Document:

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                                                                     EXHIBIT 4.2
                           U.S. PHYSICAL THERAPY, INC.

                       NONSTATUTORY STOCK OPTION AGREEMENT

         THIS AGREEMENT is made and entered effective as of February 26, 2002
between U.S. Physical Therapy, Inc., a Nevada corporation (the "Corporation"),
and MARY DIMICK (the "Holder") in connection with the grant of a Nonstatutory
Option (hereinafter defined).

                                  WITNESSETH:

         WHEREAS, the Holder is employed by the Corporation, one of its
Affiliates (hereinafter defined) or U.S. PT Management, Ltd., a Texas limited
partnership ("USPTM") and the Corporation desires to encourage him to own Stock
(hereinafter defined) and to give him added incentive to advance the interests
of the Corporation and desires to grant the Holder a Nonstatutory Option (the
"Option) to purchase shares of Stock of the Corporation under terms and
conditions hereinafter set forth.

         NOW, THEREFORE, in consideration of these premises, the parties agree
that the following shall constitute the Agreement between the Corporation and
the Holder:

         1. Definitions. For purposes of this Agreement, the following terms
shall have the meanings specified below:

         1.1 "Affiliates" shall mean (a) any corporation, other than the
Corporation, in an unbroken chain of corporations ending with the Corporation if
each of the corporations, other than the Corporation, owns stock possessing 50%
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain and (b) any corporation, other than the
Corporation, in an unbroken chain of corporations beginning with the Corporation
if each of the corporations, other than the last corporation in the unbroken
chain, owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

         1.2 "Agreement" shall mean the written agreement between the
Corporation and the Holder which is embodied herein.

         1.3 "Board of Directors" shall mean the board of directors of the
Corporation.

         1.4 "Code" shall mean the Internal Revenue Code of 1986, as amended.

         1.5 "Eligible Individual" shall mean an employee of the Corporation or
of any of its Affiliates or of USPTM.

         1.6 "Nonstatutory Option" shall mean a stock option that is not
intended to satisfy the requirements of section 422 of the Code.

         1.7 "Securities Act" shall mean the Securities Act of 1933, as amended.

         1.8 "Stock" shall mean the Corporation's authorized common stock, $.01
par value, together with any other securities with respect to which this Option
may become exercisable.

         2. Grant of Option. Subject to the terms and conditions set forth
herein, the Corporation grants to the Holder an Option to purchase from the
Corporation during the period ending ten years from the date of said grant
10,000 shares of Stock at a price of $14.75 per share, subject to adjustment or
termination as provided in Paragraph

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                                                                          Page 2

12 below. This Option is exercisable with respect to the shares of Stock
indicated as 2,000 shares of Stock one year from the date of grant and 2,000
each year thereafter from the date of grant.

         Notwithstanding the foregoing, upon the occurrence of a "Change in
Control" of the Corporation (as defined below), the Option shall become
exercisable in full without regard to the foregoing schedule, except as provided
in the next sentence. If, after reduction for any applicable federal excise tax
that would be imposed on the Holder under Section 4999 of the Code and any
federal income tax that would be imposed on the Holder by the Code, the Holder's
net proceeds from an exercise of the Option in full and immediate sale of the
Stock would be less than the amount of the Holder's net proceeds, after
reduction for federal income taxes, resulting from an exercise of the Option and
immediate sale of the Stock after acceleration of exercisability of the Option
only to the extent of the "Parachute Cap" as defined below, then the Option
shall become exercisable in the event of a Change in Control only to the extent
of the Parachute Cap. For this purpose, the "Parachute Cap" means the maximum
extent to which the Option could be made exercisable upon a Change in Control of
the Corporation, taking into account any other payments or other benefits to the
Holder from the Corporation or any Affiliate, without the Holder being deemed to
have received a "parachute payment" as defined in Code Section 280G(b)(2). In
the event that the application of the Parachute Cap would otherwise prevent the
Option from becoming exercisable in full, the Holder shall have the right, in
the Holder's discretion, to designate payments or other benefits to the Holder
from the Corporation or any Affiliate (if any) that shall be reduced or
eliminated so as to permit the Option to become exercisable to a greater extent.

         A "Change in Control" shall mean any of the following events:

               (a) a merger or consolidation to which the Corporation is a party
if the individuals and entities who were stockholders of the Corporation
immediately prior to the effective date of such merger or consolidation have
beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934 ("Rule 13d-3")) of less than 50 percent of the total combined voting
power for election of directors of the surviving corporation following the
effective date of such merger or consolidation; or

               (b)  the sale of all or substantially all of the assets of the
Corporation to any person or entity that is not a wholly-owned subsidiary of the
Corporation; or

               (c)  the stockholders of the Corporation approve any plan or
proposal for the liquidation of the Corporation; or

               (d) a change in the composition of the Board of Directors at any
time during any consecutive 24-month period such that the Incumbent Directors
cease for any reason to constitute at least a majority of the Board of
Directors. For this purpose, the "Incumbent Directors" means those members of
the Board of Directors who either:

                    (1)  were directors at the beginning of such consecutive
24-month period; or

                    (2)  were elected by, or on the nomination or recommendation
of, a majority of the then-members of the Board of Directors.

         3. Notice of Exercise. This Option may be exercised in whole or in
part, from time to time, in accordance with Paragraph 2, by written notice to
the Corporation at the address provided in Paragraph 11, which notice shall:

               (a)  specify the number of shares of Stock to be purchased and
the exercise price to be paid therefor;

               (b)  if the person exercising this Option is not the Holder,
contain or be accompanied by evidence satisfactory to the Committee of such
person's right to exercise this Option; and

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                                                                          Page 3

               (c)  be accompanied by payment in full of the purchase price in
any form acceptable to the Committee in its sole discretion, which form may
include cash, shares of Stock or a share or shares of Stock owned by the Holder
and surrendered for actual or deemed multiple exchanges of shares of Stock, or
any combination thereof. The Corporation shall not in any case be required to
sell, issue, or deliver a fractional share of Stock with respect to this Option.

