Exhibit 10.6


 


MSC.SOFTWARE CORPORATION


PERFORMANCE STOCK UNIT AWARD AGREEMENT


 


THIS PERFORMANCE
STOCK UNIT AWARD AGREEMENT (this “Award
Agreement”) by and between MSC.SOFTWARE
CORPORATION, a Delaware corporation (the “Corporation”),
and John A. Mongelluzzo (the “Grantee”)
evidences the performance stock unit award (the “Award”)
granted by the Corporation to the Grantee as to the number of stock units first
set forth below.


 


	
  Number
  of Stock Units:(1)

  	
  30,000

  	
  Effective
  Date: March 9, 2005

  
	
   

  
	
  Vesting(1),(2)
  The Award shall vest as provided
  in Section 2 below.

  



 


The
Award is subject to the Terms and Conditions of Performance Stock Unit Award
(the “Terms”) attached to this Award
Agreement (incorporated herein by this reference).  The Award 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.  The
Award is in full satisfaction of the Corporation’s obligation to grant
performance stock units to the Grantee pursuant to that certain letter
agreement, dated on or about February 28, 2005, providing for the terms and
conditions of Grantee’s employment by the Corporation.  The parties agree to the terms of the Award
set forth herein.  The Grantee
acknowledges receipt of a copy of the Terms.


 


	
  “GRANTEE”

  	
  MSC.SOFTWARE
  CORPORATION,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
  /s/ JOHN A. MONGELLUZZO

  	
   

  	
   

  
	
  John A. Mongelluzzo

  	
  By:

  	
  /s/ WILLIAM J. WEYAND

  	
   

  
	
   

  	
   

  	
  Name: William J. Weyand

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  
					



 










(1)  Subject to
adjustment under Section 8 of the Terms.


(2)  Subject to early termination under Section 7
of the Terms.


 





















 


TERMS AND CONDITIONS OF PERFORMANCE STOCK UNIT
AWARD


 


1.             Performance Stock Units.  As used herein, a “Performance Stock
Unit” is a non-voting unit of measurement which is deemed for
bookkeeping purposes to be equivalent in value to one outstanding share of
Common Stock of the Corporation.  The Performance
Stock Units shall be used solely as a device for the determination of any
payment to eventually be made to the Grantee if and when such Performance Stock
Units vest pursuant to Section 2.


 


The Performance Stock
Units create no fiduciary duty to the Grantee and shall create only a
contractual obligation on the part of the Corporation to make payments, subject
to vesting and the other terms and conditions hereof, as provided in Section 6
below.  The Performance Stock Units shall
not be treated as property or as a trust fund of any kind.  No assets have been secured or set aside by
the Corporation with respect to the Award and, if amounts become payable to the
Grantee pursuant to this Award Agreement, the Grantee’s rights with respect to
such amounts shall be no greater than the rights of any general unsecured
creditor of the Corporation.


 


2.             Vesting.  Subject
to adjustment as provided herein, the Performance Stock Units subject to the Award
shall vest upon the earlier to occur of


 


(i)            the date
following the date on which the closing price or last price, as applicable, per
share of the Common Stock reported on the composite tape for securities listed
on either the New York Stock Exchange or the NASDAQ National Market has equaled
or exceeded $17.00 for each of the thirty (30) consecutive trading days on
which the Common Stock is actively traded preceding such date; or


 


(ii)           the date
immediately preceding a Company Sale (as defined below) in which the value of
the per-share consideration received by the holders of the Corporation’s Common
Stock in respect of such Company Sale equals or exceeds $17.00;


 


provided,
however, that any Performance Stock Units that have not vested pursuant to the
foregoing clause (i) as of the close of trading on the thirtieth (30th)
trading day following the second anniversary of the Effective Date, or pursuant
to the foregoing clause (ii) as of the second anniversary of the Effective Date
shall automatically terminate as of such second anniversary date.  For purposes of clarity, the Performance
Stock Units may not vest pursuant to the foregoing clause (i) based on the
price of the Common Stock on any securities exchange other than the New York
Stock Exchange or the NASDAQ National Market.


 


For purposes of
this Award Agreement, “Company Sale”
means any of the following:


 


(i)            approval
by the stockholders of the Corporation of an agreement to merge or consolidate,
or otherwise reorganize, with or into one or more entities that are not
Subsidiaries (as defined below) 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 stockholders of the Corporation immediately before such
reorganization (assuming for purposes of such determination that there is no
change in the record ownership of the Corporation’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 affiliates of the Corporation);


 


(ii)           approval
by the stockholders of the Corporation of the sale of substantially all of the
Corporations’ business and/or assets to a person or entity that is not a
Subsidiary (as defined below); or


 


(iii)          any
“person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (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 30% 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.


