Document:

Exhibit
10.10

 

ISRAELI SHARE OPTION
PLAN

 

NESS TECHNOLOGIES INC.

 

THE 2003 ISRAELI SHARE
OPTION PLAN

 

(*In compliance with
Amendment No. 132 of the Israeli Tax Ordinance, 2002)

 

1

 

TABLE OF CONTENTS

 

	
  1. PURPOSE
  OF THE ISOP

  	
  3

  
	
   

  	
   

  
	
  2.
  DEFINITIONS

  	
  3

  
	
   

  	
   

  
	
  3.
  ADMINISTRATION OF THE ISOP

  	
  6

  
	
   

  	
   

  
	
  4.
  DESIGNATION OF PARTICIPANTS

  	
  7

  
	
   

  	
   

  
	
  5.
  DESIGNATION OF OPTIONS PURSUANT TO SECTION 102

  	
  7

  
	
   

  	
   

  
	
  6.
  TRUSTEE

  	
  9

  
	
   

  	
   

  
	
  7. SHARES
  RESERVED FOR THE ISOP

  	
  9

  
	
   

  	
   

  
	
  8.
  PURCHASE PRICE

  	
  10

  
	
   

  	
   

  
	
  9. ADJUSTMENTS

  	
  10

  
	
   

  	
   

  
	
  10. TERM
  AND EXERCISE OF OPTIONS

  	
  12

  
	
   

  	
   

  
	
  11.
  VESTING OF OPTIONS

  	
  13

  
	
   

  	
   

  
	
  12.
  SHARES SUBJECT TO RIGHT OF FIRST REFUSAL

  	
  13

  
	
   

  	
   

  
	
  13.
  PURCHASE FOR INVESTMENT

  	
  14

  
	
   

  	
   

  
	
  14.
  DIVIDENDS

  	
  15

  
	
   

  	
   

  
	
  15.
  RESTRICTIONS ON ASSIGNABILITY AND SALE OF OPTIONS

  	
  15

  
	
   

  	
   

  
	
  16.
  EFFECTIVE DATE AND DURATION OF THE ISOP

  	
  15

  
	
   

  	
   

  
	
  17.
  AMENDMENTS OR TERMINATION

  	
  16

  
	
   

  	
   

  
	
  18.
  GOVERNMENT REGULATIONS

  	
  16

  
	
   

  	
   

  
	
  19.
  CONTINUANCE OF EMPLOYMENT

  	
  16

  
	
   

  	
   

  
	
  20.
  GOVERNING LAW & JURISDICTION

  	
  16

  
	
   

  	
   

  
	
  21. ARBITRATION

  	
  16

  
	
   

  	
   

  
	
  22. TAX CONSEQUENCES

  	
  17

  
	
   

  	
   

  
	
  23. NON-EXCLUSIVITY
  OF THE ISOP

  	
  17

  
	
   

  	
   

  
	
  24.
  MULTIPLE AGREEMENTS

  	
  17

  

 

2

 

This plan, as amended from time to time, shall be known as Ness
Technologies Inc. 2003 Israeli Share Option Plan (the “ISOP”).

 

1.                                      PURPOSE OF THE ISOP

 

The ISOP is intended to provide an incentive to retain, in the employ
of the  Company and its Affiliates
(as defined below), persons of training, experience, and ability, to attract
new employees, directors, consultants, service providers and any other entity
which the Board shall decide their services are considered valuable to the
Company, to encourage the sense of proprietorship of such persons, and to
stimulate the active interest of such persons in the development and financial
success of the Company by providing them with opportunities to purchase shares
in the Company, pursuant to the ISOP.

 

2.                                      DEFINITIONS

 

For purposes of the ISOP and related documents, including the Option
Agreement, the following definitions shall apply:

 

2.1                                 “Affiliate” means any “employing company”
within the meaning of Section 102(a) of the Ordinance.

 

2.2                                 “Approved 102 Option” means an Option
granted pursuant to Section 102(b) of the Ordinance and held in trust by a
Trustee for the benefit of the Optionee.

 

2.3                                 “Board” means the Board of Directors of the
Company.

 

2.4                                 “Capital Gain Option (CGO)” as defined in
Section 5.4 below.

 

2.5                                 “Cause” means, (i) conviction of any felony
involving moral turpitude or affecting the Company; (ii) any refusal to carry
out a reasonable directive of the chief executive officer, the Board or the
Optionee’s direct supervisor, which involves the business of the Company or its
Affiliates and was capable of being lawfully performed; (iii) embezzlement of
funds of the Company or its Affiliates; (iv) any breach of the Optionee’s
fiduciary duties or duties of care of the Company; including without limitation
disclosure of confidential information of the Company; and (v) any conduct
(other than conduct in good faith) reasonably determined by the Board to be
materially detrimental to the Company.

 

2.6                                 “Chairman” means the chairman of the
Committee.

 

2.7                                 “Committee” means a share option
compensation committee appointed by the Board, which shall consist of no fewer
than two members of the Board.

 

2.8                                 “Company” means Ness Technologies Inc., a
U.S. corporation incorporated under the

 

3

 

laws of Delaware.

 

2.9                                 “Controlling Shareholder” shall have the
meaning ascribed to it in Section 32(9) of the Ordinance.

 

2.10                           “Date of Grant” means, the date of grant of an Option, as
determined by the Board  and set forth
in the Optionee’s Option Agreement.

 

2.11                           “Employee”
means a person who is employed by the Company or its Affiliates, including an
individual who is serving as a director or an office holder, but excluding
Controlling Shareholder.

 

2.12                           “Expiration date” means the date upon which an Option shall
expire, as set forth in Section 10.2 of the ISOP.

 

2.13                           “Fair
Market Value” means as of any date, the value of a Share determined as
follows:

 

(i) If the Shares are listed on any established stock exchange or a
national market system, including without limitation the NASDAQ National Market
system, or the NASDAQ SmallCap Market of the NASDAQ Stock Market, the Fair Market
Value shall be the closing sales price for such Shares (or the closing bid, if
no sales were reported), as quoted on such exchange or system for the last
market trading day prior to time of determination, as reported in the Wall
Street Journal, or such other source as the Board deems reliable.

 

Without derogating from the above, solely for the purpose of
determining the tax liability pursuant to Section 102(b)(3) of the
Ordinance, if at the Date of Grant the Company’s shares are listed on any
established stock exchange or a national market system or if the Company’s
shares will be registered for trading within ninety (90) days following the
Date of Grant, the Fair Market Value of a Share at the Date of Grant shall be
determined in accordance with the average value of the Company’s shares on the
thirty (30) trading days preceding the Date of Grant or on the thirty (30)
trading days following the date of registration for trading, as the case may
be;

 

(ii) If the Shares are regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value shall be the
mean between the high bid and low asked prices for the Shares on the last
market trading day prior to the day of determination, or;

 

(iii) In the absence of an established market for the Shares, the Fair
Market Value thereof shall be determined in good faith by the Board or the
Committee.

 

2.14                           “IPO” means the initial public offering of the Company’s
shares.

 

2.15                           “ISOP” means this 2003 Israeli Share Option Plan.

 

2.16                           “ITA” means the Israeli Tax Authorities.

 

4

 

2.17                           “Non-Employee” means a consultant, adviser, service provider,
Controlling Shareholder or any other person who is not an Employee.

 

2.18                           “Ordinary Income Option (OIO)” as defined in Section 5.5
below.

 

2.19                           “Option” means an option to purchase one or more Shares of the
Company pursuant to the ISOP.

 

2.20                           “102 Option” means any Option granted to Employees pursuant to
Section 102 of the Ordinance.

 

2.21                           “3(i) Option” means an Option granted pursuant to
Section 3(i) of the Ordinance to any person who is Non- Employee.

 

2.22                           “Optionee” means a person who receives or holds an Option
under the ISOP.

 

2.23                           “Option Agreement” means the share option agreement between the
Company and an Optionee that sets out the terms and conditions of an Option.

 

2.24                           “Ordinance” means the 1961 Israeli Income Tax Ordinance [New
Version] 1961 as now in effect or as hereafter amended.

 

2.25                           “Purchase Price” means the price for each Share subject to an
Option.

 

2.26                           “Section 102” means section 102 of the Ordinance as
now in effect or as hereafter amended.

 

2.27                           “Share” means the common stock, $0.01 par value each, of the
Company.

 

2.28                           “Successor Company” means any entity the Company is merged to
or is acquired by, in which the Company is not the surviving entity.

 

2.29                           “Transaction” means merger, reorganization, consolidation or
amalgamation of the Company with one or more other entities in which the
Company is not the surviving entity.

