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                                                                    EXHIBIT 10.3


                              EMPLOYMENT AGREEMENT

         EMPLOYMENT AGREEMENT, effective as of August 19, 1998, between
CHILDREN'S COMPREHENSIVE SERVICES, INC., a Tennessee corporation (hereinafter
the "Company"), and WILLIAM J BALLARD (hereinafter "Employee").

                                 R E C I T A L S

         The Company desires to continue to employ Employee and to be assured of
its rights to his services in a management capacity on the terms and conditions
hereinafter set forth. Employee is willing to continue his employment on such
terms and conditions. In consideration of the premises and other mutual
agreements hereinafter set forth, the parties agree as follows:

         1. EMPLOYMENT. (a) The Company hereby confirms Employee's employment as
Chief Executive Officer of the Company. Employee shall perform the services and
discharge the duties normally associated with the position of Chief Executive
Officer of the Company and any other executive officer position he may hold
following a Transaction (as defined in Section 10 below). During the term of
this Agreement, Employee shall also serve without additional compensation in
such other offices of the Company or its subsidiaries or affiliates to which he
may be elected or appointed by the Board of Directors.

         2. PLACE OF EMPLOYMENT. The duties Employee is to perform hereunder
shall be conducted from the Nashville, Tennessee offices of the Company.

         3. TERM. Except as to the covenants set forth in Sections 7 and 8
hereof, the term of this Agreement and of the employment of Employee hereunder
shall be for a term of four (4) years commencing on the date hereof (the
"Initial Term"), and thereafter renewing for successive one year terms, each
such term to commence on the successive anniversaries of the commencement date
hereof, unless either party shall give written notice of intention to terminate
to the other party at least sixty (60) days prior to the expiration of any such
term, and subject to earlier termination as hereinafter provided.

         4. ACCEPTANCE OF EMPLOYMENT. Employee hereby accepts such employment
for the compensation and upon the other terms and conditions provided for in
this Agreement and agrees to use his best efforts to serve the Company
faithfully and competently and agrees to devote substantially all his working
time and efforts to the business and affairs of the Company, to use his best
efforts to advance the best interests of the Company and not to engage in
outside business activities which interfere with the performance of his duties
hereunder. Notwithstanding the foregoing and except as provided in Section 8
hereof, Employee may engage in investing and related activities and, with the
prior approval of the Company's Board of Directors, serve on the Boards of
Directors of other companies, provided, however, that such activities do not
detract from his ability to perform his duties hereunder and do not involve the
provision of education, treatment and juvenile justice services for at-risk and
troubled youth, or otherwise compete with the business of the Company, either
directly or through management contracts, and provided



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further, that Employee may continue to serve as a director of Setech, Inc.
without the approval of the Board of Directors. Employee acknowledges that the
services to be rendered by him under this Agreement require special training,
skill, information and experience and that this Agreement is entered into for
the purpose of obtaining such skilled services for the Company. Employee
warrants and represents that he is under no contractual arrangement or agreement
or provision under law or equity which prohibits or limits his rendering to the
Company the services contemplated by this Agreement.

         5. COMPENSATION. (a) As compensation for the services contemplated by
this Agreement, the Company shall pay to Employee a salary (the "Salary") of
$225,000 per year, payable in twenty-six equal bi-weekly installments of
$8,653.85. The Salary shall automatically increase to $250,000 per year
effective July 1, 1999 if the Company meets its earnings-per-share projections
for the 1999 fiscal year as set forth on Exhibit A attached hereto. In addition,
the Compensation Committee will reconsider the Salary at the end of the 1999
fiscal year and thereafter, in its discretion. Employee may also be eligible to
receive an annual bonus as determined from time to time by the Compensation
Committee of the Board of Directors.

            (b) Employee shall be entitled to 4 weeks paid vacation each year,
and shall be entitled to major medical health and accident coverage and
disability insurance coverage to the extent provided to other members of the
Company's senior management. Employee shall be entitled to such other employee
benefits as the Compensation Committee of the Board of Directors of the Company,
from time to time, shall determine to be reasonable and feasible for the Company
to provide for senior management, including, without limitation, the right to
participate in the Company's stock option plan and any other benefits approved
by the Compensation Committee of the Board of Directors. In addition to the
foregoing benefits, Employee shall be entitled to other employee benefits made
available to senior executive officers of the Company.

            (c) Employee shall be reimbursed for all reasonable direct expenses
incurred by him on behalf of the Company in the discharge of his duties
hereunder. Employee agrees to maintain adequate records, in such form and detail
as the Company may reasonably request, of all such expenses to be reimbursed and
to make such records available to the Company for copy and inspection as and
when requested.

         6. STOCK OPTION. Employee shall be granted an option to purchase
125,000 shares of the Company's common stock on the terms and conditions set
forth in the Stock Option Agreement attached hereto as Exhibit B.

