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                                                                     Exhibit 4.3

                        INCENTIVE STOCK OPTION AGREEMENT

         INCENTIVE STOCK OPTION AGREEMENT made this ___ day of ______, _______
between PSYCHEMEDICS CORPORATION, a Delaware corporation (hereinafter called the
Corporation), and ___________________ (hereinafter called the Employee).

         The Corporation desires, by affording the Employee an opportunity to
purchase shares of its Common Stock, $.005 par value (hereinafter called the
Common Stock), as hereinafter provided, to carry out the purpose of the
Corporation's 2000 Stock Option Plan adopted March 21, 2000 (hereinafter called
the Plan).

         NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto have
agreed, and do hereby agree as follows:

         1. GRANT OF OPTION. The Corporation hereby irrevocably grants to the
Employee the right and option (hereinafter called the Option) to purchase all or
any part of an aggregate of _________ shares of the Common Stock (such number
being subject to adjustment as provided in paragraph 7 hereof) on the terms and
conditions herein set forth. The Option is intended by the parties hereto to be,
and shall be treated as, an incentive stock option (as such term is defined
under Section 422 of the Internal Revenue Code of 1986) (hereinafter called the
Code).

         2. PURCHASE PRICE. The purchase price of the shares of the Common Stock
covered by the Option shall be $________ per share.

         3. TERM OF OPTION. The term of the Option shall be for a period of ten
years from the date hereof, subject to earlier termination as provided in
paragraphs 5 and 6 hereof. The Option shall become exercisable with respect to
25% of the total number of shares subject to the Option twelve months after the
date hereof and with respect to an additional 25% of such total number of shares
at the end of each twelve-month period thereafter during the succeeding three
years provided however, that the Corporation may, at any time during the period
in which the Option is not then exercisable in full, accelerate the
exercisability of the Option subject to such terms as the Corporation deems
necessary and appropriate. The purchase price of the shares as to which the
Option shall be exercised shall be paid at the time of exercise as provided in
paragraph 8 hereof. Except as provided in paragraphs 5 and 6 hereof, the Option
may not be exercised at any time unless the Employee shall have been in the
continuous employ of the Corporation or one or more of its subsidiaries, from
the date hereof to the date of the exercise of the Option.

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         The Corporation may, in its discretion, require as conditions to the
right to exercise this Option that (a) a registration statement under the
Securities Act of 1933, as amended, shall be in effect and current with respect
to the shares issuable upon exercise of this Option, or (b) the Employee (and
any other person in whose name, as joint tenant with the Employee, are
registered the certificate or certificates representing the shares being
purchased on exercise hereof) has given to the Corporation prior to the purchase
of any shares pursuant hereto, assurances satisfactory to it that such shares
are being purchased for the purpose of investment and not with a view to or for
sale in connection with any distribution thereof, including without limitation,
a written agreement of the Employee (and any other person in whose name, as
joint tenant with the Employee, are registered the certificate or certificates
representing the shares being purchased on exercise hereof) that the shares will
not be transferred unless registered under the Securities Act of 1933, as
amended, or unless counsel for the Corporation gives a written opinion that such
transfer is permissible under federal and state law without registration.

         Nothing herein contained shall be deemed to require the Corporation to
register, under federal or any state law, this Option or any shares issued
hereunder.

         4. NON-TRANSFERABILITY. The Option shall not be transferable otherwise
than by will or the laws of descent and distribution, and the Option may be
exercised, during the lifetime of the Employee, only by him, provided, however,
that the Employee may designate in writing a beneficiary to exercise his option
after his death. More particularly (but without limiting the generality of the
foregoing), the Option may not be assigned, transferred (except as provided
above), pledged, or hypothecated in any way, shall not be assignable by
operation of law and shall not be subject to execution, attachment, or similar
process. Any attempted assignment, transfer, pledge, hypothecation, or other
disposition of the Option contrary to the provisions hereof, and the levy of any
execution, attachment, or similar process upon the Option shall be null and void
and without effect.

         5. TERMINATION OF EMPLOYMENT. In the event the employment of the
Employee shall be terminated for any reason other than death, permanent
disability or retirement, the Option shall expire and all rights to purchase
shares pursuant hereto shall terminate immediately. Temporary absence from
employment because of illness, vacation, approved leaves of absence, and
transfers of employment among the Corporation and its subsidiaries, shall not be
considered to terminate employment or to interrupt continuous employment.

