**Exhibit10.3**

 

**EMPLOYMENTAGREEMENT**

 

**THIS AGREEMENT**is made on the 21 of April 2005.

 

**BETWEEN**:

 

**Ness Technologies, Inc.**

A Delaware Corporation

With offices at Kiryat Atidim,

Tel Aviv, Israel (the **“Company”**)

 

**Mr. Ytzhak Edelman**

 

Israel (the **“Executive”**)

 

WHEREAS, the Company desires to employ theExecutive as the CFO of the Company and the Executive is willing to commithimself to be employed by the Company; and

 

WHEREAS, the parties desire to enterinto this Agreement setting forth the terms and conditions of the employmentrelationship of the Executive with the Company;

 

**NOW, THEREFORE**,in consideration of the premises and the mutual agreements set forth below, andintending to be legally bound, the parties hereto hereby agree as follows:

 

1.                                       **Personal Employment Agreement**.  This Employment Agreement is the onlyagreement, which shall govern the relations between the Company and theExecutive, and shall exclusively determine the Executive’s terms of employmentby the Company.  This Agreement shall bebinding upon the parties, and shall not be subject to any other agreements orarrangements of any kind.

 

2.                                       **Term**. The period of employment of the Executive by the Company hereunder (the “EmploymentPeriod”) shall commence on June 1, 2005 (the “Effective Date”) and shallend on February 1st, 2007 (the “Initial Period”), provided,however, that the Employment Period shall automatically be extended forsuccessive one year periods (each a “Renewal Period”) unless either of theparties shall give to the other party written notice of its desire not to soextend the Employment Period no later than six (6) months prior to theexpiration of Initial Period or the Renewal Period, as the case may be.

 

3.                                       **Position and Duties**.

 

(a)                                  Duringthe Employment Period, the Executive shall serve as the Chief Financial Officerof the Company and a member of the executive management, and in addition willbe responsible for M&A and capital market matters and shall provide to thecompany such other services reasonably related to his position, as he shall berequested from time to time by the

 

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Company.The parties will review the executive’s title and position shall be upgradednot later then 1.1.2006.

 

(b)                                 TheExecutive agrees to devote all of his working time and efforts to theperformance of his duties for the Company.

 

(c)                                  TheExecutive’s services are included among the positions of management and thepositions requiring a special degree of personal trust and the Company is notable to supervise the number of working hours of the Executive.  Accordingly, the provisions of the Hours ofWork and Rest Law 1951 will not apply to the Executive and he will not beentitled to any additional remuneration whatsoever for his work with theexception of that specifically set out in this Agreement.

 

4.                                       **Compensation and Related Matters**.

 

(a)                                  **Monthly Salary**.  As compensation for the performance by theExecutive of his obligations hereunder, during the Employment Period, theCompany shall pay the Executive a monthly salary of 75,000 NIS which sum shallbe adjusted at the time of each payment of the salary in accordance with thechanges in the Israeli Consumer Price Index (basic index published on May 15th2005) (the “Monthly Salary”). It is hereby stated that such adjustment to theCPI shall be deemed to include any incremental cost of living addition to whichthe executive may become entitled and that the Executive shall not be entitledto such additions. Once a year the parties will review the Executive salary.

 

In any event the executive salary shall not be less then 75,000 NIS.

 

(b)                                 **Gross Salary**.  The Monthly Salary represents the Executive’sgross salary, and includes all of the salary components and various supplementsand benefits and/or all supplements under any law and/or expansion order and/orany special or general collective bargaining agreement that may apply to therelations between the Company and the Executive.  It is hereby acknowledged and agreed that allpayments to the Executive by the Company, including, without limitation, theMonthly Salary and other benefits and payments of any kind, as provided in thisAgreement are, unless otherwise required by law, stated in gross figures, andthere shall be deducted therefrom all relevant taxes and/or charges that shallapply to them, at the time of their payment, pursuant to any applicable law.

 

(c)                                  **Options**.  The Executive shall be entitled to 125,000options to purchase shares of Common Stock of the Company as shall be set forthin Exhibit A, in accordance with the terms of the option agreement, in theform attached hereto as Exhibit A. It is hereby clarified that such options shall be at all times subjectto the Company’s Employee Share Option Plan and the applicable provisions ofthe Israeli Tax Code and any rules and regulations promulgated thereunder Upona Change of Control (as this term is defined in the option plan) all theunvested options shall be vested and exercisable.

 

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(d)                                 **Bonus**. The Executive shall be entitled to a Bonus equal to 90% - 95% (per thediscretion of the Compensation Committee of the Company’s Board of Directors)of the CEO’S bonus for the relevant year. In the event that the Company shallemploy the Executive only during part of a fiscal year, the bonus shall be paidin part, in proportion to that part of the fiscal year during which theExecutive was employed hereunder. All bonuses are gross and subject to tax,payable in NIS and are not part of the Executive regular salary.

 

(e)                                  **Expenses**. The Company shall promptlyreimburse the Executive for all reasonable business expenses incurred duringthe Employment Period by the Executive in performing services hereunder,including all expenses of travel and living expenses while traveling onbusiness or at the request of and in the service of the Company, provided thatsuch expenses are incurred and accounted for in accordance with the policiesand procedures established by the Company, including the submission to theCompany of appropriate vouchers or receipts for such expenses.

