Exhibit 10 (a)

                             WARRANTECH CORPORATION
                                150 Westpark Way
                               Euless, Texas 76040


                                                 Dated: as of June 4, 2002


Re:  Nonqualified Stock Options to purchase 1,000,000 shares at $2 per share


To:  Staples, Inc., Optionee
     500 Staples Drive
     Framingham, Massachusetts 01702

      By authorization of the Board of Directors of Warrantech Corporation (the
"Company"), on March 12, 2002, the Company has been authorized to grant you
certain options to purchase shares of the Company's common stock, par value
$.007 per share (the "Common Stock"), upon the terms and conditions hereinafter
set forth. Capitalized terms used but not defined in the body of this letter
shall have the respective meanings set forth on Appendix 1 attached hereto and
made a part hereof.

      1. The Company hereby gives and grants you, subject to all of the
provisions, terms and conditions contained herein, the rights and options to
purchase up to the aggregate number of shares of Common Stock of the Company,
and at the price per share, set forth above (the "Options").

      2. The Options may be exercised by you from time to time as to any or all
of the shares at any time from the date hereof until June 4, 2002.

      3. Unless otherwise permitted by Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code") and approved in advance by the Company, the
Options are not assignable or transferable by the Optionee. However, the
Optionee may assign or transfer the Options in whole or in part to any affiliate
of the Optionee. For purposes of this Section affiliate shall mean any
corporation, partnership, or other entity in which Optionee owns a controlling
interest, or which controls, or is under common control with, Optionee. In the
event of such a transfer or assignment to an affiliate, the Company's consent
shall not be necessary or required. In the event of a permissible assignment or
transfer under this Section, the rights and benefits of the Optionee shall inure
to assignee or transferee.

      4. The exercise of an Option shall be made by the delivery of a written
notice of intention to exercise the Option (the "Exercise Notice"), specifying
the number of shares then to be purchased under the Option. The Optionee shall,
within ten (10) days after the delivery of the Exercise Notice, make payment in
cash, by certified check or wire transfer of the exercise price for the
aggregate number of shares of Common Stock covered by the Exercise Notice. In
the event that the Optionee fails to remit the required payment within the
specified time, the Exercise Notice shall be deemed void. Payment shall be a
condition of issuance of Common Stock pursuant to exercise of an Option.

      Upon receipt of a duly executed Exercise Notice and payment of the
aggregate exercise price for the shares of Common Stock covered by such Exercise
Notice, the Company shall issue or cause the issuance of, in the name of the
Optionee or the Optionee's legal representative, the shares of Common Stock
purchased by such exercise of such Option. Said issuance shall occur within
seven (7) days of receipt of payment as set


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forth above. The Company shall bear and cover all expenses, fees, or other costs
associated with the issuance of the shares of Common Stock and the Company shall
not pass on or charge the Optionee, in any manner, any such expenses, fees, or
costs.

      The Optionee will have no rights as a shareholder with respect to any
shares covered by the Options until the issuance of the shares covered by the
Option. Except as otherwise provided in Section 6 hereof, no adjustment shall be
made for dividends or other rights for which the record date is prior to the
issuance of such shares.

      5. The Company shall at all time reserve and keep available for issuance
upon the exercise of the Options such number of its authorized but unissued
shares of Common Stock as will be sufficient to permit the exercise in full of
all of the shares under the Options. The Company shall not amend its certificate
of incorporation or bylaws in any way to adversely affect your rights under the
Options. The Company represents and warrants that this agreement and the Options
do not conflict with the certificate of incorporation or bylaws of the Company.
The Company further represents and warrants that this agreement and the Options
are duly executed and delivered. All shares of Common Stock which shall be so
issuable, when issued upon exercise of the Options shall be duly authorized,
validly issued, fully paid and nonassessable, free and clear of all liens,
security interests, charges and other encumbrances or restrictions.

