Exhibit 10.4

                          DATA SYSTEMS & SOFTWARE INC.

                            1994 STOCK INCENTIVE PLAN


                  SECTION  1.  Purpose.  The  purposes  of this  Data  Systems &
Software  Inc.  1994  Incentive  Plan  is  to  provide  incentive  to  employees
(including  officers) of, and  consultants to, Data Systems & Software Inc. (the
"Company")  and its  Affiliates  (as  hereinafter  defined),  to encourage  such
individuals  to remain in the employ of, or to continue to provide  services to,
the Company and its  Affiliates and to attract to the Company and its Affiliates
individuals of experience and ability.

                  SECTION 2.  Definitions.  As used in the Plan,  the  following
terms shall have the meanings set forth below:

                  "Affiliate"  shall  mean  (i) any  entity  that,  directly  or
indirectly,  is  controlled  by the  Company  and (ii) any  entity  in which the
Company has a significant  equity interest,  in either case as determined by the
Committee.

                  "Award"  shall  mean any  Option,  Stock  Appreciation  Right,
Restricted Stock Award, Performance Award or Other Stock-Based Award.

                  "Award Agreement" shall mean any written  agreement,  contract
or other instrument or document  evidencing any Award,  which may, but need not,
be executed or acknowledged by a Participant.

                  "Board" shall mean the Board of Directors of the Company.

                  "Code"  shall  mean the  Internal  Revenue  Code of  1986,  as
amended from time to time.

                  "Committee"  shall mean a committee of the Board designated by
the Board to  administer  the Plan and  composed  of not less  than the  minimum
number of persons from time to time required by Rule 16b-3, each of whom, to the
extent  necessary to comply with Rule 16b-3 only,  is a  "disinterested  person"
within the meaning of Rule 16b-3.

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                  "Company"  shall mean Data Systems & Software  Inc.,  together
with any successor thereto.

                  "Consultant"  shall mean a consultant who performs services to
the Company.

                  "Disability"  shall mean the  condition  of an 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,  all within the meaning of Section 22(e)(3) of
the Code.

                  "Employee"  shall mean an  employee  of the  Company or of any
Affiliate.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

                  "Fair  Market  Value"  shall mean the fair market value of the
property or other item being valued,  as determined by the Committee in its sole
discretion.

                  "Incentive Stock Option" shall mean a right to purchase Shares
from  the  Company  that is  granted  under  Section  6 of the  Plan and that is
intended to meet the  requirements  of Section 422 of the Code or any  successor
provision thereto.

                  "Non-Qualified  Stock  Option"  shall mean a right to purchase
Shares from the Company that is granted  under Section 6 of the Plan and that is
not intended to be an Incentive Stock Option.

                  "Option"   shall  mean  an   Incentive   Stock   Option  or  a
Non-Qualified Stock Option and shall include a Restoration Option.

                  "Other  Stock-Based  Award" shall mean any right granted under
Section 10 of the Plan.

                  "Participant"  shall mean any Employee or Consultant  selected
by the Committee to receive an Award under the Plan.

                  "Performance Award" shall mean any right granted under Section
9 of the Plan.

                  "Person" shall mean any individual, corporation,  partnership,
association, joint-stock company, trust, unincorporated organization, government
or political subdivision thereof or other entity.

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                  "Plan" shall mean this Data Systems & Software Inc. 1994 Stock
Incentive Plan.

                  "Restoration  Option" shall mean an Option granted pursuant to
Section 6(e) of the Plan.

                  "Restricted  Stock" shall mean any Share granted under Section
8 of the Plan. "Restricted Stock Unit" shall mean any unit granted under Section
8 of the Plan.

                  "Rule  16b-3"  shall  mean  Rule  16b-3  as  promulgated   and
interpreted  by the  SEC  under  the  Exchange  Act,  or any  successor  rule or
regulation thereto as in effect from time to time.

                  "SEC" shall mean the Securities and Exchange Commission or any
successor thereto and shall include the Staff thereof.

                  "Shares"  shall mean the Common Stock,  par value $.01, of the
Company,  or such other  securities  of the Company as may be  designated by the
Committee from time to time.

