Document:

<PAGE>
                                                                   EXHIBIT 10.24

                      FOURTH AMENDMENT AND MODIFICATION OF
                            REIMBURSEMENT AGREEMENTS

      THIS FOURTH AMENDMENT AND MODIFICATION OF REIMBURSEMENT AGREEMENTS (the
"Fourth Amendment") entered into as of the 14th of May, 2002 by and between
ASSISTED LIVING CONCEPTS, INC., a Nevada corporation ("Borrower") and U.S. BANK
NATIONAL ASSOCIATION ("Bank") with reference to the following facts:

                                    RECITALS

      A. Pursuant to Reimbursement Agreement dated as of November 1, 1996 by and
between Borrower and Bank (the "Washington Reimbursement Agreement"), Bank
issued a letter of credit on behalf of Borrower in the total Stated Amount of
$8,677,671.20 (the "Washington Letter of Credit") to Norwest Bank Minnesota,
National Association, as Trustee under that certain Indenture of Trust dated as
of November 1, 1996, in connection with the issuance by the Washington State
Housing Finance Commission of $8,500,000 in aggregate principal amount of its
Variable Rate Demand Multifamily Revenue Bonds (Assisted Living Concepts, Inc.
Project), Series 1996 (the "Washington Bonds"). Borrower's obligations under the
Washington Reimbursement Agreement are secured, in part, by deeds of trust,
security agreements, assignments of leases and rents and fixture filings on 5
real properties located in the State of Washington legally described in Exhibit
B-1 through Exhibit B-5 to the Washington Reimbursement Agreement and by this
reference incorporated herein (collectively, "the Washington Properties") and
other security interests in other real and personal property owned by Borrower.

      B. Pursuant to Reimbursement Agreement dated as of July 1, 1997 by and
between Borrower and Bank (the "Idaho Reimbursement Agreement"), Bank issued a
letter of credit on behalf of Borrower in the total Stated Amount of $7,494,987
(the "Idaho Letter of Credit") to First Security Bank, N.A., as Trustee under
that certain Indenture of Trust dated as of July 1, 1997, in connection with the
issuance by the Idaho Housing and Finance Association of $7,350,000 in aggregate
principal amount of its Variable Rate Demand Housing Revenue Bonds (Assisted
Living Concepts, Inc. Project), Series 1997 (the "Idaho Bonds"). Borrower's
obligations under the Idaho Reimbursement Agreement are secured, in part, by
deeds of trust, security agreements, assignments of leases and rents and fixture
filings on 4 real properties located in the State of Idaho legally described in
Exhibit B-1 through Exhibit B-4 to the Idaho Reimbursement Agreement and by this
reference incorporated herein (collectively, the "Idaho Properties") and other
security interests in other real and personal property owned by Borrower.

      C. Pursuant to Reimbursement Agreement dated as of July 1, 1998 by and
between Borrower and Bank (the "Ohio Reimbursement Agreement"), Bank used a
letter of credit on behalf of Borrower in the total Stated Amount of $13,480,779
(the "Ohio Letter of Credit") to PNC Bank, National Association, as Trustee
under that certain Indenture of Trust dated as of July 1, 1998, in connection
with the issuance by the Ohio Housing Finance
<PAGE>
Agency of $12,690,000 in aggregate principal amount of its Variable Rate Demand
Housing Revenue Bonds (Assisted Living Concepts, Inc., Project) 1998 Series A-1
and $530,000 in aggregate principal amount of its Taxable Variable Rate Demand
Housing Revenue Bonds (Assisted Living Concepts, Inc. Project) 1998 Series A-2
(the "Taxable Bonds") (collectively, the "Ohio Bonds"). Borrower's obligations
under the Ohio Reimbursement Agreement are secured, in part, by open-ended
mortgages, security agreements, assignment of leases and rents, and fixture
filings on 7 real properties located in the State of Ohio legally described in
Exhibit B-1 through Exhibit B-7 to the Ohio Reimbursement Agreement and by this
reference incorporated herein (collectively, the "Ohio Properties") and other
security interests in other real and personal property owned by Borrower.

      D. Pursuant to Amendment and Modification of Reimbursement Agreements
dated as of August 18, 1999 (the "Modification"), the Bank agreed to forbear and
waive certain defaults by Borrower under the Washington Reimbursement Agreement,
the Idaho Reimbursement Agreement and the Ohio Reimbursement Agreement and the
Related Documents (as defined in each Reimbursement Agreement) in exchange for
the modification and restructure of the Borrower's obligation to the Bank as set
forth in the Modification. The Washington Reimbursement Agreement, the Idaho
Reimbursement Agreement and the Ohio Reimbursement Agreement, each as modified
by the Modification, the Second Amendment (defined below) and the Third
Amendment (as defined below), are hereinafter referred to collectively as the
"Reimbursement Agreements." The Washington Properties, the Idaho Properties, the
Ohio Properties and all other facilities owned or leased by the Borrower that
are financed with proceeds of a Bank credit enhanced bond issue, including, but
not limited to, all facilities financed by the Washington State Housing Finance
Commission's Variable Rate Demand Multifamily Revenue Bonds (LTC Properties,
Inc. Project), Series 1995 are hereinafter referred to individually as a "Bond
Financed Property" and collectively as the "Bond Financed Properties."

      E. As part of the modification and restructure of the Borrower's
obligations to the Bank under the Reimbursement Agreements set forth in the
Modification, the Borrower deposited $8,300,000 in cash collateral with the Bank
(the "Cash Collateral"), which Cash Collateral constitutes security for any and
all indebtedness of Borrower to the Bank, including, but not limited to the
Borrower's obligations under the Reimbursement Agreements and the Related
Documents. The Bank has since release $4,000,000 of the Cash Collateral to
Borrower pursuant to the terms of Section 3.B of the Modification. The Bank
continues to hold $4,3000,000 of the Cash Collateral pursuant to the terms of
Section 3.C of the Modification.

