8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  02/27/2006

Pegasystems Inc.

(Exact name of registrant as specified in its charter)

Commission File Number:  1-11859

Massachusetts	04-2787865
(State or other jurisdiction of	(IRS Employer
incorporation)	Identification No.)

101 Main Street, Cambridge, Massachusetts 02142

(Address of principal executive offices, including zip code)

617-374-9600

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Information to be included in the report

Item 1.01.    Entry into a Material Definitive Agreement

On February 27, 2006, Pegasystems Inc. (the "Company") filed a press release announcing the appointment of Edward Hughes as its Senior Vice President, Global Sales, effective February 21, 2006. A copy of the Company's press release is attached hereto as Exhibit 99.1.

In connection with his appointment, the Company and Mr. Hughes signed an offer letter specifying the details of his compensation. Mr. Hughes' offer letter provides for his employment on an "at-will" basis as Senior Vice President, Global Sales at an annual base salary of $250,000. Mr. Hughes is eligible for an annual bonus of up to 40% of his base salary, subject to the funding provisions of the applicable bonus plan, and additional individual incentives outlined in his offer letter related to the attainment of certain sales operations goals and the level of the Company's license bookings. In the event the Company terminates Mr. Hughes' employment without cause, he will receive a severance payment initially equal to six months of his base salary, which amount shall be increased by one additional month of base salary for each six months that he remains employed following the first anniversary of his start date, up to a maximum total of twelve months of base salary.

In the offer letter, Mr. Hughes was also granted an option on February 21, 2006 to purchase 100,000 shares of the Company's common stock pursuant to the Company's 2004 Long-Term Incentive Plan, at an exercise price equal to the fair market value of the stock on that date. The option will vest in equal quarterly installments over a four-year period, beginning on the grant date. The vesting schedule for the option is subject to acceleration by six months in the event of certain change in control events.

A copy of Mr. Hughes's offer letter is attached hereto as Exhibit 99.2.

Signature(s)

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		Pegasystems Inc.
Date: February 27, 2006	By:	/s/    Shawn S. Hoyt
		Shawn S. Hoyt
		General Counsel

Exhibit Index

Exhibit No.	Description
EX-99.1	Press Release Issued February 27, 2006
EX-99.2	Offer Letter between Pegasystems Inc. and Edward L. Hughes dated February 21, 2006

EX-99.1 2 rrd109331_12094.htm PRESS RELEASE ISSUED FEBRUARY 27, 2006

For information, contact:

Rosalind Morville

Sr. Public Relations Manager

Pegasystems Inc.

(617) 866-6029

rosalind.morville@pega.com

Darlene Doyle

Account Manager

Lois Paul and Partners

(781) 782-5868

darlene_doyle@lpp.com

Pegasystems Appoints Edward Hughes Global Sales Executive

Sales Team Strengthened with Global Appointment

CAMBRIDGE, Mass., February 27, 2006 -- Pegasystems Inc. (Nasdaq: PEGA), the leader in unified process and rules technology, today announced the appointment of Edward Hughes as senior vice president, Global Sales.

"Pegasystems is the leader in a growing market," said Edward Hughes. "I am excited to join this world-class company and help foster continued growth on a world-wide basis."

Edward Hughes joins Pegasystems with an extensive sales background including domestic and international experience. Most recently at IBM, in his role as vice president of Sales, he led sales in the Americas for the Software Development Tools group. Previously, Hughes was vice president of Sales for Rational Software, responsible for the pan-European organization including sales, service and support. He began his software sales career at Compuware Corporation, a recognized leader in enterprise software and IT services.

Alan Trefler, CEO and founder commented, "We are delighted to welcome Edward to Pegasystems. His experience with other leading software companies makes him a superb addition to our organization."

About Pegasystems

Pegasystems Inc. (Nasdaq: PEGA) provides software to automate complex, changing business processes. Pegasystems, the leader in unified process and rules technology, gives business people and IT departments the ability to use best processes across the enterprise and outperform their competition.

Our new class of Business Process Management (BPM) technology makes enterprise systems easy to use and easy to change. By automating policy manuals, system specifications and lines of manual coding with dynamically responsive updates, Pegasystems powers the world's most sophisticated organizations to "build for change™."

Pegasystems' award-winning, standards-based BPM suite is complemented with best-practice solution frameworks to help leaders in the financial services, insurance, healthcare, manufacturing and government markets drive growth and productivity.

Headquartered in Cambridge, MA, Pegasystems has regional offices in North America, Europe and the Pacific Rim. For more information, visit www.pega.com.

