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                                                                  EXHIBIT 10.18




                            UROHEALTH SYSTEMS, INC.

                           1994 STOCK INCENTIVE PLAN
                      (AS AMENDED THROUGH AUGUST 9, 1996)


     1.          Establishment, Purpose, and Definitions.

           (a)            UroHealth Systems, Inc. (the "Company") hereby adopts
the UroHealth Systems, Inc. 1994 Stock Incentive Plan (the "Plan").

           (b)            The purpose of the Plan is to facilitate the
Company's restructuring and allow it to attract and provide incentives to
eligible individuals (as defined in Section 4, below) for employment, increased
efforts and successful achievements on behalf of or in the interests of the
Company and its Affiliates and to maximize the rewards due them for those
efforts and achievements.  The Plan provides employees (including officers and
directors who are employees) of the Company and of its Affiliates an
opportunity to purchase shares of common stock of the Company ("Stock")
pursuant to options which may qualify as incentive stock options (referred to
as "incentive stock options") under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and employees, officers, independent
contractors, and consultants of the Company and of its Affiliates an
opportunity to purchase shares of Stock pursuant to options which are not
described in Sections 422 or 423 of the Code (referred to as "nonqualified
stock options").  The Plan also provides for the sale or bonus of Stock to
eligible individuals in connection with the performance of services for the
Company or its Affiliates.  Finally, the Plan authorizes the grant of stock
appreciation rights ("SARs"), either separately or in tandem with stock
options, entitling holders to cash compensation measured by appreciation in the
value of the Stock.

           (c)            The term "Affiliate" as used in the Plan means parent
or subsidiary corporations of the Company, as defined in Sections 424(e) and
(f) of the Code (but substituting "the Company" for "employer corporation"),
including parents or subsidiaries of the Company that become such after
adoption of the Plan.

     2.          Administration of the Plan.

          (a)             The Plan shall be administered by the Board of
Directors of the Company (the "Board").  Subject to Section 2(f) below, the
Board may delegate the responsibility for administering the Plan to a
committee, under such terms and conditions as the Board shall determine (the
"Committee").  The Committee shall consist of two or more members of the Board
or such lesser number of members of the Board as permitted by Rule 16b-3 (or
any successor thereto) promulgated under the Securities Exchange Act of 1934,
as amended ("Rule 16b-3").  None of the members of the Committee shall receive,
while serving on the Committee, or during the one-year period preceding
appointment to the Committee, a grant or award of equity securities under (i)
the Plan or (ii) any other plan of the Company or its Affiliates under which
the participants are entitled to acquire Stock (including restricted stock),
stock
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options, stock bonuses, related rights or stock appreciation rights of the
Company or any of its Affiliates, other than pursuant to transactions in any
such other plan which do not disqualify a director from being a disinterested
person under Rule 16b-3.  Members of the Committee shall serve at the pleasure
of the Board.  The Committee shall select one of its members as chair of the
Committee and shall hold meetings at such times and places as it may determine.
A majority of the Committee shall constitute a quorum, and acts of the
Committee at which a quorum is present, or acts reduced to or approved in
writing by all the members of the Committee, shall be the valid acts of the
Committee.  If the Board does not delegate administration of the Plan to the
Committee, then each reference in this Plan to the "Committee" shall be
construed to refer to the Board.

          (b)             The Committee shall determine which eligible
individuals (as defined in Section 4 below) shall be granted options under the
Plan, the timing of such grants, the terms thereof (including any restrictions
on the Stock), and the number of shares subject to such options.

          (c)             The Committee shall also determine which eligible
individuals (as defined in Section 4 below) shall be granted or issued SARs or
Stock (other than pursuant to the exercise of options) under the Plan, the
timing of such grants or issuances, the terms thereof (including any
restrictions and the consideration, if any, to be paid therefor) and the number
of shares or SARs to be granted.

          (d)             The Committee may amend the terms of any outstanding
option or SAR granted under this Plan, but any amendment that would adversely
affect the holder's rights under an outstanding option or SAR shall not be made
without the holder's written consent.  The Committee may, with the holder's
written consent, cancel any outstanding option or SAR or accept any outstanding
option or SAR in exchange for a new option or SAR.  The Committee also may
amend any stock purchase agreement or stock bonus agreement relating to sales
or bonuses of Stock under the Plan, but any amendment that would adversely
affect the individual's rights to the Stock shall not be made without his or
her written consent.

