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                                  EXHIBIT 10.6



                           STOCK OPTION AGREEMENT FOR
                      1995 INCENTIVE STOCK OPTION PLAN FOR
                        EMPLOYEES AND EMPLOYEE DIRECTORS
                                       OF
                           DYNACQ INTERNATIONAL, INC.

The parties to this Agreement are DYNACQ INTERNATIONAL, INC., a Nevada
corporation (the "Company"), and PHILIP CHAN, (the "Participant").

                                 GRANT OF OPTION

         The Company hereby grants to Participant the right, privilege, and
option to purchase up to 157,606 shares of common stock of the Company at a
purchase (grant) price of $ 15/16 per share, in accordance with the terms and
conditions of the 1995 Incentive Stock Option Plan for Employees and Employee
Directors approved by the Company's Board of Directors on August 31, 1995 (the
"Plan"). The Plan, a copy of which is attached hereto, is incorporated herein by
this reference.

         1.       Notice of Exercise. Subject to the provisions set forth in
                  paragraph 8 of the Plan, any option granted under this
                  Agreement may be exercised at any time and from time to time
                  in whole or in part by written notice delivered to the
                  Company. Such notice shall state the number of shares being
                  exercised and shall specify a date, not more than (10) days
                  from the date of such notice, as the date on which full
                  payment for the option price for the number of shares
                  specified shall be made thereof at the principal office of the
                  Company. Upon receipt of payment, the Company shall instruct
                  its transfer agent to issue such shares, provided that if any
                  law or regulation requires the Company to take action with
                  respect to the shares specified in the notice, before the
                  issuance thereof, then the date of delivery of such shares
                  shall be extended for the period necessary to take such action
                  which may include registration of the stock under applicable
                  law.

         2.       No Shareholder Rights. The Participant acknowledges that he
                  has no rights as a shareholder with respect to shares for
                  which the option has not been exercised, and the Participant
                  shall have no rights with respect to such shares unless
                  otherwise conferred hereby.

         3.       Option Rights and Holding Period. The options granted
                  hereunder shall be fully vested and exercisable by the
                  Participant one year from the Effective Date hereof. The
                  option rights herein are exercisable for the full amount or
                  for any part hereof from time to time during the period of
                  five (5) years from the Effective Date hereof and only by such
                  participant.

         4.       Nontransferability. No option granted hereby shall be
                  transferable other than by Will or by the laws of descent and
                  distribution. No option or interest therein may be
                  transferred, assigned, pledged, or hypothecated by the
                  Participant
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                  during the lesser of (1) five years from the Effective Date
                  hereof, or (2) his lifetime, by operation of law or otherwise,
                  or be made subject to execution, attachment, or similar
                  process.

         5.       Effective Date. The Effective Date of this Agreement shall be
                  May 15, 1996.
                     

         6.       Acknowledgment. The undersigned Participant has read and
                  understands this Agreement and the laws and the terms and
                  conditions of the Plan and hereby agrees to be bound by all of
                  the terms and conditions thereof.


                                                  COMPANY:

                                                  DYNACQ INTERNATIONAL, INC.


                                                  By:    /s/ Chiu Chan
                                                     --------------------------
                                                  Title:
                                                        -----------------------

                                                  PARTICIPANT:

                                                    /s/ Philip Chan
                                                  -----------------------------

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