 

(f)                                    **Company Car.** The Executive shall beentitled to the use of a Company car, in accordance with the Company’s policyand as customary for executives of the Company. The Company shall pay all expenses in connection with the car, and shallreimburse the Executive for all income taxes imposed in connection with his useof the car by way of grossing up (“GILUM”)

 

(g)                                 **Managers Insurance Policy.**  During the Employment Period, the Companyshall contribute to an insurance company as part of a Managers InsurancePolicy, which shall be the property of the Company an amount equal to 131/3% ofthe Monthly Salary (out of which 5% shall be for provident funds and 8 1/3%shall serve to cover severance compensation). The executive shall have theright to allocate the contribution of the above-mentioned 131/3% between ManagersInsurance Policy program and a Pension fund. In the event due to applicable taxlaw or regulation, the executive shall not be entitled to deduct any part ofthe above mentioned 131/3% contribution, the executive shall have the right toreceive this part of the contribution as part of his salary (similar to theequivalent treatment of advanced study fund (“**KerenHishtalmut**”). Any tax payable in respect of such contributions tothe insurance company shall be paid by the Executive.  The aforementioned allocations shall be inlieu of severance pay according to the Severance Pay Law, 1963. The policy willinclude irrevocable instructions of the Company for an automatic transfer oftitle upon termination of employment for any reason other than termination by theCompany pursuant to Art. 5 (c) (III) below.

 

(h)                                 **Disability Insurance**.  In addition to the foregoing, during theEmployment Period the Company will bear the cost of disability insurance withan insurance company, which secures a monthly payment to the Executive.  In any event the amount paid by the Companyfor such insurance shall not exceed 2.5% of the Executive’s gross salary.

 

(i)                                     **Advanced Study Fund**.  The Company shall, during the EmploymentPeriod, make monthly contributions on behalf of the Executive to a recognizedAdvanced Study Fund in an amount equal to 7.5% of the Executive’s salary. Anytax payable in respect of such contributions to such fund shall be paid by theCompany. In addition

 

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the Company shalldeduct 2.5% from the Executive’s salary which deduction shall also be paid tosuch Fund.

 

(j)                                     **Vacation**.  The Executive shall be entitled to vacationdays and to compensation in respect of earned but unused vacation days,determined in accordance with the Company’s vacation plan (currently 24 workingdays per year that can be aggregated for up to two years (up to 48 days)[“TheAggregating Period”].  Official stateholidays in Israel shall not be considered as vacation days. Within theAggregating Period the company shall not obligate the Executive to leave forvacation including during the Notice Period.

 

(k)                                  **Medical Examination**.  The Company shall pay for one annual medicalexamination of the Executive, to be performed at a medical center of theExecutive’s choice, provided that the cost of such examination shall not exceedthe cost of a similar examination at the Tel-HaShomer hospital.

 

(l)                                     **Alternative Allocation of Payments**.  At the Executive’s request, the Company shallmodify the payments and benefits set forth in this Section 4 by increasingcertain payments and benefits and decreasing others, in accordance with theExecutive’s request, provided, however, that all such modifications shall notresult in any increase to the overall cost to the Company of the Executive’semployment (including costs in connection with future entitlements of theExecutive or his heirs).

 

(m)                               **Daily Newspaper**. The Executive shall beentitled to the “Globes” newspaper and or a daily newspaper on the Company’saccount.

 

(n)                                 **Insurance and Indemnification.**Thecompany undertakes to take all necessary steps and actions in order to (1)include the executive under the directors’ and officers’ insurance policyproviding sufficient insurance coverage and (2) Providing him with fullindemnification. Both insurance and indemnification shall be in full force andeffect for the Term of his employment by the company plus additional sevenyears.

 

5.                                       **Termination**.  The Executive’s employment hereunder may beterminated, in which case the Employment Period shall end, under the circumstancesset forth below:

 

(a)                                   **Death**.  The Executive’s employment hereunder shallterminate upon his death.

 

(b)                                  **Disability**.  If, as a result of the Executive’s incapacitydue to physical or mental illness or injury, the Executive shall have beenabsent from the performance of his duties hereunder for a period of sixconsecutive months or 180 days within a one year period, the Company mayterminate the Executive’s employment hereunder for “Disability.”

 

(c)                                   **Cause**.  The Company may terminate the Executive’s employmenthereunder for Cause.  For purposes ofthis Agreement, the Company shall have “Cause” to

 

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terminate theExecutive’s employment hereunder upon the occurrence of any of the followingevents:

 

(i)                                     Theconviction of the Executive for the commission of a felony; or

 

(ii)                                  Anevent constituting a material breach of this Agreement by the Executive,including, but not limited to, breach by the Executive of the provisions of Section 3hereof, that has not been fully cured within seven (7) days after writtennotice thereof has been given by the Company to the Executive; or

 

(iii)                               Seriousmisconduct by the Executive (including, but not limited to, breach by theExecutive of the provisions of Section 7 hereof) that is injurious to theCompany or its subsidiaries or any other member of the Group, whethermonetarily or otherwise.

