EXHIBIT 10.1

NetManage, Inc. Key Employee Retention and Severance Benefit Plan

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KEY EMPLOYEE RETENTION AND SEVERANCE BENEFITS AGREEMENT

This Retention and Severance Benefits Agreement (“Agreement”) is by and between
NetManage, Inc., a Delaware Corporation (“Company”), and
                                         (“Employee”), collectively known as the
Parties and is effective as of                                         
(“Effective Date”).

WHEREAS, Employee is an employee of the Company; and

WHEREAS, Company intends to retain existing key employees by providing those key
employees with; (1) additional stock and (2) a retention bonus as provided
herein.

NOW, THEREFORE, it is hereby agreed by and between Company and Employee:

 

1. Stock Option Grant

 

  1.1 Number of Shares:

Subject to the limitations of Section 9 and other terms and conditions of this
Agreement, Employee will receive ______ options to purchase shares of Company’s
common stock, at the fair market price, under Company’s 1999 Non-statutory Stock
Option Plan, on the          day of                             , 2007(“Grant
Date”).

 

  1.2 Vesting:

Option shall vest as follows: (a) 50% of options shall vest on the one-year
anniversary of the Grant Date and, (b) the remaining 50% shall vest on the
two-year anniversary of the Grant Date.

 

  1.3 Acceleration Events:

 

  1.3.1 If Employee is terminated within two years following the date of a
Change of Control of the Company without Cause or during this period Employee
voluntarily terminates employment for Good Reason, any unvested Options granted
pursuant to this Agreement shall immediately fully vest and become exercisable
on Employee’s termination date.

 

  1.3.2 In the event of a Change of Control of the Company, if the surviving
company, successor company or parent company, as applicable, does not assume any
Options granted pursuant to this Agreement then held by Employee, any unvested
portion of such Options shall immediately fully vest and become exercisable
immediately prior to the effective time of the Change of Control.

 

2. RETENTION BONUS PAYMENT.

 

 

2.1

1st Year Retention Bonus

Subject to the limitations of Section 9 and other terms and conditions of this
Agreement, Employee will receive a cash bonus of 25% of Employee’s base salary
on the one-year anniversary of the Grant Date as indicated in Section 1.1. Base
salary for purposes of this Agreement shall be Employee’s base salary in effect
as of the Grant Date.

 

 

2.2

2nd Year Retention Bonus

Subject to the limitations of Section 9 and other terms and conditions of this
Agreement, Employee will receive a cash bonus of 50% of Employee’s base salary
on the two-year anniversary date of the Grant Date as indicated in Section 1.1.
Base salary for purposes of this Agreement shall be Employee’s base salary in
effect as of the Grant Date.

 

  2.3 Service Requirement

Employee must be employed by Company on the bonus payment date and must have
been continuously employed by Company since the Grant Date in order to receive
any retention bonus.

 

  2.4 Bonus Payment Date

All payments under this Section 2 shall be made as soon as possible after
becoming due and payable and, in any event, no later than two and one-half
(2 1/2 ) months following the taxable year of Employee in which such payment
becomes due and payable.

 

3. SEVERANCE BENEFITS

Subject to the limitations of Section 9 and other terms and conditions of this
Agreement, if Employee is terminated within two years following the date of a
Change of Control of the Company without Cause or during this period he or she
voluntarily terminates his or her employment for Good Reason and properly
executes a Standard Release Agreement, Employee shall receive the following
severance benefits beginning immediately following his or her termination of
employment;

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  3.1 Cash Severance

Employee shall receive              months of base salary. Cash severance
benefits shall be paid in accordance with Company’s normal payroll practices.
Notwithstanding the foregoing, under no circumstances will cash severance
payments: (a) exceed two times the lesser of Employee’s annualized compensation
based on the annual rate of pay for services provided to Company for Employee’s
taxable year preceding the table year in which Employee terminates employment
with Company (adjusted for any increase during that year that was expected to
continue indefinitely if Employee had not terminated employment), and the
maximum amount that may be taken into account under a qualified plan pursuant to
Internal Revenue Code (“Code”) Section 401(a)(17) for the year in which Employee
terminates employment; and (b) continue beyond the end of the second calendar
year following the year in which Employee terminates employment.

