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                                                                    Exhibit 10.4

                          ONE LIBERTY PROPERTIES, INC.

                             1989 STOCK OPTION PLAN

         1.       Purpose. The purpose of the 1989 Stock Option Plan of One
Liberty Properties, Inc. (the "Company") is to provide incentive to officers,
directors and key employees of the Company and to attract to the Company
individuals of experience and ability.

         2.       Definitions.

                  (a)      "Board" shall mean the Board of Directors of the
Company.

                  (b)      "Code" shall mean the Internal Revenue Code of 1986,
together with any applicable amendments.

                  (c)      "Common Stock" shall mean the Common Stock, $1.00 par
value of the Company.

                  (d)      "Company" shall mean One Liberty Properties, Inc., a
corporation organized under the laws of the State of Maryland and any of its
Subsidiaries.

                  (e)      "Controlled Entities" shall mean any entity
(corporation, partnership or other business organization) in which the officer,
director or Employee is a controlling person; i.e., the officer, director or
Employee has the power, direct or indirect, to direct or cause the direction of
the management and policies of the entity either through the ownership of voting
securities, by contract or otherwise.

                  (f)      "Disability" shall mean the condition of an officer,
director or Employee who is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or which has lasted or can be expected to last
for a continuous period of not less than twelve (12) months.

                  (g)      "Employee" shall mean an individual (who may be an
officer or a director who does not devote full time to the affairs of the
Company employed by the Company (within the meaning of Code section 3401 and the
regulations thereunder).

                  (h)      "Exercise Price" shall mean the price per Share,
determined by the Board (or a committee selected pursuant to Section 4 of the
Plan), at which an Option may be exercised.
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                  (i)      "Fair Market Value" of a Share as of a specified date
shall mean the closing price of a Share on the principal securities exchange on
which such Shares are traded on the day immediately preceding the date as of
which Fair Market Value is being determined, or on the next preceding date on
which such Shares are traded if no Shares were traded on such immediately
preceding day, or if the Shares are not traded on a securities exchange, Fair
Market Value shall be deemed to be the average of the high bid and low asked
prices of the Shares in the over-the-counter market on the day immediately
preceding the date as of which Fair Market Value is being determined. If the
Shares are not publicly traded, Fair Market Value shall be determined by the
Board (or a committee selected pursuant to Section 4 of the Plan). In no case
shall Fair Market Value be less than the par value of a Share.

                  (j)      "Incentive Stock Option" shall mean an Option
described in Code section 422A(b).

                  (k)      "Nonstatutory Stock Option" shall mean an Option not
described in Code sections 422(b), 422A(b), 423(b) or 424(b).

                  (1)      "Option" shall mean a stock option granted pursuant
to the Plan.

                  (m)      "Purchase Price" shall mean the Exercise Price times
the number of whole Shares with respect to which an Option is exercised.

                  (n)      "Optionee" shall mean an officer, director or
Employee to whom an Option has been granted.

                  (o)      "Plan" shall mean this One Liberty Properties, Inc.
1989 Stock Option Plan.

                  (p)      "Retirement" shall mean the voluntary termination by
an Employee of employment with the Company, provided that on the effective date
of Retirement the Employee shall have attained 62 years of age.

                  (q)      "Share" shall mean one share of Common Stock adjusted
in accordance with Section 10 of the Plan (if applicable).

                  (r)      "Subsidiary" shall mean those subsidiaries of the
Company as defined in section 425(f) of the Code.

         3.       Effective Date. The Plan was approved by the Board effective
October 16, 1989 and must be approved by shareholders on or before October 15,
1990.
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         4.       Administration. The Plan shall be administered by the Board or
at the discretion of the Board by a committee of three directors not employed by
the Company. Members of the committee shall be eligible to receive Option grants
under the Plan, but Options granted to any member of the committee shall be
granted only by action of the full Board. The Board or the committee, as
appropriate, shall from time to time make determinations with respect to
officers, directors or Employees who shall be granted Options, the number of
Shares to be optioned to each and the designation, in accordance with the terms
of the Plan, as Incentive Stock Options or Nonstatutory Stock Options. The
interpretation and construction by the Board or the committee, as appropriate,
of any provisions of the Plan or of any Option granted hereunder shall be
binding and conclusive on all Optionees and on their legal representatives and
beneficiaries.

         5.       ELIGIBILITY. Optionees shall be such officers, directors or
Employees of the Company who perform services of importance to the management,
operation and development of the business of the Company as the Board or the
committee, as appropriate, shall select, but subject to the terms and conditions
set forth below.