         4. General Restrictions. The Corporation shall not be required to sell
or issue any shares of Stock under this Option if the sale or issuance of such
shares would constitute a violation by the individual exercising this Option or
by the Corporation of any provision of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or
regulations. If at any time the Corporation shall determine, in its discretion,
that the listing, registration or qualification of any shares subject to this
Option upon any securities exchange or under any state or federal law, or the
consent or approval of any government regulatory body, is necessary or desirable
as a condition of, or in connection with, the issuance or purchase of shares,
this Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Corporation, and any delay
caused thereby shall in no way affect the date of termination of this Option.
Specifically in connection with the Securities Act, unless a registration
statement under such Act is in effect with respect to the shares of Stock
covered by this Option, the Corporation shall not be required to sell or issue
such shares unless the Corporation has received evidence satisfactory to it that
the holder of this Option may acquire such shares pursuant to an exemption from
registration under such Act. Any determination in this connection by the
Corporation shall be final, binding, and conclusive. The Corporation may, but
shall in no event be obligated to, register any securities covered hereby
pursuant to the Securities Act. The Corporation shall not be obligated to take
any affirmative action in order to cause the exercise of this Option or the
issuance of shares pursuant thereto to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the
requirement that this Option shall not be exercisable unless and until the
shares of Stock covered by this Option are registered or are subject to an
available exemption from registration, the exercise of this Option (under
circumstances in which the laws of such jurisdiction apply) shall be deemed
conditioned upon the effectiveness of such registration or the availability of
such an exemption. At the time of any exercise of this Option, the Corporation
may, as a condition precedent to the exercise of this Option, require from the
Holder of the Option (or in the event of his death, his legal representatives,
heirs, legatees, or distributees) such written representations, if any,
concerning his intentions with regard to the retention or disposition of the
shares being acquired by exercise of this Option and such written covenants and
agreements, if any, as to the manner of disposal of such shares as, in the
opinion of counsel to the Corporation, may be necessary to ensure that any
disposition by such Holder (or in the event of his death, his legal
representatives, heirs, legatees, or distributees), will not involve a violation
of the Securities Act or any similar or superseding statute or statutes, or any
other applicable state or federal statute or regulation, as then in effect.
Certificates for shares of Stock, when issued, may have the following or similar
legend (in the event the shares of Stock covered by this Option are not then
registered under the Securities Act and under applicable state securities laws),
or statements of other applicable restrictions, endorsed thereon, and, as
described in the preceding sentence, may not be immediately transferable:

             The shares of Stock evidenced by this certificate have been issued
             to the registered owner in reliance upon written representations
             that these shares have been purchased for investment. These shares
             have not been registered under the Securities Act of 1933, as
             amended, or any applicable state securities laws, in reliance upon
             an exception from registration. Without such registration, these
             shares may not be sold, transferred, assigned or otherwise disposed
             of unless, in the opinion of the Corporation and its legal counsel,
             such sale, transfer, assignment or disposition will not be in
             violation of the Securities Act

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                                                                          Page 4

              of 1933, as amended, applicable rules and regulations of the
              Securities and Exchange Commission, and any applicable state
              securities laws.

         5. Transfer and Exercise of Option. This Option shall not be
transferable except by will or by the laws of descent and distribution. During
the Holder's lifetime this Option may be exercised only by him. No assignment or
transfer of this Option, whether voluntary or involuntary, by operation of law
or otherwise, except a transfer by will or by the laws of descent or
distribution, shall vest in the assignee or transferee any interest or right
whatsoever in this Option.

         6. Status of Holder. The Holder shall not be deemed a stockholder of
the Corporation with respect to any of the shares of Stock subject to this
Option, except to the extent that such shares shall have been purchased and
transferred to him. The Corporation shall not be required to issue or transfer
any certificates for shares of Stock purchased upon exercise of this Option
until all applicable requirements of law have been complied with and, in the
event that the Stock is publicly traded, such shares shall have been duly listed
on any securities exchange on which the Stock may then be listed.

         7. No Effect on Capital Structure. This Option shall not affect the
right of the Corporation or any Affiliate thereof to reclassify, recapitalize or
otherwise change its capital or debt structure or to merge, consolidate, convey
any or all of its assets, dissolve, liquidate, windup, or otherwise reorganize.

         8. Premature Expiration of Option. If a Holder (a) voluntarily ceases
to be an Eligible Individual or (b) ceases to be an Eligible Individual by
reason that his status as such was terminated by the Corporation or one of its
Affiliates (with or without cause), this Option shall terminate thirty days
after such Holder ceases to be an Eligible Individual.

         Notwithstanding the foregoing, if a Holder ceases to be an Eligible
Individual by reason of (a) disability (as defined in Section 22(e)(3) of the
Code) or (b) death, then the Holder shall have the right for twelve months after
the date of disability or death to exercise this Option to the extent that it is
exercisable on the date of his disability.

         That portion of this Option which is not exercisable on the date the
Holder ceases to be an Eligible Individual shall terminate and be forfeited to
the Corporation on the date of such cessation.

         9. Board Authority. Any question concerning the interpretation of this
Agreement, any adjustments required to be made under Paragraph 12 and any
controversy which may arise under this Agreement shall be determined by the
Board of Directors in its sole discretion.

         10. Tax Withholding. This Option is not intended to qualify as an
"incentive stock option"within the meaning of section 422 of the Internal
Revenue Code of 1986, as amended, and shall be so construed. The parties
recognize that the Corporation or an Affiliate may be obligated to withhold
federal, state and local income taxes and Social Security taxes to the extent
that the Holder realizes ordinary income in connection with the exercise of the
Option. The Holder agrees that the Corporation or Affiliate may withhold amounts
needed to cover such taxes from payments otherwise due and owing to the Holder,
and also agrees that upon demand the Holder will promptly pay to the Corporation
or Affiliate having such obligation any additional amounts as may be necessary
to satisfy such withholding tax obligation. Such payment shall be made in cash
or cash equivalent.

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                                                                          Page 5

         11. Notice. Whenever any notice is required or permitted hereunder,
such notice must be in writing and personally delivered or sent by mail, courier
or facsimile machine. Any notice required or permitted to be delivered hereunder
shall be deemed to be delivered on the date which it is personally delivered,
or, whether actually received or not, on the third business day after it is
deposited in the United States mail, certified or registered, postage prepaid,
addressed to the person who is to receive it at the address which such person
has theretofore specified by written notice delivered in accordance herewith.
The Corporation or Holder may change, at any time and from time to time, by
written notice to the other, the address previously specified for receiving
notices. Until changed in accordance herewith, the Corporation and the Holder
specify their respective addresses as set forth below:

        Corporation:            U.S. Physical Therapy, Inc. Att'n:  Corporate
                                Secretary
                                3040 Post Oak Boulevard, Suite 222
                                Houston, Texas  77056

        Holder:                 Mary Dimick
                                2312 Creekridge Drive
                                McKinney, TX  75070

         12. Adjustments Upon Changes in Capitalization, Merger, Etc.
Notwithstanding any other provision hereof, in the event of any change in the
number of outstanding shares of Stock

                  (a) effected without receipt of consideration therefor by the
         Corporation, by reason of a stock dividend, or split, combination,
         exchange of shares or other recapitalization, merger, or otherwise, in
         which the Corporation is the surviving corporation, or

                  (b) by reason of a spin-off of a part of the Corporation into
         a separate entity, or assumptions and conversions of outstanding grants
         due to an acquisition by the Corporation of a separate entity,

(1) the number and class of shares subject to this Option and (2) the exercise
price of this Option shall be automatically adjusted to accurately and equitably
reflect the effect thereon of such change (provided, however, that any
fractional share resulting from such adjustment may be eliminated). In the event
of a dispute concerning such adjustment, the Board of Directors has full
discretion to determine the resolution of the dispute. Such determination shall
be final, binding and conclusive.