          (e)             The Committee shall have the sole authority, in its
absolute discretion to adopt, amend, and rescind such rules and regulations as,
in its opinion, may be advisable in the administration of the Plan, to construe
and interpret the Plan, the rules and the regulations, and the instruments
evidencing options, SARs or Stock granted or issued under the Plan and to make
all other determinations deemed necessary or advisable for the administration
of the Plan.  All decisions, determinations, and interpretations of the
Committee shall be binding on all participants.

          (f)             Notwithstanding the foregoing provisions of this
Section 2, grants of options, SARs stock bonuses or stock sales to any "Covered
Employee," as such term is defined by Section 162(m) of the Code shall be made
only by a subcommittee of the Committee which, in addition to meeting other
applicable requirements of this Section 2, is composed solely of two or more
outside directors (the "Subcommittee").  In the case of grants to Covered
Employees, references to the "Committee" shall be deemed to be references to
the Subcommittee as specified



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above.  For this purpose, outside director shall have the meaning assigned to
that term by Proposed Treasury Regulation Section 1.162-27(e)(3) or any
successor provision thereto, including final regulations.  Notwithstanding the
preceding provisions of this Section 2(f), a director who qualifies as a
disinterested person under Rule 16b-3 shall be treated as satisfying the
requirements of an outside director until the first meeting of shareholders of
the Company at which directors are to be elected that occurs after January 1,
1996, or until such other date as shall be specified in proposed or final
treasury regulations issued under Section 162(m) of the Code or other guidance
issued by the Internal Revenue Service which may be relied upon by taxpayers
generally.

     3.          Stock Subject to the Plan.

          (a)             The maximum aggregate number of shares of Stock
available for issuance under the Plan and during the life of the Plan shall
equal the greater of (i) two million three hundred thirty-three thousand three
hundred thirty-three (2,333,333) (after adjusting such amounts for any stock
splits or reverse stock splits) or (ii) 20% of the then outstanding shares of
the Stock of the Company; provided, that for purposes of calculating the 20%
maximum, the term Stock shall include securities issued by the Company that
have voting rights on an "as converted" basis equivalent to the voting rights
associated with the underlying Common Stock.  Notwithstanding the preceding
provisions of this Section 3(a), the maximum aggregate number of shares
available for issuance under the Plan during the life of the Plan with respect
to the exercise of incentive stock options shall equal 2,333,333.

          (b)             If an option is surrendered or for any other reason
ceases to be exercisable in whole or in part, the shares of Stock that were
subject to such option, but as to which the option had not been exercised,
shall continue to be available under the Plan.  Any shares of Stock forfeited
to the Company pursuant to the terms of agreements evidencing sales or bonuses
of Stock under the Plan shall continue to be available under the Plan.

          (c)             If there is any change in the Stock through merger,
consolidation, reorganization, recapitalization, reincorporation, stock split,
stock dividend (in excess of 2%), or other change in the corporate structure of
the Company, appropriate adjustments shall be made by the Committee, in order
to preserve but not to increase the benefits to the outstanding options, SARs
and stock purchase or stock bonus awards under the Plan, including adjustments
to the aggregate number and kind of shares subject to the Plan, or to
outstanding stock purchase or stock bonus agreements, or SAR agreements, and
the number and kind of shares and the price per share subject to outstanding
options.

     4.          Eligible Individuals.  Individuals who shall be eligible to
have granted to them options, SARs or Stock under the Plan shall be such
employees, officers, independent contractors, and consultants of the Company or
an Affiliate as the Committee, in its discretion, shall designate from time to
time.  Notwithstanding the foregoing, only employees of the Company or an
Affiliate (including officers and directors who are bona fide employees) shall
be eligible to receive incentive stock options.





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     5.          The Option Price.  The exercise price of the each incentive
stock option shall be not less than the per share fair market value of the
Stock subject to such option on the date the option is granted.  The exercise
price of each nonqualified stock option shall be as determined by the
Committee.  Notwithstanding the foregoing, (i) in the case of an incentive
stock option granted to a person possessing more than 10% of the combined
voting power of the Company or an Affiliate, the exercise price shall be not
less than 110% of the fair market value of the Stock on the date the option is
granted, and (ii) in the case of an option granted to a Covered Employee, the
exercise price shall be not less than the per share fair market value of the
Stock subject to such option on the date the option is granted.  The exercise
price of an option shall be subject to adjustment to the extent provided in
Section 3(c), above.

     6.          Terms and Conditions of Options.

          (a)             Each option granted pursuant to the Plan will be
evidenced by a written stock option agreement executed by the Company and the
person to whom such option is granted.

          (b)             The Committee shall determine the term of each option
granted under the Plan; provided, however, that the term of an incentive stock
option shall not be for more than ten years and that, in the case of an
incentive stock option granted to a person possessing more than 10% of the
combined voting power of the Company or an Affiliate, the term of each
incentive stock option shall be no more than five years.