      F. Pursuant to Second Amendment and Modification of Reimbursement
Agreements dated as of July 28, 2000 (the "Second Amendment"), Bank agreed to
forbear and waive certain defaults by Borrower under the Reimbursement
Agreements in exchange for the modification and restructure of Borrower's
obligations to the Bank as set forth in the Second Amendment. As part of the
Second Amendment, the Borrower granted Bank, as security for the Borrower's
obligations to the Bank under the Reimbursement Agreements and other Related
Documents, a first lien deed of trust, security agreement, assignment of
<PAGE>
leases and rents and fixture filing on three assisted living facilities located
in the State of Washington owned and operated by Borrower and legally described
in Exhibits A through C to the Second Amendment (individually, an "Addition
Property" and collectively, the "Additional Properties") (the "Additional
Properties Deed of Trust"), a first lien assignment of leases and cash
collateral with respect to the Additional Properties (the "Additional Properties
Assignment of Leases") and other real and personal property security interests.
The Additional Properties constitute security for any and all indebtedness of
Borrower to Bank, including, but not limited to, Borrower's obligations under
the Reimbursement Agreements and the Related Documents.

      G. Pursuant to Third Amendment and Modification of Reimbursement
Agreements dated as of March 12, 2002 (the "Third Amendment"), Bank agreed to
forbear and waive certain defaults by Borrower under the Reimbursement
Agreements in exchange for the modification and restructure of Borrower's
obligations to the Bank as set forth in the Third Amendment.

      H. Borrower has requested that Bank waive Bank's right to declare an Event
of Default under the Reimbursement Agreements and Related Documents (as defined
in the Reimbursement Agreements) by reason of Borrower's failure to comply with
certain financial covenants and Bank is willing to waive Bank's right to declare
an event of Default under the Reimbursement Agreements on the express condition
that Borrower agree to further modify and restructure Borrower's obligations
under the Reimbursement Agreements and Related Documents on the terms and
conditions hereinafter set forth.

      NOW, THEREFORE, in consideration of the foregoing recitals and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

                                   AGREEMENT

            1. Incorporation of Recitals. Each recital set forth above is
incorporated into this Fourth Amendment as though fully set forth herein. Unless
the context clearly provides otherwise, all capitalized terms not otherwise
defined herein shall have the same meaning as set forth in the Modification or
if not defined herein as defined in the Second Amendment, or the Reimbursement
Agreements.

            2. Waiver of Right to Declare an Event of Default. In exchange for
further modification and restructure of Borrower's obligations to Bank under the
Reimbursement Agreements on the terms and conditions hereinafter set forth, Bank
will waive Bank's right to declare an Event of Default under the Reimbursement
Agreements or any of the Related Documents (as defined in the Reimbursement
Agreements) by reason of the Borrower's failure to comply with the Tangible Net
Worth covenant set forth in Section 7.01(G)(ii), the Cash Flow Coverage covenant
set forth in Section 7.01(G)(iii) and the Minimum Cash Balances covenant set
forth in Section 7.01(G)(iv) of each of the Reimbursement Agreements, in all
cases for the quarter ending March 31, 2002. As of the date of this Fourth
<PAGE>
Amendment, Bank has no actual knowledge of the occurrence of any other event
that would constitute an Event of Default, or of any other event that with the
giving of notice, the passage of time, or both might constitute an Event of
Default, under the Reimbursement Agreements or any of the Related Documents (as
defined in the Reimbursement Agreements).

            3. Modification and Restructure of Reimbursement Agreements. In
exchange for the waiver of the Bank's right to declare an Event of Default under
the Reimbursement Agreements by reason of Borrower's failure to comply with the
Tangible Net Worth covenant set forth in Section 7.01(G)(ii), the Cash Flow
Coverage covenant set forth in Section 7.01(G)(iii) and the Minimum Cash
Balances covenant set forth in Section 7.01(G)(iv) of each of the Reimbursement
Agreements, in all cases for the quarter ending March 31, 2002, Section
7.01(G)(ii), (iii) and (iv) of each of the Reimbursement Agreements is amended
to read as follows:

                (ii) Tangible Net Worth shall be greater than or equal to
$27,000,000, measured quarterly for the quarters ending March 31, 2002, June 30,
2002, September 30, 2002 and December 31, 2002, and thereafter shall be greater
than or equal to $27,000,000 plus twenty-five percent (25%) of Net Income (after
taxes), measured quarterly;

                (iii) The Cash Flow Coverage Ratio will be a two-tier test,
either of which if not in compliance will cause an Event of Default under the
Reimbursement Agreements:

                  a) The Borrower's ratio of Net Income + Interest Expenses +
Depreciation & Amortization divided by cash Interest Expense + pro-rata (for the
quarter) scheduled principal payments on all Indebtedness + pro-rata (for the
quarter) annual fees relating to the U.S. Bank Bonds and U.S. Bank Letters of
Credit shall be greater than or equal to 0.90:1.00, measured quarterly for the
quarters ending March 31, 2002, June 30, 2002, September 30, 2002 and December
31, 2002, and thereafter shall be greater than or equal to 1.25:1.00, measured
quarterly (Company - Wide Test); and

                  b) Each of the group of Washington Properties, Idaho
Properties and Ohio Properties shall independently maintain a financial
performance level such that the sum of their quarterly Net Income + Interest
Expense + Depreciation & Amortization shall exceed the sum of Interest Expense +
pro-rata (for the quarter) scheduled principal payments on the Washington Bonds
and/or the Ohio Bonds, as applicable + pro-rata (for the quarter) annual fees
relating to the Washington Bonds and/or Ohio Bonds, as applicable and the
Washington Letter of Credit and/or Ohio Letter of Credit by 1.25 times, measured
quarterly beginning March 31, 2002 (Individual U.S. Bank Bond Properties' Test).

