Document:

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                                                                    EXHIBIT 10.4

                        BINDVIEW DEVELOPMENT CORPORATION

                             OMNIBUS INCENTIVE PLAN

                 (INCLUDING AMENDMENTS THROUGH OCTOBER 1999 AND
                GIVING EFFECT TO THE ONE-FOR-ONE STOCK DIVIDEND
                           PAID ON FEBRUARY 17, 2000)

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                        BINDVIEW DEVELOPMENT CORPORATION

                             OMNIBUS INCENTIVE PLAN

                               TABLE OF CONTENTS

ARTICLE I - PLAN                                                        Section

             Purpose......................................................1.1
             Effective Date of Plan.......................................1.2

ARTICLE II - DEFINITIONS

             Affiliate....................................................2.1
             Board of Directors or Board..................................2.2
             Change of Control............................................2.3
             Code.........................................................2.4
             Commission...................................................2.5
             Committee....................................................2.6
             Company......................................................2.7
             Corporate Plan...............................................2.8
             Corporate Plan Options.......................................2.9
             Employee....................................................2.10
             Exchange Act................................................2.11
             Fair Market Value...........................................2.12
             Incentive Option............................................2.13
             1996 ISO Plan...............................................2.14
             1996 ISO Plan Options.......................................2.15
             1997 Incentive Plan.........................................2.16
             1997 Incentive Plan Options.................................2.17
             1998 Incentive Plan Options.................................2.18
             Non-Employee Director.......................................2.19
             Nonqualified Option.........................................2.20
             Option......................................................2.21
             Option Agreement............................................2.22
             Outside Director............................................2.23
             Plan........................................................2.24
             Plan Year...................................................2.25
             Reload Option...............................................2.26
             Restricted Stock............................................2.27
             Restricted Stock Agreement..................................2.28
             Restricted Stock Purchase Price.............................2.29
             Stock.......................................................2.30
             Stock Award.................................................2.31

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             10% Stockholder.............................................2.32
             Voting Stock................................................2.33

ARTICLE III - ELIGIBILITY

ARTICLE IV - GENERAL PROVISIONS RELATING TO OPTIONS AND STOCK AWARDS

             Authority to Grant Options and Stock Awards...................4.1
             Dedicated Shares..............................................4.2
             Non-Transferability...........................................4.3
             Requirements of Law...........................................4.4
             Changes in the Company's Capital Structure....................4.5
             Election Under Section 83(b) of the Code......................4.6

ARTICLE V - OPTIONS

             Type of Option................................................5.1
             Option Price..................................................5.2
             Duration of Options...........................................5.3
             Amount Exercisable--Incentive Options.........................5.4
             Exercise of Options...........................................5.5
             Exercise on Termination of Employment.........................5.6
             Exercise of Options Under the Corporate Plan,
               the 1996 ISO Plan and the 1997 Incentive Plan...............5.7
             Reload Options................................................5.8
             Substitution Options..........................................5.9
             No Rights as Stockholder.....................................5.10

ARTICLE VI - STOCK AWARDS

             Stock Awards..................................................6.1
             Restrictions..................................................6.2
             Stock Certificate.............................................6.3
             Rights as Stockholder.........................................6.4
             Lapse of Restrictions.........................................6.5
             Restriction Period............................................6.6

ARTICLE VII - ADMINISTRATION

ARTICLE VIII - AMENDMENT OR TERMINATION OF PLAN

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ARTICLE IX - MISCELLANEOUS

             No Establishment of a Trust Fund..............................9.1
             No Employment Obligation......................................9.2
             Forfeiture ...................................................9.3
             Tax Withholding...............................................9.4
             Written Agreement.............................................9.5
             Indemnification of the Committee and the
                      Board of Directors...................................9.6
             Gender........................................................9.7
             Headings......................................................9.8
             Other Compensation Plans......................................9.9
             Other Options or Awards......................................9.10
             Governing Law................................................9.11
             No Modification, Extension, or Renewal of Corporate
                 Plan Options, 1996 ISO Plan Options, and
                 1997 Incentive Plan Options..............................9.12
             Conforming Amendments to Options Issued Under
                 the Corporate Plan, 1996 ISO Plan and
                 1997 Incentive Plan on and After the
                 Effective Date of this Section 9.13......................9.13

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                                   ARTICLE I

                                      PLAN

        1.1 PURPOSE. This Plan is a plan for key employees (including officers
and employee directors) of the Company and its Affiliates and is intended to
advance the best interests of the Company, its Affiliates, and its stockholders
by providing those persons who have substantial responsibility for the
management and growth of the Company and its Affiliates with additional
incentives and an opportunity to obtain or increase their proprietary interest
in the Company, thereby encouraging them to continue in the employ of the
Company or any of its Affiliates. For administrative purposes, and subject to
Section 9.12 hereof, this Plan incorporates the BindView Development
Corporation Stock Option Plan (the "Corporate Plan"), the BindView Development
Corporation Incentive Stock Option Plan (the "1996 ISO Plan and the BindView
Development Corporation 1997 Incentive Plan (the "1997 Incentive Plan").

        1.2 EFFECTIVE DATE OF PLAN. The Plan is effective January 1, 1998, if
within one year of that date it shall have been approved by at least a majority
vote of stockholders voting in person or by proxy at a duly held stockholders'
meeting, or if the provisions of the corporate charter, by-laws or applicable
state law prescribes a greater degree of stockholder approval for this action,
the approval by the holders of that percentage, at a duly held meeting of
stockholders. No Incentive Option, Nonqualified Option, Reload Option or Stock
Award shall be granted pursuant to the Plan after December 31, 2007.

                                   ARTICLE II

                                  DEFINITIONS

         The words and phrases defined in this Article shall have the meaning
set out in these definitions throughout this Plan, unless the context in which
any such word or phrase appears reasonably requires a broader, narrower, or
different meaning.

        2.1 "AFFILIATE" means any parent corporation and any subsidiary
corporation. The term "parent corporation" means any corporation (other than
the Company) in an unbroken chain of corporations ending with the Company if,
at the time of the action or transaction, each of the corporations other than
the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.
The term "subsidiary corporation" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if, at
the time of the action or transaction, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in the chain.

        2.2 "BOARD OF DIRECTORS" or "BOARD" means the board of directors of the
Company.

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        2.3 "CHANGE OF CONTROL."  A "Change in Control" shall have occurred if,
after the Effective Date of the Plan:

                  (i) a report on Schedule 13D or Schedule 14D-1 (or any
         successor schedule, form or report) shall be filed with the Commission
         pursuant to the Exchange Act and that report discloses that any person
         (within the meaning of Section 13(d) or Section 14(d)(2) of the
         Exchange Act), other than the Company (or one of its subsidiaries) or
         any employee benefit plan sponsored by the Company (or one of its
         subsidiaries), is the beneficial owner (as that term is defined in
         Rule 13d-3 or any successor rule or regulation promulgated under the
         Exchange Act), directly or indirectly, of 20 percent or more of the
         outstanding Voting Stock;

                  (ii) any person (within the meaning of Section 13(d) or
         Section 14(d)(2) of the Exchange Act), other than the Company (or one
         of its subsidiaries) or any employee benefit plan sponsored by the
         Company (or one of its subsidiaries), shall purchase securities
         pursuant to a tender offer or exchange offer to acquire any Voting
         Stock (or any securities convertible into Voting Stock) and,
         immediately after consummation of that purchase, that person is the
         beneficial owner (as that term is defined in Rule 13d-3 or any
         successor rule or regulation promulgated under the Exchange Act),
         directly or indirectly, of 20 percent or more of the outstanding
         Voting Stock (such person's beneficial ownership to be determined, in
         the case of rights to acquire Voting Stock, pursuant to paragraph (d)
         of Rule 13d-3 or any successor rule or regulation promulgated under
         the Exchange Act);

                  (iii)    the consummation of:

                                    (x) a merger, consolidation or
                           reorganization of the Company with or into any other
                           person if (a) the Company is not the surviving
                           entity or (b) as a result of such merger,
                           consolidation or reorganization, 50 percent or less
                           of the combined voting power of the then-outstanding
                           securities of such other person immediately after
                           such merger, consolidation or reorganization are
                           held in the aggregate by the holders of Voting Stock
                           immediately prior to such merger, consolidation or
                           reorganization;

                                    (y) any sale, lease, exchange or other
                           transfer of all or substantially all the assets of
                           the Company and its consolidated subsidiaries to any
                           other person if as a result of such sale, lease,
                           exchange or other transfer, 50 percent or less of
                           the combined voting power of the then-outstanding
                           securities of such other person immediately after
                           such sale, lease, exchange or other transfer are
                           held in the aggregate by the holders of Voting Stock
                           immediately prior to such sale, lease, exchange or
                           other transfer; or

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                                    (z) a transaction immediately after the
                           consummation of which any person (within the meaning
                           of Section 13(d) or Section 14(d)(2) of the Exchange
                           Act) would be the beneficial owner (as that term is
                           defined in Rule 13d-3 or any successor rule or
                           regulation promulgated under the Exchange Act),
                           directly or indirectly, of more than 50 percent of
                           the outstanding Voting Stock;

                  (iv)     the stockholders of the Company approve the
         dissolution of the Company; or

                  (v)      during any period of 12 consecutive months, the
         individuals who at the beginning of that period constituted the Board
         of Directors shall cease to constitute a majority of the Board of
         Directors, unless the election, or the nomination for election by the
         Company's stockholders, of each director of the Company first elected
         during such period was approved by a vote of at least a two-thirds of
         the directors of the Company then still in office who were directors
         of the Company at the beginning of any such period.

        2.4  "CODE" means the Internal Revenue Code of 1986, as amended.

        2.5  "COMMISSION" means the United States Securities and Exchange
Commission or any successor agency.

