Document:

Exhibit 10.8

 

NESS TECHNOLOGIES INC.

 

 

THE 1999

SHARE OPTION PLAN

 

 

NESS TECHNOLOGIES INC.

 

THE 1999

SHARE OPTION PLAN

 

1.         NAME

 

This Plan, as amended from time
to time, shall be known as the Ness Technologies Inc. 1999 Share Option Plan (“the Option
Plan”).

 

2.         PURPOSE OF THE OPTION
PLAN

 

The Option Plan is intended as
an incentive to retain, in the employ of Ness Technologies Inc. (the  “Company”) and its subsidiaries (the “Group”), persons of training, experience,
and ability, to attract new employees and others, including directors and
consultants (“Optionees”), whose
services are considered valuable, 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 Group by providing them with
opportunities to purchase shares in the Company, pursuant to the Option Plan
approved by the board of directors of the Company (the  “Board”), which is designed to
benefit from, and is made pursuant to, the provisions of Section 102 of
the Israeli Income Tax Ordinance (New Version) 1961 (the “Tax Ordinance”) and any regulations, rules,
orders or procedures promulgated thereunder (“Section 102”) or pursuant to other provisions of
the Tax Ordinance (including Section 3(9) of the Tax Ordinance), with
respect to Options granted to eligible participants of the Group pursuant to
the Option Plan (the  “Options”).  The Option Plan may also serve to convert
shares and options to purchase shares in any of the Company’s subsidiaries, so
as to enable such shareholders and option holders to become shareholders and
option holders of the Company.

 

3.         ADMINISTRATION OF THE
OPTION PLAN

 

The Board or a stock option
committee appointed and maintained by the Board for such purpose (the “Committee”)
shall have the power to administer the Option Plan. Notwithstanding the above,
the Board shall have authority to administer the Option Plan if it resolved to
do so or if no Committee shall be constituted or if such Committee shall cease
to operate for any reason whatsoever.

 

The Committee shall consist of
such number of members (not less than two (2) in number) as may be fixed by the
Board. The Committee shall select one of its members as its chairman (the  “Chairman”) and shall hold its
meetings at such times and places as the Chairman shall

 

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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.

 

The Committee shall have full
power and authority: (i) to designate participants; (ii) to determine the terms
and provisions of respective Option agreements (which need not be identical)
including, but not limited to, the number of shares in the Company to be
covered by each Option, provisions concerning the time or times when and the
extent to which the Options may be vested and exercised and the nature and
duration of restrictions as to transferability or restrictions constituting
substantial risk of forfeiture; (iii) to accelerate the right of an Optionee to
exercise, in whole or in part, any previously granted Option; (iv) to interpret
the provisions and supervise the administration of the Option Plan; and (v) to
determine any other matter which is necessary or desirable for, or incidental
to, administration of the Option Plan.

 

The Committee shall be
authorized, at its discretion, to convert or adopt shares and options to
purchase shares in the Company’s subsidiaries into Options or Shares under the
Option Plan, and to determine all terms and conditions of such conversion or
adoption. The Committee may require that Optionees receiving Options upon such
conversion or adoption make such covenants, agreements and representations as
the Committee, in its sole discretion, deems necessary or desirable. Subject to
the approval of the Israeli Tax Authorities, the Committee shall be authorized
to determine that the date of grant of options to purchase shares in a
subsidiary of the Company shall be deemed to be the date of the grant of those
Options under the Option Plan to which such options in the Company’s subsidiary
were converted.

 

In addition, the Committee shall
be authorized, at its discretion, to convert or adopt Options or Shares under
the Option Plan or shares and options to purchase shares in the Company’s
subsidiaries into options or shares under an option plan of a company that
shall (i) be controlled by the shareholders of the Company at the time of such
conversion and (ii) hold a majority of the outstanding shares of the Company (a
“Holding Company”).  In such event, the Committee shall be
authorized, at its discretion, to determine all terms and conditions of such
conversion or adoption. The Committee may require that Optionees receiving
options or shares upon such conversion or adoption make such covenants,
agreements and representations as the Committee, in its sole discretion, deems
necessary or desirable.

 

The Committee shall have the
authority to grant, in its discretion, to the holder of an outstanding Option
(with her or his consent), 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 provided in the Option so surrendered and
canceled, and containing such other terms and conditions as the Committee may
prescribe in accordance with the provisions of the Option Plan.

