AMENDMENT NO. 4 AND WAIVER TO CREDIT AGREEMENT

Exhibit 10.4

AMENDMENT NO. 4 AND WAIVER
TO CREDIT AGREEMENT

      AMENDMENT NO. 4 AND WAIVER , dated as of September 30, 2007 (this “Amendment and Waiver“) to the Credit Agreement, dated as of January 28, 2005 (as amended, restated, modified or otherwise supplemented, from time to time, the “Credit Agreement”), by and among NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC. (the “Borrower”), JPMORGAN CHASE BANK, N.A. , as Administrative Agent and the LENDERS from time to time party thereto (each, a “Lender” and, collectively, the “Lenders”).

      WHEREAS , the Borrower has requested, and the Required Lenders have agreed, subject to the terms and conditions of this Amendment and Waiver, to amend and waive certain provisions of the Credit Agreement as set forth herein.

      NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows:

1. Amendments .

     a. The definition of the term “Applicable Rate” in Section 1.01 of the Credit Agreement is hereby amended by adding the following sentence at the end thereof:

“Notwithstanding anything to the contrary herein, the Applicable Rate will be determined based on a ratio of Consolidated Debt to Consolidated EBITDA of greater than or equal to 2.00:1.00 for all periods from the Effective Date through the Maturity Date.”

     b. The last sentence of the definition of “Commitments” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to provide as follows:

“The aggregate amount of the Lenders’ Commitments is $25,000,000.”

     c. The first sentence of the definition of the term “Consolidated Fixed Charge Coverage Ratio” is hereby amended and restated in its entirety to provide as follows:

“ Consolidated Fixed Charge Ratio ” means the ratio of (1) Consolidated EBITDA minus Consolidated Unfunded Capital Expenditures to (2) the sum of (a) the current portion of Consolidated Debt, including cash “earn-out” payments made by the Borrower and its Subsidiaries in the twelve (12) months preceding the date of calculation, plus (b) interest expense plus (c) cash taxes paid by the Borrower and its Subsidiaries.

     d. The definition of the term “Maturity Date” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to provide as follows:

“ Maturity Date ” means March 31, 2008.

     e. The following definitions are hereby added to Section 1.01 of the Credit Agreement in their appropriate alphabetical order:

“Borrowing Base” shall mean an amount equal to the sum of (1) seventy five (75%) percent of all Eligible Receivables, plus (2) the lesser of (a) fifty percent (50%) of Eligible Inventory or (b) $7,500,000; provided, however, the Required Lenders may increase or decrease such percentages from time to time in their reasonable discretion. Any such revision to advance rates or to the inventory limitation would become effective five (5) days after notice of such change is delivered to the Borrower, unless a Default or an Event of Default is then existing, in which case such revision shall be effective immediately upon delivery of such notice. Notwithstanding anything to the contrary herein, the Required Lenders will not decrease the advance rate for Eligible Receivable to a rate less than 50% at any time prior to the occurrence and continuance of an Event of Default.

“Borrowing Base Certificate” shall mean the Borrowing Base Certificate in the form set forth as Exhibit G attached hereto.

“Customer” shall mean and include the account debtor or obligor with respect to any Receivable.

“Effective Date” shall mean September 30, 2007.

“Eligible Inventory” shall mean the gross amount of the Borrower’s finished goods and raw materials inventory located in the United States of America, less the following items: any packaging materials and supplies; work-in-process; supplies (other than supplies held for sale), damaged or unsalable goods, damaged or unsalable goods returned or rejected by Customers; obsolete goods; goods to be returned to the Borrower’s suppliers; goods in transit to third parties; consigned inventory; inventory in transit; and inventory located at facilities where the Administrative Agent has not (a) been granted a first priority perfected security interest and (b) received landlord or warehousemens’ waiver letters, as appropriate, if the facility is not owned and occupied by the Borrower, provided “Eligible Inventory” shall exclude all other inventory which is otherwise regarded by the Required Lenders in its sole discretion as unsuitable collateral for the Loans. If any inventory is moved to a location where the Lenders’ security interest therein becomes unperfected upon such move under applicable law, such inventory shall not be Eligible Inventory (a) until 91 days after the date on which the Lenders’ security interest therein has become perfected under applicable law and (b) such inventory meets all of the other requirements set forth in this definition. The value of all Eligible Inventory shall be determined at the lower of cost or market value on a first in first out basis in accordance with Generally Accepted Accounting Principles applied on a consistent basis.

