BMC SOFTWARE, INC.
2007 INCENTIVE PLAN

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BMC SOFTWARE, INC. 2007 INCENTIVE PLAN

TABLE OF CONTENTS

Page

      SECTION I. DEFINITIONS
1.1
  Definitions
 
   

      SECTION 2 THE STOCK INCENTIVE PLAN
2.1
  Purpose of the Plan
 
   
2.3
  Administration of the Plan
 
   
2.4
  Eligibility and Limits
 
   

      SECTION 3 TERMS OF STOCK INCENTIVES
3.1
  Terms and Conditions of All Stock Incentives
 
   
3.2
  Terms and Conditions of Options.
 
   

(a) Option Price
(b) Option Term
(c) Payment.
(d) Conditions to the Exercise of an Option.
(e) Termination of Incentive Stock Option.
(f) Special Provisions for Certain Substitute Options.

3.3 Terms and Conditions of Stock Appreciation Rights.

(a) Settlement.
(b) Option Term
(b) Conditions to Exercise.

3.4 Terms and Conditions of Stock Awards.
3.5 Terms and Conditions of Dividend Equivalent Rights.

(a) Payment.
(b) Conditions to Payment.

3.6 Terms and Conditions of Performance Unit Awards.

(a) Payment.
(b) Conditions to Payment.

3.7 Terms and Conditions of Phantom Shares.

(a) Payment.
(b) Conditions to Payment.

3.8 Treatment of Awards Upon Termination of Employment

      SECTION 4 RESTRICTIONS ON STOCK
4.1
  Escrow of Shares.
 
   
4.2
  Restrictions on Transfer.
 
   

      SECTION 5 GENERAL PROVISIONS
5.1
  Withholding.
 
   
5.2
  Changes in Capitalization; Merger; Liquidation.
 
   
5.3
  Compliance with Code.
 
   
5.4
  Right to Terminate Employment or Service.
 
   
5.5
  Non-Alienation of Benefits.
 
   
5.6
  Restrictions on Delivery and Sale of Shares; Legends.
 
   
5.7
  Listing and Legal Compliance
 
   
5.8
  Termination and Amendment of the Plan.
 
   
5.9
  Stockholder Approval.
 
   
5.10
  Choice of Law.
 
   
5.11
  Effective Date of Plan
 
   

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BMC SOFTWARE, INC.
2007 INCENTIVE PLAN

SECTION I
DEFINITIONS

1.1 Definitions. Whenever used herein, the masculine pronoun will be deemed to
include the feminine, and the singular to include the plural, unless the context
clearly indicates otherwise, and the following capitalized words and phrases are
used herein with the meaning thereafter ascribed:

  (a)   “Affiliate” means:

(1) Any Subsidiary or Parent,

(2) An entity that directly or through one or more intermediaries controls, is
controlled by, or is under common control with the Company, as determined by the
Company, or

(3) Any entity in which the Company has such a significant interest that the
Company determines it should be deemed an “Affiliate”, as determined in the sole
discretion of the Company.

(b) “Award” means, individually and collectively, an Incentive Stock Option,
Non-Qualified Stock Option, Dividend Equivalent Right, Performance Award,
Restricted Stock Unit, Stock Appreciation Right, Stock Award, and Phantom Stock.

(c) “Award Agreement” means an agreement between the Company and a Participant
or other documentation evidencing any Award granted under the Plan.

(d) “Award Program” means a written program established by the Committee,
pursuant to which Awards are granted under the Plan under uniform terms,
conditions and restrictions set forth in such written program.

(e) “Board of Directors” means the board of directors of the Company.

(f) “Code” means the Internal Revenue Code of 1986, as amended.

(g) “Committee” means the one or more committees appointed by the Board of
Directors to administer the Plan. The Board of Directors shall consider the
advisability of whether the members of the Committee shall consist solely of two
or more members of the Board of Directors who are both Outside Directors.
Notwithstanding the foregoing, with respect to Awards granted by an officer or
officers of the Company and/or the Chairperson of the Compensation Committee
pursuant to Section 2.3(b), the “Committee” as used in the Plan shall mean such
officer or officers and/or such Chairperson, unless the context would clearly
indicate otherwise.

(h) “Company” means BMC Software, Inc., a Delaware corporation.

(i) “Disability” has the same meaning as provided in the long-term disability
plan or policy maintained or, if applicable, most recently maintained, by the
Company or, if applicable, any Affiliate of the Company for the Participant. If
no long-term disability plan or policy was ever maintained on behalf of the
Participant or, if the determination of Disability relates to an Incentive Stock
Option, Disability means that condition described in Code Section 22(e)(3), as
amended from time to time. In the event of a dispute, the determination of
Disability will be made by the Committee and will be supported by advice of a
physician competent in the area to which such Disability relates.

(j) “Dividend Equivalent Rights” means certain rights to receive cash payments
as described in Section 3.5.

(k) “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time.

(l) “Fair Market Value” refers to the determination of the value of a share of
Stock as of a date, determined as follows:

(1) if the shares of Stock are actively traded on any national securities
exchange or any nationally recognized quotation or market system (including,
without limitation Nasdaq), Fair Market Value shall mean the price at which
Stock shall have been sold on such date or on the trading day immediately
preceding such date, as reported by any such exchange or system selected by the
Committee on which the             shares of Stock are then traded;

(2) if the shares of Stock are not actively traded on any such exchange or
system, Fair Market Value shall mean the price for the Stock on such date, or on
the trading day immediately preceding such date, as reported by such exchange or
system; or

(3) if the shares of Stock are not actively traded or reported on any exchange
or system on such date or on the business day immediately preceding such date,
Fair Market Value shall mean the fair market value of a share of Stock as
determined by the Committee taking into account such facts and circumstances
deemed to be material by the Committee to the value of the Stock in the hands of
the Participant.