                  No Employee who, at the time of the grant of an Option, would
own (or have options to acquire) more than ten percent (l0%) of the total
combined voting power of all classes of outstanding stock of the Company, its
parent or any of its Subsidiaries (a 10% shareholder) is eligible to receive the
grant of an Incentive Stock Option pursuant to the Plan. However, an Employee
who is a 10% shareholder is eligible to receive the grant of an Incentive Stock
Option pursuant to the Plan if

                  (a)      the Exercise Price of the Incentive Stock Option is
                  at least 110% of the Fair Market Value of a Share on the date
                  of grant, and

                  (b)      the Incentive Stock Option, by its terms, is not
                  exercisable after the expiration of five (5) years from the
                  date it is granted.

         No officer or director who is not an Employee of the Trust is eligible
to receive the grant of an Incentive Stock Option pursuant to the Plan.

         6.       Stock. (a) The stock subject to Options granted under the Plan
shall be the Company's authorized but unissued or reacquired shares of Common
Stock. The aggregate number of Shares which may be issued under Options
exercised under this Plan shall not exceed 225,000. The number of Shares subject
to Options outstanding under the Plan at any time may not exceed the number of
Shares
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remaining available for issuance under the Plan. In the event that any Option
outstanding under the Plan expires for any reason or is terminated, the Shares
allocable to the unexercised portion of such Option may again be subjected to an
Option under the Plan.

                  (b)      (1) Shares acquired pursuant to the exercise of
Nonstatutory Stock Options granted under the Plan will be forfeited to the
Company within the meaning of Code Section 83(c)(1) at the Optionee's exercise
price if the Optionee does not continue in the Company's employ or if a
non-employee director or officer does not continue to render services to the
Company for any reason (other than death or Retirement as defined in Section
2(p) of the Plan) for a two year period of time beginning on the date the option
is exercised.

                           (2)      Any Shares so acquired may not be
transferred (other than by will or by the laws of descent and distribution)
during this two year period of time other than to a Controlled Entity which
would succeed to the forfeiture provisions described in Section 6(b)(1) hereof.

                  (c)      The limitations established by this Section 6 shall
be subject to adjustment upon the occurrence of the events specified and in the
manner provided in Section 10 hereof.

         7.       Terms and Conditions of Options. Options granted pursuant to
the Plan shall be evidenced by written agreements in such form as the Board or
the committee, as appropriate, shall from time to time determine, which
agreements shall comply with and be subject to the following terms and
conditions:

                  (a)      Date of Grant. Each Option shall specify its
effective date (the "date of grant"), which shall be the date specified by the
Board or the committee in its action relating to the grant of the Option.

                  (b)      Number of Shares. Each Option shall state the number
of Shares to which it pertains and shall provide for the adjustment thereof in
accordance with the provisions of Section 10 hereof.

                  (c)      Exercise Price. Each Option shall state the Exercise
Price, which price, with respect to Incentive Stock Options, shall not be less
than the Fair Market Value of a Beneficial Share on the date of grant. In the
case of a Nonstatutory Stock Option, the Exercise Price may be any amount
determined by the Board or the committee, but not less than the par value of the
shares subject to the Option.

                  (d)      Exercise of Options and Medium and Time of
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Payment. To exercise an Option, the Optionee shall give written notice to the
Company specifying the number of shares to be purchased and accompanied by
payment for the full Purchase Price therefor. No Share shall be issued until
full payment therefor has been made. Payment for Shares shall be in cash or by
certified check or surrender of stock certificates representing like shares
having an aggregate Fair Market Value, determined as of the date of exercise,
equal to the number of Shares with respect to which such option is exercised
multiplied by the Exercise Price per share, or a combination of cash and
surrender of stock certificate representing like shares, the cash and the shares
having an aggregate value equal to the number of Shares with respect to which
such Option is exercised multiplied by the Exercise Price per share; provided
the Board or the committee may impose whatever restrictions it deems necessary
or desirable with respect to payment, in whole or in part, for Shares by the
surrender of stock certificates representing like shares of the Company.

                  (e)      Term and Exercise of Options; Nontransferability of
Options. Each Option shall state the time or times when it becomes exercisable.
Options granted under the Plan may be of such duration as shall be determined by
the Board of Directors or the committee, as appropriate, but no Option shall be
exercisable after the expiration of ten years (five years in the case of a 10%
shareholder) from the date it is granted. During the lifetime of the Optionee,
the Option shall be exercisable only by the Optionee and shall not be assignable
or transferable. In the event of the Optionee's death, no Option shall be
transferable by the Optionee otherwise than by will or the laws of descent and
distribution.

                  (f)      Termination of Employment Except Death. In the case
of an Incentive Stock Option, if an Optionee shall cease to be employed by the
Trust for any reason other than his or her death, such Optionee shall have the
right to exercise the Option at any time within thirty (30) days after such
termination of employment (six (6) months if termination was due to Disability
or Retirement), to the extent that, on the day preceding the date of termination
of employment, the Optionee's right to exercise such Option had accrued pursuant
to the terms of the option agreement pursuant to which such Option was granted,
and had not previously been exercised.