         In addition to the foregoing, in the event of:

                  (a) a dissolution or liquidation of the Corporation,

                  (b) a merger or consolidation (other than a merger effecting a
         reincorporation of the Corporation in another state or any other merger
         or a consolidation in which the stockholders of the surviving
         corporation and their proportionate interests therein immediately after
         the merger or consolidation

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                                                                          Page 6

         are substantially identical to the stockholders of the Corporation and
         their proportionate interests therein immediately prior to the merger
         or consolidation) in which the Corporation is not the surviving
         corporation (or survives only as a subsidiary of another corporation in
         a transaction in which the stockholders of the parent of the
         Corporation and their proportionate interests therein immediately after
         the transaction are not substantially identical to the stockholders of
         the Corporation and their proportionate interests therein immediately
         prior to the transaction; provided, however, that the Board of
         Directors may at any time prior to such a merger or consolidation
         provide by resolution that the foregoing provisions of this
         parenthetical shall not apply if a majority of the board of directors
         of such parent immediately after the transaction consists of
         individuals who constituted a majority of the Board of Directors
         immediately prior to the transaction), or

                (c) a transaction in which any person becomes the owner of 50%
         or more of the total combined voting power of all classes of stock of
         the Corporation (provided, however, that the Board of Directors may at
         any time prior to such transaction provide by resolution that this
         subparagraph (c) shall not apply if such acquiring person is a
         corporation and a majority of the board of directors of the acquiring
         corporation immediately after the transaction consists of individuals
         who constituted a majority of the Board of Directors immediately prior
         to the acquisition of such 50% or more total combined voting power)

    this Option shall terminate, except to the extent provision is made in
    writing in connection with such transaction for the assumption of this
    Option, or for the substitution for this Option of a new option covering the
    stock of a successor corporation, or a parent or subsidiary thereof, with
    appropriate adjustments as to the number and kind of shares and exercise
    price, in which event this Option shall continue in the manner and under the
    terms so provided. In the event of any such termination of this Option, the
    Holder shall have the right (subject to the general limitations on exercise
    set forth in Paragraph 8 above), immediately prior to the occurrence of such
    termination and during such period occurring prior to such termination as
    the Board of Directors in its sole discretion shall determine and designate,
    to exercise this Option in whole or in part, whether or not this Option was
    otherwise exercisable at the time such termination occurs. The Board shall
    send written notice of an event that will result in such a termination to
    the Holder not later than the time at which the Corporation gives notice
    thereof to its stockholders.

         13. Rights as a Stockholder. The Holder shall have no right as a
stockholder with respect to any shares covered by this Option until a
certificate representing such shares is issued to him. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash or other
property) or distributions or other rights for which the record date is prior to
the date such certificate is issued, except as provided in Paragraph 12 hereof.

         14. Furnish Information. The Holder shall furnish to the Corporation
all information requested by the Corporation to enable it to comply with any
reporting or other requirement imposed upon the Corporation by or under any
applicable statute or regulation.

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                                                                          Page 7

         15. Termination of Employment. In the event of the Holder's termination
of employment with the Corporation or an Affiliate or USPTM, the unexercised
portion of this Option granted hereunder shall terminate in accordance with
Paragraph 8 hereof.

         16. Right of the Corporation, Affiliates Thereof and USPTM to Terminate
Holder's Employment. Nothing contained in this Agreement shall confer upon the
Holder the right to continue in the employ of the Corporation, any of its
Affiliates or USPTM, or interfere in any way with the rights of the Corporation,
any of its Affiliates or USPTM to terminate his employment at any time.

         17. No Liability for Good Faith Determinations. The members of the
Board of Directors shall not be liable for any act, omission, or determination
taken or made in good faith with respect to this Agreement, and members of the
Board of Directors shall be entitled to indemnification and reimbursement by the
Corporation in respect of any claim, loss, damage, or expense (including
attorneys' fees, the costs of settling any suit, provided such settlement is
approved by independent legal counsel selected by the Corporation, and amounts
paid in satisfaction of a judgment, except a judgment based on a finding of bad
faith) arising therefrom to the full extent permitted by law and under any
directors and officers liability or similar insurance coverage that may from
time to time be in effect.

         18. Execution of Receipts and Releases. Any payment of cash or any
issuance or transfer of shares of Stock to the Holder, or to his legal
representative, heir, legatee, or distributee, in accordance with the provisions
hereof, shall, to the extent thereof, be in full satisfaction of all claims of
such persons hereunder. The Board of Directors may require any Holder, legal
representative, heir, legatee, or distributee, as a condition precedent to such
payment, to execute a release and receipt therefor in such form as it shall
determine.

         19. No Guarantee of Interests. Neither the Board of Directors nor the
Corporation guarantees the Stock of the Corporation from loss or depreciation.

         20. Corporation Records. Records of the Corporation or its Affiliates
(including USPTM) regarding the Holder's period of employment, termination of
employment and the reason therefor, leaves of absence, re-employment, and other
matters shall be conclusive for all purposes hereunder, unless determined by the
Board of Directors to be incorrect.

         21. No Liability of Corporation. The Corporation assumes no obligation
or responsibility to the Holder or his legal representatives, heirs, legatees,
or distributees for any act of, or failure to act on the part of, the Board of
Directors.

         22. Corporation Act. Any action required of the Corporation shall be by
resolution of its Board of Directors, by a person authorized to act by
resolution of the Board of Directors, or by a person authorized to act by the
bylaws of the Corporation.

         23. Severability. If any provision of this Agreement is held to be
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining provisions hereof, but such provision shall be fully severable and
this Agreement shall be construed and enforced as if the illegal or invalid
provision had never been included herein.

         24. Entire Agreement. This Agreement constitutes the entire agreement
and supersedes all prior understandings and agreements, written or oral, of the
parties hereto with respect to the subject matter hereof. Neither this Agreement
nor any term hereof may be amended, waived, discharged or

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                                                                          Page 8

terminated except by a written instrument signed by the Corporation and the
Holder; provided, however, that the Corporation unilaterally may waive any
provision hereof in writing to the extent that such waiver does not adversely
affect the interests of the Holder hereunder, but no such waiver shall operate
as or be construed to be a subsequent waiver of the same provision or a waiver
of any other provision hereof.

