UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                               -------------------

                                    FORM 8-K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

      Date of Report (Date of Earliest Event Reported): September 29, 2005

                           FREQUENCY ELECTRONICS, INC.
             (Exact name of registrant as specified in its charter)


          Delaware                   1-8061                    11-1986657
(State or other jurisdiction      (Commission               (I.R.S. Employer
      of incorporation)           File Number)             Identification No.)

55 Charles Lindbergh Blvd., Mitchel Field, NY                     11553
   (Address of principal executive offices)                    (Zip Code)

                                 (516) 794-4500
              (Registrant's telephone number, including area code)

                                      NONE
      (Former name, address and fiscal year, if changed since last report)
       ------------------------------------------------------------------

     Check the  appropriate  box below if the Form 8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

|_|  Written  communications  pursuant to Rule 425 under the  Securities Act (17
     CFR 230.425)

|_|  Soliciting  material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
     240.14a-12)

|_|  Pre-commencement   communications  pursuant  to  Rule  14d-2(b)  under  the
     Exchange Act (17 CFR 240.14d-2(b))

|_|  Pre-commencement   communications  pursuant  to  Rule  13e-4(c)  under  the
     Exchange Act (17 CFR 240.13e-4(c))

                               Page 1 of 22 pages
<PAGE>


ITEM 1.01.    ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT


     On September 29, 2005, the Stockholders of Frequency Electronics, Inc. (the
"Company") approved the Frequency  Electronics,  Inc. 2005 Stock Award Plan (the
"Plan"). The plan became effective as of June 23, 2005 and will remain in effect
for no more than ten years from the date of the later of (i) the Effective  Date
and (ii) the date an  increase  in the number of shares  reserved  for  issuance
under the Plan is approved by the Company's  Board of Directors  (the  "Board").
The Board has full  discretion  and  authority to determine  the  employees  and
directors  eligible to participate in the Plan and the times and types of awards
to be granted. Under the Plan, the Board may grant awards of non-qualified stock
options,  incentive stock options, stock appreciation rights,  restricted stock,
stock  units,  stock  granted as a bonus or in lieu of another  award,  dividend
equivalent,  or other  stock-based  or  performance  awards.  A total of 400,000
shares of the Company's  common stock have been reserved for issuance  under the
Plan, as may be adjusted by the terms of the Plan.

     Following  stockholder  approval  of the  Plan,  the  Plan was  amended  to
prohibit  the  repricing  of  any  options,  other  than  in  connection  with a
capitalization adjustment, unless stockholder approval is obtained.

     A copy of the Plan, as amended,  is attached  hereto as Exhibit 10.1 and is
incorporated herein by reference. Additional information about the Plan can also
be found in the  Company's  definitive  proxy  statement on Schedule 14A for the
Annual  Meeting of  Stockholders,  as filed  with the  Securities  and  Exchange
Commission  on August 26, 2005, in the section of the proxy  statement  entitled
"Approval of the Frequency Electronics, Inc. 2005 Stock Award Plan."



ITEM 9.01 (c)   EXHIBITS.

     10.1 Frequency Electronics, Inc. 2005 Stock Award Plan, as amended



<PAGE>


                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.


                                               FREQUENCY ELECTRONICS, INC.

                                                 By: /s/ Alan Miller
                                                     ---------------
                                                        Alan Miller
                                                        Chief Financial Officer
                                                        and Treasurer

Dated: October 4, 2005



<PAGE>


                                                                    Exhibit 10.1

                           Frequency Electronics, Inc.

                              2005 Stock Award Plan

     1.  Purpose.  The purpose of this 2005 Stock Award Plan (the  "Plan") is to
assist Frequency  Electronics,  Inc., a Delaware corporation (the "Company") and
its  Related  Entities  in  attracting,   motivating,  retaining  and  rewarding
high-quality  Employees,  officers,  Directors and  Consultants by enabling such
persons to acquire or increase a proprietary interest in the Company in order to
strengthen  the  mutuality of interests  between such persons and the  Company's
shareholders,  and providing such persons with annual and long-term  performance
incentives to expend their maximum efforts in the creation of shareholder value.
The Plan is intended to qualify certain  compensation awarded under the Plan for
tax deductibility under Section 162(m) of the Code (as hereafter defined) to the
extent deemed  appropriate by the Committee (or any successor  committee) of the
Board.

     2.  Definitions.  For purposes of the Plan,  the  following  terms shall be
defined as set forth  below,  in  addition  to such  terms  defined in Section 1
hereof.

          (a)  "Applicable   Laws"  means  the  requirements   relating  to  the
     administration  of equity  compensation  plans under U.S.  state  corporate
     laws,  U.S.  federal and state  securities  laws,  the Code,  the rules and
     regulations of any stock exchange upon which the Common Stock is listed and
     the applicable laws of any foreign country or jurisdiction where Awards are
     granted under the Plan.

          (b) "Award" means any award granted pursuant to the terms of this Plan
     including,  an Option,  Stock Appreciation  Right,  Restricted Stock, Stock
     Units,  Stock  granted  as a bonus or in lieu of  another  award,  Dividend
     Equivalent, Other Stock-Based Award or Performance Award, together with any
     other right or interest, granted to a Participant under the Plan.

          (c)  "Beneficiary"  means the person,  persons,  trust or trusts which
     have been  designated  by a Participant  in his or her most recent  written
     beneficiary  designation  filed with the  Committee to receive the benefits
     specified under the Plan upon such  Participant's  death or to which Awards
     or other  rights  are  transferred  if and to the  extent  permitted  under
     Section  10(b)  hereof.  If,  upon  a  Participant's  death,  there  is  no
     designated Beneficiary or surviving designated  Beneficiary,  then the term
     Beneficiary means the person,  persons, trust or trusts entitled by will or
     the laws of descent and distribution to receive such benefits.

          (d)  "Beneficial   Owner",   "Beneficially   Owning"  and  "Beneficial
     Ownership"  shall  have the  meanings  ascribed  to such terms in Rule 13d3
     under the Exchange Act and any successor to such Rule.

          (e) "Board" means the Company's Board of Directors.

          (f)  "Cause"  shall,  with  respect  to  any  Participant,   have  the
     equivalent  meaning  (or the same  meaning as "cause" or "for  cause")  set
     forth in any employment  agreement  between the Participant and the Company
     or a Related  Entity or, in the  absence of any such  agreement,  such term
     shall mean (i) the failure by the  Participant to perform his or her duties
     as assigned by the Company (or a Related  Entity) in a  reasonable  manner,
     (ii) any violation or breach by the  Participant  of his or her  employment
     agreement  with the  Company  (or a  Related  Entity),  if any,  (iii)  any
     violation  or  breach  by  the  Participant  of  his  or  her  confidential
     information  and  invention  assignment  agreement  with the  Company (or a
     Related  Entity),  if any, (iv) any act by the Participant of dishonesty or
     bad faith  with  respect  to the  Company  (or a Related  Entity),  (v) any
     material  violation  or breach by the  Participant  of the  Company's  or a
     Related Entity's policy for employee  conduct,  if any, (vi) any act by the
     Participant  of  dishonesty  or bad faith with respect to the Company (or a
     Related Entity),  (vii) use of alcohol,  drugs or other similar  substances
     affecting the Participant's  work performance,  or (viii) the commission by
     the Participant of any act,  misdemeanor,  or crime reflecting  unfavorably
     upon the Participant or the Company.  The good faith  determination  by the
     Committee of whether the Participant's Continuous Service was terminated by
     the  Company  for  "Cause"  shall be final  and  binding  for all  purposes
     hereunder.

          (g) "Change in Control"  means and shall be deemed to have occurred on
     the earliest of the following dates:

               (i) the  date on which  any  "person"  (as  such  term is used in
          Sections  13(d) and 14(d) of the  Exchange  Act)  obtains  "beneficial
          ownership"  (as  defined  in  Rule  13d-3  of the  Exchange  Act) or a
          pecuniary  interest fifty percent (50%) or more of the combined voting
          power of the Company's then outstanding securities ("Voting Stock");

               (ii) the consummation of a merger, consolidation,  reorganization
          or  similar  transaction  other than a  transaction:  (1) (a) in which
          substantially  all of the holders of  Company's  Voting  Stock hold or
          receive  directly or  indirectly  fifty  percent  (50%)or  more of the
          voting stock of the resulting entity or a parent company  thereof,  in
          substantially  the same  proportions as their ownership of the Company
          immediately  prior to the transaction;  or (2) in which the holders of
          Company's  capital stock  immediately  before such  transaction  will,
          immediately after such transaction, hold as a group on a fully diluted
          basis the ability to elect at least a majority of the directors of the
          surviving corporation (or a parent company);

               (iii) there is consummated a sale,  lease,  exclusive  license or
          other  disposition  of all or  substantially  all of the  consolidated
          assets of the Company and its Subsidiaries,  other than a sale, lease,
          license  or  other  disposition  of  all or  substantially  all of the
          consolidated  assets of the Company and its Subsidiaries to an entity,
          fifty percent (50%) or more of the combined voting power of the voting
          securities  of which  are  owned by  shareholders  of the  Company  in
          substantially  the same  proportions as their ownership of the Company
          immediately prior to such sale, lease,  license or other  disposition;
          or

               (iv)  individuals  who,  on the date this Plan is  adopted by the
          Board,  are Directors (the "Incumbent  Board") cease for any reason to
          constitute at least a majority of the  Directors;  provided,  however,
          that if the  appointment  or election (or  nomination for election) of
          any new Director was approved or recommended by a majority vote of the
          members of the Incumbent  Board then still in office,  such new member
          shall,  for purposes of this Plan,  be  considered  as a member of the
          Incumbent Board.

     For purposes of  determining  whether a Change in Control has  occurred,  a
transaction includes all transactions in a series of related  transactions,  and
terms used in this  definition  but not defined are used as defined in the Plan.
The term Change in Control  shall not include a sale of assets,  merger or other
transaction effected exclusively for the purpose of changing the domicile of the
Company.

     Notwithstanding  the  foregoing or any other  provision  of this Plan,  the
definition of Change in Control (or any analogous term) in an individual written
agreement  between the Company and the Participant shall supersede the foregoing
definition   with  respect  to  Awards  subject  to  such  agreement  (it  being
understood, however, that if no definition of Change in Control or any analogous
term is set  forth  in such  an  individual  written  agreement,  the  foregoing
definition shall apply).

          (h) "Code"  means the Internal  Revenue Code of 1986,  as amended from
     time to time, including regulations thereunder and successor provisions and
     regulations thereto.

          (i)  "Committee"  means  a  committee   designated  by  the  Board  to
     administer  the  Plan  with  respect  to at  least  a group  of  Employees,
     Directors or Consultants.

          (j)  "Consultant"  means  any  person  (other  than an  Employee  or a
     Director,  solely  with  respect to  rendering  services  in such  person's
     capacity as a director) who is engaged by the Company or any Related Entity
     to render  consulting  or advisory  services to the Company or such Related
     Entity.

          (k) "Continuous Service" means uninterrupted  provision of services to
     the Company as an Employee, a Director, or a Consultant. Continuous Service
     shall not be considered to be  interrupted  in the case of (i) any approved
     leave of absence,  (ii) transfers among the Company,  any Related Entities,
     or any  successor  entities,  as  either  an  Employee,  a  Director,  or a
     Consultant, or (iii) any change in status as long as the individual remains
     in the service of the Company or a Related Entity as either an Employee,  a
     Director,  or a  Consultant  (except as  otherwise  provided  in the Option
     Agreement). An approved leave of absence shall include sick leave, military
     leave, or any other authorized personal leave.

          (l)  "Corporate  Transaction"  means  the  occurrence,   in  a  single
     transaction or in a series of related  transactions,  of any one or more of
     the following events:

               (i) a sale, lease,  exclusive license or other disposition of all
          or substantially all, as determined by the Board in its discretion, of
          the consolidated assets of the Company and its Subsidiaries;

               (ii) a sale or other  disposition  of more  than  twenty  percent
          (20%) of the outstanding securities of the Company; or

               (iii)  a  merger,   consolidation,   reorganization   or  similar
          transaction, whether or not the Company is the surviving corporation.

          (m)  "Covered  Employee"  means an  Eligible  Person  who is a Covered
     Employee as specified in Section 7(d) of the Plan.

          (n)  "Director"  means a member of the Board or the board of directors
     of any Related Entity.

          (o) "Disability"  means a permanent and total  disability  (within the
     meaning of Section 22(e) of the Code),  as  determined by a medical  doctor
     satisfactory to the Committee.

          (p)  "Dividend  Equivalent"  means a right,  granted to a  Participant
     under Section 6(g) hereof,  to receive cash,  Stock,  other Awards or other
     property  equal in value to  dividends  paid with  respect  to a  specified
     number of Shares, or other periodic payments.

          (q)  "Effective  Date" means the  effective  date of this Plan,  which
     shall be the  date  this  Plan is  adopted  by the  Board,  subject  to the
     approval of the shareholders of the Company.

          (r)  "Eligible  Person"  means  all  Employees  (including  officers),
     Directors  and  Consultants  of the Company or of any Related  Entity.  The
     foregoing  notwithstanding,  only employees of the Company,  the Parent, or
     any  Subsidiary  shall be Eligible  Persons for purposes of  receiving  any
     Incentive Stock Options.  An Employee on leave of absence may be considered
     as still in the employ of the Company or a Related  Entity for  purposes of
     eligibility for participation in the Plan.

          (s) "Employee" means any person, including an officer or Director, who
     is an  employee  of the  Company or any  Related  Entity.  The Payment of a
     director's  fee by the Company or a Related  Entity shall not be sufficient
     to constitute "employment" by the Company.

          (t)  "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
     amended  from  time to  time,  including  rules  thereunder  and  successor
     provisions and rules thereto.

          (u) "Executive  Officer" means an executive  officer of the Company as
     defined under the Exchange Act.

          (v) "Fair Market  Value" means the fair market value of Stock,  Awards
     or  other  property  as  determined  by the  Plan  Administrator,  or under
     procedures   established  by  the  Plan  Administrator.   Unless  otherwise
     determined by the Plan Administrator,  the Fair Market Value of Stock as of
     any  given  date,  after  which  the  Stock is  publicly  traded on a stock
     exchange or market, shall be the closing sale price per share reported on a
     consolidated  basis for stock  listed on the  principal  stock  exchange or
     market on which Stock is traded on the date as of which such value is being
     determined or, if there is no sale on that date,  then on the last previous
     day on which a sale was reported.

          (w) "Good Reason"  shall,  with respect to any  Participant,  have the
     equivalent  meaning  (or the same  meaning  as "good  reason"  or "for good
     reason") set forth in any employment  agreement between the Participant and
     the Company or a Related  Entity or, in the absence of any such  agreement,
     such term shall mean (i) the  assignment to the  Participant  of any duties
     inconsistent  in any respect  with the  Participant's  position  (including
     status, offices, titles and reporting requirements),  authority,  duties or
     responsibilities  as assigned by the Company (or a Related Entity),  or any
     other  action by the  Company  (or a Related  Entity)  which  results  in a
     diminution  in  such  position,   authority,  duties  or  responsibilities,
     excluding  for this  purpose an  isolated,  insubstantial  and  inadvertent
     action not taken in bad faith and which is  remedied  by the  Company (or a
     Related  Entity)  promptly  after  receipt of notice  thereof  given by the
     Participant;  (ii) any  failure  by the  Company  (or a Related  Entity) to
     comply with its obligations to the  Participant as agreed upon,  other than
     an isolated,  insubstantial  and  inadvertent  failure not occurring in bad
     faith and which is remedied by the Company (or a Related  Entity)  promptly
     after  receipt  of  notice  thereof  given by the  Participant;  (iii)  the
     Company's (or Related  Entity's)  requiring the  Participant to be based at
     any  office  or  location  more  than  fifty  miles  from the  location  of
     employment as of the date of Award,  except for travel reasonably  required
     in  the  performance  of  the  Participant's  responsibilities;   (iv)  any
     purported  termination  by  the  Company  (or  a  Related  Entity)  of  the
     Participant's  Continuous  Service  otherwise  than for Cause as defined in
     Section  2(f), or by reason of the  Participant's  Disability as defined in
     Section  2(o),  prior to the  Expiration  Date; or (v) any reduction in the
     Participant's base salary.

          (x)  "Incentive   Stock  Option"  means  any  Option  intended  to  be
     designated  as an incentive  stock option within the meaning of Section 422
     of the Code or any successor provision thereto.

          (y) "Non-Employee Director" means a Director of the Company who is not
     an Employee.

          (z) "Option" means a right granted to a Participant under Section 6(b)
     hereof,  to  purchase  Stock or other  Awards at a specified  price  during
     specified time periods.

          (aa) "Other Stock-Based  Awards" means Awards granted to a Participant
     pursuant to Section 6(h) hereof.

          (bb) "Parent" means any corporation (other than the Company),  whether
     now or hereafter existing, in an unbroken chain of corporations ending with
     the  Company,  if each of the  corporations  in the chain  (other  than the
     Company) owns stock  possessing  50 percent or more of the combined  voting
     power  of all  classes  of stock in one of the  other  corporations  in the
     chain.

          (cc) "Participant"  means a person who has been granted an Award under
     the Plan which remains outstanding,  including a person who is no longer an
     Eligible Person.

          (dd) "Performance Award" means a right,  granted to an Eligible Person
     under Section 7 hereof,  to receive Awards based upon performance  criteria
     specified by the Plan Administrator. (ee) "Person" has the meaning ascribed
     to such term in Section  3(a)(9) of the  Exchange  Act and used in Sections
     13(d) and 14(d) thereof,  and shall include a "group" as defined in Section
     12(d) thereof.

          (ff) "Plan  Administrator"  means the Board or any Committee delegated
     by the Board to administer the Plan.

