Exhibit 10.1

BMC SOFTWARE, INC.

1994 EMPLOYEE INCENTIVE PLAN

(Conformed Version)

I. PURPOSE

The purpose of the BMC SOFTWARE, INC. 1994 EMPLOYEE INCENTIVE PLAN (the “Plan”)
is to provide a means through which BMC SOFTWARE, INC., a Delaware corporation
(the “Company”), and its subsidiaries may attract able persons to serve as
Directors or to enter the employ of the Company or its subsidiaries and to
provide a means whereby those individuals upon whom the responsibilities of the
successful administration and management of the Company and its subsidiaries
rest, and whose present and potential contributions to the Company and its
subsidiaries are of importance, can acquire and maintain stock ownership,
thereby strengthening their concern for the welfare of the Company and its
subsidiaries. A further purpose of the Plan is to provide such individuals with
additional incentive and reward opportunities designed to enhance the profitable
growth of the Company and its subsidiaries. Accordingly, the Plan provides for
granting Incentive Stock Options, options that do not constitute Incentive Stock
Options, Restricted Stock Awards, or any combination of the foregoing, as is
best suited to the circumstances of the particular employee or Director as
provided herein. The Plan as set forth herein constitutes an amendment and
restatement of the Plan as previously adopted by the Company, and shall
supersede and replace in its entirety such previously adopted plan.

II. DEFINITIONS

The following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:

(a) “Award” means, individually or collectively, any Option or Restricted Stock
Award.

(b) “Board” means the Board of Directors of the Company.

(c) “Code” means the Internal Revenue Code of 1986, as amended. Reference in the
Plan to any section of the Code shall be deemed to include any amendments or
successor provisions to such section and any regulations under such section.

(d) “Committee” means not less than two members of the Board who are selected by
the Board as provided in Paragraph IV(a).

(e) “Common Stock” means the common stock, par value $.01 per share, of the
Company.

(f) “Company” means BMC Software, Inc.

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(g) “Director” means an individual who is a member of the Board.

(h) An “employee” means any person (including a Director) in an employment
relationship with the Company or any parent or subsidiary corporation (as
defined in section 424 of the Code).

(i) “Fair Market Value” means, as of any specified date, the mean of the high
and low sales prices of the Common Stock (i) reported by the NASDAQ-National
Market System on that date or (ii) if the Common Stock is listed on a national
stock exchange, reported on the stock exchange composite tape on that date; or,
in either case, if no prices are reported on that date, on the last preceding
date on which such prices of the Common Stock are so reported. If the Common
Stock is traded over the counter at the time a determination of its fair market
value is required to be made hereunder, its fair market value shall be deemed to
be equal to the average between the reported high and low or closing bid and
asked prices of Common Stock on the most recent date on which Common Stock was
publicly traded. In the event Common Stock is not publicly traded at the time a
determination of its value is required to be made hereunder, the determination
of its fair market value shall be made by the Board in such manner as it deems
appropriate.

(j) “Holder” means an employee or a Director who has been granted an Award.

(k) “Incentive Stock Option” means an incentive stock option within the meaning
of section 422 of the Code.

(l) “1934 Act” means the Securities Exchange Act of 1934, as amended.

(m) “Option” means an Award granted under Paragraph VII of the Plan and includes
both Incentive Stock Options to purchase Common Stock and Options which do not
constitute Incentive Stock Options to purchase Common Stock.

(n) “Option Agreement” means a written agreement between the Company and a
Holder with respect to an Option.

(o) “Plan” means the BMC Software, Inc. 1994 Employee Incentive Plan as set
forth herein and, as amended from time to time.

(p) “Restricted Stock Agreement” means a written agreement between the Company
and a Holder with respect to a Restricted Stock Award.

(q) “Restricted Stock Award” means an Award granted under Paragraph VIII of the
Plan.

(r) “Rule 16b-3” means SEC Rule 16b-3 promulgated under the 1934 Act, as such
may be amended from time to time, and any successor rule, regulation or statute
fulfilling the

 

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same or a similar function.

(s) “Stock Appreciation Right” shall have the meaning assigned to such term in
Paragraph VII(d) of the Plan.

