AMENDMENT NUMBER 1 TO EMPLOYMENT AGREEMENT

Exhibit 10.19

AMENDMENT NUMBER 1 TO

EMPLOYMENT AGREEMENT

THIS AMENDMENT NUMBER 1 TO EMPLOYMENT AGREEMENT (this “ Agreement ”) is made and entered into this 23 ^rd day of December 2008 , by and between MSC.Software Corporation, a Delaware corporation (the “ Corporation ” or “ MSC ”) and William J. Weyand, an individual (“ Weyand ”). By amendment, this Agreement amends and restates in its entirety the Employment Agreement between MSC and Weyand dated November 27, 2006 (the “ Prior Employment Agreement ”), and the Prior Employment Agreement remains in force on its original terms except where modified through this Amendment Number 1.

RECITALS

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

 

A.

Weyand’s currently serves as MSC’s CEO and Chairman of the Board;

 

B.

MSC desires to continue to employ Weyand to carry out the duties and responsibilities described below, all on the terms and conditions hereinafter set forth in this new Employment Agreement.

 

C.

Weyand desires to accept such employment with MSC 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 . MSC hereby hires, engages and employs Weyand for the Term (as defined in Section 2) on the terms and conditions expressly set forth in this Agreement. Weyand hereby accepts and agrees to such hiring, engagement and employment, on the terms and conditions expressly set forth in this Agreement.

1.2 Duties . During the Term, Weyand shall serve as MSC’s Chief Executive Officer (“ CEO ”) unless and until it is otherwise determined by MSC’s Board of Directors (the “ Board ”) that he shall serve in another senior executive capacity. In addition, throughout the Term, MSC shall nominate and use its reasonable best efforts to elect and maintain Weyand as the Chairman of the Board (“ Chairman ”). During Weyand’s service as CEO, Weyand shall be principally responsible for the general supervision, direction and control of MSC’s business and officers, in each case subject to the Board’s directives. While serving as CEO, Weyand shall have the general powers and duties of management usually vested in the offices of general manager and CEO of a corporation of the size and nature of MSC 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 CEO. In no event, however, shall his duties as Chairman be deemed inconsistent with his position as CEO for such purposes. For such period of time that Weyand does not serve as CEO, Weyand’s duties shall be (as may be determined from time to time by the Board) consistent with Weyand’s position as a senior executive officer. Weyand shall also be subject to the corporate policies of MSC as they are in effect from time to time throughout the Term (including, without limitation, MSC’s insider trading and ethics policies, as they may change from time to time). During the Term, Weyand shall report solely to the Board.

1.3 No Other Employment; Minimum Time Commitment . During the Term, Weyand shall both (x) devote substantially all his business time, energy and skill to the performance of Weyand’s duties for MSC, and (y) hold no other employment. Nothing herein shall preclude Weyand from (i) continuing to serve on the boards of directors of companies 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 do not materially interfere with the effective discharge of his duties and responsibilities to MSC. MSC hereby agrees that Weyand’s service on the boards of directors of the entities listed on Schedule 1 and the other entities approved by the Governance and Nominating Committee of 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, MSC shall have the right to require Weyand to resign from any board or similar body which he may then serve if the Governance and Nominating Committee of the Board reasonably determines in writing that Weyand’s service on such board or body materially interferes with the effective discharge of Weyand’s duties and responsibilities to MSC 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 . Weyand hereby represents to MSC that to the best of Weyand’s knowledge: (i) the execution and delivery of this Agreement by Weyand and MSC and the performance by Weyand of his duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any other agreement or policy to which Weyand is a party or otherwise bound; (ii) that Weyand 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, Weyand entering into this Agreement or carrying out his duties hereunder; (iii) that Weyand 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.

1.5 Location . Weyand acknowledges that MSC’s principal executive offices are currently located in Santa Ana, California. Weyand’s principal place of employment shall be MSC’s principal executive offices. Weyand agrees that he will be regularly present at MSC’s principal executive offices. Weyand acknowledges that he may be required to travel from time to time in the course of performing his duties for MSC.

2. Term . The “ Term ” shall commence on February 10, 2007 (the “ Effective Date ”) and continue until Weyand’s employment (x) is terminated by MSC, or (y) is terminated by Weyand, in each case, for any reason or no reason. For purposes of this Agreement, the last day of Weyand’s employment shall be referred to as the “ Termination Date .”

