Document:

EXHIBIT 10.54

 

SETTLEMENT AGREEMENT

 

AND GENERAL, JOINT AND MUTUAL RELEASE

 

This
Settlement Agreement and General, Joint and Mutual Release (“Agreement”) is
made at Newport Beach, California, dated for reference purposes February 4,
2005, by and between Metropolitan Life Insurance Company, a New York
corporation (“Met Life”) and BroadVision, Inc., a Delaware corporation (“BroadVision”),
on the other.  The above-parties are
collectively referred to hereinafter as “the Agreeing Parties”.

 

RECITATIONS AND REPRESENTATIONS

 

A.                                   Met Life and BroadVision are real parties in
interest in that certain action entitled Metropolitan Life
Insurance Company v. BroadVision, Inc.; Los Angeles County Superior Court Case
No. YC049085 (“the Action”). 
The Action involves Met Life’s claims against BroadVision for breach of
a written Office Lease dated September 1, 2000 (“the Lease”) in connection
with the real property commonly known as 400 N. Continental Blvd., Suite 250,
El Segundo, CA 90245 (“the Subject Property”), all as more particularly set
forth in Met Life’s complaint on file in the Action.

 

B.                                     The Agreeing Parties have agreed to resolve
the Action and wish to reduce to writing the full terms of their settlement
agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the
following respective provisions and covenants, the Agreeing Parties hereto
agree as follows:

 

1.                                       BroadVision shall pay Met Life the sum of One
Million Nine Hundred Twelve Thousand Five Hundred Dollars ($1,912,500.00) (“the
Settlement Amount”) in full and final settlement of the Action. Concurrently
with its execution of this Agreement, BroadVision shall also execute the
original of the Stipulation Re: Entry of Judgment in the Event of Broadvision’s
Default on Payment of Settlement; and Order Thereon (“the Stipulation”), in the
form attached to this Agreement as Exhibit “1”. 
All terms of the Stipulation are incorporated herein by reference.  The Settlement Amount shall be paid pursuant
to the payment schedule and terms set forth in the Stipulation.

 

2.                                       Concurrently with its execution of this
Agreement, BroadVision shall pay Met Life the sum of Fifteen Thousand Dollars
($15,000.00)

 

 

as reimbursement of Met Life’s attorneys’ fees and costs of suit
incurred in the Action.

 

3.                                       Upon the Agreeing Parties execution of this
Agreement and the Stipulation and BroadVision’s payment of the sum of Six
Hundred Fifty Two Thousand Five Hundred Dollars ($652,500.00) ($637,500.00
pursuant to Paragraph 1.a. of the Stipulation and $15,000.00 pursuant to Paragraph
2 above), Met Life shall, within fourteen (14) business days, file a Request
for Dismissal of the Action without prejudice; provided, however, that pursuant
to California Code of Civil Procedure §664.6, the Court shall retain
jurisdiction over the Agreeing Parties to enforce the settlement and the
Stipulation.  Within fourteen (14)
business days following BroadVision’s timely completion of payment of the
Settlement Amount in full, Met Life shall file a Request for Dismissal of the
entire Action with prejudice.

 

4.                                       Upon execution
of this Agreement and the Stipulation by the Agreeing Parties, the Lease shall
be deemed terminated.  However, nothing
herein is intended to nor shall it constitute a waiver or release of: 1) Met
Life’s right to make claims against BroadVision’s liability insurance under Article 10
of the Lease for third party claims for bodily injury or property damage
arising prior to the time that BroadVision returned possession of the Subject
Property to Met Life (June 22, 2004), and 2) Met Life’s rights to
indemnity under Article 10 of the Lease.

 

5.                                       In the event that any payment made by
BroadVision hereunder is adjudicated as a preferential payment under U.S.
Bankruptcy Code §547, Met Life shall have the right to file a proof of claim in
the bankruptcy proceeding and such claim shall not be limited by the Settlement
Amount, the Stipulation or the release set forth in this Agreement.

 

6.                                       Except for the obligations set forth in
Paragraphs 1 through 5 above and the Stipulation, the Agreeing Parties release
and forever discharge each other, and their respective predecessors, assigns,
investors, parent companies, sister companies, successor companies, property
management companies, and each past or present employee, agent, representative,
officer, director, stockholder, partner, attorney, title company, witness and
any other person, firm or corporation now, previously or hereafter affiliated
in any manner with any of the above from any and all claims, demands, causes of
action, lease obligations, security deposit refund claims, damages and
liabilities of whatever kind or nature or how so ever arising which each may
have against or claim to have against the other and the parties identified
herein by reason of any act, failure to act, cause, matter or event whatsoever,
as of the effective date of this Agreement, limited to those arising from or
related to the Lease.

 

2

 

7.                                       The Agreeing Parties acknowledge that they
have been advised by their respective attorneys concerning, and are familiar
with, the provisions of California Civil Code Section 1542, which provides
as follows:

 

“A general release does not extend to claims which
the creditor does not know or suspect to exist in his favor at the time of executing
the release which if known by him must have materially affected his settlement
with the debtor.”

 

The
Agreeing Parties, in that connection, acknowledge that they may have sustained
damage, loss, cost or expense that are presently unknown and unsuspected, and
that such damage, loss, cost or expense as may have been sustained may give
rise to additional damage, loss, cost or expense in the future. 
Nevertheless, the Agreeing Parties acknowledge that this Agreement has been
negotiated and agreed upon in light of this situation, and hereby expressly
waive any and all rights which they may have under California Civil Code Section 1542
or under any other state or federal statute or common law principal of similar
effect, limited to those arising from or related to the Lease.

 

8.                                       The Agreeing Parties each agree, that in the
event of any breach of this Agreement, the party aggrieved shall be entitled to
recover from the party who breaches, in addition to any other relief provided
by law, such costs and expenses as may be incurred by said party, including the
costs incurred in the preparation of this Agreement, court costs, attorneys’
fees, and other costs and expenses, taxable or otherwise, reasonably necessary
in preparing the defense of, defending against, or seeking or obtaining an
abatement of, or an injunction against, such action or such proceeding, or
enforcing this Agreement, or in establishing or maintaining the applicability
of, or the validity of, this Agreement, or any provision thereof, and in prosecuting
any counterclaim or cross-claim based thereon.

 

9.                                       This Agreement and the Stipulation shall be
binding upon and for the benefit of the Agreeing Parties and their respective
predecessors, successors, affiliates, representatives, assigns, officers, directors,
partners, agents and employees wherever the context requires or admits.

 

10.                                 The Agreeing Parties expressly state that
they have consulted with their respective attorneys concerning all portions of
this Agreement and the Stipulation regarding their rights and obligations
hereunder.

 

11.                                 This Agreement and the Stipulation
constitutes the entire agreement between the Agreeing Parties, and it is
expressly understood and agreed

 

3

 

that this Agreement and the Stipulation may not be altered, amended,
modified or otherwise changed in any respect or particular whatsoever except by
writing duly executed by authorized representatives of the Agreeing Parties
hereto.  The Agreeing Parties hereby agree and acknowledge that they will
make no claim at any time or place that this Agreement or the Stipulation has
been orally altered or modified or otherwise changed by oral communication of
any kind or character.

 

12.                                 This Agreement and the Stipulation shall not
be effective until they have been fully executed by the Agreeing Parties.

 

13.                                 The Agreeing Parties acknowledge that this
Agreement and the Stipulation shall not be considered an admission of liability
by any party for any purpose.  The
Agreeing Parties acknowledge that their respective claims have not been
assigned and/or otherwise transferred to any third party.

 

14.                                 Each individual executing this Agreement and
Stipulation acknowledges and agrees that each has read all the foregoing and
understands it in its entirety, and has been authorized to execute it on behalf
of the entity on whose behalf he or she signs.

 

15.     This Agreement may be executed in
counterpart which, when taken together, shall constitute one original
Agreement.  An executed copy sent via facsimile
transmission shall also be deemed to be an executed original.

 

WHEREFORE,  the parties execute this Agreement effective
as of the date first written above.

 

	
  Metropolitan
  Life Insurance Company,

  	
  BroadVision,
  Inc.,

  
	
  a
  New York corporation

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
  By:

  	
    /s/ John Menne

  	
   

  	
  By:

  	
  /s/ William E. Meyer

  	
   

  
	
  Its:

  	
    Director

  	
   

  	
  Its:

  	
  CFO

  	
   

  

 

APPROVED
AS TO FORM:

 

	
  Grant
  & Morasse, APC

  	
  Cooley
  Godward, LLP

  
	
  4921
  Birch Street, Suite 120

  	
  One
  Maritime Plaza, 20th Floor

  
	
  Newport
  Beach, California 92660

  	
  San
  Francisco, CA 94111-3580

  
	
  (949)
  622-0600

  	
  (415)
  693-2000

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/
  Desmond J. Collins

  	
   

  	
  By:

  	
    /s/
  Kenneth J. Adelson

  	
   

  
	
   

  	
  Desmond
  J. Collins

  	
   

  	
   

  	
  Kenneth
  J. Adelson

  	
   

  
	
   

  	
  Attorneys
  for Met Life

  	
   

  	
   

  	
  Attorneys
  for BroadVision

  	
   

  

 

4

 

EXHIBIT “1”

 

TO SETTLEMENT AGREEMENT

 

5

 

Steven R. Morasse, Esq., SB# 117693

Desmond J. Collins, Esq., SB# 179732

GRANT & MORASSE

A Professional Corporation

4921 Birch Street, Suite 120

Newport Beach, California 
92660-2144

(949) 622-0600

 

Attorneys for Met Life

 

 

SUPERIOR COURT FOR THE STATE OF CALIFORNIA

 

COUNTY OF LOS ANGELES, SOUTHWEST DISTRICT –
REDONDO BEACH

 

 

	
  METROPOLITAN LIFE INSURANCE

  COMPANY, a New York corporation,

  	
   

  	
  CASE NO. YC049085

  
	
   

  	
   

  	
  [Unlimited Jurisdiction]

  
	
  Met Life,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  vs.

  	
   

  	
  STIPULATION RE: ENTRY OF

  JUDGMENT IN THE EVENT OF

  
	
  BROADVISION, INC., a Delaware

  corporation; and DOES 1 through 20,

  inclusive.

  	
   

  	
  BROADVISION’S DEFAULT ON

  PAYMENT OF SETTLEMENT; AND

  ORDER THEREON

  
	
   

  	
   

  	
   

  
	
  BroadVisions.

  	
   

  	
   

  

 

 

IT IS HEREBY STIPULATED
by and between plaintiff Metropolitan Life Insurance Company, a New York
corporation (“Met Life”) and defendant BroadVision, Inc., a Delaware
Corporation (“BroadVision”), in accordance with the Settlement Agreement and
General, Joint and Mutual Release executed by the same parties hereto (“Settlement
Agreement”) that:

 

1.                                       BroadVision
shall pay Met Life the sum of One Million Nine Hundred Twelve Thousand Five
Hundred Dollars ($1,912,500.00) (“the Settlement Amount”) in settlement of the
above-entitled action.  The Settlement
Amount shall be paid as follows:

//

 

STIPULATION RE: ENTRY OF JUDGMENT IN THE
EVENT OF BROADVISION’S FAILURE TO PAY

SETTLEMENT AMOUNT; AND ORDER THEREON

 

1

 

	
  a.

