NATIONAL MEDICAL HEALTH CARD SYSTEMS INC
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>nmhc1999stockoptionplanamd.txt
<TEXT>
                                                                    EXHIBIT 10.4



                   National Medical Health Card Systems, Inc.

                             1999 Stock Option Plan

                          As Amended on March 18, 2004

     1. Purpose of the Plan. The National Medical Health Card Systems, Inc. 1999
Stock Option Plan (the "Plan") is intended to advance the  interests of National
Medical Health Card Systems,  Inc. (the  "Company") by inducing  individuals and
eligible entities (as hereinafter provided) of outstanding ability and potential
to join and remain  with,  or provide  consulting  or advisory  services to, the
Company, by encouraging and enabling eligible employees, non-employee Directors,
consultants and advisors to acquire proprietary interests in the Company, and by
providing the participating employees,  non-employee Directors,  consultants and
advisors  with an  additional  incentive  to promote the success of the Company.
This is accomplished  by providing for the granting of "Options,"  which term as
used herein  includes both  "Incentive  Stock Options" and  "Nonstatutory  Stock
Options," as later defined, to employees,  non-employee  Directors,  consultants
and advisors.

     2. Administration. The Plan shall be administered by the Board of Directors
of the Company (the "Board of Directors")  or by a committee  (the  "Committee")
consisting of at least one (1) person  chosen by the Board of Directors.  Except
as herein  specifically  provided,  the  interpretation  and construction by the
Board of  Directors  or the  Committee  of any  provision  of the Plan or of any
Option granted under it shall be final and conclusive. The receipt of Options by
Directors, or any members of the Committee, shall not preclude their vote on any
matters in connection with the administration or interpretation of the Plan.

     3. Shares Subject to the Plan.  The stock subject to Options  granted under
the Plan shall be shares of the  Company's  common  stock,  par value  $.001 per
share (the  "Common  Stock"),  whether  authorized  but  unissued or held in the
Company's  treasury,  or shares  purchased from  stockholders  expressly for use
under the Plan.  The maximum  number of shares of Common  Stock (a) which may be
issued  pursuant to Options or SARs  granted  under the Plan shall not exceed in
the aggregate four million eight hundred fifty thousand  (4,850,000) shares, and
(b) with  respect to which  Options  and SARs (as  hereinafter  defined)  may be
granted  during any fiscal year of the Company to any employee  shall not exceed
six hundred thousand (600,000) shares,  subject to adjustment in accordance with
the  provisions  of Section 14 hereof.  The Company shall at all times while the
Plan is in force  reserve  such  number of  shares  of  Common  Stock as will be
sufficient to satisfy the requirements of all outstanding  Options granted under
the Plan.  In the event  any  Option  granted  under  the Plan  shall  expire or
terminate for any reason  without  having been  exercised in full or shall cease
for any reason to be  exercisable in whole or in part,  the  unpurchased  shares
subject thereto shall again be available for Options under the Plan.

     4. Participation.  The class of individual or entity that shall be eligible
to receive  Options under the Plan shall be (a) with respect to Incentive  Stock
Options  described in Section 6 hereof,  all employees  (including  officers) of
either the Company or any subsidiary  corporation  of the Company,  and (b) with
respect  to  Nonstatutory  Stock  Options  described  in  Section 7 hereof,  all
employees (including officers) and non-employee Directors of, or consultants and
advisors to, either the Company or any  subsidiary  corporation  of the Company;
provided,  however,  that Nonstatutory Stock Options shall not be granted to any
such  consultants and advisors unless (i) bona fide services have been or are to
be rendered by such  consultant  or advisor  and (ii) such  services  are not in
connection   with  the  offer  or  sale  of  securities  in  a  capital  raising
transaction.  For purposes of the Plan, for an entity to be an eligible  entity,
it must be included in the  definition of "employee"  for purposes of a Form S-8
Registration  Statement  filed under the Securities Act of 1933, as amended (the
"Act").  The Board of Directors or the Committee,  in its sole  discretion,  but
subject  to the  provisions  of the Plan,  shall  determine  the  employees  and
non-employee  Directors of, and the consultants and advisors to, the Company and
its subsidiary  corporations to whom Options shall be granted, and the number of
shares to be covered  by each  Option,  taking  into  account  the nature of the
employment or services rendered by the individuals or entities being considered,
their annual  compensation,  their  present and potential  contributions  to the
success of the Company,  and such other factors as the Board of Directors or the
Committee may deem relevant.

