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                                                                   EXHIBIT 10.27
 
                          APACHE MEDICAL SYSTEMS, INC.
                             NON-EMPLOYEE DIRECTOR
                         SUPPLEMENTAL STOCK OPTION PLAN
 
                       Amended and Restated May 12, 1999
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                          APACHE MEDICAL SYSTEMS, INC.
 
                             NON-EMPLOYEE DIRECTOR
                         SUPPLEMENTAL STOCK OPTION PLAN
 
                       Amended and Restated May 12, 1999
SECTION 1.  Purpose.
 
     The purpose of the Plan, as hereinafter set forth, is to enable the Company
to attract, retain and reward qualified non-employee directors by offering them
an opportunity to have a greater proprietary interest in and a closer identity
with the Company and its financial success. By permitting Options to be granted
on a discretionary basis, the Plan gives the Company more flexibility to address
special situations than is possible under the existing APACHE Medical Systems,
Inc. Non-Employee Director Stock Option Plan. The Plan is intended to apply to
the supplemental grant of an Option to purchase 16,700 shares of Common Stock to
each non-employee director by the Board on January 26, 1999.
 
     Options granted under this Plan shall be nonqualified stock options.
 
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:  A committee composed of at least two Non-Employee Directors,
within the meaning of Rule 16b-3(b)(3) of the Securities and Exchange
Commission, who are responsible for the administration of the Plan in accordance
with Section 3. Members of the Committee shall be designated by the Chairman of
the Board and shall include the Chairman of the Board if that is consistent with
the preceding sentence.
 
     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.
 
     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 membership on the Board.
 
     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
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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.
 
     Option:  A nonqualified stock option to purchase shares of Common Stock
granted to a Participant pursuant to Section 6.
 
     Participant:  Any non-employee member of the Board.
 
     Plan:  The APACHE Medical Systems, Inc. Non-Employee Director Supplemental
Stock Option Plan, as amended from time to time.
 
SECTION 3.  Administration.
 
     (a) Committee.  The Plan shall be administered by the Committee.
 
     (b) Authority of the Committee.  The Committee shall have the authority to
construe and interpret the Plan and to establish, amend or waive rules and
regulations for its administration. Subject to the limitations of the express
provisions of the Plan, Options may be subject to such provisions as the
Committee shall deem advisable, and may be amended by the Committee from time to
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.
 
     (e) Authority of the Board.  In addition to the authority otherwise
expressly granted to the Board under the Plan, the Board at its discretion may
carry out any of the functions of the Committee as set forth in the Plan, in
which capacity the Board and the members thereof shall have all of the
authority, powers and rights of the Committee and the members thereof as set
forth in the Plan.
 
SECTION 4.  Common Stock Subject to Plan.
 
     The aggregate shares of Common Stock that may be issued under the Plan
shall not exceed 120,000, 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 shall be granted under the Plan solely to individuals who are
non-employee members of the Board on the date of grant ("Participants").
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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 terms
and conditions and to such other terms and conditions as the Committee may deem
appropriate that are not inconsistent with the provisions of the Plan:
 
          (a) Timing of Option Grants and Number of Underlying Shares.  Options
     shall be granted to such Participants as the Committee may designate at
     such time or times as the Committee may determine. Each Option agreement
     shall designate the number of shares of common Stock to which they pertain.
 
          (b) Exercise Price.  The per share exercise price of each Option
     granted under the Plan shall be no less than 100% of the Fair Market Value
     per share of Common Stock at the date the Option is granted.
 
          (c) Vesting of Options.  Each Option agreement shall specify the
     manner in which the Option shall vest.
 
          (d) Option Period.  Each Option agreement shall specify the period for
     which the Option thereunder is granted and shall provide that the Option
     shall expire at the end of such period.
 
          (e) 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).
 
SECTION 7.  Treatment of Options Upon Termination.
 
     (a) Termination due to Disability or Death.  Upon the termination of a
Participant's membership on the Board 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 a
Participant's membership on the Board or 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 three-month period commencing on the date of termination,
but not later than the expiration of the term of the Options. If a Participant
dies during such three 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 or the expiration of the term
of the Options.
 
     (c) Termination for Cause.  Upon termination of a Participant's membership
on the Board 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 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.
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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 continue until terminated by the Board or until no Common
Stock remains available for issuance under Section 4, whichever occurs first.
 
SECTION 10.  Change in Control.
 
     In the event of a Change in Control, all outstanding Options shall fully
vest in each Participant.
 
SECTION 11.  General Provisions.
 
     (a) Board Membership.  Nothing in the Plan or in any related instrument
shall confer upon any Participant any right to continue as a member of the Board
or shall affect the right of the Company to terminate the Board membership of
any Participant 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 issuances 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 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 shall be exercisable only by him or her by his or her
guardian or legal representative. No Option shall be assignable or transferable,
except by will or by laws of descent and distribution, and no option shall be
subjected to any encumbrance, pledge or charge of any nature.
 
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 take any action that would cause the
Plan to fail to comply with Rule 16b-3(b)(3) of the Securities and Exchange
Commission or any other applicable law or any applicable exchange requirements;
and provided further that no such action shall materially and adversely affect
any outstanding Options without consent of the respective Participants.
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SECTION 13.  Effective Date of Plan.
 
     The Plan is effective on January 1, 1999; provided that it shall be
submitted for approval by the holders of a majority of the outstanding shares of
Common Stock of the Company within 12 months thereafter, and Options granted
prior to such stockholder approval shall become null and void if such
stockholder approval is not obtained. The Plan is intended to apply to the
supplemental grant of an Option to purchase 16,700 shares of Common Stock to
each non-employee director by the Board on January 26, 1999.  The Plan was
amended and restated effective May 12, 1999.
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                         FORM OF STOCK OPTION AGREEMENT
 
Participant Name:  [insert full name of Participant]
 
APACHE Medical Systems, Inc.
Stock Option Agreement
 
     You (the "Optionee") have been granted an option (the "Option") to purchase
shares of common stock of APACHE Medical Systems, Inc. under the APACHE Medical
Systems, Inc. Non-Employee Director Supplemental Stock Option Plan (the "Plan").
The Plan is subject to shareholder approval. The Option is subject to the terms
and conditions set forth below and in the Plan.
 
        1. Number of Shares:
 
        2. Date of Grant:
 
        3. Exercise Price Per Share:
 
        4. Vesting: vests ratably over five years plus provisions for
           acceleration on change in control as set forth in the Plan
 
        5. Termination Date: none other than as set forth in the Plan
 
        6. Option Period: ten years
 
     By signing this agreement, the Optionee accepts the Option subject to the
terms and conditions of the Plan and this Agreement.
 
<TABLE>
<S>                                            <C>
OPTIONEE:                                      WITNESS:
 
---------------------------------------------  ---------------------------------------------
                 (Signature)                                    (Signature)
</TABLE>
 
     APACHE Medical Systems, Inc., by its duly-authorized officer agrees that
the Option, as hereby amended, is granted under the terms and conditions of the
Plan and this agreement.
 
<TABLE>
<S>                                            <C>
                   ATTEST:                             APACHE MEDICAL SYSTEMS, INC.:
 
By:                                            By:
   ------------------------------------------     ------------------------------------------
                 (Signature)                                    (Signature)
</TABLE>