  	
   

  	
  The sum of Six Hundred Thirty Seven Thousand Five Hundred Dollars
  ($637,500.00) concurrently 

  
	
  with BroadVision’s execution of this Stipulation and the Settlement
  Agreement and in no event later than February 11, 2005.

  
	
   

  
	
  b.

  	
   

  	
  The sum of Six Hundred Thirty Seven Thousand Five Hundred Dollars
  ($637,500.00) by no later than 

  
	
  May 5, 2005.

  
	
   

  
	
  c.

  	
   

  	
  The sum of Six Hundred Thirty Seven Thousand Five Hundred Dollars
  ($637,500.00) by no later than 

  
	
  September 7, 2005.

  

 

Each payment set forth above shall be payable to “Metropolitan Life
Insurance Company” and shall be delivered, by the due dates set forth above, to
Met Life, Attention: Jeff Finn, 333 South Hope Street, Suite 3650, Los Angeles,
CA 90071, unless Met Life directs another address for delivery of payment.

 

2.                                       In
the event that BroadVision fails to fully and timely perform its payment
obligations under Paragraph 1 above, Met Life shall provide BroadVision with
written notice of such failure served via facsimile transmission, personal
delivery or overnight mail delivery service (such as by FedEx), with service
deemed effected at time of facsimile transmission, personal delivery or
overnight mail delivery service, to BroadVision at 585 Broadway, Redwood City,
CA 94063, attention William E. Meyer, Facsimile No. (650) 542-5900, and to
BroadVision’s counsel, Kenneth J. Adelson, Cooley Godward LLP, One Maritime
Plaza, 20th Floor, San Francisco, CA 94111, Facsimile No. (415)
951-3699.  BroadVision shall have seven
(7) business days from receipt of such written notice to perform its payment
obligation.  In the event that Met Life
has not received such payment within said seven (7) business day period, Met
Life shall have the right to have judgment entered in its favor in the
above-entitled action, without any further notice to BroadVision, for the
following:

//

//

 

2

	
  a.

  	
   

  	
  Met Life shall have and recover from BroadVision an award of damages
  in the sum of Two Million 

  
	
  Eight Hundred Twelve Thousand Seven Hundred Eighty Four Dollars
  ($2,812,784.00), less any sums actually paid by BroadVision under this
  Stipulation, all pursuant to declaration(s) filed concurrently therewith.

  

 

3.                                       The
judgment set forth in Paragraph 2 hereof shall be entered without notice of
hearing, without hearing, and by a judge or a commissioner of the court upon:

 

	
  a.

  	
   

  	
  the filing of this Stipulation; and

  
	
   

  
	
  b.

  	
   

  	
  the filing of a declaration under penalty of perjury stating that
  BroadVision failed to timely perform 

  
	
  its payment obligations under Paragraph 1 of this Stipulation and
  failed to cure such failure to perform its payment obligation after being
  served with written notice in accordance with Paragraph 2 of this
  Stipulation. Judgment on the Stipulation shall become final for all purposes
  upon entry of judgment, the parties having waived any right to appeal from
  any such Judgment.

  

 

4.                                       The
signed original of this Stipulation shall be held in the possession of Met Life
or its counsel of record and shall not be filed with the Court until and unless
BroadVision fails to fully and timely perform its payment obligations under the
terms of this Stipulation and fails to timely cure such payment obligation as
provided in this Stipulation.  If
Broadvision fully and timely performs its payment obligations under the terms
of this Stipulation, Met Life or its counsel of record shall within fourteen
(14) business days after completion of performance of such payment obligations
deliver back to BroadVision or its counsel of record the signed original of
this Stipulation.

 

5.                                       Each
individual executing this Stipulation acknowledges, affirms and agrees that
each has read all the foregoing, understands it in its entirety and has
authority to execute this Stipulation.

 

3

 

6.                                       This
Stipulation may be executed in counterpart which, when taken together, shall
constitute one original Stipulation.  An
executed copy sent via facsimile transmission shall also be deemed to be an
executed original.

 

WHEREFORE, the parties execute this Stipulation effective as of February 4,
2005.

 

 

	
  Metropolitan Life Insurance Company,

  	
  BroadVision, Inc.,

  
	
  a New York corporation

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John Menne

  	
   

  	
  By:

  	
  /s/ William E. Meyer

  	
   

  
	
  Its:

  	
  Director

  	
   

  	
  Its:

  	
  CFO

  	
   

  

 

 

IT IS SO ORDERED:

 

 

	
  Dated:

  	
   

  	
  , 2005

  	
   

  	
   

  
	
   

  	
  Judge of the Los Angeles County Superior Court,

  Southwest District – Redondo Beach

  

 

 

APPROVED AS TO FORM:

 

	
  Grant & Morasse, APC

  	
  Cooley Godward, LLP

  
	
  4921 Birch Street, Suite 120

  	
  One Maritime Plaza, 20th Floor

  
	
  Newport Beach, California 92660

  	
  San Francisco, CA 94111-3580

  
	
  (949) 622-0600

  	
  (415) 693-2000

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/ Desmond J. Collins

  	
   

  	
  By:

  	
    /s/ Kenneth J. Adelson

  	
   

  
	
   

  	
  Desmond J. Collins

  	
   

  	
   

  	
  Kenneth J. Adelson

  	
   

  
	
   

  	
  Attorneys for Met Life

  	
   

  	
   

  	
  Attorneys for BroadVision

  	
   

  

 

4Exhibit
10.1

 

EMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT
(this “Agreement”) is made and entered into this 10th day of February 2005
(the “Effective Date”), by and between MSC.Software Corporation, a
Delaware corporation (the “Corporation”) and William J. Weyand, an
individual (the “Executive”).

 

RECITALS

 

THE PARTIES ENTER THIS AGREEMENT
on the basis of the following facts, understandings and intentions:

 

A. 
The Corporation desires that the Executive be employed
by the Corporation to carry out the duties and responsibilities described
below, all on the terms and conditions hereinafter set forth.

 

B. 
The Executive desires to accept such employment on
such terms and conditions.

 

NOW, THEREFORE,
in consideration of the above recitals incorporated herein and the mutual
covenants and promises contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby expressly
acknowledged, the parties agree as follows:

 

1.                                      Retention
and Duties.

 

1.1                               Retention.  The
Corporation does hereby hire, engage and employ the Executive for the Period of
Employment (as defined in Section 2) on the terms and conditions expressly
set forth in this Agreement.  The
Executive does hereby accept and agree to such hiring, engagement and employment,
on the terms and conditions expressly set forth in this Agreement.

 

1.2                               Duties.  During
the Period of Employment, the Executive shall serve the Corporation as its
Chief Executive Officer unless
and until it is otherwise determined by
the Corporation’s Board of Directors (the “Board”) that he shall serve in another senior executive capacity.  In addition, throughout the Period of
Employment, it is the intention of the parties that the Executive shall also
serve as the Chairman of the Board.  For such period of time that the Executive
serves as Chief Executive Officer, the Executive shall be the general manager
and chief executive officer of the Corporation and shall be principally
responsible for the general supervision, direction and control of the business
and officers of the Corporation, in each case subject to the directives of the
Board.  For such period of time that the
Executive serves as Chief Executive Officer, the Executive shall have the
general powers and duties of management usually vested in the offices of
general manager and chief executive officer of a corporation of the size and
nature of the Corporation and such other powers and duties as the Board may
assign from time to time, provided that such other duties are not inconsistent
with his position as Chief Executive 

 

1

 

Officer.  In no event, however, shall his duties as Chairman of the Board be deemed
inconsistent with the Executive’s position as Chief Executive Officer for such
purposes.  For such period of time that
the Executive does not serve as Chief Executive Officer, the Executive shall
have such duties as may be determined from time to time by the Board, provided
that those duties are consistent with the Executive’s position as a senior
executive officer with the position of Chairman.  The Executive shall also be subject to the
corporate policies of the Corporation as they are in effect from time to time
throughout the Period of Employment (including, without limitation, the
Corporation’s insider trading and ethics policies, as they may change from time
to time).  During the Period of
Employment, the Executive shall report solely to the Board. The Executive
hereby resigns from each and every Board committee on which he currently serves.

 

1.3                               No Other Employment; Minimum Time Commitment.  During
the Period of Employment, the Executive shall both (x) devote substantially all
of the Executive’s business time, energy and skill to the performance of the
Executive’s duties for the Corporation, and (y) hold no other employment.  Nothing herein shall preclude the Executive
from (i) continuing to serve on the boards of directors of the corporations or
entities listed on Schedule 1 annexed hereto, (ii) serving on such other
boards of directors of other business entities as the Board approves in
writing, (iii) engaging in a reasonable level of charitable activities and
community affairs, including serving on boards of directors or the equivalent
and (iv) managing his personal investments and affairs, provided that the
activities set forth in this Section 1.3(i), (ii) and (iii) do not
interfere in a material way with the effective discharge of his duties and
responsibilities to the Corporation.  The
Corporation hereby agrees that the Executive’s service on the boards of
directors of the entities listed on Schedule 1 and the other entities
approved by the Board shall not be deemed to be a violation of the
non-competition and non-solicitation provisions of Section 7, 10 and 11
given the current scope and business activities of those entities.  However, the Corporation shall have the right
to require the Executive to resign from any board or similar body which he may
then serve if the Board reasonably determines in writing that the Executive’s
service on such board or body materially interferes with the effective
discharge of the Executive’s duties and responsibilities to the Corporation or
that any business related to such service is then in material competition with
any business of any entity within the Company Group (as such term is defined in
Section 7).

 

1.4                               No Breach of Contract.  The
Executive hereby represents to the Corporation that to the best of the
Executive’s knowledge: (i) the execution and delivery of this Agreement by the
Executive and the Corporation and the performance by the Executive of the
Executive’s duties hereunder shall not constitute a breach of, or otherwise
contravene, the terms of any other agreement or policy to which the Executive
is a party or otherwise bound; (ii) that the Executive has no information
(including, without limitation, confidential information and trade secrets)
relating to any other person or entity which would prevent, or be violated by,
the Executive entering into this Agreement or carrying out his duties hereunder;
(iii) that the Executive is not bound by any confidentiality, trade secret or
similar agreement (other than this Agreement and the Inventions Agreement
referred to in Section 9) with any other person or entity.

 

2

 

1.5                               Location.  The
Executive acknowledges that the Corporation’s principal executive offices are
currently located in Santa Ana, California. 
The Executive’s principal place of employment shall be the Corporation’s
principal executive offices or such other location as the Executive shall
approve in writing.  The Executive agrees
that he will be regularly present at the Corporation’s principal executive
offices.  The Executive acknowledges that
he may be required to travel from time to time in the course of performing his
duties for the Corporation.

 

2.                                      Period
of Employment.  The “Period of
Employment” shall, unless sooner terminated as provided herein, be a period
of two years commencing on the Effective Date and ending at the close of
business on the second anniversary of the Effective Date (the “Termination
Date”).

 

3.                                      Compensation.

 

3.1                               Base Salary.  The Executive’s base salary for the Period of
Employment (the “Base Salary”) shall be at a rate of Four Hundred and
Eighty Five Thousand Dollars ($485,000) per annum and shall be paid in
accordance with the Corporation’s regular payroll practices in effect from time
to time, but not less frequently than in monthly installments.  During the Period of Employment, the
Corporation may increase (but it will not decrease) the Executive’s Base Salary
from the rate in effect immediately preceding any such change.