Notwithstanding the foregoing, for purposes of Paragraph (1), (2), or (3) above,
the Committee may use the closing price as of the indicated date, the average of
the high and low prices or value as of the indicated date or for a period
certain ending on the indicated date, the price determined at the time the
transaction is processed, the tender offer price for shares of Stock, or any
other method which the Committee determines is reasonably indicative of the fair
market value of the Stock; provided further, that for purposes of granted
Non-Qualified Stock Options or Stock Appreciation Rights, Fair Market Value of
Stock shall be determined in accordance with the requirements of Code
Section 409A, and for purposes of granting Incentive Stock Options, Fair Market
Value of Stock shall be determined in accordance with the requirements of Code
Section 422.

(m) “Incentive Stock Option” means an incentive stock option within the meaning
of Section 422 of the Internal Revenue Code.

(n) “Non-Qualified Stock Option” means a stock option that is not an Incentive
Stock Option

(o) “Option” means a Non-Qualified Stock Option or an Incentive Stock Option.

(p) “Outside Director” means an outside director as defined in Treas. Reg. §
1.162-27(e) as promulgated by the Internal Revenue Service and “non-employee
directors” as defined in Rule 16b-3(b)(3) as promulgated under the Exchange Act,
and if applicable, who satisfies the requirements of the national securities
exchange or nationally recognized quotation or market system on which the Stock
is then traded.

(q) “Over 10% Owner” means an individual who at the time an Incentive Stock
Option to such individual is granted owns Stock possessing more than 10% of the
total combined voting power of the Company or one of its Subsidiaries,
determined by applying the attribution rules of Code Section 424(d).

(r) “Parent” means any corporation (other than the Company) in an unbroken chain
of corporations ending with the Company if, with respect to Incentive Stock
Options, at the time of the granting of the Option, each of the corporations
other than the Company owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain. A Parent shall include any entity other than a corporation to the extent
permissible under Section 424(f) or regulations and rulings thereunder.

(s) “Participant” means an individual who receives an Award hereunder.

(t) “Performance Goals” means any one or more of the following performance
goals, intended by the Committee to constitute objective goals for purposes of
Code Section 162(m), either individually, alternatively or in any combination,
applied to either the Company as a whole or to a business unit or Affiliate,
either individually, alternatively or in combination, and measured either
quarterly, annually or cumulatively over a period of quarters or years, on an
absolute basis or relative to a pre-established target, to previous quarter’s or
years’ results or to a designated comparison group, in each case as specified by
the Committee in the Award:

(i) earnings per share;

     
(ii)
(iii)
(iv)
  operating cash flow;
cash available;
net income;

(v) revenue, including but not limited to maintenance revenue, deferred revenue,
or ratable license revenue;

     
(vi)
(vii)
(viii)
(ix)
  total shareholder return;
return on invested capital;
return on shareholder equity;
return on assets;

(x) return on common book equity;

     
(xi)
(xii)
(xiii)
(xiv)
(xv)
(xvi)
  market share;
economic value added;
stock price;
operating income;
operating margin;
EBIT, or EBITDA;

(xvii) sales, including but not limited to the linearity of sales or the
percentage of sales before a specified time period in a quarter or fiscal year;

(xviii) cost reduction goals;

(xix) expenses or operating expenses;

(xx) productivity of employees as measured by revenues, costs or earnings per
employee; or

(xxi) any combination of the foregoing.

The Committee may appropriately adjust any evaluation of performance under a
Performance Goal to remove the effect of equity compensation expense under FAS
123R, amortization of acquired technology and intangibles, asset write-downs;
litigation or claim judgments or settlements; the effect of changes in or
provisions under tax law, accounting principles or other such laws or provisions
affecting reported results; accruals for reorganization and restructuring
programs; discontinued operations; and any items that are extraordinary, unusual
in nature, non-recurring or infrequent in occurrence, except where such action
would result in the loss of the otherwise available exemption of the Award under
Section 162(m) of the Code, if applicable.

(u) “Performance Period” means, with respect to an Award, a period of time
within which the Performance Goals relating to such Award are to be measured.
The Performance Period will be established by the Committee at the time the
Award is granted.

(v) “Performance Award” refers to a performance award as described in Section
3.6.

(w) “Phantom Stock” refers to the rights described in Plan Section 3.8.

(x) “Plan” means the BMC Software, Inc. 2007 Incentive Plan.

(y) “Restricted Stock Units” refers to the rights described in Section 3.7.

(z) “Stock” means the Company’s common stock.

(aa) “Stock Appreciation Rights” refers to the rights described in Section 3.3.

(bb) “Stock Award” means a stock award described in Section 3.4.

(cc) “Subsidiary” means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the time of the granting
of the Option, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain. A
“Subsidiary” shall include any entity other than a corporation to the extent
permissible under Section 424(f) or regulations or rulings thereunder.

(dd) “Termination of Employment” means the termination of the employment
relationship between a Participant and the Company and its Affiliates,
regardless of whether severance or similar payments are made to the Participant
for any reason, including, but not by way of limitation, a termination by
resignation, discharge, death, Disability or retirement. The Committee will, in
its absolute discretion, determine the effect of all matters and questions
relating to a Termination of Employment as it affects an Award, including, but
not by way of limitation, the question of whether a leave of absence constitutes
a Termination of Employment. With respect to directors, “Termination of
Employment” shall mean the termination of services by such director for the
Company and its Affiliates.