3. Compensation .

3.1 Base Salary . As of the Effective Date, Weyand’s base salary for the Term (the “ Base Salary ”) shall be at a rate of Five Hundred and Seventy Five Thousand Dollars ($575,000) per annum and shall be paid in accordance with MSC’s regular payroll practices in effect from time to time, but not less frequently than in monthly installments. MSC shall review Weyand’s Base Salary for increase on an annual basis and shall not reduce such Base Salary, except as part of an across the board salary reduction (determined on a percentage basis) applicable to all of MSC’s senior executives, or to the extent that Weyand agrees to a salary reduction.

3.2 Incentive Bonus . During the Term, Weyand shall be eligible to participate in MSC’s annual incentive plan and to receive annually an incentive bonus (“ Incentive Bonus ”) in an amount to be determined by the Compensation Committee of the Board (“ Committee ”) in its sole discretion. Except as provided in Section 5.3, Weyand must be employed with MSC through the end of a particular fiscal year to be eligible to receive an Incentive Bonus for that fiscal year, with such bonus to be paid not later than two and one-half months after the end of that fiscal year. At or near the beginning of each applicable fiscal year, the Committee, after consultation with Weyand, shall in its sole discretion establish performance objectives (“ Performance Objectives ”) for that year, the satisfaction of which (or lack thereof) will be utilized by the Committee in determining Weyand’s Incentive Bonus for that year. As of the Effective Date, Weyand’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 and twenty percent (120%) of Weyand’s Base Salary for that year (“ Target Bonus ”). In no event shall Weyand be entitled to an Incentive Bonus greater than two hundred percent (200%) of Weyand’s Target Bonus in any year.

3.3 Equity Awards .

(a) One Time Sign-On Award .

(1) Option Grant . On the Effective Date, (the “ Grant Date ”) MSC will grant Weyand a nonqualified stock option (the “ Option ”) to purchase One Hundred and Fifty Thousand (150,000) shares of Common Stock, $0.01 par value, of MSC (“ 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 NASDAQ Stock Market for the Grant Date. The Option will have a term of ten (10) years, (subject to earlier termination) and shall vest in its entirety on the 4th anniversary of the Grant Date. The Option shall be granted under MSC’s 2006 Performance Incentive Plan, as amended (the “ Plan ”) and 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 Committee (or Board) may, in its sole discretion, determine to grant all or a portion of the Option 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 been granted under the Plan evidenced by such form of option agreement.

(2) Cash Award . MSC will pay Weyand the sum of One Hundred Thousand Dollars ($100,000) as a cash signing bonus within 10 business days of the Signing Date (as defined in the Prior Employment Agreement).

(b) Restricted Stock Unit Grant . On the Effective Date, MSC shall grant Weyand 50,000 restricted stock units (the “ RSU Award ”), representing the right to receive 50,000 shares of Common Stock at a future date. The RSU Award shall vest in four equal annual installments on each of the first four anniversaries of the Grant Date, and shall have other terms and conditions consistent with the form of Restricted Stock Unit Agreement attached hereto as Exhibit B .

(c) Performance Stock Unit Grant . On the Effective Date, MSC shall grant to Weyand a performance stock unit award (“ PSU Award ”) of 150,000 Units. The PSU Award shall be subject to the terms and conditions of the form of PSU Award Agreement in substantially the form attached hereto as Exhibit C , and shall vest in accordance with the following:

 

Vesting shall be determined after the issuance of audited financial statements for the cumulative 24 month period ending with the 2008 fiscal operating periods. Vesting, if any, shall occur no later than ten (10) business days after the date of issuance of such statements, provided that performance criteria has been satisfied. Any PSUs which do not vest because performance criteria was not satisfied shall be forfeited.

(d) Annual Equity Award Grants . Beginning on October 1, 2007, Weyand shall be eligible to participate in additional MSC equity award and incentive plans, including but not limited to the Plan, and to receive annually such awards in such amounts as may be determined by the Compensation Committee of the Board (“ Committee ”) in its sole discretion.

3.4 Section 280G Gross-Up . Weyand shall be covered by the tax gross-up provisions set forth in Exhibit D hereto, incorporated herein by this reference.