 

Without limiting the foregoing,
the Committee may, only with the consent of the Optionee, from time to time
cancel all or any portion of any Option then subject to exercise, and the
Company’s obligation in respect of such Option may be discharged by (i) payment
to the Optionee of an amount in cash equal to the excess, if any, of the fair
market value of the Shares at the date of such cancellation subject to the
portion of the Option so canceled over the aggregate purchase price of such
Shares under the Option, (ii) the issuance or transfer to the Optionee of
Shares of the Company with a fair market value at the date of such transfer equal
to any such excess, or (iii) a combination of cash and shares with a combined
value equal to any such excess, all as determined by the Committee in its sole
discretion.

 

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All decisions and selections made
by the Board or the Committee pursuant to the provisions of the Option Plan
shall be made by a majority of its members. Any decision reduced to writing and
signed by a majority of the members who are authorized to make such decision
shall be fully effective as if it had been made by a majority at a meeting duly
held.

 

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

 

Subject to the Company’s
decision, 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 Option Plan to the maximum extent
permitted under Delaware 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 Certificate of Incorporation, any agreement, any vote of
shareholders or disinterested directors, insurance policy or otherwise.

 

4.         DESIGNATION OF
PARTICIPANTS

 

The persons eligible for
participation in the Option Plan as recipients of Options shall include any
employees of the Company or of any subsidiary of the Company and others,
including directors and consultants. The grant of an Option hereunder shall
neither entitle the recipient thereof to participate nor disqualify him from
participating in, any other grant of Options pursuant to this Option Plan or
any other option or stock plan of the Company or any of its subsidiaries or
affiliates.

 

5.         TRUSTEE

 

The Options which shall be granted
to employees of the Group and/or any Shares (as defined below) issued upon
exercise of such Options and/or other shares received subsequently following
any realization of rights, shall be issued to a Trustee nominated by the
Committee, and approved in accordance with the provisions of Section 102
(“the Trustee”) and held for the benefit of the
Optionees for a period of not less than two years (24 months) from the date of
grant, or such other shorter period that shall be determined by the Board or the
Committee, subject to the approval of the Israeli Tax Authority.

 

Anything herein to the contrary
notwithstanding, the Trustee shall not release any Options and/or any Shares
issued upon exercise of Options, prior to the full payment of the Optionee’s tax
liabilities arising from Options which were granted to him and/or any Shares
issued upon exercise of such Options.

 

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

 

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6.         SHARES RESERVED FOR THE
OPTION PLAN; RESTRICTION THEREON

 

6.1        Subject to adjustments
as set forth in Section 8 below, a total of
               
Common Stock, of par value of U.S. $ 0.01 per share (the “Shares”), shall
be subject to the Option Plan. The Shares subject to the Option Plan are hereby
reserved for such purpose in the authorized share capital of the Company and
may only be issued in accordance with the terms hereof. Any of such Shares
which may remain unissued and which are not subject to outstanding Options at
the termination of the Option Plan shall cease to be reserved for the purpose
of the Option Plan, but until termination of the Option Plan the Company shall
at all times reserve sufficient number of Shares to meet the requirements of
the Option Plan. Should any Option 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 Option Plan.

 

6.2        An Optionee who
purchased Shares hereunder upon exercise of Options shall have no voting rights
as a shareholder (in any and all matters whatsoever) until the consummation of
the initial public offering of the Company’s shares (the “IPO”). Until the IPO,
such Shares shall be voted by a proxy pursuant to the directions of the Board,
such proxy to be to the person or persons designated by the Board. All Shares
issued upon exercise of the Options shall entitle the holder thereof to receive
dividends and other distributions thereon.

 

6.3        The Committee may at
its discretion, issue to certain Optionees Shares instead of Options.

 

7.         OPTION PRICE

 

7.1        The purchase price of each
Share subject to an Option or any portion thereof shall be determined by the
Committee in its sole and absolute discretion in accordance with applicable
law, subject to any guidelines as may be determined by the Board from time to
time.

