Document:

<PAGE>

                                                                   Exhibit 10.13

                                UGS CAPITAL CORP.
                              UGS CAPITAL CORP. II
                                    UGS CORP.

                                  May 18, 2004

Charles Grindstaff
247 Bennett Avenue
Long Beach, CA 90803

      Re: Rollover Arrangements

Dear Mr. Grindstaff:

When signed by you in the space indicated below, this letter will confirm our
irrevocable agreement that, if the transaction contemplated by the Stock
Purchase Agreement, dated as of March 12, 2004 (the "Purchase Agreement"), among
Electronic Data Systems Corporation, UGS Capital Corp. (formerly known as BSW
Holdings, Inc.) ("Capital Corp.") and UGS PLM Solutions Inc. (the "Company")
closes in accordance with the Purchase Agreement on or prior to June 30, 2004:

            (a) you agree to forego the amounts set forth on Schedule 1 hereto
      to which you would otherwise be entitled to be paid pursuant to your
      letter agreement with the Company, dated on or about February 16, 2004
      (the "Retention Incentive Agreement"); and

            (b) in lieu thereof, Capital Corp., UGS Capital Corp. II ("Capital
      Corp. II"), and UGS Corp. ("UGS Corp.") will make the following awards to
      you as of the date of the closing of the transactions contemplated by the
      Purchase Agreement pursuant to the Management Incentive Plan of Capital
      Corp. and Capital Corp. II:

                  -     a Restricted Stock Award of shares of "Class A Common
                        Stock" of Capital Corp. in the amount and subject to
                        vesting restrictions set forth on Schedule 2 hereto; and

                  -     a Stock Option Award for the option to purchase shares
                        of "Class L Common Stock" of Capital Corp. in the amount
                        and subject to vesting restrictions set forth on
                        Schedule 2 hereto; and

                  -     a deferred cash award in an amount set forth on Schedule
                        2 payable by UGS Corp. at the time you exercise your
                        option to purchase shares of "Class L Common Stock" of
                        Capital Corp.; and

<PAGE>

                  -     a Stock Option Award for the option to purchase shares
                        of "Cumulative Preferred Stock" of Capital Corp. II in
                        the amount and subject to vesting restrictions set forth
                        on Schedule 2 hereto; and

                  -     a deferred cash award in an amount set forth on Schedule
                        2 payable by UGS Corp. at the time you exercise your
                        option to purchase shares of "Cumulative Preferred
                        Stock" of Capital Corp. II.

Descriptions of the equity interests of Capital Corp. and Capital Corp. II
contained in this letter shall substantially conform to the descriptions thereof
in the confidential memorandum dated as of May 12, 2004. As a condition to your
receipt of the benefits of this letter, you agree to join the Stockholders
Agreement of Capital Corp. and Capital Corp. II on the closing date. Capital
Corp., Capital Corp. II, UGS Corp., and you agree that nothing in this letter,
or the awards made hereunder, is intended to or will affect your employment
status with the Company as an at-will employee. Capital Corp., Capital Corp. II,
UGS Corp., and you agree that this letter and your choice to forego the amounts
set forth in Schedule 1 hereto will not affect any of the rights and obligations
of the Company or you pursuant to the Retention Incentive Agreement with respect
to the cash amounts you chose not to forego as set forth in Schedule 1. Capital
Corp., Capital Corp. II, UGS Corp., and you further agree that nothing in this
letter is intended to or will affect any of the rights and obligations of the
Company or you pursuant to the Retention Incentive Agreement (a) if the closing
pursuant to the Purchase Agreement does not occur on or prior to June 30, 2004,
in which case this letter shall be null and void or (b) to the extent you have
not foregone 100% of your Retention Incentive hereby, in which case your
Retention Incentive Agreement shall apply to the portion of Retention Incentive
retained. All payments taxed at ordinary income rates are subject to
withholding.

<PAGE>

If the foregoing is in accordance with your understanding, please sign this
letter and return it to Capital Corp.

                                                 Very truly yours,

                                                 UGS CAPITAL CORP.

                                                               /s/ Kenneth Hao
                                                            --------------------
                                                            By: Kenneth Hao
                                                            Title:  Co-President

                                                 UGS CAPITAL CORP. II

                                                               /s/ Kenneth Hao
                                                            --------------------
                                                            By: Kenneth Hao
                                                            Title:  Co-President

                                                 UGS CORP.

                                                               /s/ Kenneth Hao
                                                            --------------------
                                                            By: Kenneth Hao
                                                            Title: Co-President

The foregoing is hereby
agreed to and accepted:

/s/ Charles C. Grindstaff
-------------------------

Letter Agreement

<PAGE>

                                   SCHEDULE 1

       Cash Retention Incentive Pursuant to Retention Incentive Agreement

<TABLE>
<CAPTION>
                                     PERCENTAGE OF   PAYMENT WITHIN 14
                                       RETENTION         DAYS OF          PAYMENT AT    PAYMENT AT
                                       INCENTIVE      DATE OF CLOSING       YEAR 1        YEAR 2        TOTAL
                                     -------------   -----------------    -----------  ------------  -----------
<S>                                  <C>             <C>                  <C>          <C>           <C>
Retention Incentive
Foregone                                 50%            $ 68,750.00       $103,125.00  $ 103,125.00  $275,000.00

Retention Incentive
Retained                                 50%            $ 68,750.00       $103,125.00  $ 103,125.00  $275,000.00
                                        ---             -----------       -----------  ------------  -----------
   TOTAL RETENTION
   INCENTIVE:                           100%            $137,500.00       $206,250.00  $206,2503.00  $550,000.00
                                        ---             -----------       -----------  ------------  -----------
</TABLE>

<PAGE>

                                   SCHEDULE 2

                                 Rollover Awards

<TABLE>
<CAPTION>
                                                                    VESTING
                                                           ----------------------------
            AWARD                 AMOUNT     PRICE/SHARE   CLOSING    YEAR 1    YEAR 2              PAYMENT
-----------------------------   -----------  -----------   --------  --------  --------  -------------------------------
<S>                             <C>          <C>           <C>       <C>       <C>       <C>
Shares of Class A Common
Stock of Capital Corp.            22,000.00     $  1       5,500.00  8,250.00  8,250.00              N/A

Options to Purchase Shares of
Class L Common Stock of
Capital Corp.                      2,444.44     $ 81         611.11    916.66    916.67              N/A

Options to Purchase Shares of
Cumulative Preferred Stock of
Capital Corp. II                     550.00     $100         137.50    206.25    206.25              N/A

Deferred Cash Bonus
(Class L Common Stock                                                                    In proportion to Class L Common
Options)                        $198,000.00      N/A          N/A       N/A       N/A        Stock Option exercise

Deferred Cash Bonus
(Cumulative Preferred Stock                                                                In proportion to Cumulative
Options)                        $ 55,000.00      N/A          N/A       N/A       N/A    Preferred Stock Option exercise
</TABLE>

<PAGE>

                                UGS CAPITAL CORP.
                         2004 MANAGEMENT INCENTIVE PLAN

            THIS AWARD AND THE SHARES ISSUED HEREUNDER 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.

      Attn: Board of Directors

Ladies and Gentlemen:

      The undersigned (i) acknowledges receipt of an award (the "Award") of
restricted stock from UGS Capital Corp. (the "Company") under the UGS Capital
Corp. and UGS Capital Corp. II 2004 Management Incentive Plan (the "Plan"),
subject to the terms set forth below and in the Plan; (ii) further acknowledges
receipt of a copy of the Plan in effect as of the date hereof; and (iii) agrees
with the Company as follows:

      1.    Effective Date. This Agreement shall take effect as of May 27, 2004.

      2.    Shares Subject to Award. The Company hereby agrees to issue, and the
            undersigned hereby agrees to accept in accordance with the terms
            hereof, that total number of shares set forth in Schedule A (the
            "Award Shares") of the Class A-4 Common Stock of the Company (the
            "Restricted Stock"). Except as otherwise specifically provided
            herein, the undersigned's rights to the Award Shares, whether vested
            or unvested, are subject to the restrictions and other provisions
            contained in the Plan and the Stockholders Agreement (both of which
            are incorporated herein by reference) in addition to such other
            restrictions, if any, as may be imposed by law. In the event of a
            conflict between the Plan and the Stockholders Agreement, the
            Stockholders Agreement shall control.

      3.    Meaning of Certain Terms. Except as otherwise defined herein, all
            initially- capitalized terms used herein shall have the same meaning
            as in the Plan and the Stockholders Agreement. The term "vest" as
            used herein with respect to any Award Share means the lapsing of the
            requirement under Section 5 below that the Award Share be forfeited
            under certain circumstances.

<PAGE>

      4.    Vesting of Shares. Any unvested Award Shares held by the undersigned
            shall vest immediately if (i) the undersigned's Employment (as
            defined in the Plan) is terminated by the Company without Cause (as
            defined in Section 5 below), or (ii) a Change of Control occurs.
            Otherwise, Award Shares shall vest in accordance with Schedule A.

      5.    Forfeiture Risk.

            a.    If the undersigned's Employment ceases for any reason other
                  than termination by the Company without Cause, any unvested
                  Award Shares shall be forfeited.

            b.    For this purpose, "Cause" means (a) material breach of any
                  agreement entered into between the undersigned and the
                  Company, (b) material misconduct, (c) material failure to
                  follow the Company's policies, directives or orders applicable
                  to Company employees holding comparable positions, (d)
                  intentional destruction or theft of Company property or
                  falsification of Company documents, (e) material failure or
                  refusal to faithfully, diligently and competitively perform
                  the usual and customary duties associated with the
                  undersigned's position, or (f) conviction of a felony or any
                  crime involving moral turpitude.

      6.    Company's Continuing Call Right. The Company shall have the right to
            purchase the Award Shares in accordance with the terms of the
            Stockholders Agreement whether or not the Shares are vested.

      7.    Transfers of Shares. Award Shares shall not be sold, transferred,
            pledged, assigned or otherwise encumbered or disposed of except in
            accordance with the Stockholders Agreement.

      8.    Legend / Certificate Retention. Award Shares shall bear such legends
            as are required by the Stockholders Agreement and as may be
            determined by the Administrator prior to issuance, and certificates
            representing unvested Award Shares shall held by the Company if the
            Administrator so specifies.

      9.    Dividends. No dividends shall be payable with respect to unvested
            Award Shares but such dividends shall be paid, without interest,
            only when, and if, said Award Shares become vested.

      10.   Certain Tax Matters. The undersigned expressly acknowledges the
            following:

            a.    The Company has strongly recommended that the undersigned
                  consider making a so-called "83(b) election" with respect to
                  the Award Shares. The undersigned has been advised to confer
                  promptly with a professional tax adviser to consider whether
                  to make such election. Any such election, to be

<PAGE>

                  effective, must be made in accordance with applicable
                  regulations and within thirty (30) days following the date of
                  "transfer" of the Shares (as determined under Section 83 of
                  the Internal Revenue Code). The undersigned hereby agrees that
                  if the undersigned makes an 83(b) election, the undersigned
                  will provide a copy of the election to the Company not later
                  than ten (10) days after filing the election with the Internal
                  Revenue Service.

            b.    The award or vesting of the Award Shares may give rise to
                  "wages" subject to withholding. The undersigned expressly
                  acknowledges and agrees that the undersigned's rights
                  hereunder are subject to the undersigned 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 undersigned also authorizes the
                  Company or its subsidiaries to withhold such amount from any
                  amounts otherwise owed to the undersigned.

<PAGE>

      By acceptance of this Award, the undersigned agrees to hereby become a
party to, and be bound by the terms of, the Stockholders Agreement and the
Participation and Registration Rights 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 Award Shares as "Purchased and
Roll-Over Shares."

                                                      Very truly yours,

                                                       /s/ Charles C. Grindstaff
                                                      --------------------------

Dated: May 27, 2004

The foregoing Restricted Stock
Award Agreement is hereby accepted:

UGS Capital Corp.

 /s/ Douglass E. Barnett
------------------------
Douglas E. Barnett
Executive Vice President

Roll-Over Restricted Stock Agreement

<PAGE>

                                   SCHEDULE A

Total number of Award Shares: 22,000.00

25% Shares vest on the date of the Award;

an additional 37.5% Shares vest on the one year anniversary of the date of the
Award and

an additional 37.5% Shares vest on the two year anniversary of the date of the
Award.

<PAGE>

                   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 ROLL-OVER OPTION AND CONDITIONAL DEFERRED CASH AWARD
                                   AGREEMENT

      This Agreement evidences a stock option granted by UGS Capital Corp., a
Delaware corporation (the "Company") and a deferred cash award conditionally
payable by UGS Corp., a Delaware corporation and an indirect subsidiary of the
Company ("UGS Corp."), 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.

            (a) Grant of Option. The Company grants to the Optionee as of May
      27, 2004, 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 L Common Stock of the
      Company, par value $.001 per share, at an exercise price of eighty-one
      dollars ($81.00) 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 May 27, 2014 (the "Final
      Exercise Date).

            (b) 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.

            (c) Vesting of Option. The Option shall vest in full immediately if
      (i) the undersigned's Employment (as defined in the Plan) is terminated by
      the Company without Cause (as defined in Section 5 below), or (ii) a
      Change of Control occurs. Otherwise, the Option shall vest in accordance
      with Schedule A.

<PAGE>

            (d) 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 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.

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

      1. If the Optionee's Employment is terminated by the Company other than
for Cause (as defined below), the Option will vest fully.

