EXHIBIT 10.4

1997 INCENTIVE STOCK OPTION PLAN

ELITE LABORATORIES, INC. INCENTIVE STOCK OPTION PLAN

Purpose.  The purpose of this stock  option plan (this  "Plan") is to secure for
the Corporation and its  stockholders the benefits which flow from providing key
employees and officers with the  incentive  inherent in common stock  ownership.
The stock  options  granted  under the Plan are intended to qualify as incentive
stock options within the meaning of Internal Revenue Code Section 422.

Amount of  Stock.  The  total  number  of  shares of Class A common  stock to be
subject to the options granted on and after __________________, 1997 pursuant to
the Plan shall not exceed 1,250,000 shares of the  Corporation's  Class A common
stock  ("Stock"),  par value $.01 per share.  This total  number of shares takes
into account the proposed  increase in the  authorized  number of Class A common
shares to  20,000,000;  however  this  number  shall be subject  to  appropriate
increase or decrease in the event of a subsequent dividend or subdivision, split
up,  combination  or  reclassification  of the  shares  purchasable  under  such
options.  In the event that options  granted under this Plan shall lapse without
being exercised,  in whole or in part, other options may be granted covering the
shares not purchased under such lapsed options.

Method of Granting.  The Board of Directors of the  Corporation  ("Board") shall
designate from time to time a person for receipt of an option, at which time the
Secretary of the  Corporation  shall send notice  thereof to the  designee.  The
notice may be accompanied by an Incentive  Option  Agreement to be signed by the
Company and by the  Optionee  if the Board shall so direct,  which shall be an a
form  that the  Board  deems  advisable.  Eligibility.  Options  may be  granted
pursuant to the plan to employees and officers of the Corporation, its parent or
any  subsidiary.  From time to time the Board  shall  select the  employees  and
officers to whom options may be granted and shall determine the number of shares
to be  covered by each  option so  granted.  Directors  of the Board who are not
officers or employees of the Corporation  are not eligible to participate  under
the Plan.

Incentive Option Agreement. The terms and provisions of options granted pursuant
to this Plan shall be set forth in an  incentive  option  agreement  ("Incentive
Option Agreement")  between the Corporation and the employee receiving the same.
The option may be in such form, not inconsistent with the terms of this Plan, as
shall be approved by the Board of Directors.

Price. The purchase price per share of Stock  purchasable  under options granted
pursuant to the Plan shall not be less than 100 percent of the fair market value
at the time the  options  are  granted.  The  purchase  price per share of Stock
purchasable under options granted pursuant to the Plan to a person who owns more
than 10 percent of the voting power of the Corporation's  voting stock shall not
be less than 110  percent of the fair  market  value at the time the options are
granted.

For purposes of this section,  (a) an employee  shall be considered to own stock
(i) owned  directly or indirectly  by or for himself,  his brothers and sisters,
spouse,  ancestors and lineal  descendants and (ii) the stock which the employee
may  purchase  under  outstanding  options  and  (b)  stock  owned  directly  or
indirectly  by or for a  corporation,  partnership,  estate  or  trust  shall be
considered as being owned  proportionately by or for its shareholders,  partners
or beneficiaries.  For purposes of this Plan, the fair market value of the Stock
shall be  determined  in good  faith at the time of the  grant of any  option by
decision of the Board.  The Board shall not take into  account the effect of any
restrictions on the Stock, except restrictions that will never lapse.

Payment.  The full purchase price of any Stock purchased under the options shall
be paid upon exercise.

Option  Period.  No option  granted  pursuant to this Plan shall be  exercisable
after the expiration of ten years from the date it is first  granted.  No option
granted  pursuant  to this Plan to a person who owns more than 10 percent of the
voting power of the  Corporation's  voting stock shall be exercisable  after the
expiration of five years from the date it is first granted.

