Document:

PHILLIPS-VAN HEUSEN CORPORATION

Exhibit 10.4

PHILLIPS-VAN HEUSEN CORPORATION

2003 STOCK OPTION PLAN

(As Amended Through April 9, 2004)

1.Purpose.  The purposes of the 2003 Stock Option Plan (the
"Plan") are to induce certain individuals to remain in
the employ, or to continue to serve as directors of, or consultants or advisors
to, Phillips-Van Heusen Corporation (the "Company")
and its present and future subsidiary corporations (each a
"Subsidiary"), as defined in Section 424(f) of the Internal Revenue
Code
of 1986, as amended (the "Code"), to attract new individuals to enter
into such employment or service and to encourage such
individuals to secure or increase on reasonable terms their stock ownership in
the Company.  The Board of Directors of the Company (the
"Board") believes that the granting of stock options (the
"Options") under the Plan will promote continuity of management
and increased incentive and personal interest in the welfare of the Company by
those who are or may become primarily responsible for shaping
and carrying out the long range plans of the Company and securing its continued
growth and financial success.  Options granted hereunder are
intended to be either (i) "incentive stock options" (which term, when
used herein, shall have the meaning ascribed thereto by the
provisions of Section 422(b) of the Code) or (ii) options which are not
incentive stock options ("non-qualified stock options") or
(iii) a combination thereof, as determined by the Committee (the
"Committee") referred to in Section 5 at the time of the grant
thereof.

2.Effective Date of the Plan.  The Plan became effective on May 1,
2003.

3.Stock Subject to Plan.  5,400,000 of the authorized but unissued
shares of the common stock, $1.00 par value, of the Company
(the "Common Stock") are hereby reserved for issue upon the exercise of Options
granted under the Plan; provided, however, that
the number of shares so reserved may from time to time be reduced to the extent
that a corresponding number of issued and outstanding shares of
the Common Stock are purchased by the Company and set aside for issue upon the
exercise of Options.  If any Options expire or terminate for any
reason without having been exercised in full, the unpurchased shares subject
thereto shall again be available for the purposes of the Plan.

4.Administration.

(a)Except as otherwise provided in Section 4(b), the Plan shall be
administered by the Committee.  Subject to the express provisions of
the Plan, the Committee shall have complete authority, in its discretion, to
interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it, to determine the terms and provisions of the
respective option agreements or certificates (which need not be
identical), to determine the individuals (each a "Participant") to
whom and the times and the prices at which Options shall be
granted, the periods during which each Option shall be exercisable, the number
of shares of the Common Stock to be subject to each Option and
whether such Option shall be an incentive stock option or a non-qualified stock
option and to make all other determinations necessary or
advisable for the administration of the Plan.  In making such determinations,
the Committee may take into account the nature of the services
rendered by the respective individuals, their present and potential
contributions to the success of the Company and the Subsidiaries and such
other factors as the Committee in its discretion shall deem relevant.  The
Committee's determination on the matters referred to in this Section
4 shall be conclusive.  Any dispute or disagreement which may arise under or as
a result of or with respect to any Option shall be determined
by the Committee, in its sole discretion, and any interpretations by the
Committee of the terms of any Option shall be final, binding and
conclusive.

(b)The Chairman of the Board or, if the Chairman is not an executive
officer of the Company, the Chief Executive Officer of the Company
or other executive officer of the Company designated by the Committee who is
also a director (the Chairman, Chief Executive Officer or other
designated executive officer being referred to as the "Designated
Director") may administer the Plan with respect to employees of the
Company or a Subsidiary (i) who are not officers of the Company subject to the
provisions of Section 16 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and (ii) whose compensation is
not, and in the judgment of the Designated Director may not be
reasonably expected to become, subject to the provisions of Section 162(m) of
the Code.  The authority of the Designated Director and Options
granted by the Designated Director shall be subject to such terms, conditions,
restrictions and limitations as may be imposed by the Board,
including, but not limited to, a limit on the aggregate number of shares of
Common Stock subject to Options that may be granted in any one
calendar year by the Designated Director to all such employees of the Company
and its Subsidiaries and a maximum number of shares that may be
subject to Options granted under the Plan in any one calendar year to any single
employee by the Designated Director.  Unless and until the
Board shall take further action, the maximum number of shares of Common Stock
that may be subject to Options granted under the Plan, the
Company's 1997 Stock Option Plan, 2000 Stock Option Plan and any other stock
option plan then in effect in any one calendar year by the
Designated Director shall be 100,000 in the aggregate and the maximum number of
shares of Common Stock that may be subject to Options granted
under the Plan, the Company's 1997 Stock Option Plan, 2000 Stock Option Plan and
any other stock option plan then in effect in any one calendar
year by the Designated Director to any single employee shall be 5,000 in the
aggregate.  Any actions duly taken by the Designated Director with
respect to the grant of Options to such employees shall be deemed to have been
taken by the Committee for purposes of the Plan.

5.Committee.  The Committee shall consist of two or more members
of the Board.  It is intended that all of the members of the
Committee shall be "non-employee directors" within the meaning of Rule
16b-3(b)(3) promulgated under the Exchange Act, and
"outside directors" within the contemplation of Section
162(m)(4)(C)(i) of the Code.  The Committee shall be appointed annually by
the Board, which may at any time and from time to time remove any members of the
Committee, with or without cause, appoint additional members
to the Committee and fill vacancies, however caused, in the Committee.  A
majority of the members of the Committee shall constitute a quorum.
All determinations of the Committee shall be made by a majority of its members
present at a meeting duly called and held, except that the
Committee may delegate to any one of its members the authority of the Committee
with respect to the grant of Options to any person who shall
not be an officer and/or director of the Company and who is not, and in the
judgment of the Committee may not be reasonably expected to become,
a "covered employee" within the meaning of Section 162(m)(3) of the
Code.  Any decision or determination of the Committee reduced to
writing and signed by all of the members of the 

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Committee (or by the member(s) of the Committee to whom authority has been
delegated) shall be fully as effective as if it had been made at
a meeting duly called and held.

