NETM Netmanage (MM)

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers .

The following disclosure is provided pursuant to Item 5.02(e) of Form 8-K and amends in its entirety the disclosure contained in that Form 8-K filed on November 9, 2007 with respect to the same subject matter.

Effective September 7, 2007, NetManage, Inc. (the “Company”) instituted a plan to grant certain key employees of the Company retention and severance benefits pursuant to the Key Employee Retention and Severance Benefits Agreement (the “Plan”).

The Plan was instituted to retain existing key employees by providing them with additional stock options and retention bonuses. Subject to the forfeiture provisions in each agreement executed by a key employee, the Plan will provide key employees of the Company with options under the Company’s 1999 Non-statutory Stock Option Plan and cash retention bonuses. The options will vest over two years with 50% of the shares subject to the option vesting on the one-year anniversary of the date of grant and with the balance vesting on the two-year anniversary of the date of grant. The key employees who will participate in the Plan and number of shares granted to each key employee will be determined by the Company’s Compensation Committee. Each key employee subject to the Plan will receive a cash bonus equal to twenty-five percent (25%) of the employee’s base salary on the one-year anniversary of the grant date and a cash bonus equal to fifty percent (50%) of the employee’s base salary on the two-year anniversary of the grant date. A key employee must be continually employed by the Company from the grant date to the specified payment date in order to receive any retention bonus. Payment of the retention bonus shall be done as soon as possible after becoming due but not later than two and one-half (2  ¹ / 2 ) months following the taxable year of Employee in which such payment becomes due and payable. The vesting of these options and the payment of the retention bonus may accelerate under certain conditions following a Change of Control (as defined in the Plan) of the Company.

The Plan also provides for cash severance benefits to be paid to a key employee in the event a key employee is terminated under specific circumstances, including: if the key employee is terminated within two years following the date of a Change of Control of the Company without Cause (as defined in the Plan) or if during this period he or she voluntarily terminates his or her employment for Good Reason (as defined in the Plan) and executes a standard release agreement. The amount of such severance benefits will be determined by the Company’s Compensation Committee. Also included are COBRA continuation coverage benefits for health, dental and vision insurance for a period equal to the amount of time the key employee receives severance payments. The Company shall also reimburse the key employee for a limited amount of outplacement service expenses actually incurred by the key employee.

An initial list of key employees was established by the Company on October 29, 2007. The table below sets forth benefits payable under the Plan to the Company’s Chief Executive Officer, Chief Financial Officer and each of the Company’s other named executive officers.