Exhibit 10.7

MSC.SOFTWARE CORPORATION

2006 PERFORMANCE INCENTIVE PLAN

PERFORMANCE STOCK UNIT AWARD AGREEMENT

FOR NON-U.S. EMPLOYEES

THIS PERFORMANCE STOCK UNIT AWARD AGREEMENT (this “Agreement”) is dated as of
[                    , 2006] by and between MSC.Software Corporation, a Delaware
corporation (the “Corporation”), and [                    ] (the “Participant”).

W I T N E S S E T H

WHEREAS, pursuant to this Agreement, any appendix to this Agreement for the
Participant’s country of residence (the “Appendix”), the MSC.Software
Corporation 2006 Performance Incentive Plan (the “U.S. Plan”) and any sub-plan
to the U.S. Plan (collectively, the “Plan”), the Corporation has granted to the
Participant effective as of the date hereof (the “Award Date”) a credit of stock
units under the Plan (the “Stock Unit Award” or “Award”), upon the terms and
conditions set forth in this Agreement, any Appendix and in the Plan.

NOW THEREFORE, in consideration of the mutual promises made herein and the
mutual benefits to be derived therefrom, the parties agree as follows:

1. Defined Terms. Capitalized terms used herein and not otherwise defined herein
shall have the meaning assigned to such terms in the Plan.

2. Grant. Subject to the terms of this Agreement and the Plan, the Corporation
hereby grants to the Participant a Stock Unit Award with respect to an aggregate
of [            ] stock units (subject to adjustment as provided in Section 7.1
of the U.S. Plan) (the “Stock Units”). As used herein, the term “stock unit”
shall mean a non-voting unit of measurement which is deemed for bookkeeping
purposes to be equivalent to one outstanding share of the Corporation’s Common
Stock (subject to adjustment as provided in Section 7.1 of the U.S. Plan) solely
for purposes of the Plan, this Agreement and any Appendix. The Stock Units shall
be used solely as a device for the determination of the payment to eventually be
made to the Participant if such Stock Units vest pursuant to Section 3. The
Stock Units shall not be treated as property or as a trust fund of any kind.

3. Vesting. Subject to Section 8 and Section 9 below, one-third of the total
number of Stock Units subject to the Award (subject to adjustment under
Section 7.1 of the U.S. Plan) shall be eligible to vest and become
nonforfeitable based on the Corporation’s performance during each of the
calendar years 2007, 2008 and 2009 (each such year, a “Performance Year”). The
Stock Units that are eligible to vest with respect to a particular Performance
Year shall vest if and to the extent that the performance measures set forth on
Exhibit A attached hereto and incorporated herein by reference are satisfied
with respect to such Performance Year; provided, however, that any vesting of
the Stock Units with respect to a Performance Year shall be contingent upon the
Participant’s continued employment by the Corporation and its Subsidiaries
through the Determination Date (as defined below) that follows such Performance
Year. The vesting of the Stock Units shall be determined by the Compensation
Committee of the Board of

 

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Directors of the Corporation (the “Committee”) in its sole discretion as soon as
practicable after the end of the Performance Year but in no event later than
March 30 of the calendar year that follows such Performance Year. (The date on
which the Committee makes such determination is referred to herein as the
“Determination Date.”) Any Stock Units that are eligible to vest with respect to
a particular Performance Year and do not vest as of the Determination Date that
follows such Performance Year shall automatically terminate and be cancelled as
of such Determination Date without payment of any consideration by the
Corporation and without any other action by the Participant. Any such terminated
Stock Units shall not thereafter be considered outstanding Stock Units for
purposes of the Award, including (without limitation) for purposes of crediting
dividend equivalents pursuant to Section 5(b) or acceleration of vesting
pursuant to Section 8(b) or Section 9.