        2.6  "COMMITTEE" means the Compensation Committee of the Board of
Directors or such other committee designated by the Board of Directors. The
Committee shall be comprised solely of at least two members who are both
Non-Employee Directors and Outside Directors.

        2.7  "COMPANY" means BindView Development Corporation.

        2.8  "CORPORATE PLAN" means the BindView Development Corporation Stock
Option Plan.

        2.9  "CORPORATE PLAN OPTIONS" means options granted under the Corporate
Plan to purchase stock.

        2.10 "EMPLOYEE" means a person employed by the Company or any Affiliate
to whom an Option or a Stock Award is granted.

        2.11 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time.

        2.12 "FAIR MARKET VALUE" of the Stock as of any date means (a) the
average of the high and low sale prices of the Stock on that date on the
principal securities exchange on which the Stock is listed; or (b) if the Stock
is not listed on a securities exchange, the average of the high and low sale
prices of the Stock on that date as reported on the NASDAQ National Market
System; or (c) if the Stock is not listed on the NASDAQ National Market System,
the average of the high and low bid quotations for the Stock on that date as
reported by the National Quotation Bureau Incorporated; or (d) if none of the
foregoing is applicable, an amount at the election of the Committee equal to
(x),

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the average between the closing bid and ask prices per share of stock on the
last preceding date on which those prices were reported or (y) that amount as
determined by the Committee.

        2.13 "INCENTIVE OPTION" means an option granted under this Plan which
is designated as an "Incentive Option" and satisfies the requirements of
Section 422 of the Code.

        2.14 "1996 ISO PLAN" means the BindView Development Corporation
Incentive Stock Option Plan.

        2.15 "1996 ISO PLAN OPTIONS" mean Options granted under the 1996 ISO
Plan.

        2.16 "1997 INCENTIVE PLAN" means the BindView Development Corporation
1997 Incentive Plan.

        2.17 "1997 INCENTIVE PLAN OPTIONS" mean Options granted under the 1997
Incentive Plan.

        2.18 "1998 INCENTIVE PLAN OPTIONS" mean Options granted pursuant to
Section 4.2 of the Plan.

        2.19 "NON-EMPLOYEE DIRECTOR" means a "Non-Employee Director" as that
term is defined in Rule 16b-3 under the Securities Exchange Act of 1934.

         2.20 "NONQUALIFIED OPTION" means an option granted under this Plan
other than an Incentive Option.

        2.21 "OPTION" means an Incentive Option, Nonqualified Option and/or
Reload Option granted under this Plan to purchase shares of Stock. Option shall
also include a reference to each Corporate Plan Option, 1996 ISO Plan Option,
1997 Incentive Plan Option and 1998 Plan Option, except to the extent otherwise
indicated or to the extent set forth in Section 9.12 of the Plan.

        2.22 "OPTION AGREEMENT" means the written agreement which sets out the
terms of an Option, as amended from time to time.

        2.23 "OUTSIDE DIRECTOR" means a member of the Board of Directors
serving on the Committee who satisfies the definition of outside director in
Section 162(m) of the Code.

        2.24 "PLAN" means the BindView Development Corporation Omnibus
Incentive Plan, as set out in this document and as it may be amended from time
to time.

        2.25 "PLAN YEAR" means the Company's fiscal year.

        2.26 "RELOAD OPTION" shall mean a 1998 Incentive Plan Option or a 1997
Incentive Plan Option which the Board may, in its sole discretion, grant in
connection with the issuing of a 1998 Incentive

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Plan Option or a 1997 Incentive Plan Option if the exercise price of the 1998
Incentive Plan Option or the 1997 Incentive Plan Option is paid in whole or in
part, by exchanging Stock owned by the Employee. A Reload Option shall be an
Incentive Option or Nonqualified Option depending on the type of 1998 Incentive
Plan Option or 1997 Incentive Plan Option exercised under the Option Agreement
containing the Reload Option feature. The Reload Options will be subject to the
same restrictions and provisions of the Plan as the original 1998 Incentive
Plan Option or 1997 Incentive Plan Option, except when specific changes are set
out in the Option Agreement.

        2.27 "RESTRICTED STOCK" means Stock awarded or purchased under a
Restricted Stock Agreement entered into pursuant to this Plan, together with
(i) all rights, warranties or similar items attached or accruing thereto or
represented by the certificate representing the Stock and (ii) any stock or
securities into which or for which the Stock is thereafter converted or
exchanged. The terms and conditions of the Restricted Stock Agreement shall be
determined by the Committee consistent with the terms of the Plan.

        2.28 "RESTRICTED STOCK AGREEMENT" means an agreement between the
Company or any Affiliate and the Employee pursuant to which the Employee
receives a Stock Award subject to Article VI.

        2.29 "RESTRICTED STOCK PURCHASE PRICE" means the purchase price, if
any, per share of Restricted Stock subject to an Award. The Restricted Stock
Purchase Price shall be determined by the Committee. It may be greater than or
less than the Fair Market Value of the Stock on the date of the Stock Award.

        2.30 "STOCK" means the common stock of the Company, no par value or, in
the event that the outstanding shares of common stock are later changed into or
exchanged for a different class of stock or securities of the Company or
another corporation, that other stock or security.

        2.31 "STOCK AWARD" means an award of Restricted Stock.

        2.32 "10% STOCKHOLDER" means an individual who, at the time the Option
is granted, owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of any Affiliate. An individual
shall be considered as owning the stock owned, directly or indirectly, by or
for his brothers and sisters (whether by the whole or half blood), spouse,
ancestors, and lineal descendants; and stock owned, directly or indirectly, by
or for a corporation, partnership, estate, or trust, shall be considered as
being owned proportionately by or for its stockholders, partners, or
beneficiaries.

        2.33 "VOTING STOCK" means shares of the capital stock of the Company
the holders of which are entitled to vote for the election of directors, but
excluding shares entitled to so vote only upon the occurrence of a contingency
unless that contingency shall have occurred.

                                  ARTICLE III

                                  ELIGIBILITY

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                  The individuals who shall be eligible to receive Incentive
Options, Nonqualified Options, and Stock Awards shall be those key employees of
the Company or any of its Affiliates as the Committee shall determine from time
to time. However, no member of the Committee shall be eligible to receive any
Option, or Stock Award or to receive stock, stock options, or stock
appreciation rights under any other plan of the Company or any of its
Affiliates, if to do so would cause the individual not to be a Non-Employee
Director or Outside Director. The Board of Directors may designate one or more
individuals who shall not be eligible to receive any Option or Stock Award
under this Plan or under other similar plans of the Company.

                                   ARTICLE IV

            GENERAL PROVISIONS RELATING TO OPTIONS AND STOCK AWARDS

         4.1 AUTHORITY TO GRANT OPTIONS AND STOCK AWARDS. The Committee may
grant to those key Employees of the Company or any of its Affiliates, as it
shall from time to time determine, Options or Stock Awards under the terms and
conditions of this Plan. Subject only to any applicable limitations set out in
this Plan, the number of shares of Stock to be covered by any Option or Stock
Award to be granted to an Employee shall be as determined by the Committee.

         4.2 DEDICATED SHARES. The total number of shares of Stock with respect
to which 1998 Incentive Plan Options and Stock Awards may be granted under the
Plan shall be 8,000,000 shares. The maximum number of shares subject to Options
which may be issued to any Employee under the Plan during each Plan Year is
2,500,000 shares. The shares may be treasury shares or authorized but unissued
shares. The number of shares stated in this Section 4.2 shall be subject to
adjustment in accordance with the provisions of Section 4.5.

             In the event that any outstanding Option or Stock Award shall
expire or terminate for any reason or any Option or Stock Award is surrendered,
the shares of Stock allocable to the unexercised portion of that Option or
Stock Award may again be subject to an Option or Stock Award under the Plan. If
Stock is used by the Employee pursuant to Section 5.6 of this Plan to pay the
exercise price of an Option, only the net number of shares of Stock issued by
the Company shall be considered utilized under this Plan. If shares of Stock
are withheld by the Company to pay tax withholding due from the Employee, the
number of such shares withheld shall not be considered utilized under this
Plan.

         4.3 NON-TRANSFERABILITY. Options shall not be transferable by the
Employee otherwise than by will or under the laws of descent and distribution,
and shall be exercisable, during the Employee's lifetime, only by him.
Restricted Stock shall be purchased by and/or become vested under a Restricted
Stock Agreement during the Employee's lifetime, only by him. Any attempt to
transfer a Stock Award other than under the terms of the Plan and the
Restricted Stock Agreement shall terminate the Stock Award and all rights of
the Employee to that Restricted Stock. Notwithstanding any provision in this
Plan to the contrary, an Employee may transfer any Nonqualified Option to an
Immediate Family Member or an entity controlled by the Employee or an Immediate
Family Member, provided, however, no further transfer shall be made except for
a

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transfer back to such Employee or such other transfer which may be approved by
the President of the Company. For this purpose "Immediate Family Member" means
an Employee's children, grandchildren or spouse, or a trust for the benefit of
such Immediate Family Members.

         4.4 REQUIREMENTS OF LAW. The Company shall not be required to sell or
issue any Stock under any Option or Stock Award if issuing that Stock would
constitute or result in a violation by the Employee or the Company of any
provision of any law, statute, or regulation of any governmental authority.
Specifically, in connection with any applicable statute or regulation relating
to the registration of securities, upon exercise of any Option or pursuant to
any Stock Award, the Company shall not be required to issue any Stock unless
the Committee has received evidence satisfactory to it to the effect that the
holder of that Option or Stock Award will not transfer the Stock except in
accordance with applicable law, including receipt of an opinion of counsel
satisfactory to the Company to the effect that any proposed transfer complies
with applicable law. The determination by the Board on this matter shall be
final, binding and conclusive. The Company may, but shall in no event be
obligated to, register any Stock covered by this Plan pursuant to applicable
securities laws of any country or any political subdivision. In the event the
Stock issuable on exercise of an Option or pursuant to a Stock Award is not
registered, the Company may imprint on the certificate evidencing the Stock any
legend that counsel for the Company considers necessary or advisable to comply
with applicable law. The Company shall not be obligated to take any other
affirmative action in order to cause the exercise of an Option or vesting under
a Stock Award, or the issuance of shares under either of them, to comply with
any law or regulation of any governmental authority.