 

3.2                               Incentive Bonus.  With
respect to fiscal year 2005 and fiscal year 2006, if the Executive has remained
employed by the Corporation for the entire year (except that for fiscal year
2005, the Executive shall be eligible if the Executive remained so employed
from the Effective Date through the end of the year), the Executive shall be
eligible to receive an incentive bonus (“Incentive Bonus”) in an amount
to be determined by the Compensation Committee of the Board in its sole
discretion.  At or near the beginning of
each applicable fiscal year, the Compensation Committee, after consultation
with the Executive, shall in its sole discretion establish performance
objectives (“Performance Objectives”) for that year, the satisfaction of
which (or lack thereof) will be taken into consideration by the Compensation
Committee in determining the Executive’s Incentive Bonus for that year.  The Executive’s target Incentive Bonus amount
for any particular fiscal year, assuming the achievement of the applicable
Performance Objectives for that year, shall equal one hundred percent (100%) of
the Executive’s Base Salary for that year. 
In no event shall the Executive be entitled to an Incentive Bonus
greater than two hundred percent (200%) of the Executive’s Base Salary for that
year.  The Executive shall present to the
Board no later than March 31, 2005 the Executive’s proposed financial plan
for the Corporation for the period from April 1, 2005 through December 31,
2005.  The Compensation Committee shall
consider such financial plan in determining the fiscal 2005 Performance
Objectives.  The Executive’s Base Salary, computed as if he
was employed for the entire fiscal year 2005, shall be taken into consideration
in determining his Incentive Bonus for fiscal 2005.

 

3.3                               Initial Stock Option Grant.  On the Effective Date (the “Grant Date”),
the Corporation will grant the Executive a nonqualified stock option (the “Option”)
to purchase Four Hundred and Fifty Thousand (450,000) shares of Common Stock,
$0.01 par value, of the

 

3

 

Corporation (“Common Stock”)
at a price per share equal to the closing price of a share of Common Stock as
reported on the composite tape for securities listed on the New York Stock
Exchange for the Grant Date, provided, however, that if the Common Stock is not
listed on the New York Stock Exchange on the Grant Date, the price per share
shall be equal to the closing price of a share of Common Stock as reported for
the principal public securities market in which the Common Stock is then
trading (such number of shares and per share exercise price subject to
adjustments to reflect stock splits, stock dividends, reverse stock splits and
other changes in capitalization as contemplated by the applicable form of stock
option agreement and any applicable equity incentive plan under which the
option is granted).  The maximum term of
the Option will be ten (10) years, subject to earlier termination as set forth
in the stock option agreement evidencing the Option (in the form provided for
below).  The Option shall be granted
under the Corporation’s 2001 Stock Option Plan, as amended (the “Plan”),
unless, in view of the number of shares subject or otherwise, all or part of
the Option shall be granted outside of the Plan.  The Option shall be subject to the terms and
conditions of the Plan and a stock option agreement in substantially the form
attached hereto as Exhibit A; provided, however, that the Board or
Compensation Committee thereof may, in its sole discretion, determine to grant
all or a portion of the Option under the Committee’s (or the Board’s, as the
case may be) authority to make stock option grants outside of the scope of the
Plan, in which case the Option (to the extent not granted under the Plan) shall
contain substantively the same terms and conditions as had the Option actually
been granted under the Plan evidenced by such form of option agreement.

 

3.4                               Stock Purchase.  The Executive shall have a limited right to
purchase from the Corporation up to an additional Fifty Thousand (50,000)
shares of Common Stock subject to the terms and conditions of the Stock
Purchase Agreement attached hereto as Exhibit B.  Such right is exercisable by the Executive
only in accordance with the terms of such Stock Purchase Agreement and only to
the extent that the Executive returns a fully-executed version of such Stock
Purchase Agreement (specifying the number of such shares that the Executive
desires to purchase and accompanied by payment in full of the purchase price of
such shares in an amount required and in a manner authorized under such Stock
Purchase Agreement) to the Corporation no later than fifteen (15) days after the
Effective Date.

 

3.5                               Restricted Stock Unit Grant.  If the Executive purchases any Common Stock
as provided in Section 3.4, the Corporation shall grant to the Executive a
restricted stock unit award (the “RSU Award”). 
Four restricted stock units (“Units”) shall be granted subject to
the award for each share of Common Stock purchased by the Executive pursuant to
Section 3.4 and the applicable Stock Purchase Agreement.  The RSU Award shall be subject to vesting,
and to the other terms and conditions of, a form of Restricted Stock Unit
Agreement in substantially the form attached hereto as Exhibit C.

 

3.6                               Performance Stock Unit Grant.  On the Effective Date, the Corporation shall
grant to the Executive a performance stock award (“Performance Stock Unit Award”)
of 100,000 Units.  The Performance Stock
Unit Award shall be subject to vesting, and the other terms and conditions of,
a form of Performance Stock Unit Award Agreement in substantially the form
attached hereto as Exhibit D.

 

4

 

3.7                               Section 280G Gross-Up.  The Executive shall be covered by the tax
gross-up provisions set forth in Exhibit E hereto, incorporated herein
by this reference.

 

3.8                               Compensation
Study. 
Within ninety (90) days of the Effective Date, the
Corporation, at its own expense, will retain a nationally known compensation
expert or firm who or which will perform a comprehensive study of the director
and executive compensation arrangements, including but not limited to retainer,
salary, bonus, incentive equity awards and pension arrangements, as applicable,
at the Corporation and will compare such arrangements with other software
businesses or businesses that the expert or firm determines are appropriate
comparators.  The Board or Compensation Committee
will determine, in its sole discretion, what, if any, changes should be made in
the overall compensation packages of the directors or executives or of any
particular director or executive; provided, however, that in no event shall any
proposed or adopted change adversely affect the Executive’s rights under this
Agreement without the written consent of the Executive.

 

3.9                               New
Board Members.  The Corporation
agrees that it will use its best efforts to cause during the six (6) month
period following the Effective Date at least three (3) individuals, who are not
members of the Board on the Effective Date, to be appointed to the Board,
either as replacements for current members of the Board or as additions to the
current Board.  The Corporation will thereafter
use its best efforts to nominate such individuals for election to the Board.

 

4.                                      Benefits.

 

4.1                               Retirement, Welfare and Fringe Benefits.  During the Period of Employment, the
Executive shall be entitled to participate in all employee pension and welfare
benefit plans and programs, and fringe benefit plans and programs, made
available by the Corporation to the Corporation’s senior executives generally,
in accordance with the eligibility and participation provisions of such plans
and as such plans or programs may be in effect from time to time.

 

4.2                               Reimbursement of Business Expenses.  The
Executive is authorized to incur reasonable expenses in carrying out the
Executive’s duties for the Corporation under this Agreement and reimbursement
for all reasonable business expenses the Executive incurs during the Period of
Employment in connection with carrying out the Executive’s duties for the
Corporation, subject to the Corporation’s expense reimbursement policies in
effect from time to time.  In addition,
the Corporation shall reimburse the Executive for up to Seventy Five Thousand
Dollars ($75,000) (in the aggregate) of the Executive’s legal fees and other
expenses relating to his employment and the negotiation and preparation of this
Agreement and related agreements.

 

4.3                               Vacation and Other Leave.  During the Period of Employment, the
Executive shall accrue and be entitled to take paid vacation, such vacation
otherwise to accrue and be taken at a rate of at least four (4) weeks per year
in accordance with the Corporation’s vacation policies in effect from time to
time, including the Corporation’s policies regarding vacation accruals
(including, without limitation, limits on the amount of

 

5

 

vacation
that may be accrued and untaken before future accruals cease).  The Executive shall also be entitled to all
other holiday and leave pay generally available to other executives of the
Corporation.

 

4.4                               Housing Allowance.  During the Period of Employment, the Corporation
shall provide the Executive with an appropriate apartment or similar temporary
housing located reasonably convenient to the Corporation’s headquarters in
Orange County, California, which the Executive acknowledges may also be
occupied by other senior executives of the Corporation from time to time.  (If the Executive’s office shall move to a
different location, as provided in Section 1.5, the Corporation shall
provide similar temporary housing to the Executive at a location reasonably
convenient to such new location.)

 

4.5                               Club Dues.  The Corporation shall reimburse the Executive
for business or social club dues incurred by the Executive during the Period of
Employment, up to a maximum amount of Twelve Thousand Dollars ($12,000)
incurred during the Period of Employment in each of 2005 and 2006.

 

4.6                               Automobile Allowance.  The Corporation shall provide the Executive
with a car allowance of One Thousand Six Hundred Eighty Five Dollars ($1,685)
per month during the Period of Employment to be used for the purchase, lease
and maintenance of an appropriate automobile for Executive’s use.

 

5.                                      Termination.

 

5.1                               Termination by the Corporation.  The Executive’s employment by the
Corporation, and the Period of Employment, may be terminated at any time by the
Corporation: (i) with Cause (as defined in Section 5.5), or (ii) without
Cause, or (iii) in the event of the Executive’s death, or (iv) in the event
that the Board determines in good faith that the Executive has a Disability (as
defined in Section 5.5).

 

5.2                               Termination by the Executive.  The Executive’s employment by the Corporation,
and the Period of Employment, may be terminated at any time by the Executive,
on no less than sixty (60) days prior written notice to the Corporation;
provided, however, that (i) in the case of termination for Good Reason, the
Executive may provide immediate written notice if the Corporation fails to, or
cannot, reasonably cure the event that constitutes Good Reason and (ii) in the
case of the Executive’s good faith determination that he has a Disability, the
Executive shall provided thirty (30) days prior written notice (except that
such determination shall not be conclusive as to whether the Executive actually
has a Disability and, if it is determined that the Executive does not actually
have a Disability, he shall be deemed to have terminated employment without a
Disability and without Good Reason);
provided, further, that if the required notice period in this Section 5.2
would result in the termination occurring on the last day or following the
Period of Employment, for purposes of determining the Executive’s entitlement
to a Severance Benefit under Section 5.3 (and any acceleration of vesting
of any equity-based award), such termination shall be deemed to occur on the
earlier of (i) immediately prior to the last day of the Period of Employment or
(ii) the day on which the Executive ceases to be employed by the Corporation.  Notwithstanding the preceding sentence, in no
event shall

 

6

 

the
Executive be entitled to the Severance Benefit under Section 5.3 if he is
actually employed by the Corporation on the last day of the Period of
Employment.

 

5.3                               Benefits Upon
Termination.  If the
Executive’s employment by the Corporation is terminated during the Period of
Employment for any reason by the Corporation or by the Executive, or upon or
following the expiration of the Period of Employment (in any case, the date
that the Executive’s employment by the Corporation terminates is referred to as
the “Severance Date”), the Corporation shall have no further obligation
to make or provide to the Executive, and the Executive shall have no further
right to receive or obtain from the Corporation, any payments or benefits
except:

 

(a)                                  the Corporation shall pay the Executive (or, in the event of
his death, the Executive’s estate) any Accrued Obligations (as defined in Section 5.5);

 

(b)                                 if,
during the Period of Employment (but not following the expiration of the Period
of Employment), the Executive’s employment is terminated by the Corporation
without Cause or by the Executive for Good Reason (as defined in Section 5.5)
(and, in each case, other than due to either (i) the Executive’s death, or (ii)
his Disability), the Corporation shall, subject to the following provisions of
this Section 5.3, pay the Executive an aggregate severance benefit (“Aggregate
Severance Benefit”) (in addition to the Accrued Obligations) equal to the
sum of the following, subject to tax withholding and other authorized
deductions:

 

(i)             the
Base Salary that would have been paid to the Executive by the Corporation (at
the rate in effect immediately prior to the termination of the Executive’s
employment) for the period commencing on the day after the Severance Date and
continuing through and including the Termination Date had the Executive’s
employment not terminated, plus

 

(ii)          either (x) if the
Severance Date occurs before December 31, 2005, an amount equal to one
hundred and seventy five percent (175%) of the Executive’s annualized Base Salary
rate in effect immediately prior to the termination of the Executive’s
employment, or (y) if the Severance Date occurs on or after December 31,
2005 but before December 31, 2006, an amount equal to one hundred percent
(100%) of the Executive’s annualized Base Salary rate in effect immediately
prior to the termination of the Executive’s employment.