 

2.30                           “Trustee” means any individual appointed by the Company to
serve as a trustee and approved by the ITA, all in accordance with the
provisions of Section 102(a) of the Ordinance.

 

2.31                           “Unapproved 102 Option” means an Option granted pursuant to
Section 102(c) of the Ordinance and not held in trust by a Trustee.

 

2.32                           “Vested
Option” means any Option, which has already been vested according to the
Vesting Dates.

 

5

 

2.33                           “Vesting Dates” means, as determined by the Board or by the
Committee, the date as of which the Optionee shall be entitled to exercise the
Options or part of the Options, as set forth in section 11 of the ISOP.

 

3.                                      ADMINISTRATION OF THE ISOP

 

3.1                                 The Board or the
Committees hall have the power to administer the ISOP, all as provided by
applicable law and in the Company’s incorporation documents. Notwithstanding
the above, the Board shall automatically have residual authority if no
Committee shall be constituted or if such Committee shall cease to operate for
any reason.

 

3.2                                 The Committee shall
select one of its members as its Chairman and shall hold its meetings at such
times and places as the Chairman shall determine. The Committee shall keep
records of its meetings and shall make such rules and regulations for the
conduct of its business as it shall deem advisable.

 

3.3                                 The Committee shall
have the full power and authority, subject to the approval of the Board to the
extent required under applicable law or under the company’s incorporation documnets
to: (i) designate optionees; (ii) determine the terms and provisions of the
respective Option Agreements, including, but not limited to, the number of
Options to be granted to each Optionee, the number of Shares to be covered by
each Option, provisions concerning the time and the extent to which the Options
may be exercised and the nature and duration of restrictions as to the
transferability or restrictions constituting substantial risk of forfeiture and
to cancel or suspend awards, as necessary; (iii) determine the Fair Market
Value of the Shares covered by each Option; (iv) make an election as to the
type of Approved 102 Option; and (v) designate the type of  Options.(vi) alter any restrictions and
conditions of any Options or Shares subject to any Options (vii) interpret the
provisions and supervise the administration of the ISOP; (viii) accelerate the
right of an Optionee to exercise in whole or in part, any previously granted
Option; (ix) determine the Purchase Price of the Option; (x) prescribe, amend
and rescind rules and regulations relating to the ISOP; and (xi) make all other
determinations deemed necessary or advisable for the administration of the
ISOP.

 

3.4                                 The Board or the
Committee shall have the authority to grant, at its discretion, to the holder
of an outstanding Option, in exchange for the surrender and cancellation of
such Option, a new Option having a purchase price equal to, lower than or
higher than the Purchase Price of the original Option so surrendered and
canceled and containing such other terms and conditions as the Board or the
Committee may prescribe in accordance with the provisions of the ISOP.

 

6

 

3.5                                 Subject to the
Company’s incorporation documents, all decisions and selections made by the
Board or the Committee pursuant to the provisions of the ISOP shall be made by
a majority of its members except that no member of the Board or the Committee
shall vote on, or be counted for quorum purposes, with respect to any proposed action
of the Board or the Committee relating to any Option to be granted to that
member. Any decision reduced to writing shall be executed in accordance with
the provisions of the Company’s incorporation documents, as the same may be in
effect from time to time.

 

3.6                                 The interpretation and
construction by the Committee of any provision of the ISOP or of any Option
Agreement thereunder shall be final and conclusive unless otherwise determined
by the Board.

 

3.7                                 Subject to the
Company’s incorporation documents and the Company’s decision, and to all
approvals legally required, including, but not limited to the provisions of the
incorporation documents, each member of the Board or the Committee shall be
indemnified and held harmless by the Company against any cost or expense
(including counsel fees) reasonably incurred by him, or any liability
(including any sum paid in settlement of a claim with the approval of the
Company) arising out of any act or omission to act in connection with the ISOP
unless arising out of such member’s own fraud or bad faith, to the extent
permitted by applicable law. Such indemnification shall be in addition to any
rights of indemnification the member may have as a director or otherwise under
the Company’s Incorporation documents, any agreement, any vote of shareholders
or disinterested directors, insurance policy or otherwise.

 

4.                                      DESIGNATION OF PARTICIPANTS

 

4.1                                 The persons eligible
for participation in the ISOP as Optionees shall include any Employees and/or
Non-Employees of the Company or of any Affiliate; provided, however, that (i)
Employees may only be granted 102 Options; (ii) Non-Employees may only be
granted 3(i) Options; and (iii) Controlling Shareholders may only be granted
3(i) Options.

 

4.2                                 The grant of an Option
hereunder shall neither entitle the Optionee to participate nor disqualify the
Optionee from participating in, any other grant of Options pursuant to the ISOP
or any other option or share plan of the Company or any of its Affiliates.

 

4.3                                 Anything in the ISOP
to the contrary notwithstanding, all grants of Options to directors and office
holders shall be authorized and implemented in accordance with the provisions
of the incorporation documents or any applicable law, as in effect from time to
time.

 

5.                                      DESIGNATION
OF OPTIONS PURSUANT TO SECTION 102

 

5.1                                 The Company may designate Options granted to
Employees pursuant to Section 102 as Unapproved 102 Options or
Approved 102 Options.

 

5.2                                 The grant of Approved
102 Options shall be made under this ISOP adopted by the Board as described in
Section 16 below, and shall be conditioned upon the approval of this ISOP
by the ITA.

 

7

 

5.3                                 Approved 102 Option
may either be classified as Capital Gain Option (“CGO”) or Ordinary Income Option (“OIO”).

 

5.4                                 Approved 102 Option
elected and designated by the Company to qualify under the capital gain tax
treatment in accordance with the provisions of Section 102(b)(2) shall be
referred to herein as CGO.

 

5.5                                 Approved 102 Option
elected and designated by the Company to qualify under the ordinary income tax
treatment in accordance with the provisions of Section 102(b)(1) shall be
referred to herein as OIO.

 

5.6                                 The Company’s election of the type of
Approved 102 Options as CGO or OIO granted to Employees (the “Election”), shall be appropriately filed
with the ITA before the Date of Grant of an Approved 102 Option. Such Election shall become effective
beginning the first Date of Grant of an Approved 102 Option under this ISOP and
shall remain in effect until the end of the year following the year during
which the Company first granted Approved 102 Options. The Election shall
obligate the Company to grant only
the type of Approved 102 Option it has elected, and shall apply to all
Optionees who were granted Approved 102 Options during the period indicated
herein, all in accordance with the provisions of Section 102(g) of the
Ordinance. For the avoidance of doubt, such Election shall not prevent the
Company from granting Unapproved 102 Options simultaneously.

 

5.7                                 All Approved 102
Options must be held in trust by a Trustee, as described in Section 6
below.

 

5.8                                 For the avoidance of
doubt, the designation of Unapproved 102 Options and Approved 102 Options shall
be subject to the terms and conditions set forth in Section 102 of the
Ordinance and the regulations promulgated thereunder.

 

5.9                                 With regards to Approved 102 Options, the
provisions of the ISOP and/or the Option Agreement shall be subject to the
provisions of Section 102 and the Tax Assessing Officer’s permit, and the
said provisions and permit shall be deemed an integral part of the ISOP and of
the Option Agreement. Any
provision of Section 102 and/or the said permit which is necessary in
order to receive and/or to keep any tax benefit pursuant to Section 102,
which is not expressly specified in the ISOP or the Option Agreement, shall be
considered binding upon the Company and the Optionees.

 

8

 

6.                                      TRUSTEE

 

6.1                                 Approved 102 Options
which shall be granted under the ISOP and/or any Shares allocated or issued
upon exercise of such Approved 102 Options and/or other shares received
subsequently following any realization of rights, including without limitation
bonus shares, shall be allocated or issued to the Trustee and held for the
benefit of the Optionees for such period of time as required by
Section 102 or any regulations, rules or orders or procedures promulgated
thereunder (the “Holding Period”).
In the case the requirements for Approved 102 Options are not met, then the
Approved 102 Options may be treated as Unapproved 102 Options, all in
accordance with the provisions of Section 102 and regulations promulgated
thereunder.

 

6.2                                 Notwithstanding
anything to the contrary, the Trustee shall not release any Shares allocated or
issued upon exercise of Approved 102 Options prior to the full payment of the
Optionee’s tax liabilities arising from Approved 102 Options which were granted
to him and/or any Shares allocated or issued upon exercise of such Options.

