Document:

EXHIBIT 10.18

                              EMPLOYMENT AGREEMENT

      This Employment Agreement ("Agreement") is entered into effective as of
January 1, 2001, by and between United Surgical Partners International, Inc., a
Delaware corporation ("USP"), and William H. Wilcox ("Employee"), with reference
to the following facts:

                                    RECITALS

      A. USP desires to employ Employee in the capacities and on the terms and
conditions hereinafter set forth and Employee is willing to serve in such
capacities and on such terms and conditions.

      B. This Agreement shall replace any and all existing employment agreements
and arrangements between USP and Employee.

      NOW, THEREFORE, in consideration of the foregoing premises and thc mutual
covenants contained herein, USP and Employee mutually agree as follows:

                                   AGREEMENT

      1. EMPLOYMENT. USP hereby employs Employee as the President of USP.

      2. DUTIES. Employee shall devote substantially all of his working time,
energies and skills to USP's business. Employee shall report to the Chief
Executive Officer of USP and shall have such duties, responsibilities and
authority as are set forth in the Bylaws of USP for the position of President.
Employee agrees to serve USP diligently and to the best of his ability.

      3. COMPENSATION.

      (a) Base Salary. USP shall pay Employee a Base Salary ("Base Salary") at a
rate of $350,000 per year. In addition, the Board of Directors of USP shall
consider granting increases in such salary based on Employee's performance and
the growth and/or profitability of USP, but it shall have no obligation to grant
any such increases in compensation. Base Salary shall be payable in equal
semi-monthly installments on the 15th day and the last working date of the
month, or at such other times and in such installments as may be agreed upon
between USP and Employee. All payments shall be subject to the deduction of
payroll taxes and similar assessments as required by law.

      (b) PERFORMANCE BONUSES. In addition to the Base Salary, Employee shall be
eligible to receive bonus compensation of up to 100% of the Base Salary based on
such performance goals and criteria as the Board of Directors or USP shall, from
time to time, determine.

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      4. EXPENSES AND BENEFITS. USP agrees to provide Employee with the
following benefits:

      (a) EXPENSE REIMBURSEMENTS. Employee is authorized to incur reasonable
expenses in connection with the business of USP, including expenses for
entertainment, travel and similar matters. USP will reimburse Employee for such
expenses upon presentation by Employee of such documentation as USP shall from
time to time require.

      (b) OFFICE SERVICES. USP will provide Employee with an administrative
assistant of his choice and reasonable office space and services.

      (c) INSURANCE. Major medical health insurance and disability insurance as
currently in place (as the same may be modified from time to time by USP for its
senior executives).

      (d) EMPLOYEE BENEFIT PLANS. Participation in any other employee benefit
plans now existing or hereafter adopted by USP for its employees.

      (e) OTHER. Such items and benefits as USP shall, from time to time,
consider necessary or appropriate to assist Employee in the performance of his
duties.

      (f) VACATIONS. Employee shall be entitled (in addition to the usual public
holidays) to a paid vacation of an aggregate of five weeks in each calendar
year.

      5. TERM. The term of this Agreement shall be from the date of this
Agreement to December 31, 2002, and shall thereafter be automatically renewed
for successive one year terms unless either party gives notice of non-renewal at
least 90 days prior to the end of the original or any such renewal term;
provided, however, that either party may terminate this Agreement at any time
upon at least 90 days prior written notice. In the event of such termination by
USP, Employee shall be entitled to severance pay based on his Base Salary at the
time of termination, plus a bonus (payable monthly on a pro rata basis) at a
rate equal to the average annual bonuses paid to Employee for the two calendar
years preceding the date of notice of termination, for a period of 12 months
following termination or until December 31, 2002, whichever is later. Such
severance pay shall be payable in monthly installments and USP shall continue
the benefits set forth in Sections 4(b) and (c) for the period during which such
severance payments are to be made. In addition, this Agreement shall terminate
as provided for in Section 7 or upon the death of Employee.

      6. DISABILITY.

      (a) In the event that Employee becomes Permanently Disabled (as
hereinafter defined) during the term of this Agreement. Employee shall continue
in the employ of USP but his compensation hereunder shall be reduced to
three-fourths of the Base Salary then in effect as set forth in Section 3(a),
commencing upon the determination of Employee's Permanent Disability and
continuing thereafter until the first to occur of (i) 24 months or (ii) the
death of Employee; and during such period of time. Employee shall not be
entitled to payment of

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expenses or benefits specified in Section 4 (except for reimbursement of
expenses incurred by Employee prior to becoming Permanently Disabled), except
that USP shall continue to provide Employee with the insurance benefits
specified in Section 4(c). The obligation of USP for continuation of
three-fourths of Employee's Base Salary shall be net of payments to Employee
from the disability insurance referred to in Section 4(c).

