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                                                                    EXHIBIT 10.1





                         EMPLOYEE STOCK OPTION PLAN
                       OF APACHE MEDICAL SYSTEMS, INC.

                (Amended and Restated Effective May 1, 1997)


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<TABLE>
<CAPTION>
                                                   TABLE OF CONTENTS
                                                   -----------------
<S>                    <C>                                                                                   <C>
Section 1.             Purpose.   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
Section 2.             Definitions.   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
Section 3.             Administration.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
Section 4.             Common Stock Subject to Plan.  . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
Section 5.             Eligibility.   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
Section 6.             Terms and Conditions of Options.   . . . . . . . . . . . . . . . . . . . . . . . . .  4
Section 7.             Treatment of Options Upon Termination.   . . . . . . . . . . . . . . . . . . . . . .  5
Section 8.             Adjustment Provisions.   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
Section 9.             Term of Plan.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
Section 10.            Change in Control.   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
Section 11.            General Provisions.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
Section 12.            Amendment or Discontinuance of the Plan.   . . . . . . . . . . . . . . . . . . . . .  8
Section 13.            Effective Date of Plan.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
</TABLE>





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                           EMPLOYEE STOCK OPTION PLAN
                        OF APACHE MEDICAL SYSTEMS, INC.

                  (AMENDED AND RESTATED EFFECTIVE MAY 1, 1997)

SECTION 1.       PURPOSE.

         The purpose of the Plan, as hereinafter set forth, is to enable the
Company to attract, retain and reward corporate officers, managerial and other
significant employees, and non-employees (other than non-employee directors)
who have an ongoing consultant or independent contractor relationship with the
Company, by offering such individuals an opportunity to have a greater
proprietary interest in and a closer identity with the Company and its
financial success.

         Options granted under this Plan may be Incentive Stock Options or
Nonqualified Stock Options.  However, Incentive Stock Options may only be
granted to employees of the Company.

SECTION 2.       DEFINITIONS.

         Board:  The Board of Directors of the Company.

         Change in Control:  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
Exchange Act or any comparable successor provisions, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 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; 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 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; a
liquidation or dissolution of the Company; or of the sale of all or
substantially all of the Company's assets.

         Code:  The Internal Revenue Code of 1986, as amended from time to
time.

         Committee:  The Compensation Committee of the Board or such other
committee as shall be appointed by the Board to administer the Plan pursuant to
Section 3.

         Common Stock:  The common stock, $0.01 par value, of the Company or
such other class of shares or other securities as may be applicable pursuant to
the provisions of Section 8.

         Company:  APACHE Medical Systems, Inc., a Delaware corporation, its
subsidiary or subsidiaries, and any successor thereto.





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         Disabled or Disability:  Permanent and total disability, as defined in
Code Section 22(e)(3).  A Participant shall not be considered Disabled unless
the Committee determines that the Disability arose prior to such Participant's
termination of employment or, in the case of a non-employee Participant, prior
to the termination of the consulting or independent contractor relationship
between such Participant and the Company.

         Exchange Act:  The Securities Exchange Act of 1934, as amended from
time to time.

         Fair Market Value:  The amount determined by the Committee from time
to time, using such good faith valuation methods as it deems appropriate,
except that as long as the Common Stock is traded on NASDAQ or a recognized
stock exchange, it shall mean the average of the highest and lowest quoted
selling prices for the shares on the relevant date, or, if there were no sales
on such date, the weighted average of the means between the highest and the
lowest quoted selling prices on the nearest day before and the nearest day
after the relevant date, as prescribed by Treasury Regulation Section
20.2031-2(b)(2), as reported in the Wall Street Journal or a similar
publication selected by the Committee.

         Incentive Stock Option:  An Option that is intended to qualify as an
"incentive stock option" under Code Section 422.

         Nonqualified Stock Option:  An Option that is not an Incentive Stock
Option.

         Option:  An option to purchase shares of Common Stock granted to a
Participant pursuant to Section 6.

         Participant:  An employee of the Company (including any employee who
is a member of the Board) or any non-employee consultant or advisor to the
Company whose participation in the Plan is determined by the Committee to be in
the best interest of the Company.

         Plan:  The Employee Stock Option Plan of APACHE Medical Systems, Inc.,
as amended from time to time.

SECTION 3.       ADMINISTRATION.