 

(d)                                 **Termination by the Company**.Notwithstanding the foregoing, the Company may terminate the Executive’semployment during the Employment Period at any time for any reason whatsoever,subject to a prior written notice delivered by the Company to the Executive,which shall take effect as set forth in Section 6(b) (b1) (iv) below.

 

(e)                                  **Termination by the Executive .**  The Executive may terminate his employmentduring the Employment Period hereunder, subject to a prior written noticedelivered by the Executive to the Company, which shall take effect as set forthin Sections 6(b) (b1) (iv) and 6(b) (b2) below.

 

6.                                      **Termination Procedure**.

 

(a)                                  **Notice of Termination**.  Any termination of the Executive’s employmentby the Company or by the Executive (other than termination pursuant to Section 5(a)hereof) shall be communicated by written Notice of Termination to the otherparty hereto in accordance with Section 9. For purposes of this Agreement, a “Notice of Termination” shall mean anotice which shall indicate the specific termination provision in thisAgreement relied upon and shall set forth in reasonable details the facts andcircumstances claimed to provide a basis for termination of the Executive’semployment under the provision so indicated.

 

(b)                                 **Date of Termination**. (b1) “Date ofTermination” shall mean (i) if the Executive’s employment is terminated by hisdeath, the date of his death, (ii) if the Executive’s employment is terminatedfor Disability pursuant to Section 5(b) above, thirty (30) days afterNotice of Termination, (iii) if the Executive’s employment is terminatedpursuant to Section 5(c), six months after the date of Notice ofTermination, except for in the event of Termination pursuant to Article 5(c) (iii) above (in which case the termination will be effective upon deliveryof the notice) and (iv) if the Executive’s employment is terminated pursuant toSection 5(d) eighteen (18) months after the date of Notice of Termination(v) ) if the Executive’s employment is terminated pursuant to Section 5  (e) above,six (6) months after the deliveryof Notice of Termination. (b2) Upon a Change of Control or in case oftermination by either party after January 31st, 2007 the noticeperiod under section (v) will be extended to 18 months. (b3) It is herebyagreed, that until the Date of Termination employer’s – employee’s relationshipshall

 

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be in full force and effect and to avoid doubt it is herebyspecifically provided that the Executive shall be entitled until the date oftermination to the relevant part of his bonus regarding the above mentionednotice period and the use of the company’s car.

 

For the purpose of this Section, “Change of Control” shall have – thefollowing – meanings: (i) as this term is defined in the company’s option planand (ii) the replacement of the person currently serving as the Chairman of theBoard of Directors and the replacement of the person currently serving as thePresident and CEO.

 

(c)                                  **Termination by Company for Cause**.  If the Executive’s employment shall beterminated by the Company for Cause, then the Company shall pay the Executivehis Monthly Salary (at the rate in effect at the time Notice of Termination isgiven) and all other unpaid amounts and benefits through the Date ofTermination.  The Executive shall beentitled to amounts deposited in pension programs for severance pay, except forin the event of Termination pursuant to Article 5 (c) (iii) above. TheCompany shall have no additional obligations to the Executive under thisAgreement except as set forth in this Section 6(c).

 

(d)                                 **Deposits to Pension Programs**.** **Uponthe termination of the Executive’s employment, provided that such terminationwas not pursuant to Article 5 (c) (iii) above, the Executive shall beentitled to all amounts deposited in his favor in pension programs, includingpayments made for severance pay.

 

7.                                       **Confidential Information; Noncompetition**.

 

(a)                                  **Confidential Information**.  In consideration of the Company’s agreementshereunder, and in further consideration of the benefits accruing to theExecutive hereunder, the Executive hereby agrees that he shall not, directly orindirectly, disclose or use at any time, either during or subsequent to theEmployment Period, any trade secrets or other confidential information, whetherpatentable or not, of the Company, its subsidiaries or its affiliates now orhereafter existing, including but not limited to, any (i) processes, formulas,trade secrets, innovations, inventions, discoveries, improvements, research ordevelopment and test results, specifications, data and know-how; (ii) marketingplans, business plans, strategies, forecasts, unpublished financialinformation, budgets, projections, product plans and pricing; (iii) personnelinformation, including organizational structure, salary, and qualifications ofemployees; (iv) customer and supplier information, including identities,product sales and purchase history or forecasts and agreements; and (v) anyother information (collectively, “Confidential Information”), of which theExecutive is or becomes informed or aware during the Employment Period, whetheror not developed by the Executive, except (A) as may be reasonably required forthe Executive to perform the Executive’s employment duties with the Company,(B) to the extent such information becomes generally available to the publicthrough no wrongful act of the Executive, (C) information which has beendisclosed without restriction as a result of a subpoena or other legal process,after the Company has had the opportunity to request a suitable protectiveorder for such information, or (D) with the Company’s prior writtenauthorization.  This covenant shallsurvive the termination of the Executive’s employment hereunder for a period ofthree year after termination.  TheExecutive agrees to execute such further agreements and/or confirmations of theExecutive’s obligations to the Company

 

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concerningnon-disclosure of Confidential Information as the Company may reasonablyrequire from time to time.  Upontermination of the Employment Period, the Executive shall promptly deliver tothe Company all physical and electronic copies and other embodiments ofConfidential Information.