 

  3.2 Health Benefits

Provided Employee timely elects COBRA continuation coverage for applicable
health, dental and vision benefits, Company shall pay his or her COBRA premiums
for such coverage for the same period of time during which Employee receives
cash severance payments as described in Section 3.1 above. COBRA continuation
coverage shall terminate before the end of the period Employee receives cash
severance subject to standard COBRA rules.

 

  3.3 Outplacement Services

Company shall reimburse Employee for reasonable outplacement service expenses
actually incurred by Employee and directly related to his or her termination of
employment, not to exceed a total cost of Fifteen Thousand Dollars ($15,000.00).
All such expenses must have been incurred by the end of the second calendar year
following the year in which Employee terminates employment. Reimbursement for
such expenses shall be paid no later than the end of the third calendar year
following the year in which Employee terminates employment.

 

4. NO SPECIAL EMPLOYMENT RIGHTS

Nothing in this Agreement shall: (a) be deemed to confer on Employee any right
to employment or continued employment with the Company; or (b) effect any right
that Company may have to terminate the employment of Employee at any time.

 

5. BENEFICIARY

In the event Employee dies prior to the full payment of any cash severance
benefits due hereunder, Company shall pay such amount in a lump sum to
Employee’s estate.

 

6. WITHHOLDING TAXES

The Company may withhold from all payments due to Employee (or his or her
estate) hereunder, all taxes which, by applicable federal, state, local or other
law, Company customarily withholds.

 

7. CONFIDENTIAL INFORMATION

Employee agrees that he or she shall not, directly or indirectly, use, make
available, sell, disclose or otherwise communicate to any person, other than in
the course of Employee’s assigned duties and for the benefit of the Company,
either during the period of Employee’s employment or at any time thereafter, any
nonpublic, proprietary or confidential information, knowledge or data relating
to Company, that has been obtained by Employee during Employee’s employment by
Company.

The foregoing shall not apply to information that:

 

  (a) was known to the public prior to its disclosure to Employee;

 

  (b) becomes known to the public subsequent to disclosure to Employee through
no wrongful act of Employee or any representative of Employee; or

 

  (c) Employee is required to disclose by applicable law, regulation or legal
process (provided that Employee provides Company with prior notice of the
contemplated disclosure and reasonably cooperates with Company at its expense in
seeking a protective order or other appropriate protection of such information).

Notwithstanding clauses (a) and (b) of the preceding sentence, Employee’s
obligation to maintain such disclosed information in confidence shall not
terminate where only portions of the information are in the public domain.

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8. NON-SOLICITATION AGREEMENT

During Employee’s employment with Company and continuing for one-year following
his or her termination date, Employee agrees that he or she shall not, directly
or indirectly, individually or on behalf of any other person, firm, corporation
or other entity, knowingly solicit, aid or induce any managerial level employee
of Company or any of its affiliates to leave such employment in order to accept
employment with or render services to or with any other person, firm,
corporation or other entity unaffiliated with Company or knowingly take any
action to materially assist or aid any other person, firm, corporation or other
entity in identifying or hiring any such employee.

 

9. ACKNOWLEDGEMENTS RESPECTING REMEDIES FOR BREACH OF RESTRICTIVE COVENANTS

 

  9.1 Forfeiture of Severance Benefits and other Payments

Notwithstanding any other provision of this Agreement to the contrary, Employee
acknowledges that if it is determined by Company that Employee has violated any
of the restrictive covenants set forth in Section 7 and 8, Employee shall be
required to repay to Company an amount equal to the economic value of all stock
options, retention bonus and severance benefits already provided to Employee
under this Agreement and Employee shall have no right to receive any stock
options, retention bonus or severance benefits hereunder. Additional vesting or
forfeiture provisions may apply pursuant to other agreements and policies
between Employee and Company, and any such forfeiture provisions shall remain in
full force and effect.

