<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 2, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------
BMC SOFTWARE, INC.
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 2101 CITYWEST BOULEVARD 74-21226120
(State or other jurisdiction HOUSTON, TEXAS 77042-2427 (I.R.S. Employer Identification No.)
of incorporation or organization) (713) 918-8800
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(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------------
BMC SOFTWARE, INC. 1994 DEFERRED COMPENSATION PLAN
(Full title of the plan)
M. BRINKLEY MORSE
SENIOR VICE PRESIDENT
2101 CITYWEST BOULEVARD
HOUSTON, TEXAS 77042-2427
(713) 918-8800
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
CALCULATION OF REGISTRATION FEE
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====================================================================================================================
TITLE OF AMOUNT PROPOSED PROPOSED AMOUNT OF
SECURITIES TO BE TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE REGISTRATION
REGISTERED(1) REGISTERED(2) PRICE PER SHARE OFFERING PRICE (2) FEE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Deferred Compensation Obligations.......... $ 50,000,000 100% $ 50,000,000 $ 13,900
====================================================================================================================
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(1) The Deferred Compensation Obligations of the Registrant to pay deferred
compensation in the future in accordance with the terms of the BMC
Software, Inc. 1994 Deferred Compensation Plan.
(2) The amount to be registered is estimated solely for purposes of
calculating the registration fee
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents which have been filed with the Securities and
Exchange Commission (the "Commission") by BMC Software, Inc., a Delaware
corporation (the "Company"), are incorporated herein by reference and made a
part hereof: (i) the Company's Annual Report on Form 10-K and 10-K/A for the
year ended March 31, 1998, (ii) the Company's Current Reports on Form 8-K filed
November 6, 1998, January 8, 1999 and March 18, 1999, and (iii) the Company's
Quarterly Reports on Form 10-Q/A for the quarters ended June 30, 1998, September
30, 1998 and December 31, 1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), subsequent to the effective date of this Registration Statement, prior to
the filing of a post-effective amendment to this Registration Statement
indicating that all securities offered hereby have been sold or deregistering
all securities then remaining unsold, shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
documents. Any statement contained herein or in any document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part of this Registration Statement, except as so modified or
superseded.
The Company will provide without charge to any person to whom a copy of
this Registration Statement has been delivered, upon written or oral request, a
copy of any or all of the foregoing documents incorporated herein by reference
(other than exhibits to such documents unless such exhibits are specifically
incorporated by reference into such documents). Requests should be directed to
BMC Software, Inc., 2101 CityWest Boulevard, Houston, Texas 77042, Attention:
Secretary, telephone (713) 918-8800.
ITEM 4. DESCRIPTION OF SECURITIES.
The Deferred Compensation Obligations registered hereunder (the
"Obligations") are unsecured obligations of the Registrant to pay deferred
compensation in the future in accordance with the terms of the BMC Software,
Inc. 1994 Deferred Compensation Plan, as amended (the "Plan"), which is filed as
an exhibit to this Registration Statement, and the BMC Software, Inc. 1994
Deferred Compensation Plan Trust Agreement (the "Trust Agreement"), a form of
which consistent in all material respects to the Trust Agreement is filed as an
exhibit to this Registration Statement. Such exhibits set forth a description of
the Obligations and are incorporated herein by reference in their entirety in
response to this Item 4, pursuant to Rule 411(b)(3) under the Securities Act of
1933.
No participant under the Plan shall have any preferred claim to, or any
beneficial ownership interest in, any assets which are subject to the Trust
established by the Trust Agreement (the "Trust"). All such assets are subject to
the claims of the creditors of the participant's employer until they are paid
out of the Trust to the participant in accordance with the terms of the Plan.
The Plan provides that the Obligations of the Registrant's subsidiaries are
separate and will be administered by separate sub-trusts for each subsidiary;
provided that the payment of the Obligations of the Registrant's subsidiaries
has been guaranteed by the Registrant.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, Article SEVENTH of
the Company's Restated Certificate of Incorporation, Sections 1 and 2 of Article
VI of the Company's bylaws, as amended, and indemnification agreements entered
into by the Company with its directors provide for the indemnification of
officers, directors, employees and agents under certain circumstances.
<PAGE> 3
Set forth below is Article SEVENTH of the Company's Restated
Certificate of Incorporation pertaining to indemnification of officers,
directors, employees and agents and insurance:
SEVENTH: A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director,
except for such liability as is expressly not subject to
limitation under the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended to
further limit or eliminate such liability. Moreover, the
Corporation shall, to the fullest extent permitted by law,
indemnify any and all officers and directors of the
Corporation, and may, to the fullest extent permitted by law
or to such lesser extent as is determined in the discretion of
the Board of Directors, indemnify any and all other persons
whom it shall have power to indemnify, from and against all
expenses, liabilities or other matters arising out of their
status as such or their acts, omissions or services rendered
in such capacities. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of
another Corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have
the power to indemnify him against such liability.
Set forth below are Sections 1 and 2 of Article VI of the
Company's bylaws, as amended:
Section 1. Right to Indemnification. Each person who
was or is made a party or is threatened to be made a party to
or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter
a "proceeding"), by reason of the fact that he or she or a
person of whom he or she is the legal representative, is or
was or has agreed to become a director or officer of the
Corporation or is or was serving or has agreed to serve at the
request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a
director or officer or in any other capacity while serving or
having agreed to serve as a director or officer, shall be
indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader
indemnification rights than said law permitted the corporation
to provide prior to such amendment), against all expense,
liability and loss (including, without limitation, attorneys'
fees, judgements, fines, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred
or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased
to serve in the capacity which initially entitled such person
to indemnify hereunder and shall inure to the benefit of his
or her heirs, executors, and administrators; provided,
however, that the Corporation shall indemnify any such person
seeking indemnification in connection with a proceeding (or
part thereof) initiated by such person if such proceeding (or
part thereof) was authorized by the board of directors of the
Corporation. The right to indemnification conferred in this
Article VI shall be a contract right and shall include the
right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final
disposition; provided, however, that if the Delaware General
Corporation Law requires, the payment of such expenses
incurred by a current, former or proposed director or officer
in his or her capacity as a director or officer or proposed
director or officer (and not in any other capacity in which
service was or is or has been agreed to be rendered by such
person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of
the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf
of such indemnified person, to repay all amounts so advanced
if it shall ultimately be determined that such indemnified
person is not entitled to be indemnified under this Section or
otherwise.
Section 2. Indemnification of Employees and Agents.
The Corporation may, by action of its Board of Directors,
provide indemnification to employees and agents of the
Corporation, individually or as a group, with the same scope
and effect as the indemnification of directors and officers
provided for in this Article.
In addition, the Company has entered into indemnification agreements
with its directors, pursuant to which the Company has agreed to indemnify such
directors in accordance with, and to the fullest extent permitted by, the
Delaware General Corporation Law, against any and all expenses, judgments, fines
and amounts paid in settlement actually and
<PAGE> 4
reasonably incurred by the indemnitee in connection with any proceeding in which
the indemnitee was or is made a party or was or is involved by reason of the
fact that the indemnitee is or was a director.
The Company has also purchased liability insurance policies covering
directors and officers of the Company.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
3.1 Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement on Form S-1 (No.
33-22892)).
3.2 Certificate of Amendment of Restated Certificate of
Incorporation (incorporated by reference to Exhibit
3.2 to the Company's Annual Report on Form 10-K for
the year ended March 31, 1997).
3.3 By-laws, as amended, of the Company (incorporated by
reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (Registration No.
33-22892)).
*4.1 BMC Software, Inc. 1994 Deferred Compensation Plan.
*4.2 First Amendment to BMC Software, Inc. 1994 Deferred
Compensation Plan
*4.3 Form of BMC Software, Inc. 1994 Deferred
Compensation Plan Trust Agreement.
*5.1 Opinion of Vinson & Elkins LLP.
*23.1 Consent of Arthur Andersen LLP.
*24.1 Powers of Attorney.
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* Filed with this Registration Statement.
<PAGE> 5
UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "1933 Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for the purposes of determining any liability under the 1933
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on March 31, 1999.
BMC SOFTWARE, INC.
By: /s/ M. Brinkley Morse
-----------------------------------
M. Brinkley Morse
Senior Vice President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears immediately below constitutes and appoints Max P. Watson Jr. and M.
Brinkley Morse, or either of them, his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the dates indicated.
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SIGNATURES TITLE DATE
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/s/ Max P. Watson Jr. Chairman of the Board, President and Chief
- -------------------------------------- Executive Officer (Principal Executive March-31, 1999
Max P. Watson Jr. Officer)
/s/ William M. Austin (Principal Financial Officer) March 31, 1999
- --------------------------------------
William M. Austin
/s/ Kevin M. Klausmeyer (Principal Accounting Officer) March 31, 1999
- --------------------------------------
Kevin M. Klausmeyer
/s/ John W. Barter Director March 31, 1999
- --------------------------------------
John W. Barter
/s/ B. Garland Cupp Director March 31, 1999
- --------------------------------------
B. Garland Cupp
/s/ Meldon K. Gafner Director March 31, 1999
- --------------------------------------
Meldon K. Gafner
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/s/ Lew W. Gray Director March 31, 1999
- --------------------------------------
Lew W. Gray
/s/ George F. Raymond Director March 31, 1999
- --------------------------------------
George F. Raymond
/s/ Tom C. Tinsley Director March 31, 1999
- --------------------------------------
Tom C. Tinsley
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<PAGE> 8
INDEX TO EXHIBITS
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EXHIBITS.
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3.1 Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement on Form S-1 (No.
33-22892)).
3.2 Certificate of Amendment of Restated Certificate of
Incorporation (incorporated by reference to Exhibit
3.2 to the Company's Annual Report on Form 10-K for
the year ended March 31, 1997).
3.3 By-laws, as amended, of the Company (incorporated by
reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (Registration No.
33-22892)).
*4.1 BMC Software, Inc. 1994 Deferred Compensation Plan.
*4.2 First Amendment to BMC Software, Inc. 1994 Deferred
Compensation Plan
*4.3 Form of BMC Software, Inc. 1994 Deferred
Compensation Plan Trust Agreement.
*5.1 Opinion of Vinson & Elkins LLP.
*23.1 Consent of Arthur Andersen LLP.
*24.1 Powers of Attorney (included on the
signature page to this Registration Statement).
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* Filed with this Registration Statement.
<PAGE> 1
EXHIBIT 4.1
BMC SOFTWARE, INC.
1994 DEFERRED COMPENSATION PLAN
As Amended and Restated
Effective April 1, 1998
<PAGE> 2
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TABLE OF CONTENTS
ARTICLE PAGE
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I - Definitions and Construction ................................... I-1
II - Participation .................................................. II-1
III - Account Credits and Allocations of Income or Loss .............. III-1
IV - Deemed Investment of Funds...................................... IV-1
V - Determination of Vested Interest and Forfeitures ............... V-1
VI - In-Service Distributions ....................................... VI-1
VII - Termination Benefits ........................................... VII-1
VIII - Administration of the Plan...................................... VIII-1
IX - Administration of Funds......................................... IX-1
X - Nature of the Plan ............................................. X-1
XI - Miscellaneous .................................................. XI-1
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(i)
<PAGE> 3
BMC SOFTWARE, INC.
1994 DEFERRED COMPENSATION PLAN
W I T N E S S E T H :
WHEREAS, BMC SOFTWARE, INC. has heretofore adopted the BMC SOFTWARE,
INC. 1994 DEFERRED COMPENSATION PLAN, hereinafter referred to as the "PLAN," to
aid certain of its employees in making more adequate provision for their
retirement; and
WHEREAS, BMC SOFTWARE, INC. desires to restate the Plan and to amend
the Plan in several respects, intending thereby to provide an uninterrupted and
continuing program of benefits;
NOW THEREFORE, the Plan is hereby restated as follows, effective April
1, 1998:
(ii)
<PAGE> 4
I.
DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS. Where the following words and phrases appear in the
Plan, they shall have the respective meanings set forth below, unless their
context clearly indicates to the contrary.
(1) ACCOUNT(S): A Member's Company Account and/or Deferral Account,
including the amounts credited thereto.
(2) BASE SALARY: The base rate of pay paid in cash by the Company to or for
the benefit of a Member for services rendered or labor performed while
a Member, including base pay a Member could have received in cash in
lieu of (i) Compensation deferrals pursuant to Section 3.1, and (ii)
contributions made on his behalf by the Company to the Profit Sharing
Plan or a plan maintained pursuant to section 125 of the Code.
(3) CHANGE IN CONTROL: The occurrence of one or more of the following
events: (i) BMC Software, Inc. shall not be the surviving entity in any
merger, consolidation or other reorganization (or survives only as a
subsidiary of an entity other than an entity wholly-owned (directly or
indirectly) by BMC Software, Inc. immediately prior to such event);
(ii) BMC Software, Inc. sells, leases or exchanges all or substantially
all of its assets to any other person or entity (other than an entity
wholly-owned (directly or indirectly) by BMC Software, Inc. immediately
prior to such event); (iii) BMC Software, Inc. is to be dissolved and
liquidated; (iv) any person or entity, including a "group" as
contemplated by Section 13(d)(3) of the Securities Exchange Act of
1934, as amended, acquires or gains ownership or control (including,
without limitation, power to vote) of more than 50% of the outstanding
shares of BMC Software, Inc.'s voting stock (based upon voting power);
or (v) as a result of or in connection with a contested election of
directors, the persons who were directors of BMC Software, Inc. before
such election shall cease to constitute a majority of the directors of
BMC Software, Inc.
(4) CODE: The Internal Revenue Code of 1986, as amended.