6.Eligibility.  An Option may be granted only to a key employee of
the Company or a Subsidiary or to a director of the Company or
a Subsidiary who is not an employee of the Company or a Subsidiary or to an
independent consultant or advisor who renders services to the
Company or a Subsidiary.

7.Option Prices.

(a)The initial per share option price of any Option shall be the price
determined by the Committee, but not less than the fair market
value of a share of the Common Stock on the date of grant; provided,
however, that, in the case of a Participant who owns more
than 10% of the total combined voting power of the Common Stock at the time an
Option which is an incentive stock option is granted to him or
her, the initial per share option price shall not be less than 110% of the fair
market value of a share of the Common Stock on the date of
grant.

(b)For all purposes of the Plan, the fair market value of a share of the
Common Stock on any date shall be equal to (i) the closing sale
price of the Common Stock on the New York Stock Exchange on the business
day preceding such date or (ii) if there is no sale of the Common
Stock on such Exchange on such business day, the average of the bid and asked
prices on such Exchange at the close of the market on such
business day.

8.Option Term.  Participants shall be granted Options for such
term as the Committee shall determine, not in excess of 10 years
from the date of the granting thereof; provided, however, that, in
the case of a Participant who owns more than 10% of the total
combined voting power of the Common Stock at the time an Option which is an
incentive stock option is granted to him or her, the term with
respect to such Option shall not be in excess of five years from the date of the
granting thereof.
9.Limitations on Amount of Options Granted.

(a)The aggregate fair market value of the shares of the Common Stock for
which any Participant may be granted incentive stock options
which are exercisable for the first time in any calendar year (whether under the
terms of the Plan or any other stock option plan of the
Company) shall not exceed $100,000.

(b)No Participant shall, during any fiscal year of the Company, be
granted Options under the Plan to purchase more than 1,200,000 shares
of the Common Stock.
10.Exercise of Options.

(a)Except as otherwise determined by the Committee at the time of grant,
a Participant may not exercise an Option during the period
commencing on the date of the grant of such Option to him or her and ending on
the day immediately preceding the first anniversary of such
date.  Except as otherwise determined by the Committee at the time of grant, a
Participant may (i) during the period commencing on the first
anniversary of the date of the grant of an Option to him or her and ending on
the day immediately preceding the second anniversary of 

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such date, exercise such Option with respect to one-quarter of the shares
granted thereby, (ii) during the period commencing on the
second anniversary of the date of such grant and ending on the day immediately
preceding the third anniversary of the date of such grant,
exercise such Option with respect to one-half of the shares granted thereby,
(iii) during the period commencing on the third anniversary of the
date of such grant and ending on the day immediately preceding the fourth
anniversary of such date, exercise such Option with respect to three-
quarters of the shares granted thereby and (iv) during the period commencing on
the fourth anniversary of the date of such grant and ending at
the time the Option expires pursuant to the terms hereof, exercise such Option
with respect to all of the shares granted thereby.

(b)Except as hereinbefore otherwise set forth, an Option may be exercised
either in whole at any time or in part from time to time.

(c)An Option may be exercised only by a written notice of intent to
exercise such Option with respect to a specific number of shares of
the Common Stock and payment to the Company of the amount of the option price
for the number of shares of the Common Stock so specified;
provided, however, that, if the Committee shall in its sole
discretion so determine at the time of the grant of any Option, all
or any portion of such payment may be made in kind by the delivery of shares of
the Common Stock having a fair market value equal to the
portion of the option price so paid; provided further,
however, that no portion of such payment may be made by delivering
shares of the Common Stock acquired upon the exercise of an Option if such
shares shall not have been held by the Participant for at least six
months; and provided further, however, that, subject to the
requirements of Regulation T (as in effect from time to time)
promulgated under the Exchange Act, the Committee may implement procedures to
allow a broker chosen by a Participant to make payment of all or
any portion of the option price payable upon the exercise of an Option and
receive, on behalf of such Participant, all or any portion of the
shares of the Common Stock issuable upon such exercise.

(d)The Committee may, in its discretion, permit any Option to be
exercised, in whole or in part, prior to the time when it would
otherwise be exercisable.

(e)(1)Notwithstanding the provisions of Section 10(a) or the last
sentence of Section 13, in the event that a Change in Control
shall occur, then, each Option theretofore granted to any Participant which
shall not have theretofore expired or otherwise been cancelled or
become unexercisable shall become immediately exercisable in full.  For the
purposes of this Section 10(e), a "Change in Control"
shall be deemed to occur upon the first to occur of the following events:

(i)Any "person" (as such term is used in Sections 3(a)(9) and
13(d) of the Securities Exchange Act), other than a
"person" who on April 9, 2004 was the owner of at least 8% of the
Voting Power (as defined below) of the securities of the Company
having Voting Power, becomes a "beneficial owner," as such term is
used in Rule 13d-3 promulgated under the Exchange Act, of
securities with at least (A) one-quarter but less than one-half of the Voting
Power of securities having Voting Power, unless such acquisition
has been approved in advance by at least three-quarters of the Incumbent Board
(as defined in clause (ii) below taking into account the
provisos) or (B) one-half of the Voting Power of the securities of the Company
having Voting Power;

