Document:

<PAGE>

                                                                    EXHIBIT 10.4

                         DIAMOND OFFSHORE DRILLING, INC.

        DEFERRED COMPENSATION AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

1.       PURPOSE

         The purpose of the Diamond Offshore Drilling, Inc. Deferred
Compensation Plan (the "Plan") is to provide select management employees of
Diamond Offshore Drilling, Inc. (the "Corporation"), and certain of its
Subsidiaries and Affiliates (hereinafter, with the Corporation, collectively
referred to as the "Company") an opportunity, in accordance with the terms and
conditions set forth herein, to defer, on a non-qualified basis, compensation
that otherwise would be payable currently and to provide supplemental retirement
income.

2.       ADMINISTRATION

         The Plan shall be administered by a committee (the "Deferred
Compensation Committee", hereinafter referred to as the "Committee") consisting
of at least three members appointed by the Board of Directors of the Corporation
(the "Board"). The Committee shall have sole and complete authority to interpret
the terms and provisions of the Plan and to adopt, alter and repeal such
administrative rules, regulations and practices governing the operation of the
Plan as it shall from time to time deem advisable, The Committee may appoint a
person or persons to administer the Plan on a day-to-day basis.

3.       ELIGIBILITY

         The Committee shall have the sole and absolute discretion to select
those employees who shall participate in the Plan ("Participants") and shall
determine the extent to which Participants can defer base salary or any other
form of compensation. A Participant shall continue to participate in the Plan
until the Committee determines otherwise.

4.       ELECTION TO DEFER

    (a)  Participant may elect to defer receipt of a portion of his/her base
         salary and/or any other form of compensation including incentive
         compensation, as (and to the extent) permitted by the Committee in
         accordance with rules and procedures to be established from time to
         time by the Committee. Amounts deferred under this Paragraph 4(a) shall
         be referred to as the "Deferred Amounts." Election forms for
         Participants to defer compensation shall be provided by the Committee,
         and all such elections shall be made in writing on such forms. Once
         made, and election cannot be revoked.

    (b)  The election by a Participant to defer compensation shall be made
         before the beginning of the calendar year in which such compensation is
         paid. A Participant must make separate elections with respect to each
         calendar year of participation in the Plan.

5.       COMPANY DEFERRALS

         To the extent hereinafter provided in this Paragraph 5, the Company
shall establish a memo-randum account (a "Company Account") for each Participant
on its books.

         The Company Account of each Participant shall be credited quarterly
with an amount equal to the excess, if any, of (a) over (b) where:

    (a)  equals the Company Contributions (as defined in the Retirement Plan) to
         which such Participant would have been entitled under the Diamond
         Offshore Defined Contribution

                                       1
<PAGE>

         Retirement Plan ("Retirement Plan"" for each calendar quarter assuming
         none of the Limitations (as defined in the Retirement Plan) were
         imposed; and

    (b)  equals the Company Contributions which were made on behalf of such
         Participant under the Retirement Plan for each calendar quarter.

         This would include any Participant whose Company Contributions were
         adversely affected by the Limitation on qualified plan income deferred
         to a non-qualified plan such as when a Participant earns less than the
         current limit on eligible compensation.

6.       ESTABLISHMENT OF DEFERRED COMPENSATION ACCOUNT

         At the time of the Participant's initial election to defer pursuant to
Paragraph 4, the Company shall establish a memorandum account (a "Deferred
Compensation Account") for each participant on its books. The Deferred Amount
(as determined under the Participant's election form) shall be credited to the
Participant's Deferred Compensation Account as of the day that the compensation
would otherwise have been paid to the Participant.