 

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

 

8.         ADJUSTMENTS

 

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

 

8.1        If the Company is separated,
reorganized, merged, consolidated or amalgamated with or into another
corporation while unexercised Options remain outstanding under the Option Plan,
there shall be substituted for the Shares subject to the unexercised portions
of such outstanding Options an appropriate number of shares of each class of
shares or other securities of the separated, reorganized, merged, consolidated
or amalgamated corporation which were distributed to the shareholders of the
Company in respect of such shares, and appropriate adjustments shall be made in
the purchase price per share

 

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to reflect such action. However,
subject to any applicable law, in the event the successor corporation does not
agree to assume the award as aforesaid, the vesting periods as set forth in
each Optionee’s Option agreement shall be accelerated so that any unexercisable
or unvested portion of the outstanding Options shall be immediately exercisable
and vested in full as of the date ten (10) days prior to the date of the change
in control, provided that such change in control shall have been effected and
such Options shall expire if unexercised immediately prior to such change of control.

 

8.2        If the Company is liquidated
or dissolved while unexercised Options remain outstanding under the Option
Plan, 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 9.2, by the Optionees giving notice in writing to the Company of
their intention to so exercise.

 

8.3        If the outstanding shares of
the Company shall at any time be changed or exchanged by declaration of a stock
dividend, stock 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
and become effective, then the number, class and kind of Shares subject to this
Option Plan or subject to any Options heretofore granted, and the Option
prices, shall be appropriately and equitably adjusted by the Board or the
Committee so as to maintain the proportionate number of Shares without changing
the aggregate Option price. Upon happening of any of the foregoing, the class
and aggregate number of Shares issuable pursuant to the Option Plan (as set
forth in Section 6 hereof), in respect of which Options have not yet been
exercised, shall be appropriately adjusted, all as will be determined by the
Board or the Committee, who’s determination shall be final.

 

8.4        For avoidance of doubt, it
is clarified that the conversion of Options and Shares under the Option Plan or
of options and shares in the Company’s subsidiaries into options and shares in
a Holding Company shall not be considered an event that entitles Optionees to
any adjustment under this Section 8.

 

9.         TERM AND EXERCISE OF
OPTIONS

 

9.1        Options shall be exercised
by the Optionee by giving written notice to the Company, in such form and method as may be determined by the Company and the
Trustee and conforming to Section 102 (where applicable), which exercise
shall be effective upon receipt of such notice by the Company at its principal
office. The notice shall specify the number of Shares with respect to which the
Option is being exercised.

 

9.2        Each Option granted under
this Option Plan shall be exercisable following the exercise 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, as defined for each
Optionee in his Option agreement.

 

9.3        The Options may be exercised
by the Optionee in whole at any time or in part from time to time, to the
extent that the Options become vested and excercisable, prior to the Expiration
Date, and provided that, subject to the provisions of Section 9.5 below
with respect to Optionees that are employees, the Optionee is an employee of
the Company or

 

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any of its subsidiaries, at all
times during the period beginning with the granting of the Option and ending
upon the date of exercise.

 

9.4        Subject to the
provisions of Section 9.5 below, in the event of termination of an
Optionee’s employment with the Company or any of its subsidiaries (regarding
Optionees that are employees), all Options granted to him will immediately
expire. Subject to the provisions of each Optionee’s individual employment
agreement (in respect of Optionees who are employees of the Group), a notice of
termination of employment shall be deemed to constitute termination of
employment and the date specified in such notice shall be deemed to be the date
of termination of employment.

 

9.5        Notwithstanding
anything to the contrary hereinabove and with respect to Optionees that are
employees, an Option may be exercised after the date of termination of an
Optionee’s employment with the Company or any subsidiary of the Company during
an additional period of time beyond the date of such termination, but only with
respect to the number of Options already vested at the date of such termination
according to the vesting periods of the Options set forth in such Optionee’s
Option agreement, if: (i) prior
to the date of such termination, the Committee shall authorize an extension of
the terms of all or part of the 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; or (ii) termination is without Cause (as
defined below), in which event any Options still in force and unexpired may be
exercised within a period of ninety (90) days from the date of such
termination, but only with respect to the number of shares purchasable at the
date of such termination,  according
to the vesting periods of the Options; or (iii) termination is the result of
death or disability of the Optionee, in which event any Options still in force
and unexpired may be exercised within a period of three (3) months from the
date of termination, but only with respect to the number of Options already
vested at the date of such termination  according
to the vesting periods of the Options. The term “Cause” shall mean (i) conviction of any felony or any
misdemeanor involving moral turpitude; (ii) habitual use of drugs without a
prescription; (iii) habitual or excessive use of alcohol; (iv) acts or
omissions involving willful or intentional malfeasance or misconduct that is
injurious to the Company (whether monetarily, reputationally or otherwise); (v)
commission of an act of fraud against the Company; (vi) breach of the fiduciary
duty one would owe toward the Company and its members as if one were a director
of the Company; (vii) acts or omissions constituting a material breach of one’s
obligations under any employment agreement with the Company; or (viii) any
action, omission or state of affairs related to the Optionee which the
Committee or the Board decides, in its sole discretion, is against the
interests of the Company.

