Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.18

EXECUTIVE EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is made as of February 1, 2007 (the Effective
Date”), by and between BMC Software, Inc., a Delaware corporation (the “Employer”), and James W.
Grant, Jr. (the “Executive”). The Employer and the Executive are each a “party” and are
together “parties” to this Agreement.

RECITALS

WHEREAS, the Employer desires to employ the Executive, and the Executive wishes to accept such
employment, upon the terms and conditions set forth in this Agreement;

WHEREAS, the Employer and Executive previously entered into an Employment Agreement dated
March 17, 2003 which provided for a four-year employment term (the “Previous Agreement”) and both
parties desire for this Agreement to supersede and replace the Previous Agreement in its entirety.

AGREEMENT

NOW THEREFORE, in consideration of the employment compensation to be paid to the Executive and
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties, intending to be legally bound, agree as follows:

1. DEFINITIONS

For the purposes of this Agreement, the following terms have the meanings specified or
referred to in this Section 1.

“Agreement” refers to this Employment Agreement, including all Exhibits attached hereto, as
amended from time to time.

“Benefits” as defined in Section 3.1(b).

“Board of Directors” refers to the board of directors of the Employer.

“Change of Control” refers to (i) the acquisition of at least 50% of Employer’s outstanding
voting stock; (ii) an unapproved change in the majority of the Employer’s board of directors; (iii)
a merger, consolidation, or similar corporate transaction in which the Company’s shareholders
immediately prior to the transaction do not own more than 60% of the voting stock of the surviving
corporation in the transaction; and (iv) shareholder approval of the company’s liquidation,
dissolution, or sale of substantially all of its assets.

 

 

 

“Confidential Information” means any and all:

	 	a.	 	trade secrets (as defined herein) concerning the business and
affairs of the Employer, product specifications, data, know-how, formulae,
compositions, processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, past, current, and planned research and
development, current and planned manufacturing or distribution methods and
processes, customer lists, current and anticipated customer requirements, price
lists, market studies, business plans, computer software and programs
(including object code and source code), computer software and database
technologies, systems, structures, and architectures (and related formulae,
compositions, processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information), and any other
information, however documented, that is a trade secret;

	 
	 	b.	 	information concerning the business and affairs of the Employer
(which includes historical financial statements, financial projections and
budgets, historical and projected sales, capital spending budgets and plans,
the names and backgrounds of key personnel, personnel training and techniques
and materials), however documented; and

	 
	 	c.	 	notes, analysis, compilations, studies, summaries, and other
material prepared by or for the Employer containing or based, in whole or in
part, on any information included in the foregoing.

“Disability” as defined in Section 6.2.

“Effective Date” is the date stated in the first paragraph of the Agreement.

“Employee Invention” shall mean any idea, invention, technique, modification, process, or
improvement (whether patentable or not), any industrial design (whether registerable or not), any
mask work, however fixed or encoded, that is suitable to be fixed, embedded or programmed in a
semiconductor product (whether recordable or not), and any work of authorship (whether or not
copyright protection may be obtained for it) created, conceived, or developed by the Executive,
either solely or in conjunction with others, during the Employment Period, or a period that
includes a portion of the Employment Period, that relates in any way to, or is useful in any manner
in, the business then being conducted or proposed to be conducted by the Employer, and any such
item created by the Executive, either solely or in conjunction with others, following termination
of the Executive’s employment with the Employer, that is based upon or uses Confidential
Information.

“Employment Period” is the term of the Executive’s employment under this Agreement.

“Fiscal Year” shall mean the Employer’s fiscal year, which shall end on March 31 of each year,
or as changed from time to time.

 

2

 

“for cause” as defined in Section 6.3.

“Good Reason” as defined in Section 6.3.

“person” is any individual, corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture, estate, trust, association,
organization, or governmental body.

“Proprietary Items” as defined in Section 7.2(a)(iv).

“Salary” as defined in Section 3.1(a).

“trade secrets” shall mean the whole or any part of any scientific or technical information,
design, process, procedure, formula, or improvement that has value and that the owner has taken
measures to prevent from becoming available to persons other than those selected by the owner to
have access for limited purposes.

2. EMPLOYMENT TERMS AND DUTIES

2.1 EMPLOYMENT

The Employer hereby employs the Executive, and the Executive hereby accepts employment by the
Employer, upon the terms and conditions set forth in this Agreement.

2.2 EMPLOYMENT PERIOD

Subject to the provisions of Section 6, the term of the Executive’s employment under this
Agreement will commence upon the Effective Date and shall continue in effect through the third
anniversary of the Effective Date (the “Employment Period”); provided, however, that, subject to
the provisions of Section 6, commencing on the day after the Effective Date and on each day
thereafter, the Employment Period shall be automatically extended for one additional day unless the
Employer shall give written notice to Executive that the Employment Period shall cease to be so
extended, in which event the Employment Period shall terminate on the third anniversary of the date
such notice is given. The Employment Period may be further extended by mutual agreement of the
parties.

2.3 DUTIES

The Executive will have such duties as are assigned or delegated to the Executive by the Board
of Directors, and will initially serve as the Employer’s Senior Vice President & General Manager –
Enterprise Service Management. The Executive will devote his entire business time, attention,
skill, and energy exclusively to the business of the Employer, will use his best efforts to promote
the success of the Employer’s business, and will cooperate fully with the Board of Directors in the
advancement of the best interests of the Employer. The Executive’s employment will be subject to
the policies maintained and established by the Employer, from

 

3

 

time to time. Nothing in this Section 2.3, however, will prevent the Executive from engaging in
additional activities in connection with passive personal investments and community affairs that
are not inconsistent with the Executive’s duties under this Agreement. Additionally, nothing in
this Section 2.3 will prevent the Executive from serving on the Board of Directors of other
companies or organizations, or engaging in other activities, so long as such participation does not
conflict with the interests or business of Employer or require such involvement as to interfere
with the performance of the Executive’s duties hereunder and has been expressly approved by the
Chief Executive Officer of Employer. If the Executive is elected as a director of the Employer or
as a director or officer of any of its affiliates, the Executive will fulfill his duties as such
director or officer without additional compensation. The Executive acknowledges and agrees that he
owes a fiduciary duty of loyalty, fidelity and allegiance to act at all times in the best interests
of the Employer.

3. COMPENSATION

3.1 COMPENSATION

	 	a.	 	Salary. During the Employment Period, the Executive
will be paid an annual base salary of $400,000 (the “Salary”), which will be
payable in twenty-four (24) equal installments according to the Employer’s
customary payroll practices. Executive may be subject to such increases in
Salary as approved by the Compensation Committee and the Board of Directors of
Employer.

	 
	 	b.	 	Benefits. The Executive will, during the Employment
Period, be permitted to participate in such pension, profit sharing, life
insurance, hospitalization, major medical, and other employee benefit plans of
the Employer that may be in effect from time to time, to the extent the
Executive is eligible under the terms of those plans (collectively, the
“Benefits”).

	 
	 	c.	 	Cash Bonus. Executive will be eligible for a cash
bonus as described in Attachment A incorporated herein by reference and such
other bonus programs as may be authorized by the Compensation Committee and the
Board of Directors of Employer.

4. FACILITIES AND EXPENSES

4.1 FACILITIES.

The Employer will furnish the Executive office space, equipment, supplies, and such
other facilities and personnel as the Employer deems necessary or appropriate for the
performance of the Executive’s duties under this Agreement.

 

4

 

4.2 EXPENSES.

The Employer will pay on behalf of the Executive (or reimburse the Executive for)
reasonable expenses incurred by the Executive at the request of, or on behalf of, the
Employer in the performance of the Executive’s duties pursuant to this Agreement, and in
accordance with the Employer’s employment policies, including reasonable expenses incurred
by the Executive in attending business meetings, in appropriate business entertainment
activities, and for promotional expenses. The Executive must file expense reports with
respect to such expenses in accordance with the Employer’s policies then in effect.

5. VACATIONS AND HOLIDAYS

The Executive will be entitled to paid vacation during the term of the Agreement in accordance
with the vacation policies of the Employer in effect for its employees from time to time. The
Executive will also be entitled to the paid holidays and other paid leave set forth in the
Employer’s policies.

