EXHIBIT 4.2
                          REGISTRATION RIGHTS AGREEMENT

     REGISTRATION RIGHTS AGREEMENT (the "Agreement") made as of this ___ day
of __________, 2002 by and among NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC., a
New York corporation (the "Company"), and the individuals whose names are set
forth on Schedule I hereto (each, a "Noteholder" and, collectively, the
"Noteholders").

                              W I T N E S S E T H:

     WHEREAS,  the  Company  is  proposing  to issue and sell up to  $11,600.000
aggregate principal amount of its 12% Convertible Promissory Notes (the "Notes")
pursuant to a private placement; and

     WHEREAS,  the Notes are  convertible  into shares of Common Stock  (defined
below) in accordance with the terms of the Notes; and

     WHEREAS,  the parties hereto desire to promote the interests of the Company
and the interests of the  Noteholders by  establishing  herein certain terms and
conditions upon which the Company will register  certain of the shares of Common
Stock issuable upon conversion of the Notes; and

     NOW,  THEREFORE,  in consideration of the premises and mutual covenants and
agreements herein contained, and for other good and valuable consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the parties hereto
agree as follows:

     1. Certain Definitions.  As used herein, the following terms shall have the
following respective meanings:

     "Business  Day"  shall  have  the  meaning  ascribed  thereto  in  the  12%
Convertible Note.

     "Changing Event shall have the meaning  ascribed  thereto in Section 3.4(d)
hereof.

     "Closing Date" shall have the meaning ascribed thereto in the Recitals.

     "Common  Stock" means the common  stock,  par value $.01 per share,  of the
Company.

     "Commission" shall mean the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.

     "Correction  Event"  shall  have the  meaning  ascribed  thereto in Section
3.4(d) hereof.

     "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

     "Holder" shall mean any holder of Registrable Securities.

     "Register",  "registered" and "registration"  shall refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities  Act  and  applicable  rules  and  regulations   thereunder  and  the
declaration or ordering of the effectiveness of such registration statement.

     "Registrable  Securities"  shall mean the shares of (i) Common Stock issued
or  issuable  to the  Holders  upon  conversion  of the Notes  (the  "Conversion
Shares") and (ii) Common Stock issuable or issued to the Holders,  in respect of
the  Conversion  Shares,   upon  any  stock  split,   stock  dividend,   merger,
consolidation,  recapitalization  or similar  event,  excluding  all such shares
which (x) have been registered  under the Securities Act, (y) have been publicly
sold  pursuant to Rule 144, or (z) are  eligible  for sale  without  restriction
under Rule 144(k).

     "Registration  Expenses" shall mean all expenses  incurred in compliance by
the  Company  with  Section  3  hereof,  including,   without  limitation,   all
registration,  qualification  and filing fees,  exchange listing fees,  expenses
incurred in connection with the  preparation,  printing and  distribution of the
registration statement and prospectus, fees and disbursements of counsel for the
Company and  independent  public  accountants of the Company,  blue sky fees and
expenses,  and the expense of any special audits  incident to or required by any
such  registration  (but excluding the compensation of regular  employees of the
Company, which shall be paid in any event by the Company).

     "Rule 144" shall mean Rule 144, or any successor rule, under the Securities
Act.

     "Rule 144(k)"  shall mean Rule 144(k),  or any  successor  rule,  under the
Securities Act.

     "Securities Act" shall mean the Securities Act of 1933, as amended.

     "Selling  Expenses"  shall  mean all  underwriting  discounts  and  selling
commissions  applicable to the sale of  Registrable  Securities and all fees and
disbursements of counsel for any Holder.

     2. Notice of Transfers.  Promptly  following a transfer of any  Registrable
Securities  (except  under  circumstances  described in Section 3 hereof),  each
Holder agrees to give written notice to the Company of such transfer,  including
the number of  Registrable  Securities,  the date of  transfer  and to whom such
Registrable Securities were transferred.