 


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


 


3.     Continuance of Employment.  The vesting schedule requires continued
employment 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 Award Agreement.  Employment for
only a portion of the vesting period, even if a substantial portion, will not
entitle the Grantee to any proportionate vesting or avoid or mitigate a
termination of rights and benefits upon or following a termination of
employment as provided in Section 7 below.


 


Nothing contained
in this Award Agreement constitutes an employment commitment by the Corporation
or any Subsidiary (as defined below), confers upon the Grantee any right to
remain employed by the Corporation or any Subsidiary, or interferes in any way
with the right of the Corporation or any Subsidiary at any time to terminate
such employment.  Nothing in this
paragraph, however, is intended to adversely affect any independent contractual
right of the Grantee under any written employment agreement with the
Corporation.


 


4.     No Stockholder Rights.  The Grantee shall have no rights as a
stockholder of the Corporation, no dividend rights and no voting rights with
respect to the Performance Stock Units or any shares of Common Stock issuable
in respect of such Performance Stock Units, until shares of Common Stock are
actually issued to and held of record by the Grantee.  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 evidencing the shares.


 


5.     Restrictions on Transfer.  Prior to the time (if any) the Performance
Stock Units are vested and paid, neither the Performance Stock Units comprising
the Award nor any interest therein or amount payable in respect thereof may be
sold, assigned, transferred, pledged or otherwise disposed of, alienated or
encumbered, either voluntarily or involuntarily, other than by will or the laws
of descent and distribution.


 


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The transfer restrictions of this Section 5 shall not apply to
transfers to the Corporation..


 


6.     Timing and Manner of Payment of Performance
Stock Units.  Performance
Stock Units subject to this Award Agreement that vest in accordance with
Section 2 shall be paid in an equivalent number of shares of Common Stock,
which shall be fully paid and non-assessable, promptly on or as soon as
practicable after the vesting date of such units (the “Payment Date”),
but in no event earlier than the earliest date that payment may be received
under Section 409A (as defined herein). 
Such payment shall be subject to the tax withholding provisions of
Section 9 and subject to adjustment as provided in Section 8, and shall be in
complete satisfaction of such vested Performance Stock Units.  The Grantee shall deliver to the Corporation
any representations or other documents or assurances required pursuant to
Section 10 and Section 11.


 


7.     Effect of
Termination of Employment.  The Award and any Performance Stock
Units subject to the Award, to the extent not vested as of the first date the
Grantee is no longer employed by the Corporation or one of its Subsidiaries,
shall terminate as of such date (regardless of the reason for such termination,
including, without limitation, a termination due to death or disability), and
the Grantee shall have no further rights with respect to the Award or such
Performance Stock Units.


 


8.     Adjustments
Upon Specified Events.


 


Upon or in contemplation
of any reclassification,
recapitalization, stock split (including a stock split in the form of a stock
dividend) or reverse stock split; any merger, combination, consolidation or
other reorganization; any split-up; spin-off, or similar extraordinary dividend
distribution in respect of the Common Stock (whether in the form of securities
or property); any exchange of Common Stock or other securities of the
Corporation, or any similar, unusual or extraordinary corporate transaction in
respect of the Common Stock; or a sale of substantially all the assets of the
Corporation as an entirety; then the Corporation shall, in such manner, to such
extent (if any) and at such time as it deems appropriate and equitable in the
circumstances make adjustments if appropriate in the number of
Restricted Stock Units contemplated hereby and the number and kind of
securities that may be issued in respect of the Award.


 


The Corporation
shall adjust the performance measures, performance goals, relative weights of
the measures, and other provisions of this Award Agreement 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 stock split, reverse
stock split, stock dividend, 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.