 

6.3                                 With respect to any
Approved 102 Option, subject to the provisions of Section 102 and any
rules or regulation or orders or procedures promulgated thereunder, an Optionee
shall not sell or release from trust any Share received upon the exercise of an
Approved 102 Option and/or any share received subsequently following any
realization of rights, including without limitation, bonus shares, until the
lapse of the Holding Period required under Section 102 of the Ordinance.
Notwithstanding the above, if any such sale or release occurs during the
Holding Period, the sanctions under Section 102 of the Ordinance and under
any rules or regulation or orders or procedures promulgated thereunder shall
apply to and shall be borne by such Optionee.

 

6.4                                 Upon receipt of Approved
102 Option, the Optionee will sign an undertaking to release the Trustee from
any liability in respect of any action or decision duly taken and bona fide
executed in relation with the ISOP, or any Approved 102 Option or Share granted
to him thereunder.

 

7.                                      SHARES RESERVED FOR THE
ISOP; RESTRICTION THEREON

 

7.1                                 The Company has
reserved
               (               )
authorized but unissued Shares, for the purposes of the ISOP and for the
purposes of  any other share option
plans which may be adopted by the Company in the future, subject to adjustment
as set forth in Section 9 below. Any Shares which remain unissued and
which are not subject to the outstanding Options at the termination of the ISOP
shall cease to be reserved for the purpose of the ISOP, but until termination
of the ISOP the Company shall at all times reserve sufficient number of Shares
to meet the requirements of the ISOP. Should any option under this ISOP or
under the Company’s 1999 share option plan, adopted on December 1999, for
any reason expire or be canceled prior to its exercise or relinquishment in
full, the Shares subject to such option may again be subjected to an Option
under the ISOP or under the Company’s other share option plans.

 

9

 

7.2                                 Each Option granted
pursuant to the ISOP, shall be evidenced by a written Option Agreement between
the Company and the Optionee, in such form as the Board or the Committee shall
from time to time approve. Each Option Agreement shall state, among other
matters, the number of Shares to which the Option relates, the type of Option
granted thereunder (whether a CGO, OIO, Unapproved 102 Option or a 3(i)
Option), the Vesting Dates, the Purchase Price per share, the Expiration Date
and such other terms and conditions as the Committee or the Board in its
discretion may prescribe, provided that they are consistent with this ISOP.

 

7.3                                 Until the consummation
of an IPO, such Shares shall be voted by an irrevocable proxy (the “Proxy”) pursuant to the directions of the
Board, such Proxy to be assigned to the person or persons designated by the
Board. Such person or persons designated by the Board shall be indemnified and
held harmless by the Company against any cost or expense (including counsel
fees) reasonably incurred by him/her, or any liability (including any sum paid
in settlement of a claim with the approval of the Company) arising out of any
act or omission to act in connection with the voting of such Proxy unless
arising out of such member’s own fraud or bad faith, to the extent permitted by
applicable law. Such indemnification shall be in addition to any rights of
indemnification the person(s) may have as a director or otherwise under the
Company’s incorporation documents, any agreement, any vote of shareholders or
disinterested directors, insurance policy or otherwise. Without derogating from
the above, with respect to Approved 102 Options, such shares shall be voted in
accordance with the provisions of Section 102 and any rules, regulations or
orders promulgated thereunder.

 

8.                                      PURCHASE  PRICE

 

8.1                                 The Purchase Price of
each Share subject to an Option shall be determined by the Board in its sole
and absolute discretion in accordance with applicable law, subject to any
guidelines as may be determined by the Committee from time to time. Each Option
Agreement will contain the Purchase Price determined for each Optionee.

 

8.2                                 The Purchase Price
shall be payable upon the exercise of the Option in a form satisfactory to the
Committee, including without limitation, by cash or check. The Committee shall
have the authority to postpone the date of payment on such terms as it may
determine.

 

8.3                                 The Purchase Price
shall be denominated in the currency of the primary economic environment of,
either the Company or the Optionee (that is the functional currency of the
Company or the currency in which the Optionee is paid) as determined by the
Company.

 

9.                                      ADJUSTMENTS

 

Upon the occurrence of any of the following described events,
Optionee’s rights to purchase Shares under the ISOP shall be adjusted as
hereafter provided:

 

9.1                                 In the event of
Transaction, the unexercised Options then outstanding under the ISOP shall be
assumed or substituted for an appropriate number of shares of each class of
shares or other securities of the Successor Company (or a parent or subsidiary
of the

 

10

 

Successor Company) as were distributed to the shareholders of the
Company in connection and with respect to the Transaction. In the case of such
assumption and/or substitution of Options, appropriate adjustments shall be
made to the Purchase Price so as to reflect such action and all other terms and
conditions of the Option Agreements shall remain unchanged, including but not
limited to the vesting schedule, all subject to the determination of the
Committee or the Board, which determination shall be in their sole discretion
and final. The Company shall notify the Optionee of the Transaction in such
form and method as it deems applicable at least ten (10) days prior to the
effective date of such Transaction.

 

9.2                                 Notwithstanding the
above and subject to any applicable law, if in any such Transaction as
described in section 9.1 above, the Successor Company (or parent or
subsidiary of the Successor Company) does not agree to assume or substitute for
the Options, the Vesting Dates shall be accelerated so that any unvested Option
or any portion thereof shall be immediately
vested as of the date which is ten (10) days prior to the effective date of the
Transaction, provided that such Transaction shall have been effected and such
Options shall expire if unexercised immediately prior to such Transaction.

 

9.3                                 For the purposes of
section 9.1 above, an Option shall be considered assumed or substituted
if, following the Transaction, the Option confers the right to purchase or
receive, for each Share underlying an Option immediately prior to the
Transaction, the consideration (whether shares, options, cash, or other
securities or property) received in the Transaction by holders of shares held
on the effective date of the Transaction (and if such holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares); provided, however, that if such consideration
received in the Transaction is not solely common stock (or their equivalent) of
the Successor Company or its parent or subsidiary, the Committee may, with the
consent of the Successor Company, provide for the consideration to be received
upon the exercise of the Option to be solely common stock (or their equivalent)
of the Successor Company or its parent or subsidiary equal in Fair Market Value
to the per Share consideration received by holders of a majority of the
outstanding shares in the Transaction; and provided further that the Committee
may determine, in its discretion, that in lieu of such assumption or
substitution of Options for options of the Successor Company or its parent or
subsidiary, such Options will be substituted for any other type of asset or
property including cash which is fair under the circumstances.

 

9.4                                 If the Company is
liquidated or dissolved while unexercised Options remain outstanding under the
ISOP, then all such outstanding Options may be exercised in full by the Optionees
as of the effective date of any such liquidation or dissolution of the Company
without regard to the installment exercise provisions of Section 11, by
the Optionees giving notice in writing to the Company of their intention to so
exercise.

 

11

 

9.5                                 Change in Control

 

Notwithstanding anything to the contrary in sections 9.1-9.2 above, the
Board or the Committee shall have discretion to determine, at the time of the
grant, whether, in the event of a Change in Control (as defined herein), an
Optionee with an outstanding Option shall have the right at any time thereafter
to exercise the Option in full notwithstanding any vesting period, waiting
period, installment period, or other limitation or restriction in any agreement
or in the ISOP.  In the event that the
Board or Committee in its discretion, elects not to provide in the grant to an
Optionee for accelerated vesting in the event of a Change in Control, the Board
or Committee may nevertheless, in its sole discretion, determine that upon a
Change in Control each Optionee with an outstanding Option shall have the right
at any time thereafter to exercise the Option in full notwithstanding any
vesting period, waiting period, installment period or other limitation or
restriction in any agreement or in the Option Plan.

 

“Change in Control” shall mean an event
(other than the transfer of shares in the Company to a holding company) that
shall be deemed to have occurred as of the first day any one or more of the following
have been satisfied:

 

(i)                                     any event
whereby any person or entity (other than (i) the Company or an affiliate, as
defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (ii) any employee
benefit plan or trust sponsored or maintained by the Company or an affiliate,
as defined in the Exchange Act) (x) acquires 50% or more of the Company’s
common stock; or (y) acquires (in one transaction or in a series of related
transactions) all or substantially all of the Company’s assets, whether by
sale, lease, exchange or other transfer; or (z) acquires (in one transaction or
in a series of related transactions) a majority interest or all or
substantially all of the assets of a subsidiary, business unit, segment or
division of the Company as defined by the Board (or, following its appointment,
the Committee) (provided, however, that in such event a Change in Control shall
be deemed to occur only with respect to employees of such subsidiary, business
unit, segment or division and who cease to be employees of the Company or any
member of the same controlled group (as defined in Section 414(b)-(o)
inclusive of the U.S. Internal Revenue Code of 1986, as amended from time to
time) (the “Code”) with the
Company); or

 

(ii)                                   any
consolidation or merger of the Company, other than a merger or consolidation of
the Company in which the common stock of the Company or the existing shares of
common stock of the Company outstanding immediately prior thereto continues to
represent (either by remaining outstanding or by being converted into common
stock of the surviving entity) at least 50% of the common stock of the Company
or such surviving entity outstanding immediately after such merger or
consolidation.