 

(c)                                  if,
during the Period of Employment (but not following the expiration of the Period
of Employment), the Executive’s employment is terminated as a result of the
Executive’s death or his Disability and other than on the last day of a fiscal
year, then the Corporation shall, subject to the following provisions of this Section 5.3,
pay the Executive a severance benefit (“Modified Severance Benefit”) (in
addition to the Accrued Obligations), equal to an amount determined as follows,
subject to withholding and other authorized deductions:

 

7

 

(i)             a
fraction, the numerator of which is the number of days in the fiscal year that
elapsed prior to the date of the Executive’s death or his termination due to
Disability and the denominator of which is 365, multiplied by

 

(ii)          the
Executive’s annualized Base Salary level in effect immediately preceding such
termination.

 

(The Aggregate Severance Benefit or the Modified Severance Benefit, as
the case may be, shall be hereinafter referred to as a “Severance Benefit”.)  The Severance Benefit shall be paid in a lump
sum paid not later than sixty (60) days after the Severance Date; provided,
however, that if it is determined by the parties or in the opinion of counsel
reasonably acceptable to the Executive and the Corporation, such determination
to be made or opinion provided to the Company no later than thirty (30) days
after the Severance Date, that the Severance Benefit is or reasonably may be
treated as deferred compensation within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), except in the
case of the Executive’s death, the payment of such Severance Benefit shall be
delayed (without interest) to a date no earlier than, and shall be paid as soon
as administratively practicable after, six months after the Executive’s “separation
from service,” as that term is defined in Section 409A.

 

Any obligation of the Corporation pursuant to Section 5.3(b) or
5.3(c) to pay a Severance Benefit in the circumstances described therein is
further subject to the following two conditions precedent: (i) such Severance
Benefit shall be paid only if, during the Period of Employment and prior to the
date of such payment, the Executive has remained in material compliance with
the provisions of Sections 7 through 12 (or, having not been in material
compliance, subsequently cures such noncompliance as provided below), and (ii)
the Executive’s execution and delivery of the release described in Section 5.4
(and such release has become irrevocable as provided therein).  For purposes of the preceding sentence, if
the Executive is not in material compliance with one or more provisions of
Sections 7 though 12, and a cure is reasonably possible in the circumstances,
the Executive will not be deemed to have breached such provision(s) unless the
Executive is given notice and a reasonable opportunity (in no case shall more than
a 10-day cure period be required) to cure such breach and such breach is not
reasonably cured within such time period.

 

The foregoing provisions of this Section 5.3 shall not affect: (i)
the Executive’s receipt of benefits otherwise due terminated employees under
group insurance coverage consistent with the terms of the applicable
Corporation welfare benefit plan; (ii) the Executive’s rights under the
Consolidated Omnibus Budget Reconciliation Act to continue participation in
medical, dental, hospitalization and life insurance coverage; (iii) the
Executive’s receipt of benefits otherwise due in accordance with the terms of
the Corporation’s 401(k) plan (if any); or (iv) any rights that the Executive
may have under and with respect to a stock option, restricted stock or other
equity-based award, to the extent that such award was granted before the
Severance Date and to the extent expressly provided in the written agreement
evidencing such award.

 

8

 

5.4                               Release; Exclusive Remedy.

 

(a)                                  This
Section 5.4 shall apply notwithstanding anything else contained in this
Agreement or any stock option, restricted stock or other equity-based award
agreement to the contrary.  As a
condition precedent to any Corporation obligation to the Executive pursuant to Section 5.3(b)
or 5.3(c) or any obligation to accelerate vesting of any equity-based award in
connection with the termination of the Executive’s employment, the Executive
shall, upon or promptly following his last day of employment with the
Corporation, provide the Corporation with a valid, executed, written release
substantially in the form attached hereto as Exhibit F, and such release
shall have not been revoked by the Executive pursuant to any revocation rights
afforded by applicable law.  The
Corporation shall have no obligation to make any payment to the Executive
pursuant to Section 5.3(b) or 5.3(c) (or otherwise accelerate the vesting
of any equity-based award in the circumstances as otherwise contemplated by the
applicable award agreement) unless and until the release contemplated by this Section 5.4
becomes irrevocable by the Executive in accordance with all applicable laws,
rules and regulations.

 

(b)                                 The
Executive agrees that the payments contemplated by Section 5.3 (and any
applicable acceleration of vesting of an equity-based award in accordance with
the terms of such award in connection with the termination of the Executive’s
employment) shall, if such payments are actually made and such accelerated
vesting is actually effected, constitute the exclusive and sole remedy for any
termination of his employment and the Executive covenants not to assert or
pursue any other remedies, at law or in equity, with respect to any termination
of employment, except as allowed under the release contemplated by Section 5.4(a).  The Corporation and Executive acknowledge and
agree that there is no duty of the Executive to mitigate damages under this
Agreement and any compensation and benefits which the Executive is entitled to
hereunder shall not be offset by any compensation or other amounts received by
the Executive from third parties or by the claims that the Corporation may have
against the Executive.  All amounts paid
to the Executive pursuant to Section 5.3 shall be paid without regard to
whether the Executive has taken or takes actions to mitigate damages.

 

5.5                               Certain Defined Terms.

 

(a)                                  As
used herein, “Accrued Obligations” means:

 

(i)                                     any Base Salary that had accrued but had not been paid
(including accrued and unpaid vacation time) on or before the Severance Date;
and

 

(ii)                                  any
Incentive Bonus payable pursuant to Section 3.2 with respect to fiscal
2005 or 2006 (if the Executive was employed by the Corporation on the last day
of that fiscal year) to the extent that such Incentive Bonus had not previously
been paid to the Executive; and

 

(iii)                               any
reimbursement due to the Executive pursuant to Section 4.2 for expenses
incurred by the Executive on or before the Severance Date.

 

9

 

(b)                                 As
used herein, “Cause” shall mean the reasonable and good faith written
determination by two-thirds of the Board (excluding the Executive, if he is
then a member of the Board, from both the numerator and the denominator of such
fraction for purposes of such determination) that, during the Period of
Employment, any of the following events or contingencies exists or has
occurred:

 

(i)                                     the
Executive is convicted of, or pleads guilty or nolo
contendre to, a felony within the meaning of such term by United States
federal or state law (other than traffic related offenses or as a result of
vicarious liability); or

 

(ii)                                  the
Executive willfully commits an act of material fraud, embezzlement or theft
against the Corporation or one of its affiliates or willfully commits a
material violation of state or federal securities laws involving the
Corporation or one of its affiliates; or

 

(iii)                               the
Executive willfully and repeatedly fails to perform his material fiduciary and
other duties to the Corporation after having received written notice from the
Corporation of such claimed failure; or

 

(iv)                              the Executive willfully engages in gross misconduct in
carrying out his duties hereunder resulting in material economic harm to the
Corporation; or

 

(v)                                 the
execution and delivery of this Agreement by the Executive and the Corporation
and the performance by the Executive of the Executive’s duties hereunder
constitutes a breach by the Executive of, or otherwise contravenes, the terms
of any other agreement or policy to which the Executive is a party or otherwise
bound which materially interferes with the Executive’s ability to effectively
perform his duties and responsibilities to the Corporation hereunder; or

 

(vi)                              the
Executive has information (including, without limitation, confidential
information and trade secrets) relating to any other person or entity which the
Executive is not legally and contractually free to disclose to the Corporation
which materially interferes with the Executive’s ability to effectively perform
his duties and responsibilities to the Corporation hereunder; or

 

(vii)                           the Executive is bound by any confidentiality, trade secret
or similar agreement (other than this Agreement and the Inventions Agreement
referred to in Section 9) with any other person or entity which materially
interferes with the Executive’s ability to effectively perform his duties and
responsibilities to the Corporation hereunder.

 

However, no act or failure to act, on the
Executive’s part shall be considered “willful” unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that the
Executive’s action or omission was in, or not opposed to, the best interests of
the Corporation.

 

10

 

Anything to the contrary notwithstanding, the
Executive shall not be terminated for Cause under paragraph 5.5(b)(ii), (iii),
(iv), (v), (vi) or (vii) unless he is given written notice setting forth the
basis for termination and he is given fifteen (15) days to cure such neglect or
conduct and, if he fails to cure such neglect or conduct, the Executive is
given the opportunity to be heard before the Board and the Board shall have
made the written determination set forth at the beginning of this Section 5.5(b).

 

(c)                                  As
used herein, “Disability” shall mean a physical or mental impairment
which renders the Executive unable to perform the essential functions of his
employment with the Corporation, even with reasonable accommodation that does
not impose an undue hardship on the Corporation, for more than 180 days in any
12-month period, unless a longer period is required by federal or state law, in
which case that longer period would apply. 
The determination of whether or not a Disability exists for purposes of
this Agreement shall be based upon the findings of a medical doctor reasonably
acceptable to both parties.  If the two
parties cannot agree on a medical doctor, each party shall select a medical
doctor and the two medical doctors shall select a third who shall be the
approved doctor for this purpose. 
Neither the Corporation nor the Executive shall terminate his employment
for Disability unless the party terminating the Executive’s employment has
given written notice to the other party as provided herein.

 

(d)                                 As
used herein, “Good Reason” shall mean the occurrence of one or more
of the following without the Executive’s written consent:

 

(i)                                     a material breach of this Agreement by the Corporation
(including, without limitation, any breach by the Corporation of Section 3.1);
or

 

(ii)                                  a
material diminution in the Executive’s duties (when such duties are viewed in
the aggregate) from the level contemplated by Section 1.2 (including,
without limitation, any change in title or position other than as contemplated
by Section 1.2); provided that it shall not constitute Good Reason
hereunder solely because the Executive is no longer serving as Chief Executive
Officer of the Corporation provided that he continues as an executive with the
title of Chairman, provided that in all cases he reports directly to the Board;
or

 

(iii)                               the
assignment by the Corporation of duties to the Executive that are materially
inconsistent with his position as Chief Executive Officer or as an executive
Chairman, as applicable; or

 

(iv)                              the
failure of the Corporation to obtain the assumption in writing of its
obligations to perform this Agreement by any successor to all or substantially
all of the assets or business of the Corporation within fifteen (15) days upon
a merger, consolidation, sale or similar transaction; or

 

(v)                                 if
for any reason the Executive is not elected as Chairman of the Board on the
Effective Date or if for any reason after such election the Executive’s term as
Chairman of the Board ends and the Executive is not immediately re-nominated
and re-elected as soon as reasonably possible, and not

 

11

 

otherwise re-appointed, as Chairman of the Board (in
each case only if the Executive has continuously remained in the employ of the
Corporation after the Effective Date, is otherwise willing to serve in such
capacity, and has not died or suffered a Disability); or

 

(vi)                              relocation
of the principal offices of the Corporation to a location more than twenty-five
(25) miles from the current location without the Executive’s prior written
approval, unless the Executive shall have previously consented that his office
shall be at a location other than the principal offices of the Corporation; or

 

(vii)                           the
failure of the Corporation to maintain Directors’ and Officers’ Liability
Insurance on terms not materially less favorable to the Executive than the
terms of the policy presently in effect; provided that in no event shall Good
Reason exist pursuant to this clause (vii) if the Corporation has in place
Directors’ and Officers’ Liability Insurance coverage at a cost on an
annualized basis that is not less than two hundred percent (200%) of the
annualized cost of the policy in effect on the Effective Date;

 

provided, however, that none
of the events specified in clause (i), (ii), (iii), (vi) or (vii) above shall
constitute Good Reason unless the Executive shall have notified the Corporation
in writing describing the events which constitute Good Reason and the
Corporation shall have failed to reasonably cure such event within a reasonable
period, not to exceed fifteen (15) days, after the Corporation’s actual receipt
of such written notice.