          (gg) "Prior Stock Plans" means all prior equity  compensation plans of
     the Company,  excluding all of the Company's  qualified  retirement  plans,
     including,  but not limited to, the 2001  Incentive  Stock Option Plan, the
     Senior  Executive  Stock Option Plan, the  Restricted  Stock Plan, the 1997
     Independent  Contractor  Stock Option Plan,  the 1993  Non-Statutory  Stock
     Option Plan and the 1987 Incentive Stock Plan.

          (hh) "Related  Entity" means any Parent,  Subsidiary and any business,
     corporation,  partnership,  limited  liability  company or other  entity in
     which the Company, a Parent or a Subsidiary,  directly or indirectly, holds
     a substantial ownership interest.

          (ii)  "Restricted  Stock" means Stock granted to a  Participant  under
     Section 6(d) hereof, that is subject to certain  restrictions and to a risk
     of forfeiture.

          (jj)  "Rule  16b-3" and "Rule  16a-1(c)(3)"  means Rule 16b-3 and Rule
     16a-1(c)(3),  as from time to time in effect and applicable to the Plan and
     Participants,  promulgated by the Securities and Exchange  Commission under
     Section 16 of the Exchange Act.

          (kk) "Shares" means the shares of the Company's  Common Stock, and the
     shares of such other  securities as may be substituted  (or  resubstituted)
     for Stock pursuant to Section 10(c) hereof.

          (ll)  "Stock"  means  the  Company's  Common  Stock,  and  such  other
     securities  as may be  substituted  (or  resubstituted)  for the  Company's
     Common Stock pursuant to Section 10(c) hereof.

          (mm) "Stock Appreciation Right" means a right granted to a Participant
     pursuant to Section 6(c) hereof.

          (nn) "Stock Unit" means a right,  granted to a Participant pursuant to
     Section 6(e) hereof,  to receive Shares,  cash or a combination  thereof at
     the end of a specified period of time.

          (oo)  "Subsidiary"  means any  corporation  (other than the  Company),
     whether now or hereafter  existing,  in an unbroken  chain of  corporations
     beginning with the Company, if each of the corporations other than the last
     corporation in the unbroken chain owns stock  possessing 50 percent or more
     of the total  combined  voting  power of all classes of stock in one of the
     other corporations in such chain.

     3. Administration.

          (a)  Administration  by Board.  The Board  shall  administer  the Plan
     unless and until the Board  delegates  administration  to a  Committee,  as
     provided in Section 3(c).

          (b) Powers of Board.  The Board shall have the power,  subject to, and
     within the limitations of, the express provisions of the Plan:

               (i) To determine from time to time which of the persons  eligible
          under the Plan shall be granted Awards;  when and how each Award shall
          be  granted;  what  type or  combination  of types  of Award  shall be
          granted;  the  provisions  of each Award  granted  (which  need not be
          identical),  including  the  time or  times  when a  person  shall  be
          permitted to receive  Shares  pursuant to an Award;  and the number of
          Shares  with  respect to which an Award  shall be granted to each such
          person.

               (ii) To construe and interpret the Plan and Awards  granted under
          it, and to establish,  amend and revoke rules and  regulations for its
          administration.  The Board, in the exercise of this power, may correct
          any  defect,  omission  or  inconsistency  in the Plan or in any Stock
          Award Agreement, in a manner and to the extent it shall deem necessary
          or expedient to make the Plan fully effective.

               (iii) To amend the Plan or an Award as provided in Section 10(e).

               (iv) To  terminate  or suspend  the Plan as  provided  in Section
          10(e).

               (v)  Generally,  to exercise such powers and to perform such acts
          as the Board  deems  necessary  or  appropriate  to  promote  the best
          interests  of the  Company  and  that  are not in  conflict  with  the
          provisions of the Plan.

          (c) Delegation to Committee.

               (i) General. The Board may delegate administration of the Plan to
          a Committee or Committees of two (2) or more members of the Board, and
          the term "Committee" shall apply to any person or persons to whom such
          authority  has been  delegated.  If  administration  is delegated to a
          Committee,   the  Committee   shall  have,  in  connection   with  the
          administration  of the Plan, the powers  theretofore  possessed by the
          Board,  including the power to delegate to a  subcommittee  any of the
          administrative  powers the  Committee is  authorized  to exercise (and
          references  in  this  Plan to the  Board  shall  thereafter  be to the
          Committee or subcommittee), subject, however, to such resolutions, not
          inconsistent  with the  provisions of the Plan, as may be adopted from
          time to time by the Board.  The Board may abolish the Committee at any
          time and revest in the Board the administration of the Plan.

               (ii) Section 162(m) and Rule 16b-3 Compliance.  In the discretion
          of the Board, the Committee may consist solely of two or more "Outside
          Directors",  in  accordance  with Section  162(m) of the Code,  and/or
          solely of two or more  "Non-Employee  Directors",  in accordance  with
          Rule 16b-3. In addition,  the Board or the Committee may delegate to a
          committee of two or more  members of the Board the  authority to grant
          Awards  to  eligible  persons  who are  either  (a) not  then  Covered
          Employees and are not expected to be Covered  Employees at the time of
          recognition of income  resulting from such Award, (b) not persons with
          respect to whom the Company  wishes to comply with  Section  162(m) of
          the Code, or (c) not then subject to Section 16 of the Exchange Act.

          (d) Effect of Board's Decision.  All  determinations,  interpretations
     and  constructions  made by the Board in good faith shall not be subject to
     review by any  person and shall be final,  binding  and  conclusive  on all
     persons.

          (e) Arbitration. Any dispute or claim concerning any Award granted (or
     not granted)  pursuant to the Plan or any disputes or claims relating to or
     arising out of the Plan shall be fully, finally and exclusively resolved by
     binding and  confidential  arbitration  conducted  pursuant to the rules of
     Judicial  Arbitration  and  Mediation  Services,  Inc.  ("JAMS")  in Nassau
     County,  New York. The Company shall pay all arbitration  fees. In addition
     to any other  relief,  the  arbitrator  may award to the  prevailing  party
     recovery of its  attorneys'  fees and costs.  By  accepting  an Award,  the
     Participant and the Company waive their respective  rights to have any such
     disputes or claims tried by a judge or jury.

          (f)  Limitation  of Liability.  The Committee and the Board,  and each
     member thereof,  shall be entitled to, in good faith,  rely or act upon any
     report  or other  information  furnished  to him or her by any  officer  or
     Employee,  the Company's  independent  auditors,  Consultants  or any other
     agents  assisting  in  the  administration  of  the  Plan.  Members  of the
     Committee  and the  Board,  and  any  officer  or  Employee  acting  at the
     direction or on behalf of the Plan  Administrator,  shall not be personally
     liable  for any  action or  determination  taken or made in good faith with
     respect to the Plan,  and shall,  to the extent  permitted by law, be fully
     indemnified and protected by the Company with respect to any such action or
     determination.

     4. Stock Subject to Plan.

          (a) Limitation on Overall Number of Shares Subject to Awards.  Subject
     to  adjustment  as provided in Section  10(c)  hereof,  the total number of
     Shares  reserved and available for delivery in connection with Awards under
     the Plan shall be 400,000 Shares.  Any Shares  delivered under the Plan may
     consist, in whole or in part, of authorized and unissued shares or treasury
     shares.

          (b) Availability of Shares Not Delivered under Awards.

               (i) If any Shares  subject to an Award are  forfeited,  expire or
          otherwise  terminate  without issuance of such Shares, or any Award is
          settled for cash or  otherwise  does not result in the issuance of all
          or a portion of the Shares subject to such Award, the Shares shall, to
          the  extent  of  such  forfeiture,   expiration,   termination,   cash
          settlement  or  non-issuance,  again be available for Awards under the
          Plan,  subject to Section  4(b)(iv) below. If any Shares subject to an
          award under the Prior Stock Plans are  forfeited,  expire or otherwise
          terminate  without  issuance  of such  Shares,  or any award under the
          Prior Stock Plans is settled for cash or otherwise  does not result in
          the issuance of all or a portion of the Shares  subject to such award,
          the  Shares  shall,  to the  extent  of such  forfeiture,  expiration,
          termination,  cash settlement or non-issuance, be available for Awards
          under the Plan, subject to Section 4(b)(iv) below.

               (ii) If any Shares issued pursuant to an Award are forfeited back
          to or repurchased by the Company,  including,  but not limited to, any
          repurchase or  forfeiture  caused by the failure to meet a contingency
          or condition required for the vesting of such shares,  then the Shares
          not  acquired  under  such  Award  shall  revert to and  again  become
          available  for issuance  under the Plan,  subject to Section  4(b)(iv)
          below. If any Shares issued pursuant to an award under the Prior Stock
          Plans are forfeited back to or repurchased by the Company,  including,
          but not limited to, any repurchase or forfeiture caused by the failure
          to meet a  contingency  or condition  required for the vesting of such
          shares,  then the Shares not  acquired  under such award shall  become
          available  for issuance  under the Plan,  subject to Section  4(b)(iv)
          below.

               (iii) In the event  that any Option or other  Award is  exercised
          through the tendering of Shares (either actually or by attestation) or
          by the  withholding  of  Shares by the  Company,  or  withholding  tax
          liabilities  arising from such Option or other Award are  satisfied by
          the tendering of Shares (either  actually or by attestation) or by the
          withholding  of Shares by the Company,  then only the number of Shares
          issued net of the Shares  tendered  or  withheld  shall be counted for
          purposes of  determining  the maximum  number of Shares  available for
          grant under the Plan,  subject to Section 4(b)(iv) below. In the event
          that any award granted under the Prior Plans is exercised  through the
          tendering  of Shares  (either  actually or by  attestation)  or by the
          withholding of Shares by the Company,  or withholding  tax liabilities
          arising from such award granted under the Prior Plans are satisfied by
          the tendering of Shares (either  actually or by attestation) or by the
          withholding  of  Shares  by the  Company,  then the  number  of Shares
          tendered or withheld  shall become  available  for issuance  under the
          Plan, subject to Section 4(b)(iv) below.

               (iv)  Notwithstanding  anything  in  this  Section  4(b)  to  the
          contrary and solely for  purposes of  determining  whether  Shares are
          available  for the  grant of  Incentive  Stock  Options,  the  maximum
          aggregate  number of shares that may be granted  under this Plan shall
          be determined  without regard to any Shares restored  pursuant to this
          Section 4(b) that,  if taken into account,  would cause the Plan,  for
          purposes  of the  grant  of  Incentive  Stock  Options,  to  fail  the
          requirement  under Code Section 422 that the Plan  designate a maximum
          aggregate number of shares that may be issued.

          (c)  Application  of  Limitations.  The  limitation  contained in this
     Section 4 shall apply not only to Awards  that are settled by the  delivery
     of Shares but also to Awards  relating to Shares but  settled  only in cash
     (such as cash-only Stock Appreciation  Rights).  The Plan Administrator may
     adopt reasonable counting procedures to ensure appropriate counting,  avoid
     double  counting  (as,  for  example,  in the case of tandem or  substitute
     awards) and make  adjustments  if the number of Shares  actually  delivered
     differs from the number of shares previously  counted in connection with an
     Award.

     5. Eligibility;  Per-Person Award Limitations.  Awards may be granted under
the Plan only to Eligible Persons.  In each fiscal year during any part of which
the Plan is in effect,  an  Eligible  Person  may not be granted an Award  under
which more than 200,000 Shares could be received by the Participant,  subject to
adjustment as provided in Section  10(c).  In addition,  the maximum amount that
may be earned as a Performance  Award  (payable in cash) or other Award (payable
or settled in cash) by any one Participant  shall be $1,000,000 for each year of
the performance period.

     6. Terms of Awards.

          (a)  General.  Awards may be granted on the terms and  conditions  set
     forth in this Section 6. In addition,  the Plan Administrator may impose on
     any  Award or the  exercise  thereof,  at the  date of grant or  thereafter
     (subject to Section  10(e)),  such  additional  terms and  conditions,  not
     inconsistent  with the  provisions of the Plan,  as the Plan  Administrator
     shall  determine,  including  terms  requiring  forfeiture of Awards in the
     event of termination  of Continuous  Service by the  Participant  and terms
     permitting a Participant  to make  elections  relating to his or her Award.
     The  Plan   Administrator   shall  retain  full  power  and  discretion  to
     accelerate, waive or modify, at any time, any term or condition of an Award
     that is not mandatory under the Plan.

          (b) Options.  The Plan Administrator is authorized to grant Options to
     Participants on the following terms and conditions:

               (i) Stock  Option  Agreement.  Each  grant of an Option  shall be
          evidenced by a Stock  Option  Agreement.  Such Stock Option  Agreement
          shall be subject to all  applicable  terms and  conditions of the Plan
          and may be subject  to any other  terms and  conditions  which are not
          inconsistent  with the Plan and  which  the Plan  Administrator  deems
          appropriate for inclusion in a Stock Option Agreement.  The provisions
          of the various  Stock  Option  Agreements  entered into under the Plan
          need not be identical.

               (ii) Number of Shares.  Each Stock Option Agreement shall specify
          the number of Shares that are subject to the Option and shall  provide
          for the  adjustment  of such number in  accordance  with Section 10(c)
          hereof.  The Stock Option  Agreement  shall also  specify  whether the
          Stock Option is an Incentive  Stock  Option or a  Non-Qualified  Stock
          Option.

               (iii) Exercise Price.

                    (A) In General.  Each Stock Option Agreement shall state the
               price at which Shares subject to the Option may be purchased (the
               "Exercise  Price"),  which  shall be, with  respect to  Incentive
               Stock Options, not less than 100% of the Fair Market Value of the
               Stock on the date of grant.  In the case of  Non-Qualified  Stock
               Options,  the  Exercise  Price  shall be  determined  in the sole
               discretion of the Plan  Administrator;  provided,  however,  that
               notwithstanding   any   other   provision   of  the   Plan,   any
               Non-Qualified  Stock Option  granted with an exercise  price less
               than the per Share Fair  Market  Value on the date of grant shall
               be  structured  to avoid the  imposition  of any excise tax under
               Section  409A  of  the  Code,   unless   otherwise   specifically
               determined by the Plan Administrator.

                    (B) Ten Percent  Shareholder.  If a  Participant  owns or is
               deemed to own (by  reason  of the  attribution  rules  applicable
               under  Section  424(d) of the Code) more than 10% of the combined
               voting  power  of all  classes  of stock  of the  Company  or any
               Related  Entity,  any  Incentive  Stock  Option  granted  to such
               Participant  must  have an  Exercise  Price per share of at least
               110% of the Fair Market  Value of a share of Stock on the date of
               grant.

               (iv) Time and Method of Exercise.  The Plan  Administrator  shall
          determine the time or times at which or the circumstances  under which
          an Option may be  exercised  in whole or in part  (including  based on
          achievement of performance goals and/or future service  requirements).
          The Plan  Administrator  may also determine the time or times at which
          Options shall cease to be or become exercisable  following termination
          of  Continuous  Service  or upon  other  conditions.  The Board or the
          Committee may  determine the methods by which such exercise  price may
          be paid or deemed to be paid (including, in the discretion of the Plan
          Administrator,  a  cashless  exercise  procedure),  the  form  of such
          payment,  including,  without  limitation,  cash, Stock, net exercise,
          other Awards or awards  granted  under other plans of the Company or a
          Related Entity,  other property  (including notes or other contractual
          obligations of  Participants  to make payment on a deferred  basis) or
          any other form of consideration  legally permissible,  and the methods
          by or forms in which Stock will be delivered or deemed to be delivered
          to Participants.

               (v) Incentive  Stock  Options.  The terms of any Incentive  Stock
          Option  granted  under the Plan shall comply in all respects  with the
          provisions  of Section  422 of the Code.  Anything  in the Plan to the
          contrary  notwithstanding,  no term of the Plan  relating to Incentive
          Stock  Options  (including  any  Stock  Appreciation  Rights in tandem
          therewith)  shall be  interpreted,  amended or altered,  nor shall any
          discretion or authority granted under the Plan be exercised,  so as to
          disqualify either the Plan or any Incentive Stock Option under Section
          422 of the Code,  unless the  Participant  has consented in writing to
          the change  that will result in such  disqualification.  If and to the
          extent  required  to comply  with  Section  422 of the  Code,  Options
          granted as Incentive  Stock  Options shall be subject to the following
          special terms and conditions:

                    (1) the Option shall not be exercisable  more than ten years
               after the date such Incentive Stock Option is granted;  provided,
               however,  that  if a  Participant  owns or is  deemed  to own (by
               reason of the  attribution  rules of Section  424(d) of the Code)
               more than 10% of the  combined  voting  power of all  classes  of
               stock of the Company or any Parent  Corporation and the Incentive
               Stock  Option is  granted  to such  Participant,  the term of the
               Incentive  Stock Option  shall be (to the extent  required by the
               Code at the time of the  grant)  for no more than five years from
               the date of grant; and

                    (2) If the aggregate Fair Market Value (determined as of the
               date the  Incentive  Stock  Option is granted) of the Shares with
               respect to which  Incentive  Stock Options granted under the Plan
               and all other  option  plans of the  Company,  its  Parent or any
               Subsidiary  are  exercisable  for the first time by a Participant
               during   any   calendar   year   exceeds   $100,000,   then  such
               Participant's  Incentive Stock Option(s) or portions thereof that
               exceed such $100,000 limit shall be treated as Nonstatutory Stock
               Options (in the reverse order in which they were granted, so that
               the last  Incentive  Stock Option will be the first  treated as a
               Nonstatutory  Stock Option).  This paragraph  shall only apply to
               the extent such  limitation is  applicable  under the Code at the
               time of the grant.