     5. Stock  Option  Agreement.  Each Option  granted  under the Plan shall be
authorized by the Board of Directors or the Committee, and shall be evidenced by
a Stock  Option  Agreement  which  shall be  executed  by the Company and by the
individual or entity to whom such Option is granted.  The Stock Option Agreement
shall  specify  the  number of shares of Common  Stock as to which any Option is
granted, the period during which the Option is exercisable, the option price per
share thereof,  and such other terms and provisions as the Board of Directors or
the Committee may deem necessary or appropriate.

     6.  Incentive  Stock  Options.  The Board of Directors or the Committee may
grant Options  under the Plan,  which are intended to meet the  requirements  of
Section 422 of the Internal  Revenue Code of 1986, as amended (the "Code"),  and
which are subject to the following  terms and conditions and any other terms and
conditions  as may at any time be required by Section 422 of the Code  (referred
to herein as an "Incentive Stock Option"):

     (a) No Incentive  Stock Option shall be granted to  individuals  other than
employees of the Company or of a subsidiary corporation of the Company.

     (b) Each  Incentive  Stock Option  under the Plan must be granted  prior to
February  9,  2009,  which is within  ten (10)  years from the date the Plan was
adopted by the Board of Directors of the Company.

     (c) The option price of the shares  subject to any  Incentive  Stock Option
shall not be less than the fair  market  value of the  Common  Stock at the time
such Incentive Stock Option is granted; provided, however, if an Incentive Stock
Option is granted to an individual  who owns,  at the time the  Incentive  Stock
Option is granted,  more than ten  percent  (10%) of the total  combined  voting
power of all  classes  of  stock of the  Company  or of a parent  or  subsidiary
corporation of the Company (a "Principal Stockholder"),  the option price of the
shares  subject to the Incentive  Stock Option shall be at least one hundred ten
percent  (110%) of the fair  market  value of the  Common  Stock at the time the
Incentive Stock Option is granted.

     (d) No Incentive  Stock Option  granted under the Plan shall be exercisable
after the expiration of ten (10) years from the date of its grant.  However,  if
an Incentive Stock Option is granted to a Principal Stockholder,  such Incentive
Stock Option shall not be  exercisable  after the  expiration  of five (5) years
from the date of its grant.  Every Incentive Stock Option granted under the Plan
shall be subject to earlier  termination  as  expressly  provided  in Section 12
hereof.

     (e) For purposes of determining  stock  ownership under this Section 6, the
attribution rules of Section 424(d) of the Code shall apply.

     (f) For purposes of the Plan,  fair market value shall be determined by the
Board of Directors or the Committee. If the Common Stock is listed on a national
securities  exchange or The Nasdaq Stock Market ("Nasdaq") or traded on the NASD
OTC Electronic  Bulletin Board (the  "Bulletin  Board") or the  Over-the-Counter
market,  fair  market  value  shall be the  closing  selling  price  or,  if not
available, the closing bid price or, if not available, the high bid price of the
Common Stock quoted on such  exchange or Nasdaq,  or as reported by the Bulletin
Bord or, with respect to the  Over-the-Counter  market,  the National  Quotation
Bureau, Incorporated or other reporting bureau, on the day immediately preceding
the day on which the  Option  is  granted  (or,  if  granted  after the close of
trading, on the day on which the Option is granted),  or, if there is no selling
or bid price on that day, the closing  selling price,  closing bid price or high
bid price on the most  recent  day which  precedes  that day and for which  such
prices are  available.  If there is no selling or bid price for the thirty  (30)
day period preceding the date of grant of an Option hereunder, fair market value
shall be determined in good faith by the Board of Directors or the Committee.