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(ii)Individuals who, as of April 9, 2004, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to April 9, 2004 whose
election, or nomination for election by the Company's stockholders, was approved
by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person (as defined
below) other than the Board;

(iii)Consummation of a reorganization, merger, consolidation or a sale or
other disposition of all or substantially all of the assets of
the Company (each, a "Business Combination"), in each case unless,
following such Business Combination, (A) all or substantially all
of the Persons that were the beneficial owners of the outstanding shares of
common stock of the Company (the "Outstanding Company Common
Stock") and the Voting Power of the securities of the Company having Voting
Power, immediately prior to such  Business Combination,
beneficially own, directly or indirectly, more than 50% of the then-outstanding
shares of common stock and more than 50% of the combined voting
power of the then-outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation that, as a result of such transaction, owns the Company
or all or substantially all of the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions
as their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and the Voting Power of the
securities of the Company having Voting Power, as the case may be (there being
excluded from securities held by such security holders of the
corporation resulting from the Business Combination, but not from the securities
with Voting Power of the corporation resulting from such
Business Combination, any securities with Voting Power received by Affiliates
(as defined below) of such other company in exchange for
securities of such other company or, if such other company is the surviving
company and its securities remain unchanged, any securities of such
other company with Voting Power held by an Affiliate of such other company
immediately prior to the Business Combination), (B) no Person
(excluding any corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially owns directly
or indirectly, 20% or more of, respectively, the then-
outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined Voting Power of the then-
outstanding voting securities of such corporation, except to the extent that
such ownership existed in the Company prior to the Business
Combination, and (C) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the execution of the initial
agreement or of the action of the Board providing for such
Business Combination, whichever occurs first; or

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(iv)Approval by the stockholders of the Company of (A) a liquidation of
all or substantially all of the Company's assets or (B) a
dissolution of the Company.

Notwithstanding the foregoing, "Change in Control" with respect to
any Participant shall be as defined in the Participant's
employment agreement, if any, with the Company or a Subsidiary, unless such
employment agreement provides otherwise.  For the purposes of this
paragraph (1), (i) the term "Affiliate" shall mean any Person that
directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, any other
Person, (ii) the term "Person" shall mean any individual,
partnership, firm, trust, corporation or other similar entity, (iii)
"Company" shall include any entity that succeeds to all
or substantially all of the business of the Company, and (iv) "Voting
Power" shall mean general voting power under ordinary
circumstances, in the absence of contingencies, to elect the directors of a
corporation.

(2)In the event that a Change of Control shall occur, then, from and
after the time of such event, neither the provisions of this
Section 10(e) nor any of the rights of any Participant hereunder shall be
modified or amended in any way.

11.Transferability.  (a)  Except as otherwise provided in Section
11(b), no Option shall be assignable or transferable except by
will and/or by the laws of descent and distribution and, during the life of any
Participant, each Option granted to such Participant may be
exercised only by him or her.

(b)  A Participant may, with the prior approval of the Committee, transfer
for no consideration an Option which is a non-qualified stock
option to or for the benefit of the Participant's Immediate Family, a trust for
the exclusive benefit of the Participant's Immediate Family or
to a partnership or limited liability company for one or more members of the
Participant's Immediate Family, subject to such limits as the
Committee may establish, and the transferee shall remain subject to all the
terms and conditions applicable to the Option prior to such
transfer.  The term "Immediate Family" shall mean the Participant's
children, stepchildren, grandchildren, parents, stepparents,
grandparents, spouse, former spouse, siblings, nieces, nephews, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships or any person sharing the
Participant's household (other than a tenant or employee).

12.Termination of Employment or Service.  Except as otherwise
determined by the Committee, in the event a Participant leaves the
employ or service, or ceases to serve as a director, of the Company and the
Subsidiaries, whether voluntarily or otherwise but other than by
reason of his or her death or, in the case of Participant who shall be an
employee or director, retirement, each Option theretofore granted to
him or her which shall not have been exercisable prior to the date of the
termination of his or her employment or service shall terminate
immediately.  Except as otherwise determined by the Committee, each other Option
theretofore granted to him or her which shall not have
theretofore expired or otherwise been cancelled shall, to the extent exercisable
on the date of such termination of employment or service and
not theretofore exercised, terminate upon the earlier to occur of (x) 90 days
after the date of such Participant's termination of employment or
cessation of service and (y) the date of termination 

