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                              EMPLOYMENT AGREEMENT

        This Employment Agreement ("Agreement") is entered into this 30th day
of May 1998, by and between Peter Gladkin (the "Executive") and APACHE MEDICAL
SYSTEMS, INC. (the "Company").

        WHEREAS, the Company wishes to retain the services of the Executive; and

        WHEREAS, Executive desires to be employed by the Company;

        NOW, THEREFORE, in consideration of the promises and mutual agreements
made herein, and intending to be legally bound hereby, the Company and Executive
agree as follows:

        1. Employment Term. Subject to Section 8, the term of this Agreement
shall be from July 1, 1998, through July 1, 2000. Should the Parties wish to
extend this Agreement beyond July 1, 2000, the Parties shall enter into a
renewal agreement delineating the terms and conditions of Executive's employment
no later than April 1, 2000.

        2. Employment Duties. Executive will serve as President and Chief
Executive Officer of the Company subject to the direction and control of the
Board of Directors. Executive shall be fully responsible for all facets of the
Company's operations, with all of the Company's employees reporting to
Executive, either directly or indirectly. Executive agrees to perform and
discharge the duties assigned to him to the Board's reasonable satisfaction. In
performing such duties, Executive agrees to comply fully with all of the
Company's policies and standards and to follow the lawful instructions and
directives of the Board of Directors. Executive agrees to devote his full
professional time, skills and best efforts to the business of the Company and
will not, during the term of this Agreement, engage (whether or not during
normal business hours) in any other business or professional activity, whether
or not such activity is pursued for gain, profit or other pecuniary advantage,
without the prior written authorization of the Board of Directors, or its
designee. Subject to Section 12, Executive's retention of his current position
on the Board of Gull Laboratories, Inc. and participation on up to two
additional corporate and trade association boards shall not constitute a breach
of his commitment to devote his full time and energies to the Company, provided
that such Board memberships do not materially interfere with his performance of
responsibilities for the Company under this Agreement.

         3. Board of Directors. Effective July 1, 1998, Executive will be named
as a member of the Company's Board of Directors. As a Director, Executive will
be permitted to nominate one additional member of the Board, whose nomination
will not be rejected unreasonably by the full Board. Executive will serve as a
member of 

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the Nominating Committee responsible for filling vacant directors positions on
the Board during the term of this Agreement.

        4. Compensation. For all services rendered by Executive under this
Agreement, the Company will pay Executive a base salary of $230,000 per annum,
in equal bi-weekly installments. Effective July 1, 1999, Executive's base salary
will increase by either five percent (5%) or at the then effective rate of the
Consumer Price Index, whichever rate is greater. Thereafter, the Compensation
Committee of the Board of Directors shall review Executive's base salary
annually during its year-end compensation review. The Company shall withhold
federal and state income and employment taxes from the salary amounts it
disburses to Executive under this Section.

        5. Benefits.

           (a)  Executive will be entitled during the term of this Agreement
to four (4) weeks paid vacation and sick leave benefits as provided by the
Company's standard policies. Additionally, Executive shall be entitled during
the term of this Agreement to other benefits as may be provided from time to
time by the Company to its employees if and when he meets the eligibility
requirements for such benefits. The Company reserves the right to change or
discontinue any employee benefit plans or programs now being offered to its
employees and their dependents.

           (b)  The Company shall reimburse Executive for all reasonable
expenses incurred in connection with the performance of his duties under this
Agreement pursuant to the Company's standard business expense reimbursement
policies.

        6. Relocation Allowance. The Company shall provide Executive a
relocation allowance as reimbursement for his relocation expenses in the amount
of $80,000. This allowance will be disbursed to Executive as follows: (i)
$20,000 will be paid on July 1, 1998; (ii) $30,000 will be paid upon the sale of
Executive's California residence or after 60 consecutive days of listing for
sale with a recognized real estate firm, but in no event, prior to July 1, 1998;
and (iii) $30,000 will be paid upon Executive's execution of a written
commitment to purchase of residence or physical relocation of his household
goods to the Washington metropolitan area, whichever occurs first.

