This preliminary
prospectus supplement relates to an effective registration
statement under the Securities Act of 1933, but is not complete
and may be changed. This preliminary prospectus supplement and
the accompanying prospectus are not an offer to sell these
securities and we are not soliciting an offer to buy these
securities in any jurisdiction where the offer or sale is not
permitted.
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Filed Pursuant to Rule 424(b)(5)
Registration No. 333-151231
SUBJECT TO COMPLETION, DATED
MAY 29, 2008
Prospectus Supplement
May , 2008
(To Prospectus Dated May 29, 2008)
$
BMC
Software, Inc.
% Notes
Due 2018
This is an offering of $ aggregate
principal amount of
our % Notes due 2018 (the
notes). The notes will mature
on ,
2018, unless redeemed prior to maturity. We will pay interest on
the notes semi-annually in arrears on
each
and ,
commencing ,
2008.
We may redeem some or all of the notes at any time and from time
to time at the prices described under the heading
Description of Notes Optional Redemption.
The notes will be our senior unsecured obligations. The notes
will rank equally in right of payment with all of our other
current and future senior unsecured debt and senior in right of
payment to all of our future subordinated debt.
This prospectus supplement and the accompanying prospectus
include additional information about the terms of the notes.
Investing in the notes involves risks. See
Risk Factors beginning on
page S-5
of this prospectus supplement and on page 2 of the
accompanying prospectus to read about important factors you
should consider before buying the notes.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus supplement or the
accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
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Per Note
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Total
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Public offering price(1)
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%
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$
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Underwriting discount
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%
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$
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Proceeds, before expenses, to BMC(1)
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%
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$
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(1)
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Plus accrued interest, if any,
from ,
2008, if settlement occurs after that date.
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We expect that the notes will be ready for delivery in
book-entry form only through the facilities of The Depository
Trust Company and its direct and indirect participants,
including Euroclear Bank S.A./N.V. and Clearstream Banking S.A.
on or
about ,
2008.
Joint Book-Running Managers
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Banc
of America Securities LLC
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Credit Suisse
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Co-Managers
You should rely only on the information contained in or
incorporated by reference in this prospectus supplement and the
accompanying prospectus. We have not and the underwriters have
not authorized anyone to provide you with different information.
We are not, and the underwriters are not, making an offer of
these securities in any state where the offer is not permitted.
You should assume that the information contained in this
prospectus supplement and the accompanying prospectus, as well
as information we previously filed with the Securities and
Exchange Commission that is incorporated by reference in this
prospectus supplement and the accompanying prospectus, is
accurate only as of their respective dates. The terms the
Company, BMC, we,
us, and our refer to BMC Software, Inc.
and our consolidated subsidiaries, where appropriate.
This document is for distribution in the United Kingdom only to
persons who (i) have professional experience in matters
relating to investments falling within Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005 (the Financial Promotion Order),
(ii) are persons falling within Article 49(2)(a) to
(d) (high net worth companies, unincorporated associations
etc.) of the Financial Promotion Order, (iii) are
outside the United Kingdom, or (iv) are persons to whom an
invitation or inducement to engage in investment activity
(within the meaning of section 21 of the Financial Services
and Markets Act 2000) in connection with the issue or sale
of any notes may otherwise lawfully be communicated or caused to
be communicated (all such persons together being referred to as
relevant persons). This document is directed only at
relevant persons and must not be acted on or relied on by
persons who are not relevant persons. Any investment or
investment activity to which this document relates is available
only to relevant persons and will be engaged in only with
relevant persons.
In respect of jurisdictions in the European Economic Area that
have adopted Directive 2003/71/EC (the Prospectus
Directive), the notes are being offered to qualified
investors as defined in the Prospectus Directive or are
being offered in any other circumstances which do not require
the publication by us of a prospectus pursuant to Article 3
of the Prospectus Directive and accordingly the offer of notes
is not subject to the obligation to publish a prospectus within
the meaning of the Prospectus Directive.
TABLE OF
CONTENTS
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Page
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Prospectus Supplement
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Special Note on Forward-Looking Statements
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S-1
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Summary
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S-2
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Risk Factors
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S-5
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Consolidated Ratios of Earnings to Fixed Charges
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S-7
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Use of Proceeds
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S-7
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Capitalization
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S-8
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Description of Notes
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S-9
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Material United States Federal Income Tax Consequences
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S-17
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Underwriting
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S-21
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Legal Matters
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S-23
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Incorporation By Reference
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S-23
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Prospectus
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About This Prospectus
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1
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Where You Can Find More Information
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1
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Incorporation of Certain Information By Reference
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1
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Special Note on Forward-Looking Statements
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2
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Risk Factors
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2
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The Company
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3
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Description of Securities We May Offer
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3
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Consolidated Ratios of Earnings to Fixed Charges
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13
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Use of Proceeds
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13
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Plan of Distribution
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13
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Legal Matters
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15
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Experts
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15
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i
SPECIAL
NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and the
documents that we incorporate by reference contain certain
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as
amended, which are identified by the use of the words
believe, expect, anticipate,
will, contemplate, would,
and similar expressions that contemplate future events. Such
forward-looking statements are based on managements
reasonable current assumptions and expectations. Numerous
important factors, risks and uncertainties affect our operating
results, including, without limitation, those contained in this
prospectus and the documents that we incorporate by reference,
and could cause our actual results, levels of activity,
performance or achievement to differ materially from the results
expressed or implied by these or any other forward-looking
statements made by us or on our behalf. There can be no
assurance that future results will meet expectations. You should
pay particular attention to the important risk factors and
cautionary statements referenced in the section of this
prospectus supplement and the accompanying prospectus entitled
Risk Factors. You should also carefully review the
cautionary statements described in the other documents we file
from time to time with the SEC, specifically our Annual Report
on
Form 10-K,
our Quarterly Reports on
Form 10-Q
and our Current Reports on
Form 8-K.
We undertake no obligation to update any forward-looking
statements.
S-1
SUMMARY
This summary may not contain all the information that may be
important to you. You should read the entire prospectus
supplement and accompanying prospectus, as well as all the
documents incorporated by reference in them, before making an
investment decision.
The
Company
BMC Software, Inc. is one of the worlds largest software
vendors. We provide system and service management solutions
primarily for large enterprises. Our extensive portfolio of
software solutions spans enterprise systems, applications,
databases and IT process management. We also provide maintenance
and support for our products and perform software
implementation, integration and education services for our
customers. We were organized as a Texas corporation in 1980 and
were reincorporated in Delaware in July 1988.
Our principal corporate offices are located at 2101 CityWest
Boulevard, Houston, Texas
77042-2827.
Our main telephone number is
(713) 918-8800,
and our primary internet address is
http://www.bmc.com
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Recent
Developments
Acquisition
of BladeLogic, Inc.
On April 18, 2008, we completed our acquisition of all of
the outstanding shares of common stock of BladeLogic, Inc., a
Delaware corporation, pursuant to an Agreement and Plan of
Merger, dated as of March 17, 2008. The aggregate merger
consideration paid by us was approximately $830 million,
plus related transaction fees and expenses. We funded the
acquisition from available cash.
BladeLogic, Inc. is a provider of leading data center automation
software to enterprises, service providers, government agencies
and other organizations in North America, Europe and Asia. Its
products and services enable organizations of any size to
address the full lifecycle of data center management using one
integrated solution for provisioning, change, administration and
compliance across complex, distributed server and application
environments.
S-2
The
Offering
The summary below describes the principal terms of the notes.
Some of the terms and conditions described below are subject to
important limitations and exceptions. See Description of
Notes for a more detailed description of the terms and
conditions of the notes.
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Issuer
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BMC Software, Inc.
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Securities Offered
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$ million aggregate principal
amount of % Notes due 2018.
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Maturity
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,
2018.
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Interest Rate
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The notes will bear interest at a rate
of % per year payable semi-annually
in arrears on
and
of each year, commencing
on ,
2008.
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Ranking
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The notes will be our senior unsecured obligations. The notes
will rank equally in right of payment with all of our other
current and future senior unsecured debt and senior in right of
payment to all of our future subordinated debt. The notes will
be effectively subordinated to:
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any of our secured debt, to the extent of the assets
securing that debt; and
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any debt for money borrowed and other liabilities of
our subsidiaries, to the extent of the assets of those
subsidiaries.
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At March 31, 2008, we had total secured indebtedness of
approximately $12.1 million, which is comprised of capital
lease obligations, and our subsidiaries had total indebtedness
of approximately $1.9 million.
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Covenants
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The indenture governing the notes contains covenants that, among
other things, will limit our ability to:
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incur, create, assume or guarantee any debt for
borrowed money secured by a lien upon our principal property;
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enter into sale and lease-back transactions; and
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consolidate with or merge into, or transfer or lease
all or substantially all of our assets to, any other party.
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These covenants are subject to important exceptions and
qualifications that are described under the heading
Description of Notes Limitation on
Liens, Limitation on Sale and Lease-Back
Transactions and Limitation on Mergers
and Other Transactions in this prospectus supplement.
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Repurchase at the Option of Holders Upon a Change of Control
Triggering Event
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If we experience a Change of Control Triggering
Event (as defined in Description of
Notes Change of Control Offer), we will be
required, unless we have exercised our right to redeem the
notes, to offer to purchase the notes at a purchase price equal
to 101% of their principal amount plus accrued and unpaid
interest.
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Optional Redemption
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The notes will be redeemable at our option, at any time in whole
or from time to time in part, at a redemption price equal to the
greater of (1) 100% of the principal amount of the notes to
be redeemed and (2) the sum of the present values of the
remaining
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S-3
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scheduled payments of principal and interest thereon discounted
to the redemption date on a semi-annual basis (assuming a
360-day
year
consisting of twelve
30-day
months) at the Treasury Rate
plus
basis points, plus accrued and unpaid interest. See
Description of Notes Optional Redemption.
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Sinking Fund
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None.
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Use of Proceeds
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See Use of Proceeds.
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Denominations and Form
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We will issue the notes of each series in the form of one or
more fully registered global notes registered in the name of the
nominee of The Depository Trust Company (DTC). The notes
will be issued in minimum denominations of $2,000 and in
integral multiples of $1,000 in excess thereof.
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No Listing
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We do not intend to apply for the listing of the notes on any
securities exchange or for the quotation of the notes in any
dealer quotation system.
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Risk Factors
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An investment in the notes involves risks. You should carefully
consider the information set forth in the section of this
prospectus supplement entitled Risk Factors
beginning on page S-5, as well as other information
included or incorporated by reference in this prospectus
supplement and the accompanying prospectus before deciding
whether to invest in the notes.
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Trustee, Registrar and Paying Agent
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Wells Fargo Bank, N.A.
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S-4
RISK
FACTORS
Before you decide to invest in the notes, you should
carefully consider the factors set forth below, as well as the
risk factors discussed in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2008, which is
incorporated by reference in this prospectus supplement and the
accompanying prospectus. See Where You Can Find More
Information in this prospectus supplement. The information
contained or incorporated by reference in this prospectus
supplement and the accompanying prospectus includes
forward-looking statements that involve risks and uncertainties.
We refer you to Special Note on Forward-Looking
Statements in this prospectus supplement. Our actual
results could differ materially from those anticipated in the
forward-looking statements as a result of certain factors,
including the risks described below and elsewhere in this
prospectus supplement and the accompanying prospectus (including
any documents incorporated by reference herein).
The
indenture does not restrict the amount of additional debt that
we may incur.
At March 31, 2008, after giving effect to this offering, we
would have had total indebtedness of approximately
$ million. We may be able to
incur substantial additional indebtedness in the future. In
particular, the notes and indenture pursuant to which the notes
will be issued do not place any limitation on the amount of
unsecured debt that we or our subsidiaries may incur. Our
incurrence of additional debt may have important consequences
for you as a holder of the notes, including, without limitation:
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we will have additional cash requirements in order to support
the payment of interest on our outstanding indebtedness;
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increases in our outstanding indebtedness and leverage may
increase our vulnerability to adverse changes in general
economic and industry conditions, as well as to competitive
pressure;
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our ability to obtain additional financing for working capital,
capital expenditures, general corporate and other purposes may
be limited; and
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our flexibility in planning for, or reacting to, changes in our
business and our industry may be limited.
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Our ability to make payments of principal and interest on our
indebtedness depends upon our future performance, which will be
subject to general economic conditions, industry cycles and
financial, business and other factors affecting our consolidated
operations, many of which are beyond our control. If we are
unable to generate sufficient cash flow from operations in the
future to service our debt, we may be required, among other
things:
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to seek additional financing in the debt or equity markets;
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to refinance or restructure all or a portion of our
indebtedness, including the notes;
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to sell selected assets;
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to reduce or delay planned capital expenditures; or
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to reduce or delay planned operating expenditures.
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Such measures might not be sufficient to enable us to service
our debt, including the notes. In addition, any such financing,
refinancing or sale of assets might not be available on
economically favorable terms.
The
notes are effectively subordinated to the existing and future
liabilities of our subsidiaries.