         25. Successors. This Agreement shall be binding upon the Holder, his
legal representatives, heirs, legatees and distributees, and upon the
Corporation and its successors and assigns.

         26. Headings. The titles and headings of Paragraphs are included for
convenience of reference only and are not to be considered in construction of
the provisions hereof.

         27. Governing Law. All questions arising with respect to the provisions
of this Agreement shall be determined by application of the laws of the State of
Nevada except to the extent Nevada law is preempted by federal law. Questions
arising with respect to the provisions of this Agreement that are matters of
contract law shall be governed by the contract law of the State of Texas, except
to the extent preempted by federal law and except to the extent that Nevada
corporate law conflicts with the contract law of such state, in which event
Nevada corporate law shall govern. The obligation of the Corporation to sell and
deliver Stock hereunder is subject to applicable laws and to the approval of any
governmental authority required in connection with the authorization, issuance,
sale, or delivery of such Stock.

         28. Word Usage. Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of this Agreement dictates, the
plural shall be read as the singular and the singular as the plural.

         IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed and the Holder has hereunto set his hand effective as of the day and
year first above written.

                                    U.S. PHYSICAL THERAPY, INC.

                                    By: /s/ Roy Spradlin
                                        --------------------------------------
                                    Name:   Roy Spradlin
                                    Title: President & Chief Executive Officer
                                    Date of Execution:  February 27, 2002
                                                      ------------------------

                                    HOLDER
                                    /s/ Mary Dimick
                                    ------------------------------------------
                                    Date of Execution:  February 27, 2002
                                                      ------------------------<PAGE>

                                                                 EXHIBIT 10.45.2

           SECOND AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

      This SECOND AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT is entered
into as of the 26th day of November, 2002, by and between COLORADO MEDTECH,
INC., a Colorado corporation ("Employer") and Stephen K. Onody ("Executive"). In
consideration of the mutual covenants contained in this Agreement, Employer
agrees to employ Executive and Executive agrees to be employed by Employer upon
the terms and conditions hereinafter set forth.

      WHEREAS, Employer and Executive entered into that certain Executive
Employment Agreement dated June 23, 2000 (the "Old Agreement") pursuant to which
Employer employed Executive for annual periods end June 23, 2001, 2002 and 2003
(each such twelve month period, a "Contract Year"); and

      WHEREAS, Employer and Executive entered into that certain Amended and
Restated Executive Employment Agreement dated May 31, 2002; and

      WHEREAS, the parties desire to amend and restate the Amended and Restated
Executive Employment Agreement to set forth the terms pursuant to which Employer
will employ Executive

                                    ARTICLE I
                               TERM OF EMPLOYMENT

      The term of employment hereunder commenced on May 31, 2002 ("Commencement
Date") and shall continue for a period ending June 30, 2005 (the "Term of
Employment"). The Term of Employment may be extended by mutual written agreement
of the parties.

                                   ARTICLE II
                                     DUTIES

      2.1 Duties. Executive shall be employed with the titles of Chief Executive
Officer and President of Employer with such responsibilities and authority as
are customarily performed by such officers including, but not limited to, those
duties as may from time to time be assigned to Executive by the Board of
Directors of Employer. Executive shall have full responsibility and authority
for formulating policies and for the management and operation of Employer,
subject to the general direction and control of the Board of Directors.
Executive shall report directly to Employer's Board of Directors.

      2.2 Extent of Duties. Executive shall devote all of his working time,
efforts, attention and energies to Employer's business. He shall render the
services described herein diligently, using his best efforts. Executive shall
hold no other employment during the Term of Employment.
<PAGE>
                                   ARTICLE III
                                  COMPENSATION

      3.1 Base Compensation. As compensation for services rendered under this
Agreement, Employer shall pay Executive a base salary of $200,000 per annum,
payable over the Term of Employment in accordance with Employer's normal payroll
practices. Executive shall also be eligible to participate in any other
compensation arrangements and benefit plans of Employer offered generally to
Employer's other executives .

      3.2 Stock Options. On the date hereof ("Grant Date"), Employer will grant
to Executive incentive and non-statutory stock options ("New Options"), under a
stock option plan of Employer, to purchase Two Hundred Thousand (200,000) shares
of Employer's Common Stock. The exercise price of such options shall be the fair
market value of Employer's Common Stock at the close of the market on the Grant
Date. Such options shall vest and become exercisable as follows:

            (a) One Hundred Thousand (100,000) New Options shall irrevocably
vest and become exercisable on June 30, 2004, and One Hundred Thousand (100,000)
New Options shall irrevocably vest and become exercisable on June 30, 2005 (each
of such dates an "Annual Vesting Date"), subject to Executive's continued
employment on each vesting date. The New Options shall expire ten (10) years
after the Grant Date.

            (b) The Old Option Agreement provides that options for 90,000 shares
of Common Stock will vest on each of August 25, 2001, August 25, 2002 and August
25, 2003 (each, an "Old Option Vesting Date"), subject to the terms of such
agreement. If Executive's employment is terminated by Employer without "Cause"
(defined below) between the Commencement Date and August 25, 2003, any unvested
Old Options as of the Date of Termination (defined below) which would have
vested at the next Old Option Vesting Date shall vest in the proportion that the
number of completed months in the current Contract Year bears to the full
Contract Year; provided, however, that if the Date of Termination is after June
23, 2003, all Old Options shall vest.

            (c) If during either of the twelve month periods ending June 30,
2004 or 2005 Executive's employment is terminated without Cause, any unvested
New Options as of the Date of Termination which would have vested at the next
Annual Vesting Date shall vest in the proportion that the number of complete
months from the beginning of such twelve month period bears to the full twelve
month period.

            (d) If Executive's employment is terminated by Executive for "Good
Reason" (defined below) pursuant to Section 5.1(a) (ii), (iii), (iv), (v) or
(vi), any unvested New Options or Old Options as of the Date of Termination
shall immediately vest in full.

      3.3 Other Benefits. Executive shall be entitled to participate in all of
Employer's Executive benefit plans and Executive benefits, including any
retirement, pension, profit-sharing, stock option (taking the Options into
consideration), insurance, hospital, vacation, paid holiday,

                                       2
<PAGE>
or other plans and benefits which now may be in effect or which may hereafter be
adopted, it being understood that Executive shall have the same rights and
privileges to participate in such plans and benefits as other executive
Executives.

      3.4 Expenses. Executive shall be entitled to reimbursement for all
reasonable expenses incurred by Executive in the performance of his duties
hereunder, provided all requests for reimbursement comply with Employer's
current policies regarding expense reimbursement.