         4.5 CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of
outstanding Options or Stock Awards shall not affect in any way the right or
power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Stock or its rights, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.

             If the Company shall effect a subdivision or consolidation of
shares or other capital readjustment, the payment of a stock dividend, or other
increase or reduction of the number of shares of the Stock outstanding, without
receiving compensation for it in money, services or property, then (a) the
number, class, and per share price of shares of Stock subject to outstanding
Options under this Plan shall be appropriately adjusted in such a manner as to
entitle an Employee to receive upon exercise of an Option, for the same
aggregate cash consideration, the equivalent total number and class of shares
he would have received had he exercised his Option in full immediately prior to
the event requiring the adjustment; and (b) the number and class of shares of
Stock then reserved to be issued under the Plan shall be adjusted by
substituting for the total number and class of shares of Stock then reserved,
that number and class of shares of Stock that would have been received by the
owner of an equal number of outstanding shares of each class of Stock as the
result of the event requiring the adjustment.

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             If while unexercised Options remain outstanding under the
Plan (i) the Company shall not be the surviving entity in any merger,
consolidation or other reorganization (or survives only as a subsidiary of an
entity other than an entity that was wholly-owned by the Company immediately
prior to such merger, consolidation or other reorganization), (ii) the Company
sells, leases or exchanges or agrees to sell, lease or exchange all or
substantially all of its assets to any other person or entity (other than an
entity wholly-owned by the Company), (iii) the Company is to be dissolved, or
(iv) the Company is a party to any other corporate transaction (as defined
under Section 424(a) of the Code and applicable Treasury Regulations) that is
not described in clauses (i), (ii) or (iii) of this sentence (each such event
is referred to herein as a "Corporate Change"), then (x) except as otherwise
provided in an Option Agreement or as a result of the Board's effectuation of
one or more of the alternatives described below, there shall be no acceleration
of the time at which any Option then outstanding may be exercised, and (y) no
later than ten (10) days after the approval by the stockholders of the Company
of such Corporate Change, the Board, acting in its sole and absolute discretion
without the consent or approval of any Optionee, shall act to effect one or
more of the following alternatives, which may vary among individual Optionees
and which may vary among Options held by any individual Optionee:

                  (1) accelerate the time at which some or all of the Options
         then outstanding may be exercised so that such Options may be
         exercised in full for a limited period of time on or before a
         specified date (before or after such Corporate Change) fixed by the
         Board, after which specified date all such Options that remain
         unexercised and all rights of Optionees thereunder shall terminate,

                  (2) require the mandatory surrender to the Company by all or
         selected Optionees of some or all of the then outstanding Options held
         by such Optionees (irrespective of whether such Options are then
         exercisable under the provisions of this Plan or the Option Agreements
         evidencing such Options) as of a date, before or after such Corporate
         Change, specified by the Board, in which event the Board shall
         thereupon cancel such Options and the Company shall pay to each such
         Optionee an amount of cash per share equal to the excess, if any, of
         the per share price offered to stockholders of the Company in
         connection with such Corporate Change over the exercise price(s) under
         such Options for such shares,

                  (3) with respect to all or selected Optionees, have some or
         all of their then outstanding Options (whether vested or unvested)
         assumed or have a new Option substituted for some or all of their then
         outstanding Options (whether vested or unvested) by an entity which is
         a party to the transaction resulting in such Corporate Change and
         which is then employing him, or a parent or subsidiary of such entity,
         provided that (A) such assumption or substitution is on a basis where
         the excess of the aggregate fair market value of the shares subject to
         the Option immediately after the assumption or substitution over the
         aggregate exercise price of such shares is equal to the excess of the
         aggregate fair market value of all shares subject to the Option
         immediately before such assumption or substitution over the aggregate
         exercise price of such shares, and (B) the assumed rights under such
         existing Option or the substituted rights under such new Option as the
         case may be will have the

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         same terms and conditions as the rights under the existing Option
         assumed or substituted for, as the case may be,

                  (4) provide that the number and class of shares of Stock
         covered by an Option (whether vested or unvested) theretofore granted
         shall be adjusted so that such Option when exercised shall thereafter
         cover the number and class of shares of stock or other securities or
         property (including, without limitation, cash) to which the Optionee
         would have been entitled pursuant to the terms of the agreement and/or
         plan relating to such Corporate Change if, immediately prior to such
         Corporate Change, the Optionee had been the holder of record of the
         number of shares of Stock then covered by such Option, or

                  (5) make such adjustments to Options then outstanding as the
         Board deems appropriate to reflect such Corporate Change (provided,
         however, that the Board may determine in its sole and absolute
         discretion that no such adjustment is necessary)."

                  In effecting one or more of alternatives (3), (4) or (5)
         above, and except as otherwise may be provided in an Option Agreement,
         the Board, in its sole and absolute discretion and without the consent
         or approval of any Optionee, may accelerate the time at which some or
         all Options then outstanding may be exercised.

                  In the event of changes in the outstanding Stock by reason of
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Option and not otherwise provided for by this Section 4.5,
any outstanding Options and any agreements evidencing such Options shall be
subject to adjustment by the Board in its sole and absolute discretion as to
the number and price of shares of stock or other consideration subject to such
Options. In the event of any such change in the outstanding Stock, the
aggregate number of shares available under this Plan may be appropriately
adjusted by the Board, whose determination shall be conclusive.

                  After a merger of one or more corporations into the Company
or after a consolidation of the Company and one or more corporations in which
the Company shall be the surviving corporation, each Employee shall be entitled
to have his Restricted Stock appropriately adjusted based on the manner the
Stock was adjusted under the terms of the agreement of merger or consolidation.

                  The issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services either upon direct sale or upon the exercise of rights
or warrants to subscribe for them, or upon conversion of shares or obligations
of the Company convertible into shares or other securities, shall not affect,
and no adjustment by reason of such issuance shall be made with respect to, the
number, class, or price of shares of Stock then subject to outstanding Options
or Stock Awards.

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         4.6 ELECTION UNDER SECTION 83(B) OF THE CODE.  No Employee shall
exercise the election permitted under Section 83(b) of the Code under this Plan
without written approval of the Committee.

                                   ARTICLE V

                                    OPTIONS

         5.1 TYPE OF OPTION. The Committee shall specify whether a given option
shall constitute an Incentive Option or a Nonqualified Option. Options
previously granted under the Corporate Plan, the 1996 ISO Plan and the 1997
Incentive Plan shall retain the designation as either an incentive stock option
that satisfies the requirements of Section 422 of the Code or as a nonqualified
stock option that does not satisfy the requirements of Section 422 of the Code.

         5.2 OPTION PRICE. The price at which Stock may be purchased under an
Incentive Option shall not be less than the greater of: (a) 100% of the Fair
Market Value of the shares of Stock on the date the Option is granted or (b)
the aggregate par value of the shares of Stock on the date the Option is
granted. The Committee in its discretion may provide that the price at which
shares of Stock may be purchased under an Incentive Option shall be more than
100% of Fair Market Value. In the case of any 10% Stockholder, the price at
which shares of Stock may be purchased under an Incentive Option shall not be
less than 110% of the Fair Market Value of the Stock on the date the Incentive
Option is granted.

             The price at which shares of Stock may be purchased under a
Nonqualified Option may be less than the Fair Market Value of the shares of
Stock on the date the Option is granted. The Committee in its discretion may
provide that the price at which shares of Stock may be purchased under a
Nonqualified Option shall be more than 100% of Fair Market Value.

         5.3 DURATION OF OPTIONS. No Option shall be exercisable after the
expiration of 10 years from the date the Option is granted. A Reload Option
shall have a term which is no longer than the original term of the underlying
Option unless it is expressly provided otherwise in the Option Agreement. In
the case of a 10% Stockholder, no Incentive Option shall be exercisable after
the expiration of five years from the date the Incentive Option is granted.

         5.4 AMOUNT EXERCISABLE.  Each Option is exercisable, in whole or in
part, in the manner and subject to the conditions the Committee, in its sole
discretion, may provide in the Option Agreement, as long as the Option is valid
and outstanding.

             To the extent that the aggregate Fair Market Value (determined as
of the time an Incentive Option is granted) of the Stock with respect to which
Incentive Options first become exercisable by the Employee during any calendar
year (under this Plan and any other incentive stock option plan(s) of the
Company or any Affiliate) exceeds $100,000, the Incentive Options shall be
treated as Nonqualified Options. In making this determination, Incentive Options
shall be taken into account in the order in which they were granted. If an
Incentive Option is not exercised within

                                      -10-

<PAGE>   15

specified time limits prescribed by the Code, it shall become a Nonqualified
Option by operation of law.

             Solely with respect to the 1997 Incentive Plan Options,
unless otherwise provided by the Board in a 1997 Incentive Plan Option
Agreement, all conditions and restrictions relating to a 1997 Incentive Plan
Option, including limitations on exercisability, risks of forfeiture and
conditions and restrictions requiring the continued performance of services or
the achievement of performance objectives with respect to the exercisability or
settlement of such 1997 Incentive Plan Option, shall immediately lapse upon a
Change of Control. Solely with respect to 1997 Incentive Plan Options, a Change
of Control shall be deemed to have occurred if any person, other than the
Company or an employee benefit plan of the Company, acquires directly or
indirectly, the beneficial ownership, as defined in Section 13(d) of the
Exchange Act, of any voting security of the Company and immediately after such
acquisition, such person is directly or directly the beneficial owner of voting
securities representing 50% or more of the total voting power of all of the
then-outstanding voting securities of the Company. In addition, all shares of
Stock granted pursuant to the exercise of the 1997 Incentive Plan Option shall
be subject to the terms of any shareholder's agreement entered into by the
Company concurrent with, or prior to the grant of any 1997 Incentive Plan
Option. Furthermore, no fractional shares of stock shall be issued or delivered
pursuant to any 1997 Incentive Plan Option. The Committee shall determine
whether cash or other Options or other property shall be issued or paid in lieu
of such fractional shares or whether such fractional or any rights thereto
shall be forfeited or otherwise eliminated.