Our equity interest in our subsidiaries is subordinate to any
debt and other liabilities and commitments of our subsidiaries
to the extent of the value of the assets of such subsidiaries,
whether or not secured. The notes will not be guaranteed by our
subsidiaries and we may not have direct access to the assets of
our subsidiaries unless these assets are transferred by dividend
or otherwise to us. The ability of our subsidiaries to pay
dividends or otherwise transfer assets to us is subject to
various restrictions under applicable law. Our right to receive
assets of any of our subsidiaries upon their bankruptcy,
liquidation or reorganization, and therefore the right of the
holders of the notes to participate in those assets, will be
effectively subordinated to the claims of
S-5
that subsidiarys creditors. In addition, even if we are a
creditor of any of our subsidiaries, our right as a creditor
would be subordinate to any security interest in the assets of
our subsidiaries and any debt of our subsidiaries senior to that
held by us.
Our
credit ratings may not reflect all risks of your investment in
the notes.
Any credit ratings assigned to the notes will be limited in
scope, and will not address all material risks relating to an
investment in the notes, but rather reflect only the view of
each rating agency at the time the rating is issued. An
explanation of the significance of such rating may be obtained
from such rating agency. There can be no assurance that such
credit ratings will remain in effect for any given period of
time or that a rating will not be lowered, suspended or
withdrawn entirely by the applicable rating agencies, if, in
such rating agencys judgment, circumstances so warrant.
Agency credit ratings are not a recommendation to buy, sell or
hold any security. Each agencys rating should be evaluated
independently of any other agencys rating. Actual or
anticipated changes or downgrades in our credit ratings,
including any announcement that our ratings are under further
review for a downgrade, could affect the market value of the
notes and increase our corporate borrowing costs.
We may
repurchase our stock and reduce cash reserves and
shareholders equity that is available for repayment of the
notes.
We have repurchased, and expect to continue to repurchase, our
common stock in the open market or in privately negotiated
transactions. In the future, we may purchase our common stock
with cash or other of our assets. These purchases may be
significant, and any purchase would reduce cash and
shareholders equity that is available to repay the notes.
We may
not be able to repurchase all of the notes upon a change of
control triggering event, which would result in a default under
the notes.
We will be required to offer to repurchase the notes upon the
occurrence of a change of control triggering event as provided
in the indenture governing the notes. However, we may not have
sufficient funds to repurchase the notes in cash at such time.
In addition, our ability to repurchase the notes for cash may be
limited by law or the terms or other agreements relating to our
indebtedness outstanding at the time. The failure to make such
repurchase would result in a default under the notes. See
Description of Notes Change of Control
Offer.
We
have made only limited covenants in the indenture governing the
notes and these limited covenants may not protect your
investment.
The indenture governing the notes does not:
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require us to maintain any financial ratios or specific levels
of net worth, revenues, income, cash flows or liquidity and,
accordingly, does not protect holders of the notes in the event
that we experience significant adverse changes in our financial
condition or results of operations;
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limit our subsidiaries ability to incur indebtedness which
would effectively rank senior to the notes;
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limit our ability to incur indebtedness that is equal in right
of payment to the notes;
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restrict our ability to repurchase our common stock; or
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restrict our ability to make investments or to pay dividends or
make other payments in respect of our common stock or other
securities ranking junior to the notes.
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Furthermore, the indenture governing the notes contains only
limited protections in the event of a change of control
triggering event as described in this prospectus supplement.
S-6
The
provisions of the notes will not necessarily protect you in the
event of a highly leveraged transaction.
The terms of the notes will not necessarily afford you
protection in the event of a highly leveraged transaction that
may adversely affect you, including a reorganization,
recapitalization, restructuring, merger or other similar
transactions involving us. As a result, we could enter into any
such transaction even though the transaction could increase the
total amount of our outstanding indebtedness, adversely affect
our capital structure or credit rating or otherwise adversely
affect the holders of the notes. These transactions may not
involve a change in voting power or beneficial ownership or
result in a downgrade in the ratings of the notes, or, even if
they do, may not necessarily constitute a change of control
triggering event that affords you the protections described in
this prospectus supplement. If any such transaction should
occur, the value of your notes may decline.
There
may not be an active trading market for the notes.
There is no existing market for the notes and we do not intend
to apply for listing of the notes on any securities exchange or
any automated quotation system. Accordingly, there can be no
assurance that a trading market for the notes will ever develop
or will be maintained. Further, there can be no assurance as to
the liquidity of any market that may develop for the notes, your
ability to sell your notes or the price at which you will be
able to sell your notes. Future trading prices of the notes will
depend on many factors, including but not limited to prevailing
interest rates, our financial condition and results of
operations, the then-current ratings assigned to the notes and
the market for similar securities. Any trading market that
develops would be affected by many factors independent of and in
addition to the foregoing, including the time remaining to the
maturity of the notes, the outstanding amount of the notes, the
terms related to the optional redemption of the notes and the
level, direction and volatility of market interest rates
generally.
CONSOLIDATED
RATIOS OF EARNINGS TO FIXED CHARGES
The following table presents our historical ratio of earnings to
fixed charges for each of the years in the five-year period
ended March 31, 2008.
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Year Ended March 31,
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2008
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2007
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2006
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2005
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2004
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Consolidated Ratios of Earnings to Fixed Charges
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24.0
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x
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16.8
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x
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12.3
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x
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5.8
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x
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(a
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(a)
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The deficiency in the coverage of
fixed charges by earnings before fixed charges was
$29.4 million for the year ended March 31, 2004.
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For purposes of computing the ratio of earnings to fixed
charges, earnings consist of earnings (loss) before income taxes
plus fixed charges. Fixed charges consist of (i) interest
expense and (ii) a portion of rental expenses deemed
representative of the interest factor.
USE OF
PROCEEDS
We estimate that the net proceeds we will receive from this
offering will be approximately $ ,
after deducting underwriting discounts and commissions and
estimated expenses of the offering payable by us. We intend to
use the net proceeds from this offering for general corporate
purposes.
S-7
CAPITALIZATION
The following table sets forth our cash and our capitalization
as of March 31, 2008 on (1) an actual basis and
(2) an as adjusted basis to give effect to (a) our
acquisition of BladeLogic, Inc. and (b) the issuance of the
notes offered hereby and the use of the proceeds therefrom.
You should read this in conjunction with our consolidated
financial statements and the notes thereto, which are
incorporated herein by reference.
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As of March 31, 2008
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Actual
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As Adjusted
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(unaudited)
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(dollars in millions)
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Cash and cash equivalents
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$
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$
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Long-term debt, including current portion:
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% Notes due 2018 offered hereby
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Secured capital lease obligations
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12.1
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12.1
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Total long-term debt, including current portion
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12.1
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Total stockholders equity
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994.5
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943.8
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Total capitalization
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$
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1,006.6
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$
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S-8
DESCRIPTION OF
NOTES
The following discussion of the terms of the notes supplements
the description of the general terms and provisions of the debt
securities contained in the accompanying prospectus and
identifies any general terms and provisions described in the
accompanying prospectus that will not apply to the notes.
Certain terms used but not defined in this prospectus supplement
have the meanings specified in the accompanying prospectus. In
this prospectus supplement, we refer to
the % Notes due 2018 as the
notes. To the extent this summary differs from the
summary in the accompanying prospectus, you should rely on the
description of notes in this prospectus supplement.
When we refer to we, our and
us in this section, we mean BMC Software, Inc.
excluding, unless the context otherwise requires or as otherwise
expressly stated, our subsidiaries.
General
The notes will be issued in an initial aggregate principal
amount of $ million. We will
issue the notes under an indenture, to be entered into between
Wells Fargo Bank, N.A., as trustee, and us, (the base
indenture), as supplemented by a supplemental indenture to
be entered into between us and the trustee (together with the
base indenture, the indenture). You should read the
accompanying prospectus for a general discussion of the terms
and provisions of the indenture. We may, from time to time,
without giving notice to or seeking the consent of the holders
of the notes, issue additional notes having the same terms
(except for the issue date, the public offering price and, in
some cases, the first interest payment due) and ranking equally
and ratably with the notes offered hereby. Any additional
securities having such similar terms, together with the notes
offered hereby, will constitute a single series of debt
securities under the indenture.
The notes will mature
on ,
2018. The notes will not be listed on any securities exchange.
Ranking
The notes will be our senior unsecured obligations and will rank
equally with all of our other existing and future senior
unsecured indebtedness. The notes will be effectively
subordinated to all of our future secured indebtedness to the
extent of the assets securing that indebtedness. In addition,
the notes will be structurally subordinated to all existing and
future indebtedness and other liabilities and commitments of our
subsidiaries to the extent of the assets of such subsidiaries,
which are distinct legal entities having no obligation to pay
any amounts pursuant to the notes or to make funds available for
such purposes.
Interest
The notes will bear interest at a rate
of % per year
from ,
2008 or from the most recent interest payment date on which we
paid or provided for interest on the notes. The interest payment
dates for the notes will be each
and ,
beginning ,
2008, and interest will be payable to the holders of record
on and immediately
preceding the related interest payment date. Interest on the
notes will be computed on the basis of a
360-day
year
comprised of twelve
30-day
months.
Optional
Redemption
The notes are redeemable at our option, at any time or from time
to time, either in whole or in part, at a redemption price equal
to the greater of the following amounts, plus, in each case,
accrued and unpaid interest thereon to the redemption date:
(i) 100% of the principal amount of the notes to be
redeemed; and
(ii) the sum of the present values of the Remaining
Scheduled Payments.
In determining the present values of the Remaining Scheduled
Payments, such payments shall be discounted to the redemption
date on a semi-annual basis (assuming a
360-day
year
consisting of twelve
30-day
months) using a discount rate equal to the Treasury Rate
plus basis
points.
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Comparable Treasury Issue
means the United
States Treasury security selected by an Independent Investment
Banker as having an actual or interpolated maturity comparable
to the remaining term of the notes to be redeemed that would be
utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of
such notes.
Comparable Treasury Price
means (A) the
arithmetic average of the Reference Treasury Dealer Quotations
for such redemption date after excluding the highest and lowest
Reference Treasury Dealer Quotations, or (B) if the
Quotation Agent obtains fewer than four Reference Treasury
Dealer Quotations, the arithmetic average of all Reference
Treasury Dealer Quotations for such redemption date.
Independent Investment Banker
means any of
Banc of America Securities LLC and Credit Suisse Securities
(USA) LLC or their respective successors as may be appointed
from time to time by the Quotation Agent after consultation with
us; provided, however, that if any of the foregoing shall cease
to be a primary U.S. Government securities dealer in New
York City (a primary treasury dealer), another
primary treasury dealer shall be substituted therefor by us.
Quotation Agent
means, for purposes of
determining the redemption price, such primary treasury dealer
as may be selected by us.
Reference Treasury Dealer
means each of Banc
of America Securities LLC and Credit Suisse Securities (USA) LLC
or their respective successors and any other primary treasury
dealer selected by the Quotation Agent after consultation with
us.
Reference Treasury Dealer Quotations
means,
with respect to each Reference Treasury Dealer and any
redemption date, the arithmetic average, as determined by the
Quotation Agent, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Quotation Agent by
such Reference Treasury Dealer at 5:00 p.m. on the third
Business Day preceding such redemption date.
Remaining Scheduled Payments
means, with
respect to any note, the remaining scheduled payments of the
principal and interest thereon that would be due after the
related redemption date but for such redemption; provided,
however, that, if such redemption date is not an interest
payment date with respect to such note, the amount of the next
scheduled interest payment thereon shall be reduced by the
amount of interest accrued thereon to such redemption date.
Treasury Rate
means, with respect to any
redemption date, the rate per annum equal to the semi-annual
equivalent yield to maturity or interpolated yield to maturity
of the Comparable Treasury Issue. In determining this rate, the
price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) shall be assumed to be equal
to the Comparable Treasury Price for such redemption date.
A partial redemption of the notes of this series may be effected
by such method as the trustee shall deem fair and appropriate
and may provide for the selection for redemption of a portion of
the principal amount of the notes equal to an authorized
denomination.
Notice of any redemption shall be mailed at least 15 days
but not more than 60 days before the redemption date to
each Holder of the notes to be redeemed.
Unless we default in payment of the redemption price, on and
after the redemption date interest shall cease to accrue on the
notes or portions thereof that are redeemed.
Change of
Control Offer
If a Change of Control Triggering Event occurs, unless we have
exercised our option to redeem the notes, we shall be required
to make an offer (a Change of Control Offer) to each
Holder of the notes to repurchase all or any part (equal to
$2,000 and in integral multiples of $1,000 in excess thereof) of
that Holders notes on the terms set forth herein. In a
Change of Control Offer, we will be required to offer payment in
cash equal to 101% of the aggregate principal amount of notes
repurchased, plus accrued and unpaid interest, if any, on the
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notes repurchased to the date of repurchase (a Change of
Control Payment). Within 30 days following any Change
of Control Triggering Event or, at our option, prior to any
Change of Control, but after public announcement of the
transaction that constitutes or may constitute the Change of
Control, a notice shall be mailed to Holders of the notes
describing the transaction that constitutes or may constitute
the Change of Control Triggering Event and offering to
repurchase such notes on the date specified in the notice, which
date shall be no earlier than 30 days and no later than
60 days from the date such notice is mailed (a Change
of Control Payment Date). The notice shall, if mailed
prior to the date of consummation of the Change of Control,
state that the offer to purchase is conditioned on the Change of
Control Triggering Event occurring on or prior to the Change of
Control Payment Date.