         In the case of a Nonstatutory Stock Option, the termination of
employment or relationship with the Company as an officer or director, except by
death, Disability or Retirement shall extinguish the Optionee's right to
exercise such option effective thirty (30) days after the date of termination
but the right to exercise shall be limited to the number of Shares Optionee had
the right to exercise on
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the date of termination. The Optionee, if an Employee, upon Disability or
Retirement shall have the right to exercise the Option at any time within six
(6) months of termination to the extent that on the day preceding the date of
termination of employment, the Optionee's right to exercise such Option had
accrued pursuant to the terms of the option agreement pursuant to which such
Option was granted, and such Option had not previously been exercised.

         For this purpose, the employment relationship will be treated as
continuing intact while the Optionee is on sick leave or other bona fide leave
of absence (to be determined in the sole discretion of the Board or the
committee, in accordance with rules and regulations construing Code section
422A(a) (2)). Notwithstanding the foregoing, in the case of an Incentive Stock
Option, employment shall not be deemed to continue beyond the ninetieth (90th)
day after the Optionee ceased active employment, unless the Optionee's
reemployment rights are guaranteed by statute or by contract.

         Anything herein to the contrary notwithstanding, if termination of
employment or provision of services is for cause (as determined by the Board of
Directors in its discretion) any Option will terminate effective upon notice of
termination.

                  (g)      Death of Optionee. If the Optionee shall die while in
the employ of or providing services to, the Company and shall not have fully
exercised the Option, an Option may be exercised at any time within six (6)
months after the Optionee's death, by the executors or administrators of his or
her estate or by any person or persons who shall have acquired the Option
directly from the Optionee by bequest or inheritance to the extent that, on the
day preceding the date of death, the Optionee's right to exercise such Option
had accrued pursuant to the terms of the option agreement pursuant to which such
Option was granted, and had not previously been exercised.

                  (h)      Rights as a Shareholder. An Optionee or a transferee
of an Optionee shall have no rights as a shareholder with respect to any Shares
covered by his or her Option until the date of the issuance of a stock
certificate for such Shares. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in Section 10.

                  (i)      Modification, Extension and Renewal of Options.
Subject to the terms and conditions and within the limitations of the Plan, the
Board may modify, extend or renew outstanding Options granted under the Plan, or
accept
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the exchange of outstanding Options (to the extent not theretofore exercised)
for the granting of new Options in substitution therefor. Notwithstanding the
foregoing, however, no modification of an Option shall, without the consent of
the Optionee, alter or impair any rights or obligations under any Option
theretofore granted under the Plan.

                  (j)      Other Provisions. The option agreements authorized
under the Plan shall contain such provisions not inconsistent with the terms of
the Plan, including, without limitation, restrictions upon the exercise of the
Option, as the Board or the committee, as appropriate, shall deem advisable.

         8.       Limitation on Annual Awards.

                  The aggregate Fair Market Value (determined as of the date an
Option is granted) of the stock with respect to which Incentive Stock Options
are exercisable for the first time by an Employee during any calendar year under
the Plan and all other plans maintained by the Trust may not exceed $100,000.

         9.       Term of Plan. Options may be granted pursuant to the Plan
until the termination of the Plan on October 15, 1999.

         10.      Recapitalization. Subject to any required action by the
shareholders, the number of Shares covered by this Plan as provided in Section
6, the number of Shares covered by each outstanding Option, and the Exercise
Price thereof shall be proportionately adjusted for any increase or decrease in
the number of issued Shares resulting from a subdivision or consolidation of
Shares, stock split, or the payment of a stock dividend.

         Subject to any required action by the shareholders, if the Company
shall be the surviving entity in any merger or consolidation, each outstanding
Option shall pertain and apply to the securities to which a holder of the number
of Shares subject to the Option would have been entitled. A dissolution or
liquidation of the Company shall cause each outstanding Option to terminate,
provided that each Optionee in such event, shall have the right immediately
prior to such dissolution or liquidation to exercise the Option in whole.

         In the event of a change in Shares as presently constituted, which is
limited to a change of all of its authorized shares with par value into the same
number of shares with a different par value or without a par value, the shares
resulting from any such change shall be deemed to be Shares within the meaning
of the Plan.
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         To the extent that the foregoing adjustments relate to stock or
securities to the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.

         Except as hereinbefore expressly provided in this Section 10, the
Optionee shall have no rights by reason of any subdivision, or consolidation of
shares of stock of any class, stock split, or the payment of any stock dividend
or any other increase or decrease in the number of shares of stock of any class
or by reason of any dissolution, liquidation, or spin-off of assets or stock of
another corporation, and any issue by the Company of shares of stock of any
class or securities convertible into shares of stock of any class, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of Shares subject to the Option.

