Exhibit 10.6

 

EMPLOYMENT SEPARATION AND GENERAL RELEASE AGREEMENT

 

This Employment Separation and General Release Agreement (this “Separation
Agreement”), is entered into this 10th day of February 2005 (the “Separation
Date”), by and between Frank Perna, Jr., an individual (“Perna”), and
MSC.Software Corporation, a Delaware corporation (“MSC”).

 

WHEREAS, Perna has been employed as the Chief Executive Officer of MSC; and

 

WHEREAS, Perna desires to retire from active employment and, accordingly, Perna
and MSC have mutually agreed to terminate Perna’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 and the Consulting Agreement attached as
Exhibit B hereto (the “Consulting Agreement”), Perna and MSC agree as follows:

 

I.                                    Resignation.  Perna hereby resigns as an
officer, director, employee, member, manager and in any other capacity with MSC
and each of its affiliates, effective immediately as of the Separation Date
first set forth above.  Concurrently with the execution of this Separation
Agreement, Perna shall execute the letter attached as Exhibit A hereto and
promptly deliver such letter to MSC.  MSC and its affiliates hereby accept such
resignation, effective immediately.  Perna acknowledges and agrees that he has
received all amounts owed for his regular and usual salary (including, but not
limited to, any severance, overtime, bonus, commissions, or other wages) and
usual benefits, except for accrued but unused vacation and paid time off through
the Separation Date (accrued but unused vacation and paid time off are estimated
at 143.46 hours and shall be paid at or promptly following the Separation Date)
and the amounts referred to in the next sentence, and that all payments due to
Perna from MSC after the Separation Date shall be determined under this
Separation Agreement and the Consulting Agreement.  Perna shall be entitled to
his benefits under MSC’s 401(k) Plan in accordance with the terms of that Plan,
and MSC shall pay Perna all amounts of compensation previously deferred by him
(including deferred bonuses) pursuant to the terms of the applicable deferred
compensation plan.

 

II.                                Consulting Agreement.  Concurrently with the
execution of this Separation Agreement, and in consideration of the promises
given and payments made hereunder, Perna shall execute the Consulting Agreement
attached as Exhibit B hereto.

 

III.                            Severance Pay.  MSC shall pay as severance pay
to Perna a lump sum amount of Eight Thousand Dollars ($8,000.00), less standard
withholding and authorized deductions (the “Cash Severance Payment”).  Such
severance shall be paid within thirty (30) days following Perna’s delivery of
this fully executed Separation Agreement to MSC.  In addition, during the period
(not to exceed eighteen (18) months) following the Separation Date which MSC is
required to provide continued medical coverage to Perna pursuant to the
Consolidated Omnibus Budget Reconciliation Act (“COBRA”), MSC shall either pay
or reimburse Perna for one hundred percent (100%) of Perna’s COBRA premiums to
continue for such period the same or reasonably equivalent medical coverage for
Perna (and, if applicable, Perna’s eligible

 

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dependents) as in effect immediately prior to the Separation Date.  For each of
the thirty (30) months following the Separation Date, Perna shall also be
entitled to continued supplemental medical benefit coverage under MSC’s
executive medical benefit program.  Such severance payment and benefits are for
and in lieu of any other payments or benefits (and, except as specifically
provided herein, none shall accrue) beyond the Separation Date.  Perna
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.

 

IV.                            Reimbursement of Legal Fees.  Subject to MSC’s
expense reimbursement policies in effect from time to time, MSC shall reimburse
Perna for the legal fees and other expenses incurred by him relating to the
negotiation and preparation of this Separation Agreement, provided that in no
event shall MSC’s obligation under this Section IV exceed Twenty Thousand
Dollars $20,000 in the aggregate.

 

V.                                Directors and Officers’ Liability Insurance. 
MSC shall keep in place a directors and officers’ liability insurance policy (or
policies) providing comprehensive coverage to Perna for a period of three (3)
years following the Separation Date to the extent that MSC provides such
coverage for any other present or former senior executive or director of the
Corporation during such period; provided, however, that MSC’s annual cost under
such policy (or policies) shall in no event exceed 200% of its current annual
cost under such policy (or policies).