7.       ADDITIONS TO DEFERRED AMOUNTS

         Amounts equivalent to interest ("interest") shall be credited to a
Participant's Deferred Compensation Account at the end of each calendar year
based on the average balance (Including Deferred Amounts and prior interest
credits) in the Participant's Account for such year. Interest for any calendar
year shall be computed at such rate (which may be a floating rate) as shall be
determined by the Committee with respect to all Deferred Compensation
subaccounts, subject to a minimum rate equal to the average Federal Funds Rate
for such year minus twenty-five basis points. A deferred Compensation Account
that is paid out prior to the last day of a calendar year shall be credited with
interest for a partial year ending with the date of payout based on the average
balance in the Participant's Account for such partial year. The foregoing
notwithstanding , a Deferred Compensation Account that is paid out because of a
Participant's termination from employment pursuant to Paragraph 8 (c) (iii)
below, shall receive no interest credit for the year in which such termination
and/or payout occurs.

         Amounts equivalent to interest ("interest") shall be credited to a
Participant's Company Account at the end of each calendar year based on the
average balance (including credits under section 5 of the Plan and prior
interest credits) in the Participant's Company Account for such year. Interest
for any calendar year shall be computed at such rate (which may be a floating
rate) as shall be determined by the committee, subject to a minimum rate equal
to the average Federal Funds Rate for such year minus twenty-five basis points.
A Company Account that is paid out prior to the last day of a calendar year
shall be credited with interest for a partial year ending with the date of
payout based on the average balance in the Participant's Account for such
partial year. The foregoing notwithstanding, a Company Account that is paid out
because of a Participant's termination from employment pursuant to Paragraph 8
(c) (iii) below shall receive not interest credit for the year in which such
termination and/or payout occurs.

8.       PAYMENT OF DEFERRED AMOUNTS

         For purposes of this Paragraph 8, continuous employment of the
Participant with the Company and any corporation or other entity that is the
successor, either directly or indirectly, to all or substantially all of the
assets and/or business of the Company shall be deemed continuous employment with
the Company.

              (a) Subject to the provisions of subparagraphs (c) and (d) below,
         unless otherwise elected by the Participant in his/her election form in
         accordance with rules established by the Committee, the period of
         deferral shall be until termination of the Participant's employment
         with the Company.

              (b) The Participant may elect, in his/her election to defer, that
         his/her Deferred Compensation Account be paid either (i) in a lump sum
         or (ii) in such number of annual installments each as nearly equal as
         possible, not to exceed fifteen, as the Participant shall elect under
         rules

                                       2
<PAGE>

         established by the Committee. In the absence of an election by the
         Participant, the Committee shall determine the manner of payment.

              (c)

              (i)     In the event of the Participant's death, payment of the
                      balance in the Participant's Deferred Compensation Account
                      shall be made as elected by the Participant in the
                      election to defer, to the Participant's designated
                      beneficiary , or if none, to the Participant's estate;

              (ii)    In the event of the Participant's termination from
                      employment from the Company for disability or retirement,
                      payment of the balance in the Participant's Deferred
                      Compensation Account shall be made in a lump sum, as soon
                      as practicable after the date of termination; the election
                      of the Participant to the contrary in his/her election to
                      defer notwithstanding.

              (iii)   In the event of the Participants termination from
                      employment with the Company for any reason other than
                      death, or disability or retirement, payment of the balance
                      in the Participants' Deferred Compensation Account shall
                      be made in a lump sum, as soon as practicable after the
                      date of termination; the election of the Participant to
                      the contrary in his/her election to defer notwithstanding.

              (d) anything contained in this Paragraph 8 to the contrary
         notwithstanding, in the event a Participant incurs a severe financial
         hardship or a Participant becomes disabled, the Committee, in its sole
         and absolute discretion and upon written application of such
         Participant, may direct immediate payment of all or a portion of the
         then current value of such Participants' Deferred Compensation Account;
         provided that, in the case of a hardship, such payment shall in no
         event exceed the amount necessary to alleviate such financial hardship.

              (e) A participant may make a new election at any time, provided
         that such election will not be effective until one full calendar year
         elapses, and further provided the Participant may not make a deferral
         election regarding that year's compensation.

         The Participant's Company count will be paid out at termination of
employment.

9.       TRANSFERABILITY OF INTERESTS

         Except for the right of a Participant to designate a beneficiary as
hereinabove provided, a Participants' or beneficiary's, rights and interests may
not be anticipated, alienated, assigned, pledged, transferred or otherwise
encumbered.

