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                                                                   EXHIBIT 10.38
                           THE 1996 STOCK OPTION PLAN
                             OF ELCOM SYSTEMS, INC.

                                 January 1, 1996


         Elcom Systems, Inc. (the "Company") hereby adopts a stock option plan
for the benefit of certain persons and subject to the terms and provisions set
forth below.

         1.   Definitions. The following terms shall have the meanings set forth
below whenever used in this instrument:

              (a)  The word "Affiliate" shall mean any corporation which, on the
                   effective date of the Plan or at any time thereafter, is,
                   within the meaning of Section 1563(a) of the Code, a member
                   of a controlled group of corporations which includes the
                   Company.

              (b)  The word "Board" shall mean the Board of Directors of the
                   Company.

              (c)  The word "Code" shall mean the United States Internal Revenue
                   Code (Title 26 of the United States Code) as the same may be
                   amended from time to time.

              (d)  The word "Committee" shall mean the Compensation Committee
                   appointed by the Board or, until such committee shall have
                   been appointed, the Board itself.

              (e)  The words "Common Stock" shall mean the common stock, par
                   value $.01 per share, of the Company.

              (f)  The word "Company" shall mean Elcom Systems, Inc., a Delaware
                   corporation and its Subsidiaries, if any, and any successor
                   thereto which shall assume this Plan.

              (g)  The words "Incentive Stock Option" shall mean any option
                   which qualifies as an incentive stock option under the terms
                   of Section 422A of the Code.

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              (h)  The words "Key Personnel" shall mean any person whose
                   performance as an employee (whether or not as Director) or as
                   an independent contractor or outside Director of the Company
                   or an Affiliate of the Company is, in the judgment of the
                   Committee, important to the successful operation of the
                   Company or a Subsidiary.

              (i)  The word "Optionee" shall mean any Key Personnel, or the
                   nominee designated by such Key Personnel and acceptable to
                   the Committee, to whom a stock option has been granted
                   pursuant to this Plan.

              (j)  The word "Plan" shall mean The 1996 Stock Option Plan of
                   Elcom Systems, Inc., as it is originally adopted in the form
                   of this document, and as it may be amended hereafter.

              (k)  The word "Subsidiary" shall mean any entity at least 50% of
                   the voting equity interest (in connection with the election
                   of Directors or the applicable governing body) of which is
                   owned directly or indirectly by the Company.

              (l)  The words "Substantial Stockholder" shall mean any Key
                   Personnel who owns more than 10% of the total combined voting
                   power of all classes of stock of the Company. Ownership shall
                   be determined in accordance with Section 424(d) of the Code
                   and lawful applicable regulations.

         2.   Purpose of the Plan. The purpose of the Plan is to provide Key
Personnel with greater incentive to serve and promote the interests of the
Company and its stockholders. The premise of the Plan is that, if such Key
Personnel acquire a proprietary interest in the business of the Company or
increase such proprietary interest as they may already hold, then the incentive
of such Key Personnel to work toward the Company's continued success will be
commensurately increased. Accordingly, the Company will, from time to time
during the effective period of the 


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Plan, grant to such Key Personnel as may be selected to participate in the Plan,
options to purchase Common Stock on the terms and subject to the conditions set
forth in the Plan.

         3.   Effective Date of the Plan. The Plan shall become effective on
January 1, 1996, subject to approval by holders of a majority of the outstanding
shares of voting capital stock of the Company. In the event the Plan is not so
approved by January 1, 1997, the Plan and any options granted hereunder shall be
null and void. If, however, the Plan is so approved, subject to the provisions
of Section 8, no further stockholder approval shall be required with respect to
the granting of any options pursuant to the Plan. In the event that the Company
has not either (i) filed a Registration Statement on Form S-1 with the
Securities and Exchange Commission which is declared effective on or before
December 31, 1999 in connection with an initial public offering of the Company's
Common Stock, or (ii) been a party to a merger, consolidation, reorganization or
other business combination with a party that is not an Affiliate and in which
the Company is not the surviving corporation, or (iii) sold, leased, exchanged,
or otherwise disposed of all or substantially all of the Company's assets to a
party that is not an Affiliate in any transaction requiring the approval of the
Company's Stockholders, or (iv) dissolved or liquidated the Company other than
with an Affiliate of the Company as the principal distributee thereof, then the
Board may consider whether, and shall be entitled upon a majority vote, to
terminate the Plan and declare the Plan and any options granted hereunder null
and void.