         5.5 EXERCISE OF OPTIONS. Each Option shall be exercised by the
delivery of written notice to the Committee setting forth the number of shares
of Stock with respect to which the Option is to be exercised, together with:
(a) cash, certified check, bank draft, or postal or express money order payable
to the order of the Company for an amount equal to the option price of the
shares, (b) Stock at its Fair Market Value on the date of exercise, (c) an
election to have shares of Stock, which otherwise would be issued on exercise,
withheld in payment of the exercise price and/or to satisfy any income tax
withholding obligation, (d) any combination of (a), (b), or (c), and/or (e) any
other form of payment which is acceptable to the Committee, and specifying the
address to which the certificates for the shares are to be mailed.

             With respect to the exercise of Corporate Plan Options and
1996 ISO Plan Options, the Employee must pay the option price solely with cash.
With respect to 1997 Incentive Plan Options, the Board shall determine the time
or times at which a 1997 Incentive Plan Option may be exercised in whole or in
part, the methods by which such exercise price may be paid or deemed to be
paid, the form of such payment, including, without limitation, cash, Stock,
other options or awards granted under other Company plans or other property,
including notes or other contractual obligations of employees to make payment
on a deferred basis, such as through "cashless exercise" arrangements, to the
extent permitted by applicable law, and the methods by which Stock will be
delivered or deemed to be delivered to employees.

             As promptly as practicable after receipt of written
notification and payment, the Company shall deliver to the Employee
certificates for the number of shares with respect to which the Option has been
exercised, issued in the Employee's name. If shares of Stock are used in

                                      -11-

<PAGE>   16

payment, the aggregate Fair Market Value of the shares of Stock tendered must
be equal to or less than the aggregate exercise price of the shares being
purchased upon exercise of the Option, and any difference must be paid by cash,
certified check, bank draft, or postal or express money order payable to the
order of the Company. Delivery of the shares shall be deemed effected for all
purposes when a stock transfer agent of the Company shall have deposited the
certificates in the United States mail, addressed to the Employee, at the
address specified by the Employee.

             Whenever an Option is exercised by exchanging shares of Stock
owned by the Employee, the Employee shall deliver to the Company certificates
registered in the name of the Employee representing a number of shares of Stock
legally and beneficially owned by the Employee, free of all liens, claims, and
encumbrances of every kind, accompanied by stock powers duly endorsed in blank
by the record holder of the shares represented by the certificates (with
signature guaranteed by a commercial bank or trust company or by a brokerage
firm having a membership on a registered national stock exchange). The delivery
of certificates upon the exercise of Options is subject to the condition that
the person exercising the Option provide the Company with the information the
Company might reasonably request pertaining to exercise, sale or other
disposition. The Committee may provide that a legend or restriction be printed
on the certificate as the Committee determines is necessary, in its discretion,
to comply with applicable laws.

         5.6 EXERCISE ON TERMINATION OF EMPLOYMENT. Unless it is expressly
provided otherwise in the Option Agreement, Options shall terminate one day
less than three months after severance of employment of the Employee from the
Company and all Affiliates for any reason, with or without cause, other than
death, retirement under the then established rules of the Company, or severance
for disability. Whether authorized leave of absence or absence on military or
government service shall constitute severance of the employment of the Employee
shall be determined by the Committee at that time.

             In determining the employment relationship between the
Company and the Employee, employment by any Affiliate shall be considered
employment by the Company, as shall employment by a corporation issuing or
assuming a stock option in a transaction to which Section 424(a) of the Code
applies, or by a parent corporation or subsidiary corporation of the
corporation issuing or assuming a stock option (and for this purpose, the
phrase "corporation issuing or assuming a stock option" shall be substituted
for the word "Company" in the definitions of parent corporation and subsidiary
corporation in Section 2.1, and the parent-subsidiary relationship shall be
determined at the time of the corporate action described in Section 424(a) of
the Code).

             DEATH. If, before the expiration of an Option, the Employee,
whether in the employ of the Company or after he has retired or was severed for
disability, dies, the Option shall become fully vested and shall continue until
the earlier of the Option's expiration date or one year following the date of
his death, unless it is expressly provided otherwise in the Option Agreement.
After the death of the Employee, his executors, administrators or any persons
to whom his Option may be transferred by will or by the laws of descent and
distribution shall have the right, at any time prior to the Option's expiration
or termination, whichever is earlier, to exercise the Option in full unless it
is expressly provided otherwise in the Option Agreement.

                                      -12-

<PAGE>   17

             RETIREMENT. Unless it is expressly provided otherwise in the
Option Agreement, before the expiration of an Incentive Option, the Employee
shall be retired in good standing from the employ of the Company under the then
established rules of the Company, the Incentive Option shall terminate on the
earlier of the Option's expiration date or one year after his retirement;
provided, if an Incentive Option is not exercised within specified time limits
prescribed by the Code, it shall become a Nonqualified Option by operation of
law.

             Unless it is expressly provided otherwise in the Option
Agreement, if before the expiration of a Nonqualified Option, the Employee
shall be retired in good standing from the employ of the Company under the then
established rules of the Company, the Nonqualified Option shall terminate on
the earlier of the Nonqualified Option's expiration date or one year after his
retirement.

             In the event of retirement, the Employee shall have the right
prior to the termination of the Option to exercise the Option, to the extent to
which he was entitled to exercise it immediately prior to his retirement,
unless it is expressly provided otherwise in the Option Agreement.

             DISABILITY. If, before the expiration of an Option, the
Employee shall be severed from the employ of the Company for disability, the
Option shall terminate on the earlier of the Option's expiration date or one
year after the date he was severed because of disability, unless it is
expressly provided otherwise in the Option Agreement. In the event that the
Employee shall be severed from the employ of the Company for disability, the
Employee shall become fully vested in his Option and have the right prior to
the termination of the Option to exercise the Option in full unless it is
expressly provided otherwise in the Option Agreement. If an Incentive Option is
not exercised within specified time limits prescribed by the Code, it shall
become a Nonqualified Option by operation of law.

             Notwithstanding the above, an Option may be amended by the
Committee, with the consent of the Employee, to extend the termination date of
the Option, provided such extension shall not exceed a period of 10 years from
the date of the initial grant of the Option.

         5.7 EXERCISE OF OPTIONS UNDER THE CORPORATE PLAN, THE 1996 ISO PLAN
AND THE 1997 INCENTIVE PLAN.

                  (a) CORPORATE PLAN OPTION PROVISIONS. Notwithstanding any
         other provision in this Plan, solely with respect to Corporate Plan
         Options, upon the death of the optionee, while still employed by
         Company, or upon the termination of the Optionee's employment with
         Company, any Option exercisable on the date of death or termination
         may be exercised by the Optionee or the Optionee's estate, as the case
         may be, provided that such exercise occurs within both the remaining
         option term of the Option and no later than 24 months after the date
         of the Optionee's death, or the date of Optionee's termination of
         employment with the Company, whichever occurs first.

                  (b) 1996 ISO PLAN. Solely with respect to Options exercisable
         under the 1996 ISO Plan, upon the Employee's death while still
         employed by the Company,

                                     -13-

<PAGE>   18

         any 1996 ISO Plan Option exercisable on the date of death may be
         exercised by the Optionee's estate or by a person who acquires the
         right to exercise such 1996 ISO by bequest or inheritance by reason of
         the death of the Optionee, provided that such exercise occurs within
         both the remaining option term of the 1996 ISO Plan Option and six
         months after the Optionee's death. Except as provided in the
         immediately preceding sentence, all 1996 ISO Plan Options shall
         immediately terminate on the date of termination of the Employee's
         employment with the Company.

                  (c) 1997 INCENTIVE PLAN.  See Section 5.5 of the Plan.

         5.8  RELOAD OPTIONS. From time to time, the Committee may grant Reload
Options to Employees. The time of grant of a Reload Option shall be the time
the Employee surrenders the shares of Stock with respect to which the Reload
Option is granted. The Reload Option shall be for the number of shares of Stock
surrendered by the Employee as payment upon the exercise of the previously
granted Option. The Reload Option shall be subject to the following
restrictions: (a) the Reload Option shall be subject to the same restrictions
on exercise and other Plan rules that are imposed on the underlying Option
which contained the Reload Option feature; and (b) the Reload Option shall not
be exercisable until the expiration of any retention holding period imposed on
the disposition of any shares of Stock covered by the underlying Option which
contained the Reload Option Feature unless it is expressly provided otherwise
in the Option Agreement.

         5.9  SUBSTITUTION OPTIONS. Options may be granted under this Plan from
time to time in substitution for stock options held by employees of other
corporations who are about to become employees of or affiliated with the
Company or any Affiliate as the result of a merger or consolidation of the
employing corporation with the Company or any Affiliate, or the acquisition by
the Company or any Affiliate of the assets of the employing corporation, or the
acquisition by the Company or any Affiliate of stock of the employing
corporation as the result of which it becomes an Affiliate of the Company. The
terms and conditions of the substitute Options granted may vary from the terms
and conditions set out in this Plan to the extent the Committee, at the time of
grant, may deem appropriate to conform, in whole or in part, to the provisions
of the stock options in substitution for which they are granted.

         5.10 NO RIGHTS AS STOCKHOLDER.  No Employee shall have any rights as a
stockholder with respect to Stock covered by his Option until the date a stock
certificate is issued for the Stock.