      6. The aggregate number of shares subject to this Option and not
theretofore delivered and the option price therefor will be appropriately
adjusted if the number of issued shares of the Company is increased or reduced
by change in par value, combination, split-up, reclassification,
recapitalization, distribution of a dividend on the shares payable in stock, or
the like after the date hereof. The foregoing adjustment shall be made so that
Optionee shall receive, upon exercise of an Option, the number and class of
securities or property that Optionee would have received in respect of the
Common Stock issuable to Optionee if the Option had been exercised immediately
prior to such event or the record date therefor, as applicable, and the
agreements governing such transaction shall contain proper provision to effect
that adjustment. The aggregate number of shares subject to this Option shall not
be adjusted upon the issuance of any shares except as aforesaid. In the event of
a "Change in Control," this Option shall be subject to the agreement of merger
or reorganization or other applicable agreement. Such agreement may provide,
without limitation, for the assumption of this Option by the surviving
corporation or its parent, or for its continuation by the Company (if the
Company is a surviving corporation). Alternatively, the Company may (i) upon
written notice to the Optionee, provide that all shares which are the subject of
the Option must be exercised, to the extent then exercisable, within a specified
number of days of the date of such notice, at the end of which period the Option
shall terminate; or (ii) terminate the Option in exchange for a cash payment
equal to the excess of the fair market value of the shares subject to the Option
(to the extent then exercisable) over the exercise price thereof.

      7. The Options may be redeemed to the extent not previously exercised in
whole or in part at the option of Company, subject to the conditions set forth
below in this Section, at any time, by notice given within thirty (30) days,
after the occurrence of a "Redemption Event" at a price per share equal to the
"Redemption Price."

            (a) The Company shall provide written notice to you of the time,
manner and place of redemption (the "Redemption Date") of the Redemption Options
and the Redemption Price (a "Redemption Notice") not less than sixty (60) days
prior to the Redemption Date. You may elect to exercise all or any part of the
Redemption Options on or before such Redemption Date pursuant to Section 4
hereof.

            (b) Unless there shall have been a failure to pay the Redemption
Price, on the Redemption Date all of your rights in the Redemption Options will
cease, except the right to receive the Redemption


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<PAGE>

Price, without interest, and the Redemption Options will not, from and after
such Redemption Date, be deemed to be outstanding.

      8. Neither the Options nor the shares that shall be received upon the
exercise of the Options have been registered or qualified under the Securities
Act or any other applicable state securities laws and the shares obtained
pursuant to the exercise of an Option may be offered or sold only in compliance
with the terms and conditions of the Options, and only if registered or
qualified pursuant to said laws or if an exemption from such registration or
qualification is available.

      9. You may be required to make an appropriate representation at the time
of any exercise of an Option that it is your intention to acquire the shares
being purchased for investment and not for resale or distribution. In addition,
you may be required to agree in writing not to sell any shares acquired pursuant
to an Option or any other shares of the Company that you may now or hereafter
acquire except in compliance with the Securities Act; provided, however, that
the Company shall be under no obligation to register any securities obtained
pursuant to your exercise of your rights hereunder with the Commission, except
as provided in Section 10 and Section 11 hereof. An appropriate legend
restricting the sale of any such shares may be placed upon the certificates
representing such shares and any resale must be in compliance with the
Securities Act and the rules and regulations thereunder.

      10. If, at any time more than one hundred and twenty (120) days and less
than three (3) years and one (1) day after the date hereof, you shall request
the Company in writing to effect the registration under the Securities Act of
all of your Registrable Shares (the "Registration Request"), then the Company
shall use its best efforts to effect the registration under the Securities Act
of such Registrable Shares. The Company shall be required to effect only one (1)
such registration on your behalf under this Section 10; provided, however, that
in the event that all of the shares requested by you to be registered pursuant
to the Registration Request are not registered (for whatever reason), then you
will be permitted to request the Company in writing to effect a registration
under the Securities Act as many times as necessary until all Registrable Shares
have been registered. However, notwithstanding the foregoing obligation, (x) the
Company shall not be required to file any Registration Statement which would
require the inclusion of audited financial statements for a period other than
the Company's fiscal year; (y) the Company shall not be required to file any
Registration Statement within one hundred twenty (120) days after the effective
date of any Registration Statement in which you were entitled to have your
Registrable Shares sold pursuant to your rights under Section 11 hereof and
declined to do so, and (z) the Company shall have the right to defer any
registration under this Section 10 for a period of ninety (90) days if the Board
of Directors shall determine that such registration would interfere with a
pending transaction of the Company.