     7. Nonstatutory Stock Options.  The Board of Directors or the Committee may
grant Options under the Plan which are not intended to meet the  requirements of
Section  422 of the Code,  as well as  Options  which are  intended  to meet the
requirements of Section 422 of the Code but the terms of which provide that they
will not be  treated  as  Incentive  Stock  Options  (referred  to  herein  as a
"Nonstatutory Stock Option"). Nonstatutory Stock Options shall be subject to the
following terms and conditions:

     (a) A Nonstatutory  Stock Option may be granted to any individual or entity
eligible to receive an Option under the Plan pursuant to Section 4(b) hereof.

     (b) The option price of the shares subject to a  Nonstatutory  Stock Option
shall be  determined  by the Board of  Directors or the  Committee,  in its sole
discretion, at the time of the grant of the Nonstatutory Stock Option.

     (c) A  Nonstatutory  Stock  Option  granted  under  the Plan may be of such
duration  as shall be  determined  by the Board of  Directors  or the  Committee
(subject to earlier termination as expressly provided in Section 12 hereof).

     8.  Reload  Feature.  The Board of  Directors  or the  Committee  may grant
Options with a reload feature. A reload feature shall only apply when the option
price is paid by delivery of Common  Stock (as set forth in Section  13(b)(ii)).
The Stock Option  Agreement for the Options  containing the reload feature shall
provide that the Option holder shall receive, contemporaneously with the payment
of the  option  price in shares of Common  Stock,  a reload  stock  option  (the
"Reload  Option") to purchase that number of shares of Common Stock equal to the
sum of (i) the number of shares of Common Stock used to exercise the Option, and
(ii) with respect to Nonstatutory Stock Options,  the number of shares of Common
Stock used to satisfy any tax withholding  requirement  incident to the exercise
of such  Nonstatutory  Stock  Option.  The terms of the Plan  applicable  to the
Option  shall be equally  applicable  to the Reload  Option  with the  following
exceptions:  (i) the option price per share of Common Stock deliverable upon the
exercise of the Reload  Option,  (A) in the case of a Reload  Option which is an
Incentive  Stock Option being granted to a Principal  Stockholder,  shall be one
hundred ten percent  (110%) of the fair market  value of a share of Common Stock
on the date of grant of the Reload Option and (B) in the case of a Reload Option
which is an  Incentive  Stock Option being  granted to an  individual  or entity
other than a Principal  Stockholder or is a Nonstatutory Stock Option,  shall be
the fair  market  value of a share of  Common  Stock on the date of grant of the
Reload  Option;  and (ii) the term of the  Reload  Option  shall be equal to the
remaining option term of the Option  (including a Reload Option) which gave rise
to the Reload  Option.  The Reload  Option shall be evidenced by an  appropriate
amendment  to the Stock Option  Agreement  for the Option which gave rise to the
Reload Option.  In the event the exercise price of an Option containing a reload
feature is paid by check and not in shares of Common Stock,  the reload  feature
shall have no application with respect to such exercise.

     9. Rights of Option  Holders.  The holder of any Option  granted  under the
Plan shall have none of the rights of a  stockholder  with  respect to the stock
covered by his Option  until such  stock  shall be  transferred  to him upon the
exercise of his Option.