 

(b)                                 **Noncompetition Covenant**.  The Executive agrees that at all times duringthe Employment Period and thereafter until the first anniversary of thetermination or expiration of the Employment Period (the “Noncompetition Period”),the Executive shall not, except on behalf of the Company, directly orindirectly, allow his name to be used by or Participate in any CompetitiveBusiness (as each of such terms is defined below).  For purposes of this Agreement, (A) the term “Participate”means to have any direct or indirect interest, participation or involvement,whether as an officer, director, employee, partner, sole proprietor, agent,representative, independent contractor, consultant, franchiser, franchisee,creditor, owner, stockholder or otherwise; provided, however,that the foregoing shall not prevent the Executive from investing in publiclytraded securities issued by any corporation, provided the holdings thereof bythe Executive do not constitute more then five percent (5%) of outstandingshares so long as the Executive does not have any participation in the businessmanagement of such entity; and (B) the term “Competitive Business” means anyenterprise, venture or proprietorship engaged in or which proposes to engage inthe development, manufacture, sale, licensing and/or distribution of anyinformation, products and/or services that are the same as or substantiallysimilar to information, products and/or services provided (or in developmentand proposed to be provided) by any business unit or division within theCompany or the Group;

 

(c)                                  **Non Solicitation of Employees**.  The Executive recognizes that he will possessconfidential information about other executives and employees of the Company,its subsidiaries and affiliates relating to their education, experience,skills, abilities, compensation and benefits, and inter-personal relationshipswith customers of the Company, its subsidiaries and affiliates.  The Executive recognizes that the informationhe will possess about these other employees is not generally known, is ofsubstantial value to the Company, its subsidiaries and affiliates in developingtheir businesses and in securing and retaining customers, and has been and willbe acquired by him because of his business position with the Company, itssubsidiaries and affiliates.  TheExecutive agrees that, during the Employment Period and the NoncompetitionPeriod, he will not, directly or indirectly, solicit or recruit any employee ofthe Company or its subsidiaries (hereinafter- the Group) for the purpose ofbeing employed by him or by any competitor of the Company or of the Group onwhose behalf he is acting as an agent, representative or employee and that hewill not convey any such confidential information or trade secrets about otheremployees of the Company or the Group to any other person.

 

(d)                                 **Ownership of Developments**.  Any invention, improvement, design,development or discovery conceived, developed, created or made by Executivealone or with others, during the period of his employment hereunder andapplicable to the business of the Company, whether or not patentable orregistrable, shall become the sole and exclusive property of the Company.  Executive shall disclose the same promptlyand completely to the Company and shall, during the period of his employmenthereunder and at any time and from time to time hereafter (i) execute alldocuments requested by the Company for vesting in the Company the entire right,title and interest in and to the same, (ii) execute all documents requested bythe Company for filing and prosecuting such applications for patents, trademarksand/or copyrights

 

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as the Company, in its sole discretion, may desire to prosecute, and(iii) give the Company all assistance it reasonably requires, including thegiving of testimony in any suit, action or proceeding, in order to obtain,maintain and protect the Company’s right therein thereto.

 

Inthe event that the Company is unable to secure the signature of Executive onany document necessary to apply for, prosecute, obtain, or enforce any patent,copyright, trademark or other similar right, whether due to mental or physicalincapacity or any other cause, Executive hereby irrevocably designates andappoints the Company and each of its duly authorized officers, as his agent andattorney in fact, to act for and in his behalf and stead, to execute and fileany such document and to do all other lawfully permitted acts to further theprosecution, issuance, and enforcement of patents, copyrights, trademarks, orother rights of protection with the same force and effect as if executed anddelivered by Executive.

 

8.                                       **Assignment; Successors**.

 

As used in this Agreement, “Company” and “Group”shall mean as defined above and any successor (whether direct or indirect, bypurchase, merger, consolation or otherwise) to all or substantially all of thebusiness and/or assets of the Company or the Group or which otherwise becomesbound by all the terms and provisions of this Agreement by operation of law.

 

This Agreement is a personal contract and,except as specifically set forth herein, or by law, Executive’s rights andobligations hereunder may not be sold, transferred, assigned, pledged orhypothecated by Executive.  ThisAgreement shall be binding upon Executive, and shall inure to the benefit ofhis heirs, executors and administrators, and upon the Company, its successorsand assigns.

 

The rights and obligations of the Companyhereunder may, in whole or in part, be sold, transferred or assigned by theCompany to any affiliated or successor corporation; provided, however,that any such transfer will not relieve the Company of its obligationshereunder.

 

9.                                       **Notice**. For the purposes of this Agreement, notices, demands and all othercommunications provided for in this Agreement shall be in writing and shall bedeemed to have been duly given when delivered or (unless otherwise specified)ten (10) days after having been mailed by certified or registered mail, returnreceipt requested, postage prepaid, addressed as follows:

 
| If to the Executive:                                                 |
|----------------------------------------------------------------------|
|                                                                 |
|                                                                 |
| If to the Company:                                                   |
| Kiryat  Atidim,Tel Aviv, Israel Att. Raviv Zoller, CEO&President |

 

orto such other address as any party may have furnished to the other in writingin accordance therewith, except that notices of change of address shall beeffective only upon receipt.