                  "Stock  Appreciation Right" shall mean any right granted under
Section 7 of the Plan.

                  "Substitute  Awards"  shall mean Awards  granted in assumption
of, or in substitution for,  outstanding  awards previously granted by a company
acquired by the Company or with which the Company combines.

                  SECTION 3. Administration.  (a) The Plan shall be administered
by the Committee.  Subject to the terms of the Plan and  applicable  law, and in
addition to other express powers and  authorizations  conferred on the Committee
by the Plan, the Committee shall have full power and authority to: (i) designate
Participants;  (ii)  determine  the type or types of  Awards  to be  granted  to
Participants;  (iii)  determine  the number of Shares to be covered  by, or with
respect to which  payments,  rights,  or other  matters are to be  calculated in
connection with,  Awards;  (iv) determine the terms and conditions of any Award;
(v) determine whether,  to what extent, and under what circumstances  Awards may
be settled or exercised in cash, Shares, other securities, other Awards or other
property,  or  cancelled,  forfeited,  or suspended and the method or methods by
which Awards may be settled, exercised, cancelled, forfeited, or suspended; (vi)
determine whether,  to what extent,  and under what circumstances  cash, Shares,
other securities,  other Awards, other property,  and other amounts payable with
respect to an Award shall be deferred either automatically or at the election of
the holder thereof or of the Committee;  (vii) interpret and administer the Plan
and any  instrument  or  agreement  relating  to, or Award  made under the Plan;
(viii)  establish,  amend,  suspend,  or waive  such rules and  regulations  and
appoint such agents as it shall deem  appropriate for the proper  administration
of the Plan;  and (ix) make any other  determination  and take any other  action
that the Committee  deems necessary or desirable for the  administration  of the
Plan.

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                  (b)  Unless  otherwise  expressly  provided  in the Plan,  all
designations, determinations, interpretations, and other decisions under or with
respect  to the Plan or any Award  shall be within  the sole  discretion  of the
Committee, may be made at any time and shall be final,  conclusive,  and binding
upon all Persons,  including the Company, any Affiliate, any Participant and any
holder or beneficiary of any Award.

                  (c) Notwithstanding the foregoing, the Board may authorize the
Chief  Executive  Officer of Data Systems & Software Inc.  (provided  that he is
also a member of the Board) to grant  Options to Employees  pertaining  up to an
aggregate of 90,000  Shares,  subject to the  provisions of the Plan.  The Chief
Executive  Officer as so appointed by the Board shall  administer  the Plan with
respect to the Options  such  officer has  granted.  With respect to the Options
granted  by  the  Chief  Executive  Officer  pursuant  to  such  authority,  all
references  to the  Committee  in this Plan shall  include  the Chief  Executive
Officer acting pursuant to such authority.

                  SECTION 4.  Shares Available for Awards.

                  (a) Shares  Available.  Subject to  adjustment  as provided in
Section  4(b),  the number of Shares with respect to which Awards may be granted
under the Plan shall be 1,600,000. If, after the effective date of the Plan, any
Shares  covered by an Award  granted  under the Plan,  or to which such an Award
relates,  are  forfeited,  or if an  Award  is  settled  for  cash or  otherwise
terminates  or is  cancelled  without the  delivery  of Shares,  then the Shares
covered by such Award,  or to which such Award relates,  or the number of Shares
otherwise  counted against the aggregate  number of Shares with respect to which
Awards  may be  granted,  to the  extent  of any  such  settlement,  forfeiture,
termination  or  cancellation,  shall  again be, or shall  become,  Shares  with
respect to which  Awards may be  granted.  In the event that any Option or other
Award granted hereunder is exercised through the delivery of Shares,  the number
of Shares  available  for Awards under the Plan shall be increased by the number
of  Shares   surrendered,   to  the  extent   permissible   under  Rule   16b-3.
Notwithstanding  the foregoing (and subject to adjustment as provided in Section
4(b)),  no more than 500,000  Shares shall be available for Awards of Restricted
Stock and Restricted Stock Units.