            You shall bear the "Registration Expenses" incurred by the Company
in connection with the Registration Request. In the event any securities in
addition to the Registrable Shares are registered under the Securities Act in
the Registration Statement requested by you in a Registration Request, you shall
be responsible for the Registration Expenses of such registration pro-rata in
accordance with the number of your Registrable Shares included in such
registration.


      11. Whenever the Company proposes to file a Registration Statement (other
than a Registration Statement covering shares to be sold solely for the account
of other holders of the Company's securities) at any time and from time to time,
it will, prior to such filing, give written notice to you of its intention to do
so; provided, that, to the extent relevant, such notice shall describe any
determination of the managing underwriter pursuant to Section 11(b) hereof.

            (a) Upon your written request given within twenty (20) days after
the Company provides such notice (which request shall state the intended method
of disposition of such Registrable Shares), the Company shall use its best
efforts to cause all Registrable Shares which the Company has been requested by
you to be registered under the Securities Act to the extent necessary to permit
their sale or other disposition


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<PAGE>

in accordance with the intended methods of distribution specified in your
request; provided, that the Company shall have the right to postpone or withdraw
any registration effected pursuant to this Section 11(a) without obligation to
you.

            (b) If the registration for which the Company gives notice pursuant
Section 11 above is an underwritten registered public offering, the Company
shall so advise you as a part of the written notice given pursuant to said
Section 11. In such event, your right to include your Registrable Shares in such
registration pursuant to this Section 11(a) shall be conditioned upon your
participation in such underwriting on the terms set forth herein. You (together
with the Company and all other holders of the Company's securities distributing
their securities through such underwriting) shall enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
the underwriting by the Company. In the event that (for any reason) the Company
limits the number of Registrable Shares to be included in the registration and
underwriting, the number of Registrable Shares that Optionee has requested for
registration and underwriting shall not be reduced or cut back.

            (c) Notwithstanding the foregoing, the Company shall not be
required, pursuant to this Section 11, to include any Registrable Shares in a
Registration Statement if such Registrable Shares can then be sold pursuant to
Rule 144(k) under the Securities Act.

      12. Any registration of Registrable Shares, whether pursuant to Section 10
or Section 11 hereof, shall be effected in accordance with the provisions of
Annex 2 attached to this Agreement and made a part hereof.

      13. Notwithstanding any other provision in this Agreement, the Optionee
shall not transfer, sell, acquire, vote, or otherwise use the Options, the
Common Stock which it receives upon the exercise of the Options, or an other
Common Stock, or take any other action, with the purpose of causing or the
effect of which shall cause a Change in Control of the Company, nor shall the
Optionee at any time act in concert with any other Person in causing or
attempting to cause any Change in Control.

      14. All notices, requests, demands or other communications hereunder shall
be in writing, shall be deemed to have been duly given when delivered by
certified mail, return receipt requested, or confirmed facsimile transmission
(or to a changed address of which notice shall have been in a manner herein
provided) as follows:

         If to the Company:

                  Joel San Antonio, Chairman and
                  Chief Executive Officer
                  Warrantech Corporation
                  150 Westpark Way
                  Euless, Texas 76040

                  Fax No.: (817) 685-5540


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<PAGE>

         With a copy to:

                                       Ralph A. Siciliano, Esq.
                                       Tannenbaum Helpern
                                       Syracuse & Hirschtritt LLP
                                       900 Third Avenue
                                       New York, New York 10022

                                       Fax No.(212) 371-1084

         If to Optionee:

                                       Mark A. Weiss or General Counsel
                                       Staples, Inc.
                                       500 Staples Drive
                                       Framingham, Massachusetts 01702

                                       Fax No. (5085) 253-7805


      14. This Agreement concerning the Options shall be binding upon and shall
inure to the benefit of any successors or assigns of the Company, and, to the
extent herein provided, shall be binding upon and inure to the benefit of your
legal representatives.

