Exhibit 10.39**STOCK OPTION AGREEMENT**made as of the 17th day of September, 2004 between **NATIONAL MEDICAL HEALTH CARDSYSTEMS, INC.**, a Delaware corporation (the “Company”), and Tery Baskin (Optionee”).**WHEREAS**, the Optionee is an employee of the Company or a subsidiary thereof;**WHEREAS**, the Company desires to provide to the Optionee an additional incentive to promote thesuccess of the Company;**NOW, THEREFORE**, in consideration of the foregoing, the Company hereby grants to the Optionee (the“Grant”) the right and option to purchase Common Shares of the Company under and pursuant to the termsand conditions of the 1999 Stock Option Plan (the “Plan”) and upon and subject to the following terms andconditions:     1. **GRANT OF OPTION.**The Company hereby grants to the Optionee theright and option (the “Option”) to purchase fifteen thousand Common Shares of the Company(the “Option Shares”) during the following periods:          (a) All or any part of three thousand seven hundred and fifty (3,750)Common Shares may be purchased during the period commencing one year from the date hereof and terminatingat 5:00 P.M. on September 17, 2014 (the “Expiration Date”).          (b) All or any part of three thousand seven hundred and fifty (3,750)Common Shares may be purchased during the period commencing two years from the date hereof andterminating at 5:00 P.M. on the Expiration Date.          (c) All or any part of three thousand seven hundred and fifty (3,750)Common Shares may be purchased during the period commencing three years from the datehereof and terminating at 5:00 P.M. on the Expiration Date.          (d) All or any part of three thousand seven hundred and fifty (3,750)Common Shares may be purchased during the period commencing four years from the datehereof and terminating at 5:00 P.M. on the Expiration Date.     2. **NATURE OF OPTION.**Such Options to purchase the Option Sharesare intended to meet the requirements of Section 422 of the Internal Revenue Code of 1986, asamended, relating to “incentive stock options”.     3. **EXERCISE PRICE.**The exercise price of each of the Option Sharesshall be **$25.10** (the “Option Price”).     4. **EXERCISE OF OPTIONS.**The Option shall be exercised inaccordance with the provisions of the Plan. As soon as practicable after the receipt of notice ofexercise (in the form annexed hereto as Exhibit A) and payment of the Option Price as providedfor in the Plan, the Company shall tender to the Optionee certificates issued in the Optionee’sname evidencing the number of Option Shares covered thereby.     5. **TRANSFERABILITY.**The Option shall not be transferable other thanby will or the laws of descent and distribution and, during the Optionee’s lifetime, shall not beexercisable by any person other than the Optionee.
 

 
     6. **CHANGE IN CONTROL.**In the event of a Change in Control any Optionsgranted hereunder which have not vested as of the date of the Change in Control shall automatically vest on such date. Change ofControl shall mean, (i) the acquisition by any Person or Persons acting as a group (other than any existing shareholder of theCompany) of more than 50% of the Company’s outstanding voting stock; (ii) the merger of the Company with or into another corporationwhere the Company is not the surviving entity; (iii) any reverse merger in which the Company’s shareholders immediately prior to themerger do not have the right to elect a majority of the members of the Board of the surviving entity; or (iv) the sale of all orsubstantially all of the assets of the Company.     7. **INCORPORATION BY REFERENCE.**The terms and conditions ofthe Plan are hereby incorporated by reference and made a part hereof.     8. **NOTICES.**Any notice or other communication given hereunder shallbe deemed sufficient if in writing and hand delivered or sent by registered or certified mail, returnreceipt requested, addressed to the Company, 26 Harbor Park Drive, Port Washington, New York11050, Attention: Secretary and to the Optionee at the address indicated below. Notices shall bedeemed to have been given on the date of hand delivery or mailing, except notices of change ofaddress, which shall be deemed to have been given when received.     9. **BINDING EFFECT.**This Agreement shall be binding upon and inureto the benefit of the parties hereto and their respective legal representatives, successors andassigns.     10. **ENTIRE AGREEMENT.**This Agreement, together with the Plan,contains the entire understanding of the parties hereto with respect to the subject matter hereofand may be modified only by an instrument executed by the party sought to be charged.     **INWITNESS WHEREOF**, the parties have executed this Agreement as of the day and year first above written.      **NATIONAL MEDICAL HEALTH**