3.  Registration Rights.

     3.1.  Request  for  Registration.  (a) At any time  following  the 18 month
anniversary of the date hereof,  pursuant to this Section 3.1(a),  Holders shall
be entitled to present to the Company a written  request (a "Request")  that the
Company effect a registration of Registrable  Securities held by the Holder.  If
the Company  shall  receive  from a Holder or Holders a Request that the Company
effect a  registration  with  respect to such  Holder's  Registrable  Securities
having a market value of not less than  $1,000,000  as of the date of a Request,
the Company will use its  reasonable  best efforts to effect a  registration  (a
"Demand  Registration")  as soon as practicable  after receipt of the Request to
permit  or  facilitate  the  sale  and  distribution  of  all  such  Registrable
Securities as are specified in such Request.

     (b) If all or any  portion  of  the  Registrable  Securities  covered  by a
Request  are,  at the request of the Holder,  to be  distributed  by means of an
underwriting,  the Holder  shall so advise the Company as a part of the Request.
If the Holder  disapproves  of the terms of the  underwriting,  such  person may
elect  to  withdraw   therefrom  by  written  notice  to  the  Company  and  the
underwriter.   The  securities  so  withdrawn   shall  also  be  withdrawn  from
registration.

     (c) The  Company  shall not be  required to effect more than one (1) Demand
Registration  in  any  twelve  month  period,   or  more  than  two  (2)  Demand
Registrations in total.

     (d) The Company  shall have the right to defer its  obligation  to effect a
registration  for up to one hundred and twenty  (120)  calendar  days if, in the
Company's  good faith  judgment,  effecting a  registration  would be materially
detrimental  to the Company and an executive  officer of the Company so notifies
the Holders in writing.

     (e) The registration statement filed pursuant to Section 3.1(a) may include
other  securities  of the Company which are held by officers or directors of the
Company  or which are held by  persons  who,  by virtue of  agreements  with the
Company  are  entitled  to include  their  securities  in any such  registration
(collectively,  "Other Stockholders"). The Company shall promptly give notice of
any registration proposed under this Section 3.1 to such Other Stockholders.

     (f) Suspension of Sales. Notwithstanding anything to the contrary contained
herein, the Company shall have the right to suspend further open market sales of
Registrable  Securities (the  "Suspension  Right")  whenever,  in the reasonable
judgment of the Company after  consultation with counsel,  there is or may be in
existence  (i) material  undisclosed  information  or events with respect to the
Company or (ii) a Changing Event.  Such suspension shall continue for the period
of time  reasonably  necessary for (x) disclosure to occur at a time that is not
detrimental  to the  Company  or its  stockholders  or  until  such  time as the
information  or event is no longer  material,  or (y) a Correction  Event as the
case may be, each as determined in good faith after  consultation  with counsel.
The Company will use  reasonable  efforts to give the Holders two days'  written
notice of any such  suspension and will use all  reasonable  efforts to minimize
the length of such suspension.

     3.2. Company  Registration.  (a) If the Company shall determine to register
any of its  securities  either for its own  account or the account of a security
holder  or  holders  exercising  demand   registration   rights  (other  than  a
registration  relating solely to employee benefit plans, a registration relating
solely  to  a  Commission   Rule  145  transaction  or  a  registration  on  any
registration form which does not permit secondary  sales),  the Company will (i)
within ten (10) days after such determination give to each Holder written notice
thereof; and (ii) include in such registration and in any underwriting  involved
therein,  all the  Registrable  Securities  specified  in a written  request  or
requests,  made by any  Holder  within  twenty  (20) days  after  receipt of the
written  notice from the Company  described  in clause (i) above,  except as set
forth in Section 3.2(b) below. Such written request may specify all or a part of
a Holder's Registrable Securities.