 

  9.2 No Adequate Remedy at law

Employee acknowledges that it is impossible to measure in money the damages that
will accrue to Company in the event that Employee breaches any of the
restrictive covenants and that any such damages, in any event, would be
inadequate and insufficient. Therefore, if Employee breaches any restrictive
covenant, Company, in its sole judgment, may seek an injunction restraining
Employee from violating such restrictive covenant. If Company institutes any
action or proceeding to enforce a restrictive covenant, Employee hereby waives,
and agrees not to assert in any such action or proceeding, the claim or defense
that Company has an adequate remedy at law.

 

  9.3 Injunctive Relief not Exclusive Remedy

In the event of a breach of any of the restrictive covenants, Employee agrees
that, in addition to any injunctive relief as described herein, Company may seek
other appropriate legal or equitable remedies at its sole judgment.

 

  9.4 This Section Reasonable, Fair and Equitable

Employee agrees that this Section 9 is reasonable, fair and equitable in light
of his/her duties and responsibilities under this Agreement and the benefits to
be provided to him or her under this Agreement and that it is necessary to
protect the legitimate business interests of Company and that Employee has had
independent legal advice in so concluding.

 

10. NON-DISPARAGEMENT

Each Party agrees not to make any public statements that disparage the other
Party or its respective affiliates, employees, officers, directors, products or
services. Notwithstanding the foregoing, statements made in the course of sworn
testimony in administrative, judicial or arbitral proceedings (including,
without limitation, depositions in connection with such proceedings) shall not
be subject to this Section.

 

11. SUCCESSORS; BINDING AGREEMENT

This Agreement is personal to Employee and without the prior written consent of
Company, shall not be assignable by Employee otherwise than by will or the laws
of descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by Employee’s legal representatives. This Agreement shall inure to
the benefit of and be binding upon Company and its successors. Company agrees
that, for so long as it has any obligations under this Agreement, it will cause
any successor or transferee (if other than Company) to unconditionally assume,
by written instrument delivered to Employee (or his estate), all of the
obligations of Company hereunder.

 

12. NOTICE

All notices or other communications pursuant to this Agreement shall be in
writing and shall be deemed valid and sufficient if delivered by personal
service or overnight courier or if dispatched by registered mail, postage
prepaid, in any post office, or by telefax, promptly confirmed by letter
dispatched as above provided, addressed as follows:

 

If to Employee:

     

 

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If to Company:

Attn: Corporate Paralegal

NetManage, Inc.

20883 Stevens Creek Blvd.

Cupertino, CA 95014

 

13. GOVERNING LAW; VALIDITY

The validity, interpretation, and enforcement of this Agreement shall be
governed by the laws of the State of California as to all matters, including,
but not limited to, matters of validity, construction and performance, without
regard to principles of conflict of laws. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which other provisions shall remain in
full force and effect.

 

14. WAIVER

Either Party’s failure to insist upon strict compliance with any provision of
this Agreement or the failure to assert any right the Parties may have hereunder
shall not be deemed to be a waiver of such provision or right of this Agreement.

 

15. ENTIRE AGREEMENT; NO AMENDMENT

This Agreement contains the entire agreement between the parties with respect to
the subject matter described herein and supersedes all other prior and
contemporaneous oral or written communications and agreements between the
parties relating to this same subject matter. Neither this Agreement, nor any of
its terms, may be changed, added to, amended, waived or varied except in a
writing signed by the Parties (only by an officer or other person other than
Employee authorized to do so by the Board of Directors on behalf of Company).

 

16. COUNTERPARTS

This Agreement may be executed in counterparts, each of which shall be deemed to
be an original and all of which together shall constitute one and the same
instrument.