 

6.                                      Means
and Effect of Termination.  Any
termination of the Executive’s employment under this Agreement shall be
communicated by written notice of termination from the terminating party to the
other party.  The notice of termination
shall indicate the specific provision(s) of this Agreement relied upon in
effecting the termination.

 

7.                                      Non-Competition.  The Executive acknowledges and recognizes
the highly competitive nature of the businesses of the Corporation, the amount
of sensitive and confidential information involved in the discharge of the
Executive’s position with the Corporation, and the harm to the Corporation that
would result if such knowledge or expertise was disclosed or made available to
a competitor.  Based on that
understanding, the Executive hereby expressly agrees as follows:

 

(a)                                  As
a result of the particular nature of the Executive’s relationship with the
Corporation, in the capacities identified earlier in this Agreement, for the
Period of Employment the Executive hereby agrees that he will not, directly or
indirectly, (i) engage in any business for the Executive’s own account or
derive any material economic benefit from any business that competes with the
business of the Corporation or any of its affiliates (the Corporation and its
affiliates are referred to, collectively, as the “Company Group”), (ii)
enter the employ of, or render any services to, any person engaged in any
business that competes with the business of any entity within the Company
Group, (iii) acquire a financial interest in any person engaged in any business
that competes with the

 

12

 

business of any entity within the Company Group, directly or
indirectly, as an individual, partner, member, shareholder, officer, director,
principal, agent, trustee or consultant, or (iv) other than in the performance
of his duties hereunder, interfere with business relationships (whether formed
before or after the Effective Date) between the Corporation, any of its
respective affiliates or subsidiaries, and any customers, suppliers, officers,
employees, partners, members or investors of any entity within the Company
Group for the purpose of competing, or allowing a third party to compete, with
the business of any entity of the Company Group.  For purposes of this Agreement, businesses in
competition with the Company Group shall include, without limitation,
businesses in which any entity within the Company Group actively participates
and any businesses which any entity within the Company Group has specific plans
to actively participate in the future if the Executive is aware of such plans,
whether or not such entity has commenced such operations.

 

(b)                                 Notwithstanding
anything to the contrary in this Agreement, the Executive may, directly or
indirectly, own, solely as an investment, (x) securities of any person which
are publicly traded on a national or regional stock exchange or on an over-the-counter
market if the Executive (i) is not a controlling person of, or a member of a
group which controls, such person, and (ii) does not, directly or indirectly,
beneficially own two percent (2%) or more of any class of securities of such person
or (y) which is a mutual fund or similar investment vehicle.

 

8.                                      Confidentiality.
 As a material part of the
consideration for the Corporation’s commitment to the terms of this Agreement,
the Executive hereby agrees that the Executive will not at any time (whether
during or after the Executive’s employment with the Corporation), other in the
course of the Executive’s duties hereunder, knowingly disclose, disclose in a
fashion that Executive reasonably should know the consequences of such
disclosure, or use for the Executive’s own benefit or purposes or the benefit
or purposes of any other person, firm, partnership, joint venture, association,
corporation or other business organization, entity or enterprise, any trade
secrets, or other confidential data or information relating to customers,
development programs, costs, marketing, trading, investment, sales activities,
promotion, credit and financial data, financing methods, or plans of any entity
within the Company Group; provided, however, that the foregoing
shall not apply to information which is generally known to the industry or the
public, other than as a result of the Executive’s breach of this covenant.  The Executive further agrees that the
Executive will not retain or use for his account, at any time, any trade names,
trademark or other proprietary business designation used or owned in connection
with the business of any entity within the Company Group.  Notwithstanding the foregoing, the provisions
of this Section 8 shall not apply when (i) disclosure is required by law
or by any court, arbitrator, mediator or administrative or legislative body
(including any committee thereof) with apparent jurisdiction to order the
Executive to disclose or make available such information, provided, however
that the Executive shall promptly notify the Corporation in writing upon
receiving a request for such information or
(ii) with respect to any other litigation, arbitration or mediation involving
this Agreement, including but not limited to enforcement of this Agreement.

 

13

 

9.                                      Inventions
and Developments.  Concurrently
with entering into this Agreement, the Executive will execute the Inventions
Agreement attached hereto as Exhibit G.

 

10.                               Anti-solicitation.  The Executive promises and agrees that during
the Period of Employment and for a period of one (1) year thereafter, the
Executive will not, directly or indirectly, individually or as a consultant to,
or as an employee, officer, stockholder, director or other owner or participant
in any business, influence or attempt to influence customers, vendors,
suppliers, joint venturers, associates, consultants, agents, or partners of any
entity within the Company Group, either directly or indirectly, to divert their
business away from the Company Group, to any individual, partnership, firm,
corporation or other entity then in competition with the business of any entity
within the Company Group, and he will not otherwise materially interfere with
any business relationship of any entity within the Company Group; provided,
however, that following the Period of Employment, the participation in, or
ownership of, a competitive business shall not, in and of itself, be deemed to
be material interference under this Section 10.

 

11.                               Soliciting
Employees.  The Executive
promises and agrees that during the Period of Employment and for a period of
one (1) year thereafter, the Executive will not, directly or indirectly,
individually or as a consultant to, or as an employee, officer, stockholder,
director or other owner of or participant in any business, solicit (or assist
in soliciting) any person who is then, or at any time within six (6) months
prior thereto was, an employee of an entity within the Company Group who earned
annually $25,000 or more as an employee of such entity during the last six (6)
months of his or her own employment to work for (as an employee, consultant or
otherwise) any business, individual, partnership, firm, corporation, or other
entity whether or not engaged in competitive business with any entity in the
Company Group.

 

12.                               Return
of Property.  The Executive
agrees to truthfully and faithfully account for and deliver to the Corporation
all property belonging to the Corporation, any other entity in the Company
Group, or any of their respective affiliates, which the Executive may receive
from or on account of the Corporation, any other entity in the Company Group,
or any of their respective affiliates, and upon the termination of the Period
of Employment, or the Corporation’s demand, the Executive shall immediately
deliver to the Corporation all such property belonging to the Corporation, any
other entity in the Company Group, or any of their respective affiliates.  Anything to the contrary notwithstanding,
nothing in this Section 12 shall prevent the Executive from retaining a
personal home computer and papers and other materials of a personal nature,
including personal diaries, calendars and personal rolodexes, personal
information relating to his compensation or relating to the reimbursement of
expenses, personal information that he reasonably believes are needed for tax
purposes and copies of the Corporation’s compensatory plans, programs and
agreements relating to his compensation as an employee.

 

13.                               Withholding
Taxes.  Notwithstanding anything
else herein to the contrary, the Corporation may withhold (or cause there to be
withheld, as the case may be) from any amounts otherwise due or payable under
or pursuant to this Agreement such federal, state and local income, employment,
or other taxes as may be required to be withheld pursuant to any applicable law
or regulation.

 

14

 

14.                               Assignment.  This Agreement is personal in its nature
and neither of the parties hereto shall, without the consent of the other,
assign or transfer this Agreement or any rights or obligations hereunder; provided,
however, that in the event of a merger, consolidation, or transfer or
sale of all or substantially all of the assets of the Corporation with or to
any other individual(s) or entity, this Agreement shall, subject to the
provisions hereof, be binding upon and inure to the benefit of such successor
and such successor shall discharge and perform all the promises, covenants,
duties, and obligations of the Corporation hereunder, provided that the
obligations hereunder are assumed, either by law or contract, by such
transferee or successor.

 

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

 

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

 

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

 

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

 

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

 

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

 

21.                               Waiver.  Neither the failure nor any delay on the
part of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor

 

15

 

shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise of the
same or of any right, remedy, power or privilege, nor shall any waiver of any
right, remedy, power or privilege with respect to any occurrence be construed
as a waiver of such right, remedy, power or privilege with respect to any other
occurrence.  No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted
such waiver.

 

22.                               Resolution
of Disputes.  Any controversy
arising out of or relating to the Executive’s employment (whether or not before
or after the expiration of the Period of Employment), any termination of the
Executive’s employment, this Agreement, the Stock Purchase Agreement referred
to herein, the Inventions Agreement referred to herein, any equity-based award
agreements referred to herein, the enforcement or interpretation of any such an
agreement, or because of an alleged breach, default, or misrepresentation in
connection with any of the provisions of such an agreement, including (without
limitation) any state or federal statutory claims, shall be submitted to final
and binding arbitration, to be held in Orange County, California before a sole
neutral arbitrator; provided, however, that provisional injunctive relief may,
but need not, be sought in a court of law while arbitration proceedings are
pending, and any provisional injunctive relief granted by such court shall
remain effective until the matter is finally determined by the arbitrator.  The arbitration shall be administered by JAMS
pursuant to its Comprehensive Arbitration Rules and Procedures.  Judgment on the award may be entered in any court
having jurisdiction.

 

The parties acknowledge and agree that they
are hereby waiving any rights to trial by jury in any action, proceeding or
counterclaim brought by either of the parties against the other in connection
with any matter whatsoever arising out of or in any way connected with any of
the matters referenced in the first sentence of the first paragraph of this Section 22.

 

The parties agree that Corporation shall be
responsible for payment of the forum costs of any arbitration hereunder, including
the Arbitrator’s fee.  The parties
further agree that in any proceeding with respect to such matters, each party
shall bear its own attorney’s fees and costs (other than forum costs associated
with the arbitration which in any event shall be paid by the Corporation).

 

Without limiting the remedies available to
the parties and notwithstanding the foregoing provisions of this Section 22,
the Executive and the Corporation acknowledge that any breach of any of the
covenants or provisions contained in Sections 7 through 12 could result in
irreparable injury to either of the parties hereto for which there might be no
adequate remedy at law, and that, in the event of such a breach or threat
thereof, the non-breaching party shall be entitled to obtain a temporary
restraining order and/or a preliminary injunction and a permanent injunction
restraining the other party hereto from engaging in any activities prohibited
by any covenant or provision in Sections 7 through 12 or such other equitable
relief as may be required to enforce specifically any of the covenants or
provisions of Sections 7 through 12.

 

16

 

23.                               Notices.

 

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

 

(i)  if to the Corporation:

 

MSC.Software Corporation

2 MacArthur Place

Santa Ana,  California 92707

Attn: Board of Directors

 

with
a copy to:

 

Jeffrey W. Walbridge, Esq.