(5) COMMITTEE: The administrative committee appointed by the Compensation
Committee to administer the Plan.
(6) COMPANY: BMC Software, Inc. and any other adopting entity which adopts
the Plan pursuant to the provisions of Section 2.3.
I-1
<PAGE> 5
(7) COMPANY ACCOUNT: An individual account for each Member to which is
credited the Company Deferrals made on his behalf pursuant to Section
3.2 and which is credited (or debited) for such account's allocation of
net income (or net loss) as provided in Section 3.3.
(8) COMPANY DEFERRALS: Deferrals made by the Company on a Member's behalf
pursuant to Section 3.2.
(9) COMPENSATION: Base Salary and/or Incentive Pay.
(10) COMPENSATION COMMITTEE: The Compensation Committee of the Board of
Directors of BMC Software, Inc.
(11) DATED DEFERRAL SUBACCOUNT: The term "Dated Deferral Subaccount" shall
have the meaning assigned to such term in Section 3.1(d).
(12) DEFERRAL ACCOUNT: An individual account for each Member to which is
credited his Compensation deferrals pursuant to Section 3.1 and which
is credited (or debited) for such account's allocation of net income
(or net loss) as provided in Section 3.3. A Member's Deferral Account
may have one or more Dated Deferral Subaccounts.
(13) DISABILITY: A Member's disability entitling him to benefits under the
Company's long-term disability plan; provided, however, that if a
Member is not eligible to participate in such plan, then such Member
shall be considered to have incurred a "Disability" if he is
permanently and totally unable to perform his duties for the Company as
a result of any medically determinable physical or mental impairment as
supported by a written medical opinion to the foregoing effect by a
physician selected by the Committee.
(14) EFFECTIVE DATE: April 1, 1998, as to this restatement of the Plan.
(15) ELECTION DATE: The first day of each Plan Year.
(16) FUNDS: The investment funds designated from time to time for the deemed
investment of Accounts pursuant to Article IV.
(17) INCENTIVE PAY: The bonuses, commissions, and residuals paid in cash by
the Company to or for the benefit of a Member for services rendered or
labor performed while a Member, including bonuses, commissions, and
residuals a Member could have received in cash in
I-2
<PAGE> 6
lieu of (i) Compensation deferrals pursuant to Section 3.1, and (ii)
contributions made on his behalf by the Company to the Profit Sharing
Plan or a plan maintained pursuant to section 125 of the Code.
(18) INSTALLMENT SCHEDULE: With respect to each Compensation deferral
election by a Member, one of the following schedules, if any, elected
by such Member pursuant to Section 3.1(d):
(a) Six annual installment payments beginning on the fifth
anniversary of the last day of the Plan Year in which such
Compensation deferral election initially became effective;
(b) Five annual installment payments beginning on the sixth
anniversary of the last day of the Plan Year in which such
Compensation deferral election initially became effective;
(c) Four annual installment payments beginning on the seventh
anniversary of the last day of the Plan Year in which such
Compensation deferral election initially became effective;
(d) Three annual installment payments beginning on the eighth
anniversary of the last day of the Plan Year in which such
Compensation deferral election initially became effective;
(e) Two annual installment payments beginning on the ninth
anniversary of the last day of the Plan Year in which such
Compensation deferral election initially became effective; or
(f) One payment upon the tenth anniversary of the last day of the
Plan Year in which such Compensation deferral election
initially became effective.
The amount of each annual installment pursuant to an Installment
Schedule shall be computed by dividing the unpaid balance of a Member's
Dated Deferral Subaccount that is to be paid in accordance with such
Installment Schedule as of the Valuation Date next preceding the date
of payment of such annual installment by the number of annual
installments remaining.
(19) MEMBER: Each individual who has been selected by the Committee for
participation in the Plan and who has become a Member pursuant to
Article II.
I-3
<PAGE> 7
(20) PLAN: The BMC Software, Inc. 1994 Deferred Compensation Plan, as
amended from time to time.
(21) PLAN YEAR: The twelve-consecutive month period commencing April 1 of
each year.
(22) PROFIT SHARING PLAN: The BMC Software, Inc. Salary Reduction Profit
Sharing Plan, as amended from time to time.
(23) RETIREMENT DATE. The earlier of (i) the first date upon which a Member
has both completed ten or more years of Vesting Service and attained
fifty-five years of age or (ii) the date upon which such Member has
attained sixty-five years of age.
(24) SUBSIDIARY: Any corporation that is a "subsidiary corporation" of the
Company within the meaning of section 424(f) of the Code.
(25) TRUST: The trust, if any, established under the Trust Agreement.
(26) TRUST AGREEMENT: The agreement, if any, entered into between the
Company and the Trustee pursuant to Article X.
(27) TRUST FUND: The funds and properties, if any, held pursuant to the
provisions of the Trust Agreement, together with all income, profits
and increments thereto.
(28) TRUSTEE: The trustee or trustees qualified and acting under the Trust
Agreement at any time.
(29) UNFORESEEABLE FINANCIAL EMERGENCY: An unexpected need of a Member for
cash that (i) arises from a sudden and unexpected illness or accident
of the Member or of a dependent of a Member, loss of the Member's
property due to casualty, or similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of such
Member and (ii) would result in severe financial hardship to such
Member if his Compensation deferral election was not canceled pursuant
to Section 3.1(c) and/or if a benefit payment pursuant to Section 6.2
was not permitted. Cash needs arising from foreseeable events, such as
the purchase of a house or education expenses for children, shall not
be considered to be the result of an Unforeseeable Financial Emergency.
Further, cash needs which may be relieved (a) through reimbursement or
compensation by insurance or otherwise, or (b) by liquidation of the
Member's assets, to the extent the liquidation of such assets would not
itself cause severe financial hardship, or (c) by
I-4
<PAGE> 8
cessation of deferrals under the Plan shall not be considered to be
Unforeseeable Financial Emergencies.
(30) VALUATION DATES: The last business day of each calendar month and any
other interim Valuation Date determined by the Committee on a
nondiscriminatory basis.
(31) VESTED INTEREST: The portion of a Member's Accounts which, pursuant to
the Plan, is nonforfeitable.
(32) VESTING SERVICE: The term "Vesting Service" shall have the same meaning
as is assigned to such term under the Profit Sharing Plan except that
only Vesting Service accumulated after March 1, 1994 shall be
considered for purposes of the Plan.
1.2 NUMBER AND GENDER. Wherever appropriate herein, words used in the
singular shall be considered to include the plural and words used in the plural
shall be considered to include the singular. The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine gender.
1.3 HEADINGS. The headings of Articles and Sections herein are included
solely for convenience, and if there is any conflict between such headings and
the text of the Plan, the text shall control.
I-5
<PAGE> 9
II.
PARTICIPATION
2.1 PARTICIPATION. Prior to each Election Date, the Committee, in its
sole discretion, shall select and notify those management or highly compensated
employees of the Company who shall be eligible to become Members as of such
Election Date. Any such eligible employee may become a Member on such Election
Date by executing and filing with the Committee, prior to such Election Date,
the Compensation deferral election prescribed by the Committee for the Plan Year
beginning on such date. Subject to the provisions of Section 2.2, a Member shall
remain eligible to defer Compensation hereunder and receive an allocation of
Company Deferrals for each Plan Year following his initial year of participation
in the Plan.
2.2 CESSATION OF ACTIVE PARTICIPATION. Notwithstanding any provision
herein to the contrary, an individual who has become a Member of the Plan shall
cease to be entitled to defer Compensation hereunder or receive an allocation of
Company Deferrals effective as of any date designated by the Committee. Any such
Committee action shall be communicated to the affected individual prior to the
effective date of such action. Such an individual may again become entitled to
defer Compensation hereunder and receive an allocation of Company Deferrals
beginning on any subsequent Election Date selected by the Committee in its sole
discretion.
2.3 ADOPTING ENTITIES. It is contemplated that other corporations may
adopt this Plan and thereby become the Company. Any such entity, whether or not
presently existing, may become a party hereto by appropriate action of its
officers without the need for approval of its board of directors or of the
Committee or the Compensation Committee; provided, however, that such entity
must be a Subsidiary. The provisions of the Plan shall apply separately and
equally to each Company and its employees in the same manner as is expressly
provided for BMC Software, Inc. and its employees, except that the power to
appoint or otherwise affect the Committee and the Trustee and the power to amend
or terminate the Plan or amend the Trust Agreement shall be exercised by the
Compensation Committee alone. Transfer of employment among Companies and
Subsidiaries shall not be considered a termination of employment hereunder. Any
Company may, by appropriate action of its officers without the need for approval
of its board of directors or the Committee or the Compensation Committee,
terminate its participation in the Plan. Moreover, the Compensation Committee
may, in its discretion, terminate a Company's Plan participation at any time.
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<PAGE> 10
III.
ACCOUNT CREDITS AND ALLOCATIONS OF INCOME OR LOSS
3.1 MEMBER DEFERRALS.
(a) A Member may elect to defer an integral percentage of from
1% to 50% of his Base Salary for a Plan Year and/or from 1% to 100% of his
Incentive Pay for a Plan Year. Compensation for a Plan Year not so deferred by
such election shall be received by such Member in cash. A Member's election to
defer an amount of his Compensation pursuant to this Section shall be made by
executing a Compensation deferral election pursuant to which the Member
authorizes the Company to reduce his Compensation in the elected amount and the
Company, in consideration thereof, agrees to credit an equal amount to such
Member's Deferral Account maintained under the Plan. Compensation deferrals made
by a Member shall be credited to such Member's Deferral Account as of a date
determined in accordance with procedures established from time to time by the
Committee; provided, however, that such deferrals shall be credited to the
Member's Deferral Account no later than 30 days after the date upon which the
Compensation deferred would have been received by such Member in cash if he had
not elected to defer such amount pursuant to this Section 3.1. The reduction in
a Member's Compensation for a Plan Year pursuant to his Compensation deferral
election shall be effected by Compensation reductions within such Plan Year
following the effective date of such election.
(b) A Member's Compensation deferral election shall become
effective as of the Election Date which is on or after the election is executed
by the Member and filed with the Company. A Member's Compensation deferral
election shall remain in force and effect for the entire Plan Year to which such
election relates.
(c) In the event that the Committee, upon written petition of
a Member, determines in its sole discretion that such Member has suffered an
Unforeseeable Financial Emergency or that such Member will, absent termination
of such Member's Compensation deferral election then in effect, suffer an
Unforeseeable Financial Emergency, then such Member's Compensation deferral then
in effect, if any, shall be terminated as soon as administratively practicable
after such determination. A Member whose Compensation deferral election has been
so terminated may again elect to defer a portion of his Compensation, effective
as of any subsequent Election Date that is at least twelve months after the
effective date of such termination, by executing and delivering to the Company a
new Compensation deferral election prior to such Election Date.
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(d) A Member's Compensation deferral election shall indicate
whether (1) 100% of the Compensation deferred thereunder and the net income (or
net loss) allocated with respect thereto are to be deferred until the date such
Member terminates his employment with the Company and its Subsidiaries, (2) 50%
of the Compensation deferred thereunder and the net income (or net loss)
allocated with respect thereto are to be deferred until such termination of
employment and 50% of the Compensation deferred thereunder and the net income
(or net loss) allocated with respect thereto are to be deferred until the
earlier of such termination of employment or payment pursuant to an Installment
Schedule as elected by such Member, or (3) 100% of the Compensation deferred
thereunder and the net income (or net loss) allocated thereto are to be deferred
until the earlier of such termination of employment or payment pursuant to an
Installment Schedule as elected by such Member. With respect to each election by
a Member pursuant to clause (2) or (3) of the preceding sentence, the portion of
the Member's Compensation that is to be deferred until the earlier of such
Member's termination of employment or the payment pursuant to an Installment
Schedule and the net income (or net loss) allocated with respect thereto, shall
be credited to a separate subaccount within his Deferral Account. Each such
subaccount shall be referred to herein as a "Dated Deferral Subaccount" and
shall be identified by the Installment Schedule which such Member has elected
and the first date payments pursuant to such Installment Schedule are to begin.
For example, if a Member's Compensation deferral election on the Effective Date
provides that some or all of the Compensation to be deferred thereunder and the
net income (or net loss) allocated with respect thereto are to begin to be
distributed to the Member as soon as administratively practicable after the
earlier of his termination of employment or an Installment Schedule consisting
of six annual installment payments, then such amounts shall be credited to a
separate subaccount within his Deferral Account to be known as the "3/31/04 Six
Year Installment Deferral Subaccount." Notwithstanding any other provision of
this paragraph (d) to the contrary, a Member's Compensation deferral election
that was effective for periods prior to the Effective Date shall be subject to
the terms of Section 3.1(d) as in effect prior to the Effective Date.
3.2 COMPANY DEFERRALS. As of any date selected by the Company, the
Company may credit a Member's Company Account with such amount, if any, as the
Company shall determine in its sole discretion. Such credits may be made on
behalf of some Members but not others, and such credits may vary in amount among
individual Members.
3.3 ALLOCATION OF NET INCOME OR LOSS AND CHANGES IN VALUE AMONG
ACCOUNTS.
(a) As of each Valuation Date, the Committee shall determine
the net income (or net loss) of each Fund for the period elapsed since the next
preceding Valuation Date. The net income (or net loss) of each Fund since the
next preceding Valuation Date shall be ascertained by
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<PAGE> 12
the Committee in such manner as it deems appropriate, provided that such
determination shall include any net increase or net decrease (whether or not
realized) in the value of the assets of each such Fund since the next preceding
Valuation Date, and may include expenses of administering the Fund, the Trust
and the Plan.