 

9.6        The holders of Options 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
unless exercised and until registration of
the Optionee as holder of such Shares in the Company’s stock register.  Such rights and privileges of shareholders
shall be subject always to the provisions of Section 5 above and
Section 11 below.

 

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10.       CHANGE IN CONTROL

 

10.1      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, 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 Option Plan.  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.

 

10.2      “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:

 

(a)        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

 

(b)       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.

 

10.3      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 upon a merger
or reorganization or the like, the shares of the Company, or any class thereof,
are to be exchanged for securities of another Company, then in such event, each
Optionee shall be obliged to sell or exchange, as the case may be, the shares
such Optionee purchased under the Option Plan, in accordance with the
instructions then issued by the Board or

 

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the Committee, whose
determination shall be final.  In order
to consummate the provisions of this Section 10.3, 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 determined by the Board or the Committee, as the
case may be, in its complete discretion.

 

11.       SHARES SUBJECT TO RIGHT OF
FIRST REFUSAL

 

11.1      Notwithstanding anything to
the contrary in the Certificate of Incorporation of the Company, none of the
Optionees shall have a right of first refusal in relation to any sale of shares
in the Company.

 

11.2      Until such time as the
Company shall effectuate an IPO, the sale of Shares issuable upon exercise of
an Option, by the Optionee or of any Shares issued to the Optionee under this
Option Plan, 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.

 

The
notice shall specify the Number of Shares offered for sale, the price per Share
and the payment terms. Subject to applicable law, the Company will be entitled for 30
days from the day of receipt of the Notice (the  “30 Days Period”),
to purchase all or part of the offered Shares. If by the end of the 30 Days
Period not all of the offered Shares have been purchased by the Company, the
Optionee will be entitled to sell such Shares at any time during the 90 days
following the end of the 30 Days Period on terms not more favorable to the
purchaser than those set out in the Notice. 
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.

 

12.       DIVIDENDS

 

With respect to all Shares (in
contrast to unexercised Options) issued upon the exercise of Options by the
Optionee and held by the Trustee, the Optionee shall be entitled to receive
dividends in accordance with the quantity of such Shares, and subject to any
applicable taxation on distribution of dividends. During the period in which
Shares issued to the Trustee on behalf of an Optionee are held by the Trustee,
the cash dividends paid with respect thereto shall be paid directly to the
Optionee.

 

13.       ASSIGNABILITY AND SALE OF
OPTIONS

 

No Option granted hereunder,
whether fully paid or not, shall be assignable or transferable (other than
transfers by will or by the laws of descent and distribution or under legal
competence laws) or given as collateral or any right with respect thereto given
to any third party whatsoever, 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, subject to legal competence laws.

 

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As long as the Shares are held
by the Trustee in favor of the Optionee or are not registered in the name of
the Optionee as the owner of the Shares, all rights the Optionee possesses over
the Shares are personal, and cannot be transferred, assigned, pledged or
mortgaged, other than transfers by will or laws of descent and distribution or
under legal competence laws.

 

14.       TERM OF THE OPTION PLAN

 

The Option Plan shall be
effective as of the day it is adopted by the Board and shall terminate at the end
of ten years from such day of adoption or such earlier date as the Board shall
determine, provided such termination shall not affect any issued Option.

 

15.       AMENDMENTS OR TERMINATION

 

The Board may, at any time and
from time to time, subject to the written consent of the Trustee, amend, alter
or discontinue the Option Plan, except that no amendment or alteration shall be
made which would impair in any material respect the rights of the holder of any
Option theretofore granted, without his consent.

 

16.       GOVERNING LAW &
JURISDICTION; APPLICABLE LAWS AND REGULATIONS

 

This Option Plan 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. Without derogating from Section 20 below, the competent
courts of Tel-Aviv, Israel shall have sole jurisdiction in any matters
pertaining to this Option Plan.