10.      AMENDMENT, SUSPENSION AND TERMINATION

         The Corporation, in its sole and absolute discretion, at any time may
amend, suspend or terminate the plan or any portion thereof in any manner and to
any extent No such amendment, suspension or termination shall alter or impair
the rights of a Participant with respect to then Deferred Amounts.

11.      DEFINITIONS

    (a)  The term "Subsidiary" shall mean any corporation 50 percent or more of
         the voting stock of which shall at the time be owned directly or
         indirectly by the Corporation.

    (b)  The term "Affiliate" means any corporation or other entity which is not
         a Subsidiary but as to which the Corporation or a Subsidiary possesses
         a direct or indirect ownership interest.

                                       3
<PAGE>

12.      UNFUNDED OBLIGATION

         No assets of the Company have been set aside to provide for the payment
         of the Deferred Amounts. Assets of the Company are subject to the
         claims of the Company's general creditors. The Plan is intended to be,
         and shall be operated and administered so as to be, a plan which is
         unfunded and which is maintained primarily for the purpose of providing
         deferred compensation for a select group of management or highly
         compensated employees. The Company shall make no provision for the
         funding or insuring of Deferred Amounts that would cause the Plant to
         be (I) a "funded" plan for purposes of section 404(a)(5) of the
         Internal Revenue Code of 1986 or Title I of the Employee Retirement
         Income Security Act of 1974, as amended, or (ii) other than an
         "unfunded and unsecured promise to pay money or Property in the future"
         under Treasury Regulations sections 1.83-3(e). a Participant and
         his/her beneficiary shall be treated as a general, unsecured creditor
         of the Company at all times under this Plan, except as otherwise
         provided under applicable state law.

13.      NO RIGHT TO EMPLOYMENT OR OTHER BENEFITS

         This Plan shall not constitute a contract of employment between the
         Company and the Participant, and nothing contained herein shall be
         construed as conferring upon any Participant the right to continue in
         the employ of the Company, except to the extent expressly provided for
         in such employee benefit plans.

14.      EFFECTIVE DATE

         The Plan shall be effective immediately upon approval by the Board of
         Directors of the Corporation.

15.      GOVERNING LAW

         The Plan shall be governed by the laws of the State of Texas without
         reference to the principles of conflict of laws.

                                       4<PAGE>
                                                                    EXHIBIT 10.9

                         DIAMOND OFFSHORE DRILLING, INC.

                             2000 STOCK OPTION PLAN

                                     GENERAL

         1.1. Purpose. The Diamond Offshore 2000 Stock Option Plan (the "Plan")
has been established by Diamond Offshore Drilling, Inc. (the "Company") to (i)
attract and retain persons eligible to participate in the Plan, (ii) motivate
Participants, by means of appropriate incentives, to achieve long-term Company
goals, and reward Participants for achievement of those goals, and (iii) provide
incentive compensation opportunities that are competitive with those of other
similar companies, and thereby promote the financial interest of the Company and
its Subsidiaries.

         1.2. Operation and Administration. The operation and administration of
the Plan shall be subject to the provisions of Section 3 (relating to operation
and administration). Capitalized terms in the Plan shall be defined as set forth
in the Plan (including the definition provisions of Section 6 of the Plan).

                                     OPTIONS

         1.3. Option Grant. The Board of Directors (the "Board") may grant
Options in accordance with this Section 2.

         1.4. Definitions. The grant of an "Option" permits the Participant to
purchase shares of Stock at an Exercise Price established by the Board. Any
Option granted under the Plan may be either an incentive stock option (an "ISO")
or a non-qualified option (an "NQO"), as determined in the discretion of the
Board. An "ISO" is an Option that is intended to be an "incentive stock option"
described in section 422(b) of the Code and does in fact satisfy the
requirements of that section. An "NQO" is an Option that is not intended to be
an "incentive stock option" as that term is described in section 422(b) of the
Code, or that fails to satisfy the requirements of that section.