 

12

 

9.6                                 If the outstanding
shares of the Company shall at any time be changed or exchanged by declaration
of a share dividend (bonus shares), share split, combination or exchange of
shares, recapitalization, or any other like event by or of the Company, and as
often as the same shall occur, then the number, class and kind of the Shares
subject to the ISOP or subject to any Options therefore granted, and the
Purchase Prices, shall be appropriately and equitably adjusted so as to
maintain the proportionate number of Shares without changing the aggregate
Purchase Price, provided, however, that no adjustment shall be made by reason
of the distribution of subscription rights (rights offering) on outstanding
shares. Upon happening of any of the foregoing, the class and aggregate number
of Shares issuable pursuant to the ISOP (as set forth in Section 7
hereof), in respect of which Options have not yet been exercised, shall be
appropriately adjusted, all as will be determined by the Board whose
determination shall be final.

 

9.7                                 Anything herein to the
contrary notwithstanding, if prior to the completion of the IPO all or
substantially all of the shares of the Company are to be sold, or in case of a
Transaction, all or substantially all of the shares of the Company are to be
exchanged for securities of another Company, then each Optionee shall be
obliged to sell or exchange, as the case may be, any Shares such Optionee
purchased under the ISOP, in accordance with the instructions issued by the
Board or the Committee, whose determination shall be final. In order to
consummate the provisions of this Section 9.7, the Board or the Committee
shall be authorized to take any action on behalf of the Optionee, including,
without limitation, to exchange or to sell such shares and pay to the Optionee
the proceeds of such sale or to cancel such shares and pay to the Optionee
their Fair Market Value, as the case may be, in its complete discretion.

 

9.8                                 The Optionee
acknowledges that in the event that the Company’s shares shall be registered
for trading in any public market, Optionee’s rights to sell the Shares may be
subject to certain limitations (including a lock-up period), as will be
requested by the Company or its underwriters, and the Optionee unconditionally
agrees and accepts any such limitations.

 

10.                               TERM AND EXERCISE OF OPTIONS

 

10.1                           Options shall be exercised
by the Optionee by giving written notice to the Company and/or to any third
party designated by the Company (the “Representative”),
in such form and method as may be determined by the Company and when
applicable, by the Trustee in accordance with the requirements of
Section 102, which exercise shall be effective upon receipt of such notice
by the Company and/or the Representative and the payment of the Purchase Price
at the Company’s or the Representative’s principal office. The notice shall
specify the number of Shares with respect to which the Option is being
exercised.

 

10.2                           Options, to the extent not
previously exercised, shall terminate forthwith upon the earlier of: (i) the
date set forth in the Option Agreement; and (ii) the expiration of any extended
period in any of the events set forth in section 10.5 below.

 

10.3                           The Options may be exercised
by the Optionee in whole at any time or in part from time

 

13

 

to time, to the extent that the Options become vested and exercisable,
prior to the Expiration Date, and provided that, subject to the provisions of
section 10.5 below, the Optionee is employed by or providing services to
the Company or any of its Affiliates, at all times during the period beginning
with the granting of the Option and ending upon the date of exercise.

 

10.4                           Subject
to the provisions of section 10.5 below, in the event of termination of
Optionee’s employment or services, with the Company or any of its Affiliates,
all Options granted to such Optionee will immediately expire. A notice of
termination of employment or service shall be deemed to constitute termination
of employment or service and the date specified in such notice shall be deemed
to be the date of termination of employment or service. For the avoidance of
doubt, in case of such termination of employment or service, the unvested
portion of the Optionee’s Option shall not vest and shall not become
exercisable.

 

10.5                           Notwithstanding anything to
the contrary hereinabove and unless otherwise determined in the Optionee’s
Option Agreement, an Option may be exercised after the date of termination of
Optionee’s employment or service with the Company or any Affiliates during an
additional period of time beyond the date of such termination, but only with
respect to the number of Vested Options at the time of such termination
according to the Vesting Dates, if:

 

(i) 
termination is without Cause, in which event any Vested Option still in
force and unexpired may be exercised within a period of ninety (90) days after
the date of such termination; or-

 

(ii) 
termination is the result of death or disability of the Optionee, in
which event any Vested Option still in force and unexpired may be exercised
within a period of twelve (12) months after the date of such termination; or -

 

(iii) prior to the date of such termination,
the Committee shall authorize an extension of the terms of all or part of the
Vested Options beyond the date of such termination for a period not to exceed
the period during which the Options by their terms would otherwise have been
exercisable.

 

For avoidance of any doubt, if termination of employment or service is
for Cause, any outstanding unexercised Option (whether vested or non-vested),
will immediately expire and terminate, and the Optionee shall not have any
right in connection to such outstanding Options.

 

10.6                           To avoid doubt, the holders
of Options shall not be deemed owners of the Shares issuable upon the exercise
of Options and shall not have any of the rights or privileges of shareholders
of the Company in respect of any Shares purchasable upon the exercise of any
part of an Option, until registration of the Optionee as holder of such Shares
in the Company’s register of shareholders upon exercise of the Option in
accordance with the provisions of the ISOP

 

14

 

10.7                           Any form of Option Agreement
authorized by the ISOP may contain such other provisions as the Committee may,
from time to time, deem advisable.

 

10.8                           With respect to Unapproved
102 Option, if the Optionee ceases to be employed by the Company or any
Affiliate, the Optionee shall extend to the Company and/or its Affiliate a security
or guarantee for the payment of tax due at the time of sale of Shares, all in
accordance with the provisions of Section 102 and the rules, regulation or
orders promulgated thereunder.

 

11.                               VESTING OF OPTIONS

 

11.1                           Subject to the provisions of
the ISOP, each Option shall vest following the Vesting Dates and for the number
of Shares as shall be provided in the Option Agreement. However, no Option
shall be exercisable after the Expiration Date.

 

11.2                           An Option may be subject to
such other terms and conditions on the time or times when it may be exercised,
as the Committee may deem appropriate. The vesting provisions of individual
Options may vary.

 

12.                               SHARES SUBJECT TO RIGHT OF
FIRST REFUSAL

 

12.1                           Notwithstanding anything to
the contrary in the incorporation documents of the Company, none of the
Optionees shall have a right of first refusal in relation with any sale of
shares in the Company.

 

12.2                           Unless otherwise determined
by the Committee, until such time as the Company shall complete an IPO, an
Optionee shall not have the right to sell Shares issued upon the exercise of an
Option within six (6) months and one day of the date of exercise of such Option
or issuance of such Shares. Unless otherwise determined by the Committee, until
such time as the Company shall complete an IPO, the sale of Shares issuable
upon the exercise of an Option shall be subject to a right of first refusal on
the part of the Company, by the Optionee giving a notice of sale (the “Notice”) to the Company.

 

12.3                           The Notice shall specify the
name of each proposed purchaser or other transferee (hereinafter the “Proposed Transferee”), the number of Shares
offered for sale, the price per Share and the payment terms. The Company will
be entitled for thirty (30) days from the day of receipt of the Notice
(hereinafter the “Notice Period”),
to purchase all or part of the offered Shares on a pro rata basis based upon
their respective holdings in the Company.

 

12.4                           If by the end of the Notice
Period not all of the offered Shares have been purchased by the Company, the
Optionee shall be entitled to sell such Shares at any time during the ninety
(90) days following the end of the Notice Period on terms not more favorable
than those set out in the Notice, provided that the Proposed Transferee agrees
in writing that the

 

15

 

provisions of this section shall continue to apply to the Shares
in the hands of such Proposed Transferee. Any sale of Shares issued under the
ISOP by the Optionee that is not made in accordance with the ISOP or the Option
Agreement shall be null and void. Upon the Company’s request, the Optionee
shall provide the Company with a signed affidavit stating the terms of the sale
of the offered Shares, including the price per Share and the payment terms.