                                   ARTICLE IV
                        NON-COMPETITION; CONFIDENTIALITY

Executive may not participate in any areas of business in which the Employer is
engaged during the term of this Agreement except through and on behalf of the
Employer. Upon the execution of this Agreement, Executive shall execute a
Non-Competition Agreement in the form attached hereto as Exhibit A. Executive
agrees that his current non-disclosure agreement with Employer shall continue in
full force and effect. Executive further agrees that he shall promptly execute
any revised non-disclosure form implemented by Employer.

                                    ARTICLE V
                            TERMINATION OF EMPLOYMENT

      5.1 Termination. Executive's employment hereunder may be terminated
without any breach of this Agreement under the following circumstances:

            (a) By Executive for Good Reason. Upon the occurrence of any of the
following events, Executive may terminate his employment for good reason ("Good
Reason") by written notice to Employer:

                  (i) if Employer makes a general assignment for the benefit of
creditors, files a voluntary bankruptcy petition, files a petition or answer
seeking a reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any law, or there shall have been filed any
petition or application for the involuntary bankruptcy of Employer, or other
similar proceeding, in which an order for relief is entered or which remains
undismissed for a period of thirty days or more, or Employer seeks, consents to,
or acquiesces in the appointment of a trustee, receiver, or liquidator of
Employer or any material part of its assets;

                  (ii) the closing of a sale by Employer of substantially all of
its assets to not more than two (2) buyers;

                  (iii) the closing of a sale by Employer of a significant
portion of the assets of any operating division of Employer (treating CIVCO as
an operating division, and including a merger, stock swap or change in control
of CIVCO) or closure and discontinuance of operation of any such operating
division;

                                       3
<PAGE>
                  (iv) if Executive is relocated to an office or site greater
than 50 miles from his location;

                  (v) if Executive elects to remain employed after a "change in
control of Employer" (defined below) and thereafter, during the Term of
Employment or twelve (12) months from the change in control, whichever is
longer, Executive: (1) is terminated without Cause or is demoted from the
position he held prior to the change in control; (2) is assigned duties
inconsistent with his roles and responsibilities prior to the change in control;
(3) is required to materially increase his travel obligations from those he had
prior to the change in control; (4) is relocated to an office or site greater
than 50 miles from his location prior to the change in control; or (5) the
compensation or benefits of Executive are materially reduced (including paid
time off and vacation). A "change of control of Employer" will be deemed to
occur under either of the following circumstances: (A) any "person" (as that
term is used in Section 13(d) and 14(d) of the Exchange Act), other than the
Employer or any "person" who on the date hereof is a director or officer of the
Employer, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Employer
representing forty percent (40%) or more of the combined voting power of the
Employer's then outstanding securities, or (B) if, during any period of two
consecutive years during the term of this Agreement, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof, unless the election of each director who was not a
director at the beginning of such period has been approved in advance by
directors representing at least two-thirds of the directors then in office who
were directors at the beginning of the period; or

                  (vi) within 90 days following a change in control of Employer.

            (b) Death. This Agreement shall terminate upon the death of
Executive.

            (c) Disability. Employer may terminate this Agreement upon the
permanent disability of Executive. "Disability" means the failure of Executive,
due to illness, accident, or other physical or mental incapacity, to perform his
duties substantially as required hereunder for a period of any ninety (90)
consecutive days, or, if earlier, upon written certification from a physician
acceptable to Employer as to Executive's inability to carry on his duties and
responsibilities if such condition is expected to continue for at least such
period.

            (d) By Employer for Cause. Employer may terminate Executive's
employment for cause ("Cause") for:

                  (i) misappropriation or unauthorized disclosure of
Confidential Information or funds by Executive or with Executive's direct
involvement;

                  (ii) fraud, embezzlement, theft or dishonesty by Executive
reasonably suspected by the Company;

                  (iii) negligent or willful misconduct or dereliction of duty
by Executive; provided, however, that no discharge shall be deemed for Cause
under this clause (iii)

                                       4
<PAGE>
unless Executive shall have first received written notice from the Company
advising Executive of the specific acts or omissions alleged to constitute such
negligent or willful misconduct, and such misconduct continues uncured by
Executive for a period of twenty (20) days; or

                  (iv) a material breach by Executive of the terms of this
Agreement and a failure by Executive to cure such breach within twenty (20) days
after receiving written notice from an officer of the Company advising Executive
of the action allegedly resulting in the material breach.

            (e) By Employer Other than for Cause. Employer may terminate
Executive's employment hereunder other than for Cause upon written notification
to Executive given at any time.

      5.2 Date of Termination. "Date of Termination" means (i) if Executive's
employment is terminated by his death, the date of his death; (ii) if the
Executive's employment is terminated for Cause, the date on which notice of
termination is delivered to Executive; and (iii) if the Executive's employment
is terminated for any other reason, the date specified in a notice of
termination by Employer or Executive.

      5.3 Compensation Upon Termination.

            (a)   Upon termination of this Agreement for Cause pursuant to
                  Section 5.1(d) Executive shall be entitled to compensation
                  only through the Date of Termination.

            (b)   In the event of termination of this Agreement by Employer for
                  reason other than Cause pursuant to Section 5.1(e), Employer
                  SHALL: (1) continue to pay Executive base salary payments for
                  twelve (12) months; and (2) if such termination occurs within
                  the original Term of Employment, provide for immediate vesting
                  of the pro-rated portion of options for the portion of the
                  year worked as set forth in Section 3.2(b) or (c) as
                  applicable.

            (c)   In the event of termination of this Agreement by Executive
                  pursuant to Section 5.1(a)(ii) or (iii) for Good Reason,
                  Employer shall: (1) continue to pay Executive base salary
                  payments for twelve (12) months; (2) accelerate vesting of any
                  unvested New Options or Old Options such that all such options
                  shall immediately vest; (3) reimburse outplacement services
                  provided Executive for a period of 12 months; and (4)
                  reimburse Executive for reasonable legal fees in connection
                  with the enforcement of the Agreement.

            (d)   In the event this Agreement is terminated at any time by
                  Executive for Good Reason pursuant to Section 5.1(a)(iv),
                  Executive shall be entitled to receive continuation of 12
                  months of base salary payments; (2) accelerated vesting of any
                  unvested New Options or Old Options such that all such options
                  shall immediately vest; (3) reimbursement outplacement
                  services

                                       5
<PAGE>
                  provided Executive for a period of 12 months; and (4)
                  reimburse Executive for reasonable legal fees in connection
                  with the enforcement of the Agreement.

