Document:

Exhibit
10.1

    

    EMPLOYMENT
AGREEMENT

    

    THIS AGREEMENT is made as of
the 1st day of
August, 2009

    

    BETWEEN:

    

    
      	
              (1)

            	
              Ness Technologies,
      Inc.

            

    

    a
Delaware corporation

    with an
office at 3 University Plaza, Hackensack, New Jersey 07601

    United
States of America (the “Company”)

    

    
      	
              (2)

            	
              Mr. Aharon
      Fogel

            

    

    Israeli
I.D. 10176485

    of 3
Tarsat St., Tel Aviv

    Israel
(the “Executive”)

    

    WHEREAS, the Company desires
to employ the Executive to provide services to the Company and its subsidiaries,
and the Executive is willing to commit himself to be employed by the Company;
and

    

    WHEREAS, the parties desire to
enter into this employment agreement (this “Agreement”) setting forth the terms
and conditions of the employment relationship of the Executive with the
Company.

    

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

    

    1.           Personal
Employment Agreement.  This Agreement is the only agreement
which shall govern the relations between the Company and the Executive, and
shall exclusively determine the Executive’s terms of employment by the
Company.  This Agreement shall be binding upon the parties and shall
not be subject to any other agreements or arrangements of any kind.

    

    2.           Term.  The
period of the Executive’s employment pursuant to this Agreement (the “Employment
Period”) shall begin on the effective date of this Agreement and end on the Date
of Termination (as defined below), except as provided in Section 6(b)
hereof.  The Executive’s employment pursuant to this Agreement is
terminable at will by either party as specified in Sections 5 and 6
hereof.  The Company shall have no obligations to the Executive under
this Agreement after the Date of Termination, except as set forth in Section 6
hereof.

    

    3.           Position
and Duties.

    

    (a)           During
the Employment Period, the Company will employ the Executive as the Active
Chairperson of the Board of Directors of the Company and the Chairperson of the
Company’s subsidiary, Ness AT Ltd.  The Executive shall perform such
duties and functions commensurate with such positions, and such other services
as from time to time may be reasonably requested by the Board of Directors of
the Company.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)           The
Executive agrees to devote the business and professional time and energy to the
Company necessary to perform faithfully his duties and responsibilities
hereunder.

    

    (c)           The
Executive’s services are included among the positions of management and the
positions requiring a special degree of personal trust and the Company is not
able to supervise the number of working hours of the
Executive.  Accordingly, the provisions of the Hours of Work and Rest
Law 1951 (Israel) will not apply to the Executive and he will not be entitled to
any additional remuneration whatsoever for his work with the exception of that
specifically set forth in this Agreement.

    

    4.           Compensation
and Related Matters.

    

    (a)           Monthly
Salary.  As compensation for the performance by the Executive
of his obligations hereunder, during the Employment Period, the Company shall
pay the Executive a monthly salary of 47,500NIS, which shall be adjusted at the
time of each payment of the salary in accordance with the changes in the Israeli
consumer price index (the “Monthly Salary”).  Value Added Tax (“VAT”),
if applicable, shall be added to each payment of the Monthly
Salary.

    

    (b)           Gross
Salary.  The Monthly Salary represents the Executive’s gross
salary and, per the request of the Executive, includes all of the salary
components and various supplements and benefits and/or all supplements under any
law and/or expansion order and/or any special or general collective bargaining
agreement that may apply to the relationship between the Company and the
Executive.  It is hereby acknowledged and agreed that all payments to
the Executive by the Company, including, without limitation, the Monthly Salary
and other benefits and payments of any kind as provided in this Agreement are,
unless otherwise required by law, stated in gross figures, and all applicable
taxes and/or charges shall be deducted therefrom at the time of payment,
pursuant to any applicable law, except that the Company shall pay the VAT, if
applicable, in connection with the Monthly Salary.  The Monthly Salary
includes any severance payment that the Executive may be entitled to upon
termination of his employment.