         1.5. Exercise Price. The "Exercise Price" of each Option granted under
this Section 2 shall be established by the Board or shall be determined by a
method established by the Board at the time the Option is granted; except that
the Exercise Price shall not be less than 100% of the Fair Market Value of a
share of Stock on the date of grant (or, if greater, the par value of a share of
Stock).

         1.6. Vesting and Exercise. An Option shall be exercisable in accordance
with such terms and conditions and during such periods as may be established by
the Board.

                                       1
<PAGE>

(a)      Unless otherwise provided by the Board at the time of grant or
         thereafter, each Option shall vest and become exercisable in four equal
         annual installments beginning on the first anniversary of the date of
         grant, and shall thereafter remain exercisable during the Option Term.

(b)      Unless otherwise provided by the Board at the time of grant or
         thereafter, the Option Term of each Option shall end on the earliest of
         (1) the date on which such Option has been exercised in full, (2) the
         date on which the Participant experiences a Termination for Cause or a
         voluntary Termination, (3) the one-year anniversary of the date on
         which the Participant experiences a Termination due to death or
         Disability, (4) the three-year anniversary of the date on which the
         Participant experiences a Termination due to such person's Retirement,
         and (5) the 90th day after the Participant experiences a Termination
         for any other reason; provided, that in no event may the Option Term
         exceed ten (10) years from the date of grant of the Option. Except as
         otherwise determined by the Board at the time of grant or thereafter,
         upon the occurrence of a Termination of a Participant for any reason,
         the Option Term of all outstanding Options held by the Participant that
         are unvested as of the date of such Termination shall thereupon end and
         such unvested Options shall be forfeited immediately; provided,
         however, that the Board may, in its sole discretion, accelerate the
         vesting of any Option and/or extend the exercise period of any Option
         (but not beyond the ten-year anniversary of the grant date).

(c)      An Option may be exercised and the underlying shares purchased in
         accordance with this Section 2 at any time after the Option with
         respect to those shares vests and before the expiration of the Option
         Term. To exercise an Option, the Participant shall give written notice
         to the Company stating the number of shares with respect to which the
         Option is being exercised.

(d)      The full Exercise Price for shares of Stock purchased upon the exercise
         of any Option shall be paid at the time of such exercise (except that,
         in the case of an exercise arrangement approved by the Board and
         described in the last sentence of this paragraph (d), payment may be
         made as soon as practicable after the exercise). The Exercise Price
         shall be payable by check, or such other instrument as the Board may
         accept. The Board may permit a Participant to elect to pay the Exercise
         Price upon the exercise of an Option by irrevocably authorizing a third
         party to sell shares of Stock (or a sufficient portion of the shares)
         acquired upon exercise of the Option and remit to the Company a
         sufficient portion of the sale proceeds to pay the entire Exercise
         Price and any tax withholding resulting from such exercise. In the case
         of any ISO such permission must be provided for at the time of grant
         and set forth in an Option Certificate. In addition, if approved by the
         Board, payment, in full or in part, may also be made in the form of
         unrestricted Mature Shares, based on the Fair Market Value of the
         Mature Shares on the date the Option is exercised; provided, however,
         that, in the case of an ISO the right to make a payment in such Mature
         Shares may be authorized only at the time the Option is granted.

                                       2
<PAGE>

                          OPERATION AND ADMINISTRATION

         1.7. Effective Date. Subject to the approval of the stockholders of the
Company at the Company's 2000 annual meeting of its stockholders, the Plan shall
be effective as of May 15, 2000 (the "Effective Date"); provided, however, that
to the extent that Options are granted under the Plan prior to its approval by
stockholders, the Options shall be contingent on approval of the Plan by the
stockholders of the Company at such annual meeting. The Plan shall be unlimited
in duration and, in the event of Plan termination, shall remain in effect as
long as any Options under it are outstanding.

         1.8. Shares Subject to Plan. The shares of Stock for which Options may
be granted under the Plan shall be subject to the following:

(a)      The shares of Stock with respect to which Options may be granted under
         the Plan shall be shares currently authorized but unissued or currently
         held or subsequently acquired by the Company as treasury shares,
         including shares purchased in the open market or in private
         transactions.