                (iv) Borrower shall at all times maintain minimum cash balances
(including amounts available under credit lines and excluding amounts that have
been restricted but not exceeding Regulatory Cash Collateral), which cash
balances shall be
<PAGE>
measured at the end of each fiscal quarter, as follows:

<TABLE>
<CAPTION>

         FISCAL QUARTER ENDING                MINIMUM CASH BALANCE REQUIREMENT
         ---------------------                --------------------------------
<S>                                           <C>
             March 31, 2002                              $4,000,000
             June 30, 2002                               $4,000,000
           September 30, 2002                            $4,000,000
           December 31, 2002                             $4,000,000
March 31, 2003 and quarterly thereafter                  $8,000,000
</TABLE>

      The Minimum Cash Balance Requirement will no longer be required when the
Ohio Housing Financing Agency, Variable Rate Demand Housing Revenue Bonds
(Assisted Living Concepts, Inc.) Series 1998 Series A-1 have been retired and
the Ohio Letter of Credit has been surrendered to the Bank.

            4. Confirmation. The Reimbursement Agreements and each of the
Related Documents (as defined in the Reimbursement Agreements) are each hereby
modified to provide that the term "Reimbursement Agreement" or "Reimbursement
Agreements" shall mean the Reimbursement Agreement or the Reimbursement
Agreements, as modified by this Fourth Amendment. Borrower hereby confirms,
subject to this Fourth Amendment, each of the covenants, agreements and
obligations of Borrower set forth in the Reimbursement Agreements or any of the
Related Documents (as defined in the Reimbursement Agreements). Borrower
acknowledges and agrees that, if and to the extent that the Bank has not
heretofore required strict compliance with the performance by Borrower of such
covenants, agreements and obligations, such action or inaction shall not
constitute a waiver of, or otherwise affect in any manner, Bank's rights and
remedies under any of the Reimbursement Agreements, as amended hereby, or any of
the Related Documents (as defined in the Reimbursement Agreements), including
the right to require performance of such covenants, agreements and obligations
strictly in accordance with the terms and provisions thereof except as waived
herein. Each Deed of Trust or, with respect to the Ohio Properties, Mortgage
which secures the Borrower's obligations under any Reimbursement Agreement is
hereby modified to provide that such Deed of Trust or Mortgage secures such
Reimbursement Agreement as modified hereby. Borrower represents and warrants
that (i) upon execution of this Fourth Amendment, and (ii) the satisfaction of
all of the terms and conditions set forth in this Fourth Amendment, including,
but not limited to, payment of the costs and expenses set forth in Section 13 of
this Fourth Amendment, Borrower will not be in default in the performance of any
of the obligations, terms, covenants, conditions representations, warranties or
other provisions set forth in the Reimbursement Agreements or any of the Related
Documents (as defined in the Reimbursement Agreements). Borrower has no
knowledge of any defenses, offsets or claims which may be asserted by Borrower,
or by anyone claiming by or through Borrower, to the indebtedness owed by
Borrower to Bank
<PAGE>
under the Reimbursement Agreements or any of the Related Documents (as defined
in the Reimbursement Agreements) or to the performance of any of the
obligations, terms, covenants, conditions, representations, warranties or other
provisions set forth in the Reimbursement Agreements or any of the Related
Documents (as defined in the Reimbursement Agreements).

            5. Validity. Except as specifically modified and amended by this
Fourth Amendment, all of the terms, covenants, conditions and provisions of the
Reimbursement Agreements and each of the Related Documents (as defined in the
Reimbursement Agreements) shall remain in full force and effect. Nothing herein
shall be deemed or construed to be an impairment of the lien or each Deed of
Trust or, with respect to the Ohio Properties, each Mortgage and lien of each
Deed of Trust or each Mortgage shall remain a first lien against the Washington
Properties, the Idaho Properties, the Ohio Properties, or the Additional
Properties as applicable, described in such Deed of Trust or, with respect to
the Ohio Properties, such Mortgage.

            6. No Continuing Waiver. No waiver of any of the provisions of the
Reimbursement Agreements or any of the Related Documents (as defined in the
Reimbursement Agreements) shall be deemed, or shall constitute, a continuing
waiver of any of the provisions of the Reimbursement Agreements or any of the
Related Documents (as defined in the Reimbursement Agreements) nor shall any
provision of this Fourth Amendment be deemed, or constitute, a waiver of any
other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver of any of the provisions of the Reimbursement
Agreements shall be binding unless executed in writing by the party making the
waiver. Nothing contained in this Fourth Amendment or in any ongoing discussions
or negotiations between Borrower or Bank shall directly or indirectly (i) create
any obligation to make any further extension of credit; (ii) create any
obligation to make any further forbearance or waiver or defer any enforcement
action by Bank as a result of the occurrence of an Event of Default under the
Reimbursement Agreements or any of the Related Documents (as defined in the
Reimbursement Agreements) which is not described in Section 2 of this Fourth
Amendment or with respect to any Event of Default which is described in Section
2 of this Fourth Amendment beyond the dates set forth in Section 2 of this
Fourth Amendment; (iii) constitute a consent or waiver of any past, present or
future Event of Default or other violation of any provision of the Reimbursement
Agreements or any of the Related Documents (as defined in the Reimbursement
Agreements) except to the extent expressly set forth in Section 2 of this Fourth
Amendment; (iv) constitute a course of dealing or other basis for altering any
of Borrower's obligations to Bank under the Reimbursement Agreements or any of
the Related Documents (as defined in the Reimbursement Agreements). Bank
expressly reserves all of its rights, powers and remedies under the
Reimbursement Agreements and each of the Related Documents (as defined in the
Reimbursement Agreements).

