Document:

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                                                                   EXHIBIT 10.17

                     UGS CAPITAL CORP. AND CAPITAL CORP. II
                         2004 MANAGEMENT INCENTIVE PLAN

1.    DEFINED TERMS

      Exhibit A, which is incorporated by reference, defines the terms used in
the Plan and sets forth certain operational rules related to those terms.

2.    PURPOSE

      The Plan has been established to advance the interests of the Company and
its Affiliates by providing for the grant to Participants of Stock-based and
other incentive Awards.

3.    ADMINISTRATION

      The Administrator has discretionary authority, subject only to the express
provisions of the Plan, to interpret the Plan; determine eligibility for and
grant Awards; determine, modify or waive the terms and conditions of any Award;
prescribe forms, rules and procedures; and otherwise do all things necessary to
carry out the purposes of the Plan. Determinations of the Administrator made
under the Plan will be conclusive and will bind all parties.

4.    LIMITS ON AWARDS UNDER THE PLAN

      (a) NUMBER OF SHARES. A maximum of 12,600,000 shares of Class A Common,
20,000 shares of Class L Common and 7,500 shares of Capital Corp. II Preferred
may be delivered in satisfaction of Awards under the Plan.

      (b) TYPE OF SHARES. Stock delivered under the Plan may be authorized but
unissued Stock or previously issued Stock acquired by the Company or any of its
subsidiaries.

5.    ELIGIBILITY AND PARTICIPATION

      The Administrator will select Participants from among those key Employees
and directors of, and consultants and advisors to, the Company or its Affiliates
who, in the opinion of the Administrator, are in a position to make a
significant contribution to the success of the Company and its Affiliates.
Eligibility for ISOs is limited to employees of the Company or of a "parent
corporation" or "subsidiary corporation" of the Company as those terms are
defined in Section 424 of the Code.

6.    RULES APPLICABLE TO AWARDS

      (a) ALL AWARDS

            (1) AWARD PROVISIONS. The Administrator will determine the terms of
all Awards, subject to the limitations provided herein.

                              UGS Confidential                            Page 1

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            (2) TRANSFERABILITY. Neither ISOs, nor, except as the Administrator
otherwise expressly provides, other Awards may be transferred other than by will
or by the laws of descent and distribution, and during a Participant's lifetime
ISOs (and, except as the Administrator otherwise expressly provides, other
non-transferable Awards requiring exercise) may be exercised only by the
Participant.

            (3) VESTING, ETC. The Administrator may determine the time or times
at which an Award will vest or become exercisable and the terms on which an
Award requiring exercise will remain exercisable. Without limiting the
foregoing, the Administrator may at any time accelerate the vesting or
exercisability of an Award, regardless of any adverse or potentially adverse tax
consequences resulting from such acceleration. Unless the Administrator
expressly provides otherwise, the following will apply if a Participant's
Employment ceases: Immediately upon the cessation Employment an Award requiring
exercise will cease to be exercisable and will terminate, and all other Awards
to the extent not already vested will be forfeited, except that --

            (A) subject to (B) below, all Stock Options and SARs held by the
      Participant or the Participant's permitted transferee, if any, immediately
      prior to the cessation of the Participant's Employment, to the extent then
      exercisable, will remain exercisable for the shorter of (i) a period of 60
      days or (ii) the period ending on the latest date on which such Stock
      Option or SAR could have been exercised without regard to this Section
      6(a)(3), and will thereupon terminate; and

            (B) all Stock Options and SARs held by a Participant or the
      Participant's permitted transferee, if any, immediately prior to the
      cessation of the Participant's Employment will immediately terminate upon
      such cessation if the Administrator in its sole discretion determines that
      such cessation of Employment has resulted for reasons which cast such
      discredit on the Participant as to justify immediate termination of the
      Award.

            (4) TAXES. The Administrator will make such provision for the
withholding of taxes as it deems necessary. The Administrator may, but need not,
hold back shares of Stock from an Award or permit a Participant to tender
previously owned shares of Stock in satisfaction of tax withholding requirements
(but not in excess of the minimum withholding required by law).

            (5) DIVIDEND EQUIVALENTS, ETC. The Administrator may in its sole
discretion provide for the payment of amounts in lieu of cash dividends or other
cash distributions with respect to Stock subject to an Award.

            (6) RIGHTS LIMITED. Nothing in the Plan will be construed as giving
any person the right to continued employment or service with the Company or its
Affiliates, or any rights as a stockholder except as to shares of Stock actually
issued under the Plan. The loss of existing or potential profit in Awards will
not constitute an element of damages in the event of termination of employment
or service for any reason, even if the termination is in violation of an
obligation of the Company or its Affiliate to the Participant.