 

17. DEFINITIONS

 

  17.1 Cause

“Cause” means Employee is accused of committing a felony or similar crime, in
violation of federal or state law, engaged in willful misconduct, performed his
or her duties with gross negligence, breached his or her agreements with
Company, or committed fraud or similar breaches of his or her fiduciary duties
to Company.

 

  17.2 Change of Control

“Change of Control” means any one or more of the following:

 

  (a) A change in the ownership of the Company which is an event that occurs on
the date that any unsolicited one person, or unsolicited persons acting as a
group (as defined in Treasury Regulation Section 1.409A-3(i)(5)(v)(B)), acquires
ownership of stock in the Company that, together with stock held by such person
or group, constitutes more than 50 percent [or higher] of the total fair market
value or total voting power of the stock of the Company. However, if any one
person, or more than one person acting as a group, is considered to own more
than 50 percent [or higher] of the total fair market value or total voting power
of the stock of the Company, the acquisition of additional stock by the same
person or persons is not considered to cause a change in the ownership of the
Company (or to cause a change in the effective control of the Company within in
the meaning of subsection (b), below). An increase in the percentage of stock
owned by any one person, or persons acting as a group, as a result of a
transaction in which the Company acquires its stock in exchange for property
shall be treated as an acquisition of stock for purposes of this subsection (a).

 

  (b) A change in the effective control of the Company which is an event that
occurs on the date:

 

  (i) That any unsolicited one person, or unsolicited persons acting as a group
(as defined in Treasury Regulation Section 1.409A-3(i)(5)(v)(B)), acquires (or
has acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the Company
possessing 50 percent [or higher] or more of the total voting power of the stock
of the Company; or

 

  (ii)

That a majority of members [or more] of the Company’s Board is replaced during
any 12-month period by directors whose appointment or election is not endorsed
by a majority of the members [or more] of the Company’s Board before the date of
the appointment or election; provided that for purposes of this subjection
(b)(ii): (I) the Company is Employee’s employer for which he or she is providing
services, (II) the Company is liable for payment of deferred compensation
attributable to the

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performance of services by Employee under this Agreement, or there is a bona
fide business purpose for the Company to be liable for such payment and, in
either case, no significant purpose of making such Company liable for such
payment is the avoidance of federal income tax; or (III) the Company is a
majority shareholder (as defined in Treasury Regulation
Section 1.409A-3(i)(5)(ii)(B)) of a corporation satisfying either (I) or (II),
above.

 

  (c) A change in the ownership of a substantial portion of the assets of the
Company which is an event that occurs on the date that any one unsolicited
person, or unsolicited persons acting as a group (as defined in Treasury
Regulation Section 1.409A-3(i)(5)(v)(B)), acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition by such person
or persons) assets from the Company that have a total gross fair market value
equal to or more than 50 percent [or higher] of the total gross fair market
value of all of the assets of the Company immediately before such acquisition or
acquisitions. For purposes of this subsection (c), gross fair market value means
the value of the assets of the Company, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such
assets. Notwithstanding the foregoing, there is no Change of Control under this
subsection (c) when there is a transfer of assets to an entity that is
controlled by the shareholders of the Company immediately after the transfer. A
transfer of assets by the Company is not treated as a change in the ownership of
such assets if the assets are transferred to:

 

  (i) A shareholder of the Company (immediately before the asset transfer) in
exchange for or with respect to its stock;

 

  (ii) An entity, 50 percent or more of the total value or voting power of which
is owned, directly or indirectly, by the Company;

 

  (iii) A person, or more than one person acting as a group, that owns, directly
or indirectly, 50 percent or more of the total value or voting power of all the
outstanding stock of the Company; or

 

  (iv) An entity, at least 50 percent of the total value or voting power of
which is owned, directly or indirectly, by a person described in subsection
(c)(iii), above.