        7. Stock Options.

           (a)  Stock Option Agreement. Executive will be eligible to receive 
stock options in the Company in accordance with the provisions and 
requirements of the Stock Option Agreement attached as Exhibit 1 to this
Agreement.

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           (b)  Bonus Target. Executive will be eligible to receive additional 
stock options worth $75,000.00, to be granted at the first meeting of the 
Board of Directors following issuance of year-end results for 1998. The value 
of such options shall be equal to fifty (50) percent of the fair market value 
of the Company's stock at year-end, as averaged over the final ten (10) 
trading days in 1998, and shall be awarded at fair market value on the day of
the grant. Except as provided in this Section 7(b), the grant of such options
shall be in accordance with the provisions and requirements of the Stock Option
Agreement attached as Exhibit 1 to this Agreement.

        8. Termination.

           (a)  For Cause. Notwithstanding any other provision of this
Agreement, the Company may terminate Executive's employment for cause at any
time without notice. For purposes of this Agreement, "cause" shall mean the
Executive's (i) commission of an action against or in derogation of the
interests of the Company which constitutes an act of fraud, dishonesty, or moral
turpitude, or which, if proven in a court of law, would constitute a violation
of a criminal code or similar law; (ii) by reason of mental or physical
incapacity or disability, becoming unable to perform the essential functions of
his position for a period of ninety (90) days; (iii) material breach of any
material duty or obligation imposed upon the Executive by the Corporation; or
(iv) divulging the Corporation's confidential information. If the Executive is
terminated pursuant to this Section 8(a), the Company's obligations under this
Agreement shall cease, and, except as required by applicable law, Executive
shall forfeit all rights to receive any other compensation or benefits under
this Agreement, except that he shall be entitled to his base salary for services
rendered through the date of termination and accrued but unpaid vacation
benefits through the effective date of termination. Additionally, Executive
shall be entitled to any vested stock options, provided that such options have
been exercised either prior to or at the time the Company notifies him of his
termination. Termination of the Executive pursuant to this Section 8(a) shall
not relieve him of his obligations under Sections 11, 12 and 13.

           (b)  Without Cause. Notwithstanding any other provision of this
Agreement, the Company may terminate Executive's employment and this Agreement
without cause by providing Executive sixty (60) days written notice, provided
that in the event of such termination, Executive shall be entitled to all vested
stock options, which may be exercised as defined in this Agreement, and
continuation of his salary and Company-paid health benefits for twelve (12)
months. The Company will also continue Executive's life insurance and disability
benefits during this twelve (12) month period to the extent that the terms of
its group insurance policies and/or plans extend coverage to non-employees.
Additionally, any stock option that would have vested in the nine (9) months
after the effective date of Executive's termination will be accelerated to, and
vest on, the effective 



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termination date. Executive's vested stock options may be exercised ninety (90)
days after the effective date of his termination.

           (c)  Material Change in Responsibilities. Notwithstanding any other 
provision of this Agreement, should the Company materially change Executive's 
responsibilities, Executive may provide the Company sixty (60) days written 
notice of his objection to such change. The Company shall be afforded
forty-five (45) days from receipt of such notice to respond to and cure
Executive's objection(s). Should the Company fail to restore Executive's
responsibilities in full during this forty-five (45) day period, Executive shall
be entitled to resign and such resignation for purposes of salary and benefit
continuation and vesting, shall be treated as a termination without cause as
defined in Section 8(b). For purposes of this Section, a "material change in
responsibility" shall mean a material change in his duties or authority.

        9. Termination Due to Change in Control.

           (a)  Defined. For purposes of this Agreement, a "change in control" 
is: (1) the purchase or other acquisition by any person, entity or group of 
persons, within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934 or any comparable successor provisions, of beneficial
ownership (within the meaning of Rule 13D-3 promulgated under such Act) of
thirty percent (30%) or more of either the outstanding shares of common stock or
the combined voting power of the Company's then outstanding voting securities
entitled to vote generally; (2) the approval by the stockholders of the Company
of a reorganization, merger or consolidation, in each case, with respect to
which persons who were stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than thirty percent (30%) of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged or
consolidated Company's then outstanding securities; (3) a liquidation or
dissolution of the Company; or (4) the sale of all or substantially all of the
Company's assets.