III. EFFECTIVE DATE AND DURATION OF THE PLAN

The Plan originally became effective on July 11, 1994. This amendment and
restatement of the Plan shall be effective as provided in Section I. No further
Awards may be granted under the Plan after August 23, 2015. The Plan shall
remain in effect until all Awards granted under the Plan have been satisfied or
expired.

IV. ADMINISTRATION

(a) Composition of Committee. The Plan shall be administered by a committee
which shall be (i) appointed by the Board, (ii) solely of “nonemployee
directors,” within the meaning of Rule 16b-3, and (iii) constituted solely by
two or more “outside directors,” within the meaning of section 162(m) of the
Code and applicable interpretive authority thereunder.

(b) Powers. Subject to the express provisions of the Plan, the Committee shall
have authority, in its discretion, to determine which individuals shall receive
an Award, the time or times when such Award shall be made, whether an Incentive
Stock Option or nonqualified Option shall be granted, and the number of shares
to be subject to each Option or Restricted Stock Award. In making such
determinations the Committee shall take into account the nature of the services
rendered by the respective individuals, their present and potential contribution
to the Company’s success and such other factors as the Committee in its
discretion shall deem relevant.

(c) Additional Powers. The Committee shall have such additional powers as are
delegated to it by the other provisions of the Plan. Subject to the express
provisions of the Plan, this shall include the power to construe the Plan and
the respective agreements executed hereunder, to prescribe rules and regulations
relating to the Plan, and to determine the terms, restrictions and provisions of
the agreement relating to each Award, including such terms, restrictions and
provisions as shall be requisite in the judgment of the Committee to cause
designated Options to qualify as Incentive Stock Options, and to make all other
determinations necessary or advisable for administering the Plan. The Committee
may correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any agreement relating to an Award in the manner and to the
extent it shall deem expedient to carry it into effect. The determinations of
the Committee on the matters referred to in this Paragraph IV shall be
conclusive.

(d) Delegation of Authority by the Committee. Notwithstanding the preceding
provisions of this Paragraph IV or any other provision of the Plan to the
contrary, the Committee may from time to time, in its sole discretion, delegate
to the Chief Executive Officer of the Company the administration (or
interpretation of any provision) of the Plan, and the right to grant

 

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Awards under the Plan, insofar as such administration (and interpretation) and
power to grant Awards relates to any person who is not subject to Section 16 of
the 1934 Act (including any successor section to the same or similar effect).
Any such delegation may be effective only so long as the Chief Executive Officer
of the Company is a Director, and the Committee may revoke such delegation at
any time. The Committee may put any conditions and restrictions on the powers
that may be exercised by the Chief Executive Officer of the Company upon such
delegation as the Committee determines in its sole discretion. In the event of
any conflict in a determination or interpretation under the Plan as between the
Committee and the Chief Executive Officer of the Company, the determination or
interpretation, as applicable, of the Committee shall be conclusive.

V. GRANT OF OPTIONS AND RESTRICTED STOCK AWARDS;

SHARES SUBJECT TO THE PLAN

(a) Stock Grant and Award Limits. The Committee may from time to time grant
Awards to one or more individuals determined by it to be eligible for
participation in the Plan in accordance with the provisions of Paragraph VI.
Subject to adjustment in the same manner as provided in Paragraph IX with
respect to shares of Common Stock subject to Options then outstanding, the
aggregate number of shares of Common Stock that may be issued under the Plan
shall not exceed 22,000,000 shares. For Awards granted prior to August 21, 2007,
shares shall be deemed to have been issued under the Plan only (i) to the extent
actually issued and delivered pursuant to an Award, or (ii) to the extent an
Award is settled in cash. To the extent that an Award lapses or the rights of
the Holder terminate, any shares of Common Stock subject to such Award shall
again be available for the grant of an Award. For Awards granted on or after
August 21, 2007, any shares of Common Stock made subject to Awards of Options or
Stock Appreciation Rights shall be counted against this number as one (1) share
of Common Stock for every one (1) share of Common Stock issued. Any shares of
Common Stock granted as an Award other than Options or Stock Appreciation rights
shall be counted against this number as two (2) shares of Common Stock for every
one (1) share of Common Stock issued. Shares of Common Stock shall not be deemed
to have been issued pursuant to the Plan with respect to any portion of an Award
that is settled in cash. The shares of Common Stock attributable to the
nonvested, unpaid, unexercised, unconverted or otherwise unsettled portion of
any Award that is forfeited or cancelled or expires or terminates for any reason
without becoming vested, paid, exercised, converted or otherwise settled in full
will again be available for purposes of the Plan. For purposes of determining
the number of shares of Common Stock issued upon the exercise, settlement or
grant of an Award under this Paragraph, any shares of Common Stock withheld to
satisfy tax withholding obligations shall be considered issued under the Plan if
such payment of tax withholding obligations with shares of Common Stock is
permitted by the Committee. Notwithstanding any provision in the Plan to the
contrary, the maximum number of shares of Common Stock that may be subject to
Awards granted to any one individual during the term of the Plan as provided in
Paragraph III hereof may not exceed 2,000,000 (subject to adjustment in the same
manner as provided in Paragraph IX hereof with respect to shares of Common Stock
subject to Options then outstanding). The limitation set forth in the preceding
sentence shall be applied in a manner which will permit compensation generated
under the Plan to constitute “performance-based” compensation for purposes of
section 162(m) of the Code, including,