(b)      Subject to the following provisions of this subsection 3.2, the maximum
         number of shares of Stock that may be delivered to Participants and
         their beneficiaries under the Plan shall be 750,000 shares of Stock.

(c)      To the extent any shares of Stock covered by an Option are not
         delivered to a Participant or beneficiary because the Option is
         forfeited or canceled, or the shares of Stock are used to pay the
         Exercise Price or satisfy the applicable tax withholding obligation,
         such shares shall not be deemed to have been delivered for purposes of
         determining the maximum number of shares of Stock available for
         delivery under the Plan.

(d)      Subject to paragraph 3.2(e), the maximum number of shares that may be
         covered by Options granted to any one individual during any one
         calendar year period shall be 200,000 shares.

(e)      In the event of a corporate transaction involving the Company
         (including, without limitation, any stock dividend, stock split,
         extraordinary cash dividend, recapitalization, reorganization, merger,
         consolidation, split-up, spin-off, combination or exchange of shares),
         the Board may make adjustments to preserve the benefits or potential
         benefits of the Plan and outstanding Options. Action by the Board may
         include: (i) adjustment of the number and kind of shares which may be
         delivered under the Plan; (ii) adjustment of the number and kind of
         shares referred to in Section 3.2(d); (iii) adjustment of the number
         and kind of shares subject to outstanding Options; (iv) adjustment of
         the Exercise Price of outstanding Options; (v) settlement in cash or
         Stock in an amount equal to the excess of the value of the Stock
         subject to such Option over the aggregate Exercise Price (as determined
         by the Board) of such Options; and (vi) any other adjustments that the
         Board determines to be equitable.

                                       3
<PAGE>

         1.9. General Restrictions. Delivery of shares of Stock or other amounts
under the Plan shall be subject to the following:

(a)      Notwithstanding any other provision of the Plan, the Company shall have
         no liability to deliver any shares of Stock under the Plan or make any
         other distribution of benefits under the Plan unless such delivery or
         distribution would comply with all applicable laws (including, without
         limitation, the requirements of the Securities Act of 1933), and the
         applicable requirements of any securities exchange or similar entity.

(b)      To the extent that the Plan provides for issuance of stock certificates
         to reflect the issuance of shares of Stock, the issuance may be
         effected on a non-certificated basis, to the extent not prohibited by
         applicable law or the applicable rules of any stock exchange.

         1.10. Tax Withholding. All distributions under the Plan are subject to
withholding of all applicable taxes, and the delivery of any shares or other
benefits under the Plan shall be conditioned on satisfaction of the applicable
withholding obligations. The Board, in its discretion, and subject to such
requirements as the Board may impose prior to the occurrence of such
withholding, may permit such withholding obligations to be satisfied through
cash payment by the Participant, through the surrender of shares of Stock which
the Participant already owns, or through the surrender of shares of Stock to
which the Participant is otherwise entitled under the Plan; provided that
surrender of shares may be used only to satisfy the minimum withholding required
by law.

         1.11. Grant and Use of Options. In the discretion of the Board, more
than one Option may be granted to a Participant. Options may be granted as
alternatives to or replacements of Options granted or outstanding under the
Plan, or any other plan or arrangement of the Company or a Subsidiary (including
a plan or arrangement of a business or entity, all or a portion of which is
acquired by the Company or a Subsidiary). Subject to the overall limitation on
the number of shares of Stock that may be delivered under the Plan, the Board
may use available shares of Stock as the form of payment for compensation,
grants or rights earned or due under any other compensation plans or
arrangements of the Company or a Subsidiary, including the plans and
arrangements of the Company or a Subsidiary assumed in business combinations.
Notwithstanding the foregoing, the assumption by the Company of options in
connection with the acquisition of a business or other entity and the conversion
of such options into options to acquire Stock shall not be treated as a new
grant of Options under the Plan unless specifically so provided by the Board.