               (vi)  Repurchase  Rights.  The Committee and the Board shall have
          the  discretion  to grant  Options that are  exercisable  for unvested
          shares of Common Stock.  Should the Participant's  Continuous  Service
          cease while holding such unvested  shares,  the Company shall have the
          right to repurchase any or all of those unvested shares, at either (a)
          the  exercise  price paid per share,  (b) the fair market value or (c)
          the lower of the  exercise  price  paid per share and the fair  market
          value. The terms upon which such repurchase right shall be exercisable
          (including  the period and procedure for exercise and the  appropriate
          vesting schedule for the purchased shares) shall be established by the
          Plan  Administrator  and set  forth in the  document  evidencing  such
          repurchase right.

               (vii)  Prohibition  on  Repricing.   Other  than  pursuant  to  a
          capitalization adjustment under Section 10(c), without approval of the
          Company's shareholders,  the Plan Administrator shall not be permitted
          to (A) lower  the  exercise  price per Share of an Option  after it is
          granted,  (B)  cancel  an  Option  when the  exercise  price per Share
          exceeds the Fair Market Value of the underlying Shares in exchange for
          (x)  another  Award or (y)  cash,  or (C) take any other  action  with
          respect to an Option that may be treated as a repricing.

          (c) Stock Appreciation Rights. The Plan Administrator is authorized to
     grant Stock Appreciation  Rights to Participants on the following terms and
     conditions:

               (i) Right to Payment.  A Stock Appreciation Right shall confer on
          the  Participant  to  whom it is  granted  a right  to  receive,  upon
          exercise thereof, the excess of (A) the Fair Market Value of one share
          of stock on the date of exercise over (B) the grant price of the Stock
          Appreciation Right as determined by the Plan Administrator.

               (ii) Other Terms. The Plan  Administrator  shall determine at the
          date of grant  or  thereafter,  the  time or  times  at which  and the
          circumstances  under which a Stock Appreciation Right may be exercised
          in whole or in part  (including  based on  achievement  of performance
          goals and/or future service requirements),  the time or times at which
          Stock  Appreciation  Rights  shall  cease to be or become  exercisable
          following  termination of Continuous Service or upon other conditions,
          the method of exercise,  method of settlement,  form of  consideration
          payable  in  settlement,  method  by or forms in which  Stock  will be
          delivered or deemed to be delivered to Participants,  whether or not a
          Stock Appreciation Right shall be in tandem or in combination with any
          other  Award,  and  any  other  terms  and  conditions  of  any  Stock
          Appreciation   Right.   Stock   Appreciation   Rights  may  be  either
          freestanding or in tandem with other Awards. Notwithstanding any other
          provision of the Plan,  unless  otherwise  exempt from Section 409A of
          the   Code  or   otherwise   specifically   determined   by  the  Plan
          Administrator,  each Stock  Appreciation  Right shall be structured to
          avoid the imposition of any excise tax under Section 409A of the Code.

          (d) Restricted  Stock.  The Plan  Administrator is authorized to grant
     Restricted Stock to Participants on the following terms and conditions:

               (i) Grant and Restrictions.  Restricted Stock shall be subject to
          such  restrictions  on  transferability,  risk of forfeiture and other
          restrictions,  if any, as the Plan  Administrator  may  impose,  or as
          otherwise provided in this Plan. The restrictions may lapse separately
          or in combination at such times, under such  circumstances  (including
          based on  achievement  of  performance  goals  and/or  future  service
          requirements),   in  such  installments  or  otherwise,  as  the  Plan
          Administrator may determine at the date of grant or thereafter. Except
          to the  extent  restricted  under  the terms of the Plan and any Award
          agreement  relating to the  Restricted  Stock,  a Participant  granted
          Restricted  Stock  shall  have  all of the  rights  of a  shareholder,
          including  the  right to vote the  Restricted  Stock  and the right to
          receive  dividends  thereon (subject to any mandatory  reinvestment or
          other  requirement  imposed  by the Plan  Administrator).  During  the
          restricted  period  applicable  to the  Restricted  Stock,  subject to
          Section  10(b)  below,   the   Restricted   Stock  may  not  be  sold,
          transferred,  pledged, hypothecated,  margined or otherwise encumbered
          by the Participant.

               (ii)  Forfeiture.  Except  as  otherwise  determined  by the Plan
          Administrator  at  the  time  of  the  Award,  upon  termination  of a
          Participant's  Continuous  Service during the  applicable  restriction
          period,  the  Participant's  Restricted  Stock  that is at  that  time
          subject to  restrictions  shall be  forfeited  and  reacquired  by the
          Company;  provided that the Plan Administrator may provide, by rule or
          regulation  or in  any  Award  agreement,  or  may  determine  in  any
          individual case, that restrictions or forfeiture  conditions  relating
          to  Restricted  Stock shall be waived in whole or in part in the event
          of  terminations   resulting  from  specified  causes,  and  the  Plan
          Administrator  may in  other  cases  waive  in  whole  or in part  the
          forfeiture of Restricted Stock.

               (iii) Certificates for Stock.  Restricted Stock granted under the
          Plan may be evidenced in such manner, as the Plan Administrator  shall
          determine.   If  certificates   representing   Restricted   Stock  are
          registered in the name of the Participant,  the Plan Administrator may
          require that such certificates bear an appropriate legend referring to
          the terms,  conditions and restrictions  applicable to such Restricted
          Stock,   that  the  Company   retain   physical   possession   of  the
          certificates,  that the  certificates be kept with an escrow agent and
          that the Participant deliver a stock power to the Company, endorsed in
          blank, relating to the Restricted Stock.

               (iv)  Dividends  and Splits.  As a  condition  to the grant of an
          Award of Restricted Stock, the Plan Administrator may require that any
          cash  dividends paid on a share of Restricted  Stock be  automatically
          reinvested in additional  shares of Restricted Stock or applied to the
          purchase  of  additional  Awards  under  the  Plan.  Unless  otherwise
          determined by the Plan Administrator,  Stock distributed in connection
          with a Stock split or Stock dividend,  and other property  distributed
          as a  dividend,  shall  be  subject  to  restrictions  and a  risk  of
          forfeiture to the same extent as the Restricted  Stock with respect to
          which such Stock or other property has been distributed.

          (e) Stock Units.  The Plan  Administrator is authorized to grant Stock
     Units to  Participants,  which are  rights to  receive  Stock,  cash,  or a
     combination  thereof at the end of a specified time period,  subject to the
     following terms and conditions:

               (i) Award  and  Restrictions.  Satisfaction  of an Award of Stock
          Units shall occur upon  expiration  of the time period  specified  for
          such Stock Units by the Plan  Administrator  (or, if  permitted by the
          Plan Administrator, as elected by the Participant). In addition, Stock
          Units shall be subject to such restrictions  (which may include a risk
          of forfeiture)  as the Plan  Administrator  may impose,  if any, which
          restrictions  may  lapse at the  expiration  of the time  period or at
          earlier specified times (including based on achievement of performance
          goals  and/or   future   service   requirements),   separately  or  in
          combination,  in installments or otherwise,  as the Plan Administrator
          may determine. Stock Units may be satisfied by delivery of Stock, cash
          equal to the Fair  Market  Value of the  specified  number  of  Shares
          covered by the Stock Units, or a combination thereof, as determined by
          the Plan  Administrator  at the date of grant or thereafter.  Prior to
          satisfaction  of an  Award  of Stock  Units,  an Award of Stock  Units
          carries no voting or dividend or other  rights  associated  with share
          ownership.  Notwithstanding  any other  provision of the Plan,  unless
          otherwise   exempt  from   Section  409A  of  the  Code  or  otherwise
          specifically  determined  by the Plan  Administrator,  each Stock Unit
          shall be  structured  to avoid the  imposition of any excise tax under
          Section 409A of the Code.

               (ii)  Forfeiture.  Except  as  otherwise  determined  by the Plan
          Administrator,  upon termination of a Participant's Continuous Service
          during  the  applicable  time  period  thereof  to  which   forfeiture
          conditions  apply (as provided in the Award  agreement  evidencing the
          Stock Units),  the  Participant's  Stock Units (other than those Stock
          Units subject to deferral at the election of the Participant) shall be
          forfeited;  provided that the Plan Administrator may provide,  by rule
          or  regulation  or in any Award  agreement,  or may  determine  in any
          individual case, that restrictions or forfeiture  conditions  relating
          to Stock  Units  shall be  waived  in whole or in part in the event of
          terminations   resulting   from   specified   causes,   and  the  Plan
          Administrator  may in  other  cases  waive  in  whole  or in part  the
          forfeiture of Stock Units.

               (iii) Dividend  Equivalents.  Unless otherwise  determined by the
          Plan Administrator at date of grant, any Dividend Equivalents that are
          granted  with  respect to any Award of Stock Units shall be either (A)
          paid with respect to such Stock Units at the dividend  payment date in
          cash or in shares of  unrestricted  Stock  having a Fair Market  Value
          equal to the amount of such dividends, or (B) deferred with respect to
          such Stock Units and the amount or value thereof  automatically deemed
          reinvested in additional Stock Units, other Awards or other investment
          vehicles,  as the Plan  Administrator  shall  determine  or permit the
          Participant to elect.

          (f)  Bonus  Stock  and  Awards  in  Lieu  of  Obligations.   The  Plan
     Administrator is authorized to grant Stock as a bonus, or to grant Stock or
     other Awards in lieu of Company  obligations  to pay cash or deliver  other
     property under the Plan or under other plans or compensatory  arrangements,
     provided  that,  in the case of  Participants  subject to Section 16 of the
     Exchange Act, the amount of such grants  remains  within the  discretion of
     the Committee to the extent necessary to ensure that  acquisitions of Stock
     or other  Awards are  exempt  from  liability  under  Section  16(b) of the
     Exchange Act.  Stock or Awards granted  hereunder  shall be subject to such
     other terms as shall be determined by the Plan Administrator.

          (g) Dividend  Equivalents.  The Plan  Administrator  is  authorized to
     grant Dividend  Equivalents to a Participant  entitling the  Participant to
     receive cash,  Stock,  other Awards,  or other  property  equal in value to
     dividends  paid with  respect to a  specified  number of  Shares,  or other
     periodic payments.  Dividend  Equivalents may be awarded on a free-standing
     basis or in  connection  with another  Award.  The Plan  Administrator  may
     provide that Dividend Equivalents shall be paid or distributed when accrued
     or shall be deemed to have been reinvested in additional Stock,  Awards, or
     other   investment   vehicles,   and  subject  to  such   restrictions   on
     transferability  and risks of  forfeiture,  as the Plan  Administrator  may
     specify.  Notwithstanding any other provision of the Plan, unless otherwise
     exempt from Section 409A of the Code or otherwise  specifically  determined
     by the Plan Administrator, each Stock Unit shall be structured to avoid the
     imposition of any excise tax under Section 409A of the Code.

          (h) Other Stock-Based  Awards.  The Plan  Administrator is authorized,
     subject to limitations  under applicable law, to grant to Participants such
     other Awards that may be  denominated  or payable in, valued in whole or in
     part by  reference  to, or  otherwise  based on, or related to,  Stock,  as
     deemed by the Plan  Administrator to be consistent with the purposes of the
     Plan,  including,  without  limitation,  convertible or  exchangeable  debt
     securities,  other rights convertible or exchangeable into Stock,  purchase
     rights for Stock, Awards with value and payment contingent upon performance
     of the Company or any other factors  designated by the Plan  Administrator,
     and Awards  valued by  reference to the book value of Stock or the value of
     securities of or the performance of specified  Related Entities or business
     units. The Plan  Administrator  shall determine the terms and conditions of
     such  Awards.  Stock  delivered  pursuant  to an Award in the  nature  of a
     purchase  right granted under this Section 6(h) shall be purchased for such
     consideration  (including  without  limitation  loans from the Company or a
     Related  Entity),  paid for at such  times,  by such  methods,  and in such
     forms,  including,  without limitation,  cash, Stock, other Awards or other
     property, as the Plan Administrator shall determine. The Plan Administrator
     shall have the discretion to grant such other Awards which are  exercisable
     for unvested shares of Common Stock.  Should the  Participant's  Continuous
     Service cease while holding such  unvested  shares,  the Company shall have
     the right to repurchase,  at a price determined by the Administrator at the
     time of grant,  any or all of those unvested  shares.  The terms upon which
     such  repurchase  right  shall be  exercisable  (including  the  period and
     procedure  for  exercise  and  the  appropriate  vesting  schedule  for the
     purchased  shares) shall be established by the Plan  Administrator  and set
     forth in the document  evidencing such repurchase right. Cash awards, as an
     element of or  supplement  to any other Award  under the Plan,  may also be
     granted pursuant to this Section 6(h).  Notwithstanding any other provision
     of the Plan,  unless  otherwise  exempt  from  Section  409A of the Code or
     otherwise  specifically  determined by the Plan  Administrator,  each Stock
     Unit shall be  structured  to avoid the  imposition of any excise tax under
     Section 409A of the Code.

     7. Tax Qualified Performance Awards.

          (a) Covered  Employees.  A Committee,  composed in compliance with the
     requirements  of  Section  162(m)  of  the  Code,  in its  discretion,  may
     determine at the time an Award is granted to an Eligible  Person who is, or
     is likely to be, as of the end of the tax year in which the  Company  would
     claim a tax deduction in connection  with such Award,  a Covered  Employee,
     that the provisions of this Section 7 shall be applicable to such Award.

          (b)  Performance  Criteria.  If an Award is subject to this Section 7,
     then the  lapsing of  restrictions  thereon and the  distribution  of cash,
     Shares  or  other  property  pursuant  thereto,  as  applicable,  shall  be
     contingent  upon  achievement of one or more objective  performance  goals.
     Performance   goals  shall  be  objective  and  shall  otherwise  meet  the
     requirements  of  Section  162(m)  of the Code and  regulations  thereunder
     including the requirement that the level or levels of performance  targeted
     by the  Committee  result in the  achievement  of  performance  goals being
     "substantially  uncertain." One or more of the following  business criteria
     for the Company, on a consolidated  basis, and/or for Related Entities,  or
     for business or  geographical  units of the Company (except with respect to
     the total  stockholder  return and earnings per share  criteria),  shall be
     used by the Committee in  establishing  performance  goals for such Awards:
     (1)  earnings  per share;  (2)  revenues  or  margins;  (3) cash flow;  (4)
     operating margin; (5) return on net assets, investment, capital, or equity;
     (6) economic value added; (7) direct contribution;  (8) net income;  pretax
     earnings;  earnings  before interest and taxes;  earnings before  interest,
     taxes,  depreciation and amortization;  earnings after interest expense and
     before  extraordinary  or special items;  operating  income;  income before
     interest income or expense, unusual items and income taxes, local, state or
     federal and excluding budgeted and actual bonuses which might be paid under
     any  ongoing  bonus  plans  of  the  Company;  (9)  working  capital;  (10)
     management  of fixed  costs  or  variable  costs;  (11)  identification  or
     consummation  of  investment   opportunities  or  completion  of  specified
     projects in accordance with corporate business plans,  including  strategic
     mergers,  acquisitions or divestitures;  (12) total stockholder return; and
     (13)  debt  reduction.  Any of the  above  goals  may be  determined  on an
     absolute or relative basis or as compared to the performance of a published
     or special  index deemed  applicable by the  Committee  including,  but not
     limited to, the  Standard & Poor's 500 Stock Index or a group of  companies
     that are comparable to the Company.  The Committee shall exclude the impact
     of  an  event  or  occurrence   which  the  Committee   determines   should
     appropriately be excluded, including without limitation (i) restructurings,
     discontinued   operations,   extraordinary  items,  and  other  unusual  or
     non-recurring  charges,  (ii) an event either not  directly  related to the
     operations  of the  Company  or not within  the  reasonable  control of the
     Company's management, or (iii) a change in accounting standards required by
     generally accepted accounting principles.

          (c) Performance  Period;  Timing For Establishing  Performance  Goals.
     Achievement  of  performance  goals in respect of such  Performance  Awards
     shall be measured  over a  Performance  Period no shorter  than twelve (12)
     months and no longer than five (5) years,  as specified  by the  Committee.
     Performance  goals  shall be  established  not later than  ninety (90) days
     after  the  beginning  of  any  Performance   Period   applicable  to  such
     Performance  Awards,  or at such other date as may be required or permitted
     for "performance-based compensation" under Section 162(m) of the Code.

          (d)  Adjustments.  The Committee  may, in its  discretion,  reduce the
     amount of a  settlement  otherwise  to be made in  connection  with  Awards
     subject to this Section 7, but may not exercise  discretion to increase any
     such amount payable to a Covered Employee in respect of an Award subject to
     this Section 7. The Committee shall specify the circumstances in which such
     Awards shall be paid or forfeited in the event of termination of Continuous
     Service  by the  Participant  prior to the end of a  Performance  Period or
     settlement of Awards.

          (e) Committee Certification.  No Participant shall receive any payment
     under the Plan unless the Committee has  certified,  by resolution or other
     appropriate action in writing,  that the performance criteria and any other
     material terms previously  established by the Committee or set forth in the
     Plan,   have  been  satisfied  to  the  extent   necessary  to  qualify  as
     "performance based compensation" under Section 162(m) of the Code.

     8. Certain Provisions Applicable to Awards or Sales.

          (a) Stand-Alone,  Additional,  Tandem, and Substitute  Awards.  Awards
     granted under the Plan may, in the discretion of the Plan Administrator, be
     granted either alone or in addition to, in tandem with, or in  substitution
     or exchange for, any other Award or any award granted under another plan of
     the Company,  any Related Entity,  or any business entity to be acquired by
     the Company or a Related  Entity,  or any other right of a  Participant  to
     receive  payment from the Company or any Related Entity.  Such  additional,
     tandem, and substitute or exchange Awards may be granted at any time. If an
     Award is granted in  substitution  or exchange for another  Award or award,
     the Plan  Administrator  shall require the surrender of such other Award or
     award in consideration for the grant of the new Award. In addition,  Awards
     may be  granted  in lieu of cash  compensation,  including  in lieu of cash
     amounts payable under other plans of the Company or any Related Entity.

