Document:

Exhibit 10.5

 

MSC.SOFTWARE CORPORATION

 

RESTRICTED STOCK PURCHASE AGREEMENT

 

This Restricted
Stock Purchase Agreement (this “Agreement”) is
dated as of March     , 2005 by and between MSC.Software
Corporation, a Delaware corporation (the “Company”), and John
A. Mongelluzzo (the “Executive”).

 

RECITALS

 

On March 9, 2005
(the “Effective Date”), the Company granted
to the Executive a right to purchase 50,000 shares of restricted Company Common
Stock, par value $0.01 per share (“Common Stock”),
upon the terms and conditions set forth herein.

 

The Executive
desires to exercise such purchase right as to [               ]
shares of Common Stock, upon the terms and conditions set forth herein.

 

AGREEMENT

 

In consideration
of services to be rendered by the Executive and payment of the purchase price for
any shares of Common Stock purchased by the Executive pursuant to the terms
hereof, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.                             Grant.  On the Effective Date, the Company granted to
the Executive a right (the “Purchase Right”)
to purchase all or any part of 50,000 shares of Common Stock.  The price per share of Common Stock subject
to the Purchase Right is $10.00.  The
shares of Common Stock that the Executive desires to purchase pursuant to this
Agreement (as set forth above) are referred to as the “Restricted Shares”
and will be subject to the restrictions set forth herein.  The grant of the Purchase Right was is in
full satisfaction of the Company’s obligation to grant stock purchase rights
covering 50,000 shares of Common Stock to the Executive at a per share price of
$10.00 pursuant to that certain letter agreement, dated on or about February
28, 2005, providing for the terms and conditions of Executive’s employment by
the Company.

 

2.                             Exercise of Purchase Right.  The Purchase Right is exercisable by the
Executive as of the Effective Date and will remain exercisable only until the
first to occur of (1) the termination of the Executive’s employment with the
Company, or (2) the close of business on March 21, 2005.  To exercise the Purchase Right, the Executive
must, before the expiration of the exercise period described above, do each of
the following: (1) execute this Agreement, have the Executive’s spouse (if the
Executive is married) execute the spousal consent attached hereto, and return
such fully executed version to the Chief Executive Officer of the Company, (2)
deliver to the Company along with the executed version of this Agreement the aggregate
purchase price ($10.00 per share), in cash or check payable to the Company, for
the Restricted Shares, and (3) execute and deliver the stock power contemplated
by Section 4(e) below.  The date that the
Purchase Right is validly exercised in accordance with this Section 2 is
referred to as the “Purchase Date.”

 

1

 

3.                             Vesting; Termination of Employment.

 

(a)                                  Repurchase
Right.  If the Executive ceases for
any reason to be employed by the Company prior to March 9, 2006, the Company
shall have the right (but not the obligation) to repurchase from the Executive,
and the Executive shall be obligated to sell to the Company, the Restricted
Shares at a per share price (the “Repurchase Price”)
equal to the lesser of (1) $10.00 per share (subject to adjustment pursuant to
Section 7) and (2) the Fair Market Value (as such term is defined in the
Company’s 2001 Stock Option Plan) of a share of Common Stock as of the date
that the Executive’s employment by the Company terminates.  Such repurchase right shall terminate (1) if
the Executive is employed by the Company on March 9, 2006, or (2) if the
Executive’s employment by the Company terminates prior to March 9, 2006, to the
extent that the Company does not exercise such repurchase right within ninety
(90) days following the last day that the Executive is employed by the Company.  No interest shall be credited with respect to
nor shall other adjustments (other than any adjustments that the Board
determines are appropriate pursuant to Section 7) be made to the Repurchase
Price for fluctuations in the fair market value of the Common Stock either
before or after the date the Executive’s employment by the Company terminates.

 

(b)                                 Exercise
of Repurchase Right.  To exercise its
repurchase right under this Section 3, the Company must give written notice
thereof to the Executive (the “Call Notice”)
during the ninety (90) day exercise period described in Section 3(a).  The Call Notice is irrevocable by the Company
and must (a) be in writing and signed by an authorized officer of the Company, and
(b) set forth the Company’s intent to exercise its repurchase right pursuant to
this Agreement and contain the total number of Restricted Shares to be sold to
the Company pursuant to such repurchase. 
The closing of any repurchase under this Section 3 shall be at a date to
be specified by the Company, such date to be no later than 30 days after the
date of the Call Notice.  The purchase
price shall be paid at the closing in the form of a check payable to the
Executive (or his estate in the event of the Executive’s death) or by offset of
any obligation of the Executive then owes to the Company.  The Company may exercise its powers under
Section 4(e) hereof and take any other action necessary or advisable to
evidence a transfer of the Restricted Shares to the Company upon such a
repurchase.  The Executive, or the Executive’s
beneficiary or personal representative, as the case may be, shall deliver any
additional documents of transfer that the Company may request to confirm the
transfer of the Restricted Shares to the Company.

 

(c)                                  Continuance of Employment.  The lapse of the repurchase right referred to
above requires continued employment through March 9, 2006 as a condition to the
vesting of the Restricted Shares.  Employment
for only a portion of the vesting period, even if a substantial portion, will
not entitle the Executive to any proportionate vesting.  Nothing contained in this Agreement
constitutes an employment commitment by the Company, affects the Executive’s status
as an employee at will who is subject to termination without cause, confers
upon the Executive any right to remain employed by the Company, interferes in
any way with the right of the Company at any time to terminate such employment,
or affects the right of the Company to increase or decrease the Executive’s
other compensation or benefits.