(b) For purposes of allocations of net income (or net loss),
each Member's Accounts (or subaccounts) shall be divided into subaccounts to
reflect such Member's deemed investment designation in a particular Fund or
Funds pursuant to Article IV. As of each Valuation Date, the net income (or net
loss) of each Fund, separately and respectively, shall be allocated among the
corresponding subaccounts of the Members who had such corresponding subaccounts
on the next preceding Valuation Date, and each such corresponding subaccount
shall be credited with (or debited for) that portion of such net income (or net
loss) that the value of each such corresponding subaccount on such next
preceding Valuation Date was of the value of all such corresponding subaccounts
on such date; provided, however, that the value of such subaccounts as of the
next preceding Valuation Date shall be reduced by the amount of any payments
debited thereto in accordance with Section 7.6 since the next preceding
Valuation Date.
(c) So long as there is any balance in any Account, such
Account shall continue to receive allocations pursuant to this Section.
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<PAGE> 13
IV.
DEEMED INVESTMENT OF FUNDS
Each Member shall designate, in accordance with the procedures
established from time to time by the Committee, the manner in which the amounts
allocated to his Accounts shall be deemed to be invested from among the Funds
made available from time to time for such purpose by the Committee. Such Member
may designate one of such Funds for the deemed investment of all the amounts
allocated to his Accounts or he may split the deemed investment of the amounts
allocated to his Accounts between such Funds in such increments as the Committee
may prescribe. If a Member fails to make a proper designation, then his Accounts
shall be deemed to be invested in the Fund or Funds designated by the Committee
from time to time in a uniform and nondiscriminatory manner.
A Member may change his deemed investment designation for future
amounts to be allocated to his Accounts. Any such change shall be made in
accordance with the procedures established by the Committee, and the frequency
of such changes may be limited by the Committee.
A Member may elect to convert his deemed investment designation with
respect to the amounts already allocated to his Accounts. Any such conversion
shall be made in accordance with the procedures established by the Committee,
and the frequency of such conversions may be limited by the Committee.
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<PAGE> 14
V.
DETERMINATION OF VESTED INTEREST AND FORFEITURES
5.1 DEFERRAL ACCOUNT. A Member shall have a 100% Vested Interest in
his Deferral Account at all times.
5.2 COMPANY ACCOUNT. A Member shall have a 50% Vested Interest in his
Company Account upon completion of ten years of Vesting Service. A Member shall
have a 100% Vested Interest in his Company Account upon his termination of
employment with the Company and its Subsidiaries after attainment of his
Retirement Date or by reason of death or Disability. Further, a Member who is
employed by the Company immediately prior to a Change in Control shall have a
100% Vested Interest in his Company Account upon the occurrence of such Change
in Control.
5.3 FORFEITURES. A Member who terminates employment with the Company
and its Subsidiaries with a Vested Interest in his Company Account that is less
than 100% shall forfeit to the Company the nonvested portion of such Account as
of the date of such termination.
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<PAGE> 15
VI.
IN-SERVICE DISTRIBUTIONS
6.1 DATED DEFERRAL SUBACCOUNTS. A Member who has not terminated his
employment with the Company and its Subsidiaries at any time after the date upon
which a Dated Deferral Subaccount was established on such Member's behalf shall
be entitled to a benefit from such subaccount as soon as administratively
practicable after the deferral date relating to such subaccount, which deferral
date shall be set forth in the name of such subaccount pursuant to Section
3.1(d). Such benefit shall be paid in one or more annual installments pursuant
to the Installment Schedule relating to such subaccount.
6.2 EMERGENCY BENEFIT. In the event that the Committee, upon written
petition of a Member, determines in its sole discretion that such Member has
suffered an Unforeseeable Financial Emergency, such Member shall be entitled to
a benefit in an amount not to exceed the lesser of (1) the amount determined by
the Committee as necessary to meet such Member's needs created by the
Unforeseeable Financial Emergency, or (2) the then value of such Member's
Deferral Account. Such benefit shall be paid in a single lump sum, cash payment
as soon as administratively practicable after the Committee has made its
determinations with respect to the availability and amount of such benefit. If a
Member's Deferral Account is deemed to be invested in more than one Fund, such
benefit shall be distributed pro rata from each Fund in which such Account is
deemed to be invested. If a Member's Deferral Account contains one or more Dated
Deferral Subaccounts, such benefit shall be considered to have been distributed,
first, from the Dated Deferral Subaccount with respect to which the earliest
installment distribution would be made pursuant to Section 6.1, then, from the
Dated Deferral Subaccount with respect to which the next earliest installment
distribution would be made pursuant to Section 6.1, and continuing in such
manner until all of such Dated Deferral Subaccounts have been exhausted.
6.3 ELECTIVE WITHDRAWAL.
(a) Subject to the approval of the Committee in its sole
discretion, a Member may elect at any time, by following the election procedure
prescribed by the Committee, to withdraw as a benefit all or a portion of his
Deferral Account as of any Valuation Date, subject to a withdrawal penalty of
15% of the amount of any such withdrawal. Upon any such withdrawal, the
withdrawal penalty shall be forfeited to the Company. Further, upon any such
withdrawal, such Member's participation in the Plan shall terminate and no
further Compensation deferrals shall be made under the Plan on behalf of such
Member until the first day of the Plan Year that is at least twelve months after
the date of such withdrawal. If a Member's Deferral
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<PAGE> 16
Account is deemed to be invested in more than one Fund, such withdrawal shall be
distributed pro rata from each Fund in which such Account is deemed to be
invested. If a Member's Deferral Account contains one or more Dated Deferral
Subaccounts, such withdrawal shall be considered to have been distributed,
first, from the Dated Deferral Subaccount with respect to which the earliest
installment distribution would be made pursuant to Section 6.1, then, from the
Dated Deferral Subaccount with respect to which the next earliest installment
distribution would be made pursuant to Section 6.1, and continuing in such
manner until all of such Dated Deferral Subaccounts have been exhausted.
(b) No election of a withdrawal of an amount allocated to a
Fund which is invested primarily in the stock of the Company may be made by an
officer or director of the Company who is subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended, on a date which is less than six
months following (i) the date of any prior election to convert such Member's
deemed investment designation which had the effect of increasing the total
amount allocated to such Fund or (ii) the date of any election by such Member
with respect to any other plan of the Company or any subsidiary thereof which
had the effect (directly or indirectly) of making an acquisition on behalf of
such Member of the same class of equity security as that which is the subject of
such Fund.
6.4 RESTRICTION ON IN-SERVICE DISTRIBUTIONS. This Article VI shall not
be applicable to a Member following his termination of employment with the
Company and its Subsidiaries, and the amounts credited to such Member's Accounts
shall be payable to such Member in accordance with the provisions of Article
VII.
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<PAGE> 17
VII.
TERMINATION BENEFITS
7.1 AMOUNT OF BENEFIT. Upon termination of employment of a Member with
the Company and all of its Subsidiaries for any reason, the Member, or, in the
event of the death of the Member while employed by the Company or a Subsidiary,
the Member's designated beneficiary, shall be entitled to a benefit equal in
value to the Member's Vested Interest in the balance in his Accounts as of the
Valuation Date next preceding the date the payment of such benefit is to
commence pursuant to Section 7.2.
7.2 TIME OF PAYMENT. Payment of a Member's benefit under Section 7.1
shall commence as soon as administratively practicable after the Valuation Date
coincident with or next succeeding the date the Member terminates his employment
with the Company and its Subsidiaries.
7.3 ALTERNATIVE FORMS OF BENEFIT PAYMENTS.
(a) A Member's benefit under Section 7.1 shall be paid in the
form of a single lump sum, cash payment if such Member's termination of
employment with the Company and its Subsidiaries occurs prior to his Retirement
Date for a reason other than death or Disability.
(b) With respect to a Member whose termination of employment
with the Company and its Subsidiaries occurs after his Retirement Date or by
reason of Disability, such Member shall receive his benefit payments in one of
the following forms irrevocably elected by such Member in writing on the form
prescribed by the Committee on or before the date he became a Member of the
Plan:
(1) A single lump sum, cash payment; or
(2) Annual installment payments for a term certain of
either 5, 10 or 15 years payable to the Member or, in the event of such
Member's death prior to the end of such term certain, to his designated
beneficiary as provided in Section 7.4.
In the event such Member fails to timely elect the form in which his benefit
payments are to be made, such benefit payments shall be in the form of annual
installment payments for a term certain of 10 years payable to such Member or,
in the event of such Member's death prior to the end of such term certain, to
his designated beneficiary as provided in Section 7.4. If a Member dies prior
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<PAGE> 18
to the date the payment of his benefit begins and if the Member failed to timely
elect the form in which his benefit payments are to be made, then benefit
payments shall be made to the Member's designated beneficiary in the form
described in the preceding sentence. If a Member dies prior to the date the
payment of his benefit begins and if the Member did timely elect the form in
which his benefit payments are to be made, then benefit payments shall be made
to the Member's designated beneficiary in the form elected by the Member.
7.4 DESIGNATION OF BENEFICIARIES.
(a) Each Member shall have the right to designate the
beneficiary or beneficiaries to receive payment of his benefit in the event of
his death. Each such designation shall be made by executing the beneficiary
designation form prescribed by the Committee and filing same with the Committee.
Any such designation may be changed at any time by execution of a new
designation in accordance with this Section.
(b) If no such designation is on file with the Committee at
the time of the death of the Member or such designation is not effective for any
reason as determined by the Committee, then the designated beneficiary or
beneficiaries to receive such benefit shall be as follows:
(1) If a Member leaves a surviving spouse, his
benefit shall be paid to such surviving spouse;
(2) If a Member leaves no surviving spouse, his
benefit shall be paid to such Member's executor or administrator, or to
his heirs at law if there is no administration of such Member's estate.
7.5 ACCELERATED PAY-OUT OF CERTAIN BENEFITS.
(a) Notwithstanding any provision in Section 7.3(b) to the
contrary, if a Member's benefit payments are to be paid in a form other than a
single lump sum, cash payment and the aggregate amount to be paid with respect
to such Member in any particular calendar year is less than $10,000, then the
Committee may, in its sole discretion, elect to cause the entire remaining
Account balance with respect to such Member to be paid in a single lump sum,
cash payment.
(b) If a Member terminated his employment with the Company and
its Subsidiaries after his Retirement Date or by reason of death or Disability
and such Member's benefit payments are being, or are to be, paid in a form other
than a single lump sum, cash
VII-2
<PAGE> 19
payment, then such Member (or his designated beneficiary in the event of the
death of the Member) may petition the Committee in writing to receive the
remaining installment payments on an accelerated basis, including without
limitation a single lump sum, cash payment. The Committee shall determine, in
its sole discretion, whether to grant or deny such request.
7.6 PAYMENT OF BENEFITS. To the extent the Trust Fund has sufficient
assets, the Trustee shall pay benefits to Members or their beneficiaries, except
to the extent the Company pays the benefits directly and provides adequate
evidence of such payment to the Trustee. To the extent the Trustee does not or
cannot pay benefits out of the Trust Fund, the benefits shall be paid by the
Company. Any benefit payments made to a Member or for his benefit pursuant to
any provision of the Plan shall be debited to such Member's Accounts. All
benefit payments shall be made in cash to the fullest extent practicable.
7.7 UNCLAIMED BENEFITS. In the case of a benefit payable on behalf of a
Member, if the Committee is unable to locate the Member or beneficiary to whom
such benefit is payable, upon the Committee's determination thereof, such
benefit shall be forfeited to the Company. Notwithstanding the foregoing, if
subsequent to any such forfeiture the Member or beneficiary to whom such benefit
is payable makes a valid claim for such benefit, such forfeited benefit shall be
restored to the Plan by the Company.
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<PAGE> 20
VIII.
ADMINISTRATION OF THE PLAN
8.1 APPOINTMENT OF COMMITTEE. The general administration of the Plan
shall be vested in the Committee which shall be appointed by the Compensation
Committee and shall consist of one or more persons. Any individual, whether or
not an employee of the Company, is eligible to become a member of the Committee.
8.2 TERM, VACANCIES, RESIGNATION, AND REMOVAL. Each member of the
Committee shall serve until he resigns, dies, or is removed by the Compensation
Committee. At any time during his term of office, a member of the Committee may
resign by giving written notice to the Compensation Committee and the Committee,
such resignation to become effective upon the appointment of a substitute member
or, if earlier, the lapse of thirty days after such notice is given as herein
provided. At any time during his term of office, and for any reason, a member of
the Committee may be removed by the Compensation Committee with or without
cause, and the Compensation Committee may in its discretion fill any vacancy
that may result therefrom. Any member of the Committee who is an employee of the
Company shall automatically cease to be a member of the Committee as of the date
he ceases to be employed by the Company or any Subsidiary.
8.3 SELF-INTEREST OF MEMBERS. No member of the Committee shall have any
right to vote or decide upon any matter relating solely to himself under the
Plan or to vote in any case in which his individual right to claim any benefit
under the Plan is particularly involved. In any case in which a Committee member
is so disqualified to act and the remaining members cannot agree, the
Compensation Committee shall appoint a temporary substitute member to exercise
all the powers of the disqualified member concerning the matter in which he is
disqualified.