            (e)   If after termination pursuant to Section 5.1(a)(iii) or (iv)
                  or Section 5.1(e) Executive elects to continue group health
                  insurance coverage through COBRA, the Employer will also pay
                  the monthly medical insurance

                                       6
<PAGE>
            (f)   premium payment required to maintain his then current medical
                  insurance coverage (less any amount he is paying for such
                  insurance at the time of termination, which payment from
                  Executive will be required by the beginning of each month) for
                  the period during which continuing base salary payments are
                  made or until Executive obtains new employment or a consulting
                  position, whichever occurs first.

            (g)   Following the termination of this Agreement pursuant to
                  Section 5.1(b), Employer shall pay to Executive's estate the
                  compensation which would otherwise be payable to Executive to
                  the end of the month in which his death occurs.

            (h)   In the event of temporary or permanent disability of the
                  Executive as described in Section 5.1(c), whether or not the
                  Employer elects to terminate this Agreement, Executive shall
                  be entitled to receive such compensation and benefits, if any,
                  as are payable to Executives generally in accordance with
                  Employer's normal practices.

            (i)   Upon termination of his employment and for a period of two
                  years thereafter, Executive shall immediately notify Employer
                  of each employment or agency relationship entered into by the
                  Executive and each corporation or other entity formed or used
                  by the Executive, the business of which is directly or
                  indirectly similar to or in competition with the Employer's
                  business and provided Executive's participation in such
                  business is the same as or similar to those activities in
                  which Executive was involved at the time of Executive's
                  termination from Employer and during the prior 12-month
                  period.

      5.4 Remedies. Any termination of this Agreement shall not prejudice any
other remedy to which the Employer or Executive may be entitled, either at law,
equity, or under this Agreement.

      5.5 Request for Post-Employment Allowance: In order to obtain any payment
pursuant to Paragraph 5.3, excluding sub-paragraph 5.3(a), Executive shall
submit a Request for Post-Employment Allowance (attached hereto as Exhibit B).
Employer shall have no obligation to make any payments to Executive unless and
until Employee shall have submitted an executed copy of such request.

                                   ARTICLE VI
                               GENERAL PROVISIONS

      6.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.

      6.2 Arbitration. Any and all disputes arising under or related to this
Agreement which cannot be resolved through negotiations between the parties
shall be submitted to binding

                                       7
<PAGE>
arbitration. If the parties fail to reach a settlement of their dispute within
fifteen (15) days after the earliest date upon which one of the parties notified
the other(s) of its desire to attempt to resolve the dispute, then the dispute
shall be promptly submitted to arbitration by a single arbiter through the
Judicial Arbiter Group ("JAG"), any successor of the Judicial Arbiter Group, or
any similar arbitration provider who can provide a former judge to conduct such
arbitration if JAG is no longer in existence, or an arbiter appointed by the
court. The arbiter shall be selected by JAG or the court on the basis, if
possible, of his or her expertise in the subject matter(s) of the dispute. The
decision of the arbiter shall be final, non-appealable and binding upon the
parties, and it may be entered in any court of competent jurisdiction. The
arbitration shall take place in Boulder, Colorado. The arbitrator shall be bound
by the laws of the State of Colorado applicable to the issues involved in the
arbitration and all Colorado rules relating to the admissibility of evidence,
including, without limitation, all relevant privileges and the attorney work
product doctrine. All such discovery shall be completed in accordance with the
time limitations prescribed in the Colorado Rules of Civil Procedure, unless
otherwise agreed by the parties or ordered by the arbitrator on the basis of
strict necessity adequately demonstrated by the party requesting an extension or
reduction of time. The arbitrator shall have the power to grant equitable relief
where applicable under Colorado law. The arbitrator shall issue a written
opinion setting forth her or his decision and the reasons therefor within thirty
(30) days after the arbitration proceeding is concluded. The obligation of the
parties to submit any dispute arising under or related to this Agreement to
arbitration as provided in this Section shall survive the expiration or earlier
termination of this Agreement. Notwithstanding the foregoing, either party may
seek and obtain an injunction or other appropriate relief from a court to
preserve or protect the status quo with respect to any matter pending conclusion
of the arbitration proceeding, but no such application to a court shall in any
way be permitted to stay or otherwise impede the progress of the arbitration
proceeding.

      6.3 Entire Agreement. This Agreement supersedes any and all other
Agreements, whether oral or in writing, between the parties with respect to the
employment of Executive by Employer, excluding any
non-disclosure/confidentiality agreements previously entered into between
Executive and Employer. Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, orally or otherwise, have
been made by either party, or anyone acting on behalf of any party, that are not
embodied in this Agreement, and that no agreement, statement, or promise not
contained in this Agreement shall be valid or binding.

      6.4 Successors and Assigns. This Agreement, all terms and conditions
hereunder, and all remedies arising herefrom, shall inure to the benefit of and
be binding upon Employer, any successor in interest to all or substantially all
of the business and/or assets of Employer, and the heirs, administrators,
successors and assigns of Executive. Except as provided in the preceding
sentence, the rights and obligations of the parties hereto may not be assigned
or transferred by either party without the prior written consent of the other
party.

      6.5 Notices. For purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed as
follows:

                                       8
<PAGE>
      If to Executive:  Stephen K. Onody
                        6640 So. Waco Way
                        Aurora, CO  80016

      If to Employer:   Colorado MEDtech, Inc.
                        Attn:  Chairman of the Board of Directors
                        4801 N. 63rd St.
                        Boulder, CO 80301
                        Phone: (303) 530-2660
                        Fax: (303) 581-1010

      with a copy to:   Colorado MEDtech, Inc.
                        Attn:  General Counsel
                        4801 N. 63rd St.
                        Boulder, CO 80301
                        Phone: (303) 530-2660
                        Fax: (303) 581-1010

      and a copy (which shall not constitute notice) to:

                        Faegre & Benson LLP
                        Attn: Christopher Hazlitt
                        1900 Fifteenth Street
                        Boulder, CO  80302

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

      6.6 Severability. If any provision of this Agreement is prohibited by or
is unlawful or unenforceable under any applicable law of any jurisdiction as to
such jurisdiction, such provision shall be ineffective to the extent of such
prohibition without invalidating the remaining provisions hereof.

      6.7 Section Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction of any terms of this
Agreement.

      6.8 Survival of Obligations. Termination of this Agreement for any reason
shall not relieve Employer or Executive of any obligation accruing or arising
prior to such termination.

      6.9 Amendments. No waiver or modification of this Agreement or any
covenant, condition, or limitation herein contained shall be valid unless in
writing and duly executed by the party to be charged therewith, and no evidence
of any waiver or modification shall be offered or received in evidence of any
proceeding, arbitration or litigation between the parties hereto arising out of
or affecting this Agreement, or the rights or obligations of the parties
hereunder, unless such waiver or modification is in writing, duly executed as
aforesaid.