      2. To the extent the Option is neither vested prior to cessation of
Employment nor vested upon cessation in accordance with (a) above, the Option
will be forfeited immediately by the Optionee and will terminate.

      3. Subject to (d) below, to the extent the Option is vested prior to
cessation of Employment or becomes vested upon cessation in accordance with (a)
above, the Option will remain exercisable for the shorter of (i) a period of 60
days or (ii) the period ending on the Final Exercise Date, and will thereupon
terminate.

      4. The Option will immediately terminate on cessation of Employment if the
Administrator in its sole discretion determines that such cessation has resulted
for reasons that cast such discredit on the Optionee as to justify immediate
forfeiture of the Option.

      5. As used herein, "Cause" is defined as (a) material breach of any
agreement entered into between the Optionee and the Company, (b) material
misconduct, (c) material failure to follow the Company's policies, directives or
orders applicable to Company employees holding comparable positions, (d)
intentional destruction or theft of Company property or falsification of Company
documents, (e) material failure or refusal to faithfully, diligently and
competitively perform the usual and customary duties associated with your
position, or (f) conviction of a felony or any crime involving moral turpitude.

            (f) 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
      and the Stockholders Agreement, the Stockholders Agreement shall control.

<PAGE>

            (g) 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.

            (h) Transfer of Option. This Option is not transferable by the
      Optionee other than in accordance with the Stockholders Agreement.

            (i) 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.

            (j) Conditional Deferred Cash Award. The Company shall cause UGS
      Corp. to pay a conditional deferred cash Award to the Optionee in
      conjunction with the exercise of this Option. The conditional deferred
      cash Award will be paid only if, when, and to the extent that, the Option
      is exercised, and if the Option is forfeited as provided in Section 5
      above, the deferred cash award shall be forfeited. The total amount of
      cash that will be paid if the Option is exercised in full is set forth in
      Schedule B. The amount of cash that will be payable upon any partial
      exercise of the Option shall be determined by multiplying the amount set
      forth in Schedule B by a fraction, the numerator of which is the number of
      Option Shares as to which the Option is then being exercised and the
      denominator of which is the total number of Option Shares as to which the
      Option was granted.

      By acceptance of this Option and conditional deferred cash award, the
undersigned agrees to hereby become a party to, and be bound by the terms of,
the Stockholders Agreement and the Participation and Registration Rights
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 "Purchased and Roll-Over Shares."

<PAGE>

      Executed as of the 27th day of May, 2004.

UGS Capital Corp.                        UGS Capital Corp.

                                          /s/ Douglas E. Barnett
                                         ---------------------------
                                         Douglas E. Barnett
                                         Executive Vice President

UGS Corp.                                UGS Corp.

                                          /s/ Douglas E. Barnett
                                         ---------------------------
                                         Douglas E. Barnett
                                         Executive Vice President

Optionee                                  /s/ Charles C. Grindstaff
                                         ---------------------------
                                         Name: Charles C. Grindstaff

Rollover Class L Option Agreement

<PAGE>

                                   SCHEDULE A

                                VESTING SCHEDULE

Total number of Option Shares: 2,444.00

25%Shares are exercisable on or after the grant of the Option;

an additional 37.5% Shares are exercisable on and after the one year anniversary
of the date of the Option; and

an additional 37.5% Shares are exercisable on and after the two year anniversary
                           of the date of the Option.

<PAGE>

                                   SCHEDULE B

                         CONDITIONAL DEFERRED CASH AWARD

Total amount of conditional deferred cash award: $198,000.00

<PAGE>

                   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. II 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. II
       NON-QUALIFIED ROLL-OVER OPTION AND CONDITIONAL DEFERRED CASH AWARD
                                    AGREEMENT

      This Agreement evidences a stock option granted by UGS Capital Corp. II, a
Delaware corporation (the "Company") and a deferred cash award conditionally
payable by UGS Corp., a Delaware corporation and an indirect subsidiary of the
Company ("UGS Corp."), 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 May 27, 2004,
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 Cumulative Preferred Stock of the Company, par value $.001
per share, at an exercise price of one-hundred dollars ($100.00) per share. The
Option evidenced by this Agreement is intended to be a non-qualified option and
is granted to 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 May 27,
2014 (the "Final Exercise Date).

      2. 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.

      3. Vesting of Option. The Option shall vest in full immediately if (i) the
undersigned's Employment (as defined in the Plan) is terminated by the Company
without Cause (as defined in Section 5 below), or (ii) a Change of Control
occurs. Otherwise, the Option shall vest in accordance with Schedule A.

<PAGE>

      4. 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 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.

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

      (a)   If the Optionee's Employment is terminated by the Company other than
            for Cause (as defined below), the Option will vest fully.

      (b)   To the extent the Option is neither vested prior to cessation of
            Employment nor vested upon cessation in accordance with (a) above,
            the Option will be forfeited immediately by the Optionee and will
            terminate.

      (c)   Subject to (d) below, to the extent the Option is vested prior to
            cessation of Employment or becomes vested upon cessation in
            accordance with (a) above, the Option will remain exercisable for
            the shorter of (i) a period of 60 days or (ii) the period ending on
            the Final Exercise Date, and will thereupon terminate.

      (d)   The Option will immediately terminate on cessation of Employment if
            the Administrator in its sole discretion determines that such
            cessation has resulted for reasons that cast such discredit on the
            Optionee as to justify immediate forfeiture of the Option.

      (e)   As used herein, "Cause" is defined as (a) material breach of any
            agreement entered into between the Optionee and the Company, (b)
            material misconduct, (c) material failure to follow the Company's
            policies, directives or orders applicable to Company employees
            holding comparable positions, (d) intentional destruction or theft
            of Company property or falsification of Company documents, (e)
            material failure or refusal to faithfully, diligently and
            competitively perform the usual and customary duties associated with
            your position, or (f) conviction of a felony or any crime involving
            moral turpitude.

      6. 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

<PAGE>

the event of a conflict between the Plan and the Stockholders Agreement, the
Stockholders Agreement shall control.

      7. 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.

      8. Transfer of Option. This Option is not transferable by the Optionee
other than in accordance with the Stockholders Agreement.

      9. 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.

      10. Conditional Deferred Cash Award. The Company shall cause UGS Corp. to
pay a conditional deferred cash Award to the Optionee in conjunction with the
exercise of this Option. The conditional deferred cash Award will be paid only
if, when, and to the extent that, the Option is exercised, and if the Option is
forfeited as provided in Section 5 above, the deferred cash award shall be
forfeited. The total amount of cash that will be paid if the Option is exercised
in full is set forth in Schedule B. The amount of cash that will be payable upon
any partial exercise of the Option shall be determined by multiplying the amount
set forth in Schedule B by a fraction, the numerator of which is the number of
Option Shares as to which the Option is then being exercised and the denominator
of which is the total number of Option Shares as to which the Option was
granted.

      By acceptance of this Option and conditional deferred cash award, the
undersigned agrees to hereby become a party to, and be bound by the terms of,
the Stockholders Agreement and the Participation and Registration Rights
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 "Purchased and Roll-Over Shares."

<PAGE>

      Executed as of the 27th day of May, 2004.

UGS Capital Corp. II                  UGS Capital Corp. II

                                         /s/ Douglas E. Barnett
                                      ----------------------------
                                      Douglas E. Barnett
                                      Executive Vice President

UGS Corp.                             UGS Corp.

                                         /s/ Douglas E. Barnett
                                      ----------------------------
                                      Douglas E. Barnett
                                      Executive Vice President

Optionee                                 /s/ Charles C. Grindstaff
                                      ----------------------------
                                      Name: Charles C. Grindstaff

Rollover Midco Option Agreement

<PAGE>

                                   SCHEDULE A

                                VESTING SCHEDULE

Total number of Option Shares: 550.00

25% Shares are exercisable on or after the grant of the Option;

an additional 37.5% Shares are exercisable on and after the one year anniversary
of the grant of the Option; and

an additional 37.5% Shares are exercisable on and after the two year anniversary
of the grant of the Option.

Rollover Midco Option Agreement
<PAGE>

                                   SCHEDULE B

                         CONDITIONAL DEFERRED CASH AWARD

Total amount of conditional deferred cash award: $55,000.00

Rollover Midco Option Agreement<PAGE>

                                                                   EXHIBIT 10.14

================================================================================

                      AMENDED & RESTATED INVESTOR AGREEMENT

                                      among

                                UGS Capital Corp.

                              UGS Capital Corp. II

                               UGS Holdings, Inc.

                                    UGS Corp.

                                       and

                                  the Investors

                            Dated as of May 24, 2004

================================================================================

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<S>                                                                                                 <C>
1.    EFFECTIVENESS; DEFINITIONS..................................................................   2
      1.1.  Closing...............................................................................   2
      1.2.  Definitions...........................................................................   2
2.    VOTING AGREEMENT............................................................................   2
      2.1.  Certain Actions.......................................................................   2
            2.1.1.  Annual Budget.................................................................   2
            2.1.2.  Change of Control.............................................................   2
            2.1.3.  Indebtedness, etc.............................................................   2
            2.1.4.  Sale of Assets................................................................   2
            2.1.5.  Acquisition of Assets.........................................................   2
            2.1.6.  Merger, Consolidation.........................................................   3
            2.1.7.  Prepayment of Debt, Repurchase of Securities, Issuance of Dividends...........   3
            2.1.8.  Initial Public Offering.......................................................   3
            2.1.9.  Board of Directors............................................................   3
            2.1.10. Acquisition Documents.........................................................   3
            2.1.11. Chief Executive Officer.......................................................   3
            2.1.12. Management Equity Program.....................................................   4
            2.1.13. Joint Ventures and Alliances..................................................   4
            2.1.14. Charter and By-laws...........................................................   4
      2.2.  Other Restricted Actions..............................................................   4
      2.3.  Committees............................................................................   6
      2.4.  Midco's and OpCo's Directors..........................................................   6
      2.5.  The Company and Midco.................................................................   6
      2.6.  Period................................................................................   6
3.    TRANSFER RESTRICTIONS.......................................................................   6
      3.1.  Permitted Public Transfers and Block Sales............................................   6
            3.1.1. Public Transfers...............................................................   6
            3.1.2. Block Sales....................................................................   7
      3.2.  Permitted Transferees.................................................................   7
      3.3.  Distributions to Limited Partners or Members..........................................   8
      3.4.  Transfers and Holder Lock-up..........................................................   8
4.    POST-IPO "TAG ALONG" RIGHTS.................................................................   8
      4.1.  Tag Along.............................................................................   8
            4.1.1. Notice.........................................................................   8
            4.1.2. Exercise.......................................................................   9
            4.1.3. Irrevocable Offer..............................................................   9
            4.1.4. Reduction of Shares Sold.......................................................  10
            4.1.5. Additional Compliance..........................................................  10
      4.2.  Miscellaneous.........................................................................  11
            4.2.1. Certain Legal Requirements.....................................................  11
            4.2.2. Further Assurances.............................................................  11
            4.2.3. Sale Process...................................................................  12
            4.2.4. Treatment of Options, Warrants and Convertible Securities......................  12
            4.2.5. Expenses.......................................................................  12
</TABLE>

                                       -i-
<PAGE>

<TABLE>
<S>                                                                                                 <C>
             4.2.6. Closing.......................................................................  12
5.    COVENANTS...................................................................................  12
      5.1.   Information Rights...................................................................  13
             5.1.1. Historical Financial Information..............................................  13
             5.1.2. Period........................................................................  13
      5.2.   Confidentiality......................................................................  13
      5.3.   Directors' and Officers' Insurance...................................................  14
6.    REMEDIES....................................................................................  14
      6.1.   Generally............................................................................  14
7.    LEGENDS.....................................................................................  14
      7.1.   Restrictive Legend...................................................................  14
      7.2.   Stop Transfer Instruction............................................................  15
8.    AMENDMENT, TERMINATION, ETC.................................................................  15
      8.1.   Oral Modifications...................................................................  15
      8.2.   Written Modifications................................................................  15
      8.3.   Withdrawal from Agreement............................................................  15
      8.4.   Effect of Termination................................................................  16
9.    DEFINITIONS.................................................................................  16
      9.1.   Certain Matters of Construction......................................................  16
      9.2.   Definitions..........................................................................  16
10.   MISCELLANEOUS...............................................................................  22
      10.1.  Authority:  Effect...................................................................  22
      10.2.  Notices..............................................................................  22
      10.3.  Binding Effect, Etc..................................................................  24
      10.4.  Descriptive Heading..................................................................  24
      10.5.  Counterparts.........................................................................  24
      10.6.  Severability.........................................................................  24
      10.7.  No Recourse..........................................................................  25
      10.8.  Aggregation of Shares................................................................  25
      10.9.  Obligations of Company, Midco, Holdings and OpCo.....................................  25
      10.10. Indemnity and Liability..............................................................  25
11.   GOVERNING LAW...............................................................................  26
      11.1.  Governing Law........................................................................  26
      11.2.  Consent to Jurisdiction..............................................................  26
      11.3.  WAIVER OF JURY TRIAL.................................................................  27
      11.4.  Exercise of Rights and Remedies......................................................  27
</TABLE>

                                      -ii-
<PAGE>

                     AMENDED AND RESTATED INVESTOR AGREEMENT

      This Amended and Restated Investor Agreement (the "Agreement") is made as
of May 24, 2004 by and among:

      (i)   UGS Capital Corp., a Delaware corporation (formerly known as BSW
            Holdings, Inc.) (together with its successors and permitted assigns,
            the "Company");

      (ii)  UGS Capital Corp. II, a Delaware corporation (together with its
            successors and permitted assigns, "Midco");

      (iii) UGS Holdings, Inc., a Delaware corporation (together with its
            successors and permitted assigns, "Holdings");

      (iv)  UGS Corp., a Delaware corporation (together with its successors and
            permitted assigns, "AcquisitionCo"); and

      (v)   each Person executing this Agreement and listed as an Investor on
            the signature pages hereto (collectively with their Permitted
            Transferees, the "Investors").