                                   ARTICLE VI

                                  STOCK AWARDS

         6.1  STOCK AWARDS. The Committee may issue shares of Restricted Stock
to an eligible employee subject to the terms of a Restricted Stock Agreement.
The Restricted Stock may be issued for no payment by the Employee or for a
payment below the Fair Market Value on the date of grant. Restricted Stock
shall be subject to restrictions as to sale, transfer, alienation, pledge or
other encumbrance and generally will be subject to vesting over a period of
time specified in the Restricted

                                      -14-

<PAGE>   19

Stock Agreement. The Committee shall determine the period of vesting, the
number of shares, the price, if any, of Stock included in a Stock Award, and
the other terms and provisions which are included in a Restricted Stock
Agreement. In the discretion of the Committee, a Restricted Stock Award may be
made as a grant of Restricted Stock or as a right to receive stock (or their
cash equivalent or a combination of both) in the future.

         6.2  RESTRICTIONS.  Restricted Stock shall be subject to the terms and
conditions as determined by the Committee, including without limitation any or
all of the following:

                  (a) a prohibition against the sale, transfer, alienation,
pledge or other encumbrance of the shares of Restricted Stock, such prohibition
to lapse at such time or times as the Committee shall determine (whether in
annual or more frequent installments, at the time of the death, disability or
retirement of the holder of such shares, or otherwise);

                  (b) a requirement that the holder of shares of Restricted
Stock forfeit, or in the case of shares sold to an Employee, resell back to the
Company at his cost, all or a part of such shares in the event of termination
of the holder's employment during any period in which the shares remain subject
to restrictions;

                  (c) a prohibition against employment of the holder of
Restricted Stock by any competitor of the Company or its Affiliates, or against
such holder's dissemination of any secret or confidential information belonging
to the Company or an Affiliate;

                  (d) unless stated otherwise in the Restricted Stock
Agreement, (i) if restrictions remain at the time of severance of employment
with the Company and all Affiliates, other than for reason of disability or
death, the Restricted Stock shall be forfeited; and (ii) if severance of
employment is by reason of disability or death, the restrictions on the shares
shall lapse and the Employee or his heirs or estate shall be 100% vested in the
shares subject to the Restricted Stock Agreement.

         Notwithstanding (a) above, an Employee may transfer Restricted Stock
to an Immediate Family Member (as defined in Section 4.3) or an entity
controlled by the Employee or an Immediate Family Member provided, however, no
further transfer shall be made except for a transfer back to such Employee or
such other transfer which may be approved by the President of the Company. For
this purpose, "Immediate Family Member" means an Employee's children,
grandchildren or spouse, or a trust for the benefit of such Immediate Family
Member.

         6.3  STOCK CERTIFICATE. Shares of Restricted Stock shall be registered
in the name of the Employee receiving the Stock Award and deposited, together
with a stock power endorsed in blank, with the Company. Each such certificate
shall bear a legend in substantially the following form:

         The transferability of this certificate and the shares of Stock
         represented by it is restricted by and subject to the terms and
         conditions (including conditions of forfeiture) contained in the
         BindView Development Corporation Omnibus Incentive Plan, and an
         agreement entered into between the registered owner and the Company,

                                      -15-

<PAGE>   20
         including any shareholders agreement.  A copy of the Plan and agreement
         is on file in the office of the Secretary of the Company.

         6.4  RIGHTS AS STOCKHOLDER. Subject to the terms and conditions of the
Plan, each Employee receiving a certificate for Restricted Stock shall have all
the rights of a stockholder with respect to the shares of Stock included in the
Stock Award during any period in which such shares are subject to forfeiture
and restrictions on transfer, including without limitation, the right to vote
such shares. Dividends paid with respect to shares of Restricted Stock in cash
or property other than stock in the Company or rights to acquire stock in the
Company shall be paid to the Employee currently. Dividends paid in stock in the
Company or rights to acquire stock in the Company shall be added to and become
a part of the Restricted Stock.

         6.5  LAPSE OF RESTRICTIONS. At the end of the time period during which
any shares of Restricted Stock are subject to forfeiture and restrictions on
sale, transfer, alienation, pledge, or other encumbrance, such shares shall
vest and will be delivered in a certificate, free of all restrictions, to the
Employee or to the Employee's legal representative, beneficiary or heir;
provided the certificate shall bear such legend, if any, as the Committee
determines is reasonably required by applicable law. By accepting a Stock Award
and executing a Restricted Stock Agreement, the Employee agrees to remit when
due any federal and state income and employment taxes required to be withheld.

         6.6  RESTRICTION PERIOD.  No Stock Award may provide for restrictions
continuing beyond 10 years from the date of the Stock Award.

                                  ARTICLE VII

                                 ADMINISTRATION

              This Plan shall be administered by the Committee. All
questions of interpretation and application of the Plan, Options or Stock
Awards shall be subject to the determination of the Committee. A majority of
the members of the Committee shall constitute a quorum. All determinations of
the Committee shall be made by a majority of its members. Any decision or
determination reduced to writing and signed by a majority of the members shall
be as effective as if it had been made by a majority vote at a meeting properly
called and held. This Plan shall be administered in such a manner as to permit
the Options granted under it which are designated to be Incentive Options to
qualify as Incentive Options. In carrying out its authority under this Plan,
the Committee shall have full and final authority and discretion, including but
not limited to the following rights, powers and authorities, to:

                  (a)      determine the Employees to whom and the time or times
at which Options or Stock Awards will be made,

                  (b)      determine the number of shares and the purchase price
of Stock covered in each Option or Stock Award, subject to the terms of the
Plan,

                                      -16-

<PAGE>   21

                  (c)      determine the terms, provisions and conditions of
each Option and Stock Award, which need not be identical,

                  (d)      accelerate the time at which any outstanding Option
may be exercised,

                  (e)      define the effect, if any, on an Option or Stock
Award of the death, disability, retirement, or termination of employment of the
Employee,

                  (f)      prescribe, amend and rescind rules and regulations
relating to administration of the Plan, and

                  (g) make all other determinations and take all other actions
deemed necessary, appropriate, or advisable for the proper administration of
this Plan.

The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of this Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive
and binding on all parties.

                                  ARTICLE VIII

                        AMENDMENT OR TERMINATION OF PLAN

                  The Board of Directors of the Company may amend, terminate or
suspend this Plan at any time, in its sole and absolute discretion; provided,
however, that to the extent required to qualify this Plan under Rule 16b-3
promulgated under Section 16 of the Exchange Act, no amendment that would (a)
materially increase the number of shares of Stock that may be issued under this
Plan, (b) materially modify the requirements as to eligibility for
participation in this Plan, or (c) otherwise materially increase the benefits
accruing to participants under this Plan, shall be made without the approval of
the Company's stockholders; provided further, however, that to the extent
required to maintain the status of any Incentive Option under the Code, no
amendment that would (a) change the aggregate number of shares of Stock which
may be issued under Incentive Options, (b) change the class of employees
eligible to receive Incentive Options, or (c) decrease the Option price for
Incentive Options below the Fair Market Value of the Stock at the time it is
granted, shall be made without the approval of the Company's stockholders.
Subject to the preceding sentence, the Board shall have the power to make any
changes in the Plan and in the regulations and administrative provisions under
it or in any outstanding Incentive Option as in the opinion of counsel for the
Company may be necessary or appropriate from time to time to enable any
Incentive Option granted under this Plan to continue to qualify as an incentive
stock option or such other stock option as may be defined under the Code so as
to receive preferential federal income tax treatment.

                                      -17-

<PAGE>   22

                                   ARTICLE IX

                                 MISCELLANEOUS

         9.1  NO ESTABLISHMENT OF A TRUST FUND. No property shall be set aside
nor shall a trust fund of any kind be established to secure the rights of any
Employee under this Plan. All Employees shall at all times rely solely upon the
general credit of the Company for the payment of any benefit which becomes
payable under this Plan.

         9.2  NO EMPLOYMENT OBLIGATION. The granting of any Option or Stock
Award shall not constitute an employment contract, express or implied, nor
impose upon the Company or any Affiliate any obligation to employ or continue
to employ any Employee. The right of the Company or any Affiliate to terminate
the employment of any person shall not be diminished or affected by reason of
the fact that an Option or Stock Award has been granted to him.

         9.3  FORFEITURE. Notwithstanding any other provisions of this Plan, if
the Committee finds by a majority vote after full consideration of the facts
that the Employee, before or after termination of his employment with the
Company or an Affiliate for any reason (a) committed or engaged in fraud,
embezzlement, theft, commission of a felony, or proven dishonesty in the course
of his employment by the Company or an Affiliate, which conduct damaged the
Company or Affiliate, or disclosed trade secrets of the Company or an
Affiliate, or (b) participated, engaged in or had a material, financial or
other interest, whether as an employee, officer, director, consultant,
contractor, stockholder, owner, or otherwise, in any commercial endeavor which
is competitive with the business of the Company or an Affiliate without the
written consent of the Company or Affiliate, the Employee shall forfeit all
outstanding Options and all outstanding Restricted Stock, and including all
exercised Options and other situations pursuant to which the Company has not
yet delivered a stock certificate. Clause (b) shall not be deemed to have been
violated solely by reason of the Employee's ownership of stock or securities of
any publicly owned corporation, if that ownership does not result in effective
control of the corporation.

              The decision of the Committee as to the cause of the Employee's
discharge, the damage done to the Company or an Affiliate, and the extent of
the Employee's competitive activity shall be final. No decision of the
Committee, however, shall affect the finality of the discharge of the
Employee by the Company or an Affiliate in any manner.