     (b)  If the  registration  of  which  the  Company  gives  notice  is for a
registered  public  offering  involving an  underwriting,  the Company  shall so
advise the Holders by written notice.  All Holders proposing to distribute their
Registrable  Securities  through  such  underwriting  shall  (together  with the
Company   distributing   its  securities  for  its  own  account   through  such
underwriting)  enter into an  underwriting  agreement in customary form with the
underwriter or underwriters  selected by the Company.  Notwithstanding any other
provision of this Section 3.2, if the representative of the underwriters advises
the  Company  in writing  that,  in its  opinion,  marketing  factors  require a
limitation  on the number of shares to be  underwritten,  the  Company  shall so
advise all Holders requesting registration, and the number of shares that may be
included in the registration  and  underwriting  shall be allocated first to the
Company for securities  being sold for its account or to the security  holder or
holders  exercising  demand  registration  rights for securities  being sold for
their  account,  as the case may be, and then in the following  manner:  (i) the
securities  requested to be  registered  by officers or directors of the Company
(other than officers or directors  who are also Holders)  shall be excluded from
such  registration and underwriting to the extent required by such limitation in
proportion,  as nearly as practicable,  to the respective  amounts of securities
requested  to be  registered  by such  officers  and  directors,  and  (ii) if a
limitation on the number of shares is still required,  the securities being sold
for the account of the  Holders  shall be excluded  from such  registration  and
underwriting to the extent required by such limitation in proportion,  as nearly
as practicable,  to the respective amounts of Registrable  Securities which they
had  requested  to be  included  in such  registration.  If any  Holder  who has
requested  inclusion in such  registration as provided above  disapproves of the
terms of the  underwriting,  such  person  may elect to  withdraw  therefrom  by
written notice to the Company and the underwriter.

     3.3.  Expenses of  Registration.  The Company  shall bear all  Registration
Expenses and the selling Holders shall bear all Selling Expenses (in proportion,
as nearly as  practicable,  to the  Registrable  Securities of each Holder being
registered)  incurred in  connection  with any  registration,  qualification  or
compliance pursuant to the provisions of Sections 3.1 and 3.2.

     3.4. Registration Procedures.  In the case of each registration effected by
the Company pursuant to this Agreement, the Company will keep each participating
Holder  advised in writing as to the initiation of such  registration  and as to
the completion thereof. At its expense, the Company will:

     (a) Keep such registration  statement effective until the earlier of (x) 12
months from the effective date of such registration statement or (y) the date on
which all of the Holders  have  completed  the  distributions  described  in the
registration statement relating thereto;

     (b) Prepare and file with the Commission such amendments and supplements to
such  registration  statement and the  prospectus  used in connection  with such
registration  statement as may be necessary to keep such registration  statement
effective and free of material misstatements or omissions and to comply with the
provisions of the Securities  Act with respect to the  disposition of securities
covered by such registration statement and respond as promptly as practicable to
any comments received with respect thereto;

     (c) Furnish to each Holder such number of prospectuses  and other documents
incident thereto, including any amendment of or supplement to the prospectus, as
a selling Holder from time to time may reasonably request in order to facilitate
the disposition of Registrable Securities covered by them;

     (d) Notify each seller of such Registrable  Securities,  at any time when a
prospectus  relating  thereto is required to be delivered  under the  Securities
Act, of the happening of any event as a result of which, the prospectus included
in such registration  statement  contains an untrue statement of a material fact
or omits a fact necessary to make the statements therein not misleading in light
of the circumstances  under which they were made (a "Changing Event"),  and, the
Company  will as  soon as  possible  prepare  and  furnish  to  such  seller  (a
"Correction  Event")  a  reasonable  number  of  copies  of a  supplement  to or
amendment to such prospectus so that, as thereafter  delivered to the purchasers
of such  Registrable  Securities,  such  prospectus  will not  contain an untrue
statement or omit to state any fact necessary to make the statements therein not
misleading in the light of the circumstances under which they were made;

     (e) Cause all Registrable  Securities  included in such  registration to be
listed  on  each,  if any,  securities  exchange  or  system  on  which  similar
securities issued by the Company are then listed; and