         (a)     Committee.  The Plan shall be administered by the Committee.
To the extent required to comply with the relevant provisions of Rule 16b-3
under the Exchange Act, each member of the Committee shall qualify as a
"non-employee director," as defined in Rule 16b-3 or in any successor
definition adopted by the Securities and Exchange Commission.

         (b)     Authority of the Committee.  The Committee shall have the
authority to approve individuals for participation; to construe and interpret
the Plan; to establish, amend or waive rules and regulations for its
administration; and to accelerate the exercisability of any Option or the
termination of any restriction under any Option.  Options may be subject to
such provisions as the Committee shall deem advisable, and may be amended by
the Committee from time to





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time; provided that no such amendment may adversely affect the rights of the
holder of an Option without such holder's consent.

         (c)     Powers of the Committee.  The Committee may employ such legal
counsel, consultants and agents as it may deem desirable for the administration
of the Plan and may rely upon any opinion received from any such counsel or
consultant and any computation received from any such consultant or agent.

         (d)     Indemnification.  No member of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any Option awarded under it.  To the maximum extent permitted by applicable
law, each member of the Committee shall be indemnified and held harmless by the
Company against any cost or expense (including legal fees) or liability
(including any sum paid in settlement of a claim with the approval of the
Company) arising out of any act or omission to act in connection with the Plan
unless arising out of such member's own fraud or bad faith.  Such
indemnification shall be in addition to any rights of indemnification the
members may have as members of the Board or under the by-laws of the Company.

SECTION 4.       COMMON STOCK SUBJECT TO PLAN.

         The aggregate shares of Common Stock that may be issued under the Plan
shall not exceed 2,200,000, as adjusted in accordance with the provisions of
Section 8.

         In the event of a lapse, expiration, termination, forfeiture or
cancellation of any Option granted under the Plan without the issuance of
shares, the Common Stock subject to or reserved for such Option may be used
again for new grants of Options hereunder; provided that in no event may the
number of shares of Common Stock issued hereunder exceed the total number of
shares reserved for issuance.  Any shares of Common Stock withheld or
surrendered to pay withholding taxes pursuant to Section 11(e) or withheld or
surrendered in full or partial payment of the exercise price of an Option
pursuant to Section 6(d) shall be added to the aggregate shares of Common Stock
available for issuance.

SECTION 5.       ELIGIBILITY.

         Options may be granted under the Plan to any employee of the Company,
including employees who are officers and/or members of the Board, whose
participation the Committee determines is in the best interest of the Company
and to any non-employee who is a consultant or advisor to the Company whose
participation the Committee determines is in the best interests of the Company
(collectively, "Participants").  The Committee shall have absolute discretion
to determine, within the limits of the express provisions of the Plan, those
Participants to whom and the time or times at which Options shall be granted.
The Committee shall also determine, within the limits of the express provisions
of the Plan, the number of shares to be subject to each Option, the duration of
each Option, the exercise price under each Option, the time or times within
which (during the term of the Option) all or portions of each Option may become
vested and exercisable, and whether an Option shall be an Incentive Stock
Option, a Nonqualified Stock


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Option or a combination thereof.  In making such determination, the Committee
may take into account the nature of the services rendered by the Participant,
his or her present and potential contributions to the Company's success and
such other factors as the Committee in its discretion shall deem relevant.

         Notwithstanding the foregoing, no Incentive Stock Option shall be
granted to any Participant who is not an employee of the Company and no
non-employee member of the Board shall be eligible to receive any new Option
grant hereunder.

SECTION 6.       TERMS AND CONDITIONS OF OPTIONS.

         Each Option granted under the Plan shall be evidenced by an agreement,
in a form approved by the Committee, which shall be subject to the following
express terms and conditions and to such other terms and conditions as the
Committee may deem appropriate:

         (a)     Option Period.  Each Option agreement shall specify the period
for which the Option thereunder is granted (which, in the case of Incentive
Stock Options, shall not exceed ten years from the date of grant) and shall
provide that the Option shall expire at the end of such period.

         (b)     Exercise Price.  The per share exercise price of each Option
shall be determined by the Committee at the time the Option is granted, and, in
the case of Incentive Stock Options, shall not be less than the Fair Market
Value of Common Stock on the date the Option is granted.