 

13.                               PURCHASE FOR INVESTMENT

 

The Company’s obligation to issue or allocate Shares upon exercise of
an Option granted under the ISOP is expressly conditioned upon: (a) the
Company’s completion of any registration or other qualifications of such Shares
under all applicable laws, rules and regulations or (b) representations and
undertakings by the Optionee (or his legal representative, heir or legatee, in
the event of the Optionee’s death) to assure that the sale of the Shares
complies with any registration exemption requirements which the Company in its
sole discretion shall deem necessary or advisable. Such required
representations and undertakings may include representations and agreements
that such Optionee (or his legal representative, heir, or legatee): (a) is
purchasing such Shares for investment and not with any present intention of
selling or otherwise disposing thereof; and (b) agrees to have placed upon the
face and reverse of any certificates evidencing such Shares a legend setting forth
(i) any representations and undertakings which such Optionee has given to the
Company or a reference thereto and (ii) that, prior to effecting any sale or
other disposition of any such Shares, the Optionee must furnish to the Company
an opinion of counsel, satisfactory to the Company, that such sale or
disposition will not violate the applicable laws, rules, and regulations,
whether of the State of Israel or of the United States or any other State
having jurisdiction over the Company and the Optionee.

 

14.                               DIVIDENDS

 

With respect to all Shares (but excluding, for avoidance of any doubt,
any unexercised Options) allocated or issued upon the exercise of Options
purchased by the Optionee and held by the Optionee or by the Trustee, as the
case may be, the Optionee shall be entitled to receive dividends in accordance
with the quantity of such Shares, subject to the provisions of the Company’s
incorporation documents (and all amendments thereto) and subject to any
applicable taxation on distribution of dividends, and when applicable subject
to the provisions of  Section 102
and the rules, regulations or orders promulgated thereunder.

 

15.                               RESTRICTIONS
ON ASSIGNABILITY AND SALE OF OPTIONS

 

15.1                          No Option or any right with
respect thereto, purchasable hereunder, whether fully paid or not, shall be
assignable, transferable or given as collateral or any right with respect to it
given to any third party whatsoever, except as specifically allowed under the
ISOP, and during the lifetime of the Optionee each and all of such Optionee’s
rights to purchase Shares hereunder shall be exercisable only by the Optionee.

 

Any such action made directly or indirectly, for an immediate
validation or for a future one, shall be void.

 

16

 

15.2                           As long as Options and/or
Shares are held by the Trustee on behalf of the Optionee, all rights of the
Optionee over the Shares are personal, can not be transferred, assigned,
pledged or mortgaged, other than by will or pursuant to the laws of descent and
distribution.

 

16.                               EFFECTIVE DATE AND DURATION
OF THE ISOP

 

The ISOP shall be effective as of the day it was adopted by the Board
and shall terminate at the end of ten (10) years from such day of adoption.

 

The Company shall obtain the approval of the Company’s shareholders for
the adoption of this ISOP or for any amendment to this ISOP, if shareholders’
approval is necessary or desirable to comply with any applicable law including
without limitation the US securities law or the securities laws of other
jurisdiction applicable to Options granted to Optionees under this ISOP, or if
shareholders’ approval is required by any authority or by any governmental
agencies or national securities exchanges including without limitation the US
Securities and Exchange Commission.

 

17.                               AMENDMENTS OR TERMINATION

 

The Board may at any time, but when applicable, after consultation with
the Trustee, amend, alter, suspend or terminate the ISOP. No amendment,
alteration, suspension or termination of the ISOP shall impair the rights of
any Optionee, unless mutually agreed otherwise between the Optionee and the
Company, which agreement must be in writing and signed by the Optionee and the
Company. Termination of the ISOP shall not affect the Committee’s ability to
exercise the powers granted to it hereunder with respect to Options granted
under the ISOP prior to the date of such termination.

 

18.                               GOVERNMENT REGULATIONS

 

The ISOP, and the granting and exercise of Options hereunder, and the
obligation of the Company to sell and deliver Shares under such Options, shall
be subject to all applicable laws, rules, and regulations, whether of the State
of Israel or of the United States or any other State having jurisdiction over
the Company and the Optionee, including the registration of the Shares under
the United States Securities Act of 1933, and the Ordinance and to such
approvals by any governmental agencies or national securities exchanges as may
be required. Nothing herein shall be deemed to require the Company to register
the Shares under the securities laws of any jurisdiction.

 

17

 

19.                               CONTINUANCE
OF EMPLOYMENT OR HIRED SERVICES

 

Neither the ISOP nor the Option Agreement with the Optionee shall
impose any obligation on the Company or an Affiliate thereof, to continue any
Optionee in its employ or service, and nothing in the ISOP or in any Option
granted pursuant thereto shall confer upon any Optionee any right to continue
in the employ or service of the Company or an Affiliate thereof or restrict the
right of the Company or an Affiliate thereof to terminate such employment or
service at any time.

 

20.                               GOVERNING LAW & JURISDICTION

 

The ISOP shall be governed by and construed and enforced in accordance
with the laws of the State of Israel applicable to contracts made and to be
performed therein, without giving effect to the principles of conflict of laws.
The competent courts of Tel-Aviv, Israel shall have sole jurisdiction in any
matters pertaining to the ISOP.

 

 

21.                               ARBITRATION

 

Any dispute in relation with this ISOP and the exercise of rights
thereunder, shall be decided by arbitration by the legal counsel to the Company
or any person nominated by such legal counsel (“the Arbitrator”), who shall decide such dispute in accordance
with the provisions of the Arbitration Law - 1968 and its supplement. The
decision of the Arbitrator shall be final and shall bind the Company and the
Optionee.  The Optionee will exempt the
Arbitrator from any liability in respect of any action or decision made in
connection with the arbitration.

 

22.                               TAX CONSEQUENCES

 

22.1                           Any tax consequences arising
from the grant or exercise of any Option, from the payment for Shares covered
thereby or from any other event or act (of the Company and/or its Affiliates,
the Trustee or the Optionee), hereunder, shall be borne solely by the Optionee.
The Company and/or its Affiliates and/or the Trustee shall withhold taxes
according to the requirements under the applicable laws, rules, and
regulations, including withholding taxes at source. Furthermore, the Optionee
shall agree to indemnify the Company and/or its Affiliates and/or the Trustee
and hold them harmless against and from any and all liability for any such tax
or interest or penalty thereon, including without limitation, liabilities
relating to the necessity to withhold, or to have withheld, any such tax from
any payment made to the Optionee.

 

22.2                           The Company and/or, when
applicable, the Trustee shall not be required to release any Share certificate
to an Optionee until all required payments have been fully made.

 

22.3                           To the extent provided by
the terms of an Option Agreement, the Optionee may satisfy any tax withholding
obligation relating to the exercise or acquisition of Shares under an Option by
any of the following means (in addition to the Company’s right to withhold from
any compensation paid to the Optionee by the Company) or by a combination of
such means: (i) tendering a cash payment; (ii) subject to the Committee’s
approval on the payment date, authorizing the Company to withhold Shares from
the Shares otherwise

 

18

 

issuable to the Optionee as a result of the exercise or acquisition of
Shares under the Option in an amount not to exceed the minimum amount of tax
required to be withheld by law; or (iii) subject to Committee approval on the
payment date, delivering to the Company owned and unencumbered Shares; provided
that Shares acquired on exercise of Options have been held for at least 6
months from the date of exercise.

 

22.                               NON-EXCLUSIVITY OF THE ISOP

 

The
adoption of the ISOP by the Board shall not be construed as amending, modifying
or rescinding any previously approved incentive arrangements or as creating any
limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of Options otherwise than under the ISOP, and such arrangements may be
either applicable generally or only in specific cases.

 

For the avoidance of doubt, prior grant of options to Optionees of the
Company under their employment agreements, and not in the framework of any
previous option plan, shall not be deemed an approved incentive arrangement for
the purpose of this Section.

 

23.                               MULTIPLE AGREEMENTS

 

The
terms of each Option may differ from other Options granted under the ISOP at
the same time, or at any other time. The Board may also grant more than one
Option to a given Optionee during the term of the ISOP, either in addition to,
or in substitution for, one or more Options previously granted to that
Optionee.

 

*       
*        *

 

19Exhibit 10.11

 

NESS TECHNOLOGIES, INC.

 

2003 STOCK OPTION PLAN

 

1.                                       Purpose of the Plan.

 

This 2003 Stock Option Plan (the “Plan”) is
intended as an incentive, to retain in the employ of and as directors,
consultants and advisors to NESS TECHNOLOGIES, INC., a Delaware corporation
(the “Company”) and any Subsidiary of the Company, within the meaning of
Section 424(f) of the United States Internal Revenue Code of 1986, as
amended (the “Code”), persons of training, experience and ability, to attract
new employees, directors, consultants and advisors whose services are
considered valuable, to encourage the sense of proprietorship and to stimulate
the active interest of such persons in the development and financial success of
the Company and its Subsidiaries.