         7. CONFIDENTIAL INFORMATION AND NO DISPARAGEMENT. During the course of
employment by the Company and following termination of such employment,
irrespective of the reason for such termination and whether it occurs
voluntarily or involuntarily, Employee agrees not to, directly or indirectly,
without the Company's prior, express written consent, use, or divulge business
connections, customers, customer lists, marketing techniques, procedures,
operations and other aspects of the Company's business that have been
established and protected


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as confidential information and trade secrets and are of great value to the
Company and provide it with a substantial competitive advantage in its business
(the "Confidential Information"); provided, however, that Confidential
Information shall not be deemed to include (i) any information that is or
becomes generally available to the public other than by disclosure by Employee,
or (ii) becomes available to Employee on a nonconfidential basis from a source
other than the Company (or an agent thereof), which source is not prohibited
from disclosing such information by a legal, contractual or fiduciary
obligation. Employee also agrees to return to the Company at the time of his
termination all Company property and all Confidential Information and summaries
thereof in his possession, and Employee agrees not to copy or otherwise record
or retain such Confidential Information.

         Employee recognizes that the Confidential Information is a valuable and
unique asset of the Company and, accordingly, Employee agrees that the foregoing
restriction on the use and disclosure of Confidential Information shall continue
during his employment by the Company and after his employment ceases (regardless
of whether his employment with the Company is terminated with or without Cause
(as defined in Section 12(a)) or is Constructively Terminated (as defined in
Section 10)).

         Employee agrees during his employment and after his employment ceases
not to disparage the Company to third parties or in public, or otherwise take
any action or make any comment that would harm the goodwill or reputation of the
Company.

         8. COMPETITION. Employee acknowledges that he has specialized knowledge
and experience in the Company's business, that his reputation and contacts
within the industry are considered to be of great value to the Company, and that
if his knowledge, experience, reputation or contacts were used to compete with
the Company, serious harm to the Company could result. Employee agrees that
during his employment by the Company and, (i) if Employee's employment with the
Company is terminated for Cause, or (ii) if Employee terminates his employment
with the Company and the Board of Directors of the Company elects to extend the
provisions of this Section 8 for the Additional Restricted Period as provided
below, then in the case of (i) and (ii) for the Additional Restricted Period
Employee shall not, without prior written consent of the Company, directly or
indirectly:

            (a) solicit business from, or perform services for, any persons,
company or other entity which, at the time of termination of his employment with
the Company, is a customer or client of the Company or any of its affiliates, or
potential customers or clients of the Company with which the Company has had
substantial contact during the term of this Agreement if such business or
services are of the same general character as those engaged in or performed by
the Company or any of its affiliates;

            (b) solicit for employment, or in any other fashion hire, any of the
employees of the Company or any of its affiliates; or



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                  (c) own, manage, operate, finance, join, control or
participate in the ownership, management, operation, financing or control of, or
be connected with, as a proprietor, officer, director, employee, partner,
principal, agent, representative, consultant, investor (other than as a
stockholder of a corporation listed on a national securities exchange or whose
stock is regularly traded in the over-the-counter market, provided that Employee
at no time owns, directly or indirectly, 5% or more of the outstanding stock of
any class of any such corporation) or otherwise, any business or enterprise,
located in any state in which the Company owns or manages one or more facilities
or within 100 miles of any Company location or location of a Company affiliate,
which business or enterprise is primarily engaged in the business of providing
education, treatment and juvenile justice services for at-risk and troubled
youth, either directly or through management contracts, or any other business
engaged in by the Company or any of its affiliates during the term of this
Agreement; provided however, nothing in this section shall prevent the Employee
from (i) serving as a director on the Board of Directors of another company so
long as Employee does not participate in the day-to-day management or operation
of such company or (ii) owning less than 5% of the voting stock of any public
corporation.

         Notwithstanding any other provision contained herein, Employee shall
not be subject to the provisions of this Section 8 if (i) Employee terminates
his employment pursuant to Section 12(c) hereof, (ii) Employee terminates his
employment following a Constructive Termination or (iii) Employee's employment
is terminated without Cause within two (2) years following a Change in Control
(as defined in Section 10).

         In the event Employee terminates his employment with the Company (other
than (i) termination pursuant to Section 12(c) hereof, or (ii) termination
following a Constructive Termination), the Board of Directors of the Company
may, at its option, elect to extend the term of the provisions of this Section 8
for the Additional Restricted Period, provided, however, that if the Board of
Directors so elects, the Company shall make bi-weekly payments to Employee equal
to one-half of his then current bi-weekly Salary payments during the Additional
Restricted Period.

         For purposes of Sections 7 and 8 of this Agreement, the term "Company"
shall include any subsidiary of the Company or other entity in which the Company
has, or has the right to acquire pursuant to a written agreement, a controlling
equity interest in such entity.