                              UGS Confidential                            Page 2

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            (7) STOCKHOLDERS' AGREEMENT. Unless otherwise specifically provided,
all Awards issued under the Plan and all Stock issued thereunder will be subject
to the Stockholders' Agreement.

      (b) AWARDS REQUIRING EXERCISE

            (1) TIME AND MANNER OF EXERCISE. Unless the Administrator expressly
provides otherwise, an Award requiring exercise by the holder will not be deemed
to have been exercised until the Administrator receives a notice of exercise (in
form acceptable to the Administrator) signed by the appropriate person and
accompanied by any payment required under the Award. If the Award is exercised
by any person other than the Participant, the Administrator may require
satisfactory evidence that the person exercising the Award has the right to do
so.

            (2) EXERCISE PRICE. The Administrator will determine the exercise
price, if any, of each Award requiring exercise. Unless the Administrator
determines otherwise, and in all events in the case of a Stock Option intended
to qualify as an ISO, the exercise price of an Award requiring exercise will not
be less than the fair market value of the Stock subject to the Award, determined
as of the date of grant.

            (3) PAYMENT OF EXERCISE PRICE. Where the exercise of an Award is to
be accompanied by payment, the Administrator may determine the required or
permitted forms of payment, subject to the following: (a) all payments will be
by cash or check acceptable to the Administrator, or, if so permitted by the
Administrator, (i) through the delivery of shares of Stock that have been
outstanding for at least six months (unless the Administrator approves a shorter
period) and that have a fair market value equal to the exercise price, (ii) by
delivery of a promissory note of the person exercising the Award, payable on
such terms as are specified by the Administrator, (iii) at such time, if any, as
the Stock is publicly traded, through a broker-assisted exercise program
acceptable to the Administrator, or (iv) by any combination of the foregoing
permissible forms of payment; and (b) where shares of Stock issued under an
Award are part of an original issue of shares, the Award will require that at
least so much of the exercise price as equals the par value of such shares be
paid other than by delivery of a promissory note or its equivalent. The delivery
of shares in payment of the exercise price under clause (a)(i) above may be
accomplished either by actual delivery or by constructive delivery through
attestation of ownership, subject to such rules as the Administrator may
prescribe.

            (4) ISOs. No ISO may be granted under the Plan after May 26, 2014,
but ISOs previously granted may extend beyond that date.

      (c) AWARDS NOT REQUIRING EXERCISE

      Awards of Restricted Stock and Unrestricted Stock may be made in exchange
for past services or other lawful consideration.

                              UGS Confidential                            Page 3

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7.    EFFECT OF CERTAIN TRANSACTIONS

      (a) MERGERS, ETC.

      Except as otherwise provided in an Award: In the event of a Change of
Control in which there is an acquiring or surviving entity, the Administrator
will, unless the Administrator determines inappropriate or unfeasible, provide
for the assumption of some or all outstanding Awards, or for the grant of new
awards in substitution therefor, by the acquiror or survivor or an affiliate of
the acquiror or survivor, in each case on such terms and subject to such
conditions as the Administrator in good faith determines. In the event of a
Change of Control (whether or not there is an acquiring or surviving entity) the
Administrator may, but is not required to, permit any Stock Option, SAR or other
Award to become fully exercisable or vested, or for the delivery of shares of
Stock issuable under each outstanding Award of Deferred Stock to be accelerated,
in which case such shares would be issued, prior to the Change of Control, in
each case on a basis that gives the holder of the Award a reasonable
opportunity, as determined by the Administrator, following exercise of the Award
or the issuance of the shares, as the case may be, to participate as a
stockholder in the Change of Control, and the Award in such case will terminate
upon consummation of the Change of Control. In the case of Restricted Stock, the
Administrator may require that any amounts delivered, exchanged or otherwise
paid in respect of such Stock in connection with the Change of Control be placed
in escrow or otherwise made subject to such restrictions as the Administrator
deems appropriate to carry out the intent of the Plan.

      (b) CHANGES IN AND DISTRIBUTIONS WITH RESPECT TO THE STOCK

            (1) BASIC ADJUSTMENT PROVISIONS. In the event of a stock dividend,
stock split or combination of shares (including a reverse stock split),
recapitalization or other change in the capital structure of the Company or an
Affiliate, the Administrator will, to the extent required by applicable law or
if determined by the Administrator in its discretion to be appropriate in order
to prevent enlargement or dilution of benefits intended to be made available
under the Plan, make adjustments to the maximum number of shares that may be
delivered under the Plan under Section 4(a) and will also make appropriate
adjustments to the number and kind of shares of stock or securities subject to
Awards then outstanding or subsequently granted, any exercise prices relating to
Awards and any other provision of Awards affected by such change.