         4.   Administration of the Plan. The Plan shall be administered by the
Committee. A majority of the Committee shall constitute a quorum, and the acts
of a majority of 


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the members present at any meeting at which a quorum is present, or acts
approved in writing by all of the members, shall be acts of the Committee.
Subject to the terms and conditions of the Plan, and in addition to the other
authorizations granted to the Committee under the Plan, the Committee shall have
full and final authority in its absolute discretion:

              (a)  to select the Optionees to whom options will be granted;

              (b)  to determine the number of shares of Common Stock subject to
                   any option;

              (c)  to determine the time when options will be granted;

              (d)  to determine the option price of Common Stock subject to an
                   option;

              (e)  to determine the time when each option may be exercised;

              (f)  to determine whether and to what extent an option is an
                   Incentive Stock Option; provided, however, that Incentive
                   Stock Options may only be granted to employees of the
                   Company;

              (g)  to prescribe the form of the option agreements governing the
                   options which are granted under the Plan and to set the
                   provisions of such option agreements as the Committee may
                   deem necessary or desirable provided such provisions are not
                   contrary to the terms and conditions of either the Plan or,
                   where the option is an Incentive Stock Option, Section 422A
                   of the Code;

              (h)  to adopt, amend and rescind such rules and regulations as, in
                   the Committee's opinion, may be advisable in the
                   administration of the Plan; and

              (i)  to construe and interpret the Plan, the rules and regulations
                   and the instruments evidencing options granted under the Plan
                   and to make all other determinations deemed necessary or
                   advisable for the administration of the Plan.


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Any decision made or action taken by the Committee in connection with the
administration, interpretation, and implementation of the Plan and of its rules
and regulations, shall, to the extent permitted by law, be conclusive and
binding upon all Optionees under the Plan and upon any person claiming under or
through such an Optionee. Neither the Committee nor any of its members shall be
liable for any act taken by the Committee pursuant to the Plan. No member of the
Committee shall be liable for the act of any other member.

         5.  Persons Eligible for Options. Subject to the restrictions herein
contained, options may be granted from time to time in the discretion of the
Committee only to such Key Personnel as designated by the Committee (or their
designees acceptable to the Committee, in its sole discretion), whose initiative
and efforts contribute or may be expected to contribute to the continued growth
and future success of the Company and/or its Subsidiaries. Notwithstanding the
preceding sentence, any Key Personnel who renounces in writing any right he or
she may have to receive stock options under the Plan shall not be eligible to
receive any stock options under the Plan. The Committee may grant more than one
option to the same Key Personnel.

         6.   Shares Subject to the Plan. Subject to the provisions of the next
succeeding provisions of this Section 6, the aggregate number of shares of
Common Stock for which options may be granted under the Plan shall be 187,500
shares of Common Stock. The maximum number of shares of Common Stock for which
options may be granted under the Plan to any one Key Personnel in any one fiscal
year of the Company is 50,000, subject to the other provisions of this Section
6. Either treasury or authorized and unissued shares of Common Stock, or both,
in such


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amounts, within the maximum limit of the Plan, as the Committee shall from time
to time determine, may be so issued. All shares of Common Stock which are the
subject of any lapsed, expired or terminated options may be made available for
reoffering under the Plan to any Key Personnel. In addition, any shares of
Common Stock which are retained to satisfy an Optionee's withholding tax
obligations or which are transferred to the Company by an Optionee to satisfy
such obligations or to pay all or any portion of the option price in accordance
with the terms of the Plan, may be made available for reoffering under the Plan
to any Key Personnel. If an option granted under this Plan is exercised, any
shares of Common Stock which are the subject thereof shall not thereafter be
available for reoffering under the Plan.

         In the event that subsequent to the date of adoption of the Plan by the
Board, the outstanding shares of Common Stock are, as a result of a stock split,
stock dividend, combination or exchange of shares, exchange for other
securities, reclassification, reorganization, redesignation, merger,
consolidation, recapitalization or other such change, including without
limitation any transaction described in Section 424(a) of the Code, increased or
decreased or changed into or exchanged for a different number or kind of shares
of stock or other securities of the Company, then (i) there shall automatically
be substituted for each share of Common Stock subject to an unexercised option
granted under the Plan and each share of Common Stock available for additional
grants of options under the Plan the number and kind of shares of stock or other
securities into which each outstanding share of Common Stock shall be exchanged,
(ii) the option price per share of Common Stock or unit of securities shall be
increased or decreased 


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proportionately so that the aggregate purchase price for the securities subject
to the option shall remain the same as immediately prior to such event, and
(iii) the Committee shall make such other adjustments to the securities subject
to options, the provisions of the Plan, and option agreements as may be
appropriate, equitable and in compliance with the provisions of Section 424(a)
of the Code to the extent applicable and any such adjustment shall be final,
binding and conclusive as to each Optionee. Any such adjustment shall provide
for the elimination of fractional shares.