      For purposes of this Agreement, the terms "Permanent Disability" or
"Permanently Disabled" shall mean three months of substantially continuous
disability. Disability shall be deemed "substantially continuous" if, as a
practical matter, Employee, by reason of his mental or physical health, is
unable to sustain reasonably long periods of substantial performance of his
duties. Frequent long illnesses, though different from the preceding illness and
though separated by relatively short periods of performance, shall be deemed to
be "substantially continuous." Disability shall be determined in good faith by
the Board of Directors, whose decision shall be final and binding upon Employee.
Employee hereby consents to medical examinations by such physicians and medical
consultants as USP shall, from time to time, require.

      7. TERMINATION BY USP FOR CAUSE. USP shall have the right to terminate
Employee's employment under this Agreement for "Cause" by an affirmative vote to
so terminate by not less than 75% of the members of USP's Board of Directors, in
which event, no compensation shall be paid or other benefits furnished to
Employee after termination for Cause. Termination for Cause shall be effective
immediately upon notice sent or given to Employee. For purposes of this
Agreement, the term "Cause" shall mean and be strictly limited to: (a)
conviction of a crime constituting a felony under state or federal law; (b)
commission of any material act of dishonesty against USP; or (c) willful and
material breach of this Agreement by Employee.

      8. NON-COMPETITION. Employee recognizes and understands that in performing
the responsibilities of his employment, he will occupy a position of fiduciary
trust and confidence, pursuant to which he will develop and acquire experience
and knowledge with respect to USP's business. It is the expressed intent and
agreement of Employee and USP that such knowledge and experience shall be used
exclusively in the furtherance of the interests of USP and not in any manner
which would be detrimental to USP's interests. Employee further understands and
agrees that USP conducts its business within a specialized market segment
throughout the United States and in portions of Europe, and that it would be
detrimental to the interests of USP if Employee used the knowledge and
experience which he currently possesses or which he acquires pursuant to this
employment hereunder for the purpose of directly or indirectly competing with
USP, or for the purpose of aiding other persons or entities in so competing with
USP. Employee therefore agrees that so long as he is employed by USP and, if
this Agreement is terminated by USP pursuant to Section 5, for an additional
period equal to the shorter of one year following termination or for the period
of time Employee is receiving a salary or severance payments from USP, unless
Employee first secures the written consent of USP, Employee will not directly or
indirectly invest, engage or participate in or become employed by any entity in
direct or indirect competition with USP's business, which shall include the
ownership and/or operation of outpatient surgical centers and surgical specialty
hospitals in the United States and the ownership and/or operation of hospitals
in the countries in Europe in which USP owns or

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operates hospitals as of the date of termination. These non-competition
provisions shall not be construed to prohibit Employee from being employed in
the health care industry during the applicable period, but rather to permit him
to be so employed so long as such employment does not involve Employee's direct
or indirect participation in a business which is the same or similar to USP's
business (as defined above). In the event that the provisions of this Section 8
should ever be deemed to exceed the time or geographic limitations permitted by
applicable laws, then such provisions shall be reformed to the maximum time or
geographic limitations permitted by applicable law.

      9. STOCK OPTIONS. In the event that (a) USP elects to terminate this
Agreement pursuant to Section 5, (b) there is a "Change of Control Event" (as
defined below) or (c) USP breaches this Agreement by termination of Employee
without the notice required under Section 5 or without Cause under Section 7,
then in each such event, all USP stock options held by Employee and all
restricted stock awards made to him by USP (whether issued subject to forfeiture
or to be issued when and if they become vested) shall thereupon automatically be
amended so as to (i) cause to vest, immediately prior to the date of such Change
in Control Event or termination of employment, all such then unvested stock
options and restricted stock awards, and (ii) provide Employee 90 days to
exercise such options (or such greater period as may be provided by the terms of
such options). For purposes of the foregoing, the term "Change of Control Event"
shall mean (i) a consolidation or merger of USP with or into any other
corporation (other than a merger which will result in the voting capital stock
of USP outstanding immediately before the effcctive date of such consolidation
or merger being converted into more than 50% of the voting capital stock of the
surviving entity outstanding immediately after such consolidation or merger),
(ii) a sale of all or substantially all of the properties and assets of the
Company as an entirety in a single transaction or in a series or related
transactions to any other "person" or (iii) the acquisition of "beneficial
ownership" by any "person" or "group" (other than Welsh, Carson, Anderson &
Stowe VII, L.P. or its affiliates) of voting stock of the Company representing
more than 50% of the voting power of all outstanding shares of such voting
stock, whether by way of merger of consolidation or otherwise. As used herein,
(x) the terms "person" and "group" shall have the meanings set forth in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not applicable, (y) the term "beneficial owner" shall have the
meaning set forth in Rules 13d-3 and 13d-5 under the Exchange Act, whether or
not applicable, except that a person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time or upon
the occurrence of certain events, and (z) any "person" or "group" will be deemed
to beneficially own any voting stock so long as such person or group
beneficially owns, directly or indirectly, in the aggregate a majority of the
voting stock of a registered holder of such voting stock.

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      10. GENERAL PROVISIONS.