                                    RECITALS

      1.    The Company has been formed for the purpose of acquiring (the
"Acquisition"), indirectly through one or more subsidiaries, pursuant to a Stock
Purchase Agreement, dated as of March 12, 2004, as amended (the "Acquisition
Agreement"), between Electronic Data Systems Corporation (the "Seller"), the
Company and UGS PLM Solutions Inc. ("OpCo"), all outstanding shares of UGS PLM
Solutions Inc.

      2.    In connection with the execution of the Acquisition Agreement,
certain of the Investors (the "Initial Investors") and the Company entered into
an Investor Agreement dated as of March 12, 2004 (the "Original Investor
Agreement").

      3.    Upon the closing of the transactions contemplated by the Acquisition
Agreement, the Common Stock (as defined below) of the Company, the common stock
and the Preferred Stock (as defined below) of Midco and all Options (as defined
below) will be held as set forth on Schedule I hereto. In connection with the
purchase of such securities, the Company, Midco, Holdings, AcquisitionCo, the
Investors and certain other Stockholders of the Company and Midco have entered
into a stockholders agreement dated as of the date hereof (the "Stockholders
Agreement") and a participation and registration rights agreement dated as of
the date hereof (the "Participation and Registration Rights Agreement").

      4.    The Initial Investors and the Company wish to add additional parties
and to amend and restate the Original Investor Agreement in its entirety.

                                    AGREEMENT

      Therefore, the parties hereto hereby agree as follows:

<PAGE>

1.    EFFECTIVENESS; DEFINITIONS.

      1.1.  Closing. This Agreement shall become effective upon the initial
purchase of Stock by the Investors in connection with the consummation of the
closing under the Acquisition Agreement (the "Closing").

      1.2.  Definitions. Certain terms are used in this Agreement as
specifically defined herein. These definitions are set forth or referred to in
Section 8 hereof.

2.    VOTING AGREEMENT.

      2.1.  Certain Actions. In addition to any other approval required by the
certificate of incorporation of the Company, Midco, Holdings or AcquisitionCo or
by applicable law, the approval of the Requisite Stockholder Majority shall be
required to do any of the following, and the Company, Midco, Holdings and
AcquisitionCo shall not, and shall cause their respective subsidiaries not to,
take any of the following actions without the approval of the Requisite
Stockholder Majority:

            2.1.1.  Annual Budget. Approve the annual operating budget of the
      Company and its subsidiaries, modify in any material respect any such
      budget or take any action that is or would be reasonably likely to be in
      material variance therefrom.

            2.1.2.  Change of Control. Effect a Change of Control transaction.

            2.1.3.  Indebtedness, etc. Other than a draw down under a debt
      agreement entered into prior to the date of such draw down the execution
      of which was previously approved by the Requisite Stockholder Majority,
      incur any indebtedness, assume, guarantee, endorse or otherwise as an
      accommodation become responsible for the obligations of any other Person
      (provided that the Company or any of its direct or indirect subsidiaries
      may provide cross-guarantees for any indebtedness that has been approved
      under this Section 2.1.3), enter into any agreement under which it may
      incur indebtedness in the future, or make any loan, advance or capital
      contribution to any Person (other than the Company or any of its
      subsidiaries), in each case outstanding at any time, or enter into or
      effect any transaction or series of related transactions involving the
      issuance by the Company or any of its subsidiaries of any debt or equity
      securities, including rights to acquire any debt or equity securities, in
      an aggregate amount in excess of $25,000,000 for all such matters.

            2.1.4.  Sale of Assets. Enter into or effect any transaction or
      series of related transactions, involving the sale, lease, exchange or
      other disposal by the Company or any of its subsidiaries of any assets for
      consideration having a fair market value (as reasonably determined by the
      Board) in excess of $25,000,000, other than (i) transactions between and
      among any of the Company and its direct or indirect wholly-owned
      subsidiaries and (ii) sales of products in the ordinary course of
      business.

            2.1.5.  Acquisition of Assets. Enter into or effect any transaction
      or series of related transactions, involving the purchase, rent, license,
      exchange or other acquisition

                                      -2-
<PAGE>

      by the Company or any of its subsidiaries of any assets for consideration
      having a fair market value (as reasonably determined by the Board) in
      excess of $25,000,000, other than purchases, rentals, licenses, exchanges
      or other acquisitions of equipment and supplies in the ordinary course of
      business.

            2.1.6.  Merger, Consolidation. Enter into or effect any transaction
      or series of related transactions, involving the merger or consolidation
      of the Company or any of its subsidiaries with or into any Person, the
      assets that are the subject of such merger or consolidation having a fair
      market value (as reasonably determined by the Board) in excess of
      $25,000,000, other than a merger or consolidation of a direct or indirect
      wholly-owned subsidiary of the Company with or into the Company or another
      direct or indirect wholly-owned subsidiary of the Company.

            2.1.7.  Prepayment of Debt, Repurchase of Securities, Issuance of
      Dividends. Enter into or effect any transaction or series of related
      transactions in connection with or involving (i) the voluntary prepayment
      of debt of the Company or any of its subsidiaries outside the ordinary
      course of business, (ii) the repurchase of securities of the Company or
      any of its subsidiaries other than any such repurchases pursuant to the
      Company's Call Right or up to an aggregate of $5,000,000 per transaction
      or series of related transactions or (iii) the declaration and payment of
      dividends by the Company or any of its subsidiaries in excess of
      $25,000,000 (other than dividends payable to the Company or any of its
      wholly-owned subsidiaries).

            2.1.8.  Initial Public Offering. Register any equity securities
      under the Securities Act in connection with, or consummate, an Initial
      Public Offering, including an Initial Public Offering initiated pursuant
      to Section 3.1 of the Participation and Registration Rights Agreement or
      register any equity securities under the Securities Act of any subsidiary
      of the Company; provided, however, that no such approval shall be required
      for the inclusion of any Registrable Securities (as defined in the
      Participation and Registration Rights Agreement) in any registration
      statement relating to an Initial Public Offering pursuant to the exercise
      by the holders thereof of piggyback registration rights under Section 3.2
      of the Participation and Registration Rights Agreement, if applicable.

            2.1.9.  Board of Directors. Expand the number of members of the
      Board to more than ten.

            2.1.10. Acquisition Documents. Amend or waive any material
      provisions of or otherwise terminate (i) the Acquisition Agreement and any
      ancillary documents entered into in connection with the Acquisition,
      provided, that any waiver of or amendment to management fees payable by
      the Company or any of its subsidiaries (i) that increases such management
      fees shall require the consent of each Investor Group or (ii) that
      decreases such management fees shall require the consent of each Investor
      Group adversely affected thereby.

            2.1.11. Chief Executive Officer. Hire or remove, with or without
      cause, the chief executive officer of the Company or the chief executive
      officer of OpCo from time to time.

                                      -3-
<PAGE>

            2.1.12. Management Equity Program. Adopt or make a material
      amendment to any management equity program.

            2.1.13. Joint Ventures and Alliances. Enter into any joint venture
      or business alliance other than in the ordinary course of business with an
      aggregate value in excess of $25,000,000.

            2.1.14. Charter and By-laws. Amend or waive any material provisions
      of the certificate of incorporation or by-laws of the Company or any of
      its subsidiaries.

      2.2.  Other Restricted Actions.

            2.2.1.  Any transaction between the Company or one of its
      subsidiaries, on the one hand, and a member of an Investor Group or one of
      its Affiliates, on the other, shall require the consent of the Principal
      Investor Majority unless such transaction is entered into in the ordinary
      course of business of the Company or such subsidiary and is negotiated by
      employees of the Company or such subsidiary that are not Affiliates of
      such Investor Group and is on terms comparable to those that would be
      received on an arms' length basis.

            2.2.2.  The approval of each Sponsor Group shall be required to
      amend, modify or waive any of the following:

                    (i) any provision of Section 3 (Transfer Restrictions),
            Section 5 (Holder Lock-Up) or Section 8 (Legends) of the
            Stockholders Agreement that imposes additional transfer restrictions
            on Investors,

                    (ii) any provision of Section 4 of the Stockholders
            Agreement (Tags and Drags) or Section 4 of this Agreement that (x)
            materially reduces the Investors' rights as a Participating Seller
            (or their right to become a Participating Seller) under Section 4.1
            of the Stockholders Agreement or this Agreement or (y) increases the
            Investors' obligations as a Participating Seller (or adversely
            modifies the circumstances under which they can be required to be a
            Participating Seller),

                    (iii) the maximum Purchase Price Value of the shares which
            an Investor Group's Designated Investor(s) may withdraw pursuant to
            the proviso in the first sentence of Section 9.3 of the Stockholders
            Agreement that decreases such maximum,

                    (iv) any provision of the definition of Investor Group in
            the Stockholders Agreement, the Participation and Registration
            Rights Agreement or this Agreement that narrows such definition so
            as to raise the threshold criteria to remain an Investor Group,

                    (v) (x) the Purchase Price Value threshold set forth in
            Section 5.1 of this Agreement (Information Rights) that increases
            such threshold or (y) that reduces the Information Rights under
            Section 5.1,

                                      -4-
<PAGE>

                  (vi) the definitions of Participation Shares or Participation
            Portion in the Participation and Registration Rights Agreement that
            reduces the rights of an Investor to participate in issuances of
            securities pursuant to Section 2 thereof,

                  (vii) Section 3.1.1 of the Participation and Registration
            Rights Agreement that increases the Purchase Price Value threshold
            required (a) to set the minimum dollar threshold for registrations
            pursuant to Section 3.1.1 thereof or (b) to request a shelf offering
            pursuant to Section 3.1.1 thereof,

                  (viii) the definitions of Minimum Director Share Amount or
            Minimum Total Combined Investment in the certificate of
            incorporation of the Company that increases the Purchase Price Value
            thresholds set forth therein or any amendment to Section 4.10.3 of
            such certificate of incorporation,

                  (ix) Section 4.5 of the certificate of incorporation of the
            Company that (a) increases the minimum thresholds of Total Combined
            Investment or Director Shares Amount set forth therein or (b)
            reduces the number of directors to which such minimum thresholds
            entitle an Investor Group,

                  (x) Section 11.8 of the Stockholders Agreement, Section 8.8 of
            the Participation and Registration Rights Agreement or Section 10.8
            hereof,

                  (xi) Section 10.10 of this Agreement that materially reduces
            the indemnification rights set forth therein, or

                  (xii) The certificate of incorporation of the Company to
            effect a reverse stock split in which all of the Stock held by any
            Investor is converted into the right to receive cash in lieu of a
            fractional share.

      provided, that any amendment to the definitions used in such provisions
      (only to the extent any such amendment would have an effect contrary to
      the intent set forth in any of clauses (i) through (xii) immediately
      above) shall also require the consent of each Sponsor Group; provided,
      further, that except with respect to matters set forth in clauses (i)
      through (xii) above, the consent of any Investor shall be required for any
      amendment to the Stockholders Agreement, the Participation and
      Registration Rights Agreement, the certificate of incorporation of the
      Company or this Agreement that discriminates against the rights of such
      Investor in a manner materially different from the other Investors
      (provided, that it is understood and agreed that, for the purposes of
      interpreting and enforcing this amendment and waiver provision, amendments
      and/or waivers will not be deemed to "discriminate against" any individual
      Investor in a "manner materially different" from any other Investors
      simply because any one Investor (i) owns or holds more or less Shares than
      any other Investors, (ii) invested more or less money in the Company than
      any other Investors or (iii) has greater or lesser voting rights or powers
      than any other Investors); provided, however, that notwithstanding any
      provision to the contrary, the certificate of incorporation of the Company
      may be amended in any way in connection with the Initial Public Offering
      so long as the Requisite Stockholder Majority

                                      -5-
<PAGE>

      consents to such amendment and such amendment does not discriminate
      against any Sponsor Group that has not consented thereto.

      2.3.  Committees. The Company shall, and each Investor shall use its best
efforts to, cause the Board to maintain the following committees: (i) an Audit
Committee, (ii) a Compensation Committee and (iii) any other committee as the
Board shall determine in its discretion; provided, that the appointment of an
executive committee and/or the delegation of board authority to a committee
shall be accomplished in accordance with the by-laws of the Company. Without the
consent of a majority of each of the Class A-1 Directors, Class A-2 Directors
and Class A-3 Directors, if any, the composition of any Board committee shall be
comprised of one Class A-1 Director, one Class A-2 Director and one Class A-3
Director.

      2.4.  Midco's and OpCo's Directors. The Company will cause the boards of
directors of Midco and OpCo to consist at all times of the same members as the
Board of the Company at such time; provided, that the Requisite Stockholder
Majority may consent to a different composition of the board of directors of
Midco or OpCo; provided, further, that the number of director designees of each
Investor Group with respect to any such other board composition shall be in
proportion to the number of director designees of each Investor Group with
respect to the Board of the Company and each Investor Group with a director
designee on the Board of the Company shall have the right to designate at least
one member to each such board of directors unless no Investor Group has any
director designees on such board. OpCo shall, and the Company shall use its best
efforts to, cause the board of directors of OpCo to maintain at all times such
committees as the Company at such time, with the same member composition;
provided, that the Requisite Stockholder Majority may consent to a different
composition of such committees.