         7.  Option Provisions.

              (a) Option Price. The option price per share of Common Stock which
is the subject of an Incentive Stock Option shall be determined by the Committee
at the time of grant but shall not be less than one hundred percent (100%) of
the fair market value of a share of Common Stock on the date the option is
granted; provided, however, that if any Key Personnel to whom an Incentive Stock
Option is granted is, at the time of the grant, a Substantial Stockholder, the
option price per share of Common Stock shall be determined by the Committee but
shall not be less than one hundred ten percent (110%) of the fair market value
of a share of Common Stock on the date the option is granted. The option price
per share of Common Stock under each option granted pursuant to the Plan which
is not an Incentive Stock Option shall be determined by the Committee at the
time of grant. Such fair market value shall be determined in accordance with
procedures to be established by the Committee. The day on which the Committee
approves the granting of an option shall be deemed for all purposes hereunder
the date on which the option is granted, unless the Committee declares a
different date in connection with its approval of the grant.


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              (b) Period of Option. The Committee shall determine when each
option is to expire but no option shall be exercisable after ten (10) years have
elapsed from the date upon which the option is granted; provided, however, that
no Incentive Stock Option granted to a person who is a Substantial Stockholder
at the time of the grant of such option shall be exercisable after five (5)
years have elapsed from the date upon which the option is granted.

              (c) Limitation on Exercise and Transfer of Option. Except as
otherwise provided in the event of an Optionee's death, only the Optionee may
exercise an option; provided, that a guardian or other legal representative who
has been duly appointed for such Optionee may exercise an option on behalf of
the Optionee. No option granted hereunder shall be transferable otherwise than
(i) by the Last Will and Testament of the Optionee or, if the Optionee dies
intestate, by the applicable laws of descent and distribution, or (ii) to the
extent approved by the Committee, pursuant to a qualified domestic relations
order as defined by the Code, or the rules thereunder. No option granted
hereunder may be pledged or hypothecated, nor shall any such option be subject
to execution, attachment or similar process.

              (d) Conditions Governing Exercise of Option. The Committee may, in
its absolute discretion, either require that, prior to the exercise of any
option granted hereunder, the Optionee shall have been an employee or
independent contractor for a specified period of time after the date such option
was granted, or make any option granted hereunder immediately exercisable. Each
option shall be subject to such additional or different restrictions or
conditions with respect to the time and method of exercise as shall be
prescribed by the Committee. Upon satisfaction of any 


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such conditions, the option may be exercised in whole or in part at any time
during the option period. Options shall be exercised by the Optionee (i) giving
written notice to the Company of the Optionee's exercise of the option
accompanied by full payment of the purchase price either in cash or, with the
consent of the Committee, in whole or in part in shares of Common Stock (either
by delivery to the Company of already-owned shares or having the Company
withhold shares to be issued) having a fair market value on the date the option
is exercised equal to that portion of the purchase price for which payment in
cash is not made, and (ii) making appropriate arrangements acceptable to the
Company with respect to income tax withholding, as required, which arrangements
may include, at the discretion of the Committee, in lieu of other withholding
arrangements, (a) the Company withholding from issuance to the Optionee such
number of shares of Common Stock otherwise issuable upon exercise of the option
as the Company and the Optionee may agree; provided that, with respect to any
Optionee subject to Section 16 of the Securities Exchange Act of 1934 or the
regulations promulgated thereunder (or any successor laws or regulations), such
Optionee has had on file with the Committee, for at least six (6) months prior
thereto, an effective standing election to satisfy said Optionee's tax
withholding obligations in such a fashion, which election form by its terms
shall not be revocable or amendable for at least six (6) months, or (b) the
Optionee's delivery to the Company of shares of Common Stock having a fair
market value on the date the option is exercised equal to that portion of the
withholding obligation for which payment in cash is not made. The Company shall
be authorized, in the discretion of its officers, to participate in a broker's
"cashless exercise" program to receive the Optionee's cash 


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payment of the exercise price and/or withholding taxes. Certain dissolutions or
liquidations of the Company (in which the principal distributee thereof is not
an Affiliate) or, unless the surviving corporation assumes said options, mergers
or consolidations with parties that are not, prior thereto, Affiliates of the
Company, in which the Company is not the surviving corporation, may cause each
outstanding option to terminate, provided that during the option period each
Optionee shall have the right during the period prescribed in the option
agreement (if any) prior to such dissolution or liquidation, or merger or
consolidation in which the Company is not the surviving corporation, to exercise
the then exercisable portion of his or her option in whole or in part without
regard to any limitations contained in the Plan or the option agreement.
Additional provision with respect to acquisitions, mergers, liquidations or
dissolutions may be made in the option agreement.

