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                          MATADOR PETROLEUM CORPORATION
                              AMENDED AND RESTATED
                    NON-STATUTORY DIRECTOR STOCK OPTION PLAN

        MATADOR PETROLEUM CORPORATION, a corporation organized and existing
under the laws of the State of Texas (the "Company"), hereby formulates and
adopts, with respect to the shares of common stock of the Company ("Common
Stock"), a non-statutory stock option plan for directors and Board advisors
of the Company, as follows:

        1.      PURPOSE OF PLAN.  The purpose of this Non-Statutory Stock
Option Plan (the "Plan") is to encourage certain individuals who are
directors or advisors to the Board of Directors of the Company to participate
in the ownership of the Company, and to provide additional incentive for such
individuals to promote the success of its business through sharing in the
future growth of such business.

        2.      ADMINISTRATION.  This Plan shall be administrated by the
Board of Directors of the Company (the "Board").  The Board shall have full
power and authority to construe, interpret and administer the Plan, and may
from time to time adopt such rules and regulations for carrying out this Plan
as it may deem proper and in the best interests of the Company except as
provided herein.  Subject to the terms, provisions and conditions of the
Plan, the Board shall have the authority to determine the number of shares
subject to each option, to determine the time or times when options will be
granted, to determine the option price of the shares subject to each option,
to fix such other provisions of each option agreements as the Board may deem
necessary or desirable, consistent with the terms of this Plan, and to
determine all other questions relating to the administration of this Plan.
The interpretation and construction of this Plan by the Board shall be final,
conclusive and binding upon all persons.

        3.      ELIGIBILITY AND AUTHORIZED GRANTS.

                (a)     ELIGIBILITY.  Options to purchase shares of Common
Stock shall be granted under this Plan only to (i) duly elected or appointed
directors of the Company who are not employees of the Company and (ii) duly
appointed advisors to the Board who are not employees of the Company.  The
Board shall determine from time to time which advisors to the Board are
eligible to participate in this Plan.

                (b)     OPTIONS FOR PAST SERVICES.  In consideration for the
past services provided to the Company by the directors of the Company who
were serving as such at the time of adoption of the Plan by the Board, each
eligible director shall be granted, upon the adoption of the Plan, an option,
which shall expire on the first anniversary of the date on which this Plan is
adopted by the Board, to purchase shares of Common Stock of the Company at an
exercise price of $12.50 per share.  By adoption of this Plan, the Board
determines that such exercise price equals or exceeds the fair market value
of a share of Common Stock at such time.  The number of shares purchasable by
each director under the option granted to him or her shall equal the product
of one hundred (100) shares times his or her total years of services as
director, as determined by the Board in connection with the adoption of the
Plan.

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                (c)     OPTION FOR FUTURE SERVICES OF DIRECTORS.  In
consideration for future services provided to the Company by each eligible
director of the Company, such director shall be granted an option under this
Plan upon completion of each year of service as a director, which year shall
consist of the periods between consecutive annual meetings of shareholders of
the Company, commencing with the 1993 annual meeting of shareholders.  Each
such option shall expire on the tenth (10th) anniversary of the formal
authorization of the grant of such option by the Board and shall provide for
the right to purchase five hundred (500) shares of Common Stock (subject to
adjustment in accordance with Section 11 hereof).

                (d)     OPTION FOR FUTURE SERVICES OF BOARD ADVISORS.  In
consideration for future services provided to the Company by each eligible
advisor to the Board of the Company, such advisor shall be granted an option
under this Plan upon completion of each year of service as a Board advisor,
which year shall consist of the periods between consecutive annual meetings
of shareholders of the Company, commencing with the 1998 annual meeting of
shareholders.  Each such option shall expire on the tenth (10th) anniversary
of the formal authorization of the grant of such option by the Board and
shall provide for the right to purchase one hundred and twenty-five (125)
shares of Common stock for each regular meeting of the Board attended by the
advisor (subject to adjustment in accordance with Section 11 hereof).