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specified in such Option.  Notwithstanding the foregoing, except as otherwise
determined by the Committee, if a Participant is terminated
for cause (as defined herein), each Option theretofore granted to him or her
which shall not have theretofore expired or otherwise been
cancelled shall, to the extent not theretofore exercised, terminate forthwith.
Except as otherwise determined by the Committee, in the event a
Participant leaves the employ, or ceases to serve as a director, of the Company
and the Subsidiaries by reason of his or her retirement, each
Option theretofore granted to him or her which shall not have theretofore
expired or otherwise been cancelled shall become immediately
exercisable in full and shall, to the extent not theretofore exercised,
terminate upon the earlier to occur of the expiration of three years
after the date of such retirement and the date of termination specified in such
Option.  Except as otherwise determined by the Committee, in
the event a Participant's employment or service with the Company and the
Subsidiaries terminates by reason of his or her death, each Option
theretofore granted to him or her which shall not have theretofore expired or
otherwise been cancelled shall become immediately exercisable in
full and shall, to the extent not theretofore exercised, terminate upon the
earlier to occur of the expiration of three months after the date
of the qualification of a representative of his or her estate and the date of
termination specified in such Option.  For purposes of the
foregoing, (a) the term "cause" shall mean:  (i) the commission
by the Participant of any act or omission that would constitute
a crime under federal, state or equivalent foreign law, (ii) the commission by
the Participant of any act of moral turpitude, (iii) fraud,
dishonesty or other acts or omissions that result in a breach of any fiduciary
or other material duty to the Company and/or the Subsidiaries,
(iv) continued substance abuse that renders the Participant incapable of
performing his or her material duties to the satisfaction of the
Company and/or the Subsidiaries, or (v) as defined in the Participant's
employment agreement, if any, with the Company or a Subsidiary and
(b) the term "retirement" shall mean (I) the termination of a
Participant's employment with the Company and all of the
Subsidiaries (x) other than for cause or by reason of his or her death and
(y) on or after the earlier to occur of (1) the first day
of the calendar month in which his or her 65th birthday shall occur and
(2) the date on which he or she shall have both attained his or
her 55th birthday and completed 10 years of employment with the Company and/or
the Subsidiaries or (II) the termination of a Participant's
service as a director with the Company and all of the Subsidiaries (x) other
than for cause or by reason of his or her death and (y) on or
after the first day of the calendar month in which his or her 65th birthday
shall occur.

13.Adjustment of Number of Shares.  In the event that a dividend
shall be declared upon the Common Stock payable in shares of the
Common Stock, the number of shares of the Common Stock then subject to any
Option and the number of shares of the Common Stock reserved for
issuance in accordance with the provisions of the Plan but not yet covered by an
Option and the number of shares set forth in Section 9(b)
shall be adjusted by adding to each share the number of shares which would be
distributable thereon if such shares had been outstanding on the
date fixed for determining the stockholders entitled to receive such stock
dividend.  In the event that the outstanding shares of the Common
Stock shall be changed into or exchanged for a different number or kind of
shares of stock or other securities of the Company or of another
corporation, whether through reorganization, recapitalization, stock split-up,
combination of shares, sale of assets, merger or consolidation
in which the Company is the surviving corporation, then, there shall be
substituted for each share of the Common Stock then subject to any
Option and for each share of the Common Stock reserved for issuance in
accordance with the provisions of the Plan but not yet covered by an
Option and for each share 

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of the Common Stock referred to in Section 9(b), the number and kind of
shares of stock or other securities into which each outstanding
share of the Common Stock shall be so changed or for which each such share shall
be exchanged.  In the event that there shall be any change,
other than as specified in this Section 13, in the number or kind of outstanding
shares of the Common Stock, or of any stock or other
securities into which the Common Stock shall have been changed, or for which it
shall have been exchanged, then, if the Committee shall, in its
sole discretion, determine that such change equitably requires an adjustment in
the number or kind of shares then subject to any Option and the
number or kind of shares reserved for issuance in accordance with the provisions
of the Plan but not yet covered by an Option and the number or
kind of shares referred to in Section 9(b), such adjustment shall be made by the
Committee and shall be effective and binding for all purposes
of the Plan and of each stock option agreement or certificate entered into in
accordance with the provisions of the Plan.  In the case of any
substitution or adjustment in accordance with the provisions of this Section 13,
the option price in each stock option agreement or certificate
for each share covered thereby prior to such substitution or adjustment shall be
the option price for all shares of stock or other securities
which shall have been substituted for such share or to which such share shall
have been adjusted in accordance with the provisions of this
Section 13.  No adjustment or substitution provided for in this Section 13 shall
require the Company to sell a fractional share under any stock
option agreement or certificate.  In the event of the dissolution or liquidation
of the Company, or a merger, reorganization or consolidation
in which the Company is not the surviving corporation, then, except as otherwise
provided in Section 10(e) and the second sentence of this
Section 13, each Option, to the extent not theretofore exercised, shall
terminate forthwith.

14.Purchase for Investment, Withholding and Waivers.  Unless the
shares to be issued upon the exercise of an Option by a
Participant shall be registered prior to the issuance thereof under the
Securities Act of 1933, as amended, such Participant will, as a
condition of the Company's obligation to issue such shares, be required to give
a representation in writing that he or she is acquiring such
shares for his or her own account as an investment and not with a view to, or
for sale in connection with, the distribution of any thereof.  In
the event of the death of a Participant, a condition of exercising any Option
shall be the delivery to the Company of such tax waivers and
other documents as the Committee shall determine.  In the case of each non-
qualified stock option, a condition of exercising the same shall be
the entry by the person exercising the same into such arrangements with the
Company with respect to withholding as the Committee may determine.

15.No Stockholder Status.  Neither any Participant nor his or her
legal representatives, legatees or distributees shall be or be
deemed to be the holder of any share of the Common Stock covered by an Option
unless and until a certificate for such share has been issued.
Upon payment of the purchase price thereof, a share issued upon exercise of an
Option shall be fully paid and non-assessable.

16.No Restrictions on Corporate Acts.  Neither the existence of
the Plan nor any Option shall in any way affect the right or
power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business, or any merger or consolidation
of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or the rights
thereof, or dissolution or liquidation of the Company, or any sale
or 

8

transfer of all or any part of its assets or business, or any other corporate
act or proceeding whether of a similar character or
otherwise.