     10.  Alternate  Stock  Appreciation   Rights.  (a)  Concurrently  with,  or
subsequent  to, the award of any Option to purchase one or more shares of Common
Stock,  the Board of Directors  or the  Committee  may, in its sole  discretion,
subject to the provisions of the Plan and such other terms and conditions as the
Board of Directors or the  Committee may  prescribe,  award to the optionee with
respect to each share of Common Stock covered by an Option ("Related Option"), a
related alternate stock appreciation  right ("SAR"),  permitting the optionee to
be paid the appreciation on the Related Option in lieu of exercising the Related
Option. An SAR granted with respect to an Incentive Stock Option must be granted
together with the Related Option.  An SAR granted with respect to a Nonstatutory
Stock Option may be granted  together  with, or subsequent to, the grant of such
Related Option.

     (b) Each SAR  granted  under the Plan shall be  authorized  by the Board of
Directors or the  Committee,  and shall be evidenced by an SAR  Agreement  which
shall be executed by the  Company and by the  individual  or entity to whom such
SAR is granted.  The SAR Agreement shall specify the period during which the SAR
is exercisable,  and such other terms and provisions not  inconsistent  with the
Plan.

     (c) An SAR may be  exercised  only if and to the  extent  that its  Related
Option is  eligible to be  exercised  on the date of exercise of the SAR. To the
extent that a holder of an SAR has a current  right to exercise,  the SAR may be
exercised  from time to time by delivery by the holder thereof to the Company at
its principal office (attention: Secretary) of a written notice of the number of
shares  with  respect  to which  it is being  exercised.  Such  notice  shall be
accompanied by the agreements  evidencing the SAR and the Related Option. In the
event the SAR shall not be exercised in full, the Secretary of the Company shall
endorse or cause to be endorsed  on the SAR  Agreement  and the  Related  Option
Agreement  the number of shares  which have been  exercised  thereunder  and the
number of shares that remain  exercisable  under the SAR and the Related  Option
and return such SAR and Related Option to the holder thereof.

     (d) An  optionee  may  exercise  an SAR only when the  market  price on the
exercise date of a share of Common Stock subject to the Related  Option  exceeds
the  exercise  price per share of the  Related  Option (the "SAR  Spread").  The
amount of payment to which an optionee  shall be entitled  upon the  exercise of
each SAR  shall  be  equal to one  hundred  percent  (100%)  of the SAR  Spread;
provided,  however,  the Company may, in its sole discretion,  withhold from any
such cash payment any amount  necessary to satisfy the Company's  obligation for
withholding taxes with respect to such payment.

     (e) The amount payable by the Company to an optionee upon exercise of a SAR
may,  in the sole  determination  of the  Company,  be paid in  shares of Common
Stock, cash or a combination thereof, as set forth in the SAR Agreement.  In the
case of a payment in shares,  the number of shares of Common Stock to be paid to
an  optionee  upon such  optionee's  exercise of an SAR shall be  determined  by
dividing the amount of payment  determined  pursuant to Section  10(d) hereof by
the fair market value of a share of Common  Stock on the  exercise  date of such
SAR. For purposes of the Plan, the exercise date of an SAR shall be the date the
Company receives written  notification  from the optionee of the exercise of the
SAR in  accordance  with the  provisions  of Section  10(c)  hereof.  As soon as
practicable after exercise, the Company shall either deliver to the optionee the
amount of cash due such  optionee  or a  certificate  or  certificates  for such
shares of Common  Stock.  All such  shares  shall be issued  with the rights and
restrictions specified herein.

     (f) SARs shall terminate or expire upon the same conditions and in the same
manner as the Related Options, and as set forth in Section 12 hereof.

     (g) The  exercise  of any SAR  shall  cancel  and  terminate  the  right to
purchase an equal number of shares covered by the Related Option.

     (h) Upon the exercise or  termination of any Related  Option,  the SAR with
respect to such Related  Option  shall  terminate to the extent of the number of
shares  of  Common  Stock  as to which  the  Related  Option  was  exercised  or
terminated.

     (i) No SAR  granted  pursuant  to the  Plan  shall be  transferable  by the
individual or entity to whom it was granted  otherwise  than by will or the laws
of descent and  distribution,  and, during the lifetime of an individual,  shall
not be exercisable by any other person, but only by him.