6. TERMINATION

6.1 EVENTS OF TERMINATION

The Employment Period, the Executive’s Salary and any and all other rights of the Executive
under this Agreement or otherwise as an employee of the Employer will terminate (except as
otherwise provided in this Section 6):

	 	a.	 	upon the death of the Executive;

	 
	 	b.	 	upon the Disability (as defined in Section 6.2) of the
Executive immediately upon notice from either party to the other;

	 
	 	c.	 	upon termination by the Employer for cause (as defined in
Section 6.3);

	 
	 	d.	 	upon the voluntary retirement from or voluntary resignation of
employment by the Executive for any reason other than those set forth in
Section 6.1(f) below;

	 
	 	e.	 	upon termination by the Employer for any reason other than
those set forth in Section 6.1(a) through 6.1(d) above; or

	 
	 	f.	 	upon voluntary resignation of employment by the Executive
within 60 days of the occurrence of an event that constitutes Good Reason, as
defined in Section 6.3 below.

 

5

 

Upon termination of the Employment Period, as provided above or otherwise, Executive’s rights
respecting Benefits, Restricted Stock, Stock Options and Cash Bonus will be determined under the
applicable plan or program providing the same.

6.2 DEFINITION OF DISABILITY

For purposes hereof, the term “Disability” shall mean an incapacity by accident, illness or
other circumstance which renders the Executive mentally or physically incapable of performing the
duties and services required of the Executive hereunder on a full-time basis for a period of at
least 180 consecutive days.

6.3 DEFINITION OF “FOR CAUSE” AND “GOOD REASON”

	 	a.	 	For purposes of Section 6.1, the phrase “for cause” means: (i)
the Executive’s continued and material failure to perform his obligations under
this Agreement; (ii) the Executive’s material failure to adhere to any Employer
policy or code of conduct; (iii) the appropriation (or attempted appropriation)
of a material business opportunity of the Employer, including attempting to
secure or securing any personal profit in connection with any transaction
entered into on behalf of the Employer; (iv) the Executive’s engaging in
conduct that is materially injurious to the Employer; (v) the misappropriation
(or attempted misappropriation) of any of the Employer’s funds or property;
(vi) the conviction of, or the entering of a guilty plea or plea of no contest
with respect to, a felony, the equivalent thereof, or any other crime with
respect to which imprisonment is a punishment; or (vii) the conviction of the
Executive by a court of competent jurisdiction of a crime involving moral
turpitude. The determination of whether the Executive’s employment is
terminated for cause shall be made solely by the Employer, which shall act in
good faith in making such determination.

	 
	 	b.	 	“Good Reason” means:

	 	i.	 	The occurrence, prior to a Change of Control or
on or after the date which is 12 months after a Change of Control
occurs, of any one or more of the following events without the
Executive’s express written consent: (i) a significant change in the
Executive’s titles or offices from those previously applicable to the
Executive (but not an alteration in Executive’s reporting
responsibilities); (ii) a reduction in the Executive’s Salary or target
bonus amount from that provided to him immediately on the Effective
Date of this Agreement (or the effective date of any extension of this
Agreement pursuant to Paragraph 7(a)) or as the same may be increased
from time to time; or (iii) a diminution in employee benefits
(including but not limited to medical, dental, life insurance and
long-term disability plans) and perquisites applicable to the Executive from those substantially similar to the employee benefits
and perquisites provided by the Employer (including subsidiaries) to
executives with comparable duties, as such benefits may be modified
from time to time; or

 

6

 

	 	ii.	 	The occurrence, within 12 months after the date
upon which a Change of Control occurs, of any one or more of the
following events without Executive’s express written consent: (i) a
change in Executive’s reporting responsibilities, titles or offices as
in effect immediately prior to the Change of Control or any removal of
Executive from, or any failure to re-elect Executive to, any of such
positions which has the effect of diminishing Executive’s
responsibility or authority; (ii) a reduction by the Employer or a
subsidiary thereof in Executive’s Salary or bonus target amount as in
effect immediately prior to the Change of Control or as the same may be
increased from time to time or a change in the eligibility requirements
or performance criteria under any bonus, incentive or compensation
plan, program or arrangement under which Executive is covered
immediately prior to the Change of Control which adversely affects
Executive; (iii) the Employer or a subsidiary thereof requiring
Executive to be permanently based anywhere other than within 50 miles
of Executive’s job location at the time of the Change of Control; (iv)
without replacement by a plan providing benefits to Executive equal to
or greater than those discontinued, the failure by the Employer or a
subsidiary thereof to continue in effect, within its maximum stated
term, any pension, bonus, incentive, stock ownership, purchase, option,
life insurance, health, accident, disability, or any other employee
benefit plan, program or arrangement in which Executive is
participating at the time of the Change of Control, or the taking of
any action by the Employer or a subsidiary thereof that would adversely
affect Executive’s participation or materially reduce Executive’s
benefits under any of such plans; (v) the taking of any action by the
Employer or a subsidiary thereof that would materially adversely affect
the physical conditions existing at the time of the Change of Control
in or under which Executive performs his employment duties; (vi) if
Executive’s primary employment duties are with a subsidiary of the
Employer, the sale, merger, contribution, transfer or any other
transaction in conjunction with which the Employer’s ownership interest
in the subsidiary decreases below a majority interest; or
(vii) any material variance from the terms of this Agreement by the
Employer or a subsidiary thereof.

 

7

 

6.4 SEVERANCE

Should the Executive’s employment with the Employer be terminated during the Employment Period
pursuant to Section 6.1(e) or Section 6.1(f) above, the Executive shall be entitled to:

	 	a.	 	a payment equal to one (1) year of his then current Salary; and

	 
	 	b.	 	a payment equal to one (1) year of his then current cash bonus
target amount.

Such payments under this section will be made no later than 30 days following the termination
from employment. Severance payments do not constitute continued employment beyond the termination
date.

6.5 CHANGE OF CONTROL

If, within 12 months of a Change of Control, the Executive’s position is eliminated or the
Executive is terminated pursuant to Section 6.1(e) or 6.1(f) above, regardless of whether such
termination event occurs during or after the Employment Period, the Executive shall be entitled to
the following in lieu of the amounts set forth in Section 6.4:

	 	a.	 	a payment equal to one (1) year of his then current Salary;

	 
	 	b.	 	a payment equal to one (1) times his then current cash bonus
target amount;

	 
	 	c.	 	vesting of Executive’s stock option and restricted stock
awards, if any, subject to the terms and conditions of the respective stock
option and restricted stock agreements; and

	 
	 	d.	 	a lump sum payment equal to the cost of COBRA coverage for 18
months for continued medical benefits for the Executive and his dependents
(including his spouse) who were covered as of such termination event under the
medical benefit plan as in effect for employees of the Employer during the
coverage period, or the substantial equivalence.

Severance payments do not constitute continued employment beyond the termination date.

Notwithstanding anything to the contrary in this Agreement, if the Executive is a
“disqualified individual” (as defined in Section 280G(c) of the Internal Revenue Code of
1986, as amended (the “Code”)), and the severance benefits provided for in this Section
6.5, together with any other payments and benefits which the Executive has the right to
receive from the Employer and its affiliates, would constitute a “parachute payment” (as
defined in Section 280G(b)(2) of the Code), then the severance benefits provided hereunder
(beginning with any benefit to be paid in cash hereunder) shall be either (1)

 

8

 

reduced (but not below zero) so that the present value of such total amounts and
benefits received by the Executive will be one dollar ($1.00) less than three times the
Executive’s “base amount” (as defined in Section 280G of the Code) and so that no portion
of such amounts and benefits received by the Executive shall be subject to the excise tax
imposed by Section 4999 of the Code or (2) paid in full, whichever produces the better net
after-tax position to the Executive (taking into account any applicable excise tax under
Section 4999 of the Code and any other applicable taxes). The determination as to whether
any such reduction in the amount of the severance benefit is necessary shall be made
initially by the Employer in good faith. If a reduced severance benefit is paid hereunder
in accordance with clause (1) of the first sentence of this paragraph and through error or
otherwise that payment, when aggregated with other payments and benefits from the Employer
(or its affiliates) used in determining if a “parachute payment” exists, exceeds one dollar
($1.00) less than three times the Executive’s base amount, then the Executive shall
immediately repay such excess to the Employer upon notification that an overpayment has
been made.