 

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10.                                 **Choice of Law. **This Agreement and the legal relationsbetween the parties hereto shall be governed by and in accordance with the lawsof the State of Israel.

 

11.                                 **Counterparts. **This Agreement may be executed in two ormore counterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument.

 

12.                                 **Waiver. **Failure to insist upon strict compliance with any of the terms,covenants or conditions hereof shall not be deemed a waiver of such term,covenant or condition, nor shall any waiver or relinquishment of any right orpower hereunder at any one or more times be deemed a waiver or relinquishmentof such right or power at any other time or times.

 

13.                                 **Miscellaneous**.  No provision of this Agreement may bemodified, waived or discharged unless such waiver, modification or discharge isagreed to in writing signed by the Executive and the Company.

 

14.                                 **Validity**.  The invalidity or unenforceability of anyprovision or provisions of this Agreement shall not affect the validity orenforceability of any other provision of this Agreement, which shall remain infull force and effect.  Upondetermination that any term or other provision is invalid, illegal or incapableof being enforced, this Agreement shall be modified so as to effectthe original intent of the parties as closely as possible to the fullest extentpermitted by applicable law.

 

15.                                 **Entire Agreement**.  This Agreement sets forth the entireagreement of the parties hereto in respect of the subject matter containedherein and supersedes all prior agreements, promises, covenants, arrangements,communications, representations or warranties, whether oral or written, by anyofficer, employee or representative of the Company or any party hereto;  Any modificationsto this Agreement can only be made in writing signed by the Executive and anappropriate Company Officer.

 

**IN WITNESS WHEREOF**,the parties have executed this Agreement on the date first above written.

 

 
|                      | **Ness Technologies, Inc.** |                |
|---------------------------|-----------------------------|---------------------|
|                      |                        |                |
| DATE: April 21, 2005 | BY:                         | /s/ RAVIV  ZOLLER   |   |
|                      |                        | Name:               | Raviv Zoller |
|                      |                        | Title:              | President and Chief Executive Officer |
|                      |                        |
|                      |                        |
|                      |                        | /s/ AHARON  FOGEL   |   |
|                      |                        | Name:               | Aharon Fogel |
|                      |                        | Title:              | Chairman of the Board |
|                      |                        |
|                      |                        |
| DATE: April 21, 2005 |                        | /s/ YTZHAK  EDELMAN |   |
|                      |                        | Ytzhak Edelman      |   |
|                           |                             |                     |  |  |

 

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**EXHIBITA**

 

 

### **ExecutiveOption Agreement**

 

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**NESS TECHNOLOGIES INC.**

 

**OPTION AGREEMENT**

 

**Made as of the    day of June, 2005**

** **
| **BETWEEN:**                                                               | **Ness Technologies Inc.**                 |
|----------------------------------------------------------------------------|--------------------------------------------|
| ** **                                                                 | ** **                                 |
| A Delaware Corporation  having offices at Kiryat Atidim, Tel Aviv,  Israel |
|                                                                       |
| **(hereinafter the “**Company”)                                  |
| ** **                                                                 | ** **                                 | ** ** |
| ** **                                                                 | ** **                                 | ** ** |
| ** **                                                                 | ** **                                 | **on the one part** |
| ** **                                                                 | ** **                                 | ** ** |
| ** **                                                                 | ** **                                 | ** ** |
| **AND:**                                                                   | **Name Ytzhak Edelman**                    | ** ** |
| ** **                                                                 | ** **                                 | ** ** |
| ** **                                                                 | **I.D. No.**                               | ** ** | ** ** | ** ** |
| ** **                                                                 | ** **                                 | ** ** |
| ** **                                                                 | **Address:**                               | ** ** | ** ** | ** ** |
| ** **                                                                 | ** **                                 | ** ** |
| ** **                                                                 | **(hereinafter the “**Optionee”) | ** ** |
| ** **                                                                 | ** **                                 | ** ** |
| ** **                                                                 | ** **                                 | ** ** |
| ** **                                                                 | ** **                                 | **on the other part** |

 

**WHEREAS**                                  OnAugust 2003, the Company duly adopted and the Board approved the 2003Israeli Share Option Plan, a copy of which is attached as **Exhibit A** hereto, forming an integral parthereof (the “**ISOP**”); and -

 

**WHEREAS**                                  Pursuant to the ISOP,the Company has decided to grant Options to purchase Shares of the Company tothe Optionee, and the Optionee has agreed to such grant, subject to all theterms and conditions as set forth in the ISOP and as provided herein;

 

**NOW, THEREFORE**, it is agreed as follows:

 

**1.**                                      Preamble andDefinitions

 

**1.1**                                 The preamble to thisagreement constitutes an integral part hereof.

 

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**1.2**                                 Unless otherwisedefined herein, capitalized terms used herein shall have the meaning ascribedto them in the ISOP.

 

**2.**                                      Grant ofOptions

 

**2.1**                                 The Company herebygrants the Optionee Options in a number set forth in Section 1 of Exhibit B hereto (the “Options”), each Optionexercisable for one ordinary (common) share of par value of 0.01$ per share,taken from the total number of shares reserved for purposes of the Option Planin the Company’s authorized capital (the “Share”), to purchase Sharesat a price per Share set forth in Section 2 of such Exhibit B (the “Purchase Price”), on the terms andsubject to the conditions hereinafter provided.

