Exhibit 10.4

                      NONQUALIFIED STOCK OPTION AGREEMENT
                      -----------------------------------
                             NESCO INDUSTRIES, INC.
                             ----------------------
                                       To
                                       --
                                MATTHEW HARRITON
                                ----------------

     THIS NONQUALIFIED  STOCK OPTION AGREEMENT (this "Agreement") is made by and
between  NESCO  INDUSTRIES,  INC., a Nevada  corporation  ("Company")  having an
address at 22-09  Queens Plaza  North,  Long Island  City,  NY 11101 and MATTHEW
HARRITON an individual having an address at 305 Madison Avenue,  Suite 4510, New
York, NY 10165 ("Optionee").


                                    RECITALS
                                    --------

     A.   Optionee is an  employee  of the Company  and/or of one or more of its
          affiliates or subsidiaries (each, a "Related Corporation") and desires
          to have the  opportunity  to  purchase  shares of common  stock of the
          Company ("Nesco Common").

     B.   Company is party to a certain  Share  Exchange  Agreement  (the "Share
          Exchange   Agreement")  with  Hydrogel   Systems,   Inc.,  a  Delaware
          corporation  ("HDS"),  certain  security holders of Hydrogel (the "HDS
          Signatories")  and  certain  security  holders of Company  (the "Nesco
          Signatories")

     C.   The Company  has agreed in the Share  Exchange  Agreement  and further
          desires for business purposes to make shares of Nesco Common available
          for  purchase  by  Optionee  as  an  inducement   to  the   continuing
          participation  of Optionee in the  business and affairs of the Company
          and/or the Related Corporations.

     ACCORDINGLY, the Company and Optionee agree as follows:

     1. GRANT OF OPTION.  Subject to the terms and conditions of this Agreement,
the Company  grants to Optionee the right and option (the  "Option") to purchase
up to 5,000,000 shares of Nesco Common (the "Shares") at an exercise price based
on the  Applicable  Trading Price as defined  herein,  on the terms set forth in
this Agreement.

     2.  NONQUALIFIED  OPTION.  The  Option is not  intended  to  qualify  as an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code").

     3. TERM OF OPTION.  The term of the Option  shall  commence  on the Closing
Date as defined in the Share Exchange  Agreement (May __, 2004) and,  subject to
earlier  termination as set forth in this  Agreement,  shall expire on the fifth
anniversary of the Closing Date (May __, 2009, the "Expiration Date").

     4.  NONTRANSFERABLE.  Except as provided  in Section 11 of this  Agreement,
neither the Option nor the rights and  privileges  conferred upon Optionee under
this Agreement may be  transferred,  assigned,  pledged or  hypothecated  in any

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manner  (whether by operation of law or otherwise)  other than by will or by the
applicable  laws of  descent  and  distribution,  and  shall not be  subject  to
execution,  attachment or similar process. Upon any attempt to transfer, assign,
pledge,  hypothecate  or  otherwise  dispose  of the Option or any such right or
privilege  contrary to the  provisions of (i) the Code, or (ii) any sale,  levy,
attachment  or  similar  process  attempted  with  respect to the Option or such
rights or  privileges,  such  Option,  right or  privilege  shall  automatically
terminate  and  become  null and  void.  This  Section 4 shall  govern  over any
inconsistent  term set forth in any current or future  agreement  concerning the
transfer  in  general  of the  Company's  shares of  capital  stock to which the
Company, Optionee and/or the Company's shareholders may be parties.

     5. VESTING/SHARES.

     5.1.  This Option  shall be  immediately  exercisable  for the  purchase of
2,000,000  Shares  and  exercisable  as to an  additional  1,000,000  Shares  of
commencing on each of the first,  second and third  anniversaries of the Closing
Date,  respectively,  provided that Optionee remains a consultant to or employee
of Company or a Related Company.

     5.1.1. If Company exercises its right to terminate the Employment Agreement
it has with Optionee after the Initial Term thereof,  without specifying reasons
for termination  that constitute  grounds for termination for "cause" as defined
in the Employment Agreement, this Option shall become immediately exercisable as
to all 5,000,000 Shares.

     5.1.2.  Once  exercisable  as set forth  above,  this Option  shall  remain
exercisable for such Shares  thereafter  until exercised or until the expiration
or termination of this Option as set forth in this Agreement.