          (b) Form and Timing of Payment Under Awards; Deferrals. Subject to the
     terms of the Plan and any applicable Award  agreement,  payments to be made
     by the Company or a Related  Entity upon the exercise of an Option or other
     Award  or  settlement  of an  Award  may be made in such  forms as the Plan
     Administrator shall determine,  including,  without limitation, cash, other
     Awards or other property,  and may be made in a single payment or transfer,
     in installments, or on a deferred basis. The settlement of any Award may be
     accelerated,  and  cash  paid in lieu of  Stock  in  connection  with  such
     settlement,  in the discretion of the Plan Administrator or upon occurrence
     of one or more  specified  events  (in  addition  to a Change in  Control).
     Installment or deferred payments may be required by the Plan  Administrator
     (subject to Section  10(g) of the Plan) or permitted at the election of the
     Participant on terms and conditions  established by the Plan Administrator.
     Payments may include,  without  limitation,  provisions  for the payment or
     crediting of a reasonable interest rate on installment or deferred payments
     or the grant or  crediting  of  Dividend  Equivalents  or other  amounts in
     respect of installment or deferred payments denominated in Stock.

          (c) Exemptions from Section 16(b)  Liability.  It is the intent of the
     Company that this Plan comply in all respects with applicable provisions of
     Rule 16b-3 or Rule  16a-1(c)(3)  to the  extent  necessary  to ensure  that
     neither the grant of any Awards to nor other  transaction  by a Participant
     who is subject to Section 16 of the  Exchange  Act is subject to  liability
     under  Section  16(b)  thereof  (except for  transactions  acknowledged  in
     writing  to  be  non-exempt  by  such  Participant).  Accordingly,  if  any
     provision  of this Plan or any Award  agreement  does not  comply  with the
     requirements  of Rule 16b-3 or Rule  16a-1(c)(3) as then  applicable to any
     such transaction, such provision will be construed or deemed amended to the
     extent necessary to conform to the applicable requirements of Rule 16b-3 or
     Rule  16a-1(c)(3)  so that such  Participant  shall avoid  liability  under
     Section 16(b).

     9. Change in Control; Corporate Transaction.

          (a) Change in Control.

               (i) The Plan Administrator may, in its discretion, accelerate the
          vesting,  exercisability,  lapsing of  restrictions,  or expiration of
          deferral of any Award, including if we undergo a Change in Control. In
          addition,  the Plan  Administrator  may provide in an Award  agreement
          that the  performance  goals  relating  to any Award will be deemed to
          have been met upon the occurrence of any Change in Control.

               (ii) In  addition  to the terms of Sections  9(a)(i)  above,  the
          effect of a "change in control," may be provided (1) in an employment,
          compensation,  or severance agreement,  if any, between the Company or
          any Related Entity and the Participant,  relating to the Participant's
          employment,  compensation,  or  severance  with or from the Company or
          such Related Entity, or (2) in the agreement evidencing the Award.

          (b) Corporate  Transactions.  In the event of a Corporate Transaction,
     any surviving corporation or acquiring corporation may either (i) assume or
     continue any or all Awards  outstanding  under the Plan or (ii)  substitute
     similar  stock  awards for  outstanding  Awards (it being  understood  that
     similar awards include,  but are not limited to, awards to acquire the same
     consideration paid to the shareholders or the Company,  as the case may be,
     pursuant to the  Corporate  Transaction).  In the event that any  surviving
     corporation or acquiring corporation does not assume or continue any or all
     such  outstanding  Awards  or  substitute  similar  stock  awards  for such
     outstanding Awards, then with respect to Awards that have been not assumed,
     continued or substituted, then such Awards shall terminate if not exercised
     (if  applicable) at or prior to such effective  time  (contingent  upon the
     effectiveness  of the Corporate  Transaction).  The  Administrator,  in its
     discretion  and  without the  consent of any  Participant,  may (but is not
     obligated  to) either (i)  accelerate  the vesting of all Awards  (and,  if
     applicable,  the time at which such Awards may be  exercised) in full or as
     to some  percentage of the Award to a date prior to the  effective  time of
     such Corporate Transaction as the Administrator shall determine (contingent
     upon the effectiveness of each Corporate Transaction) or (ii) provide for a
     cash  payment in exchange  for the  termination  of an Award or any portion
     thereof  where such cash  payment is equal to the Fair Market  Value of the
     Shares that the  Participant  would  receive if the Award were fully vested
     and exercised (if applicable) as of such date (less any applicable exercise
     price). The Administrator,  in its sole discretion, shall determine whether
     each Award is assumed, continued, substituted or terminated.

          With respect to Restricted Stock and any other Award granted under the
     Plan that the Company  has any  reacquisition  or  repurchase  rights,  the
     reacquisition  or repurchase  rights for such Awards may be assigned by the
     Company to the successor of the Company (or the successor's parent company)
     in  connection   with  such  Corporate   Transaction.   In  addition,   the
     Administrator,  in its  discretion,  may (but is not  obligated to) provide
     that any  reacquisition  or  repurchase  rights  held by the  Company  with
     respect to such Awards shall lapse in whole or in part (contingent upon the
     effectiveness of the Corporate Transaction).

          (c)  Dissolution  or  Liquidation.  In the event of a  dissolution  or
     liquidation of the Company,  then all  outstanding  Awards shall  terminate
     immediately prior to the completion of such dissolution or liquidation, and
     shares of Common Stock  subject to the Company's  repurchase  option may be
     repurchased by the Company notwithstanding the fact that the holder of such
     stock is still in Continuous Service.

     10. General Provisions.

          (a) Compliance With Legal and Other Requirements.  The Company may, to
     the  extent  deemed  necessary  or  advisable  by the  Plan  Administrator,
     postpone  the  issuance or  delivery of Stock or payment of other  benefits
     under any Award until  completion of such  registration or qualification of
     such Stock or other required action under any federal or state law, rule or
     regulation,  listing or other  required  action  with  respect to any stock
     exchange  or  automated  quotation  system  upon  which  the Stock or other
     Company  securities  are listed or  quoted,  or  compliance  with any other
     obligation  of  the  Company,  as  the  Plan  Administrator,  may  consider
     appropriate,  and may require any Participant to make such representations,
     furnish  such  information  and  comply  with or be  subject  to such other
     conditions as it may consider  appropriate in connection  with the issuance
     or  delivery  of Stock or  payment of other  benefits  in  compliance  with
     applicable laws,  rules, and regulations,  listing  requirements,  or other
     obligations. The foregoing notwithstanding,  in connection with a Change in
     Control,  the Company shall take or cause to be taken no action,  and shall
     undertake  or  permit  to arise no legal or  contractual  obligation,  that
     results or would result in any  postponement of the issuance or delivery of
     Stock or payment of benefits under any Award or the imposition of any other
     conditions on such issuance,  delivery or payment,  to the extent that such
     postponement  or other  condition  would  represent  a greater  burden on a
     Participant than existed on the 90th day preceding the Change in Control.

          (b) Limits on Transferability; Beneficiaries.

               (i)  General.  Except  as  provided  in the  Award  agreement,  a
          Participant may not assign, sell,  transfer,  or otherwise encumber or
          subject to any lien any Award or other right or interest granted under
          this Plan, in whole or in part,  other than by will or by operation of
          the laws of descent and  distribution,  and such Awards or rights that
          may be  exercisable  shall be  exercised  during the  lifetime  of the
          Participant  only by the  Participant  or his or her guardian or legal
          representative.

               (ii) Permitted Transfer of Option. The Plan Administrator, in its
          sole  discretion,  may permit the  transfer  of an Option  (but not an
          Incentive  Stock  Option,  or any other right to purchase  Stock other
          than  an  Option)  as  follows:  (A)  by  gift  to  a  member  of  the
          Participant's  Immediate  Family or (B) by transfer by instrument to a
          trust providing that the Option is to be passed to beneficiaries  upon
          death of the  Participant.  For  purposes of this  Section  10(b)(ii),
          "Immediate  Family" shall mean the  Participant's  spouse (including a
          former spouse subject to terms of a domestic relations order);  child,
          stepchild, grandchild,  child-in-law; parent, stepparent, grandparent,
          parent-in-law;  sibling and sibling-in-law, and shall include adoptive
          relationships.  If a determination  is made by counsel for the Company
          that the  restrictions  contained  in this Section  10(b)(ii)  are not
          required  by  applicable  federal or state  securities  laws under the
          circumstances,   then  the  Committee  or  the  Board,   in  its  sole
          discretion,  may permit the transfer of Awards  (other than  Incentive
          Stock Options and Stock  Appreciation  Rights in tandem  therewith) to
          one or more  Beneficiaries or other transferees during the lifetime of
          the  Participant,  which  may be  exercised  by  such  transferees  in
          accordance with the terms of such Award, but only if and to the extent
          permitted by the Plan  Administrator  pursuant to the express terms of
          an Award agreement (subject to any terms and conditions which the Plan
          Administrator   may  impose  thereon,   and  further  subject  to  any
          prohibitions  and  restrictions  on such  transfers  pursuant  to Rule
          16b-3). A Beneficiary, transferee, or other person claiming any rights
          under the Plan from or through any Participant shall be subject to all
          terms and conditions of the Plan and any Award agreement applicable to
          such  Participant,   except  as  otherwise   determined  by  the  Plan
          Administrator,  and to any  additional  terms  and  conditions  deemed
          necessary or appropriate by the Plan Administrator.

          (c) Adjustments.

               (i)  Adjustments  to Awards.  In the event that any  dividend  or
          other  distribution  (whether  in the  form of cash,  Stock,  or other
          property), recapitalization, forward or reverse split, reorganization,
          merger,  consolidation,   spin-off,  combination,   repurchase,  share
          exchange,   liquidation,   dissolution  or  other  similar   corporate
          transaction or event affects the Stock and/or such other securities of
          the Company or any other issuer such that a substitution, exchange, or
          adjustment is determined by the Plan  Administrator to be appropriate,
          then the  Plan  Administrator  shall,  in such  manner  as it may deem
          equitable,  substitute,  exchange,  or  adjust  any or all of (A)  the
          number and kind of Shares which may be delivered  in  connection  with
          Awards granted thereafter,  (B) the number and kind of Shares by which
          annual  per-person  Award  limitations  are measured  under  Section 5
          hereof, (C) the number and kind of Shares subject to or deliverable in
          respect of outstanding  Awards, (D) the exercise price, grant price or
          purchase price relating to any Award and/or make provision for payment
          of cash or other property in respect of any outstanding Award, and (E)
          any other aspect of any Award that the Plan  Administrator  determines
          to be appropriate.

               (ii) Other Adjustments.  The Committee (and the Board if and only
          to the extent such  authority  is not  required to be exercised by the
          Committee to comply with Code Section  162(m)) is  authorized  to make
          adjustments in the terms and conditions of, and the criteria  included
          in,  Awards  (including  Awards  subject  to  performance   goals)  in
          recognition  of unusual or  nonrecurring  events  (including,  without
          limitation,  acquisitions  and  dispositions of businesses and assets)
          affecting the Company, any Related Entity or any business unit, or the
          financial  statements  of the  Company or any  Related  Entity,  or in
          response  to  changes  in  applicable  laws,  regulations,  accounting
          principles,  tax rates and  regulations  or business  conditions or in
          view of the  Committee's  assessment  of the business  strategy of the
          Company,  any Related Entity or business unit thereof,  performance of
          comparable organizations,  economic and business conditions,  personal
          performance  of a  Participant,  and any  other  circumstances  deemed
          relevant; provided that no such adjustment shall be authorized or made
          if and to the  extent  that  such  authority  or the  making  of  such
          adjustment  would  cause  Options,   Stock   Appreciation   Rights  or
          Performance Awards granted to Participants designated by the Committee
          as Covered  Employees  and  intended to qualify as  "performance-based
          compensation" under Code Section 162(m) and the regulations thereunder
          to otherwise fail to qualify as "performance-based compensation" under
          Code Section 162(m) and regulations thereunder.

          (d) Taxes.  The  Company  and any  Related  Entity are  authorized  to
     withhold from any Award granted, any payment relating to an Award under the
     Plan,  including  from a  distribution  of Stock,  or any  payroll or other
     payment to a  Participant,  amounts of  withholding  and other taxes due or
     potentially payable in connection with any transaction  involving an Award,
     and to take such other action as the Plan  Administrator may deem advisable
     to enable the  Company  and  Participants  to satisfy  obligations  for the
     payment of  withholding  taxes and other tax  obligations  relating  to any
     Award.  This authority shall include authority to withhold or receive Stock
     or  other  property  and to  make  cash  payments  in  respect  thereof  in
     satisfaction of a Participant's  tax obligations,  either on a mandatory or
     elective basis in the discretion of the Committee.

          (e)  Changes  to the Plan and  Awards.  The  Board may  amend,  alter,
     suspend, discontinue or terminate the Plan, or the Committee's authority to
     grant  Awards  under the Plan,  without  the  consent  of  shareholders  or
     Participants.  Any  amendment or alteration to the Plan shall be subject to
     the approval of the Company's  shareholders if such shareholder approval is
     deemed necessary and advisable by the Board.  However,  without the consent
     of an affected  Participant,  no such  amendment,  alteration,  suspension,
     discontinuance  or  termination  of the Plan may  materially  and adversely
     affect the rights of such  Participant  under any  previously  granted  and
     outstanding  Award.  The Plan  Administrator  may waive any  conditions  or
     rights under, or amend, alter, suspend,  discontinue or terminate any Award
     theretofore  granted and any Award agreement  relating  thereto,  except as
     otherwise  provided in the Plan;  provided that,  without the consent of an
     affected  Participant,  no such action may materially and adversely  affect
     the rights of such Participant under such Award.

          (f) Limitation on Rights  Conferred  Under Plan.  Neither the Plan nor
     any action  taken  hereunder  shall be construed as (i) giving any Eligible
     Person  or  Participant  the right to  continue  as an  Eligible  Person or
     Participant  or in the  employ of the  Company  or a Related  Entity;  (ii)
     interfering in any way with the right of the Company or a Related Entity to
     terminate any Eligible Person's or Participant's  Continuous Service at any
     time,  (iii)  giving  an  Eligible  Person or  Participant  any claim to be
     granted  any Award  under the Plan or to be  treated  uniformly  with other
     Participants and Employees,  or (iv) conferring on a Participant any of the
     rights of a shareholder of the Company unless and until the  Participant is
     duly issued or transferred Shares in accordance with the terms of an Award.

          (g)  Unfunded  Status  of  Awards;  Creation  of  Trusts.  The Plan is
     intended to  constitute  an  "unfunded"  plan for  incentive  and  deferred
     compensation. With respect to any payments not yet made to a Participant or
     obligations to deliver Stock pursuant to an Award, nothing contained in the
     Plan or any Award  shall  give any such  Participant  any  rights  that are
     greater than those of a general creditor of the Company;  provided that the
     Committee may  authorize  the creation of trusts and deposit  therein cash,
     Stock,  other Awards or other property,  or make other arrangements to meet
     the Company's obligations under the Plan. Such trusts or other arrangements
     shall be  consistent  with the  "unfunded"  status of the Plan  unless  the
     Committee   otherwise   determines   with  the  consent  of  each  affected
     Participant.  The  trustee of such trusts may be  authorized  to dispose of
     trust assets and reinvest the proceeds in alternative investments,  subject
     to such terms and conditions as the Plan  Administrator  may specify and in
     accordance with applicable law.

          (h)  Nonexclusivity  of the Plan.  Neither the adoption of the Plan by
     the  Board  nor its  submission  to the  shareholders  of the  Company  for
     approval shall be construed as creating any limitations on the power of the
     Board or a committee thereof to adopt such other incentive  arrangements as
     it may deem desirable including incentive  arrangements and awards which do
     not qualify under Code Section 162(m).

          (i)  Fractional  Shares.  No  fractional  Shares  shall be  issued  or
     delivered pursuant to the Plan or any Award. The Plan  Administrator  shall
     determine  whether cash,  other Awards or other property shall be issued or
     paid in lieu of such fractional shares or whether such fractional shares or
     any rights thereto shall be forfeited or otherwise eliminated.

          (j) Governing Law. The validity,  construction and effect of the Plan,
     any rules and regulations  under the Plan, and any Award agreement shall be
     determined  in  accordance  with the laws of the State of New York  without
     giving effect to principles of conflicts of laws,  and  applicable  federal
     law.

          (k) Plan Effective Date and Shareholder Approval; Termination of Plan.
     The  Plan  shall  become  effective  on  the  Effective  Date,  subject  to
     subsequent  approval within twelve (12) months of its adoption by the Board
     by  shareholders  of the  Company  eligible  to  vote  in the  election  of
     directors,  by a vote sufficient to meet the  requirements of Code Sections
     162(m) (if  applicable)  and 422,  Rule 16b-3  under the  Exchange  Act (if
     applicable),  applicable Nasdaq requirements,  and other laws, regulations,
     and  obligations  of the  Company  applicable  to the Plan.  Awards  may be
     granted  subject  to  shareholder  approval,  but may not be  exercised  or
     otherwise  settled in the event shareholder  approval is not obtained.  The
     Plan  shall  terminate  no later  than ten (10)  years from the date of the
     later of (x) the Effective  Date and (y) the date an increase in the number
     of shares reserved for issuance under the Plan is approved by the Board (so
     long as such increase is also approved by the shareholders).







