31, 2018, and (iii) Your performance of the obligations under this Agreement and being
available to the Company for consultation until August 31, 2018, the Company agrees to (A) pay You $60,000.00 (minus applicable
withholdings and deductions) which is equal to three (3) months of your base salary at your current rate of pay. Such payments
shall be made on a semi-monthly basis as part of regular Company payroll (which shall be accelerated to a single payment on May
31, 2018 if the Company, in its sole discretion, determines that You have fulfilled your obligations to assist with the transition
per (ii) above) and (B) the Company shall continue to pay the Company portion of your current group health insurance benefits until
the earlier of (i) December 31, 2018 or (ii) the first date on which You become eligible for coverage under another group health
insurance plan, provided You timely elect and are eligible for COBRA coverage starting September 1, 2018. The Company also acknowledges
that You will be paid any earned MIP for Q12018 results in accordance with the MIP which has been approved by the Board.


8.
Availability. You are free to accept another position with another company after May 31, 2018 provided that You make
yourself available for calls, as needed to support the Company through August 31, 2018.


9.
Disclosure of this Agreement. You acknowledge that You understand that the Company is required to file this Agreement
with the SEC within four business days after it is fully executed. That filing shall be in the form of the Form 8-K which shall
state that You resigned to pursue other opportunities.



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10.
Nonadmission. You and Company each understand and agree that neither the signing of this Agreement nor the payment
of any money or benefits constitutes an admission by Company, or any other Released Party of any wrongdoing. Company and each other
Released Party expressly denies any liability or violation of law.


GENERAL RELEASE OF ALL CLAIMS


11.
Release of Company and other Released Parties. In consideration of (in return for) the benefits from Company as outlined
in Paragraph 6 as well as the release of You pursuant to Paragraph 11, You hereby irrevocably and unconditionally release, waive
and forever discharge Company, its affiliates, parents, successors, predecessors, subsidiaries, assigns, stockholders, directors,
officers, employees, representatives, agents, and attorneys (collectively, the “Released Parties”), from any and all
claims, agreements, causes of action, demands, or liabilities of any nature whatsoever arising, occurring or existing at any time
prior to the signing of this Agreement or arising out of any facts or circumstances that occurred or existed at any time prior
to the signing of this Agreement, whether known or unknown, except as to all claims that cannot be released under applicable law
(including claims of discrimination arising under federal law filed with or through a federal agency) or claims related to the
validity of this Agreement.


Examples of Claims
Released. You understand that this release is intended to and does waive:


		a.	Your ability to file a lawsuit against the Company for any and all claims arising from or relating
to Your employment with Company and/or the termination of Your employment with Company. This includes, but is not limited to, any
and all claims for breach of Company’s or its predecessor’s policies, rules, regulations, or handbooks or for breach
of expressed or implied contracts or expressed or implied covenants of good faith, and any and all claims for promissory estoppel,
wrongful discharge, defamation, invasion of privacy, violation of public policy, retaliation, mental distress or any other personal
injury; any and all claims for back pay, front pay, or for any kind of compensatory, special or consequential damages, punitive
or liquidated damages, attorneys’ fees, costs, disbursements or expenses of any kind whatsoever.



		b.	Any and all claims arising under the Family Medical Leave Act, as amended, that were available
on or prior to the date You sign this Agreement, whether known or unknown.



		c.	Any and all claims arising under the Age Discrimination in Employment Act, as amended, that were
available on or prior to the date You sign this Agreement, whether known or unknown.



		d.	Any and all other claims of any kind whatsoever that You had or may have against Company or any
other Released Party at the time You sign this Release, whether known or unknown. This includes, but is not limited to, any and
all rights or claims of any kind that You may have against Company or any other Released Party arising, existing or occurring (or
that arise out of any facts or circumstances that occurred or existed) before You became an employee and/or during any period of
time You acted as a consultant to the Company.



		e.	Any and all claims for payment for vacation pay.







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This provides examples
of the claims that are waived and is not a complete listing of waived claims.