 

2

 

4.                             Stock Certificates.

 

(a)                                  Book
Entry Form.  The Company shall, in
its discretion but in any event promptly following the Purchase Date, issue the
Restricted Shares either (1) in certificate form as provided in Section 4(b)
below or (2) in book entry form, registered in the name of the Executive with
notations regarding the applicable restrictions on transfer imposed under this Agreement.

 

(b)                                 Certificates
to be Held by Company; Legend.  Any
certificates representing Restricted Shares that may be delivered to the Executive
by the Company prior to vesting shall be immediately redelivered by the Executive
to the Company to be held by the Company until the repurchase right on such
shares under Section 3 shall have lapsed and the shares shall thereby have
become vested or the shares represented thereby have been repurchased by the
Company pursuant to Section 3.  Such
certificates shall bear the following legend (in addition to the legend(s)
contemplated by Section 4(d)):

 

“The
ownership of this certificate and the shares of stock evidenced hereby and any
interest therein are subject to substantial restrictions on transfer and a
repurchase right under a Restricted Stock Purchase Agreement entered into
between the registered owner and MSC.Software Corporation.  A copy of such Restricted Stock Purchase Agreement
is on file in the office of the Secretary of MSC.Software Corporation.”

 

(c)                                  Delivery
of Certificates Upon Vesting. 
Promptly after the vesting of any Restricted Shares pursuant to Section
3 and the satisfaction of any and all related tax withholding obligations pursuant
to Section 8, the Company shall, as applicable, either remove the notations referencing
the repurchase right under Section 3 on any Restricted Shares issued in book
entry form that have vested or deliver to the Executive a certificate or
certificates evidencing the number of Restricted Shares that have vested (or,
in either case, such lesser number of shares as may be permitted pursuant to
Section 8).  The Executive (or the
beneficiary or personal representative of the Executive in the event of the Executive’s
death or incapacity, as the case may be) shall deliver to the Company any
representations or other documents or assurances as the Company may deem
necessary or reasonably desirable to ensure compliance with all applicable
legal and regulatory requirements.

 

(d)                                 Share
Legend Generally.  The certificate(s)
representing the Restricted Shares (both before and after such shares shall
have become vested pursuant to Section 3) shall bear the following legend
and/or any other appropriate or required legends under applicable laws (and in
addition to any legend provided in Section 4(b) above):

 

“The
securities represented hereby have not been registered or qualified under the
Securities Act of 1933, as amended (“Act”), nor have they been registered or
qualified under the securities laws of any state.  No transfer of such securities will be
permitted unless a registration statement under the Act is then in effect as to
such transfer, the transfer is made in accordance with Rule 144 under the Act,
or in the opinion of counsel to MSC.Software Corporation registration under the
Act is unnecessary in order for such transfer to comply with the Act and with
applicable state securities laws.”

 

3

 

Any Restricted
Shares issued in book entry form shall include a notation referencing such
restrictions (both before and after such shares shall have become vested
pursuant to Section 3).

 

(e)                                  Stock
Power; Power of Attorney.  Concurrent
with the execution and delivery of this Agreement, the Executive shall deliver
to the Company an executed stock power in the form attached hereto as Exhibit
A, in blank, with respect to the Restricted Shares.  The Executive, by execution of this Agreement,
appoints the Company and each of its authorized representatives as the Executive’s
attorney(s)-in-fact to effect any transfer of any Restricted Shares that are
repurchased by the Company pursuant to Section 3 to the Company and to execute
such documents as the Company or such representatives deem necessary or
advisable in connection with any such transfer.

 

5.                             Dividend and Voting Rights.  After the issuance of the Restricted Shares,
the Executive shall be entitled to cash dividends and voting rights with
respect to such shares even though such shares are not vested pursuant to
Section 3, provided that such rights shall terminate immediately as to any
Restricted Shares that are repurchased by the Company pursuant to Section 3.

 

6.                             Restrictions on Transfer.

 

(a)                                  Restrictions
Prior to Vesting.  Prior to the time
that the Restricted Shares have become vested pursuant to Section 3, neither
the Restricted Shares, nor any interest therein, amount payable in respect
thereof (other than cash dividends), nor Restricted Property (as defined in
Section 7) with respect thereto may be sold, assigned, transferred, pledged or
otherwise disposed of, alienated or encumbered, either voluntarily or
involuntarily (other than to the Company pursuant to a repurchase in accordance
with Section 3).

 

(b)                                 Restrictions
After Vesting.  Upon and after the
time that the Restricted Shares have become vested pursuant to Section 3,
neither the Restricted Shares, nor any interest therein, amount payable in
respect thereof (other than cash dividends), nor Restricted Property shall be disposed
of, in whole or in part, except in compliance with all applicable federal and
state securities laws and unless and until:

 

•                  there is
then in effect a registration statement under the Securities Act of 1933, as
amended (the “Securities Act”), covering such proposed disposition and such
disposition is made in accordance with such registration statement; or

 

•                  such
disposition is made in accordance with Rule 144 under the Securities Act; or

 

•                  the
Executive notices the Company of the proposed disposition and furnishes the
Company with a statement of the circumstances surrounding the proposed
disposition, and, if requested by the Company, furnishes the Company with an
opinion of counsel acceptable to the Company’s counsel, that such disposition

 

4

 

will
not require registration under the Securities Act and will be in compliance
with all applicable state securities laws.

 

Notwithstanding anything
else herein to the contrary, the Company has no obligation to register or cause
to be registered any of the Restricted Shares.

 

(c)                                  Other
Transfers Void.  Any sale or
transfer, or purported sale or transfer, of any Restricted Shares acquired
pursuant to this Agreement or any interest therein, amount payable in respect
thereof (other than cash dividends) or Restricted Property with respect
thereto, other than to the Company shall be null and void unless the terms,
conditions and provisions of this Agreement are strictly observed and followed.