                (e)     SHAREHOLDER RATIFICATION.  The effectiveness of this
Plan and any options granted hereunder including subsequent grants shall be
subject to the ratification and approval of the Plan by the shareholders of
the Company.

        4.      SHARES SUBJECT TO THE PLAN.  Options granted under this Plan
shall be granted solely with respect to shares of Common Stock.  Subject to
any adjustments made pursuant to the provisions of Section 12, the aggregate
number of shares of Common Stock which may be issued upon exercise of all the
options which may be granted under this Plan shall not exceed one hundred
thousand (100,000).  If any option granted under this Plan shall expire or
terminate for any reason without having been exercised in full, the
unpurchased shares subject to such option shall be added to the number of
shares otherwise available for options which may be granted in accordance
with the terms of this Plan.  The shares to be delivered upon exercise of the
options granted under this Plan shall be made available, at the discretion of
the Board, from either the authorized but unissued shares of Common Stock or
any treasury shares of Common Stock held by the Company.

        5.      OPINION CONTRACT.  Each option granted under this Plan shall
be evidenced by a non-statutory stock option contract which shall be signed
by an officer of the Company and by the individual to whom the option is
granted ("optionee").  The terms of said contract shall be in accordance with
the provisions of this Plan and substantially in accordance with the form of
contract attached to this Plan as EXHIBIT A, but it may include such other
provisions as may be approved by the Board.  The granting of an option under
this Plan shall be deemed to occur on the date on which the contract
evidencing such option is executed by the Company and the optionee, and every
optionee, upon execution of a contract, shall be bound by the terms and
restrictions of this Plan and such contract.

        6.      OPTION PRICE.  The price at which shares of Common Stock may
be purchased under an option granted pursuant to this Plan shall be
determined by the Board, but in no event shall the price be less than one
hundred percent (100%) of the fair market value of such shares on the date
that the option is granted.  The fair market value of shares of Common Stock
for purposes of this Plan shall be determined by the Board, in its sole
discretion.

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        7.      PERIOD AND EXERCISE OF OPTION.

                (a)     PERIOD.  Subject to the provisions of Sections 8 and
9 hereof with respect to the death or cessation as a director or advisor of
an optionee, the period during which each option granted under this Plan may
be exercised shall be fixed by the Board in accordance with the terms of this
Plan at the time such option is granted (the "Granting Date").

                (b)     EXERCISE.  Any option granted under this Plan may be
exercised by the optionee only be delivering to the Company written notice of
the number of shares with respect to which he is exercising his option right,
paying in full the option price of the purchased shares, and furnishing to
the Company a representation in writing signed by the optionee that he is
familiar with the business and financial condition of the Company, is
purchasing the shares of stock in good faith for himself for investment
purposes and not with a view towards the sale or distribution thereof, and
will not effect any sale in violation of any laws or regulations of the
United States or any state.  Subject to the limitations of this Plan and the
terms and conditions of the respective stock option contract, each option
granted under this plan shall be exercisable in whole or in part.

                (c)     PAYMENT FOR SHARES.  Payment for shares of Common
Stock purchased pursuant to an option granted under this Plan must be made in
cash.

                (d)     DELIVERY OF CERTIFICATES.  As soon as practicable
after receipt by the Company of the notice and representation described in
Subsection (b), and of payment in full of the option price for all of the
shares being purchased pursuant to an option granted under this Plan, a
certificate or certificates representing such shares of stock shall be
registered in the name of the optionee and shall be delivered to the
optionee.  However, no certificate for fractional shares of stock shall be
issued by the Company notwithstanding any request therefor.  Neither any
optionee, nor the legal representative, legatee or distribute of any
optionee, shall be deemed to be a holder of any shares of stock subject to an
option granted under this Plan unless and until the certificate or
certificates for such shares have been issued.  All stock certificates issued
upon the exercise of any option granted pursuant to this Plan may bear such
legend as the Board shall deem appropriate regarding restrictions upon the
transfer or sale of the shares evidenced thereby.