    

    The
Executive acknowledges that he is responsible to make all provisions, deductions
and contributions from the Monthly Salary to any plan, purpose or program,
whether required hereunder, required under law or elected by the Executive
(including, without limitation, pension programs, disability insurance, advanced
educational funds, vacation allowance, etc.) and represents that he shall have
no claim against the Company in respect thereof.

    

    (c)           Stock
Incentive Awards.  Per the discretion of the Company’s Board of
Directors, the Company may issue the Executive options, restricted stock units
or other stock incentive awards subject to the Company’s incentive plans and the
applicable provisions of the Israeli Tax Code and any rules and regulations
promulgated thereunder.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)           Bonus.  Subject
to the complete discretion of the Company’s Board of Directors, the Company may
pay to the Executive an annual bonus. The applicable performance targets and
bonus formula for each year shall be agreed upon not later than the end of the
first quarter of such year.

    

    (e)           Expenses.  The
Company shall promptly reimburse the Executive for all mobile phone expenses and
reasonable business expenses incurred during the Employment Period by the
Executive in performing services hereunder, including all expenses of travel and
living expenses while traveling on business or at the request of and in the
service of the Company, provided that such expenses are incurred and accounted
for in accordance with the policies and procedures established by the Company,
including the submission to the Company of appropriate vouchers or receipts for
such expenses.

    

    (f)           Managers
Insurance Policy.  During the Employment Period, the Executive
shall contribute to an insurance company as part of a Managers Insurance Policy,
an amount equal to 18 1/3% of the Monthly Salary (out of which 10% shall be for
provident funds and 8 1/3% shall serve to cover severance
compensation).  Any tax payable in respect of such contributions to
the insurance company shall be paid by the  Executive.  The
aforementioned allocations shall be in lieu of severance pay according to the
Severance Pay Law, 1963 (Israel).

    

    5.           Termination.

    

    (a)           Death.  The
Executive’s employment hereunder shall terminate automatically upon his
death.

    

    (b)           Disability.  The
Company may terminate the Executive’s employment hereunder if a Disability
exists.  For purposes of this Agreement, a “Disability” exists if the
Executive becomes physically or mentally unable to perform his duties for the
Company hereunder and such incapacity has continued for a total of ninety (90)
consecutive days or any one hundred twenty (120) days in a period of three
hundred sixty-five (365) consecutive days.

    

    (c)           Cause.  The
Company may terminate the Executive’s employment hereunder for
Cause.  For purposes of this Agreement, the Company shall have “Cause”
to terminate the Executive’s employment hereunder upon the occurrence of any of
the following events:

    

    (i)            the
conviction of the Executive for the commission of a felony;

    

    (ii)            the
failure by the Executive to substantially perform his duties hereunder (other
than such failure resulting from the Executive’s incapacity due to physical or
mental illness or injury), provided that a written demand for substantial
performance is delivered by the Company to the Executive specifically
identifying the manner in which the Company believes the Executive has not
substantially performed his duties (“Demand”). The Company shall have Cause to
terminate the Executive’s employment if the Executive’s failure to perform has
not been cured within fourteen (14) days after the delivery of the
Demand;

    

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (iv)            serious
misconduct by the Executive (including, but not limited to, breach by the
Executive of the provisions of Section 7 hereof) that is injurious to the
Company or its subsidiaries, whether monetarily or otherwise.

    

    (d)           Termination
by the Company. Notwithstanding the foregoing, the Company may terminate
the Executive’s employment hereunder at any time for any reason whatsoever,
subject to the delivery of a prior written notice by the Company to the
Executive, which termination shall take effect as set forth in Section 6(b)
below.

    

    (e)           Termination
by the Executive .  The Executive may terminate his employment
hereunder at any time for any reason whatsoever, subject to the delivery of a
prior written notice by the Executive to the Company, which termination shall
take effect as set forth in Section 6(b) below.

    

    6.           Termination
Procedure.

    

    (a)           Notice of
Termination.  Any termination of the Executive’s employment by
the Company or by the Executive (other than termination pursuant to Section 5(a)
hereof) shall be communicated by a Notice of Termination to the other party
hereto in accordance with Section 9 hereof.  For purposes of this
Agreement, a “Notice of Termination” shall mean a written notice indicating the
specific termination provision in this Agreement relied upon and setting forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so
indicated.