17.No Employment Right.  Neither the existence of the Plan nor the
grant of any Option shall require the Company or any
Subsidiary to continue any Participant in the employ or service of the Company
or such Subsidiary.

18.Termination and Amendment of the Plan.  The Board may at any
time terminate the Plan or make such modifications of the Plan as
it shall deem advisable; provided, however, that the Board may not
without further approval of the holders of a majority of the
shares of the Common Stock present in person or by proxy at any special or
annual meeting of the stockholders, increase the number of shares as
to which Options may be granted under the Plan (as adjusted in accordance with
the provisions of Section 13), or change the class of persons
eligible to participate in the Plan, or change the manner of determining the
option prices.  Except as otherwise provided in Section 13, no
termination or amendment of the Plan may, without the consent of the Participant
to whom any Option shall theretofore have been granted,
adversely affect the rights of such Participant under such Option.  The
Committee may not, without further approval of the holders of a
majority of the shares of the Common Stock present in person or by proxy at any
special or annual meeting of the stockholders, amend any
outstanding Option to reduce the option price, or cancel any outstanding Option
and contemporaneously award a new Option to the same optionee
for substantially the same number of shares at a lower option price.

19.Expiration and Termination of the Plan.  The Plan shall
terminate on April 30, 2013 or at such earlier time as the Board may
determine.  Options may be granted under the Plan at any time and from time to
time prior to its termination.  Any Option outstanding under the
Plan at the time of the termination of the Plan shall remain in effect until
such Option shall have been exercised or shall have expired in
accordance with its terms.

20.Options for Outside Directors.

(a)A director of the Company who is not an employee of the Company or a
Subsidiary and who is not a director elected solely by the
holders of the Company's Series B convertible preferred stock (an "Outside
Director") shall be eligible to receive, in addition to
any other Option which he or she may receive pursuant to Section 6, an annual
Option.  Except as otherwise provided in this Section 20, each
such Option shall be subject to all of the terms and conditions of the Plan.

(b)(i)At the first meeting of the Board immediately following each
Annual Meeting of the Stockholders of the Company, each Outside
Director shall be granted an Option, which shall be a non-qualified stock
option, to purchase 10,000 shares of the Common Stock.
Notwithstanding the foregoing, an Outside Director may not receive a grant under
this Section 20 for any year if and to the extent such Outside
Director receives a grant of options to purchase Common Stock under any other
Company stock option plan then in effect solely for his or her
services as a director of the Company for such year and the aggregate number of
shares of Common Stock issuable upon the exercise of all such
options granted for such year would exceed 10,000.

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(ii)The initial per share option price of each Option granted to an
Outside Director shall under this Section 20 be equal to the
fair market value of a share of the Common Stock on the date of grant.

(iii)The term of each Option granted to an Outside Director shall be
ten years from the date of the granting thereof.

(iv)All or any portion of the payment required upon the exercise of
an Option granted to an Outside Director may be made in kind by
the delivery of shares of the Common Stock having a fair market value equal to
the portion of the option price so paid; provided,
however, that no portion of such payment may be made by delivering shares
of the Common Stock acquired upon the exercise of an Option if
such shares shall not have been held by such Outside Director for at least six
months; and provided further, however,
that, subject to the requirements of Regulation T (as in effect from time to
time) promulgated under the Exchange Act, the Committee may
implement procedures to allow a broker chosen by such Outside Director to make
payment of all or any portion of the option price payable upon
the exercise of an Option and receive, on behalf of such Outside Director, all
or any portion of the shares of the Common Stock issuable upon
such exercise.

(c)The provisions of this Section 20 may not be amended except by the
vote of a majority of the members of the Board and by the vote of
a majority of the members of the Board who are not Outside Directors.

10Exhibit 4(ds)

THIS  WARRANT  HAS NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS
AMENDED,  OR APPLICABLE  STATE  SECURITIES  LAWS, NOR THE SECURITIES LAWS OF ANY
OTHER  JURISDICTION.  THIS WARRANT MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THOSE SECURITIES LAWS OR AN OPINION
OF COUNSEL, IN FORM AND SUBSTANCE  SATISFACTORY TO THE COMPANY, THAT THE SALE OR
TRANSFER IS PURSUANT TO AN EXEMPTION TO THE  REGISTRATION  REQUIREMENTS OF THOSE
SECURITIES LAWS.

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

No. CS-77                                                Dated as of May 7, 2004
---------