          (c)             In the case of incentive stock options, the aggregate
fair market value (determined as of the time such option is granted) of the
Stock with respect to which incentive stock options are exercisable for the
first time by an eligible employee in any calendar year (under this Plan and
any other plans of the Company or its Affiliates) shall not exceed $100,000.

          (d)             The stock option agreement may contain such other
terms, provisions, and conditions consistent with this Plan as may be
determined by the Committee.  If an option, or any part thereof is intended to
qualify as an incentive stock option, the stock option agreement shall contain
those terms and conditions which are necessary to so qualify it.

          (e)             The maximum number of shares of Stock with respect to
which SARs or options to acquire Stock may be granted to any individual per
calendar year under this Plan shall not exceed 400,000 shares (which number may
be increased without shareholder approval to reflect adjustments under Section
3(c), above, to the extent such increase does not cause the grant to fail to
qualify as remuneration payable solely on account of one or more performance
goals within the meaning of Section 162(m) of the Code).  This limit shall also
apply to any restricted stock purchase made by an individual which such
purchase was at the fair market value of the stock on the date of purchase or
to any restricted stock when the vesting of such stock is subject to the
satisfaction of performance goals.  Unless otherwise provided in final Treasury
Regulations (or other guidance issued by the Internal Revenue Service which may
be relied upon by taxpayers generally), in applying the foregoing limitation
with respect to any employee, if any option is cancelled, the cancelled option
shall continue to count against the maximum number of





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shares for which options may be grant to the employee.  For this purpose, the
repricing of an option shall be treated as a cancellation of the existing
option and the grant of a new option.

     7.          Terms and Conditions of Stock Purchases and Bonuses

          (a)             Each sale (other than upon exercise of options) or
bonus grant of Stock pursuant to the Plan will be evidenced by a written stock
purchase or stock bonus agreement, as applicable, executed by the Company and
the person to whom such stock is sold or granted.

          (b)             The stock purchase agreement or stock bonus agreement
may contain such other terms, provisions, and conditions consistent with this
Plan as may be determined by the Committee, including not by way of limitation,
restrictions on transfer, forfeiture provisions, repurchase provisions, and
vesting provisions.

          (c)             In the event of the sale or grant of such stock at
less than the fair market value of the stock on the date of sale or grant,
which sale or grant is conditioned on the satisfaction of performance goals
(which may be measured in one year periods or multiple year periods), the
aggregate excess of the fair market value of such stock over the purchase price
thereof may not exceed a per individual aggregate of $500,000 per year.

          (d)             The performance goals to be used in connection with
stock purchases and bonuses shall be the revenues and operating profit of the
Company, as determined in the sole discretion of the Board.

     8.          Terms and Conditions of SARs.  The Committee may, under such
terms and conditions as it deems appropriate, authorize the issuance of SARs
evidenced by a written SAR agreement (which, in the case of tandem options, may
be part of the option agreement to which the SAR relates) executed by the
Company and the person to whom the SARs are granted.  The SAR agreement shall
specify the term for the SARs covered thereby and contain such other terms,
provisions and conditions consistent with this Plan as may be determined by the
Committee.

     9.          Use of Proceeds.  Cash proceeds realized from the exercise of
options granted under the Plan or from other sales of Stock under the Plan
shall constitute general funds of the Company.

     10.         Amendment, Suspension, or Termination of the Plan.

          (a)             The Board may at any time amend, suspend or terminate
the Plan as it deems advisable; provided that such amendment, suspension or
termination complies with all applicable requirements of state and federal law,
including any applicable requirement that the Plan or an amendment to the Plan
be approved by the shareholders, and provided further that, except as provided
in Section 3(c) above, the Board shall in no event amend the Plan in the
following respects without the consent of shareholders then sufficient to
approve the Plan in the first instance:





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               (i)                To materially increase the benefits accruing
to participants under the Plan;

               (ii)               To increase the maximum number of shares of
Stock with respect to which restricted stock described in Section 6(e) may be
purchased or SARs or options to acquire Stock may be granted to any individual
per calendar year under the Plan;

               (iii)              To materially increase the number of shares
of Stock available under the Plan or to increase the number of shares of Stock
available for grant of incentive stock options under the Plan; or

               (iv)               To materially modify the eligibility
requirements for participation in the Plan or the class of employees eligible
to receive options under the Plan or to change the designation or class of
persons eligible to receive incentive stock options under the Plan.