4. Benefits .

4.1 Retirement, Welfare and Fringe Benefits . During the Term, Weyand shall be entitled to participate in all employee health and welfare benefit plans and programs, including but not limited to health insurance (“ Welfare Benefits ”), pension plans, and fringe benefit plans and programs, made available by MSC to its 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 . Weyand is authorized to incur reasonable expenses in carrying out Weyand’s duties for MSC under this Agreement and reimbursement for all reasonable business expenses Weyand incurs during the Term in connection with carrying out Weyand’s duties for MSC, subject to MSC’s expense reimbursement policies in effect from time to time.

4.3 Vacation and Other Leave . During the Term, Weyand shall accrue and be entitled to take four (4) weeks of paid vacation per year in accordance with MSC’s vacation policies in effect from time to time, including MSC’s policies regarding vacation accruals (including, without limitation, limits on the amount of vacation that may be accrued and untaken before future accruals cease). Weyand shall also be entitled to all other holiday and leave pay generally available to other executives of MSC.

4.4 Automobile Allowance . MSC shall provide Weyand with One Thousand Six Hundred Eighty Five Dollars ($1,685) per month during the Term to be used for the purchase, lease, insurance and maintenance of an automobile for Weyand’s use.

4.5 Legal Fees . MSC shall reimburse Weyand for up to Ten Thousand Dollars ($10,000) of Weyand’s reasonable legal fees and other expenses relating to the negotiation and preparation of the Prior Employment Agreement and related agreements.

5. Termination .

5.1 Termination by MSC . MSC may terminate Weyand’s employment and this Agreement at any time: (i) with Cause (as defined in Section 5.5), (ii) without Cause, (iii) in the event of Weyand’s death, or (iv) in the event that the Board determines in good faith that Weyand has a Disability (as defined in Section 5.5).

5.2 Termination by Weyand . Weyand may terminate his employment and this Agreement at any time on no less than sixty (60) days prior written notice to MSC; provided, however , that (i) if the termination is for Good Reason, Weyand may provide immediate written notice if MSC fails to, or cannot, reasonably cure the event that constitutes Good Reason, and (ii) in the case of Weyand’s good faith determination that he has a Disability, Weyand shall provide thirty (30) days prior written notice (except that such determination shall not be conclusive as to whether Weyand actually has a Disability and, if it is determined that Weyand does not actually have a Disability, he shall be deemed to have terminated employment without a Disability and without Good Reason).

5.3 Benefits Upon Termination .

(a) By MSC for Cause, or Quit by Weyand . If Weyand’s employment is terminated during the Term by MSC for Cause or by Weyand without Good Reason (other than death or Disability), Weyand shall receive his Accrued Obligations (as defined in Section 5.5).

(b) By MSC without Cause, or By Weyand for Good Reason . If, during the Term, Weyand’s employment is terminated by MSC without Cause or by Weyand for Good Reason (other than in connection with a Change in Control Event) (each term as defined in Section 5.5 below) (and, in each case, other than due to either (i) Weyand’s death, or (ii) his Disability), MSC shall, subject to the following provisions of this Section 5.3, pay Weyand, in addition to the Accrued Obligations, the following severance benefits (“ Severance Benefits ”), subject to tax withholding and other authorized deductions:

 

(i)

1 times Weyand’s Base Salary at the annual rate then in effect, payable in equal monthly installments over a 12-month period, subject to Section 29(b) below and Weyand’s ongoing compliance with Section 7, with the first such installment to be paid in the month following the month in which Weyand’s Separation from Service occurs;

 

(ii)

continuation of Weyand’s health and welfare benefits under MSC’s plans, policies and programs (“ Welfare Benefits ”) for the lesser of a period of 12 months following the Termination Date or until substantially similar coverage is received from a subsequent employer;

 

(iii)

with respect to Weyand’s outstanding equity grants received from MSC prior to the Effective Date, (A) all unvested stock options shall immediately vest and (B) all restrictions with respect to restricted stock shall be removed and such stock shall be freely tradable; and

 

(iv)

with respect to Weyand’s outstanding equity grants received on or after the Effective Date, all such awards not then vested, including without limitation any stock option, RSU Award or PSU Award, shall be forfeited in their entirety.