                                       9
<PAGE>
      6.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original but all of which, when
taken together, shall constitute only one legal instrument. This Agreement shall
become effective when copies hereof, when taken together, shall bear the
signatures of both parties hereto. It shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.

      6.11 Fees and Costs. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys fees, costs and necessary disbursements in
addition to any other relief to which that party may be entitled.

      6.12 Taxes. Executive expressly acknowledges that Employer has not made,
nor herein makes, any representation about the tax consequences of any
consideration provided by Employer to Executive pursuant to this Agreement or
any Stock Option Agreement. Executive further acknowledges that all such
consideration shall be subject to various taxes and withholding which shall be
made by Employer. It is also possible that amounts or benefits paid or
distributed to the Executive pursuant to this Agreement, taken together with any
amount or benefits otherwise paid or distributed to the Executive would be an
"excess parachute payment" as defined in Section 280G of the Internal Revenue
Code (the "Code") and would subject Executive to an excise tax. In the event
such tax is triggered, Employer may limit its payments as follows: If (x) the
aggregate value of all compensation payments or benefits to be paid or provided
to the Executive under this Agreement and any other plan, agreement, or
arrangement with Employer exceeds the amount which can be paid to the Executive
without the Executive incurring an Excise Tax and (y) the Executive would
receive a greater net after-tax amount (taking into account all applicable taxes
payable by the Executive, including any Excise Tax) by applying the limitation
contained in this Paragraph, then the amounts payable to the Executive under
this Agreement shall be reduced (but not below zero) to the maximum amount which
may be paid hereunder without the Executive becoming subject to such an Excise
Tax (such reduced payments to be referred to as the "Payment Cap"). In the event
that Executive receives reduced payments and benefits hereunder, Executive shall
have the right to designate which of the payments and benefits otherwise
provided for in this Agreement that Executive will receive in connection with
the application of the Payment Cap. If the Executive receives reduced payments
and benefits under this Paragraph (or the Payment Cap is determined not to be
applicable to the Executive because the parties conclude that Executive is not
subject to any Excise Tax) and it is established pursuant to a final
determination of a court or an Internal Revenue Service proceeding (a "Final
Determination") that, notwithstanding the good faith of the Executive and
Employer in applying the terms of this Agreement, the aggregate "parachute
payments" within the meaning of Section 280G of the Code paid to the Executive
or for his benefit are in an amount that would result in the Executive being
subject an Excise Tax, then the amount equal to such excess parachute payments
shall be deemed for all purposes to be a loan to the Executive made on the date
of receipt of such excess payments, which the Executive shall have an obligation
to repay to Employer on demand, together with interest on such amount at the
applicable federal rate (as defined in Section 1274(d) of the Code) from the
date of the payment hereunder to the date of repayment by the Executive. If this
Paragraph is not applied to reduce the Executive's entitlements under this
Paragraph because the parties determine

                                       10
<PAGE>
that the Executive would not receive a greater net after-tax benefit by applying
this Paragraph and it is established pursuant to a Final Determination that,
notwithstanding the good faith of the Executive and Employer in applying the
terms of this Agreement, the Executive would have received a greater net
after-tax benefit by subjecting his payments and benefits hereunder to the
Payment Cap, then the aggregate "parachute payments" paid to the Executive or
for his benefit in excess of the Payment Cap shall be deemed for all purposes a
loan to the Executive made on the date of receipt of such excess payments, which
the Executive shall have an obligation to repay to Employer on demand, together
with interest on such amount at the applicable federal rate (as defined in
Section 1274(d) of the Code) from the date of the payment hereunder to the date
of repayment by the Executive. If the Executive receives reduced payments and
benefits by reason of this Paragraph and it is established pursuant to a Final
Determination that the Executive could have received a greater amount without
exceeding the Payment Cap, then Employer shall promptly thereafter pay the
Executive the aggregate additional amount which could have been paid without
exceeding the Payment Cap.

                                       11
<PAGE>
      IN WITNESS WHEREOF, Employer and Executive have entered into this
Executive Employment Agreement as of the date first above written.

"EMPLOYER"

COLORADO MEDTECH, INC.

By: /s/ Clifford W. Mezey
   ----------------------------------------------
      Clifford W. Mezey,
      Chairman of the Compensation Committee
of the Board of Directors

"EXECUTIVE"

   /s/ Stephen K. Onody
-------------------------------------------------
Stephen K. Onody

                                       12
<PAGE>
                                    EXHIBIT A

                            NON-COMPETITION AGREEMENT

      THIS AGREEMENT is made and entered into on and as of the 31st day of May,
2002, by and between Colorado MEDtech, Inc., a Colorado corporation (the
"Company") and Stephen K. Onody ("Executive").

      WHEREAS, Executive holds the offices of President and Chief Executive
Officer of the Company, and in such positions is a key, valued executive
employee of the Company, and, as such, is in a position to damage the business
of the Company by engaging in competing activities; and

      WHEREAS, the Company wishes to protect itself from competitive activities
of Executive which would injure its business and subject Company to the
inevitable disclosure of trade secret information; and

      WHEREAS, it is a condition of the Amended and Restated Executive
Employment Agreement of Executive, Executive has agreed not to compete with the
Company during, or for a period of one (1) year after, his employment with the
Company;

      NOW, THEREFORE, in consideration of the offices held by Executive, for the
compensation to be paid to Executive as described in the Amended and Restated
Executive Employment Agreement which is entered into by the parties as of the
date hereof, and for the protection of Company's trade secret information and
other valuable consideration, the receipt and sufficiency of which is
acknowledged, the parties agree as follows:

      1. Executive agrees that he possesses or will possess the knowledge,
skills and reputation in the outsourcing industry in which the Company operates
which are of material importance to the Company, and which are special, unique
and extraordinary. Executive acknowledges that his services cannot be replaced
and that the loss of his services, or the use of his services by a competitor,
may cause the inevitable disclosure of trade secret information and other
irreparable harm to the Company. Therefore, Executive agrees that during the
period commencing with the date hereof and ending one (1) year after his
employment with the Company is terminated (voluntarily or involuntarily) he will
not, knowingly, directly or indirectly, as a principal, officer, director,
shareholder (other than as a holder of 5% or less of a publicly traded
corporation's capital stock), partner, become employed by, consult for or with,
or in any other capacity whatsoever, engage in, be or become associated with, or
advise or assist any business, firm, partnership, individual, corporation, or
any other entity which is engaged in any outsourcing business engaged in, or
anticipated to be engaged in, by the Company as of
<PAGE>
his Date of Termination, as defined in Executive's Executive Employment
Agreement, anywhere in the United States of America.