    

    (b)           Date of
Termination.  For purposes of this Agreement, “Date of
Termination” shall mean (i) if the Executive’s employment is terminated as a
result of his death pursuant to Section 5(a), the date of his death, (ii) if the
Executive’s employment is terminated for Disability pursuant to Section 5(b),
thirty (30) days after delivery of the Notice of Termination, (iii) if the
Executive’s employment is terminated pursuant to Section 5(c), the date of
delivery of the Notice of Termination, (iv) if the Executive’s employment is
terminated pursuant to Section 5(d), then, unless a later date is specified
therein, twelve (12) months after the delivery of the Notice of Termination, and
(v) if the Executive’s employment is terminated pursuant to Section 5(e), the
date specified therein or such later date not exceeding twelve (12) months after
the delivery of the Notice of Termination.  Notwithstanding the
foregoing, the Company shall be entitled to terminate the Executive’s employment
hereunder and end the Employment Period before the applicable Date of
Termination provided that the Company continues to provide the Executive with
all of the benefits set forth in and subject to Section 4 above through such
Date of Termination.

    

    Notwithstanding the foregoing, if the
Board of Directors of the Company does not nominate the Executive for election
to the Company’s Board of Directors or if the Company’s shareholders do not
re-elect the Executive to the Company’s Board of Directors, then (i) such event
shall be considered a termination of the Executive’s employment pursuant to
Section 5(d) of this Agreement, (ii) the delivery of a Notice of Termination
shall not be required in connection with such termination, and (iii) the Date of
Termination shall mean twelve (12) months after the date of the Company’s
nomination of a slate of directors not including the Executive or the date the
Executive fails to be elected to the Board of Directors by the Company’s
shareholders, as applicable.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)           Termination
by Company for Cause.  If the Executive’s employment shall be
terminated by the Company for Cause, then the Company shall pay the Executive
his Monthly Salary (at the rate in effect at the time Notice of Termination is
given) and all other unpaid amounts and benefits through the Date of
Termination.  The Company shall have no additional obligations to the
Executive under this Agreement except as set forth in this Section
6(c).

    

    (d)           Deposits
to Pension Programs. Upon the termination of
the Executive’s employment for any reason, the Executive shall be entitled to
all amounts deposited in his favor in pension programs, including payments made
for severance pay.

    

    7.           Confidential
Information; Noncompetition.

    

    In this section all
references to the Company include all its subsidiaries and
affiliates.

    

    (a)           Confidential
Information.  In consideration of the Company’s agreements
hereunder, and in further consideration of the benefits accruing to the
Executive hereunder, the Executive hereby agrees that he shall not, directly or
indirectly, disclose or use at any time, either during or subsequent to the
Employment Period, any trade secrets or other confidential information, whether
patentable or not, of the Company, its subsidiaries or its affiliates now or
hereafter existing, including but not limited to, any (i) processes, formulas,
trade secrets, innovations, inventions, discoveries, improvements, research or
development and test results, specifications, data and know-how; (ii) marketing
plans, business plans, strategies, forecasts, unpublished financial information,
budgets, projections, product plans and pricing; (iii) personnel information,
including organizational structure, salary, and qualifications of employees;
(iv) customer and supplier information, including identities, product sales and
purchase history or forecasts and agreements; and (v) any other information
(collectively, “Confidential Information”), of which the Executive is or becomes
informed or aware during the Employment Period, whether or not developed by the
Executive, except (A) as may be reasonably required for the Executive to perform
the Executive’s employment duties with the Company, (B) to the extent such
information becomes generally available to the public through no wrongful act of
the Executive, (C) information which has been disclosed without restriction as a
result of a subpoena or other legal process, after the Company has had the
opportunity to request a suitable protective order for such information, or (D)
with the Company’s prior written authorization.  This covenant shall
survive the termination of the Executive’s employment hereunder.  The
Executive agrees to execute such further agreements and/or confirmations of the
Executive’s obligations to the Company concerning non-disclosure of Confidential
Information as the Company may reasonably require from time to
time.  Upon termination of the Employment Period, the Executive shall
promptly deliver to the Company all physical and electronic copies and other
embodiments of Confidential Information.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)           Noncompetition
Covenant.  The Executive agrees that at all times during the
Employment Period and thereafter until the first anniversary of the end of the
Employment Period (the “Noncompetition Period”), the Executive shall not, except
on behalf of the Company, directly or indirectly, allow his name to be used by
or Participate in any Competitive Business (as each of such terms is defined
below).  For purposes of this Agreement, (i) 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 publicly traded
securities issued by any corporation, provided the holdings thereof by the
Executive do not constitute more than $25,000 in market value of shares, or two
percent (2%) of outstanding shares, whichever is greater, so long as the
Executive does not have any participation in the business management of such
entity; and (ii) the term “Competitive Business” means any enterprise, venture
or proprietorship engaged in or which proposes to engage in the development,
manufacture, sale, licensing and/or distribution of any information, products
and/or services that are the same as or substantially similar to information,
products and/or services provided (or in development and proposed to be
provided) by any business unit or division within the Company;