           (b)  In the event that a change in control results in either an
involuntary termination of Executive through elimination of his position or
transfer of Executive to a location outside of a 50-mile radius of his permanent
residence, Executive shall be entitled to all options which have vested or are
otherwise due to vest pursuant to Section 10 of the Executive's Incentive Stock
Option Agreement with the Company, and continuation of his salary and
Company-provided health, disability and life insurance benefits for twelve (12)
months as provided in Section 8(b).

           (c)  In the event of Executive's termination pursuant to Section
9(b), Executive may, at his sole option, elect to receive payment of his twelve
(12) months salary in the form of a lump sum distribution, less applicable
withholdings, which 



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shall be payable within twenty (20) days of the effective date of his
termination. Executive's election to such a lump sum distribution shall not
diminish Executive's obligations under Sections 11, 12 and 13.

            (d)  A "change in control" will not effect or diminish Executive's 
rights and obligations under any provision of this Agreement, including, 
without limitation, Sections 11, 12 and 13.

        10. Election of Board Chair. In the event that the Board of Directors
elects a new Chairperson, other than Executive or Thomas Hodson, during the term
of this Agreement, Executive shall notify the Board in writing of any objections
he may have to the newly elected Chair within sixty (60) days of his or her
election. The Board shall thereafter be afforded forty-five (45) days to resolve
and redress Executive's concerns. Should the Board fail to redress Executive's
objections to his satisfaction, Executive may resign his employment and receive
the salary and continuation of his benefits as provided in Section 8(b). 

        11. Confidentiality. In the course of performing his duties under this
Agreement, Executive will have access to "Confidential Information." Executive
agrees and acknowledges that this Confidential Information constitutes a
valuable and unique asset of the Company and that its protection is of critical
importance to the Company. To ensure that such Confidential Information is not
disclosed or divulged to third persons, Executive agrees as follows:

            (a)    that Confidential Information is owned by the Company and 
is to be held by Executive in trust and solely for the benefit of the Company;

            (b)  that he shall not disclose or otherwise make available such
Information to any person or entity without the prior written authorization of
the Board of Directors of the Company, except as necessary for the performance
of Executive's services under this Agreement;

            (c)    that he shall not in any way utilize such Confidential 
Information for the gain or advantage or Executive or others or to the detriment
of the Company; and

            (d)  that upon termination of this Agreement, he shall promptly
return any and all such Confidential Information to the Company and shall
continue to abide by the confidentiality provisions of this Section.

        For purposes of this Agreement, "Confidential Information" shall
include, but not be limited to, information that has been created, discovered,
developed, or otherwise become known to APACHE (including, without limitation,
information created, discovered, developed, or made known by Consultant during
the period of this Agreement) and/or in which property rights have been assigned
or otherwise 



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conveyed to APACHE, which information has commercial value in the business in
which APACHE is or may become engaged. By way of illustration, but not
limitation, Confidential Information includes trade secrets, processes,
structures, formulas, data and know-how, improvements, inventions, product
concepts, techniques, marketing plans, strategies, forecasts, customer lists and
information about APACHE's employees and/or consultants (including without
limitation, the compensation, job responsibility and job performance of such
employees and/or consultants). Additionally, Confidential Information shall
include certain information that has been made known to APACHE from third
parties, including, but not limited to, patient identifying information,
physician identifying information, information that would link a client's name
to individual data, and any information protected by a confidentiality agreement
or terms and conditions of an agreement regarding confidentiality.

        12. Non-Competition. Executive agrees and acknowledges that the Company
has a legitimate and necessary interest in protecting its goodwill, customer and
client relationships, and Confidential Information. Consistent with that
interest, Executive agrees that during the term of this Agreement and for a
period of eighteen (18) months following his receipt of notice of termination
under Section 8, that he will not, directly or indirectly, own, manage, control,
participate in, consult with, render services to or otherwise engage in any
Competitive Business, or solicit or assist any other person to engage in any
Competitive Business.