<PAGE>

                  (b)  Adjustments.  In the event that the Committee  determines
that any dividend or other  distribution  (whether in the form of cash,  Shares,
other securities,  or other property),  recapitalization,  stock split,  reverse
stock  split,  reorganization,   merger,   consolidation,   split-up,  spin-off,
combination,  repurchase,  or  exchange  of  Shares or other  securities  of the
Company,  issuance  of  warrants  or other  rights to  purchase  Shares or other
securities  of the Company,  or other  similar  corporate  transaction  or event
affects the Shares such that an  adjustment is determined by the Committee to be
appropriate  in order to prevent  dilution  or  enlargement  of the  benefits or
potential  benefits  intended  to be made  available  under the  Plan,  then the
Committee  shall, in such manner as it may deem equitable,  adjust any or all of
(i) the number of Shares or other  securities of the Company (or number and kind
of other  securities  or property)  with respect to which Awards may be granted,
(ii) the number of Shares or other securities of the Company (or number and kind
of other securities or property)  subject to outstanding  Awards,  and (iii) the
grant or  exercise  price with  respect to any Award or, if deemed  appropriate,
make  provision  for a cash  payment  to the  holder  of an  outstanding  Award;
provided,  in each case,  that with respect to Awards of Incentive Stock Options
no such  adjustment  shall be authorized to the extent that such authority would
cause the Plan to violate  Section  422(b)(1) of the Code,  as from time to time
amended.

                  (c) Substitute Awards. Any Shares underlying Substitute Awards
shall not, except in the case of Shares with respect to which Substitute  Awards
are granted to  Participants  who are  officers or  directors of the Company for
purposes of Section 16 of the Exchange Act or any successor section thereto,  be
counted against the Shares available for Awards under the Plan.

<PAGE>

                  SECTION 5. Eligibility. Any Employee, including any officer or
employee-director of the Company or any Affiliate, or any Consultant, who is not
a member of the Committee, shall be eligible to be designated a Participant.

                  SECTION 6.  Stock Options.

                  (a)  Grant.  Subject  to  the  provisions  of  the  Plan,  the
Committee shall have sole and complete  authority to determine the  Participants
to whom  Options  shall be  granted,  the number of Shares to be covered by each
Option, the option price therefor and the conditions and limitations  applicable
to the exercise of the Option.  The Committee  shall have the authority to grant
Incentive Stock Options,  or to grant  Non-Qualified  Stock Options, or to grant
both types of options.  In the case of Incentive  Stock  Options,  the terms and
conditions  of such grants shall be subject to and comply with such rules as may
be prescribed by Section 422 of the Code, as from time to time amended,  and any
regulations implementing such statute.

                  (b) Exercise Price. The Committee shall establish the exercise
price at the time each Option is  granted,  which  price,  except in the case of
Options that are Incentive Stock Options or Substitute Awards, shall not be less
than 85% of the per Share Fair Market Value on the date of grant.

                  (c) Exercise.  Each Option shall be  exercisable at such times
and  subject to such terms and  conditions  as the  Committee  may,  in its sole
discretion,  specify  in the  applicable  Award  Agreement  or  thereafter.  The
Committee  may impose such  conditions  with respect to the exercise of Options,
including  without  limitation,  any relating to the  application  of federal or
state securities laws, as it may deem necessary or advisable.

                  (d)  Payment.  No Shares  shall be  delivered  pursuant to any
exercise  of an Option  until  payment in full of the option  price  therefor is
received by the Company.  Such payment may be made in cash,  or its  equivalent,
or, if and to the extent permitted by the Committee,  by exchanging Shares owned
by the  optionee  (which are not the  subject  of any  pledge or other  security
interest),  or by a  combination  of the  foregoing,  provided that the combined
value of all cash and cash  equivalents  and the Fair  Market  Value of any such
Shares so  tendered  to the  Company  as of the date of such  tender is at least
equal to such option price.