          (b)             No option or SAR may be granted nor may any Stock be
issued (other than upon exercise of outstanding options) under the Plan during
any suspension or after the termination of the Plan, and no amendment,
suspension, or termination of the Plan shall, without the affected individual's
consent, alter or impair any rights or obligations under any option or SAR
previously granted under the Plan.  The Plan shall terminate with respect to
the grant of incentive stock options on the tenth anniversary of the date of
adoption of the Plan, unless previously terminated by the Board pursuant to
this Section 10.

     11.         Assignability.  To the extent required by Rule 16b-3, no
option or SAR granted pursuant to this Plan shall be transferable by the holder
except by operation of law or by will or the laws of descent and distribution;
provided that, if Rule 16b-3 is amended after the date of the Board's adoption
the Plan to permit broader transferability of options or SARs under that Rule,
(i) an option or SAR shall be transferable to the extent provided in the option
agreement or SAR agreement covering the option or SAR, and (ii) outstanding
options and SARs may, in the Committee's discretion, be amended to provide for
broader transferability of those options and SARs as the Committee may
authorize within the limitations of Rule 16b-3.  Stock subject to a stock
purchase agreement or a stock bonus agreement shall be transferable only as
provided in such agreement.  Notwithstanding the foregoing, each incentive
stock option under the Plan shall be transferable by the optionee only by will
or the laws of descent and distribution, and, during the optionee's lifetime,
be exercisable only by the optionee unless the Code or Regulations permit
otherwise.

     12.         Payment Upon Exercise of Options.

          (a)             Payment of the purchase price upon exercise of any
option granted under this Plan shall be made in cash, by optionee's personal
check, a certified check, bank draft, or postal or express money order payable
to the order of the Company in lawful money of the United States; provided,
however, that the Committee, in its sole discretion, may permit an optionee to
pay the option price in whole or in part (i) with shares of Stock owned by the





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optionee or with shares of Stock withheld from the shares otherwise deliverable
to the optionee upon exercise of an option; (ii) by delivery on a form
prescribed by the Committee of an irrevocable direction to a securities broker
approved by the Committee to sell shares of Stock and deliver all or a portion
of the proceeds to the Company in payment for the Stock; (iii) by delivery of
the optionee's promissory note with such recourse, interest, security, and
redemption provisions as the Committee in its discretion determines
appropriate; or (iv) in any combination of the foregoing.  Any Stock used to
exercise options shall be valued at its fair market value on the date of the
exercise of the option.  In addition, the Committee, in its sole discretion,
may authorize the surrender by an optionee of all or part of an unexercised
option and authorize a payment in consideration thereof an an amount equal to
the difference between the aggregate fair market value of the Stock subject to
such option and the aggregate option price of such Stock.  In the Committee's
discretion, such payment may be made in cash, shares of Stock with a fair
market value on the date of surrender equal to the payment amount, or some
combination thereof.

          (b)             In the event that the exercise price is satisfied by
shares withheld from the shares of Stock otherwise deliverable to the optionee,
the Committee may issue the optionee an additional option, with terms identical
to the option agreement under which the option was exercised, entitling the
optionee to purchase additional shares of Stock equal to the number of shares
so withheld but at an exercise price equal to the fair market value of the
Stock on the grant date of the new option.  Such additional option shall be
subject to the provisions of Section 6(e) above.

     13.         Withholding Taxes.

          (a)             No Stock shall be granted or sold under the Plan to
any individual, and no SAR may be exercised, until the individual has made
arrangements acceptable to the Committee for the satisfaction of federal,
state, and local income and employment tax withholding obligations, including
without limitation obligations incident to the receipt of Stock under the Plan,
the lapsing of restrictions applicable to such Stock, the failure to satisfy
the conditions for treatment as incentive stock options under applicable tax
law, or the receipt of cash payments.  Upon the exercise of a stock option or
the lapsing of a restriction on Stock issued under the Plan, the Company (or
the optionee's or shareholder's employer) may withhold from the shares
otherwise deliverable to the optionee upon such exercise, or require the
shareholder to surrender shares of Stock as to which the restriction has
lapsed, such number of shares having a fair market value sufficient to satisfy
federal, state and local income and employment tax withholding obligations.

          (b)             In the event that such tax withholding is satisfied
by the Company or the optionee's employer withholding shares of Stock otherwise
deliverable to the optionee, the Committee may issue the optionee an additional
option, with terms identical to the option agreement under which the option was
exercised, entitling the optionee to purchase additional shares of Stock equal
to the number of shares so withheld but at an exercise price equal to the fair
market value of the Stock on the grant date of the new option.  Such additional
option shall be subject to the provisions of Section 6(e) above.