 

Without derogating from the
above, the Company and the Optionees shall comply with all applicable laws,
rules, and regulations, whether of the State of Israel or of the United States
or any other state or country having jurisdiction over the Company, its
successors or the Optionee, including with respect to the registration of the
Shares under the United States Securities Act of 1933, and to such approvals by
any governmental agencies or national securities exchanges as may be required.

 

17.       SECURITIES LAW
REQUIREMENTS

 

17.1      No Option granted pursuant
to this Option Plan shall be exercisable in whole or in part, nor shall the
Company be obligated to acquire or sell any shares of Common Stock subject to
any such Option, if such exercise, acquisition or sale would, in the opinion of
counsel for the Company, violate the U.S. Securities Act of 1933, as amended
(the “Act”) (or other federal, Israeli, or state statutes having similar
requirements or any other applicable law), as may be in effect at that
time.  In this regard, the Board (or,
following its appointment, the Committee) may require, as a condition of the
grant of

 

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any
Option or the issuance and delivery of any Shares upon the exercise of any
Option that the recipient of any Option hereunder make such covenants,
agreements and representations as the Board (or, following its appointment, the
Committee), in its sole discretion, deems necessary or desirable, including,
without limitation, a written representation from the Optionee that Shares
being purchased upon exercise of an Option are being purchased for investment
and not for distribution, acknowledging that such Shares have not been
registered under the Act and agreeing that such shares may not be sold or
transferred unless there is an effective Registration Statement for them under
the Act, or, in the opinion of counsel to the Company, that such sale or
transfer is not in violation of the Act.

 

The Optionee will exempt the legal
counsel for the Company and indemnify and hold him harmless from any liability
in respect of any action or decision made by such legal counsel in relation
with the Option Plan, or any Option or Share granted to him thereunder, whether
in connection with this Section 17 or otherwise.

 

17.2      Each Option shall be subject
to the further requirement that, if at any time the Board (or, following its
appointment, the Committee) shall determine in its discretion that the listing
or qualification of the shares of Common Stock subject to such Option under any
securities exchange requirement or under any applicable law, or the consent or
approval of any governmental regulatory body, is necessary as a condition of,
or in connection with, the granting of such Option or the issue of Shares
thereunder, such Option may not be exercised in whole or in part, unless such
listing, qualification, consent or approval shall have been affected or
obtained free of any conditions not acceptable to the Board.

 

17.3      No person who acquires
Shares under the Option Plan may, during any period of time that such person is
an affiliate of the Company within the meaning of the rules and regulations of
the Securities and Exchange Commission under the Act, sell such Shares, unless
such offer and sale is made (i) pursuant to an effective registration statement
under the Act, which is current and includes the shares to be sold, or (ii)
pursuant to an appropriate exemption from the registration requirements of the
Act, such as that set forth in Rule 144 promulgated under the Act.

 

17.4      With respect to any person
subject to the reporting requirements of Section 16(a) of the Exchange Act
(a “Reporting Person”), transactions under the Option Plan are
intended to comply with all applicable conditions of Rule 16b-3 under the
Exchange Act.  To the extent any
provision of the Option Plan or any action by an authority under the Option
Plan fails to so comply, such provision or action shall, without further action
by any person, be deemed to be automatically amended to the extent necessary to
effect compliance with Rule 16b-3, provided that if such provision or action
cannot be amended to effect such compliance, such provision or action shall be
deemed null and void, to the extent permitted by law and deemed advisable by
the appropriate authority.  Each Option
to a Reporting Person under the Option Plan shall be deemed issued subject to
the foregoing qualification.

 

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18.       FOREIGN PARTICIPANTS

 

In order to facilitate the
granting of an Option to foster and promote achievement of the purposes of the
Option Plan, the Board (or, following its appointment, the Committee) may
provide for such special terms for Options to Optionees who are nationals of,
or who are employed by the Company in, countries other than the State of Israel
or the United States of America, as the Board (or, following its appointment,
the Committee) may consider necessary or appropriate to accommodate differences
in local law, tax policy or custom. 
Moreover, the Board (or, following its appointment, the Committee) may
approve such supplements to, or amendments, restatements or alternative
versions of this Option Plan as in effect for any other purpose, and the
Secretary or other appropriate officer of the Company may certify any such
document as having been approved and adopted in the same manner as the Option
Plan; provided, however, that no such supplements, amendments, restatements or
alternative versions shall include any provisions that are inconsistent with
the terms of the Option Plan, as then in effect, unless the Option Plan could
have been amended to eliminate the inconsistency without further approval by
the stockholders of the Company.