<PAGE>

                  (e)  Restoration  Options.  In the event that any  Participant
delivers Shares in payment of the exercise price of any Option granted hereunder
in accordance with Section 6(d), the Committee shall have the authority to grant
or provide for the automatic grant of a Restoration  Option to such Participant.
The grant of a Restoration  Option shall be subject to the  satisfaction of such
conditions or criteria as the Committee in its sole  discretion  shall establish
from time to time.  A  Restoration  Option shall  entitle the holder  thereof to
purchase a number of Shares equal to the number of such Shares so delivered upon
exercise of the original  Option and, in the  discretion of the  Committee,  the
number of Shares, if any, tendered to the Company to satisfy any withholding tax
liability  arising in  connection  with the exercise of the original  Option.  A
Restoration  Option shall have a per share  exercise price of not less than 100%
of the per  Share  Fair  Market  Value on the date of grant of such  Restoration
Option,  a term not longer than the remaining term of the original Option at the
time of exercise  thereof,  and such other terms and conditions as the Committee
in its sole discretion shall determine.

                  SECTION 7.  Stock Appreciation Rights.

                  (a)  Grant.  Subject  to  the  provisions  of  the  Plan,  the
Committee shall have sole and complete  authority to determine the  Participants
to whom Stock Appreciation  Rights shall be granted,  the number of Shares to be
covered by each Stock  Appreciation Right Award, the grant price thereof and the
conditions  and   limitations   applicable  to  the  exercise   thereof.   Stock
Appreciation  Rights may be granted in tandem with another Award, in addition to
another  Award,   or  freestanding   and  unrelated  to  another  Award.   Stock
Appreciation  Rights  granted in tandem  with or in  addition to an Award may be
granted  either  at the  same  time  as the  Award  or at a  later  time.  Stock
Appreciation  Rights  shall not be  exercisable  earlier  than six months  after
grant,  and except for Stock  Appreciation  Rights which are Substitute  Awards,
shall have an exercise  price of not less than 100% of the Fair Market  Value of
the  Shares on the date of grant or, in the case of a Stock  Appreciation  Right
granted in tandem with or in addition to another Award,  at the time of grant of
such related Award.

<PAGE>

                  (b)  Exercise and Payment.  A Stock  Appreciation  Right shall
entitle  the  Participant  to receive an amount  equal to the excess of the Fair
Market Value of a Share on the date of exercise of the Stock  Appreciation Right
over the grant price thereof, provided that the Committee may for administrative
convenience  determine that, with respect to any Stock  Appreciation Right which
is not related to an Incentive  Stock Option and which can only be exercised for
cash during  limited  periods of time in order to satisfy the conditions of Rule
16b-3,  the  exercise  of such Stock  Appreciation  Right for cash  during  such
limited  period shall be deemed to occur for all  purposes  hereunder on the day
during such  limited  period on which the Fair Market Value of the Shares is the
highest. Any such determination by the Committee may be changed by the Committee
from time to time and may  govern  the  exercise  of Stock  Appreciation  Rights
granted  prior  to  such  determination  as well as  Stock  Appreciation  Rights
thereafter  granted.  The Committee shall determine whether a Stock Appreciation
Right shall be settled in cash, Shares or a combination of cash and Shares.

                  (c) Other  Terms and  Conditions.  Subject to the terms of the
Plan and any applicable  Award Agreement,  the Committee shall determine,  at or
after the grant of a Stock  Appreciation  Right, the term,  methods of exercise,
methods and form of settlement,  and any other terms and conditions of any Stock
Appreciation  Right.  Any such  determination by the Committee may be changed by
the  Committee  from  time  to  time  and  may  govern  the  exercise  of  Stock
Appreciation  Rights granted or exercised prior to such determination as well as
Stock  Appreciation  Rights granted or exercised  thereafter.  The Committee may
impose such conditions or restrictions on the exercise of any Stock Appreciation
Right as it shall deem appropriate.

                  SECTION 8.  Restricted Stock and Restricted Stock Units.