8.4 COMMITTEE POWERS AND DUTIES. The Committee shall supervise the
administration and enforcement of the Plan according to the terms and provisions
hereof and shall have all powers necessary to accomplish these purposes,
including, but not by way of limitation, the right, power, authority, and duty:
(a) To make rules, regulations, and bylaws for the
administration of the Plan that are not inconsistent with the terms and
provisions hereof, and to enforce the terms of the Plan and the rules
and regulations promulgated thereunder by the Committee;
VIII-1
<PAGE> 21
(b) To construe in its discretion all terms, provisions,
conditions, and limitations of the Plan;
(c) To correct any defect or to supply any omission or to
reconcile any inconsistency that may appear in the Plan in such manner
and to such extent as it shall deem in its discretion expedient to
effectuate the purposes of the Plan;
(d) To employ and compensate such accountants, attorneys,
investment advisors, and other agents, employees, and independent
contractors as the Committee may deem necessary or advisable for the
proper and efficient administration of the Plan;
(e) To determine in its discretion all questions relating to
eligibility;
(f) To determine whether and when there has been a termination
of a Member's employment with the Company and its Subsidiaries, and the
reason for such termination;
(g) To make a determination in its discretion as to the right
of any person to a benefit under the Plan and to prescribe procedures
to be followed by distributees in obtaining benefits hereunder;
(h) To receive and review reports from the Trustee as to the
financial condition of the Trust Fund, including its receipts and
disbursements; and
(i) To establish or designate Funds as investment options as
provided in Article IV.
8.5 CLAIMS REVIEW. In any case in which a claim for Plan benefits of a
Member or beneficiary is denied or modified, the Committee shall furnish written
notice to the claimant within ninety days (or within 180 days if additional
information requested by the Committee necessitates an extension of the
ninety-day period), which notice shall:
(a) State the specific reason or reasons for the denial or
modification;
(b) Provide specific reference to pertinent Plan provisions on
which the denial or modification is based;
VIII-2
<PAGE> 22
(c) Provide a description of any additional material or
information necessary for the Member, his beneficiary, or
representative to perfect the claim and an explanation of why such
material or information is necessary; and
(d) Explain the Plan's claim review procedure as contained
herein.
In the event a claim for Plan benefits is denied or modified, if the Member, his
beneficiary, or a representative of such Member or beneficiary desires to have
such denial or modification reviewed, he must, within sixty days following
receipt of the notice of such denial or modification, submit a written request
for review by the Committee of its initial decision. In connection with such
request, the Member, his beneficiary, or the representative of such Member or
beneficiary may review any pertinent documents upon which such denial or
modification was based and may submit issues and comments in writing. Within
sixty days following such request for review the Committee shall, after
providing a full and fair review, render its final decision in writing to the
Member, his beneficiary or the representative of such Member or beneficiary
stating specific reasons for such decision and making specific references to
pertinent Plan provisions upon which the decision is based. If special
circumstances require an extension of such sixty-day period, the Committee's
decision shall be rendered as soon as possible, but not later than 120 days
after receipt of the request for review. If an extension of time for review is
required, written notice of the extension shall be furnished to the Member,
beneficiary, or the representative of such Member or beneficiary prior to the
commencement of the extension period.
8.6 COMPANY TO SUPPLY INFORMATION. The Company shall supply full and
timely information to the Committee, including, but not limited to, information
relating to each Member's Compensation, age, retirement, death, or other cause
of termination of employment and such other pertinent facts as the Committee may
require. The Company shall advise the Trustee of such of the foregoing facts as
are deemed necessary for the Trustee to carry out the Trustee's duties under the
Plan and the Trust Agreement. When making a determination in connection with the
Plan, the Committee shall be entitled to rely upon the aforesaid information
furnished by the Company.
8.7 INDEMNITY. To the extent permitted by applicable law, the Company
shall indemnify and save harmless each member of the Committee and the
Compensation Committee against any and all expenses, liabilities and claims
(including legal fees incurred to defend against such liabilities and claims)
arising out of their discharge in good faith of responsibilities under or
incident to the Plan. Expenses and liabilities arising out of willful misconduct
shall not be covered under this indemnity. This indemnity shall not preclude
such further indemnities as may be available under insurance purchased by the
Company or provided by the Company under any
VIII-3
<PAGE> 23
bylaw, agreement, vote of stockholders or disinterested directors or otherwise,
as such indemnities are permitted under applicable law.
8.8 CHANGE IN CONTROL. Notwithstanding any provision in the Plan to the
contrary, upon the occurrence of a Change in Control, the Committee's powers and
duties under the Plan shall cease to the extent, if any, such powers and duties
are vested in the Trustee under the terms of the Trust Agreement.
VIII-4
<PAGE> 24
IX.
ADMINISTRATION OF FUNDS
9.1 PAYMENT OF EXPENSES. All expenses incident to the administration of
the Plan and Trust, including but not limited to, legal, accounting, Trustee
fees, and expenses of the Committee, may be paid by the Company and, if not paid
by the Company, shall be paid by the Trustee from the Trust Fund.
9.2 TRUST FUND PROPERTY. All income, profits, recoveries,
contributions, forfeitures and any and all moneys, securities and properties of
any kind at any time received or held by the Trustee shall be held for
investment purposes as a commingled Trust Fund pursuant to the terms of the
Trust Agreement. The Committee shall maintain one or more Accounts in the name
of each Member, but the maintenance of an Account designated as the Account of a
Member shall not mean that such Member shall have a greater or lesser interest
than that due him by operation of the Plan and shall not be considered as
segregating any funds or property from any other funds or property contained in
the commingled fund. No Member shall have any title to any specific asset in the
Trust Fund.
9.3 CONTRIBUTIONS TO THE TRUST FUND. The amount of contributions to the
Trust Fund, if any, shall be determined by and in the sole discretion of the
chief financial officer of the Company and the Committee.
9.4 INVESTMENT OF THE TRUST FUND. The chief financial officer of BMC
Software, Inc. and the Committee shall have the right, power, authority, and
duty to instruct the Trustee as to the management, investment, and reinvestment
of the Trust Fund.
IX-1
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X.
NATURE OF THE PLAN
The Company intends and desires by the adoption of the Plan to
recognize the value to the Company of the past and present services of employees
covered by the Plan and to encourage and assure their continued service with the
Company by making more adequate provision for their future retirement security.
The establishment of the Plan is made necessary by certain benefit limitations
which are imposed on the Profit Sharing Plan by the Employee Retirement Income
Security Act of 1974 and by the Code. The Plan is intended to constitute an
unfunded, unsecured plan of deferred compensation for a select group of
management or highly compensated employees of the Company. Plan benefits herein
provided are to be paid out of the Company's general assets. Nevertheless,
subject to the terms hereof and of the Trust Agreement, the Company may, in the
sole discretion of the chief financial officer of the Company and the Committee,
transfer money or other property to the Trustee and the Trustee shall pay Plan
benefits to Members and their beneficiaries out of the Trust Fund.
The Company, in its sole discretion, may establish the Trust and enter
into the Trust Agreement. In such event, the Company shall remain the owner of
all assets in the Trust Fund and the assets shall be subject to the claims of
Company creditors if the Company ever becomes insolvent. For purposes hereof,
the Company shall be considered "insolvent" if (a) the Company is unable to pay
its debts as they become due, or (b) the Company is subject to a pending
proceeding as a debtor under the United Sates Bankruptcy Code (or any successor
federal statute). The chief executive officer of the Company and its board of
directors shall have the duty to inform the Trustee in writing if the Company
becomes insolvent. Such notice given under the preceding sentence by any party
shall satisfy all of the parties' duty to give notice. When so informed, the
Trustee shall suspend payments to the Members and hold the assets for the
benefit of the Company's general creditors. If the Trustee receives a written
allegation that the Company is insolvent, the Trustee shall suspend payments to
the Members and hold the Trust Fund for the benefit of the Company's general
creditors, and shall determine within the period specified in the Trust
Agreement whether the Company is insolvent. If the Trustee determines that the
Company is not insolvent, the Trustee shall resume payments to the Members. No
Member or beneficiary shall have any preferred claim to, or any beneficial
ownership interest in, any assets of the Trust Fund.
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<PAGE> 26
XI.
MISCELLANEOUS
11.1 NOT CONTRACT OF EMPLOYMENT. The adoption and maintenance of the
Plan shall not be deemed to be a contract between the Company and any person or
to be consideration for the employment of any person. Nothing herein contained
shall be deemed to give any person the right to be retained in the employ of the
Company or to restrict the right of the Company to discharge any person at any
time nor shall the Plan be deemed to give the Company the right to require any
person to remain in the employ of the Company or to restrict any person's right
to terminate his employment at any time.
11.2 ALIENATION OF INTEREST FORBIDDEN. The interest of a Member or his
beneficiary or beneficiaries hereunder may not be sold, transferred, assigned,
or encumbered in any manner, either voluntarily or involuntarily, and any
attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber, or
charge the same shall be null and void; neither shall the benefits hereunder be
liable for or subject to the debts, contracts, liabilities, engagements or torts
of any person to whom such benefits or funds are payable, nor shall they be an
asset in bankruptcy or subject to garnishment, attachment or other legal or
equitable proceedings.
11.3 WITHHOLDING. All Compensation deferrals and payments provided for
hereunder shall be subject to applicable withholding and other deductions as
shall be required of the Company under any applicable local, state or federal
law.
11.4 AMENDMENT AND TERMINATION. The Compensation Committee may from
time to time, in its discretion, amend, in whole or in part, any or all of the
provisions of the Plan; provided, however, that no amendment may be made that
would impair the rights of a Member with respect to amounts already allocated to
his Accounts. The Compensation Committee may terminate the Plan at any time. In
the event that the Plan is terminated, the balance in a Member's Accounts shall
be paid to such Member or his designated beneficiary in the manner specified by
the Committee, which may include the payment of a single lump sum, cash payment
in full satisfaction of all of such Member's or beneficiary's benefits
hereunder.
11.5 SEVERABILITY. If any provision of this Plan shall be held illegal
or invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions hereof; instead, each provision shall be fully severable
and the Plan shall be construed and enforced as if said illegal or invalid
provision had never been included herein.
11.6 GOVERNING LAWS. ALL PROVISIONS OF THE PLAN SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF TEXAS EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW.
XI-1
<PAGE> 27
EXECUTED this ______ day of , 1998.
-------------------------
BMC SOFTWARE, INC.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
(iii)
<PAGE> 1
EXHIBIT 4.2
FIRST AMENDMENT TO
BMC SOFTWARE, INC.
1994 DEFERRED COMPENSATION PLAN
WHEREAS, BMC SOFTWARE, INC. (the "Company") has heretofore adopted the
BMC SOFTWARE, INC. 1994 DEFERRED COMPENSATION PLAN, as Amended and Restated
Effective April 1, 1998 (the "Plan"), for the benefit of certain of the
Company's employees and the employees of other Adopting Entities; and
WHEREAS, the Company desires to amend the Plan in certain respects; and
WHEREAS, the power to amend the Plan is vested in the Compensation
Committee pursuant to Section 11.4 of the Plan;
NOW, THEREFORE, the Plan shall be amended as follows, effective April
1, 1999:
1. Section 1.1(18) of the Plan shall be deleted in its entirety and the
following shall be substituted therefor:
"(18) Intentionally Omitted."
2. Section 3.1(d) of the Plan shall be deleted and the following shall
be substituted therefor:
"(d) A Member's Compensation deferral election shall
indicate with respect to each deferral of Base Salary and/or Incentive
Pay whether (1) 100% of the amounts deferred thereunder and the net
income (or net loss) allocated with respect thereto are to be deferred
until the date such Member terminates his employment with the Company
and its Subsidiaries, (2) 100% of the amounts deferred thereunder and
the net income (or net loss) allocated with respect thereto are to be
deferred until the earlier of such termination of employment or the
fifth anniversary of the last day of the Plan Year in which such
deferral election initially became effective, (3) 100% of the amounts
deferred thereunder and the net income (or net loss) allocated with
respect thereto are to be deferred until the earlier of such
termination of employment or the tenth anniversary of the last day of
the Plan Year in which such deferral election initially became
effective, or (4) 50% of the amounts deferred thereunder and the net
income (or net loss) allocated with respect thereto are to be deferred
until such termination of employment and 50% of the amounts deferred
thereunder and the net income (or net loss) allocated with respect
thereto are to be deferred until the earlier of (i) such termination of
employment or (ii) either (A) the fifth anniversary of the last day of
the Plan Year in which such deferral election initially became
effective or (B) the tenth anniversary of the last day of the Plan Year
in which such deferral election initially became effective, as elected
by such Member. With respect to each election by a Member pursuant to
clauses (2), (3) or (4) of the preceding sentence, the portion of the
Member's Compensation that is to be deferred until the earlier of such
Member's termination of employment or the referenced fifth or tenth
anniversary dates and the net income (or net loss)
<PAGE> 2
allocated with respect thereto, shall be credited to a separate
subaccount within his Deferral Account. Each such subaccount shall be
referred to herein as a "Dated Deferral Subaccount" and shall be
identified by the date upon which such fifth or tenth anniversary, as
applicable, will occur. For example, if a Member's Compensation
deferral election for the Plan Year beginning on April 1, 1999,
provides that some or all of the Compensation to be deferred thereunder
and the net income (or net loss) allocated with respect thereto are to
be distributed to the Member as soon as administratively practicable
after the earlier of his termination of employment or the fifth
anniversary of the last day of such Plan Year, then such amounts shall
be credited to a separate subaccount within his Deferral Account to be
known as the "3/31/05 Deferral Subaccount." Notwithstanding any other
provision of this paragraph (d) to the contrary, a Member's
Compensation deferral election that was effective for periods prior to
April 1, 1999, shall be subject to the terms of Section 3.1(d) as in
effect from time to time prior to such date."
3. The last sentence of Section 6.1 of the Plan shall be deleted and
the following shall be substituted therefor:
"Such benefit shall be paid in a single lump sum, cash payment and
shall be equal in value to the balance in such Dated Deferral
Subaccount as of the Valuation Date next preceding the date of such
payment."