4. Continuance of Employment. The vesting schedule requires continued employment
or service through each applicable vesting date as a condition to the vesting of
the applicable installment of the Award and the rights and benefits under this
Agreement. Employment or service for only a portion of the vesting period, even
if a substantial portion, will not entitle the Participant to any proportionate
vesting or avoid or mitigate a termination of rights and benefits upon or
following a termination of employment or services as provided in Section 8(a)
below or under the Plan.

5. Dividend and Voting Rights.

(a) Limitations on Rights Associated with Units. The Participant shall have no
rights as a stockholder of the Corporation, no dividend rights (except as
expressly provided in Section 5(b) with respect to Dividend Equivalent Rights)
and no voting rights, with respect to the Stock Units and any shares of Common
Stock underlying or issuable in respect of such Stock Units until such shares of
Common Stock are actually issued to and held of record by the Participant. No
adjustments will be made for dividends or other rights of a holder for which the
record date is prior to the date of issuance of the stock certificate.

(b) Dividend Equivalent Rights Distributions. In the event that the Corporation
pays an ordinary cash dividend on its Common Stock and the related dividend
payment record date occurs at any time after the Award Date and before all of
the Stock Units subject to the Award have either been paid pursuant to Section 7
or terminated pursuant to Section 3 or Section 8(a), the Corporation shall
credit the Participant as of such record date with an additional number of Stock
Units equal to (i) the per-share cash dividend paid by the Corporation on its
Common Stock with respect to such record date, multiplied by (ii) the total
number of outstanding and unpaid Stock Units (including any dividend equivalents
previously credited hereunder) (with such total number adjusted pursuant to
Section 7.1 of the U.S. Plan and Section 9 hereof) subject to the Award as of
such record date, divided by (iii) the fair market value of a share of Common
Stock (as determined under the Plan) on such record date. Any Stock Units
credited pursuant to the foregoing provisions of this Section 5(b) shall be
subject to the same vesting, payment and other terms, conditions and
restrictions as the original Stock Units to which they relate. No crediting of
Stock Units shall be made pursuant to this Section 5(b) with respect to any
Stock Units which, as of such record date, have either been paid pursuant to
Section 7 or terminated pursuant to Section 3 or Section 8(a).

 

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6. Restrictions on Transfer. Neither the Stock Unit Award, nor any interest
therein or amount or shares payable in respect thereof may be sold, assigned,
transferred, pledged or otherwise disposed of, alienated or encumbered, either
voluntarily or involuntarily. The transfer restrictions in the preceding
sentence shall not apply to (a) transfers to the Corporation, or (b) transfers
by will or the laws of descent and distribution.

7. Timing and Manner of Payment of Stock Units. On or as soon as
administratively practical following each vesting of the applicable portion of
the total Award pursuant to Section 3, Section 8 or Section 9, the Corporation
shall deliver to the Participant a number of shares of Common Stock (either by
delivering one or more certificates for such shares or by entering such shares
in book entry form, as determined by the Corporation in its discretion) equal to
the number of Stock Units subject to this Award that vest on the applicable
vesting date, unless such Stock Units terminate prior to the given vesting date
pursuant to Section 8(a). The Corporation’s obligation to deliver shares of
Common Stock or otherwise make payment with respect to vested Stock Units is
subject to the condition precedent that the Participant or other person entitled
under the Plan to receive any shares with respect to the vested Stock Units
deliver to the Corporation any representations or other documents or assurances
required pursuant to Section 8.1 of the U.S. Plan. The Participant shall have no
further rights with respect to any Stock Units that are paid or that terminate
pursuant to Section 3 or Section 8(a).