      15. This Agreement concerning the Options may be amended only by written
instrument executed by you and the Company.

      16. This Agreement concerning the Options shall be construed in accordance
with the laws of the State of Delaware, applicable to contracts performed within
such State, without giving effect to conflicts to law principles.

      17. This Agreement concerning the Options may be signed in counterparts.

      If the foregoing is in accordance with your understanding and approved by
you, please so confirm by signing and returning the duplicate of this letter
enclosed for that purpose.


                                        Very truly yours,

                                        WARRANTECH CORPORATION


                                        By:__________________________
                                           Name: James F. Morganteen
                                           Title: Senior Vice President

      The undersigned hereby confirms that the foregoing is in accordance with
its understanding and is hereby agreed and accepted in its entirety as of the
date of the above letter.

Staples, Inc., Optionee

By:______________________________
Name: Joseph S. Vassalluzzo
Title: Vice Chairman


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<PAGE>

                                   Appendix 1
                                   Definitions

      1. "Change in Control" shall mean the occurrence of any "person" (as
defined in Section 13(d) of the Exchange Act), other than the Company, its
parent or subsidiary or employee benefit plan or trust maintained by the
Company, its parent or subsidiary,

            (a) becoming the "beneficial owner" (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of more than 50% of the shares of Common
Stock of the Company outstanding at such time on a fully diluted basis, without
the prior approval of the Board of Directors of the Company, and

            (b) acquiring majority control of the Board of Directors of the
Company.

      2. "Commission" means the Securities and Exchange Commission.

      3. "Exchange Act" means the Securities Act of 1934, as amended, or any
successor federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.

      4. "Fair Market Value" shall mean the market price of shares of Common
Stock, determined by the board of directors as follows:

            (a) If the shares of Common Stock were traded over-the-counter on
the date in question but were not classified as a national market issue, then
the Fair Market Value shall be equal to the mean between the last reported
representative bid and asked prices quoted by the NASDAQ system for such date;

            (b) If the shares of Common Stock were traded over-the-counter on
the date in question but were classified as a national market issue, then the
Fair Market Value shall be equal to the last-transaction price quoted by the
NASDAQ system for such date;

            (c) If the shares of Common Stock were traded on a stock exchange on
the date in question, then the Fair Market Value shall be equal to the closing
price reported by the applicable composite transactions report for such date;
and

            (d) If none of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the board of directors of the Company in
good faith on such basis as it deems appropriate.

            (e) When possible, the determination of Fair Market Value by the
Board of Directors of the Company shall be based on the prices reported in The
Wall Street Journal. The determination on the Board of Directors of the Company
shall be conclusive and binding on all persons.

      5. "Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by an amendment or prospectus supplement,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.

      6. "Redemption Event" shall be deemed to occur if the Common Stock has
been trading for any five (5) consecutive trading days at $3.00 or more per
share, determined by taking the average between the bid and the ask of the
Common Stock on each such day as provided in Section 4 of this Annex 1 in
connection with the calculation of the Fair Market Value of a share of Common
Stock.

      7. "Redemption Options" means those Options that the Company requests to
redeem pursuant to a Redemption Notice.


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<PAGE>

      8. "Redemption Price" is $.001 times the number of Options that the
Company requests to redeem pursuant to a Redemption Notice, plus any dividends
declared but unpaid thereon, subject to appropriate adjustment in the event of
any stock dividend, stock split, combination or other similar recapitalization
affecting such shares.

      9. "Registration Expenses" shall mean all expenses incurred by the Company
in complying with Section 10 of this Option, including, without limitation, all
registration and filing fees, exchange listing fees, printing expenses,
reasonable fees and expenses of counsel selected by you to represent you, state
Blue Sky fees and expenses, and the expense of any special audits incident to or
required by any such registration. Registration Expenses shall not include
underwriting discounts, selling commissions and the fees and expenses.

      10. "Registration Statement" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).