 

19.       CONTINUANCE OF EMPLOYMENT

 

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

 

20.       ARBITRATION

 

Any dispute in relation with
this Option Plan 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.

 

21.       TAX CONSEQUENCES — GENERAL

 

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, the Trustee or the
Optionee), hereunder, shall be borne solely by the Optionee. The Company 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 the Trustee
and hold them harmless against and from any and all

 

12

 

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.

 

The Committee and/or the Trustee
shall not release any Share certificate to an Optionee until all required
payments have been fully made.

 

22.       TAX CONSEQUENCES — ISRAEL

 

Certain Options granted and
Shares issued under this Option Plan shall be granted or issued in connection
with employee-employer relationships. 
The following is a general summary of certain tax laws of the State of
Israel and consequences that may apply  to
Optionees that are residents of the State of Israel and who are employees of
the Group.  This discussion should not
be construed as legal or professional tax advice and is not exhaustive of all
possible tax considerations.

 

OPITONEES ARE URGED TO CONSULT
THEIR OWN TAX ADVISOR AS TO THE ISRAELI OR OTHER TAX CONSEQUENCES OF THE GRANT
OF OPTIONS OR ISSUE OF SHARES.

 

Taxation
Under Section 102 of the Israeli Tax Ordinance (the “Ordinance”)

 

Section 102 of the
Ordinance provides for special tax arrangements in connection with granting of
options and issuance of shares by a company to its employees.  The Company has requested the Tax Authority
to approve the Option Plan as a plan under Section 102, however, there is
no guarantee that the Tax Authority shall issue such approval. In addition, the
company may determine to grant Options otherwise than under Section 102.  Under other tax provisions, income in
connection with the Options and the Shares may be considered as income from
work, and result in additional taxation, such as social security and health
taxes.

 

Under Section 102, the
obligation to pay tax arises on the earlier of (i) the date of transfer of the
shares in the name of the employee or (ii) the sale of the shares or the
options by the Trustee or the employee. 
At such date, the employee will be taxed for his or her gains, which
shall be equal to the difference between the employee’s consideration for the
shares or the options, as the case may be, (but not less than the fair market
value of the shares at such time as determined by the Tax Authority) and the
amount originally paid the employee at the time of issuance (the Option
price).  The taxation of such gains will
be calculated according to each Optionee’s incremental tax bracket.  The Trustee shall deduct at source an amount
equal to 30% of the consideration, or such other rate determined by the Tax
Authority.

 

It is not expected that the tax
exemption under Section 97(c) of the Tax Ordinance on securities traded
publicly outside of Israel shall apply to the Options and the Shares.

 

The Hebrew text of
Section 102 and the rules promulgated thereunder and the ruling of the
Israeli Tax Authority regarding the Option Plan are attached as an appendix to
this Option Plan.

 

13

 

Taxation
Under Sections 2(2) and 3(9) of the Ordinance

 

In the event that Section 102
shall not apply to the Option Plan, the Company’s position regarding taxation
is as follows: As long as the Shares are not publicly traded, tax shall not be
payable at the time of the grant of the Option.  Under Section 3(9) of the Ordinance, tax shall be payable at
the time of the exercise of the Option. 
This position does not necessarily reflect the position of the Israeli
Tax Authority, that may view the grant of the option as causing immediate tax
liability.  In such event, the Optionees
may have to pay tax upon the grant of the option and upon its
exercise.  Such tax will be considered
and calculated as the employee’s income from work or (for Optionees who are not
employees of the Group) as income from professional services.

 

At the sale of the Shares, the
Optionee shall pay tax on her or his gain. 
The Company’s position is that the calculation of such tax should take
into account taxes previously paid by employee in connection with the Option.  However, this position does not necessarily
reflect the position of the Tax Authority. 
In any event in which Shares are issued at a price that in the opinion
of the Tax Authority is lower than their fair market value, full tax may be
levied against such difference.

 

It is not expected that the tax
exemption under Section 97(c) of the Tax Ordinance on securities traded
publicly outside of Israel shall apply to the Options and the Shares.