 

7.                             Adjustments Upon Specified Events.  Upon the occurrence of a stock split, reverse
stock split, stock dividend or any other change in capitalization,
reorganization, merger or similar event affecting the Common Stock, the
restrictions and limitations applicable to the Restricted Shares under this
Agreement will continue in effect with respect to any consideration or other
securities (the “Restricted Property” and, for the purposes of this
Agreement, “Restricted Shares” shall include Restricted Property, unless
the context otherwise requires) received in respect of such Restricted
Shares.  In connection with any such
event, the Company’s Board of Directors or a duly authorized committee thereof
(the “Board”) shall, in such manner, to such
extent (if any) and at such time as it deems appropriate and equitable in the
circumstances, proportionately adjust the per share repurchase price
contemplated by Section 3(a) above.  Any
Restricted Property shall be subject to the Company’s repurchase rights under
this Agreement and shall vest at such times and in such proportion as the Restricted
Shares to which the Restricted Property is attributable vest, or would have
vested pursuant to the terms hereof if such Restricted Shares had remained
outstanding.  To the extent that the
Restricted Property includes any cash (other than regular cash dividends
provided for in Section 5 hereof), such cash shall be invested, pursuant to
policies established by the Board, in interest bearing, FDIC-insured (subject
to applicable insurance limits) deposits of a depository institution selected
by the Board, the earnings on which shall be added to and become a part of the
Restricted Property.  Any adjustment or
determination by the Board pursuant to this Section 7 shall be final, binding,
and conclusive.  Unless otherwise
expressly provided by the Board, in no event shall a new issuance of securities
by the Company for consideration be deemed, in and of itself, to require an
adjustment pursuant to this Section 7.

 

8.                             Tax Withholding.  The Company shall reasonably determine the
amount of any federal, state, local or other income, employment, or other taxes
which the Company or any of its affiliates may reasonably be obligated to
withhold with respect to the purchase, vesting, making of an election under
Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”), or other event with respect to the Restricted Shares
or any bonus payment pursuant to the terms hereof.  The Company may, in its sole discretion,
withhold and/or reacquire a sufficient number of Restricted Shares in
connection with the vesting of such shares at their then Fair Market Value
(determined either as of the date of such withholding or as of the immediately
preceding trading day, as determined by the Company in its discretion) to satisfy
the amount of any such withholding obligations that arise with respect to the
vesting of such shares.  The Company may
take such action(s) without notice to the Executive and shall remit to the Executive
the balance of any proceeds from withholding and/or reacquiring such shares in
excess

 

5

 

of the amount reasonably
determined to be necessary to satisfy such withholding obligations.  The Executive shall have no discretion as to
the satisfaction of tax withholding obligations in such manner.  If, however, the Executive makes an election
under Section 83(b) of the Code with respect to the Restricted Shares, if any
other withholding event occurs with respect to the Restricted Shares other than
the vesting of such stock, or if the Company for any reason does not satisfy
the withholding obligations with respect to the vesting of the Restricted
Shares as provided above in this Section 8, the Company shall be entitled to
require a cash payment by or on behalf of the Executive and/or to deduct from
other compensation payable to the Executive the amount of any such withholding
obligations.  The Company’s obligation to
delivery the Restricted Shares or any certificates representing the Restricted
Shares is subject to the condition precedent that all such tax withholding
obligations have been satisfied by the Executive. The Company may reduce any
cash payment by the amount it reasonably determines is required to be withheld
with respect to such payment.

 

9.                             Investment
Representations.  The Executive
acknowledges that the Restricted Shares are not being registered under the
United States Securities Act of 1933, as amended (the “Securities
Act”), based, in part, in reliance upon an exemption from
registration under the Securities Act and a comparable exemption from
qualification under the applicable state securities law, as each may be amended
from time to time.  By execution of this
Agreement, the Executive makes the representations set forth below to the Company
and acknowledges that the Company’s reliance on federal and state securities
law exemptions from registration and qualification is predicated, in part, on
such representations.

 

•                  Accredited Investor.  The Executive (1) has individual net worth,
or joint net worth with his spouse, that currently exceeds $1 million and/or
(2) has had individual income in excess of $200,000 in each of the two most
recent years or joint income with his spouse in excess of $300,000 in each of
those years and has a reasonable expectation of reaching the same income level
in the current year.  The Executive is an
“accredited investor” within the meaning of Rule 501 promulgated under the
Securities Act.  The Executive has a copy
of and is familiar with such Rule.

 

•                  No Intent to Sell.  The Executive represents that he is acquiring
the Restricted Shares solely for his own account, for investment purposes only,
and not with a view to or an intent to sell, or to offer for resale in
connection with any unregistered distribution of all or any portion of the shares
within the meaning of the Securities Act or other applicable state securities
laws.

 

•                  No Reliance on Company.  In evaluating the merits and risks of an
investment in the Restricted Shares, the Executive represents that he has and
will rely upon the advice of his own legal counsel, tax advisors, and/or
investment advisors.  The Executive
recognizes that this Agreement is a legally binding contract.

 

•                  Relationship to and
Knowledge About Company. 
The Executive represents that he is knowledgeable about the Company and
has a preexisting personal and business relationship with the Company.  As a result of such relationship, he is
familiar with, among other characteristics, its business and financial

 

6

 

circumstances
and has access on a regular basis to and may request the Company’s balance
sheet and income statement setting forth information material to the Company’s
financial condition, operations and prospects.

 

•                  Restrictions on Shares.  The Executive represents that he understands
that the Restricted Shares (both before and after such shares vest) are and
will be characterized as “restricted securities” under the federal securities
laws since the shares are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act
only in certain limited circumstances. 
The Executive acknowledges receiving a copy of Rule 144 promulgated
under the Securities Act, as presently in effect, and represents that he is
familiar with such rule, and understands the resale limitations imposed thereby
and by the Securities Act and the applicable state securities law.