6.6 NO MITIGATION

Any remuneration received by the Executive from a third party following the Employment Period shall
not apply to reduce the Employer’s obligations to make payments hereunder.

6.7 LIQUIDATED DAMAGES

Due to the difficulties in estimating damages for an early termination of the Employment Period,
the Employer and the Executive agree that the payments, if any, to be received by the Executive
hereunder shall be received as liquidated damages.

7. NON-DISCLOSURE COVENANT; EMPLOYEE INVENTIONS

7.1 ACKNOWLEDGMENTS BY THE EXECUTIVE

The Executive acknowledges that (a) prior to and during the Employment Period and as a part of
his employment, the Executive has been and will be afforded access to Confidential Information; (b)
public disclosure of such Confidential Information could have an adverse effect on the Employer and
its business; (c) because the Executive possesses substantial technical expertise and skill with
respect to the Employer’s business, the Employer desires to obtain exclusive ownership of each
Employee Invention, and the Employer will be at a substantial competitive disadvantage if it fails
to acquire exclusive ownership of each Employee Invention; and (d) the provisions of this Section 7
are reasonable and necessary to prevent the improper use or disclosure of Confidential Information
and to provide the Employer with exclusive ownership of all Employee Inventions.

 

9

 

7.2 AGREEMENTS OF THE EXECUTIVE

In consideration of the compensation and benefits to be paid or provided to the Executive by
the Employer under this Agreement, the Executive covenants the following:

a. Confidentiality.

	 	i.	 	The Executive will hold in confidence the
Confidential Information and will not disclose it to any person except
with the specific prior written consent of the Employer or except as
otherwise expressly permitted by the terms of this Agreement.

	 
	 	ii.	 	Any trade secrets of the Employer will be
entitled to all of the protections and benefits under any applicable
law. If any information that the Employer deems to be a trade secret
is found by a court of competent jurisdiction not to be a trade secret
for purposes of this Agreement, such information will, nevertheless, be
considered Confidential Information for purposes of this Agreement.
The Executive hereby waives any requirement that the Employer submit
proof of the economic value of any trade secret or post a bond or other
security.

	 
	 	iii.	 	None of the foregoing obligations and
restrictions applies to any part of the Confidential Information that
the Executive demonstrates was or became generally available to the
public other than as a result of a disclosure by the Executive.

	 
	 	iv.	 	The Executive will not remove from the
Employer’s premises (except to the extent such removal is for purposes
of the performance of the Executive’s duties at home or while
traveling, or except as otherwise specifically authorized by the
Employer) any document, record, notebook, plan, model, component,
device, or computer software or code, whether embodied in a disk or in
any other form (collectively, the “Proprietary Items”). The Executive
recognizes that, as between the Employer and the Executive, all of the
Proprietary Items, whether or not developed by the Executive, are the
exclusive property of the Employer. Upon termination of this Agreement
by either party, or upon the request of the Employer during the
Employment Period, the Executive will return to the Employer all of the
Proprietary Items in the Executive’s possession or subject to the
Executive’s control, and the Executive shall not retain any copies,
abstracts, sketches, or other physical embodiment of any of the
Proprietary Items.

 

10

 

	 	b.	 	Employee Inventions. Each Employee Invention will
belong exclusively to the Employer. The Executive acknowledges that all of the
Executive’s writing, works of authorship, and other Employee Inventions are
works made for hire and the property of the Employer, including any copyrights,
patents, or other intellectual property rights pertaining thereto. If it is
determined that any such works are not works made for hire, the

	 	 	 	Executive hereby assigns to the Employer all of the Executive’s right,
title, and interest, including all rights of copyright, patent, and other
intellectual property rights, to or in such Employee Inventions. The
Executive covenants that he will promptly:

	 	i.	 	disclose to the Employer in writing any
Employee Invention;

	 
	 	ii.	 	assign to the Employer or to a party designated
by the Employer, at the Employer’s request and without additional
compensation, all of the Executive’s right to the Employee Invention
for the United States and all foreign jurisdictions;

	 
	 	iii.	 	execute and deliver to the Employer such
applications, assignments, and other documents as the Employer may
request in order to apply for and obtain patents or other registrations
with respect to any Employee Invention in the United States and any
foreign jurisdictions;

	 
	 	iv.	 	sign all other papers necessary to carry out
the above obligations; and

	 
	 	v.	 	give testimony and render any other assistance
in support of the Employer’s rights to any Employee Invention.

	 	c.	 	Notice of Intent to Resign. Except in the event of a
resignation for Good Reason, Executive agrees to provide Employer with 90 days
advance notice of his intention to resign (“Notice Period”). During the Notice
Period, Executive shall continue in the diligent fulfillment of all duties of
his position and this Agreement. Should Executive fail to provide Employer
with the full Notice Period, Executive shall forfeit that portion of his earned
pro-rata yearly cash bonus as follows:

	 
	 	 	 	(90 — (number of full days of advance notice) / 90) X(times) pro-rata
earned yearly cash bonus = amount forfeited by Executive.

	 
	 	 	 	Pro-rata earned yearly cash bonus is: (unconditional portion of yearly cash
bonus, if any, targeted for Executive in the current Fiscal Year) / (number
of full months worked in the current Fiscal Year / 12).

	 
	 	d.	 	NonDisparagement. Executive shall not disparage the
Employer or any of its shareholders, directors, officers, employees, or agents.

	 
	 	e.	 	Creative Works. Executive shall not create, assist
with or consult on any creative works which discuss, describe or reference
Employer or any executive of Employer. Creative works includes but is not
limited to novels, nonfiction writings, any authored work, plays, screenplays, musicals
or the like.

 

11

 

7.3 DISPUTES OR CONTROVERSIES

The Executive recognizes that should a dispute or controversy arising from or relating to this
Agreement be submitted for adjudication to any court, arbitration panel, or other third party, the
preservation of the secrecy of Confidential Information may be jeopardized. All pleadings,
documents, testimony, and records relating to any such adjudication will be maintained in secrecy
and will be available for inspection by the Employer, the Executive, and their respective attorneys
and experts, who will agree, in advance and in writing, to receive and maintain all such
information in secrecy, except as may be limited by them in writing.

8. NON-COMPETITION AND NON-INTERFERENCE

8.1 ACKNOWLEDGMENTS BY THE EXECUTIVE

The Executive acknowledges that: (a) the services to be performed by him under this Agreement
are of a special, unique, unusual, extraordinary, and intellectual character; (b) the Employer’s
business is international in scope and its products are marketed throughout the United States and
the world; (c) the Employer competes with other businesses that are or could be located in any part
of the United States or the world; (d) the provisions of this Section 8 are reasonable and
necessary to protect the Employer’s business; and (e) in connection with the fulfillment of his
duties hereunder and as an employee of the Employer, the Employer will provide Executive with
Confidential Information necessitating the execution of the covenants contained in this Section 8.

8.2 COVENANTS OF THE EXECUTIVE

In consideration of the acknowledgments by the Executive, and in consideration of the
compensation and benefits to be paid or provided to the Executive by the Employer, the Executive
covenants that during and for eighteen months following the Employment Period he will not, directly
or indirectly:

	 	a.	 	except in the course of his employment hereunder, engage or
invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of, be employed by,
associated with, or in any manner connected with, lend the Executive’s name or
any similar name to, lend Executive’s credit to or render services or advice
to, any business whose products or activities compete in whole or in part with
the products or activities of the Employer anywhere in the world, provided,
however, that the Executive may purchase or otherwise acquire up to (but not
more than) five percent (5%) of any class of securities of any enterprise (but
without otherwise participating in the activities of such enterprise) if such
securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of
the Securities Exchange Act of 1934, as amended;

 

12

 

	 	b.	 	whether for the Executive’s own account or for the account of
any other person, solicit business of the same or similar type being carried on
by the Employer, from any person known by the Executive to be a customer or a
potential customer of the Employer, whether or not the Executive had personal
contact with such person during and by reason of the Executive’s employment
with the Employer; or

	 
	 	c.	 	whether for the Executive’s own account or the account of any
other person, (i) solicit, employ, or otherwise engage as an employee,
independent contractor, or otherwise, any person who is an employee (or was an
employee within two (2) years of the date in question) of the Employer at any
time during the Employment Period or in any manner induce or attempt to induce
any employee of the Employer to terminate his or her employment with the
Employer; or (ii) interfere with the Employer’s relationship with any person,
including any person who at any time during the Employment Period was an
employee, contractor, supplier, or customer of the Employer.