      2. Executive acknowledges that Company has invested substantial time and
effort in assembling its present staff of personnel. Executive agrees that so
long as he is employed by the Company and during one (1) year immediately
thereafter, Executive shall not either directly or indirectly employ, solicit
for employment or advise or recommend to any other person that a third party
employ or solicit for employment, any of the Company's employees.

      3. Executive agrees that so long as he is employed by the Company and
during one (1) year immediately thereafter, Executive shall not either directly
or indirectly solicit business, as to products or services competitive with the
business of the Company from any of Company's customers with whom Executive had
contact during his employment. Executive agrees that during such post-employment
period he will not influence or attempt to interfere with any of Company's
relationships with its investors, customers or clients.

      4. Executive agrees that so long as he is employed by the Company and for
one (1) year immediately thereafter, Executive shall not either directly or
indirectly interfere with any relationship between the Company and any of its
suppliers, clients or their employees.

      5. Any waiver of any of the terms and conditions of this Agreement shall
not operate as a waiver of any other breach of such terms or conditions, or any
other term or condition, nor shall any failure to enforce any provision hereof
operate as a waiver of such provision or any other provision hereof.

      6. It is agreed that Executive's services are unique, and that any breach
or threatened breach by Executive of any provisions of this Agreement may not be
remedied solely by damages. Accordingly, in the event of a breach or threatened
breach by Executive of any of the provisions of this Agreement, the Company
shall be entitled to injunctive relief, restraining Executive and any business,
firm, partnership, individual, corporation, or entity participating in such
breach or attempted breach, from engaging in any activity which would constitute
a breach of this Agreement. Nothing herein, however, shall be construed as
prohibiting the Company from pursuing any other remedies available at law or in
equity for such breach or threatened breach, including the recovery of damages.

      7. The restrictive period for all of the aforementioned covenants shall be
extended for every day that Executive is in violation of any one of the
covenants.

      8. Any and all notices referred to herein shall be sufficient if furnished
in writing, sent by registered or certified mail to Executive at his address as
shall be furnished to the Company in writing, and to the Company at its
principal office in Boulder, Colorado.
<PAGE>
      9. This Agreement shall be governed by and construed in accordance with
the laws of the State of Colorado.

      10. No modification or changes in this Agreement shall be valid unless
such modification or changes are in writing and signed by all parties hereto.

      11. The invalidity or unenforceability of any provision in this Agreement
shall not affect the other provisions hereof. This Agreement shall be construed
as though such invalid or unenforceable provisions were modified to the minimum
extent necessary to make this Agreement valid and enforceable.

      12. Company may assign this Agreement to its successors. Executive may not
assign this Agreement without the prior written approval of the Company.

      13. Any controversy or claim arising out of or relating to this Agreement
or the breach thereof shall be settled by arbitration in Boulder, Colorado in
accordance with the rules then existing of the American Arbitration Association
and judgment upon the award may be entered in any court having jurisdiction
thereof.

      14. As used herein, any reference to the masculine shall include, if
appropriate, the feminine.
<PAGE>
      IN WITNESS WHEREOF, the parties have executed this Non-Competition
Agreement as of the date first above written.

COLORADO MEDTECH, INC.

By:   /s/ Clifford W. Mezey
   ----------------------------------------
      On behalf of the Compensation
Committee of the Board of Directors

"EXECUTIVE"

   /s/ Stephen K. Onody
-------------------------------------------
Stephen K. Onody
<PAGE>
                                    EXHIBIT B

                      REQUEST FOR POST-EMPLOYMENT ALLOWANCE

      This request for severance allowance is made by ___________(hereinafter
"the Employee") pursuant to the provisions of the Agreement between the Employee
and _______________(hereinafter "the Company") as of (the "Agreement").

      1.    In consideration of the execution of this request for
            post-employment allowance, the Company agrees to pay me the amount
            set forth in the Agreement.

      2.    In return for these payments, I fully and finally release, waive and
            discharge Company, including any of its parents, subsidiaries, or
            otherwise affiliated corporations, partnerships or business
            enterprises, and their respective present and former directors,
            shareholders, employees, assigns, insurers and employee benefit
            administrators (hereinafter "Released Parties") from all charges,
            claims and causes of action of any sort which I may have, including
            but not limited to, claims arising from or related to my employment
            or termination of my employment, any age, race, any unlawful
            employment practices of any kind, whether such claims arise under
            federal, state, local, common, contract, tort or other laws or
            regulations, specifically including Title VII of the Civil Rights
            Act of 1964 as amended by the Equal Employment Opportunity Act of
            1972 and the Age Discrimination in Employment Act, 42 U.S.C. Section
            1981. BY SIGNING THIS AGREEMENT, I ACKNOWLEDGE THAT COMPANY HAS
            ADVISED ME TO DISCUSS THIS AGREEMENT WITH AN ATTORNEY BEFORE SIGNING
            IT. I further acknowledge and agree that the Company is not
            responsible for any of my costs, expenses, and attorneys' fees, if
            any, incurred in connection with the review and signing of this
            Agreement. I acknowledge that I have been given a period of at least
            twenty-one (21) days in which to consider the terms of this
            Agreement. If I have chosen to waive the twenty-one day period, I
            represent that I did so voluntarily without any pressure by Company.
            I also understands that I have the right to revoke this Agreement at
            any time within seven (7) days after signing it, by providing
            written notice to Company, and that upon such revocation, this
            Agreement will not have any further legal effect.

      3.    I represent and warrant that I have returned all property of the
            Company in my possession, including but not limited to, documents,
            manuals, pertinent business contacts (names and addresses),
            shareholder lists, software, computers and computer disks, notes,
            keys, cellular phone, and other articles or equipment I used in the
            course of my employment.
<PAGE>
      4.    It is understood that the Company does not admit the existence or
            validity of any such claims or any liability of any sort nor has the
            Company made any agreement or promise to do or omit to do any act or
            thing not herein set forth.

      5.    I agree that I will not disclose this document or its terms or
            provisions without first obtaining the written consent of the
            Company.

      6.    I understand that this Request shall be governed by Colorado law.

      7.    I have read and completely understand this request and recognize
            that it constitutes a general release and waiver of all claims, and
            I agree that this is an acceptable compromise of any such claims and
            knowingly and voluntarily intend to be bound by these provisions
            without any further promises or consideration by the Company. I
            further agree that this agreement terminates all other agreements
            between myself and the Company, excluding any non-disclosure or
            non-compete obligations which may survive my employment. As such,
            except as provided in this Agreement, I am not entitled to any other
            benefits as a result of my separation.

------------------------------------            ------------------
Stephen K. Onody                                      Date

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