     11. Transferability. No Option granted under the Plan shall be transferable
by the individual or entity to whom it was granted otherwise than by will or the
laws of descent and  distribution,  and,  during the lifetime of an  individual,
shall not be exercisable by any other person, but only by him.

     12. Termination of Employment or Death.

     (a) Subject to the terms of the Stock Option  Agreement,  if the employment
of an employee by, or the services of a non-employee Director for, or consultant
or advisor to, the Company or a subsidiary  corporation  of the Company shall be
terminated  for cause or  voluntarily  by the employee,  non-employee  Director,
consultant or advisor, then his or its Option shall expire forthwith. Subject to
the terms of the Stock Option  Agreement,  and except as provided in subsections
(b) and (c) of this Section 12, if such  employment or services shall  terminate
for any other reason, then such Option may be exercised at any time within three
(3) months after such  termination,  subject to the provisions of subsection (d)
of this Section 12. For purposes of the Plan,  the  retirement  of an individual
either pursuant to a pension or retirement plan adopted by the Company or at the
normal  retirement  date  prescribed  from time to time by the Company  shall be
deemed to be termination of such individual's  employment other than voluntarily
or for cause.  For purposes of this  subsection  (a), an employee,  non-employee
Director, consultant or advisor who leaves the employ or services of the Company
to become an employee or  non-employee  Director of, or a consultant  or advisor
to, a subsidiary  corporation of the Company or a corporation  (or subsidiary or
parent  corporation  of the  corporation)  which has  assumed  the Option of the
Company as a result of a corporate reorganization, etc., shall not be considered
to have terminated his employment or services.

     (b) Subject to the terms of the Stock Option Agreement, if the holder of an
Option  under  the Plan  dies (i)  while  employed  by,  or while  serving  as a
non-employee  Director  for or a  consultant  or advisor  to,  the  Company or a
subsidiary corporation of the Company, or (ii) within three (3) months after the
termination of his employment or services other than voluntarily by the employee
or non-employee Director,  consultant or advisor, or for cause, then such Option
may,  subject  to the  provisions  of  subsection  (d) of this  Section  12,  be
exercised by the estate of the employee or non-employee Director,  consultant or
advisor,  or by a person  who  acquired  the right to  exercise  such  Option by
bequest  or  inheritance  or  by  reason  of  the  death  of  such  employee  or
non-employee  Director,  consultant  or advisor at any time  within one (1) year
after such death.

     (c) Subject to the terms of the Stock Option Agreement, if the holder of an
Option under the Plan ceases  employment  or services  because of permanent  and
total  disability  (within  the  meaning of Section  22(e)(3) of the Code) while
employed by, or while  serving as a  non-employee  Director for or consultant or
advisor to, the Company or a subsidiary  corporation  of the Company,  then such
Option may,  subject to the  provisions of subsection (d) of this Section 12, be
exercised at any time within one (1) year after his  termination  of employment,
termination of Directorship  or termination of consulting or advisory  services,
as the case may be, due to the disability.

     (d) An Option may not be  exercised  pursuant to this  Section 12 except to
the extent that the holder was  entitled  to exercise  the Option at the time of
termination  of  employment,   termination  of   Directorship,   termination  of
consulting or advisory services, or death, and in any event may not be exercised
after the expiration of the Option.

     (e) For  purposes of this  Section 12, the  employment  relationship  of an
employee of the Company or of a  subsidiary  corporation  of the Company will be
treated as continuing intact while he is on military or sick leave or other bona
fide leave of absence (such as temporary  employment by the  Government) if such
leave does not exceed ninety (90) days,  or, if longer,  so long as his right to
reemployment is guaranteed either by statute or by contract.