If any covenant in this Section 8.2 is held to be unreasonable, arbitrary, or against public
policy, such covenant will be considered to be divisible with respect to scope, time, and
geographic area, and such lesser scope, time, or geographic area, or all of them, as a court of
competent jurisdiction may determine to be reasonable, not arbitrary, and not against public
policy, will be effective, binding, and enforceable against the Executive.

The period of time applicable to any covenant in this Section 8.2 will be extended by the
duration of any violation by the Executive of such covenant.

9. GENERAL PROVISIONS

9.1 INJUNCTIVE RELIEF AND ADDITIONAL REMEDY

The Executive acknowledges that the injury that would be suffered by the Employer as a result
of a breach of the provisions of this Agreement (including any provision of Sections 7 and 8) would
be irreparable and that an award of monetary damages to the Employer for such a breach would be an
inadequate remedy. Consequently, the Employer will have the right, in addition to any other rights
it may have, to obtain injunctive relief to restrain any breach or threatened breach or otherwise
to specifically enforce any provision of this Agreement, and the Employer will not be obligated to
post bond or other security in seeking such relief.

 

13

 

9.2 COVENANTS OF SECTIONS 7 AND 8 ARE ESSENTIAL AND INDEPENDENT COVENANTS

The covenants by the Executive in Sections 7 and 8 are essential elements of this Agreement,
and without the Executive’s agreement to comply with such covenants, the Employer would not have
entered into this Agreement or employed the Executive. The Employer and the Executive have
independently consulted with their respective counsel and have been advised in all respects
concerning the reasonableness and propriety of such covenants, with specific regard to the nature
of the business conducted by the Employer.

If the Executive’s employment hereunder expires or is terminated, this Agreement will continue
in full force and effect as is necessary or appropriate to enforce the covenants and agreements of
the Executive in Sections 7 and 8.

9.3 REPRESENTATIONS AND WARRANTIES BY THE EXECUTIVE

The Executive represents and warrants to the Employer that the execution and delivery by the
Executive of this Agreement do not, and the performance by the Executive of the Executive’s
obligations hereunder will not, with or without the giving of notice or the passage of time, or
both: (a) violate any judgment, writ, injunction, or order of any court, arbitrator, or
governmental agency applicable to the Executive; or (b) conflict with, result in the breach of any
provisions of or the termination of, or constitute a default under, any agreement to which the
Executive is a party or by which the Executive is or may be bound. The Executive further
specifically represents and warrants that he is not subject to, nor will he violate, any agreement
not to compete upon the execution and delivery by him of this Agreement.

The Executive represents and warrants that he will not utilize or divulge any proprietary
materials or information from his previous employers and acknowledges that Employer has prohibited
Executive from bringing any such materials on to Employer’s premises and has advised Executive that
Executive’s failure to adhere to these prohibitions will subject Executive to immediate
termination.

9.4 OBLIGATIONS CONTINGENT ON PERFORMANCE

The obligations of the Employer hereunder, including its obligation to pay the compensation
provided for herein, are contingent upon the Executive’s performance of the Executive’s obligations
hereunder.

 

14

 

9.5 WAIVER

The rights and remedies of the parties to this Agreement are cumulative and not alternative.
Neither the failure nor any delay by either party in exercising any right, power, or privilege
under this Agreement will operate as a waiver of such right, power, or privilege, and no single or
partial exercise of any such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement can
be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of the right of the
party giving such notice or demand to take further action without notice or demand as provided in
this Agreement.

9.6 BINDING EFFECT; DELEGATION OF DUTIES PROHIBITED

This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto
and their respective successors, assigns, heirs, and legal representatives, including any entity
with which the Employer may merge or consolidate or to which all or substantially all of its assets
may be transferred. The duties and covenants of the Executive under this Agreement, being
personal, may not be delegated or assigned.

9.7 NOTICES

All notices, consents, waivers, and other communications under this Agreement must be in
writing and will be deemed to have been duly given when (a) delivered by hand (with written
confirmation of receipt), (b) sent by facsimile (with written confirmation of receipt), provided
that a copy is mailed by registered mail, return receipt requested and signed for by the party
required to receive notice, or (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case to the appropriate
addresses and facsimile numbers set forth below (or to such other addresses and facsimile numbers
as a party may designate by notice to the other parties):

If to Employer:

BMC Software, Inc.

2101 CityWest Blvd

Houston, Texas 77042

Telephone No.: (713) 918-8800

Facsimile No.: 713-918-1110

Attn: General Counsel

If to the Executive:

James W. Grant, Jr.

[Texas Home address]

 

15

 

9.8 ENTIRE AGREEMENT; AMENDMENTS

Except as provided in (a) plans and programs of the Employer referred to in Sections 3.1(b)
through (d), and (b) any signed written agreement contemporaneously or hereafter executed by the
Employer and the Executive, this Agreement contains the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements and understandings
(including the Previous Agreement), oral or written, between the parties hereto with respect to the
subject matter hereof. Notwithstanding the foregoing, this Agreement shall not be construed to
supersede any stock option agreements or restricted stock agreements entered into between Executive
and Employer at any time prior to the execution of this Agreement. This Agreement may not be
amended orally, but only by an agreement in writing signed by the parties hereto.

9.9 GOVERNING LAW

This Agreement will be governed by the laws of the State of Texas without regard to conflicts
of laws principles.

9.10 ARBITRATION

In the event that there shall be any dispute arising out of or in any way relating to this
Agreement, the contemplated transactions, any document referred to or incorporated herein by
reference or centrally related to the subject matter hereof, or the subject matter of any of the
same, the parties covenant and agree as follows:

	 	a.	 	The parties shall first use their reasonable best efforts to
resolve such dispute among themselves, with or without mediation.

	 
	 	b.	 	If the parties are unable to resolve such dispute among
themselves, such dispute shall be submitted to binding arbitration in Houston,
Texas, under the auspices of, and pursuant to the rules of, the American
Arbitration Association’s Commercial Arbitration Rules as then in effect, or
such other procedures as the parties may agree to at the time, before a
tribunal of three (3) arbitrators, one of which shall be selected by the
Executive, one of which shall be selected by the Employer, and the third of
which shall be selected by the two (2) arbitrators so selected. Any award
issued as a result of such arbitration shall be final and binding between the
parties, and shall be enforceable by any court having jurisdiction over the
party against whom enforcement is sought. A ruling by the arbitrators shall be
non-appealable. The parties agree to abide by and perform any award rendered
by the arbitrators. If either the Executive or Employer seeks enforcement of
the terms of this Agreement or seeks enforcement of any award rendered by the
arbitrators, then the prevailing party

 

16

 

	 	 	 	(designated by the arbitrators) to such proceeding(s) shall be entitled to
recover its costs and expenses (including applicable travel expenses) from
the non-prevailing party, in addition to any other relief to which it may be
entitled. If a dispute arises and one party fails or refuses to designate
an arbitrator within thirty (30) days after receipt of a written notice that
an arbitration proceeding is to be held, then the dispute shall be resolved
solely by the arbitrator designated by the other party and such arbitration
award shall be as binding as if three (3) arbitrators had participated in
the arbitration proceeding. Either the Executive or the Employer may cause
an arbitration proceeding to commence by giving the other party notice in
writing of such arbitration. Executive and the Employer covenant and agree
to act as expeditiously as practicable in order to resolve all disputes by
arbitration. Notwithstanding anything in this section to the contrary,
neither Executive nor the Employer shall be precluded from seeking court
action in the event the action sought is either injunctive action, a
restraining order or other equitable relief. The arbitration proceeding
shall be held in English.

	 
	 	c.	 	Legal process in any action or proceeding referred to in the
preceding section may be served on any party anywhere in the world.

	 
	 	d.	 	Except as expressly provided herein and except for injunctions
and other equitable remedies that are required in order to enforce this
Agreement, no action may be brought in any court of law and EACH OF THE PARTIES
WAIVES ANY RIGHTS THAT IT MAY HAVE TO BRING A CAUSE OF ACTION IN ANY COURT OR
IN ANY PROCEEDING INVOLVING A JURY TO THE MAXIMUM EXTENT PERMITTED BY LAW.
Each party acknowledges that it has been represented by legal counsel of its
own choosing and has been advised of the intent, scope and effect of this
Section 9.10 and has voluntarily entered into this Agreement and this Section
9.10.

	 
	 	e.	 	Excluded from this Section 9.10 are any claims for temporary
injunctive relief to enforce Sections 7 and 8 of this Agreement.