            Void after 5:00 p.m., New York City time, on May 7, 2009

                                     WARRANT

              for the Purchase of 6,750,000 Shares of Common Stock

     FOR  VALUE  RECEIVED,   NCT  GROUP,   INC.  (the  "Company"),   a  Delaware
corporation,  on this day of May 7, 2004 (the "Grant  Date")  hereby issues this
warrant (the  "Warrant")  and certifies  that Carole  Salkind (the  "Holder") is
granted the right,  subject to the  provisions of the Warrant,  to purchase from
the Company,  at any time, or from time to time during the period  commencing at
9:00 a.m. New York City local time on May 7, 2004, and expiring,  unless earlier
terminated as hereinafter provided, at 5:00 p.m. New York City local time on May
7, 2009 up to Six Million Seven Hundred Fifty  Thousand  (6,750,000)  fully paid
and  nonassessable  shares of Common Stock,  $.01 par value, of the Company at a
price per share (the  "Exercise  Price")  equal to the closing sale price of the
Common  Stock  (as  defined  below)  on  the  Trading  Day  (as  defined  below)
immediately preceding the date of this Warrant;  provided,  however, that if, on
the date of this Warrant and the three Trading Days  thereafter  (the "Window"),
neither the Holder nor any Related Party (as defined below) sells or, whether in
writing or  otherwise,  agrees to sell any shares of Common Stock or any option,
warrant,  instrument  or right to convert into,  exchange for or acquire  Common
Stock,  then the Exercise  Price shall be reduced to a price equal to the lowest
closing sale price, if lower than the price specified above in this sentence, of
the Common  Stock  during the Window on the  principal  securities  exchange  or
market  on which  the  Common  Stock is then  traded as  reported  on  Bloomberg
Financial  Markets.  If any closing  sale price of the Common  Stock  during the
Window is lower than the price specified in the immediately  preceding sentence,
the  Holder  shall give the  Borrower  prompt  written  notice of any sale of or
agreement to sell any Common Stock or option,  warrant,  instrument  or right to
convert  into,  exchange  for or  acquire  Common  Stock made by the Holder or a
Related  Party during the Window.  "Trading Day" shall mean any day on which the
applicable  common stock is traded for any period on the NASDAQ National Market,
or on the principal  securities exchange or other securities market on which the
applicable  common  stock is then being  traded.  "Related  Party"  shall mean a
member of the Holder's immediate family,  including spouse (even if separated or
not residing with the Holder) and adult  children (even if not residing with the
Holder),  or an entity  (other than the Company) of which the Holder or any such
immediate  family  member is an  officer,  director  or  beneficial  shareholder
(determined  under Rule 13d-3  under the  Securities  Exchange  Act of 1934,  as
amended).

<PAGE>

     The term "Common  Stock" means the shares of Common Stock,  $.01 par value,
of the Company constituted on the Grant Date of this Warrant,  together with any
other equity securities that may be issued by the Company in addition thereto or
in  substitution  therefor.  The number of shares of Common Stock to be received
upon  the  exercise  of  this  Warrant  may be  adjusted  from  time  to time as
hereinafter  set  forth.  The  shares  of  Common  Stock  deliverable  upon such
exercise,  and as adjusted from time to time, are hereinafter sometimes referred
to as "Warrant Stock".

     Upon receipt by the Company of evidence  reasonably  satisfactory  to it of
the loss, theft,  destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and upon
surrender  and  cancellation  of this Warrant,  if mutilated,  the Company shall
execute and  deliver a new Warrant of like tenor and date.  Any such new Warrant
executed and delivered shall constitute an additional  contractual obligation on
the part of the Company,  whether or not this Warrant so lost, stolen, destroyed
or mutilated shall be at any time enforceable by anyone.

     The Holder agrees with the Company that this Warrant is issued, and all the
rights  hereunder shall be held,  subject to all of the conditions,  limitations
and provisions set forth herein.

     1.  Exercise of Warrant.  This Warrant may be exercised in whole or in part
at any time,  or from time to time,  during the period  commencing at 9:00 a.m.,
New York City local time,  on May 7, 2004,  and expiring at 5:00 p.m.,  New York
City  local  time,  on May 7,  2009,  or, if such day is a day on which  banking
institutions in the City of New York are authorized by law to close, then on the
next succeeding day that shall not be such a day.

     Subject to the restrictions  and limitations set forth above,  this Warrant
may be  exercised by  presentation  and  surrender  hereof to the Company at its
principal  office with the Warrant  Exercise Form attached  hereto duly executed
and  accompanied  by payment  (either in cash or by certified  or official  bank
check, payable to the order of the Company) of the Exercise Price for the number
of shares  specified in such Form and  instruments of transfer,  if appropriate,
duly executed by the Holder.  If this Warrant  should be exercised in part only,
the Company shall, upon surrender of this Warrant for cancellation,  execute and
deliver a new Warrant  evidencing  the rights of the Holder  thereof to purchase
the balance of the shares purchasable hereunder.  Upon receipt by the Company of
this Warrant, together with the Warrant Exercise Form and the Exercise Price, at
its office,  in proper form for  exercise,  the Holder shall be deemed to be the
holder of record of the  shares of Common  Stock  issuable  upon such  exercise,
notwithstanding  that the stock  transfer  books of the  Company  shall  then be
closed or that  certificates  representing such shares of Common Stock shall not
then be  actually  delivered  to the Holder.  The Company  shall pay any and all
documentary  stamp or similar issue or transfer  taxes payable in respect of the
issue or delivery of shares of Common Stock on exercise of this Warrant.

     2.  Reservation  of  Shares.  The  Company  will at all times  reserve  for
issuance and delivery  upon  exercise of this Warrant all shares of Common Stock
of the Company from time to

                                       2
<PAGE>

time  receivable  upon exercise of this  Warrant.  All such shares shall be duly
authorized and, when issued upon such exercise,  shall be validly issued,  fully
paid and nonassessable and free of all preemptive rights.

     3. Warrant Stock  Transfer to Comply with the  Securities  Act of 1933. The
Warrant  Stock  may not be sold  or  otherwise  disposed  of  unless  registered
pursuant to the  provisions of the Securities Act of 1933, as amended (the "1933
Act"), or an opinion of counsel in form and content  satisfactory to the Company
is obtained  stating that such sale or other  disposition  is made in compliance
with  an  available  exemption  from  such  registration.   Any  sale  or  other
disposition  of the Warrant  Stock must also comply  with all  applicable  state
securities laws and regulations.

     4. Fractional Shares. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant,  but the Company shall
issue one  additional  share of its Common  Stock in lieu of each  fraction of a
share otherwise called for upon any exercise of this Warrant.