     (f) Register or qualify for offer and sale the  Registrable  Securities  by
the time the  registration  is declared  effective by the  Commission  under all
applicable  state  securities  or "blue sky" laws of the 50 states of the United
States  or  obtain  appropriate   exemptions   therefrom,   to  keep  each  such
registration  or  qualification  effective  during the  period the  registration
statement is required to be kept effective, and to do any and all other acts and
things which may be  reasonably  necessary or advisable to enable each Holder to
consummate  the  disposition  in  each  such  jurisdiction  of  the  Registrable
Securities owned by such Holder;  provided,  however, that the Company shall not
be required to submit to the general service of process in any such jurisdiction
unless the Company is already subject to such service in such jurisdiction;

     (g) During the period that the Company is required to keep the registration
statement  effective,  the Company  will advise the Holders  within a reasonable
time (i) when the  prospectus or any  prospectus  supplement  or  post-effective
amendment thereto has been filed, and when the same has become  effective,  (ii)
of any  request by the  Commission  for any  amendments  to, or  issuance by the
Commission of any stop order with respect to the  registration  statement or any
prospectus  or  amendment  thereto,  or  (iii)  of the  issuance  by  any  state
securities  commission or other regulatory authority of any order suspending the
registration or qualification or exemption from registration or qualification or
any proceedings for that purpose;

     (h) If reasonably requested by Holders' counsel or any Holder,  incorporate
as  promptly  as  practicable  in  a  prospectus  supplement  or  post-effective
amendment  such  information as such Holder or Holders'  counsel  requests to be
included therein, including, without limitation, with respect to the Registrable
Securities  being sold by such Holder to any  underwriter or  underwriters,  the
purchase price being paid therefor by such  underwriter or underwriters  and any
other terms of any  underwritten  offering of the  Registrable  Securities to be
sold in such offering,  and the Company shall promptly make all required filings
of such prospectus supplement or post-effective amendment;

     (i) Cooperate  with the Holders to facilitate  the timely  preparation  and
delivery of certificates  (which shall not bear any  restrictive  legends unless
required under applicable law) representing  Registrable Securities sold under a
registration  statement to the purchasers  thereof,  and enable such Registrable
Securities  to be in such  denominations  and  registered  in such  names as the
managing  underwriter or  underwriters,  if any, or such Holders may request and
keep available and make  available to the Company's  transfer agent prior to the
effectiveness of such registration statement a supply of such certificates;

     (j) Enter into such customary  agreements  (including,  if  applicable,  an
underwriting  agreement  in customary  form) and take such other  actions as the
Holders  or  the  underwriters  retained  by  the  Holders  participating  in an
underwritten  public  offering,  if any,  may  reasonably  request  in  order to
expedite or facilitate  the  disposition of  Registrable  Securities;  provided,
however, that such underwriters are reasonably acceptable to the Company;

     (k)  Furnish to each  Holder of  Registrable  Securities  included  in such
offering  and to each  underwriter,  if any,  if  requested  by such  Holder  or
underwriter, a signed counterpart,  addressed to such Holder or underwriter,  of
(i) an opinion or opinions  of counsel to the Company and (ii) a comfort  letter
or comfort letters from the Company's  independent public  accountants,  each in
customary form and covering matters of the type customarily  covered by opinions
or comfort letters, as the case may be.

     4.  Indemnification.  (a) The Company will indemnify and hold harmless each
Holder, its partners, officers,  directors,  trustees, employees and agents, and
each person, if any, who controls any Holder within the meaning of Section 15 of
the  Securities  Act or  Section  20 of the  Exchange  Act,  together  with  the
partners,   officers,   directors,   trustees,  employees  and  agents  of  such
controlling  person,  each Holder and each underwriter,  if any, and each person
who controls such  underwriter  within the meaning of the  Securities Act or the
Exchange Act, against all claims,  losses,  damages and liabilities (or actions,
proceedings or settlements  in respect  thereof)  arising out of or based on any
untrue  statement (or alleged untrue  statement) of a material fact contained in
any prospectus or other document (including any related registration  statement,
any  amendments  thereto and all documents  incorporated  by reference  therein)
incident to any such registration,  qualification or compliance, or based on any
omission (or alleged  omission) to state  therein a material fact required to be
stated therein or necessary to make the statements  therein not misleading,  and
will  reimburse  each such  person,  for any legal  and  other  expenses  as are
reasonably  incurred in connection by them with  investigating and defending any
such claim,  loss, damage,  liability or action,  provided that the Company will
not be liable in any such case to the extent that any such claim,  loss, damage,
liability  or  expense  arises  out of or is based on any  untrue  statement  or
omission based upon written information  furnished to the Company by such Holder
or underwriter  and stated to be  specifically  for use therein or to the extent
due to the  failure  of  such  Holder  or  underwriter  to  provide  an  updated
prospectus  or other  document  to a  purchaser  at a time when the  Company has
informed such Holder or underwriter of a material  misstatement or omission in a
prospectus  or other  document and has provided  updated  prospectuses  or other
documents correcting such misstatement or omission.