         9.4  TAX WITHHOLDING. The Company or any Affiliate shall be entitled to
deduct from other compensation payable to each Employee any sums required by
federal, state, or local tax law to be withheld with respect to the grant or
exercise of an Option or lapse of restrictions on Restricted Stock. In the
alternative, the Company may require the Employee (or other person exercising
the Option or receiving the Restricted Stock) to pay the sum directly to the
employer corporation. If the Employee (or other person exercising the Option or
receiving the Restricted Stock) is required to pay the sum directly, payment in
cash or by check of such sums for taxes shall be delivered within 10 days after
the date of exercise or lapse of restrictions. The Company shall have no
obligation upon exercise of any Option or lapse of restrictions on Restricted
Stock until payment has been received,

                                      -18-

<PAGE>   23

unless withholding (or offset against a cash payment) as of or prior to the
date of exercise or lapse of restrictions is sufficient to cover all sums due
with respect to that exercise. The Company and its Affiliates shall not be
obligated to advise an Employee of the existence of the tax or the amount which
the employer corporation will be required to withhold.

         9.5  WRITTEN AGREEMENT. Each Option and Stock Award shall be embodied
in a written Option Agreement or Restricted Stock Agreement which shall be
subject to the terms and conditions of this Plan and shall be signed by the
Employee and by a member of the Committee on behalf of the Board and the
Company or an executive officer of the Company other than the Employee on
behalf of the Company. The Option Agreement or Restricted Stock Agreement may
contain any other provisions that the Committee in its discretion shall deem
advisable which are not inconsistent with the terms of this Plan. This Plan and
all shares of stock or stock equivalents granted pursuant hereto shall be
subject to the terms of any shareholders agreement entered into by the Company
concurrent, or prior to, the grant of any Option hereunder.

         9.6  INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS. With
respect to administration of this Plan, the Company shall indemnify each
present and future member of the Committee and the Board of Directors against,
and each member of the Committee and the Board of Directors shall be entitled
without further act on his part to indemnity from the Company for, all expenses
(including attorney's fees, the amount of judgments and the amount of approved
settlements made with a view to the curtailment of costs of litigation, other
than amounts paid to the Company itself) reasonably incurred by him in
connection with or arising out of any action, suit, or proceeding in which he
may be involved by reason of his being or having been a member of the Committee
and/or the Board of Directors, whether or not he continues to be a member of
the Committee and/or the Board of Directors at the time of incurring the
expenses -- including, without limitation, matters as to which he shall be
finally adjudged in any action, suit or proceeding to have been found to have
been negligent in the performance of his duty as a member of the Committee or
the Board of Directors. However, this indemnity shall not include any expenses
incurred by any member of the Committee and/or the Board of Directors in
respect of matters as to which he shall be finally adjudged in any action, suit
or proceeding to have been guilty of gross negligence or willful misconduct in
the performance of his duty as a member of the Committee and the Board of
Directors. In addition, no right of indemnification under this Plan shall be
available to or enforceable by any member of the Committee and the Board of
Directors unless, within 60 days after institution of any action, suit or
proceeding, he shall have offered the Company, in writing, the opportunity to
handle and defend same at its own expense. This right of indemnification shall
inure to the benefit of the heirs, executors or administrators of each member
of the Committee and the Board of Directors and shall be in addition to all
other rights to which a member of the Committee and the Board of Directors may
be entitled as a matter of law, contract, or otherwise.

         9.7  GENDER. If the context requires, words of one gender when used in
this Plan shall include the others and words used in the singular or plural
shall include the other.

         9.8  HEADINGS. Headings of Articles and Sections are included for
convenience of reference only and do not constitute part of the Plan and shall
not be used in construing the terms of the Plan.

                                      -19-

<PAGE>   24

         9.9  OTHER COMPENSATION PLANS. The adoption of this Plan shall not
affect any other stock option, incentive or other compensation or benefit plans
in effect for the Company or any Affiliate, nor shall the Plan preclude the
Company from establishing any other forms of incentive or other compensation
for employees of the Company or any Affiliate.

         9.10 OTHER OPTIONS OR AWARDS. The grant of an Option or Stock Award
shall not confer upon the Employee the right to receive any future or other
Options or Stock Awards under this Plan, whether or not Options or Stock Awards
may be granted to similarly situated Employees, or the right to receive future
Options or Stock Awards upon the same terms or conditions as previously
granted.

         9.11 GOVERNING LAW.  The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Texas.

         9.12 NO MODIFICATION, EXTENSION, OR RENEWAL OF CORPORATE PLAN OPTIONS,
1996 ISO PLAN OPTIONS, AND 1997 INCENTIVE PLAN OPTIONS. Notwithstanding any
provision in this Plan to the contrary, no provision of this Plan is intended
to modify, extend or renew any Corporate Plan Option, 1996 ISO Plan Option and
1997 Incentive Plan Option. Any provision in this Plan that is contrary to a
provision in the Corporate Plan Option, 1996 ISO Plan Option and 1997 Incentive
Plan Option that would create a modification, extension or renewal of such
option is hereby incorporated into this Plan. All terms, conditions and
limitations, if any, that are set forth in any previously granted option
agreement shall remain in full force and effect under the terms of the Plan
pursuant to which it was issued.

         9.13 CONFORMING AMENDMENTS TO OPTIONS ISSUED UNDER THE CORPORATE PLAN,
1996 ISO PLAN AND 1997 INCENTIVE PLAN ON AND AFTER THE EFFECTIVE DATE OF THIS
SECTION 9.13. Notwithstanding any provision in this Plan to the contrary, all
options issued under the Corporate Plan, the 1996 ISO Plan and the 1997
Incentive Plan on and after the effective date of this Section 9.13 shall be
subject to the same terms and conditions to those options that are issued under
Section 4.2 of the Plan.

                                      -20-<PAGE>   1

                                                                    EXHIBIT 10.5

                        BINDVIEW DEVELOPMENT CORPORATION

                  1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

<PAGE>   2

                        BINDVIEW DEVELOPMENT CORPORATION

                  1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

                                TABLE OF CONTENTS

                                                                     Page
                                                                     ----
1.       Purpose......................................................1
2.       Effective Date of Plan.......................................1
3.       Administration...............................................1
4.       Dedicated Shares.............................................1
5.       Grant of Options.............................................1
6.       Eligibility..................................................1
7.       Option Grant Size and Grant Dates............................2
8.       Option Price; Fair Market Value..............................2
9.       Duration of Options..........................................2
10.      Amount Exercisable...........................................2
11.      Exercise of Options..........................................3
12.      Non-Transferability of Options...............................3
13.      Termination of Directorship of Optionee......................3
14.      Requirements of Law..........................................4
15.      No Rights as Stockholder.....................................4
16.      No Obligation to Retain Optionee.............................4
17.      Changes in the Company's Capital Structure...................4
18.      Termination and Amendment of Plan............................6
19.      Written Agreement............................................6
20.      Indemnification of Board.....................................6
21.      Forfeitures..................................................7
22.      Gender.......................................................7
23.      Headings.....................................................7
24.      Governing Law................................................7

                                       -i-

<PAGE>   3

                        BINDVIEW DEVELOPMENT CORPORATION

                  1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

         1. PURPOSE. The BindView Development Corporation 1998 Non-Employee
Director Stock Option Plan (the "Plan") of BindView Development Corporation (the
"Company") is for the benefit of members of the Board of Directors of the
Company who, at the time of their service, are not employees of the Company or
any of its affiliates, by providing them an opportunity to become owners of the
Common Stock, no par value, of the Company (the "Stock"), thereby advancing the
best interests of the Company by increasing their proprietary interest in the
success of the Company and encouraging them to continue in their present
capacity.

         2. EFFECTIVE DATE OF PLAN. The Plan is effective January 5, 1998, if
within one year of that date it shall have been approved by the holders of at
least a majority of the outstanding shares of voting stock of the Company voting
in person or by proxy at a duly held shareholders' meeting, or if the provisions
of the corporate charter, bylaws or applicable state law prescribes a greater
degree of shareholder approval for this action, the approval by the holders of
that percentage, at a duly held meeting of shareholders, or in either case by a
consent in lieu of a meeting if permitted by the corporate charter, bylaws and
applicable law.

         3. ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company (the "Board"). Subject to the terms of the Plan, the
Board shall have the power to construe the provisions of the Plan, Options, and
Stock issued hereunder, to determine all questions arising hereunder, and to
adopt and amend such rules and regulations for administering the Plan as the
Board deems desirable.

         4. DEDICATED SHARES. The total number of shares of Stock with respect
to which initial grants (collectively, the "Options") may be granted under this
Plan shall not exceed, in the aggregate, 100,000 shares; provided, that the
class and aggregate number of shares of Stock which may be granted hereunder
shall be subject to adjustment in accordance with the provisions of Paragraph
17. The shares of Stock may be treasury shares or authorized but unissued shares
of Stock. In the event that any outstanding Option shall expire or is terminated
or canceled for any reason, the shares of Stock allocable to the unexercised
portion of that Option may again be subject to an Option or Options under the
Plan.

         5. GRANT OF OPTIONS. All Options granted under the Plan shall be
Nonqualified Options which are not intended to satisfy the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended. No options shall
be granted under the Plan subsequent to January 4, 2008.

         6. ELIGIBILITY. The individuals who shall be eligible to receive
Options under the Plan shall be each member of the Board who is not an employee
of the Company or any affiliate of the Company ("Eligible Director").

                                       -1-

<PAGE>   4

         7.       OPTION GRANT SIZE AND GRANT DATES.

         On the day the Eligible Director is first elected or appointed to be a
director (whichever is applicable), the Eligible Director shall be granted an
Option to purchase 20,000 shares of stock on the terms and conditions set forth
herein. Notwithstanding the provisions of Section 17, the number of shares which
may subsequently be awarded pursuant to this Section 7 shall not increase but
may be decreased if appropriate under Section 17. If service of an Eligible
Director who previously received an initial grant terminates and the Director is
subsequently elected or appointed to the Board, that Director shall not be
eligible to receive a second grant.