                  (a)  Grant.  Subject  to  the  provisions  of  the  Plan,  the
Committee shall have sole and complete  authority to determine the  Participants
to whom Shares of Restricted  Stock and Restricted Stock Units shall be granted,
the number of Shares of Restricted  Stock and/or the number of Restricted  Stock
Units to be granted  to each  Participant,  the  duration  of the period  during
which, and the conditions under which, the Restricted Stock and Restricted Stock
Units may be  forfeited to the Company,  and the other terms and  conditions  of
such  Awards.

<PAGE>

                  (b)  Transfer  Restrictions.  Shares of  Restricted  Stock and
Restricted  Stock  Units  may not be sold,  assigned,  transferred,  pledged  or
otherwise  encumbered,  except,  in the case of Restricted Stock, as provided in
the Plan or the applicable Award Agreements.  Certificates  issued in respect of
Shares of Restricted  Stock shall be  registered in the name of the  Participant
and  deposited  by such  Participant,  together  with a stock power  endorsed in
blank, with the Company.  Upon the lapse of the restrictions  applicable to such
Shares of Restricted  Stock, the Company shall deliver such  certificates to the
Participant or the Participant's legal representative.

                  (c)  Payment.  Each  Restricted  Stock Unit shall have a value
equal to the Fair Market Value of a Share.  Restricted Stock Units shall be paid
in cash, Shares,  other securities or other property,  as determined in the sole
discretion  of the  Committee,  upon the  lapse of the  restrictions  applicable
thereto,  or  otherwise  in  accordance  with the  applicable  Award  Agreement.
Dividends  paid on any Shares of  Restricted  Stock may be paid  directly to the
Participant, or may be reinvested in additional Shares of Restricted Stock or in
additional  Restricted  Stock Units,  as determined by the Committee in its sole
discretion.

                  SECTION 9.  Performance Awards.

                  (a)  Grant.   The  Committee  shall  have  sole  and  complete
authority to determine the Participants who shall receive a "Performance Award",
which shall consist of a right which is (i) denominated in cash or Shares,  (ii)
valued,  as determined by the Committee,  in accordance  with the achievement of
such performance  goals during such  performance  periods as the Committee shall
establish,  and (iii)  payable  at such  time and in such form as the  Committee
shall determine.

                  (b) Terms and Conditions. Subject to the terms of the Plan and
any applicable  Award  Agreement,  the Committee shall determine the performance
goals  to  be  achieved  during  any  performance  period,  the  length  of  any
performance  period, the amount of any Performance Award and the amount and kind
of any payment or transfer to be made pursuant to any Performance Award.

<PAGE>

                  (c) Payment of Performance  Awards.  Performance Awards may be
paid in a lump sum or in  installments  following  the close of the  performance
period or, in accordance  with  procedures  established by the  Committee,  on a
deferred basis.

                  SECTION 10. Other Stock-Based Awards.

                  (a) General.  The Committee  shall have  authority to grant to
eligible  Participants an "Other Stock-Based Award",  which shall consist of any
right which is (i) not an Award described in Sections 6 through 9 above and (ii)
an Award of Shares or an Award  denominated or payable in, valued in whole or in
part by reference to, or otherwise  based on or related to,  Shares  (including,
without  limitation,  securities  convertible  into  Shares),  as  deemed by the
Committee to be consistent with the purposes of the Plan; provided that any such
rights must comply,  to the extent deemed desirable by the Committee,  with Rule
16b-3 and  applicable  law.  Subject to the terms of the Plan and any applicable
Award  Agreement,  the Committee shall determine the terms and conditions of any
such Other Stock-Based  Award.  Except in the case of an Other Stock-Based Award
that is a  Substitute  Award,  the price at which  securities  may be  purchased
pursuant  to any  Other  Stock-Based  Award  granted  under  this  Plan,  or the
provision,  if any,  of any such  Award that is  analogous  to the  purchase  or
exercise  price,  shall  not be less  than 85% of the Fair  Market  Value of the
securities to which such Award relates on the date of grant.

                  (b) Dividend Equivalents.  In the sole and complete discretion
of the Committee,  an Award,  whether made as an Other  Stock-Based  Award under
this Section 10 or as an Award granted  pursuant to Sections 6 through 9 hereof,
may provide the Participant with dividends or dividend  equivalents,  payable in
cash, Shares, other securities or other property on a current or deferred basis.