 

•                  Additional Restrictions.  The Executive represents that he has read and
understands the restrictions and limitations imposed on the Restricted Shares,
including, but not limited to, the following: 
(1) the non-transferability provisions of Section 6; and (2) the
repurchase rights contained in Section 3.

 

•                  No Company Representations.  The Executive represents that at no time was
an oral representation made to him relating to the purchase of the Restricted
Shares and that he was not presented with or solicited by any promotional
meeting or material relating to the shares.

 

•                  Share Certificate Legend.  The Executive represents that he understands
and acknowledges that any certificate evidencing the Restricted Shares (or
evidencing any other securities issued with respect thereto pursuant to any
stock split, stock dividend, merger or other form of reorganization or
recapitalization) when issued shall bear, in addition to any other legends
which may be required by applicable state securities laws, the legend(s) set forth
in Section 4.

 

10.                      Effect of this Agreement.  This Agreement shall be assumed by, be
binding upon and inure to the benefit of any successor or successors to the
Company.  The term “Company” for purposes
of this Agreement includes any such successor(s).  The Executive has no right to transfer the
Purchase Right or any portion thereof.

 

11.                      Notices.  Any notice to be given under the terms of
this Agreement shall be in writing and addressed to the Company at its
principal office to the attention of the Chief Executive Officer, and to the Executive
at the Executive’s last address reflected on the Company’s records, or at such
other address as either party may hereafter designate in writing to the
other.  Any such notice shall be given
only when received, but if the Executive is no longer an employee of the Company,
shall be deemed to have been duly given by the Company when enclosed in a
properly sealed envelope addressed as aforesaid, registered or certified, and
deposited (postage and registry or certification fee prepaid) in a post office
or branch post office regularly maintained by the United States Government.

 

7

 

12.                      Counterparts.  This Agreement may be executed in one or more
counterparts, and each such counterpart shall be deemed to be an original, but
all such counterparts together shall constitute but one agreement.  Photographic copies of such signed
counterparts may be used in lieu of the originals for any purpose.

 

13.                      Section Headings.  The section headings of this Agreement are
for convenience of reference only and shall not be deemed to alter or affect
any provision hereof.

 

14.                      Governing Law.  This Agreement will be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would case the laws of any
jurisdiction other than the State of Delaware to be applied.  In furtherance of the foregoing, the internal
law of the State of Delaware will control the interpretation and construction
of this Agreement, even if under such jurisdiction’s choice of law or conflict
of law analysis, the substantive law of some other jurisdiction would
ordinarily apply.

 

15.                      Entire
Agreement.  This Agreement
constitutes the entire agreement and supersedes all prior understandings,
negotiations and agreements, written or oral, of the parties hereto with
respect to the subject matter hereof.  This
Agreement is intended by the parties as a complete and exclusive statement of
the terms of their agreement with respect to the subject matter hereof.  Any representation, promise or agreement with
respect to the subject matter hereof not specifically included in this Agreement
shall not be binding upon or enforceable against either party.  This Agreement constitutes a fully integrated
agreement.  This Agreement may be amended
only by a written agreement signed by each of the parties hereto.  The waiver by either party of a breach of any
provision of this Agreement must be in writing and shall not operate or be
construed as a waiver of any other or subsequent breach.

 

16.                      Construction.  The terms of this Agreement have resulted
from the negotiations of the parties and each of the parties has had an
opportunity to obtain and consult with its own counsel.  Each party has participated in the drafting
and in the preparation of this Agreement. 
Hence, in any construction of this Agreement, the same shall not be
construed against either party on the basis that the party was the
drafter.  The language of all parts of this
Agreement shall in all cases be construed as a whole, according to its fair
meaning, and not strictly for or against either of the parties.

 

17.                      Limited
Rights.  The Executive shall have
no rights as a stockholder of the Company with respect to the Restricted Shares
until such shares have actually been issued in the name of the Executive.  The Executive’s rights with respect to the Restricted
Shares after the date of such issuance are subject to the terms and conditions
of this Agreement.

 

18.                      Severability.  It is the desire and intent of the parties
hereto that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. 
Accordingly, if any particular provision of this Agreement shall be
adjudicated by a court of competent jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction.  Notwithstanding the

 

8

 

foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.

 

19.                      Executive’s
Undertaking.  The Executive
hereby agrees to take whatever additional actions and execute whatever
additional documents the Company may in its reasonable judgment deem necessary
or advisable in order to carry out or effect one or more of the obligations or
restrictions imposed on the Executive pursuant to the express provisions of
this Agreement.

 

IN
WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by a duly authorized officer and the Executive has
hereunto set his or her hand as of the date and year first above written.

 

	
   

  	
  MSC.SOFTWARE
  CORPORATION,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  WILLIAM WEYAND

  
	
   

  	
  Its Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  John A. Mongelluzzo

  

 

9

 

CONSENT
OF SPOUSE

 

In consideration
of the execution of the foregoing Restricted Stock Purchase Agreement by MSC.Software
Corporation, a Delaware corporation, I,
                                 ,
the spouse of the Executive therein named, do hereby join with my spouse in
executing the foregoing Restricted Stock Purchase Agreement and do hereby agree
to be bound by all of the terms and provisions thereof.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature
  of Spouse

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print
  Name

  

 

10

 

EXHIBIT A

 

STOCK
POWER

 

FOR VALUE RECEIVED
and pursuant to that certain Restricted Stock Purchase Agreement between MSC.Software
Corporation, a Delaware corporation (the “Company”), and the individual
named below (the “Individual”) dated as of March     ,
2005, the Individual hereby sells, assigns and transfers to the Company, an
aggregate
                       
shares of Common Stock of the Company, standing in the Individual’s name on the
books of the Company and represented by stock certificate number(s)                                    
to which this instrument is attached, and hereby irrevocably constitutes and
appoints                                     
                                                           
as his or her lawful attorney in fact and agent to transfer such shares on the
books of the Company, with full power of substitution in the premises.