                                    EXHIBIT A
                                  Plan History

     1. Plan adopted by the board of directors on June 23, 2005.

     2. Plan approved by the shareholders on September 29, 2005.

     3. Plan amended to prohibit repricings (Section 6(b)(vii)) on September 29,
2005.
[{"type": "8-K", "sequence": "1", "filename": "stockplan8k.txt", "description": "2005 STOCK AWARD PLAN", "secsgml_size_bytes": 87991}]
{"company-data": {"conformed-name": "FREQUENCY ELECTRONICS INC", "cik": "0000039020", "assigned-sic": "3825", "irs-number": "111986657", "state-of-incorporation": "DE", "fiscal-year-end": "0430"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-08061", "film-number": "051119716"}, "business-address": {"street1": "55 CHARLES LINDBERGH BLVD", "city": "MITCHEL FIELD", "state": "NY", "zip": "11553", "phone": "5167944500"}, "mail-address": {"street1": "55 CHARLES LINDBERGH BOULEVARD", "city": "MITCHELL FIELD", "state": "NY", "zip": "11553"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                               -------------------

                                    FORM 8-K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

      Date of Report (Date of Earliest Event Reported): September 29, 2005

                           FREQUENCY ELECTRONICS, INC.
             (Exact name of registrant as specified in its charter)

          Delaware                   1-8061                    11-1986657
(State or other jurisdiction      (Commission               (I.R.S. Employer
      of incorporation)           File Number)             Identification No.)

55 Charles Lindbergh Blvd., Mitchel Field, NY                     11553
   (Address of principal executive offices)                    (Zip Code)

                                 (516) 794-4500
              (Registrant's telephone number, including area code)

                                      NONE
      (Former name, address and fiscal year, if changed since last report)
       ------------------------------------------------------------------

     Check the  appropriate  box below if the Form 8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

|_|  Written  communications  pursuant to Rule 425 under the  Securities Act (17
     CFR 230.425)

|_|  Soliciting  material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
     240.14a-12)

|_|  Pre-commencement   communications  pursuant  to  Rule  14d-2(b)  under  the
     Exchange Act (17 CFR 240.14d-2(b))

|_|  Pre-commencement   communications  pursuant  to  Rule  13e-4(c)  under  the
     Exchange Act (17 CFR 240.13e-4(c))

                               Page 1 of 22 pages
ITEM 1.01.    ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

     On September 29, 2005, the Stockholders of Frequency Electronics, Inc. (the
"Company") approved the Frequency  Electronics,  Inc. 2005 Stock Award Plan (the
"Plan"). The plan became effective as of June 23, 2005 and will remain in effect
for no more than ten years from the date of the later of (i) the Effective  Date
and (ii) the date an  increase  in the number of shares  reserved  for  issuance
under the Plan is approved by the Company's  Board of Directors  (the  "Board").
The Board has full  discretion  and  authority to determine  the  employees  and
directors  eligible to participate in the Plan and the times and types of awards
to be granted. Under the Plan, the Board may grant awards of non-qualified stock
options,  incentive stock options, stock appreciation rights,  restricted stock,
stock  units,  stock  granted as a bonus or in lieu of another  award,  dividend
equivalent,  or other  stock-based  or  performance  awards.  A total of 400,000
shares of the Company's  common stock have been reserved for issuance  under the
Plan, as may be adjusted by the terms of the Plan.

     Following  stockholder  approval  of the  Plan,  the  Plan was  amended  to
prohibit  the  repricing  of  any  options,  other  than  in  connection  with a
capitalization adjustment, unless stockholder approval is obtained.

     A copy of the Plan, as amended,  is attached  hereto as Exhibit 10.1 and is
incorporated herein by reference. Additional information about the Plan can also
be found in the  Company's  definitive  proxy  statement on Schedule 14A for the
Annual  Meeting of  Stockholders,  as filed  with the  Securities  and  Exchange
Commission  on August 26, 2005, in the section of the proxy  statement  entitled
"Approval of the Frequency Electronics, Inc. 2005 Stock Award Plan."

ITEM 9.01 (c)   EXHIBITS.

     10.1 Frequency Electronics, Inc. 2005 Stock Award Plan, as amended
SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

                                               FREQUENCY ELECTRONICS, INC.

                                                 By: /s/ Alan Miller
                                                     ---------------
                                                        Alan Miller
                                                        Chief Financial Officer
                                                        and Treasurer

Dated: October 4, 2005
Exhibit 10.1

                           Frequency Electronics, Inc.

                              2005 Stock Award Plan

     1.  Purpose.  The purpose of this 2005 Stock Award Plan (the  "Plan") is to
assist Frequency  Electronics,  Inc., a Delaware corporation (the "Company") and
its  Related  Entities  in  attracting,   motivating,  retaining  and  rewarding
high-quality  Employees,  officers,  Directors and  Consultants by enabling such
persons to acquire or increase a proprietary interest in the Company in order to
strengthen  the  mutuality of interests  between such persons and the  Company's
shareholders,  and providing such persons with annual and long-term  performance
incentives to expend their maximum efforts in the creation of shareholder value.
The Plan is intended to qualify certain  compensation awarded under the Plan for
tax deductibility under Section 162(m) of the Code (as hereafter defined) to the
extent deemed  appropriate by the Committee (or any successor  committee) of the
Board.

     2.  Definitions.  For purposes of the Plan,  the  following  terms shall be
defined as set forth  below,  in  addition  to such  terms  defined in Section 1
hereof.

          (a)  "Applicable   Laws"  means  the  requirements   relating  to  the
     administration  of equity  compensation  plans under U.S.  state  corporate
     laws,  U.S.  federal and state  securities  laws,  the Code,  the rules and
     regulations of any stock exchange upon which the Common Stock is listed and
     the applicable laws of any foreign country or jurisdiction where Awards are
     granted under the Plan.

          (b) "Award" means any award granted pursuant to the terms of this Plan
     including,  an Option,  Stock Appreciation  Right,  Restricted Stock, Stock
     Units,  Stock  granted  as a bonus or in lieu of  another  award,  Dividend
     Equivalent, Other Stock-Based Award or Performance Award, together with any
     other right or interest, granted to a Participant under the Plan.

          (c)  "Beneficiary"  means the person,  persons,  trust or trusts which
     have been  designated  by a Participant  in his or her most recent  written
     beneficiary  designation  filed with the  Committee to receive the benefits
     specified under the Plan upon such  Participant's  death or to which Awards
     or other  rights  are  transferred  if and to the  extent  permitted  under
     Section  10(b)  hereof.  If,  upon  a  Participant's  death,  there  is  no
     designated Beneficiary or surviving designated  Beneficiary,  then the term
     Beneficiary means the person,  persons, trust or trusts entitled by will or
     the laws of descent and distribution to receive such benefits.

          (d)  "Beneficial   Owner",   "Beneficially   Owning"  and  "Beneficial
     Ownership"  shall  have the  meanings  ascribed  to such terms in Rule 13d3
     under the Exchange Act and any successor to such Rule.

          (e) "Board" means the Company's Board of Directors.

          (f)  "Cause"  shall,  with  respect  to  any  Participant,   have  the
     equivalent  meaning  (or the same  meaning as "cause" or "for  cause")  set
     forth in any employment  agreement  between the Participant and the Company
     or a Related  Entity or, in the  absence of any such  agreement,  such term
     shall mean (i) the failure by the  Participant to perform his or her duties
     as assigned by the Company (or a Related  Entity) in a  reasonable  manner,
     (ii) any violation or breach by the  Participant  of his or her  employment
     agreement  with the  Company  (or a  Related  Entity),  if any,  (iii)  any
     violation  or  breach  by  the  Participant  of  his  or  her  confidential
     information  and  invention  assignment  agreement  with the  Company (or a
     Related  Entity),  if any, (iv) any act by the Participant of dishonesty or
     bad faith  with  respect  to the  Company  (or a Related  Entity),  (v) any
     material  violation  or breach by the  Participant  of the  Company's  or a
     Related Entity's policy for employee  conduct,  if any, (vi) any act by the
     Participant  of  dishonesty  or bad faith with respect to the Company (or a
     Related Entity),  (vii) use of alcohol,  drugs or other similar  substances
     affecting the Participant's  work performance,  or (viii) the commission by
     the Participant of any act,  misdemeanor,  or crime reflecting  unfavorably
     upon the Participant or the Company.  The good faith  determination  by the
     Committee of whether the Participant's Continuous Service was terminated by
     the  Company  for  "Cause"  shall be final  and  binding  for all  purposes
     hereunder.

          (g) "Change in Control"  means and shall be deemed to have occurred on
     the earliest of the following dates:

               (i) the  date on which  any  "person"  (as  such  term is used in
          Sections  13(d) and 14(d) of the  Exchange  Act)  obtains  "beneficial
          ownership"  (as  defined  in  Rule  13d-3  of the  Exchange  Act) or a
          pecuniary  interest fifty percent (50%) or more of the combined voting
          power of the Company's then outstanding securities ("Voting Stock");

               (ii) the consummation of a merger, consolidation,  reorganization
          or  similar  transaction  other than a  transaction:  (1) (a) in which
          substantially  all of the holders of  Company's  Voting  Stock hold or
          receive  directly or  indirectly  fifty  percent  (50%)or  more of the
          voting stock of the resulting entity or a parent company  thereof,  in
          substantially  the same  proportions as their ownership of the Company
          immediately  prior to the transaction;  or (2) in which the holders of
          Company's  capital stock  immediately  before such  transaction  will,
          immediately after such transaction, hold as a group on a fully diluted
          basis the ability to elect at least a majority of the directors of the
          surviving corporation (or a parent company);

               (iii) there is consummated a sale,  lease,  exclusive  license or
          other  disposition  of all or  substantially  all of the  consolidated
          assets of the Company and its Subsidiaries,  other than a sale, lease,
          license  or  other  disposition  of  all or  substantially  all of the
          consolidated  assets of the Company and its Subsidiaries to an entity,
          fifty percent (50%) or more of the combined voting power of the voting
          securities  of which  are  owned by  shareholders  of the  Company  in
          substantially  the same  proportions as their ownership of the Company
          immediately prior to such sale, lease,  license or other  disposition;
          or

               (iv)  individuals  who,  on the date this Plan is  adopted by the
          Board,  are Directors (the "Incumbent  Board") cease for any reason to
          constitute at least a majority of the  Directors;  provided,  however,
          that if the  appointment  or election (or  nomination for election) of
          any new Director was approved or recommended by a majority vote of the
          members of the Incumbent  Board then still in office,  such new member
          shall,  for purposes of this Plan,  be  considered  as a member of the
          Incumbent Board.

     For purposes of  determining  whether a Change in Control has  occurred,  a
transaction includes all transactions in a series of related  transactions,  and
terms used in this  definition  but not defined are used as defined in the Plan.
The term Change in Control  shall not include a sale of assets,  merger or other
transaction effected exclusively for the purpose of changing the domicile of the
Company.

     Notwithstanding  the  foregoing or any other  provision  of this Plan,  the
definition of Change in Control (or any analogous term) in an individual written
agreement  between the Company and the Participant shall supersede the foregoing
definition   with  respect  to  Awards  subject  to  such  agreement  (it  being
understood, however, that if no definition of Change in Control or any analogous
term is set  forth  in such  an  individual  written  agreement,  the  foregoing
definition shall apply).

          (h) "Code"  means the Internal  Revenue Code of 1986,  as amended from
     time to time, including regulations thereunder and successor provisions and
     regulations thereto.

          (i)  "Committee"  means  a  committee   designated  by  the  Board  to
     administer  the  Plan  with  respect  to at  least  a group  of  Employees,
     Directors or Consultants.

          (j)  "Consultant"  means  any  person  (other  than an  Employee  or a
     Director,  solely  with  respect to  rendering  services  in such  person's
     capacity as a director) who is engaged by the Company or any Related Entity
     to render  consulting  or advisory  services to the Company or such Related
     Entity.

          (k) "Continuous Service" means uninterrupted  provision of services to
     the Company as an Employee, a Director, or a Consultant. Continuous Service
     shall not be considered to be  interrupted  in the case of (i) any approved
     leave of absence,  (ii) transfers among the Company,  any Related Entities,
     or any  successor  entities,  as  either  an  Employee,  a  Director,  or a
     Consultant, or (iii) any change in status as long as the individual remains
     in the service of the Company or a Related Entity as either an Employee,  a
     Director,  or a  Consultant  (except as  otherwise  provided  in the Option
     Agreement). An approved leave of absence shall include sick leave, military
     leave, or any other authorized personal leave.

          (l)  "Corporate  Transaction"  means  the  occurrence,   in  a  single
     transaction or in a series of related  transactions,  of any one or more of
     the following events:

               (i) a sale, lease,  exclusive license or other disposition of all
          or substantially all, as determined by the Board in its discretion, of
          the consolidated assets of the Company and its Subsidiaries;

               (ii) a sale or other  disposition  of more  than  twenty  percent
          (20%) of the outstanding securities of the Company; or

               (iii)  a  merger,   consolidation,   reorganization   or  similar
          transaction, whether or not the Company is the surviving corporation.

          (m)  "Covered  Employee"  means an  Eligible  Person  who is a Covered
     Employee as specified in Section 7(d) of the Plan.

          (n)  "Director"  means a member of the Board or the board of directors
     of any Related Entity.

          (o) "Disability"  means a permanent and total  disability  (within the
     meaning of Section 22(e) of the Code),  as  determined by a medical  doctor
     satisfactory to the Committee.

          (p)  "Dividend  Equivalent"  means a right,  granted to a  Participant
     under Section 6(g) hereof,  to receive cash,  Stock,  other Awards or other
     property  equal in value to  dividends  paid with  respect  to a  specified
     number of Shares, or other periodic payments.

          (q)  "Effective  Date" means the  effective  date of this Plan,  which
     shall be the  date  this  Plan is  adopted  by the  Board,  subject  to the
     approval of the shareholders of the Company.

          (r)  "Eligible  Person"  means  all  Employees  (including  officers),
     Directors  and  Consultants  of the Company or of any Related  Entity.  The
     foregoing  notwithstanding,  only employees of the Company,  the Parent, or
     any  Subsidiary  shall be Eligible  Persons for purposes of  receiving  any
     Incentive Stock Options.  An Employee on leave of absence may be considered
     as still in the employ of the Company or a Related  Entity for  purposes of
     eligibility for participation in the Plan.

          (s) "Employee" means any person, including an officer or Director, who
     is an  employee  of the  Company or any  Related  Entity.  The Payment of a
     director's  fee by the Company or a Related  Entity shall not be sufficient
     to constitute "employment" by the Company.

          (t)  "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
     amended  from  time to  time,  including  rules  thereunder  and  successor
     provisions and rules thereto.

          (u) "Executive  Officer" means an executive  officer of the Company as
     defined under the Exchange Act.

          (v) "Fair Market  Value" means the fair market value of Stock,  Awards
     or  other  property  as  determined  by the  Plan  Administrator,  or under
     procedures   established  by  the  Plan  Administrator.   Unless  otherwise
     determined by the Plan Administrator,  the Fair Market Value of Stock as of
     any  given  date,  after  which  the  Stock is  publicly  traded on a stock
     exchange or market, shall be the closing sale price per share reported on a
     consolidated  basis for stock  listed on the  principal  stock  exchange or
     market on which Stock is traded on the date as of which such value is being
     determined or, if there is no sale on that date,  then on the last previous
     day on which a sale was reported.

          (w) "Good Reason"  shall,  with respect to any  Participant,  have the
     equivalent  meaning  (or the same  meaning  as "good  reason"  or "for good
     reason") set forth in any employment  agreement between the Participant and
     the Company or a Related  Entity or, in the absence of any such  agreement,
     such term shall mean (i) the  assignment to the  Participant  of any duties
     inconsistent  in any respect  with the  Participant's  position  (including
     status, offices, titles and reporting requirements),  authority,  duties or
     responsibilities  as assigned by the Company (or a Related Entity),  or any
     other  action by the  Company  (or a Related  Entity)  which  results  in a
     diminution  in  such  position,   authority,  duties  or  responsibilities,
     excluding  for this  purpose an  isolated,  insubstantial  and  inadvertent
     action not taken in bad faith and which is  remedied  by the  Company (or a
     Related  Entity)  promptly  after  receipt of notice  thereof  given by the
     Participant;  (ii) any  failure  by the  Company  (or a Related  Entity) to
     comply with its obligations to the  Participant as agreed upon,  other than
     an isolated,  insubstantial  and  inadvertent  failure not occurring in bad
     faith and which is remedied by the Company (or a Related  Entity)  promptly
     after  receipt  of  notice  thereof  given by the  Participant;  (iii)  the
     Company's (or Related  Entity's)  requiring the  Participant to be based at
     any  office  or  location  more  than  fifty  miles  from the  location  of
     employment as of the date of Award,  except for travel reasonably  required
     in  the  performance  of  the  Participant's  responsibilities;   (iv)  any
     purported  termination  by  the  Company  (or  a  Related  Entity)  of  the
     Participant's  Continuous  Service  otherwise  than for Cause as defined in
     Section  2(f), or by reason of the  Participant's  Disability as defined in
     Section  2(o),  prior to the  Expiration  Date; or (v) any reduction in the
     Participant's base salary.

          (x)  "Incentive   Stock  Option"  means  any  Option  intended  to  be
     designated  as an incentive  stock option within the meaning of Section 422
     of the Code or any successor provision thereto.

          (y) "Non-Employee Director" means a Director of the Company who is not
     an Employee.

          (z) "Option" means a right granted to a Participant under Section 6(b)
     hereof,  to  purchase  Stock or other  Awards at a specified  price  during
     specified time periods.

          (aa) "Other Stock-Based  Awards" means Awards granted to a Participant
     pursuant to Section 6(h) hereof.

          (bb) "Parent" means any corporation (other than the Company),  whether
     now or hereafter existing, in an unbroken chain of corporations ending with
     the  Company,  if each of the  corporations  in the chain  (other  than the
     Company) owns stock  possessing  50 percent or more of the combined  voting
     power  of all  classes  of stock in one of the  other  corporations  in the
     chain.

          (cc) "Participant"  means a person who has been granted an Award under
     the Plan which remains outstanding,  including a person who is no longer an
     Eligible Person.

          (dd) "Performance Award" means a right,  granted to an Eligible Person
     under Section 7 hereof,  to receive Awards based upon performance  criteria
     specified by the Plan Administrator. (ee) "Person" has the meaning ascribed
     to such term in Section  3(a)(9) of the  Exchange  Act and used in Sections
     13(d) and 14(d) thereof,  and shall include a "group" as defined in Section
     12(d) thereof.