(c) Death, Disability . If, during the Term, Weyand’s employment is terminated as a result of Weyand’s death or his Disability, then MSC shall pay Weyand the Accrued Obligations and, in the case of Disability, provide for continuation of Weyand’s Welfare Benefits for the lesser of a period of 12 months following the Termination Date or until substantially similar coverage is received from a subsequent employer.

(d) By MSC Without Cause or by Weyand for Good Reason in CIC Context . If, during the Term, Weyand’s employment is terminated by MSC without Cause or by Weyand for Good Reason within 24 months of the occurrence of a Change in Control Event, MSC shall pay Weyand (in addition to the Accrued Obligations) the following Severance Benefits, subject to tax withholding and other authorized deductions:

 

(i)

2.5 times the sum of (A) Weyand’s Base Salary at the annual rate then in effect, plus (B) the Target Bonus, such

payment to be made in a lump sum, subject to Section 29(b), in the month following the month in which Weyand’s Separation from Service occurs;

 

(ii)

(A) a fraction, the numerator of which is the number of days in the fiscal year that elapsed prior to the date of Weyand’s termination and the denominator of which is 365, multiplied by (B) Weyand’s Target Bonus level in effect immediately preceding such termination, such payment to be made in a lump sum, subject to Section 29(b), in the month following the month in which Weyand’s Separation from Service occurs;

 

(iii)

continuation of Weyand’s Welfare Benefits for the lesser of a period of 30 months following the Termination Date or until substantially similar coverage is received from a subsequent employer; and

 

(iv)

with respect to Weyand’s outstanding equity grants received from MSC (irrespective of whether such award was received before or after the Effective Date), (A) all unvested stock options shall immediately vest and (B) all restrictions with respect to restricted stock shall be removed and such stock shall be freely tradable, and (C) any RSU Award and the PSU Award shall be deemed to be 100% vested.

(e) Additional Conditions Precedent . Any obligation of MSC pursuant to Section 5.3(b), (c) or (d) 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 Term and prior to the date of such payment, Weyand 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) Weyand’s execution and delivery of the release described in Section 5.4 (and such release has become irrevocable as provided therein); provided that, if Weyand provides the release described in Section 5.4, in no event shall Weyand be entitled to benefits pursuant to Section 5.3(b), (c) or (d), as applicable, of less than $5,000 (or the amount of such benefits, if less than $5,000), which amount the parties agree is good and adequate consideration, in and of itself, for Weyand’s release contemplated by Section 5.4. For purposes of the preceding sentence, if Weyand is not in material compliance with one or more provisions of Sections 7 though 12, and a cure is reasonably possible in the circumstances, Weyand will not be deemed to have breached such provision(s) unless MSC gives Weyand written 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) Weyand’s receipt of benefits otherwise due terminated employees under group insurance coverage consistent with

the terms of the applicable Corporation welfare benefit plan; (ii) Weyand’s rights under the Consolidated Omnibus Budget Reconciliation Act to continue participation in medical, dental, hospitalization and life insurance coverage; (iii) Weyand’s receipt of benefits otherwise due in accordance with the terms of MSC’s 401(k) plan (if any); or (iv) any rights that Weyand 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 Termination Date and to the extent expressly provided in the written agreement evidencing such award.

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, performance award, or other equity-based award agreement to the contrary. As a condition precedent to any Corporation obligation to Weyand to pay a Severance Benefit pursuant to Section 5.3(b), (c) or (d) or any obligation to accelerate vesting of any equity-based award in connection with the termination of Weyand’s employment, Weyand shall, upon or within twenty-one (21) days following his last day of employment with MSC, provide MSC with a valid, executed, written release substantially in the form attached hereto as Exhibit E (the “ Release ”), and such Release shall have not been revoked by Weyand pursuant to any revocation rights afforded by applicable law. MSC shall have no obligation to make any payment to Weyand pursuant to Section 5.3(b), (c) or (d) (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 Weyand in accordance with all applicable laws, rules and regulations.

(b) Weyand 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 Weyand’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 Weyand 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). MSC and Weyand acknowledge and agree that there is no duty of Weyand to mitigate damages under this Agreement and any compensation and benefits which Weyand is entitled to hereunder shall not be offset by any compensation or other amounts received by Weyand from third parties or by the claims that MSC may have against Weyand. All amounts paid to Weyand pursuant to Section 5.3 shall be paid without regard to whether Weyand 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 Termination Date; and

 

(ii)

any Incentive Bonus payable pursuant to Section 3.2 with respect to a fiscal year (if Weyand was employed by MSC

on the last day of that fiscal year) to the extent that such Incentive Bonus had previously been earned but not paid to Weyand; and

 

(iii)

any reimbursement due to Weyand pursuant to Section 4.2 for expenses incurred by Weyand on or before the Termination Date.

