-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RvfoGjlKki7P6F0LOAgGgW2QOHTJpGPIN4t5wfdJBMZnNF3P3qj2DDeVcUMg7ox9 udM5ErExzhhL9AGT4tJ0TQ== 0000950129-99-001397.txt : 19990405 0000950129-99-001397.hdr.sgml : 19990405 ACCESSION NUMBER: 0000950129-99-001397 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19990402 EFFECTIVENESS DATE: 19990402 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BMC SOFTWARE INC CENTRAL INDEX KEY: 0000835729 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 742126120 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-75547 FILM NUMBER: 99586354 BUSINESS ADDRESS: STREET 1: 2101 CITYWEST BLVD CITY: HOUSTON STATE: TX ZIP: 77042-2827 BUSINESS PHONE: 7139188800 MAIL ADDRESS: STREET 1: 2101 CITYWEST BLVD CITY: HOUSTON STATE: TX ZIP: 77042-2827 S-8 1 BMC SOFTWARE, INC. 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 2, 1999 REGISTRATION NO. 333- ================================================================================ 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) 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
(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
==================================================================================================================== 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 - -------------------------------------------------------------------------------------------------------------------- Deferred Compensation Obligations.......... $ 50,000,000 100% $ 50,000,000 $ 13,900 ====================================================================================================================
(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 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. 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 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. - ----------------- * Filed with this Registration Statement. 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. 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.
SIGNATURES TITLE DATE ---------- ----- ---- /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
7 /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
8 INDEX TO EXHIBITS
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 (included on the signature page to this Registration Statement).
- ----------------- * Filed with this Registration Statement. EX-4.1 2 1994 DEFERRED COMPENSATION PLAN 1 EXHIBIT 4.1 BMC SOFTWARE, INC. 1994 DEFERRED COMPENSATION PLAN As Amended and Restated Effective April 1, 1998 2
TABLE OF CONTENTS ARTICLE PAGE - ------- ---- 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
(i) 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) 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 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 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 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 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 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. II-1 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. III-1 11 (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 III-2 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. III-3 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. IV-1 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. V-1 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 VI-1 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. VI-2 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 VII-1 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 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. VII-3 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 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 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 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 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 25 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. X-1 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 27 EXECUTED this ______ day of , 1998. ------------------------- BMC SOFTWARE, INC. By: ---------------------------------- Name: ----------------------------- Title: ---------------------------- (iii) EX-4.2 3 FIRST AMENDMENT TO 1994 DEFERRED COMPENSATION PLAN 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) 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- 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- EX-4.3 4 FORM OF 1994 DEFERRED COMPENSATION PLAN TRUST AGMT 1 EXHIBIT 4.3 BMC SOFTWARE, INC. 1994 DEFERRED COMPENSATION PLAN TRUST 2 TABLE OF CONTENTS 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
(i) 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: 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 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 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 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 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 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 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 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. III-5 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. III-6 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 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. V-1 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 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. VI-2 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. VII-1 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 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 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 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 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 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. XI-1 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 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 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) 27 BGS SYSTEMS, INC. BY: ----------------------------------- Name: --------------------------------- Title: -------------------------------- BMC INFORMATION TECHNOLOGY, INC. BY: ----------------------------------- Name: --------------------------------- Title: -------------------------------- (iv) 28 SCHEDULE A BENEFITS SCHEDULE [TO BE ADDED FOR EACH ADOPTING ENTITY] (v) EX-5.1 5 OPINION OF VINSON & ELKINS LLP 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. EX-23.1 6 CONSENT OF ARTHUR ANDERSEN LLP 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 -----END PRIVACY-ENHANCED MESSAGE-----