 

	
  Dated

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  John A. Mongelluzzo

  

 

 

(Instruction:
Please do not fill in any blanks on the preceding Stock Power other than the
signature line.  The purpose of the
assignment is to enable the Company to exercise its rights set forth in the Restricted
Stock Purchase Agreement in connection with a repurchase of any restricted
shares subject thereto without requiring additional signatures on the part of
the Individual.)

 

2Exhibit 10.6

 

MSC.SOFTWARE CORPORATION

PERFORMANCE STOCK UNIT AWARD AGREEMENT

 

THIS PERFORMANCE
STOCK UNIT AWARD AGREEMENT (this “Award
Agreement”) by and between MSC.SOFTWARE
CORPORATION, a Delaware corporation (the “Corporation”),
and John A. Mongelluzzo (the “Grantee”)
evidences the performance stock unit award (the “Award”)
granted by the Corporation to the Grantee as to the number of stock units first
set forth below.

 

	
  Number
  of Stock Units:(1)

  	
  30,000

  	
  Effective
  Date: March 9, 2005

  
	
   

  
	
  Vesting(1),(2)
  The Award shall vest as provided
  in Section 2 below.

  

 

The
Award is subject to the Terms and Conditions of Performance Stock Unit Award
(the “Terms”) attached to this Award
Agreement (incorporated herein by this reference).  The Award has been granted to the Grantee in
addition to, and not in lieu of, any other form of compensation otherwise
payable or to be paid to the Grantee.  The
Award is in full satisfaction of the Corporation’s obligation to grant
performance stock units to the Grantee pursuant to that certain letter
agreement, dated on or about February 28, 2005, providing for the terms and
conditions of Grantee’s employment by the Corporation.  The parties agree to the terms of the Award
set forth herein.  The Grantee
acknowledges receipt of a copy of the Terms.

 

	
  “GRANTEE”

  	
  MSC.SOFTWARE
  CORPORATION,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
  /s/ JOHN A. MONGELLUZZO

  	
   

  	
   

  
	
  John A. Mongelluzzo

  	
  By:

  	
  /s/ WILLIAM J. WEYAND

  	
   

  
	
   

  	
   

  	
  Name: William J. Weyand

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  
					

 

(1)  Subject to
adjustment under Section 8 of the Terms.

(2)  Subject to early termination under Section 7
of the Terms.

 

 

TERMS AND CONDITIONS OF PERFORMANCE STOCK UNIT
AWARD

 

1.             Performance Stock Units.  As used herein, a “Performance Stock
Unit” is a non-voting unit of measurement which is deemed for
bookkeeping purposes to be equivalent in value to one outstanding share of
Common Stock of the Corporation.  The Performance
Stock Units shall be used solely as a device for the determination of any
payment to eventually be made to the Grantee if and when such Performance Stock
Units vest pursuant to Section 2.

 

The Performance Stock
Units create no fiduciary duty to the Grantee and shall create only a
contractual obligation on the part of the Corporation to make payments, subject
to vesting and the other terms and conditions hereof, as provided in Section 6
below.  The Performance Stock Units shall
not be treated as property or as a trust fund of any kind.  No assets have been secured or set aside by
the Corporation with respect to the Award and, if amounts become payable to the
Grantee pursuant to this Award Agreement, the Grantee’s rights with respect to
such amounts shall be no greater than the rights of any general unsecured
creditor of the Corporation.

 

2.             Vesting.  Subject
to adjustment as provided herein, the Performance Stock Units subject to the Award
shall vest upon the earlier to occur of

 

(i)            the date
following the date on which the closing price or last price, as applicable, per
share of the Common Stock reported on the composite tape for securities listed
on either the New York Stock Exchange or the NASDAQ National Market has equaled
or exceeded $17.00 for each of the thirty (30) consecutive trading days on
which the Common Stock is actively traded preceding such date; or

 

(ii)           the date
immediately preceding a Company Sale (as defined below) in which the value of
the per-share consideration received by the holders of the Corporation’s Common
Stock in respect of such Company Sale equals or exceeds $17.00;

 

provided,
however, that any Performance Stock Units that have not vested pursuant to the
foregoing clause (i) as of the close of trading on the thirtieth (30th)
trading day following the second anniversary of the Effective Date, or pursuant
to the foregoing clause (ii) as of the second anniversary of the Effective Date
shall automatically terminate as of such second anniversary date.  For purposes of clarity, the Performance
Stock Units may not vest pursuant to the foregoing clause (i) based on the
price of the Common Stock on any securities exchange other than the New York
Stock Exchange or the NASDAQ National Market.

 

For purposes of
this Award Agreement, “Company Sale”
means any of the following:

 

(i)            approval
by the stockholders of the Corporation of an agreement to merge or consolidate,
or otherwise reorganize, with or into one or more entities that are not
Subsidiaries (as defined below) or other affiliates, as a result of which less
than 50% of the outstanding voting securities of the surviving or resulting
entity immediately after the reorganization are, or will be, owned, directly or
indirectly, by stockholders of the Corporation immediately before such
reorganization (assuming for purposes of such determination that there is no
change in the record ownership of the Corporation’s securities from the record
date for such approval

 

 

until such reorganization
and that such record owners hold no securities of the other parties to such
reorganization, but including in such determination any securities of the other
parties to such reorganization held by affiliates of the Corporation);

 

(ii)           approval
by the stockholders of the Corporation of the sale of substantially all of the
Corporations’ business and/or assets to a person or entity that is not a
Subsidiary (as defined below); or

 

(iii)          any
“person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”),
but excluding any person described in and satisfying the conditions of Rule
13d-1(b)(1) thereunder) becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing more than 30% of the combined voting power of the
Corporation’s then outstanding securities entitled to then vote generally in
the election of directors of the Corporation.