 

It is further intended that certain options
granted pursuant to the Plan shall constitute incentive stock options within
the meaning of Section 422 of the Code (the “Incentive Options”) while
certain other options granted pursuant to the Plan shall be nonqualified stock
options (the “Nonqualified Options”). 
Incentive Options and Nonqualified Options are hereinafter referred to
collectively as “Options.”

 

The Company intends that the Plan meet the
requirements of Rule 16b-3 (“Rule 16b-3”) promulgated under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and that transactions of
the type specified in subparagraphs (c) to (f) inclusive of Rule 16b-3 by
officers and directors of the Company pursuant to the Plan will be exempt from
the operation of Section 16(b) of the Exchange Act.  Further, the Plan is intended to satisfy the
performance-based compensation exception to the limitation on the Company’s tax
deductions imposed by Section 162(m) of the Code with respect to those
Options for which qualification for such exception is intended. In all cases,
the terms, provisions, conditions and limitations of the Plan shall be
construed and interpreted consistent with the Company’s intent as stated in
this Section 1.

 

2.                                       Administration of the Plan.

 

The Board of Directors of the Company (the
“Board”) shall appoint and maintain as administrator of the Plan a Committee
(the “Committee”) consisting of two or more directors who are “Non-Employee
Directors” (as such term is defined in Rule 16b-3) and “Outside Directors” (as
such term is defined in Section 162(m) of the Code), which shall serve at
the pleasure of the Board.  The
Committee, subject to Sections 3 and 5 hereof, shall have full power and
authority to designate recipients of Options, to determine the terms and
conditions of respective Option agreements (which need not be identical) and to
interpret the provisions and supervise the administration of the Plan.  The Committee shall have the authority,
without

 

 

limitation, to designate which
Options granted under the Plan shall be Incentive Options and which shall be
Nonqualified Options.  To the extent any
Option does not qualify as an Incentive Option, it shall constitute a separate
Nonqualified Option.

 

Subject to the provisions of the Plan, the Committee
shall interpret the Plan and all Options granted under the Plan, shall make
such rules as it deems necessary for the proper administration of the Plan,
shall make all other determinations necessary or advisable for the
administration of the Plan and shall correct any defects or supply any omission
or reconcile any inconsistency in the Plan or in any Options granted under the
Plan in the manner and to the extent that the Committee deems desirable to
carry into effect the Plan or any Options. 
The act or determination of a majority of the Committee shall be the act
or determination of the Committee and any decision reduced to writing and
signed by all of the members of the Committee shall be fully effective as if it
had been made by a majority at a meeting duly held.  Subject to the provisions of the Plan, any action taken or
determination made by the Committee pursuant to this and the other Sections of
the Plan shall be conclusive on all parties.

 

In the event that for any reason the
Committee is unable to act or if the Committee at the time of any grant, award
or other acquisition under the Plan of Options or Stock as hereinafter defined
does not consist of two or more Non-Employee Directors, or if there shall be no
such Committee, then the Plan shall be administered by the Board, and
references herein to the Committee (except in the proviso to this sentence)
shall be deemed to be references to the Board, and any such grant, award or
other acquisition may be approved or ratified in any other manner contemplated
by subparagraph (d) of Rule 16b-3; provided, however, that options granted to
the Company’s Chief Executive Officer or to any of the Company’s other four
most highly compensated officers that are intended to qualify as
performance-based compensation under Section 162(m) of the Code may only
be granted by the Committee.

 

3.                                       Designation of Optionees.

 

The persons eligible for participation in the
Plan as recipients of Options (the “Optionees”) shall include employees,
officers and directors of, and, subject to their meeting the eligibility
requirements of Rule 701 promulgated under the Securities Act (as defined
below), consultants and advisors to, the Company or any Subsidiary; provided
that Incentive Options may only be granted to employees of the Company and the
Subsidiaries.  In selecting Optionees,
and in determining the number of shares to be covered by each Option granted to
Optionees, the Committee may consider any factors it deems relevant, including without
limitation, the office or position held by the Optionee or the Optionee’s
relationship to the Company, the Optionee’s degree of responsibility for and
contribution to the growth and success of the Company or any Subsidiary, the
Optionee’s length of service, promotions and potential.  An Optionee who has been granted an Option
hereunder may be granted an additional Option or Options, if the Committee
shall so determine.

 

2

 

4.                                       Stock Reserved for the Plan.

 

Subject to adjustment as provided in
Section 7 hereof, a total of 2,000,000 shares of the Company’s Common
Stock, $0.01 par value per share (the “Stock”), shall be subject to the
Plan.  The maximum number of shares of
Stock that may be subject to options granted under the Plan to any individual
in any calendar year shall not exceed 250,000 shares (subject to adjustment
pursuant to Section 7 hereof), and the method of counting such shares
shall conform to any requirements applicable to performance-based compensation
under Section 162(m) of the Code. The shares of Stock subject to the Plan
shall consist of unissued shares, treasury shares or previously issued shares
held by any Subsidiary of the Company, and such amount of shares of Stock shall
be and is hereby reserved for such purpose. 
Any of such shares of Stock that may remain unsold and that are not
subject to outstanding Options at the termination of the Plan shall cease to be
reserved for the purposes of the Plan, but until termination of the Plan the
Company shall at all times reserve a sufficient number of shares of Stock to
meet the requirements of the Plan. 
Should any Option expire or be canceled prior to its exercise in full or
should the number of shares of Stock to be delivered upon the exercise in full
of an Option be reduced for any reason, the shares of Stock theretofore subject
to such Option may be subject to future Options under the Plan, except where
such reissuance is inconsistent with the provisions of Section 162(m) of
the Code.

 

5.                                       Terms and Conditions of Options.

 

Options granted under the Plan shall be
subject to the following conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall
deem desirable:

 

a.                                       Option Price. 
The purchase price of each share of Stock purchasable under an Incentive
Option shall be determined by the Committee at the time of grant, but shall not
be less than 100% of the Fair Market Value (as defined below) of such share of
Stock on the date the Option is granted; provided, however, that with respect
to an Optionee who, at the time such Incentive Option is granted, owns (within
the meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or of any Subsidiary,
the purchase price per share of Stock shall be at least 110% of the Fair Market
Value per share of Stock on the date of grant. 
The purchase price of each share of Stock purchasable under a
Nonqualified Option shall not be less than the Fair Market Value of such share
of Stock on the date the Option is granted; provided, however, that if an
option granted to the Company’s Chief Executive Officer or to any of the
Company’s other four most highly compensated officers is intended to qualify as
performance-based compensation under Section 162(m) of the Code, the
exercise price of such Option shall not be less than 100% of the Fair Market
Value (as such term is defined below) of such share of Stock on the date the
Option is granted.  The exercise price
for each Option shall be subject to adjustment as provided in Section 7
below.  “Fair Market Value” means the
closing price of publicly traded shares of Stock on the principal securities
exchange on which shares of Stock are listed (if the shares of Stock are so
listed), or on the NASDAQ Stock Market (if the shares of Stock are regularly
quoted on the NASDAQ Stock Market), or, if not so listed or regularly quoted,
the mean between the closing bid and asked prices of publicly traded shares of
Stock in the over-the-counter market, or, if such bid and asked prices shall
not be

 

3

 

available, as reported by any nationally recognized quotation service
selected by the Company, or as determined by the Committee in a manner
consistent with the provisions of the Code. 
Anything in this Section 5(a) to the contrary notwithstanding, in
no event shall the purchase price of a share of Stock be less than the minimum
price permitted under the rules and policies of any national securities
exchange on which the shares of Stock are listed.

 

b.                                      Option Term. 
The term of each Option shall be fixed by the Committee, but no Option
shall be exercisable more than ten years after the date such Option is granted
and in the case of an Incentive Option granted to an Optionee who, at the time
such Incentive Option is granted, owns (within the meaning of
Section 424(d) of the Code) more than 10% of the total combined voting
power of all classes of stock of the Company or of any Subsidiary, no such
Incentive Option shall be exercisable more than five years after the date such
Incentive Option is granted.

 

c.                                       Exercisability. 
Subject to Section 5(j) hereof, Options shall be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Committee at the time of grant.

 

Upon the occurrence of a “Change in Control”
(as hereinafter defined), the Committee may accelerate the vesting and
exercisability of outstanding Options, in whole or in part, as determined by
the Committee in its sole discretion. 
In its sole discretion, the Committee may also determine that, upon the
occurrence of a Change in Control, each outstanding Option shall terminate
within a specified number of days after notice to the Optionee thereunder, and
each such Optionee shall receive, with respect to each share of Company Stock
subject to such Option, an amount equal to the excess of the Fair Market Value
of such shares immediately prior to such Change in Control over the exercise
price per share of such Option; such amount shall be payable in cash, in one or
more kinds of property (including the property, if any, payable in the
transaction) or a combination thereof, as the Committee shall determine in its
sole discretion.