SECTION 2
THE INCENTIVE PLAN

2.1 Purpose of the Plan.  The Plan is intended to (a) provide incentives to
certain officers, employees, and directors of the Company and its Affiliates to
stimulate their efforts toward the continued success of the Company and to
operate and manage the business in a manner that will provide for the long-term
growth and profitability of the Company; (b) encourage stock ownership by
certain officers, employees, and directors by providing them with a means to
acquire a proprietary interest in the Company, acquire shares of Stock, or to
receive compensation which is based upon appreciation in the value of Stock; and
(c) provide a means of obtaining, rewarding and retaining officers, employees,
and directors.

2.2 Stock Subject to the Plan. Subject to adjustment in accordance with
Section 5.2, Eighteen Million, Two Hundred and Fifty Thousand (18,250,000)
shares of Stock (the “Maximum Plan Shares”) are hereby reserved exclusively for
issuance upon exercise or payment pursuant to Awards, all or any of which may be
pursuant to any one or more Award, including without limitation, Incentive Stock
Options. Any shares of Stock made subject to Awards of Options or Stock
Appreciation Rights shall be counted against this number as one (1) share of
Stock for every one (1) share of Stock issued. Any shares of Stock granted as an
Award other than Options or Stock Appreciation Rights shall be counted against
this number as two and one-quarter (2.25) shares of Stock for every one
(1) share of Stock issued. Shares of Stock shall not be deemed to have been
issued pursuant to the Plan with respect to any portion of an Award that is
settled in cash. The shares of Stock attributable to the nonvested, unpaid,
unexercised, unconverted or otherwise unsettled portion of any Award that is
forfeited or cancelled or expires or terminates for any reason without becoming
vested, paid, exercised, converted or otherwise settled in full will again be
available for purposes of the Plan. For purposes of determining the number of
shares of Stock issued upon the exercise, settlement or grant of an Award under
this Section, any shares of Stock withheld to satisfy tax withholding
obligations shall be considered issued under the Plan.

2.3 Administration of the Plan. 

(a) The Plan is administered by the Committee.  The Committee has full authority
in its discretion to determine the officers, employees, and directors of the
Company or its Affiliates to whom Awards will be granted and the terms and
provisions of Awards, subject to the Plan. Subject to the provisions of the
Plan, the Committee has full and conclusive authority to interpret the Plan; to
prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the respective Award Agreements and to
make all other determinations necessary or advisable for the proper
administration of the Plan.  The Committee’s determinations under the Plan need
not be uniform and may be made by it selectively among persons who receive, or
are eligible to receive, Awards under the Plan (whether or not such persons are
similarly situated).  The Committee’s decisions are final and binding on all
Participants. Each member of the Committee shall serve at the discretion of the
Board of Directors and the Board of Directors may from time to time remove
members from or add members to the Committee. Vacancies on the Committee shall
be filled by the Board of Directors.

(b) Notwithstanding any other provision of this Plan, the Board of Directors may
by resolution authorize one or more officers of the Company and/or the Chairman
of the Compensation Committee of the Board of Directors to do one or both of the
following: (1) designate individuals (other than officers or directors of the
Company or any Affiliate who are subject to Section 16 of the Securities
Exchange Act of 1934, as amended) to receive Awards under the Plan, and
(2) determine the number of shares of Stock subject to such Awards; provided
however, that the resolution shall specify the total number of shares of Stock
that may be awarded subject to such Awards.

2.4 Eligibility and Limits.  Awards may be granted only to officers, employees,
and directors of the Company or any Affiliate of the Company; provided, however,
that an Incentive Stock Option may only be granted to an employee of the Company
or any Parent or Subsidiary.  In the case of Incentive Stock Options, the
aggregate Fair Market Value (determined as of the date an Incentive Stock Option
is granted) of Stock with respect to which stock options intended to meet the
requirements of Code Section 422 become exercisable for the first time by an
individual during any calendar year under all plans of the Company and its
Subsidiaries may not exceed $100,000; provided further, that if the limitation
is exceeded, the Incentive Stock Option(s) which cause the limitation to be
exceeded will be treated as Non-Qualified Stock Option(s). To the extent
required under Section 162(m) of the Code and the regulations thereunder, for
compensation to be treated as qualified performance-based compensation, subject
to adjustment in accordance with Section 5.2, the maximum number of shares of
Stock with respect to which (a) Options, (b) Stock Appreciation Rights, and
(c) other Awards (other than Performance Awards) to the extent they are granted
with the intent that they qualify as qualified performance-based compensation
under Section 162(m) of the Code may be granted during any calendar year to any
employee may not exceed One Million (1,000,000). To the extent required under
Section 162(m) of the Code and the regulations thereunder, for compensation to
be treated as qualified performance-based compensation, the maximum aggregate
dollar amount that may be paid in any calendar year to an employee with respect
to Performance Awards may not exceed Ten Million Dollars ($10,000,000). If,
after grant, an Option is cancelled, the cancelled Option shall continue to be
counted against the maximum number of shares for which options may be granted to
an employee as described in this Section 2.4.

2.5 Outside Director Awards. Each Outside Director may be granted Awards (each
an “Outside Director Award”) each fiscal year for up to Seventy-Five Thousand
(75,000) shares of Stock, as determined by the Board of Directors.
Notwithstanding anything to the contrary in this Plan, the foregoing limitation
shall be subject to adjustment under Section 5.2. The number of shares of Stock
subject to each Outside Director Award or the formula pursuant to which such
number shall be determined, the type or types of Awards included in the Outside
Director Awards, the date of grant and the vesting, expiration and other terms
applicable to such Outside Director Awards shall be specified from time to time
by the Board of Directors, subject to the terms of this Plan, including the
terms specified in Section 3.