        13.    Exercise of Options.

     (a) Unless  otherwise  provided in the Stock Option  Agreement,  any Option
granted  under the Plan shall be  exercisable  in whole at any time,  or in part
from time to time, prior to expiration. The Board of Directors or the Committee,
in its absolute  discretion,  may provide in any Stock Option Agreement that the
exercise  of any  Options  granted  under the Plan shall be subject  (i) to such
condition  or  conditions  as it may  impose,  including,  but not limited to, a
condition  that the  holder  thereof  remain  in the  employ or  service  of, or
continue  to provide  consulting  or  advisory  services  to,  the  Company or a
subsidiary  corporation  of the Company for such period or periods from the date
of grant of the  Option  as the  Board of  Directors  or the  Committee,  in its
absolute  discretion,  shall  determine;  and (ii) to such limitations as it may
impose,  including,  but not limited to, a limitation  that the  aggregate  fair
market value of the Common Stock with respect to which  Incentive  Stock Options
are  exercisable  for the first time by any employee  during any  calendar  year
(under all plans of the  Company  and its parent  and  subsidiary  corporations)
shall not exceed one hundred  thousand dollars  ($100,000).  For purposes of the
preceding sentence, the fair market value of any stock shall be determined as of
the date the option with respect to such stock is granted.  In addition,  in the
event that under any Stock Option  Agreement the aggregate  fair market value of
the Common Stock with respect to which  Incentive  Stock Options are exercisable
for the first time by any employee  during any calendar year (under all plans of
the  Company  and its parent and  subsidiary  corporations)  exceeds one hundred
thousand dollars  ($100,000),  the Board of Directors or the Committee may, when
shares are  transferred  upon exercise of such Options,  designate  those shares
which shall be treated as transferred upon exercise of an Incentive Stock Option
and those  shares  which  shall be treated as  transferred  upon  exercise  of a
Nonstatutory Stock Option.

     (b) An Option  granted under the Plan shall be exercised by the delivery by
the holder  thereof to the Company at its  principal  office  (attention  of the
Secretary)  of written  notice of the number of shares with respect to which the
Option is being exercised. Such notice shall be accompanied,  or followed within
ten (10) days of delivery  thereof,  by payment of the full option price of such
shares,  and payment of such option price shall be made by the holder's delivery
of (i) his check payable to the order of the Company;  (ii) previously  acquired
Common Stock,  the fair market value of which shall be determined as of the date
of exercise;  (iii) if provided in the Stock Option  Agreement at the discretion
of the Board or  Committee,  a  promissory  note  made  payable  to the  Company
accompanied  by  cash  payment  of the  par  value  of the  Common  Stock  being
purchased;  or (iv) by the holder's delivery of any combination of the foregoing
(i), (ii) and if provided in the Stock Option Agreement at the discretion of the
Board or Committee, (iii).

        14.    Adjustment Upon Change in Capitalization.

     (a) In the event that the outstanding  Common Stock is hereafter changed by
reason   of    reorganization,    merger,    consolidation,    recapitalization,
reclassification,  stock split-up,  combination of shares,  reverse split, stock
dividend or the like, an  appropriate  adjustment  shall be made by the Board of
Directors or the Committee in the aggregate number of shares available under the
Plan, the maximum number of shares with respect to which Options and SARs may be
granted  during any fiscal year of the Company to any employee and in the number
of shares and option  price per share  subject to  outstanding  Options.  If the
Company shall be reorganized,  consolidated, or merged with another corporation,
the holder of an Option  shall be entitled to receive  upon the  exercise of his
Option  the same  number  and kind of  shares  of  stock or the same  amount  of
property,  cash or securities as he would have been entitled to receive upon the
happening of any such corporate  event as if he had been,  immediately  prior to
such event, the holder of the number of shares covered by his Option;  provided,
however,  that in such event the Board of Directors or the Committee  shall have
the  discretionary  power to take any action necessary or appropriate to prevent
any  Incentive  Stock  Option  granted  hereunder  which  is  intended  to be an
"incentive stock option" from being disqualified as such under the then existing
provisions of the Code or any law amendatory thereof or supplemental thereto.