 

For purposes of
this Award Agreement, “Subsidiary”
means any corporation or other entity a majority of whose outstanding voting
stock or voting power is beneficially owned, directly or indirectly, by the Corporation.

 

3.     Continuance of Employment.  The vesting schedule requires continued
employment through each applicable vesting date as a condition to the vesting
of the applicable installment of the Award and the rights and benefits under
this Award Agreement.  Employment for
only a portion of the vesting period, even if a substantial portion, will not
entitle the Grantee to any proportionate vesting or avoid or mitigate a
termination of rights and benefits upon or following a termination of
employment as provided in Section 7 below.

 

Nothing contained
in this Award Agreement constitutes an employment commitment by the Corporation
or any Subsidiary (as defined below), confers upon the Grantee any right to
remain employed by the Corporation or any Subsidiary, or interferes in any way
with the right of the Corporation or any Subsidiary at any time to terminate
such employment.  Nothing in this
paragraph, however, is intended to adversely affect any independent contractual
right of the Grantee under any written employment agreement with the
Corporation.

 

4.     No Stockholder Rights.  The Grantee shall have no rights as a
stockholder of the Corporation, no dividend rights and no voting rights with
respect to the Performance Stock Units or any shares of Common Stock issuable
in respect of such Performance Stock Units, until shares of Common Stock are
actually issued to and held of record by the Grantee.  No adjustments will be made for dividends or
other rights of a holder for which the record date is prior to the date of
issuance of the stock certificate evidencing the shares.

 

5.     Restrictions on Transfer.  Prior to the time (if any) the Performance
Stock Units are vested and paid, neither the Performance Stock Units comprising
the Award nor any interest therein or amount payable in respect thereof may be
sold, assigned, transferred, pledged or otherwise disposed of, alienated or
encumbered, either voluntarily or involuntarily, other than by will or the laws
of descent and distribution.

 

2

 

The transfer restrictions of this Section 5 shall not apply to
transfers to the Corporation..

 

6.     Timing and Manner of Payment of Performance
Stock Units.  Performance
Stock Units subject to this Award Agreement that vest in accordance with
Section 2 shall be paid in an equivalent number of shares of Common Stock,
which shall be fully paid and non-assessable, promptly on or as soon as
practicable after the vesting date of such units (the “Payment Date”),
but in no event earlier than the earliest date that payment may be received
under Section 409A (as defined herein). 
Such payment shall be subject to the tax withholding provisions of
Section 9 and subject to adjustment as provided in Section 8, and shall be in
complete satisfaction of such vested Performance Stock Units.  The Grantee shall deliver to the Corporation
any representations or other documents or assurances required pursuant to
Section 10 and Section 11.

 

7.     Effect of
Termination of Employment.  The Award and any Performance Stock
Units subject to the Award, to the extent not vested as of the first date the
Grantee is no longer employed by the Corporation or one of its Subsidiaries,
shall terminate as of such date (regardless of the reason for such termination,
including, without limitation, a termination due to death or disability), and
the Grantee shall have no further rights with respect to the Award or such
Performance Stock Units.

 

8.     Adjustments
Upon Specified Events.

 

Upon or in contemplation
of any reclassification,
recapitalization, stock split (including a stock split in the form of a stock
dividend) or reverse stock split; any merger, combination, consolidation or
other reorganization; any split-up; spin-off, or similar extraordinary dividend
distribution in respect of the Common Stock (whether in the form of securities
or property); any exchange of Common Stock or other securities of the
Corporation, or any similar, unusual or extraordinary corporate transaction in
respect of the Common Stock; or a sale of substantially all the assets of the
Corporation as an entirety; then the Corporation shall, in such manner, to such
extent (if any) and at such time as it deems appropriate and equitable in the
circumstances make adjustments if appropriate in the number of
Restricted Stock Units contemplated hereby and the number and kind of
securities that may be issued in respect of the Award.

 

The Corporation
shall adjust the performance measures, performance goals, relative weights of
the measures, and other provisions of this Award Agreement to the extent (if
any) it determines that the adjustment is necessary or advisable to preserve
the intended incentives and benefits to reflect (1) any stock split, reverse
stock split, stock dividend, material change in corporate capitalization, any
material corporate transaction (such as a reorganization, combination,
separation, merger, acquisition, or any combination of the foregoing), or any
complete or partial liquidation of the Corporation, (2) any change in
accounting policies or practices, (3) the effects of any special charges to the
Corporation’s earnings, or (4) any other similar special circumstances.

 

9.     Tax Withholding.  The Corporation shall reasonably determine
the amount of any federal, state, local or other income, employment, or other
taxes which the Corporation or any of its affiliates may reasonably be
obligated to withhold with respect to the grant, vesting, or other event with
respect to the Performance Stock Units. 
The Corporation may, in its sole discretion, withhold a sufficient
number of shares of Common Stock in connection with the vesting of the

 

3

 

Performance Stock Units
at the then Fair Market Value (as defined below) of the Common Stock
(determined either as of the date of such withholding or as of the immediately
preceding trading day, as determined by the Corporation in its discretion) to
satisfy the amount of any such withholding obligations that arise with respect
to the vesting of such Performance Stock Units. 
The Corporation may take such action(s) without notice to the Grantee
and shall remit to the Grantee the balance of any proceeds from withholding
such shares in excess of the amount reasonably determined to be necessary to
satisfy such withholding obligations. 
The Grantee shall have no discretion as to the satisfaction of tax
withholding obligations in such manner. 
If, however, any withholding event occurs with respect to the Performance
Stock Units other than the vesting of such units, or if the Corporation for any
reason does not satisfy the withholding obligations with respect to the vesting
of the Stock Units as provided above in this Section 9 the Corporation shall be
entitled to require a cash payment by or on behalf of the Grantee and/or to
deduct from other compensation payable to the Grantee the amount of any such
withholding obligations.