 

Deduction
at Source

 

Without derogating from the
Optionee’s duty to pay in full all taxes in connection with the Options and
Shares, the Company or the Trustees may decide, or be obligated, to deduct tax
in source from any payment to which the Optionee is entitled, including,
without limitation, from salary, dividends and proceeds of the sale of the
Shares by the Trustee.  If the Trustee
shall sell Shares on behalf of the Optionee, the Trustee shall make a deduction
under Section 102 of the Ordinance, if applicable.  At the time of publication of this Option
Plan, such deduction at source is at the rate of 30% of the proceeds of such
sale.

 

In the event that Shares shall
be sold at a time in which the Shares are not publicly traded, and subject to
any limitations on the sale of such Shares (under law or under the Company’s
by-laws or otherwise), the Company may require the Optionee to present proof of
the price paid for such Shares and assurance that the amount of Shares sold
shall be sufficient to cover any tax liability.  The Company shall also be entitled to prevent such sale or set
terms and conditions for such sale, as it may see fit in its sole and complete
discretion.

 

Approval
of the Tax Authority

 

To ensure payment of taxes,
prior to the registration of the Shares in the name of each Optionee and prior
to the payment to the Optionee of any proceeds from sale of the Shares, the
Trustee may, at his discretion, require an approval from the Tax Authority that  the  tax has
been paid and that the Shares may be registered in the name of the Optionee or
that proceeds may be paid to the Optionee, as the case may be.  At the request of the Company or the
Trustee, the Optionee shall present such approval to the Trustee.

 

14

 

Caveat

 

The Company’s interpretations of
the Ordinance and legal situation as set forth above are not binding in any
manner, and the Tax Authority may have different interpretations with harsher
tax implications for Optionees.  Also,
both the law and its interpretation are modified from time to time and there is
no assurance that present conditions shall not change in the future. The
Optionees shall have no claim or recourse against the Company, the Board, the
Committee, the Trustee or their respective counsel in connection with the above
discussion, any ensuing tax liabilities, deductions at source or other liabilities.  Optionees are urged to seek independent
advice in respect of such matters.

 

23.       NON-EXCLUSIVITY OF THE
OPTION PLAN

 

The adoption of the Option Plan
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 stock Options
otherwise then under the Option Plan, and such arrangements may be either
applicable generally or only in specific cases. For the avoidance of doubt,
prior grant of options to employees 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.

 

24.       OPTION AGREEMENTS

 

Any form of Option agreement
authorized under the Option Plan may contain such other provisions as the
Committee may, from time to time, deem advisable, including provisions other
than as indicated under this Option Plan. 
In the event of a contradiction between the provisions of this Option
Plan and the provisions of an Option agreement, the later shall prevail.

 

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

 

15Exhibit 10.9

 

NESS
TECHNOLOGIES, INC.

 

2001
STOCK OPTION PLAN

 

 

1.             Purpose
of the Plan.

 

This 2001 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. 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 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 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, age, promotions, potential
and any other factors that the Committee may consider relevant.  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
1,000,000 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 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 80% of 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

 

3

 

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 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

 

4

 

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 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

 

5

 

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.  Options are not
transferable and may be exercised solely by the Optionee during his lifetime or
after his death by the person or persons entitled thereto under his will or the
laws of descent and distribution.  The
Committee, in its sole discretion, may permit a transfer of a Nonqualified
Option to (i) a trust for the benefit of the Optionee or (ii) a member of the
Optionee’s immediate family (or a trust for his or her benefit).  Any attempt to transfer, assign, pledge or
otherwise dispose of, or to subject to execution, attachment or similar
process, any Option contrary to the provisions hereof shall be void and
ineffective and shall give no right to the purported transferee.

 

(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 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.

 

6

 

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.

 

(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)           Transfer
of Incentive Option Shares.  The
stock option agreement evidencing any Incentive Options granted under this Plan
shall provide that 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
March 21, 2011, but Options theretofore granted may extend beyond that
date.

 

7

 

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.

 

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.

 

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 or any other tax matters.

 

10.           Effective Date of Plan.

 

The Plan shall be effective on March 22, 2001, provided however
that the Plan shall subsequently be approved by majority vote of the Company’s
stockholders not later than March 21, 2002.

 

11.           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;

 

8

 

(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 80% 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).

 

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.

 

12.           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.

 

13.           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.

 

9

 

(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 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.

  
	
   

  	
  March 22, 2001

  

 

10

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