     5.2.  Anything  contained in this Section to the contrary  notwithstanding,
until the last to occur of the filing of the Information  Statement with the SEC
and filing of the Additional  Capitalization Amendment (both as described in the
Share  Exchange  Agreement)  to the extent  that the Option is  exercisable  for
Shares,  it shall instead be exercisable for the equivalent  number of shares of
Nesco Series B Preferred.

     6. EXERCISE.

     6.1. Exercise Notice. Once vested as set forth in Section 5, the Option may
be exercised from time to time in accordance with the terms of this Agreement by
written notice of exercise  substantially in the form attached hereto as Exhibit
A (the "Exercise  Notice") signed by Optionee and Optionee's spouse, if any (or,
in the case of a permitted  exercise of the Option  after the death of Optionee,
by the executor,  administrator, heir or legatee of Optionee, as the case may be
and the spouse,  if any, of such heir or legatee),  and delivered by Optionee to
the  Company  at the  address  set forth in this  Agreement  for  notices to the
Company.  The  Exercise  Notice shall state the number of Shares as to which the
Option is being  exercised and the date of exercise.  The Exercise  Notice shall
also state the date (not a Saturday, Sunday or legal holiday) for completing the

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purchase of Shares covered by the Exercise Notice, which date shall be not later
than 15 days after the date of the Exercise Notice.  The closing of the purchase
of  Shares  pursuant  to an  exercise  of the  Option  shall  take  place at the
Company's principal executive offices.

     6.2. Payment. Upon the date set forth in the Exercise Notice for completion
of the purchase,  payment of the full exercise price for the Shares with respect
to which the Option is being exercised shall be made by certified check or other
immediately available funds.

     6.3.  Exercise Price.  The price per share (the "Exercise  Price") shall be
the Applicable Trading Price. "Applicable Trading Price" means the lesser of (i)
the  average  closing  bid price per share of Nesco  Common for the thirty  (30)
consecutive  Trading  Days prior to the Closing Date (as adjusted to reflect the
Reverse Split  contemplated by the Share Exchange  Agreement by multiplying such
price by the number of shares of Nesco  Common that became one share  thereof in
the Reverse  Split),  and (ii) the average  closing bid price per share of Nesco
Common for the thirty (30)  consecutive  Trading Days commencing on the 31st day
following the effective  date of the Reverse  Split (the  "Post-Split  Period");
provided,  however,  whenever this  Agreement  provides for  application  of the
Applicable  Trading Price at any time prior to  commencement  of the  Post-Split
Period,  the Applicable Trading Price shall be the price determined under clause
(i) of this paragraph.

     7. WITHHOLDING.  Prior to delivering  certificates for any Shares purchased
upon  exercise of the  Option,  the Company  shall  determine  the amount of any
federal,  state or local tax, if any,  which is  required  to be withheld  under
applicable law and shall collect from Optionee the amount of any such tax to the
extent not previously withheld.

     8. NO RIGHTS AS  SHAREHOLDER.  Neither  Optionee nor  Optionee's  permitted
successors or assigns shall have any rights or privileges as a shareholder  with
respect to any Shares  subject to the Option until  Optionee has  exercised  the
Option with respect to such Shares and stock  certificate(s) have been issued to
Optionee for the Shares as to which the Option was exercised.  The Company shall
issue such certificate(s) as expeditiously as possible.

     9. CONTINUATION OF EMPLOYMENT.  Neither the grant of the Option,  execution
of this  Agreement  nor  exercise of any portion of the Option shall confer upon
Optionee  any right to, or  guaranty  of,  continued  employment  by the Company
and/or any Related Corporation,  or in any way limit the right of the Company or
such Related Corporation to terminate the employment of Optionee at any time.

     10. TERMINATION EVENTS

     10.1. Termination of Employment, Death and Disability.

     10.1.1. In General. In the event that the Company's  employment of Optionee
should terminate  because of Optionee's  retirement or for any reason (including
but not limited to voluntary termination by Optionee and termination of Optionee
by Company without "cause"), other than because of death, Disability (as defined
in  subsection  10.1.3) or for "cause" (as defined in  subsection  10.1.4),  the
Option may be exercised by Optionee at any time prior to the Expiration  Date or

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the expiration of three months after the effective  date of such  termination of
employment,  whichever  is earlier,  but only if and to the extent  Optionee was
entitled to exercise the Option at such effective date of termination.