            7. Reaffirmation of Representations and Warranties. Borrower does
hereby reaffirm to Bank each of the representations, warranties, covenants and
agreements made by Borrower set forth in each of the Reimbursement Agreements
with the same force and effect
<PAGE>
as if each were separately stated herein and made again as of the date hereof.
This reaffirmation shall not in any way limit, derogate or abrogate the
representations, warranties, covenants and agreements made by Borrower as set
forth in the Reimbursement Agreements. Borrower further represents and warrants
to Bank that with the exception of the Events of Default as described in Section
2 of this Fourth Amendment, Borrower is in compliance with all of the terms,
covenants, representations, warranties and agreements made by Borrower in the
Reimbursement Agreements and each of the Related Documents (as defined in the
Reimbursement Agreements). There is no Event of Default under and no event that
with the giving of notice, the passage of time, or both, would constitute an
Event of Default under any of the Reimbursement Agreements, or any of the
Related Documents (as defined in the Reimbursement Agreements).

            8. Release. The Borrower, for and on behalf of itself and its legal
representatives, heirs, successors and assigns, does herby waive, release,
relinquish and forever discharge the Bank and its past and present directors,
officers, agents, employees, parents, subsidiaries, affiliates, insurers,
attorneys, representatives and assigns, and each and all thereof (collectively,
the "Released Parties"), of and from any and all manner of action and causes of
action, suits, claims, demands, judgments, damages, levies, and the execution of
whatsoever kind, nature and/or description arising on or before the date first
above written, including, without limitation, any claims, losses, costs or
damages, including compensatory and punitive damages, in each case whether know
or unknown, liquidated or unliquidated, fixed or contingent, direct or indirect,
with the Borrower, or its legal representatives, heirs, successors or assigns,
ever had or now has claim to have against any of the Released Parties, with
respect to any matter whatsoever arising on or the date hereof.

            9. Time is of the Essence. Time is of the essence of this Fourth
Amendment.

            10. Binding Effect. This Fourth Amendment shall be binding upon
Borrower and its successors and permitted assigns and shall inure to the benefit
of Bank and its successors and assigns.

            11. Prior Agreements. The Reimbursement Agreements and each of the
Related Documents (as defined in the Reimbursement Agreements), including this
Fourth Amendment and the documents attached as exhibits to or referred to in
this Fourth Amendment (i) integrate all the terms and conditions mentioned in or
incidental to the Reimbursement Agreements and each of the Related Documents (as
defined in the Reimbursement Agreements), (ii) supersede all oral negotiations
and prior and other writings with respect to the subject matter thereof, and
(iii) are intended by the parties as the final expression of the agreement with
respect to the terms and conditions set forth in this Fourth Amendment modifying
and restructuring the Reimbursement Agreements and each of the Related Documents
(as defined in the Reimbursement Agreements) and as the complete and exclusive
statement of the terms agreed to by the parties. If there is any conflict
between the terms, conditions and provisions of this Fourth Amendment and those
of any of the Reimbursement Agreements or any of the Related Documents (as
defined in the
<PAGE>
Reimbursement Agreements), the terms, conditions and provisions of this Fourth
Amendment shall prevail.

            12. No Rights conferred on Others. Nothing contained in this Fourth
Amendment, the Reimbursement Agreements or any of the Related Documents (as
defined in the Reimbursement Agreements) shall be construed as giving any
person, other than the parties hereto, any right, remedy or claim under or in
respect of this Fourth Amendment.

            13. Costs and Expenses. Borrower shall reimburse Bank for all actual
costs and expenses incurred by Bank in the negotiation, preparation and
administration of the modification and restructuring of the Reimbursement
Agreements and other Related Documents contemplated by this Fourth Amendment.
Such costs include, but are not limited to, attorney fees and costs, inspection
fees, UCC searches, filing and recording fees, and the costs incurred to satisfy
all terms of this Fourth Amendment. All such costs and expenses shall be paid
upon execution of this Fourth Amendment.

            14. Governing Law. This Fourth Amendment and the rights and
obligations of the parties hereunder shall in all respects be governed by, and
construed and enforced in accordance with the laws of the Sate of Washington. If
any court of competent jurisdiction determines any provision of this Fourth
Amendment or any of the Reimbursement Agreements or any of the Related Documents
(as defined in the Reimbursement Agreements) to be invalid, illegal or
unenforceable, that portion shall be deemed severed from the rest, which shall
remain in full force and effect as though the invalid, illegal or unenforceable
portion had never been a part hereof or of the Reimbursement Agreements or any
of the Related Documents (as defined in the Reimbursement Agreements).

            15. Voluntary Agreement. The Borrower acknowledges that the Borrower
is represented by legal counsel of the Borrower's choice, is fully aware of the
terms contained in this Fourth Amendment, and has voluntarily and without
coercion or duress of any kind entered into this Fourth Amendment and the
documents executed in connection with this Fourth Amendment.

            16. Counterparts. This Fourth Amendment may be executed in any
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.

            17. NOTICE OF ORAL COMMITMENTS. ORAL AGREEMENTS OR ORAL COMMITMENTS
TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT
ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

                            [Signature Page Follows]
<PAGE>
         IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first above written.