O’Melveny & Myers LLP

610 Newport Center Drive, Suite 1700

Newport Beach, California 92660

 

(ii)  if to the Executive:

 

William J. Weyand

6805 Alberly Lane

Cincinnati, Ohio 45243

 

(b)                                 Any
party may alter the address to which communications or copies are to be sent by
giving notice of such change of address in conformity with the provisions of
this Section 23 for the giving of notice. 
Any communication shall be effective when delivered by hand, when
otherwise delivered against receipt therefor, or five (5) business days after
being mailed in accordance with the foregoing.

 

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

 

25.                               Provisions
that Survive Termination.  The
terms of this Agreement to the extent necessary to carry out the intentions of
the parties underlying their respective rights and obligations shall survive
any termination of the Period of Employment. 
For this purpose,

 

17

 

the parties intend that the following
provisions of this Agreement shall survive any termination of the Period of
Employment (without limiting the generality of the preceding sentence as to any
other provision that may also be necessary to carry out the intentions of the
parties): Sections 3.7, 5.3, 5.4, 5.5, 7 through 24, 26 through 28, and this Section 25).

 

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

 

27.                               Corporation’s
Representations.  The Corporation
represents and warrants that (i) the execution, delivery and performance of
this Agreement by the Corporation has been fully and validly authorized by all
necessary corporate action, (ii) the officer signing this Agreement on behalf
of the Corporation is duly authorized to do so, (iii) the execution, delivery
and performance of this Agreement does not violate any applicable law,
regulation, order, judgment or decree or any agreement, plan or corporate
governance document to which the Corporation is a party or by which it is bound
and (iv) upon execution and delivery of this agreement by the parties hereto,
it shall be a valid and binding obligation of the Corporation enforceable
against it in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors’ rights generally.

 

28.                               Indemnification.

 

(a)                                  The
Corporation agrees that (i) if the Executive is made a party, or is threatened
to be made a party, to any threatened or actual action, suit or proceeding
whether civil, criminal, administrative, investigative, appellate or other (a “Proceeding”)
by reason of the fact that he is or was a director, officer or employee of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, member, employee, agent, manager, consultant or
representative of another person or (ii) if any claim, demand, request,
investigation, controversy, threat, discovery request or request for testimony
or information (a “Claim”) is made, or threatened to be made, that
arises out of or relates to the Executive’s service in any of the foregoing
capacities, whether arising before or after the Effective Date, then the
Executive shall promptly be indemnified and held harmless by the Corporation to
the fullest extent legally permitted or authorized by the Corporation’s
certificate of incorporation, bylaws or Board resolutions or, if greater, by
the laws of the State of Delaware, against any and all costs, expenses, liabilities
and losses (including, without limitation, attorney’s fees, judgments,
interest, expenses of investigating, defending or obtaining indemnity with
respect to any Proceeding or Claim, penalties, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) incurred or suffered by
the Executive in connection therewith, and such indemnification shall continue
as to the Executive even if he has ceased to be a director, officer or employee
of the Corporation or a director, officer, member, employee, agent,

 

18

 

manager, consultant or
representative of such other person and shall inure to the benefit of the
Executive’s heirs, executors and administrators.  To the extent permitted by law, the
Corporation shall advance to the Executive all costs and expenses incurred by
him in connection with any such Proceeding or Claim within thirty (30) days
after receiving written notice requesting such an advance.  Such notice shall include, to the extent
required by applicable law, an undertaking by the Executive to repay the amount
advanced if he is ultimately determined not to be entitled to indemnification
against such costs and expenses.

 

(b)                                 Neither
the failure of the Corporation (including its Board, independent legal counsel
or stockholders) to have made a determination in connection with any request
for indemnification or advancement under Section 28(a) that
indemnification of the Executive is proper because he has satisfied any
applicable standard of conduct, nor a determination by the Corporation
(including its Board, independent legal counsel or stockholders) that the
Executive has not met any applicable standard of conduct, shall create a
presumption that the Executive has not met an applicable standard of conduct.

 

(c)                                  During
the Period of Employment and for a period of three (3) years thereafter, the
Corporation shall keep in place a directors and officers’ liability insurance
policy (or policies) providing comprehensive coverage to the Executive to the
extent that the Corporation provides such coverage for any other present or
former senior executive or director of the Corporation.  Such policy shall be on terms not materially
less favorable to the Executive than the terms of the policy then in effect on
the Effective Date; provided that in no event shall the Corporation be
obligated to provide such level of coverage to the extent that the annualized
cost of the coverage would exceed two hundred percent (200%) of the annualized
cost of the coverage in effect on the Effective Date.

 

[The remainder of this page has intentionally been left blank.]

 

19

 

IN WITNESS WHEREOF,
the Corporation and the Executive have executed this Agreement as of the Effective
Date.

 

	
   

  	
  “COMPANY”

  
	
   

  	
   

  
	
   

  	
  MSC.Software Corporation,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Laskey

  	
   

  
	
   

  	
  Name: John Laskey

  
	
   

  	
  Title: Senior Vice President, Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “EXECUTIVE”

  
	
   

  	
   

  
	
   

  	
  /s/ William J. Weyand

  	
   

  
	
   

  	
  William J. Weyand

  
					

 

20

 

SCHEDULE 1
– LIST OF CURRENT DIRECTORSHIPS

 

 

[Attached hereto.]

 

 

EXHIBIT
A – FORM OF NONQUALIFIED STOCK OPTION AGREEMENT

 

 

[Attached hereto.]

 

 

EXHIBIT
B – FORM OF STOCK PURCHASE AGREEMENT

 

 

[Attached hereto.]

 

 

EXHIBIT
C – FORM OF RESTRICTED STOCK UNIT AGREEMENT

 

 

[Attached hereto.]

 

 

EXHIBIT
D – FORM OF PERFORMANCE STOCK UNIT AGREEMENT

 

 

[Attached hereto.]

 

 

EXHIBIT E
– TAX GROSS-UP PROVISIONS

 

1.1                               Gross-Up Payment.  In the event it is determined (pursuant to Section 1.2)
or finally determined (as defined in Section 1.3(c)) that any payment,
distribution, transfer, or benefit by the Corporation,
or a direct or indirect subsidiary or affiliate of the Corporation, to or for
the benefit of the Executive or the Executive’s dependents, heirs or beneficiaries
(whether such payment, distribution, transfer, benefit or other event occurs
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Exhibit E) (each a “Payment”
and collectively the “Payments”) is subject to the excise tax imposed by
Section 4999 of the Code, and any successor provision or any comparable
provision of state or local income tax law (collectively, “Section 4999”),
or any interest, penalty or addition to tax is incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest,
penalty, and addition to tax, hereinafter collectively referred to as the “Excise
Tax”), then, within 10 days after such determination or final determination,
as the case may be, the Corporation shall
pay to the Executive (or to the applicable taxing authority on the Executive’s
behalf) an additional cash payment (hereinafter referred to as the “Gross-Up
Payment”) equal to an amount such that after payment by the Executive of
all taxes, interest, penalties, additions to tax and costs imposed or incurred
with respect to the Gross-Up Payment (including, without limitation, any income
and excise taxes imposed upon the Gross-Up Payment), the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon such
Payment or Payments.  This provision is
intended to put the Executive in the same position as the Executive would have
been had no Excise Tax been imposed upon or incurred as a result of any
Payment.

 

1.2                               Determination of Gross-Up.

 

(a)                                  Except
as provided in Section 1.3, the determination that a Payment is subject to
an Excise Tax shall be made in writing by the principal certified public
accounting firm then retained by the Corporation to audit its annual financial
statements (the “Accounting Firm”). 
Such determination shall include the amount of the Gross-Up Payment and
detailed computations thereof, including any assumptions used in such
computations.  Any determination by the
Accounting Firm will be binding on the Corporation and the Executive.

 

(b)                                 For
purposes of determining the amount of the Gross-Up Payment, the Executive shall
be deemed to pay Federal income taxes at the highest marginal rate of Federal
individual income taxation in the calendar year in which the Gross-Up Payment
is to be made.  Such highest marginal
rate shall take into account the loss of itemized deductions by the Executive
and shall also include the Executive’s share of the hospital insurance portion
of FICA and state and local income taxes at the highest marginal rate of
individual income taxation in the state and locality of the Executive’s
residence on the date that the Payment is made, net of the maximum reduction in
Federal income taxes that could be obtained from the deduction of such state
and local taxes.

 

 

1.3                               Notification.

 

(a)                                  The
Executive shall notify the Corporation in writing of any claim by the Internal
Revenue Service (or any successor thereof) or any state or local taxing
authority (individually or collectively, the “Taxing Authority”) that,
if successful, would require the payment by the Corporation of a Gross-Up Payment.  Such notification shall be given as soon as
practicable but no later than 30 days after the Executive receives written
notice of such claim and shall apprise the Corporation of the nature of such
claim and the date on which such claim is requested to be paid; provided,
however, that failure by the Executive to give such notice within such 30-day
period shall not result in a waiver or forfeiture of any of the Executive’s
rights under this Exhibit E except to the extent of actual damages suffered by
the Corporation as a result of
such failure.  The Executive shall not
pay such claim prior to the expiration of the 15-day period following the date
on which the Executive gives such notice to the Corporation (or such shorter
period ending on the date that any payment of taxes, interest, penalties or
additions to tax with respect to such claim is due).  If the Corporation notifies the Executive in
writing prior to the expiration of such 15-day period (regardless of whether
such claim was earlier paid as contemplated by the preceding parenthetical)
that it desires to contest such claim, the Executive shall:

 

(1)                                  give the Corporation any information reasonably requested by
the Corporation relating to such claim;

 

(2)                                  take
such action in connection with contesting such claim as the Corporation shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
selected by the Corporation;

 

(3)                                  cooperate with the Corporation in good faith in order
effectively to contest such claim; and

 

(4)                                  permit
the Corporation to participate in any proceedings relating to such claim;

 

provided, however, that the Corporation shall bear and pay
directly all attorneys fees, costs and expenses (including additional interest,
penalties and additions to tax) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for all
taxes (including, without limitation, income and excise taxes), interest,
penalties and additions to tax imposed in relation to such claim and in
relation to the payment of such costs and expenses or indemnification.

 

(b)                                 Without
limitation on the foregoing provisions of this Section 1.3, and to the
extent its actions do not unreasonably interfere with or prejudice the
Executive’s disputes with the Taxing Authority as to other issues, the
Corporation shall control all proceedings taken in connection with such contest
and, in its

 

 

reasonable
discretion, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the Taxing Authority in respect of
such claim and may, at its or in their sole option, either direct the Executive
to pay the tax, interest or penalties claimed and sue for a refund or contest
the claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Corporation
shall determine; provided, however, that if the Corporation directs the
Executive to pay such claim and sue for a refund, the Corporation shall advance an amount
equal to such payment to the Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis, from all
taxes (including, without limitation, income and excise taxes), interest,
penalties and additions to tax imposed with respect to such advance or with
respect to any imputed income with respect to such advance, as any such amounts
are incurred; and, further, provided, that any extension of the statute of
limitations relating to payment of taxes, interest, penalties or additions to
tax for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount; and,
provided, further, that any settlement of any claim shall be reasonably
acceptable to the Executive, and the Corporation’s control of the contest shall
be limited to issues with respect to which a Gross-Up Payment would be payable
hereunder, and the Executive shall be entitled to settle or contest, as the
case may be, any other issue.