 


9.     Tax Withholding.  The Corporation shall reasonably determine
the amount of any federal, state, local or other income, employment, or other
taxes which the Corporation or any of its affiliates may reasonably be
obligated to withhold with respect to the grant, vesting, or other event with
respect to the Performance Stock Units. 
The Corporation may, in its sole discretion, withhold a sufficient
number of shares of Common Stock in connection with the vesting of the


 


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Performance Stock Units
at the then Fair Market Value (as defined below) of the Common Stock
(determined either as of the date of such withholding or as of the immediately
preceding trading day, as determined by the Corporation in its discretion) to
satisfy the amount of any such withholding obligations that arise with respect
to the vesting of such Performance Stock Units. 
The Corporation may take such action(s) without notice to the Grantee
and shall remit to the Grantee the balance of any proceeds from withholding
such shares in excess of the amount reasonably determined to be necessary to
satisfy such withholding obligations. 
The Grantee shall have no discretion as to the satisfaction of tax
withholding obligations in such manner. 
If, however, any withholding event occurs with respect to the Performance
Stock Units other than the vesting of such units, or if the Corporation for any
reason does not satisfy the withholding obligations with respect to the vesting
of the Stock Units as provided above in this Section 9 the Corporation shall be
entitled to require a cash payment by or on behalf of the Grantee and/or to
deduct from other compensation payable to the Grantee the amount of any such
withholding obligations.


 


For purposes of
this Award Agreement, “Fair Market Value”
on any date means (i) if the stock is listed or admitted to trade on a national
securities exchange, the closing price of the stock on the Composite Tape, as
published in the Western Edition of the Wall Street Journal, of the principal
national securities exchange on which the stock is so listed or admitted to
trade, on such date, or, if there is no trading of the stock on such date, then
the closing price of the stock as quoted on such Composite Tape on the next
preceding date on which there was trading in such shares; (ii) if the stock is
not listed or admitted to trade on a national securities exchange, the last/closing
price for the stock on such date, as furnished by the National Association of
Securities Dealers, Inc. (“NASD”) through the NASDAQ National Market Reporting
System or a similar organization if the NASD is no longer reporting such
information; (c) if the stock is not listed or admitted to trade on a national
securities exchange and is not reported on the National Market Reporting
System, the mean between the bid and asked price for the stock on such date, as
furnished by the NASD or a similar organization; or (d) if the stock is not
listed or admitted to trade on a national securities exchange, is not reported
on the National Market Reporting System and if bid and asked prices for the
stock are not furnished by the NASD or a similar organization, the value as
established by the Corporation’s Board of Directors at such time for purposes
of this Award Agreement.  Any
determination as to fair market value made pursuant to this Award Agreement
shall be determined without regard to any restriction other than a restriction
which, by its terms, will never lapse, and shall be conclusive and binding on
all persons.


 


10.   Compliance
with Laws.  The
Award and the offer, issuance and delivery of securities and/or payment of
money under this Award Agreement are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Corporation, be necessary or advisable in connection
therewith.  The Grantee will, if
requested by the Corporation, provide such assurances and representations to
the Corporation as the Corporation may deem necessary or desirable to assure
compliance with all applicable legal requirements.  The Corporation will cause such action to be
taken, and such filings to be made, so that the grant hereunder shall comply
with the rules of the New York Stock Exchange.


 


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11.   Representations
and Warranties.  In
the event, and only in the event, that any Performance Stock Units are to be
paid in shares of Common Stock pursuant to this Award Agreement at a time when
the Corporation does not have an effective Form S-8 Registration Statement (including
a reoffer prospectus prepared in accordance with the SEC’s General Instructions
to Form S-8) on file with the Securities and Exchange Commission with respect
to the offer and sale of the shares of Common Stock covered by this Award
Agreement, the Grantee, at the time he acquires such shares, shall represent
and warrant to the Corporation that:


 


(a)                                  the shares of Common Stock that may be
acquired by the Grantee pursuant to this Award Agreement will be acquired for
the Grantee’s own account and not with a view to, or in connection with, a
distribution thereof in violation of the Securities Act of 1933, as amended
(the “Securities Act”), or any applicable
state securities laws, and the shares of Common Stock will not be disposed of
in contravention of the Securities Act or any applicable state securities laws;


 


(b)                                 the Grantee is an “accredited investor”
as such term is defined in Rule 501 promulgated under the Securities Act and is
sophisticated in financial matters;


 


(c)                                  the Grantee is able to bear the economic
risk of his investment in the shares for an indefinite period of time because
the shares have not been registered under the Securities Act and, therefore,
cannot be sold unless subsequently registered under the Securities Act or an
exemption from such registration is available;


 


(d)                                 the Grantee has had the opportunity to
ask questions of, and receive answers from, the Corporation and its management
concerning the terms and conditions of the offering of the Common Stock and to
obtain information regarding the Corporation’s condition (financial and
otherwise) and operations; and


 


(e)                                  this Award Agreement and each of the
other agreements contemplated hereby to which such Grantee is a party
constitute legal, valid and binding obligations of the Grantee, enforceable in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and limitations on the availability of equitable
remedies, and the execution, delivery and performance of this Award Agreement
and such other agreements by such Grantee does not and will not conflict with,
violate or cause a breach of any agreement, contract or instrument to which the
Grantee is a party or any judgment or decree to which the Grantee is subject.