SECTION 3
TERMS OF AWARDS

3.1 Terms and Conditions of All Awards.

(a) The number of shares of Stock as to which an Award may be granted will be
determined by the Committee in its sole discretion, subject to the provisions of
Section 2.2 as to the total number of shares available for grants under the Plan
and subject to the limits in Section 2.4.

(b) Each Award will be evidenced by an Award Agreement in such form and
containing such terms, conditions and restrictions as the Committee may
determine to be appropriate, including without limitation, Performance Goals, if
any, that must be achieved as a condition to vesting or settlement of the Award,
or be made subject to the terms of an Award Program, containing such terms,
conditions and restrictions as the Committee may determine to be appropriate,
including without limitation, Performance Goals that must be achieved as a
condition to vesting or settlement of the Award. Performance Goals, if any,
attributable to any Award which is intended to be “performance-based”
compensation under Code Section 162(m) shall be established before twenty-five
percent (25%) of the Performance Period has elapsed, but in no event later than
ninety (90) days after the first day of a Performance Period. At the time any
Performance Goals are established, the outcome as to whether the Performance
Goals will be met must be substantially uncertain. If any Performance Goals are
established as a condition to vesting or settlement of an Award, the Committee
shall certify in writing that the applicable Performance Goals were in fact
satisfied before such Award is vested or settled, as applicable. Each Award
Agreement or Award Program is subject to the terms of the Plan and any
provisions contained in the Award Agreement or Award Program that are
inconsistent with the Plan are null and void. To the extent an Award is subject
to Performance Goals with the intent that the Award constitute performance-based
compensation under Code Section 162(m), the Committee shall comply with all
applicable requirements under Code Section 162(m) and the rules and regulations
promulgated thereunder in granting and settling such Award. The Committee may,
but is not required to, structure any Award so as to qualify as
performance-based compensation under Code Section 162(m).

(c) The date as of which an Award is granted will be the date on which the
Committee has approved the terms and conditions of the Award and has determined
the recipient of the Award and the number of shares, if any, covered by the
Award, and has taken all such other actions necessary to complete the grant of
the Award or such later date as may be specified in the approval of such Award.

(d) Any Award may be granted in connection with all or any portion of a
previously or contemporaneously granted Award. Exercise or vesting of an Award
granted in connection with another Award may result in a pro rata surrender or
cancellation of any related Award, as specified in the applicable Award
Agreement or Award Program.

(e) Awards are not transferable or assignable except by will or by the laws of
descent and distribution and are exercisable, during the Participant’s lifetime,
only by the Participant; or in the event of the Disability of the Participant,
by the legal representative of the Participant; or in the event of death of the
Participant, by the legal representative of the Participant’s estate or if no
legal representative has been appointed, by the successor in interest determined
under the Participant’s will; except to the extent that the Committee may
provide otherwise as to any Awards other than Incentive Stock Options.

(f) After the date of grant of an Award, the Committee may, in its sole
discretion, modify the terms and conditions of an Award, except to the extent
that such modification would be inconsistent with other provisions of the Plan
or would adversely affect the rights of a Participant under the Award (except as
otherwise permitted under the Plan).

3.2 Terms and Conditions of Options.  Each Option granted under the Plan must be
evidenced by an Award Agreement. At the time any Option is granted, the
Committee will determine whether the Option is to be an Incentive Stock Option
described in Code Section 422 or a Non-Qualified Stock Option, and the Option
must be clearly identified as to its status as an Incentive Stock Option or a
Non-Qualified Stock Option. Incentive Stock Options may only be granted to
employees of the Company or any Subsidiary or Parent. At the time any Incentive
Stock Option granted under the Plan is exercised, the Company will be entitled
to legend the certificates representing the shares of Stock purchased pursuant
to the Option to clearly identify them as representing the shares purchased upon
the exercise of an Incentive Stock Option. An Incentive Stock Option may only be
granted within ten (10) years from the earlier of the date the Plan is adopted
or approved by the Company’s stockholders.

(a) Option Price. Subject to adjustment in accordance with Section 5.2 and the
other provisions of this Section 3.2, the exercise price (the “Exercise Price”)
per share of Stock purchasable under any Option must be as set forth in the
applicable Award Agreement, but in no event may it be less than the Fair Market
Value on the date the Option is granted. With respect to each grant of an
Incentive Stock Option to a Participant who is an Over 10% Owner, the Exercise
Price may not be less than 110% of the Fair Market Value on the date the Option
is granted. Except as provided in Section 5.2, without approval of the Company’s
stockholders the exercise price of an Option may not be amended or modified
after the grant of the Option, and an Option may not be surrendered in
consideration of, or in exchange for, the grant of a new Option having an
exercise price below that of the Option that was surrendered, Stock or cash.

(b) Option Term.  Any Incentive Stock Option granted to a Participant who is not
an Over 10% Owner is not exercisable after the expiration of eight (8) years
after the date the Option is granted. Any Incentive Stock Option granted to an
Over 10% Owner is not exercisable after the expiration of five (5) years after
the date the Option is granted. The term of any Non-Qualified Stock Option shall
be as specified in the applicable Award Agreement but shall be no greater than
eight (8) years after the date the Option is granted.