            (2) CERTAIN OTHER ADJUSTMENTS. To the extent consistent with
qualification of ISOs under Section 422 of the Code, the Administrator may also
make adjustments of the type described in paragraph (1) above to take into
account distributions to stockholders other than those provided for in Section
7(a) and 7(b)(1), or any other event, if the Administrator determines that
adjustments are appropriate to avoid distortion in the operation of the Plan and
to preserve the value of Awards made hereunder.

                              UGS Confidential                            Page 4

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            (3) CONTINUING APPLICATION OF PLAN TERMS. References in the Plan to
shares of Stock will be construed to include any stock or securities resulting
from an adjustment pursuant to this Section 7.

8.    LEGAL CONDITIONS ON DELIVERY OF STOCK

      Neither the Company nor any Affiliate will be obligated to deliver any
shares of Stock pursuant to the Plan or to remove any restriction from shares of
Stock previously delivered under the Plan until: (i) the Company is satisfied
that all legal matters in connection with the issuance and delivery of such
shares have been addressed and resolved; (ii) if the outstanding Stock is at the
time of delivery listed on any stock exchange or national market system, the
shares to be delivered have been listed or authorized to be listed on such
exchange or system upon official notice of issuance; and (iii) all conditions of
the Award have been satisfied or waived. If the sale of Stock has not been
registered under the Securities Act of 1933, as amended, the Company may
require, as a condition to exercise of the Award, such representations or
agreements as counsel for the Company may consider appropriate to avoid
violation of such Act. The Company may require that certificates evidencing
Stock issued under the Plan bear an appropriate legend reflecting any
restriction on transfer applicable to such Stock, and the Company may hold the
certificates pending lapse of the applicable restrictions.

9.    AMENDMENT AND TERMINATION

      The Administrator may at any time or times amend the Plan or any
outstanding Award for any purpose which may at the time be permitted by law, and
may at any time terminate the Plan as to any future grants of Awards; provided,
that except as otherwise expressly provided in the Plan the Administrator may
not, without the Participant's consent, alter the terms of an Award so as to
affect adversely the Participant's rights under the Award, unless the
Administrator expressly reserved the right to do so at the time of the Award.

10.   OTHER COMPENSATION ARRANGEMENTS

      The existence of the Plan or the grant of any Award will not in any way
affect the right of the Company or an Affiliate to Award a person bonuses or
other compensation in addition to Awards under the Plan.

Amended and Restated as of July 10, 2004

                              UGS Confidential                            Page 5

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                                    EXHIBIT A

                               DEFINITION OF TERMS

      The following terms, when used in the Plan, will have the meanings and be
subject to the provisions set forth below:

      "ADMINISTRATOR": The Board or, if one or more has been appointed, the
Committee. The Administrator may delegate ministerial tasks to such persons as
it deems appropriate.

      "AFFILIATE": Any corporation or other entity that is an "Affiliate" of the
Company within the meaning of the Stockholders Agreement.

      "AWARD": Any or a combination of the following:

            (i) Stock Options.

            (ii) SARs.

            (iii) Restricted Stock.

            (iv) Unrestricted Stock.

            (v) Deferred Stock.

            (vi) Securities (other than Stock Options) that are convertible into
      or exchangeable for Stock on such terms and conditions as the
      Administrator determines.

            (vii) Performance Awards.

           (viii) Current or deferred grants of cash (which the Company may
      make payable by any of its direct or indirect subsidiaries) or loans, made
      in connection with other Awards.

      "BOARD": The Board of Directors of the Company or Capital Corp. II, as the
context requires.

      "CAPITAL CORP. II": UGS Capital Corp. II, a Delaware corporation and a
direct subsidiary of the Company.

      "CAPITAL CORP. II PREFERRED": Cumulative Preferred Stock of Capital Corp.
II.

      "CHANGE OF CONTROL": A "Change of Control" as defined in the Stockholders
Agreement.

                              UGS Confidential                            Page 6

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      "CLASS A COMMON": Class A-4 Common Stock of the Company, par value $.001
per share or another class of Class A Common Stock of the Company as designated
by the Board.

      "CLASS L COMMON": Class L Common Stock of the Company, par value $.001 per
share.

      "CODE": The U.S. Internal Revenue Code of 1986 as from time to time
amended and in effect, or any successor statute as from time to time in effect.

      "COMMITTEE": One or more committees of the Board.

      "COMPANY": UGS Capital Corp., a Delaware corporation that is the immediate
parent of Capital Corp. II and the ultimate parent of UGS Corp.

      "DEFERRED STOCK": An unfunded and unsecured promise to deliver Stock or
other securities in the future on specified terms.

      "EMPLOYEE": Any person who is employed by the Company or an Affiliate.