         (c)     Vesting of Options.  No part of any Option may be exercised
until the Participant shall have satisfied the vesting conditions (i.e., such
as remaining in the employ of the Company for a certain period of time), if
any, as the Committee may specify in the applicable Option agreement.  Subject
to the provisions of Section 6(e), any Option may be exercised, to the extent
exercisable by its terms, at such time or times as may be determined by the
Committee.

         (d)     Payment.  The exercise price of an Option shall be paid in
full at the time of exercise (i) in cash, (ii) through the surrender of
previously-acquired shares of Common Stock having a Fair Market Value equal to
the exercise price of the Option, (iii) through the withholding by the Company
(at the election of the Participant) of shares of Common Stock having a Fair
Market Value equal to the exercise price or (iv) by a combination of (i), (ii)
and (iii).

         (e)     Other Rules Applicable to Incentive Stock Options.

                 (i)      Grant Period.  Consistent with Section 9, an
Incentive Stock Option must be granted within ten years of the date this Plan
is adopted (i.e., the Effective Date, as defined in Section 13) or the date the
Plan is approved by the stockholders of the Company, whichever is earlier.



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                (ii)     Ten Percent Owner.  If a Participant, on the date that
        an Incentive Stock Option is granted, owns, directly or indirectly,
        within the meaning of Section 424(d) of the Code, stock representing
        more than 10% of the voting power of all classes of stock of the
        Company, then the exercise price per share shall in no instance be less
        than 110% of the Fair Market Value per share of Common Stock at the time
        the Incentive Stock Option is granted, and no Incentive Stock Option
        shall be exercisable by such Participant after the expiration of five
        years from the date it is granted.

                (iii)    Employee Status.  To retain favorable Incentive Stock
        Option tax treatment, the Option holder must at all times from the date
        the Option is granted through a date that is no more than three months
        prior to the date it is exercised (or no more than one year prior to the
        date it is exercised, where the Participant's termination of employment
        is due to death or Disability) remain an employee of the Company.  For
        this purpose, authorized leaves of absence shall not be deemed to sever
        the employment relationship.

                (iv)     Limitations on Dispositions.  To retain favorable
        Incentive Stock Option tax treatment, Common Stock received upon the
        exercise of an Incentive Stock Option may not be disposed of prior to
        the later of two years from the date the Incentive Stock Option is
        granted or one year from the date the shares of Common Stock are
        transferred to the Participant upon exercise of the Incentive Stock
        Option.

                (v)      Value of Shares.  The aggregate Fair Market Value      
        (determined at the date of grant) of the Incentive Stock Options
        exercisable for the first time by a Participant during any calendar year
        shall not exceed $100,000 or any other limit imposed by the Code.

                (f)      Limit on the Exercisability of all Options.  No Option
        granted under this Plan may become exercisable prior to six months
        following the date it is granted or six months after stockholders
        approve the Plan, whichever date is later.

SECTION 7.     TREATMENT OF OPTIONS UPON TERMINATION.

         (a)     Termination due to Disability or Death.  Upon the termination
of employment of an employee Participant or upon the termination of the
consulting or advisor relationship of a non-employee Participant by reason of
Disability or death, such Participant's Options shall become or remain fully
vested and shall be exercisable by such Participant (or, in the case of death,
by his or her estate) for not later than the earlier of one year after the
termination date or the expiration of the term of the Options.

         (b)     Termination Other than For Cause.  Upon the termination of
employment of an employee Participant or upon the termination of the consulting
or advisor relationship of a non-employee Participant for any reason other than
for Cause (as defined in Section 7(c)), Disability or death, such Participant's
Options (to the extent vested prior to such termination) may be exercised by
such Participant during the six-month period commencing on the date of



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termination, but not later than the expiration of the term of the Options.  If
a Participant dies during such six-month period, his or her estate may exercise
the Options (to the extent such Options were vested and exercisable prior to
death), but not later than the earlier of one year after the date of death or
the expiration of the term of the Options.  Notwithstanding the foregoing, to
retain favorable Incentive Stock Option tax treatment, Incentive Stock Options
must be exercised within three months of the Participant's termination of
employment.