###

EX-99.2 3 rrd109331_12098.htm OFFER LETTER BETWEEN PEGASYSTEMS INC. AND EDWARD L. HUGHES DATED FEBRUARY 21, 2006

February 21, 2006

Mr. Edward L. Hughes

___________

___________

___________

Dear Ed:

Pegasystems is pleased to offer you the position of Senior Vice President, Global Sales reporting directly to Alan Trefler, CEO and Chairman. This offer is contingent upon the successful completion of our pre-employment process and final approval of the Compensation Committee. Your starting salary for this position will be paid semi-monthly at a rate of $10,417, an annualized rate of $250,000. You will also be eligible to participate in our Corporate Incentive Plan at a 40% incentive target.

Separate and in addition to the Corporate Incentive Plan, you will be eligible for two individual variable compensation opportunities, which for 2006 are as follows:

1. Special Incentive Opportunity - $30,000

- $10,000 at mid-year, based on the successful adoption of the Sales Plays and Quality

Account Reviews

- $20,000 at year end, based on a certain quantity of sales account executives achieving quota, to be mutually agreed in Q1

2. Commissions - Payable Monthly Based on Bookings and Customer Deployment

- First $60M of License Bookings, at $1,000 per million

- Next 25% (to $75M) at $4,000 per million

- Above $75M, at $6,000 per million

In addition, you will be granted an option to purchase 100,000 shares of Pegasystems' common stock pursuant to our 2004 Long-Term Incentive Plan. The shares will have a four (4) year, quarterly vesting schedule and the exercise price of this option shall be the fair market value of Pegasystems' common stock on your first day of employment. These terms, which become effective on your date of hire, will be conveyed to you in a separate document after you become a Pegasystems employee. While any acceleration of unvested options occurs solely at the discretion of our Board of Directors, these options will be subject to a minimum acceleration of vesting of six months in the event of a Sale of the Company (as defined in the 2004 Long-Term Incentive Plan). This grant is contingent on your signing the enclosed Standards Letter.

You will be eligible to participate in the benefit programs which Pegasystems makes available to similarly situated employees. You will accrue paid time off in accordance with Pegasystems' Paid Time Off Policy. This includes 20 days of vacation per year along with 11 paid Holidays and 1 personal day. Your vacation and holidays are prorated during your first year of employment.

As we discussed, we would welcome your starting employment with Pegasystems on a full-time basis as early as February 21, 2006. As a condition of employment, we require you to sign the enclosed Standards Letter, prior to your start date. You will also need to provide us with proper employment authorization. This offer of employment is not a contract. Pegasystems is an at-will employer. Thus, either you or Pegasystems may terminate employment at anytime. In the event that Pegasystems terminates your employment without cause, you will be entitled to severance initially equal to six months of base salary, provided that you sign a mutually acceptable form of release. In addition, for each additional six months of employment following the first anniversary of your start date, the amount of severance shall be increased by one month of base salary, up to a maximum total of twelve months.

We would appreciate a written response no later than February 21, 2006. Please send or fax (617-494-5581) your signed Offer Letter and Standards Letter to me directly. You may contact me personally at 617-312-9308 (c) if you have any questions.

We are all very excited at the prospect of you working with us!

Sincerely,

/s/ Carmelina Procaccini

Carmelina Procaccini

Vice President, Human Resources

I accept the terms of this offer letter and will begin work at Pegasystems on February 21, 2006.

/s/ Edward L. Hughes

Edward L. Hughes

February 22, 2006

Date

-----END PRIVACY-ENHANCED MESSAGE-----

EX-99.1

For information, contact:

Rosalind Morville

Sr. Public Relations Manager

Pegasystems Inc.

(617) 866-6029

rosalind.morville@pega.com

Darlene Doyle

Account Manager

Lois Paul and Partners

(781) 782-5868

darlene_doyle@lpp.com

Pegasystems Appoints Edward Hughes Global Sales Executive

Sales Team Strengthened with Global Appointment

CAMBRIDGE, Mass., February 27, 2006 -- Pegasystems Inc. (Nasdaq: PEGA), the leader in unified process and rules technology, today announced the appointment of Edward Hughes as senior vice president, Global Sales.

"Pegasystems is the leader in a growing market," said Edward Hughes. "I am excited to join this world-class company and help foster continued growth on a world-wide basis."