 

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without limitation, counting against such maximum number of shares, to the
extent required under section 162(m) of the Code and applicable interpretive
authority thereunder, any shares subject to Options or Stock Appreciation Rights
that are cancelled or repriced.

(b) Stock Offered. The stock to be offered pursuant to the grant of an Award may
be authorized but unissued Common Stock or Common Stock previously issued and
outstanding and reacquired by the Company.

VI. ELIGIBILITY

Awards may be granted only to persons who, at the time of grant, are employees
or Directors. An Award may be granted on more than one occasion to the same
person, and, subject to the limitations set forth in the Plan, such Award may
include an Incentive Stock Option, an Option which is not an Incentive Stock
Option, a Restricted Stock Award, or any combination thereof.

VII. STOCK OPTIONS

(a) Option Period. The term of each Option shall be as specified by the
Committee at the date of grant.

(b) Limitations on Exercise of Option. An Option shall be exercisable in whole
or in such installments and at such times as determined by the Committee.

(c) Special Limitations on Incentive Stock Options. An Incentive Stock Option
may be granted only to an individual who is an employee at the time the Option
is granted. To the extent that the aggregate Fair Market Value (determined at
the time the respective Incentive Stock Option is granted) of Common Stock with
respect to which Incentive Stock Options granted after 1986 are exercisable for
the first time by an individual during any calendar year under all incentive
stock option plans of the Company and its parent and subsidiary corporations
exceeds $100,000, such Incentive Stock Options shall be treated as options which
do not constitute Incentive Stock Options. The Committee shall determine, in
accordance with applicable provisions of the Code, Treasury Regulations and
other administrative pronouncements, which of a Holder’s Incentive Stock Options
will not constitute Incentive Stock Options because of such limitation and shall
notify the Holder of such determination as soon as practicable after such
determination. No Incentive Stock Option shall be granted to an individual if,
at the time the Option is granted, such individual owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or of its parent or subsidiary corporation, within the meaning of
section 422(b)(6) of the Code, unless (i) at the time such Option is granted the
option price is at least 110% of the Fair Market Value of the Common Stock
subject to the Option and (ii) such Option by its terms is not exercisable after
the expiration of five years from the date of grant. An Incentive Stock Option
shall not be transferable otherwise than by will or the laws of descent and
distribution, and shall be exercisable during the Holders lifetime only by such
Holder or the Holder’s guardian or legal representative.

 