 

VI.                            Non-Disparagement.  Perna agrees that he shall
not (1) directly or indirectly, make or ratify any statement, public or private,
oral or written, to any person that disparages, either professionally or
personally, MSC or any of its affiliates, past and present, and each of them, 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, or (2) make any
statement or engage in any conduct that has the purpose or effect of disrupting
the business of MSC or any of its affiliates.  MSC, and its officers and
directors, shall not, directly or indirectly, make or ratify any statement,
public or private, oral or written, to any person that disparages, either
professionally or personally, Perna.  Nothing in the preceding two sentences,
however, shall in any way prohibit Perna or MSC from disclosing such information
as may be required by law, or by judicial or administrative process or order or
the rules of any securities exchange or similar self-regulatory organization
applicable to such person.

 

VII.                        Release.  Perna 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, 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

 

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heretofore owned or held or may in the future hold as against any of said
Releasees, arising out of or in any way connected with his service as an
officer, director, employee, member or manager of any Releasee, his separation
from his position as an officer, director, employee, manager and/or member, as
applicable, of any Releasee, 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 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 or the Consulting Agreement for which
receipt or satisfaction has not been acknowledged, (2) any right to
indemnification that Perna may have pursuant to MSC’s Bylaws with respect to any
losses that Perna may in the future incur with respect to his past service as an
officer of MSC, and (3) with respect to any such losses, any rights that Perna
may have to insurance coverage for such losses under any MSC directors and
officers liability insurance policy.

 

VIII.                    1542 Waiver.  It is the intention of Perna 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, Perna 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.”

 

Perna acknowledges that he may hereafter discover claims or facts in addition to
or different from those which Perna 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, Perna hereby waives any
right, claim or cause of action that might arise as a result of such different
or additional claims or facts.  Perna acknowledges that he understands the
significance and consequences of such release and such specific waiver of
SECTION 1542.

 

IX.                           ADEA Waiver.  Perna 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

 

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Age Discrimination in Employment Act of 1967, as amended, which have arisen on
or before the date of execution of this Separation Agreement.  Perna 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 February 10, 2005 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.

 

X.                               No Transferred Claims.  Perna 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.

 

XI.                           Confidential Information.

 

A.                                    Perna, in the performance of Perna’s
services on behalf of MSC and its affiliates, has had access to, received and
been entrusted with confidential information, including but in no way limited to
development, marketing, organizational, financial, management, administrative,
production, distribution and sales information, data, specifications and
processes presently owned or at any time in the future developed, by MSC, its
affiliates, or its or their agents or consultants, or used presently or at any
time in the future in the course of its or their business that is not otherwise
part of the public domain (collectively, the “Confidential Material”).  All such
Confidential Material is considered secret and was made available to Perna in
confidence.  Perna represents that he has held all such information confidential
and will continue to do so.

 

B.                                    Except in the performance of services on
behalf of MSC and its affiliates, Perna shall not, directly or indirectly for
any reason whatsoever, disclose or use any such Confidential Material, unless
such Confidential Material ceases (through no fault of Perna’s) to be
confidential because it has become part of the public domain or he is otherwise
obligated to disclose such information by the lawful order of any competent
jurisdiction.  All records, files, drawings, documents, equipment and other
tangible items, wherever located, relating in any way to the Confidential
Material or otherwise to the business of MSC or any of its affiliates, which
Perna prepares, uses or encounters, shall be and remain the sole and exclusive
property of the appropriate entity or entities and shall be included in the
Confidential Material.  Upon the termination or expiration, as applicable, of
the Consulting Term as set forth in the Consulting Agreement, or whenever
requested by MSC, Perna shall promptly deliver to MSC any and all of

 

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the Confidential Material, not previously delivered to MSC, that may be or at
any previous time has been in Perna’s possession or under Perna’s control.

 

C.                                    Perna hereby acknowledges that the sale or
unauthorized use or disclosure of any of the Confidential Material by any means
whatsoever and any time before, during or after Perna’s engagement with MSC
shall constitute “Unfair Competition.”  Perna agrees that Perna shall not engage
in Unfair Competition either during the time engaged by MSC or any time
thereafter.