"Bank"                                      "Borrower"

U.S. BANK NATIONAL ASSOCIATION             ASSISTED LIVING CONCEPTS, INC., a
                                           Nevada corporation

By:     /s/ Alan A. Owens                  By:     /s/ Matthew G. Patrick
   -----------------------------               -------------------------------

Name:   Alan A. Owens                      Name:    Matthew G. Patrick
     ---------------------------                 -----------------------------

Title:   Vice President                    Title:   Sr. VP, CFO and Treasurer
       -------------------------                   ---------------------------<PAGE>
                                                                   Exhibit 10.25

                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT is made and effective this 16th day of May, 2002, by and
between Assisted Living Concepts, Inc., a Nevada corporation with a principal
address at 11835 NE Glenn Widing Drive, Building E, Portland, Oregon 97220-9057
(together with its successors and assigns, the "Corporation") and Matthew G.
Patrick, an individual residing at 4909 Calle de Tierra, N.E., Albuquerque, New
Mexico, 87111 (the "Employee").

                                  WITNESSETH:

     WHEREAS, the Corporation desires to employ the Employee as the Chief
Financial Officer of the Corporation; and

     WHEREAS, the Employee desires to be so employed by the Corporation; and

     WHEREAS, the Corporation and the Employee desire to set forth in writing
their agreements regarding the employment and compensation of the Employee;

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Corporation and the Employee
agree as follows:

     1.   Employment. The Corporation hereby employs the Employee as Chief
Financial Officer of the Corporation, for the Term (as defined in Section 7) of
this Agreement, and the Employee hereby accepts such employment, upon the terms
and conditions hereinafter set forth.

     2.   Duties; Location. In his capacity as the Chief Financial Officer of
the Corporation, the Employee shall timely and faithfully perform and discharge
the duties of such position set forth in the by-laws of the Corporation, as
amended and in effect from time to time, as well as such other duties
commensurate with such position as shall be prescribed from time to time by the
President and Chief Executive Officer and/or Board of Directors of the
Corporation. The Employee shall report to, and be subject to the supervision and
control of the President and Chief Executive Officer and/or Board of Directors
of the Corporation. The Employee shall also serve as an officer and director of
the Corporation and/or affiliates of the Corporation, and shall do so without
additional compensation. The Employee shall devote his full time to the business
of the Corporation and shall faithfully perform the duties assigned to him to
the best of his ability, provided however, Employee may serve on civic or
charitable boards or committees, fulfill speaking engagements, and manage a
financial portfolio of personal investments so long as such activities do not
interfere with the performance of Employee's duties hereunder.

     Employee's location of employment shall be at the Company's executive
offices in Dallas, Texas. The Corporation may not transfer Employee to any
other location without Employee's prior written consent unless the transfer is
at the Corporation's expense and results from the relocation of the Company's
executive offices and the relocation thereto of other executive officers of the
Corporation.

     3.   Compensation. As compensation for the services to be rendered by the
Employee to the Corporation pursuant to this Agreement during the Term:

<PAGE>
          (a)  Salary.   The Corporation shall pay the Employee a base salary
at the annualized rate of One Hundred Seventy-Five Thousand Dollars
($175,000.00), payable in accordance with the Corporation's usual payroll
practices, and subject to withholding therefrom of federal and state income
taxes, any other employment taxes required to be collected or withheld by the
Corporation, and other amounts required or requested by Employee to be
withheld. Such salary shall be subject to annual review but not reduction by
the Board of Directors and Compensation Committee of the Corporation.

          (b)  Bonus Advance.   The Corporation shall pay the Employee, as an
advance, against his bonus for fiscal year 2002, twenty-five thousand dollars
($25,000.00) less applicable taxes and withholding within ten (10) days of the
execution of this Agreement by the parties.

          (c)  Bonus.   The Corporation shall pay the Employee a bonus to be
calculated according to the following formula; the bonus shall be in the amount
of twenty-five thousand dollars ($25,000) for each million dollars of earnings
of the Corporation, for fiscal year 2002, before depreciation, amortization
(excluding the amortization on loan fees and other finance costs shown in the
other expense section of the projected income statement for 2002, as presented
to the Board of Directors on January 3, 2002) and taxes, excluding the
five-hundred thousand dollar ($500,000.00) restructuring charge of the
Corporation for the year 2002, and excluding any one-time gain from the sale of
assets and any one-time charge. The bonus shall be calculated after the
Corporation's audit for the year 2002. If the bonus is insufficient to cover
the advance, such advance shall be credited against the following year's bonus
to the extent it exceeds the 2002 bonus. The Employee's total compensation for
the years 2003 and 2004 shall be determined by the Board of Directors and
Compensation Committee of the Corporation.

          (d)  Other Benefits.   Subject to the Employee's meeting the
eligibility requirements of the provider(s) (including without limitation any
waiting periods), the Employee shall be eligible to participate in any health
care plan, dental care plan, life insurance plan, long-term disability insurance
plan, retirement plan, 401(k) plan and any other employee benefit plan sponsored
or maintained by the Corporation from time to time, on the same basis as other
employees of the Corporation similarly situated. Nothing is this Agreement shall
obligate the Corporation to sponsor, maintain or provide access to any such plan
generally or limit the discretion of the Corporation to terminate or modify the
terms of any such plan or change providers thereof.

          (e)  Vacation.   The Employee shall be entitled to four (4) weeks of
vacation per calendar year. Fifty percent (50%) of any unused vacation time
shall expire at the close of business on December 31 of each year. The Employee
shall not be entitled to any payment or other compensation in lieu of unused
vacation time.

          (f)  Expenses.   The Corporation shall reimburse the Employee's
documented, reasonable and necessary out-of-pocket business expenses incurred
by the Employee in the performance and discharge of his duties on behalf of the
Corporation in accordance with and subject to the Corporation's policies and
procedures regarding expense reimbursement in effect from time to time.

                                       2
<PAGE>
          (g)  Moving Expenses. The Corporation shall pay directly or reimburse
the Employee, at the Employee's option, for all reasonable, itemized allocable
moving expenses, up to fifty thousand ($50,000.00) dollars, incurred in
connection with the Employee relocating to the Dallas, Texas area.