(c) Payment.  Payment for all shares of Stock purchased pursuant to exercise of
an Option will be made in any form or manner authorized by the Committee in the
Award Agreement or by amendment thereto, including, but not limited to, cash or,
if the Award Agreement provides:

(i) by delivery to the Company of a number of shares of Stock which have been
owned by the holder for at least six (6) months prior to the date of exercise
having an aggregate Fair Market Value of not less than the product of the
Exercise Price multiplied by the number of shares the Participant intends to
purchase upon exercise of the Option on the date of delivery;

(ii) in a cashless exercise through a broker; or

(iii) by having a number of shares of Stock withheld, the Fair Market Value of
which as of the date of exercise is sufficient to satisfy the Exercise Price.

Payment must be made at the time that the Option or any part thereof is
exercised, and no             shares may be issued or delivered upon exercise of
an Option until full payment has been made by the Participant.  The holder of an
Option, as such, has none of the rights of a stockholder.

(d) Conditions to the Exercise of an Option.  Each Option granted under the Plan
is exercisable by whom, at such time or times, or upon the occurrence of such
event or events, and in such amounts, as the Committee specifies in the Award
Agreement; provided, however, that subsequent to the grant of an Option, the
Committee, at any time before complete termination of such Option, may modify
the terms of an Option to the extent not prohibited by the terms of the Plan,
including, without limitation, accelerating the time or times at which such
Option may be exercised in whole or in part, including, without limitation, upon
a change in control and may permit the Participant or any other designated
person to exercise the Option, or any portion thereof, for all or part of the
remaining Option term, notwithstanding any provision of the Award Agreement to
the contrary.

(e) Termination of Incentive Stock Options.  With respect to an Incentive Stock
Option, in the event of Termination of Employment of a Participant, the Option
or portion thereof held by the Participant which is unexercised will expire,
terminate, and become unexercisable no later than the expiration of three
(3) months after the date of Termination of Employment; provided, however, that
in the case of a holder whose Termination of Employment is due to death or
Disability, one (1) year will be substituted for such three (3) month period;
provided, further that such time limits may be exceeded by the Committee under
the terms of the grant, in which case, the Incentive Stock Option will be a
Non-Qualified Option if it is exercised after the time limits that would
otherwise apply. For purposes of this Subsection (e), Termination of Employment
of the Participant will not be deemed to have occurred if the Participant is
employed by another corporation (or a parent or subsidiary corporation of such
other corporation) which has assumed the Incentive Stock Option of the
Participant in a transaction to which Code Section 424(a) is applicable.

(f) Special Provisions for Certain Substitute Options.  Notwithstanding anything
to the contrary in this Section 3.2, any Option issued in substitution for an
option previously issued by another entity, which substitution occurs in
connection with a transaction to which Code Section 424(a) is applicable, may
provide for an exercise price computed in accordance with such Code Section and
the regulations thereunder and may contain such other terms and conditions as
the Committee may prescribe to cause such substitute Option to contain as nearly
as possible the same terms and conditions (including the applicable vesting and
termination provisions) as those contained in the previously issued option being
replaced thereby.

(g) No Reload Grants. Options shall not be granted under the Plan in
consideration for and shall not be conditioned upon the delivery of shares of
Stock to the Company in payment of the exercise price and/or tax withholding
obligation under any other option held by a Participant.

(h) No Repricing. Except as provided in Section 5.2, without the approval of the
Company’s stockholders the exercise price of an Option may not be amended or
modified after the grant of the Option and an Option may not be surrendered in
consideration of, or in exchange for, the grant of a new Option having an
exercise price below that of the Option that was surrendered, Stock, cash, or
any other Award.

3.3 Terms and Conditions of Stock Appreciation Rights. Each Stock Appreciation
Right granted under the Plan must be evidenced by an Award Agreement.  A Stock
Appreciation Right entitles the Participant to receive the excess of (1) the
Fair Market Value of a specified or determinable number of shares of the Stock
at the time of payment or exercise over (2) a specified or determinable price
which may not be less than the Fair Market Value of the Stock on the date of
grant. A Stock Appreciation Right granted in connection with another Award may
only be exercised to the extent that the related Award has not been exercised,
paid or otherwise settled.

(a) Settlement. Upon settlement of a Stock Appreciation Right, the Company must
pay to the Participant the appreciation in cash or shares of Stock (valued at
the aggregate Fair Market Value on the date of payment or exercise) as provided
in the Award Agreement or, in the absence of such provision, as the Committee
may determine.

(b) Term.  The term of any Stock Appreciation Right shall be as specified in the
applicable Award Agreement but shall be no greater than eight (8) years after
the date the Stock Appreciation Right is granted.

(c) Conditions to Exercise. Each Stock Appreciation Right granted under the Plan
is exercisable or payable at such time or times, or upon the occurrence of such
event or events, and in such amounts, as the Committee specifies in the Award
Agreement; provided, however, that subsequent to the grant of a Stock
Appreciation Right, the Committee, at any time before complete termination of
such Stock Appreciation Right, may accelerate the time or times at which such
Stock Appreciation Right may be exercised or paid in whole or in part.

(d) No Repricing. Except as provided in Section 5.2, without the approval of the
Company’s stockholders the price of a Stock Appreciation Right may not be
amended or modified after the grant of the Stock Appreciation Right, and a Stock
Appreciation Right may not be surrendered in consideration of, or in exchange
for, the grant of a new Stock Appreciation Right having a price below that of
the Stock Appreciation Right that was surrendered, Stock, cash, or any other
Award.

3.4 Terms and Conditions of Stock Awards. The number of shares of Stock subject
to a Stock Award and restrictions or conditions on such shares, if any, will be
as the Committee determines, and the certificate for such shares will bear
evidence of any restrictions or conditions.  Subsequent to the date of the grant
of the Stock Award, the Committee has the power to permit, in its discretion, an
acceleration of the expiration of an applicable restriction period with respect
to any part or all of the shares awarded to a Participant. The Committee may
require a cash payment from the Participant in an amount no greater than the
aggregate Fair Market Value of the shares of Stock awarded determined at the
date of grant in exchange for the grant of a Stock Award or may grant a Stock
Award without the requirement of a cash payment.