 

For purposes of
this Award Agreement, “Fair Market Value”
on any date means (i) if the stock is listed or admitted to trade on a national
securities exchange, the closing price of the stock on the Composite Tape, as
published in the Western Edition of the Wall Street Journal, of the principal
national securities exchange on which the stock is so listed or admitted to
trade, on such date, or, if there is no trading of the stock on such date, then
the closing price of the stock as quoted on such Composite Tape on the next
preceding date on which there was trading in such shares; (ii) if the stock is
not listed or admitted to trade on a national securities exchange, the last/closing
price for the stock on such date, as furnished by the National Association of
Securities Dealers, Inc. (“NASD”) through the NASDAQ National Market Reporting
System or a similar organization if the NASD is no longer reporting such
information; (c) if the stock is not listed or admitted to trade on a national
securities exchange and is not reported on the National Market Reporting
System, the mean between the bid and asked price for the stock on such date, as
furnished by the NASD or a similar organization; or (d) if the stock is not
listed or admitted to trade on a national securities exchange, is not reported
on the National Market Reporting System and if bid and asked prices for the
stock are not furnished by the NASD or a similar organization, the value as
established by the Corporation’s Board of Directors at such time for purposes
of this Award Agreement.  Any
determination as to fair market value made pursuant to this Award Agreement
shall be determined without regard to any restriction other than a restriction
which, by its terms, will never lapse, and shall be conclusive and binding on
all persons.

 

10.   Compliance
with Laws.  The
Award and the offer, issuance and delivery of securities and/or payment of
money under this Award Agreement are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Corporation, be necessary or advisable in connection
therewith.  The Grantee will, if
requested by the Corporation, provide such assurances and representations to
the Corporation as the Corporation may deem necessary or desirable to assure
compliance with all applicable legal requirements.  The Corporation will cause such action to be
taken, and such filings to be made, so that the grant hereunder shall comply
with the rules of the New York Stock Exchange.

 

4

 

11.   Representations
and Warranties.  In
the event, and only in the event, that any Performance Stock Units are to be
paid in shares of Common Stock pursuant to this Award Agreement at a time when
the Corporation does not have an effective Form S-8 Registration Statement (including
a reoffer prospectus prepared in accordance with the SEC’s General Instructions
to Form S-8) on file with the Securities and Exchange Commission with respect
to the offer and sale of the shares of Common Stock covered by this Award
Agreement, the Grantee, at the time he acquires such shares, shall represent
and warrant to the Corporation that:

 

(a)                                  the shares of Common Stock that may be
acquired by the Grantee pursuant to this Award Agreement will be acquired for
the Grantee’s own account and not with a view to, or in connection with, a
distribution thereof in violation of the Securities Act of 1933, as amended
(the “Securities Act”), or any applicable
state securities laws, and the shares of Common Stock will not be disposed of
in contravention of the Securities Act or any applicable state securities laws;

 

(b)                                 the Grantee is an “accredited investor”
as such term is defined in Rule 501 promulgated under the Securities Act and is
sophisticated in financial matters;

 

(c)                                  the Grantee is able to bear the economic
risk of his investment in the shares for an indefinite period of time because
the shares have not been registered under the Securities Act and, therefore,
cannot be sold unless subsequently registered under the Securities Act or an
exemption from such registration is available;

 

(d)                                 the Grantee has had the opportunity to
ask questions of, and receive answers from, the Corporation and its management
concerning the terms and conditions of the offering of the Common Stock and to
obtain information regarding the Corporation’s condition (financial and
otherwise) and operations; and

 

(e)                                  this Award Agreement and each of the
other agreements contemplated hereby to which such Grantee is a party
constitute legal, valid and binding obligations of the Grantee, enforceable in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and limitations on the availability of equitable
remedies, and the execution, delivery and performance of this Award Agreement
and such other agreements by such Grantee does not and will not conflict with,
violate or cause a breach of any agreement, contract or instrument to which the
Grantee is a party or any judgment or decree to which the Grantee is subject.

 

12.   Legends.

 

(a)                                  In
the event, and only in the event, that, at the time any Performance Stock Units
are to be paid in shares of Common Stock pursuant to this Award Agreement, the
Corporation does not have an effective Form S-8 Registration Statement (including
a reoffer prospectus prepared in accordance with the SEC’s General Instructions
to Form S-8) on file with the Securities and Exchange Commission with respect
to the offer and sale of shares of Common Stock covered by this

 

5

 

Award
Agreement, the certificates,
if any, representing the shares of Common Stock so paid will bear a legend in
substantially the following form:

 

“THESE SHARES HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY APPLICABLE
STATE LAW. THEY MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR PLEDGED
WITHOUT (1) REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE
STATE LAW, OR (2) AT HOLDER’S EXPENSE, AN OPINION (SATISFACTORY TO THE
CORPORATION) OF COUNSEL (SATISFACTORY TO THE CORPORATION) THAT REGISTRATION IS
NOT REQUIRED.”