    

    (c)           Non
Solicitation of Employees.  The Executive recognizes that he
will possess confidential 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
relationships with customers of the Company, its subsidiaries and
affiliates.  The Executive recognizes that the information he will
possess about these other employees is not generally known, is of substantial
value to the Company in developing its businesses and in securing and retaining
customers, and has been and will be acquired by him because of his business
position with the Company.  The Executive agrees that during the
Employment Period and the Noncompetition Period he will not, directly or
indirectly, solicit or recruit any employee of the Company for the purpose of
being employed by him or by any other person or entity on whose behalf he is
acting as an agent, representative or employee and that he will not convey any
such confidential information or trade secrets about other employees of the
Company to any other person.

    

    (d)           Ownership
of Developments.  Any invention, improvement, design,
development or discovery conceived, developed, created or made by Executive
alone or with others, during the period of his employment hereunder and
applicable to the business of the Company, whether or not patentable or
registrable, shall become the sole and exclusive property of the
Company.  Executive shall disclose the same promptly and completely to
the Company and shall, during the period of his employment hereunder and at any
time and from time to time hereafter (i) execute all documents 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 by the Company for filing and
prosecuting such applications for patents, trademarks and/or copyrights as the
Company, in its sole discretion, may desire to prosecute, and (iii) give the
Company all assistance it reasonably requires, including the giving of testimony
in any suit, action or proceeding, in order to obtain, maintain and protect the
Company’s right therein thereto.

    

    In the event that the Company is unable
to secure the signature of Executive on any document necessary to apply for,
prosecute, obtain, or enforce any patent, copyright, trademark or other similar
right, whether due to mental or physical incapacity or any other cause,
Executive hereby irrevocably designates and appoints the Company and each of its
duly authorized officers, as his agent and attorney in fact, to act for and in
his behalf and stead, to execute and file any such document and to do all other
lawfully permitted acts to further the prosecution, issuance, and enforcement of
patents, copyrights, trademarks, or other rights of protection with the same
force and effect as if executed and delivered by Executive.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    8.           Assignment;
Successors.

    

    As used
in this Agreement, “Company” shall mean as defined above and any successor
(whether direct or indirect, by purchase, merger, consolation or otherwise) to
all or substantially all of the business and/or assets of the Company or which
otherwise becomes bound 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, Executive’s rights and obligations
hereunder may not be sold, transferred, assigned, pledged or hypothecated by
Executive.  This Agreement shall be binding upon Executive, his heirs,
executors and administrators, and upon the Company, its successors and
assigns.

    

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

    

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

    

    If to the
Executive:

    3 Tarsat
St.

    Tel Aviv,
Israel

    

    If to the
Company:

    3
University Plaza

    Hackensack,
New Jersey 07601

    United
States of America

    

    or to
such other address as any party may have furnished to the other in writing in
accordance therewith, except that notices of change of address shall be
effective only upon receipt.