9.11 SECTION HEADINGS, CONSTRUCTION

The headings of Sections in this Agreement are provided for convenience only and will not
affect its construction or interpretation. All references to “Section” or “Sections” refer to the
corresponding Section or Sections of this Agreement unless otherwise specified. All words used in
this Agreement will be construed to be of such gender or number as the circumstances require.
Unless otherwise expressly provided, the word “including” does not limit the preceding words or
terms.

 

17

 

9.12 SEVERABILITY

If any provision of this Agreement is held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.

9.13 COUNTERPARTS

This Agreement may be executed in one or more counterparts, each of which will be deemed to be
an original copy of this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement.

9.14 WAIVER OF JURY TRIAL

THE PARTIES HERETO HEREBY WAIVE A JURY TRIAL IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT.

9.15 WITHHOLDING OF TAXES AND OTHER EMPLOYEE DEDUCTIONS

The Employer may withhold from any payments and benefits made pursuant to this Agreement all
federal, state, city, and other taxes as may be required pursuant to any law or governmental
regulation or ruling and all other normal deductions made with respect to the Employer’s employees
generally.

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date
above first written above.

	 	 	 	 	 	 	 
	 	 	EMPLOYER:	 	 
	 
	 	 	 	 	 	 
	 	 	BMC Software, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ MICHAEL VESCUSO	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Michael Vescuso	 	 
	 	 	Title: Sr. Vice President of Administration	 	 
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE:	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ JAMES W. GRANT, JR.	 	 
	 	 	 	 	 
	 	 	James W. Grant, Jr.	 	 

 

18

 

			
	 	 	 
	James W. Grant, Jr.
	 	Attachment A
	 	 	 

BMC SOFTWARE, INC.

Executive Employment Agreement

Cash Bonus Description

The Executive will, during the Employment Period, be permitted to participate in the BMC
Short-term Incentive Performance Award Program that may be in effect from time to time. During the
employment period, the Executive will be eligible to receive a target incentive, which currently is
100% of base salary. The actual amount received is not guaranteed and is dependent on the
performance of the Company and the Executive in accordance with the BMC Short-term Incentive
Performance Award Program established for each fiscal year during the employment period.

Each fiscal year, the Executive will receive a detailed description of the BMC Short-term
Incentive Performance Award Program and the targeted measures and objectives for that year.

 

192005 OMNIBUS INCENTIVE PLAN

	
EXHIBIT 4.4

	 
	
Cullen /Frost Bankers, Inc.

	
2007 Outside Directors Incentive Plan

	 
	 
	 
	
Article 1. Establishment, Purpose, and Duration

	 
	 	
1.1
	
Establishment. Cullen/Frost Bankers, Inc. (hereinafter referred to as the "Company"), establishes an incentive compensation plan to be known as the 2007 Outside Directors Incentive Plan (hereinafter referred to as the "Plan"), as set forth in this document.

	 	 	 
	 	 	
This Plan permits the grant of Nonqualified Stock Options, Restricted Stock and Restricted Stock Units.

	 	 	 
	 	 	
This Plan shall become effective upon stockholder approval (the "Effective Date") and shall remain in effect as provided in Section 1.3 hereof.

	 	 	 
	 	
1.2
	
Purpose of this Plan. The objectives of the Plan are to link the interests of Outside Directors to those of the Company's stockholders by providing for the ability to pay some or all of the Outside Director's compensation through stock options, restricted stock and restricted stock units and to optimize the profitability and growth of the Company through incentives which are consistent with the Company's goals.

	 	 	 
	 	 	
The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Outside Directors who make significant contributions to the Company's success and to allow Outside Directors to share in the success of the Company.

	 	 	 
	 	
1.3
	
Duration of this Plan. Unless sooner terminated as provided herein, this Plan shall terminate ten (10) years from the Effective Date. After this Plan is terminated, no new Awards may be granted but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and this Plan's terms and conditions.

	 	 	 
	
Article 2. Definitions

	 
	
Whenever used in this Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.

	 
	 	
2.1
	
"Affiliate" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations of the Exchange Act. The Committee shall not designate the Company as an Affiliate if in doing so it results in noncompliance with Code Section 409A.

	 	 	 
	 	
2.2
	
"Award" means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Restricted Stock or Restricted Stock Units.

	 	 	 
	 	
2.3
	
"Award Agreement" means either (i) a written agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under this Plan, or (ii) a written or electronic statement issued by the Company to a Participant describing the terms and provisions of such Award.

	 	 	 
	 	
2.4
	
"Board" or "Board of Directors" means the Board of Directors of the Company.

	 	 	 
	 	
2.5
	
"Change of Control" means any of the following events:

	 	 	 	 
	 	 	
(a)
	
Any "person" (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities eligible to vote for the election of the Board (the "Company Voting Securities"); provided, however, that the event described in this paragraph shall not be deemed to be a Change of Control by virtue of any of the following acquisitions: (i) by the Company or any Subsidiary, (ii) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, (iii) by any underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a transaction (other than one described in (b) below) in which Company Voting Securities are acquired from the Company, if a majority of the incumbent Directors approve a resolution providing expressly that the acquisition pursuant to this clause (iv) does not constitute a Change of Control under this paragraph (a);

	 	 	 	 
	 	 	
(b)
	
The consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries that requires the approval of the Company's stockholders, whether for such transaction or the issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (i) more than 60% of the total voting power of (x) the corporation resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among (and only among) the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (ii) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation) is or becomes the beneficial owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (iii) at least 50% of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such business combination; or

	 	 	 	 
	 	 	
(c)
	
During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in paragraph (a) or (b) of this section) whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

	 	 	 	 
	 	 	
(d)
	
The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or a sale of all or substantially all of the Company's assets.

	 
	
Notwithstanding the foregoing, a Change of Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 20% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change of Control of the Company shall then occur.

	 	 	 

 

	 	
2.6
	
"Code" means the U.S. Internal Revenue Code of 1986, as amended from time to time.

	 	 	 
	 	
2.7
	
"Committee" means the Compensation and Benefits Committee of the Board or a subcommittee thereof, or any other committee designated by the Board to administer this Plan; provided that the Committee shall consist entirely of Outside Directors.

	 	 	 
	 	
2.8
	
"Company" means Cullen/Frost Bankers, Inc. and any successor thereto as provided in Article 15 herein.

	 	 	 
	 	
2.9
	
"Effective Date" has the meaning set forth in Section 1.1.

	 	 	 
	 	
2.10
	
"Employee" means any person designated as an employee of the Company, its Affiliates, and/or its Subsidiaries on the payroll records thereof. An Employee shall not include any individual during any period he or she is classified or treated by the Company, Affiliate, and/or Subsidiary as an independent contractor, a consultant, or any employee of an employment, consulting, or temporary agency or any other entity other than the Company, Affiliate, and/or Subsidiary, without regard to whether such individual is subsequently determined to have been, or is subsequently retroactively reclassified as a common-law employee of the Company, Affiliate, and/or Subsidiary during such period.

	 	 	 
	 	
2.11
	
"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

	 	 	 
	 	
2.12
	
"Fair Market Value" or "FMV" means a price that is based on the opening, closing, actual, high, low, or average selling prices of a Share reported on the New York Stock Exchange ("NYSE") or other established stock exchange (or exchanges) on the applicable date, the preceding trading day, the next succeeding trading day, or an average of trading days, as determined by the Committee in its discretion. Unless the Committee determines otherwise, Fair Market Value shall be deemed to be equal to the reported closing price of a Share on the most recent date on which Shares were publicly traded. In the event Shares are not publicly traded at the time a determination of their value is required to be made hereunder, the determination of their Fair Market Value shall be made by the Committee in such manner as it deems appropriate, however, such determination shall be made in compliance with Code Section 409A, as appropriate. Such definition(s) of FMV shall be specified in each Award Agreement and may differ depending on whether FMV is in reference to the grant, exercise, vesting, settlement, or payout of an Award. Notwithstanding anything to the contrary, the Committee's determination of FMV for the exercise price for stock options shall be consistent with the meaning of "fair market value" under Section 409A of the Code.