              (e) Termination of Employment, Etc. If an Optionee ceases to be
either an employee, outside Director or independent contractor, of the Company
and all Subsidiaries (the "Cessation Date"), then the Committee shall have
absolute discretion to establish, in the option agreement or otherwise, the
restrictions on the exercisability of options granted hereunder. An Optionee's
employment shall not be deemed to have terminated while he is on a military,
sick or other bona fide approved leave of absence from the Company or a
Subsidiary as such a leave of absence is described in Section 1.421-7(h) of the
Federal Income Tax Regulations or any lawful successor regulations thereto. If
the stock option is an Incentive Stock Option, no option agreement shall:

              (i)  permit any Optionee to exercise any Incentive Stock Option
                   more than three (3) months after the date the Optionee ceased
                   to be employed by the Company or any Subsidiary if the reason
                   for the 


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                   Optionee's cessation of employment was other than his death
                   or his disability (as such term is defined by Section
                   105(d)(4) of the Code); or

             (ii)  permit any Optionee to exercise any Incentive Stock Option
                   more than one (1) year after the date the Optionee ceased to
                   be employed by the Company or any Subsidiary if the reason
                   for the Optionee's cessation of employment was the Optionee's
                   disability (as such term is defined by Section 105(d)(4) of
                   the Code); or

             (iii) permit any person to exercise any Incentive Stock Option
                   more than one (1) year after the date the Optionee ceased to
                   be employed by the Company or any Subsidiary if either (A)
                   the reason for the Optionee's cessation of employment was his
                   death or (B) the Optionee died within three (3) months after
                   ceasing to be employed by the Company or any Subsidiary.

If any option is by terms of the option agreement exercisable following the
Optionee's death, then such option shall be exercisable by the Optionee's
estate, or the person designated in the Optionee's Last Will and Testament, or
the person to whom the option was transferred by the applicable laws of descent
and distribution.

              (f) Limitations on Grant of Incentive Stock Options. In no event
may Incentive Stock Options be granted hereunder to any person other than an
employee of the Company. During the calendar year in which any Incentive Stock
Option first becomes exercisable, the aggregate fair market value of the shares
of Common Stock which are subject to such Incentive Stock Option (determined as
of the date the Incentive Stock Option was granted) shall not exceed the sum of
One Hundred Thousand Dollars ($100,000). Options which are not designated as
Incentive Stock Options shall not be subject to the limitations described in the
preceding sentence and shall not be counted when applying such limitation.


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              (g) Prohibition of Alternative Options. It is intended that Key
Personnel who are employees may be granted, simultaneously or from time to time,
Incentive Stock Options or other stock options, but no eligible Key Personnel
shall be granted alternative rights in Incentive Stock Options and other stock
options so as to prevent options granted as Incentive Stock Options from
qualifying as such within the meaning of Section 422A of the Code.

         8.  Amendments to the Plan. The Committee is authorized to interpret
the Plan and from time to time adopt any rules and regulations for carrying out
the Plan that it may deem advisable. Subject to the approval of the Board, the
Committee may at any time amend, modify, suspend or terminate the Plan. In no
event, however, without the approval of the Company's stockholders, shall any
action of the Committee or the Board result in:

              (a)  amending, modifying or altering the eligibility requirements
                   provided in Section 5 hereof; or

              (b)  increasing or decreasing, except as provided in Section 6
                   hereof, the maximum number of shares for which options may be
                   granted; or

              (c)  decreasing the minimum option price per share at which
                   options may be granted under the Plan, as provided in Section
                   7(a) hereof; or

              (d)  extending either the maximum period during which an option is
                   exercisable as provided in Section 7(b) hereof or the date on
                   which the Plan shall terminate as provided in Section 12
                   hereof; or

              (e)  changing the requirements relating to the Committee,

except as necessary to conform the Plan and/or the option agreements to changes
in the Code or other governing law. No option may be granted during any
suspension of this Plan or after this Plan has terminated and no amendment,
suspension or termination shall, without the Optionee's 


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consent, alter or impair any of the rights or obligations under an option
theretofore granted to such Optionee under this Plan, except to the extent as
may be contemplated in the option agreement or Section 3 hereof.