          (ff) "Plan  Administrator"  means the Board or any Committee delegated
     by the Board to administer the Plan.

          (gg) "Prior Stock Plans" means all prior equity  compensation plans of
     the Company,  excluding all of the Company's  qualified  retirement  plans,
     including,  but not limited to, the 2001  Incentive  Stock Option Plan, the
     Senior  Executive  Stock Option Plan, the  Restricted  Stock Plan, the 1997
     Independent  Contractor  Stock Option Plan,  the 1993  Non-Statutory  Stock
     Option Plan and the 1987 Incentive Stock Plan.

          (hh) "Related  Entity" means any Parent,  Subsidiary and any business,
     corporation,  partnership,  limited  liability  company or other  entity in
     which the Company, a Parent or a Subsidiary,  directly or indirectly, holds
     a substantial ownership interest.

          (ii)  "Restricted  Stock" means Stock granted to a  Participant  under
     Section 6(d) hereof, that is subject to certain  restrictions and to a risk
     of forfeiture.

          (jj)  "Rule  16b-3" and "Rule  16a-1(c)(3)"  means Rule 16b-3 and Rule
     16a-1(c)(3),  as from time to time in effect and applicable to the Plan and
     Participants,  promulgated by the Securities and Exchange  Commission under
     Section 16 of the Exchange Act.

          (kk) "Shares" means the shares of the Company's  Common Stock, and the
     shares of such other  securities as may be substituted  (or  resubstituted)
     for Stock pursuant to Section 10(c) hereof.

          (ll)  "Stock"  means  the  Company's  Common  Stock,  and  such  other
     securities  as may be  substituted  (or  resubstituted)  for the  Company's
     Common Stock pursuant to Section 10(c) hereof.

          (mm) "Stock Appreciation Right" means a right granted to a Participant
     pursuant to Section 6(c) hereof.

          (nn) "Stock Unit" means a right,  granted to a Participant pursuant to
     Section 6(e) hereof,  to receive Shares,  cash or a combination  thereof at
     the end of a specified period of time.

          (oo)  "Subsidiary"  means any  corporation  (other than the  Company),
     whether now or hereafter  existing,  in an unbroken  chain of  corporations
     beginning with the Company, if each of the corporations other than the last
     corporation in the unbroken chain owns stock  possessing 50 percent or more
     of the total  combined  voting  power of all classes of stock in one of the
     other corporations in such chain.

     3. Administration.

          (a)  Administration  by Board.  The Board  shall  administer  the Plan
     unless and until the Board  delegates  administration  to a  Committee,  as
     provided in Section 3(c).

          (b) Powers of Board.  The Board shall have the power,  subject to, and
     within the limitations of, the express provisions of the Plan:

               (i) To determine from time to time which of the persons  eligible
          under the Plan shall be granted Awards;  when and how each Award shall
          be  granted;  what  type or  combination  of types  of Award  shall be
          granted;  the  provisions  of each Award  granted  (which  need not be
          identical),  including  the  time or  times  when a  person  shall  be
          permitted to receive  Shares  pursuant to an Award;  and the number of
          Shares  with  respect to which an Award  shall be granted to each such
          person.

               (ii) To construe and interpret the Plan and Awards  granted under
          it, and to establish,  amend and revoke rules and  regulations for its
          administration.  The Board, in the exercise of this power, may correct
          any  defect,  omission  or  inconsistency  in the Plan or in any Stock
          Award Agreement, in a manner and to the extent it shall deem necessary
          or expedient to make the Plan fully effective.

               (iii) To amend the Plan or an Award as provided in Section 10(e).

               (iv) To  terminate  or suspend  the Plan as  provided  in Section
          10(e).

               (v)  Generally,  to exercise such powers and to perform such acts
          as the Board  deems  necessary  or  appropriate  to  promote  the best
          interests  of the  Company  and  that  are not in  conflict  with  the
          provisions of the Plan.

          (c) Delegation to Committee.

               (i) General. The Board may delegate administration of the Plan to
          a Committee or Committees of two (2) or more members of the Board, and
          the term "Committee" shall apply to any person or persons to whom such
          authority  has been  delegated.  If  administration  is delegated to a
          Committee,   the  Committee   shall  have,  in  connection   with  the
          administration  of the Plan, the powers  theretofore  possessed by the
          Board,  including the power to delegate to a  subcommittee  any of the
          administrative  powers the  Committee is  authorized  to exercise (and
          references  in  this  Plan to the  Board  shall  thereafter  be to the
          Committee or subcommittee), subject, however, to such resolutions, not
          inconsistent  with the  provisions of the Plan, as may be adopted from
          time to time by the Board.  The Board may abolish the Committee at any
          time and revest in the Board the administration of the Plan.

               (ii) Section 162(m) and Rule 16b-3 Compliance.  In the discretion
          of the Board, the Committee may consist solely of two or more "Outside
          Directors",  in  accordance  with Section  162(m) of the Code,  and/or
          solely of two or more  "Non-Employee  Directors",  in accordance  with
          Rule 16b-3. In addition,  the Board or the Committee may delegate to a
          committee of two or more  members of the Board the  authority to grant
          Awards  to  eligible  persons  who are  either  (a) not  then  Covered
          Employees and are not expected to be Covered  Employees at the time of
          recognition of income  resulting from such Award, (b) not persons with
          respect to whom the Company  wishes to comply with  Section  162(m) of
          the Code, or (c) not then subject to Section 16 of the Exchange Act.

          (d) Effect of Board's Decision.  All  determinations,  interpretations
     and  constructions  made by the Board in good faith shall not be subject to
     review by any  person and shall be final,  binding  and  conclusive  on all
     persons.

          (e) Arbitration. Any dispute or claim concerning any Award granted (or
     not granted)  pursuant to the Plan or any disputes or claims relating to or
     arising out of the Plan shall be fully, finally and exclusively resolved by
     binding and  confidential  arbitration  conducted  pursuant to the rules of
     Judicial  Arbitration  and  Mediation  Services,  Inc.  ("JAMS")  in Nassau
     County,  New York. The Company shall pay all arbitration  fees. In addition
     to any other  relief,  the  arbitrator  may award to the  prevailing  party
     recovery of its  attorneys'  fees and costs.  By  accepting  an Award,  the
     Participant and the Company waive their respective  rights to have any such
     disputes or claims tried by a judge or jury.

          (f)  Limitation  of Liability.  The Committee and the Board,  and each
     member thereof,  shall be entitled to, in good faith,  rely or act upon any
     report  or other  information  furnished  to him or her by any  officer  or
     Employee,  the Company's  independent  auditors,  Consultants  or any other
     agents  assisting  in  the  administration  of  the  Plan.  Members  of the
     Committee  and the  Board,  and  any  officer  or  Employee  acting  at the
     direction or on behalf of the Plan  Administrator,  shall not be personally
     liable  for any  action or  determination  taken or made in good faith with
     respect to the Plan,  and shall,  to the extent  permitted by law, be fully
     indemnified and protected by the Company with respect to any such action or
     determination.

     4. Stock Subject to Plan.

          (a) Limitation on Overall Number of Shares Subject to Awards.  Subject
     to  adjustment  as provided in Section  10(c)  hereof,  the total number of
     Shares  reserved and available for delivery in connection with Awards under
     the Plan shall be 400,000 Shares.  Any Shares  delivered under the Plan may
     consist, in whole or in part, of authorized and unissued shares or treasury
     shares.

          (b) Availability of Shares Not Delivered under Awards.

               (i) If any Shares  subject to an Award are  forfeited,  expire or
          otherwise  terminate  without issuance of such Shares, or any Award is
          settled for cash or  otherwise  does not result in the issuance of all
          or a portion of the Shares subject to such Award, the Shares shall, to
          the  extent  of  such  forfeiture,   expiration,   termination,   cash
          settlement  or  non-issuance,  again be available for Awards under the
          Plan,  subject to Section  4(b)(iv) below. If any Shares subject to an
          award under the Prior Stock Plans are  forfeited,  expire or otherwise
          terminate  without  issuance  of such  Shares,  or any award under the
          Prior Stock Plans is settled for cash or otherwise  does not result in
          the issuance of all or a portion of the Shares  subject to such award,
          the  Shares  shall,  to the  extent  of such  forfeiture,  expiration,
          termination,  cash settlement or non-issuance, be available for Awards
          under the Plan, subject to Section 4(b)(iv) below.

               (ii) If any Shares issued pursuant to an Award are forfeited back
          to or repurchased by the Company,  including,  but not limited to, any
          repurchase or  forfeiture  caused by the failure to meet a contingency
          or condition required for the vesting of such shares,  then the Shares
          not  acquired  under  such  Award  shall  revert to and  again  become
          available  for issuance  under the Plan,  subject to Section  4(b)(iv)
          below. If any Shares issued pursuant to an award under the Prior Stock
          Plans are forfeited back to or repurchased by the Company,  including,
          but not limited to, any repurchase or forfeiture caused by the failure
          to meet a  contingency  or condition  required for the vesting of such
          shares,  then the Shares not  acquired  under such award shall  become
          available  for issuance  under the Plan,  subject to Section  4(b)(iv)
          below.

               (iii) In the event  that any Option or other  Award is  exercised
          through the tendering of Shares (either actually or by attestation) or
          by the  withholding  of  Shares by the  Company,  or  withholding  tax
          liabilities  arising from such Option or other Award are  satisfied by
          the tendering of Shares (either  actually or by attestation) or by the
          withholding  of Shares by the Company,  then only the number of Shares
          issued net of the Shares  tendered  or  withheld  shall be counted for
          purposes of  determining  the maximum  number of Shares  available for
          grant under the Plan,  subject to Section 4(b)(iv) below. In the event
          that any award granted under the Prior Plans is exercised  through the
          tendering  of Shares  (either  actually or by  attestation)  or by the
          withholding of Shares by the Company,  or withholding  tax liabilities
          arising from such award granted under the Prior Plans are satisfied by
          the tendering of Shares (either  actually or by attestation) or by the
          withholding  of  Shares  by the  Company,  then the  number  of Shares
          tendered or withheld  shall become  available  for issuance  under the
          Plan, subject to Section 4(b)(iv) below.

               (iv)  Notwithstanding  anything  in  this  Section  4(b)  to  the
          contrary and solely for  purposes of  determining  whether  Shares are
          available  for the  grant of  Incentive  Stock  Options,  the  maximum
          aggregate  number of shares that may be granted  under this Plan shall
          be determined  without regard to any Shares restored  pursuant to this
          Section 4(b) that,  if taken into account,  would cause the Plan,  for
          purposes  of the  grant  of  Incentive  Stock  Options,  to  fail  the
          requirement  under Code Section 422 that the Plan  designate a maximum
          aggregate number of shares that may be issued.

          (c)  Application  of  Limitations.  The  limitation  contained in this
     Section 4 shall apply not only to Awards  that are settled by the  delivery
     of Shares but also to Awards  relating to Shares but  settled  only in cash
     (such as cash-only Stock Appreciation  Rights).  The Plan Administrator may
     adopt reasonable counting procedures to ensure appropriate counting,  avoid
     double  counting  (as,  for  example,  in the case of tandem or  substitute
     awards) and make  adjustments  if the number of Shares  actually  delivered
     differs from the number of shares previously  counted in connection with an
     Award.

     5. Eligibility;  Per-Person Award Limitations.  Awards may be granted under
the Plan only to Eligible Persons.  In each fiscal year during any part of which
the Plan is in effect,  an  Eligible  Person  may not be granted an Award  under
which more than 200,000 Shares could be received by the Participant,  subject to
adjustment as provided in Section  10(c).  In addition,  the maximum amount that
may be earned as a Performance  Award  (payable in cash) or other Award (payable
or settled in cash) by any one Participant  shall be $1,000,000 for each year of
the performance period.

     6. Terms of Awards.

          (a)  General.  Awards may be granted on the terms and  conditions  set
     forth in this Section 6. In addition,  the Plan Administrator may impose on
     any  Award or the  exercise  thereof,  at the  date of grant or  thereafter
     (subject to Section  10(e)),  such  additional  terms and  conditions,  not
     inconsistent  with the  provisions of the Plan,  as the Plan  Administrator
     shall  determine,  including  terms  requiring  forfeiture of Awards in the
     event of termination  of Continuous  Service by the  Participant  and terms
     permitting a Participant  to make  elections  relating to his or her Award.
     The  Plan   Administrator   shall  retain  full  power  and  discretion  to
     accelerate, waive or modify, at any time, any term or condition of an Award
     that is not mandatory under the Plan.

          (b) Options.  The Plan Administrator is authorized to grant Options to
     Participants on the following terms and conditions:

               (i) Stock  Option  Agreement.  Each  grant of an Option  shall be
          evidenced by a Stock  Option  Agreement.  Such Stock Option  Agreement
          shall be subject to all  applicable  terms and  conditions of the Plan
          and may be subject  to any other  terms and  conditions  which are not
          inconsistent  with the Plan and  which  the Plan  Administrator  deems
          appropriate for inclusion in a Stock Option Agreement.  The provisions
          of the various  Stock  Option  Agreements  entered into under the Plan
          need not be identical.

               (ii) Number of Shares.  Each Stock Option Agreement shall specify
          the number of Shares that are subject to the Option and shall  provide
          for the  adjustment  of such number in  accordance  with Section 10(c)
          hereof.  The Stock Option  Agreement  shall also  specify  whether the
          Stock Option is an Incentive  Stock  Option or a  Non-Qualified  Stock
          Option.

               (iii) Exercise Price.

                    (A) In General.  Each Stock Option Agreement shall state the
               price at which Shares subject to the Option may be purchased (the
               "Exercise  Price"),  which  shall be, with  respect to  Incentive
               Stock Options, not less than 100% of the Fair Market Value of the
               Stock on the date of grant.  In the case of  Non-Qualified  Stock
               Options,  the  Exercise  Price  shall be  determined  in the sole
               discretion of the Plan  Administrator;  provided,  however,  that
               notwithstanding   any   other   provision   of  the   Plan,   any
               Non-Qualified  Stock Option  granted with an exercise  price less
               than the per Share Fair  Market  Value on the date of grant shall
               be  structured  to avoid the  imposition  of any excise tax under
               Section  409A  of  the  Code,   unless   otherwise   specifically
               determined by the Plan Administrator.

                    (B) Ten Percent  Shareholder.  If a  Participant  owns or is
               deemed to own (by  reason  of the  attribution  rules  applicable
               under  Section  424(d) of the Code) more than 10% of the combined
               voting  power  of all  classes  of stock  of the  Company  or any
               Related  Entity,  any  Incentive  Stock  Option  granted  to such
               Participant  must  have an  Exercise  Price per share of at least
               110% of the Fair Market  Value of a share of Stock on the date of
               grant.

               (iv) Time and Method of Exercise.  The Plan  Administrator  shall
          determine the time or times at which or the circumstances  under which
          an Option may be  exercised  in whole or in part  (including  based on
          achievement of performance goals and/or future service  requirements).
          The Plan  Administrator  may also determine the time or times at which
          Options shall cease to be or become exercisable  following termination
          of  Continuous  Service  or upon  other  conditions.  The Board or the
          Committee may  determine the methods by which such exercise  price may
          be paid or deemed to be paid (including, in the discretion of the Plan
          Administrator,  a  cashless  exercise  procedure),  the  form  of such
          payment,  including,  without  limitation,  cash, Stock, net exercise,
          other Awards or awards  granted  under other plans of the Company or a
          Related Entity,  other property  (including notes or other contractual
          obligations of  Participants  to make payment on a deferred  basis) or
          any other form of consideration  legally permissible,  and the methods
          by or forms in which Stock will be delivered or deemed to be delivered
          to Participants.

               (v) Incentive  Stock  Options.  The terms of any Incentive  Stock
          Option  granted  under the Plan shall comply in all respects  with the
          provisions  of Section  422 of the Code.  Anything  in the Plan to the
          contrary  notwithstanding,  no term of the Plan  relating to Incentive
          Stock  Options  (including  any  Stock  Appreciation  Rights in tandem
          therewith)  shall be  interpreted,  amended or altered,  nor shall any
          discretion or authority granted under the Plan be exercised,  so as to
          disqualify either the Plan or any Incentive Stock Option under Section
          422 of the Code,  unless the  Participant  has consented in writing to
          the change  that will result in such  disqualification.  If and to the
          extent  required  to comply  with  Section  422 of the  Code,  Options
          granted as Incentive  Stock  Options shall be subject to the following
          special terms and conditions:

                    (1) the Option shall not be exercisable  more than ten years
               after the date such Incentive Stock Option is granted;  provided,
               however,  that  if a  Participant  owns or is  deemed  to own (by
               reason of the  attribution  rules of Section  424(d) of the Code)
               more than 10% of the  combined  voting  power of all  classes  of
               stock of the Company or any Parent  Corporation and the Incentive
               Stock  Option is  granted  to such  Participant,  the term of the
               Incentive  Stock Option  shall be (to the extent  required by the
               Code at the time of the  grant)  for no more than five years from
               the date of grant; and

                    (2) If the aggregate Fair Market Value (determined as of the
               date the  Incentive  Stock  Option is granted) of the Shares with
               respect to which  Incentive  Stock Options granted under the Plan
               and all other  option  plans of the  Company,  its  Parent or any
               Subsidiary  are  exercisable  for the first time by a Participant
               during   any   calendar   year   exceeds   $100,000,   then  such
               Participant's  Incentive Stock Option(s) or portions thereof that
               exceed such $100,000 limit shall be treated as Nonstatutory Stock
               Options (in the reverse order in which they were granted, so that
               the last  Incentive  Stock Option will be the first  treated as a
               Nonstatutory  Stock Option).  This paragraph  shall only apply to
               the extent such  limitation is  applicable  under the Code at the
               time of the grant.