“Eligible Receivables” shall mean Receivables created by the Borrower in the ordinary course of business arising out of the sale or lease of goods or rendition of services by the Borrower, which are and at all times shall continue to be acceptable to the Required Lenders in all respects. Standards of eligibility may be fixed and revised from time to time solely by the Required Lenders in the Required Lenders’ exclusive judgment. In general, without limiting the foregoing, a Receivable shall in no event be deemed to be an Eligible Receivable unless: (a) all payments due on the Receivable have been invoiced and the underlying goods shipped or services performed, as the case may be; (b) no more than ninety (90) days have elapsed from the invoice date and not more than sixty (60) days have elapsed from the invoice due date; (c) the payments due on more than 50% of all Receivables from the same Customer are not more than ninety (90) days past the invoice date or more than sixty (60) days past due the invoice due date; (d) the

Receivable arose from a completed and bona fide transaction (and with respect to a sale of goods, a transaction in which title has passed to the Customer) which requires no further act under any circumstances on the part of the Borrower in order to cause such Receivable to be payable in full by the Customer; (e) the Receivable is in full conformity with the representations and warranties made by the Administrative Agent and Lenders with respect thereto and is free and clear of all security interests and Liens of any nature whatsoever other than any security interest deemed to be held by the Borrower or any security interest created pursuant to the Security Documents or permitted by Section 7.02 hereof; (f) the Receivable constitutes an “account” or “chattel paper” within the meaning of the Uniform Commercial Code of the state in which the Receivable is located; (g) the Customer has not asserted that the Receivable, and the Borrower is not aware that the Receivable, arises out of a bill and hold, consignment or progress billing arrangement or is subject to any setoff, rebate, contrast, net-out contract, offset, deduction, dispute, credit, counterclaim or other defense arising out of the transactions represented by the Receivables or independently thereof and the Customer has finally accepted the goods from the sale out of which the Receivable arose and has not objected to its liability thereon or returned, rejected or repossessed any of such goods, except for complaints made or goods returned in the ordinary course of business for which, in the case of goods returned, goods of equal or greater value have been shipped in return; (h) the Receivable arose in the ordinary course of business of the Borrower; (i) the Customer is not (x) the United States government or the government of any state or political subdivision thereof or therein, or any agency or department of any thereof or any foreign government unless there has been compliance to the satisfaction of the Administrative Agent with the Federal Assignment of Claims Act or similar state or foreign statutes or (y) an Affiliate of the Borrower or any Guarantor or any Subsidiary of any thereof; (j) such Receivable is from a Customer which is (i) a United States person, or (ii) an obligor in the United States; (k) the Receivable complies with all material requirements of all applicable laws and regulations, whether federal, state or local (including, without limitation, usury laws and laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy); (1) the Receivable is in full force and effect and constitutes a legal, valid and binding obligation of the Customer enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors’ rights generally and by general equity principles; (m) the Receivable is denominated in and provides for payment by the Customer in U.S. dollars; (n) the Receivable has not been and is not required to be charged off or written off as uncollectible in accordance with Generally Accepted Accounting Principles or the customary business practices of the Borrower; (o) the Administrative Agent on behalf of the Lenders possesses a valid, perfected first priority security interest in such Receivable as security for payment of the Obligations; (p) the Receivable does not arise with respect to a Customer or a pharmacy located in the State of Ohio; (q) the Customer has executed the Borrower’s standard form of Pharmacy Benefit Management Agreement; and (p) the Required Lenders are satisfied with the credit standing of the Customer in relation to the amount of credit extended.

“Receivables” shall mean any and all rights of the Borrower to payment for goods sold or leased or for services rendered, including accounts, contract rights, general intangibles and any such right evidenced by chattel paper, instruments or documents.

     f. The first sentence of Section 2.01 of the Credit Agreement is hereby amended and restated in its entirety to provide as follows:

“Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in (a) such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment or (b) the sum of the total Revolving Credit Exposures exceeding the lesser of (x) the total Commitments and (b) the Borrowing Base.”

     g. The second sentence of Section 2.02(c) of the Credit Agreement is hereby amended and restated in its entirety to provide as follows:

“At the time that each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $1,500,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the lesser of (a) the Borrowing Base and (b) the entire unused balance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e).”

     h. Section 2.04 of the Credit Agreement is hereby amended and restated in its entirety to provide as follows:

“Intentionally omitted”

     i. The first sentence Section 2.05(a) of the Credit Agreement is hereby amended and restated in its entirety to provide as follows:

“Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrower from time to time during the Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $5,000,000 or (ii) the sum of the total Revolving Credit Exposures exceeding the lesser of (x) the total Commitments and (b) the Borrowing Base; provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan.”

     j. The last sentence of Section 2.06(b) of the Credit Agreement is hereby amended and restated in its entirety to provide as follows:

“A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after gi