                  SECTION 11.  Amendment and Termination.

                  (a)  Amendments  to the  Plan.  The Board  may  amend,  alter,
suspend,  discontinue, or terminate the Plan or any portion thereof at any time;
provided that no such  amendment,  alteration,  suspension,  discontinuation  or
termination  shall be made  without  stockholder  approval  if such  approval is
necessary to comply with any tax or regulatory requirement,  including for these
purposes any approval  requirement  which is a prerequisite for exemptive relief
from Section 16(b) of the Exchange Act. Notwithstanding anything to the contrary
herein,  the  Committee may amend the Plan in such manner as may be necessary so
as to have the Plan conform with local rules and regulations in any jurisdiction
outside the United States.

<PAGE>

                  (b)  Amendments  to  Awards.   The  Committee  may  waive  any
conditions or rights under, amend any terms of, or alter, suspend,  discontinue,
cancel  or  terminate,   any  Award   theretofore   granted,   prospectively  or
retroactively; provided that any such waiver, amendment, alteration, suspension,
discontinuance,  cancellation or termination that would impair the rights of any
Participant or any holder or beneficiary of any Award theretofore  granted shall
not to that extent be effective without the consent of the affected Participant,
holder or beneficiary.

                  (c)  Adjustment  of  Awards  Upon the  Occurrence  of  Certain
Unusual or  Nonrecurring  Events.  The  Committee is hereby  authorized  to make
adjustments in the terms and conditions of, and the criteria included in, Awards
in recognition of unusual or nonrecurring events (including, without limitation,
the  events  described  in Section  4(b)  hereof)  affecting  the  Company,  any
Affiliate,  or the financial  statements of the Company or any Affiliate,  or of
changes in applicable laws, regulations, or accounting principles,  whenever the
Committee  determines that such  adjustments are appropriate in order to prevent
dilution or  enlargement  of the benefits or potential  benefits  intended to be
made available under the Plan.

                  (d)  Cancellation.  Any  provision  of this  Plan or any Award
Agreement to the contrary  notwithstanding,  the  Committee  may cause any Award
granted  hereunder  to be  cancelled  in  consideration  of a  cash  payment  or
alternative  Award made to the holder of such cancelled  Award equal in value to
the Fair Market Value of such cancelled Award.

                  SECTION 12.  General Provisions.

                  (a)  Transferability.

                           (i)      Except as is  specifically  provided for  in
                                    any Award  approved by the  Committee  or as
                                    otherwise   specifically  permitted  by  the
                                    Committee  each Award and each  right  under
                                    any Award,  shall be exercisable only by the
                                    Participant    during   the    Participant's
                                    lifetime, or if permissible under applicable
                                    law, by the Participant's  guardian or legal
                                    representative    or   by   the   transferee
                                    receiving such Award pursuant to a qualified
                                    domestic   relations  order   ("QDRO"),   as
                                    determined by the Committee.

<PAGE>

                            (ii)    Except as specifically  provided  for in any
                                    Award approved by the Committee or otherwise
                                    specifically  permitted  by  the  Committee,
                                    except as may be no Award that constitutes a
                                    "derivative   security",   for  purposes  of
                                    Section  16 of  the  Exchange  Act,  may  be
                                    assigned, alienated, pledged, attached, sold
                                    or otherwise  transferred or encumbered by a
                                    Participant otherwise than by will or by the
                                    laws of descent and distribution or pursuant
                                    to  a   QDRO,   and   any   such   purported
                                    assignment,  alienation, pledge, attachment,
                                    sale,  transfer or encumbrance shall be void
                                    and unenforceable against the Company or any
                                    Affiliate;   provided,   however   that  the
                                    designation  of  a  beneficiary   shall  not
                                    constitute   an   assignment,    alienation,
                                    pledge,   attachment,   sale,   transfer  or
                                    encumbrance.