         In the event that the employment of the Employee shall be terminated on
account of retirement (at the age 65 or earlier as may be permitted by the
Corporation), or in the event that the employment of the Employee shall be
terminated on account of permanent and total disability as such term is defined
in Section 22 (e)(3) of the Code, the Option may be exercised (to the extent
that the Employee shall have been entitled


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to do so at the termination of his employment) at any time within one year after
such termination, but not more than ten years after the date of grant thereof.
Notwithstanding the foregoing, the Employee hereby acknowledges that in addition
to other requirements, in order to be entitled to favorable tax treatment under
the Code with respect to the Option, the Employee may not exercise the Option
more than three months after the date of termination of employment due to
retirement. So long as the Employee shall continue to be an employee of the
Corporation or one or more of its subsidiaries, the Option shall not be affected
by any change of duties or position. Nothing in this Option Agreement shall
confer upon the Employee any right to continue in the employ of the Corporation
or of any of its subsidiaries or interfere in any way with the right of the
Corporation or any such subsidiary to terminate his employment at any time.

         6. DEATH OF EMPLOYEE. If the Employee shall die while he shall be
employed by the Corporation or one or more of its subsidiaries, the Option may
be exercised (to the extent that the Employee shall have been entitled to do so
at the date of his death) by a legatee or legatees of the Employee under his
last will, or by his personal representatives or distributees, at any time
within one year after his death, but not more than ten years after the date
hereof.

         7. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. The Plan contains
provisions covering the treatment of options in a number of contingencies such
as stock splits and mergers. Provisions in the Plan for adjustment with respect
to stock subject to options and the related provisions with respect to
successors to the business of the Corporation are hereby made applicable
hereunder and are incorporated herein by reference.

         8. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of
this Option Agreement, the Option may be exercised by written notice to the
Corporation at its principal business address attention of the Secretary. Such
notice shall state the election to exercise the Option and the number of shares
in respect of which it is being exercised, and shall be signed by the person or
persons so exercising the Option. At that time, this Option Agreement shall be
turned in to the Corporation for action by the Corporation to reduce the number
of shares to which it applies. Such notice shall be accompanied by payment of
the purchase price: (a) in cash or by check; (b) through delivery of shares of
Common Stock having a fair market value equal as of the date of the exercise to
the cash purchase price of the Option; (c) consistent with applicable law,
through the delivery of an assignment to the Corporation of a sufficient amount
of the proceeds from the sale of the Common Stock acquired upon exercise of the
Option and an authorization to the broker or selling agent to pay that amount to
the Corporation, which sale shall be at the Employee's discretion at the time of
exercise; or (d) by any combination of these methods of payment. Notwithstanding
the foregoing, the Employee may not pay any part of the purchase price hereof by
transferring Common Stock to the Corporation unless such Common Stock has been
owned by the Employee free of any substantial risk of forfeiture for at least
six months. The certificate or certificates for the shares as to which the
Option shall have been so exercised shall be


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registered in the name of the person or persons so exercising the Option, (or,
if the Option shall be exercised by the Employee and if the Employee shall so
request in the notice exercising the Option, the certificate or certificates
shall be registered in the name of the Employee and another person jointly, with
the right of survivorship) and shall be delivered as provided above to or upon
the written order of the person or persons exercising the Option. In the event
the Option shall be exercised, pursuant to paragraph 6 hereof, by any person or
persons other than the Employee, such notice shall be accompanied by appropriate
proof of the right of such person or persons to exercise the Option.

         9. EARLY DISPOSITION. The Employee agrees to notify the Corporation in
writing immediately after the Employee transfers any shares issued upon exercise
of the Option, if such transfer occurs on or before the later of (a) the date
two years after the date of this Agreement or (b) the date one year after the
date the Employee acquired such shares acquired on exercise. The Employee also
agrees to provide the Corporation with any information concerning any such
transfer required by the Corporation for tax purposes.

         10. GENERAL. The Corporation shall at all times during the term of the
Option reserve and keep available such number of shares of Common Stock as will
be sufficient to satisfy the requirements of this Option Agreement, shall pay
all original issue taxes with respect to the issue of shares pursuant hereto and
all other fees and expenses necessarily incurred by the Corporation in
connection therewith, and will from time to time use its best efforts to comply
with all laws and regulations which, in the opinion of counsel for the
Corporation, shall be applicable thereto. The Corporation makes no
representation or warranty that this Option or shares issued pursuant hereto
qualify under any federal or state law for any special tax treatment. The terms
of this Option Agreement shall be construed to conform with, and shall be
governed by the provisions of the Plan and in the event of any inconsistency
between the provisions of this Option Agreement and the Plan the provisions of
the Plan shall control.

         11. SUBSIDIARY. As used herein, the term "subsidiary" shall mean any
present or future corporation which would be a "subsidiary corporation" of the
Corporation, as the term is defined in Section 424 of the Code.


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         IN WITNESS WHEREOF, the Corporation has caused this Incentive Stock
Option Agreement to be duly executed by its officer thereunto duly authorized,
and the Employee has hereunto set his hand and seal all on the day and year
first above written.


                                          PSYCHEMEDICS CORPORATION


                                          By:
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                                              Raymond C. Kubacki, Jr.,
                                              President


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                                              (name of employee)


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                                              Address


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