 

**The Option Price will be paid in NIS in accordance with therepresentative rate of exchange of the U.S. dollar, published by the Bank ofIsrael and known on the date of giving the notice of exercise (as set forth in Section 6.1hereinafter).**

 

**2.2**                                 The Optionee is aware thatthe Company intends to issue additional shares in the future to variousentities and individuals, as the Company in its sole discretion shalldetermine.

 

**3.**                                      Period ofOption and Conditions of Exercise

 

**3.1**                                 The terms of thisOption Agreement shall commence on the date hereof (the “Date of Grant”) and terminate atthe Expiration Date (as defined in Section 2.12 in the ISOP), or at thetime at which the Option expires pursuant to the terms of the ISOP or pursuantto this Option Agreement.

 

**3.2**                                 Options may beexercised by the Optionee in whole or at any time or in part from time to time,as determined by the Board, and to the extent that the Options become vestedand exercisable, prior to the Expiration Date, and provided that, subject tothe provisions of Section 10.5 of the ISOP and to Exhibit B, the Optionee is anemployee or providing services to the Company or any of its Affiliates, at alltimes during the period beginning with the granting of the Option and endingupon the date of exercise. It is agreed that the provisions of Section 10.5  of the ISOP regarding immediate expiry ofunexercised options upon termination for cause will only be applicable in caseof termination pursuant to section 5 (c) (iii) of the EmploymentAgreement.

 

**3.3**                                 The Options may beexercised only to purchase whole Shares, and in no case may a fraction of aShare be purchased. If any fractional Shares would be deliverable uponexercise, such fraction shall be rounded up one-half or more, or otherwiserounded down, to the nearest whole number.

 

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**4.**                                      Adjustments

** **

Notwithstanding anything to the contrary in Section 9.5of the ISOP and in addition thereto, if in any such Change in Control asdescribed in Section 9.5 of the ISOP, the Successor Company (or parent orsubsidiary of the Successor Company) does not agree to assume or substitute forthe Options, the Vesting Dates shall be accelerated so that any unvested Optionshall be immediately vested in full as of the date which is ten (10) days priorto the effective date of the Change in Control, and the Committee shall notifythe Optionee that the unexercised Options are fully exercisable for a period often (10) days from the date of such notice, and that any unexercised Optionsshall terminate upon the expiration of such period.

 

If the successor Company (or parent orsubsidiary of the Successor Company) agrees to assume or substitute for theOptions and Optionee’s employment with the Successor Company is terminated bythe Successor Company without “Cause” within one year of the closing of suchChange in Control, the Vesting Dates shall be accelerated so that any unvestedportion of the substituted Option shall be immediately vested in full as of thedate of such termination without Cause.

 

**5.**                                      Vesting; Periodof Exercise

 

**Subject to the provisions of the ISOP, Options shall vestand become exercisable according to the Vesting Dates set forth in** Exhibit B hereto, provided thatthe Optionee is an Employee of or providing services to the Company and/or itsAffiliates on the applicable Vesting Date.

 

All unexercised Options granted to theOptionee shall terminate and shall no longer be exercisable on the ExpirationDate, as described in Section 2.12 of the ISOP.

 

**6.**                                      Exercise of Options

** **

6.1**                                **Options may beexercised in accordance with the provisions of Section 10.1 of the ISOP.

 

6.2                                 Inorder for the Company to issue Shares upon the exercise of any of the Options,the Optionee hereby agrees to sign any and all documents required by anyapplicable law and/or by the Company’s incorporation documents. The Optioneefurther agrees that in the event that the Company and its counsel deem itnecessary or advisable, in their sole discretion, the issuance of Shares may beconditioned upon certain representations, warranties, and acknowledgments bythe Optionee.

 

6.3                                 Deleted.

 

6.4                                 TheCompany shall not be obligated to issue any Shares upon the exercise of anOption if such issuance, in the opinion of the Company, might constitute aviolation by the Company of any provision of law.

 

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6.5                                 EachOption shall be subject to the further requirement that, if at any time theBoard (or, following its appointment, the Committee) shall determine in itsdiscretion that the listing or qualification of the shares of common stocksubject to such Option under any securities exchange requirement or under anyapplicable law, or the consent or approval of any governmental regulatory body,is necessary as a condition of, or in connection with, the granting of suchOption or the issue of Shares thereunder, such Option may not be exercised inwhole or in part, unless such listing, qualification, consent or approval shallhave been affected or obtained free of any conditions not acceptable to theBoard.

 

**7.**                                      Restrictions on Transfer of Options andShares

** **

7.1                                 Thetransfer of Options and the transfer of Shares to be issued upon exercise ofthe Options shall be subject to the limitations set forth in the ISOP and inthe Company’s incorporation documents, in any shareholders’ agreement to whichthe holders of ordinary shares of the Company are bound or in or in anyapplicable law including securities law of any jurisdiction.