	 	 	 
	 	
2.13
	
"Full Value Award" means an Award other than in the form of a NQSO and which is settled by the issuance of Shares.

	 	 	 
	 	
2.14
	
"Nonqualified Stock Option" "NQSO" means an Option that is not intended to meet the requirements of Code Section 422, or that otherwise does not meet such requirements.

	 	 	 
	 	
2.15
	
"Option" means a Nonqualified Stock Option, as described in Article 6.

	 	 	 
	 	
2.16
	
"Option Price" means the price at which a Share may be purchased by a Participant pursuant to an Option.

	 	 	 
	 	
2.17
	
"Other Stock-Based Award" means an Award granted to a Participant pursuant to Article 8.

	 	 	 
	 	
2.18
	
"Outside Director" means an individual who is a member of the Board of Directors, but is not an Employee of the Company.

	 	 	 
	 	
2.19
	
"Participant" means any eligible individual as set forth in Article 5 to whom an Award is granted.

	 	 	 
	 	
2.20
	
"Plan" means the Cullen/Frost Bankers, Inc. 2007 Outside Directors Incentive Plan.

	 	 	 
	 	
2.21
	
"Plan Year" means the calendar year.

	 	 	 
	 	
2.22
	
"Restricted Stock" means an Award granted to a Participant pursuant to Article 7.

	 	 	 
	 	
2.23
	
"Restricted Stock Unit" means an Award granted to a Participant pursuant to Article 7, except no Shares are actually awarded to the Participant on the date of grant.

	 	 	 
	 	
2.24
	
"Share" means a share of common stock of the Company, $.01 par value per share.

	 	 	 
	 	
2.25
	
"Subsidiary" means any corporation or other entity, whether domestic or foreign, in which the Company has or obtains, directly or indirectly, a proprietary interest of more than fifty percent (50%) by reason of stock ownership or otherwise.

	 
	
Article 3. Administration 

	 
	 	
3.1
	
General. The Committee shall be responsible for administering this Plan, subject to this Article 3 and the other provisions of this Plan. The Committee may employ attorneys, consultants, accountants, agents, and other individuals, any of whom may be an Employee, and the Committee, the Company, and its officers and Directors shall be entitled to rely upon the advice, opinions, or valuations of any such individuals. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, the Company, and all other interested individuals.

	 	 	 
	 	
3.2
	
Authority of the Committee. The Committee shall have full and exclusive discretionary power to interpret the terms and the intent of this Plan and any Award Agreement or other agreement or document ancillary to or in connection with this Plan, to determine eligibility for Awards and to adopt such rules, regulations, forms, instruments, and guidelines for administering this Plan as the Committee may deem necessary or proper. Such authority shall include, but not be limited to, selecting Award recipients, establishing all Award terms and conditions, including the terms and conditions set forth in Award Agreements determining whether, to what extent, and under what circumstances Awards may be settled or exercised and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended,  construing any ambiguous provision of the Plan or any Award Agreement and, subject to Article 13, adopting modifications and amendments to this Plan or any Award Agreement, including without limitation, any that are necessary to comply with the laws of the countries and other jurisdictions in which the Company, its Affiliates, and/or its Subsidiaries operate.

	 	 	 
	 	
3.3
	
Delegation. The Committee may delegate to one or more of its members or to one or more officers of the Company, and/or its Subsidiaries and Affiliates or to one or more agents or advisors such administrative duties or powers as it may deem advisable, and the Committee or any individuals to whom it has delegated duties or powers as aforesaid may employ one or more individuals to render advice with respect to any responsibility the Committee or such individuals may have under this Plan.

	 
	
Article 4. Shares Subject to this Plan and Maximum Awards

	 
	 	
4.1
	
Number of Shares Available for Awards.

	 	 	 
	 	 	
(a)
	
Subject to adjustment as provided in Section 4.4, the maximum number of Shares available for grant to Participants under this Plan on or after the Effective Date (the "Share Authorization") shall be five hundred thousand (500,000) Shares.

	 	 	 	 
	 	 	
(b)
	
Of the Shares reserved for grant under Section 4.1(a) of this Plan, no more than fifty thousand (50,000) of the reserved Shares may be granted pursuant to Full Value Awards.

	 
	 	
4.2
	
Share Usage.  Shares covered by an Award shall only be counted as used to the extent they are actually issued. Any Shares related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of Shares, or are exchanged with the Committee's permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant under this Plan. Notwithstanding anything herein to the contrary, Shares subject to an Award under the Plan may not again be made available for issuance under the Plan if such Shares are: (i) Shares delivered to or withheld by the Company to pay the exercise price of an Option or the withholding taxes related to any Award, or (ii) Shares repurchased on the open market with the proceeds of an Option exercise. The Shares available for grant under this Plan may be authorized and unissued Shares or treasury Shares.

	 	 	 
	 	
4.3
	
Annual Award Limits. The following limits (each an "Annual Award Limit" and, collectively, "Annual Award Limits") shall apply to grants of such Awards under this Plan:

	 	 	 
	 	 	
(a)
	
Options: The maximum aggregate number of Shares subject to Options granted in any one Plan Year to any one Participant shall be fifty thousand (50,000) plus the amount of the Participant's unused applicable Annual Award Limit for Options as of the close of the previous Plan Year.

	 	 	 	 
	 	 	
(b)
	
Restricted Stock or Restricted Stock Units: The maximum aggregate grant with respect to Awards of Restricted Stock or Restricted Stock Units in any one Plan Year to any one Participant shall be fifty thousand (50,000) plus the amount of the Participant's unused applicable Annual Award Limit for Restricted Stock or Restricted Stock Units as of the close of the previous Plan Year.

	 	 	 	 
	 	 	
(c)
	
Other Stock-Based Awards. The maximum aggregate grant with respect to Other Stock-Based Awards pursuant to Article 8 in any one Plan Year to any one Participant shall be fifty thousand (50,000).

	 	 	 
	 	
4.4
	
Adjustments in Authorized Shares. In the event of any corporate event or transaction (including, but not limited to, a change in the Shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin-off, or other distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, or other like change in capital structure, number of outstanding shares or distribution (other than normal cash dividends) to stockholders of the Company, or any similar corporate event or transaction, the Committee, in order to prevent dilution or enlargement of Participants' rights under this Plan, shall substitute or adjust, as applicable, the number and kind of Shares that may be issued under this Plan or under particular forms of Awards, the number and kind of Shares subject to outstanding Awards, the Option Price or Grant Price applicable to outstanding Awards, the Annual Award Limits, and other value determinations applicable to outstanding Awards.

	 	 	 
	 	 	
The Committee, in its sole discretion, may also make appropriate adjustments in the terms of any Awards under this Plan to reflect (or related to) such changes or distributions and to modify any other terms of outstanding Awards. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan.

	 	 	 
	 	 	
Subject to the provisions of Article 12, without affecting the number of Shares reserved or available hereunder, the Committee may authorize the issuance or assumption of benefits under this Plan in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate.

	 
	
Article 5. Eligibility and Participation 

	 
	 	
5.1
	
Eligibility. Individuals eligible to participate in this Plan include all Outside Directors.

	 	 	 
	 	
5.2
	
Actual Participation. Subject to the provisions of this Plan, the Committee may, from time to time, select from all eligible individuals, those individuals to whom Awards shall be granted and shall determine, in its sole discretion, the nature of, any and all terms permissible by law, and the amount of each Award.

	 
	
Article 6. Stock Options 

	 
	 	
6.1
	
Grant of Options. Subject to the terms and provisions of this Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion. However, a Participant who provides services to an Affiliate and/or Subsidiary may only be granted Options to the extent the Affiliate and/or Subsidiary is part of: (i) the Company's controlled group of corporations, or (ii) a trade or business under common control, as of the date of grant as determined within the meaning of Code Section 414(b) or 414(c), and substituting for this purpose ownership of at least fifty percent (50%) of the Affiliate and/or Subsidiary to determine the members of the controlled group of corporations and the entities under common control.