     10.1.2. Death. In the event of the death of Optionee while in the employ of
the Company, the Option shall be exercisable at any time prior to the Expiration
Date or the expiration of one year after the date of Optionee's death, whichever
is earlier,  but only if and to the extent Optionee was entitled to exercise the
Option at the date of Optionee's death and only by the person or persons to whom
Optionee's  rights under the Option shall have passed by  Optionee's  will or by
the laws of descent  and  distribution  of the state or  country  of  Optionee's
domicile at the time of death.

     10.1.3. Disability.

     (a) In the event  Optionee's  employment  with the  Company  is  terminated
because of Optionee's  disability  within the meaning of  subsection  10.1.3(b),
below ("Disability"),  the Option may be exercised by Optionee at any time prior
to the Expiration Date or the expiration of one year after the effective date of
such  termination  of employment,  whichever is earlier,  but only if and to the
extent  Optionee was entitled to exercise the Option at such  effective  date of
termination.

     (b)  Optionee is disabled  for  purposes of this  Agreement if the Board of
Company makes a good faith  determination  that Optionee suffers from Disability
(as hereinafter defined) so as to be unable to substantially  perform his duties
hereunder for an aggregate of one hundred and eighty (180)  calendar days during
any period of twelve (12)  consecutive  months.  As used in this Agreement,  the
term  "Disability"  shall  mean  the  material  inability,  in  the  opinion  of
three-fourths  (3/4)  of the  entire  membership  of the  Board  set  forth in a
resolution giving the particulars thereof, of Optionee to render his agreed-upon
services to Company due to physical  and/or mental  infirmity,  which opinion is
concurred in by a physician or psychiatrist  reasonably  satisfactory to Company
and Optionee or his duly appointed representative or guardian.

     10.1.4.  For  "Cause."  In the  event  of  the  termination  of  Optionee's
employment  with the Company  and/or any Related  Corporation  for  "cause," the
Option shall  automatically  terminate as of the first advice or  discussion  of
such  termination.  Optionee shall  thereafter  have no right to purchase Shares
pursuant to this  Agreement.  Termination  for "cause" shall mean: (a) dismissal
for  dishonesty,  conviction or confession of a crime  punishable by law (except
minor violations) intoxication while at work, fraud, misconduct or disclosure of
confidential  information;   (b)  dismissal  for  cause  as  defined  under  any
employment  or other  service  contract  entered into  between  Optionee and the
employer;  or (c)  Optionee's  persistent  breach  of (i)  any  policy,  rule or
regulation of the employer, or (ii) Optionee's terms of employment.

     10.1.5.  Cancellation  of Option.  To the extent that the Option  shall not
have been exercised under the  circumstances  and within the limited periods set
forth in this Agreement,  all further rights to purchase Shares pursuant to this

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Agreement and the Option shall cease and terminate as of the  expiration of such
applicable period, automatically and without notice or action by any party.


     11. TRANSFER OF SHARES/SECURITIES LAWS. All Shares acquired by Optionee (or
Optionee's permitted  successors) pursuant to an exercise of the Option shall be
acquired by the  purchaser  for  investment  only and such  purchaser  shall not
transfer the Shares so as to result in a distribution in violation of applicable
federal and state securities laws. Optionee  understands and agrees on behalf of
Optionee  (and  Optionee's  permitted  successors)  that any Shares which may be
issued  pursuant  to an  exercise  of the  Option  may  have  such  legends  and
restrictions  on the  certificates  for  the  Shares  and  be  subject  to  such
stop-transfer  instructions  as  the  Company  determines  to  be  necessary  or
appropriate, and further agrees to execute such agreements regarding transfer of
such  Shares  as the  Company  or  its  counsel  may  deem  advisable.  Optionee
acknowledges that Shares acquired upon an exercise of the Option may be required
to be held  indefinitely in the absence of  registration or the  availability of
exemptions from registration under applicable federal and state securities laws.
Upon an exercise of the Option,  the  purchaser  shall be required to execute an
investment  representation  letter containing the  representations  set forth in
this Section 11 and other representations required by the Company.