      "EMPLOYMENT": A Participant's employment or other service relationship
with the Company and its Affiliates. Unless the Administrator provides
otherwise: A Participant who receives an Award in his or her capacity as an
Employee will be deemed to cease Employment when the employee-employer
relationship with the Company and its Affiliates ceases. A Participant who
receives an Award in any other capacity will be deemed to continue Employment so
long as the Participant is providing services in a capacity described in Section
5. If a Participant's relationship is with an Affiliate and that entity ceases
to be an Affiliate, the Participant will be deemed to cease Employment when the
entity ceases to be an Affiliate unless the Participant transfers Employment to
the Company or its remaining Affiliates.

      "ISO": A Stock Option intended to be an "incentive stock option" within
the meaning of Section 422 of the Code. Each option granted pursuant to the Plan
will be treated as providing by its terms that it is to be a non-incentive
option unless, as of the date of grant, it is expressly designated as an ISO.

      "PARTICIPANT": A person who is granted an Award under the Plan.

      "PERFORMANCE AWARD": An Award subject to Performance Criteria.

      "PERFORMANCE CRITERIA": Specified criteria the satisfaction of which is a
condition for the grant, exercisability, vesting or full enjoyment of an Award.

      "PLAN": The UGS Capital Corp. 2004 Management Incentive Plan as from time
to time amended and in effect.

                              UGS Confidential                            Page 7

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      "RESTRICTED STOCK": An Award of Stock for so long as the Stock remains
subject to restrictions under this Plan or such Award requiring that it be
redelivered or offered for sale to the Company if specified conditions are not
satisfied.

      "SARs": Rights entitling the holder upon exercise to receive cash or
Stock, as the Administrator determines, equal to a function (determined by the
Administrator using such factors as it deems appropriate) of the amount by which
the Stock has appreciated in value since the date of the Award.

      "STOCK": Class A Common, Class L Common and Capital Corp. II Preferred.

      "STOCKHOLDERS' AGREEMENT": Stockholders' Agreement, dated as of May 24,
2004, among the Company and certain affiliates, stockholders and Participants.

      "STOCK OPTIONS": Options entitling the recipient to acquire shares of
Stock upon payment of the exercise price.

      "UNRESTRICTED STOCK": An Award of Stock not subject to any restrictions
under the Plan.

                              UGS Confidential                            Page 8

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                          APPENDIX - ISRAELI RESIDENTS

                     UGS CAPITAL CORP. AND CAPITAL CORP. II
                         2004 MANAGEMENT INCENTIVE PLAN

   1.    SPECIAL PROVISIONS FOR PERSONS WHO ARE ISRAELI RESIDENTS

      1.1 This Appendix (the "APPENDIX") to the UGS Capital Corp. and Capital
Corp. II 2004 Management Incentive Plan, as amended and restated as of July 10,
2004 (the "PLAN") is effective as of March__, 2005 (the "EFFECTIVE DATE").

      1.2 The provisions specified hereunder apply only to persons who are
deemed to be residents of the State of Israel for tax purposes.

      1.3 This Appendix applies with respect to Awards granted as (a) Stock
Options (b) Restricted Stock or (c) Unrestricted Stock, where such Stock Options
or shares of Restricted or Unrestricted Stock are granted or issued under the
Plan. The purpose of this Appendix is to establish certain rules and limitations
applicable to Stock Options and shares of Stock that may be granted or issued
under the Plan from time to time, in compliance with the securities and other
applicable laws currently in force in the State of Israel. Except as otherwise
provided by this Appendix, all grants made pursuant to this Appendix shall be
governed by the terms of the Plan. This Appendix is applicable only to grants
made after the Effective Date. This Appendix complies with, and is subject to
the ITO and Section 102.

      1.4 The Plan and this Appendix shall be read together. In any case of
contradiction, whether explicit or implied, between the provisions of this
Appendix and the Plan, the provisions of this Appendix shall govern.

   2.    DEFINITIONS

      Capitalized terms not otherwise defined herein shall have the meaning
assigned to them in Exhibit A of the Plan. The following additional definitions
will apply to grants made pursuant to this Appendix:

      "3(I) Option" means an Option which is subject to taxation pursuant to
Section 3(I) of the ITO which has been granted to any person who is not an
Eligible 102 Participant.

      "102 Capital Gains Track" means the tax alternative set forth in Section
102(b)(2) of the ITO pursuant to which income resulting from the sale of Common
Stock derived from Options is taxed as a capital gain.

      "102 Capital Gains Track Grant" means a 102 Trustee Grant qualifying for
the special tax treatment under the 102 Capital Gains Track.