On the Change of Control Payment Date, we will, to the extent
lawful:
(i) accept for payment all notes or portions of such
notes properly tendered pursuant to the Change of Control Offer;
(ii) deposit with the Paying Agent an amount equal to
the Change of Control Payment in respect of all notes or
portions of such notes properly tendered; and
(iii) deliver or cause to be delivered to the trustee the
notes properly accepted together with an Officers
Certificate stating the aggregate principal amount of notes or
portions of such notes being repurchased.
We will not be required to make a Change of Control Offer upon
the occurrence of a Change of Control Triggering Event if a
third party makes such an offer in the manner, at the times and
otherwise in compliance with the requirements for an offer made
by us and the third party purchases all notes properly tendered
and not withdrawn under its offer.
We will comply with the requirements of
Rule 14e-1
under the Securities Exchange Act of 1934, as amended (the
Exchange Act), and any other securities laws and
regulations thereunder to the extent those laws and regulations
are applicable in connection with the repurchase of the notes as
a result of a Change of Control Triggering Event. To the extent
that the provisions of any such securities laws or regulations
conflict with the Change of Control Offer provisions of the
notes, we will comply with those securities laws and regulations
and shall not be deemed to have breached our obligations under
the Change of Control Offer provisions of the notes by virtue of
any such conflict.
For purposes of the Change of Control Offer provisions of the
notes, the following terms are applicable:
Change of Control
means the occurrence of any
of the following: (1) the direct or indirect sale,
transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or more series of related
transactions, of all or substantially all of our assets and the
assets of our subsidiaries, taken as a whole, to any person,
other than our company or one of our subsidiaries; (2) the
consummation of any transaction (including, without limitation,
any merger or consolidation) the result of which is that any
person becomes the beneficial owner (as defined in
Rules 13d-3
and
13d-5
under the Exchange Act), directly or indirectly, of more than
50% of our outstanding Voting Stock or other Voting Stock into
which our Voting Stock is reclassified, consolidated, exchanged
or changed, measured by voting power rather than number of
shares; (3) we consolidate with, or merge with or into, any
person, or any person consolidates with, or merges with or into,
us, in any such event pursuant to a transaction in which any of
our outstanding Voting Stock or the Voting Stock of such other
person is converted into or exchanged for cash, securities or
other property, other than any such transaction where the shares
of our Voting Stock outstanding immediately prior to such
transaction constitute, or are converted into or exchanged for,
a majority of the Voting Stock of the surviving person or any
direct or indirect parent company of the surviving person
immediately after giving effect to such transaction;
(4) the first day on which a majority of the members of our
Board of Directors are not Continuing Directors; or (5) the
adoption of a plan relating to our liquidation or dissolution.
Notwithstanding the foregoing, a transaction will not be deemed
to involve a Change of Control if (1) we become a direct or
indirect wholly owned subsidiary of a holding company and (2)(A)
the direct or indirect holders of the Voting Stock of such
holding company immediately following that transaction are
substantially the same as the holders of our Voting Stock
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immediately prior to that transaction or (B) immediately
following that transaction no person (other than a holding
company satisfying the requirements of this sentence) is the
beneficial owner, directly or indirectly, of more than 50% of
the Voting Stock of such holding company. The term
person, as used in this definition, has the meaning
given thereto in Section 13(d)(3) of the Exchange Act.
The definition of Change of Control includes a
phrase relating to the direct or indirect sale, transfer,
conveyance or other disposition of all or substantially
all of our properties or assets and those of our
subsidiaries taken as a whole. Although there is a limited body
of case law interpreting the phrase substantially
all, there is no precise established definition of the
phrase under applicable law. Accordingly, the ability of a
holder of notes to require us to repurchase the notes as a
result of a sale, transfer, conveyance or other disposition of
less than all of our properties or assets and those of our
subsidiaries taken as a whole to another person may be uncertain.
Change of Control Triggering Event
means the
occurrence of both a Change of Control and a Rating Event.
Continuing Directors
means, as of any date of
determination, any member of our Board of Directors who
(1) was a member of such Board of Directors on the date the
notes were issued or (2) was nominated for election,
elected or appointed to such Board of Directors with the
approval of a majority of the Continuing Directors who were
members of such Board of Directors at the time of such
nomination, election or appointment (either by a specific vote
or by approval of our proxy statement in which such member was
named as a nominee for election as a director, without objection
to such nomination).
Investment Grade Rating
means a rating equal
to or higher than Baa3 (or the equivalent) by Moodys and
BBB- (or the equivalent) by S&P.
Moodys
means Moodys Investors
Service, Inc., and its successors.
Rating Agencies
means each of Moodys
and S&P; provided, that if either of Moodys and
S&P ceases to provide rating services to issuers or
investors, we may appoint a replacement for such Rating Agency
that is a nationally recognized statistical rating
organization within the meaning of
Rule 15c3-1(c)(2)(vi)(F)
under the Exchange Act.
Rating Event
means the notes are rated below
an Investment Grade Rating by each of the Rating Agencies on any
day within the 60 day period (which period shall be
extended so long as the rating of the notes is under publicly
announced consideration for a possible change by any of the
Rating Agencies) after the earlier of (1) public notice of
the occurrence of a Change of Control or our intention to effect
a Change of Control and (2) consummation of such Change of
Control.
S&P
means Standard &
Poors Rating Services, a division of The McGraw-Hill
Companies, Inc., and its successors.
Voting Stock
means, with respect to any
specified person (as that term is used in
Section 13(d)(3) of the Exchange Act) as of any date, the
capital stock of such person that is at the time entitled to
vote generally in the election of the board of directors of such
person.
Limitation
on Liens
We will not (nor will we permit any subsidiary to) issue, incur,
create, assume or guarantee any debt for borrowed money
(including all obligations evidenced by bonds, debentures, notes
or similar instruments) secured by a mortgage, deed of trust,
security interest, pledge, lien, charge or other encumbrance
(collectively, a lien) upon any Principal Property
or upon any shares of stock of any subsidiary that owns or
leases any Principal Property (whether such Principal Property
or shares are now existing or owed or hereafter created or
acquired) without in any such case effectively providing,
substantially concurrently with or prior to the issuance,
incurrence, creation, assumption or guaranty of any such secured
debt, or the grant of such lien, that the notes (together with,
if we shall so determine, any other indebtedness of or guarantee
by us or such
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subsidiary ranking equally with the notes) shall be secured
equally and ratably with (or, at our option, prior to) such
secured debt. The foregoing restriction, however, will not apply
to each of the following:
(a) liens on property, shares of stock or other
assets of any person existing at the time such person becomes a
subsidiary, provided that such liens are not incurred in
anticipation of such persons becoming a subsidiary and do
not extend to any assets other than those of such person;
(b) liens on property, shares of stock or other
assets existing at the time of acquisition thereof by us or a
subsidiary, or liens thereon to secure the payment of all or any
part of the purchase price thereof, or liens on property, shares
of stock or indebtedness or other assets to secure any debt
incurred prior to, at the time of, or within 12 months
after, the latest of the acquisition thereof or, in the case of
property, the completion of construction, the completion of
improvements or the commencement of substantial commercial
operation of such property for the purpose of financing all or
any part of the purchase price thereof, such construction or the
making of such improvements;
(c) liens in favor of, or which secure debt owing to,
us or any of our subsidiaries;
(d) liens existing at the date of the issuance of the
notes;
(e) liens on property of a person existing at the
time such person is merged into or consolidated with us or a
subsidiary of ours or at the time of a sale, lease or other
disposition of the properties of such person as an entirety or
substantially as an entirety to us or a subsidiary, provided
that such lien was not incurred in anticipation of such merger
or consolidation or sale, lease or other disposition and do not
extend to any assets other than those of the person merged into
or consolidated with us or a subsidiary of ours or such property
sold, leased or disposed;
(f) liens in favor of the United States of America or
any state, territory or possession thereof (or the District of
Columbia), or any department, agency, instrumentality or
political subdivision of the United States of America or any
state, territory or possession thereof (or the District of
Columbia), to secure partial, progress, advance or other
payments pursuant to any contract or statute or to secure any
indebtedness incurred for the purpose of financing all or any
part of the purchase price or the cost of constructing or
improving the property subject to such liens;
(g) inchoate liens incident to construction or
maintenance of real property, or liens incident to construction
or maintenance of real property, now or hereafter filed of
record for sums not yet delinquent or being contested in good
faith, if reserves or other appropriate provisions, if any, as
shall be required by GAAP shall have been made therefore;
(h) liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties
in connection with the importation of goods;
(i) liens upon specific items of inventory or other
goods and proceeds of any person securing such persons
obligations in respect of bankers acceptances issued or
created for the account of such person to facilitate the
purchase, shipment or storage of such inventory or other goods;
(j) liens encumbering customary initial deposits and
margin deposits and other liens in the ordinary course of
business, in each case securing Hedging Obligations and forward
contract, option, futures contracts, futures options or similar
agreements or arrangements designed to protect us or any of our
subsidiaries from fluctuations in interest rates, currencies or
the price of commodities;
(k) liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale of
goods entered into by us or any of our subsidiaries in the
ordinary course of business;
(l) statutory liens arising in the ordinary course of
business with respect to obligations which are not delinquent or
are being contested in good faith, if reserves or other
appropriate provisions, if any, as shall be required by GAAP
shall have been made therefore;
(m) liens consisting of pledges or deposits to secure
obligations under workers compensation laws or similar
legislation, including liens of judgments thereunder which are
not currently dischargeable;
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(n) liens consisting of pledges or deposits of
property to secure performance in connection with operating
leases made in the ordinary course of business to which we or
any of our subsidiaries is a party as lessee;
(o) liens created by or resulting from any litigation
or other proceeding which is being contested in good faith by
appropriate proceedings, including liens arising out of
judgments or awards against us or any of our subsidiaries;
(p) liens imposed by law, such as mechanics,
workmens, repairmens, materialmens,
carriers, warehousemens, vendors or other
similar liens arising in the ordinary course of business, or
governmental (Federal, state or municipal) liens arising out of
contracts for the sale of products or services by us or any of
our subsidiaries, or deposits or pledges to obtain the release
of any of the foregoing;
(q) liens arising solely by virtue of any statutory
or common law provision relating to bankers liens, rights
of setoff or similar rights and remedies as to deposit accounts
or other funds maintained with a creditor depository institution;
(r) liens for taxes or assessments or governmental
charges or levies not yet due or delinquent, or which can
thereafter be paid without penalty, or which are being contested
in good faith by appropriate proceedings;
(s) liens on or sales of receivables and customary
cash reserves established in connection therewith;
(t) liens consisting of easements, rights-of-way,
zoning restrictions, restrictions on the use of real property,
and defects and irregularities in the title thereto,
landlords liens and other similar liens and encumbrances
none of which interfere materially with the use of the property
covered thereby in the ordinary course of the business of us or
any of our subsidiaries and which do not, in our opinion,
materially detract from the value of such properties; or
(u) extensions, renewals or replacements of any liens
referred to in the foregoing clauses; provided, however, that
(i) the principal amount of indebtedness secured thereby
shall not exceed the principal amount of indebtedness so secured
at the time of such extension, renewal or replacement and
(ii) such extension, renewal or replacement liens will be
limited to all or part of the same property and improvement
thereon which secured the indebtedness so secured at the time of
such extension, renewal or replacement
Notwithstanding the restrictions in the preceding paragraph, we
or any subsidiary of ours may issue, incur, create, assume or
guarantee debt secured by a lien which would otherwise be
subject to such restrictions, without equally and ratably
securing the notes, provided that after giving effect thereto,
the aggregate amount of all debt so secured by liens (not
including liens permitted under clauses (a) through
(u) above) plus the aggregate amount of Attributable Debt
in respect of sale and lease-back transactions entered into
after the date of issuance of the notes and permitted by the
covenant described below under the caption
Limitation on Sale and Lease-Back
Transaction does not exceed 20% of our Consolidated Net
Tangible Assets.
Limitation
on Sale and Lease-Back Transactions
We will not, nor will we permit any subsidiary to, enter into
any Sale and Lease-Back Transaction with respect to any
Principal Property, other than any such Sale and Lease-Back
Transaction involving a lease for a term of not more than three
years or any such Sale and Lease-Back Transaction between us and
one of our subsidiaries, or between subsidiaries, unless:
(a) we or such subsidiary would be entitled to incur
indebtedness secured by a lien on the Principal Property
involved in such Sale and Lease-Back Transaction at least equal
in amount to the Attributable Debt with respect to such Sale and
Lease-Back Transaction, without equally and ratably securing the
notes, pursuant to the covenant described above under the
caption Limitation on Liens; or
(b) the proceeds of such Sale and Lease-Back
Transaction are at least equal to the fair market value of the
affected Principal Property (as determined in good faith by our
Board of Directors) and we apply the net proceeds of such Sale
and Lease-Back Transaction within 180 days of such Sale and
Lease-Back
Transaction to either (or a combination of) (i) the
prepayment or retirement of debt for
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borrowed money of ours or a subsidiary of ours (other than debt
that is subordinated to the notes or debt owed to us or a
subsidiary) that by its terms matures more than 12 months
after its creation or (ii) the purchase, construction,
development, expansion or improvement of comparable properties
or facilities.