8. Effect of Termination of Employment or Change in Control Event.

(a) Termination of Employment. The Participant’s Stock Units shall terminate to
the extent such units have not become vested prior to the first date the
Participant is no longer employed by the Corporation or one of its Subsidiaries,
regardless of the reason for the termination of the Participant’s employment
with the Corporation or a Subsidiary, whether with or without cause, voluntarily
or involuntarily. If any unvested Stock Units are terminated hereunder, such
Stock Units shall automatically terminate and be cancelled as of the applicable
termination date without payment of any consideration by the Corporation and
without any other action by the Participant, or the Participant’s personal
representative, as the case may be. For purposes of the foregoing sentence, the
Participant’s employment is terminated as of the date that the Participant is no
longer actively employed and will not be extended by any notice period mandated
under local law (e.g., active employment would not include a period of “garden
leave” or similar period pursuant to local law). The Board or Administrator
shall have the exclusive discretion to determine when the Participant is no
longer actively employed for purposes of the Participant’s Award.

(b) Automatic Acceleration Upon Change in Control Event. Upon a Change in
Control Event, any Stock Units subject to the Award that are not then otherwise
vested (and have not previously terminated pursuant to Section 3 or
Section 8(a)) shall automatically become vested upon the occurrence of such
event.

9. Adjustments Upon Specified Events. The Administrator may accelerate payment
and vesting of the Stock Units in such circumstances as it, in its sole
discretion, may determine. In addition, upon the occurrence of certain events
relating to the Corporation’s stock contemplated by Section 7.1 of the U.S. Plan
(including, without limitation, an extraordinary cash dividend on such stock),
the Administrator shall make adjustments in accordance with such

 

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section in the number of Stock Units then outstanding and the number and kind of
securities that may be issued in respect of the Award. No such adjustment shall
be made with respect to any ordinary cash dividend for which dividend
equivalents are credited pursuant to Section 5(b). Furthermore, the
Administrator shall adjust the performance measures set forth on Exhibit A
hereto to the extent (if any) it determines that the adjustment is necessary or
advisable to preserve the intended incentives and benefits to reflect (1) any
material change in corporate capitalization, any material corporate transaction
(such as a reorganization, combination, separation, merger, acquisition, or any
combination of the foregoing), or any complete or partial liquidation of the
Corporation, (2) any change in accounting policies or practices, (3) the effects
of any special charges to the Corporation’s earnings, or (4) any other similar
special circumstances.

10. Tax Withholding. Regardless of any action the Corporation and/or the
Participant’s employer (the “Employer”) take with respect to any or all income
tax (including U.S. federal, state and local tax and/or non-U.S. tax), social
insurance, payroll tax, payment on account or other tax-related withholding
(“Tax-Related Items”), the Participant acknowledges that the ultimate liability
for all Tax-Related Items legally due by the Participant is and remains the
Participant’s responsibility and that the Corporation and/or the Employer
(a) make no representations or undertakings regarding the treatment of any
Tax-Related Items in connection with any aspect of the Award, including the
grant of the Stock Units, the vesting of the Stock Units, the delivery of shares
of Common Stock, the subsequent sale of any shares of Common Stock acquired at
vesting and the receipt of any dividends; and (b) do not commit to structure the
terms of the grant or any aspect of the Award to reduce or eliminate the
Participant’s liability for Tax-Related Items.

Prior to the relevant taxable event, the Participant shall pay or make adequate
arrangements satisfactory to the Corporation and/or the Employer to satisfy all
withholding and payment on account obligations of the Corporation and/or the
Employer. In this regard, if permissible under local law, the Participant
authorizes the Corporation and/or the Employer, at its discretion, to satisfy
the obligations with regard to all Tax-Related Items legally payable by the
Participant by reducing the number of shares of Common Stock to be delivered
upon settlement of vested Stock Units by such number of whole shares valued at
their then fair market value (with the “fair market value” of such shares
determined in accordance with the applicable provisions of the Plan), equal to
the amount necessary to satisfy the minimum statutorily applicable withholding
amount. If the foregoing method of withholding is prohibited or insufficient to
satisfy all Tax-Related Items legally payable by the Participant or if the
Corporation, in its discretion, determines not to apply the foregoing method of
withholding for any other reason, then the Participant hereby authorizes the
Corporation and/or the Employer to satisfy the obligations by one or a
combination of the following: (a) withholding from the Participant’s wages or
other cash compensation paid to the Participant by the Corporation and/or the
Employer; or (b) selling shares or arranging for the sale of shares of Common
Stock (in either case on the Participant’s behalf and at the Participant’s
direction pursuant to this authorization) issued in settlement of vested Stock
Units. If the obligation of Tax-Related Items is satisfied by reducing the
number of shares of Common Stock delivered as described herein, the Participant
is deemed to have been issued the full number of shares of Common Stock subject
to the Award, notwithstanding that a number of the shares of Common Stock are
held