      2.5.  The Company and Midco. The Company and Midco will not give effect to
any action by any Investor or any other Person which is in contravention of this
Section 2.

      2.6.  Period. Each of the foregoing provisions of this Section 2 shall
expire on the earlier of (a) a Change of Control and (b) with respect to any
particular provision, the last date permitted by applicable law (including the
rules of the Commission and any exchange upon which equity securities of the
Company might be listed).

3.    TRANSFER RESTRICTIONS.

      3.1.  Permitted Public Transfers and Block Sales. No Investor shall
Transfer any or all of its Shares after the closing of the Initial Public
Offering, pursuant to Rule 144 or a block sale to a financial institution in the
ordinary course of its trading business, in each case other than in compliance
with Section 3.1.1 hereof and Section 3.3 of the Stockholders Agreement. Shares
Transferred pursuant to this Section 3.1 shall conclusively be deemed thereafter
not to be Shares under this Agreement.

            3.1.1. Public Transfers. From time to time after the Initial Public
      Offering, the Requisite Stockholder Majority may determine to require the
      Investors to make reasonable efforts to coordinate their efforts to
      Transfer Shares pursuant to Rule 144 ("144 Coordination") or to
      discontinue such requirement. The Requisite Stockholder

                                      -6-
<PAGE>

      Majority shall give notice of any such determination to each Investor. At
      any time after a notice requiring 144 Coordination has been given and
      before a notice discontinuing such requirement has been given, the
      Investors will make reasonable efforts to coordinate their efforts to
      Transfer Shares pursuant to Rule 144, and each Specified Holder promptly
      shall notify each Related Stockholder (i) when it has commenced a
      measurement period for purposes of the Rule 144 group volume limit in
      connection with a Sale that is subject to such limit and (ii) what the
      volume limit for that measurement period, determined as of its
      commencement, will be. In the event of 144 Coordination, each Related
      Stockholder shall be entitled to effect Sales that are subject to the Rule
      144 group volume limit pro rata during the applicable measurement period
      based on its percentage ownership of Shares held by all holders of Shares
      at the start of such measurement period. In the event any Related
      Stockholder agrees to forego its full pro rata share of the Rule 144 group
      volume limit by written notice to the Specified Holder and all other
      Related Stockholders, the remainder shall be re-allocated pro rata among
      the Specified Holder and all other Related Stockholders in like manner
      (except that the Shares held by such forfeiting Related Holder at the
      start of such measurement period shall be excluded from such calculation).
      The provisions of this Section 3.1.1 shall not apply to any Transfer of
      Shares (i) in a Public Offering, (ii) not subject to volume limitation
      under Rule 144 or (iii) at any time with respect to which the Requisite
      Stockholder Majority has determined not to coordinate sales pursuant to
      this Section 3.1.1. For purposes of this Section 3.1.1, a "Specified
      Holder" means a holder of Shares whose sale of Shares pursuant to Rule 144
      would be subject to aggregation with another Stockholder (such other
      Stockholder being a "Related Stockholder"). Notwithstanding the foregoing,
      an Investor may opt out of 144 Coordination with respect to any period of
      time if such Investor delivers a notice to the other Investors irrevocably
      committing not to Transfer Shares pursuant to Rule 144 during such period.

            3.1.2. Block Sales. After the Initial Public Offering, each Investor
      (the "Initiating Block Transferor") shall notify each other Investor (the
      "Potential Block Participant") when it plans to Transfer any or all of its
      Shares pursuant to a block sale to a financial institution in the ordinary
      course of its trading business. Each Potential Block Participant shall be
      entitled to participate in such block transfer pro rata based on its
      percentage ownership of Shares held by all Investors at the time of such
      proposed transfer. In the event any Potential Block Participant agrees to
      forego its full pro rata share of the block sale by written notice to the
      Initiating Block Transferor and all other Potential Block Participants,
      the remainder shall be re-allocated pro rata among the Initiating Block
      Transferor and all other Potential Block Participants in like manner
      (except that the Shares held by such forfeiting Potential Block
      Participant shall be excluded from such calculation).

      3.2.  Permitted Transferees. Any Permitted Transferee receiving Shares
from an Investor in a Transfer pursuant to Section 3.1.1, 3.1.4(b) or 3.1.5 of
the Stockholders Agreement shall be subject to the terms and conditions of, and
be entitled to enforce, this Agreement to the same extent, and in the same
capacity, as the Investor that Transfers the Shares to such Permitted Transferee
as if such Permitted Transferee were such Investor. Prior to the initial
Transfer of any Shares to any Permitted Transferee pursuant to Section 3.1.1,
3.1.4(b) or 3.1.5 of the Stockholders Agreement hereof, and as a condition
thereto, each holder of Shares effecting such

                                      -7-
<PAGE>

Transfer shall (i) cause such Permitted Transferee to deliver to the Company and
each of the Investors (other than the transferor) its written agreement, in form
and substance reasonably satisfactory to the Company, to be bound by the terms
and conditions of this Agreement to the extent described in the preceding
sentence and (ii) remain directly liable for the performance by the Permitted
Transferee of all obligations of such Permitted Transferee under this Agreement.
Shares transferred to any Person (other than a Permitted Transferee receiving
Shares from an Investor in a Transfer pursuant to Section 3.1.1, 3.1.4(b) or
3.1.5 of the Stockholders Agreement) shall cease to be Shares for all purposes
of this Agreement.

      3.3.  Distributions to Limited Partners or Members. Each Investor agrees
that, until the earlier of (a) 30 months after the Initial Public Offering or
(b) the date on which the Sponsor Group of which such Investor is a member
beneficially owns less than 10% of the outstanding Common Stock, it shall (i)
provide reasonable prior notice to each of the other Investors prior to the
distribution of its then unregistered Shares to its partners, members or
stockholders and (ii) use reasonable efforts to coordinate in good faith the
timing and amount of any such distributions with the other Investors' plans to
distribute Shares to their partners, members or stockholders or to sell Shares
pursuant to Rule 144 or otherwise.

      3.4.  Transfers and Holder Lock-up. No Investor shall Transfer Shares in a
transaction that would have violated Section 5 of the Stockholders Agreement
(Holder Lock-up) or a lock-up agreement entered into pursuant thereto but for
the fact that such Investor has been granted permission to make such Transfer or
has been released from such Section or such lock-up agreement unless each
Investor is granted similar permission or has been similarly released.

4.    POST-IPO "TAG ALONG" RIGHTS. Any Investor that wishes to Transfer any or
all of its Shares after the closing of an Initial Public Offering in a
transaction that is subject to Section 3.1.5 of the Stockholders Agreement
(Other Private Transfers), other than a Transfer by a Participating Seller
pursuant to the exercise of such Participating Seller's rights under this
Section 4, shall first comply with this Section 4. Any Shares Transferred
pursuant to this Section 4 to a Person other than an Investor or Permitted
Transferee shall conclusively be deemed thereafter not to be Shares under this
Agreement.

      4.1.  Tag Along.

            4.1.1. Notice. The Prospective Selling Stockholder shall, prior to
      any such proposed Transfer, furnish a written notice (the "Tag Along
      Notice") to each of the other Investors (each, a "Tag Along Holder"). The
      Tag Along Notice shall include:

                  (a)   the principal terms and conditions of the proposed Sale,
            including (i) the number and class of the Shares to be purchased
            from the Prospective Selling Stockholder, (ii) the fraction(s)
            expressed as a percentage, determined by dividing the number of
            Shares of each class to be purchased from the Prospective Selling
            Stockholder by the total number of Shares of each such class held by
            the Prospective Selling Stockholder (for each class, the "Tag Along
            Sale Percentage") (it being understood that the Company shall
            reasonably cooperate with the Prospective Selling Stockholder in
            respect of the determination of each applicable Tag Along Sale
            Percentage), (iii) the per share purchase price or the formula by

                                      -8-
<PAGE>

            which such price is to be determined and the payment terms,
            including a description of any non-cash consideration sufficiently
            detailed to permit valuation thereof, (iv) the name and address of
            each Prospective Buyer and (v) the proposed Transfer date; and

                  (b)   an invitation to each Tag Along Holder to make an offer
            to include in the proposed Sale to the applicable Prospective
            Buyer(s) Shares of the same class(es) being sold by the Prospective
            Selling Stockholder held by such Tag Along Holder (not in any event
            to exceed the Tag Along Sale Percentage of the total number of
            Shares (other than unvested Shares) of the applicable class held by
            such Tag Along Holder), on the same terms and conditions (subject to
            Section 4.2.4 in the case of Options, Warrants and Convertible
            Securities and subject to Section 4.2.1 under all circumstances),
            with respect to each Share Sold, as the Prospective Selling
            Stockholder shall Sell each of its Shares. For purposes of this
            Section 4, the Class A Common Stock will be treated as a single
            class and, subject to Section 4.2.4, all Options and Warrants will
            be treated as the same class of Shares for which they may be
            exercised.

            4.1.2. Exercise. Within ten business days after the date of delivery
      of the Tag Along Notice (such date the "Tag Along Deadline"), each Tag
      Along Holder desiring to make an offer to include Shares in the proposed
      Sale (each a "Participating Seller" and, together with the Prospective
      Selling Stockholder, collectively, the "Tag Along Sellers") shall furnish
      a written notice (the "Tag Along Offer") to the Prospective Selling
      Stockholder indicating the number of Shares which such Participating
      Seller desires to have included in the proposed Sale (subject to the
      limitation set forth in Section 4.1.1(b)). Each Tag Along Holder who does
      not make a Tag Along Offer in compliance with the above requirements,
      including the time period, shall be deemed to have waived all of such
      holder's rights to participate in such Sale, and the Tag Along Sellers
      shall thereafter be free to Sell to the Prospective Buyer, at a per share
      price no greater than the per share price set forth in the Tag Along
      Notice and on other principal terms and conditions which are not
      materially more favorable to the Tag Along Sellers than those set forth in
      the Tag Along Notice, without any further obligation to such non-accepting
      Tag Along Holder pursuant to this Section 4.1.

            4.1.3. Irrevocable Offer. The offer of each Participating Seller
      contained in such holder's Tag Along Offer shall be irrevocable, and, to
      the extent such offer is accepted, such Participating Seller shall be
      bound and obligated to Sell in the proposed Sale on the same terms and
      conditions, with respect to each Share Sold (subject to Section 4.2.4 in
      the case of Options, Warrants and Convertible Securities), as the
      Prospective Selling Stockholder, up to such number of Shares as such
      Participating Seller shall have specified in such holder's Tag Along
      Offer; provided, however, that if the principal terms of the proposed Sale
      change with the result that the per share price shall be less than the per
      share price set forth in the Tag Along Notice or the other principal terms
      and conditions shall be materially less favorable to the Tag Along Sellers
      than those set forth in the Tag Along Notice, the Prospective Seller shall
      provide written notice thereof to each Participating Seller and each
      Participating Seller shall be permitted to withdraw the offer contained in
      such holder's Tag Along Offer by written notice to the Prospective

                                      -9-
<PAGE>

      Selling Stockholder and upon such withdrawal shall be released from such
      holder's obligations thereunder.

            4.1.4. Reduction of Shares Sold. The Prospective Selling Stockholder
      shall attempt to obtain the inclusion in the proposed Sale of the entire
      number of Shares which each of the Tag Along Sellers requested to have
      included in the Sale (as evidenced in the case of the Prospective Selling
      Stockholder by the Tag Along Notice and in the case of each Participating
      Seller by such Participating Seller's Tag Along Offer). In the event the
      Prospective Selling Stockholder shall be unable to obtain the inclusion of
      such entire number of Shares in the proposed Sale, the number of Shares to
      be sold in the proposed Sale shall be allocated among the Tag Along
      Sellers in proportion, as nearly as practicable, as follows:

                  (i)   there shall be first allocated to each Tag Along Seller
            a number of Shares equal to the lesser of (A) the number of Shares
            offered (or proposed, in the case of the Prospective Selling
            Stockholder) to be included by such Tag Along Seller in the proposed
            Sale pursuant to this Section 4.1, and (B) a number of Shares equal
            to such Tag Along Seller's Pro Rata Portion; and

                  (ii)  the balance, if any, not allocated pursuant to clause
            (a) above shall be allocated to the Prospective Selling Stockholder,
            or in such other manner as the Prospective Selling Stockholder may
            otherwise agree (it being understood that no Tag Along Seller will
            be obligated to sell more Shares than it offered to sell in the
            proposed Sale).