Attributable Debt
with regard to a Sale and
Lease-Back Transaction with respect to any Principal Property
means, at the time of determination, the lesser of:
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the fair market value of the Principal Property subject to the
transaction; or
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the present value of the total net amount of rent required to be
paid under such lease during the remaining term thereof
(including any period for which such lease has been extended),
discounted at the rate of interest set forth or implicit in the
terms of such lease (or, if not practicable to determine such
rate, the weighted average interest rate per annum borne by the
securities then outstanding under the indenture, which may
include securities in addition to the notes offered hereby)
compounded semi-annually.
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Consolidated Net Tangible Assets
means, as of
any date on which we effect a transaction requiring such
Consolidated Net Tangible Assets to be measured hereunder, the
aggregate amount of assets (less applicable reserves) after
deducting therefrom (a) all current liabilities, except for
current maturities of long-term debt, the current portion of
deferred revenue and obligations under capital leases; and
(b) all intangible assets, to the extent included in said
aggregate amount of assets, all as set forth on our most recent
consolidated balance sheet and computed in accordance with GAAP.
GAAP
means accounting principles generally
accepted in the United States of America set forth in the
opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity
as have been approved by a significant segment of the accounting
profession, which are in effect as of the date of determination.
Hedging Obligations
means, with respect to
any specified person, the obligations of such person under:
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interest rate swap agreements (whether from fixed to floating or
from floating to fixed), interest rate cap agreements and
interest rate collar agreements;
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other agreements or arrangements designed to manage interest
rates or interest rate risk; and
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other agreements or arrangements designed to protect such person
against fluctuations in currency exchange rates or commodity
prices.
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Principal Property
means (i) our
principal corporate office (including any leasehold interest
therein) and (ii) any facility with a primary function of
distribution of our products or development (whether now owned
or hereafter acquired) which is owned or leased by us or any of
our subsidiaries and is located within the United States of
America, unless (as to both (i) and (ii)) our Board of
Directors has determined in good faith that such office or
facility is not of material importance to the total business
conducted by us and our subsidiaries, taken as a whole;
provided, however, that any office or facility for which the
annual lease obligation on the date as of which the
determination is being made is equal to or less than
$2.0 million shall in no event be deemed a Principal
Property. With respect to any Sale and Lease-Back Transaction or
series of related Sale and Lease-Back Transactions, the
determination of whether any property is a Principal Property
shall be determined by reference to all properties affected by
such transaction or series of transactions.
Sale and Lease-Back Transaction
means any
arrangement with any person providing for the leasing by us or
any subsidiary of any Principal Property, whether now owned or
hereafter acquired, which Principal Property has been or is to
be sold or transferred by us or such subsidiary to such person.
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Limitation
on Mergers and Other Transactions
We may not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all of our properties and
assets to, any person (a successor person) unless:
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we are the surviving corporation or the successor person (if
other than us) is a corporation organized and validly existing
under the laws of any U.S. domestic jurisdiction and
expressly assumes our obligations on the debt securities and
under the indenture;
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immediately after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time, or
both, would become an Event of Default, shall have occurred and
be continuing under the indenture; and
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certain other conditions are met.
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Notwithstanding the above, any subsidiary of ours may
consolidate with, merge into or transfer all or part of its
properties to us.
Events of
Default
Any of the following constitutes an Event of Default with
respect to the notes:
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default in the payment of any interest on the notes when it
becomes due and payable, and continuance of that default for a
period of 30 days (unless the entire amount of the payment
is deposited by us with the trustee or with a paying agent prior
to the expiration of the
30-day
period);
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default in the payment of principal of or premium on the notes
when due and payable;
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default in the performance or breach of any other covenant or
warranty by us in the indenture (other than a covenant or
warranty that has been included in the indenture solely for the
benefit of a series of debt securities other than the notes),
which default continues uncured for a period of 60 days
after we receive written notice from the trustee or we and the
trustee receive written notice from the holders of not less than
25% in principal amount of the outstanding notes as provided in
the indenture;
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(1) our failure or the failure of any of our subsidiaries
to pay indebtedness for money we borrowed or any of our
subsidiaries borrowed in an aggregate principal amount of at
least $100 million, at the later of final maturity and the
expiration of any related applicable grace period and such
defaulted payment shall not have been made, waived or extended
within 30 days after written notice from the trustee or the
holders of at least 25% in principal amount of such indebtedness
that is outstanding or (2) acceleration of the maturity of
indebtedness for money we borrowed or any of our subsidiaries
borrowed in an aggregate principal amount of at least
$100 million, if that acceleration results from a default
under the instrument giving rise to or securing such
indebtedness for money borrowed and such indebtedness has not
been discharged in full or such acceleration has not be
rescinded or annulled within 30 days after written notice
from the trustee or the holders of at least 25% in principal
amount of such indebtedness that is outstanding;
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certain events of bankruptcy, insolvency or reorganization
involving us.
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S-16
MATERIAL UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal
income tax considerations relating to the purchase, ownership
and disposition of the notes, but does not purport to be a
complete analysis of all the potential tax considerations
relating thereto. This summary is based upon the provisions of
the Internal Revenue Code of 1986, as amended (the
Code), Treasury Regulations promulgated thereunder,
administrative rulings and judicial decisions, all as of the
date hereof. These authorities may be changed, possibly
retroactively, so as to result in United States federal income
tax consequences different from those set forth below. We have
not sought any ruling from the Internal Revenue Service
(IRS) with respect to the statements made and the
conclusions reached in the following summary, and there can be
no assurance that the IRS will agree with such statements and
conclusions.
This summary is limited to holders who purchase the notes upon
their initial issuance at their initial issue price (which will
equal the first price at which a substantial amount of notes are
sold to the public for cash) and who hold the notes as capital
assets. This summary also does not address the effect of the
United States federal estate or gift tax laws or the tax
considerations arising under the laws of any foreign, state or
local jurisdiction. In addition, this discussion does not
address tax considerations applicable to an investors
particular circumstances or to investors that may be subject to
special tax rules, including, without limitation:
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banks, insurance companies, or other financial institutions;
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holders subject to the alternative minimum tax;
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tax-exempt organizations;
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dealers in securities or commodities;
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traders in securities that elect to use a mark-to-market method
of accounting for their securities holdings;
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foreign persons or entities (except to the extent specifically
set forth below);
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persons that are S-corporations, partnerships or other
pass-through entities;
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expatriates and certain former citizens or long-term residents
of the United States;
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U.S. holders (as defined below) whose functional currency
is not the U.S. dollar;
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persons who hold the notes as a position in a hedging
transaction, straddle, conversion
transaction or other risk reduction transaction; or
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persons deemed to sell the notes under the constructive sale
provisions of the Code.
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YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE
APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX LAWS TO YOUR
PARTICULAR SITUATION AS WELL AS ANY TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES ARISING
UNDER THE FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE
LAWS OF ANY STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION
OR UNDER ANY APPLICABLE TAX TREATY.
S-17
Consequences
to U.S. Holders
The following is a summary of certain material United States
federal income tax consequences that will apply to you if you
are a U.S. holder of the notes. Certain consequences to
non-U.S. holders
of the notes are described under Consequences
to
Non-U.S. Holders
below. U.S. holder means a holder of a note
that is:
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an individual citizen or resident of the United States;
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a corporation or other entity taxable as a corporation for
United States federal income tax purposes created or organized
in the United States or under the laws of the United States, any
state thereof, or the District of Columbia;
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an estate, the income of which is subject to United States
federal income taxation regardless of its source; or
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a trust that (1) is subject to the primary supervision of a
United States court and the control of one or more United States
persons or (2) has a valid election in effect under
applicable Treasury Regulations to be treated as a United States
person.
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Payments
of Interest on the Notes
You generally will be required to recognize any stated interest
as ordinary income at the time it is paid or accrued on the
notes in accordance with your method of accounting for United
States federal income tax purposes.
Optional
Redemption; Repurchase at Option of Holders
As described under the heading Description of
Notes Optional Redemption and
Description of Notes Change of Control
Offer, we may be obligated to pay amounts in excess of
stated interest and principal on the notes. We intend to take
the position that the likelihood of any such redemption or
repurchase is a remote contingency within the
meaning of the applicable Treasury Regulations, and any amounts
paid to you pursuant to any such redemption or repurchase would
be taxable as described below in Consequences
to U.S. Holders Sale, Exchange, Redemption or
Other Taxable Disposition of the Notes. Our determination
that these contingencies are remote is binding on
you unless you disclose your contrary position in the manner
required by applicable Treasury Regulations. The IRS, however,
may take a position contrary to our position, which could affect
the timing and character of your income and the timing of our
deduction with respect to the notes.
Sale,
Exchange, Redemption or Other Taxable Disposition of the
Notes
Upon the sale, exchange, redemption or other taxable disposition
of a note, you generally will recognize capital gain or loss
equal to the difference between (i) the sum of cash plus
the fair market value of all other property received on such
disposition (except to the extent such cash or property is
attributable to accrued but unpaid interest not previously
included in income, which generally will be taxable as ordinary
income) and (ii) your adjusted tax basis in the note. Your
adjusted tax basis in a note generally will equal the cost of
the note. Such capital gain or loss will be long-term capital
gain or loss if, at the time of such disposition, you have held
the note for more than one year. Long-term capital gains
recognized by certain non-corporate U.S. holders, including
individuals, will generally be subject to a reduced tax rate.
The deductibility of capital losses is subject to limitations.
Information
Reporting and Backup Withholding
We are required to furnish to the record holders of the notes,
other than corporations and other exempt holders, and to the
IRS, information with respect to interest paid on the notes.
You may be subject to backup withholding with respect to
interest paid on the notes or with respect to proceeds received
from a disposition of the notes. Certain holders (including,
among others, corporations) generally are not subject to backup
withholding. You will be subject to backup withholding if you
are not
S-18
otherwise exempt and you (i) fail to furnish your taxpayer
identification number (TIN), which, for an
individual, is ordinarily his or her social security number;
(ii) furnish an incorrect TIN; (iii) are notified by
the IRS that you have failed to properly report payments of
interest; or (iv) fail to certify, under penalties of
perjury, that you have furnished a correct TIN and that the IRS
has not notified you that you are subject to backup withholding.
Backup withholding is not an additional tax. You generally will
be entitled to credit any amounts withheld under the backup
withholding rules against your U.S. federal income tax
liability provided that the required information is furnished to
the IRS in a timely manner.
Consequences
to
Non-U.S.
Holders
The following is a summary of material United States federal
income tax consequences that will apply to you if you are a
non-U.S. holder
of the notes. For purposes of this discussion, a
non-U.S. holder
means a holder of notes that is not a U.S. holder.
Payments
of Interest on the Notes
You will not be subject to the 30% United States federal
withholding tax with respect to payments of interest on the
notes, provided that:
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you do not own, actually or constructively, 10% or more of the
total combined voting power of all classes of our stock entitled
to vote;
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you are not a controlled foreign corporation with
respect to which we are, directly or indirectly, a related
person;
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you are not a bank receiving interest pursuant to a loan
agreement entered into in the ordinary course of its trade or
business; and
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you provide your name and address, and certify, under penalties
of perjury, that you are not a United States person (which
certification may be made on an IRS
Form W-8BEN
(or successor form)), or you hold your notes through certain
foreign intermediaries and you and the foreign intermediaries
satisfy the certification requirements of applicable Treasury
Regulations.
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If you cannot satisfy the requirements described above, you will
be subject to the 30% United States federal withholding tax with
respect to payments of interest on the notes, unless you provide
us with a properly executed (1) IRS
Form W-8BEN
(or successor form) claiming an exemption from or reduction in
withholding under the benefit of an applicable United States
income tax treaty or (2) IRS
Form W-8ECI
(or successor form) stating that the interest is not subject to
withholding tax because it is effectively connected with the
conduct of a United States trade or business. If you are engaged
in a trade or business in the United States and interest on
a note is effectively connected with your conduct of that trade
or business, you will be subject to United States federal income
tax on that interest on a net income basis (although you will be
exempt from the 30% withholding tax, provided the certification
requirements described above are satisfied) in the same manner
as if you were a United States person as defined under the Code.
In addition, if you are a foreign corporation, you may be
subject to a branch profits tax equal to 30% (or lower rate as
may be prescribed under an applicable United States income tax
treaty) of your earnings and profits for the taxable year,
subject to adjustments, that are effectively connected with your
conduct of a trade or business in the United States.
Optional
Redemption; Repurchase at Option of Holders
As described under the heading Description of
Notes Optional Redemption and
Description of Notes Change of Control
Offer, we may be obligated to pay amounts in excess of
stated interest and principal on the notes. We intend to treat
any amounts paid to you pursuant to any such redemption or
repurchase as additional amounts paid for the notes, subject to
the rules described below in Consequences to
Non-U.S. Holders
Sale, Exchange, Redemption or Other Taxable Disposition of the
Notes.
