<PAGE>

                                                                 EXHIBIT 10.12

                             SEPARATION AGREEMENT

     The parties to this Separation Agreement ("Agreement") are the following:

     1.  The MacNeal-Schwendler Corporation ("MSC") and

     2.  Thomas C. Curry ("Curry").

     Whereas MSC desires to employ Curry as its President and Chief 
Executive Officer;

     Whereas Curry desires to be so employed with MSC;

     Whereas both parties desire to set forth in advance their respective 
rights and obligations upon the termination of their employment relationship, 
the parties agree as follows:

     1.  Curry hereby acknowledges and agrees that he is an "at will" 
employee who is employed for an indefinite term. Accordingly, either he or 
MSC can terminate the employment relationship at any time for any or no 
reason without liability except for the obligations and rights expressly set 
forth in this Agreement.

     2.  If Curry resigns his position, dies or otherwise terminates the 
employment relationship, he shall be entitled to his pro rata share of his 
base salary then in effect through the last day of his employment plus any 
accrued but unused vacation. Curry's resignation shall be effective on the 
date he gives notice unless the parties agree otherwise. Curry shall not be 
entitled to any other compensation or benefits from MSC except as statutorily 
required by law, such as COBRA rights.

     3.  If MSC terminates Curry for "cause," Curry shall be entitled to his 
pro rata share of his base salary then in effect through the last day of his 
employment plus any accrued but unused vacation. Curry shall not be


                                     Page 1 


<PAGE>


entitled to any other compensation or benefits from MSC except as statutorily 
required by law, such as COBRA rights.

     4.  For the purposes of this Agreement, "cause" for termination shall 
include any reason that would constitute "cause" under California law. It 
shall also include, but not be limited to, dishonesty, fraud, theft, 
embezzlement, conviction of a misdemeanor involving moral turpitude or of any 
felony, failure to perform duties in a manner satisfactory to the Board of 
Directors after being advised in writing of a performance deficiency, 
unauthorized absence from work for a period of five or more consecutive work 
days, violation of Company policy or procedure, inability to perform the 
essential functions of the job for a period of 180 days due to any physical 
or mental disability, competing with the MSC while in its employ, or 
violation of the terms of the Employment Service/Non-Disclosure Agreement 
signed by Curry upon his employment as President and Chief Operating Officer.

    5.  If MSC terminates Curry for reasons other than cause, MSC shall 
provide Curry with the following compensation and benefits:

         (a)  MSC will continue to pay Curry the base salary he was receiving 
     at the time of termination for a period of eighteen (18) months from the 
     effective date of the termination as determined by MSC (the "Termination 
     Date"). These salary continuation payments shall be made in the form of 
     regular semi-monthly payroll payments with appropriate withholdings and 
     authorized deductions that were in effect at the time of the termination 
     and/or as required by law.

         (b)  If Curry elects to exercise his rights under COBRA to continue 
     the medical benefits provided under the MSC medical plan in which he was 
     participating, MSC shall continue to pay the same amount towards the 
     premium as it paid towards the premium immediately prior to the 
     Termination Date to continue Curry's medical coverage under MSC's then 
     current medical plan for a period not to exceed eighteen (18) months 
     after the Termination Date. Other than MSC's payment of the premium, 
     Curry shall be subject to all the terms and conditions of MSC's medical 
     plan that are applicable to


                                     Page 2


<PAGE>


     MSC's other executives. MSC's obligation under this subparagraph shall 
     terminate immediately upon Curry's commencing employment with another 
     employer and becoming eligible to participate in the medical plan 
     offered by the new employer or if Curry becomes otherwise ineligible for 
     continuance of medical insurance coverage under COBRA. Curry agrees to 
     notify MSC in writing immediately of the fact that he has accepted new 
     employment and to provide MSC with a copy of his new employer's medical 
     insurance.

          (c)  MSC will continue Curry's participation in its then-current 
     Company Automobile Benefits Program (which is currently described in MSC 
     Program No. 8.1.4.) for a period not to exceed eighteen (18) months from 
     the Termination Date. Curry's continued participation in that program 
     during the eighteen (18) month period shall be subject to all the terms 
     and conditions of that program which are then in effect and applicable 
     to other MSC executives participating in that program.

          (d)  The 70,000 non-qualified stock options granted under the 
     special stock option agreement dated January 11, 1995, if not already 
     vested, shall become fully vested as of the Termination Date and Curry 
     may exercise those options for a period of twelve (12) months from the 
     Termination Date. Curry shall remain subject to all other terms and 
     conditions of the special stock option agreement. Curry's rights under 
     any and all other employee stock option plans shall be cancelled in 
     accordance with the terms of those plans.

