KEY EMPLOYEE RETENTION AND SEVERANCE BENEFITS AGREEMENT

EXHIBIT 10.1

NetManage, Inc. Key Employee Retention and Severance Benefit Plan

KEY EMPLOYEE RETENTION AND SEVERANCE BENEFITS AGREEMENT

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

WHEREAS , Employee is an employee of the Company; and

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The foregoing shall not apply to information that:

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

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

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

Employee acknowledges that it is impossible to measure in money the damages that will accrue to Company in the event that Employee breaches any of the restrictive covenants and that any such damages, in any event, would be inadequate and insufficient. Therefore, if Employee breaches any restrictive covenant, Company, in