          (h)  Apartment. In connection with the Employee relocating to the
Dallas, Texas area, the Corporation shall reimburse the Employee for all rental
and related payments for an apartment in Dallas, Texas for up to six months,
provided that the cost of the apartment shall not be unreasonable in the
reasonable opinion of the Board of Directors of the Corporation.

          (i)  Stock Options. Pursuant to a separate stock option agreement to
be entered into between the Corporation and the Employee, the Employee shall
receive options for the purchase of thirty two thousand five hundred (32,500)
shares of the Corporation's common stock, par value $.01 per share (the "Common
Stock"). The options shall vest over three years at the rate of 29.65328 shares
per calendar day. The exercise price for each share of Common Stock shall be
the lower of (i) $4.85 ($31,500,000 equity valuation divided by 6,500,000
shares outstanding) or (ii) the average closing price of a share of Common
Stock as quoted on the OTC Bulletin Board, for the thirty (30) trading days
commencing on the later of (x) the next trading day after the day this
Agreement is executed by all parties, and (y) the first day that the Common
Stock is publicly traded. The Employee acknowledges that all options shall be
governed by the Corporation's stock option plan, which is currently being
developed, and that any inconsistencies between this section and said stock
option plan shall be controlled by the stock option plan, provided that the
exercise price, number of shares and vesting schedule shall not be adversely
affected thereby.

     4.   "Key Man" Life Insurance. The Corporation, in its discretion, may
apply for and procure in its own name and for its own benefit, life insurance
on the life of the Employee in any amount or amounts considered advisable by
the Corporation, and the Employee shall submit to any medical or other
examination, and shall execute and deliver any application or other instrument
in writing, reasonably necessary to effectuate such insurance.

     5.   Restrictions on the Disclosure of Proprietary Information.

          (a)  Proprietary Information. For purposes of this Agreement, the
term "Proprietary Information" shall mean all confidential knowledge and
information in any form or medium which the Employee acquires, learns or
becomes aware of as a result of or in connection with his employment with the
Corporation concerning (i) the Corporation's business, financial condition,
operations, strategic planning, research and development activities, current or
proposed products, product designs, trade secrets, competitive business
information, patents, patent rights, inventions, technology, copyrights,
software (including without limitation, source code, object code and firmware),
improvements, applications, processes, services, cost and pricing policies,
client lists, vendor relationships and contact lists, and (ii) information of
the kind, type or nature described in the foregoing clause (i) of or with
respect to each third party with whom the Corporation at any time and from time
to time enters a confidentiality or non-disclosure agreement pursuant to which
the Corporation is obligated to keep such third party's information
confidential. Notwithstanding the foregoing, Proprietary Information does not
include information (1) which is or becomes part of the public domain through
no fault of the

                                       3

<PAGE>
Employee, or (2) which the Employee can demonstrate was independently developed
by him without use of or reference to any Proprietary Information.

          (b) Non-disclosure and Non-use Obligations.  The Employee agrees that
he will not at any time, without the prior written consent of the Corporation
(which shall be evidenced by a writing signed by a majority of the Corporation's
Board of Directors or by action taken by the Board of Directors at a meeting),
either during or after any termination of this Agreement, divulge or disclose to
anyone outside the Corporation or its professional advisers, or use or permit
any third party to use for its own benefit, any such Proprietary Information.
The Employee will not, during his or her engagement by the Corporation hereunder
or at any time thereafter, use or attempt to use any such Proprietary
Information for any purpose other than the Employee's provision of services to
the Corporation, and in no event in any manner which may injure or cause loss or
may be calculated or reasonably expected to injure or cause loss to the
Corporation. Notwithstanding the provisions of this paragraph, Employee may
divulge or disclose Proprietary Information to Employee's legal advisers,
provided that such advisors agree to keep such Proprietary Information
confidential, or in response to a court or arbitration order.

     The Employee further agrees not to make any notes, memoranda, flow charts,
logic diagrams, specifications, reports, compilations, analyses, sketches,
drawings, technical data, source code, object code, models or other physical
manifestations (or copies thereof) relating to any matter within the scope of
the Proprietary Information at any time otherwise than for the benefit of the
Corporation, or, either during or after the termination of this Agreement, to
use or permit to be used any such information (or copies thereof) otherwise
than for the benefit of the Corporation. Upon termination of this Agreement,
the Employee shall deliver to the Corporation at its address set forth above
all such notes, memoranda, flow charts, logic diagrams, specifications',
reports, compilations, analyses, sketches, drawings, technical data, source
code, object code, models and other physical manifestations and any other
related information and all copies thereof made during the term of this
Agreement. Notwithstanding the provisions of this paragraph, Employee may
retain, for a reasonable time, such copies as Employee reasonably believes may
be necessary for legal reasons or upon advice of legal counsel for the purpose
of defending Employee in any pending or threatened litigation.

     6. Certain Covenants of the Employee.

          (a) Property and Non-Solicitation.

               (i) Non-Compete.  During the time Employee is employed under this
                   Agreement (the "Restricted Period"), the Employee shall not,
                   in the United States of America or in any foreign country,
                   directly or indirectly, (i) engage in the Corporation
                   Business for his own account; (ii) enter the employ of or
                   render any services to, any persons engaged in such
                   activities; or (iii) become interested in any person engaged
                   in the Corporation Business, directly or indirectly, as an
                   individual, partner, shareholder, officer, director,
                   principal, agent, employee, trustee, consultant or in any
                   other relationship or capacity; provided, however, that the
                   Employee may own, directly or indirectly, solely as an
                   investment, securities of any person

                                       4
<PAGE>
               which are traded on any national securities exchange or NASDAQ if
               the Employee (a) is not a controlling person of, or a member of a
               group which controls such person or (b) does not, directly or
               indirectly, own 4% or more of any class of securities of such
               person.