         1.12. Settlement of Options. The Board may from time to time establish
procedures pursuant to which a Participant may elect to defer, until a time or
times later than the exercise of an Option, receipt of all or a portion of the
shares of Stock subject to such Option and/or to receive cash at such later time
or times in lieu of such deferred shares, all on such terms and conditions as
the Board shall determine. If any such deferrals are permitted, then a
Participant who elects such deferral shall not have any rights as a stockholder
with respect to such deferred shares unless and until shares are actually
delivered to the Participant with respect thereto, except to the extent
otherwise determined by the Board.

                                       4
<PAGE>

         1.13. Other Plans. Amounts payable under this Plan shall not be taken
into account as compensation for purposes of any other employee benefit plan or
program of the Company or any of its Subsidiaries, except to the extent
otherwise provided by such plans or programs, or by an agreement between the
affected Participant and the Company.

         1.14. Heirs and Successors. The terms of the Plan shall be binding
upon, and inure to the benefit of, the Company and its successors and assigns,
and upon any person acquiring, whether by merger, consolidation, purchase of
assets or otherwise, all or substantially all of the Company's assets and
business.

         1.15. Transferability. Options granted under the Plan are not
transferable except (i) as designated by the Participant by will or by the laws
of descent and distribution or (ii) in the case of an NQO, as otherwise
expressly permitted by the Board including, if so permitted, pursuant to a
transfer to such Participant's immediate family, whether directly or indirectly
or by means of a trust or partnership or otherwise. If any rights exercisable by
a Participant or benefits deliverable to a Participant under any Option
Certificate under the Plan have not been exercised or delivered, respectively,
at the time of the Participant's death, such rights shall be exercisable by the
Designated Beneficiary, and such benefits shall be delivered to the Designated
Beneficiary, in accordance with the provisions of the applicable terms of the
Option Certificate and the Plan. The "Designated Beneficiary" shall be the
beneficiary or beneficiaries designated by the Participant to receive benefits
under the Company's group term life insurance plan or such other person or
persons as the Participant may designate by notice to the Company. If a deceased
Participant fails to have designated a beneficiary, or if the Designated
Beneficiary does not survive the Participant, any rights that would have been
exercisable by the Participant and any benefits distributable to the Participant
shall be exercised by or distributed to the legal representative of the estate
of the Participant. If a deceased Participant designates a beneficiary and the
Designated Beneficiary survives the Participant but dies before the Designated
Beneficiary's exercise of all rights under the Option Certificate or before the
complete distribution of benefits to the Designated Beneficiary under the Option
Certificate, then any rights that would have been exercisable by the Designated
Beneficiary shall be exercised by the legal representative of the estate of the
Designated Beneficiary, and any benefits distributable to the Designated
Beneficiary shall be distributed to the legal representative of the estate of
the Designated Beneficiary. All Options shall be exercisable, subject to the
terms of this Plan, only by the Participant or any person to whom such Option is
transferred pursuant to this paragraph, it being understood that the term
Participant shall include such transferee for purposes of the exercise
provisions contained herein.

         1.16. Notices. Any written notices provided for in the Plan or under
any Option Certificate shall be in writing and shall be deemed sufficiently
given if either hand delivered or if sent by confirmed fax or overnight courier,
or by postage paid first class mail. Notice and communications shall be
effective when actually received by the addressee. Notices shall be directed, if
to the Participant, at the Participant's address indicated in the Option
Certificate, or if to the Company, at the Company's principal executive office
to the attention of the Company's Corporate Secretary.

         1.17. Action by Company. Any action required or permitted to be taken
by the Company shall be by resolution of the Board of Directors, or by action of
one or more members

                                       5
<PAGE>

of the Board (including a Committee of the Board) who are duly authorized to
act for the Board, or by a duly authorized officer of the Company.

         1.18. Limitation of Implied Rights.

(a)      Neither a Participant nor any other person shall, by reason of
         participation in the Plan, acquire any right in or title to any assets,
         funds or property of the Company whatsoever, including, without
         limitation, any specific funds, assets, or other property which the
         Company, in its sole discretion, may set aside in anticipation of a
         liability under the Plan. A Participant shall have only a contractual
         right to the amounts, if any, payable under the Plan, unsecured by any
         assets of the Company, and nothing contained in the Plan shall
         constitute a guarantee that the assets of the Company shall be
         sufficient to pay any benefits to any person.