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(d) Option Agreement. Each Option shall be evidenced by an Option Agreement in
such form and containing such provisions not inconsistent with the provisions of
the Plan as the Committee from time to time shall approve, including, without
limitation, provisions to qualify an Incentive Stock Option under section 422 of
the Code. Each Option Agreement shall specify the effect of termination of
employment on the exercisability of the Option. An Option Agreement may provide
for the payment of the option price, in whole or in part, by the delivery of a
number of shares of Common Stock (plus cash if necessary) having a Fair Market
Value equal to such option price. Moreover, an Option Agreement may provide for
a “cashless exercise” of the Option by establishing procedures whereby the
Holder, by a properly-executed written notice, directs (i) an immediate market
sale or margin loan respecting all or a part of the shares of Common Stock to
which he is entitled upon exercise pursuant to an extension of credit by the
Company to the Holder of the option price, (ii) the delivery of the shares of
Common Stock from the Company directly to a brokerage firm, and (iii) the
delivery of the option price from sale or margin loan proceeds from the
brokerage firm directly to the Company. Further, an Option Agreement may provide
for the surrender of the right to purchase shares under the Option in return for
a payment in cash or shares of Common Stock or a combination of cash and shares
of Common Stock equal in value to the excess of the Fair Market Value of the
shares with respect to which the right to purchase is surrendered over the
option price therefor (“Stock Appreciation Rights”), on such terms and
conditions as the Committee in its sole discretion may prescribe; provided, that
with respect to Stock Appreciation Rights granted to individuals who are subject
to Section 16 of the 1934 Act, except as provided in Subparagraph IX(c) hereof,
the Committee shall retain final authority (i) to determine whether a Holder
shall be permitted, or (ii) to approve an election by a Holder, to receive cash
in full or partial settlement of Stock Appreciation Rights. In the case of any
such Stock Appreciation Right that is granted in connection with an Incentive
Stock Option, such right shall be exercisable only when the Fair Market Value of
the Common Stock exceeds the price specified therefor in the Option or the
portion thereof to be surrendered. The terms and conditions of the respective
Option Agreements need not be identical.

(e) Option Price and Payment. The price at which a share of Common Stock may be
purchased upon exercise of an Option shall be determined by the Committee but,
subject to adjustment as provided in Paragraph IX, shall not be less than the
Fair Market Value of a share of Common Stock on the date such Option is granted.
The option or portion thereof may be exercised by delivery of an irrevocable
notice of exercise to the Company. The purchase price of the Option or portion
thereof shall be paid in full in the manner prescribed by the Committee.
Separate stock certificates shall be issued by the Company for those shares
acquired pursuant to the exercise of an Incentive Stock Option and for those
shares acquired pursuant to the exercise of any Option which does not constitute
an Incentive Stock Option.

(f) Shareholder Rights and Privileges. The Holder shall be entitled to all the
privileges and rights of a shareholder only with respect to such shares of
Common Stock as have been purchased under the Option and for which certificates
of stock have been registered in the Holder’s name.

 

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(g) Options and Rights in Substitution for Stock Options Granted by Other
Corporations. Options and Stock Appreciation Rights may be granted under the
Plan from time to time in substitution for stock options held by individuals
employed by corporations who become employees as a result of a merger or
consolidation of the employing corporation with the Company or any subsidiary,
or the acquisition by the Company or a subsidiary of the assets of the employing
corporation, or the acquisition by the Company or a subsidiary of stock of the
employing corporation with the result that such employing corporation becomes a
subsidiary.

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

VIII. RESTRICTED STOCK AWARDS

(a) Restrictions To Be Established by the Committee. Shares of Common Stock that
are the subject of a Restricted Stock Award shall be subject to restrictions on
disposition by the Holder and an obligation of the Holder to forfeit and
surrender the shares to the Company under certain circumstances (the “Forfeiture
Restrictions”). The Forfeiture Restrictions shall be determined by the Committee
in its sole discretion, and the Committee may provide that the Forfeiture
Restrictions shall lapse upon (i) the attainment of one or more performance
targets established by the Committee that are based on (1) the price of a share
of Common Stock, (2) the Company’s earnings per share, (3) the Company’s market
share, (4) the market share of a business unit of the Company designated by the
Committee, (5) the Company’s sales, (6) the sales of a business unit of the
Company designated by the Committee, or (7) the return on stockholders’ equity
achieved by the Company, (ii) the Holder’s continued employment with the Company
for a specified period of time, (iii) the occurrence of any event or the
satisfaction of any other condition specified by the Committee in its sole
discretion or (iv) a combination of any of the foregoing. Each Restricted Stock
Award may have different Forfeiture Restrictions, in the discretion of the
Committee. The Forfeiture Restrictions applicable to a particular Restricted
Stock Award shall not be changed except as permitted by Paragraph VIII(b) or
Paragraph IX.

