Exhibit 10.5

 

 

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UNIFORM TERMS AND CONDITIONS APPLICABLE TO
EMPLOYEE RESTRICTED STOCK UNIT GRANTS UNDER
THE MTS SYSTEMS CORPORATION 2011 STOCK INCENTIVE PLAN

Pursuant to the authority set forth in Section 5 of the MTS Systems Corporation
2011 Stock Incentive Plan (the “Plan”) the Compensation Committee (the
“Committee”) of the Board of Directors adopts the following terms and conditions
to apply to any and all awards of Restricted Stock Units granted under the Plan
to employees (the “Participant”) in addition to the terms set forth in the Plan
(Section references are to Sections of the Plan):

 

 

 

 

 

1.

The terms and conditions set forth below govern the issuance to the Participant
of the number of units (“Units”), which represent the right to receive shares of
MTS Common Stock, $.25 par value per share (the “Shares”) set forth in a
separate Notice of Grant of Restricted Stock Units (the “Notice”), and the
issuance of Shares upon the vesting of the Units. This document and the Notice
constitute the Restricted Stock Unit Agreement.

 

 

 

 

 

2.

The Units will vest in accordance with the date or dates set forth in the
Notice, or upon an earlier date as set forth herein or as otherwise determined
by the Committee; provided that the Participant is serving as an employee,
director or consultant of MTS or its subsidiaries on the date on which occurs
the event giving rise to the vesting. In the event that the Participant ceases
to serve as an employee, director or consultant due to death or disability
during the Restriction Period, all restrictions will immediately lapse (Section
7.1(f)). If the Participant ceases to serve as an employee, director or
consultant during the Restriction Period for any reason other than death or
disability, all Units that are not vested shall be forfeited to MTS, without
payment.

 

 

 

 

 

3.

Notwithstanding Paragraph 2 above, all Units that have not vested in accordance
with the Notice shall immediately fully (100%) vest upon the occurrence of a
Change in Control (as defined in the Plan) provided that the terms of the
agreements effectuating the Change in Control do not provide for the assumption
or substitution of the Units (Section 11.2).

 

 

 

 

 

4.

MTS shall, no later than 30 days from the date of vesting as to any Units shall
make a book entry of the issuance of such Shares to the Participant on MTS’s
stock records. Upon the request of the Participant, MTS shall deliver to the
Participant certificated Shares representing the number of vested Shares in
certificated form as requested.

 

 

 

 

 

5.

Until Shares are issued in settlement of the vested Units in accordance with
Paragraph 4, the Participant will not be deemed for any purpose to be, or have
rights as, a shareholder of MTS, or to exercise, directly or by proxy, voting
rights or to receive dividends with respect to the Shares issuable prior to or
concurrent with the vesting of the Units. In addition, the Participant will not
be entitled to any dividend equivalents, in the form of cash, additional Units
or Shares, with respect to the Units for the period prior to the settlement of
the Units. From and after the date of settlement, the Participant shall have all
rights and privileges of any other shareholder with respect to the Shares issued
in settlement of the vested Units.

 

 

 

 

 

6.

MTS may make an equitable adjustment in the number of Units that have not vested
in the event of any change in the capital structure of MTS, including but not
limited to such changes as stock dividends or stock splits (Section 3.4). Any
additional Units issued to the Participant as a result of any of the foregoing
events shall continue to be subject to the terms set forth herein to the same
extent as the Units giving rise to the right to receive such additional Units.

 

 

 

 

7.

Nothing in this Agreement shall modify or reduce the rights or discretions of
the Committee set forth in the Plan, including but not limited to:

 

 

a.

Modifying the Award to comply with tax laws or upon dissolution or liquidation
of MTS (Section 12.3);

 

 

b.

Requiring Shares to be held in escrow (Section 13.6); or

 

 

c.

Amending the terms and conditions of any Award consistent with Section 12.3.

 

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8.