      "102 Ordinary Income Track" means the tax alternative set forth in Section
102(b)(1) of the ITO pursuant to which income resulting from the sale of Stock
derived from Options is taxed as ordinary income.

      "102 Ordinary Income Track Grant" means a 102 Trustee Grant qualifying for
the ordinary income tax treatment under the 102 Ordinary Income Track.

      "102 Trustee Grant" means an Award of Stock Options, Restricted Stock
Unrestricted Srock granted pursuant to Section 102(b) of the ITO and held in
trust by

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a Trustee for the benefit of the Participant, and includes both 102 Capital
Gains Track Grants and 102 Ordinary Income Track Grants.

      "Affiliate" means any "employing company" within the meaning of Section
102(a) of the ITO.

      "Controlling Shareholder" as defined under Section 32(9) of the Ordinance,
means an employee who prior to the grant or as a result of the exercise of any
Option, holds or would hold, directly or indirectly, in his name or with a
relative (as defined in the Ordinance) (i) 10% of the outstanding shares of the
Company, (ii) 10% of the voting power of the Company, (iii) the right to hold or
purchase 10% of the outstanding equity or voting power, (iv) the right to obtain
10% of the "profit" of the Company (as defined in the Ordinance), or (v) the
right to appoint a director of the Company.

      "Election" means the Company's choice of the type (as between capital
gains track or ordinary income track) of 102 Trustee Grants it will make under
the Plan, as filed with the ITA.

      "Eligible 102 Participant" means a person who is employed by the Company
or its Affiliates, including an individual who is serving as a director or an
office holder, who is not a Controlling Shareholder.

      "Fair Market Value" shall mean with respect to 102 Capital Gains Track
Grants only, for the sole purpose of determining tax liability pursuant to
Section 102(b)(3) of the ITO, if at the date of grant the Company's shares are
listed on any established stock exchange or a national market system or if the
Company's shares will be registered for trading within ninety (90) days
following the date of grant, the fair market value of the Shares at the date of
grant shall be determined in accordance with the average value of the Company's
shares on the thirty (30) trading days preceding the date of grant or on the
thirty (30) trading days following the date of registration for trading, as the
case may be.

      "ITA" means the Israeli Tax Authorities.

      "ITO" means the Israeli Income Tax Ordinance (New Version) 1961 and the
rules, regulations, orders or procedures promulgated thereunder and any
amendments thereto, including specifically the Rules, all as may be amended from
time to time.

      "Non-Trustee Grant" means an Award granted pursuant to Section 102(c) of
the ITO and not held in trust by a Trustee.

      "Required Holding Period" means the requisite period prescribed by the ITO
and the Rules, or such other period as may be required by the ITA, with respect
to 102 Trustee Grants, during which Options or Common Stock granted by the
Company must be held by the Trustee for the benefit of the person to whom it was
granted.

      "Rules" means the Income Tax Rules (Tax benefits in Stock Issuance to
Employees) 5763-2003.

      "Section 102" shall mean the provisions of Section 102 of the ITO, as
amended from time to time, including most recently by the Law Amending the
Income Tax Ordinance (Number 132) 2002, effective as of January 1, 2003.

      "Shares" means shares of Stock, including Restricted or Unrestricted Stock
or shares of Stock issued upon exercise of Stock Options.

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      "Stock Option" means a Stock Option granted pursuant to the terms and
conditions of the Plan and the Appendix.

      "Trustee" means a person or entity designated by the Board to serve as a
trustee and approved by the ITA in accordance with the provisions of Section
102(a) of the ITO.

   3.    TYPES OF AWARDS AND SECTION 102 ELECTION

      3.1 Awards made pursuant to Section 102, whether as grants of Stock
Options or as issuances of Common Stock under the Plan, shall be made pursuant
to either (a) Section 102(b)(2) of the ITO as 102 Capial Gains Track Grants or
(b) Section 102(b)(1) of the ITO as 102 Ordinary Income Track Grants. The
Company's Election regarding the type of 102 Trustee Grant it chooses to make
has to be filed with the ITA. Once the Company has filed such Election, it may
change the type of 102 Trustee Grant that it chooses to make only after the
passage of at least 12 months from the end of the calendar year in which the
first grant was made in accordance with the previous Election, in accordance
with Section 102. For the avoidance of doubt, such Election shall not prevent
the Company from granting Non-Trustee Grants at any time.

      3.2 Eligible 102 Participants may receive only 102 Trustee Grants or
Non-Trustee Grants under this Appendix. Participants who are not Eligible 102
Participants may be granted only 3(I) Options under this Appendix.

      3.3 No 102 Trustee Grants may be made effective pursuant to this Appendix
until 30 days after the requisite filings required by the ITO and the Rules have
been made with the ITA.