 

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back solely for the purpose of paying the Tax-Related Items due as a result of
any aspect of the Award.

Finally, the Participant shall pay to the Corporation and/or the Employer any
amount of Tax-Related Items that the Corporation and/or the Employer may be
required to withhold as a result of the Participant’s participation in the Plan
that cannot be satisfied by the means previously described. The Corporation may
refuse to deliver to the Participant any shares of Common Stock pursuant to the
Award if the Participant fails to comply with the Participant’s obligations in
connection with the Tax-Related Items as described in this Section 10.

11. Acknowledgement of Nature of Plan and Award. In accepting the Award, the
Participant acknowledges that:

(a) the Plan is established voluntarily by the Corporation, it is discretionary
in nature, and it may be modified, amended, suspended or terminated by the
Corporation at any time, unless otherwise provided in the Plan and this
Agreement;

(b) the Award is voluntary and occasional and does not create any contractual or
other right to receive future awards of Stock Units, or benefits in lieu of
Stock Units, even if Stock Units have been granted repeatedly in the past;

(c) all decisions with respect to future awards, if any, will be at the sole
discretion of the Corporation;

(d) the Participant’s participation in the Plan is voluntary;

(e) the Participant’s participation in the Plan shall not create a right to
further employment with the Employer and shall not interfere with the ability of
the Employer to terminate the Participant’s employment or service relationship
(if any) at any time with or without cause;

(f) the Award is an extraordinary item that does not constitute compensation of
any kind for services of any kind rendered to the Corporation or any Subsidiary,
and which is outside the scope of the Participant’s employment or service
contract, if any;

(g) the Award is not part of normal or expected compensation or salary for any
purposes, including, but not limited to, calculation of any severance,
resignation, termination, redundancy, end of service payments, bonuses,
long-service awards, pension or retirement or welfare benefits or similar
payments and in no event should be considered as compensation for, or relating
in any way to, past services for the Corporation or any Subsidiary;

(h) in the event that the Participant is not an employee of the Corporation, the
Award and the Participant’s participation in the Plan will not be interpreted to
form an employment or service contract or relationship with the Corporation;
and, furthermore, the Award and the Participant’s participation in the Plan will
not be interpreted to form an employment or service contract or relationship
with the Employer or any other Subsidiary;

 

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(i) the future value of the underlying shares of Common Stock is unknown and
cannot be predicted with certainty;

(j) in consideration of the Award, no claim or entitlement to compensation or
damages shall arise from termination of the Award or from any diminution in
value of the Award or shares of Common Stock acquired upon vesting of the Award
resulting from termination of the Participant’s employment or service by the
Corporation or any Subsidiary (for any reason whatsoever and whether or not in
breach of local labor laws) and the Participant irrevocably releases the
Corporation and any Subsidiary from any such claim that may arise; if,
notwithstanding the foregoing, any such claim is found by a court of competent
jurisdiction to have arisen, then, by signing this Agreement, the Participant
shall be deemed irrevocably to have waived his or her entitlement to pursue such
claim;

(k) the Corporation is not providing any tax, legal or financial advice, nor is
the Corporation making any recommendations regarding the Participant’s
participation in the Plan or the Participant’s acquisition or sale of the
underlying shares of Common Stock; and

(l) the Participant is hereby advised to consult with the Participant’s own
personal tax, legal and financial advisors regarding the Participant’s
participation in the Plan before taking any action related to the Plan.