S-19
Sale,
Exchange, Redemption or Other Taxable Disposition of the
Notes
Any gain realized by you on the sale, exchange, redemption or
other disposition of a note (except with respect to accrued and
unpaid interest, which would be taxable as described above)
generally will not be subject to United States federal income
tax unless:
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the gain is effectively connected with your conduct of a trade
or business in the United States; or
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you are an individual who is present in the United States for
183 days or more in the taxable year of sale, exchange,
redemption or other disposition, and certain conditions are met.
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If your gain is described in the first bullet point above, you
generally will be subject to United States federal income tax on
the net gain derived from the sale. If you are a corporation,
you may be required to pay a branch profits tax at a 30% rate
(or such lower rate as may be prescribed under an applicable
United States income tax treaty) on any such effectively
connected gain. If you are an individual described in the second
bullet point above, you will be subject to a 30% United States
federal income tax on the gain derived from the sale, which may
be offset by United States source capital losses, even though
you are not considered a resident of the United States. You
should consult any applicable income tax treaties that may
provide for different rules. In addition, you are urged to
consult your tax advisor regarding the tax consequences of the
acquisition, ownership and disposition of the notes.
Information
Reporting and Backup Withholding
If you are a
non-U.S. holder,
in general, you will not be subject to backup withholding and
information reporting with respect to payments that we make to
you provided that we do not have actual knowledge or reason to
know that you are a United States person and you have given us
the statement described above under
Consequences to
Non-U.S. Holders
Payments of Interest on the Notes. In addition, you will
not be subject to backup withholding or information reporting
with respect to the proceeds of the sale of a note within the
United States or conducted through certain
U.S.-related
financial intermediaries, if the payor receives the statement
described above and does not have actual knowledge or reason to
know that you are a United States person, as defined under the
Code, or you otherwise establish an exemption. However, we may
be required to report annually to the IRS and to you the amount
of, and the tax withheld with respect to, any interest paid to
you, regardless of whether any tax was actually withheld. Copies
of these information returns may also be made available under
the provisions of a specific treaty or agreement to the tax
authorities of the country in which you reside.
You generally will be entitled to credit any amounts withheld
under the backup withholding rules against your
U.S. federal income tax liability provided that the
required information is furnished to the IRS in a timely manner.
S-20
UNDERWRITING
We and the underwriters for the offering named below, for whom
Banc of America Securities LLC and Credit Suisse Securities
(USA) LLC are acting as representatives, have entered into an
underwriting agreement dated as of the date of this prospectus
supplement with respect to the notes. Subject to certain
conditions, each underwriter has severally agreed to purchase,
and we have agreed to sell to each underwriter, the total
principal amount of notes shown in the following table.
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Principal Amount
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Underwriter
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of Notes
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Banc of America Securities LLC
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$
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Credit Suisse Securities (USA) LLC
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J.P. Morgan Securities Inc.
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Merrill Lynch, Pierce, Fenner & Smith Incorporated
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Morgan Stanley & Co. Incorporated
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UBS Securities LLC
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Total
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$
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The obligations of the several underwriters to purchase the
notes offered hereby are subject to certain conditions. The
underwriters are obligated to purchase all of the notes, if they
purchase any of them. The offering of the notes by the
underwriters is subject to receipt and acceptance and subject to
the underwriters right to reject any order in whole or in
part.
Notes sold by the underwriters to the public initially will be
offered at the public offering price set forth on the cover of
this prospectus supplement. Any notes sold by the underwriters
to securities dealers may be sold at discounts from the
applicable public offering price of up
to % of the principal amount of
notes. Any such securities dealers may resell any notes
purchased from the underwriters to certain other brokers or
dealers at discounts from the applicable public offering price
of up to % of the principal amount
of notes. If all the notes are not sold at the applicable public
offering price, the underwriters may change such offering price
and the other selling terms.
The notes are a new issue of securities with no established
trading market. The notes will not be listed on any securities
exchange or on any automated dealer quotation system. We have
been advised that the representatives intend to make a market in
the notes, but they are not obligated to do so and may
discontinue such market-making at any time without notice. No
assurance can be given as to the liquidity of the trading market
for the notes.
In connection with the offering, the representatives may
purchase and sell the notes in the open market. These
transactions may include short sales, stabilizing transactions
and purchases to cover positions created by short sales. Short
sales involve the sale by the representatives of a greater
number of notes than they are required to purchase in the
offering. Stabilizing transactions consist of certain bids or
purchases made for the purpose of preventing or retarding a
decline in the market price of the notes while the offering is
in progress.
The representatives may also impose a penalty bid. This occurs
when a particular underwriter repays to the representatives a
portion of the underwriting discount received by it because a
representative has repurchased notes sold by or for the account
of such underwriter in stabilizing or short covering
transactions.
Stabilizing transactions may have the effect of preventing or
retarding a decline in the market price of the notes, and
together with the imposition of the penalty bid, may stabilize,
maintain or otherwise affect the market price of the notes. As a
result, the price of the notes may be higher than the price that
otherwise might exist in the open market. If these activities
are commenced, they may be discontinued by the underwriters at
any time without notice. These transactions may be effected in
the over-the-counter market or otherwise.
In addition to the underwriting discounts payable to the
underwriters as set forth on the cover page of this prospectus
supplement, we estimate that our expenses for this offering will
be approximately $650,000.
S-21
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of
1933, as amended, or contribute to payments the underwriters may
be required to make in respect of those liabilities.
The notes are offered for sale in the United States and certain
jurisdictions outside the United States in which such offer and
sale is permitted.
Each of the underwriters has represented and agreed that in
relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a
Relevant Member State), with effect from and
including the date on which the Prospectus Directive is
implemented in that Relevant Member State (the Relevant
Implementation Date), it has not made, and will not make,
an offer of notes to the public in that Relevant Member State
prior to the publication of a prospectus in relation to the
notes which has been approved by the competent authority in that
Relevant Member State or, where appropriate, approved in another
Relevant Member State and notified to the competent authority in
that Relevant Member State, all in accordance with the
Prospectus Directive, except that it may, with effect from and
including the Relevant Implementation Date, make an offer of
notes to the public in that Relevant Member State at any time:
(i) to legal entities which are authorized or regulated to
operate in the financial markets, or, if not so authorized or
regulated, whose corporate purpose is solely to invest in
securities; (ii) to any legal entity which has two or more
of (1) an average of at least 250 employees during the
last financial year, (2) a total balance sheet of more than
43,000,000 and (3) an annual net turnover of more
than 50,000,000, as shown in its last annual or
consolidated accounts; (iii) to fewer than 100 natural or
legal persons (other than qualified investors as defined in the
Prospectus Directive) subject to obtaining the prior consent of
the representatives for any such offer; or (iv) in any
other circumstances which do not require the publication by the
issuer of a prospectus pursuant to Article 3 of the
Prospectus Directive.
For the purpose of the foregoing, the term an offer of
notes to the public means, in relation to any notes in any
Relevant Member State, the communication in any form and by any
means of sufficient information of the terms of the offer and
the notes to be offered so as to enable an investor to decide to
purchase or subscribe for notes, as the same may be varied in
that Relevant Member State by any measure implementing the
Prospectus Directive in that Relevant Member State, and the term
Prospectus Directive means Directive
2003/71./EC
and includes any relevant implementing measure in each Relevant
Member State.
This prospectus supplement has been prepared on the basis that
all offers of the notes within the European Economic Area will
be made pursuant to an exemption under Article 3(2) of the
Prospectus Directive, as implemented in Relevant Member States
of the European Economic Area, from the requirement to produce a
prospectus for offers of the notes. Accordingly, any person
making or intending to make any offer of the notes within the
European Economic Area should only do so in circumstances in
which no obligation arises for us, our affiliates or any of the
underwriters to produce a prospectus for such offer. Neither we
nor any of the underwriters have authorized, nor do we or they
authorize, the making of any offer of the notes through any
financial intermediary, other than offers made by the
underwriters which constitute the final placement of the notes
contemplated in this prospectus supplement.
Each of the underwriters has represented and agreed and
undertaken that:
(i) it has only communicated or caused to be
communicated and will only communicate or cause to be
communicated an invitation or inducement to engage in investment
activity (within the meaning of Section 21 of the Financial
Services and Markets Act 2000 (the FSMA)) received
by it in connection with the issue or sale of the notes in
circumstances in which Section 21(1) of the FSMA does not
apply to us; and
(ii) it has complied and will comply with all
applicable provisions of the FSMA with respect to anything done
by it in relation to the notes, in, from or otherwise involving
the United Kingdom.
Certain of the underwriters and their respective affiliates
have, from time to time, performed, and may in the future
perform, various financial advisory, commercial banking and
investment banking services for us and our affiliates, for which
they received or will receive customary fees and expense
reimbursement. In addition, certain underwriters and their
respective affiliates are customers of our products and
solutions.
S-22
LEGAL
MATTERS
The validity of the notes offered by this prospectus supplement
and the accompanying prospectus will be passed upon for us by
Latham & Watkins LLP, San Francisco, California.
Certain legal matters will be passed upon for the underwriters
by Shearman & Sterling LLP, San Francisco,
California.
INCORPORATION BY
REFERENCE
As described in the accompanying prospectus under the caption
Incorporation of Certain Information By Reference,
we have incorporated by reference into that prospectus specified
documents that we have filed or may file with the Securities and
Exchange Commission under the Exchange Act. However, no document
that we have furnished or may in the future
furnish to the Securities and Exchange Commission
pursuant to the Exchange Act shall be incorporated by reference
into the accompanying prospectus or this prospectus supplement.
S-23
BMC Software, Inc.
Debt Securities
Preferred Stock
Common Stock
BMC Software, Inc., from time to time, may offer to sell, in one
or more series, any combination of debt securities, preferred
stock or common stock. Our common stock is listed on the New
York Stock Exchange (NYSE) and trades under the
ticker symbol BMC.
We or any selling securityholder may offer and sell these
securities to or through one or more underwriters, dealers and
agents, or directly to purchasers, on a continuous or delayed
basis through a public offering or negotiated purchases.
This prospectus describes some of the general terms that may
apply to these securities. The specific terms of any securities
to be offered may be described in a supplement to this
prospectus.
Investing in these securities involves certain risks. See
Risk Factors on page 2 of this prospectus.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
Prospectus dated May 29, 2008
TABLE OF
CONTENTS
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ABOUT
THIS PROSPECTUS
This prospectus is part of a registration statement that we
filed with the Securities and Exchange Commission
(SEC or Commission) utilizing a
shelf registration process. Under this shelf
registration process, we may sell any combination of the
securities described in this prospectus in one or more offerings
in amounts and with prices and other terms to be determined.
This prospectus provides you with a general description of the
securities we may offer. When we sell securities under this
shelf registration, we may provide a prospectus supplement that
will contain specific information about the terms of that
offering. The prospectus supplement may also add, modify or
supersede information contained in this prospectus. You should
read both this prospectus and any prospectus supplement together
with additional information described under the heading
Where You Can Find More Information.
We have not authorized any dealer, salesman or other person to
give any information or to make any representation other than
those contained or incorporated by reference in this prospectus
and any accompanying prospectus supplement. You must not rely
upon any information or representation not contained or
incorporated by reference in this prospectus or in any
accompanying prospectus supplement. This prospectus and any
accompanying prospectus supplement do not constitute an offer to
sell or the solicitation of an offer to buy any securities other
than the securities to which they relate, nor do this prospectus
and any accompanying prospectus supplement constitute an offer
to sell or the solicitation of an offer to buy securities in any
jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. You should not
assume that the information contained in this prospectus and the
accompanying prospectus supplement is accurate on any date
subsequent to the date set forth on the front of the document or
that any information we have incorporated by reference is
correct on any date subsequent to the date of the document
incorporated by reference, even though this prospectus and any
accompanying prospectus supplement is delivered or securities
are sold on a later date.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. You can inspect and copy
these reports, proxy statements and other information at the
Public Reference Room of the SEC, 100 F Street, N.E.,
Washington, D.C. 20549. You can obtain copies of these
materials from the Public Reference Section of the SEC,
100 F Street, N.E., Washington, D.C. 20549, at
prescribed rates. Please call the SEC at
1-800-SEC-0330
for further information on the operation of the public reference
room. Our SEC filings will also be available to you on the
SECs website at
http://www.sec.gov
and through the New York Stock Exchange, 20 Broad Street,
New York, New York 10005, on which our common stock is listed.