      3.4 The option agreement or documents evidencing the Options granted or
Shares issued pursuant to the Plan and this Appendix shall indicate whether the
grant is a 102 Trustee Grant, a Non-Trustee Grant or a 3(I) Grant; and, if the
grant is a 102 Trustee Grant, whether it is a 102 Capital Gains Track Grant or a
102 Ordinary Income Track Grant.

   4.    TERMS AND CONDITIONS OF 102 TRUSTEE OPTIONS

      4.1 Each 102 Trustee Grant will be deemed granted on the date stated in a
written notice by the Company, provided that on or before such date (i) the
Company has provided such notice to the Trustee and (ii) the Participant has
signed all documents required pursuant to this Section 4.

      4.2 Each 102 Trustee Grant granted to an Eligible 102 Participant and each
certificate for shares of Stock acquired pursuant to the exercise of a Stock
Option or issued directly as Restricted or Unrestricted Stock shall be issued to
and registered in the name of a Trustee and shall be held in trust for the
benefit of the Participant for the Required Holding Period. After termination of
the Required Holding Period, the Trustee may release such Option and any such
shares, provided that (i) the Trustee has received an acknowledgment from the
Israeli Income Tax Authority that the Eligible 102 Participant has paid any
applicable tax due pursuant to the ITO or (ii) the Trustee and/or the Company or
its Affiliate withholds any applicable tax due pursuant to the ITO. The Trustee
shall not release any 102 Trustee Options or shares issued upon exercise of such
Option prior to the full payment of the Eligible 102 Participant's tax
liabilities.

                                       3

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      4.3 Each 102 Trustee Grant (whether a 102 Capital Gains Track Grant or a
102 Ordinary Income Track Grant, as applicable) shall be subject to the relevant
terms of Section 102 and the ITO, which shall be deemed an integral part of the
102 Trustee Option and shall prevail over any term contained in the Plan, this
Appendix or any agreement that is not consistent therewith. Any provision of the
ITO and any approvals by the Income Tax Commissioner not expressly specified in
this ISOP or Option Agreement which are necessary to receive or maintain any tax
benefit pursuant to the Section 102 shall be binding on the Eligible 102
Participant. The Trustee and the Eligible 102 Participant granted a 102 Trustee
Grant shall comply with the ITO, and the terms and conditions of the Trust
Agreement entered into between the Company and the Trustee. For avoidance of
doubt, it is reiterated that compliance with the ITO specifically includes
compliance with the Rules. Further, the Eligible 102 Participant agrees to
execute any and all documents which the Company or the Trustee may reasonably
determine to be necessary in order to comply with the provision of any
applicable law, and, particularly, Section 102.

      4.4 During the Restricted Holding Period, the Eligible 102 Participant
shall not require the Trustee to release or sell the Stock Options or Shares and
other shares received subsequently following any realization of rights derived
from Shares or Stock Options (including stock dividends) to the Eligible
102Participant or to a third party, unless permitted to do so by applicable law.
Notwithstanding the foregoing, the Trustee may, pursuant to a written request
and subject to applicable law, release and transfer such Shares to a designated
third party, provided that both of the following conditions have been fulfilled
prior to such transfer: (i) payment has been rendered to the tax authorities of
all taxes required to be paid upon the release and transfer of the shares, and
confirmation of such payment has been received by the Trustee and (ii) the
Trustee has received written confirmation from the Company that all requirements
for such release and transfer have been fulfilled according to the terms of the
Company's corporate documents, the Plan, any applicable agreement and any
applicable law. To avoid doubt such sale or release during the Restricted
Holding Period will result in different tax ramifications to the Eligible 102
Participant under Section 102 of the ITO and the Rules and/or any other
regulations or orders or procedures promulgated thereunder, which shall apply to
and shall be borne solely by such Eligible 102 Participant.

      4.5 In the event a stock dividend is declared on Shares which derive from
Awards granted as 102 Trustee Grants, such dividend shall also be subject to the
provisions of this Section 4 and the Required Holding Period for such dividend
shares shall be measured from the commencement of the Required Holding Period
for the Stock Option or Shares with respect to which the dividend was declared.

      4.6 If a Stock Option granted as a 102 Trustee Grant is exercised during
the Required Holding Period, the Shares issued upon such exercise shall be
issued in the name of the Trustee for the benefit of the Eligible 102
Participant. If such an Option is exercised after the Required Holding Period
ends, the Shares issued upon such exercise shall, at the election of the
Eligible 102 Participant, either (i) be issued in the name of the Trustee, or
(ii) be transferred to the Eligible 102 Participant directly, provided that the
Participant first complies with all applicable provisions of the Plan.