 

(b)                                 In
addition, the certificates, if any, representing any shares of Common Stock
paid pursuant to this Award Agreement will bear a legend in substantially the
following form:

 

“THE OWNERSHIP OF THIS
CERTIFICATE AND THE SHARES OF STOCK EVIDENCED HEREBY AND ANY INTEREST THEREIN
ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFER UNDER AN AGREEMENT ENTERED
INTO BETWEEN THE REGISTERED OWNER AND MSC.SOFTWARE CORPORATION.  A COPY OF SUCH AGREEMENT IS ON FILE IN THE
OFFICE OF THE SECRETARY OF MSC.SOFTWARE.”

 

The legend set forth in this Section 12(b) will
be removed from the certificates evidencing such shares upon the occurrence of
one of the events set forth in Section 5.

 

13.   Number
and Gender.  Where
the context requires, the singular shall include the plural, the plural shall
include the singular, and any gender shall include all other genders.

 

14.   Section
Headings.  The
section headings of, and titles of paragraphs and subparagraphs contained in,
this Award Agreement are for the purpose of convenience only, and they neither
form a part of this Award Agreement nor are they to be used in the construction
or interpretation thereof.

 

15.   Governing
Law.  This Award
Agreement, and all questions relating to its validity, interpretation,
performance and enforcement, as well as the legal relations hereby created
between the parties hereto, shall be governed by and construed under, and
interpreted and enforced in accordance with, the laws of the State of
California, notwithstanding any California or other conflict of law provision
to the contrary.

 

16.   Construction.  This Award Agreement shall be construed and
interpreted to comply with Section 409A of the Internal Revenue Code (“Section 409A”).  The
Corporation reserves the right to amend this Award Agreement to the extent it
reasonably determines is necessary in order to preserve the intended tax
consequences of the Performance Stock Units in light of Section 409A and any
regulations or other guidance promulgated thereunder.

 

6

 

17.   Severability.  If any provision of this Award Agreement or
the application thereof is held invalid, the invalidity shall not affect other
provisions or applications of this Award Agreement which can be given effect
without the invalid provisions or applications and to this end the provisions
of this Award Agreement are declared to be severable.

 

18.   Entire
Agreement.  This
Award Agreement embodies the entire agreement of the parties hereto respecting
the matters within the scope of this Award Agreement and supersedes all prior
and contemporaneous agreements of the parties hereto that directly or
indirectly bears upon the subject matter hereof.  Any prior negotiations, correspondence,
agreements, proposals or understandings relating to the subject matter hereof
shall be deemed to have been merged into this Award Agreement, and to the
extent inconsistent herewith, such negotiations, correspondence, agreements,
proposals, or understandings shall be deemed to be of no force or effect.  There are no representations, warranties, or
agreements, whether express or implied, or oral or written, with respect to the
subject matter hereof, except as expressly set forth herein.  This Award Agreement is an integrated
Agreement as to the subject matter hereof.

 

19.   Modifications.  This Award Agreement may not be amended,
modified or changed (in whole or in part), except by a formal, definitive
written agreement expressly referring to this Award Agreement, which agreement
is executed by both of the parties hereto.

 

20.   Waiver.  Neither the failure nor any delay on the part
of a party to exercise any right, remedy, power or privilege under this Award
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any right, remedy, power or privilege, nor shall any
waiver of any right, remedy, power or privilege with respect to any occurrence
be construed as a waiver of such right, remedy, power or privilege with respect
to any other occurrence.  No waiver shall
be effective unless it is in writing and is signed by the party asserted to
have granted such waiver.

 

21.   Notices.

 

(a)                                  All notices,
requests, demands and other communications required or permitted under this
Award Agreement shall be in writing and shall be deemed to have been duly given
and made if (i) delivered by hand, (ii) otherwise delivered against receipt
therefor, or (iii) sent by registered or certified mail, postage prepaid,
return receipt requested.  Any notice
shall be duly addressed to the parties as follows:

 

7

 

	
  (i)  if
  to the Corporation:

  
	
   

  
	
   

  	
  MSC.Software
  Corporation

  
	
   

  	
  2 MacArthur Place

  
	
   

  	
  Santa Ana, California
  92707

  
	
   

  	
  Attn: Board of
  Directors

  
	
   

  	
   

  
	
  (ii)  if to the Grantee:

  
	
   

  	
   

  
	
   

  	
  John A. Mongelluzzo

  
	
   

  	
  MSC.Software
  Corporation

  
	
   

  	
  2 MacArthur Place

  
	
   

  	
  Santa Ana, California
  92707

  

 

(b)           Any party may alter the address to which communications or copies are
to be sent by giving notice of such change of address in conformity with the
provisions of this Section 21 for the giving of notice.  Any communication shall be effective when
delivered by hand, when otherwise delivered against receipt therefor, or five
(5) business days after being mailed in accordance with the foregoing.

 

22.   Legal
Counsel; Mutual Drafting. 
Each party recognizes that this is a legally binding contract and
acknowledges and agrees that they have had the opportunity to consult with
legal counsel of their choice.  Each
party has cooperated in the drafting, negotiation and preparation of this Award
Agreement.  Hence, in any construction to
be made of this Award Agreement, the same shall not be construed against either
party on the basis of that party being the drafter of such language.  Grantee agrees and acknowledges that he has
read and understands this Award Agreement completes, is entering into it freely
and voluntarily, and has been advised to seek counsel prior to entering into
this Award Agreement and has had ample opportunity to do so.

 

23.   Counterparts.  This Award Agreement may be executed in any
number of counterparts, each of which shall be deemed an original as against
any party whose signature appears thereon, and all of which together shall
constitute one and the same instrument. 
This Award Agreement shall become binding when one or more counterparts
hereof, individually or taken together, shall bear the signatures of all of the
parties reflected hereon as the signatories. 
Photographic copies of such signed counterparts may be used in lieu of
the originals for any purpose.

 

8

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