      11. "Registrable Shares" means

            (a) the shares of Common Stock issued or issuable upon exercise of
the Options; and

            (b) any other shares of Common Stock issued in respect of such
shares (because of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events); provided, however, that shares of Common
Stock which are Registrable Shares shall cease to be Registrable Shares upon any
sale pursuant to a Registration Statement or Rule 144 under the Securities Act.

      10. "Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.

Annex 2

Registration Procedures

      1. If and whenever the Company is required by the provisions of this
Agreement to use its best efforts to effect the registration of any Registrable
Shares under the Securities Act, the Company shall:

            (a) file with the Commission a Registration Statement with respect
      to such Registrable Shares and use its best efforts to cause that
      Registration Statement to become effective as soon as practicable;

            (b) as expeditiously as possible prepare and file with the
      Commission any amendments and supplements to the Registration Statement
      and the prospectus included in the Registration Statement as may be
      necessary to comply with the provisions of the Securities Act (including
      the anti-fraud provisions thereof) and to keep the Registration Statement
      effective for eight (8) months from the effective date or such lesser
      period until all such Registrable Shares are sold;

            (c) as expeditiously as possible furnish to you such reasonable
      numbers of copies of the Prospectus, including any preliminary Prospectus,
      in conformity with the requirements of the Securities Act, and such other
      documents as you may reasonably request


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<PAGE>

      in order to facilitate the public sale or other disposition of the
      Registrable Shares owned by you;

            (d) as expeditiously as possible use its best efforts to register or
      qualify the Registrable Shares covered by the Registration Statement under
      the securities or Blue Sky laws of such states as you shall reasonably
      request, and do any and all other acts and things that may be necessary or
      desirable to enable you to consummate the public sale or other disposition
      in such states of the Registrable Shares owned by you; provided, however,
      that the Company shall not be required in connection with this Section
      1(d) to qualify as a foreign corporation or execute a general consent to
      service of process in any jurisdiction;

            (e) as expeditiously as possible, cause all such Registrable Shares
      to be listed on each securities exchange or automated quotation system on
      which similar securities issued by the Company are then listed;

            (f) promptly provide a transfer agent and registrar for all such
      Registrable Shares not later than the effective date of such Registration
      Statement;

            (g) promptly make available for inspection by you, any managing
      underwriter participating in any disposition pursuant to such Registration
      Statement, and any attorney or accountant or other agent retained by any
      such underwriter or selected by you, all financial and other records,
      pertinent corporate documents and properties of the Company and cause the
      Company's officers, directors, employees and independent accountants to
      supply all information reasonably requested by you, any such, underwriter,
      attorney, accountant or agent in connection with such Registration
      Statement;

            (h) as expeditiously as possible, notify you, promptly after it
      shall receive notice thereof, of the time when such Registration Statement
      has become effective or a supplement to any Prospectus forming a part of
      such Registration Statement has been filed; and

            (i) as expeditiously as possible following the effectiveness of such
      Registration Statement, notify you of any request by the Commission for
      the amending or supplementing of such Registration Statement or
      Prospectus.

      2. If the Company has delivered a Prospectus to you and after having done
so the Prospectus is amended to comply with the requirements of the Securities
Act, the Company shall promptly notify you and, if requested, you shall
immediately cease making offers of Registrable Shares and return all
Prospectuses to the Company. The Company shall promptly provide you with revised
Prospectuses and, following receipt of the revised Prospectuses, you shall be
free to resume making offers of the Registrable Shares.

      3. In the event that, in the judgment of the Company, it is advisable to
suspend use of a Prospectus included in a Registration Statement due to pending
material developments or other events that have not yet been publicly disclosed
and as to which the Company believes public disclosure would be detrimental to
the Company, the Company shall notify you to such effect, and, upon receipt of
such notice, you shall immediately discontinue any sales of Registrable Shares
pursuant to such Registration Statement until you have received copies of a
supplemented or amended Prospectus or until you are advised in writing by the
Company that the then current Prospectus may be used and has received copies of
any additional or supplemental filings that are incorporated or deemed
incorporated by reference in such Prospectus. Notwithstanding anything to the
contrary herein, the Company shall not exercise its rights under this Section 3
to suspend sales of Registrable Shares for a period in excess of sixty (60) days
in any 365-day period.


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