    

    10.           Choice of
Law.  This Agreement and the legal relations between the
parties hereto shall be governed by and in accordance with the laws of the State
of Israel.

    

    11.           Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together 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 or power hereunder at any one or
more times be deemed a waiver or relinquishment of such right or power at any
other time or times.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    13.           Miscellaneous.  No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed by the
Executive and the Company.

    

    14.           Validity.  The
invalidity or unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.  Upon
determination that any term or other provision is invalid, illegal or incapable
of being enforced, this Agreement shall be modified so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law.

    

    15.           Entire
Agreement.  This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of the Company or any of its subsidiaries;
and any prior agreement of the parties hereto including any subsidiary or
affiliate of the Company in respect of the subject matter contained herein is
hereby terminated and canceled.  Any modifications to this Agreement
can only be made in writing signed by the Executive and an appropriate officer
of the Company.

    

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

    

    
      
        
          
            	 
      	 
      	 
      	
                    Ness
      Technologies, Inc.

                  
	 
      	 
      	 
      	 
      	 
      
	
                    DATE:

                  	
                    August 4, 2009

                  	 
      	
                    BY:

                  	
                    /s/ Issachar
      Gerlitz

                  
	 
      	 
      	 
      	 
      	
                    Name:
      Issachar Gerlitz

                  
	 
      	 
      	 
      	 
      	
                    Title:
      CEO & President

                  
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                    BY:

                  	
                    /s/ Ofer
      Segev

                  
	 
      	 
      	 
      	 
      	
                    Name:
      Ofer Segev

                  
	 
      	 
      	 
      	 
      	
                    Title:
      CFO & EVP

                  
	 
      	 
      	 
      	 
      	 
      
	
                    DATE:

                  	
                    August 4, 2009

                  	 
      	 
      	
                    /s/ Aharon
      Fogel

                  
	 
      	 
      	 
      	 
      	
                    Aharon
      FogelDIRECTOR
COMPENSATION POLICY

    OF
THE BOARD OF DIRECTORS OF MICROMET, INC.

     

     

    This
Director Compensation Policy (the “Policy”) was adopted by the Board of
Directors (the “Board”) of Micromet, Inc. (the “Company”) on June 17, 2009, and
supersedes the Policy previously adopted by the Board.

     

    
      
        	
                1.

              	
                SCOPE

              

      

    

     

    Non-employee
members of the Board of the Company shall be eligible to receive cash
compensation and equity awards as set forth in this Policy.  Such
compensation and awards shall be paid or be made, as applicable, automatically
and without further action of the Board, unless such non-employee director
declines to receive such compensation or awards by notice to the
Company.  This Policy shall remain in effect until it is revised or
rescinded by further action of the Board.

     

    
      
        	
                2.

              	
                CASH
      COMPENSATION

              

      

    

     

    
      	
              2.1

            	
              Annual
      Retainer

            

    

     

    Each
non-employee director shall be eligible to receive an annual retainer of $20,000
for service on the Board.  The Chairman of the Board shall be eligible
to receive an additional annual retainer of $100,000 for service on the
Board.  The annual retainer shall be paid in quarterly installments
within thirty (30) days after the end of each calendar quarter.

     

    
      	
              2.2

            	
              Meeting
      Stipends

            

    

     

    Each
non-employee director shall receive a stipend of $1,500 for each Board meeting
attended in person and $1,000 for each committee meeting attended in
person.  In addition, each non-employee director shall receive such
stipends with respect to telephonic Board meetings and committee meetings if
such telephonic meetings last approximately two hours or longer.  The
meeting stipends will be paid on a quarterly basis within thirty (30) days after
the end of each calendar quarter.

     

    
      	
              2.3

            	
              Expense
      Reimbursements

            

    

     

    The
Company shall reimburse non-employee directors for reasonable expenses incurred
to attend meetings of the Board or its committees.  Any travel
expenses shall be reimbursed in accordance with the Company’s standard travel
policy.  The travel expenses will be reimbursed within thirty (30)
days after receipt by the Company of an invoice together with originals or
copies of receipts showing the payment of such expenses.