         If the General Counsel of the Company determines, in his sole
discretion, that the Company is in possession of material, nonpublic information
about the Company or any of its subsidiaries, he may suspend granting of the
initial grant to each Eligible Director until the second trading day after
public dissemination of that information, and the determination by the General
Counsel that issuance of the Options is then appropriate.

         8. OPTION PRICE; FAIR MARKET VALUE. The price at which shares of Stock
may be purchased by each Eligible Director (the "Optionee") pursuant to his
initial grant, shall be 100% of the "Fair Market Value" of the shares of Stock
on the date of grant of the initial grant.

         For all purposes of this Plan, the "Fair Market Value" of the Stock as
of any date means (a) the average of the high and low sale prices of the Stock
on that date on the principal securities exchange on which the Stock is listed;
or (b) if the Stock is not listed on a securities exchange, the average of the
high and low sale prices of the Stock on that date as reported on the NASDAQ
National Market System; or (c) if the Stock is not listed on the NASDAQ National
Market System, the average of the high and low bid quotations for the Stock on
that date as reported by the National Quotation Bureau Incorporated; (d) for any
Options issued prior to the initial public offering of the Stock, the initial
public offering price; or (e) if none of the foregoing is applicable, the
average between the closing bid and ask prices per share of stock on the last
preceding date on which those prices were reported or that amount as determined
by the Board.

         9. DURATION OF OPTIONS. The term of each Option shall be ten years from
the date of grant. No Option shall be exercisable after the expiration of ten
years from the date the Option is granted.

         10. AMOUNT EXERCISABLE. Each Option hereunder shall become exercisable
on a cumulative basis in 20% increments on and after each annual anniversary of
the grant of the Option. However, upon a Change of Control, each Option shall
become immediately exercisable. For this purpose, a "Change in Control" shall
have occurred if, after the Effective Date of the Plan:

                  (i) a report on Schedule 13D or Schedule 14D-1 (or any
         successor schedule, form or report) shall be filed with the Commission
         pursuant to the Exchange Act and that report discloses that any person
         (within the meaning of Section 13(d) or Section 14(d)(2) of the
         Exchange Act), other than the Company (or one of its subsidiaries) or
         any employee benefit plan sponsored by the Company (or one of its
         subsidiaries), is the beneficial owner

                                       -2-

<PAGE>   5

         (as that term is defined in Rule 13d-3 or any successor rule or
         regulation promulgated under the Exchange Act), directly or indirectly,
         of 20 percent or more of the outstanding Voting Stock;

                  (ii) any person (within the meaning of Section 13(d) or
         Section 14(d)(2) of the Exchange Act), other than the Company (or one
         of its subsidiaries) or any employee benefit plan sponsored by the
         Company (or one of its subsidiaries), shall purchase securities
         pursuant to a tender offer or exchange offer to acquire any Voting
         Stock (or any securities convertible into Voting Stock) and,
         immediately after consummation of that purchase, that person is the
         beneficial owner (as that term is defined in Rule 13d-3 or any
         successor rule or regulation promulgated under the Exchange Act),
         directly or indirectly, of 20 percent or more of the outstanding Voting
         Stock (such person's beneficial ownership to be determined, in the case
         of rights to acquire Voting Stock, pursuant to paragraph (d) of Rule
         13d-3 or any successor rule or regulation promulgated under the
         Exchange Act);

                  (iii)    the consummation of:

                                    (x) a merger, consolidation or
                           reorganization of the Company with or into any other
                           person if (a) the Company is not the surviving entity
                           or (b) as a result of such merger, consolidation or
                           reorganization, 50 percent or less of the combined
                           voting power of the then-outstanding securities of
                           such other person immediately after such merger,
                           consolidation or reorganization are held in the
                           aggregate by the holders of Voting Stock immediately
                           prior to such merger, consolidation or
                           reorganization;

                                    (y) any sale, lease, exchange or other
                           transfer of all or substantially all the assets of
                           the Company and its consolidated subsidiaries to any
                           other person if as a result of such sale, lease,
                           exchange or other transfer, 50 percent or less of the
                           combined voting power of the then-outstanding
                           securities of such other person immediately after
                           such sale, lease, exchange or other transfer are held
                           in the aggregate by the holders of Voting Stock
                           immediately prior to such sale, lease, exchange or
                           other transfer; or

                                    (z) a transaction immediately after the
                           consummation of which any person (within the meaning
                           of Section 13(d) or Section 14(d)(2) of the Exchange
                           Act) would be the beneficial owner (as that term is
                           defined in Rule 13d-3 or any successor rule or
                           regulation promulgated under the Exchange Act),
                           directly or indirectly, of more than 50 percent of
                           the outstanding Voting Stock;

                  (iv)     the stockholders of the Company approve the
         dissolution of the Company; or

                                       -3-

<PAGE>   6

                  (v)      during any period of 12 consecutive months, the
         individuals who at the beginning of that period constituted the Board
         of Directors shall cease to constitute a majority of the Board of
         Directors, unless the election, or the nomination for election by the
         Company's stockholders, of each director of the Company first elected
         during such period was approved by a vote of at least a two-thirds of
         the directors of the Company then still in office who were directors of
         the Company at the beginning of any such period.

                  "Voting Stock" means shares of the capital stock of the
Company the holders of which are entitled to vote for the election of directors,
but excluding shares entitled to so vote only upon the occurrence of a
contingency unless that contingency shall have occurred.

         11. EXERCISE OF OPTIONS. Options shall be exercised by the delivery of
written notice to the Company setting forth the number of shares with respect to
which the Option is to be exercised, together with: (a) cash, certified check,
bank draft, or postal or express money order payable to the order of the Company
for an amount equal to the option price of the shares, (b) Stock at its Fair
Market Value on the date of exercise, (c) an election to have shares of Stock,
which otherwise would be issued on exercise, withheld in payment of the exercise
price, (d) any combination of (a), (b), or (c), and/or (e) any other form which
is acceptable to the Board, and specifying the address to which the certificates
for the shares are to be mailed. As promptly as practicable after receipt of
written notification and payment, the Company shall deliver to the Eligible
Director certificates for the number of shares with respect to which the Option
has been exercised, issued in the Eligible Director's name. If shares of Stock
are used in payment, the Fair Market Value of the shares of Stock tendered must
be less than the option price of the shares being purchased, and the difference
must be paid by check. Delivery shall be deemed effected for all purposes when a
stock transfer agent of the Company shall have deposited the certificates in the
United States mail, addressed to the Eligible Director, at the address specified
by the Eligible Director.

         Whenever an Option is exercised by exchanging shares of Stock owned by
the Optionee, the Optionee shall deliver to the Company certificates registered
in the name of the Optionee representing a number of shares of Stock legally and
beneficially owned by the Optionee, free of all liens, claims, and encumbrances
of every kind, accompanied by stock powers duly endorsed in blank by the record
holder of the shares represented by the certificates, (with signature guaranteed
by a commercial bank or trust company or by a brokerage firm having a membership
on a registered national stock exchange). The delivery of certificates upon the
exercise of Options is subject to the condition that the person exercising the
Option provide the Company with the information the Company might reasonably
request pertaining to exercise, sale or other disposition.

         12. NON-TRANSFERABILITY OF OPTIONS. Options shall not be transferable
by the Optionee other than by will or under the laws of descent and
distribution, and shall be exercisable, during the Optionee's lifetime, only by
him. Notwithstanding any provision in this Plan to the contrary, an Eligible
Director may transfer an Option to an Immediate Family Member or an entity
controlled by an Eligible Director or an Immediate Family Member, provided,
however, no further transfer shall be made except by operation of law or a
transfer back to such Eligible Director or such other transfer which may be
approved by the Board. For this purpose "Immediate Family Member" means an

                                       -4-

<PAGE>   7

Eligible Director's children, grandchildren or spouse, or a trust for the
benefit of such Immediate Family Members.

         13. TERMINATION OF DIRECTORSHIP OF OPTIONEE. If, before the date of
expiration of the Option, the Optionee shall cease to be a director of the
Company, the Option shall terminate on the earlier of the date of expiration or
90 days after the date of ceasing to serve as a director. In this event, the
Optionee shall have the right, prior to the termination of the Option, to
exercise the Option if he was entitled to exercise immediately prior to ceasing
to serve as a director.

         Upon the death or disability of the Optionee while serving as a
director, his options shall become fully vested and, in the case of death his
executors, administrators, or any person or persons to whom his Option may be
transferred by will or by the laws of descent and distribution, shall have the
right, at any time prior to the earlier of the date of expiration of the Option
or 12 months following the date of his death, to exercise the Option, in whole
or in part.

         14. REQUIREMENTS OF LAW. The Company shall not be required to sell or
issue any Stock under any Option if issuing that Stock would constitute or
result in a violation by the Optionee or the Company of any provision of any
law, statute, or regulation of any governmental authority. Specifically, in
connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option, the Company shall not
be required to issue any Stock unless the Company has received evidence
satisfactory to it to the effect that the holder of that Option will not
transfer the Stock except in accordance with applicable law, including receipt
of an opinion of counsel satisfactory to the Company to the effect that any
proposed transfer complies with applicable law. The determination by the Company
on this matter shall be final, binding and conclusive. The Company may, but
shall in no event be obligated to, register any Stock covered by this Plan
pursuant to applicable securities laws of any country or any political
subdivision. In the event the Stock issuable on exercise of an Option is not
registered, the Company may imprint on the certificate evidencing the Stock any
legend that counsel for the Company considers necessary or advisable to comply
with applicable law. The Company shall not be obligated to take any other
affirmative action in order to cause the exercise of an Option, or the issuance
of shares under it, to comply with any law or regulation of any governmental
authority.

         15. NO RIGHTS AS STOCKHOLDER. No Optionee shall have any rights as a
stockholder with respect to Stock covered by any Option until the date a stock
certificate is issued for the Stock, and, except as otherwise provided in
Paragraph 17 hereof, no adjustment for dividends, or otherwise, shall be made if
the record date thereof is prior to the date of issuance of such certificate.