     (b) Any adjustment in the number of shares shall apply  proportionately  to
only the unexercised portion of the Option granted hereunder.  If fractions of a
share would result from any such adjustment,  the adjustment shall be revised to
the next lower whole number of shares.

     15. Further Conditions of Exercise.

     (a) Unless  prior to the  exercise of the Option the shares  issuable  upon
such exercise have been registered  with the Securities and Exchange  Commission
pursuant  to  the  Act,  the  notice  of  exercise  shall  be  accompanied  by a
representation or agreement of the person or estate exercising the Option to the
Company  to the  effect  that such  shares  are being  acquired  for  investment
purposes  and  not  with a view  to the  distribution  thereof,  or  such  other
documentation  as may be  required  by the  Company,  unless in the  opinion  of
counsel to the Company such  representation,  agreement or  documentation is not
necessary to comply with the Act.

     (b) The Company shall not be obligated to deliver any Common Stock until it
has been listed on each securities  exchange or stock market on which the Common
Stock  may  then be  listed  or until  there  has  been  qualification  under or
compliance with such federal or state laws,  rules or regulations as the Company
may deem  applicable.  The Company shall use  reasonable  efforts to obtain such
listing, qualification and compliance.

     16.  Effectiveness  of the  Plan.  The Plan  was  adopted  by the  Board of
Directors  on  February  10,  1999.  The Plan shall be subject to approval on or
before February 9, 2000, which is within one (1) year of adoption of the Plan by
the  Board of  Directors,  by a  majority  of the  votes  cast at a  meeting  of
stockholders  of the Company by the holders of shares  entitled to vote  thereon
(or,  in the  case  of  action  by  written  consent  in lieu  of a  meeting  of
stockholders, the number of votes required by applicable law to act in lieu of a
meeting)  ("Stockholder  Approval").  In the event such Stockholder  Approval is
withheld or otherwise  not received on or before the latter date,  the Plan and,
subject to the terms of the Stock  Option  Agreement,  all Options that may have
been granted hereunder shall become null and void.

     17. Termination, Modification and Amendment.

     (a) The Plan (but not Options or SARs  previously  granted  under the Plan)
shall  terminate  on February  9, 2009,  which is within ten (10) years from the
date of its  adoption by the Board of  Directors  of the  Company,  or sooner as
hereinafter  provided,  and no Option shall be granted after  termination of the
Plan.

     (b) The Plan may from time to time be terminated,  modified,  or amended if
Stockholder Approval of the termination, modification or amendment is obtained.

     (c) In addition,  the Board of Directors  may at any time, on or before the
termination  date referred to in Section  17(a)  hereof,  terminate the Plan, or
from time to time make such  modifications  or  amendments to the Plan as it may
deem  advisable;  provided,  however,  that the Board of  Directors  shall  not,
without Stockholder Approval,  increase (except as otherwise provided by Section
14  hereof)  the  maximum  number of shares as to which  Options  may be granted
hereunder, change the designation of individuals or entities eligible to receive
Options,  make any other change which would prevent any  Incentive  Stock Option
granted  hereunder  which is intended to be an  "incentive  stock  option"  from
qualifying  as such under the then  existing  provisions  of the Code or any law
amendatory  thereof  or  supplemental  thereto,  or adopt  any  modification  or
amendment which, pursuant to the applicable law, requires Stockholder Approval.

     (d) No termination, modification, or amendment of the Plan may, without the
consent of the  individual or entity to whom any Option shall have been granted,
adversely affect the rights conferred by such Option.