            4.1.5. Additional Compliance. If prior to consummation, the terms of
      the proposed Sale shall change with the result that the per share price to
      be paid in such proposed Sale shall be greater than the per share price
      set forth in the Tag Along Notice or the other principal terms of such
      proposed Sale shall be materially more favorable to the Tag Along Sellers
      than those set forth in the Tag Along Notice, the Tag Along Notice shall
      be null and void, and it shall be necessary for a separate Tag Along
      Notice to be furnished, and the terms and provisions of this Section 4.1
      separately complied with, in order to consummate such proposed Sale
      pursuant to this Section 4.1; provided, however, that in the case of such
      a separate Tag Along Notice, the applicable period to which reference is
      made in Sections 4.1.1 and 4.1.2 shall be three business days and two
      business days, respectively. In addition, if the Prospective Selling
      Stockholders have not completed the proposed Sale by the end of the 180th
      day after the date of delivery of: (i) if the proposed Transfer is also
      the subject of a currently effective Sale Notice under Section 4.4 of the
      Stockholders Agreement, such Sale Notice, and (ii) otherwise, the Tag
      Along Notice, each Participating Seller shall be released from such
      holder's obligations under such holder's Tag Along Offer, the Tag Along
      Notice shall be null and void, and it shall be necessary for a separate
      Tag Along Notice to be furnished, and the terms and provisions of this
      Section 4.1 separately complied with, in order to consummate such proposed
      Sale pursuant to this Section 4.1, unless the failure to complete such
      proposed Sale resulted from any failure by any Participating Seller to
      comply with the terms of this Section 4.

                                      -10-
<PAGE>

      4.2.  Miscellaneous. The following provisions shall be applied to any
proposed Sale to which Section 4.1 applies:

            4.2.1. Certain Legal Requirements. In the event the consideration to
      be paid in exchange for Shares in a proposed Sale pursuant to Section 4.1
      includes any securities, and the receipt thereof by a Participating Seller
      would require under applicable law (a) the registration or qualification
      of such securities or of any Person as a broker or dealer or agent with
      respect to such securities where such registration or qualification is not
      otherwise required for the Sale by the Prospective Selling Stockholder(s)
      or (b) the provision to any Tag Along Seller of any specified information
      regarding the Company or any of its subsidiaries, such securities or the
      issuer thereof that is not otherwise required to be provided for the Sale
      by the Prospective Selling Stockholder(s), then such Participating Seller
      shall not have the right to Sell Shares in such proposed Sale. In such
      event, the Prospective Selling Stockholder(s) shall have the right, but
      not the obligation, to cause to be paid to such Participating Seller in
      lieu thereof, against surrender of the Shares (in accordance with Section
      4.2.6 hereof) which would have otherwise been Sold by such Participating
      Seller to the Prospective Buyer in the proposed Sale, an amount in cash
      equal to the Fair Market Value of such Shares as of the date such
      securities would have been issued in exchange for such Shares.

            4.2.2. Further Assurances. Each Participating Seller, whether in
      such holder's capacity as a Participating Seller, stockholder, officer or
      director of the Company (subject to such officer's or director's fiduciary
      duty), or otherwise, shall take or cause to be taken all such actions as
      may be necessary or reasonably desirable in order expeditiously to
      consummate each Sale pursuant to Section 4.1 and any related transactions,
      including executing, acknowledging and delivering consents, assignments,
      waivers and other documents or instruments; furnishing information and
      copies of documents; filing applications, reports, returns, filings and
      other documents or instruments with governmental authorities; and
      otherwise cooperating with the Prospective Selling Stockholder(s);
      provided, however, that Participating Sellers shall be obligated to become
      liable in respect of any representations, warranties, covenants,
      indemnities or otherwise to the Prospective Buyer solely to the extent
      provided in the immediately following sentence. Without limiting the
      generality of the foregoing, each Participating Seller agrees to execute
      and deliver such agreements as may be reasonably specified by the
      Prospective Selling Stockholder(s) to which such Prospective Selling
      Stockholder(s) will also be party, including agreements to (a) (i) make
      individual representations, warranties, covenants and other agreements as
      to the unencumbered title to its Shares and the power, authority and legal
      right to Transfer such Shares and the absence of any Adverse Claim with
      respect to such Shares and (ii) be liable as to such representations,
      warranties, covenants and other agreements, in each case to the same
      extent (on a pro rata basis) as the Prospective Selling Stockholder(s),
      and (b) be liable (whether by purchase price adjustment, indemnity
      payments or otherwise) in respect of representations, warranties,
      covenants and agreements in respect of the Company and its subsidiaries;
      provided, however, that the aggregate amount of liability described in
      this clause (b) in connection with any Sale of Shares shall not exceed the
      lesser of (i) such Participating Seller's pro rata portion of any such
      liability, to be determined in accordance with such Participating Seller's
      portion of the aggregate proceeds to all

                                      -11-
<PAGE>

      Participating Sellers and Prospective Selling Stockholder(s) in connection
      with such Sale or (ii) the proceeds to such Participating Seller in
      connection with such Sale.

            4.2.3. Sale Process. The Prospective Selling Stockholder shall, in
      its sole discretion, decide whether or not to pursue, consummate, postpone
      or abandon any proposed Sale and the terms and conditions thereof. No
      holder of Shares nor any Affiliate of any such holder shall have any
      liability to any other holder of Shares or the Company arising from,
      relating to or in connection with the pursuit, consummation, postponement,
      abandonment or terms and conditions of any proposed Sale except to the
      extent such holder shall have failed to comply with the provisions of this
      Section 4.

            4.2.4. Treatment of Options, Warrants and Convertible Securities. If
      any Participating Seller shall Sell Options, Warrants or Convertible
      Securities in any Sale pursuant to Section 4, such Participating Seller
      shall receive in exchange for such Options, Warrants or Convertible
      Securities consideration in the amount (if greater than zero) equal to the
      purchase price received by the Prospective Selling Stockholder(s) in such
      Sale for the number of shares of each class of Stock that would be issued
      upon exercise, conversion or exchange of such Options, Warrants or
      Convertible Securities less the exercise price, if any, of such Options,
      Warrants or Convertible Securities (to the extent exercisable, convertible
      or exchangeable at the time of such Sale), subject to reduction for any
      tax or other amounts required to be withheld under applicable law.

            4.2.5. Expenses. All reasonable costs and expenses incurred by the
      Prospective Selling Stockholder(s) or the Company in connection with any
      proposed Sale pursuant to Section 4.1 (whether or not consummated),
      including all attorneys fees and charges, all accounting fees and charges
      and all finders, brokerage or investment banking fees, charges or
      commissions, shall be paid by the Company. Each Investor Group shall be
      entitled to retain its own counsel in connection with any proposed sale
      pursuant to this Section 4 (whether or not consummated) whose expenses
      will be paid by the Company. Any other costs and expenses incurred by or
      on behalf of any or all of the Participating Sellers in connection with
      any proposed Sale pursuant to this Section 4 (whether or not consummated)
      shall be borne by such Participating Seller(s).

            4.2.6. Closing. The closing of a Sale to which Section 4.1 applies
      shall take place (i) on the proposed Transfer date, if any, specified in
      the Tag Along Notice (provided that consummation of any Transfer may be
      extended beyond such date to the extent necessary to obtain any applicable
      governmental approval or other required approval or to satisfy other
      conditions) and (ii) at such place as the Prospective Selling
      Stockholder(s) shall specify by notice to each Participating Seller. At
      the closing of such Sale, each Participating Seller shall deliver the
      certificates evidencing the Shares to be Sold by such Participating
      Seller, duly endorsed, or with stock (or equivalent) powers duly endorsed,
      for transfer with signature guaranteed, free and clear of any liens or
      encumbrances, with any stock (or equivalent) transfer tax stamps affixed,
      against delivery of the applicable consideration.

5.    COVENANTS.

                                      -12-
<PAGE>

      5.1.  Information Rights.

            5.1.1. Historical Financial Information. The Company will furnish
      each Investor holding Shares representing a Total Investment of at least
      twenty five million dollars ($25,000,000), the following:

                   5.1.1.1. As soon as available, and in any event within 120
            days after the end of each fiscal year of the Company, the
            consolidated balance sheet of the Company and its subsidiaries as at
            the end of each such fiscal year and the consolidated statements of
            income, cash flows and changes in stockholders' equity for such year
            of the Company and its subsidiaries, setting forth in each case in
            comparative form the figures for the next preceding fiscal year,
            accompanied by the report of independent certified public
            accountants of recognized national standing, to the effect that,
            except as set forth therein, such consolidated financial statements
            have been prepared in accordance with generally accepted accounting
            principles applied on a basis consistent with prior years and fairly
            present in all material respects the financial condition of the
            Company and its subsidiaries at the dates thereof and the results of
            their operations and changes in their cash flows and stockholders'
            equity for the periods covered thereby.

                   5.1.1.2. As soon as available, and in any event within 60
            days after the end of each fiscal quarter of the Company, the
            consolidated balance sheet of the Company and its subsidiaries as at
            the end of such quarter and the consolidated statements of income,
            cash flows and changes in stockholders' equity for such quarter and
            the portion of the fiscal year then ended of the Company and its
            subsidiaries, setting forth in each case the figures for the
            corresponding periods of the previous fiscal year in comparative
            form, all in reasonable detail.

                   5.1.1.3. Such other information made available to the Board.

            5.1.2. Period. Each of the foregoing provisions of this Section 5.1
      shall expire on the earlier of (a) a Change of Control or (b) the closing
      of the Initial Public Offering.

      5.2.  Confidentiality. Each Investor agrees that it will keep confidential
and will not disclose, divulge or use for any purpose, other than to monitor its
investment in the Company and its subsidiaries, any confidential information
obtained from the Company pursuant to the terms of this Agreement, unless such
confidential information (i) is known or becomes known to the public in general
(other than as a result of a breach of this Section 5.2 by such Investor or its
Affiliates), (ii) is or has been independently developed or conceived by such
Investor without use of the Company's confidential information or (iii) is or
has been made known or disclosed to such Investor by a third party (other than
an Affiliate of such Investor) without a breach of any obligation of
confidentiality such third party may have to the Company that is known to such
Investor; provided, however, that an Investor may disclose confidential
information (a) to its attorneys, accountants, consultants, and other
professionals to the extent necessary to obtain their services in connection
with monitoring its investment in the Company, (b) to any prospective purchaser
of any Shares from such Investor as long as such prospective purchaser agrees to
be bound by the provisions of this Section 5.2, (c) to any Affiliate, partner or
member of such

                                      -13-
<PAGE>

Investor in the ordinary course of business, or (d) as may otherwise be required
by law, provided that such Investor takes reasonable steps to minimize the
extent of any such required disclosure; and provided, further, however, that the
acts and omissions of any Person to whom such Investor may disclose confidential
information pursuant to clauses (a) through (c) of the preceding proviso shall
be attributable to such Investor for purposes of determining such Investor's
compliance with this Section 5.2. Each of the parties hereto acknowledge that
the Investors may review the business plans and related proprietary information
of many enterprises, including enterprises which may have products or services
which compete directly or indirectly with those of the Company. Nothing in this
Section 5.2 shall preclude or in any way restrict the Investors or their
Affiliates from investing or participating in any particular enterprise, or
trading in the securities thereof, whether or not such enterprise has products
or services that compete with those of the Company.

      5.3.  Directors' and Officers' Insurance. The Company shall purchase,
within a reasonable period following the Closing, and maintain for such periods
as the Board shall in good faith determine, at its expense, insurance in an
amount determined in good faith by the Board to be appropriate, on behalf of any
person who after the Closing is or was a director or officer of the Company, or
is or was serving at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, including any direct or indirect subsidiary of the Company, against
any expense, liability or loss asserted against such Person and incurred by such
Person in any such capacity, or arising out of such Person's status as such,
subject to customary exclusions. The provisions of this Section 5.3 shall
survive any termination of this Agreement.

6.    REMEDIES.

      6.1.  Generally. The parties shall have all remedies available at law, in
equity or otherwise in the event of any breach or violation of this Agreement or
any default hereunder. The parties acknowledge and agree that in the event of
any breach of this Agreement, in addition to any other remedies which may be
available, each of the parties hereto shall be entitled to specific performance
of the obligations of the other parties hereto and, in addition, to such other
equitable remedies (including preliminary or temporary relief) as may be
appropriate in the circumstances.

7.    LEGENDS.

      7.1.  Restrictive Legend. Each certificate representing Shares issued or
transferred to an Investor shall have the following legend endorsed
conspicuously thereupon:

            "THE VOTING OF THE SHARES OF STOCK REPRESENTED BY
            THIS CERTIFICATE, AND THE SALE, ENCUMBRANCE OR OTHER
            DISPOSITION THEREOF, ARE SUBJECT TO THE PROVISIONS OF
            AN INVESTOR AGREEMENT TO WHICH THE ISSUER AND CERTAIN
            OF ITS STOCKHOLDERS ARE PARTY, A COPY OF WHICH MAY BE
            INSPECTED AT THE

                                      -14-
<PAGE>

            PRINCIPAL OFFICE OF THE ISSUER OR OBTAINED FROM THE
            ISSUER WITHOUT CHARGE."

      Any Person who acquires Shares which are not subject to all or part of the
terms of this Agreement shall have the right to have such legend (or the
applicable portion thereof) removed from certificates representing such Shares.

      7.2.  Stop Transfer Instruction. The Company or Midco will instruct any
transfer agent not to register the Transfer of any Shares until the conditions
specified in the foregoing legend, this Agreement, the Stockholders Agreement
and the Participation and Registration Rights Agreement are satisfied.

8.    AMENDMENT, TERMINATION, ETC.

      8.1.  Oral Modifications. This Agreement may not be orally amended,
modified, extended or terminated, nor shall any oral waiver of any of its terms
be effective.

      8.2.  Written Modifications. This Agreement may be amended, modified,
extended or terminated, and the provisions hereof may be waived, only by an
agreement in writing signed by the Company, Midco and the Requisite Stockholder
Majority; provided, however, that:

            (a)   the consent of each of the Investor Groups shall be required
      for any amendment, modification, extension, termination or waiver (an
      "Amendment") of (i) the provisions of Section 2.2.2 or 10.8, (ii) any
      provision requiring unanimous consent of the Investor Groups or requiring
      the consent of the Principal Investor Majority, or (iii) this clause (a)
      of Section 8.2;

            (b)   the consent of any Investor shall be required for any
      Amendment that discriminates against such Investor as such under this
      Agreement or would disproportionately impact that Investor as compared to
      Investors that are not in the same Investor Group as such Investor.