               (vi)  Repurchase  Rights.  The Committee and the Board shall have
          the  discretion  to grant  Options that are  exercisable  for unvested
          shares of Common Stock.  Should the Participant's  Continuous  Service
          cease while holding such unvested  shares,  the Company shall have the
          right to repurchase any or all of those unvested shares, at either (a)
          the  exercise  price paid per share,  (b) the fair market value or (c)
          the lower of the  exercise  price  paid per share and the fair  market
          value. The terms upon which such repurchase right shall be exercisable
          (including  the period and procedure for exercise and the  appropriate
          vesting schedule for the purchased shares) shall be established by the
          Plan  Administrator  and set  forth in the  document  evidencing  such
          repurchase right.

               (vii)  Prohibition  on  Repricing.   Other  than  pursuant  to  a
          capitalization adjustment under Section 10(c), without approval of the
          Company's shareholders,  the Plan Administrator shall not be permitted
          to (A) lower  the  exercise  price per Share of an Option  after it is
          granted,  (B)  cancel  an  Option  when the  exercise  price per Share
          exceeds the Fair Market Value of the underlying Shares in exchange for
          (x)  another  Award or (y)  cash,  or (C) take any other  action  with
          respect to an Option that may be treated as a repricing.

          (c) Stock Appreciation Rights. The Plan Administrator is authorized to
     grant Stock Appreciation  Rights to Participants on the following terms and
     conditions:

               (i) Right to Payment.  A Stock Appreciation Right shall confer on
          the  Participant  to  whom it is  granted  a right  to  receive,  upon
          exercise thereof, the excess of (A) the Fair Market Value of one share
          of stock on the date of exercise over (B) the grant price of the Stock
          Appreciation Right as determined by the Plan Administrator.

               (ii) Other Terms. The Plan  Administrator  shall determine at the
          date of grant  or  thereafter,  the  time or  times  at which  and the
          circumstances  under which a Stock Appreciation Right may be exercised
          in whole or in part  (including  based on  achievement  of performance
          goals and/or future service requirements),  the time or times at which
          Stock  Appreciation  Rights  shall  cease to be or become  exercisable
          following  termination of Continuous Service or upon other conditions,
          the method of exercise,  method of settlement,  form of  consideration
          payable  in  settlement,  method  by or forms in which  Stock  will be
          delivered or deemed to be delivered to Participants,  whether or not a
          Stock Appreciation Right shall be in tandem or in combination with any
          other  Award,  and  any  other  terms  and  conditions  of  any  Stock
          Appreciation   Right.   Stock   Appreciation   Rights  may  be  either
          freestanding or in tandem with other Awards. Notwithstanding any other
          provision of the Plan,  unless  otherwise  exempt from Section 409A of
          the   Code  or   otherwise   specifically   determined   by  the  Plan
          Administrator,  each Stock  Appreciation  Right shall be structured to
          avoid the imposition of any excise tax under Section 409A of the Code.

          (d) Restricted  Stock.  The Plan  Administrator is authorized to grant
     Restricted Stock to Participants on the following terms and conditions:

               (i) Grant and Restrictions.  Restricted Stock shall be subject to
          such  restrictions  on  transferability,  risk of forfeiture and other
          restrictions,  if any, as the Plan  Administrator  may  impose,  or as
          otherwise provided in this Plan. The restrictions may lapse separately
          or in combination at such times, under such  circumstances  (including
          based on  achievement  of  performance  goals  and/or  future  service
          requirements),   in  such  installments  or  otherwise,  as  the  Plan
          Administrator may determine at the date of grant or thereafter. Except
          to the  extent  restricted  under  the terms of the Plan and any Award
          agreement  relating to the  Restricted  Stock,  a Participant  granted
          Restricted  Stock  shall  have  all of the  rights  of a  shareholder,
          including  the  right to vote the  Restricted  Stock  and the right to
          receive  dividends  thereon (subject to any mandatory  reinvestment or
          other  requirement  imposed  by the Plan  Administrator).  During  the
          restricted  period  applicable  to the  Restricted  Stock,  subject to
          Section  10(b)  below,   the   Restricted   Stock  may  not  be  sold,
          transferred,  pledged, hypothecated,  margined or otherwise encumbered
          by the Participant.

               (ii)  Forfeiture.  Except  as  otherwise  determined  by the Plan
          Administrator  at  the  time  of  the  Award,  upon  termination  of a
          Participant's  Continuous  Service during the  applicable  restriction
          period,  the  Participant's  Restricted  Stock  that is at  that  time
          subject to  restrictions  shall be  forfeited  and  reacquired  by the
          Company;  provided that the Plan Administrator may provide, by rule or
          regulation  or in  any  Award  agreement,  or  may  determine  in  any
          individual case, that restrictions or forfeiture  conditions  relating
          to  Restricted  Stock shall be waived in whole or in part in the event
          of  terminations   resulting  from  specified  causes,  and  the  Plan
          Administrator  may in  other  cases  waive  in  whole  or in part  the
          forfeiture of Restricted Stock.

               (iii) Certificates for Stock.  Restricted Stock granted under the
          Plan may be evidenced in such manner, as the Plan Administrator  shall
          determine.   If  certificates   representing   Restricted   Stock  are
          registered in the name of the Participant,  the Plan Administrator may
          require that such certificates bear an appropriate legend referring to
          the terms,  conditions and restrictions  applicable to such Restricted
          Stock,   that  the  Company   retain   physical   possession   of  the
          certificates,  that the  certificates be kept with an escrow agent and
          that the Participant deliver a stock power to the Company, endorsed in
          blank, relating to the Restricted Stock.

               (iv)  Dividends  and Splits.  As a  condition  to the grant of an
          Award of Restricted Stock, the Plan Administrator may require that any
          cash  dividends paid on a share of Restricted  Stock be  automatically
          reinvested in additional  shares of Restricted Stock or applied to the
          purchase  of  additional  Awards  under  the  Plan.  Unless  otherwise
          determined by the Plan Administrator,  Stock distributed in connection
          with a Stock split or Stock dividend,  and other property  distributed
          as a  dividend,  shall  be  subject  to  restrictions  and a  risk  of
          forfeiture to the same extent as the Restricted  Stock with respect to
          which such Stock or other property has been distributed.

          (e) Stock Units.  The Plan  Administrator is authorized to grant Stock
     Units to  Participants,  which are  rights to  receive  Stock,  cash,  or a
     combination  thereof at the end of a specified time period,  subject to the
     following terms and conditions:

               (i) Award  and  Restrictions.  Satisfaction  of an Award of Stock
          Units shall occur upon  expiration  of the time period  specified  for
          such Stock Units by the Plan  Administrator  (or, if  permitted by the
          Plan Administrator, as elected by the Participant). In addition, Stock
          Units shall be subject to such restrictions  (which may include a risk
          of forfeiture)  as the Plan  Administrator  may impose,  if any, which
          restrictions  may  lapse at the  expiration  of the time  period or at
          earlier specified times (including based on achievement of performance
          goals  and/or   future   service   requirements),   separately  or  in
          combination,  in installments or otherwise,  as the Plan Administrator
          may determine. Stock Units may be satisfied by delivery of Stock, cash
          equal to the Fair  Market  Value of the  specified  number  of  Shares
          covered by the Stock Units, or a combination thereof, as determined by
          the Plan  Administrator  at the date of grant or thereafter.  Prior to
          satisfaction  of an  Award  of Stock  Units,  an Award of Stock  Units
          carries no voting or dividend or other  rights  associated  with share
          ownership.  Notwithstanding  any other  provision of the Plan,  unless
          otherwise   exempt  from   Section  409A  of  the  Code  or  otherwise
          specifically  determined  by the Plan  Administrator,  each Stock Unit
          shall be  structured  to avoid the  imposition of any excise tax under
          Section 409A of the Code.

               (ii)  Forfeiture.  Except  as  otherwise  determined  by the Plan
          Administrator,  upon termination of a Participant's Continuous Service
          during  the  applicable  time  period  thereof  to  which   forfeiture
          conditions  apply (as provided in the Award  agreement  evidencing the
          Stock Units),  the  Participant's  Stock Units (other than those Stock
          Units subject to deferral at the election of the Participant) shall be
          forfeited;  provided that the Plan Administrator may provide,  by rule
          or  regulation  or in any Award  agreement,  or may  determine  in any
          individual case, that restrictions or forfeiture  conditions  relating
          to Stock  Units  shall be  waived  in whole or in part in the event of
          terminations   resulting   from   specified   causes,   and  the  Plan
          Administrator  may in  other  cases  waive  in  whole  or in part  the
          forfeiture of Stock Units.

               (iii) Dividend  Equivalents.  Unless otherwise  determined by the
          Plan Administrator at date of grant, any Dividend Equivalents that are
          granted  with  respect to any Award of Stock Units shall be either (A)
          paid with respect to such Stock Units at the dividend  payment date in
          cash or in shares of  unrestricted  Stock  having a Fair Market  Value
          equal to the amount of such dividends, or (B) deferred with respect to
          such Stock Units and the amount or value thereof  automatically deemed
          reinvested in additional Stock Units, other Awards or other investment
          vehicles,  as the Plan  Administrator  shall  determine  or permit the
          Participant to elect.

          (f)  Bonus  Stock  and  Awards  in  Lieu  of  Obligations.   The  Plan
     Administrator is authorized to grant Stock as a bonus, or to grant Stock or
     other Awards in lieu of Company  obligations  to pay cash or deliver  other
     property under the Plan or under other plans or compensatory  arrangements,
     provided  that,  in the case of  Participants  subject to Section 16 of the
     Exchange Act, the amount of such grants  remains  within the  discretion of
     the Committee to the extent necessary to ensure that  acquisitions of Stock
     or other  Awards are  exempt  from  liability  under  Section  16(b) of the
     Exchange Act.  Stock or Awards granted  hereunder  shall be subject to such
     other terms as shall be determined by the Plan Administrator.

          (g) Dividend  Equivalents.  The Plan  Administrator  is  authorized to
     grant Dividend  Equivalents to a Participant  entitling the  Participant to
     receive cash,  Stock,  other Awards,  or other  property  equal in value to
     dividends  paid with  respect to a  specified  number of  Shares,  or other
     periodic payments.  Dividend  Equivalents may be awarded on a free-standing
     basis or in  connection  with another  Award.  The Plan  Administrator  may
     provide that Dividend Equivalents shall be paid or distributed when accrued
     or shall be deemed to have been reinvested in additional Stock,  Awards, or
     other   investment   vehicles,   and  subject  to  such   restrictions   on
     transferability  and risks of  forfeiture,  as the Plan  Administrator  may
     specify.  Notwithstanding any other provision of the Plan, unless otherwise
     exempt from Section 409A of the Code or otherwise  specifically  determined
     by the Plan Administrator, each Stock Unit shall be structured to avoid the
     imposition of any excise tax under Section 409A of the Code.

          (h) Other Stock-Based  Awards.  The Plan  Administrator is authorized,
     subject to limitations  under applicable law, to grant to Participants such
     other Awards that may be  denominated  or payable in, valued in whole or in
     part by  reference  to, or  otherwise  based on, or related to,  Stock,  as
     deemed by the Plan  Administrator to be consistent with the purposes of the
     Plan,  including,  without  limitation,  convertible or  exchangeable  debt
     securities,  other rights convertible or exchangeable into Stock,  purchase
     rights for Stock, Awards with value and payment contingent upon performance
     of the Company or any other factors  designated by the Plan  Administrator,
     and Awards  valued by  reference to the book value of Stock or the value of
     securities of or the performance of specified  Related Entities or business
     units. The Plan  Administrator  shall determine the terms and conditions of
     such  Awards.  Stock  delivered  pursuant  to an Award in the  nature  of a
     purchase  right granted under this Section 6(h) shall be purchased for such
     consideration  (including  without  limitation  loans from the Company or a
     Related  Entity),  paid for at such  times,  by such  methods,  and in such
     forms,  including,  without limitation,  cash, Stock, other Awards or other
     property, as the Plan Administrator shall determine. The Plan Administrator
     shall have the discretion to grant such other Awards which are  exercisable
     for unvested shares of Common Stock.  Should the  Participant's  Continuous
     Service cease while holding such  unvested  shares,  the Company shall have
     the right to repurchase,  at a price determined by the Administrator at the
     time of grant,  any or all of those unvested  shares.  The terms upon which
     such  repurchase  right  shall be  exercisable  (including  the  period and
     procedure  for  exercise  and  the  appropriate  vesting  schedule  for the
     purchased  shares) shall be established by the Plan  Administrator  and set
     forth in the document  evidencing such repurchase right. Cash awards, as an
     element of or  supplement  to any other Award  under the Plan,  may also be
     granted pursuant to this Section 6(h).  Notwithstanding any other provision
     of the Plan,  unless  otherwise  exempt  from  Section  409A of the Code or
     otherwise  specifically  determined by the Plan  Administrator,  each Stock
     Unit shall be  structured  to avoid the  imposition of any excise tax under
     Section 409A of the Code.

     7. Tax Qualified Performance Awards.

          (a) Covered  Employees.  A Committee,  composed in compliance with the
     requirements  of  Section  162(m)  of  the  Code,  in its  discretion,  may
     determine at the time an Award is granted to an Eligible  Person who is, or
     is likely to be, as of the end of the tax year in which the  Company  would
     claim a tax deduction in connection  with such Award,  a Covered  Employee,
     that the provisions of this Section 7 shall be applicable to such Award.

          (b)  Performance  Criteria.  If an Award is subject to this Section 7,
     then the  lapsing of  restrictions  thereon and the  distribution  of cash,
     Shares  or  other  property  pursuant  thereto,  as  applicable,  shall  be
     contingent  upon  achievement of one or more objective  performance  goals.
     Performance   goals  shall  be  objective  and  shall  otherwise  meet  the
     requirements  of  Section  162(m)  of the Code and  regulations  thereunder
     including the requirement that the level or levels of performance  targeted
     by the  Committee  result in the  achievement  of  performance  goals being
     "substantially  uncertain." One or more of the following  business criteria
     for the Company, on a consolidated  basis, and/or for Related Entities,  or
     for business or  geographical  units of the Company (except with respect to
     the total  stockholder  return and earnings per share  criteria),  shall be
     used by the Committee in  establishing  performance  goals for such Awards:
     (1)  earnings  per share;  (2)  revenues  or  margins;  (3) cash flow;  (4)
     operating margin; (5) return on net assets, investment, capital, or equity;
     (6) economic value added; (7) direct contribution;  (8) net income;  pretax
     earnings;  earnings  before interest and taxes;  earnings before  interest,
     taxes,  depreciation and amortization;  earnings after interest expense and
     before  extraordinary  or special items;  operating  income;  income before
     interest income or expense, unusual items and income taxes, local, state or
     federal and excluding budgeted and actual bonuses which might be paid under
     any  ongoing  bonus  plans  of  the  Company;  (9)  working  capital;  (10)
     management  of fixed  costs  or  variable  costs;  (11)  identification  or
     consummation  of  investment   opportunities  or  completion  of  specified
     projects in accordance with corporate business plans,  including  strategic
     mergers,  acquisitions or divestitures;  (12) total stockholder return; and
     (13)  debt  reduction.  Any of the  above  goals  may be  determined  on an
     absolute or relative basis or as compared to the performance of a published
     or special  index deemed  applicable by the  Committee  including,  but not
     limited to, the  Standard & Poor's 500 Stock Index or a group of  companies
     that are comparable to the Company.  The Committee shall exclude the impact
     of  an  event  or  occurrence   which  the  Committee   determines   should
     appropriately be excluded, including without limitation (i) restructurings,
     discontinued   operations,   extraordinary  items,  and  other  unusual  or
     non-recurring  charges,  (ii) an event either not  directly  related to the
     operations  of the  Company  or not within  the  reasonable  control of the
     Company's management, or (iii) a change in accounting standards required by
     generally accepted accounting principles.

          (c) Performance  Period;  Timing For Establishing  Performance  Goals.
     Achievement  of  performance  goals in respect of such  Performance  Awards
     shall be measured  over a  Performance  Period no shorter  than twelve (12)
     months and no longer than five (5) years,  as specified  by the  Committee.
     Performance  goals  shall be  established  not later than  ninety (90) days
     after  the  beginning  of  any  Performance   Period   applicable  to  such
     Performance  Awards,  or at such other date as may be required or permitted
     for "performance-based compensation" under Section 162(m) of the Code.

          (d)  Adjustments.  The Committee  may, in its  discretion,  reduce the
     amount of a  settlement  otherwise  to be made in  connection  with  Awards
     subject to this Section 7, but may not exercise  discretion to increase any
     such amount payable to a Covered Employee in respect of an Award subject to
     this Section 7. The Committee shall specify the circumstances in which such
     Awards shall be paid or forfeited in the event of termination of Continuous
     Service  by the  Participant  prior to the end of a  Performance  Period or
     settlement of Awards.

          (e) Committee Certification.  No Participant shall receive any payment
     under the Plan unless the Committee has  certified,  by resolution or other
     appropriate action in writing,  that the performance criteria and any other
     material terms previously  established by the Committee or set forth in the
     Plan,   have  been  satisfied  to  the  extent   necessary  to  qualify  as
     "performance based compensation" under Section 162(m) of the Code.

     8. Certain Provisions Applicable to Awards or Sales.

          (a) Stand-Alone,  Additional,  Tandem, and Substitute  Awards.  Awards
     granted under the Plan may, in the discretion of the Plan Administrator, be
     granted either alone or in addition to, in tandem with, or in  substitution
     or exchange for, any other Award or any award granted under another plan of
     the Company,  any Related Entity,  or any business entity to be acquired by
     the Company or a Related  Entity,  or any other right of a  Participant  to
     receive  payment from the Company or any Related Entity.  Such  additional,
     tandem, and substitute or exchange Awards may be granted at any time. If an
     Award is granted in  substitution  or exchange for another  Award or award,
     the Plan  Administrator  shall require the surrender of such other Award or
     award in consideration for the grant of the new Award. In addition,  Awards
     may be  granted  in lieu of cash  compensation,  including  in lieu of cash
     amounts payable under other plans of the Company or any Related Entity.