4. Section 8.8 of the Plan shall be deleted and the following shall be
substituted therefor:
"8.8 CHANGE IN CONTROL. Notwithstanding any provision in the
Plan to the contrary, upon the occurrence of a Change in Control, the
powers and duties under the Plan of the Committee and/or the chief
financial officer of BMC Software, Inc. shall cease to the extent, if
any, such powers and duties are vested in the Trustee under the terms
of the Trust Agreement."
5. Section 9.3 of the Plan shall be deleted and the following shall be
substituted therefor:
"9.3 CONTRIBUTIONS TO THE TRUST FUND. As soon as
administratively practicable after each date upon which an amount is
credited to a Member's Deferral Account pursuant to Section 3.1 with
respect to a Plan Year beginning on or after April 1, 1999, the
Employer shall contribute an equivalent amount to the Trust Fund. In
addition, the Employer shall contribute to the Trust Fund an amount
equal to the aggregate deferrals made under Section 3.1 on behalf of
Members for the Plan Year that began on April 1, 1998, and the net
income (or net loss) allocated with respect thereto, as soon as
practicable following April 1, 1999; provided, however, that the amount
of such contribution shall be reduced by the aggregate amount, if any,
distributed to Members with respect to such deferred amounts."
6. The following new Section 11.7 shall be added to the end of
Article XI of the Plan:
"11.7 GUARANTY. Notwithstanding any provisions of the Plan to
the contrary, in the event any Subsidiary that adopts the Plan pursuant
to Section 2.3 hereof fails to make payment of the benefits due under
the Plan on behalf of its
-2-
<PAGE> 3
Members, whether directly or through the Trust, BMC Software, Inc.
shall be liable for and shall make payment of such benefits due as a
guarantor of such entity's obligations hereunder. The guaranty
obligations provided herein shall be satisfied directly and not through
the Trust."
7. As amended hereby, the Plan is specifically ratified and reaffirmed.
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed this __________ day of March, 1999.
BMC SOFTWARE, INC.
BY:
-----------------------------
Name:
------------------------
Title:
-----------------------
-3-
<PAGE> 1
EXHIBIT 4.3
BMC SOFTWARE, INC.
1994 DEFERRED COMPENSATION PLAN TRUST
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I : GENERAL TRUST PROVISIONS ................................................. I-1
ARTICLE II : GENERAL DUTIES OF THE PARTIES ............................................ II-1
ARTICLE III : INVESTMENT, ADMINISTRATION AND
DISBURSEMENT OF TRUST FUND .............................................. III-1
ARTICLE IV : SETTLEMENT OF ACCOUNTS ................................................... IV-1
ARTICLE V : TAXES, EXPENSES AND COMPENSATION
OF TRUSTEE .............................................................. V-1
ARTICLE VI : FOR PROTECTION OF TRUSTEE ................................................ VI-1
ARTICLE VII : INDEMNITY OF TRUSTEE .................................................... VII-1
ARTICLE VIII : RESIGNATION AND REMOVAL OF TRUSTEE ....................................... VIII-1
ARTICLE IX : DURATION AND TERMINATION OF
TRUST AND AMENDMENT ...................................................... IX-1
ARTICLE X : CLAIMS OF COMPANY'S CREDITORS ............................................ X-1
ARTICLE XI : ADOPTING ENTITIES......................................................... XI-1
ARTICLE XII : MISCELLANEOUS ............................................................ XII-1
</TABLE>
(i)
<PAGE> 3
BMC SOFTWARE, INC.
1994 DEFERRED COMPENSATION PLAN TRUST
THIS AGREEMENT AND DECLARATION OF TRUST, made this ___________ day of
____________________ , 1999, by and between (i) BMC SOFTWARE, INC. (hereinafter
referred to as the "Company") and (ii) SECURITY TRUST COMPANY (hereinafter
referred to as the "Trustee").
WHEREAS, the Company has established the BMC SOFTWARE, INC. 1994
DEFERRED COMPENSATION PLAN (hereinafter referred to as the "Plan") for the
benefit of certain employees who are eligible for benefits under the terms of
the Plan (such employees being referred to herein as the "Members"), which Plan
provides for the payment of certain deferred compensation benefits (the
"Benefits") to the Members and the beneficiaries of the respective Members who
may become entitled to any payments under the terms of the Plan in the event of
the Member's death ("Beneficiaries"); and
WHEREAS, the Plan contemplates that the Company will pay the entire
cost of the Benefits from its general assets; and
WHEREAS, the Company desires to adopt the BMC SOFTWARE, INC. 1994
DEFERRED COMPENSATION PLAN TRUST (the "Trust Agreement") establishing a trust
(the "Trust") to aid the Company in meeting its obligations under the Plan; and
WHEREAS, the Trust is intended to be a "grantor trust" with the corpus
and income of the Trust treated as assets and income of the Company for federal
income tax purposes; and
WHEREAS, the Company intends that the assets of the Trust shall at all
times be subject to the claims of general creditors of the Company as provided
in Article X; and
WHEREAS, the Company intends that the existence of the Trust shall not
alter the characterization of the Plan as "unfunded" for purposes of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and shall
not be construed to provide income to any Member prior to actual payment of
Benefits under the Plan; and
WHEREAS, other adopting entities may adopt the Plan, and the Company
desires to permit such entities to adopt separate subtrusts hereunder that are
substantially similar to the Trust; and
WHEREAS, under the Trust, the Trustee covenants that it will hold all
property which it may receive hereunder, IN TRUST, for the uses and purposes and
upon the terms and conditions hereinafter stated;
NOW, THEREFORE, the parties hereto establish the Trust, effective April
1, 1999, and agree, as follows:
<PAGE> 4
ARTICLE I
GENERAL TRUST PROVISIONS
1.1 ESTABLISHMENT OF TRUST. The Company hereby establishes the Trust
with the Trustee. The Trust shall consist of such sums of money and other
property acceptable to the Trustee as from time to time shall be paid or
delivered to the Trustee by the Company. All such money and other property, all
investments and reinvestments made therewith or proceeds thereof and all
earnings and profits thereon, less all payments and charges as authorized
herein, shall constitute the "Trust Fund." The Trust Fund shall at all times be
subject to the claims of general creditors of the Company as provided in Article
X. No Member or Beneficiary shall have any preferred claim to, or any beneficial
ownership interest in, any assets of the Trust Fund prior to the time such
assets are paid to such Member or Beneficiary as Benefits.
1.2 SEPARATE SUB-TRUSTS. Contrary provisions of the Trust
notwithstanding, except as provided in Article XI, the provisions of the Trust
shall apply separately and equally to the Company and to each adopting entity
that has entered into this Trust Agreement pursuant to Article XI. The Company
and each such adopting entity shall bear the cost of providing Benefits for its
own Members and their Beneficiaries, and the portion of the Trust Fund
attributable to the contributions of the Company and each such adopting entity
shall be available to provide benefits only to the Company's or such adopting
entity's (as applicable) Members and their Beneficiaries or to satisfy claims of
the Company's or such adopting entity's (as applicable) Bankruptcy Creditors in
the event the Company or such adopting entity (as applicable) become Insolvent
(as such terms are defined in Section 10.1).
1.3 TRUST IRREVOCABLE. The Trust shall be irrevocable and shall be held
for the exclusive purpose of providing benefits under the Plan to Members and
their Beneficiaries and defraying expenses of the Trust in accordance with the
provisions of this Trust Agreement. Except as provided in Sections 3.6(c) and
3.6(d) and Articles IX and X hereof, no part of the income or corpus of the
Trust Fund shall be recoverable by or for the Company.
1.4 NON-ALIENATION. No right or interest to receive benefits from the
Trust may be assigned, sold, anticipated, alienated or otherwise transferred by
any Member or Beneficiary.
1.5 ACCEPTANCE BY TRUSTEE. The Trustee accepts the Trust established
under this Trust Agreement on the terms and subject to the provisions set forth
herein, and it agrees to discharge and perform fully and faithfully all of the
duties and obligations imposed upon it under this Trust Agreement.
I-1
<PAGE> 5
ARTICLE II
GENERAL DUTIES OF THE PARTIES
2.1 GENERAL DUTIES OF THE COMPANY AND THE TRUSTEE.
(a) The Company has provided or will provide the Trustee with
a copy of the Plan and shall provide the Trustee with a copy of any amendment to
the Plan promptly upon its adoption. The Plan, as of the date of execution of
this Trust Agreement, is hereby incorporated by reference into and shall form a
part of this Trust Agreement as fully as if set forth herein verbatim. Any
amendment to the Plan shall also be incorporated by reference into and form a
part of this Trust Agreement, effective as of the effective date of such
amendment. Schedule A to this Trust Agree ment sets forth, as of the last day of
the calendar month coincident with or immediately preceding the date of
execution of this Trust Agreement, (1) the name and mailing address of each
Member entitled to receive Benefits, (2) the Beneficiaries, if any, designated
by each Member, (3) the aggregate balance of each Member's Company Account (as
defined in Section 1.1(7) of the Plan) and nonforfeitable interest ("Vested
Interest") in such Company Account, and (4) the balance in each Deferral Account
and Dated Deferral Subaccount (as defined in Sections 1.1(12) and 1.1(11),
respectively, of the Plan) of each Member and the Installment Schedule elected
for each such Dated Deferral Subaccount pursuant to Section 3.1(d) of the Plan.
Schedule A (as amended from time to time as provided herein) is hereinafter
referred to as the "Benefit Schedule." The Company shall be responsible for
notifying the Trustee of any changes in the information set forth on the Benefit
Schedule, including, but not limited to, the addition of new Members and a
change in the mailing address of a Member.
(b) Based on information received from the Company and subject
to the provisions of Section 2.1(c), the Trustee shall be charged with keeping
the Benefit Schedule accurate and current, including but not limited to,
preparing by May 31 of each year a completely updated Benefit Schedule as of the
preceding March 31 with such assistance from the Company and independent third
parties as may be necessary in order to permit distributions from the Trust Fund
to be made in accordance with the provisions of Section 3.6. The Company shall
keep accurate books and records with respect to the eligibility of employees to
participate in the Plan and the Bene fits payable under the Plan, and shall
provide such information to the Trustee and any independent third party referred
to in the immediately preceding sentence and shall also provide access to such
books and records at such time or times as the Trustee shall reasonably request.
(c) If, at any time, the Company fails or refuses to give the
Trustee data or access to such books and records in accordance with Section
2.1(b), the Trustee shall deliver a written request to the Company to provide
access to books and records of the Company and to provide such data as required
in accordance with Section 2.1(b) for the Trustee to keep the Benefit Schedule
accu rate and current. If the Company fails or refuses to comply with the
Trustee's written request pursuant to the preceding sentence prior to the
expiration of thirty days from the date of delivery thereof by the Trustee, the
Trustee shall, after ten days written notice to the Company, immediately pay to
each Member an amount equal to such Member's Vested Interest in his aggregate
account
II-1
<PAGE> 6
balances ("Account Balance") as set forth on the most recent Benefit Schedule,
reduced by any taxes to be withheld pursuant to Section 3.6. Such payment shall
be made in accordance with the provisions of Section 3.6. For this purpose, the
Company shall be deemed to have complied with the Trustee's written request if,
in the Trustee's judgment, it shall have substantially complied at the end of
the thirty-day period and is endeavoring in good faith to complete compliance
without delay.
(d) The Company shall notify each Member and Beneficiary of a
then deceased Member in writing of any changes in the Benefit Schedule with
respect to such Member or Beneficiary and, to the extent that such notification
is not provided by the Company, the Trustee shall provide such notification and
the Trustee shall notify all Members and such Beneficiaries of any failure of
the Company to provide information required in this Section 2.1.
(e) It is intended that Benefits payable to Members shall be
determined under the provisions of the Plan and shall be calculated under the
provisions of the Plan as of the date of payment. Payment of Benefits shall be
based upon the amounts set forth on the Benefit Schedule only under the
circumstances set forth in Section 2.1(c). If the actual Benefits payable to a
Member under the provisions of the Plan exceeds the amount set forth on the
Benefit Schedule which is paid pursuant to Section 2.1(c), the Company shall be
liable for payment of the remaining portion of such Benefits.
(f) Trust provisions to the contrary notwithstanding, the
Company shall have the right at any time, and from time to time, in its sole
discretion, to substitute marketable securities of equal fair market value for
any asset held by the Trust. This right is exercisable by the Company in a
nonfiduciary capacity without the approval or consent of any person in a
fiduciary capacity.
(g) As soon as administratively practicable after each date
upon which an amount is credited to a Member's "Deferral Account" under the Plan
pursuant to Section 3.1 of the Plan, the Company shall contribute an equivalent
amount to the Trust.
2.2 ADDITIONAL GENERAL DUTIES OF TRUSTEE. The Trustee shall manage,
invest and reinvest the Trust Fund as the Trustee may determine in the exercise
of its fiduciary duties hereunder, consistent with the provisions of Article
III. The Trustee shall collect the income on the Trust Fund, and make
distributions therefrom, all as hereinafter provided.