Each such Amendment shall be binding upon each party hereto and each holder of
Shares subject hereto. In addition, each party hereto and each holder of Shares
subject hereto may waive any right hereunder by an instrument in writing signed
by such party or holder. To the extent the Amendment of any Section of this
Agreement would require a specific consent pursuant to this Section 8.2, any
Amendment to the definitions used in such Section shall also require the
specified consent.

      8.3.  Withdrawal from Agreement. Any Investor that withdraws Shares from
the Stockholders Agreement in accordance with Section 9.3 thereof shall be
deemed to have simultaneously withdrawn such Shares from this Agreement. From
the date of delivery of such Investor's withdrawal notice pursuant to Section
9.3 of the Stockholders Agreement, the withdrawn shares shall cease to be Shares
subject to this Agreement and, if the Investor withdrawing such Shares does not
own any Share that will remain subject to this Agreement (each such holder, a
"Withdrawing Holder"), such Investor shall cease to be a party to this Agreement
and shall no longer be subject to the obligations of this Agreement or have
rights

                                      -15-
<PAGE>

under this Agreement; provided, however, that any such Withdrawing Holder shall
retain the indemnification rights pursuant to Section 10.10 hereof with respect
to any matter that (i) may be an Indemnified Liability and (ii) occurred prior
to such withdrawal.

      8.4.  Effect of Termination. No termination under this Agreement shall
relieve any Person of liability for breach prior to termination. In the event
this Agreement is terminated, each Investor shall retain the indemnification
rights pursuant to Section 10.10 hereof with respect to any matter that (i) may
be an Indemnified Liability and (ii) occurred prior to such termination.

9.    DEFINITIONS. For purposes of this Agreement:

      9.1.  Certain Matters of Construction. In addition to the definitions
referred to or set forth below in this Section 9:

                  (i)   The words "hereof', "herein", "hereunder" and words of
            similar import shall refer to this Agreement as a whole and not to
            any particular Section or provision of this Agreement, and reference
            to a particular Section of this Agreement shall include all
            subsections thereof;

                  (ii)  The word "including" shall mean including, without
            limitation;

                  (iii) Definitions shall be equally applicable to both nouns
            and verbs and the singular and plural forms of the terms defined;
            and

                  (iv)  The masculine, feminine and neuter genders shall each
            include the other.

      9.2.  Definitions. The following terms shall have the following meanings:

      "144 Coordination" shall have the meaning set forth in Section 3.2.

      "Acquisition" shall have the meaning set forth in the Recitals.

      "AcquisitionCo" shall have the meaning set forth in the Preamble.

      "Acquisition Agreement" shall have the meaning set forth in the Recitals.

      "Adverse Claim" shall have the meaning set forth in Section 8-102 of the
applicable Uniform Commercial Code.

      "Affiliate" shall mean, with respect to any specified Person, (a) any
other Person which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
Person (for the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise);

                                      -16-
<PAGE>

provided, however, that neither the Company nor any of its subsidiaries shall be
deemed an Affiliate of any of the Stockholders (and vice versa), (b) if such
specified Person is an investment fund, any other investment fund the primary
investment advisor to which is the primary investment advisor to such specified
Person or an Affiliate thereof and (c) if such specified Person is a natural
Person, any Family Member of such natural Person. Notwithstanding the foregoing,
for all purposes of this Agreement, Integral Capital Partners VI, L.P. and its
Affiliates will be considered Affiliates of Silver Lake Partners, L.P., Silver
Lake Investors, L.P. and Silver Lake Technology Investors, L.L.C. and their
respective Affiliates.

      "Affiliated Fund" shall mean, with respect to any specified Person, an
investment fund that is an Affiliate of such Person or that is advised by the
same investment adviser as such Person or by an Affiliate of such investment
adviser.

      "Agreement" shall have the meaning set forth in the Preamble.

      "Amendment" shall have the meaning set forth in Section 8.2.

      "Bain Investors" shall mean, as of any date, Bain Capital Integral
Investors, LLC, Bain Capital VII Coinvestment Fund, LLC and BCIP TCV, LLC, and
their respective Permitted Transferees, in each case only if such Person is then
an Investor and holds any Shares.

      "Board" shall mean the board of directors of the Company.

      "business day" shall mean any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by law to be closed in the
City of New York.

      "Change of Control" shall mean the occurrence of (a) any consolidation or
merger of the Company with or into any other corporation or other Person, or any
other corporate reorganization or transaction (including the acquisition of
capital stock of the Company), whether or not the Company is a party thereto, in
which the stockholders of the Company immediately prior to such consolidation,
merger, reorganization or transaction, own capital stock either (i) representing
directly, or indirectly through one or more entities, less than fifty percent
(50%) of the economic interests in or voting power of the Company or other
surviving entity immediately after such consolidation, merger, reorganization or
transaction or (ii) that does not directly, or indirectly through one or more
entities, have the power to elect a majority of the entire board of directors of
the Company or other surviving entity immediately after such consolidation,
merger, reorganization or transaction, (b) any transaction or series of related
transactions, whether or not the Company is a party thereto, after giving effect
to which in excess of fifty percent (50%) of the Company's voting power is owned
directly, or indirectly through one or more entities, by any Person and its
"affiliates" or "associates" (as such terms are defined in the rules adopted by
the Commission under the Exchange Act), other than the Investors and their
respective Affiliated Funds, excluding, in any case referred to in clause (a) or
(b) any Initial Public Offering or any bona fide primary or secondary public
offering following the occurrence of an Initial Public Offering; or (c) a sale,
lease or other disposition of all or substantially all of the assets of the
Company.

      "Class A-1 Director" shall mean any director of the Company elected by the
holders of Class A-1 Common Stock in accordance with the Company's certificate
of incorporation.

                                      -17-
<PAGE>

      "Class A-2 Director" shall mean any director of the Company elected by the
holders of Class A-2 Common Stock in accordance with the Company's certificate
of incorporation.

      "Class A-3 Director" shall mean any director of the Company elected by the
holders of Class A-3 Common Stock in accordance with the Company's certificate
of incorporation.

      "Class A Stock" shall mean the Class A Common Stock, par value $.001 per
share, of the Company, which is comprised of Class A-1 Common Stock, Class A-2
Common Stock, Class A-3 Common Stock and Class A-4 Common Stock.

      "Class L Stock" shall mean the Class L Common Stock, par value $.001 per
share, of the Company.

      "Closing" shall have the meaning set forth in Section 1.1.

      "Commission" shall mean the Securities and Exchange Commission.

      "Common Stock" shall mean the common stock of the Company, including the
Class A Stock and the Class L Stock.

      "Company" shall have the meaning set forth in the Preamble.

      "Company Shares" shall mean Shares in respect of capital stock of the
Company.

      "Convertible Securities" shall mean any evidence of indebtedness, shares
of stock (other than Stock) or other securities (other than Options and
Warrants) which are directly or indirectly convertible into or exchangeable or
exercisable for shares of Stock.

      "Equivalent Shares" shall mean, at any date of determination, (a) as to
any outstanding shares of Stock, such number of shares of Stock and (b) as to
any outstanding Options, Warrants or Convertible Securities which constitute
Shares, the maximum number of shares of Stock for which or into which such
Options, Warrants or Convertible Securities may at the time be exercised,
converted or exchanged (or which will become exercisable, convertible or
exchangeable on or prior to, or by reason of, the transaction or circumstance in
connection with which the number of Equivalent Shares is to be determined).

      "Exchange Act" shall mean the Securities Exchange Act of 1934, as in
effect from time to time.

      "Family Member" shall mean, with respect to any natural Person, (i) any
lineal descendant or ancestor or sibling (by birth or adoption) of such natural
Person, (ii) any spouse or former spouse of any of the foregoing, (iii) any
legal representative or estate of any of the foregoing, (iv) any trust
maintained for the benefit of the foregoing and (v) any corporation, private
charitable foundation or other organization controlled by the foregoing.

      "Holdings" shall have the meaning set forth in the Preamble.

      "Indemnified Liabilities" shall have the meaning set forth in Section
10.10.

                                      -18-
<PAGE>

      "Indemnitees" shall have the meaning set forth in Section 10.10.

      "Initial Public Offering" shall mean the initial Public Offering
registered on Form S-1 (or any successor form under the Securities Act).

      "Investor Group" shall mean any one of (a) the Bain Investors,
collectively, (b) the Silver Lake Investors, collectively and (c) the Warburg
Pincus Investors, collectively. Where this Agreement provides for the vote,
consent or approval of any Investor Group, such vote, consent or approval shall
be determined by the Majority Bain Investors, the Majority Silver Lake Investors
or the Majority Warburg Pincus Investors, as the case may be, except as
otherwise specifically set forth herein; provided, however, that any such
Investor Group shall cease to be an Investor Group at such time after the
Closing, and at all times thereafter, as (i) such Investor Group ceases to hold
Shares representing a Total Combined Investment (as defined in the Company's
certificate of incorporation) of at least the Minimum Total Combined Investment
(as defined in the Company's certificate of incorporation) or (ii) such Investor
Group ceases to hold Shares equal to or greater than the Minimum Director Share
Amount (as defined in the Company's certificate of incorporation); provided that
no adjustment pursuant to the Company's certificate of incorporation to the
"Minimum Total Combined Investment" or the "Minimum Director Share Amount" shall
cause any former Investor Group to again become an Investor Group.

      "Investors" shall have the meaning set forth in the Preamble.

      "Majority Bain Investors" shall mean, as of any date, the holders of a
Majority in Interest of the Shares held by the Bain Investors.

      "Majority in Interest" shall mean, (a) with respect to a set of Shares of
a single class, a majority of such Shares and (b) with respect to a set of
Shares of more than one class, a majority in aggregate Purchase Price Value of
such Shares.

      "Majority Silver Lake Investors" shall mean, as of any date, the holders
of a Majority in Interest of the Shares held by the Silver Lake Investors.

      "Majority Warburg Pincus Investors" shall mean, as of any date, the
holders of a Majority in Interest of the Shares held by the Warburg Pincus
Investors.

      "Midco" shall have the meaning set forth in the Preamble.

      "OpCo" shall have the meaning set forth in the Recitals.

      "Options" shall mean any options to subscribe for, purchase or otherwise
directly acquire Stock, other than any such option held by the Company or Midco
or any right to purchase shares pursuant to this Agreement.

      "Original Investor Agreement" shall have the meaning set forth in the
Recitals.

      "Participating Seller" shall have the meaning set forth in Section 4.1.2.

                                      -19-
<PAGE>

      "Permitted Transferee" shall mean, in respect of any Investor, any
Affiliated Fund of such Investor, and, in respect of any Manager, any Family
Member of such Manager, in each case to the extent such Person agrees to be
bound by the terms of this Agreement in accordance with Section 3.3 and the
Stockholders Agreement, as applicable. In addition, any Stockholder shall be a
Permitted Transferee of the Permitted Transferees of itself.

      "Person" shall mean any individual, partnership, corporation, company,
association, trust, joint venture, limited liability company, unincorporated
organization, entity or division, or any government, governmental department or
agency or political subdivision thereof.

      "Preferred Stock" shall mean the 10% Cumulative Preferred Stock, par value
$.001 per share, of Midco.

      "Principal Investor Majority" shall mean, with respect to a transaction
between the Company or one of its subsidiaries on the one hand and an Investor
or one of its Affiliates on the other (a "Related Affiliate"), (i) a majority of
Investor Groups that are not a Related Affiliate, or (ii) if there is no
unaffiliated Investor Group, a majority vote of all Class A-1 Common Stock,
Class A-2 Common Stock and Class A-3 Common Stock (voting as a single class)
held by all Investors that are not and whose Affiliates are not a Related
Affiliate.

      "Pro Rata Portion" shall mean with respect to each Tag Along Seller, a
number of Shares equal to the aggregate number of Shares that the Prospective
Buyer is willing to purchase in the proposed Sale, multiplied by a fraction, the
numerator of which is the aggregate number of Shares of the applicable class
held by such Tag Along Seller and the denominator of which is the aggregate
number of Shares of the applicable class held by all Tag Along Sellers.

      "Prospective Buyer" shall mean any Person proposing to purchase shares
from a Prospective Selling Stockholder.

      "Prospective Selling Stockholder" shall mean, for purposes of Section 4.1,
any Stockholder that proposes to Transfer any Shares to any Prospective Buyer,
including a First Offer Purchaser pursuant to Section 4.4 of the Stockholders
Agreement.

      "Public Offering" shall mean a public offering and sale of Common Stock
for cash pursuant to an effective registration statement under the Securities
Act.

      "Purchase Price Value" shall mean: (a) $1.00, in the case of a share of
Class A Stock, (b) $81.00, in the case of a share of Class L Stock and (c)
$100.00, in the case of a share of Preferred Stock, in each case appropriately
adjusted for any stock split, stock dividend, combination, recapitalization or
the like involving such class.

      "Purchaser" shall have the meaning set forth in the Recitals.

      "Related Affiliate" shall have the meaning set forth in the definition of
Principal Investor Majority.

      "Related Stockholder" shall have the meaning set forth in Section 3.1.1.