(b) As used herein, “ Cause ” shall mean the reasonable and good faith written determination by two-thirds of the Board (excluding Weyand, 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 Term, any of the following events or contingencies exists or has occurred:

 

(i)

Weyand 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);

 

(ii)

Weyand willfully commits an act of material fraud, embezzlement or theft against MSC or one of its affiliates or willfully commits a material violation of state or federal securities laws involving MSC or one of its affiliates;

 

(iii)

Weyand willfully and repeatedly fails to perform his material fiduciary and other duties to MSC after having received written notice from MSC of such claimed failure;

 

(iv)

Weyand willfully engages in gross misconduct in carrying out his duties hereunder resulting in material economic harm to MSC;

 

(v)

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

 

(vi)

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

(vii)

Weyand 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 Weyand’s ability to effectively perform his duties and responsibilities to MSC hereunder; or

 

(viii)

any intentional wrongful act or omission by Weyand has occurred that results in the restatement of the Company’s financial statements due to a violation of the Sarbanes-Oxley Act of 2002.

For purposes of a termination for Cause, no act or failure to act, on Weyand’s part shall be considered “willful” unless done, or omitted to be done, by Weyand not in good faith and without reasonable belief that Weyand’s action or omission was in, or not opposed to, the best interests of MSC.

Anything to the contrary notwithstanding, Weyand 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, Weyand 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 Weyand unable to perform the essential functions of his employment with MSC, even with reasonable accommodation that does not impose an undue hardship on MSC, 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 MSC nor Weyand shall terminate his employment for Disability unless the party terminating Weyand’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 Weyand’s written consent:

 

(i)

a material breach of this Agreement by MSC (including, without limitation, any breach by MSC of Section 3.1);

 

(ii)

a material diminution in Weyand’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 Weyand is no longer serving as Chairman, provided that he reports directly to the Board;

 

(iii)

the assignment by MSC of duties to Weyand that are materially inconsistent with his position as CEO or as an executive Chairman, as applicable;

 

(iv)

the failure of MSC to maintain Directors’ and Officers’ Liability Insurance on terms not materially less favorable to Weyand than the terms of the policy presently in effect; provided that in no event shall Good Reason exist if MSC 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; or

 

(v)

Within 24 months of the occurrence of a Change in Control Event, any reduction in Weyand’s Base Salary, Target Bonus opportunity, or aggregate benefits levels;

provided, however , that none of the foregoing events shall constitute Good Reason unless Weyand shall have notified MSC in writing describing the events which constitute Good Reason and MSC shall have failed to reasonably cure such event within a reasonable period, not to exceed fifteen (15) days, after MSC’s actual receipt of such written notice.

(e) As used herein, “ Change in Control Event ” and “ CIC ” means any of the following:

 

(i)

Approval by MSC’s stockholders of the dissolution or liquidation of MSC;

 

(ii)

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

securities of the other parties to such reorganization held by MSC’s affiliates);

 

(iii)

Approval by MSC’s stockholders of the sale ,lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of MSC’s business and/or assets to a person or entity that is not a Subsidiary;

 

(iv)

Any “ person ” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act but excluding any person described in and satisfying the conditions of Rule 13d-1(b)(1) thereunder) becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing more than 35% of the combined voting power of the Corporation’s then outstanding securities entitled to then vote generally in the election of directors of the Corporation; or

 

(v)

During any period not longer than twelve consecutive months, a majority of the members of the Board is replaced by Board members whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election.

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

(f) As used herein, a “ Separation from Service ” occurs when Weyand dies, retires, or otherwise has a termination of employment with MSC that constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder.