II-2
<PAGE> 7
ARTICLE III
INVESTMENT, ADMINISTRATION AND DISBURSEMENT OF TRUST FUND
3.1 INVESTMENT OF TRUST FUND.
(a) At any time prior to the occurrence of a Change in Control
(as such term is defined in Section 12.4), the Trustee shall invest and reinvest
the assets of the Trust Fund in accordance with the written directions received
from time to time by the Trustee from the chief financial officer of BMC
Software, Inc. (the "CFO") and the administrative committee charged with the
general administration of the Plan (the "Committee"). Alternatively, the CFO and
the Committee may, in writing, direct the Trustee to follow the deemed
investment directions of each Member or Beneficiary of a deceased Member,
whether written or telephonic, with respect to a portion of the Trust Fund
assets equal in value to the Account Balance maintained under the Plan on behalf
of such individual, within parameters established by, and as agent for, the CFO
and the Committee;
(b) To the extent that the Trustee is directed by the CFO and
the Committee, the Trustee may invest in securities (including stock or rights
to acquire stock) or obligations issued by the Company;
(c) To the extent that the Trustee is directed by the CFO and
the Committee, the Trustee may establish one or more separate investment
accounts within the Trust Fund, each separate account being hereinafter referred
to as a Fund. Except as otherwise provided, the Trustee shall transfer to each
such Fund such portion of the assets of the Trust Fund as the CFO and the
Committee direct. The Trustee shall be under no duty to question, and shall not
incur any liability on account of following, any direction of the CFO and the
Committee. The Trustee shall be under no duty to review the investment
guidelines, objectives, and restrictions established, or the specific investment
directions given by the CFO and the Committee for any Fund, or to make
suggestions to the CFO or the Committee in connection therewith. To the extent
that directions from the CFO and the Committee to the Trustee represent deemed
investment elections of the Members, the Trustee shall have no responsibility
for such investment elections and shall incur no liability on account of
investing the assets of the Trust Fund in accordance with such directions. All
interest, dividends, and other income received with respect to, and any proceeds
received from the sale or other disposition of securities or other property held
in, a Fund shall be credited to and reinvested in such Fund. All expenses of the
Trust Fund which are allocable to a particular Fund shall be so allocated and
charged. The CFO and the Committee may direct the Trustee to eliminate a Fund or
Funds, and the Trustee shall thereupon dispose of the assets of such Fund and
reinvest the proceeds thereof in accordance with the directions of the CFO and
the Committee; and
(d) From and after the occurrence of a Change in Control, or
if the CFO and the Committee fail to provide the Trustee with such written
directions, the Trustee shall have, with respect to the Trust Fund, power in its
discretion to invest and reinvest such assets in (i) common and preferred
stocks, bonds, notes (whether secured or unsecured) and debentures (including
convertible stocks and securities but not including any stock, debt instruments,
or other securities
III-1
<PAGE> 8
of the Company, the Trustee or their affiliates) which are readily marketable
and listed on a United States national securities exchange or the NASDAQ
national market, (ii) interest-bearing deposit accounts or certificates of
deposit maturing within one year after acquisition thereof, entered into or
issued by a United States national or state bank or trust company having
capital, surplus and undivided profits, at the holding company level, of at
least $75 million, (iii) direct obligations of, and obligations fully guaranteed
by, the United States of America or any agency of the United States of America
which is backed by the full faith and credit of the United States of America (so
long as such obligations shall mature within one year after acquisition
thereof), and (iv) any common, collective or commingled fund, including a fund
maintained by the Trustee, established and maintained primarily for the purpose
of investing and reinvesting in assets of the type described in (i), (ii), or
(iii) above. Further, notwithstanding the provisions of the preceding sentence,
after the occurrence of a Change in Control or in the event the CFO and the
Committee fail to provide the Trustee with written directions pursuant to the
preceding provisions of this Section, the Trustee shall have the power in its
discretion to retain, maintain, continue, sell, or take any other actions
relative to any assets then held in the Trust Fund (including, without
limitation, to take actions in accordance with investment directions obtained
directly from a Member or Beneficiary of a deceased Member with respect to a
portion of the Trust Fund assets equal in value to the Account Balance
maintained under the Plan on behalf of such individual).
3.2 VALUATION OF TRUST FUND. As soon as practicable after the last bank
business day of each calendar year and as of such other dates as may be
specified by the Company or the Committee, the Trustee shall report to the
Company and the Committee the assets held in the Trust Fund as of such day and
shall determine and include in such report the fair market value as of such day
of each such asset. In determining such fair market values, the Trustee shall
use such market quotations and other information as are available to it and may
in its discretion be appropriate. The report of any such valuation shall not
constitute a representation by the Trustee that the amounts reported as fair
market values would actually be realized upon the liquidation of the Trust Fund.
The Trustee shall not be accountable to the Company or to any other person on
the basis of any such valuation, but its accountability shall be in accordance
with the provisions of Article IV hereof.
3.3 ADDITIONAL INVESTMENT POWERS OF TRUSTEE. Subject to the provisions
of Sections 3.1, 3.6 and 9.2 hereof, the Trustee shall have, with respect to the
Trust Fund, the power in its discretion:
(a) To retain any property at any time received by it;
(b) To sell, exchange, convey, transfer or dispose of, and to
grant options for the purchase or exchange with respect to, any
property at any time held by it;
(c) To register and carry any securities or any other property
in the name of the Trustee, or in the name of the nominee of the
Trustee (or to hold any such property unregistered) without increasing
or decreasing the fiduciary liability of the Trustee, and to exercise
any option, right or privilege to convert any convertible securities,
including shares or fractional shares of the Trustee so long as the
conversion privilege is offered pro rata to all shareholders;
III-2
<PAGE> 9
(d) To cause any securities to be held in book-entry or in
bearer form;
(e) To hold property for investment that may be unproductive
of income; and
(f) To hold uninvested at any time, without liability for
interest thereon for a reasonable period of time, any money received by
the Trustee or raised by the Trustee from the sale of investments or
otherwise until same can be reinvested or disbursed.
3.4 ADMINISTRATIVE POWERS OF TRUSTEE. The Trustee shall have the
power in its discretion:
(a) To exercise all voting rights with respect to the shares
of stock held in the Trust Fund and to grant proxies, discretionary or
otherwise; provided, however, that, prior to the occurrence of a Change
in Control, (1) the CFO and the Committee shall direct the Trustee with
respect to all such matters other than with respect to stock issued by
the Company or its affiliates, and (2) the Trustee shall exercise all
voting and other rights with respect to stock issued by the Company or
its affiliates;
(b) To cause any shares of stock to be registered and held in
the name of one or more of its nominees, or one or more nominees of any
system for the central handling of securities, without increase or
decrease of liability;
(c) To collect and receive any and all money and other
property due to the Trust Fund and to give full discharge therefor;
(d) Subject to the provisions of Section 3.6 hereof: to
settle, compromise or submit to arbitration any claims, debts or
damages due or owing to or from the Trustee; to commence or defend
suits or legal proceedings to protect any interest of the Trust; and to
represent the Trust in all suits or legal proceedings in any court or
before any other body or tribunal;
(e) To organize under the laws of any state a corporation for
the purpose of acquiring and holding title to any property which it is
authorized to acquire under this Trust Agreement and to exercise with
respect thereto any or all of the powers set forth in this Trust
Agreement;
(f) To determine how all receipts and disbursements shall be
credited, charged or apportioned as between income and principal;
(g) To determine the amount and time of Benefit payments in
accordance with Section 3.6;
(h) To employ and compensate such attorneys, counsel, brokers
or other agents or employees and to delegate to them such of the
duties, rights and powers of the Trustee as may be deemed advisable in
handling and administering the Trust; and
III-3
<PAGE> 10
(i) Generally to do all acts, whether or not expressly
authorized, which the Trustee may deem necessary or desirable for the
protection of the Trust Fund.
3.5 DEALINGS WITH TRUSTEE. Persons dealing with the Trustee shall be
under no obligation to see to the proper application of any money paid or
property delivered to the Trustee or to inquire into the Trustee's authority as
to any transaction.
3.6 DISTRIBUTIONS FROM TRUST FUND.
(a) Except as set forth in Section 3.6(c), Section 3.6(d),
Section 9.2 and Article X hereof, distributions from the Trust Fund shall be
made by the Trustee to the Members and Beneficiaries at the times and in the
amounts determined in accordance with the provisions of the Plan and, to the
maximum extent permitted by applicable law, the Trustee shall be fully protected
in so doing. Any amounts so paid shall be reduced by the amount of any federal,
state, or local income or other taxes that may be required by law to be withheld
or paid by the Trustee and the Trustee shall pay such amounts to the appropriate
governmental authorities; provided, however, that the Company, the Committee,
the Members, and the Beneficiaries shall provide the Trustee with all of the
information necessary for the Trustee to determine the amount of such taxes
required to be withheld or paid by the Trustee and the Trustee shall be fully
protected in relying upon such information. Notwithstanding any provision of
this Trust Agreement to the contrary, the Company shall be obligated to pay the
Benefits. To the extent that the Trust Fund is not sufficient to pay any Benefit
when due, the Company shall pay such Benefit directly. In the event Benefits are
due to more than one Member or Beneficiary on the same date and the Trust Fund
is not sufficient to pay all such Benefits, the Trust Fund shall be applied pro
rata among such Members and Beneficiaries on the basis of the Benefits due to be
paid such individuals on such date. Nothing in this Trust Agreement shall
relieve the Company of its liabilities to pay Benefits except to the extent such
liabilities are met by application of Trust Fund assets.
(b) Prior to the occurrence of a Change in Control, the
Committee shall direct the Trustee in writing as to the time and amount of
Benefits to be distributed to the Members and Beneficiaries. From and after the
occurrence of a Change in Control, a Member or Beneficiary who believes that he
or she is entitled to Benefits may apply in writing directly to the Trustee for
payment of such Benefits. Such application shall advise the Trustee of the
circumstances which entitle such Member or Beneficiary to payment of such
Benefits. The Trustee shall, in such case, reach its own independent
determination as to the Member's or Beneficiary's entitlement to Benefits, even
though the Trustee may be informed from another source (including the Company or
the Committee) that payments are not due under the Plan. If the Trustee so
desires, it may, in its sole discretion, make such additional inquiries and/or
take such additional measures as it deems necessary in order to enable it to
determine whether Benefits are due and payable, including, but not limited to,
interviewing appropriate persons, requesting affidavits, soliciting oral or
written testimony under oath, or holding a hearing or other proceeding. After
the occurrence of a Change in Control, the Trustee shall determine whether
Benefits are payable as promptly as possible.
(c) At any time and from time to time, the Committee may
direct the Trustee in writing to distribute to the Company cash held by the
Trustee as part of the Trust Fund in an amount
III-4
<PAGE> 11
equal to the Benefits accrued under the Plan that have been forfeited under the
terms of the Plan. As soon as practicable after receipt of such a direction and,
if such direction is received by the Trustee after the occurrence of a Change in
Control, the Trustee's independent determination that such benefits have, in
fact, been forfeited in accordance with the terms of the Plan, the Trustee shall
distribute such amount to the Company.
(d) At any time and from time to time prior to the occurrence
of a Change in Control, the Company may apply in writing to the Trustee for a
distribution by the Trustee to the Company of assets held by the Trustee as part
of the Trust Fund ("Trust Assets") in an amount (the "Refund Amount") equal to
or less than the difference, if any, between (i) the Net Fair Market Value of
the Trust Assets (as such term is hereinafter defined) as of the last day of the
month coincident with or immediately preceding the date of such application, and
(ii) the aggregate Account Balances for all Members and Beneficiaries as of such
date. Such application shall advise the Trustee of the manner in which the
Refund Amount was calculated. Upon the receipt of such an application from the
Company, the Trustee shall reach its own independent determination as to the
Company's entitlement to the Refund Amount, even though the Trustee may be
informed from another source (including a Member) that the Company is not
entitled to the Refund Amount. If the Trustee so de sires, it may, in its sole
discretion, make such additional inquiries and/or take such additional measures
as it deems necessary in order to enable it to determine whether the Company is
entitled to the Refund Amount, including, but not limited to, interviewing
appropriate persons, requesting affidavits, soliciting oral or written testimony
under oath, or engaging such independent third parties as the Trustee may deem
necessary to assist in making such determination. The Trustee shall determine
whether the Company is entitled to all or any portion of the Refund Amount as
promptly as possible. If the Trustee determines that the Company is entitled to
all or any portion of the Refund Amount, then the Trustee shall distribute such
amount to the Company in cash or in kind as determined by the Trustee in its
sole discretion. As used herein, the term "Net Fair Market Value of the Trust
Assets" shall mean the fair market value of the Trust Assets, as determined by
the Trustee in its sole discretion, reduced by all liabilities of the Trust,
whether or not such liabilities are secured by any or all of the Trust Assets,
other than liabilities to Members or Beneficiaries under the Plan. In
determining such fair market value, the Trustee shall use such market quotations
and other information as are available to it and may in its discretion be
appropriate; provided, however, that the fair market value of any life insurance
contract which constitutes a portion of the Trust Assets shall be its net cash
surrender value. The determination of the Net Fair Market Value of the Trust
Assets by the Trustee shall not constitute a representation by the Trustee that
the amounts reported as fair market values would actually be realized upon the
liquidation of the Trust Assets. The Trustee shall not be accountable to the
Company or to any other person, including the Members or Beneficiaries, on the
basis of any such valuation except as otherwise provided in this Trust
Agreement.
(e) The Trustee may engage its own counsel or other experts to
assist it in making any determination under Section 3.6(a), (b), (c), (d) or (g)
hereof. The cost of such counsel or other expert assistance, and any other costs
reasonably incurred by the Trustee in making any such determination, shall be
borne by the Company. If the Company fails to pay any such costs when due or
requested by the Trustee, the Trustee may use the assets of the Trust Fund to
pay them as provided in Section 5.2.
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<PAGE> 12
(f) The Trustee shall not itself commence any legal action,
whether in the nature of an interpleader action, request for declaratory
judgment or otherwise, requesting a court to make a determination under Section
3.6(a), (b), (c) or (d) hereof in the Trustee's stead without first using its
best efforts to make such determination.