We have filed with the SEC a registration statement on
Form S-3
relating to the securities covered by this prospectus. This
prospectus, which forms a part of the registration statement,
does not contain all the information that is included in the
registration statement. You will find additional information
about us in the registration statement. Any statements made in
this prospectus concerning the provisions of legal documents are
not necessarily complete and you should read the documents that
are filed as exhibits to the registration statement or otherwise
filed with the SEC for a more complete understanding of the
document or matter.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The SEC allows the incorporation by reference of the
information filed by us with the SEC into this prospectus, which
means that important information can be disclosed to you by
referring you to those documents. Those documents that are filed
prior to the date of this prospectus listed below are considered
part of this prospectus, and those documents that are filed
after the date of this prospectus and prior to the sale of
securities to you pursuant to this prospectus will be considered
a part of this prospectus. Information that we file later with
the SEC will automatically update and supersede the previously
filed information. The documents listed below and any filings we
make with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the
1
Securities Exchange Act of 1934, as amended (the Exchange
Act) after the date of this prospectus and prior to the
termination of the offering of securities hereby are
incorporated by reference herein:
1. Our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2008, filed on
May 21, 2008.
2. Our Current Reports on
Form 8-K
filed on April 23, 2008, May 7, 2008, May 22,
2008 and May 27, 2008 and on
Form 8-K/A
filed on May 27, 2008.
3. Our Definitive Proxy Statement on Schedule 14A,
filed on July 19, 2007.
4. The description of our common stock contained in the
Registration Statement on
Form 8-A
dated August 25, 1988, filed with the SEC to register such
securities under the Exchange Act, including any amendment or
report filed for the purpose of updating such description.
5. All documents filed by us with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this prospectus and before termination of the
offering of securities hereby.
We are not, however, incorporating by reference any documents or
portions thereof, whether specifically listed above or filed in
the future, that are not deemed filed with the SEC,
including any information furnished pursuant to Items 2.02
or 7.01 of
Form 8-K
or certain exhibits furnished pursuant to Item 9.01 of
Form 8-K.
We will provide without charge, upon written or oral request, a
copy of any or all of the documents that have been incorporated
by reference into this prospectus. You should direct any
requests to BMC Software, Inc., Attn: Investor Relations, 2101
CityWest Boulevard, Houston, Texas
77042-2827,
or you may contact us at
(800) 841-2031
ext. 4525 or via email at investor@bmc.com. Information about us
is also available on our web site at
http://www.bmc.com.
Information on our web site is not incorporated by reference
into this prospectus and therefore is not part of this
prospectus.
SPECIAL
NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus and the documents that we incorporate by
reference contain certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of
1934, as amended, which are identified by the use of the words
believe, expect, anticipate,
will, contemplate, would,
and similar expressions that contemplate future events. Such
forward-looking statements are based on managements
reasonable current assumptions and expectations. Numerous
important factors, risks and uncertainties affect our operating
results, including, without limitation, those contained in this
prospectus and the documents that we incorporate by reference,
and could cause our actual results, levels of activity,
performance or achievement to differ materially from the results
expressed or implied by these or any other forward-looking
statements made by us or on our behalf. There can be no
assurance that future results will meet expectations. You should
pay particular attention to the important risk factors and
cautionary statements referenced in the section of this
prospectus entitled Risk Factors. You should also
carefully review the cautionary statements described in the
other documents we file from time to time with the SEC,
specifically our Annual Report on
Form 10-K,
our Quarterly Reports on
Form 10-Q
and our Current Reports on
Form 8-K.
We undertake no obligation to update any forward-looking
statements.
RISK
FACTORS
You should carefully consider the specific risks set forth under
the caption Risk Factors in any applicable
prospectus supplement and under the caption Risk
Factors in our filings with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act,
incorporated by reference herein, before making an investment
decision.
2
THE
COMPANY
All references in this prospectus to BMC,
the company, we, us and
our are to BMC Software, Inc. and its direct and
indirect subsidiaries, unless the context otherwise requires.
BMC Software, Inc. is one of the worlds largest software
vendors. We provide system and service management solutions
primarily for large enterprises. Our extensive portfolio of
software solutions spans enterprise systems, applications,
databases and IT process management. We also provide maintenance
and support for our products and perform software
implementation, integration and education services for our
customers. We were organized as a Texas corporation in 1980 and
were reincorporated in Delaware in July 1988.
Our principal corporate offices are located at 2101 CityWest
Boulevard, Houston, Texas
77042-2827.
Our main telephone number is
(713) 918-8800,
and our primary internet address is
http://www.bmc.com
.
DESCRIPTION
OF SECURITIES WE MAY OFFER
DEBT
SECURITIES
This prospectus describes certain general terms and provisions
of our debt securities. When we offer to sell a particular
series of debt securities, we will describe the specific terms
of the series in a supplement to this prospectus. We will also
indicate in the supplement whether the general terms and
provisions described in this prospectus apply to a particular
series of debt securities.
Unless otherwise specified in a supplement to this prospectus,
the debt securities will be our direct, unsecured obligations
and will rank equally with all of our other unsecured and
unsubordinated indebtedness.
The debt securities will be issued under an indenture between us
and Wells Fargo Bank, N.A., as trustee. We have summarized
select portions of the indenture below. The summary is not
complete. The form of the indenture has been incorporated by
reference as an exhibit to the registration statement and you
should read the indenture for provisions that may be important
to you. In the summary below, we have included references to the
section numbers of the indenture so that you can easily locate
these provisions. Capitalized terms used in the summary and not
defined herein have the meanings specified in the indenture.
When we refer to BMC Software, we,
our and us in this section, we mean BMC
Software, Inc. excluding, unless the context otherwise requires
or as otherwise expressly stated, our subsidiaries.
General
The terms of each series of debt securities will be established
by or pursuant to a resolution of our Board of Directors and set
forth or determined in the manner provided in a resolution of
our Board of Directors, in an officers certificate or by a
supplemental indenture. (Section 2.2) The particular terms
of each series of debt securities will be described in a
prospectus supplement relating to such series (including any
pricing supplement or term sheet).
We can issue an unlimited amount of debt securities under the
indenture that may be in one or more series with the same or
various maturities, at par, at a premium, or at a discount. We
will set forth in a prospectus supplement (including any pricing
supplement or term sheet) relating to any series of debt
securities being offered, the aggregate principal amount and the
following terms of the debt securities, if applicable:
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the title of the debt securities;
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the price or prices (expressed as a percentage of the principal
amount) at which we will sell the debt securities;
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any limit on the aggregate principal amount of the debt
securities;
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the date or dates on which we will pay the principal on the debt
securities;
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the rate or rates (which may be fixed or variable) per annum or
the method used to determine the rate or rates (including any
commodity, commodity index, stock exchange index or financial
index) at which the debt securities will bear interest, the date
or dates from which interest will accrue, the date or dates on
which interest will commence and be payable and any regular
record date for the interest payable on any interest payment
date;
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the place or places where principal of, premium and interest on
the debt securities will be payable;
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the terms and conditions upon which we may redeem the debt
securities;
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any obligation we have to redeem or purchase the debt securities
pursuant to any sinking fund or analogous provisions or at the
option of a holder of debt securities;
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the dates on which and the price or prices at which we will
repurchase debt securities at the option of the holders of debt
securities and other detailed terms and provisions of these
repurchase obligations;
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the denominations in which the debt securities will be issued,
if other than denominations of $1,000 and any integral multiple
thereof;
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whether the debt securities will be issued in the form of
certificated debt securities or global debt securities;
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the portion of principal amount of the debt securities payable
upon declaration of acceleration of the maturity date, if other
than the principal amount;
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the currency of denomination of the debt securities;
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the designation of the currency, currencies or currency units in
which payment of principal of, premium and interest on the debt
securities will be made;
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if payments of principal of, premium or interest on the debt
securities will be made in one or more currencies or currency
units other than that or those in which the debt securities are
denominated, the manner in which the exchange rate with respect
to these payments will be determined;
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the manner in which the amounts of payment of principal of,
premium or interest on the debt securities will be determined,
if these amounts may be determined by reference to an index
based on a currency or currencies other than that in which the
debt securities are denominated or designated to be payable or
by reference to a commodity, commodity index, stock exchange
index or financial index;
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any provisions relating to any security provided for the debt
securities;
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any addition to or change in the Events of Default described in
this prospectus or in the indenture with respect to the debt
securities and any change in the acceleration provisions
described in this prospectus or in the indenture with respect to
the debt securities;
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any addition to or change in the covenants described in this
prospectus or in the indenture with respect to the debt
securities;
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any other terms of the debt securities, which may supplement,
modify or delete any provision of the indenture as it applies to
that series; and
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any depositaries, interest rate calculation agents, exchange
rate calculation agents or other agents with respect to the debt
securities. (Section 2.2)
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In addition, the indenture does not limit our ability to issue
convertible or subordinated debt securities. Any conversion or
subordination provisions of a particular series of debt
securities will be set forth in the resolution of our Board of
Directors, the officers certificate or supplemental
indenture related to that series of debt securities and will be
described in the relevant prospectus supplement. Such terms may
include provisions for conversion, either mandatory, at the
option of the holder or at our option, in which case the number
of shares of common stock or other securities to be received by
the holders of debt securities would be calculated as of a time
and in the manner stated in the prospectus supplement.
4
We may issue debt securities that provide for an amount less
than their stated principal amount to be due and payable upon
declaration of acceleration of their maturity pursuant to the
terms of the indenture. We will provide you with information on
the federal income tax considerations and other special
considerations applicable to any of these debt securities in the
applicable prospectus supplement.
If we denominate the purchase price of any of the debt
securities in a foreign currency or currencies or a foreign
currency unit or units, or if the principal of and any premium
and interest on any series of debt securities is payable in a
foreign currency or currencies or a foreign currency unit or
units, we will provide you with information on the restrictions,
elections, general tax considerations, specific terms and other
information with respect to that issue of debt securities and
such foreign currency or currencies or foreign currency unit or
units in the applicable prospectus supplement.
Transfer
and Exchange
Each debt security will be represented by either one or more
global securities registered in the name of The Depository
Trust Company, as Depositary (the Depositary),
or a nominee (we will refer to any debt security represented by
a global debt security as a book-entry debt
security), or a certificate issued in definitive
registered form (we will refer to any debt security represented
by a certificated security as a certificated debt
security) as set forth in the applicable prospectus
supplement. Except as set forth under the heading Global
Debt Securities and Book-Entry System below, book-entry
debt securities will not be issuable in certificated form.
Certificated Debt Securities.
You may transfer
or exchange certificated debt securities at any office we
maintain for this purpose in accordance with the terms of the
indenture. No service charge will be made for any transfer or
exchange of certificated debt securities, but we may require
payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with a transfer or
exchange.
You may effect the transfer of certificated debt securities and
the right to receive the principal of, premium and interest on
certificated debt securities only by surrendering the
certificate representing those certificated debt securities and
either reissuance by us or the trustee of the certificate to the
new holder or the issuance by us or the trustee of a new
certificate to the new holder.
Global Debt Securities and Book-Entry
System.
Each global debt security representing
book-entry debt securities will be deposited with, or on behalf
of, the Depositary, and registered in the name of the Depositary
or a nominee of the Depositary.
The Depositary has indicated it intends to follow the following
procedures with respect to book-entry debt securities.
Ownership of beneficial interests in book-entry debt securities
will be limited to persons that have accounts with the
Depositary for the related global debt security
(participants) or persons that may hold interests
through participants. Upon the issuance of a global debt
security, the Depositary will credit, on its book-entry
registration and transfer system, the participants
accounts with the respective principal amounts of the book-entry
debt securities represented by such global debt security
beneficially owned by such participants. The accounts to be
credited will be designated by any dealers, underwriters or
agents participating in the distribution of the book-entry debt
securities. Ownership of book-entry debt securities will be
shown on, and the transfer of such ownership interests will be
effected only through, records maintained by the Depositary for
the related global debt security (with respect to interests of
participants) and on the records of participants (with respect
to interests of persons holding through participants). The laws
of some states may require that certain purchasers of securities
take physical delivery of such securities in definitive form.
These laws may impair the ability to own, transfer or pledge
beneficial interests in book-entry debt securities.
So long as the Depositary for a global debt security, or its
nominee, is the registered owner of that global debt security,
the Depositary or its nominee, as the case may be, will be
considered the sole owner or holder of the book-entry debt
securities represented by such global debt security for all
purposes under the indenture. Except as described below,
beneficial owners of book-entry debt securities will not be
entitled to have securities registered in their names, will not
receive or be entitled to receive physical delivery of a
certificate
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in definitive form representing securities and will not be
considered the owners or holders of those securities under the
indenture. Accordingly, each person beneficially owning
book-entry debt securities must rely on the procedures of the
Depositary for the related global debt security and, if such
person is not a participant, on the procedures of the
participant through which such person owns its interest, to
exercise any rights of a holder under the indenture.
We understand, however, that under existing industry practice,
the Depositary will authorize the persons on whose behalf it
holds a global debt security to exercise certain rights of
holders of debt securities, and the indenture provides that we,
the trustee and our respective agents will treat as the holder
of a debt security the persons specified in a written statement
of the Depositary with respect to that global debt security for
purposes of obtaining any consents or directions required to be
given by holders of the debt securities pursuant to the
indenture. (Section 2.14.6)
We will make payments of principal of, and premium and interest
on book-entry debt securities to the Depositary or its nominee,
as the case may be, as the registered holder of the related
global debt security. (Section 2.14.5) BMC Software, the
trustee and any other agent of ours or agent of the trustee will
not have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial
ownership interests in a global debt security or for
maintaining, supervising or reviewing any records relating to
beneficial ownership interests.