 

D.                                    Soliciting Customers.  Perna promises and
agrees that he will not, during his engagement pursuant to the Consulting
Agreement and for a period of one year following termination or expiration, as
applicable, of the Consulting Term thereunder, influence or attempt to influence
any customers of MSC or any of its affiliates, either directly or indirectly, to
divert their business to any individual, partnership, firm, corporation or other
entity which is currently or at that particular point in time in competition
with (or has plans to engage in business which would be in competition with) the
business of MSC or any of its affiliates.  (For purposes of this Separation
Agreement, a business in competition with MSC or its affiliates will be deemed
to include (without limiting any other business in competition with MSC or its
affiliates) any business which is engaged in the development, marketing and/or
support of virtual product development tools for the computer-aided engineering
marketplace (including, without limitation, simulation software and/or
professional services).)  Perna acknowledges that during his employment with
MSC, he was given access to Confidential Material of MSC and its affiliates, and
that such Confidential Material constitutes MSC’s trade secrets.  Perna
acknowledges and agrees that this restriction is necessary in order for MSC to
preserve and protect its legitimate proprietary interest in its Confidential
Material and trade secrets.

 

XII.                       Soliciting Employees.  Perna promises and agrees that
he will not, during his engagement pursuant to the Consulting Agreement and for
a period of one year following the termination or expiration, as applicable, of
the Consulting Term thereunder, directly or indirectly solicit any employee of
MSC or any of its affiliates who earned annually $25,000 or more as an employee
of such entity during the last six months of his or her own employment to work
for any business, individual, partnership, firm, or corporation.

 

XIII.                   Stock Options.  MSC has previously granted options on
shares of MSC common stock to Perna.  As of the Separation Date, such options
(to the extent not previously expired, terminated, or exercised) remain
outstanding as to an aggregate of 1,605,475 shares of MSC common stock, of which
such options are currently vested as to 1,292,975 shares of MSC common stock
(the “Vested Options”) and the balance of such options as to 312,500 shares of
MSC common stock are currently unvested (the “Unvested Options”).  The Unvested
Options are hereby terminated and Perna shall have no further rights with
respect thereto.  Of the Vested Options, the Vested Options referred to below
are hereby terminated and Perna shall have no further rights with respect
thereto:

 

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Date of Grant

 

Per Share Exercise Price

 

Number of Shares

 

 

 

 

 

 

 

March 23, 2000

 

$

25.00

 

100,000

 

August 2, 2001

 

$

21.95

 

112,500

 

August 2, 2001

 

$

27.50

 

112,500

 

March 19, 2002

 

$

21.96

 

100,000

 

 

This confirms that MSC has amended the balance of the Vested Options (those not
terminated pursuant to the foregoing, the “Continuing Vested Options”) so that
Perna will have until the first to occur of the following to exercise such
Continuing Vested Options: (1) the third anniversary of the Separation Date, (2)
the expiration of the maximum term of such option, (3) the termination of the
option in connection with a change in control or similar event as provided in
the applicable option agreement and/or plan under which the option was granted,
or (4) MSC’s termination of Perna’s consulting engagement pursuant to the
Consulting Agreement for Cause (as such term is defined in the Consulting
Agreement).  Except as otherwise expressly provided above in this Section XI,
the Continuing Vested Options otherwise shall remain outstanding in accordance
with their respective terms and conditions.

 

XIV.                   Miscellaneous

 

A.                                    Successors.

 

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

 

2.                                       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
Perna and the Chief Executive Officer of MSC or his designee.

 

D.                                    Complete Agreement.  This Separation
Agreement and the Consulting Agreement constitute and contain the entire
agreement and final understanding concerning Perna’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
hereof.  The

 

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Employee Confidentiality and Inventions Agreement by and between Perna and MSC
and entered into on or about March 14, 2004 (the “Confidentiality Agreement”) is
outside of the scope of the preceding sentence and shall continue in effect in
accordance with its terms.  Any representation, promise or agreement not
specifically included in this Separation Agreement, the Consulting Agreement or
the Confidentiality Agreement shall not be binding upon or enforceable against
either party.  This Separation Agreement, along with the Consulting Agreement
and the Confidentiality Agreement, constitute an integrated agreement.