(g) Notwithstanding any other provision of this Trust
Agreement, if any amounts held in the Trust are found in a "determination"
(within the meaning of Section 1313(a) of the Internal Revenue Code of 1986, as
amended) to have been includible in gross income of a Member or Beneficiary
prior to payment of such amounts from the Trust, the Trustee shall, as soon as
practicable after receiving notice thereof, pay such amounts to such Member or
Beneficiary, as applicable, (but not in excess of such Member's or Beneficiary's
Account Balance at the time of such payment). For purposes of this Section 3.6,
the Trustee shall be entitled to rely on an affidavit by a Member or
Beneficiary, as applicable, and a copy of the determination to the effect that a
determination described in the preceding sentence has occurred.
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<PAGE> 13
ARTICLE IV
SETTLEMENT OF ACCOUNTS
The Trustee shall keep full accounts of all of its receipts and
disbursements. The Trustee's books and records with respect to the Trust Fund
shall be open to inspection by the Company, any Member, or any Beneficiary of a
deceased Member, or their representatives at all times during business hours of
the Trustee. Within sixty days after December 31 of each year (or such other
date as may be agreed to by the Company and the Trustee), or any termination of
the duties of the Trustee, the Trustee shall prepare, sign and mail to the
Company and the Committee an account of its acts and transactions as Trustee
hereunder. If, within sixty days after the mailing of the account or any amended
account, the Company and the Committee have not filed with the Trustee notice of
any objection to any act or transaction of the Trustee, the account or amended
account shall become an account stated. If any objection has been filed, and if
the objecting party is satisfied that it should be withdrawn or if the account
is adjusted to the objecting party's satisfaction, the objecting party shall in
writing filed with the Trustee signify its approval of the account and it shall
become an account stated. When an account becomes an account stated, such
account shall be finally settled, and the Trustee shall be completely discharged
and released, as if such account had been settled and allowed by a judgment or
decree of a court of competent jurisdiction in an action or proceeding in which
the Trustee, the Company, and the Committee were parties. The Trustee, the
Company or the Committee shall have the right to apply at any time to a court of
competent jurisdiction for judicial settlement of any account of the Trustee not
previously settled as hereinabove provided. In any such action or proceeding it
shall be necessary to join as parties the Trustee, the Company and the Committee
and any judgment or decree entered therein shall be conclusive upon all such
parties.
IV-1
<PAGE> 14
ARTICLE V
TAXES, EXPENSES AND COMPENSATION OF TRUSTEE
5.1 TAXES. The Company agrees that all income, deductions, and credits
of the Trust Fund belong to it as owner for income tax purposes and will be
included on the Company's income tax returns. The Company shall from time to
time pay taxes (references in this Trust Agreement to the payment of taxes shall
include interest and applicable penalties) of any and all kinds whatsoever which
at any time are lawfully levied or assessed upon or become payable in respect of
the Trust Fund, the income or any property forming a part thereof, or any
security transaction pertaining thereto. To the extent that any taxes levied or
assessed upon the Trust Fund are not paid by the Company or contested by the
Company pursuant to the last sentence of this Section 5.1, the Trustee shall pay
such taxes out of the Trust Fund and the Company shall upon demand by the
Trustee deposit into the Trust Fund an amount equal to the amount paid from the
Trust Fund to satisfy such tax liability. If requested by the Company, the
Trustee shall, at Company expense, contest the validity of such taxes in any
manner deemed appropriate by the Company or its counsel, but only if it has
received an indemnity bond or other security satisfactory to it to pay any
expenses of such contest. Alternatively, the Company may itself contest the
validity of any such taxes, but any such contest shall not affect the Company's
obligation to reimburse the Trust Fund for taxes paid from the Trust Fund.
5.2 BOND, EXPENSES AND COMPENSATION. The Trustee shall be paid
compensation by the Company as the Company and the Trustee may from time to time
agree. The Trustee shall be reimbursed by the Company for its reasonable
expenses of management and administration of the Trust, including reasonable
compensation of counsel and any agent engaged by the Trustee to assist it in
such management and administration. In the event that the Company shall fail or
refuse to make such compensation payment or expense reimbursement upon demand,
the Trustee may satisfy such obligations out of the assets of the Trust Fund; in
that event, the Company shall immediately upon demand by the Trustee deposit
into the Trust Fund a sum equal to the amount paid by the Trust Fund for such
fees and expenses.
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<PAGE> 15
ARTICLE VI
FOR PROTECTION OF TRUSTEE
6.1 COMMUNICATIONS WITH THE COMPANY, THE COMMITTEE AND THE MEMBERS.
(a) The Company shall certify to the Trustee the name or names
of any person or persons authorized to act for the Company and for the
Committee. Such certification shall be signed by the President or a Vice
President and the Secretary or an Assistant Secretary of the Company. Until the
Company notifies the Trustee, in a similarly signed notice, that any such person
is no longer authorized to act for the Company or for the Committee, as
applicable, the Trustee may continue to fully rely upon the authority of such
person.
(b) The Trustee may fully rely upon any certificate, notice or
direction of the Company or the Committee which the Trustee reasonably believes
to have been signed by a duly authorized officer or agent of the Company or the
Committee, as applicable.
(c) Communications to the Trustee shall be sent in writing to
the Trustee at 2390 East Camelback Road, Suite 240, Phoenix, Arizona 85016, or
to such other address as the Trustee may specify. No communication shall be
binding upon the Trust Fund or the Trustee until it is received by the Trustee
and unless it is in writing and signed by an authorized person.
(d) Communications to the Company or the CFO shall be sent in
writing to the Company at 2101 CityWest Boulevard, Houston, Texas 77056,
Attention: Chief Financial Officer, or to such other address as the Company may
specify in writing to the Trustee. Communications to the Committee shall be sent
in writing to the Company's address, Attention: 1994 Deferred Compensation Plan
Administrative Committee. Communications to a Member or Beneficiary shall be
sent in writing to the address of such person as stated on the Benefit Schedule,
or to such other address as such person may specify in writing to the Trustee.
No communication shall be binding upon the Company, the CFO, the Committee, or a
Member or Beneficiary until it is received by such person.
6.2 ADVICE OF COUNSEL. The Trustee may consult with any legal counsel
with respect to the construction of this Trust Agreement, its duties hereunder
or any act which it proposes to take or omit, and shall not be liable for any
action taken or omitted in good faith pursuant to such advice. Expenses of such
counsel shall be deemed to be expenses of management and administration of the
Trust within the meaning of Section 5.2 hereof.
6.3 FIDUCIARY RESPONSIBILITY.
(a) The Trustee shall discharge its duties under this Trust
Agreement in effectuating the Plan in a manner consistent with the objectives of
this Trust Agreement and the Plan. The Trustee shall not be liable for any loss
sustained by the Trust Fund by reason of the purchase, retention, sale or
exchange of any investment in good faith and in accordance with the provisions
VI-1
<PAGE> 16
of this Trust Agreement. The Trustee shall have no responsibility or liability
for any failure of the Company to make contributions to the Trust Fund or for
any insufficiency of assets in the Trust Fund to pay Benefits when due. The
Trustee shall not be liable hereunder for any act taken or omitted to be taken
in good faith, except for its own negligence or misconduct.
(b) The Trustee's duties and obligations shall be limited to
those expressly imposed upon it by this Trust Agreement.
(c) No bond shall be required of the Trustee unless otherwise
required by law.
(d) The Company at any time may employ as agent (to perform
any act, keep any records or accounts, or make any computations required of the
Company or the Committee by this Trust Agreement or the Plan) the individual,
corporation or association serving as Trustee hereunder. Nothing done by said
individual, corporation or association as such agent shall affect its
responsibilities or liability as Trustee hereunder.
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<PAGE> 17
ARTICLE VII
INDEMNITY OF TRUSTEE
The Company hereby indemnifies and holds the Trustee harmless from and
against any and all losses, damages, costs, expenses or liabilities (herein,
"Liabilities"), including reasonable attorneys' fees and other costs of
litigation, to which the Trustee may become subject pursuant to, arising out of,
occasioned by, incurred in connection with or in any way associated with this
Trust Agreement, except for any act or omission constituting negligence or
misconduct of the Trustee. If one or more Liabilities shall arise, or if the
Company fails to indemnify the Trustee as provided herein, or both, then the
Trustee may engage counsel of the Trustee's choice, but at the Company's
expense, either to conduct the defense against such Liabilities or to conduct
such actions as may be necessary to obtain the indemnity provided for herein, or
to take both such actions. The Trustee shall notify the Company within five days
after the Trustee has so engaged counsel of the name and address of such
counsel. If the Trustee shall be entitled to indemnification by the Company
pursuant to this Article VII and the Company shall not provide such
indemnification upon demand, the Trustee may apply assets of the Trust Fund in
full satisfaction of the obligations for indemnity by the Company, and any legal
proceeding by the Trustee against the Company for such indemnification shall be
on behalf of the Trust.
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<PAGE> 18
ARTICLE VIII
RESIGNATION AND REMOVAL OF TRUSTEE
8.1 RESIGNATION OF TRUSTEE. The Trustee may resign upon sixty days'
prior written notice to the Compensation Committee of the Board of Directors of
BMC Software, Inc. (the "Compensation Committee") and the Committee, except that
any such resignation shall not be effective until the Compensation Committee has
appointed in writing a successor trustee, which must be a bank, trust company,
or an individual, and such successor has accepted the appointment in writing;
provided, however, that if such appointment is to become effective at any time
after the occurrence of a Change in Control, then the consent of a majority of
the Members to the appointment of such successor trustee must be obtained. For
all purposes of this Trust Agreement where the consent of a majority of the
Members is required, the determination of majority consent shall be based upon
receiving the consent of any combination of Members whose sum of Account
Balances as of the time of determination is greater than fifty percent of the
sum of Account Balances for all Members at such time, rather than upon receiving
the consent of a majority of the number of Members. For purposes of this
determination, Beneficiaries of deceased Members shall be considered Members.
The Compensation Committee shall make a good faith effort, following receipt of
notice of resignation from the Trustee, to find and appoint a successor Trustee
who will adhere to the obligations imposed on such successor under the terms of
this Trust Agreement, and in particular, but without limitation, the obligation
to exercise judgment independent of the Company in the circumstances described
in Section 3.6 hereof. The appointment of a successor trustee shall also be
conditioned upon obtaining from such successor a written statement that the
successor has read the Trust Agreement and understands its obligations
thereunder. If the consent of a majority of the Members is required for the
appointment of a successor Trustee, then the Trustee shall be responsible for
securing such Member consents in a timely fashion and, unless ordered by a court
of competent jurisdiction, shall not reveal to the Compensation Committee, the
Company, the Committee or any other person any information concerning such
consents, except whether the required majority has been achieved. Any notice
sent to Members by the Trustee canvassing the Members as to their consent to a
successor trustee shall include the name and address of the proposed successor
trustee. Any consent of a Member required under this Section 8.1 shall be deemed
given if no written objection is received by the Trustee from such Member within
fourteen days after request for such consent is sent postpaid by United States
registered or certified mail with return receipt requested to such Member.
8.2 REMOVAL OF TRUSTEE. The Compensation Committee may remove the
Trustee upon sixty days' prior written notice to the Trustee and the Committee,
except that any such removal shall not be effective until (a) the close of such
notice period, (b) the delivery by the Compensation Committee to the Trustee of
an instrument in writing appointing a successor trustee meeting the requirements
of Section 8.1, and (c) an acceptance of such appointment in writing executed by
such successor. Notwithstanding the provisions of the preceding sentence, if
such appointment of a successor trustee is to become effective at any time after
the occurrence of a Change in Control, then the removal of the Trustee and the
appointment of a successor trustee shall not be effective until the Trustee has
received the consent of a majority of the Members (as determined in accordance
with
VIII-1
<PAGE> 19
the provisions of Section 8.1 hereof) to such removal and such appointment. Upon
the receipt by the Trustee of a written notice of removal, the Trustee shall be
responsible for securing the Member consents (if such consents are required
pursuant to the preceding provisions of this Section 8.2) in a timely fashion
and, unless ordered by a court of competent jurisdiction, shall not reveal to
the Compensation Committee, the Company, the Committee or any other person any
information concerning such consents, except whether the required majority has
been achieved. Any notice sent to Members by the Trustee canvassing the Members
as to their consent to removal of the Trustee and the appointment of a proposed
successor trustee, shall include the name and address of the proposed successor
trustee. Any consent of a Member required under this Section 8.2 shall be deemed
given if no written objection is received by the Trustee from such Member within
fourteen days after request for such consent is sent postpaid by United States
registered or certified mail with return receipt requested to such Member.
8.3 SUCCESSOR TRUSTEE. All of the provisions set forth herein with
respect to the Trustee shall relate to each successor with the same force and
effect as if such successor had been originally named as the Trustee hereunder.
8.4 TRANSFER OF TRUST FUND TO SUCCESSOR. Upon the resignation or
removal of the Trustee and appointment of a successor, the Trustee shall
transfer and deliver the Trust Fund to such successor. Following the effective
date of the appointment of the successor, the Trustee's responsibility hereunder
shall be limited to managing the assets in its possession and transferring such
assets to the successor, and settling its final account. Neither the Trustee nor
the successor shall be liable for the acts of the other.
VIII-2
<PAGE> 20
ARTICLE IX
DURATION AND TERMINATION OF TRUST AND AMENDMENT
9.1 DURATION AND TERMINATION. The Trust is hereby declared to be
irrevocable and shall continue until (a) all payments required by Section 3.6
have been made or (b) until the Trust Fund contains no assets and retains no
claims to recover assets from the Company or any other person or entity,
whichever shall first occur. Notwithstanding the preceding provisions of this
Section 9.1, unless earlier terminated, the Trust shall terminate twenty-one
(21) years after the death of the last to die of all of the Members and their
issue living on the effective date of this Trust Agreement; provided, however,
that if at that time the Trust may be continued in force without violating the
rule against perpetuities or any other law of the State of Texas, then the Trust
shall remain in effect until otherwise terminated as provided hereunder.