         (ii)  Property of the Corporation. Subject to Section 5(b), all
               memoranda, notes, lists, records and other documents (and all
               copies thereof) made or compiled by the Employee or made
               available to the Employee concerning the business of the
               Corporation or any of its affiliates shall be the Corporation's
               property and shall be delivered to the Corporation promptly upon
               the termination of the Employee's employment with the
               Corporation or any of its affiliates or at any other time on
               request.

         (iii) Employees of the Corporation. During the Restricted Period and
               for a period of six months following the termination (whether for
               cause of otherwise) of the Employee's employment with the
               Corporation or any of its affiliates, the Employee shall not,
               directly or indirectly, hire, solicit or encourage to leave the
               employment of the Corporation or any of its affiliates, any
               employee of the Corporation or its affiliates or hire any such
               employee who has left the employment of the Corporation or any of
               its affiliates within six (6) months of the termination of such
               employee's employment with the Corporation or any of its
               affiliates.

         (iv)  Consultants and Independent Contractors of the Corporation.
               During the Restricted Period and for a period of six months
               following the termination (whether for cause of otherwise) of the
               Employee's employment with the Corporation or any of its
               affiliates, the Employee shall not, directly or indirectly, hire,
               solicit or encourage to cease to work with the Corporation or any
               of its affiliates, any consultant, sales representative or other
               person then under contract with the Corporation or any of its
               affiliates.

     (b) Rights and Remedies Upon Breach. If the Employee breaches, or
threatens to commit a breach of, any of the provisions of Section 6(a) (the
"Restrictive Covenants"), the Corporation shall have the following rights and
remedies, each of which rights and remedies shall be independent of the other
and severally enforceable, and all of which rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Corporation under law or in equity.

         (i)   Specific Performance. The right and remedy to have the
               Restrictive Covenants specifically enforced by any court having
               equity jurisdiction, it being acknowledged and agreed that any
               such breach or threatened breach will cause irreparable injury
               to the

                                       5
<PAGE>
                    Corporation and its affiliates and that money damages will
                    not provide an adequate remedy to the Corporation.

               (ii) Accounting. The right and remedy to require the Employee to
                    account for and pay over to the Corporation all
                    compensation, profits, monies, accruals, increments or other
                    benefits (collectively, "Benefits") derived or received by
                    the Employee as a result of any transactions constituting a
                    breach of any of the Restrictive Covenants, and the Employee
                    shall account for and pay over such Benefits to the
                    Corporation.

          (c)  Severability of Covenants. If any court determines that any of
the Restrictive Covenants, or any parts thereof are invalid or unenforceable,
the remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full effect, without regard to the invalid portions.

          (d)  "Blue-Penciling". If any court construes any of the Restrictive
Covenants, or any part thereof, to be unenforceable because of the duration of
such provision or the area covered thereby, such court shall have the power to
reduce the duration or area of such provision and, in its reduced form, such
provision shall then be enforceable and shall be enforced.

          (e)  Enforceability in Jurisdictions. The parties intend to and hereby
confer jurisdiction to enforce the Restrictive Covenants upon the courts of any
jurisdiction within the geographical scope of such Restrictive Covenants. If the
courts of any one or more of such jurisdictions hold the Restrictive Covenants
wholly unenforceable under the law of that jurisdiction by reason of the breadth
of such scope or otherwise, it is the intention of the parties that such
determination not bar or in any way affect the Corporation's right to the relief
provided above in the courts of any other jurisdiction within the geographical
scope of such Restrictive Covenants, as to breaches of such Restrictive
Covenants in such other respective jurisdictions, such Restrictive Covenants as
they relate to each jurisdiction being, for this purpose, severable into diverse
and independent covenants.

     7.   Termination.

          (a)  Term. This Agreement shall commence as of the date first above
written and shall continue in effect for three (3) years unless earlier
terminated in one of the following manners, or upon the occurrence of one of the
following events (with the period from the date hereof until the date of such
expiration or earlier termination being referred to herein as the ("Term");

               (i)  upon the Employee's death.

               (ii) if the Employee becomes "Disabled." As used herein, the term
                    "Disabled" shall mean the inability of the Employee to
                    substantially perform the Employee's duties under this
                    Agreement for a period in excess of either three (3)
                    consecutive months or a total of one hundred eighty (180)
                    days in any twelve (12) month period by reason of any
                    incapacity, physical or mental, which the

                                       6

<PAGE>
                    Corporation's Board of Directors, based upon medical advice
                    or an opinion provided by Employee's treating physician,
                    determines to have incapacitated the Employee from
                    satisfactorily performing all of the Employee's usual
                    services for the Corporation during the foreseeable future.
                    The Board of Directors may elect to have Employee examined
                    by a duly licensed independent physician, and Employee
                    agrees to submit to such examination. In the event
                    Employee's treating physician and any such independent
                    physician are unable to agree as to whether Employee is
                    Disabled, then the two physicians shall select a third
                    physician and the opinion of any two of the three physicians
                    shall be determinative.

              (iii) by mutual agreement of the Employee and the Corporation.

              (iv)  by the Corporation for "Cause." As used herein, "Cause"
                    shall mean the failure by the Employee to observe any
                    material provision of this Agreement or any other agreement,
                    or any breach of any of the Employee's covenants,
                    agreements, representations or warranties in any agreement
                    between the Corporation and the Employee which default or
                    breach continues ten (10) days after Employee receives
                    notice thereof specifying each claimed breach or default, or
                    any act committed by the Employee involving fraud, gross
                    negligence or willful disregard of duty, insubordination
                    (after written notice of the particulars and a reasonable --
                    under the circumstances -- opportunity to correct the
                    conduct constituting the basis for such alleged
                    insubordination), or other willful misconduct, the
                    Employee's indictment or arraignment on any felony charges,
                    or any conduct involving moral turpitude.