                  (b) No Rights to Awards.  No Participant  shall have any claim
to be granted any Award,  and there is no obligation for uniformity of treatment
of Participants, or holders or beneficiaries of Awards. The terms and conditions
of Awards need not be the same with respect to each recipient.

                  (c) Share  Certificates.  All certificates for Shares or other
securities of the Company or any Affiliate  delivered under the Plan pursuant to
any Award or the exercise  thereof shall be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under the Plan or the
rules,  regulations,  and other  requirements  of the  Securities  and  Exchange
Commission,  any stock  exchange or automated  quotation  system upon which such
Shares or other securities are then listed,  and any applicable Federal or state
laws,  and the  Committee  may cause a legend or  legends  to be put on any such
certificates to make appropriate reference to such restrictions.

<PAGE>

                  (d)  Delegation.   Subject  to  the  terms  of  the  Plan  and
applicable  law, the  Committee may delegate to one or more officers or managers
of the Company or any Affiliate, or to a committee of such officers or managers,
the  authority,  subject to such terms and  limitations  as the Committee  shall
determine, to grant Awards to, or to cancel, modify or waive rights with respect
to, or to alter, discontinue,  suspend, or terminate Awards held by Participants
who are not  officers or  directors of the Company for purposes of Section 16 of
the Exchange Act, or any  successor  section  thereto,  or who are otherwise not
subject to such Section.

                  (e)  Withholding.  A participant may be required to pay to the
Company or any Affiliate  and the Company or any Affiliate  shall have the right
and is hereby  authorized  to withhold  from any Award,  from any payment due or
transfer  made  under any Award or under  the Plan or from any  compensation  or
other  amount  owing  to a  Participant  the  amount  (in  cash,  Shares,  other
securities,  other Awards or other property) of any applicable withholding taxes
in respect of an Award, its exercise,  or any payment or transfer under an Award
or under  the Plan and to take such  other  action  as may be  necessary  in the
opinion of the Company to satisfy all obligations for the payment of such taxes.
The Committee may provide for  additional  cash payments to holders of Awards to
defray or offset any tax arising from the grant,  vesting,  exercise or payments
of any Award.

                  (f) Award Agreements.  Each Award hereunder shall be evidenced
by an Award  Agreement  which shall be  delivered to the  Participant  and shall
specify the terms and conditions of the Award and any rules applicable  thereto,
including but no limited to the effect on such Award of the death, retirement or
other  termination of employment of a Participant  and the effect,  if any, of a
change in control of the Company.

<PAGE>

                  (g) No  Limit  on  Other  Compensation  Arrangements.  Nothing
contained in the Plan shall prevent the Company or any  Affiliate  from adopting
or continuing  in effect other  compensation  arrangements,  which may, but need
not, provide for the grant of options,  restricted stock, Shares and other types
of Awards  provided  for  hereunder  (subject  to  shareholder  approval if such
approval is required),  and such arrangements may be either generally applicable
or applicable only in specific cases.

                  (h) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant  the right to be retained in the employ of the
Company or any Affiliate.  Further,  the Company or an Affiliate may at any time
dismiss a  Participant  from  employment,  free from any  liability or any claim
under the Plan, unless otherwise  expressly provided in the Plan or in any Award
Agreement.

                  (i) No Rights as Stockholder. Subject to the provisions of the
applicable  Award,  no  Participant  or holder or beneficiary of any Award shall
have any rights as a  stockholder  with respect to any Shares to be  distributed
under  the  Plan  until  he or  she  has  become  the  holder  of  such  Shares.
Notwithstanding the foregoing, in connection with each grant of Restricted Stock
hereunder,  the  applicable  Award  shall  specify  if and to  what  extent  the
Participant  shall not be entitled to the rights of a stockholder  in respect of
such Restricted Stock.

                  (j) Governing Law. The validity,  construction,  and effect of
the  Plan and any  rules  and  regulations  relating  to the Plan and any  Award
Agreement  shall be determined  in accordance  with the laws of the State of New
York.