 

(c)                                  If,
after receipt by the Executive of an amount advanced by the Corporation pursuant to Section 1.3(a),
the Executive receives any refund with respect to such claim, the Executive
shall (subject to the Corporation’s
compliance with the requirements of this Exhibit E) promptly pay to the Corporation an amount equal to such
refund (together with any interest paid or credited thereof after taxes
applicable thereto), net of any taxes (including, without limitation, any
income or excise taxes), interest, penalties or additions to tax and any other
costs incurred by the Executive in connection with such advance, after giving
effect to such repayment.  If, after the
receipt by the Executive of an amount advanced by the Corporation pursuant to Section 1.3(a), it is finally
determined that the Executive is not entitled to any refund with respect to
such claim, then such advance shall be forgiven and shall not be required to be
repaid and the amount of such advance shall be treated as a Gross-Up Payment
and shall offset, to the extent thereof, the amount of any Gross-Up Payment
otherwise required to be paid.

 

(d)                                 For
purposes of this Exhibit E, whether the Excise Tax is applicable to a Payment
shall be deemed to be “finally determined” upon the earliest of: (1) the
expiration of the 15-day period referred to in Section 1.3(a) if the
Corporation or the Executive’s Employer has not notified the Executive that it
intends to contest the underlying claim, (2) the expiration of any period
following which no right of appeal exists, (3) the date upon which a closing
agreement or similar agreement with respect to the claim is executed by the
Executive and the Taxing Authority (which agreement may be executed only in
compliance with this section), or (4) the receipt by the Executive of notice
from the Corporation that it no longer seeks

 

 

to pursue a
contest (which shall be deemed received if the Corporation does not, within 15
days following receipt of a written inquiry from the Executive, affirmatively
indicate in writing to the Executive that the Corporation intends to continue
to pursue such contest).

 

1.4                               Underpayment and Overpayment.  It is possible that no Gross-Up Payment will
initially be made but that a Gross-Up Payment should have been made, or that a
Gross-Up Payment will initially be made in an amount that is less than what
should have been made (either of such events is referred to as an “Underpayment”).  It is also possible that a Gross-Up Payment
will initially be made in an amount that is greater than what should have been
made (an “Overpayment”).  The
determination of any Underpayment or Overpayment shall be made by the
Accounting Firm in accordance with Section 1.2.  In the event of an Underpayment, the amount
of any such Underpayment shall be paid to the Executive as an additional
Gross-Up Payment.  In the event of an
Overpayment, the Executive shall promptly pay to the Corporation the amount of
such Overpayment together with interest on such amount at the applicable
Federal rate provided for in Section 1274(d) of the Code for the period
commencing on the date of the Overpayment to the date of such payment by the
Executive to the Corporation.  The
Executive shall make such payment to the Corporation as soon as administratively
practicable after the Corporation notifies the Executive of (a) the Accounting
Firm’s determination that an Overpayment was made and (b) the amount to be
repaid.

 

 

EXHIBIT
F 

 

FORM
OF RELEASE

 

EMPLOYMENT
SEPARATION AND GENERAL RELEASE AGREEMENT

 

This Employment Separation and General Release
Agreement (this “Separation Agreement”), is entered into this      
day of            ,       
by and between William J. Weyand, an individual (“Weyand”), and
MSC.Software Corporation, a Delaware corporation (“MSC”).

 

WHEREAS, Weyand has
been employed as the Chief Executive Officer and/or Chairman of MSC pursuant to
an employment agreement entered into between Weyand and MSC, dated February 9,
2005 (“Employment Agreement”); and

 

WHEREAS, Weyand and
MSC have mutually agreed to terminate Weyand’s employment relationship with MSC
upon the terms set forth herein;

 

NOW, THEREFORE, in
consideration of the covenants undertaken and the releases contained in this
Separation Agreement, Weyand and MSC agree as follows:

 

I.                                    Termination.  Weyand’s position as an officer,
director, employee, member, manager and in any other capacity with MSC and each
of its affiliates is hereby terminated effective                             ,
20      (“Separation Date”), and all benefits
and perquisites of employment will cease as of the Separation Date.  The Employment Agreement shall terminate as
of the Separation Date, provided, however, that notwithstanding anything to the
contrary in this Agreement, Sections 3.7, 5.3, 5.4, 5.5, and 7 through 28 of
the Employment Agreement shall continue to apply in accordance with their
terms.  All payments due to Weyand from
MSC shall be determined under the
applicable provisions of the Employment Agreement and this Agreement.  Weyand acknowledges and agrees that, upon
receipt of all payments due to him on or before the Separation Date, he will
have received all amounts owed for his regular and usual salary
(including, but not limited to, any severance, overtime, bonus, commissions, or
other wages), usual benefits and accrued but unused vacation through the
Separation Date and that all payments due to Weyand from MSC after the
Separation Date shall be determined under this Separation Agreement.

 

II.                                Severance Benefit.  MSC shall pay as severance pay to Weyand a
lump sum amount of                                
($           ), less
standard withholding and authorized deductions (the “Severance Benefit”),
as determined under Section 5.3 of the Employment Agreement.  Such severance shall be paid within thirty
(30) days following Weyand’s delivery of this fully executed Separation
Agreement to MSC; provided, however, that if it is determined by the parties or
in the opinion of counsel reasonably acceptable to the Executive and the
Corporation, such determination to be made or opinion provided to the Company
no later than thirty (30) days after the Severance Date, that the Severance
Benefit is or reasonably may be treated as deferred compensation within the
meaning of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), except in the case of the Executive’s death, the payment

 

 

of
such Severance Benefit shall be delayed (without interest) to a date no earlier
than, and shall be paid as soon as administratively practicable after, six months
after the Executive’s “separation from service,” as that term is defined in Section 409A.  Such Severance Benefit is for and in lieu of
any other payments or benefits (and, except as specifically provided herein,
none shall accrue) for periods after the Separation Date, except with respect
to his continuing rights in certain equity awards made pursuant to the Option
Agreement, Stock Purchase Agreement, the Restricted Stock Unit Award Agreement
and the Performance Stock Unit Award Agreement (as such terms are defined in
the Employment Agreement) as acknowledged in Section VII.D hereof.  Weyand specifically acknowledges and agrees
that he is entitled to receive no severance pay or other benefits pursuant to
any severance plan or policy of MSC or any of its affiliates.

 

III.                            Release.  Weyand on behalf of himself, his descendants,
dependents, heirs, executors, administrators, assigns, and successors, and each
of them, hereby covenants not to sue and fully releases and discharges MSC and
each of its parents, subsidiaries and affiliates, past and present (together,
the “Company Group”), as well as its and their trustees, directors, officers,
members, managers, partners, agents, attorneys, insurers, employees,
stockholders, representatives, assigns, and successors, past and present, and
each of them, hereinafter together and collectively referred to as the “Releasees,”
with respect to and from any and all claims, wages, demands, rights, liens,
agreements, contracts, covenants, actions, suits, causes of action, obligations,
debts, costs, expenses, attorneys’ fees, damages, judgments, orders and
liabilities of whatever kind or nature in law, equity or otherwise, whether now
known or unknown, suspected or unsuspected, and whether or not concealed or
hidden, which he now owns or holds or he has at any time heretofore owned or
held or may in the future hold as against any of said Releasees, arising out of
or in any way related to his service as an officer, director, employee, member
or manager of any member of the Company Group, his separation from his position
as an officer, director, employee, manager and/or member, as applicable, of any
member of the Company Group, or any other transactions, occurrences, acts or
omissions or any loss, damage or injury whatever, known or unknown, suspected
or unsuspected, resulting from any act or omission by or on the part of said
Releasees, or any of them, committed or omitted prior to the date of this
Separation Agreement related to Weyand’s employment or service with any member
of the Company Group, including, without limiting the generality of the
foregoing, any claim under Title VII of the Civil Rights Act of 1964, the
Americans with Disabilities Act, the Age Discrimination in Employment Act, the
Family and Medical Leave Act of 1993, the California Fair Employment and
Housing Act, the California Family Rights Act, or any claim for severance pay,
bonus, sick leave, holiday pay, vacation pay, life insurance, health or medical
insurance or any other fringe benefit, workers’ compensation or disability; provided
that such release shall not apply to (1) any obligation created by or arising
out of this Separation Agreement for which receipt or satisfaction has not been
acknowledged, (2) any right to indemnification that Weyand may have pursuant to
MSC’s Bylaws, its certificate of incorporation or under the Employment
Agreement with respect to any loss, damages or expenses (including but not
limited to attorneys’ fees) that Weyand may in the future incur with respect to
his service as an employee, officer or director of MSC or any of its
subsidiaries or affiliates, (3) with respect to any rights that Weyand may have
to insurance coverage for such losses, damages or expenses under any MSC
directors and officers liability insurance policy, (4) any right under a
written equity-based award agreement entered into by and between MSC and Weyand
before the Separation Date to the extent that such right continues after the
Separation Date in accordance with the terms of the award, (5) the right of Weyand
to obtain contribution as permitted by law in the event of an entry

 

 

of judgment
against Weyand as a result of any act or failure to act for which Weyand and
MSC are jointly liable, (6) any rights to continued medical coverage that
Weyand may have under COBRA, (7) any rights to payment of benefits that Weyand
may have under a retirement plan sponsored or maintained by MSC that is
intended to qualify under Section 401(a) of the Internal Revenue Code of
1986, as amended, and (8) any deferred compensation or supplemental retirement
benefits that Weyand may be entitled to under a nonqualified deferred
compensation or supplemental retirement plan of MSC.

 

IV.                            1542 Waiver.  It is the intention of Weyand in executing
this instrument that the same shall be effective as a bar to each and every
claim, demand and cause of action hereinabove specified.  In furtherance of this intention, Weyand
hereby expressly waives any and all rights and benefits conferred upon him by
the provisions of SECTION 1542 OF THE CALIFORNIA CIVIL CODE and expressly
consents that this Separation Agreement shall be given full force and effect
according to each and all of its express terms and provisions, including those
related to unknown and unsuspected claims, demands and causes of action, if
any, as well as those relating to any other claims, demands and causes of
action hereinabove specified. SECTION 1542 provides:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.”

 

Weyand acknowledges that he may hereafter
discover claims or facts in addition to or different from those which Weyand
now knows or believes to exist with respect to the subject matter of this
Separation Agreement and which, if known or suspected at the time of executing
this Separation Agreement, may have materially affected this settlement.  Nevertheless, Weyand hereby waives any right,
claim or cause of action that might arise as a result of such different or
additional claims or facts.  Weyand
acknowledges that he understands the significance and consequences of such
release and such specific waiver of SECTION 1542.

 

V.                                ADEA Waiver.  Weyand expressly acknowledges and agrees that
by entering into this Agreement, he is waiving any and all rights or claims
that he may have arising under the Age Discrimination in Employment Act of
1967, as amended, which have arisen on or before the date of execution of this
Separation Agreement.  Weyand further
expressly acknowledges and agrees that:

 

A.                                   In
return for this Separation Agreement, he will receive consideration beyond that
which he was already entitled to receive before entering into this Separation
Agreement;

 

B.                                     He
is hereby advised in writing by this Separation Agreement to consult with an
attorney before signing this Separation Agreement;

 

 

C.                                     He
was given a copy of this Separation Agreement on                    ,
20    and informed that he had twenty-one (21) days within which
to consider this Separation Agreement; and

 

D.                                    He
was informed that he had seven (7) days following the date of execution of this
Separation Agreement in which to revoke this Separation Agreement.