         (c)     Termination for Cause.  Upon termination of the employment of
an employee Participant or upon the termination of the consulting or advisor
relationship of a non-employee Participant for Cause (as defined below), the
Participant's right to exercise his or her Options shall terminate at the time
notice of termination is given by the Company to such Participant.  For
purposes of this provision, substantial cause shall include:

                (i)     The 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)    A material breach of any material duty or obligation
        imposed upon the Participant by the Company;

                (iii)   Divulging the Company's confidential information; or

                (iv)    The performance of any similar action that the
        Committee, in its sole discretion, may deem to be sufficiently injurious
        to the interests of the Company so as to constitute substantial cause
        for termination.

SECTION 8.       ADJUSTMENT PROVISIONS.

         In the event of a stock split, stock dividend, recapitalization,
reclassification or combination of shares, merger, sale of assets or similar
event, the Committee shall adjust equitably (a) the number and class of shares
or other securities that are reserved for issuance under the Plan, (b) the
number and class of shares or other securities that are subject to outstanding
Options, and (c) the appropriate Fair Market Value and other price
determinations applicable to Options.  The Committee shall make all
determinations under this Section 8, and all such determinations shall be
conclusive and binding.

SECTION 9.       TERM OF PLAN.

         The Plan shall be deemed adopted and shall become effective on the
date it is approved by the stockholders of the Company and shall continue until
April 1, 2006, or, if earlier, upon termination of the Plan by the Board or
until no Common Stock remains available for issuance under Section 4.




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SECTION 10.  CHANGE IN CONTROL.

        In the event of a Change in Control, all outstanding Options shall
fully vest in each Participant.  The Committee, in its discretion, may also
provide in any Option agreement for adjustment of certain terms of such
Option upon the occurrence of a Change in Control.

SECTION 11.  GENERAL PROVISIONS.

        (a)  Employment.  Nothing in the Plan or any related instrument shall
confer upon any employee Participant or other employee any right to continue in
the employ of the Company or shall affect the right of the Company to terminate
the employment of any employee Participant or other employee with or without
cause.

        (b)  Legality of Issuance of Shares.  No Common Stock shall be issued
pursuant to the exercise of an Option unless and until all legal requirements
applicable to such issuance have been satisfied.

        (c)  Ownership of Common Stock Allocated to Plan.  No Participant
(individually or as a member of a group), and no beneficiary or other person
claiming under or through such Participant, shall have any right, title or
interest in or to any Common Stock allocated or reserved for purposes of the
Plan or subject to any Option, except as to shares of Common Stock, if any, as
shall have been issued to such Participant or beneficiary.

        (d)  Governing Law.  The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Virginia.

        (e)  Withholding of Taxes.  The Company may withhold, or allow a
Participant to remit to the Company, any Federal, state or local taxes required
by law to be withheld with respect to any event giving rise to income tax
liability with respect to an Option.  In order to satisfy all or any portion of
such income tax liability, a Participant may elect to surrender Common Stock
previously acquired by the Participant or to have the Company withhold Common
Stock that would otherwise have been issued to the Participant pursuant to the
exercise of an Option, the number of shares of such withheld or surrendered
Common Stock to be sufficient to satisfy all or a portion of the income tax
liability that arises upon the event giving rise to income tax liability with
respect to an Option.

        (f)  Nontransferability.  During the lifetime of a Participant, any
Option granted to him or her be exercisable only by him or her or by his or her
guardian or legal representative.  No Option shall be assignable or
transferable, except by will or by the laws of descent and distribution, and no
option shall be subjected to any encumbrance, pledge or charge of any nature.




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SECTION 12.      AMENDMENT OR DISCONTINUANCE OF THE PLAN.

         The Board, acting by a majority of its members, without further action
on the part of the stockholders, may from time to time alter, amend or suspend
the Plan or any Option granted hereunder or may at any time terminate the Plan;
provided, however, that the Board may not materially increase the number of
shares of Common Stock subject to the Plan (except as provided in Section 8
hereof); and provided further that no such action shall materially and
adversely affect any outstanding Options without the consent of the respective
Participants.

SECTION 13.      EFFECTIVE DATE OF PLAN.

         The Plan as adopted by the Board and approved by stockholders was
originally effective as of November 8, 1990 and amended and restated as of
April 1, 1996.  The Plan is hereby further amended and restated effective May
1, 1997 (the "Effective Date"), subject to approval by the holders of a
majority of the outstanding shares of Common Stock of the Company.




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