     (b) Each  Holder (on a several  and not joint  basis)  will  indemnify  the
Company, its officers, directors, employees and agents, and each person, if any,
who controls the Company  within the meaning of Section 15 of the Securities Act
or  Section 20 of the  Exchange  Act,  together  with the  officers,  directors,
employees and agents of such controlling  person, and each underwriter,  if any,
and each  person  who  controls  such  underwriter  within  the  meaning  of the
Securities Act, and each other Holder,  against all claims,  losses, damages and
liabilities (or actions,  proceedings or settlements in respect thereof) arising
out of or based on any untrue  statement  (or  alleged  untrue  statement)  of a
material fact contained in any such registration statement,  prospectus or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated  therein or necessary to make the  statements  therein not
misleading, and will reimburse each such person for any legal and other expenses
as are reasonably incurred by them in connection with investigating or defending
any such claim, loss,  damage,  liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or  omission  (or  alleged  omission)  is made in such  registration  statement,
prospectus or other  document in reliance  upon and in  conformity  with written
information   furnished  to  the  Company  by  such  Holder  and  stated  to  be
specifically  for use therein;  provided,  that in no event shall any  indemnity
under this Section 4(b) exceed the net  proceeds  from the offering  received by
such  Holder,  and no Holder  shall be liable  under this  Section  4(b) for any
statements or omissions of any other Holder.

     (c) Each  party  entitled  to  indemnification  under  this  Section 4 (the
"Indemnified  Party")  shall give  notice in writing  to the party  required  to
provide   indemnification   (the  "Indemnifying   Party")  promptly  after  such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought,  and shall  permit the  Indemnifying  Party to assume the defense of any
such claim or any litigation resulting therefrom,  provided that counsel for the
Indemnifying  Party,  who  shall  conduct  the  defense  of  such  claim  or any
litigation  resulting  therefrom,  shall be  approved by the  Indemnified  Party
(whose approval shall not unreasonably be withheld),  and the Indemnified  Party
may participate in such defense at such Indemnified  Party's expense;  provided,
however,  that the  Indemnifying  Party shall pay the expense of one counsel for
all similarly situated Indemnified Parties if representation of such Indemnified
Parties by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential  differing  interests between the Indemnified Parties
and any other party represented by such counsel in such proceeding, and provided
further  that the  failure of any  Indemnified  Party to give notice as provided
herein shall not relieve the  Indemnifying  Party of its obligations  under this
Section  4,  unless  such  failure  materially  prejudices  the  ability  of the
Indemnifying Party to defend against the claims asserted against the Indemnified
Party.  No  Indemnifying  Party, in the defense of any such claim or litigation,
shall,  except with the consent of each Indemnified  Party,  consent to entry of
any  judgment  or enter  into  any  settlement  which  does  not  include  as an
unconditional  term  thereof  the giving by the  claimant or  plaintiff  to such
Indemnified  Party of a release  from all  liability in respect of such claim or
litigation,  and no Indemnified  Party shall consent to entry of any judgment or
settle  such  claim or  litigation  without  the prior  written  consent  of the
Indemnifying  Party.  Each  Indemnified  Party shall  furnish  such  information
regarding  itself  or  the  claim  in  question  as an  Indemnifying  Party  may
reasonably request in writing and as shall be reasonably  required in connection
with the defense of such claim and litigation resulting therefrom.