Notwithstanding
the foregoing, nothing in this Agreement shall be construed to prevent You from being indemnified as an officer or Director of
the Company pursuant to the Company’s Amended and Restated By-Laws, or the General Corporation Law of the State of Delaware
or from filing a charge with or participating in an investigation conducted by any governmental agency, including, without limitation,
the United States Equal Employment Opportunity Commission (“EEOC”) or applicable state or city fair employment practices
agency, to the extent required or permitted by law. Nevertheless, You understand and agree that You are waiving any relief available
(including, for example, monetary damages or reinstatement), under any of the claims and/or causes of action waived in this Paragraph
9, including but not limited to financial benefit or monetary recovery from any lawsuit filed or settlement reached by the EEOC
or anyone else with respect to any claims released and waived in this agreement.


12.
No Claims Exist. You confirm that You have not filed, caused to be filed, or are a party to, any claim, charge, complaint,
or action against any Released Party in any court. In the event that any such claim, charge, complaint, or action is filed in
any court and You obtain a judgment, it is the intent of You and Company that all payments made to You under this Agreement shall
be offset against (the amount will be deducted from) any judgment You obtain.  You further confirm that You have no known workplace
injuries. In addition, You agree that it is the Company’s policy to comply with all applicable laws and regulations, including
its own policies. You are not aware of any violations of any such applicable laws or Company policies by the Company or anyone
associated with the Company.


You agree that you
shall not, at any time in the future, encourage any current or former Company employee, or any other person or entity, to file
any legal or administrative claim of any type or nature against the Company or any of its directors, officers, or employees. You
further agree that you shall not, at any time in the future, assist in any manner any current or former Company employee, or any
other person or entity, in the pursuit or prosecution of any legal or administrative claim of any type or nature against the Company
or any of its officers or employees, unless pursuant to a duly-issued subpoena or other compulsory legal process.


13.
Release of You. In consideration of (in return for) You entering into this Agreement and the release set forth in
Paragraph 9, the Company hereby irrevocably and unconditionally releases, waives and forever discharges You from any and all claims,
agreements, causes of action, demands or liabilities of any nature whatsoever arising, occurring or existing at any time prior
to the signing of this Agreement or arising out of any facts or circumstances that occurred or existed at any time prior to the
signing of this Agreement, whether known or unknown claims related to the validity of this Agreement other than (i) any claims
resulting from fraud or gross negligence committed by You, (ii) any claim that cannot be released under applicable law or (iii)
claims related to the validity of this Agreement.



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14.
No Claims Exist. The Company confirms that it has not filed, caused to be filed, or are a party to, any claim, charge,
complaint, or action against You in any court.


15.
COBRA Rights. Your regular coverage under Company’s medical and dental plans ends on August 31, 2018. You become
eligible to receive health care continuation coverage under the respective plans under COBRA and under applicable laws the day
after the regular coverage under the respective plans ends. If You timely elect health care continuation coverage under COBRA in
accordance with Section 4980B of the Code, You shall be entitled to receive COBRA continuation coverage for the maximum period
allowed under the law at your own expense, other than as set forth in Paragraph 8, and in accordance with the provisions
of COBRA, which provisions are more fully explained in the COBRA information provided to You by the Company. However, You will
no longer be eligible for any continuation coverage under COBRA if Your eligibility for continuation coverage ceases pursuant to
the provisions of COBRA.


16.
No Entitlement to Severance. You acknowledge that the compensation You are receiving is being received solely in
exchange for Your promises in this Agreement. You understand that severance pay is not ordinarily available under Company’s
policy to employees whose employment relationship ends. You further acknowledge that You have been paid all wages and provided
all benefits (including, but not limited to, base salary, bonuses, and paid time off/vacation).


17.
Cooperation. You shall assist in the orderly transition of all current projects and assignments. You will sign (and,
as necessary, at the Company’s expense, have notarized) all documents as reasonably requested by the Company, including all
documents relating to resignation from executive or director positions with the Company’s subsidiaries.