     

    
      	
              2.4

            	
              Limitations
      for Members of Audit Committee

            

    

     

    Members
of the Audit Committee may not directly or indirectly receive any compensation
from the Company other than their directors’ compensation in accordance with
this Policy.

     

    
      
        	
                3.

              	
                Equity
      Compensation

              

      

    

     

    
      	
              3.1

            	
              Initial
      Awards

            

    

     

    On the
effective date of his or her election or appointment to the Board, each
non-employee director, other than the Chairman of the Board, automatically shall
be granted a non-qualified stock option to purchase 35,000 shares of Company
common stock.  On the effective date of his or her election or
appointment as Chairman of the Board, the Chairman of the Board automatically
shall be granted a non-qualified stock option to purchase 70,000 shares of the
Company’s common stock.  Each of the options described in this Section
3.1 is referred to herein as an “Initial
Award.”

     

     

    
      
        
          
            	
                    Director
      Compensation Policy

                  	
                    1

                  

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
        

      

    

     

     

    
      	
              3.2

            	
              Committee
      Chair Awards

            

    

     

    On the
date of each annual meeting of the Company’s stockholders, (i) the Chairman of
the Audit Committee automatically shall be granted a non-qualified stock option
to purchase 7,500 shares of Company common stock, (ii) the Chairman of the
Compensation Committee automatically shall be granted a non-qualified stock
option to purchase 5,000 shares of Company common stock, and (iii) the Chairman
of the Nominating & Corporate Governance Committee automatically shall be
granted a non-qualified stock option to purchase 2,500 shares of common
stock.  The option grants described in this Section 3.2 are referred
to herein as “Committee Chair
Awards.”

     

    
      	
              3.3

            	
              Annual
      Awards

            

    

     

    On the
date of each annual meeting of the Company’s stockholders, each non-employee
director, other than the Chairman of the Board, automatically shall be granted a
non-qualified stock option to purchase 15,000 shares of Company common stock,
and the Chairman of the Board automatically shall be granted a non-qualified
stock option to purchase 30,000 shares of the Company’s common stock. The option
grants described in this Section 3.3 are referred to herein as “Annual
Awards.”

     

    
      	
              3.4

            	
              Terms
      of Stock Option Awards

            

    

     

    
      3.4.1 
General
Terms

    

     

    The stock
options described in this Policy shall be granted under and shall be subject to
the terms and provisions of the Company’s Amended and Restated 2003 Equity
Incentive Award Plan (the “2003 Plan”), as
amended from time to time, and shall be granted subject to the execution and
delivery of award agreements, including attached exhibits, in substantially the
same forms approved by the Board, setting forth the vesting schedule applicable
to such awards and such other terms as may be required by the 2003
Plan.

     

    
      3.4.2 
Exercise
Price

    

     

    The
exercise price of each option granted to a non-employee director shall be the
closing price of a share of common stock of the Company on the date of grant (or
if the stock market was closed on the date of grant, on the last trading day
preceding the date of grant).

     

    
      3.4.3 
Vesting
of Initial Awards

    

     

    Options
granted as Initial Awards to non-employee directors shall become vested in equal
installments at the end of each calendar month over a period of three years from
the date of grant, such that each stock option shall be 100% vested on the third
anniversary of its date of grant, subject to a director’s continuing service on
the Board through such dates.  No portion of an option which is
unexercisable at the time of a non-employee director’s termination of membership
on the Board shall thereafter become exercisable.

     

    
      3.4.4 
Vesting
of Committee Chair Awards and Annual Awards

    

     

    Options
granted as Committee Chair Awards and as Annual Awards shall become vested in
equal installments at the end of each calendar month over a period of one year
from the date of grant, such that each stock option shall be 100% vested on the
first anniversary of the date of grant, subject to a director’s continuing
service on the Board through such date.  No portion of an option which
is unexercisable at the time of a non-employee director’s termination of
membership on the Board shall thereafter become exercisable.

     

    
       

      
        
          
            
              	
                      Director
      Compensation Policy

                    	
                      2

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