         The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.

         11.      Effect of Change in Control or Tender Offer. (a) Each Stock
Option Agreement entered into pursuant to the Plan shall provide that options
granted under the Plan shall be exercisable in full, at the option of the
Optionee, for a period of thirty (30) days (i) following the date of a Change in
Control of the Company or (ii) commencing on the date of approval by the
Company's shareholders of an agreement providing for a merger in which the
Company will not remain an independent, publicly-owned entity, or a
consolidation, or a sale or other disposition of all or substantially all the
assets of the Company, provided that the foregoing shall not extend the term of
any Option. A Change in Control shall be deemed to occur if (i) any person,
including a "group", as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, who was not previously such an owner, becomes a beneficial owner of
Shares entitled to cast twenty percent (20%) or more of the total number of
votes for the election of the Board; or (ii) as a result of, or in connection
with, a merger or other business combination, sale of assets, cash tender or
exchange offer, or contested election, or any combination of the foregoing
transactions, the persons who were directors of the Company before the
transaction ("Existing Board") cease to constitute a majority of the Board of
the Company or any successor entity.

(b)      A tender offer or exchange offer for Shares which results in a Change
in Control shall be deemed to constitute
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a Tender Offer.

(c)      All Options outstanding at the end of the period specified in
subsection (a) shall be surrendered to the Secretary of the Company for
cancellation in exchange for a settlement payment. The amount paid in settlement
for the surrender and cancellation of each Option shall be the higher of:

                  (i)      the excess of the Fair Market Value of the Shares
subject to the Option (regardless of exercisability) at the end of the period
specified in subsection (a) over the Exercise Price; or

                  (ii)     the excess of the "Offer Price per Share" (as
hereinafter defined), if any, of the Shares subject to the Option (regardless of
exercisability) over the Exercise Price.

         As used in subparagraph (ii) above, the term "Offer Price per Share"
shall mean the highest price per Share payable in any Tender Offer which was in
effect at any time during the period beginning sixty (60) days prior to the date
on which such Option was surrendered. Any securities or other property which are
part of the consideration paid for Shares in a Tender Offer shall be valued in
determining the Offer Price per Share at the valuation placed on such securities
or property by the corporation, person or other entity making the Tender Offer.

(d)      The Existing Board at any time may exempt from the operation of
subsections (a) and (c) any outstanding Option selected by the Existing Board or
may exempt all outstanding Options. No exemption shall, however, be effective
after a Change of Control or after payment or delivery of Shares have been made
in settlement of a surrendered Option.

(e)      The Existing Board shall have sole discretion to determine whether
settlement payments shall be made wholly in cash, wholly in shares or by a
combination of cash and shares. In the event no action is taken by the Board to
determine the method of payment, the amount due shall be paid in cash.

(f)      Notwithstanding subsections (a) and (c), Options granted to an Optionee
subject to Section 16(b) of the Securities Exchange Act of 1934 shall not be
exercised or surrendered for cancellation earlier than the expiration of six (6)
months from the date of grant in the event of a Change in Control or Tender
Offer, except that such limitation shall not apply in the event of death or
Disability of such Optionee occurring prior to the expiration of such six-month
period.
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         12.      Securities Law Requirements. No Shares shall be issued upon
the exercise of any Option unless and until the Company has determined that: (i)
it and the Optionee have taken all actions required to register the Shares under
the Securities Act of 1933 or perfect an exemption from the registration
requirements thereof; (ii) any applicable listing requirement of any stock
exchange on which the Shares are listed has been satisfied; and (iii) any other
applicable provision of state or federal law has been satisfied.

         13.      Amendment of the Plan. The Board may, insofar as permitted by
law, from time to time, with respect to any Shares at the time not subject to
Options, suspend or discontinue the Plan or revise or amend it in any respect
whatsoever except that, without approval of the shareholders, no such revision
or amendment shall:

         (a)      Increase the number of Shares subject to the plan; or

         (b)      Change the designation in Section 5 of the Plan of the persons
                  eligible to receive options.

         (c)      amend this Section 13 to defeat its purpose.

         14.      Application of Funds. The proceeds received by the Company
from the sale of Shares pursuant to the exercise of an Option will be used for
general corporate purposes.


         15.      No Obligation to Exercise Option. The granting of an Option
shall impose no obligation upon the Optionee to exercise such Option.

         16.      Withholding Taxes. The Company's obligation to deliver Shares
or make any payment upon the exercise of any Option shall be subject to
applicable federal, state and local tax withholding requirements. Accordingly,
the Company may at its option either (i) reduce the number of shares otherwise
issuable, or (ii) require reimbursement from the holder equal to the withholding
applicable under federal, state, and local income tax laws and regulations.