(b) Other Terms and Conditions. Common Stock awarded pursuant to a Restricted
Stock Award shall be represented by a stock certificate registered in the name
of the Holder of such Restricted Stock Award. The Holder shall have the right to
receive dividends with respect to Common Stock subject to a Restricted Stock
Award, to vote Common Stock subject thereto and to enjoy all other shareholder
rights, except that (i) the Holder shall not be entitled to delivery of the
stock certificate until the Forfeiture Restrictions have expired, (ii) the
Company shall retain custody of the stock until the Forfeiture Restrictions have
expired (iii) the Holder may not sell, transfer, pledge, exchange, hypothecate
or otherwise dispose of the stock until the Forfeiture Restrictions have
expired, and (iv) a breach of the terms and conditions established by the
Committee pursuant to the Restricted Stock Agreement, shall cause a forfeiture
of the Restricted Stock Award. At the time of such Award, the Committee may, in
its sole discretion,

 

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prescribe additional terms, conditions or restrictions relating to Restricted
Stock Awards, including, but not limited to, rules pertaining to the termination
of employment (by retirement, disability, death or otherwise) of a Holder prior
to expiration of the Forfeiture Restrictions. Such additional terms, conditions
or restrictions shall be set forth in a Restricted Stock Agreement made in
conjunction with the Award.

(c) Payment for Restricted Stock. The Committee shall determine the amount and
form of any payment for Common Stock received pursuant to a Restricted Stock
Award, provided that in the absence of such a determination, a Holder shall not
be required to make any payment for Common Stock received pursuant to a
Restricted Stock Award, except to the extent otherwise required by law.

(d) Agreements. At the time any Award is made under this Paragraph VIII, the
Company and the Holder shall enter into a Restricted Stock Agreement setting
forth each of the matters contemplated hereby and such other matters as the
Committee may determine to be appropriate. The terms and provisions of the
respective Restricted Stock Agreements need not be identical.

IX. RECAPITALIZATION OR REORGANIZATION

(a) The existence of the Plan and the Awards granted hereunder shall not affect
in any way the right or power of the Board or the shareholders of the Company to
make or authorize any adjustment, recapitalization, reorganization or other
change in the Company’s capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities ahead of or
affecting Common Stock or the rights thereof, the dissolution or liquidation of
the Company or any sale, lease, exchange or other disposition of all or any part
of its assets or business or any other corporate act or proceeding.

(b) The shares with respect to which Options may be granted are shares of Common
Stock as presently constituted, but if, and whenever, prior to the expiration of
an Option theretofore granted, the Company shall effect a subdivision or
consolidation of shares of Common Stock or the payment of a stock dividend on
Common Stock without receipt of consideration by the Company, the number of
shares of Common Stock with respect to which such Option may thereafter be
exercised (i) in the event of an increase in the number of outstanding shares
shall be proportionately increased, and the purchase price per share shall be
proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares shall be proportionately reduced, and the purchase price per
share shall be proportionately increased. Any fractional share resulting from
such adjustment shall be rounded up to the next whole share.

(c) If the Company recapitalizes, reclassifies its capital stock, or otherwise
changes its capital structure (a “recapitalization”), the number and class of
shares of Common Stock covered by an Option theretofore granted shall be
adjusted so that such Option shall thereafter cover the number and class of
shares of stock and securities to which the Holder would have been entitled
pursuant to the terms of the recapitalization if, immediately prior to the
recapitalization, the

 