     5. Exchange,  Transfer,  Assignment of Loss of Warrant. This Warrant is not
registered  under the 1933 Act nor under any applicable  state securities law or
regulation.  This Warrant cannot be sold,  exchanged,  transferred,  assigned or
otherwise  disposed of unless registered  pursuant to the provisions of the 1933
Act or an opinion of counsel in form and content  satisfactory to the Company is
obtained  stating  that such  disposition  is in  compliance  with an  available
exemption  from  registration.  Any  such  disposition  must  also  comply  with
applicable state securities laws and regulations.

     6.  Rights of the  Holder.  The Holder  shall  not,  by virtue  hereof,  be
entitled  to any rights of a  stockholder  of the  Company,  either at law or in
equity,  and the  rights of the Holder are  limited to those  expressed  in this
Warrant.

     7. Redemption. This Warrant is not redeemable by the Company.

     8. Anti-Dilution Provisions.

          8.1  Adjustment  for Dividends in Other  Securities,  Property,  Etc.:
     Reclassification,  Etc.  In case at any time or from time to time after the
     Grant Date the holders of Common Stock (or any other securities at the time
     receivable upon the exercise of this Warrant) shall have received, or on or
     after the record date fixed for the determination of eligible stockholders,
     shall have become entitled to receive without payment  therefor:  (a) other
     or additional  securities or property (other than cash) by way of dividend,
     (b) any cash paid or payable except out of earned surplus of the Company at
     the Grant Date as increased  (decreased)  by subsequent  credits  (charges)
     thereto (other than credits in respect of any capital or paid-in surplus or
     surplus  created as a result of a revaluation  of property) or (c) other or
     additional  (or less)  securities  or property  (including  cash) by way of
     stock-split, spin-off, split-up, reclassification, combination of shares or
     similar corporate rearrangement, then, and in each such case, the Holder of
     this Warrant,  upon the exercise thereof as provided in Section 1, shall be

                                       3
<PAGE>

     entitled to receive,  subject to the limitations and restrictions set forth
     above,  the amount of securities and property  (including cash in the cases
     referred to in clauses (b) and (c) above)  which such Holder  would hold on
     the date of such  exercise  if on the Grant  Date it had been the holder of
     record of the number of shares of Common Stock (as constituted on the Grant
     Date)  subscribed  for upon such  exercise as provided in Section 1 and had
     thereafter, during the period from the Grant Date to and including the date
     of such  exercise,  retained  such shares and/or all other  additional  (or
     less)  securities and property  (including cash in the cases referred to in
     clauses  (b) and (c)  above)  receivable  by it as  aforesaid  during  such
     period,  giving effect to all adjustments  called for during such period by
     Section 8.2.

          8.2 Adjustment for Reorganization, Consolidation, Merger, Etc. In case
     of any  reorganization  of the  Company  (or  any  other  corporation,  the
     securities  of which are at the time  receivable  on the  exercise  of this
     Warrant)  after the Grant Date or in case after such date the  Company  (or
     any such other  corporation)  shall  consolidate with or merge into another
     corporation  or convey  all or  substantially  all of its assets to another
     corporation,  then,  and in each such case, the Holder of this Warrant upon
     the  exercise  thereof  as  provided  in  Section  1 at any time  after the
     consummation of such reorganization,  consolidation,  merger or conveyance,
     shall be  entitled  to  receive,  in lieu of the  securities  and  property
     receivable  upon the exercise of this Warrant  prior to such  consummation,
     the  securities  or property to which such Holder would have been  entitled
     upon  such   consummation   if  such  Holder  had  exercised  this  Warrant
     immediately prior thereto, all subject to further adjustment as provided in
     Section  8.1;  in each  such  case,  the  terms  of this  Warrant  shall be
     applicable to the  securities or property  receivable  upon the exercise of
     this Warrant after such consummation.

          8.3  Certificate as to  Adjustments.  In each case of an adjustment in
     the  number of shares of Common  Stock (or other  securities  or  property)
     receivable on the exercise of the Warrant,  the Company at its expense will
     promptly  compute  such  adjustment  in  accordance  with the  terms of the
     Warrant and prepare a certificate setting forth such adjustment and showing
     in detail  the facts  upon  which such  adjustment  is based,  including  a
     statement  of (a)  the  consideration  received  or to be  received  by the
     Company for any additional  shares of Common Stock issued or sold or deemed
     to have been  issued  or sold,  (b) the  number  of shares of Common  Stock
     outstanding  or deemed to be  outstanding,  and (c) the pro forma  adjusted
     Exercise.  The Company will forthwith mail a copy of each such  certificate
     to the holder of this Warrant.

          8.4  Notices of Record Date, Etc.

               In case:

               (a) the Company  shall take a record of the holders of its Common
          Stock (or other securities at the time receivable upon the exercise of
          the Warrant) for the purpose of entitling them to receive any dividend
          (other than a cash  dividend) or other  distribution,  or any right to
          subscribe  for,  purchase or otherwise  acquire any shares of stock of
          any class or any other securities, or to receive any other right; or

                                       4
<PAGE>

               (b) of any capital  reorganization  of the Company  (other than a
          stock  split or reverse  stock  split),  any  reclassification  of the
          capital  stock of the  Company,  any  consolidation  or  merger of the
          Company  with or into  another  corporation  (other  than a merger for
          purposes  of  change  of  domicile)  or  any   conveyance  of  all  or
          substantially all of the assets of the Company to another corporation;
          or