          (c)  MSC shall pay, directly to the service provider, reasonable 
     job search/out placement fees actually incurred by Curry in his efforts 
     to secure new employment, but in no event shall the total amount of such 
     fees exceed $35,000.

     6.  Curry's entitlement to the compensation and benefits described in 
Paragraph 5 (a) - (e) is expressly conditioned upon his execution, at the 
time of his termination, of MSC's then-current Separation Non-Disclosure 
Agreement and the execution of a general release of MSC, its directors, 
officers, employees, attorneys, insurers and affiliated entities from any and


                                     Page 3


<PAGE>


all liability. If Curry fails to sign either the Separation Non-Disclosure 
Agreement or the general release, he shall be entitled to nothing under this 
Agreement other than what he would receive upon his resignation pursuant to 
Paragraph 2 plus two (2) weeks severance pay. Moreover, if Curry subsequently 
violates the terms of the Separation Non-Disclosure Agreement, he shall 
immediately forfeit any rights to the benefits set forth in Paragraph 5 (a) - 
(e) and shall immediately repay to MSC any and all compensation and the cost 
of any and all benefits already received pursuant to Paragraph 5 (a) - (e).

     7.  The parties acknowledge and agree that the compensation and benefits 
described in Paragraph 5 (a) - (e) (or, in the alternative, Paragraph 6) are 
the sole and exclusive relief to which Curry shall be entitled if he is 
terminated without cause. Accordingly, Curry shall not be entitled to any other 
fringe benefits, bonuses, payments, compensation, severance pay or 
participation in any other MSC programs or plans then in existence except as 
expressly set forth in Paragraph 5 (a) - (e).

     8.  The parties acknowledge and agree that the compensation and benefits 
set forth in Paragraph 5 (a) - (e) (or, in the alternative, Paragraph 6) 
shall be the limitation of MSC's liability in connection with any termination 
of Curry's employment under this Agreement. Accordingly, if MSC terminates 
Curry for cause and it is later determined that cause did not exist, MSC's 
liability shall be limited to the compensation and its cost of the benefits 
described in Paragraph 5 (a) - (e).

     9.  This Agreement sets forth the entire agreement between MSC and Curry 
with respect to Curry's term of employment and the termination of that 
employment. No express or implied modification, alteration or termination of 
this Agreement shall be valid except if it is made in writing and executed by 
the Chairman of the Board of Directors of MSC. Accordingly, this Agreement 
supersedes any and all previous or concurrent arrangements and agreements, 
written or oral, expressed or implied, if any, which may have existed between 
MSC and Curry, including but not limited to the "Agreement Re: Change in 
Control" dated April 14, 1994.


                                     Page 4


<PAGE>


     10.  If any provision of this Agreement is illegal and unenforceable in 
whole or in part, the remainder of this Agreement shall remain enforceable to 
the extent permitted by law.

     11.  The parties agree that any lawsuit or action filed in connection 
with Curry's employment, this Agreement and/or the termination of Curry's 
employment shall be filed in California Superior court for the County of Los 
Angeles. Moreover, all disputes arising out of or relating to Curry's 
employment with MSC, or to enforce or interpret this Agreement, shall be 
resolved by way of a reference procedure, as described in Code of Civil 
Procedure Section 638, et seq. Both parties agree to waive any right to a 
jury trial. The scope of this clause is to be broadly construed, so as to 
include both contract, tort and statutory causes of action of whatever 
description. In the event of such a dispute, the parties shall jointly 
appoint a Referee, and, in the event that no referee can be agreed upon, then 
the parties shall apply to the Judicial Arbitration and Mediation Service for 
a list of seven available referees, and each party shall be entitled to 
strike names from the list, alternating between them and beginning with 
Curry, until only one name remains, and that person shall be designated the 
referee. The cost of the reference procedure shall be evenly divided between 
the parties, but the referee may, at the conclusion of the reference 
procedure, allocate the reference costs as he or she deems appropriate. 
Notwithstanding Code of Civil Procedure Section 643, the referee may render 
his or her decision within sixty (60) days after the close of proceedings, 
but, in the event that no decision is rendered after that time, the referee 
shall nonetheless not lose jurisdiction over the matter, and shall render a 
decision as soon thereafter as is practicable.

                                  /s/ Richard H. MacNeal
                                  ________________________________________
                                  For The MacNeal-Schwendler Corporation


                                  /s/ Thomas C. Curry
                                  ________________________________________
                                  Thomas C. Curry


                                     Page 5