 


12.   Legends.


 


(a)                                  In
the event, and only in the event, that, at the time any Performance Stock Units
are to be paid in shares of Common Stock pursuant to this Award Agreement, the
Corporation does not have an effective Form S-8 Registration Statement (including
a reoffer prospectus prepared in accordance with the SEC’s General Instructions
to Form S-8) on file with the Securities and Exchange Commission with respect
to the offer and sale of shares of Common Stock covered by this


 


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Award
Agreement, the certificates,
if any, representing the shares of Common Stock so paid will bear a legend in
substantially the following form:


 


“THESE SHARES HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY APPLICABLE
STATE LAW. THEY MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR PLEDGED
WITHOUT (1) REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE
STATE LAW, OR (2) AT HOLDER’S EXPENSE, AN OPINION (SATISFACTORY TO THE
CORPORATION) OF COUNSEL (SATISFACTORY TO THE CORPORATION) THAT REGISTRATION IS
NOT REQUIRED.”


 


(b)                                 In
addition, the certificates, if any, representing any shares of Common Stock
paid pursuant to this Award Agreement will bear a legend in substantially the
following form:


 


“THE OWNERSHIP OF THIS
CERTIFICATE AND THE SHARES OF STOCK EVIDENCED HEREBY AND ANY INTEREST THEREIN
ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFER UNDER AN AGREEMENT ENTERED
INTO BETWEEN THE REGISTERED OWNER AND MSC.SOFTWARE CORPORATION.  A COPY OF SUCH AGREEMENT IS ON FILE IN THE
OFFICE OF THE SECRETARY OF MSC.SOFTWARE.”


 


The legend set forth in this Section 12(b) will
be removed from the certificates evidencing such shares upon the occurrence of
one of the events set forth in Section 5.


 


13.   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.


 


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


 


15.   Governing
Law.  This Award
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.


 


16.   Construction.  This Award Agreement shall be construed and
interpreted to comply with Section 409A of the Internal Revenue Code (“Section 409A”).  The
Corporation reserves the right to amend this Award Agreement to the extent it
reasonably determines is necessary in order to preserve the intended tax
consequences of the Performance Stock Units in light of Section 409A and any
regulations or other guidance promulgated thereunder.


 


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


 


18.   Entire
Agreement.  This
Award Agreement embodies the entire agreement of the parties hereto respecting
the matters within the scope of this Award Agreement and supersedes all prior
and contemporaneous agreements of the parties hereto that directly or
indirectly bears upon the subject matter hereof.  Any prior negotiations, correspondence,
agreements, proposals or understandings relating to the subject matter hereof
shall be deemed to have been merged into this Award 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.  This Award Agreement is an integrated
Agreement as to the subject matter hereof.


 


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


 


20.   Waiver.  Neither the failure nor any delay on the part
of a party to exercise any right, remedy, power or privilege under this Award
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.


 


21.   Notices.


 


(a)                                  All notices,
requests, demands and other communications required or permitted under this
Award 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:


 


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  (i)  if
  to the Corporation:

  
	
   

  
	
   

  	
  MSC.Software
  Corporation

  
	
   

  	
  2 MacArthur Place

  
	
   

  	
  Santa Ana, California
  92707

  
	
   

  	
  Attn: Board of
  Directors

  
	
   

  	
   

  
	
  (ii)  if to the Grantee:

  
	
   

  	
   

  
	
   

  	
  John A. Mongelluzzo

  
	
   

  	
  MSC.Software
  Corporation

  
	
   

  	
  2 MacArthur Place

  
	
   

  	
  Santa Ana, California
  92707

  



 


(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 21 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.


 


22.   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 Award
Agreement.  Hence, in any construction to
be made of this Award Agreement, the same shall not be construed against either
party on the basis of that party being the drafter of such language.  Grantee agrees and acknowledges that he has
read and understands this Award Agreement completes, is entering into it freely
and voluntarily, and has been advised to seek counsel prior to entering into
this Award Agreement and has had ample opportunity to do so.


 


23.   Counterparts.  This Award 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 Award 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.


 


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