 

E.                                      Litigation and Investigation
Assistance.  Perna agrees to cooperate in the defense of MSC or any of its
affiliates against any threatened or pending litigation or in any investigation
or proceeding by any governmental agency or body that relates to any events or
actions which occurred during or prior to the term of Perna’s employment or the
Consulting Term (as defined in the Consulting Agreement).  Furthermore, Perna
agrees to cooperate in the prosecution of any claims and lawsuits brought by MSC
or any of its affiliates that are currently outstanding or that may in the
future be brought relating to matters which occurred during or prior to the term
of Perna’s employment or the Consulting Term.  From and after the Separation
Date, except as requested by MSC or as required by law, Perna shall not comment
upon any (i) threatened or pending claim or litigation (including investigations
or arbitrations) involving MSC or any of its affiliates or (ii) threatened or
pending government investigation involving MSC or any of its affiliates.

 

F.                                      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.

 

G.                                    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.

 

H.                                    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.

 

I.                                         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.

 

J.                                      Arbitration.  Any dispute, claim or
controversy arising out of or relating to this Separation Agreement, its
enforcement or interpretation, or because of an alleged breach, default, or
misrepresentation in connection with any of its provisions, including the
determination of the scope or applicability of this agreement to arbitrate,
shall be submitted to final and binding arbitration, to be held in Orange
County, California before a sole arbitrator; provided, however, that provisional
injunctive relief may, but need not, be sought in a court of

 

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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.  In the event either
party institutes arbitration under this Separation Agreement, the party
prevailing in any such proceeding, as determined by the arbitrator, shall be
entitled, in addition to all other relief, to reasonable attorneys’ fees
relating to such arbitration.  The nonprevailing party shall be responsible for
all costs of the arbitration, including but not limited to, the arbitration
fees, court reporter fees, etc.  Any dispute as to the reasonableness of costs
and expenses shall be determined by the arbitrator.

 

K.                                    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.

 

L.                                     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.

 

M.                                  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.

 

N.                                    Taxes.  Other than MSC’s right to reduce
the Cash Severance Payment for standard withholding, Perna shall be solely
responsible for any taxes due as a result of the payment of the Cash Severance
Payment and other benefits to be provided to Perna pursuant to Section III. 
Perna 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 Perna’s failure to pay any taxes due with respect to any such payment.

 

[Remainder of page intentionally left blank.]

 

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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 10th day of February 2005, at Orange County, California.

 

 

“Perna”

 

 

 

 

 

 

/s/ Frank Perna, Jr.

 

 

Frank Perna, Jr.

 

 

 

 

EXECUTED this 10th day of February 2005, at Orange County, California.

 

 

 

“MSC”

 

 

 

MSC.Software Corporation,

 

a Delaware corporation

 

 

 

 

 

 

/s/  John Laskey

 

 

By:

John Laskey

 

 

Its:

Senior Vice President,

 

 

 

Chief Financial Officer

 

 

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EXHIBIT A

 

RESIGNATION LETTER

 

To:

The Board of Directors of MSC.Software Corporation

 

 

From:

Frank Perna, Jr.

 

 

 

I hereby resign as an employee, officer, director, member, manager and in any
other capacity with MSC.Software Corporation and each of its affiliates,
effective February 10, 2005.

 

 

/s/ Frank Perna, Jr.

 

 

Frank Perna, Jr.

 

 

 

February 10, 2005

 

 

Date

 

A-1

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EXHIBIT B

 

CONSULTING AGREEMENT

 

B-1

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EXHIBIT C

 

ENDORSEMENT

 

I, Frank Perna, Jr., 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 10th day of February 2005, at Orange County, California.

 

 

 

/s/ Frank Perna, Jr.

 

 

Frank Perna, Jr.

 

C-1

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