3.5 Terms and Conditions of Dividend Equivalent Rights. A Dividend Equivalent
Right entitles the Participant to receive payments from the Company in an amount
determined by reference to any cash dividends paid on a specified number of
shares of Stock to Company stockholders of record during the period such rights
are effective. The Committee may impose such restrictions and conditions on any
Dividend Equivalent Right as the Committee in its discretion shall determine,
including the date any such right shall terminate and may reserve the right to
terminate, amend or suspend any such right at any time.

(a) Payment. Payment in respect of a Dividend Equivalent Right may be made by
the Company in cash or shares of Stock (valued at Fair Market Value as of the
date payment is owed) as provided in the Award Agreement or Award Program, or,
in the absence of such provision, as the Committee may determine.

(b) Conditions to Payment. Each Dividend Equivalent Right granted under the Plan
is payable at such time or times, or upon the occurrence of such event or
events, and in such amounts, as the Committee specifies in the applicable Award
Agreement or Award Program; provided, however, that subsequent to the grant of a
Dividend Equivalent Right, the Committee, at any time before complete
termination of such Dividend Equivalent Right, may accelerate the time or times
at which such Dividend Equivalent Right may be paid in whole or in part.

3.6 Terms and Conditions of Performance Awards. A Performance Award shall
entitle the Participant to receive, at a specified future date, payment of an
amount equal to all or a portion of either (i) the value of a specified or
determinable number of units (stated in terms of a designated or determinable
dollar amount per unit) granted by the Committee, or (ii) a percentage or
multiple of a specified amount determined by the Committee. At the time of the
grant, the Committee must determine the base value of each unit; the number of
units subject to a Performance Award, the specified amount and the percentage or
multiple of the specified amount, as may be applicable; and the Performance
Goals applicable to the determination of the ultimate payment value of the
Performance Award. The Committee may provide for an alternate base value for
each unit or an alternate percentage or multiple under certain specified
conditions.

(a) Payment. Payment in respect of Performance Awards may be made by the Company
in cash or shares of Stock (valued at Fair Market Value as of the date payment
is owed) as provided in the applicable Award Agreement or Award Program or, in
the absence of such provision, as the Committee may determine.

(b) Conditions to Payment. Each Performance Award granted under the Plan shall
be payable at such time or times, or upon the occurrence of such event or
events, and in such amounts, as the Committee may specify in the applicable
Award Agreement or Award Program; provided, however, that subsequent to the
grant of a Performance Award, the Committee, at any time before complete
termination of such Performance Award, may accelerate the time or times at which
such Performance Award may be paid in whole or in part.

3.7 Terms and Conditions of Restricted Stock Units. Restricted Stock Units shall
entitle the Participant to receive, at a specified future date or event, payment
of an amount equal to all or a portion of the Fair Market Value of a specified
number of shares of Stock at the end of a specified period. At the time of the
grant, the Committee will determine the factors which will govern the portion of
the Restricted Stock Units so payable, including, at the discretion of the
Committee, any performance criteria that must be satisfied as a condition to
payment. Restricted Stock Unit awards containing performance criteria may be
designated as performance share awards.

(a) Payment. Payment in respect of Restricted Stock Units may be made by the
Company in cash or shares of Stock (valued at Fair Market Value as of the date
payment is owed) as provided in the applicable Award Agreement or Award Program,
or, in the absence of such provision, as the Committee may determine.

(b) Conditions to Payment. Each Restricted Stock Unit granted under the Plan is
payable at such time or times, or upon the occurrence of such event or events,
and in such amounts, as the Committee may specify in the applicable Award
Agreement or Award Program; provided, however, that subsequent to the grant of a
Restricted Stock Unit, the Committee, at any time before complete termination of
such Restricted Stock Unit, may accelerate the time or times at which such
Restricted Stock Unit may be paid in whole or in part.

3.8 Terms and Conditions of Phantom Stock. Phantom Stock shall entitle the
Participant to receive, at a specified future date, payment of an amount equal
to all or a portion of the Fair Market Value of a specified number of shares of
Stock at the end of a specified period. At the time of the grant, the Committee
shall determine the factors which will govern the portion of the rights so
payable, including, at the discretion of the Committee, any Performance Goals
that must be satisfied as a condition to payment.

(a) Payment. Payment in respect of Phantom Stock may be made by the Company in
cash or shares of Stock (valued at Fair Market Value on the date of payment) as
provided in the Award Agreement, or, in the absence of such provision, as the
Committee may determine.

(b) Conditions to Payment. Each grant of Phantom Stock under the Plan shall be
payable at such time or times, or upon the occurrence of such event or events,
and in such amounts, as the Committee shall specify in the applicable Award
Agreement or Award Program; provided, however, that subsequent to the grant of a
Phantom Stock, the Committee, at any time before complete termination of such
Phantom Stock, may accelerate the time or times at which such Phantom Stock may
be paid in whole or in part.

3.9 Treatment of Awards Upon Termination of Employment. Except as otherwise
provided by Plan Section 3.2(e), any award under this Plan to a Participant who
has experienced a Termination of Employment or termination of some other service
relationship with the Company and its Affiliates may be cancelled, accelerated,
paid or continued, as provided in the applicable Award Agreement or Award
Program, or, as the Committee may otherwise determine to the extent not
prohibited by the Plan. The portion of any Award exercisable in the event of
continuation or the amount of any payment due under a continued Award may be
adjusted by the Committee to reflect the Participant’s period of service from
the date of grant through the date of the Participant’s Termination of
Employment or other service relationship or such other factors as the Committee
determines are relevant to its decision to continue the Award.