     18. Not a Contract of Employment.  Nothing  contained in the Plan or in any
Stock Option Agreement  executed  pursuant hereto shall be deemed to confer upon
any  individual  or entity to whom an Option is or may be granted  hereunder any
right to  remain  in the  employ  or  service  of the  Company  or a  subsidiary
corporation  of the  Company or any  entitlement  to any  remuneration  or other
benefit pursuant to any consulting or advisory arrangement.

     19. Use of  Proceeds.  The  proceeds  from the sale of shares  pursuant  to
Options granted under the Plan shall constitute general funds of the Company.

     20. Indemnification of Board of Directors or Committee. In addition to such
other rights of  indemnification  as they may have,  the members of the Board of
Directors  or the  Committee,  as the case may be, shall be  indemnified  by the
Company to the extent  permitted  under  applicable  law  against  all costs and
expenses  reasonably  incurred by them in connection  with any action,  suit, or
proceeding  to which  they or any of them may be a party by reason of any action
taken or  failure  to act  under or in  connection  with the Plan or any  rights
granted thereunder and against all amounts paid by them in settlement thereof or
paid  by  them  in  satisfaction  of a  judgment  of any  such  action,  suit or
proceeding,  except a  judgment  based  upon a finding  of bad  faith.  Upon the
institution of any such action,  suit, or  proceeding,  the member or members of
the Board of  Directors or the  Committee,  as the case may be, shall notify the
Company in writing,  giving the Company an opportunity at its own cost to defend
the same before such  member or members  undertake  to defend the same on his or
their own behalf.

     21.  Captions.  The use of  captions  in the Plan is for  convenience.  The
captions are not intended to provide substantive rights.

     22. Disqualifying  Dispositions.  If Common Stock acquired upon exercise of
an Incentive Stock Option granted under the Plan is disposed of within two years
following the date of grant of the Incentive  Stock Option or one year following
the issuance of the Common Stock to the Optionee, or is otherwise disposed of in
a manner that  results in the  optionee  being  required to  recognize  ordinary
income,  rather  than  capital  gain,  from the  disposition  (a  "Disqualifying
Disposition"),  the holder of the Common Stock shall,  immediately prior to such
Disqualifying  Disposition,  notify the Company in writing of the date and terms
of such Disqualifying  Disposition and provide such other information  regarding
the Disqualifying Disposition as the Company may reasonably require.

     23. Withholding  Taxes.  Whenever under the Plan shares of Common Stock are
to be delivered by an optionee upon exercise of a Nonstatutory Stock Option, the
Company  shall be  entitled  to  require as a  condition  of  delivery  that the
optionee  remit or, in  appropriate  cases,  agree to remit when due,  an amount
sufficient to satisfy all current or estimated  future Federal,  state and local
income  tax  withholding  requirements,   including,   without  limitation,  the
employee's portion of any employment tax requirements  relating thereto.  At the
time of a Disqualifying Disposition,  the optionee shall remit to the Company in
cash  the  amount  of  any  applicable  Federal,  state  and  local  income  tax
withholding and the employee's portion of any employment taxes.

     24. Other  Provisions.  Each Option granted under the Plan may contain such
other terms and conditions not  inconsistent  with the Plan as may be determined
by the  Board or the  Committee,  in its sole  discretion.  Notwithstanding  the
foregoing,  each  Incentive  Stock Option  granted  under the Plan shall include
those terms and  conditions  which are necessary to qualify the Incentive  Stock
Option as an "incentive  stock option"  within the meaning of Section 422 of the
Code and the  regulations  thereunder  and  shall  not  include  any  terms  and
conditions which are inconsistent therewith.

     25. Definitions.  For purposes of the Plan, the terms "parent  corporation"
and  "subsidiary  corporation"  shall have the  meanings  set forth in  Sections
424(e) and 424(f) of the Code, respectively, and the masculine shall include the
feminine and the neuter as the context requires.

     26. Governing Law. The Plan shall be governed by, and all questions arising
hereunder  shall be determined in accordance  with, the laws of the State of New
York.




</TEXT>
</DOCUMENT>