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Holder had been the holder of record of the number of shares of Common Stock
then covered by such Option. If (i) the Company shall not be the surviving
entity in any merger or consolidation (or survives only as a subsidiary of an
entity, (ii) the Company sells, leases or exchanges or agrees to sell, lease or
exchange all or substantially all of its assets to any other person or entity,
(iii) the Company is to be dissolved and liquidated, (iv) any person or entity,
including a “group” as contemplated by Section 13(d)(3) of the 1934 Act,
acquires or gains ownership or control (including, without limitation, power to
vote) of more than 50% of the outstanding shares of the Company’s voting stock
(based upon voting power), or (v) as a result of or in connection with a
contested election of directors, the persons who were directors of the Company
before such election shall cease to constitute a majority of the Board (each
such event is referred to herein as a “Corporate Change”), no later than (x) ten
days after the approval by the shareholders of the Company of such merger,
consolidation, reorganization, sale, lease or exchange of assets or dissolution
of such election of directors or (y) thirty days after a Corporate Change of the
type described in clause (iv), the Committee, acting in its sole discretion
without the consent or approval of any Holder, shall effect one or more of the
following alternatives, which may vary among individual Holders and which may
vary among Options held by any individual Holder: (1) accelerate the time at
which Options then outstanding may be exercised so that Options may be exercised
in full for a limited period of time on or before a specified date (before or
after such Corporate Change) fixed by the Committee, after which specified date
all unexercised Options and all rights of Holders thereunder shall terminate,
(2) require the mandatory surrender to the Company by selected Holders of some
or all of the outstanding Options held by such Holders (irrespective of whether
such Options are then exercisable under the provisions of the Plan) as of a
date, before or after such Corporate Change, specified by the Committee, in
which event the Committee shall thereupon cancel such Options and pay to each
Holder an amount of cash per share equal to the excess, if any, of the amount
calculated in Subparagraph (d) below (the “Change of Control Value”) of the
shares subject to such Option over the exercise price(s) under such Options for
such shares, (3) make such adjustments to Options then outstanding as the
Committee deems appropriate to reflect such Corporate Change (provided, however,
that the Committee may determine in its sole discretion that no adjustment is
necessary to Options then outstanding) or (4) provide that the number and class
of shares of Common Stock covered by an Option theretofore granted shall be
adjusted so that such Option shall thereafter cover the number and class of
shares of stock or other securities or property (including, without limitation,
cash) to which the Holder would have been entitled pursuant to the terms of the
agreement of merger, consolidation or sale of assets and dissolution if,
immediately prior to such merger, consolidation or sale of assets and
dissolution, the Holder had been the holder of record of the number of shares of
Common Stock then covered by such Option.

(d) For the purposes of clause (2) in Subparagraph (c) above, the “Change of
Control Value” shall equal the amount determined in clause (i), (ii) or (iii),
whichever is applicable, as follows: (i) the per share price offered to
shareholders of the Company in any such merger, consolidation, sale of assets or
dissolution transaction, (ii) the price per share offered to shareholders of the
Company in any tender offer or exchange offer whereby a Corporate Change takes
place, or (iii) if such Corporate Change occurs other than pursuant to a tender
or exchange offer, the fair market value per share of the shares into which such
Options being surrendered are exercisable, as determined by the Committee as of
the date determined by the Committee to be

 

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the date of cancellation and surrender of such Options. In the event that the
consideration offered to shareholders of the Company in any transaction
described in this Subparagraph (d) or Subparagraph (c) above consists of
anything other than cash, the Committee shall determine the fair cash equivalent
of the portion of the consideration offered which is other than cash.

(e) In the event of changes in the outstanding Common Stock by reason of
recapitalization, reorganizations, mergers, consolidations, combinations,
split-offs, spin-offs, split-ups, exchanges or other relevant changes in
capitalization occurring after the date of the grant of any Award and not
otherwise provided for by this Paragraph IX, any outstanding Awards and any
agreements evidencing such Awards shall be subject to adjustment by the
Committee at its discretion as to the number and price of shares of Common Stock
or other consideration subject to such Awards. In the event of any such change
in the outstanding Common Stock, the aggregate number of shares available under
the Plan (and the aggregate number of shares that may be granted to any one
individual) may be appropriately adjusted by the Committee, whose determination
shall be conclusive.

(f) Any adjustment provided for in the above Subparagraphs shall be subject to
any required shareholder action.

(g) Except as hereinbefore expressly provided, the issuance by the Company of
shares of stock of any class or securities convertible into shares of stock of
any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Common Stock subject to Awards theretofore granted or the purchase
price per share, if applicable.

(h) Plan provisions to the contrary notwithstanding, with respect to any
Restricted Stock Awards outstanding at the time a Corporate Change as described
in Subparagraph (c) above occurs, the Committee may, in its discretion and as of
a date determined by the Committee, fully vest any or all Common Stock awarded
to the Holder pursuant to such Restricted Stock Award and then outstanding and,
upon such vesting, all restrictions applicable to such Restricted Stock Award
shall terminate as of such date. Any action by the Committee pursuant to this
Subparagraph may vary among individual Holders and may vary among the Restricted
Stock Awards held by any individual Holder.