          (b) Form and Timing of Payment Under Awards; Deferrals. Subject to the
     terms of the Plan and any applicable Award  agreement,  payments to be made
     by the Company or a Related  Entity upon the exercise of an Option or other
     Award  or  settlement  of an  Award  may be made in such  forms as the Plan
     Administrator shall determine,  including,  without limitation, cash, other
     Awards or other property,  and may be made in a single payment or transfer,
     in installments, or on a deferred basis. The settlement of any Award may be
     accelerated,  and  cash  paid in lieu of  Stock  in  connection  with  such
     settlement,  in the discretion of the Plan Administrator or upon occurrence
     of one or more  specified  events  (in  addition  to a Change in  Control).
     Installment or deferred payments may be required by the Plan  Administrator
     (subject to Section  10(g) of the Plan) or permitted at the election of the
     Participant on terms and conditions  established by the Plan Administrator.
     Payments may include,  without  limitation,  provisions  for the payment or
     crediting of a reasonable interest rate on installment or deferred payments
     or the grant or  crediting  of  Dividend  Equivalents  or other  amounts in
     respect of installment or deferred payments denominated in Stock.

          (c) Exemptions from Section 16(b)  Liability.  It is the intent of the
     Company that this Plan comply in all respects with applicable provisions of
     Rule 16b-3 or Rule  16a-1(c)(3)  to the  extent  necessary  to ensure  that
     neither the grant of any Awards to nor other  transaction  by a Participant
     who is subject to Section 16 of the  Exchange  Act is subject to  liability
     under  Section  16(b)  thereof  (except for  transactions  acknowledged  in
     writing  to  be  non-exempt  by  such  Participant).  Accordingly,  if  any
     provision  of this Plan or any Award  agreement  does not  comply  with the
     requirements  of Rule 16b-3 or Rule  16a-1(c)(3) as then  applicable to any
     such transaction, such provision will be construed or deemed amended to the
     extent necessary to conform to the applicable requirements of Rule 16b-3 or
     Rule  16a-1(c)(3)  so that such  Participant  shall avoid  liability  under
     Section 16(b).

     9. Change in Control; Corporate Transaction.

          (a) Change in Control.

               (i) The Plan Administrator may, in its discretion, accelerate the
          vesting,  exercisability,  lapsing of  restrictions,  or expiration of
          deferral of any Award, including if we undergo a Change in Control. In
          addition,  the Plan  Administrator  may provide in an Award  agreement
          that the  performance  goals  relating  to any Award will be deemed to
          have been met upon the occurrence of any Change in Control.

               (ii) In  addition  to the terms of Sections  9(a)(i)  above,  the
          effect of a "change in control," may be provided (1) in an employment,
          compensation,  or severance agreement,  if any, between the Company or
          any Related Entity and the Participant,  relating to the Participant's
          employment,  compensation,  or  severance  with or from the Company or
          such Related Entity, or (2) in the agreement evidencing the Award.

          (b) Corporate  Transactions.  In the event of a Corporate Transaction,
     any surviving corporation or acquiring corporation may either (i) assume or
     continue any or all Awards  outstanding  under the Plan or (ii)  substitute
     similar  stock  awards for  outstanding  Awards (it being  understood  that
     similar awards include,  but are not limited to, awards to acquire the same
     consideration paid to the shareholders or the Company,  as the case may be,
     pursuant to the  Corporate  Transaction).  In the event that any  surviving
     corporation or acquiring corporation does not assume or continue any or all
     such  outstanding  Awards  or  substitute  similar  stock  awards  for such
     outstanding Awards, then with respect to Awards that have been not assumed,
     continued or substituted, then such Awards shall terminate if not exercised
     (if  applicable) at or prior to such effective  time  (contingent  upon the
     effectiveness  of the Corporate  Transaction).  The  Administrator,  in its
     discretion  and  without the  consent of any  Participant,  may (but is not
     obligated  to) either (i)  accelerate  the vesting of all Awards  (and,  if
     applicable,  the time at which such Awards may be  exercised) in full or as
     to some  percentage of the Award to a date prior to the  effective  time of
     such Corporate Transaction as the Administrator shall determine (contingent
     upon the effectiveness of each Corporate Transaction) or (ii) provide for a
     cash  payment in exchange  for the  termination  of an Award or any portion
     thereof  where such cash  payment is equal to the Fair Market  Value of the
     Shares that the  Participant  would  receive if the Award were fully vested
     and exercised (if applicable) as of such date (less any applicable exercise
     price). The Administrator,  in its sole discretion, shall determine whether
     each Award is assumed, continued, substituted or terminated.

          With respect to Restricted Stock and any other Award granted under the
     Plan that the Company  has any  reacquisition  or  repurchase  rights,  the
     reacquisition  or repurchase  rights for such Awards may be assigned by the
     Company to the successor of the Company (or the successor's parent company)
     in  connection   with  such  Corporate   Transaction.   In  addition,   the
     Administrator,  in its  discretion,  may (but is not  obligated to) provide
     that any  reacquisition  or  repurchase  rights  held by the  Company  with
     respect to such Awards shall lapse in whole or in part (contingent upon the
     effectiveness of the Corporate Transaction).

          (c)  Dissolution  or  Liquidation.  In the event of a  dissolution  or
     liquidation of the Company,  then all  outstanding  Awards shall  terminate
     immediately prior to the completion of such dissolution or liquidation, and
     shares of Common Stock  subject to the Company's  repurchase  option may be
     repurchased by the Company notwithstanding the fact that the holder of such
     stock is still in Continuous Service.

     10. General Provisions.

          (a) Compliance With Legal and Other Requirements.  The Company may, to
     the  extent  deemed  necessary  or  advisable  by the  Plan  Administrator,
     postpone  the  issuance or  delivery of Stock or payment of other  benefits
     under any Award until  completion of such  registration or qualification of
     such Stock or other required action under any federal or state law, rule or
     regulation,  listing or other  required  action  with  respect to any stock
     exchange  or  automated  quotation  system  upon  which  the Stock or other
     Company  securities  are listed or  quoted,  or  compliance  with any other
     obligation  of  the  Company,  as  the  Plan  Administrator,  may  consider
     appropriate,  and may require any Participant to make such representations,
     furnish  such  information  and  comply  with or be  subject  to such other
     conditions as it may consider  appropriate in connection  with the issuance
     or  delivery  of Stock or  payment of other  benefits  in  compliance  with
     applicable laws,  rules, and regulations,  listing  requirements,  or other
     obligations. The foregoing notwithstanding,  in connection with a Change in
     Control,  the Company shall take or cause to be taken no action,  and shall
     undertake  or  permit  to arise no legal or  contractual  obligation,  that
     results or would result in any  postponement of the issuance or delivery of
     Stock or payment of benefits under any Award or the imposition of any other
     conditions on such issuance,  delivery or payment,  to the extent that such
     postponement  or other  condition  would  represent  a greater  burden on a
     Participant than existed on the 90th day preceding the Change in Control.

          (b) Limits on Transferability; Beneficiaries.

               (i)  General.  Except  as  provided  in the  Award  agreement,  a
          Participant may not assign, sell,  transfer,  or otherwise encumber or
          subject to any lien any Award or other right or interest granted under
          this Plan, in whole or in part,  other than by will or by operation of
          the laws of descent and  distribution,  and such Awards or rights that
          may be  exercisable  shall be  exercised  during the  lifetime  of the
          Participant  only by the  Participant  or his or her guardian or legal
          representative.

               (ii) Permitted Transfer of Option. The Plan Administrator, in its
          sole  discretion,  may permit the  transfer  of an Option  (but not an
          Incentive  Stock  Option,  or any other right to purchase  Stock other
          than  an  Option)  as  follows:  (A)  by  gift  to  a  member  of  the
          Participant's  Immediate  Family or (B) by transfer by instrument to a
          trust providing that the Option is to be passed to beneficiaries  upon
          death of the  Participant.  For  purposes of this  Section  10(b)(ii),
          "Immediate  Family" shall mean the  Participant's  spouse (including a
          former spouse subject to terms of a domestic relations order);  child,
          stepchild, grandchild,  child-in-law; parent, stepparent, grandparent,
          parent-in-law;  sibling and sibling-in-law, and shall include adoptive
          relationships.  If a determination  is made by counsel for the Company
          that the  restrictions  contained  in this Section  10(b)(ii)  are not
          required  by  applicable  federal or state  securities  laws under the
          circumstances,   then  the  Committee  or  the  Board,   in  its  sole
          discretion,  may permit the transfer of Awards  (other than  Incentive
          Stock Options and Stock  Appreciation  Rights in tandem  therewith) to
          one or more  Beneficiaries or other transferees during the lifetime of
          the  Participant,  which  may be  exercised  by  such  transferees  in
          accordance with the terms of such Award, but only if and to the extent
          permitted by the Plan  Administrator  pursuant to the express terms of
          an Award agreement (subject to any terms and conditions which the Plan
          Administrator   may  impose  thereon,   and  further  subject  to  any
          prohibitions  and  restrictions  on such  transfers  pursuant  to Rule
          16b-3). A Beneficiary, transferee, or other person claiming any rights
          under the Plan from or through any Participant shall be subject to all
          terms and conditions of the Plan and any Award agreement applicable to
          such  Participant,   except  as  otherwise   determined  by  the  Plan
          Administrator,  and to any  additional  terms  and  conditions  deemed
          necessary or appropriate by the Plan Administrator.

          (c) Adjustments.

               (i)  Adjustments  to Awards.  In the event that any  dividend  or
          other  distribution  (whether  in the  form of cash,  Stock,  or other
          property), recapitalization, forward or reverse split, reorganization,
          merger,  consolidation,   spin-off,  combination,   repurchase,  share
          exchange,   liquidation,   dissolution  or  other  similar   corporate
          transaction or event affects the Stock and/or such other securities of
          the Company or any other issuer such that a substitution, exchange, or
          adjustment is determined by the Plan  Administrator to be appropriate,
          then the  Plan  Administrator  shall,  in such  manner  as it may deem
          equitable,  substitute,  exchange,  or  adjust  any or all of (A)  the
          number and kind of Shares which may be delivered  in  connection  with
          Awards granted thereafter,  (B) the number and kind of Shares by which
          annual  per-person  Award  limitations  are measured  under  Section 5
          hereof, (C) the number and kind of Shares subject to or deliverable in
          respect of outstanding  Awards, (D) the exercise price, grant price or
          purchase price relating to any Award and/or make provision for payment
          of cash or other property in respect of any outstanding Award, and (E)
          any other aspect of any Award that the Plan  Administrator  determines
          to be appropriate.

               (ii) Other Adjustments.  The Committee (and the Board if and only
          to the extent such  authority  is not  required to be exercised by the
          Committee to comply with Code Section  162(m)) is  authorized  to make
          adjustments in the terms and conditions of, and the criteria  included
          in,  Awards  (including  Awards  subject  to  performance   goals)  in
          recognition  of unusual or  nonrecurring  events  (including,  without
          limitation,  acquisitions  and  dispositions of businesses and assets)
          affecting the Company, any Related Entity or any business unit, or the
          financial  statements  of the  Company or any  Related  Entity,  or in
          response  to  changes  in  applicable  laws,  regulations,  accounting
          principles,  tax rates and  regulations  or business  conditions or in
          view of the  Committee's  assessment  of the business  strategy of the
          Company,  any Related Entity or business unit thereof,  performance of
          comparable organizations,  economic and business conditions,  personal
          performance  of a  Participant,  and any  other  circumstances  deemed
          relevant; provided that no such adjustment shall be authorized or made
          if and to the  extent  that  such  authority  or the  making  of  such
          adjustment  would  cause  Options,   Stock   Appreciation   Rights  or
          Performance Awards granted to Participants designated by the Committee
          as Covered  Employees  and  intended to qualify as  "performance-based
          compensation" under Code Section 162(m) and the regulations thereunder
          to otherwise fail to qualify as "performance-based compensation" under
          Code Section 162(m) and regulations thereunder.

          (d) Taxes.  The  Company  and any  Related  Entity are  authorized  to
     withhold from any Award granted, any payment relating to an Award under the
     Plan,  including  from a  distribution  of Stock,  or any  payroll or other
     payment to a  Participant,  amounts of  withholding  and other taxes due or
     potentially payable in connection with any transaction  involving an Award,
     and to take such other action as the Plan  Administrator may deem advisable
     to enable the  Company  and  Participants  to satisfy  obligations  for the
     payment of  withholding  taxes and other tax  obligations  relating  to any
     Award.  This authority shall include authority to withhold or receive Stock
     or  other  property  and to  make  cash  payments  in  respect  thereof  in
     satisfaction of a Participant's  tax obligations,  either on a mandatory or
     elective basis in the discretion of the Committee.

          (e)  Changes  to the Plan and  Awards.  The  Board may  amend,  alter,
     suspend, discontinue or terminate the Plan, or the Committee's authority to
     grant  Awards  under the Plan,  without  the  consent  of  shareholders  or
     Participants.  Any  amendment or alteration to the Plan shall be subject to
     the approval of the Company's  shareholders if such shareholder approval is
     deemed necessary and advisable by the Board.  However,  without the consent
     of an affected  Participant,  no such  amendment,  alteration,  suspension,
     discontinuance  or  termination  of the Plan may  materially  and adversely
     affect the rights of such  Participant  under any  previously  granted  and
     outstanding  Award.  The Plan  Administrator  may waive any  conditions  or
     rights under, or amend, alter, suspend,  discontinue or terminate any Award
     theretofore  granted and any Award agreement  relating  thereto,  except as
     otherwise  provided in the Plan;  provided that,  without the consent of an
     affected  Participant,  no such action may materially and adversely  affect
     the rights of such Participant under such Award.

          (f) Limitation on Rights  Conferred  Under Plan.  Neither the Plan nor
     any action  taken  hereunder  shall be construed as (i) giving any Eligible
     Person  or  Participant  the right to  continue  as an  Eligible  Person or
     Participant  or in the  employ of the  Company  or a Related  Entity;  (ii)
     interfering in any way with the right of the Company or a Related Entity to
     terminate any Eligible Person's or Participant's  Continuous Service at any
     time,  (iii)  giving  an  Eligible  Person or  Participant  any claim to be
     granted  any Award  under the Plan or to be  treated  uniformly  with other
     Participants and Employees,  or (iv) conferring on a Participant any of the
     rights of a shareholder of the Company unless and until the  Participant is
     duly issued or transferred Shares in accordance with the terms of an Award.

          (g)  Unfunded  Status  of  Awards;  Creation  of  Trusts.  The Plan is
     intended to  constitute  an  "unfunded"  plan for  incentive  and  deferred
     compensation. With respect to any payments not yet made to a Participant or
     obligations to deliver Stock pursuant to an Award, nothing contained in the
     Plan or any Award  shall  give any such  Participant  any  rights  that are
     greater than those of a general creditor of the Company;  provided that the
     Committee may  authorize  the creation of trusts and deposit  therein cash,
     Stock,  other Awards or other property,  or make other arrangements to meet
     the Company's obligations under the Plan. Such trusts or other arrangements
     shall be  consistent  with the  "unfunded"  status of the Plan  unless  the
     Committee   otherwise   determines   with  the  consent  of  each  affected
     Participant.  The  trustee of such trusts may be  authorized  to dispose of
     trust assets and reinvest the proceeds in alternative investments,  subject
     to such terms and conditions as the Plan  Administrator  may specify and in
     accordance with applicable law.

          (h)  Nonexclusivity  of the Plan.  Neither the adoption of the Plan by
     the  Board  nor its  submission  to the  shareholders  of the  Company  for
     approval shall be construed as creating any limitations on the power of the
     Board or a committee thereof to adopt such other incentive  arrangements as
     it may deem desirable including incentive  arrangements and awards which do
     not qualify under Code Section 162(m).

          (i)  Fractional  Shares.  No  fractional  Shares  shall be  issued  or
     delivered pursuant to the Plan or any Award. The Plan  Administrator  shall
     determine  whether cash,  other Awards or other property shall be issued or
     paid in lieu of such fractional shares or whether such fractional shares or
     any rights thereto shall be forfeited or otherwise eliminated.

          (j) Governing Law. The validity,  construction and effect of the Plan,
     any rules and regulations  under the Plan, and any Award agreement shall be
     determined  in  accordance  with the laws of the State of New York  without
     giving effect to principles of conflicts of laws,  and  applicable  federal
     law.

          (k) Plan Effective Date and Shareholder Approval; Termination of Plan.
     The  Plan  shall  become  effective  on  the  Effective  Date,  subject  to
     subsequent  approval within twelve (12) months of its adoption by the Board
     by  shareholders  of the  Company  eligible  to  vote  in the  election  of
     directors,  by a vote sufficient to meet the  requirements of Code Sections
     162(m) (if  applicable)  and 422,  Rule 16b-3  under the  Exchange  Act (if
     applicable),  applicable Nasdaq requirements,  and other laws, regulations,
     and  obligations  of the  Company  applicable  to the Plan.  Awards  may be
     granted  subject  to  shareholder  approval,  but may not be  exercised  or
     otherwise  settled in the event shareholder  approval is not obtained.  The
     Plan  shall  terminate  no later  than ten (10)  years from the date of the
     later of (x) the Effective  Date and (y) the date an increase in the number
     of shares reserved for issuance under the Plan is approved by the Board (so
     long as such increase is also approved by the shareholders).

                                    EXHIBIT A
                                  Plan History

     1. Plan adopted by the board of directors on June 23, 2005.

     2. Plan approved by the shareholders on September 29, 2005.

     3. Plan amended to prohibit repricings (Section 6(b)(vii)) on September 29,
2005.