 

For purposes of the Plan, a Change in Control
shall be deemed to have occurred if:

 

i.                                          a tender offer (or series of related offers)
shall be made and consummated for the ownership of 50% or more of the
outstanding voting securities of the Company, unless as a result of such tender
offer more than 50% of the outstanding voting securities of the surviving or
resulting corporation shall be owned in the aggregate by the shareholders of
the Company (as of the time immediately prior to the commencement of such
offer), any employee benefit plan of the Company or its Subsidiaries, and their
affiliates;

 

ii.                                       the Company shall be merged or consolidated
with another corporation, unless as a result of such merger or consolidation
more than 50% of the outstanding voting securities of the surviving or
resulting corporation shall be owned in the aggregate by the shareholders of
the Company (as of the time immediately prior to such transaction), any
employee benefit plan of the Company or its Subsidiaries, and their affiliates;

 

iii.                                    the Company shall sell substantially all of
its assets to another corporation that is not wholly owned by the Company,
unless as a result of such sale more than

 

4

 

50% of such assets shall be owned in the aggregate by the shareholders
of the Company (as of the time immediately prior to such transaction), any
employee benefit plan of the Company or its Subsidiaries and their affiliates;
or

 

iv.                                   a Person (as defined below) shall acquire
50% or more of the outstanding voting securities of the Company (whether
directly, indirectly, beneficially or of record), unless as a result of such
acquisition more than 50% of the outstanding voting securities of the surviving
or resulting corporation shall be owned in the aggregate by the shareholders of
the Company (as of the time immediately prior to the first acquisition of such
securities by such Person), any employee benefit plan of the Company or its
Subsidiaries, and their affiliates.

 

For purposes of this Section 5(c),
ownership of voting securities shall take into account and shall include
ownership as determined by applying the provisions of Rule 13d-3(d)(I)(i) (as
in effect on the date hereof) under the Exchange Act.  In addition, for such purposes, “Person” shall have the meaning
given in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof; however, a Person shall not include (A) the
Company or any of its Subsidiaries; (B) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
Subsidiaries; (C) an underwriter temporarily holding securities pursuant to an
offering of such securities; or (D) a corporation owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportion as their ownership of stock of the Company.

 

d.                                      Method of Exercise. 
Options to the extent then exercisable may be exercised in whole or in
part at any time during the option period, by giving written notice to the
Company specifying the number of shares of Stock to be purchased, accompanied
by payment in full of the purchase price, in cash, or by check or such other
instrument as may be acceptable to the Committee.  As determined by the Committee, in its sole discretion, at or
after grant, payment in full or in part may be made at the election of the
Optionee (i) in the form of Stock owned by the Optionee (based on the Fair
Market Value of the Stock on the trading day before the Option is exercised)
which is not the subject of any pledge or security interest, (ii) in the form
of shares of Stock withheld by the Company from the shares of Stock otherwise
to be received with such withheld shares of Stock having a Fair Market Value on
the date of exercise equal to the exercise price of the Option, or (iii) by a
combination of the foregoing, provided that the combined value of all cash and
cash equivalents and the Fair Market Value of any shares surrendered to the
Company is at least equal to such exercise price and except with respect to (ii)
above, such method of payment will not cause a 
disqualifying disposition of all or a portion of the Stock received upon
exercise of an Incentive Option.  An
Optionee shall have the right to dividends and other rights of a stockholder
with respect to shares of Stock purchased upon exercise of an Option at such
time as the Optionee has given written notice of exercise and has paid in full
for such shares and (ii) has satisfied such conditions that may be imposed by
the Company with respect to the withholding of taxes.

 

e.                                       Non-transferability of Options.

 

i.                                          Except as provided in Section 5(e)(ii)
hereof, during the lifetime of an Optionee, only the Optionee (or, in the event
of legal incapacity or incompetence, the Optionee’s guardian or legal
representative) may exercise an Option. Except as provided in

 

5

 

Section 5(e)(ii) hereof, no Option shall be assignable or
transferable by the Optionee to whom it is granted, other than by will or the
laws of descent and distribution.

 

ii.                                       A Optionee may Transfer (as defined in
Section 5(e)(iii) below) all or part of an Option that is not an Incentive
Stock Option by gift or domestic relations order to any “family member” (as
that term is defined under Rule 701(c)(3) of the Securities Act, as amended or
any successor provision of law); provided, that (x) there shall be no
consideration for any such Transfer and (y) subsequent Transfers of transferred
Options shall be prohibited except those made in accordance with this Section 5(e)(ii)
or by will or the laws of descent and distribution and otherwise in compliance
with applicable U.S. federal and state and foreign securities laws. Following
any permitted Transfer hereunder, any transferred Option shall continue to be
subject to the same terms and conditions as were applicable immediately prior
to such Transfer, provided that for purposes of this Section 11(e)(ii) the
term “Optionee” shall be deemed to refer to the transferee and the transferee
shall agree to be bound by the terms and conditions of the Options and this
Plan. The events of termination of the employment or other relationship of
Section 5(i) hereof shall continue to be applied with respect to the
original Optionee, following which the Option shall be exercisable by the
transferee only to the extent and for the periods specified in
Section 5(f), 5(g), 5(h), or 5(i) hereof.

 

iii.                                    Except pursuant to the laws of descent and
distribution, Optionee shall not sell or in any other way, directly or
indirectly, transfer, assign, distribute, pledge, hypothecate, encumber, gift
or otherwise alienate or dispose of (collectively, “Transfer”) any Stock issued
pursuant to the exercise of an Option (whether now owned or hereafter acquired
pursuant to such exercise), or any right or interest therein, whether
voluntarily or involuntarily, by operation of law, court order, foreclosure,
marital property division or otherwise, except (a) in compliance with all
applicable U.S. federal and state and foreign securities laws and (b) with the
written consent of the Company. Notwithstanding the foregoing, the Optionee may
Transfer such Stock by gift or domestic relations order to any “family member”
(as that term is defined under Rule 701(c)(3) of the Securities Act, as amended
from time to time) without obtaining the written consent of the Company;
provided, that (i) such Transfer shall be in compliance with all applicable
U.S. federal and state and foreign securities laws; (ii) there shall be no
consideration for any such Transfer; and (iii) the transferee shall agree not
to Transfer such Stock except in accordance with this Section 5(e)(iii).
Any attempted Transfer of Stock acquired pursuant to the exercise of an Option
that is not permitted in accordance with this Section 5(e)(iii) shall be void
and of no further force and effect and shall not be registered on the books of
the Company. The provisions of this Section 5(e)(iii) will be of no
further force or effect upon the earlier of: (x) the first date on which Shares
are held of record by more than five hundred (500) persons and are registered
pursuant to an effective registration statement filed with the United States
Securities and Exchange Commission; (y) the consummation of a firm commitment
underwritten public offering, pursuant to an effective registration statement
under the Securities Act, as amended from time to time; or (z) a sale of the
Company to, or merger of the Company with, a company subject to the reporting
requirements of the Exchange Act, as amended from time to time.

 

f.                                         Termination by Death. 
Unless otherwise determined by the Committee at grant, if any Optionee’s
employment with or service to the Company or any Subsidiary terminates by
reason of death, the Option may thereafter be exercised, to the extent then
exercisable (or on such accelerated basis as the Committee shall determine at
or after grant), by

 

6

 

the legal representative of the estate or by the legatee of the
Optionee under the will of the Optionee, for a period of one year after the
date of such death or until the expiration of the stated term of such Option as
provided under the Plan, whichever period is shorter.

 

g.                                      Termination by Reason of Disability. 
Unless otherwise determined by the Committee at grant, if any Optionee’s
employment with or service to the Company or any Subsidiary terminates by
reason of total and permanent disability, any Option held by such Optionee may
thereafter be exercised, to the extent it was exercisable at the time of
termination due to Disability (or on such accelerated basis as the Committee
shall determine at or after grant), but may not be exercised after 30 days
after the date of such termination of employment or service or the expiration
of the stated term of such Option, whichever period is shorter; provided,
however, that, if the Optionee dies within such 30-day period, any unexercised
Option held by such Optionee shall thereafter be exercisable to the extent to
which it was exercisable at the time of death for a period of one year after
the date of such death or for the stated term of such Option, whichever period
is shorter.