               (c) of any voluntary or involuntary  dissolution,  liquidation or
          winding-up of the Company,  then,  and in each such case,  the Company
          shall mail or cause to be mailed to each  holder of the Warrant at the
          time outstanding a notice specifying, as the case may be, (i) the date
          on which a record is to be taken  for the  purpose  of such  dividend,
          distribution  or right,  and stating the amount and  character of such
          dividend,  distribution  or  right,  or (ii) the  date on  which  such
          reorganization,  reclassification,  consolidation, merger, conveyance,
          dissolution, liquidation or winding-up is to take place, and the time,
          if any,  is to be fixed,  as to which the  holders of record of Common
          Stock  (or  such  other  securities  at the time  receivable  upon the
          exercise of the Warrant) shall be entitled to exchange their shares of
          Common  Stock  (or such  other  securities)  for  securities  or other
          property  deliverable  upon  such  reorganization,   reclassification,
          consolidation,   merger,  conveyance,   dissolution,   liquidation  or
          winding-up.  Such  notice  shall be mailed at least  twenty  (20) days
          prior to the date therein  specified  and the Warrant may be exercised
          prior to said date  during the term of the  Warrant no later than five
          (5) days prior to said date.

     9. Legend. In the event of the exercise of this Warrant and the issuance of
any of the Warrant Stock hereunder, all certificates  representing Warrant Stock
shall bear on the face thereof  substantially the following legends,  insofar as
is consistent with Delaware law:

     "The shares of common stock  represented by this  certificate have not
     been registered  under the Securities Act of 1933, as amended,  or the
     Securities  laws of any  state or other  jurisdiction,  and may not be
     sold,  offered for sale,  assigned,  transferred or otherwise disposed
     of, unless  registered  pursuant to the  provisions of that Act and of
     such  Securities  laws or an  opinion  of  counsel  acceptable  to the
     Corporation is obtained stating that such disposition is in compliance
     with an available exemption from such registration."

     10. Governing Law and  Jurisdiction.  This Warrant shall be governed by the
internal  laws of the State of  Delaware,  without  regard to  conflicts of laws
principles.  The parties hereto hereby submit to the exclusive  jurisdiction  of
the United States Federal Courts located in the state of New Jersey with respect
to any dispute arising under this Warrant.

     11. Notices.  Notices,  demands and other  communications  given under this
Agreement  shall be in  writing  and shall be deemed  to have  been  given  when
delivered  (if  personally  delivered),  on the  scheduled  date of delivery (if
delivered  via  commercial  courier),  three  days  after  mailed  (if mailed by
certified  or  registered  mail,  return  receipt  requested)  or  when  sent by
facsimile  (if  sent by  facsimile  with  evidence  of  successful  transmission
retained by the  sender);  provided,  however,  that  failure to give proper and
timely  notice as set forth in the "with a copy to"  provisions  below shall not
invalidate a notice  properly and timely given to the

                                       5
<PAGE>

associated  party.  Unless another  address or facsimile  number is specified by
notice hereunder, all notices shall be sent as follows:

If to the Holder:                              with a copy to:
----------------                               --------------

--------------------------------------------------------------------------------
Ms. Carole Salkind                             Peter Rosen, Esq.
c/o Sills Cummis Epstein & Gross P.C.          Rosen & Avigliano
One Riverfront Plaza                           431 Route 10 East
Newark NJ 07102                                Randolph, NJ  07689
--------------------------------------------------------------------------------
Facsimile:  973-643-6500                       Facsimile:  973-361-1644
--------------------------------------------------------------------------------

If to the Company:                                            with a copy to:
-----------------                                             --------------

--------------------------------------------------------------------------------
NCT Group, Inc.                                NCT Group, Inc.
20 Ketchum Street                              20 Ketchum Street
Westport, CT  06880                            Westport, CT  06880
Attention:  Chief Financial Officer            Attention:  General Counsel
--------------------------------------------------------------------------------
Facsimile:  203-226-4338                       Facsimile:  203-226-4338
--------------------------------------------------------------------------------

     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on its
behalf,  in its corporate name, by its duly authorized  officer,  as of the date
first written above.

                                               NCT GROUP, INC.

                                               By:  /s/  Irene Lebovics
                                                  ------------------------------
                                                         Irene Lebovics
                                                         President

                                       6
<PAGE>

                              WARRANT EXERCISE FORM

         (To be executed by the Holder in order to Exercise the Warrant)

                  TO:         NCT Group, Inc.
                              20 Ketchum Street
                              Westport, CT  06880
                              Attention:  Chief Financial Officer

     The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing _________ shares of Common Stock of NCT Group, Inc. and
hereby  makes  payment at the rate of  $______  per share,  or an  aggregate  of
$________, in payment therefor.

     The  undersigned  represents,  warrants and  certifies  that all offers and
sales  of the  Warrant  Stock  shall  be  made:  (i)  pursuant  to an  effective
registration  statement  under the 1933 Act or pursuant to an exemption from, or
in a transaction not subject to, the registration  requirements of the 1993 Act;
and (ii) in compliance  with applicable  state  securities laws and those of any
other applicable jurisdiction.

Dated:
           ----------------------

                                               -------------------------------
                                               Name of Warrant Holder

                                               -------------------------------
                                               Signature

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

                       INSTRUCTIONS FOR ISSUANCE OF STOCK

         (if other than to the registered holder of the within Warrant)

Name:             ________________________________________________________
                         (Please type or print in block letters)

Address:          ________________________________________________________

Social Security or Taxpayer Identification Number:  ______________________

                                       7

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