 

7.2                                 With respect to anyApproved 102 Option, subject to the provisions of Section 102 and anyrules or regulation or orders or procedures promulgated thereunder, an Optioneeshall not sell or release from trust any Share received upon the exercise of anApproved 102 Option and/or any share received subsequently following anyrealization of rights, including without limitation, bonus shares, until thelapse of the Holding Period required under Section 102 of the Ordinance.Notwithstanding the above, if any such sale or release occurs during the HoldingPeriod, the sanctions under Section 102 of the Ordinance and under anyrules or regulation or orders or procedures promulgated thereunder shall applyto and shall be borne by such Optionee.

 

7.3                                 Withrespect to Unapproved 102 Option, if the Optionee ceases to be employed by theCompany or any Affiliate, the Optionee shall extend to the Company and/or itsAffiliate a security or guarantee for the payment of tax due at the time ofsale of Shares, all in accordance with the provisions of Section 102 and therules, regulation or orders promulgated thereunder.

 

7.4                                 TheOptionee acknowledges that in the event Company’s shares shall be registeredfor trading in any public market, the Optionee’s right to sell Shares may besubject to limitations (including a lock-up period), as will be requested bythe Company or its underwriters, and the Optionee unconditionally agrees andaccepts any such limitations.

 

The Optionee acknowledges that in order toenforce the above restriction, the Company may impose stop-transferinstructions with respect to the exercised Shares.

 

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7.5                                 TheOptionee shall not dispose of any Shares in transactions which violate, in theopinion of the Company, any applicable laws, rules and regulations.

 

7.6                                 TheOptionee agrees that the Company shall have the authority to endorse upon thecertificate or certificates representing the Shares such legends referring tothe foregoing restrictions, and any other applicable restrictions as it maydeem appropriate (which do not violate the Optionee’s rights according to thisOption Agreement).

 

7.7                                 Noperson who acquires Shares under the ISOP may, during any period of time thatsuch person is an affiliate of the Company within the meaning of the rules andregulations of the Securities and Exchange Commission under the U.S. SecuritiesAct of 1933 as amended (the “Act”), sell such Shares, unless such offer andsale is made (i) pursuant to an effective registration statement under the Act,which is current and includes the shares to be sold, or (ii) pursuant to anappropriate exemption from the registration requirements of the Act, such asthat set forth in Rule 144 promulgated under the Act.

 

7.8                                 Withrespect to any person subject to the reporting requirements of Section 16(a)of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (a “ReportingPerson”), transactions under the ISOP are intended to comply with allapplicable conditions of Rule 16b-3 under the Exchange Act.  To the extent any provision of the ISOP orany action by an authority under the ISOP fails to so comply, such provision oraction shall, without further action by any person, be deemed to beautomatically amended to the extent necessary to effect compliance with Rule16b-3, provided that if such provision or action cannot be amended to effectsuch compliance, such provision or action shall be deemed null and void, to theextent permitted by law and deemed advisable by the appropriate authority.  Each Option to a Reporting Person under the ISOPshall be deemed issued subject to the foregoing qualification.

 

7.9                                 NotwithstandingSection 12.2 of the ISOP, the Optionee shall not be subject to thelimitation of the six (6) months and one day of the date of exercise of suchOption or issuance of such Shares, with respect to Options granted under thisOption Agreement.

 

**8.**                                      Taxes; Indemnification

 

8.1                                 Anytax consequences arising from the grant or exercise of any Option, from thepayment for Shares covered thereby or from any other event or act (of theCompany and/or its Affiliates, the Trustee or the Optionee), hereunder, shallbe borne solely by the Optionee. The Company and/or its Affiliates and/or theTrustee shall withhold taxes according to the requirements under the applicablelaws, rules, and regulations, including withholding taxes at source.Furthermore, the Optionee hereby agrees to indemnify the Company and/or itsAffiliates and/or the Trustee and hold them****harmlessagainst and from any

 

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andall liability for any such tax or interest or penalty thereon, includingwithout limitation, liabilities relating to the necessity to withhold, or tohave withheld, any such tax from any payment made to the Optionee.

 

8.2                                 TheOptionee will not be entitled to receive from the Company and/or the Trusteeany Shares allocated or issued upon the exercise of Options prior to the fullpayments of the Optionee’s tax liabilities arising from Options which weregranted to him and/or Shares issued upon the exercise of Options. For theavoidance of doubt, neither the Company nor the Trustee shall be required torelease any share certificate to the Optionee until all payments required to bemade by the Optionee have been fully satisfied.

 

8.3                                 Thereceipt of the Options and the acquisition of the Shares to be issued upon theexercise of the Options may result in tax consequences. THE OPTIONEE IS ADVISEDTO CONSULT A TAX ADVISER WITH RESPECT TO THE TAX CONSEQUENCES OF RECEIVING OREXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

 

8.4                                 Withrespect to Approved 102 Options, the Optionee hereby acknowledges that he isfamiliar with the provisions of Section 102 and the regulations and rulespromulgated thereunder, including without limitations the type of Optiongranted hereunder and the tax implications applicable to such grant. TheOptionee accepts the provisions of the trust agreement signed between theCompany and the Trustee, attached as **ExhibitC** hereto, and agrees to be bound by its terms.