 

VI.                            No Transferred Claims.  Weyand warrants and represents that he has
not heretofore assigned or transferred to any person not a party to this
Separation Agreement any released matter or any part or portion thereof and he
shall defend, indemnify and hold MSC and each of its affiliates harmless from
and against any claim (including the payment of attorneys’ fees and costs
actually incurred whether or not litigation is commenced) based on or in
connection with or arising out of any such assignment or transfer made,
purported or claimed.

 

VII.                        Miscellaneous

 

A.                              Successors.

 

This Separation Agreement is personal to Weyand and
shall not, without the prior written consent of MSC, be assignable by Weyand.

 

This Separation Agreement shall inure to the benefit
of and be binding upon MSC and its respective successors and assigns and any
such successor or assignee shall be deemed substituted for MSC under the terms
of this Separation Agreement for all purposes. 
As used herein, “successor” and “assignee” shall include any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires the ownership of
MSC or to which MSC assigns this Separation Agreement by operation of law or
otherwise.

 

B.                                Waiver. 
No waiver of any breach of any term or provision of this Separation
Agreement shall be construed to be, nor shall be, a waiver of any other breach
of this Separation Agreement.  No waiver
shall be binding unless in writing and signed by the party waiving the breach.

 

C.                                Modification.  This Separation Agreement may not be
amended or modified other than by a written agreement executed by Weyand and
the Chief Executive Officer of MSC or his designee, or if Weyand is then Chief
Executive Officer, an officer authorized by the Board.

 

D.                               Complete Agreement.  This Separation Agreement constitutes and
contains the entire agreement and final understanding concerning Weyand’s
relationship with MSC and its affiliates and the other subject matters
addressed herein between the parties, and supersedes and replaces all prior
negotiations and all agreements proposed or otherwise, whether written or oral,
concerning the subject matters.  Any
representation, promise or agreement not specifically included in this
Separation Agreement or the Confidentiality Agreement shall not be binding upon
or enforceable against either party. 
This Separation Agreement constitutes an integrated agreement.  Notwithstanding the preceding provisions of
this Section VII.D, MSC’s rights under

 

 

the Employment Agreement
entered into by and between MSC and Weyand on or about February 10, 2005
(including, without limitation, the confidentiality and no solicitation
provisions thereof), the Inventions Agreement by and between Weyand and MSC and
entered into on or about February 10, 2005 (the “Inventions Agreement”),
and any written equity-based award agreement entered into by and between MSC
and Weyand before the Separation Date pursuant to which Weyand has rights that
continue after the Separation Date in accordance with the terms of the award
are each outside of the scope of the foregoing provisions of this Section VII.D
and shall continue in effect in accordance with their terms.

 

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

 

F.                                 Choice of Law.  This Separation Agreement shall be deemed to
have been executed and delivered within the State of California, and the rights
and obligations of the parties hereunder shall be construed and enforced in
accordance with, and governed by, the laws of the State of California without
regard to principles of conflict of laws.

 

G.                                Cooperation in Drafting.  Each party has cooperated in the drafting and
preparation of this Separation Agreement. 
Hence, in any construction to be made of this Separation Agreement, the
same shall not be construed against any party on the basis that the party was
the drafter.

 

H.                               Counterparts.  This Separation Agreement may be executed
in counterparts, and each counterpart, when executed, shall have the efficacy
of a signed original.  Photographic
copies of such signed counterparts may be used in lieu of the originals for any
purpose.

 

I.                                    Arbitration.  Any controversy arising out of or relating to
this Separation Agreement, the enforcement or interpretation of this Separation
Agreement, or because of an alleged breach, default, or misrepresentation in
connection with any of the provisions of this Separation Agreement, including
(without limitation) any state or federal statutory claims, shall be submitted
to final and binding arbitration, to be held in Orange County, California
before a sole neutral arbitrator; provided, however, that provisional
injunctive relief may, but need not, be sought in a court of law while
arbitration proceedings are pending, and any provisional injunctive relief
granted by such court shall remain effective until the matter is finally determined
by the arbitrator.  The arbitration shall
be administered by JAMS pursuant to its Comprehensive Arbitration Rules and
Procedures.  Judgment on the award may be
entered in any court having jurisdiction.

 

The parties acknowledge and agree that they
are hereby waiving any rights to trial by jury in any action, proceeding or
counterclaim brought by either of the parties against the other in connection
with any matter whatsoever arising out of or in any way connected with any of
the matters referenced in the first sentence of the first paragraph of this Section VIII.J.

 

 

The parties agree that MSC shall be
responsible for payment of the forum costs of any arbitration hereunder,
including the Arbitrator’s fee.  The
parties further agree that in any proceeding with respect to such matters, each
party will bear its own attorney’s fees and costs (other than forum costs
associated with the arbitration which in any event shall be paid by MSC).

 

Without limiting the remedies available to
the parties and notwithstanding the foregoing provisions of this Section VII.J,
Weyand and MSC acknowledge that any breach of any of the covenants or
provisions contained in this Separation Agreement could result in irreparable
injury to either of the parties hereto for which there might be no adequate
remedy at law, and that, in the event of such a breach or threat thereof, the
non-breaching party shall be entitled to obtain a temporary restraining order
and/or a preliminary injunction and a permanent injunction restraining the
other party hereto from engaging in any activities prohibited by any covenant
or provision in this Separation Agreement or such other equitable relief as may
be required to enforce specifically any of the covenants or provisions of this
Separation Agreement.

 

J.                                   Advice of Counsel.  In entering this Separation Agreement, the
parties represent that they have relied upon the advice of their attorneys, who
are attorneys of their own choice, and that the terms of this Separation
Agreement have been completely read and explained to them by their attorneys,
and that those terms are fully understood and voluntarily accepted by them.

 

K.                               Supplementary Documents.  All parties agree to cooperate fully and to
execute any and all supplementary documents and to take all additional actions
that may be necessary or appropriate to give full force to the basic terms and
intent of this Separation Agreement and which are not inconsistent with its
terms.

 

L.                                 Headings.  The section headings contained in this
Separation Agreement are inserted for convenience only and shall not affect in
any way the meaning or interpretation of this Separation Agreement.

 

M.                            Taxes. 
Other than MSC’s obligation to withhold taxes as required by law or
regulation, Weyand shall be solely responsible for any taxes due as a result of
the payment of the Severance Benefit and other benefits to be provided to
Weyand pursuant to Section III. 
Weyand will defend and indemnify MSC and each of its affiliates from and
against any tax liability that any of them may have with respect to any such
payment and against any and all losses or liabilities, including defense costs,
arising out of Weyand’s failure to pay any taxes due with respect to any such
payment.  Notwithstanding the foregoing,
in the event that Weyand is liable for excise tax under Section 4999 of
the Code, MSC shall pay him the amounts required under Section 3.7 of the
Employment Agreement.

 

[Remainder of page intentionally
left blank.]

 

 

I have
read the foregoing Separation Agreement and I accept and agree to the
provisions it contains and hereby execute it voluntarily with full
understanding of its consequences.

 

EXECUTED this      day of
             20   ,
at Orange County, California.

 

	
   

  	
  “Weyand”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  William J. Weyand

  
	
   

  	
   

  
	
   

  	
   

  
	
  EXECUTED
  this      day of
              
  20   , at Orange County, California.

  
	
   

  
	
   

  	
  “MSC”

  
	
   

  	
   

  
	
   

  	
  MSC.Software Corporation,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	 

	
   

  	
  Its:

  	
   

  	
   

  	 

 

 

ATTACHMENT
A

 

ENDORSEMENT

 

I, William J. Weyand, hereby acknowledge that I was
given 21 days to consider the foregoing Employment Separation and General
Release Agreement and voluntarily chose to sign the Employment Separation and
General Release Agreement prior to the expiration of the 21-day period.

 

I declare under penalty of perjury under the laws of
the state of California, that the foregoing is true and correct.

 

EXECUTED this      day of              
20   , at Orange County, California.

 

	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  William J. Weyand

  

 

 

EXHIBIT
G – FORM OF INVENTIONS AGREEMENT

 

 

[Attached hereto.]

 

 

William J. Weyand

6805 Alberly Lane

Cincinnati, OH 45243

 

February 10,
2005

 

MSC.Software Corporation

2 MacArthur Place

Santa Ana, CA 97207

 

Gentlemen:

 

Reference is made to certain agreements, entered into as of February 10,
2005, between MSC.Software Corporation (the “Company”) and William J. Weyand (“Weyand”),
namely a Stock Purchase Agreement, a Stock Option Agreement, a Restricted Stock
Unit Award Agreement and a Performance Stock Unit Award Agreement
(individually, an “Agreement” and collectively, the “Agreements”).  Capitalized terms shall have the meaning set
forth in each of the Agreements except as otherwise defined herein.

 

1. 
Each of the Agreements provides that, upon the termination of employment
of Weyand for any reason, if there is no public market for the Company’s Common
Stock, Weyand shall have the right to require the Company to purchase any or
all of the Common Stock acquired by Weyand under each of the Agreements for its
then fair market value.  In such case, if
Weyand exercises his right to require the Company to purchase any or all of
such Common Stock, the fair market value of such Common Stock promptly shall be
determined reasonably and in good faith by the Board of Directors of the
Company (the “Board”) in the first instance. 
In the event Weyand shall object in writing to the determination by the
Board within 30 days after receipt of notice thereof, fair market value shall
be conclusively determined by an independent appraiser (the “Appraiser”)
mutually acceptable to Weyand and the Company. 
In the event that Weyand and the Company are unable to agree upon an
Appraiser, they shall each select an independent investment banking firm and
the two firms so selected shall choose a third entity to act as the Appraiser
hereunder.  The Appraiser shall, in all
events, be a nationally recognized investment banking firm which shall not have
acted on behalf of the Company or any affiliate thereof or Weyand during the
preceding two years.  All costs of the
Appraiser shall be borne by the Company. 
In determining fair market value, the Appraiser shall not take into
account any discounts for lack of control, lack of marketability or similar
items.

 

2.  Each of the Agreements also provides that,
upon a Change in Control Event or a Going Private Transaction, Weyand may
require the Company, immediately before such Change in Control Event or Going
Private Transaction, to purchase any or all of the Common Stock acquired by
Weyand under each such Agreement.  If and
to the extent that Weyand does not sell any or all of such Common Stock to the
Company upon either a Change in Control Event or a Going Private Transaction,
as the case may be, and 

 

 

Weyand continues
to own shares or other equity interests (the “Remaining Shares”) in the
Company, or any successor thereto, Weyand shall enjoy with respect to the
Remaining Shares such “tag along” rights, “put” rights, exchange rights,
registration rights and other comparable rights, if any, as are provided to any
other holder of shares or equity interest in the Company or such successor on a
basis which is no less favorable than is then or thereafter provided to any
other holder of such shares of equity interests.

 

Except as expressly set forth herein and amended hereby, the provisions
of each of the Agreements shall remain in full force and effect.

 

Please acknowledge your agreement with the foregoing by signing the
enclosed copy of this letter and returning it to me.

 

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  /s/ William J. Weyand

  	
   

  
	
   

  	
   

  
	
   

  	
  William J. Weyand

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed to and Accepted:

  	
   

  
	
   

  	
   

  
	
  MSC.SOFTWARE CORPORATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John Laskey

  	
   

  	
   

  
	
  Name:

  	
  John Laskey

  	
   

  
	
  Title:

  	
  Senior Vice President,

  	
   

  
	
   

  	
  Chief Financial Officer

  	
   

  
						

 

2

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