         16. NO OBLIGATION TO RETAIN OPTIONEE. The granting of any Option shall
not impose upon the Company or its stockholders any obligation to retain or
continue to retain any Optionee or nominate any Optionee for election to
continue in his capacity as a director of the Company. The right of the Company,
the Board of Directors, and the Stockholders to terminate the service of any
Optionee as a director shall not be diminished or affected by reason of the fact
that one or more Options have been or would be granted to him.

                                       -5-

<PAGE>   8

         17 CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Stock or its rights, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.

            If the Company shall effect a subdivision or consolidation of shares
or other capital readjustment, the payment of a stock dividend, or other
increase or reduction of the number of shares of the Stock outstanding, without
receiving compensation for it in money, services or property, then (a) the
number, class, and per share price of shares of Stock subject to outstanding
Options under this Plan shall be appropriately adjusted in such a manner as to
entitle an Optionee to receive upon exercise of an Option, for the same
aggregate cash consideration, the equivalent total number and class of shares he
would have received had he exercised his Option in full immediately prior to the
event requiring the adjustment; and (b) the number and class of shares of Stock
with respect to which Options may be granted under the Plan shall be adjusted by
substituting for the total number and class of shares of Stock then available
for grant, that number and class of shares of Stock that would have been
received by the owner of an equal number of outstanding shares of each class of
Stock as the result of the event requiring the adjustment.

            If while unexercised Options remain outstanding under the Plan
(i) the Company shall not be the surviving entity in any merger, consolidation
or other reorganization (or survives only as a subsidiary of an entity other
than an entity that was wholly-owned by the Company immediately prior to such
merger, consolidation or other reorganization), (ii) the Company sells, leases
or exchanges or agrees to sell, lease or exchange all or substantially all of
its assets to any other person or entity (other than an entity wholly-owned by
the Company), (iii) the Company is to be dissolved, or (iv) the Company is a
party to any other corporate transaction (as defined under Section 424(a) of the
Code and applicable Treasury Regulations) that is not described in clauses (i),
(ii) or (iii) of this sentence (each such event is referred to herein as a
"Corporate Change"), then (x) except as otherwise provided in an Option
Agreement or as a result of the Board's effectuation of one or more of the
alternatives described below, there shall be no acceleration of the time at
which any Option then outstanding may be exercised, and (y) no later than ten
(10) days after the approval by the stockholders of the Company of such
Corporate Change, the Board, acting in its sole and absolute discretion without
the consent or approval of any Optionee, shall act to effect one or more of the
following alternatives, which may vary among individual Optionees and which may
vary among Options held by any individual Optionee:

                  (1) accelerate the time at which some or all of the Options
         then outstanding may be exercised so that such Options may be exercised
         in full for a limited period of time on or before a specified date
         (before or after such Corporate Change) fixed by the Board, after which
         specified date all such Options that remain unexercised and all rights
         of Optionees thereunder shall terminate,

                                          -6-

<PAGE>   9

                  (2) require the mandatory surrender to the Company by all or
         selected Optionees of some or all of the then outstanding Options held
         by such Optionees (irrespective of whether such Options are then
         exercisable under the provisions of this Plan or the Option Agreements
         evidencing such Options) as of a date, before or after such Corporate
         Change, specified by the Board, in which event the Board shall
         thereupon cancel such Options and the Company shall pay to each such
         Optionee an amount of cash per share equal to the excess, if any, of
         the per share price offered to stockholders of the Company in
         connection with such Corporate Change over the exercise price(s) under
         such Options for such shares,

                  (3) with respect to all or selected Optionees, have some or
         all of their then outstanding Options (whether vested or unvested)
         assumed or have a new Option substituted for some or all of their then
         outstanding Options (whether vested or unvested) by an entity which is
         a party to the transaction resulting in such Corporate Change and which
         is then employing him, or a parent or subsidiary of such entity,
         provided that (A) such assumption or substitution is on a basis where
         the excess of the aggregate fair market value of the shares subject to
         the Option immediately after the assumption or substitution over the
         aggregate exercise price of such shares is equal to the excess of the
         aggregate fair market value of all shares subject to the Option
         immediately before such assumption or substitution over the aggregate
         exercise price of such shares, and (B) the assumed rights under such
         existing Option or the substituted rights under such new Option as the
         case may be will have the same terms and conditions as the rights under
         the existing Option assumed or substituted for, as the case may be,

                  (4) provide that the number and class of shares of Stock
         covered by an Option (whether vested or unvested) theretofore granted
         shall be adjusted so that such Option when exercised shall thereafter
         cover the number and class of shares of stock or other securities or
         property (including, without limitation, cash) to which the Optionee
         would have been entitled pursuant to the terms of the agreement and/or
         plan relating to such Corporate Change if, immediately prior to such
         Corporate Change, the Optionee had been the holder of record of the
         number of shares of Stock then covered by such Option, or

                  (5) make such adjustments to Options then outstanding as the
         Board deems appropriate to reflect such Corporate Change (provided,
         however, that the Board may determine in its sole and absolute
         discretion that no such adjustment is necessary)."

                  In effecting one or more of alternatives (3), (4) or (5)
         above, and except as otherwise may be provided in an Option Agreement,
         the Board, in its sole and absolute discretion and without the consent
         or approval of any Optionee, may accelerate the time at which some or
         all Options then outstanding may be exercised.

                                       -7-

<PAGE>   10
             In the event of changes in the outstanding Stock by reason of
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Option and not otherwise provided for by this Section 4.5,
any outstanding Options and any agreements evidencing such Options shall be
subject to adjustment by the Board in its sole and absolute discretion as to the
number and price of shares of stock or other consideration subject to such
Options. In the event of any such change in the outstanding Stock, the aggregate
number of shares available under this Plan may be appropriately adjusted by the
Board, whose determination shall be conclusive.

             The issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services either upon direct sale or upon the exercise of rights
or warrants to subscribe for them, or upon conversion of shares or obligations
of the Company convertible into shares or other securities, shall not affect,
and no adjustment by reason of such issuance shall be made with respect to, the
number, class, or price of shares of Stock then subject to outstanding Options.

         18. TERMINATION AND AMENDMENT OF PLAN. The Board of Directors of the
Company may amend, terminate or suspend the Plan at any time, in its sole and
absolute discretion; provided, however, to the extent required to qualify the
Plan under Rule 16b-3 promulgated under Section 16 of the Securities Exchange
Act of 1934, as amended, no amendment shall be made more than once every six
months that would change the amount, price or timing of the initial grants,
other than to comport with changes in the Internal Revenue Code of 1986, as
amended, the Employee Retirement Income Security Act or the rules and
regulations promulgated thereunder; and provided, further, to the extent
required to qualify the Plan under Rule 16b-3, no amendment that would (a)
materially increase the number of shares of the Stock that may be issued under
the Plan, (b) materially modify the requirements as to eligibility for
participation in the Plan, or (c) otherwise materially increase the benefits
accruing to participants under the Plan, shall be made without the approval of
the Company's stockholders.

         19. WRITTEN AGREEMENT. Each Option granted hereunder shall be embodied
in a written agreement, which shall be subject to the terms and conditions of
this Plan and shall be signed by the Optionee and by the Chairman of the Board,
the Vice Chairman, the President or any Vice President of the Company for and in
the name and on behalf of the Company.

         20. INDEMNIFICATION OF BOARD. With respect to administration of the
Plan, the Company shall indemnify each present and future member of the Board of
Directors against, and each member of the Board of Directors shall be entitled
without further act on his part to indemnity from the Company for, all expenses
(including the amount of judgments and the amount of approved settlements made
with a view to the curtailment of costs of litigation, other than amounts paid
to the Company itself) reasonably incurred by him in connection with or arising
out of any action, suit, or proceeding in which he may be involved by reason of
his being or having been a member of the Board of Directors, whether or not he
continues to be a member of the Board of Directors at the time of incurring the
expenses. However, this indemnity shall not include any expenses incurred by any
member of the Board of Directors (a) in respect of matters as to which he shall
be finally adjudged in any action, suit or proceeding to have been guilty of
gross negligence or willful misconduct in the

                                       -8-

<PAGE>   11

performance of his duty as a member of the Board of Directors, or (b) in respect
of any matter in which any settlement is effected, to an amount in excess of the
amount approved by the Company on the advice of its legal counsel. In addition,
no right of indemnification under this Plan shall be available to or enforceable
by any member of the Board of Directors unless, within 60 days after institution
of any action, suit or proceeding, he shall have offered the Company, in
writing, the opportunity to handle and defend same at its own expense. This
right of indemnification shall inure to the benefit of the heirs, executors or
administrators of each member of the Board of Directors and shall be in addition
to all other rights to which a member of the Board of Directors may be entitled
as a matter of law, contract, or otherwise.

         21. FORFEITURES. Notwithstanding any other provision of this Plan, if,
before or after termination of the Optionee's capacity as a director of the
Company, there is an adjudication by a court of competent jurisdiction that the
Optionee committed fraud, embezzlement, theft, commission of felony, or proven
dishonesty in the course of his advisory relationship to the Company and its
affiliates which conduct materially damaged the Company or its affiliates, or
disclosed trade secrets of the Company or its affiliates, then any outstanding
options which have not been exercised by Optionee shall be forfeited. In order
to provide the Company with an opportunity to enforce this Section, an Option
may not be exercised if a lawsuit alleging that an action described in the
preceding sentence has taken place until a final resolution of the lawsuit
favorable to the Optionee.

         22. GENDER. If the context requires, words of one gender when used in
this Plan shall include the others and words used in the singular or plural
shall include the other.

         23. HEADINGS. Headings are included for convenience of reference only
and do not constitute part of the Plan and shall not be used in construing the
terms of the Plan.

         24. GOVERNING LAW. The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Texas.

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