We expect that the Depositary, upon receipt of any payment of
principal of, premium or interest on a global debt security,
will immediately credit participants accounts with
payments in amounts proportionate to the respective amounts of
book-entry debt securities held by each participant as shown on
the records of such Depositary. We also expect that payments by
participants to owners of beneficial interests in book-entry
debt securities held through those participants will be governed
by standing customer instructions and customary practices, as is
now the case with the securities held for the accounts of
customers in bearer form or registered in street
name, and will be the responsibility of those participants.
We will issue certificated debt securities in exchange for each
global debt security if the Depositary is at any time unwilling
or unable to continue as Depositary or ceases to be a clearing
agency registered under the Exchange Act, and a successor
Depositary registered as a clearing agency under the Exchange
Act is not appointed by us within 90 days. In addition, we
may at any time and in our sole discretion determine not to have
the book-entry debt securities of any series represented by one
or more global debt securities and, in that event, will issue
certificated debt securities in exchange for the global debt
securities of that series. Any certificated debt securities
issued in exchange for a global debt security will be registered
in such name or names as the Depositary shall instruct the
trustee. We expect that such instructions will be based upon
directions received by the Depositary from participants with
respect to ownership of book-entry debt securities relating to
such global debt security.
We have obtained the foregoing information concerning the
Depositary and the Depositarys book-entry system from
sources we believe to be reliable, but we take no responsibility
for the accuracy of this information.
No
Protection In the Event of a Change of Control
Unless we state otherwise in the applicable prospectus
supplement, the debt securities will not contain any provisions
which may afford holders of the debt securities protection in
the event we have a change in control or in the event of a
highly leveraged transaction (whether or not such transaction
results in a change in control) which could adversely affect
holders of debt securities.
Covenants
We will set forth in the applicable prospectus supplement any
restrictive covenants applicable to any issue of debt securities.
6
Consolidation,
Merger and Sale of Assets
We may not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all of our properties and
assets to, any person (a successor person) unless:
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we are the surviving corporation or the successor person (if
other than BMC Software) is a corporation organized and validly
existing under the laws of any U.S. domestic jurisdiction
and expressly assumes our obligations on the debt securities and
under the indenture;
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immediately after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time, or
both, would become an Event of Default, shall have occurred and
be continuing under the indenture; and
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certain other conditions are met.
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Notwithstanding the above, any subsidiary of BMC Software may
consolidate with, merge into or transfer all or part of its
properties to BMC Software. (Section 5.1)
Events of
Default
Event of Default
means with respect to any
series of debt securities, any of the following:
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default in the payment of any interest upon any debt security of
that series when it becomes due and payable, and continuance of
that default for a period of 30 days (unless the entire
amount of the payment is deposited by us with the trustee or
with a paying agent prior to the expiration of the
30-day
period);
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default in the payment of principal of or premium on any debt
security of that series when due and payable;
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default in the performance or breach of any other covenant or
warranty by us in the indenture (other than a covenant or
warranty that has been included in the indenture solely for the
benefit of a series of debt securities other than that series),
which default continues uncured for a period of 60 days
after we receive written notice from the trustee or we and the
trustee receive written notice from the holders of not less than
25% in principal amount of the outstanding debt securities of
that series as provided in the indenture;
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certain events of bankruptcy, insolvency or reorganization of
BMC Software; and
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any other Event of Default provided with respect to debt
securities of that series that is described in the applicable
prospectus supplement accompanying this prospectus.
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No Event of Default with respect to a particular series of debt
securities (except as to certain events of bankruptcy,
insolvency or reorganization) necessarily constitutes an Event
of Default with respect to any other series of debt securities.
(Section 6.1) The occurrence of certain Events of Default
or an acceleration under the indenture may constitute an event
of default under certain of our other indebtedness outstanding
from time to time.
If an Event of Default with respect to debt securities of any
series at the time outstanding occurs and is continuing, then
the trustee or the holders of not less than 25% in principal
amount of the outstanding debt securities of that series may, by
a notice in writing to us (and to the trustee if given by the
holders), declare to be due and payable immediately the
principal of (or, if the debt securities of that series are
discount securities, that portion of the principal amount as may
be specified in the terms of that series) and accrued and unpaid
interest, if any, on all debt securities of that series. In the
case of an Event of Default resulting from certain events of
bankruptcy, insolvency or reorganization, the principal (or such
specified amount) of and accrued and unpaid interest, if any, on
all outstanding debt securities will become and be immediately
due and payable without any declaration or other act on the part
of the trustee or any holder of outstanding debt securities. At
any time after a declaration of acceleration with respect to
debt securities of any series has been made, but before a
judgment or decree for payment of the money due has been
obtained by the trustee, the holders of a
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majority in principal amount of the outstanding debt securities
of that series may rescind and annul the acceleration if all
Events of Default, other than the non-payment of accelerated
principal and interest, if any, with respect to debt securities
of that series, have been cured or waived as provided in the
indenture. (Section 6.2) We refer you to the prospectus
supplement relating to any series of debt securities that are
discount securities for the particular provisions relating to
acceleration of a portion of the principal amount of such
discount securities upon the occurrence of an Event of Default.
The indenture provides that the trustee will be under no
obligation to exercise any of its rights or powers under the
indenture unless the trustee receives indemnity satisfactory to
it against any loss, liability or expense. (Section 7.1(e))
Subject to certain rights of the trustee, the holders of a
majority in principal amount of the outstanding debt securities
of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to
the trustee or exercising any trust or power conferred on the
trustee with respect to the debt securities of that series.
(Section 6.12)
No holder of any debt security of any series will have any right
to institute any proceeding, judicial or otherwise, with respect
to the indenture or for the appointment of a receiver or
trustee, or for any remedy under the indenture, unless:
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that holder has previously given to the trustee written notice
of a continuing Event of Default with respect to debt securities
of that series; and
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the holders of not less than 25% in principal amount of the
outstanding debt securities of that series have made written
request, and offered reasonable indemnity, to the trustee to
institute the proceeding as trustee, and the trustee has not
received from the holders of not less than 25% in principal
amount of the outstanding debt securities of that series a
direction inconsistent with that request and has failed to
institute the proceeding within 60 days. (Section 6.7)
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Notwithstanding the foregoing, the holder of any debt security
will have an absolute and unconditional right to receive payment
of the principal of, premium and any interest on that debt
security on or after the due dates expressed in that debt
security and to institute suit for the enforcement of payment.
(Section 6.8)
The indenture requires us, within 120 days after the end of
our fiscal year, to furnish to the trustee a statement as to
compliance with the indenture. (Section 4.3) The indenture
provides that the trustee may withhold notice to the holders of
debt securities of any series of any Default or Event of Default
(except in payment on any debt securities of that series) with
respect to debt securities of that series if it in good faith
determines that withholding notice is in the interest of the
holders of those debt securities. (Section 7.5)
Modification
and Waiver
We may modify and amend the indenture with the consent of the
holders of at least a majority in principal amount of the
outstanding debt securities of each series affected by the
modifications or amendments. We may not make any modification or
amendment without the consent of the holders of each affected
debt security then outstanding if that amendment will:
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reduce the amount of debt securities whose holders must consent
to an amendment, supplement or waiver;
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reduce the rate of or extend the time for payment of interest
(including default interest) on any debt security;
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reduce the principal of or premium on or change the fixed
maturity of any debt security or reduce the amount of, or
postpone the date fixed for, the payment of any sinking fund or
analogous obligation with respect to any series of debt
securities;
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reduce the principal amount of discount securities payable upon
acceleration of maturity;
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waive a default in the payment of the principal of, premium or
interest on any debt security (except a rescission of
acceleration of the debt securities of any series by the holders
of at least a majority in
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aggregate principal amount of the then outstanding debt
securities of that series and a waiver of the payment default
that resulted from such acceleration);
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make the principal of or premium or interest on any debt
security payable in currency other than that stated in the debt
security;
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make any change to certain provisions of the indenture relating
to, among other things, the right of holders of debt securities
to receive payment of the principal of, premium and interest on
those debt securities and to institute suit for the enforcement
of any such payment and to waivers or amendments; or
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waive a redemption payment with respect to any debt security.
(Section 9.3)
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Except for certain specified provisions, the holders of at least
a majority in principal amount of the outstanding debt
securities of any series may on behalf of the holders of all
debt securities of that series waive our compliance with
provisions of the indenture. (Section 9.2) The holders of a
majority in principal amount of the outstanding debt securities
of any series may on behalf of the holders of all the debt
securities of such series waive any past default under the
indenture with respect to that series and its consequences,
except a default in the payment of the principal of, premium or
any interest on any debt security of that series; provided,
however, that the holders of a majority in principal amount of
the outstanding debt securities of any series may rescind an
acceleration and its consequences, including any related payment
default that resulted from the acceleration. (Section 6.13)
Defeasance
of Debt Securities and Certain Covenants in Certain
Circumstances
Legal Defeasance.
The indenture provides that,
unless otherwise provided by the terms of the applicable series
of debt securities, we may be discharged from any and all
obligations in respect of the debt securities of any series
(except for certain obligations to register the transfer or
exchange of debt securities of such series, to replace stolen,
lost or mutilated debt securities of such series, and to
maintain paying agencies and certain provisions relating to the
treatment of funds held by paying agents). We will be so
discharged upon the deposit with the trustee, in trust, of money
and/or
U.S. Government Obligations or, in the case of debt
securities denominated in a single currency other than
U.S. Dollars, Foreign Government Obligations, that, through
the payment of interest and principal in accordance with their
terms, will provide money in an amount sufficient in the opinion
of a nationally recognized firm of independent public
accountants to pay and discharge each installment of principal,
premium and interest on and any mandatory sinking fund payments
in respect of the debt securities of that series on the stated
maturity of those payments in accordance with the terms of the
indenture and those debt securities.
This discharge may occur only if, among other things, we have
delivered to the trustee an opinion of counsel stating that we
have received from, or there has been published by, the United
States Internal Revenue Service a ruling or, since the date of
execution of the indenture, there has been a change in the
applicable United States federal income tax law, in either case
to the effect that, and based thereon such opinion shall confirm
that, the holders of the debt securities of that series will not
recognize income, gain or loss for United States federal income
tax purposes as a result of the deposit, defeasance and
discharge and will be subject to United States federal income
tax on the same amounts and in the same manner and at the same
times as would have been the case if the deposit, defeasance and
discharge had not occurred. (Section 8.3)
Defeasance of Certain Covenants.
The indenture
provides that, unless otherwise provided by the terms of the
applicable series of debt securities, upon compliance with
certain conditions:
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we may omit to comply with the covenant described under the
heading Consolidation, Merger and Sale of Assets and
certain other covenants set forth in the indenture, as well as
any additional covenants which may be set forth in the
applicable prospectus supplement; and
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any omission to comply with those covenants will not constitute
a Default or an Event of Default with respect to the debt
securities of that series (covenant defeasance).
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The conditions include:
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depositing with the trustee money
and/or
U.S. Government Obligations or, in the case of debt
securities denominated in a single currency other than
U.S. Dollars, Foreign Government Obligations, that, through
the payment of interest and principal in accordance with their
terms, will provide money in an amount sufficient in the opinion
of a nationally recognized firm of independent public
accountants to pay and discharge each installment of principal
of, premium and interest on and any mandatory sinking fund
payments in respect of the debt securities of that series on the
stated maturity of those payments in accordance with the terms
of the indenture and those debt securities; and
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delivering to the trustee an opinion of counsel to the effect
that the holders of the debt securities of that series will not
recognize income, gain or loss for United States federal income
tax purposes as a result of the deposit and related covenant
defeasance and will be subject to United States federal income
tax on the same amounts and in the same manner and at the same
times as would have been the case if the deposit and related
covenant defeasance had not occurred. (Section 8.4)
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Covenant Defeasance and Events of Default.
In
the event we exercise our option to effect covenant defeasance
with respect to any series of debt securities and the debt
securities of that series are declared due and payable because
of the occurrence of any Event of Default, the amount of money
and/or
U.S. Government Obligations or Foreign Government
Obligations on deposit with the trustee will be sufficient to
pay amounts due on the debt securities of that series at the
time of their stated maturity but may not be sufficient to pay
amounts due on the debt securities of that series at the time of
the acceleration resulting from the Event of Default. However,
we shall remain liable for those payments.
Foreign Government Obligations
means, with
respect to debt securities of any series that are denominated in
a currency other than U.S. Dollars:
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direct obligations of the government that issued or caused to be
issued such currency for the payment of which obligations its
full faith and credit is pledged which are not callable or
redeemable at the option of the issuer thereof; or
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obligations of a person controlled or supervised by or acting as
an agency or instrumentality of that government the timely
payment of which is unconditionally guaranteed as a full faith
and credit obligation by that government which are not callable
or redeemable at the option of the issuer thereof.