 

**9.**                                      Miscellaneous

** **

9.1**                                **No Obligation to Exercise Options. The grant and acceptance of these Optionsimposes no obligation on the Optionee to exercise it.

 

9.2                                 Confidentiality.  TheOptionee shall regard the information in this Option Agreement and its exhibitsattached hereto as confidential information and the Optionee shall not revealits contents to anyone except when required by law or for the purpose ofgaining legal or tax advice.

 

9.3                                 Continuation of Employment or Service. Neither the ISOP nor this Option Agreement shall impose any obligationon the Company or an Affiliate to continue the Optionee’s employment or serviceand nothing in the ISOP or in this Option Agreement shall confer upon theOptionee any right to continue in the employ or service of the Company and/oran Affiliate or restrict the right of the Company or an Affiliate to terminatesuch employment or service at any time.

 

9.4                                 Entire Agreement. Subject to the provisions of the ISOP, towhich this Option Agreement is subject, this Option Agreement, together withthe exhibits

 

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hereto,constitute the entire agreement between the Optionee and the Company withrespect to Options granted hereunder, and supersedes all prior agreements,understandings and arrangements, oral or written, between the Optionee and theCompany with respect to the subject matter hereof.

 

9.5                                 Failure to Enforce - Not a Waiver. The failure of any party to enforce at anytime any provisions of this Option Agreement or the ISOP shall in no way beconstrued to be a waiver of such provision or of any other provision hereof.

 

9.6                                 Provisionsof the ISOP. The Options provided for herein are granted pursuant to theISOP and said Options and this Option Agreement are in all respects governed bythe ISOP and subject to all of the terms and provisions of the ISOP.

 

Any interpretation of this Option Agreementwill be made in accordance with the ISOP but in the event there is anycontradiction between the provisions of this Option Agreement and the ISOP, theprovisions of the Option Agreement will prevail.

 

9.7                                 BindingEffect. The ISOP and this Option Agreement shall be binding upon the heirs,executors, administrators and successors of the parties hereof.

 

9.8                                 Notices.All notices or other communications given or made hereunder shall be in writingand shall be delivered or mailed by registered mail or delivered by email orfacsimile with written confirmation of receipt to the Optionee and/or to theCompany at the addresses shown on the letterhead above, or at such other placeas the Company may designate by written notice to the Optionee. The Optionee isresponsible for notifying the Company in writing of any change in the Optionee’saddress, and the Company shall be deemed to have complied with any obligationto provide the Optionee with notice by sending such notice to the addressindicated below.

 

 

Company’s Signature:

 

**Ness Technologies Inc.**

 
| By :  |            |       |
|------------|-----------------|------------|
|       |            |       |
| Name:      | Hadas Halbreich | Ilan Rotem |
|       |            |       |
|       |            |       |
| Signature: |            |       |   |   |
|            |                 |            |  |  |

 

 

 

I, the undersigned, hereby acknowledge receipt of a copy of the ISOPand accept the Options subject to all of the terms and provisions thereof. Ihave reviewed the ISOP and this Option Agreement in its entirety, have had anopportunity to obtain the advice of counsel prior to executing this OptionAgreement, and fully understand all provisions of this Option Agreement. Iagree to notify the Company upon any change in the residence address indicatedabove.

 

 
| ** ** | ** **                     | ** ** | ** ** |
|------------|--------------------------------|------------|------------|
| **Date**   | **Optionee’s  Signature** |

 

 
| **Attachments:** |   | **Exhibit A:** |   | **Ness Technologies Inc. 2003 Israeli Share  Option Plan** |
|------------------|--------|----------------|--------|------------------------------------------------------------|
|             |   |           |   |                                                       |
| ** **       |   | **Exhibit B:** |   | **Terms of the Option**                                    |
|             |   |           |   |                                                       |
| ** **       |   | **Exhibit C:** |   | **Trust Agreement**                                        |

 

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**EXHIBITB**

 

**TERMSOF THE OPTION**

 
| **Name of the Optionee:** | Ytzhak Edelman             |
|---------------------------|----------------------------|
|                      |                       |
| **Date of Grant:**        | **June, 2005**             |
| ** **                | ** **                 |
| **Designation:**          | **•**                 | **x Approved 102 Option:** |
| ** **                | **•**                 | **Capital Gain Option (CGO)** |
|                      |
| 1.                        | Number of Options granted: | 125,000 |
|                      |                       |   |
| 2.                        | Purchase Price:            | The lower of 11.82$ per share or the share  market price at the Date of Grant (start date of employment) |
|                      |                       |   |
| 3.                        | Vesting Dates:             | As follows: |

 
| **Number of Options** | ** ** | **Vesting  Date**                   |
|-----------------------|------------|-------------------------------------|
| 41,667                |       | One year as of the Date of Grant    |
|                  |       |                                |
| 41,667                |       | Two years as of the Date of Grant   |
|                  |       |                                |
| 41,666                |       | Three years as of the Date of Grant |

 
| 4. | Expiration Date: | 31.12.2010 |
|----|------------------|------------|

 

 
|     |         |                   |   |   |   |
|----------|--------------|------------------------|--------|--------|--------|
| Optionee | Printed Name | Ness Technologies Inc. |

 

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