6. Means and Effect of Termination . Any termination of Weyand’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 . Weyand acknowledges and recognizes the highly competitive nature of MSC’s businesses, the amount of sensitive and confidential information involved in the discharge of Weyand’s position with MSC, and the harm to MSC that would result if such knowledge or expertise was disclosed or made available to a competitor. Based on that understanding, Weyand hereby expressly agrees as follows:

7.1 As a result of the particular nature of Weyand’s relationship with MSC, in the capacities identified earlier in this Agreement, during the Term and for the longer of (a) 12

months thereafter or (b) any period that Weyand is receiving payments pursuant to Section 5.3 (including any period such payments are delayed pursuant to Section 29(b) hereof (for purposes of complying with Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”)), Weyand hereby agrees that he will not, directly or indirectly, (i) engage in any business for Weyand’s own account or derive any material economic benefit from any business that competes with the business of MSC or any of its affiliates (MSC 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 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 MSC, 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 Weyand is aware of such plans, whether or not such entity has commenced such operations.

7.2 Notwithstanding anything to the contrary in this Agreement, Weyand 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 Weyand (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 MSC’s commitment to the terms of this Agreement, Weyand hereby agrees that Weyand will not at any time (whether during or after Weyand’s employment with MSC), other in the course of Weyand’s duties hereunder, knowingly disclose, disclose in a fashion that Weyand reasonably should know the consequences of such disclosure, or use for Weyand’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 Weyand’s breach of this covenant. Weyand further agrees that Weyand 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 Weyand to disclose or make available such information, provided, however that Weyand shall promptly notify MSC 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.

9. Inventions and Developments . The Inventions Agreement attached hereto as Exhibit F executed by Weyand on or about February 10, 2005 remains in effect.

10. Anti-solicitation . Weyand promises and agrees that during the Term and for a period of one (1) year thereafter, Weyand 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 Term, 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 . Weyand promises and agrees that during the Term and for a period of one (1) year thereafter, Weyand 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 . Weyand agrees to truthfully and faithfully account for and deliver to MSC all property belonging to MSC, any other entity in the Company Group, or any of their respective affiliates, which Weyand may receive from or on account of MSC, any other entity in the Company Group, or any of their respective affiliates, and upon the termination of the Term, or MSC’s demand, Weyand shall immediately deliver to MSC all such property belonging to MSC, 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 Weyand 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 MSC’s compensatory plans, programs and agreements relating to his compensation as an employee.

13. Withholding Taxes . Notwithstanding anything else herein to the contrary, MSC 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. Assignment . This Agreement is personal in its nature and neither of the parties hereto shall, without the other’s consent, 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 MSC 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 MSC 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 (including, without limitation, the Prior Employment Agreement which has been amended and restated herein), other than for any currently existing awards or agreement relating to stock options, restricted stock, restricted stock units, performance units or any other incentive awards to Weyand. 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 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 Weyand’s employment (whether or not before or after the expiration of the Term), any termination of Weyand’s employment, this Agreement, the Inventions Agreement referred to herein, any equity-based award agreements referred to herein, the enforcement or interpretation of any such 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 the 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 MSC.

Without limiting the remedies available to the parties and notwithstanding the foregoing provisions of this Section 22, Weyand and MSC 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.

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 MSC:

MSC.Software Corporation

2 MacArthur Place

Santa Ana, California 92707

Attn: Board of Directors

 

(ii)

if to Weyand:

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. Weyand 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 Term. For this purpose, the parties intend that the following provisions of this Agreement shall survive any termination of the Term (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 and 7 through 28.

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 . MSC represents and warrants that (i) the execution, delivery and performance of this Agreement by MSC has been fully and validly authorized by all necessary corporate action, (ii) the officer signing this Agreement on behalf of MSC 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 MSC 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 MSC 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) MSC agrees that (i) if Weyand 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 MSC or is or was serving at the request of MSC 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 Weyand’s service in any of the foregoing capacities, whether arising before or after the Effective Date, then Weyand shall promptly be indemnified and held harmless by MSC to the fullest extent legally permitted or authorized by MSC’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 Weyand in connection therewith, and such indemnification shall continue as to Weyand even if he has ceased to be a director, officer or employee of MSC or a director, officer, member, employee, agent, manager, consultant or representative of such other person and shall inure to the benefit of Weyand’s heirs, executors and administrators. To the extent permitted by law, MSC shall advance to Weyand 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 Weyand 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 MSC (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 Weyand is proper because he has satisfied any applicable standard of conduct, nor a determination by MSC (including its Board, independent legal counsel or stockholders) that Weyand has not met any applicable standard of conduct, shall create a presumption that Weyand has not met an applicable standard of conduct.

