EXHIBIT 10.4

                            REGENCY AFFILIATES, INC.

                             STOCK OPTION AGREEMENT

      THIS STOCK OPTION AGREEMENT (this "Agreement") dated as of April 4, 2003
(the "Grant Date"), is between Regency Affiliates, Inc., a Delaware corporation
(the "Company"), and Laurence S. Levy (the "Participant"), relating to options
to purchase shares of Stock, which options are granted under the Regency
Affiliates, Inc. 2003 Stock Incentive Plan, as amended (the "Plan"). Capitalized
terms used, but not otherwise defined, in this Agreement shall have the meanings
ascribed to such terms in the Plan.

I. Grant of Stock Option, Option Price and Term.

      The Company grants to the Participant a Non-Qualified Stock Option to
purchase 25,000 shares of Stock of the Company ("Option Shares") at a price of
$1.35 per share ("Option Price"), subject to the provisions of the Plan and the
terms and conditions herein. The term of this Stock Option shall be a period of
10 years from the Grant Date unless earlier terminated as provided herein and in
the Plan (the "Option Period"). Subject to the provisions contained herein and
in the Plan, the Stock Option shall become exercisable immediately upon the
Grant Date.

      The Stock Option granted hereunder is designated as a nonqualified stock
option which is not transferable by the Participant except to a Family Member,
as provided in Section 4 of the Plan, or by will or the laws of descent and
distribution.

II. Exercise.

      The Stock Option shall be exercisable during the Participant's lifetime
only by the Participant (or his or her Representative), and after the
Participant's death only by a Representative. The Stock Option may only be
exercised by the delivery to the Company of a properly completed written notice,
in form satisfactory to the Committee, which notice shall specify the number of
Option Shares to be purchased and the aggregate Option Price for such shares,
together with payment in full of such aggregate Option Price. Payment shall only
be made as specified in the Plan. If any part of the payment of the Option Price
is made in shares of Stock, such shares shall be valued by using their Fair
Market Value as of the date of exercise of the Stock Option.

      The Stock Option may not be exercised unless there has been compliance
with all the preceding provisions of this Section 2, and, for all purposes of
this Agreement, the date of the exercise of the Stock Option shall be the date
upon which there is compliance with all such requirements. The Committee may
deny any method of exercise permitted hereunder if such method would result in
liability under Federal or state securities law to the Participant or the
Company, result in an expense charge to the Company or prevent the use of
pooling of interest accounting.
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III. Payment of Withholding Taxes.

      If the Company is obligated to withhold an amount on account of any tax
imposed as a result of the exercise of the Stock Option, the Participant shall
be required to pay such amount to the Company, as provided in the Plan. The
Participant acknowledges and agrees that he or she is responsible for the tax
consequences associated with the grant of the Stock Option and its exercise.

IV. Changes in Company's Capital Structure.

      The existence of this Stock Option will not affect in any way the right or
authority of the Company or its stockholders to make or authorize (a) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (b) any merger or consolidation of
the Company's capital structure or its business; (c) any merger or consolidation
of the Company; (d) any issue of bonds, debentures, preferred or prior
preference stock ahead of or affecting the Stock or the rights thereof; (e) the
dissolution or liquidation of the Company; (f) any sale or transfer of all or
any part of its assets or business; or (g) any other corporate act or
proceeding, whether of a similar character or otherwise.

      In the event of a Change in Control or other corporate restructuring
provided for in the Plan, the Participant shall have such rights, and the
Committee shall take such actions, as are provided for in the Plan.

V. Plan.

      The Stock Option is granted pursuant to the Plan, and the Stock Option and
this Agreement are in all respects governed by the Plan and subject to all of
the terms and provisions thereof, whether such terms and provisions are
incorporated in this Agreement by reference or are expressly cited.

VI. Employment Rights.

      No provision of this Agreement or of the Stock Option granted hereunder
shall give the Participant any right to continue as a director of the Company or
any Affiliates, create any inference as to the length of directorship of the
Participant, affect the right of the Company or any Affiliates to terminate the
provision of services of the Participant, with or without Cause, or give the
Participant any right to participate in any welfare or benefit plan or other
program (other than the Plan) of the Company or any Affiliate.

VII. Governing Law.

      This Agreement and the Stock Option granted hereunder shall be governed
by, and construed and enforced in accordance with, the laws of the State of
Delaware (other than its laws respecting choice of law), except to the extent
Federal laws would be mandatorily applicable.
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VIII. Waiver; Cumulative Rights.

      The failure or delay of either party to require performance by the other
party of any provision hereof shall not affect its right to require performance
of such provision unless and until such performance has been waived in writing.
Each and every right hereunder is cumulative and may be exercised in part or in
whole from time to time.

IX. Notices.

      Any notice which either party hereto may be required or permitted to give
the other shall be in writing and may be delivered personally or by mail,
postage prepaid, addressed to the Secretary of the Company, at its then
corporate headquarters, and the Participant at his or her address as shown on
the Company's records, or to such other address as the Participant, by notice to
the Company, may designate in writing from time to time.

            IN WITNESS WHEREOF, the Company has caused this Stock Option
Agreement to be duly executed by an officer thereunto duly authorized, and the
Participant has hereunto set his hand, all as of the day and year first above
written.

REGENCY AFFILIATES, INC.


/s/ Neil N. Hasson                            /s/ Laurence S. Levy
-------------------------------               ----------------------------------
Name:  Neil N. Hasson                         Laurence S. Levy
Title: Secretary                              Participant