        8.      CESSATION AS DIRECTORS.  If an optionee shall cease to serve
as a director or Board advisor of the Company for any reason other than
death, the optionee may, but only within thirty (30) days following such
cessation, exercise his or her option to the extent that the optionee was
entitled to exercise it at the date of such cessation.  Nothing in this Plan
or in any stock option contract shall be construed as an obligation on the
part of the Company or the shareholders of the Company to continue the
optionee as a director or Board advisor.

        9.      DEATH OF OPTIONEE.  In the event of the death of an optionee
while serving as a director or Board advisor of the Company, any option or
unexercised portion thereof granted to the optionee under this Plan which is
otherwise exercisable may be exercised by the person or persons to whom such
optionee's rights under the option pass by operation of the optionee's will
or the laws of descent and distribution, at any time within a period of three
(3) months following the death of the optionee (even though such period is
later than the expiration date of the option).

        10.     NONTRANSFERABILITY OF OPTIONS.  Each option granted under
this Plan shall not be transferable or assignable by the optionee other than
by will or the laws of descent and distribution, or

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pursuant to a qualified domestic relations order and during the lifetime of
the optionee may otherwise be exercised only by such optionee.

        11.     ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.  In the event of
any change in the capital structure of the Company, including, but not
limited to a change resulting from a stock dividend, stock split,
reorganization, merger, consolidation, liquidation or any combination or
exchange of shares, the number of shares of Common Stock subject to this Plan
and the number of such shares subject to each option granted hereunder shall
be correspondingly adjusted by the Board.  The option price for which shares
of Common Stock may be purchased pursuant to an option granted under this
Plan shall also be adjusted so that there will be no change in the aggregate
price payable upon the exercise of any option.

        12.     AMENDMENT AND TERMINATION OF PLAN.  No option shall be
granted pursuant to this Plan after January 15, 2008, on which date this Plan
will expire.  Any unexpired options then outstanding under the Plan shall
remain in effect until they have been exercised or have expired.  The Board
may at any time before such date amend, modify or terminate the Plan except
that any amendment or modification that materially adversely affects the
shareholders of the Company, such as for example an amendment of the exercise
price or share limitations or number of shares subject to the Plan, shall
only be effective if approved or ratified by the shareholders of the Company.
 No amendment, modification or termination of this Plan may adversely affect
the rights of any optionee under any then outstanding option granted
hereunder without the consent of such optionee.

        13.     TERMINATION OF OLD OPTION CONTRACT AND GRANT OF NEW OPTION
CONTRACT.  An option may be granted under this Plan which may be conditioned
upon the termination of an option previously granted to the optionee which
has not yet expired or been exercised.<PAGE>
                                                                   Exhibit 10.4

            1997 BONUS PLAN REPLACEMNT - MILLENNIUM STOCK OPTION PLAN

PRIMARY FEATURES:

o        Voluntary replacement program, any employee may stay with existing
         Bonus Plan

o        Establishes a viable Long Term shareholder value linked performance
         incentive Plan for all employees and employees yet to come

o        Does not replace annual Short Term merit based performance incentive
         cash bonus plan

o        Modeled after Matador's existing Stock Option Plan except for SAR's

         - Vesting 20% at inception, 20% per year thereafter
         - Ten year period to Option expiration
         - Excludes SAR provision (Runway Plan requires we are public)
         - 100% vested at retirement (age 65) or change in control
         - Expandable via adding new Option allocations in subsequent years

o        Partial Cash payment when $50/share valuation threshold is met

o        Number of Options tied by formula to base salary amount

SPECIFIC FEATURES:

o        Cash payment equal to 25% of Base Salary upon satisfaction of $50/share
         value threshold, no deadline for threshold achievement

o        250 Options per $10,000 in salary for Runway participants electing to
         convert

o        100 - 200 Options per $10,000 in salary for Non-Runway participants

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