 

h.                                      Termination by Reason of Retirement. 
Unless otherwise determined by the Committee at grant, if any Optionee’s
employment with or service to the Company or any Subsidiary terminates by
reason of Normal or Early Retirement (as such terms are defined below), any
Option held by such Optionee may thereafter be exercised to the extent it was
exercisable at the time of such Retirement (or on such accelerated basis as the
Committee shall determine at or after grant), but may not be exercised after 30
days after the date of such termination of employment or service or the
expiration of the stated term of such Option, whichever period is shorter;
provided, however, that, if the Optionee dies within such 30-day period, any
unexercised Option held by such Optionee shall thereafter be exercisable, to
the extent to which it was exercisable at the time of death, for a period of
one year after the date of such death or for the stated term of such Option,
whichever period is shorter.

 

For purposes of this paragraph (h) “Normal
Retirement” shall mean retirement from active employment with the Company or
any Subsidiary on or after the normal retirement date specified in the
applicable Company or Subsidiary pension plan or if no such pension plan, age
65, and “Early Retirement” shall mean retirement from active employment with
the Company or any Subsidiary pursuant to the early retirement provisions of
the applicable Company or Subsidiary pension plan or if no such pension plan,
age 55.

 

i.                                          Other Termination. 
Unless otherwise determined by the Committee at grant, if any Optionee’s
employment with or service to the Company or any Subsidiary terminates for any
reason other than death, Disability or Normal or Early Retirement, the Option
shall thereupon terminate, except that the portion of any Option that was
exercisable on the date of such termination of employment or service may be
exercised for the lesser of 30 days after the date of termination or the
balance of such Option’s term if the Optionee’s employment or service with the
Company or any Subsidiary is terminated by the Company or such Subsidiary
without cause (the determination as to whether termination was for cause to be
made by the Committee).  The transfer of
an Optionee from the employ of or service to the Company to the employ of or
service to a Subsidiary, or vice versa, or from one Subsidiary to another,
shall not be deemed to constitute a termination of employment or service for
purposes of the Plan.

 

7

 

j.                                          Limit on Value of Incentive Option. 
The aggregate Fair Market Value, determined as of the date the Incentive
Option is granted, of Stock for which Incentive Options are exercisable for the
first time by any Optionee during any calendar year under the Plan (and/or any
other stock option plans of the Company or any Subsidiary) shall not exceed
$100,000.

 

k.                                       Incentive Option Shares.  A
grant of an Incentive Option under this Plan shall provide that (a) the
Optionee shall be required as a condition of the exercise to furnish to the
Company any payroll (employment) tax required to be withheld, and (b)if the
Optionee makes a disposition, within the meaning of Section 424(c) of the
Code and regulations promulgated thereunder, of any share or shares of Stock
issued to him upon exercise of an Incentive Option granted under the Plan
within the two-year period commencing on the day after the date of the grant of
such Incentive Option or within a one-year period commencing on the day after
the date of transfer of the share or shares to him pursuant to the exercise of
such Incentive Option, he shall, within 10 days after such disposition, notify
the Company thereof and immediately deliver to the Company any amount of United
States federal, state and local income tax withholding required by law.

 

6.                                       Term of Plan.

 

No Option shall be granted pursuant to the
Plan on or after April 10, 2013, but Options theretofore granted may extend
beyond that date.

 

7.                                       Capital Change of the Company.

 

In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, or other change in corporate
structure affecting the Stock, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares reserved for issuance under the
Plan and in the number and option price of shares subject to outstanding
Options granted under the Plan, to the end that after such event each
Optionee’s proportionate interest shall be maintained as immediately before the
occurrence of such event.  The Committee
shall, to the extent feasible, make such other adjustments as may be required
under the tax laws so that any Incentive Options previously granted shall not
be deemed modified within the meaning of Section 424(h) of the Code.

 

8.                                       Purchase for Investment.

 

Unless the Options and shares covered by the
Plan have been registered under the Securities Act of 1933, as amended (the
“Securities Act”), or the Company has determined that such registration is
unnecessary, each person exercising an Option under the Plan may be required by
the Company to give a representation in writing that he is acquiring the shares
for his own account for investment and not with a view to, or for sale in
connection with, the distribution of any part thereof.

 

8

 

9.                                       Taxes.

 

The Company may make such provisions as it
may deem appropriate, consistent with applicable law, in connection with any
Options granted under the Plan with respect to the withholding of any taxes
(including income or employment taxes) or any other tax matters.

 

10.                                 Initial Public Offering.

 

As a condition of Participation in this Plan,
each Optionee shall be obligated to cooperate with the Company and the
underwriters in connection with any public offering of the Company’s securities
and any transaction s relating to a public offering, and shall execute and
deliver any agreements and documents, including without limitation, a lock-up
agreement, that may be requested by the Company or the underwriters.  The Optionees’ obligations under this
Section 10 shall apply to any Stock issued under the Plan as well as to
any and all other securities of the Company or its successor for which Stock
may be exchanged or into which Stock may be converted.

 

11.                                 Effective Date of Plan.

 

The Plan shall be effective on April 10,
2003; provided, however, that the Plan shall subsequently be approved by
majority vote of the Company’s stockholders generally entitled to vote at a
meeting of stockholders not later than April 9, 2004.

 

12.                                 Amendment and Termination.

 

The Board may amend, suspend, or terminate
the Plan, except that no amendment shall be made that would impair the rights
of any Optionee under any Option theretofore granted without the Optionee’s
consent, and except that no amendment shall be made which, without the approval
of the stockholders of the Company would:

 

a.                                       materially increase the number of shares
that may be issued under the Plan, except as is provided in Section 7;

 

b.                                      materially increase the benefits accruing to
the Optionees under the Plan;

 

c.                                       materially modify the requirements as to
eligibility for participation in the Plan;

 

d.                                      decrease the exercise price of an Incentive
Option to less than 100% of the Fair Market Value per share of Stock on the
date of grant thereof or the exercise price of a Nonqualified Option to less
than 100% of the Fair Market Value per share of Stock on the date of grant
thereof; or

 

e.                                       extend the term of any Option beyond that
provided for in Section 5(b).

 

9

 

The Committee may amend the terms of any
Option theretofore granted, prospectively or retroactively, but no such
amendment shall impair the rights of any Optionee without the Optionee’s
consent.  The Committee may also
substitute new Options for previously granted Options, including options
granted under other plans applicable  to
the participant and previously granted Options having higher option prices, upon
such terms as the Committee may deem appropriate.

 

13.                                 Government Regulations.

 

The Plan, and the grant and exercise of
Options hereunder, and the obligation of the Company to sell and deliver shares
under such Options, shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies, national
securities exchanges and interdealer quotation systems as may be required.

 

14.                                 General Provisions.

 

a.                                       Certificates. 
All certificates for shares of Stock delivered under the Plan shall be
subject to such stop transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, or other securities commission having
jurisdiction, any applicable Federal or state securities law, any stock
exchange or interdealer quotation system upon which the Stock is then listed or
traded and the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.

 

b.                                      Employment Matters. 
The adoption of the Plan shall not confer upon any Optionee of the
Company or any Subsidiary any right to continued employment or, in the case of
an Optionee who is a director, continued service as a director, with the
Company or a Subsidiary, as the case may be, nor shall it interfere in any way
with the right of the Company or any Subsidiary to terminate the employment of
any of its employees, the service of any of its directors or the retention of
any of its consultants or advisors at any time.

 

c.                                       Limitation of Liability.  No
member of the Board or the Committee, or any officer or employee of the Company
acting on behalf of the Board or the Committee, shall be personally liable for
any action, determination or interpretation taken or made in good faith with
respect to the Plan, and all members of the Board or the Committee and each and
any officer or employee of the  Company
acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company in respect of any such action,
determination or interpretation.

 

d.                                      Registration of Stock. 
Notwithstanding any other provision in the Plan, no Option may be
exercised unless and until the Stock to be issued upon the exercise thereof has
been registered under the Securities Act and applicable state securities laws,
or are, in the opinion of counsel to the Company, exempt from such registration
in the United States.  The Company shall
not be under any obligation to register under applicable federal or state
securities laws any Stock to be issued upon the exercise of an Option granted
hereunder in order to permit

 

10

 

the exercise of an Option and the issuance and sale of the Stock
subject to such Option, although the Company may in its sole discretion
register such Stock at such time as the Company shall determine.  If the Company chooses to comply with such
an exemption from registration, the Stock issued under the Plan may, at the
direction of the Committee, bear an appropriate restrictive legend restricting
the transfer or pledge of the Stock represented thereby, and the Committee may
also give appropriate stop transfer instructions with respect to such Stock to
the Company’s transfer agent.

 

	
   

  	
  NESS
  TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
  April 10, 2003

  

 

11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}]]