(b)      The Plan does not constitute a contract of employment, and selection as
         a Participant will not give any Participant the right to be retained in
         the employ of, or as a director or consultant to, the Company or any
         Subsidiary, nor any right or claim to any benefit under the Plan,
         unless such right or claim has specifically accrued under the terms of
         the Plan.

         1.19. Gender and Number. Where the context admits, words in any gender
shall include any other gender, words in the singular shall include the plural
and the plural shall include the singular.

         1.20. Laws Applicable to Construction. The interpretation, performance
and enforcement of this Plan and all Option Certificates shall be governed by
the laws of the State of Delaware without reference to principles of conflict of
laws, as applied to contracts executed in and performed wholly within the State
of Delaware.

         1.21. Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.

                               BOARD OF DIRECTORS

         1.22. Administration. The authority to control and manage the operation
and administration of the Plan shall be vested in the Board in accordance with
this Section 4.

         1.23. Powers of Board. The Board's administration of the Plan shall be
subject to the following:

(a)      Subject to the provisions of the Plan, the Board will have the
         authority and discretion to select from among the Eligible Grantees
         those persons who shall receive Options, to determine the grant date
         of, the number of shares subject to and the Exercise Price of those
         Options, to establish all other terms and conditions of such Options,
         and (subject to the restrictions imposed by Section 5) to cancel or
         suspend Options.

                                       6
<PAGE>

(b)      The Board will have the authority and discretion to interpret the Plan,
         to establish, amend, and rescind any rules and regulations relating to
         the Plan, and to make all other determinations that may be necessary or
         advisable for the administration of the Plan.

(c)      Any interpretation of the Plan by the Board and any decision made by it
         under the Plan is final and binding on all persons.

(d)      In controlling and managing the operation and administration of the
         Plan, the Board shall take action in a manner that conforms to the
         articles and by-laws of the Company, and applicable state corporate
         law.

         1.24. Delegation by Board. Except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the Board may
allocate all or any portion of its responsibilities and powers to any one or
more of its members and may delegate all or any part of its responsibilities and
powers to any person or persons selected by it. Any such allocation or
delegation may be revoked by the Board at any time.

         1.25. Information to be Furnished to Board. The Company and
Subsidiaries shall furnish the Board with such data and information as it
determines may be required for it to discharge its duties. The records of the
Company and Subsidiaries as to an employee's or Participant's employment,
engagement, Termination, leave of absence, reemployment and compensation shall
be conclusive on all persons unless determined to be incorrect. Participants and
other persons eligible for benefits under the Plan must furnish the Board such
evidence, data or information as the Board considers desirable to carry out the
terms of the Plan.

                            AMENDMENT AND TERMINATION

         The Board may, at any time, amend or terminate the Plan; provided that
no amendment or termination may, in the absence of written consent to the change
by the affected Participant (or, if the Participant is not then living, the
affected beneficiary), adversely affect the rights of any Participant or
beneficiary under any Option granted under the Plan prior to the date such
amendment is adopted by the Board; and further provided that adjustments
pursuant to paragraph 3.2(e) shall not be subject to the foregoing limitations
of this Section 5.

                                  DEFINED TERMS

         In addition to the other definitions contained herein, the following
definitions shall apply:

(a)      Board.  The term "Board" means the Board of Directors of the Company.

(b)      Cause: The term "Cause" shall have the meaning set forth in the
         employment or engagement agreement between a Participant and the
         Company or any Subsidiary thereof, if such an agreement exists and
         contains a definition of Cause; otherwise Cause shall mean (1)
         conviction of the Participant for committing a felony under Federal law
         or

                                       7
<PAGE>

         the law of the state in which such action occurred, (2) dishonesty in
         the course of fulfilling a Participant's employment, engagement or
         directorial duties, (3) willful and deliberate failure on the part of a
         Participant to perform the Participant's employment, engagement or
         directorial duties in any material respect or (4) such other events as
         shall be determined in good faith by the Board. The Board shall, unless
         otherwise provided in the Option Certificate or an employment agreement
         with the Participant, have the sole discretion to determine whether
         Cause exists, and its determination shall be final.