         9.  Investment Representation, Approvals and Listing. The Committee may
condition its grant of any option hereunder upon receipt of an investment
representation from the Optionee which shall be substantially similar to the
following:

         "Optionee agrees that any shares of Common Stock of Elcom Systems, Inc.
         which he may acquire by virtue of the exercise of this option shall be
         acquired for investment purposes only and not with a view to
         distribution or resale; provided, however, that this restriction shall
         become inoperative in the event the shares of Common Stock of Elcom
         Systems, Inc. which are subject to this option shall be registered
         under the Securities Act of 1933, as amended, or in the event there is
         presented to Elcom Systems, Inc. evidence satisfactory to Elcom
         Systems, Inc. to the effect that the offer or sale of the shares of
         Common Stock of Elcom Systems, Inc. which are subject to this option
         may lawfully be made without registration under the Securities Act of
         1933, as amended".

The Company shall not be required to issue any certificates for shares of Common
Stock upon the exercise of an option granted under the Plan prior to (i)
obtaining any approval from any governmental agency which the Committee shall,
in its sole discretion, determine to be necessary or advisable, (ii) the
admission of such shares to listing on any national securities exchange on which
the shares of Common Stock may be listed, (iii) completion of any registration
or other qualification of the shares of Common Stock under any state or federal
law or ruling or regulations of any governmental body which the Committee shall,
in its sole discretion, determine to be 


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necessary or advisable, or the determination by the Committee, in its sole
discretion, that any registration or other qualification of the shares of Common
Stock is not necessary or advisable, and (iv) obtaining an investment
representation from the Optionee in the form set forth above or in such other
form as the Committee, in its sole discretion, shall determine to be adequate.

         10.  General Purposes.

              (a) Option Agreements Need Not Be Identical. The form and
substance of option agreements, whether granted at the same or different times,
need not be identical.

              (b) No Right To Be Employed, Etc. Nothing in the Plan or in any
option agreement shall confer upon any Optionee any right to continue in the
employ of the Company or a Subsidiary, or to serve as a member of the Board or
as an independent contractor, or to be entitled to receive any remuneration or
benefits not set forth in the Plan or such option agreement, or to interfere
with or limit either the right of the Company or a Subsidiary to terminate the
employment of, or independent contractor relationship with, such Optionee at any
time or the right of the stockholders of the Company to remove him as a member
of the Board with or without cause.

              (c) Optionee Does Not Have Rights Of Stockholder. Nothing
contained in the Plan or in any option agreement shall be construed as entitling
any Optionee to any rights of a stockholder as a result of the grant of an
option until such time as shares of Common Stock are actually issued to such
Optionee pursuant to the exercise of an option.


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              (d) Successors In Interest. The Plan shall be binding upon the
successors and assigns of the Company.

              (e) No Liability Upon Distribution of Shares. The liability of the
Company under the Plan and any distribution of shares of Common Stock made
hereunder is limited to the obligations set forth herein with respect to such
distribution and no term or provision of the Plan shall be construed to impose
any liability on the Company or the Committee in favor of any person with
respect to any loss, cost or expense which the person may incur in connection
with or arising out of any transaction in connection with the Plan.

              (f) Use of Proceeds. The cash proceeds received by the Company
from the issuance of shares of Common Stock pursuant to the Plan will be used
for general corporate purposes.

              (g) Expenses. The expenses of administering the Plan shall be
borne by the Company.

              (h) Captions. The captions and section numbers appearing in the
Plan are inserted only as a matter of convenience. They do not define, limit,
construe or describe the scope or intent of the provisions of the Plan.

              (i) Number. The use of the singular or plural herein shall not be
restrictive as to number and shall be interpreted in all cases as the context
may require.

              (j) Gender. The use of the feminine, masculine or neuter pronoun
shall not be restrictive as to gender and shall be interpreted in all cases as
the context may require.


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         11.  Termination of the Plan. The Plan shall terminate on January 1,
2006, and thereafter no options shall be granted under the Plan. All options
outstanding at the time of termination of the Plan shall continue in full force
and effect according to the terms of the option agreements governing such
options and the terms and conditions of the Plan.

         IN WITNESS WHEREOF, Elcom Systems, Inc., by its appropriate officer
duly authorized, has executed this document as of the 1st day of January, 1996.


                                       ELCOM SYSTEMS, INC.





                                       By:  /s/Robert J. Crowell
                                          -----------------------------------
                                             Robert J. Crowell, Chairman
                                             and Chief Executive Officer


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