For purposes of this section (a) an employee  shall be  considered  to own stock
(i) owned  directly or indirectly  by or for himself,  his brothers and sisters,
spouse,  ancestors and lineal  descendants and (ii) the stock which the employee
may  purchase  under  outstanding  options  and  (b)  stock  owned  directly  or
indirectly  by or for a  corporation,  partnership,  estate  or  trust  shall be
considered as being owned  proportionately by or for its shareholders,  partners
or beneficiaries.

The  expiration  date stated in the Incentive  Option  Agreement is  hereinafter
called the Expiration Date.

Termination of Employment. The Incentive Option Agreement shall provide that: If
prior to the Expiration  Date the employee  shall for any reason  whatever other
than his death or his authorized retirement as defined in (b) below, cease to be
employed by the  Corporation,  its parent or a subsidiary of it, any unexercised
portion of the option  granted shall  automatically  terminate;  If prior to the
Expiration  Date the employee shall (1) retire upon or after reaching the normal
retirement age for employees of the  Corporation or (2) with the written consent
of the  Corporation  retire  prior to the  normal  retirement  age on account of
physical or mental  disability  (retirement  pursuant to (1) or (2)  hereinafter
referred to as "Authorized  Retirement"),  any unexercised portion of the option
shall expire at the end of three months after such  Authorized  Retirement,  and
during the three  months'  period,  the employee may exercise all or any part of
the unexercised  portion of the option;  and If prior to the Expiration Date the
employee  shall die (either  while  employed or within  three  months  after his
Authorized  Retirement),  the legal representatives of his estate shall have the
privilege for a period of six months after his death,  of exercise any or all of
the unexercised portion of the option.  Nothing in this section shall extend the
exercise period beyond the Expiration Date.

Assignability.  The  Incentive  Option  Agreement  shall provide that the option
granted shall not be  transferable  or assignable  except by will or the laws of
descent  and  distribution,   and  during  the  employee's   lifetime  shall  be
exercisable only by him.

Adjustment.  The Incentive Option Agreement may contain provisions,  as approved
by the Board of  Directors,  concerning  the effect upon the option and upon the
option price of (a) stock dividends, subdivisions, split-ups, combinations, etc.
of the Common Stock; or (b) proposals to merge or consolidate  the  Corporation,
to sell  substantially  all of its assets,  or to  liquidate  and  dissolve  the
Corporation.

Stock for  Investment.  The Incentive  Option  Agreement  shall provide that the
employee  shall  upon  each  exercise  of a part  or all of the  option  granted
represent and warrant that his purchase of stock  pursuant to such option is for
investment only and not with a view to distribution involving a public offering.
At any time the Board of Directors of the  Corporation  may waive the  foregoing
requirement.

Amendment of Plan.  The Board of Directors  may from time to time alter,  amend,
suspend or discontinue  the Plan and make rules for its  administration,  except
that the Board of  Directors  shall not amend the Plan in any manner which would
have  the  effect  of  preventing  options  issued  under  the Plan  from  being
"incentive stock options" as defined in Section 422 of the Internal Revenue Code
of 1986.  Furthermore,  if  Section  422 of the  Internal  Revenue  Code of 1986
requires any  additional  or different  provisions  in order for this Plan to be
considered  "qualified" such changes or provisions are deemed to be incorporated
herein by reference.  Options  Discretionary.  The granting of options under the
Plan shall be entirely discretionary with the Committee.

Limitation as to Amount.  No person to whom options are granted  hereunder shall
receive  options first  exercisable  during any single calendar year for shares,
the  fair  market  value of which  (determined  at the time of the  grant of the
options)  exceeds  $100,000.  Accordingly,  no  optionee  shall be  entitled  to
exercise  options  in any  single  calendar  year,  except to the  extent  first
exercisable in previous  calendar years, for shares of Common Stock the value of
which  (determined  at the  time of the  grant  of  options)  exceeds  $100,000.
Stockholder  Approval.  The Plan will be submitted to the common stockholders of
the  Corporation  for  approval by the  holders of a majority of the  oustanding
shares of common stock of the Corporation.

 Dated:  ____________________, 1997.