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Governing
Law
The indenture and the debt securities will be governed by, and
construed in accordance with, the internal laws of the State of
New York. (Section 10.10)
PREFERRED
STOCK
The following briefly summarizes the material terms of our
preferred stock, other than pricing and related terms that will
be disclosed in an accompanying prospectus supplement. You
should read the particular terms of any series of preferred
stock offered by us, which will be described in more detail in
any prospectus supplement relating to such series, together with
the more detailed provisions of our certificate of
incorporation, as amended (which we refer to as our Restated
Certificate of Incorporation), and the certificate of
designation relating to each particular series of preferred
stock for provisions that may be important to you. The Restated
Certificate of Incorporation is incorporated by reference into
the registration statement of which this prospectus forms a
part. The certificate of designation relating to the particular
series of preferred stock offered by an accompanying prospectus
supplement and this prospectus will be filed as an exhibit to a
document incorporated by reference in the registration
statement. The prospectus supplement will also state whether any
of the terms summarized below do not apply to the series of
preferred stock being offered.
As of the date of this prospectus, we are authorized to issue up
to 1,000,000 shares of preferred stock, par value $.01 per
share (none of which are currently outstanding). Under our
Restated Certificate of
10
Incorporation, our board of directors is authorized to issue
shares of preferred stock in one or more series, and to
establish from time to time a series of preferred stock with the
following terms specified:
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the number of shares to be included in the series;
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the designations, preferences and relative, participating,
optional and other special rights of the shares of such series;
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any voting rights of that series of preferred stock; and
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the qualifications, limitations or restrictions of such series.
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All shares of preferred stock offered hereby will not have any
preemptive rights. Our board of directors may exercise its
discretion in establishing the terms of each series of preferred
stock. Shares of preferred stock could have rights that would
cause such shares to be equal or superior to the common stock
with respect to such matters as voting, dividends and
liquidation rights or which could adversely affect holders of
the common stock or discourage or make difficult any attempt to
obtain control of the company.
We will set forth in a prospectus supplement relating to the
series of preferred stock being offered the terms of the
preferred stock as determined by our board of directors,
including the following:
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the title and stated value of the preferred stock;
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the number of shares of the preferred stock offered, the
liquidation preference per share and the offering price of the
preferred stock;
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the dividend rate(s), period(s)
and/or
payment date(s) or method(s) of calculation applicable to the
preferred stock;
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whether dividends are cumulative or non-cumulative and, if
cumulative, the date from which dividends on the preferred stock
will accumulate;
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the procedures for any auction and remarketing, if any, for the
preferred stock;
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the provisions for a sinking fund, if any, for the preferred
stock;
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the provision for redemption or repurchase, if applicable, of
the preferred stock;
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while any shares of such series are outstanding, the limitations
and restrictions, if any, upon the payment of dividends on, and
upon the purchase, redemption or other acquisition by us of, our
common stock, or any other class or series of our stock ranking
junior to the shares of such series either as to dividends or
upon liquidation;
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any listing of the preferred stock on any securities exchange;
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the terms and conditions, if applicable, upon which the
preferred stock will be convertible into common stock or other
series of preferred stock or other securities, including the
conversion price (or manner of calculation) and conversion
period;
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voting rights, if any, of the preferred stock;
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whether interests in the preferred stock will be represented by
depositary shares;
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a discussion of any material
and/or
special federal income tax considerations applicable to the
preferred stock;
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the relative ranking and preferences of the preferred stock as
to dividend rights and rights upon the liquidation, dissolution
or winding up of our affairs;
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any limitations on issuance of any class or series of preferred
stock ranking senior to or on a parity with the class or series
of preferred stock as to dividend rights and rights upon
liquidation, dissolution or winding up of our affairs; and
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any other specific terms, preferences, rights, limitations or
restrictions of the preferred stock.
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COMMON
STOCK
The following description of our common stock is only a summary.
We encourage you to read our Restated Certificate of
Incorporation, which is incorporated by reference into the
registration statement of which this prospectus forms a part. As
of the date of this prospectus, we are authorized to issue up to
600,000,000 shares of common stock, $0.01 par value
per share. As of May 9, 2008, we had outstanding
191,003,000 shares of our common stock.
Subject to such preferential rights as may be granted by the
board of directors in connection with future issuances of
preferred stock, the holders of shares of common stock are
entitled to one vote for each share held on all matters to be
voted on by stockholders and are entitled to receive ratably
such dividends as may be declared by the board of directors in
its discretion from funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the
company, holders of common stock are entitled to share ratably
in all assets remaining after payment of liabilities and any
liquidation preference owed to holders of preferred stock.
Holders of common stock have no preemptive rights and have no
rights to convert their common stock into any other securities.
Matters submitted for stockholder approval generally require a
majority vote. The common stock currently outstanding is fully
paid and nonassessable.
Our common stock is listed on the New York Stock Exchange and
trades under the symbol BMC.
Anti-Takeover
Effects of Delaware Law
We are subject to the provisions of Section 203 of the
Delaware General Corporation Law, which, subject to certain
exceptions, prohibits a Delaware corporation from engaging in
any business combination with any interested stockholder for a
period of three years following the time that such stockholder
became an interested stockholder, unless:
(1) prior to such time, the board of directors of the
corporation approved either the business combination or the
transaction that resulted in the stockholder becoming an
interested stockholder;
(2) upon consummation of the transaction that resulted in
the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of
the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of
shares outstanding those shares owned:
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by persons who are directors and also officers; and
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by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange
offer; or
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(3) at or subsequent to such time the business combination
is approved by the board of directors and authorized at an
annual or special meeting of the stockholders, and not by
written consent, by the affirmative vote of at least
66
2
/
3
%
of the outstanding voting stock that is not owned by the
interested stockholder.
Section 203 defines business combination to
include:
(1) any merger or consolidation involving the corporation
and the interested stockholder;
(2) any sale, transfer, pledge or other disposition of 10%
or more of the assets of the corporation involving the
interested stockholder;
(3) subject to certain exceptions, any transaction that
results in the issuance or transfer by the corporation of any
stock of the corporation to the interested stockholder;
(4) any transaction involving the corporation that has the
effect of increasing the proportionate share of the stock of any
class or series of the corporation beneficially owned by the
interested stockholder; or
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(5) the receipt by the interested stockholder of the
benefit of any loans, advances, guarantees, pledges or other
financial benefits provided by or through the corporation.
In general, Section 203 defines an interested
stockholder as any person who or which beneficially owns
15% or more of the outstanding voting stock of the corporation
or any person affiliated with or controlling or controlled by
the corporation that was the owner of 15% or more of the
outstanding voting stock of the corporation at any time within
the three-year period immediately prior to the date of
determination if such person is an interested stockholder.
The existence of this provision would be expected to have an
anti-takeover effect with respect to transactions not approved
in advance by our board of directors, including discouraging
attempts that might result in a premium over the market price
for the shares of common stock held by stockholders.
CONSOLIDATED
RATIOS OF EARNINGS TO FIXED CHARGES
The following table presents our historical ratio of earnings to
fixed charges for each of the years in the five-year period
ended March 31, 2008.
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Year Ended March 31,
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2008
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2007
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2006
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2005
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2004
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Consolidated Ratios of Earnings to Fixed Charges
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24.0
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16.8
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x
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12.3
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x
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5.8
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x
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(a)
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(a)
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The deficiency in the coverage of fixed charges by earnings
before fixed charges was $29.4 million for the year ended
March 31, 2004.
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For purposes of computing the ratio of earnings to fixed
charges, earnings consist of earnings (loss) before income taxes
plus fixed charges. Fixed charges consist of (i) interest
expense and (ii) a portion of rental expenses deemed
representative of the interest factor.
USE OF
PROCEEDS
We intend to use the net proceeds from the sales of the
securities as set forth in the applicable prospectus supplement.
PLAN OF
DISTRIBUTION
We or the selling securityholders, if any, may sell the
securities in any of three ways (or in any combination):
(a) through underwriters or dealers; (b) directly to a
limited number of purchasers or to a single purchaser; or
(c) through agents. The prospectus supplement will set
forth the terms of the offering of such securities, including:
(a) the name or names of any underwriters, dealers or
agents and the amounts of securities underwritten or purchased
by each of them;
(b) the initial public offering price of the securities and
the proceeds to us and any discounts, commissions or concessions
allowed or reallowed or paid to dealers; and
(c) any securities exchanges on which the securities may be
listed.
We or any of the selling securityholders may distribute the
securities from time to time in one or more transactions:
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at a fixed price or prices, which may be changed;
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at market prices prevailing at the time of sale;
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at prices related to such prevailing market prices; or
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at negotiated prices.
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We or the selling securityholders may solicit directly offers to
purchase the securities being offered by this prospectus. We may
also designate agents to solicit offers to purchase the
securities from time to time. We will name in a prospectus
supplement any agent involved in the offer or sale of our
securities.
If we utilize a dealer in the sale of the securities being
offered by this prospectus, we will sell the securities to the
dealer, as principal. The dealer may then resell the securities
to the public at varying prices to be determined by the dealer
at the time of resale.
If we utilize an underwriter in the sale of the securities being
offered by this prospectus, we will execute an underwriting
agreement with the underwriter at the time of sale and we will
provide the name of any underwriter in the prospectus supplement
that the underwriter will use to make resales of the securities
to the public. In connection with the sale of the securities,
we, or the purchasers of securities for whom the underwriter may
act as agent, may compensate the underwriter in the form of
underwriting discounts or commissions. The underwriter may sell
the securities to or through dealers, and those dealers may
receive compensation in the form of discounts, concessions or
commissions from the underwriters
and/or
commissions form the purchasers for which they may act as agent.
Unless otherwise indicated in a prospectus supplement, an agent
will be acting on a best efforts basis and a dealer will
purchase securities as a principal, and may then resell the
securities at varying prices to be determined by the dealer.
We will provide in the applicable prospectus supplement any
compensation we pay to underwriters, dealers or agents in
connection with the offering of the securities, and any
discounts, concessions or commissions allowed by underwriters to
participating dealers. Underwriters, dealers and agents
participating in the distribution of the securities may be
deemed to be underwriters within the meaning of the Securities
Act of 1933, as amended, or the Securities Act, and any
discounts and commissions received by them and any profit
realized by them on resale of the securities may be deemed to be
underwriting discounts and commissions. We may enter into
agreements to indemnify underwriters, dealers and agents against
civil liabilities, including liabilities under the Securities
Act, or to contribute to payments they may be required to make
in respect thereof and to reimburse those persons for certain
expenses.
The securities may or may not be listed on a national securities
exchange such as the NYSE. To facilitate the offering of
securities, certain persons participating in the offering may
engage in transactions that stabilize, maintain or otherwise
affect the price of the securities. This may include
over-allotments or short sales of the securities, which involve
the sale by persons participating in the offering of more
securities than we sold to them. In these circumstances, these
persons would cover such over-allotments or short positions by
making purchases in the open market or by exercising their
over-allotment option, if any. In addition, these persons may
stabilize or maintain the price of the securities by bidding for
or purchasing securities in the open market or by imposing
penalty bids, whereby selling concessions allowed to dealers
participating in the offering may be reclaimed if securities
sold by them are repurchased in connection with stabilization
transactions. The effect of these transactions may be to
stabilize or maintain the market price of the securities at a
level above that which might otherwise prevail in the open
market. These transactions may be discontinued at any time.
In addition, we may enter into derivative transactions with
third parties, or sell securities not covered by this prospectus
to third parties in privately negotiated transactions. If the
applicable prospectus supplement so indicates, in connection
with those derivatives, the third parties may sell securities
covered by this prospectus and the applicable prospectus
supplement, including in short sale transactions. If so, the
third party may use securities pledged by us or borrowed from us
or others to settle those sales or to close out any related open
borrowings of stock, and may use securities received from us in
settlement of those derivatives to close out any related open
borrowings of stock. The third party in such sale transactions
will be an underwriter and, if not identified in this
prospectus, will be identified in the applicable prospectus
supplement (or a post-effective amendment). In addition, we may
otherwise loan or pledge securities to a financial institution
or other third party that in turn may sell the securities short
using this prospectus and an applicable prospectus supplement.
Such financial institution or other third party may transfer its
economic short position to investors in our securities or in
connection with a concurrent offering of other securities.
The underwriters, dealers and agents may engage in transactions
with us, or perform services for us, in the ordinary course of
business for which they receive compensation.
14
LEGAL
MATTERS
In connection with particular offerings of the securities in the
future, and if stated in the applicable prospectus supplements,
the validity of those securities may be passed upon for us by
Latham & Watkins LLP, San Francisco, California,
and for any underwriters or agents by counsel named in the
applicable prospectus supplement.
EXPERTS
The consolidated financial statements of BMC Software, Inc.
appearing in BMC Software, Inc.s Annual Report
(Form 10-K)
for the year ended March 31, 2008 have been audited by
Ernst & Young LLP, independent registered public
accounting firm, as set forth in their reports thereon, included
therein, and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in
reliance upon such reports given on the authority of such firm
as experts in accounting and auditing.
15
$
BMC
Software, Inc.
% Notes
Due 2018
Prospectus Supplement
May , 2008
Joint Book-Running Managers
Banc
of America Securities LLC
Credit
Suisse
Co-Managers
JPMorgan
Merrill Lynch & Co.
Morgan Stanley
UBS Investment Bank
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