12. Data Privacy Notice and Consent. The Participant hereby explicitly and
unambiguously consents to the collection, use and transfer, in electronic or
other form, of the Participant’s personal data as described in this Agreement
and any other Stock Unit grant materials by and among, as applicable, the
Employer, the Corporation and its Subsidiaries for the exclusive purpose of
implementing, administering and managing the Participant’s participation in the
Plan.

The Participant understands that the Corporation and the Employer may hold
certain personal information about the Participant, including, but not limited
to, the Participant’s name, home address and telephone number, date of birth,
social insurance number or other identification number, salary, nationality, job
title, any shares of stock or directorships held in the Corporation, details of
all Stock Units or any other entitlement to shares of Common Stock awarded,
canceled, vested, unvested or outstanding in the Participant’s favor, for the
exclusive purpose of implementing, administering and managing the Plan (“Data”).

The Participant understands that Data will be transferred to Citigroup Global
Markets Inc., or such other stock plan service provider as may be selected by
the Corporation in the future, which is assisting the Corporation with the
implementation, administration and management of the Plan. The Participant
understands the recipients of the Data may be located in the Participant’s
country, in the United States or elsewhere, and that the recipients’ country may
have different data privacy laws and protections than the Participant’s country.
The Participant understands that he or she may request a list with the names and
addresses of any potential recipients of the Data by contacting the
Participant’s local human resources representative. The Participant authorizes
the Corporation, Citigroup Global Markets Inc., and any other possible
recipients which may assist the Corporation (presently or in the future) with
implementing, administering and managing the Plan to receive, possess, use,
retain and

 

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transfer the Data, in electronic or other form, for the sole purpose of
implementing, administering and managing the Participant’s participation in the
Plan. The Participant understands that Data will be held only as long as is
necessary to implement, administer and manage the Participant’s participation in
the Plan. The Participant understands that he or she may, at any time, view
Data, request additional information about the storage and processing of Data,
require any necessary amendments to Data or refuse or withdraw the consents
herein, in any case without cost, by contacting in writing the Participant’s
local human resources representative. The Participant understands, however, that
refusing or withdrawing his or her consent may affect the Participant’s ability
to participate in the Plan. For more information on the consequences of the
Participant’s refusal to consent or withdrawal of consent, the Participant
understands that the Participant may contact his or her local human resources
representative.

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

14. Plan. The Award and all rights of the Participant under this Agreement are
subject to the terms and conditions of the provisions of the Plan, incorporated
herein by reference. The Participant agrees to be bound by the terms of the Plan
and this Agreement. The Participant acknowledges having read and understanding
the Plan, the Prospectus for the Plan, and this Agreement. Unless otherwise
expressly provided in other sections of this Agreement, provisions of the Plan
that confer discretionary authority on the Board or the Administrator do not
(and shall not be deemed to) create any rights in the Participant unless such
rights are expressly set forth herein or are otherwise in the sole discretion of
the Board or the Administrator so conferred by appropriate action of the Board
or the Administrator under the Plan after the date hereof.

15. Entire Agreement. This Agreement and the Plan together constitute the entire
agreement and supersede all prior understandings and agreements, written or
oral, of the parties hereto with respect to the subject matter hereof. The Plan
and this Agreement may be amended pursuant to Section 8.6 of the U.S. Plan. Such
amendment must be in writing and signed by the Corporation. The Corporation may,
however, unilaterally waive any provision hereof in writing to the extent such
waiver does not adversely affect the interests of the Participant hereunder, but
no such waiver shall operate as or be construed to be a subsequent waiver of the
same provision or a waiver of any other provision hereof.