         The term "Additional Restricted Period" shall mean the Initial Term of
this Agreement, provided, however, that if the termination of employment occurs
during any subsequent one-year term, then the Additional Restricted Period shall
mean the remaining period of such one-year term.

         9. VIOLATIONS OF COVENANTS. Employee agrees and acknowledges that he
shall not be entitled to any compensation otherwise due under this Agreement for
any period of time during which he is in violation of his obligations under this
Agreement. Employee further agrees and acknowledges that the violation by
Employee of the covenants set forth in Sections 7 and 8 hereof would cause
irreparable injury to the Company and that the remedy at law for any violation
or



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threatened violation thereof by him would be inadequate and that the Company
shall be entitled to temporary and permanent injunctive relief or other
equitable relief without the necessity of proving actual damages.

         10. SEVERANCE. Upon any Constructive Termination or upon any
termination by the Company of Employee's employment with the Company without
Cause (except on Employee's death or disability pursuant to Section 12(b)
hereof), then:

                  (a) Employee shall be entitled to a severance payment (the
"Severance") equal to two times (i) his Salary at the time of termination plus
(ii) the sum of his cash bonus received for each of the prior three (3) years,
divided by three (3) (which calculation shall include zero (0) for any such year
in which he did not receive a bonus); and

                  (b) any stock options held by Employee pursuant to any
qualified or non-qualified Company option plan shall immediately vest and become
exercisable.

         Employee shall be entitled to the benefits of this Section 10 without
regard to whether he obtains additional employment upon termination of his
employment with the Company. Any Severance payable to Employee pursuant to this
Section 10 shall be paid as follows: (i) one-half of the Severance shall be paid
within fifteen (15) days of the effective date of termination of Employee's
employment and (ii) one-half of the Severance shall be paid on the January 1
immediately following the year of termination.

         The provisions of this Section 10 shall supersede any contrary
provisions of any other agreement by and between the parties hereto, now
existing or hereafter created, unless the provisions of this Section 10 are
specifically modified, amended or waived in such other agreement.

         For the purposes of this Agreement, a "Change in Control" means the
happening of any of the following:

                  (i) any person or entity, including a "group" as defined in
         Section 13(d)(3) of the Exchange Act, other than the Company or a
         wholly-owned subsidiary thereof or any employee benefit plan of the
         Company or any of its subsidiaries, becomes the beneficial owner of the
         Company's securities having 35% or more of the combined voting power of
         the then outstanding securities of the Company that may be cast for the
         election of directors of the Company (other than as a result of an
         issuance of securities initiated by the Company in the ordinary course
         of business); or

                  (ii) as the result of, or in connection with, any cash tender
         or exchange offer, merger or other business combination, sales of
         assets or contested election, or any combination of the foregoing
         transactions (a "Transaction"), less than a majority of the combined
         voting power of the then outstanding securities of the Company or any
         successor


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         Company or entity entitled to vote generally in the election of the
         directors of the Company or such other company or entity after such
         Transaction are held in the aggregate by the holders of the Company's
         securities entitled to vote generally in the election of directors of
         the Company immediately prior to such Transaction; or

                  (iii) during any period of two consecutive years, as a result
         of one or more elections of directors which elections were contested by
         one or more shareholders, individuals who at the beginning of any such
         period constitute the Board of Directors cease for any reason to
         constitute at least a majority thereof, unless the election, or the
         nomination for election by the Company's shareholders, of each director
         of the Company first elected during such period was approved by a vote
         of at least two-thirds of the directors of the Company then still in
         office who were directors of the Company at the beginning of any such
         period.

         Notwithstanding the foregoing definition of "Change in Control," a
Change in Control shall not be deemed to have occurred by virtue of the
Company's issuance of securities to an underwriting syndicate in a public
offering approved by the Board of Directors.

         For purposes of this Agreement, a "Constructive Termination" will be
deemed to have occurred if Employee's duties have been significantly altered
such that he is no longer entitled to perform the duties reasonably incident to
the office of Chief Executive Officer of the Company, or if the Company requires
Employee to move his principal place of employment more than thirty-five (35)
miles away from the Company's current executive offices in Nashville, Tennessee,
provided, however, that if the Company is involved in a Transaction in which it
becomes a subsidiary or division of the acquiring company, a Constructive
Termination shall not be deemed to have occurred if Employee, in connection with
or following such Transaction, is offered a position as a senior executive
officer of the acquiring company and is offered a comparable salary.

         11. NONASSIGNMENT. Neither party hereto may assign any rights or
obligations hereunder, except that upon the occurrence of a Change in Control,
this Agreement shall bind and inure to the benefit of both Employee and the
Company's successors and assigns, or the acquiring or surviving corporation, as
the case may be.