     12. CHANGES IN CAPITAL STRUCTURE.

     12.1.  Adjustments  Upon  Changes in  Capitalization.  The number of Shares
covered by the Option and the exercise price per Share shall be  proportionately
adjusted for any  increase or decrease in the number of issued  shares of common
stock of the Company resulting from a split-up or consolidation of shares or any
like capital adjustment, or the payment of any stock dividend.

     12.2. Effect of Certain Transactions.

     12.2.1.  Termination or Acceleration of Exercise Rights. Except as provided
in subsection 12.2.2, upon a merger,  consolidation,  acquisition of property or
stock, separation,  reorganization or liquidation of the Company, as a result of
which  event  the  shareholders  of the  Company  receive  cash,  stock or other
property in exchange for or in  connection  with their shares of common stock of
the Company (any such  transaction is referred to as an "Exchange  Event"),  the
Option shall terminate;  provided, however, that if Optionee shall have held the
Option  for a period  of at  least  one  year  from the date of this  Agreement,
Optionee  shall  have the right to  exercise  the  Option,  in whole or in part,
whether or not any vesting  requirements  set forth in this  Agreement have been
satisfied.  Any such exercise shall be deemed to take place immediately prior to
the Exchange Event,  assuming the Company  receives the Exercise Notice at least
two business days prior to such Event.

     12.2.2.  Alternative for Conversion to Exchange Stock. If the  shareholders
of the Company are to receive  capital stock of another  corporation  ("Exchange
Stock")  in  exchange  for their  shares of common  stock of the  Company in any
Exchange  Event,  and if the issuer of the  Exchange  Stock agrees in writing to
assume the  obligations  of the Company under this  Agreement,  then  subsection
12.2.1 shall not apply and, alternatively, the Option shall automatically,  upon
the  occurrence of the Exchange  Event,  be converted into an option to purchase
shares of Exchange  Stock.  The amount and exercise  price of shares of Exchange

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Stock  subject to the  converted  option shall be  determined  by adjusting  the
amount and  exercise  price for Shares set forth in this  Agreement  in the same
proportion as used for  determining  the number of shares of Exchange  Stock the
holders  of the  Company's  common  stock  are to  receive  as a result  of such
Exchange Event. The vesting schedule set forth in this Agreement, the Expiration
Date, and all other  provisions of this Agreement shall continue to apply to the
converted option for the Exchange Stock. In the event the issuer of the Exchange
Stock does not assume the Company's obligations under this Agreement, the Option
shall  terminate  pursuant to  subsection  12.2.1  unless  sooner  exercised  in
accordance with the terms of this Agreement.

     12.3.  Fractional  Shares.  In the event of any adjustment in the number of
Shares  covered  by the  Option,  any  fractional  shares  resulting  from  such
adjustment  shall be  disregarded  and the Option shall cover only the number of
full Shares resulting from such adjustment.

     12.4.  Determination  of Board of  Directors to Be Final.  All  adjustments
under this  Section 12 shall be made by the board of  directors  of the Company,
and its  determination as to what  adjustments  shall be made, and the extent of
such adjustments, shall be final, binding and conclusive.

     13.  RESERVATION OF SHARES. The Company shall set aside and reserve for the
term of the Option set forth in Section 3 that number of shares of common  stock
of the Company (or other securities  arising as a result of any adjustments made
pursuant to Section 12) which will permit the Company to perform its obligations
under this Agreement.

     14. MISCELLANEOUS.

     14.1. Notices. Any notice or demand required or permitted to be given under
this  Agreement  shall be in  writing  and  shall be  effective  when  delivered
personally or sent by certified mail, postage prepaid, addressed as follows:

If to the Company:      NESCO INDUSTRIES, INC.
                        22-09 Queens Plaza North
                        Long Island City,  NY 11101

If to Optionee:         MATTHEW HARRITON
                        305 Madison Avenue
                        Suite 4510
                        New York, NY 10165

Either party may, by notice delivered as set forth in this Section 14.1,  direct
that future notices or demands be sent to a different address.