16. Limitation on Participant’s Rights. Participation in the Plan confers no
rights or interests other than as herein provided. This Agreement creates only a
contractual obligation on the part of the Corporation as to amounts payable and
shall not be construed as creating a trust. Neither the Plan nor any underlying
program, in and of itself, has any assets. The Participant shall have only the
rights of a general unsecured creditor of the Corporation with respect to

 

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amounts credited and benefits payable, if any, with respect to the Stock Units,
and rights no greater than the right to receive the Common Stock as a general
unsecured creditor with respect to Stock Units, as and when payable hereunder.

17. Counterparts. This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

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

19. Language. If the Participant has received this Agreement or any other
document related to the Plan translated into a language other than English and
if the translated version is different than the English version, the English
version will control, unless otherwise prescribed by local law.

20. Governing Law and Choice of Venue. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware, as
provided in the U.S. Plan, without regard to conflict of law principles
thereunder. For purposes of litigating any dispute that arises under the Award
or this Agreement, the parties hereby submit to and consent to the jurisdiction
of the State of California, and agree that such litigation shall be conducted in
the courts of Orange County, California, or the federal courts for the United
States for the Central District of California, and no other courts, where this
Award of Stock Units is made and/or to be performed.

21. Construction. It is intended that the terms of the Award will not result in
the imposition of any tax liability pursuant to Section 409A of the Code. The
Agreement shall be construed and interpreted consistent with that intent.

22. Appendix. Notwithstanding any provision in this Agreement to the contrary,
the Stock Units shall be subject to the special terms and provisions as set
forth in the Appendix to this Agreement for the Participant’s country of
residence, if any.

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

 

MSC.SOFTWARE CORPORATION,

a Delaware corporation

          PARTICIPANT           By:                               Signature    
Print Name: __________________________________________                         
   

Its:_________________________________________________

 

         

Print Name

 

   

 

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Exhibit A

PERFORMANCE MEASURES

(a) 2007 Performance Year. Up to one-third of the total number of Stock Units
(the “2007 Eligible Stock Units”) shall vest based on the percentage increase in
software license revenue during the 2007 Performance Year when compared against
software license revenue during calendar year 2006 as follows:

 

Percent Software License Revenue Growth

  

Percent of 2007 Eligible Stock Units That Vest

Less than 5%

   0

5% or greater but less than 8%

   33.33%

8% or greater but less than 10%

   66.66%

10% or greater

   100.00%

(b) 2008 Performance Year. Up to one-third of the total number of Stock Units
(the “2008 Eligible Stock Units”) shall vest based on the percentage increase in
software license revenue during the 2008 Performance Year when compared against
software license revenue during calendar year 2007 as follows:

 

Percent Software License Revenue Growth

  

Percent of 2008 Eligible Stock Units That Vest

Less than 5%

   0

5% or greater but less than 8%

   33.33%

8% or greater but less than 10%

   66.66%

10% or greater

   100.00%

(c) 2009 Performance Year. Up to one-third of the total number of Stock Units
(the “2009 Eligible Stock Units”) shall vest based on the percentage increase in
software license revenue during the 2009 Performance Year when compared against
software license revenue during calendar year 2008 as follows:

 

Percent Software License Revenue Growth

  

Percent of 2009 Eligible Stock Units That Vest

Less than 5%

   0

5% or greater but less than 8%

   33.33%

8% or greater but less than 10%

   66.66%

10% or greater

   100.00%

 

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APPENDIX A

India

MSC.Software Corporation 2006 Performance Incentive Plan

Performance Stock Unit Award Agreement for Non-U.S. Employees

Exchange Control Notification

To the extent required by local law, the Participant must immediately repatriate
all proceeds resulting from the sale of shares of Common Stock issued upon
vesting of the Stock Units to India and convert the proceeds into local
currency. The Participant will receive a foreign inward remittance certificate
(“FIRC”) from the bank where the Participant deposits the foreign currency. The
Participant should maintain the FIRC as evidence of the repatriation of funds in
the event the Reserve Bank of India or the Employer requests proof of
repatriation.

 

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