NATIONAL MEDICAL HEALTH CARD SYSTEMS INC
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<FILENAME>nmhcstkoptn0504.htm
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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT 10.17  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>STOCK
OPTION AGREEMENT</B> made as of the 4<SUP>th</SUP> day of May, 2004 between <B>NATIONAL
MEDICAL HEALTH CARD SYSTEMS, INC.</B>, a New York corporation (the &#147;Company&#148;),
and ________________ (the &#147;Optionee&#148;). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS,
</B>the Optionee is a non-employee Director of the Company or a subsidiary thereof; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS,</B>
 the Company  desires to provide to the Optionee an additional  incentive to promote the
success of the Company; </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW,
THEREFORE</B>, in consideration of the foregoing, the Company hereby grants to the
Optionee (the &#147;Grant&#148;) the right and option to purchase Common Shares of the
Company under and pursuant to the terms and conditions of the 1999 Stock Option Plan, as
amended, (the &#147;Plan&#148;) and upon and subject to the following terms and
conditions:  </FONT></P>



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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <B><U>GRANT OF OPTION</U></B><U></U>. The Company hereby grants to the Optionee
          the right and option (the &#147;Option&#148;) to purchase up to Twenty Thousand
          (20,000) Common Shares of the Company (the &#147;Option Shares&#148;) during the
          following periods: </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          All or any part of Six Thousand Six Hundred and Sixty Seven (6,667) Common
          Shares may be purchased during the period commencing one year from the date
          hereof and terminating at 5:00 P.M. on May 4, 2011 (the &#147;Expiration
          Date&#148;). </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          All or any part of an additional Six Thousand Six Hundred and Sixty Seven
          (6,667) Common Shares may be purchased during the period commencing two years
          from the date hereof and terminating at 5:00 P.M. on the Expiration Date. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          All or any part of an additional Six Thousand Six Hundred and Sixty Six (6,666)
          Common Shares may be purchased during the period commencing three years from the
          date hereof and terminating at 5:00 P.M. on the Expiration Date. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <B><U>NATURE OF OPTION</U></B><U></U>. Such Options to purchase the Option
          Shares are not intended to meet the requirements of Section 422 of the Internal
          Revenue Code of 1986, as amended, relating to &#147;incentive stock
          options&#148;. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <B><U>EXERCISE PRICE</U></B><U></U>. The exercise price of each of the Option
          Shares shall be thirty one dollars ($31.00) (the &#147;Option Price&#148;). The
          Company shall pay all original issue or transfer taxes on the exercise of the
          Option. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <B><U>EXERCISE OF OPTIONS</U></B><U></U>. The Option shall be exercised in
          accordance with the provisions of the Plan. As soon as practicable after the
          receipt of notice of exercise (in the form annexed hereto as Exhibit A) and
          payment of the Option Price as provided for in the Plan, the Company shall
          tender to the Optionee certificates issued in the Optionee&#146;s name
          evidencing the number of Option Shares covered thereby. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <B><U>TRANSFERABILITY</U></B><U></U>. The Option shall not be transferable other
          than by will or the laws of descent and distribution and, during the
          Optionee&#146;s lifetime, shall not be exercisable by any person other than the
          Optionee. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <B><U>INCORPORATION BY REFERENCE</U></B><U></U>. The terms and conditions of the
          Plan are hereby incorporated by reference and made a part hereof. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <B><U>NOTICES</U></B><U></U>. Any notice or other communication given hereunder
          shall be deemed sufficient if in writing and hand delivered or sent by
          registered or certified mail, return receipt requested, addressed to the
          Company, 26 Harbor Park Drive, Port Washington, New York 11050, Attention:
          Secretary and to the Optionee at the address indicated below. Notices shall be
          deemed to have been given on the date of hand delivery or mailing, except
          notices of change of address, which shall be deemed to have been given when
          received. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <B><U>BINDING EFFECT</U></B><U></U>. This Agreement shall be binding upon and
          inure to the benefit of the parties hereto and their respective legal
          representatives, successors and assigns. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <B><U>ACCELERATION</U>. </B>In the event of any (i) consolidation or merger of
          the Company with or into another company where the Company is not the survivor
          and the directors of the Company immediately prior to the consolidation or
          merger do not constitute a majority of the board of directors subsequent to the
          consolidation or merger, or (ii) conveyance of all or substantially all of the
          assets of the Company to another company, (such consolidation, merger or
          conveyance of assets a &#147;Change in Control&#148;) each then outstanding
          Option (x) shall, immediately prior to the effective date of the Change in
          Control, become fully exercisable, provided that no acceleration of
          exercisability shall occur with respect to an outstanding Option if and to the
          extent such Option is, in connection with the Change in Control, to be assumed
          or otherwise continued in full force or effect by the successor entity (or
          parent thereof) pursuant to the terms of the Change in Control transaction, and
          (y) shall upon exercise thereafter entitle the holder thereof to such number of
          shares of Common Stock or other securities or property to which a holder of
          shares of Common Stock of the Company would have been entitled upon such Change
          in Control. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <B><U>ENTIRE AGREEMENT</U></B><U></U>. This Agreement, together with the Plan,
          contains the entire understanding of the parties hereto with respect to the
          subject matter hereof and may be modified only by an instrument executed by the
          party sought to be charged. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN
WITNESS WHEREOF</B>, the parties have executed this Agreement as of the day and year first
above written. </FONT></P>

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<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.</B><BR><BR>
<BR>BY: /S/ JAMES J. BIGL<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
JAMES J. BIGL<BR>PRESIDENT &amp; CEO </FONT>
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<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B></B><BR><BR>
<BR><u></u><BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
OPTIONEE<BR></FONT></TD>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT A </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>NATIONAL MEDICAL
HEALTH CARD SYSTEMS, INC. </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>OPTION EXERCISE FORM </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned hereby irrevocably elects to exercise the within Option dated to the extent of
purchasing Common Shares of National Medical Health Card Systems, Inc. The undersigned
hereby makes a payment of $<U> </U> in payment therefor. </FONT></P>

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<BR><BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
OPTIONEE<BR></FONT></TD>
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<BR><BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
SIGNATURE OF OPTIONEE<BR></FONT></TD>
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<BR><BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
ADDRESS OF OPTIONEE<BR></FONT></TD>
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<BR><BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
DATE<BR></FONT></TD>
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