SECTION 4
RESTRICTIONS ON STOCK

4.1 Escrow of Shares. Any certificates representing the shares of Stock issued
under the Plan will be issued in the Participant’s name, but, if the applicable
Award Agreement or Award Program so provides, the shares of Stock will be held
by a custodian designated by the Committee (the “Custodian”). Each applicable
Award Agreement or Award Program providing for transfer of shares of Stock to
the Custodian must appoint the Custodian as the attorney-in-fact for the
Participant for the term specified in the applicable Award Agreement or Award
Program, with full power and authority in the Participant’s name, place and
stead to transfer, assign and convey to the Company any shares of Stock held by
the Custodian for such Participant, if the Participant forfeits the shares under
the terms of the applicable Award Agreement or Award Program.  During the period
that the Custodian holds the shares subject to this Section, the Participant is
entitled to all rights, except as provided in the applicable Award Agreement or
Award Program, applicable to shares of Stock not so held. Any dividends declared
on shares of Stock held by the Custodian must, as provided in the applicable
Award Agreement or Award Program, be paid directly to the Participant or, in the
alternative, be retained by the Custodian or by the Company until the expiration
of the term specified in the applicable Award Agreement or Award Program and
shall then be delivered, together with any proceeds, with the shares of Stock to
the Participant or to the Company, as applicable.

4.2 Restrictions on Transfer. The Participant does not have the right to make or
permit to exist any disposition of the shares of Stock issued pursuant to the
Plan except as provided in the Plan or the applicable Award Agreement or Award
Program. Any disposition of the shares of Stock issued under the Plan by the
Participant not made in accordance with the Plan or the applicable Award
Agreement or Award Program will be void. The Company will not recognize, or have
the duty to recognize, any disposition not made in accordance with the Plan and
the applicable Award Agreement or Award Program, and the shares so transferred
will continue to be bound by the Plan and the applicable Award Agreement or
Award Program.

SECTION 5
GENERAL PROVISIONS

5.1 Withholding.  The Company must deduct from all cash distributions under the
Plan any taxes required to be withheld by federal, state or local government.
Whenever the Company proposes or is required to issue or transfer shares of
Stock under the Plan or upon the vesting of any Award, the Company has the right
to require the recipient to remit to the Company an amount sufficient to satisfy
any federal, state and local tax withholding requirements prior to the delivery
of any certificate or certificates for such shares or the vesting of such Award.
A Participant may pay the withholding obligation in cash, or, if and to the
extent the applicable Award Agreement or Award Program so provides, a
Participant may elect to have the number of shares of Stock he is to receive
reduced by, or tender back to the Company, the smallest number of whole shares
of Stock which, when multiplied by the Fair Market Value of the shares of Stock
determined as of the Tax Date (defined below), is sufficient to satisfy federal,
state and local, if any, withholding obligation arising from exercise or payment
of an Award (a “Withholding Election”).

5.2 Changes in Capitalization; Merger; Liquidation.

(a) The number of shares of Stock reserved for the grant of Awards under the
Plan; the number of shares of Stock reserved for issuance pursuant to Awards
granted under the Plan; the Exercise Price of each outstanding Option; the
strike price of each outstanding Stock Appreciation Right; the specified number
of shares of Stock to which each Award pertains; and the maximum number of
shares as to which Awards may be granted, shall be proportionately adjusted for
any nonreciprocal transaction between the Company and the holders of capital
stock of the Company that causes the per share value of the shares of Stock
underlying an Award to change, such as a stock dividend, stock split, spin-off,
rights offering, or recapitalization through a large, nonrecurring cash dividend
(each, an “Equity Restructuring”). Any adjustment described in the preceding
sentence may include a substitution in whole or in part of other equity
securities of the issuer and the class involved in such Equity Restructuring in
lieu of the shares of Stock that are subject to the Award.

(b) In the event of a merger, consolidation, reorganization, extraordinary
dividend, spin-off, sale of substantially all of the Company’s assets, other
change in capital structure of the Company, tender offer for shares of Stock, or
a change in control of the Company (as defined by the Committee in the
applicable Award Agreement) that in each case does not constitute an Equity
Restructuring, the Committee may make such adjustments with respect to Awards
and take such other action as it deems necessary or appropriate, including,
without limitation, the substitution of new Awards, or the adjustment of
outstanding Awards, the acceleration of Awards, the removal of restrictions on
outstanding Awards, or the termination of outstanding Awards in exchange for the
cash value determined in good faith by the Committee of the vested and/or
unvested portion of the Award, all as may be provided in the applicable Award
Agreement or, if not expressly addressed therein, as the Committee subsequently
may determine in its sole discretion. Any adjustment pursuant to this
Section 5.2 may provide, in the Committee’s discretion, for the elimination
without payment therefor of any fractional shares that might otherwise become
subject to any Award, but except as set forth in this Section may not otherwise
diminish the then value of the Award.

(c) The existence of the Plan and the Awards granted pursuant to the Plan shall
not affect in any way the right or power of the Company to make or authorize any
adjustment, reclassification, reorganization or other change in its capital or
business structure, any merger or consolidation of the Company, any issue of
debt or equity securities having preferences or priorities as to the Stock or
the rights thereof, the dissolution or liquidation of the Company, any sale or
transfer of all or any part of its business or assets, or any other corporate
act or proceeding.