                  (k) Severability. If any provision of the Plan or any Award is
or  becomes  or is  deemed  to be  invalid,  illegal,  or  unenforceable  in any
jurisdiction or as to any Person or Award,  or would  disqualify the Plan or any
Award under any law deemed applicable by the Committee,  such provision shall be
construed or deemed amended to conform the  applicable  laws, or if it cannot be
construed or deemed  amended  without,  in the  determination  of the Committee,
materially altering the intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction,  Person or Award and the remainder of the Plan
and any such Award shall remain in full force and effect.

<PAGE>

                  (l) Other Laws.  The Committee may refuse to issue or transfer
any  Shares  or  other  consideration  under  an Award  if,  acting  in its sole
discretion,  it determines  that the issuance or transfer of such Shares or such
other  consideration  might violate any  applicable law or regulation or entitle
the Company to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant, other holder or beneficiary in
connection  with the  exercise of such Award  shall be promptly  refunded to the
relevant Participant, holder or beneficiary.  Without limiting the generality of
the foregoing, no Award granted hereunder shall be construed as an offer to sell
securities of the Company,  and no such offer shall be  outstanding,  unless and
until the Committee in its sole  discretion has determined  that any such offer,
if made,  would be in compliance  with all applicable  requirements  of the U.S.
federal securities laws.

                  (m) No Trust or Fund  Created.  Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other  Person.  To the extent  that any  Person  acquires a right to receive
payments  from the Company or any  Affiliate  pursuant  to an Award,  such right
shall be no greater  than the right of any  unsecured  general  creditor  of the
Company or any Affiliate.

                  (n) No Fractional Shares. No fractional Shares shall be issued
or  delivered  pursuant  to the  Plan  or any  Award,  and the  Committee  shall
determine  whether cash,  other  securities,  or other property shall be paid or
transferred in lieu of any fractional  Shares or whether such fractional  Shares
or any rights thereto shall be cancelled, terminated, or otherwise eliminated.

                  (o)  Conformity  to  Securities  Laws. It is the intent of the
Company that the Plan shall comply in all respects with applicable provisions of
Rule 16b-3 under the Exchange Act, so that any Award granted to a Participant or
other  transaction  incident  thereto  by a  Participant  who is  subject to the
reporting  requirements of Section 16(a) of the Exchange Act shall not result in
short-swing  profit  liability  under Section 16(b) (except for any  transaction
exempted under alternative Exchange Act rules or intended by such Participant to
be a non-exempt transaction).  Accordingly, if any provision of this Plan or any
agreement  relating to an Award does not comply with such  requirements  of Rule
16b-3 as then applicable to any such  transaction so that the Participant  would
be subject to Section  16(b)  liability,  such  provision  shall be construed or
deemed amended to the extent necessary to conform to such requirements,  and the
Participant shall be deemed to have consented to such construction or amendment.

<PAGE>

                  (p)   Headings.   Headings  are  given  to  the  Sections  and
subsections  of the Plan solely as a convenience to facilitate  reference.  Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of the Plan or any provision thereof.

                  SECTION 13.  Term of the Plan.

                  (a) Effective Date. The Plan shall be effective as of the date
of its approval by the stockholders of the Company.

                  (b) Expiration  Date. No Award shall be granted under the Plan
after  December 31, 2008;  provided that the authority for grant of  Restoration
Options hereunder in accordance with Section 6(e) shall continue, subject to the
provisions  of  Section  4, as  long as any  Option  granted  hereunder  remains
outstanding. Unless otherwise expressly provided in the Plan or in an applicable
Award Agreement, any Award granted hereunder may, and the authority of the Board
or the Committee to amend, alter, adjust, suspend, discontinue, or terminate any
such Award or to waive any  conditions  or rights  under any such  Award  shall,
continue after December 31, 2008.

<PAGE>

[As  amended by the Board of  Directors  on August 8, 1995 and  approved  by the
stockholders  at the Annual  Meeting on September 22, 1995 and as amended by the
Board of Directors on May 17, 2001 and approved by the  stockholders on June 21,
2001 and as amended by the Board of  Directors  on December 21, 2004 and subject
to approval by the  stockholders at an annual meeting to be held on December 16,
2004]