     (d) If the indemnification provided for in this Section 4 is unavailable to
an Indemnified  Party in respect of any losses,  claims,  damages or liabilities
referred to therein,  then each Indemnifying Party, in lieu of indemnifying such
Indemnified  Party,  shall  contribute  to the  amount  paid or  payable by such
Indemnified Party as a result of such losses,  claims, damages or liabilities in
such  proportion as is appropriate to reflect the relative fault of the Company,
on the one hand,  and such Holder,  on the other hand,  in  connection  with the
statements  or  omissions  which  resulted in such  losses,  claims,  damages or
liabilities,  as  well  as any  other  relevant  equitable  considerations.  The
relative fault of the Company,  on the one hand, and Holder,  on the other hand,
shall be determined  by reference to, among other things,  whether the untrue or
alleged untrue statement of material fact or the omission or alleged omission to
state a material fact relates to information  supplied by the Company or by such
Holder and the parties'  relevant intent,  knowledge,  access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if  contribution  pursuant to this
Section  4(d)  were  based  solely  upon  the  number  of  entities   from  whom
contribution  was requested or by any other method of allocation  which does not
take account of the equitable  considerations  referred to above in this Section
4(d).  The amount  paid or payable  by an  Indemnified  Party as a result of the
losses,  claims,  damages and liabilities referred to above in this Section 4(d)
shall be deemed to include any legal or other  expenses  reasonably  incurred by
such  Indemnified  Party in connection with  investigating or defending any such
action or claim,  subject to the  provisions  of Section 4(d) hereof.  No person
guilty of  fraudulent  misrepresentation  (within the meaning of the  Securities
Act) shall be  entitled  to  contribution  from any person who was not guilty of
such  fraudulent  misrepresentation.  The  obligations of each Holder under this
Section 4(d) are several and not joint,  and are subject to the  limitation  set
forth in the proviso to Section 4(b) above.

     5.  Information  by Holders.  Each Holder shall furnish to the Company such
information  regarding such Holder and the distribution  proposed by such Holder
as the Company  may  reasonably  request in writing  and as shall be  reasonably
required  in  connection  with any  registration,  qualification  or  compliance
referred to in this Agreement.

     6. "Lock-Up" Agreement. Each Holder, if requested by the Company and the
managing underwriter of an offering by the Company of Common Stock or other
securities of the Company pursuant to a registration statement, shall agree in
writing (the "Lock-Up Agreement") not to sell publicly or otherwise transfer or
dispose of any shares of Common Stock or other securities of the Company held by
such Holder (other than those included in the registration, if applicable) for a
specified period of time (not to exceed 180 days) following the effective date
of such registration statement.

     7. Rule 144  Reporting.  With a view to making  available  the  benefits of
certain rules and  regulations  of the  Commission  which may permit the sale of
restricted securities to the public without registration, the Company agrees to:

     (a) use its  reasonable  best  efforts  to make  and  keep  current  public
information  available  as those  terms are  understood  and defined in Rule 144
under the Securities Act at all times;

     (b) use its reasonable best efforts to file with the Commission in a timely
manner  all  reports  and other  documents  required  of the  Company  under the
Securities Act and the Exchange Act; and

     (c) furnish to the Holders  forthwith  upon request a written  statement by
the Company as to its compliance  with the reporting  requirements  of Rule 144,
and of the Securities Act and the Exchange Act, a copy of the most recent annual
or quarterly  report of the  Company,  and such other  reports and  documents so
filed as the Holders may reasonably  request in availing  themselves of any rule
or regulation of the Commission allowing the Holders to sell any such securities
without registration.

     8. No Transfer or Assignment of  Registration  Rights.  The rights to cause
the Company to register  securities  granted to the Holders by the Company under
Section 3 may not be transferred or assigned  without the prior written  consent
of the Company.