9.2 DISTRIBUTION UPON TERMINATION. If this Trust terminates under the
provisions of Section 9.1, the Trustee shall liquidate the Trust Fund and, after
its final account has been settled as provided in Article IV, shall distribute
to the Company the net balance of any assets of the Trust remaining after all
expenses have been paid and all Benefits, whether or not due and payable under
the terms of the Plan on the date of such termination, have been paid to the
Members and Beneficiaries. Upon making such distribution, the Trustee shall be
relieved from all further liability. The powers of the Trustee hereunder shall
continue so long as any assets of the Trust Fund remain in its hands.
9.3 AMENDMENT. The Compensation Committee may from time to time amend,
in whole or in part, any or all of the provisions of this Trust Agreement;
provided, however, that (a) no amendment will be made to this Trust Agreement or
the Plan which will cause this Trust Agreement, the Plan or the assets of the
Trust Fund to be governed by or subject to Part 2, 3, or 4 of Title I of ERISA,
(b) no such amendment shall adversely affect any Benefits to the date of such
amendment in respect of any Member or Beneficiary or the amount of assets of the
Trust Fund available to pay such Benefits, (c) no such amendment shall purport
to alter the irrevocable character of the Trust established under this Trust
Agreement, (d) no such amendment shall increase the duties or responsibilities
of the Trustee unless the Trustee consents thereto in writing, and (e) after the
occurrence of a Change in Control, no amendment will be made to this Trust
Agreement without the consent of a majority of the Members (as determined
pursuant to the provisions of Section 8.1 hereof). Upon receipt of a request
from the Compensation Committee for an amendment which requires the consent of a
majority of the Members, the Trustee shall be responsible for securing Member
consents in a timely fashion, and unless ordered by a court of competent
jurisdiction, shall not reveal to the Compensation Committee, the Committee, the
Company, or any other person any information concerning such consents, except
whether the required majority has been achieved. Any consent of a Member
required under this Section 9.3 shall be deemed given if no written objection is
received by the Trustee from such Member within fourteen days after request for
such consent is sent postpaid by United States registered or certified mail with
return receipt requested to such Member. This Trust Agreement may be amended, to
the extent permitted in this Section 9.3, by an instrument in writing executed
on behalf of BMC Software, Inc. by its authorized representatives, consents to
which instrument have been obtained from the required majority of Members if
such consents are required.
IX-1
<PAGE> 21
ARTICLE X
CLAIMS OF COMPANY'S CREDITORS
10.1 INSOLVENCY OF COMPANY. As used in this Article X, the Company
shall be deemed to be "Insolvent" if (a) the Company is unable to pay its debts
as they come due, or (b) the Company is subject to a pending proceeding as a
debtor under the United States Bankruptcy Code (or any successor federal
statute). In the event that the Company shall be deemed Insolvent, the assets of
the Trust Fund shall be held for the benefit of the general creditors of the
Company (hereinafter referred to as "Bankruptcy Creditors").
10.2 TRUSTEE'S RESPONSIBILITIES IF COMPANY MAY BE INSOLVENT.
(a) If at any time the Company or a person claiming to be a
creditor of the Company alleges in writing to the Trustee that the Company has
become Insolvent, the Trustee shall within thirty days independently determine
whether the Company is Insolvent and, pending such determination, the Trustee
shall discontinue any payment of Benefits under the Plan and this Trust
Agreement and shall hold the Trust Fund for the benefit of Bankruptcy Creditors.
The Trustee shall resume payments of Benefits under the Plan and this Trust
Agreement in accordance with Section 3.6 hereof only after the Trustee has
determined that the Company is not Insolvent (or is no longer Insolvent, if the
Trustee initially determined the Company to be Insolvent) or upon receipt of an
order of a court of competent jurisdiction requiring such payments. The Company,
by its chief executive officer and its Board of Directors, shall further be
obligated to give the Trustee prompt notice in writing in the event that the
Company becomes Insolvent, with the same consequences as provided in the
preceding two sentences. In determining whether the Company is Insolvent, the
Trustee may rely conclusively upon, and shall be protected in relying upon,
court records showing that the Company is Insolvent, or a current report or
statement from a nationally recognized credit reporting agency showing that the
Company is Insolvent. For purposes of this Trust Agreement, knowledge and
information concerning the Company which is not in the possession of the Trustee
shall not be imputed to the Trustee. The Trustee shall have no duty or
obligation to ascertain whether the Company is Insolvent unless and until it
receives a writing that the Company is Insolvent as described in the first or
third sentence of this Section 10.2(a).
(b) If the Trustee determines that the Company is Insolvent,
the Trustee shall hold the assets of the Trust Fund for the benefit of the
Bankruptcy Creditors, and shall disburse the assets of the Trust Fund to satisfy
such claims as a court of competent jurisdiction shall direct.
(c) If the Trustee discontinues payment of Benefits pursuant
to Section 10.2(a) and subsequently resumes such payments, the first payment to
a Member or Beneficiary following such discontinuance shall include an aggregate
amount equal to the difference between the payments that would have been made to
such Member or Beneficiary, as applicable, under this Trust Agreement but for
this Section 10.2 and the aggregate payments actually made to such Member or
Beneficiary, as applicable, by the Company pursuant to the Plan during any such
period of discontinuance. In the event that upon resumption of payments pursuant
to the preceding sentence,
X-1
<PAGE> 22
the assets of the Trust Fund are insufficient to pay Benefits in full, Benefit
payments to the affected Members and Beneficiaries shall be prorated so as to
equitably apportion the assets of the Trust Fund among all affected Members and
Beneficiaries in proportion to their Benefits.
10.3 TRUST RECOVERY OF PAYMENTS TO CREDITORS. In the event that at any
time an amount is paid from the Trust Fund to Bankruptcy Creditors of the
Company, the Trustee shall demand that the Company deposit into the Trust Fund a
sum equal to the amount paid by the Trust Fund to such Bankruptcy Creditors and,
if such payment is not made within ninety days of such demand, the Trustee shall
take such action as it deems prudent or advisable to recover payment.
X-2
<PAGE> 23
ARTICLE XI
ADOPTING ENTITIES
It is contemplated that other corporations, associations, partnerships
or proprietorships that have adopted the Plan may adopt this Trust Agreement and
thereby become the Company. Any such entity, whether or not presently existing,
may become a party hereto by appropriate action of its officers without the need
for approval of its board of directors or noncorporate counterpart or of the
Compensation Committee or the Committee. As of the date hereof, BMC Software
Distribution, Inc., BMC Software Services, Inc., BGS Systems, Inc., BMC
Information Technology, Inc., along with BMC Software, Inc., have adopted the
Plan and shall be deemed parties to this Trust Agreement. The provisions of the
Trust Agreement shall apply separately and equally to the Company and each other
adopting entity and their respective Members and their Beneficiaries in the same
manner as is expressly provided for the Company and its Members and their
Beneficiaries, except that (a) the power to appoint or otherwise affect the
Trustee and the power to amend the Trust Agreement shall be exercised by the
Compensation Committee alone, and (b) the determination of whether a Change in
Control has occurred shall be based solely on BMC Software, Inc.
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<PAGE> 24
ARTICLE XII
MISCELLANEOUS
12.1 LAWS OF TEXAS TO GOVERN. THIS TRUST AGREEMENT AND THE TRUST HEREBY
CREATED SHALL BE CONSTRUED AND REGULATED BY THE LAWS OF THE STATE OF TEXAS.
12.2 TITLES AND HEADINGS NOT TO CONTROL. The titles to Articles and
headings of Sections in this Trust Agreement are placed herein for convenience
of reference only and, in the case of any conflict, the text of this Trust
Agreement, rather than such titles or headings, shall control.
12.3 AFFILIATES. As used in this Trust Agreement, the term "affiliate"
as applied to the Company or to the Trustee means any person or entity that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Company or the Trustee, as
the case may be. For purposes of this definition, the term "control" as used
with respect to any person or entity shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such person or entity, whether through the ownership of an equity
interest in such entity, by contract or otherwise.
12.4 CHANGE IN CONTROL. For purposes of this Trust Agreement, a "Change
in Control" shall occur if: (i) BMC Software, Inc. shall not be the surviving
entity in any merger, consolidation, or other reorganization (or survives only
as a subsidiary of an entity other than an entity wholly-owned (directly or
indirectly) by BMC Software, Inc. immediately prior to such event); (ii) BMC
Software, Inc. sells, leases, or exchanges all or substantially all of its
assets to any other person or entity (other than an entity wholly-owned
(directly or indirectly) by BMC Software, Inc. immediately prior to such event);
(iii) BMC Software, Inc. is to be dissolved and liquidated; (iv) any person or
entity, including a "group" as contemplated by Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, acquires or gains ownership or
control (including, without limitation, power to vote) of more than 50% of the
outstanding shares of BMC Software, Inc.'s voting stock (based upon voting
power); or (v) as a result of or in connection with a contested election of
directors, the persons who were directors of BMC Software, Inc. before such
election shall cease to constitute a majority of the directors of BMC Software,
Inc. BMC Software, Inc., by its chief executive officer, and its Board of
Directors, shall be obligated to give the Trustee prompt notice in writing of
the occurrence of a Change in Control. In the event the Trustee receives such a
notice or if at any time a Member or a Beneficiary of a deceased Member alleges
in writing to the Trustee that a Change in Control has occurred, the Trustee
shall within thirty days independently determine whether a Change in Control has
occurred and, pending such determination, the Trustee shall assume that a Change
in Control has occurred for all purposes of this Trust Agreement and the Plan.
The Trustee shall have no duty or obligation to ascertain whether a Change in
Control has occurred unless it receives a written notice as described in either
of the preceding two sentences. In determining whether a Change in Control has
occurred, the Trustee may, in its sole discretion, make such additional
inquiries and/or take such additional measures as it deems necessary, including,
but not limited to, interviewing appropriate persons, requesting affidavits,
soliciting oral or written testimony under oath, or engaging such independent
third parties as the Trustee may deem necessary to assist in
XII-1
<PAGE> 25
making such determination. Notwithstanding the foregoing, if at any time the
chief executive officer or the Board of Directors of BMC Software, Inc. notify
the Trustee in writing that the Trustee should interpret this Trust Agreement
and the Plan as if a Change in Control had occurred, then for all purposes of
this Trust Agreement and the Plan, the Trustee shall so interpret this Trust
Agreement and the Plan. Once the notice described in the preceding sentence is
received by the Trustee, it may not be rescinded.
12.5 SUCCESSORS AND ASSIGNS. This Trust Agreement may not be assigned
by either party without the prior written consent of the other, and any
purported assignment without such prior written consent shall be null and void.
This Trust Agreement shall be binding upon the successors and permitted assigns
of each party hereto.
12.6 CONTROLLING DOCUMENT. Should an inconsistency or conflict exist
between the specific terms of this Trust Agreement and those of the Plan, then
the relevant terms of this Trust Agreement shall govern and control.
XII-2
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be executed as of the day and year first above written.
BMC SOFTWARE, INC.
BY:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
SECURITY TRUST COMPANY, TRUSTEE
BY:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
OTHER ADOPTING ENTITIES
AS OF APRIL 1, 1999
BMC SOFTWARE DISTRIBUTION, INC.
BY:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
BMC SOFTWARE SERVICES, INC.
BY:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
(iii)
<PAGE> 27
BGS SYSTEMS, INC.
BY:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
BMC INFORMATION TECHNOLOGY, INC.
BY:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
(iv)
<PAGE> 28
SCHEDULE A
BENEFITS SCHEDULE
[TO BE ADDED FOR EACH ADOPTING ENTITY]
(v)
<PAGE> 1
EXHIBIT 5.1
[VINSON & ELKINS L.L.P. LETTERHEAD]
March 31, 1999
BMC Software, Inc.
2101 CityWest Boulevard
Houston, Texas 77042-2827
Gentlemen:
We have acted as counsel for BMC Software, Inc., a Delaware corporation
(the "Company"), with respect to certain legal matters in connection with the
registration by the Company under the Securities Act of 1933, as amended (the
"Securities Act"), of the offer and issuance of Deferred Compensation Obligation
(the "Obligations") of the Company pursuant to the BMC Software, Inc. 1994
Deferred Compensation Plan, as amended (the "Plan").
In connection with the foregoing, we have examined or are familiar with
the Restated Certificate of Incorporation, as amended, of the Company, the
Bylaws, as amended, of the Company, the Plan, the BMC Software, Inc. 1994
Deferred Compensation Plan Trust Agreement (the "Trust Agreement"), the
corporate proceedings with respect to the registration of the Obligations, and
the Registration Statement on Form S-8 filed in connection with the registration
of the Obligations (the "Registration Statement"), and such other certificates,
instruments and documents as we have considered necessary or appropriate for
purposes of this opinion.
Based upon the foregoing, we are of the opinion that (i) the Plan and
Trust Agreement have been duly and validly approved by the Company and (ii) the
Obligations have been duly and validly authorized by the Company.
The foregoing opinion is limited to the laws of the United States of
America and the State of Texas and to the General Corporation Law of the State
of Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are
within the category of persons whose consent is required under Section 7 of the
Securities Act and the rules and regulations thereunder.
Very truly yours,
/s/ VINSON & ELKINS L.L.P.
Vinson & Elkins L.L.P.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated May 1, 1998
included in BMC Software, Inc.'s Form 10-K/A for the year ended March 31, 1998
and to all references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Houston, Texas
March 29, 1999