                                      -20-
<PAGE>

      "Requisite Stockholder Majority" shall mean at any time the approval of
(a) each of at least two Investor Groups if there is more than one Investor
Group, (b) a single Investor Group if there is only one Investor Group and (c)
otherwise, Investors holding a majority of the outstanding Class A Stock
constituting Shares then held by all Investors.

      "Rule 144" shall mean Rule 144 under the Securities Act (or any successor
Rule).

      "Sale" shall mean a Transfer for value and the terms "Sell" and "Sold"
shall have correlative meanings.

      "Securities Act" shall mean the Securities Act of 1933, as in effect from
time to time.

      "Seller" shall have the meaning set forth in the Recitals.

      "Shares" shall mean (a) all shares of Stock held by an Investor, whenever
issued, including all shares of Stock issued upon the exercise, conversion or
exchange of any Options, Warrants or Convertible Securities and (b) all Options,
Warrants and Convertible Securities held by an Investor (treating such Options,
Warrants and Convertible Securities as a number of Shares equal to the number of
Equivalent Shares represented by such Options, Warrants and Convertible
Securities for all purposes of this Agreement except as otherwise specifically
set forth herein).

      "Silver Lake Investors" shall mean, as of any date, Silver Lake Partners,
L.P., Silver Lake Investors, L.P., Silver Lake Technology Investors, L.L.C. and
Integral Capital Partners VI, L.P., and their respective Permitted Transferees,
in each case only if such Person is then a Stockholder and holds any Shares.

      "Specified Holder" shall have the meaning set forth in Section 3.1.1.

      "Sponsor Group" shall mean any one of (a) the Bain Investors,
collectively, (b) the Silver Lake Investors, collectively and (c) the Warburg
Pincus Investors, collectively. Where this Agreement provides for the vote,
consent or approval of any Sponsor Group, such vote, consent or approval shall
be determined by the Majority Bain Investors, the Majority Silver Lake Investors
or the Majority Warburg Pincus Investors, as the case may be, except as
otherwise specifically set forth herein.

      "Stock" shall mean the Common Stock and the Preferred Stock.

      "Stockholders" shall have the meaning set forth in the Stockholders
Agreement.

      "Stockholders Agreement" shall have the meaning set forth in the Recitals.

      "Subscription Agreement" shall have the meaning set forth in Section 10.3.

      "Tag Along Deadline" shall have the meaning set forth in Section 4.1.2.

      "Tag Along Holder" shall have the meaning set forth in Section 4.1.1.

      "Tag Along Notice" shall have the meaning set forth in Section 4.1.1.

                                      -21-
<PAGE>

      "Tag Along Offer" shall have the meaning set forth in Section 4.1.2.

      "Tag Along Sale Percentage" shall have the meaning set forth in Section
4.1.1.

      "Tag Along Sellers" shall have the meaning set forth in Section 4.1.2.

      "Third-Party Claim" shall have the meaning set forth in Section 10.10.

      "Total Investment" shall mean at any time, with respect to a set of
Shares, the aggregate Purchase Price Value of such Shares.

      "Transfer" shall mean any sale, pledge, assignment, encumbrance or other
transfer or disposition of any Shares to any other Person, whether directly,
indirectly, voluntarily, involuntarily, by operation of law, pursuant to
judicial process or otherwise.

      "Warburg Pincus Investors" shall mean, as of any date, Warburg Pincus
Private Equity VIII, L.P., Warburg Pincus Netherlands Private Equity VIII I,
C.V., Warburg Pincus Netherlands Private Equity VIII II, C.V., Warburg Pincus
Germany Private Equity VIII K.G., Warburg Pincus International Partners, L.P.,
Warburg Pincus Netherlands International Partners I, C.V., Warburg Pincus
Netherlands International Partners II, C.V. and Warburg Pincus Germany
International Partners, K.G. and their respective Permitted Transferees, in each
case only if such Person is then a Stockholder and holds any Shares.

      "Warrants" shall mean any warrants to subscribe for, purchase or otherwise
directly acquire Stock.

      "Withdrawing Holders" shall have the meaning set forth in Section 8.3.

10.   MISCELLANEOUS.

      10.1. Authority: Effect. Each party hereto represents and warrants to and
agrees with each other party that the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized on behalf of such party and do not violate any agreement or other
instrument applicable to such party or by which its assets are bound. This
Agreement does not, and shall not be construed to, give rise to the creation of
a partnership among any of the parties hereto, or to constitute any of such
parties members of a joint venture or other association.

      10.2. Notices. Any notices and other communications required or permitted
in this Agreement shall be effective if in writing and (a) delivered personally,
(b) sent by facsimile, or (c) sent by overnight courier, in each case, addressed
as follows:

      If to the Company, Midco, Holdings or OpCo, to it:

            c/o UGS Corp.
            13690 Riverport Drive
            Maryland Heights, Missouri 63043

                                      -22-
<PAGE>

            Facsimile: (314) 264-8913
            Attention: Anthony J. Affuso

      with copies to:

            Ropes & Gray LLP
            One International Place
            Boston, Massachusetts 02210
            Facsimile: (617) 951-7050
            Attention: Alfred Rose, Esq.

      If to a Bain Investor, to it:

            c/o Bain Capital, LLC
            600 Montgomery Street, 33rd Floor
            San Francisco, California  94111
            Facsimile: (415) 352-5010
            Attention: Andrew Balson

      with copies to:

            Ropes & Gray LLP
            One International Place
            Boston, Massachusetts 02210
            Facsimile: (617) 951-7050
            Attention: R. Newcomb Stillwell, Esq.

      If to a Silver Lake Investor, to it:

            c/o Silver Lake Partners
            2725 Sand Hill Road, Ste. 150
            Menlo Park, California  94025
            Facsimile: (650) 234-2593
            Attention: Kenneth Y. Hao

      with copies to:

            Simpson Thacher & Bartlett LLP
            3330 Hillview Avenue
            Palo Alto, California  94304
            Facsimile: (650) 251-5002
            Attention: Richard Capelouto, Esq.

      If to a Warburg Pincus Investor, to it:

            c/o Warburg Pincus LLC

                                      -23-
<PAGE>

            466 Lexington Ave
            New York, NY 10017
            Facsimile: (212) 716-5040
            Attention: Gregory F. Back

      with copies to:

            Willkie Farr & Gallagher LLP
            787 Seventh Avenue
            New York, NY 10019-6099
            Facsimile: (212) 728-8111
      Attention:  Gordon R. Caplan, Esq.

      Notice to the holder of record of any shares of capital stock shall be
deemed to be notice to the holder of such shares for all purposes hereof.

      Unless otherwise specified herein, such notices or other communications
shall be deemed effective (a) on the date received, if personally delivered, (b)
on the date received if delivered by facsimile on a business day, or if not
delivered on a business day, on the first business day thereafter and (b) two
business days after being sent by overnight courier. Each of the parties hereto
shall be entitled to specify a different address by giving notice as aforesaid
to each of the other parties hereto.

      10.3. Binding Effect, Etc. Except for the Stockholders Agreement, the
Participation and Registration Rights Agreement, and the Subscription Agreement
dated as of May 24, 2004 among Company, Midco, Holdings, OpCo and the
stockholders named therein ("Subscription Agreement"), this Agreement
constitutes the entire agreement of the parties with respect to its subject
matter, supersedes all prior or contemporaneous oral or written agreements,
including the Original Investor Agreement, or discussions with respect to such
subject matter and shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, representatives, successors and permitted
assigns. Except as otherwise expressly provided herein, no Investor or other
party hereto may assign any of its respective rights or delegate any of its
respective obligations under this Agreement without the prior written consent of
the other parties hereto, and any attempted assignment or delegation in
violation of the foregoing shall be null and void.

      10.4. Descriptive Heading. The descriptive headings of this Agreement are
for convenience of reference only, are not to be considered a part hereof and
shall not be construed to define or limit any of the terms or provisions hereof.

      10.5. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one instrument.

      10.6. Severability. In the event that any provision hereof would, under
applicable law, be invalid or unenforceable in any respect, such provision shall
be construed by modifying or limiting it so as to be valid and enforceable to
the maximum extent compatible with, and possible

                                      -24-
<PAGE>

under, applicable law. The provisions hereof are severable, and in the event any
provision hereof should be held invalid or unenforceable in any respect, it
shall not invalidate, render unenforceable or otherwise affect any other
provision hereof.

      10.7. No Recourse. Notwithstanding anything that may be expressed or
implied in this Agreement, the Company and each Investor covenant, agree and
acknowledge that no recourse under this Agreement or any documents or
instruments delivered in connection with this Agreement shall be had against any
current or future director, officer, employee, general or limited partner or
member of any Investor or of any Affiliate or assignee thereof, as such, whether
by the enforcement of any assessment or by any legal or equitable proceeding, or
by virtue of any statute, regulation or other applicable law, it being expressly
agreed and acknowledged that no personal liability whatsoever shall attach to,
be imposed on or otherwise be incurred by any current or future officer, agent
or employee of any Investor or any current or future member of any Investor or
any current or future director, officer, employee, partner or member of any
Investor or of any Affiliate or assignee thereof, as such, for any obligation of
any Investor under this Agreement or any documents or instruments delivered in
connection with this Agreement for any claim based on, in respect of or by
reason of such obligations or their creation.

      10.8. Aggregation of Shares. All Shares held by an Investor and its
Affiliates and Affiliated Funds shall be aggregated together for purposes of
determining all rights and obligations hereunder, including under Sections 3 and
4. Within any Investor Group, the Investors may allocate the ability to exercise
any rights under this Agreement in any manner that such Investor Group (by a
Majority in Interest of the Shares held by such Investor Group) sees fit.

      10.9. Obligations of Company, Midco, Holdings and OpCo. Each of the
Company, Midco, Holdings and OpCo shall be jointly and severally liable for any
obligation of any of the Company, Midco, Holdings or OpCo pursuant to this
Agreement.

      10.10. Indemnity and Liability. Each of the Company, Midco, Holdings and
OpCo, jointly and severally, will indemnify, exonerate and hold each of the
Investors, and each of their respective partners, shareholders, members,
Affiliates, directors, officers, fiduciaries, managers, controlling Persons,
employees and agents and each of the partners, shareholders, members,
Affiliates, directors, officers, fiduciaries, managers, controlling Persons,
employees and agents of each of the foregoing (collectively, the "Indemnitees")
free and harmless from and against any and all actions, causes of action, suits,
claims, liabilities, losses, damages and costs and out-of-pocket expenses in
connection therewith (including reasonable attorneys' fees and expenses)
incurred by the Indemnitees or any of them before or after the date of this
Agreement (collectively, the "Indemnified Liabilities"), as a result of, arising
out of, or in any way relating to (i) this Agreement, the Acquisition, any
transaction to which any of the Company, Midco, Holdings or OpCo is a party or
any other circumstances with respect to any of the Company, Midco, Holdings or
OpCo (other than any such Indemnified Liabilities to the extent such Indemnified
Liabilities arise out of any breach of the Stockholders Agreement, the
Participation and Registration Rights Agreement or the Subscription Agreement by
such Indemnitee or its affiliated or associated Indemnitees or other related
Persons or any transaction entered into after the Closing or other circumstances
existing after the Closing with respect to which the interests

                                      -25-
<PAGE>

of such Indemnitee or its affiliated or associated Indemnitees were adverse to
the interests of any of the Company, Midco, Holdings or OpCo) or (ii) operations
of, or services provided by any of the Indemnitees to, any of the Company,
Midco, Holdings or OpCo, or any of their Affiliates from time to time (including
but not limited to any indemnification obligations assumed or incurred by any
Indemnitee to or on behalf of the Seller, or any of its accountants or other
representatives, agents or Affiliates); provided that the foregoing
indemnification rights shall not be available to the extent that any such
Indemnified Liabilities arose on account of such Indemnitee's gross negligence
or willful misconduct, and further provided that, if and to the extent that the
foregoing undertaking may be unavailable or unenforceable for any reason, the
Company, Midco, Holdings and OpCo hereby agree to make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. For purposes of this Section 10.10, none of
the circumstances described in the limitations contained in the two provisos in
the immediately preceding sentence shall be deemed to apply absent a final
non-appealable judgment of a court of competent jurisdiction to such effect, in
which case to the extent any such limitation is so determined to apply to any
Indemnitee as to any previously advanced indemnity payments made by any of the
Company, Midco, Holdings or OpCo, then such payments shall be promptly repaid by
such Indemnitee to the Company, Midco, Holdings and OpCo. The rights of any
Indemnitee to indemnification hereunder will be in addition to any other rights
any such Person may have under any other agreement or instrument referenced
above or any other agreement or instrument to which such Indemnitee is or
becomes a party or is or otherwise becomes a beneficiary or under law or
regulation. None of the Indemnitees shall in any event be liable to any of the
Company, Midco, Holdings or OpCo or any of their Affiliates for any act or
omission suffered or taken by such Indemnitee that does not constitute gross
negligence or willful misconduct. If all Investor Groups are similarly situated
with respect to their interests in a matter that may be an Indemnified Liability
and that is not based on a Third-Party Claim, the Indemnitees may enforce their
rights pursuant to this Section 10.10 only with the consent of the Requisite
Stockholder Majority (determined based on the Investor Groups existing at the
time of the events giving rise to such claim for indemnification). A
"Third-Party Claim" means any (i) claim brought by a Person other than the
Company, Midco, Holdings, AcquisitionCo or any of their subsidiaries, an
Investor or any Indemnitee and (ii) any derivative claim brought in the name of
the Company, Midco, Holdings, AcquisitionCo, or any of their respective
subsidiaries that is initiated by a Person other than an Investor or any
Indemnitee.