                                       4

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   5.    ASSIGNABILITY

      As long as Options or Shares are held by the Trustee on behalf of the
Eligible 102 Participant, all rights of the Eligible 102 Participant over the
shares are personal, can not be transferred, assigned, pledged or mortgaged,
other than by will or laws of descent and distribution.

   6.    TAX CONSEQUENCES

      6.1 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, and/or its Affiliates, and the Trustee or the Participant),
hereunder, shall be borne solely by the Participant. The Company and/or its
Affiliates, 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 Participant shall agree to
indemnify the Company and/or its Affiliates and/or the Trustee and hold them
harmless against and from any and all 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 Participant. The Company or any of its Affiliates and the Trustee may
make such provisions and take such steps as it may deem necessary or appropriate
for the withholding of all taxes required by law to be withheld with respect to
Options granted under the Plan and the exercise thereof, including, but not
limited, to (i) deducting the amount so required to be withheld from any other
amount then or thereafter payable to a Participant, and/or (ii) requiring a
Participant to pay to the Company or any of its Affiliates the amount so
required to be withheld as a condition of the issuance, delivery, distribution
or release of any Shares. In addition, the Participant will be required to pay
any amount which exceeds the tax to be withheld and transferred to the tax
authorities, pursuant to applicable Israeli tax regulations.

      6.2 With respect to Non-Trustee Grants, if the Participant ceases to be
employed by the Company or any Affiliate, the Eligible 102 Participant shall
extend to the Company and/or its Affiliate a security or guarantee for the
payment of tax due at the time of sale of Shares, all in accordance with the
provisions of Section 102 of the ITO and the Rules.

   7.    GOVERNING LAW AND JURISDICTION

Notwithstanding any other provision of the Plan, with respect to Participants
subject to this Appendix, the Plan and all instruments issued thereunder or in
connection therewith shall be governed by, and interpreted in accordance with,
the laws of the State of Israel applicable to contracts made and to be performed
therein.

                                      * * *

                                       5<PAGE>

                                                                   EXHIBIT 10.18

                   UGS CAPITAL CORP. AND UGS CAPITAL CORP. II
                         2004 MANAGEMENT INCENTIVE PLAN

           THIS AWARD AND ANY SECURITIES ISSUED UPON EXERCISE OF THIS
           OPTION ARE SUBJECT TO RESTRICTIONS ON VOTING AND TRANSFER
           AND REQUIREMENTS OF SALE AND OTHER PROVISIONS AS SET FORTH
             IN THE STOCKHOLDERS AGREEMENT AMONG UGS CAPITAL CORP.,
        UGS CAPITAL CORP. II, UGS HOLDINGS, INC., UGS CORP. AND CERTAIN
          STOCKHOLDERS OF UGS CAPITAL CORP. AND UGS CAPITAL CORP. II,
            DATED AS OF MAY 24, 2004 (THE "STOCKHOLDERS AGREEMENT").

              UGS CAPITAL CORP. STRONGLY ENCOURAGES YOU TO SEEK THE
              ADVICE OF YOUR OWN LEGAL AND FINANCIAL ADVISORS WITH
           RESPECT TO YOUR AWARD AND ITS TAX CONSEQUENCES. THANK YOU.

                                UGS CAPITAL CORP.
                      NON-QUALIFIED STOCK OPTION AGREEMENT

      This Agreement evidences a stock option granted by UGS Capital Corp., a
Delaware corporation (the "Company"), to the undersigned (the "Optionee"),
pursuant to, and subject to the terms of, the UGS Capital Corp. and UGS Capital
Corp. II 2004 Management Incentive Plan (the "Plan"), which is incorporated
herein by reference and of which the Optionee hereby acknowledges receipt.

      1. Grant of Option. The Company grants to the Optionee as of

      2. , an option (the "Option") to purchase, in whole or in part, on the
terms provided herein and in the Plan, that total number of shares set forth in
Schedule A (the "Option Shares") of Class A-4 Common Stock of the Company, par
value $.001 per share, at an exercise price of   ($   ) per share. The Option
evidenced by this Agreement is intended to be a non-qualified option and is
granted to the Optionee in an Employment capacity as an employee. The latest
date on which this Option, or any portion of it, may be exercised shall be ,
2015 (the "Final Exercise Date).

      3. Meaning of Certain Terms. Except as otherwise defined herein, all
initially-capitalized terms used in this Agreement shall have the same meaning
as in the Plan and the Stockholders Agreement. As used herein with respect to
the Option, the term "vest" means to become exercisable in whole or in specified
part.