	 	 	 
	 	
6.2
	
Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the maximum duration of the Option, the number of Shares to which the Option pertains, the conditions upon which an Option shall become vested and exercisable, and such other provisions as the Committee shall determine which are not inconsistent with the terms of this Plan.

	 	 	 
	 	
6.3
	
Option Price. The Option Price for each grant of an Option under this Plan shall be as determined by the Committee in its sole discretion and shall be specified in the Award Agreement; provided, however, the Option Price on the date of grant must be at least equal to one hundred percent (100%) of the FMV of the Shares on the date of grant.

	 	 	 
	 	
6.4
	
Term of Options. Each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant; provided, however, no Option shall be exercisable later than the tenth (10th) anniversary date of its grant.

	 	 	 
	 	
6.5
	
Exercise of Options. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve.

	 	 	 
	 	
6.6
	
Payment. Options granted under this Article 6 shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which the Options is to be exercised, accompanied by full payment for the Shares.

	 	 	 
	 	 	
The Option Price upon exercise of any Option shall be payable to the Company in full either: 

(a) in cash or its equivalent, or (b) by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Price (provided that the Shares which are tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Option Price), or (c) by a combination of (a) and (b).

	 	 	 
	 	 	
The Committee also may allow cashless exercise as permitted under Federal Reserve Board's Regulation T, subject to applicable securities law restrictions, or by any other means which the Committee determines to be consistent with the Plan's purpose and applicable law.

	 	 	 
	 	 	
Subject to any governing rules or regulations, as soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver to the Participant, in the Participant's name, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option.

	 	 	 
	 	 	
Unless otherwise determined by the Committee, all payments under all of the methods indicated above shall be paid in United States dollars.

	 	 	 
	 	
6.7
	
Termination of Provision of Services. Each Participant's Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant's provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on the reasons for termination.

	 	 	 
	 	
6.8
	
No Other Feature of Deferral. No Option granted pursuant to this Plan shall provide for any feature for the deferral of compensation other than the deferral of recognition of income until the later of the exercise or disposition of the Option, or the time the stock acquired pursuant to the exercise of the Option first becomes substantially vested.

	 
	
Article 7. Restricted Stock and Restricted Stock Units

	 
	 	
7.1
	
Grant of Restricted Stock or Restricted Stock Units. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to Participants in such amounts as the Committee shall determine. Restricted Stock Units shall be similar to Restricted Stock except that no Shares are actually awarded to the Participant on the date of grant.

	 	 	 
	 	
7.2
	
Restricted Stock or Restricted Stock Unit Agreement. Each Restricted Stock and/or Restricted Stock Unit grant shall be evidenced by an Award Agreement that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock or the number of Restricted Stock Units granted, and such other provisions as the Committee shall determine.

	 	 	 
	 	
7.3
	
Other Restrictions. The Committee shall impose such other conditions and/or restrictions on any Shares of Restricted Stock or Restricted Stock Units granted pursuant to this Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock or each Restricted Stock Unit, restrictions based upon time-based restrictions, and/or restrictions under applicable laws or under the requirements of any stock exchange or market upon which such Shares are listed or traded, or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Restricted Stock or Restricted Stock Units.

	 	 	 
	 	 	
To the extent deemed appropriate by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company's possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied or lapse.

	 	 	 
	 	 	
Except as otherwise provided in this Article 7, Shares of Restricted Stock covered by each Restricted Stock Award shall become freely transferable by the Participant after all conditions and restrictions applicable to such Shares have been satisfied or lapse (including satisfaction of any applicable tax withholding obligations), and Restricted Stock Units shall be paid in cash, Shares, or a combination of cash and Shares as the Committee, in its sole discretion shall determine.

	 	 	 
	 	
7.4
	
Certificate Legend. In addition to any legends placed on certificates pursuant to Section 7.3, each certificate representing Shares of Restricted Stock granted pursuant to this Plan may bear a legend such as the following or as otherwise determined by the Committee in its sole discretion:

	 	 	 
	 	 	
The sale or transfer of Shares of stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer as set forth in the Cullen/Frost Bankers, Inc. 2007 Outside Directors Incentive Plan, and in the associated Award Agreement. A copy of this Plan and such Award Agreement may be obtained from Cullen/Frost Bankers, Inc.

	 	 	 
	 	
7.5
	
Voting Rights. Unless otherwise determined by the Committee and set forth in a Participant's Award Agreement, to the extent permitted or required by law, as determined by the Committee, Participants holding Shares of Restricted Stock granted hereunder may be granted the right to exercise full voting rights with respect to those Shares during the Period of Restriction.

	 	 	 
	 	
7.6
	
Termination of Provision of Services. Each Award Agreement shall set forth the extent to which the Participant shall have the right to retain Restricted Stock and/or Restricted Stock Units following termination of the Participant's provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Shares of Restricted Stock or Restricted Stock Units issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination.

	 	 	 
	 	
7.7
	
Section 83(b) Election. The Committee may provide in an Award Agreement that the Award of Restricted Stock is conditioned upon the Participant making or refraining from making an election with respect to the Award under Code Section 83(b). If a Participant makes an election pursuant to Code Section 83(b) concerning a Restricted Stock Award, the Participant shall be required to file promptly a copy of such election with the Company.

	 
	
Article 8. Other Stock Based Awards

	 
	 	
8.1
	
Other Stock-Based Awards. The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms of this Plan (including the grant or offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions as the Committee shall determine. Such Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares, and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.

	 	 	 
	 	
8.2
	
Value of Other Stock-Based Awards. Each Other Stock-Based Award shall be expressed in terms of Shares or units based on Shares, as determined by the Committee.

	 	 	 
	 	
8.3
	
Payment of Cash-Based Awards and Other Stock-Based Awards. Payment, if any, with respect to Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash or Shares as the Committee determines.

	 	 	 
	 	
8.4
	
Termination of Provision of Services. The Committee shall determine the extent to which the Participant shall have the right to receive Other Stock-Based Awards following termination of the Participant's provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, such provisions may be included in an agreement entered into with each Participant, but need not be uniform among all Awards of Other Stock-Based Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

	 
	
Article 9. Transferability of Awards

	 
	 	
9.1
	
Transferability. Except as provided in Section 9.2 below, during a Participant's lifetime, his or her Awards shall be exercisable only by the Participant. Awards shall not be transferable other than by will or the laws of descent and distribution; no Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind; and any purported transfer in violation hereof shall be null and void. The Committee may establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable or Shares deliverable in the event of, or following, the Participant's death.

	 	 	 
	 	
9.2
	
Committee Action. The Committee may, in its discretion, upon written request from a Participant, determine that notwithstanding Section 9.1, any or all of the Participant's Awards shall be transferable to and exercisable by such transferees, and subject to such terms and conditions, as the Committee may deem appropriate; provided, however, no Award may be transferred for value as defined in the General Instructions to Form S-8 and that only the Participant to which the Award had been granted, a "family member" (as defined in Section 9.4 below) of such Participant, or a charity may be a transferee of such Award. Such a request and determination may be made at the time an Award is granted or at any time thereafter.

	 	 	 
	 	
9.3
	
Domestic Relations Orders. Without limiting the generality of Section 9.1, and notwithstanding Section 9.2, no domestic relations order purporting to authorize a transfer of an Award shall be recognized as valid.

	 	 	 
	 	
9.4
	
Family Member. For purposes of Section 9.2, "family member" shall mean a Participant's child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Participant's household (other than a tenant of the Participant), a trust in which these persons (or the Participant) have more than fifty percent (50%) of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty percent (50%) of the voting interests.

	 
	
Article 10. Dividend Equivalents

	 
	 	 	
Any Participant selected by the Committee may be granted dividend equivalents based on the dividends declared on Shares that are subject to any Award (other than an Option), to be credited as of dividend payment dates, during the period between the date the Award is granted and the date the Award is exercised, vests or expires, as determined by the Committee. Such dividend equivalents may, in the sole discretion of the Committee, accrue interest or be converted to cash or additional Shares by such formula and at such time and subject to such limitations as may be determined by the Committee.