          (b) Termination of Obligations. Upon the termination of the Employee's
employment hereunder, all benefits hereunder shall thereupon terminate as of the
date of termination, and the Employee shall return to the Corporation all of the
Corporation's property in his possession or under his control, including all
files, keys, reports and other tangible and intangible property of any kind,
nature or description. The provisions of Sections 5 through 19 shall survive any
expiration or earlier termination of this Agreement. The Employee shall receive
all salary, bonuses and stock options pro rata to the extent earned as of the
date of termination, as well as any other compensation to which he may be
entitled under Section 7(d).

          (c) Repayment of Moving Expenses. If, within one year of the date of
this Agreement, (i) the Employee voluntarily (excluding death and disability)
terminates his Employment with the Corporation, or (ii) the Corporation
terminates the Employee's employment for Cause, then the Employee shall
reimburse the Corporation for all moving expenses previously paid to the
Employee or on the Employee's behalf within thirty (30) days.

          (d) Severance. If, within two years of the date of this Agreement, the
Corporation terminates the Employee's employment without Cause, then the
Corporation shall continue to pay the Employee his then current salary, bonuses
and stock options pro rata, and

                                       7

<PAGE>
other benefits (to the extent eligible), as of the date of termination, for six
months following the date of the termination. Upon the termination of
Employee's employment hereunder due to Employee's death or due to Employee
becoming Disabled, Employee's salary, bonuses and stock options pro rata, and
other benefits (to the extent eligible) hereunder shall continue for a period
of six months following such termination.

     8.   Prior Agreements.  The Employee represents and warrants that he is
not a party to or bound by an agreement which in any way prevents, limits,
impairs or otherwise affects his ability to enter into and/or fully and timely
perform his obligations under this Agreement, other than the terms of a
Separation Agreement between Employee and his current employer, which terms
have been furnished to the Corporation.

     9.   Waiver.  A party's failure to insist on compliance or enforcement of
any provision of this Agreement, shall not affect the validity or
enforceability or constitute a waiver of future enforcement of that provision
or of any other provision of this Agreement by that party or any other party.

    10.   Governing Law Arbitration.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas as applied to
agreements between Texas residents entered and to be performed entirely within
Texas. Any dispute between the Employee and the Corporation arising under or
related to this Agreement or otherwise concerning the employment of Employee by
the Corporation or the termination of such employment shall be resolved by
submitting the matter to binding arbitration in accordance with this Section 11.
Arbitration shall be conducted in Dallas, Texas pursuant to the procedural rules
then in effect of the American Arbitration Association and shall be heard by a
single arbitrator, reasonably agreed to by the parties, who shall be an
attorney-at-law licensed to practice and in good standing in the State of Texas
and knowledgeable in employment matters. The decision of such arbitrator shall
be final and binding on the parties and may be entered for enforcement in any
court or tribunal of competent jurisdiction and authority. The arbitrator shall
award such damages or other relief, as he deems appropriate and may, but shall
not be required to, award legal fees and costs to the prevailing party. All
costs of such arbitration (excluding fees, disbursements and expenses of
counsel, advisors, witnesses and experts) shall be borne equally by the parties,
subject to the arbitrator's award of costs and legal fees, if any. This Section
10 shall not prevent the Corporation from seeking or obtaining injunctive relief
where such remedy is the appropriate form of remedy under the circumstances,
including, without limitation, for any breach of Section 6 or 7 above.

    11.  Severability.  The invalidity or unenforceability of any provision in
the Agreement shall not in any way affect the validity or enforceability of any
other provision of this Agreement and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision had never been in the
Agreement.

    12.   Notice.  Any and all notices required or permitted herein shall be
deemed given if hand delivered or if mailed by registered or certified mail,
return receipt requested, or by nationally recognized overnight courier, to the
Corporation at its principal place of business, addressed to the attention of
the Chief Executive Officer, and to the Employee at the address

                                       8
<PAGE>

specified in the preamble of this Agreement, or at such other address or
addresses as either party may hereafter designate in writing to the other.

     13.  Assignment. This Agreement, together with any amendments hereto, shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors, assigns, heirs and personal representatives, except that
the rights and benefits of either of the parties under this Agreement may not be
assigned without the prior written consent of the other party.

     14.  Amendments. This Agreement may be amended at any time, but only  by
mutual consent of the parties hereto in writing, signed by the Corporation and
the Employee.

     15.  Right to Advice of Counsel. The Employee acknowledges that he has
consulted with counsel and is fully aware of his rights and obligations under
this Agreement.

     16.  Counterparts. This Agreement may be executed in one or more
counterparts, none of which need contain the signature of more than one party
hereto, and each of which shall be deemed to be an original, and all of which
together shall constitute a single agreement.

     17.  Entire Agreement. This Agreement represents the final and entire
agreement between the parties respecting its subject matter, and merges and
supersedes any and all prior and contemporaneous agreements, promises,
commitments, statements and communications, written and oral, between them
relating to such subject matter.

     18.  Approval of Board of Directors. This Agreement shall be effective upon
execution by both parties.

     19.  Headings. The various headings in this Agreement are inserted for
convenience only and are not part of this Agreement.

     IN WITNESS WHEREOF, the Corporation and the Employee have duly executed
this Employment Agreement as a sealed instrument as of the day and year first
above written.

                                        CORPORATION:

                                        BY: /s/ Steven Vick
                                            ------------------------------
                                            Name: Steven Vick
                                            Title: Chief Executive Officer

                                        EMPLOYEE:

                                        /s/ Matthew G. Patrick
                                            ------------------------------

                                       9

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