 

  17.3 Good Reason

“Good Reason” means any one or more of the following:

 

  (a) A material decrease in Employee’s base compensation;

 

  (b) A material decrease in Employee’s authority, duties or responsibilities;

 

  (c) A material decrease in the authority, duties or responsibilities of the
supervisor to whom Employee is required to report, including a requirement that
Employee report to a corporate officer or employee instead of reporting directly
to the Board of Directors of the Company;

 

  (d) A material decrease in the budget over which Employee retains authority;

 

  (e) A material change in the geographic location at which Employee must
perform his or her duties; or

 

  (f) Any other action or inaction that constitutes a material breach by the
Company of the agreement under which Employee provides services.

In addition, Employee’s termination will not be for Good Reason unless he or she

 

  (i) notifies the Company in writing of the existence of the condition which
Employee believes constitutes Good Reason within 90 days of the initial
existence of such condition (which notice specifically identifies such
condition);

 

  (ii) gives the Company at least 30 days following the date on which the
Company receives such notice (and prior to termination) in which to remedy the
condition, and

 

  (iii) if the Company does not remedy such condition within such 30 day period,
actually terminates employment within 30 days after the expiration of such 30
day period (and before the Company remedies such condition). If the Company
remedies such condition within such 30 day period (or at any time prior to
Employee’s actual termination), then any termination by Employee on account of
such condition will not be for Good Reason.

 

  17.4 Specified Employee

Employee is a Specified Employee if, as of the date of his or her termination of
employment, he or she is a key employee of the Company or any of its affiliates
(as defined in Code Sections 414(b) or 414(c)), but only if the stock of the
Company or any such affiliates is publicly traded on an established securities
market or otherwise on such date. Employee is a key employee if he or she meets
the requirements of Code Section 416(i)(1)(A)(i), (ii) or (iii) (applied in
accordance with the regulations thereunder and disregarding Code
Section 416(i)(5)) at any time during the 12-month period ending on a “specified
employee identification date.” If Employee is a key employee as of the specified
employee identification date, he or she shall be treated as a Specified Employee
for the entire 12-month period beginning on the related “specified employee
effective date.” Unless the Company and it affiliates have designated different
dates as the specified employee designation date and/or the specified employee
effective date in accordance with

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the provisions of Treasury Regulation Sections 1.409A-1(i)(3) and (4), the
specified employee designation date shall be December 31 of each year and the
specified employee effective date shall be the following April 1.

 

18. SECTION 409A

 

  18.1 Interpretation

The payments under this Agreement are intended to qualify for the short-term
deferral exception to Code Section 409A described in Treasury Regulation
Section 1.409A-1(b)(4) to the maximum extent possible, and to the extent such
payments do not so qualify, they are intended to qualify for the involuntary
separation pay plan exception to Code Section 409A described in Treasury
Regulation Section 1.409A-1(b)(9)(iii) to the maximum extent possible. To the
extent Code Section 409A is applicable to this Agreement, this Agreement is
intended to comply with Code Section 409A. Notwithstanding any other provision
of this Agreement to the contrary, this Agreement shall be interpreted, operated
and administered by the Company in a manner consistent with such intentions and
to avoid the pre-distribution inclusion in income of amounts payable under this
Agreement and the imposition of any additional tax or interest with respect
thereto.

 

  18.2 Delay in Payments to Specified Employees

To the extent any payments do not qualify under the short-term deferral
exception or the involuntary separation pay plan exception as described above,
in order to comply with Code Section 409A any payments due to a Specified
Employee as a result of his or her termination of employment shall not be made
before the date that is six months after the date of such termination of
employment. Any amounts that would have been paid during the six-month period
immediately following such termination of employment but for such delay shall be
paid on the first business day following the date that is six months after the
Specified Employee’s date of termination.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
             day of                     , 2007.

 

EMPLOYEE     NETMANAGE, INC. By:         By:       (Name)       Zvi Alon,
President and Chief Executive Officer