As a condition to MTS’s obligation to issue Shares in settlement of the Units,
the Participant shall pay or make arrangements for the payment of any required
tax withholding applicable to the vesting and issuance of the Shares in
settlement of any vested Units. The Participant may elect by written notice to
MTS to satisfy part or all of any withholding tax requirements associated with
the issuance of Shares by (a) authorizing MTS to retain from the number of
Shares that would otherwise be issued to the Participant or (b) delivering to
MTS from Shares already owned by the Participant that number of Shares having an
aggregate Fair Market Value equal to part or all of the tax payable by the
Participant under this Paragraph, and in the event Shares are withheld or
delivered, the amount withheld shall not exceed the statutory minimum required
federal, state FICA and other payroll taxes.

 

 

 

 

9.

The Units shall represent an unfunded promise to issue Shares in the future and
Participant shall have no rights other than as a general creditor of MTS with
respect to the issuance of Shares. Except as otherwise provided in Section
7.1(h), a Participant shall not sell, transfer, pledge, assign or otherwise
encumber any of the Units, whether voluntarily, involuntarily or by operation of
law. Any purported transfer, pledge or encumbrance of such Units shall be void
and unenforceable against MTS, and no purported transferee shall acquire any
right or interest with respect to the Shares as a result.

 

 

 

 

10.

If any Participant who is an employee is on: (a) a qualified military leave; (b)
an MTS-approved leave of absence of less than 90 days; or (c) an MTS-approved
leave of greater than 90 days and MTS is obligated by statute or written
contract to re-employ the Participant at the end of the approved leave, and in
any event, does not return to employment with MTS within 30 days of the end of
the approved leave, the Participant will incur a termination of employment for
purposes of the Plan as of the last day of the approved leave. The Vice
President of Human Resources of MTS has been delegated the authority to approve
all leaves of absence and to enter into such contracts to provide for
re-employment for purposes of the Plan (Section 5.3).

 

 

 

 

11.

MTS shall cancel any Units, recover all or any portion of Shares issued under
the Plan (or the proceeds thereof), and shall take such other action, including
recovery out of other amounts paid or owing to the Participant, in an amount and
under such conditions as required by law (Section 13.8).

 

 

 

 

12.

MTS may, in its sole discretion, reduce, cancel, forfeit or recoup any rights,
payments or benefits paid or otherwise due to the Participant, including any
Units and any Shares issued under the Plan for Cause (including termination of
employment as a result), breach of any noncompetition, confidentiality,
nonsolicitation, noninterference, corporate property protection or any other
agreement between MTS and Participant or any other action of the Participant
that the Committee deems detrimental to the business or reputation of MTS or any
of its subsidiaries (Section 13.8). The Committee hereby delegates to the Chief
Executive Officer the authority and discretion to exercise the rights under
Section 13.8 with respect to Shares held by and Units and other payments paid or
due to persons other than the executive officers of MTS.

 

 

 

 

13.

Nothing in this Agreement shall be construed as constituting a commitment,
guaranty, agreement or understanding of any kind or nature that MTS or its
subsidiaries will retain the services of the Participant as an employee,
director or consultant, and this Agreement shall not affect in any way the right
of MTS or its subsidiaries or the Participant to terminate the relationship as
an employee, director or consultant at any time or for any reason in accordance
with the procedures governing such termination, without any liability or claim
under the Plan.

 

 

 

 

14.

The Committee shall exercise any authority and discretion in the interpretation
of this Agreement in accordance with the terms of the Plan. This Agreement is
intended to be exempt from the requirements of Section 409A of the Code and
shall be construed and interpreted in accordance with such intent. Except as
provided herein or as provided in the Plan, no payment shall be subject to
further deferral except as otherwise permitted or required pursuant to
regulations and other guidance issued pursuant to Section 409A of the Code. Any
provision of this Agreement

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that would fail to satisfy the exemption for a short-term deferral for purposes
of Section 409A of the Code shall be amended to so comply on a timely basis.

Except to the extent specifically provided in this Agreement, this award shall
be subject to and governed by the terms and conditions of the Plan, which shall
be incorporated as though fully set forth herein. The foregoing terms and
conditions shall remain in effect until further modified by action of the
Committee, either in the form of a modification of these terms and conditions or
by a written term or condition set forth in any individual award approved by the
Committee subsequent to the date of adoption of these terms and conditions,
provided that no change shall adversely affect any accrued right of the
Participant without the Participant’s written consent.

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