X. AMENDMENT AND TERMINATION OF THE PLAN

The Board in its discretion may terminate the Plan at any time with respect to
any shares of Common Stock for which Awards have not theretofore been granted.
The Board shall have the right to alter or amend the Plan or any part thereof
from time to time; provided that no change in any Award theretofore granted may
be made which would impair the rights of the Holder without the consent of the
Holder, and provided, further, that the Board may not, without approval of the
shareholders, amend the Plan:

 

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(a) to increase the maximum number of shares of Common Stock which may be issued
on exercise or surrender of Options or pursuant to Restricted Stock Awards,
except as provided in Paragraph IX; or

(b) to change the class of individuals eligible to receive Awards under the
Plan.

XI. MISCELLANEOUS

(a) No Right To An Award. Neither the adoption of the Plan nor any action of the
Board or of the Committee shall be deemed to give any individual any right to be
granted an Option, a right to a Restricted Stock Award, or any other rights
hereunder except as may be evidenced by an Option Agreement or a Restricted
Stock Agreement duly executed on behalf of the Company, and then only to the
extent and on the terms and conditions expressly set forth therein. The Plan
shall be unfunded. The Company shall be not be required to establish any special
or separate fund or to make any other segregation of funds or assets to assure
the payment of any Award.

(b) No Employment Rights Conferred. Nothing contained in the Plan shall
(i) confer upon any employee any right with respect to continuation of
employment with the Company or any subsidiary or (ii) interfere in any way with
the right of the Company or any subsidiary to terminate his or her employment at
any time. In addition, for all purposes under the Plan, any reference to the
employment of an employee or individual, or the termination thereof, shall be
deemed to also include reference to the service of a Director on the Board, or
the termination thereof, as applicable.

(c) Other Laws; Withholding. The Company shall not be obligated to issue any
Common Stock pursuant to any Award granted under the Plan at any time when the
shares covered by such Award have not been registered under the Securities Act
of 1933 and such other state and federal laws, rules or regulations as the
Company or the Committee deems applicable and, in the opinion of legal counsel
for the Company, there is no exemption from the registration requirements of
such laws, rules or regulations available for the issuance and sale of such
shares. No fractional shares of Common Stock shall be delivered, nor shall any
cash in lieu of fractional shares be paid. The Company shall have the right to
deduct in connection with all Awards any taxes required by law to be withheld
and to require any payments required to enable it to satisfy its withholding
obligations.

(d) No Restriction on Corporate Action. Nothing contained in the Plan shall be
construed to prevent the Company or any subsidiary from taking any corporate
action which is deemed by the Company or such subsidiary to be appropriate or in
its best interest, whether or not such action would have an adverse effect on
the Plan or any Award made under the Plan. No employee, Director, beneficiary or
other person shall have any claim against the Company or any subsidiary as a
result of any such action.

(e) Restrictions on Transfer. An Award (other than an Incentive Stock Option,

 

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which shall be subject to the transfer restrictions set forth in Paragraph
VII(c)) shall not be transferable otherwise than (i) by will or the laws of
descent and distribution, (ii) pursuant to a qualified domestic relations order
as defined by the Code or Title I of the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder, or (iii) with the consent of the
Committee.

(f) Rule 16b-3. It is intended that the Plan and any grant of an Award made to a
person subject to Section 16 of the 1934 Act meet the requirements of Rule 16b-3
so that any transaction under the Plan involving a grant, award, or other
acquisition from the Company or disposition to the Company is exempt from
Section 16(b) of the 1934 Act. If any provision of the Plan or any such Award
would result in any such transaction not being exempt from Section 16(b) of the
1934 Act, such provision or Award shall be construed or deemed amended so that
such transaction will be exempt from Section 16(b) of the 1934 Act.

(g) Governing Law. This Plan shall be construed in accordance with the laws of
the State of Texas, except to the extent that it implicates matters which are
the subject of the General Corporation Law of the State of Delaware which
matters shall be governed by the latter law.

 

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