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     14.2.  Governing  Law;  Venue.  This  Agreement  shall be  governed  by and
construed under the laws of the State of New York as to matters of procedure and
substantive  law. All disputes under this Agreement  shall be settled by a court
of competent jurisdiction of the State of New York.

     14.3.  Entire  Agreement.  This Agreement  constitutes the entire agreement
between the parties with respect to its subject  matter and supersedes all prior
oral and  written  agreements,  negotiations  and  understandings  between  such
parties  relating to the grant to Optionee of options to purchase  capital stock
of the Company.  This  Agreement  may not be changed  except by an instrument in
writing signed by the Company and Optionee.

     14.4.  Severability.  If any term or  provision of this  Agreement,  or the
applicability of a term or provision to any person shall be deemed to any extent
to be  invalid  or  unenforceable,  the  remainder  of  this  Agreement,  or the
application of such term or provision to persons other than those as to which it
is held invalid or  unenforceable,  shall not be affected and shall  continue in
full force and effect.

     14.5.  Titles and  Subtitles.  The titles and  subtitles  contained in this
Agreement  are  used  for  convenience  of  reference  only  and  are  not to be
considered in construing or interpreting this Agreement.

     14.6. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original,  but all of which together  shall  constitute
one and the same agreement.

     14.7.  Attorneys'  Fees and Costs. If legal action should arise between the
parties  concerning the interpretation of or performance in connection with this
Agreement,  the  substantially  prevailing  party, as determined by the trier of
fact in a final  judgment or decree,  shall  recover from the other party in any
trial, bankruptcy, appellate court or arbitration such costs and attorneys' fees
as shall be fixed by the trier of fact.

     14.8.  Rules of  Construction.  This Agreement  shall be construed so that,
whenever  applicable,  the use of the singular shall include the plural, the use
of the  plural  shall  include  the  singular,  the use of any  gender  shall be
applicable  to all genders,  and the word "person"  shall include  corporations,
partnerships (including limited partnerships), estates, governmental authorities
and all other legal entities. Unless expressly stated to be "business days," the
term "days" as used in this Agreement shall mean calendar days.

     14.9. Specific  Performance.  The parties to this Agreement declare that it
is  impossible to measure in money the damages that will accrue to a party or to
the personal  representative or other  administrator of the estate of a deceased
party by reason of any  failure to perform  the  obligations  contained  in this
Agreement.  Therefore,  if any  party or the  personal  representative  or other
administrator  of the estate of a party shall institute any action or proceeding
to enforce specifically the provisions of this Agreement,  any person, including
the Company, against whom such action or proceeding is brought, waives any claim
or defense in such action or proceeding  that such person has an adequate remedy

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at law or in damages, and such person shall not urge in any action or proceeding
the claim or defense that such remedy at law or in damages exists.

     14.10.  Acknowledgment  Regarding Any Outstanding  Rights and Options.  The
Company and Optionee  acknowledge and agree the Option granted in this Agreement
shall replace, supersede, cancel and annul any and all outstanding rights and/or
options Optionee may have to acquire shares of the common stock of Company.

     14.11. Date of Agreement. This Agreement shall be dated and effective as of
the Closing Date defined above.

IN WITNESS WHEREOF the parties have agreed to the terms hereof as of the date of
this Agreement.

Company                                  Optionee
Nesco Industries, Inc.

By /s/                                   /s/
Authorized Signator                      Matthew Harriton

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                                                                       Exhibit A
                                                                       ---------

                         Notice of Election to Exercise
                         ------------------------------

     This Notice of Election to Exercise shall constitute proper notice pursuant
to  Section  6.1 of  that  certain  Nonqualified  Stock  Option  Agreement  (the
"Agreement")  dated as of May __, 2000,  between  Nesco  Industries,  Inc.  (the
"Company") and the undersigned.

     The  undersigned  hereby elects to exercise  Optionee's  option to purchase
______________  shares of the common stock of the Company at a purchase price of
$_________ per share, for aggregate consideration of $_____________ on the terms
and conditions set forth in the Agreement.. Such aggregate consideration, in the
form specified in Section 6.2 of the Agreement, accompanies this Notice.

     The undersigned has executed this Notice this ______ day of  _____________,
200_.


                                ___________________________________
                                [Name]


                                ___________________________________
                                [spouse]