	 
	
Article 11 Benefits Upon Death

	 
	 	 	
Awards remaining unpaid or rights remaining unexercised at the Participant's death shall be paid to the Participant's estate and may be exercised by the Participant's executor, administrator, or authorized legal representative.

	 
	
Article 12 Rights of Participants

	 
	 	
12.1
	
Employment. Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right of the Company, its Affiliates, and/or its Subsidiaries, to terminate any Participant's employment at any time or for any reason not prohibited by law, nor confer upon any Participant any right to continue his employment for any specified period of time.

	 	 	 
	 	 	
Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company, its Affiliates, and/or its Subsidiaries and, accordingly, subject to Articles 3 and 12, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company, its Affiliates, and/or its Subsidiaries.

	 	 	 
	 	
12.2
	
Participation. No individual shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.

	 	 	 
	 	
12.3
	
Rights as a Shareholder. Except as otherwise provided herein, a Participant shall have none of the rights of a stockholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares.

	 
	
Article 13 Amendment, Modification, Suspension, and Termination

	 	 	 
	 	
13.1
	
Amendment, Modification, Suspension, and Termination. Subject to Section 13.3, the Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate this Plan and any Award Agreement in whole or in part; provided, however, that, without the prior approval of the Company's stockholders and except as provided in Section 4.4, Options issued under this Plan will not be repriced, replaced by any other Awards, or regranted through cancellation, or by lowering the Option Price of a previously granted Option, and no material amendment of this Plan shall be made without stockholder approval if stockholder approval is required by law, regulation, or stock exchange rule, including, but not limited to, the Securities Exchange Act of 1934, as amended, the Internal Revenue Code of 1986, as amended, and, if applicable, the New York Stock Exchange Listed Company Manual issuer rules.

	 	 	 
	 	
13.2
	
Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee shall make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.4 hereof) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan.

	 	 	 
	 	
13.3
	
Awards Previously Granted. Notwithstanding any other provision of this Plan to the contrary (other than Section 13.4), no termination, amendment, suspension, or modification of this Plan or an Award Agreement shall adversely affect in any material way any Award previously granted under this Plan, without the written consent of the Participant holding such Award.

	 	 	 
	 	
13.4
	
Amendment to Conform to Law. Notwithstanding any other provision of this Plan to the contrary, the Board of Directors may amend the Plan or an Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan or an Award Agreement to any present or future law relating to plans of this or similar nature (including, but not limited to, Code Section 409A), and to the administrative regulations and rulings promulgated thereunder.

	 
	
Article 14 Withholding

	 	 	 
	 	
14.1
	
Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, the minimum statutory amount to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.

	 	 	 
	 	
14.2
	
Share Withholding. With respect to withholding required upon the exercise of Options, upon the lapse of restrictions on Restricted Stock and Restricted Stock Units, Participants may elect to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction. All such elections shall be irrevocable, made in writing, and signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

	 
	
Article 15 Successors

	 	 	 
	 	 	
All obligations of the Company under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

	 
	
Article 16 General Provisions

	 	 	 
	 	
16.1
	
Forfeiture Events.

	 	 	 	 
	 	 	
(a)
	
The Committee may specify in an Award Agreement that the Participant's rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of provision of services for cause, termination of the Participant's provision of services to the Company, Affiliate, and/or Subsidiary, violation of material Company, Affiliate, and/or Subsidiary policies, breach of non-competition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company, its Affiliates, and/or its Subsidiaries.

	 	 	 	 
	 	 	
(b)
	
If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, if the Participant knowingly or grossly negligently engaged in the misconduct, or knowingly or grossly negligently failed to prevent the misconduct, or if the Participant is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, the Participant shall reimburse the Company the amount of any payment in settlement of an Award earned or accrued during the twelve- (12-) month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever just occurred) of the financial document embodying such financial reporting requirement.

	 	 	 
	 	
16.2
	
Legend. The certificates for Shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer of such Shares.

	 	 	 
	 	
16.3
	
Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.

	 	 	 
	 	
16.4
	
Severability. In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

	 	 	 
	 	
16.5
	
Requirements of Law. The granting of Awards and the issuance of Shares under this Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

	 	 	 
	 	
16.6
	
Delivery of Title. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under this Plan prior to:

	 	 	 	 
	 	 	
(a)
	
Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

	 	 	 	 
	 	 	
(b)
	
Completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

	 	 	 	 
	 	
16.7
	
Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

	 	 	 
	 	
16.8
	
Investment Representations. The Committee may require any individual receiving Shares pursuant to an Award under this Plan to represent and warrant in writing that the individual is acquiring the Shares for investment and without any present intention to sell or distribute such Shares.

	 	 	 
	 	
16.9
	
Participants Based Outside of the United States. Notwithstanding any provision of this Plan to the contrary, in order to comply with the laws in other countries in which the Company, its Affiliates, and/or its Subsidiaries operate or have Participants, the Committee, in its sole discretion, shall have the power and authority to:

	 	 	 
	 	 	
(a)
	
Determine which Affiliates and Subsidiaries shall be covered by this Plan;

	 	 	 	 
	 	 	
(b)
	
Determine which Outside Directors outside the United States are eligible to participate in this Plan;

	 	 	 	 
	 	 	
(c)
	
Modify the terms and conditions of any Award granted to Participants outside the United States to comply with applicable foreign laws;

	 	 	 	 
	 	 	
(d)
	
Establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any subplans and modifications to Plan terms and procedures established under this Section 16.9 by the Committee shall be attached to this Plan document as appendices; and

	 	 	 	 
	 	 	
(e)
	
Take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals.

	 	 	 
	 	 	
Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate applicable law.

	 	 	 
	 	
16.10
	
Uncertificated Shares. To the extent that this Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.

	 	 	 
	 	
16.11
	
Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to any investments that the Company, and/or its Subsidiaries, and/or its Affiliates may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other individual. To the extent that any person acquires a right to receive payments from the Company, its Subsidiaries, and/or its Affiliates under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company, a Subsidiary, or an Affiliate, as the case may be. All payments to be made hereunder shall be paid from the general funds of the Company, a Subsidiary, or an Affiliate, as the case may be and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in this Plan.

	 	 	 
	 	
16.12
	
No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash, Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

	 	 	 
	 	
16.13
	
Retirement and Welfare Plans. Neither Awards made under this Plan nor Shares or cash paid pursuant to such Awards may be included as "compensation" for purposes of computing the benefits payable to any Participant under the Company's or any Subsidiary's or Affiliate's retirement plans (both qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a Participant's benefit.

	 	 	 
	 	
16.14
	
Deferred Compensation. It is intended that any Award made under this Plan that results in the deferral of compensation (as defined under Code Section 409A) complies with the requirements of Code Section 409A.

	 	 	 
	 	
16.15
	
Nonexclusivity of this Plan. The adoption of this Plan shall not be construed as creating any limitations on the power of the Board or Committee to adopt such other compensation arrangements as it may deem desirable for any Participant.

	 	 	 
	 	
16.16
	
No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (i) limit, impair, or otherwise affect the Company's or a Subsidiary's or an Affiliate's right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or, (ii) limit the right or power of the Company or a Subsidiary or an Affiliate to take any action which such entity deems to be necessary or appropriate.

	 	 	 
	 	
16.17
	
Governing Law. The Plan and each Award Agreement shall be governed by the laws of the State of Texas, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan to the substantive law of another jurisdiction. Unless otherwise provided in the Award Agreement, recipients of an Award under this Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Texas, to resolve any and all issues that may arise out of or relate to this Plan or any related Award Agreement.

	 	 	 
	 	
16.18
	
Indemnification. Subject to requirements of Texas law, each individual who is or shall have been a member of the Board, or a Committee appointed by the Board, or an employee of the Company to whom authority was delegated in accordance with Article 3, (each, an "Indemnified Person") shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit, or proceeding to which he may be a party or in which he or she may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by him in settlement thereof, with the Company's approval, or paid by him in satisfaction of any judgment in any such action, suit, or proceeding against him, provided he shall give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall not be available to an Indemnified Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case, not subject to further appeal, determines that the acts or omissions of such Indemnified Person giving rise to the indemnification claim resulted from such Indemnified Person's bad faith, fraud or willful criminal act or omission.

	 	 	 
	 	 	
The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled under the Company's Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00124-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00124-of-00352.parquet"}]]