         12. TERMINATION. (a) Termination With Cause. If, during the term of
this Agreement, Employee breaches or fails to perform a material provision of
this Agreement (including his duties hereunder), engages in conduct harmful to
the Company, or willfully disregards the lawful instructions of the Board of
Directors of the Company (which breach, failure to perform, harmful conduct or
willful disregard of lawful instructions is not cured by Employee within 30 days
following written notice thereof by the Company to Employee), engages in
fraudulent conduct, or is convicted of a crime or misdemeanor involving moral
turpitude or dishonesty, then this Agreement shall at the election of the
Company, terminate (i) immediately upon conviction, or (ii) upon a reasonable
determination by the Board of Directors that Employee has failed to cure such
breach, failure to perform a material provision of this Agreement, conduct
harmful to the


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Company or willful disregard of lawful instructions, or has engaged in
fraudulent conduct (the occurrence of such events, singly or collectively, being
"Cause" for termination), and the Company shall have no further obligations
hereunder.

            (b) Termination on Death or Disability. If, during the term of this
Agreement, Employee dies or becomes mentally or physically incapacitated or
disabled so as to be unable to perform his duties, then this Agreement shall
terminate as of the last day of the month in which Employee dies or his mental
or physical incapacity or disability is established (the "Termination Date") and
the Company shall pay to Employee (or his heirs or executors) all Salary accrued
through the Termination Date and any other accrued and unpaid benefits to which
Employee was entitled as of the Termination Date. Upon any termination of
Employee's employment with the Company due to the Employee's death, unless
otherwise provided by the related option plan or option agreement, any stock
options held by Employee pursuant to any qualified or non-qualified Company
option plan shall immediately vest and become exercisable. Employee's mental or
physical incapacity or disability shall be conclusively evidenced by Employee's
inability to perform services hereunder for a period of sixty (60) consecutive
business days.

            (c) Termination by the Employee. This Agreement may be terminated by
Employee upon the material breach by the Company of any material provision
hereof, by providing thirty (30) days' prior written notice to the Company, in
which event Employee shall be bound by the provisions of Section 7 hereof but
shall not be bound by the provisions of Section 8 hereof.

         13. NOTICES. Any notice or other communication under this Agreement
shall be in writing and shall be sent by certified or registered mail addressed
to the respective parties as follows:

         If to the Company:

                  Children's Comprehensive Services, Inc.
                  3401 West End Avenue
                  Suite 500
                  Nashville, TN  37203
                  Attention: Chief Financial Officer





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         with a copy to:

                  Children's Comprehensive Services, Inc.
                  3401 West End Avenue
                  Suite 500
                  Nashville, Tennessee 37203
                  Attn: Compensation Committee of Board of Directors

         If to Employee:

                  William J Ballard
                  2 Peach Blossom Square
                  Nashville, Tennessee 37205

Any such notice or other communication shall be deemed to have been given when
deposited, postage paid, in the United States mail. Either of the above
addresses may be changed at any time on ten days' prior notice given in the
manner provided above.

         14. GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Tennessee.

         15. HEADINGS. The headings herein are for convenience for reference
only and shall not be deemed to be part of the substance of this Agreement.

         16. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof and may be changed
or supplemented only by a written agreement signed by the Employee and the
Company.

         17. ENFORCEABILITY; SEVERABILITY. It is the intention of the Company
and Employee that the provisions of this Agreement shall be enforced to the
fullest extent permissible under the laws and public policies of the laws of the
State of Tennessee, but that the unenforceability (or the modification to
conform with such laws or public policies) of any provisions hereof shall not
render unenforceable or impair the remainder of this Agreement. Accordingly, if
any provision of this Agreement shall be determined to be invalid or
unenforceable, either in whole or in part, this Agreement shall be deemed
amended to delete or modify, as necessary, the offending provisions and to alter
the balance of this Agreement in order to render the same valid and enforceable
to the fullest extent permissible as aforesaid. The provisions of this Agreement
shall be deemed severable, and the invalidity or unenforceability of any one or
more of the provisions hereof shall not affect the validity and enforceability
of the other provisions hereof. In the event that any provision of Section 8
relating the time period and/or geographical areas of restriction shall be
declared by a court of competent jurisdiction to exceed the maximum time period
and/or geographical areas of restriction such court deems reasonable and
enforceable, said time period and/or geographical areas of restriction shall be
deemed to become and thereafter be the maximum



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time period and/or geographical area of restriction that such court deems
reasonable and enforceable.

         18. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute one and the same instrument.

         IN WITNESS WHEREOF, the Company and Employee have executed this
Agreement as of the date first above written.

                                   CHILDREN'S COMPREHENSIVE
                                   SERVICES, INC.



                                   By:
                                       -----------------------------------------

                                   Title: 
                                          --------------------------------------



                                   WILLIAM J BALLARD



                                   ---------------------------------------------


                                                 




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