      4. Vesting of Option. The Option shall vest in accordance with Schedule A.

      5. Exercise of Option. Each election to exercise this Option shall be in
writing, signed by the Participant or the Participant's executor, administrator,
or legally appointed representative (in the event of the Participant's
incapacity) or the person or persons to whom this Option is transferred by will
or the applicable laws of descent and distribution (collectively, the "Option
Holder"), and received by the Company at its principal office, accompanied by
payment in full as provided in the Plan. Subject to the

                              UGS Confidential                            Page 1

<PAGE>

further terms and conditions provided in the Plan, the purchase price may be
paid by delivery of cash or check acceptable to the Administrator or by such
other method provided under the Plan and explicitly approved by the
Administrator. In the event that this Option is exercised by an Option Holder
other than the Participant, the Company will be under no obligation to deliver
Shares hereunder unless and until it is satisfied as to the authority of the
Option Holder to exercise this Option.

      6. Cessation of Employment. Unless the Administrator determines otherwise,
the following will apply if the Optionee's Employment ceases:

      (a)   To the extent the Option is not vested prior to cessation of
            Employment, the Option will be forfeited immediately by the Optionee
            and will terminate.

      (b)   To the extent the Option is vested prior to cessation of Employment,
            the Option will remain exercisable for the shorter of (i) a period
            of 60 days (6 months if Employment ceased due to death or
            disability) or (ii) the period ending on the Final Exercise Date,
            and will thereupon terminate.

      (c)   Notwithstanding Section 5(b), the Option will immediately terminate
            if the Optionee's Employment is terminated by the Company for Cause
            (as defined below).

      (d)   The Company has certain rights at or after cessation of employment
            to repurchase vested options (or shares issued upon exercise of
            vested options) pursuant to Section 6 of the Stockholders Agreement.
            This right of repurchase must be exercised within 90 days after the
            date of cessation of Employment (or within 90 days after the
            exercise of the Option if the Option can be exercised after the
            cessation of Employment) or the right will lapse.

      (e)   As used herein, "Cause" is defined as (i) material breach of any
            agreement entered into between the Optionee and the Company after
            notice and an opportunity to cure, (ii) material failure to follow
            the Company's policies, directives or orders applicable to Company
            employees holding comparable positions after notice and an
            opportunity to cure, (iii) intentional destruction or theft of
            Company property or falsification of Company documents, or (iv)
            conviction of a felony or any crime involving moral turpitude.

      7. Share Restrictions, etc. The Optionee's rights to Option Shares are
subject to the restrictions and other provisions contained in the Plan and the
Stockholders Agreement in addition to such other restrictions, if any, as may be
imposed by law. In the event of a conflict between the Plan or this Agreement
and the Stockholders Agreement, the Stockholders Agreement shall control.

                                    UGS Confidential                      Page 2

<PAGE>

      8. Legends, etc. Option Shares issued upon exercise shall bear such
legends as are required by the Stockholders Agreement and as may be determined
by the Administrator prior to issuance.

      9. Transfer of Option. This Option is not transferable by the Optionee
other than upon death of the Optionee, by will or the applicable laws of descent
and distribution.

      10. Withholding. The exercise of the Option will give rise to "wages"
subject to withholding. The Optionee expressly acknowledges and agrees that the
Optionee's rights hereunder, including the right to be issued Shares upon
exercise, are subject to the Optionee promptly paying to the Company in cash (or
by such other means as may be acceptable to the Administrator in its discretion)
all taxes required to be withheld. The Optionee also authorizes the Company or
its subsidiaries to withhold such amount from any amounts otherwise owed to the
Optionee.

      By acceptance of this Option, the undersigned hereby becomes a party to,
and is bound by the terms of, the Stockholders Agreement among UGS Capital
Corp., UGS Capital Corp. II, UGS Holdings, Inc., UGS Corp. and certain
stockholders of UGS Capital Corp. and UGS Capital Corp. II, dated as of May 24,
2004, in each case treating the undersigned as a "Manager" and the Option Shares
as "Incentive Shares". The effectiveness of this Option is conditioned on the
execution and delivery by the undersigned of an Employee Agreement between UGS
Corp. and the undersigned.

                                   UGS Confidential                       Page 3

<PAGE>

      Executed as of the _________ day of ___________________, 2005.

UGS Capital Corp.                             UGS Capital Corp.

                                              __________________________________
                                              Name: Anthony J. Affuso
                                              Title: Chairman, CEO and President

Optionee                                      __________________________________
                                              Name:

                                    UGS Confidential                      Page 4

<PAGE>

                                   SCHEDULE A

                                VESTING SCHEDULE

Total number of Option Shares: ____________

20% Shares are exercisable on or after the one year anniversary of the grant of
this Option; and

an additional 1.67% Shares are exercisable after the last day of each month
during the four year period following the one year anniversary of the grant of
this Option.

                                UGS Confidential                             A-1

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