Edward Hughes joins Pegasystems with an extensive sales background including domestic and international experience. Most recently at IBM, in his role as vice president of Sales, he led sales in the Americas for the Software Development Tools group. Previously, Hughes was vice president of Sales for Rational Software, responsible for the pan-European organization including sales, service and support. He began his software sales career at Compuware Corporation, a recognized leader in enterprise software and IT services.

Alan Trefler, CEO and founder commented, "We are delighted to welcome Edward to Pegasystems. His experience with other leading software companies makes him a superb addition to our organization."

About Pegasystems

Pegasystems Inc. (Nasdaq: PEGA) provides software to automate complex, changing business processes. Pegasystems, the leader in unified process and rules technology, gives business people and IT departments the ability to use best processes across the enterprise and outperform their competition.

Our new class of Business Process Management (BPM) technology makes enterprise systems easy to use and easy to change. By automating policy manuals, system specifications and lines of manual coding with dynamically responsive updates, Pegasystems powers the world's most sophisticated organizations to "build for change™."

Pegasystems' award-winning, standards-based BPM suite is complemented with best-practice solution frameworks to help leaders in the financial services, insurance, healthcare, manufacturing and government markets drive growth and productivity.

Headquartered in Cambridge, MA, Pegasystems has regional offices in North America, Europe and the Pacific Rim. For more information, visit www.pega.com.

###

EX-99.2

February 21, 2006

Mr. Edward L. Hughes

___________

___________

___________

Dear Ed:

Pegasystems is pleased to offer you the position of Senior Vice President, Global Sales reporting directly to Alan Trefler, CEO and Chairman. This offer is contingent upon the successful completion of our pre-employment process and final approval of the Compensation Committee. Your starting salary for this position will be paid semi-monthly at a rate of $10,417, an annualized rate of $250,000. You will also be eligible to participate in our Corporate Incentive Plan at a 40% incentive target.

Separate and in addition to the Corporate Incentive Plan, you will be eligible for two individual variable compensation opportunities, which for 2006 are as follows:

1. Special Incentive Opportunity - $30,000

- $10,000 at mid-year, based on the successful adoption of the Sales Plays and Quality

Account Reviews

- $20,000 at year end, based on a certain quantity of sales account executives achieving quota, to be mutually agreed in Q1

2. Commissions - Payable Monthly Based on Bookings and Customer Deployment

- First $60M of License Bookings, at $1,000 per million

- Next 25% (to $75M) at $4,000 per million

- Above $75M, at $6,000 per million

In addition, you will be granted an option to purchase 100,000 shares of Pegasystems' common stock pursuant to our 2004 Long-Term Incentive Plan. The shares will have a four (4) year, quarterly vesting schedule and the exercise price of this option shall be the fair market value of Pegasystems' common stock on your first day of employment. These terms, which become effective on your date of hire, will be conveyed to you in a separate document after you become a Pegasystems employee. While any acceleration of unvested options occurs solely at the discretion of our Board of Directors, these options will be subject to a minimum acceleration of vesting of six months in the event of a Sale of the Company (as defined in the 2004 Long-Term Incentive Plan). This grant is contingent on your signing the enclosed Standards Letter.

You will be eligible to participate in the benefit programs which Pegasystems makes available to similarly situated employees. You will accrue paid time off in accordance with Pegasystems' Paid Time Off Policy. This includes 20 days of vacation per year along with 11 paid Holidays and 1 personal day. Your vacation and holidays are prorated during your first year of employment.

As we discussed, we would welcome your starting employment with Pegasystems on a full-time basis as early as February 21, 2006. As a condition of employment, we require you to sign the enclosed Standards Letter, prior to your start date. You will also need to provide us with proper employment authorization. This offer of employment is not a contract. Pegasystems is an at-will employer. Thus, either you or Pegasystems may terminate employment at anytime. In the event that Pegasystems terminates your employment without cause, you will be entitled to severance initially equal to six months of base salary, provided that you sign a mutually acceptable form of release. In addition, for each additional six months of employment following the first anniversary of your start date, the amount of severance shall be increased by one month of base salary, up to a maximum total of twelve months.

We would appreciate a written response no later than February 21, 2006. Please send or fax (617-494-5581) your signed Offer Letter and Standards Letter to me directly. You may contact me personally at 617-312-9308 (c) if you have any questions.

We are all very excited at the prospect of you working with us!

Sincerely,

/s/ Carmelina Procaccini

Carmelina Procaccini

Vice President, Human Resources

I accept the terms of this offer letter and will begin work at Pegasystems on February 21, 2006.

/s/ Edward L. Hughes

Edward L. Hughes

February 22, 2006

Date