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     14.         Restrictions on Transfer of Shares.  The Committee may require
that the Stock acquired pursuant to the Plan be subject to such restrictions
and agreements regarding sale, assignment, encumbrances, or other transfer as
are in effect among the shareholders of the Company at the time such Stock is
acquired, as well as to such other restrictions as the Committee shall deem
appropriate.

     15.         Change in Control.

          (a)             For purposes of this Section 15, a "Change in
Control" shall be deemed to occur upon:

               (i)                the direct or indirect acquisition by any
person or related group of persons (other than an acquisition from or by the
Company or by a Company-sponsored employee benefit plan or by a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of
the Securities Exchange Act of 1934, as amended) of securities possessing more
than fifty percent (50%) of the total combined voting power of the Company's
outstanding Stock;

               (ii)               a change in the composition of the Board over
a period of thirty-six (36) months or less such that a majority of the Board
members cease, by reason of one or more contested elections for Board
membership or by one or more actions by written consent of shareholders, to be
comprised of individuals who either (A) have been Board members continuously
since the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of the
Board members described in clause (A) who were still in office at the time such
election or nomination was approved by the Board;

               (iii)              approval by the Company's shareholders of a
merger or consolidation in which the Company is not the surviving entity,
except for a transaction the principal purpose of which is to change the state
in which the Company is incorporated;

               (iv)               approval by the Company's shareholders of (A)
the sale, transfer or other disposition of all or substantially all of the
assets of the Company (including the capital stock of the Company's subsidiary
corporations) or (B) the complete liquidation or dissolution of the Company; or

               (v)                approval by the Company's shareholders of any
reverse merger in which the Company survives as an entity but in which
securities possessing more than fifty percent (50%) of the total combined
voting power of the Company's outstanding securities are transferred to a
person or persons different from those who held such securities immediately
prior to such merger.





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          (b)             In its discretion, the Committee may provide in any
stock option, SAR, Stock bonus or Stock purchase agreement (or in an amendment
thereto) evidencing an option, SAR, Stock bonus or Stock purchase hereunder
that, in the event of any Change in Control any outstanding options or SARs
covered by such an agreement shall be fully vested, nonforfeitable and become
exercisable, and that any restricted Stock covered by such an agreement shall
be released from restrictions on transfer and repurchase or forfeiture rights,
as of the date of the Change in Control.  However, an outstanding option may
not be accelerated under this Section 15 if and to the extent (i) such option
is, in connection with the transaction giving rise to a Change of Control,
either to be assumed by the successor or parent thereof or to be replaced with
a comparable option to purchase shares of the capital stock of the successor
corporation or parent thereof, or (ii) such option is to be replaced with a
cash incentive program of the successor corporation that preserves the option
spread existing at the time of the corporate transaction giving rise to the
Change of Control and provides for subsequent payment in accordance with the
same vesting schedule applicable to such option.

          (c)             If the Committee determines to incorporate a Change
in Control provision in any option or SAR agreement hereunder, the agreement
shall provide that, (i) in the event of a Change in Control described in
clauses (i), (ii) and (v) of Section 15(a) above, the Option or SAR shall
remain exercisable for the remaining term of the option or SAR and (ii) in the
event of a Change in Control described in clauses (iii) or (iv) of Section
15(a) above, the option or SAR shall terminate as of the effective date of the
merger, disposition of assets, liquidation or dissolution described therein.
In no event shall any option or SAR under the Plan be exercised after the
expiration of the term provided for in the related stock option or SAR
agreement pursuant to Section 6(b) or Section 8.

     16.         Shareholder Approval.  The Plan and any incentive stock
options and options granted to Covered Employees hereunder shall become
effective only upon approval by the holders of a majority of the Company's
shares voting (in person or by proxy) at a shareholders' meeting held within 12
months of the Board's adoption of the Plan.  The Committee may grant such stock
options under the Plan prior to the stockholders' meeting, but until
stockholder approval of the Plan is obtained, no such option shall be
exercisable.  In the event that stockholder approval is not obtained within the
period provided above, all incentive stock options and options granted to
Covered Employees previously granted above, shall terminate.

     17.         Rule 16b-3 Compliance.  With respect to persons subject to
Section 16 of the Securities Exchange Act of 1934, transactions under the Plan
are intended to comply with all applicable conditions of Rule 16b-3.  To the
extent any provision of the Plan or action by the Committee fails to so comply,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.  Moreover, in the event the Plan does not include a
provision required by Rule 16b-3 to be stated therein, such provision (other
than one relating to eligibility requirements or the price and amount of
awards) shall be deemed automatically to be incorporated by reference into the
Plan insofar as persons subject to Section 16 are concerned.

*Includes 12/29/95 amendments and 8/9/96 amendments





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