(c)      Code. The term "Code" means the Internal Revenue Code of 1986, as
         amended. A reference to any provision of the Code shall include
         reference to any successor provision of the Code.

(d)      Company. The term "Company" shall have the meaning set forth in Section
         1.1.

(e)      Designated Beneficiary. The term "Designated Beneficiary" shall have
         the meaning set forth in Section 3.9.

(f)      Disability. The term "Disability" shall mean, unless otherwise provided
         by the Board, (1) "Disability" as defined in any individual Option
         Certificate to which the Participant is a party, or (2) if there is no
         such Option Certificate or it does not define "Disability," permanent
         and total disability as determined under the Company's long-term
         disability plan applicable to the Participant.

(g)      Effective Date. The term "Effective Date" shall have the meaning set
         forth in Section 3.1.

(h)      Eligible Grantee. The term "Eligible Grantee" shall mean any individual
         who is employed on a full-time or part-time basis by, or who serves as
         a consultant to, the Company or a Subsidiary and any non-employee
         director of the Company. An Option may be granted to an individual in
         connection with such individual's hiring or engagement prior to the
         date the individual first performs services for the Company or the
         Subsidiaries, provided that the individual will be an Eligible Grantee
         upon his hiring or engagement, and further provided that such Options
         shall not become vested prior to the date the individual first performs
         such services.

(i)      Exercise Price. The term "Exercise Price" shall have the meaning set
         forth in Section 2.3.

(j)      Fair Market Value. The "Fair Market Value" of a share of Stock shall
         be, as of any given date, the mean between the highest and lowest
         reported sales prices on the immediately preceding date (or, if there
         are no reported sales on such immediately preceding date, on the last
         date prior to such date on which there were sales) of the Stock on the
         New York Stock Exchange Composite Tape or, if not listed on such
         exchange, on any other national securities exchange on which the Stock
         is listed or on NASDAQ. If there is no regular public trading market
         for such Stock, the Fair Market Value of the Stock shall be determined
         by the Board in good faith.

(k)      ISO. The term "ISO" shall have the meaning set forth in Section 2.2.

                                       8
<PAGE>

(l)      Mature Shares. The term "Mature Shares" shall mean shares of Stock that
         have been owned by the Participant in question for at least six months.

(m)      NQO. The term "NQO" shall have the meaning set forth in Section 2.2.

(n)      Option. The term "Option" shall have the meaning set forth in Section
         2.2.

(o)      Option Certificate: The term "Option Certificate" shall mean a written
         Option certificate setting forth the terms and conditions of an Option,
         in the form attached hereto as Exhibit A or such other form as the
         Board may from time to time prescribe.

(p)      Option Term: The term "Option Term" shall mean the period beginning on
         the date of grant of an Option and ending on the date the Option
         expires pursuant to the Plan and the relevant Option Certificate.

(q)      Plan: The term "Plan" shall have the meaning set forth in Section 1.1.

(r)      Retirement: The term "Retirement" shall mean retirement from active
         employment with the Company pursuant to any retirement plan or program
         of the Company or any Subsidiary in which the Participant participates.
         A Termination by a consultant or non-employee director shall in no
         event be considered a Retirement.

(s)      Stock. The term "Stock" shall mean shares of common stock of the
         Company.

(t)      Subsidiary. The term "Subsidiary" means any business or entity in which
         at any relevant time the Company holds at least a 50% equity (voting or
         non-voting) interest.

(u)      Termination. A Participant shall be considered to have experienced a
         Termination if he or she ceases, for any reason, to be an employee,
         consultant or non-employee director of the Company or any of its
         Subsidiaries, including, without limitation, as a result of the fact
         that the entity by which he or she is employed or engaged or of which
         he or she is a director has ceased to be affiliated with the Company.

                                       9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}]]