            (a)  For purposes of this Agreement, "Competitive Business" is
defined as (1) all entities and/or individuals with whom the Company has a
contract to provide support and services; (2) entities and/or individuals that
the Company has identified on its key prospect list at the time Executive
receives notice of his termination; and/or (3) any other business engaged in
developing, selling, licensing or otherwise merchandising computer programs,
databases and related manuals, service and/or know-how for the purpose(s) of:
(i) managing the quality and utilization of patient care or related services
using outcomes management applications; or (ii) assessing and/or predicting
mortality and other treatment outcomes of hospital patients or outpatients; or
(iii) otherwise recording patient health factors in connection with predicting
their treatment, managing clinical productivity or containing costs through the
use of outcomes management applications. Ownership of not more than three
percent (3%) or the outstanding securities of any class of any corporation that
are listed on a national securities exchange or traded in the over-the-counter
market shall not constitute ownership of a Competitive Business within the
meaning of this provision. If the Company expands, diminishes and/or changes the
scope of its business during the term of this Agreement, the definition of
Competitive Business hereunder will be considered automatically revised to
incorporate any such expansion, diminution and/or change.


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        13. Non-Solicitation.

            (a)  Executive agrees that during the term of this Agreement and
for an eighteen (18) month period following his receipt of notice of his
termination under Section 8, he will not, directly or indirectly, without the
prior written consent of the Company, solicit or attempt to solicit business
from any individual or entity that was a customer of the Company at any time
during the six (6) month period immediately prior to Executive's termination of
employment with the Company.

            (b)  Executive agrees that during the term of this Agreement and
for an eighteen (18) month period following his receipt of notice of his
termination under Section 8, he will not, directly or indirectly, without the
prior written consent of the Company, solicit or induce any employee of the
Company to leave the employ of the Company or hire for any purpose any employee
of the Company.

        14. Remedies. Executive agrees and acknowledges that the violation of
any of the covenants or agreements contained in Sections 11, 12 and 13 would
cause irreparable injury to the Company, that the remedy at law for such
violation or threatened violation would be inadequate, and that the Company will
be entitled, in addition to any other remedy, to temporary injunctive or other
equitable relief without the necessity of proving actual damages or posting a
bond.

        15. Notices. Any notice or communication under this Agreement will be in
writing and sent by registered or certified mail addressed to the respective
parties as follows:

<TABLE>
               <S>                      <C>
               If to the Company:       Counsel
                                        Chairman of the Board
                                        c/o NeuroSource, Inc.
                                        515 N. State Street, Suite 1700
                                        Chicago, IL 60610

               Notice to Executive:     Mr. Peter Gladkin
                                        P.O. Box 531
                                        Cedar Glenn, CA  92321
</TABLE>

        Executive shall notify the Company by certified mail of any change in
his address, and thereafter, the Company shall forward any notices under this
Agreement to Executive at such new address.

        16. Entire Agreement. This Agreement embodies the entire agreement of
the Parties relating to Executive's employment and supersedes all prior
agreements, oral or written. No amendment or modification of this Agreement
shall be valid or enforceable unless made in writing and signed by the Parties.


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        17. Assignment. This Agreement is one for personal services and may not
be assigned by Executive to a third party.

        18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia.

        19. Severability. Should one or more of the provisions of this Agreement
be held invalid or unenforceable by a court of competent jurisdiction, such
provisions or portions thereof shall be ineffective only to the extent of such
invalidity or unenforceability, and the remaining provisions of this Agreement
or portions thereof shall nevertheless be valid, enforceable and remain in full
force and effect. The Company's rights under this Agreement shall not be
exclusive and shall be in addition to all other rights and remedies available at
law or in equity.


                                   
                                         
                                            APACHE MEDICAL SYSTEMS, INC.
                                         

/s/ PETER GLADKIN                           By: /s/ THOMAS W. HODSON
-----------------------------------            ---------------------------------
PETER GLADKIN                            
                                            Its: CHAIRMAN OF THE BOARD
                                                --------------------------------

Date: 5/30/98                               Date: 6/3/98
     ------------------------------              -------------------------------



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