11.   GOVERNING LAW.

      11.1. Governing Law. This Agreement and all claims arising out of or based
upon this Agreement or relating to the subject matter hereof shall be governed
by and construed in accordance with the domestic substantive laws of the State
of Delaware without giving effect to any choice or conflict of laws provision or
rule that would cause the application of the domestic substantive laws of any
other jurisdiction.

      11.2. Consent to Jurisdiction. Each party to this Agreement, by its
execution hereof, (a) hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the State of Delaware for the purpose
of any action, claim, cause of action or suit (in contract, tort or otherwise),
inquiry, proceeding or investigation arising out of or based upon this Agreement
or relating to the subject matter hereof, (b) hereby waives to the extent not
prohibited

                                      -26-
<PAGE>

by applicable law, and agrees not to assert, and agrees not to allow any of its
subsidiaries to assert, by way of motion, as a defense or otherwise, in any such
action, any claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment or
execution, that any such proceeding brought in one of the above-named courts is
improper, or that this Agreement or the subject matter hereof or thereof may not
be enforced in or by such court and (c) hereby agrees not to commence or
maintain any action, claim, cause of action or suit (in contract, tort or
otherwise), inquiry, proceeding or investigation arising out of or based upon
this Agreement or relating to the subject matter hereof or thereof other than
before one of the above-named courts nor to make any motion or take any other
action seeking or intending to cause the transfer or removal of any such action,
claim, cause of action or suit (in contract, tort or otherwise), inquiry,
proceeding or investigation to any court other than one of the above-named
courts whether on the grounds of inconvenient forum or otherwise.
Notwithstanding the foregoing, to the extent that any party hereto is or becomes
a party in any litigation in connection with which it may assert indemnification
rights set forth in this agreement, the court in which such litigation is being
heard shall be deemed to be included in clause (a) above. Notwithstanding the
foregoing, any party to this Agreement may commence and maintain an action to
enforce a judgment of any of the above-named courts in any court of competent
jurisdiction. Each party hereto hereby consents to service of process in any
such proceeding in any manner permitted by Delaware law, and agrees that service
of process by registered or certified mail, return receipt requested, at its
address specified pursuant to Section 10.2 hereof is reasonably calculated to
give actual notice.

      11.3. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND COVENANTS THAT IT
WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO
TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF
ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY, PROCEEDING OR
INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE TRANSACTIONS
CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING.
EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES
HERETO THAT THIS SECTION 11.3 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY
ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT. ANY PARTY HERETO MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 11.3 WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO
TRIAL BY JURY.

      11.4. Exercise of Rights and Remedies. No delay of or omission in the
exercise of any right, power or remedy accruing to any party as a result of any
breach or default by any other party under this Agreement shall impair any such
right, power or remedy, nor shall it be construed as a waiver of or acquiescence
in any such breach or default, or of any similar breach or default occurring
later; nor shall any such delay, omission nor waiver of any single breach or
default be deemed a waiver of any other breach or default occurring before or
after that waiver.

                            [Signature pages follow]

                                      -27-
<PAGE>

      IN WITNESS WHEREOF, each of the undersigned has duly executed this
Agreement (or caused this Agreement to be executed on its behalf by its officer
or representative thereunto duly authorized) under seal as of the date first
above written.

THE COMPANY:                                UGS CAPITAL CORP.

                                                           *
                                            ________________________________
                                            Douglas E. Barnett
                                            Executive Vice President

MIDCO:                                      UGS CAPITAL CORP.  II

                                                           *
                                            ________________________________
                                            Douglas E. Barnett
                                            Executive Vice President

HOLDINGS:                                   UGS HOLDINGS, INC.

                                                           *
                                            ________________________________
                                            Douglas E. Barnett
                                            Executive Vice President

ACQUISITIONCO:                              UGS CORP.

                                                           *
                                            ________________________________
                                            Douglas E. Barnett
                                            Executive Vice President

            * The signature appearing immediately below shall serve as a
            signature at each place indicated with an "*" on this page:

                                            /s/ Douglas E. Barnett
                                            --------------------------------
                                            Douglas E. Barnett
                                            Executive Vice President

Amended and Restated Investor Agreement
<PAGE>

THE INVESTORS:                    BAIN CAPITAL INTEGRAL INVESTORS, LLC
                                  By: Bain Capital Investors, LLC
                                      its administrative member

                                                *
                                      __________________________________________
                                      Andrew Balson
                                      Managing Director

                                  BAIN CAPITAL VII COINVESTMENT FUND, LLC
                                  By: Bain Capital VII Coinvestment Fund, L.P.,
                                      its sole member
                                  By: Bain Capital Partners VII, L.P.,
                                      its general partner
                                  By: Bain Capital Investors, LLC,
                                      its general partner

                                                *
                                      __________________________________________
                                      Andrew Balson
                                      Managing Director

                                  BCIP TCV, LLC
                                  By: Bain Capital Investors, LLC
                                      its administrative member

                                                *
                                      __________________________________________
                                      Andrew Balson
                                      Managing Director

                  * The signature appearing immediately below shall serve as a
                  signature at each place indicated with an "*" on this page:

                                  /s/ Andrew Balson
                                  --------------------------
                                  Andrew Balson
                                  Managing Director

Amended and Restated Investor Agreement
<PAGE>

                                  SILVER LAKE PARTNERS, L.P.
                                  By: Silver Lake Technology Associates, L.L.C.
                                      its General Partner

                                                *
                                      __________________________________________
                                      Kenneth Y. Hao
                                      Managing Director

                                  SILVER LAKE INVESTORS, L.P.
                                  By: Silver Lake Technology Associates, L.L.C.
                                      its General Partner

                                                   *
                                      __________________________________________
                                      Kenneth Y. Hao
                                      Managing Director

                                  SILVER LAKE TECHNOLOGY INVESTORS, L.L.C.
                                  By: Silver Lake Technology Management, L.L.C.
                                      its Manager

                                                   *
                                      __________________________________________
                                      Kenneth Y. Hao
                                      Managing Director

                  * The signature appearing immediately below shall serve as a
                  signature at each place indicated with an "*" on this page:

                                  /s/ Kenneth Y. Hao
                                  --------------------------
                                  Kenneth Y. Hao
                                  Managing Director

Amended and Restated Investor Agreement
<PAGE>

                                  INTEGRAL CAPITAL PARTNERS VI, L.P.
                                  By: Integral Capital Management VI, LLC
                                      its General Partner

                                  By: /s/ Pamela K. Hagenah
                                      --------------------------
                                      Pamela K. Hagenah
                                      Manager

Amended and Restated Investor Agreement
<PAGE>

                                 WARBURG PINCUS PRIVATE EQUITY VIII, L.P.
                                 By: Warburg Pincus & Co.
                                     its General Partner

                                               *
                                     __________________________________________
                                     Gregory F. Back
                                     Partner

                                 WARBURG PINCUS NETHERLANDS PRIVATE
                                 EQUITY VIII I, C.V.
                                 By: Warburg Pincus & Co.
                                     its General Partner

                                               *
                                     __________________________________________
                                     Gregory F. Back
                                     Partner

                                 WARBURG PINCUS NETHERLANDS PRIVATE
                                 EQUITY VIII II, C.V.
                                 By: Warburg Pincus & Co.
                                     its General Partner

                                               *
                                     __________________________________________
                                     Gregory F. Back
                                     Partner

                                 WARBURG PINCUS GERMANY PRIVATE EQUITY VIII K.G.
                                 By: Warburg Pincus & Co.
                                     its General Partner

                                               *
                                     __________________________________________
                                     Gregory F. Back
                                     Partner

Amended and Restated Investor Agreement
<PAGE>

                                  WARBURG PINCUS INTERNATIONAL
                                  PARTNERS, L.P.
                                  By: Warburg Pincus & Co.
                                      its General Partner

                                                *
                                      __________________________________________
                                      Gregory F. Back
                                      Partner

                                  WARBURG PINCUS NETHERLANDS
                                  INTERNATIONAL PARTNERS I, C.V.
                                  By: Warburg Pincus & Co.
                                      its General Partner

                                                *
                                      __________________________________________
                                      Gregory F. Back
                                      Partner

                                  WARBURG PINCUS NETHERLANDS
                                  INTERNATIONAL PARTNERS II, C.V.
                                  By: Warburg Pincus & Co.
                                      its General Partner

                                                *
                                      __________________________________________
                                      Gregory F. Back
                                      Partner

                                  WARBURG PINCUS GERMANY INTERNATIONAL
                                  PARTNERS, K.G.
                                  By: Warburg Pincus & Co.
                                      its General Partner

                                                *
                                      __________________________________________
                                      Gregory F. Back
                                      Partner

Amended and Restated Investor Agreement
<PAGE>

                  * The signature appearing immediately below shall serve as a
                  signature at each place indicated with an "*" on the two pages
                  above:

                                  /s/ Gregory F. Back
                                  --------------------------
                                  Gregory F. Back
                                  Partner

Amended and Restated Investor Agreement
<PAGE>

                                   SCHEDULE I
                               HOLDINGS OF SHARES

<TABLE>
<CAPTION>
                                    CLASS A COMMON   CLASS L COMMON                     CLASS A    CLASS L   PREFERRED
STOCKHOLDER                             STOCK            STOCK        PREFERRED STOCK   OPTIONS    OPTIONS    OPTIONS
-----------                         --------------   --------------   ---------------   -------   --------   ---------
<S>                                 <C>              <C>              <C>               <C>       <C>        <C>
Bain Capital Integral
  Investors, LLC                     21,372,116.03     2,355,682.49        529,100.05         -          -           -
Bain Capital VII
  Coinvestment Fund, LLC              6,000,000.00       666,666.66        150,000.00         -          -           -
BCIP TCV, LLC                           147,884.00        35,428.62          8,899.94         -          -           -
Silver Lake Partners, L.P.           26,078,366.28     2,897,596.25        651,959.16         -          -           -
Silver Lake Investors, L.P.             733,819.35        81,535.48         18,345.49         -          -           -
Silver Lake Technology
  Investors, L.L.C.                     157,414.40        17,490.49          3,935.35         -          -           -
Integral Capital Partners
  VI, L.P.                              550,400.00        61,155.55         13,759.99         -          -           -
Warburg Pincus Private
  Equity VIII, L.P.                  13,334,831.49     1,481,647.95        333,370.78         -          -           -
Warburg Pincus Netherlands
  Private Equity VIII I, C.V.           226,756.55        25,195.17          5,668.91         -          -           -
Warburg Pincus Netherlands
  Private Equity VIII II, C.V.          159,760.30        17,751.14          3,994.01         -          -           -
Warburg Pincus Germany
  Private Equity VIII K.G.               38,651.68         4,294.63            966.29         -          -           -
Warburg Pincus International
  Partners, L.P.                     13,189,235.21     1,465,470.58        329,730.88         -          -           -
Warburg Pincus Netherlands
  International Partners I, C.V.        330,240.00        36,693.33          8,256.00         -          -           -
Warburg Pincus Netherlands
  International Partners II, C.V.       220,160.00        24,462.22          5,504.00         -          -           -
Warburg Pincus Germany
  International Partners, K.G.           20,364.80         2,262.75            509.12         -          -           -
Anthony J. Affuso                        76,000.00                -                 -         -   8,444.44    1,900.00
Charles Grindstaff                       22,000.00                -                 -         -   2,444.44      550.00
Steve Bashada                             9,044.00                -                 -         -   1,004.89      226.10
Robert Nierman                           16,720.00                -                 -         -   1,857.78      418.00
Hans-Kurt Luebberstedt                   18,400.00                -                 -         -   2,044.44      460.00
James Duncan                              2,880.00                -                 -         -     320.00       72.00
Tony L. Hemmelgarn                        4,000.00                -                 -         -     444.44      100.00
Haruyoshi Iida (RSL)                      9,600.00                -                 -         -   1,066.67      240.00
Daniel Malliet                            9,880.00                -                 -         -   1,097.78      247.00
William A. Carrelli                         950.00                -                 -         -     105.56       23.75
Rich Ramsey                               2,400.00                -                 -         -     266.67       60.00
</TABLE>

Amended and Restated Investor Agreement
<PAGE>

<TABLE>
<CAPTION>
                                    CLASS A COMMON   CLASS L COMMON                     CLASS A    CLASS L    PREFERRED
STOCKHOLDER                             STOCK            STOCK        PREFERRED STOCK   OPTIONS    OPTIONS     OPTIONS
-----------                         --------------   --------------   ---------------   -------   ---------   ---------
<S>                                 <C>              <C>              <C>               <C>       <C>         <C>
Donald Vogt                                 950.00                -                 -         -     105.56        23.75
Donald Vossler                            3,800.00                -                 -         -     422.22        95.00
W. Michael White                          2,000.00                -                 -         -     222.22        50.00
Thomas Lemberg                           12,000.00         1,333.33            300.00         -          -            -
Douglas E. Barnett                       20,000.00         2,222.22            500.00         -          -            -
The Anthony James Affuso and
  Lorraine Perkins Affuso
  Revocable Trust                        12,000.00         1,333.33            300.00         -          -            -

TOTAL                                82,782,624.09     9,178,222.20      2,065,099.97         -   19,847.11    4,465.60
</TABLE>

Amended and Restated Investor Agreement

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