(c) During the Term and for a period of three (3) years thereafter, MSC shall keep in place a directors and officers’ liability insurance policy (or policies) providing comprehensive coverage to Weyand to the extent that MSC provides such coverage for any other present or former senior executive or director of MSC. Such policy shall be on terms not materially less favorable to Weyand than the terms of the policy then in effect on the Effective Date; provided that in no event shall MSC 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.

29. Section 409A .

(a) It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A of the Code (including the Treasury regulations and other published guidance relating thereto) (“ Code Section 409A ”) so as not to subject Weyand to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to Weyand.

(b) Notwithstanding any provision of this Agreement to the contrary, if Weyand is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of Weyand’s Separation from Service, Weyand shall not be entitled to any payment or benefit pursuant to Section 5.3 until the earlier of (i) the date which is six (6) months after Weyand’s Separation from Service for any reason other than death, or (ii) the date of Weyand’s death. Any amounts otherwise payable to Weyand upon or in the six (6) month period following Weyand’s Separation from Service that are not so paid by reason of this Section 29(b) shall be paid (without interest) as soon as practicable (and in all events within thirty (30) days) after the date that is six (6) months after Weyand’s Separation from Service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of Weyand’s death). The provisions of this Section 29(b) shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Code Section 409A.

(c) To the extent that any benefits or reimbursements pursuant to Sections 4.2, 4.4, 4.5, 5.3(b)(iii), 5.3(c)(ii) or 5.3(d)(iv) are taxable to Weyand, any reimbursement payment due to Weyand pursuant to any such provision shall be paid to Weyand on or before the last day of Weyand’s taxable year following the taxable year in which the related expense was incurred. The benefits and reimbursements pursuant to such provisions are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that Weyand receives in one taxable year shall not affect the amount of such benefits or reimbursements that Weyand receives in any other taxable year.

[Remainder of Page Intentionally Blank]

IN WITNESS WHEREOF , MSC and Weyand have executed this Agreement as of the date first set forth above.

 

SCHEDULE 1

LIST OF CURRENT DIRECTORSHIPS

TechSolve, Inc.

Pavilion Technologies

Nichols College, Board of Trustees

Exhibit A

PERFORMANCE MEASURES

 

Vesting shall be determined after the issuance of audited financial statements for the cumulative 24 month period ending with the 2008 fiscal operating periods. Vesting, if any, shall occur no later than ten (10) business days after the date of issuance of such statements, provided that performance criteria has been satisfied. Any PSUs which do not vest because performance criteria was not satisfied shall be forfeited.

 

1

EXHIBIT A – FORM OF NONQUALIFIED STOCK OPTION AGREEMENT

[Attached hereto.]

EXHIBIT A

MSC.SOFTWARE CORPORATION

2006 PERFORMANCE INCENTIVE PLAN

NONQUALIFIED STOCK OPTION AGREEMENT

THIS NONQUALIFIED STOCK OPTION AGREEMENT (this “Option Agreement” ) dated February 12, 2007 by and between MSC.SOFTWARE CORPORATION, a Delaware corporation (the “Corporation” ), and William J. Weyand (the “Grantee”) evidences the nonqualified stock option (the “Option” ) granted by the Corporation to the Grantee as to the number of shares of the Corporation’s Common Stock first set forth below.

 

Vesting ^1,2 The Option shall become vested as to 100% of the total number of shares of Common Stock subject to the Option on the fourth anniversary of the Award Date.

The Option is granted under the MSC.Software Corporation 2006 Performance Incentive Plan (the “Plan”) and subject to the Terms and Conditions of Nonqualified Stock Option (the “Terms”) attached to this Option Agreement (incorporated herein by this reference) and to the Plan. The Option has been granted to the Grantee in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Grantee. Capitalized terms are defined in the Plan if not defined herein. The parties agree to the terms of the Option set forth herein. The Grantee acknowledges receipt of a copy of the Terms, the Plan and the Prospectus for the Plan.

 

“GRANTEE”				MSC.SOFTWARE CORPORATION
				a Delaware corporation
Signature				By:
				Print Name:
William J. Weyand				Title:
Print Name

CONSENT OF SPOUSE

In consideration of the Corporation’s execution of this Option Agreement, the undersigned spouse of the Grantee agrees to be bou