5.3 Awards to Non-U.S. Employees. The Committee shall have the power and
authority to determine which Affiliates shall be covered by this Plan and which
employees outside the U.S. shall be eligible to participate in the Plan. The
Committee may adopt, amend or rescind rules, procedures or sub-plans relating to
the operation and administration of the Plan to accommodate the specific
requirements of local laws, procedures, and practices. Without limiting the
generality of the foregoing, the Committee is specifically authorized to adopt
rules, procedures and sub-plans with provisions that limit or modify rights on
death, disability or retirement or on termination of employment; available
methods of exercise or settlement of an award; payment of income, social
insurance contributions and payroll taxes; the withholding procedures and
handling of any stock certificates or other indicia of ownership which vary with
local requirements. The Committee may also adopt rules, procedures or sub-plans
applicable to particular Affiliates or locations.

5.4 Compliance with Code. 

(a) Code Section 422. All Incentive Stock Options to be granted hereunder are
intended to comply with Code Section 422, and all provisions of the Plan and all
Incentive Stock Options granted hereunder must be construed in such manner as to
effectuate that intent.

(b) Code Section 409A. Except to the extent specifically provided otherwise by
the Committee, Awards under the Plan are intended to satisfy the requirements of
Section 409A of the Code (and the Treasury Department guidance and regulations
issued thereunder) so as to avoid the imposition of any additional taxes or
penalties under Code Section 409A. If the Committee determines that an Award,
Award Agreement, Award Program, payment, distribution, deferral election,
transaction or any other action or arrangement contemplated by the provisions of
the Plan would, if undertaken, cause a Participant to become subject to any
additional taxes or other penalties under Code Section 409A, then unless the
Committee specifically provides otherwise, such Award, Award Agreement, Award
Program, payment, distribution, deferral election, transaction or other action
or arrangement shall not be given effect to the extent it causes such result and
the related provisions of the Plan, Award Agreement, and / or Award Program will
be deemed modified, or, if necessary, suspended in order to comply with the
requirements of Code Section 409A to the extent determined appropriate by the
Committee, in each case without the consent of or notice to the Participant. To
the extent any provision in the Plan, Award Agreement, or Award Program gives
the Committee discretion to modify the terms and conditions of an Award, and the
mere possession (as opposed to the exercise) of such discretion would result in
adverse tax consequences to any Participant, then unless the Committee
specifically provides otherwise, the Committee shall not have such power.

5.5 Right to Terminate Employment or Service.  Nothing in the Plan or in any
Award Agreement confers upon any Participant the right to continue as an
officer, employee, or director of the Company or any of its Affiliates or affect
the right of the Company or any of its Affiliates to terminate the Participant’s
employment or services at any time.

5.6 Non-Alienation of Benefits. Other than as provided herein, no benefit under
the Plan may be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge; and any attempt to do so
shall be void. No such benefit may, prior to receipt by the Participant, be in
any manner liable for or subject to the debts, contracts, liabilities,
engagements or torts of the Participant.

5.7 Restrictions on Delivery and Sale of Shares; Legends. Each Award is subject
to the condition that if at any time the Committee, in its discretion, shall
determine that the listing, registration or qualification of the shares covered
by such Award upon any securities exchange or under any state or federal law is
necessary or desirable as a condition of or in connection with the granting of
such Award or the purchase or delivery of shares thereunder, the delivery of any
or all shares pursuant to such Award may be withheld unless and until such
listing, registration or qualification shall have been effected. If a
registration statement is not in effect under the Securities Act of 1933 or any
applicable state securities laws with respect to the shares of Stock purchasable
or otherwise deliverable under Awards then outstanding, the Committee may
require, as a condition of exercise of any Option or as a condition to any other
delivery of Stock pursuant to an Award, that the Participant or other recipient
of an Award represent, in writing, that the shares received pursuant to the
Award are being acquired for investment and not with a view to distribution and
agree that the shares will not be disposed of except pursuant to an effective
registration statement, unless the Company shall have received an opinion of
counsel that such disposition is exempt from such requirement under the
Securities Act of 1933 and any applicable state securities laws. The Company may
include on certificates representing shares delivered pursuant to an Award such
legends referring to the foregoing representations or restrictions or any other
applicable restrictions on resale as the Company, in its discretion, shall deem
appropriate.

5.8 Listing and Legal Compliance. The Committee may suspend the exercise or
payment of any Award so long as it determines that securities exchange listing
or registration or qualification under any securities laws is required in
connection therewith and has not been completed on terms acceptable to the
Committee.

5.9 Termination and Amendment of the Plan. The Board of Directors at any time
may amend or terminate the Plan without shareholder approval; provided, however,
that the Board of Directors shall obtain shareholder approval for any amendment
to the Plan that increases the number of shares of Stock available under the
Plan, materially expands the classes of individuals eligible to receive Awards,
materially expands the type of awards available for issuance under the Plan, or
would otherwise require shareholder approval under the rules of the applicable
exchange. No such termination or amendment without the consent of the holder of
an Award may adversely affect the rights of the Participant under such Award.

5.10 Stockholder Approval. The Plan must be submitted to the stockholders of the
Company for their approval within twelve (12) months before or after the
adoption of the Plan by the Board of Directors of the Company. If such approval
is not obtained, any Award granted hereunder will be void.

5.11 Choice of Law.  The laws of the State of Delaware shall govern the Plan, to
the extent not preempted by federal law, without reference to the principles of
conflict of laws.

5.12 Effective Date of Plan.  The Plan shall become effective as of the date the
Plan was approved by the Board of Directors.

IN WITNESS WHEREOF, the Company has executed this Plan, and the Plan has become
effective as of      , 2007.

BMC SOFTWARE, INC.

By:
Title:

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