You shall cooperate
fully with Company and with Company’s counsel in connection with any present or future, actual or threatened, litigation
or administrative proceeding involving Company or any predecessor of Company that relates to events, occurrences or conduct occurring
(or claimed to have occurred) during the period of Your employment by Company or any predecessor to Company. This cooperation by
You shall include, but not be limited to (i) being reasonably available for interviews and discussions with Company’s
counsel as well as for depositions and trial testimony; (ii) if depositions or trial testimony are to occur, being reasonably available
and cooperating in the preparation therefore as and to the extent that Company’s or other party’s counsel reasonably
requests; (iii) refraining from impeding in any way Company’s prosecution or defense of such litigation or administrative
proceeding; and (iv) cooperating fully in the development and presentation of prosecution or defense of such litigation or
administrative proceeding.



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You will be reimbursed
by Company for reasonable travel, lodging, telephone and similar expenses incurred in connection with such cooperation.


18.
Governing Law. This Agreement shall be governed by the laws of the State of New York except to the extent preempted
by Federal law.


19.
Venue. Both You and the Company hereby irrevocably waive any objection that they now or hereafter may have to the
laying of venue of any action or proceeding arising out of or relating to this Agreement brought in the United States District
Court for the Eastern District of New York, or any New York state court, and any objection on the ground that any such action or
proceeding in either of such Courts has been brought in an inconvenient forum. This means that if Company sues you for violating
this Agreement, Company may do so in a state or federal court located in New York, including Suffolk County.


20.
Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, YOU AND THE COMPANY IRREVOCABLY WAIVE YOUR RESPECTIVE
RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. This means that only a judge,
not a jury, will decide any lawsuit.


21.
Amendment. This Agreement may not be modified, altered or changed except upon express written consent of both parties
in a document that specifically refers to this Agreement.


22.
Severability. Each provision of this Agreement is severable from the entire Agreement. In the event that any provision
is declared invalid or unenforceable, that provision shall be amended if possible to be enforceable, but in any event, the remaining
provisions of this Agreement shall remain in effect.


23.
Entire Agreement. You and the Company agree that: (a) this Agreement contains the entire agreement between the Released
Parties, the Company and You; and (b) that neither Company, any other Released Party, nor You has made any other representations
except those set forth in this Agreement to induce the other parties to agree to this Agreement.


YOU ACKNOWLEDGE
THAT YOU HAVE READ THIS AGREEMENT, THAT YOU HAVE BEEN GIVEN AN OPPORTUNITY TO HAVE ANY PARAGRAPHS EXPLAINED, AND THAT YOU UNDERSTAND
EACH PARAGRAPH OF THE AGREEMENT.


YOU HAVE BEEN ADVISED
THAT YOU HAVE TWENTY-ONE (21) CALENDAR DAYS TO CONSIDER THIS AGREEMENT AND YOU HAVE BEEN ADVISED IN WRITING TO CONSULT WITH AN
ATTORNEY BEFORE SIGNING THIS AGREEMENT.



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YOU AGREE THAT ANY
MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT DO NOT RESTART OR AFFECT IN ANY MANNER THE ORIGINAL TWENTY-ONE (21)
CALENDAR DAY CONSIDERATION PERIOD.


HAVING ELECTED TO
SIGN THIS AGREEMENT, TO FULFILL THE PROMISES SET FORTH IN THIS AGREEMENT, AND TO RECEIVE THE AMOUNTS SET FORTH IN PARAGRAPH “7”
ABOVE, YOU FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTER INTO THIS AGREEMENT INTENDING TO WAIVE, SETTLE AND RELEASE
ALL CLAIMS YOU HAVE OR MIGHT HAVE AS OF THE DATE OF SIGNING AGAINST THE COMPANY OTHER THAN SET FORTH IN PARAGRAPH 11 ABOVE.


IN WITNESS WHEREOF,
the parties hereto knowingly and voluntarily executed this Agreement as of the date set forth below:


	 	NAME	 	 	FalconStor Software, Inc.
	By:	
        /s/ Patrick McClain
	 	By:	
        Todd Brooks

	 	Patrick McClain	 	 	
        Todd Brooks, Chief Executive Officer

         

	Date:	
   

	 	Date:	
   




 








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