     9.  Amendment;  Waiver.  No amendment,  alteration or  modification of this
Agreement shall be valid unless in each instance such  amendment,  alteration or
modification is expressed in a written instrument executed by Holders who own at
least a majority of the  Registrable  Securities.  No waiver of any provision of
this  Agreement  shall be valid unless it is  expressed in a written  instrument
duly  executed by the party or parties  making such waiver;  it being agreed and
understood  that  execution  by Holders  who own a majority  of the  Registrable
Securities  shall  constitute  a waiver by all the  Holders.  The failure of any
party to insist,  in any one or more  instances,  on  performance  of any of the
terms and  conditions  of this  Agreement  shall not be construed as a waiver or
relinquishment of any rights granted  hereunder or of the future  performance of
any such  term,  covenant  or  condition  but the  obligation  of any party with
respect thereto shall continue in full force and effect.

     10. Specific Performance,  Remedies.  The parties hereby declare that it is
impossible  to measure in money the damages  which will accrue to a party hereto
by reason of a failure to perform any of the  obligations  under this Agreement.
Therefore,  all parties  hereto shall have the right to specific  performance of
the  obligations  of the other  parties under this  Agreement,  and if any party
hereto shall institute an action or proceeding to enforce the provisions hereof,
any person  (including  the Company)  against whom such action or  proceeding is
brought  hereby  waives  the claim or  defense  therein  that such  party has an
adequate  remedy at law,  and such  person  shall not urge in any such action or
proceeding the claim or defense that such remedy at law exists.

     11.  Notices.  All notices and other  communications  required or permitted
hereunder shall be in writing and shall be mailed by  first-class,  certified or
registered mail, postage prepaid,  return receipt  requested,  or transmitted by
facsimile or delivered either by hand, by messenger or by nationally  recognized
overnight courier, addressed:

     (a) if to the Holders,  at the  addresses  set forth on Schedule I attached
hereto or at such other  address as they shall have  furnished to the Company in
writing.

     (b) if to the Company,  at the following address,  or at such other address
as the Company shall have furnished to the Holders,

                   National Medical Health Card Systems, Inc.
                   26 Harbor Park Drive
                   Port Washington, New York 11050
                   Attn:  Chief Financial Officer

                  with a copy to:

                   National Medical Health Card Systems, Inc.
                   26 Harbor Park Drive
                   Port Washington, New York 11050
                   Fax: (516) 605-6989
                   Attention:  Jonathan Friedman, Esq.

     Alternatively,  to such other  address as a party  hereto  supplies to each
other party in writing.

     12. Successors and Assigns.  All the terms and provisions of this Agreement
shall be  binding  upon and inure to the  benefit of and be  enforceable  by the
respective permitted transferees,  successors and assigns of the parties hereto,
whether so expressed or not.

     13.  Governing  Law.  This  Agreement is to be governed by and  interpreted
under the laws of the State of New York without  giving effect to the principles
of conflicts of laws thereof.

     14. Titles and Subtitles.  The titles of the sections of this Agreement are
for the convenience of reference only and are not to be considered in construing
this Agreement.

     15.  Severability.  The invalidity or unenforceability of any provisions of
this Agreement shall not be deemed to affect the validity or  enforceability  of
any other provision of this Agreement.

     16.  Entire  Agreement.  This  Agreement  constitutes  the full and  entire
understanding  and  agreement  between the parties  with  respect to the subject
matter  hereof  and  supersedes  all  previous   agreements,   arrangements  and
understandings,  whether  written or oral,  with  respect to the subject  matter
hereof.

     17.  Counterparts.  This  Agreement  may  be  executed  in  any  number  of
counterparts,  each of which  shall be an  original,  but all of which  together
shall constitute one instrument.

     18. Termination.  This Agreement shall terminate and be of no further force
or effect upon the fourth anniversary of the date of this Agreement.

                                      [This space intentionally left blank.]



         IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.

                                    NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.


                                   By:-----------------------------------------


                                    HOLDERS:


                                    --------------------------------



                                    --------------------------------



                                    --------------------------------



<PAGE>


                                   SCHEDULE I