      (a) NOTICES. All notices required or permitted by this Agreement shall be
in writing and may be delivered in person or sent by regular, registered or
certified mail or United States Postal Service Express Mail, with postage
prepaid, or by other courier service, or by facsimile transmission, and shall be
deemed sufficiently given if served in the manner specified in this Section
10(a). The addresses and facsimile numbers set forth below shall be the parties
addressed and facsimile numbers for purposes for purposes of delivery or mailing
of notices:

            If to USP:        c/o United Surgical Partners International, Inc.
                              17103 Preston Road, Suite 200 North
                              Dallas, Texas 75248
                              Attention: Donald E. Steen
                                         Chief Executive Officer
                              FAX No.:(972) 267-0084

            If to Employee:   William H. Wilcox
                              9726 Rockbrook Drive
                              Dallas, Texas 75220
                              FAX No.:(972)__________

The parties may change addresses and facsimile numbers noted above through
written notice in compliance with this Section lO(a). Any notice sent by
registered or certified mail, return receipt requested, shall be deemed given
when actually received by the addressee, as shown on the receipt card which must
be signed by a representative of the addressee. If sent by regular mail, the
notice shall be deemed given after the notice is addressed, mailed with postage
prepaid and when actually received by the addressee. Notices delivered by United
States Express Mail or other courier service shall be deemed given when actually
received by the addressee as shown by the signature of an authorized
representative of the addressee on the log or other documentation maintained by
the United States Postal Service or courier to show proof of delivery. If any
notice is transmitted by facsimile transmission or similar means, the notice
shall be deemed served or delivered upon telephone confirmation of receipt of
the transmission.

      (b) CHOICE OF LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, excluding principles of conflict
of laws.

      (c) INTEGRATION: MODIFICATION AND WAIVER. This Agreement constitutes the
entire understanding of the parties hereto relating to the subject matter
hereof, supersedes any and all other agreements, whether oral or in writing,
between the parties hereto and their affiliates with respect to the employment
of Employee, and contains all covenants and agreements between the parties
hereto relating to such employment in any manner whatsoever; provided, however,
that except as expressly provided herein, this Agreement shall not affect any
stock option agreements, indemnity agreements or agreements relating to
Employee's purchase

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or ownership of USP securities to which Employee is now or hereafter a party.
This Agreement shall not be amended, modified or revised in any respect, except
by a writing signed by USP and Employee. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision, whether or not similar, and no waiver shall constitute a continuing
waiver. No waiver shall be binding unless executed in writing by the party
making the waiver-

      (d) SEVERABILITY. If any provision of this Agreement shall be determined
by a court or governmental agency of competent jurisdiction to be invalid,
illegal or unenforceable, such invalidity, illegality or unenforceability shall
not affect the remainder of this Agreement, which shall remain in full force and
effect and be enforced in accordance with its remaining enforceable terms.

      (e) ASSIGNMENT. Because of the personal nature of the services to be
rendered hereunder, the obligations of Employee under this Agreement may not be
delegated or assigned in whole or in part without the prior written consent of
USP (which consent may be withheld in its sole discretion). However, subject to
the foregoing limitation, this Agreement shall be binding upon, and shall insure
to the benefit of, the parties hereto and their respective heirs, devisees,
executors, administrators, trustees, legal representatives, successors,
transferees and assigns.

      (f) ATTORNEYS' FEES. In any action or proceeding at law or in equity,
including but not limited to arbitration, brought to enforce or construe any
provisions or rights under this Agreement, the unsuccessful party or parties to
such litigation or arbitration, as determined by the appropriate court or
arbitrator pursuant to a final judgment or decree, shall pay the successful
party or parties all costs, expenses and reasonable attorneys' fees incurred by
such successful party or parties (including but not limited to such costs,
expenses and fees in connection with any appeals) and, if such successful party
or parties shall recover judgment in any such action or proceeding, such costs,
expenses and attorneys' fees shall be included as part of such judgment.

      (g) SURVIVAL OF CERTAIN PROVISIONS. The provisions of Sections 4(a) (as to
expenses incurred prior to termination), 5, 8 and 9 shall survive the expiration
or other termination of this Agreement.

      (h) HEADINGS AND CAPTIONS. Headings and captions are included in this
Agreement for purposes of convenience only and are not a part of this
Agreement.

      (i) MISCELLANEOUS. Any term used in the plural shall refer to all members
of the relevant class and any term used in the singular shall refer to any one
or more of the members of the relevant class. References in this Agreement to
articles, sections, paragraphs and exhibits are to articles, sections,
paragraphs and exhibits to this Agreement. The terms "herein," "hereof,"
"hereto," "hereunder" and other terms similar to such terms refer to this
Agreement as a whole and not merely to the specific article, section, paragraph
or clause where such terms may appear.

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      (j) COUNTERPARTS AND FACSIMILE SIGNATURES. Separate copies of this
Agreement may be signed by the parties hereto, with the same effect as though
all of the parties had signed one copy of this Agreement. Signatures transmitted
by facsimile shall be accepted as original signatures.

      IN WITNESS WHEREOF, the undersigned have duly executed this Employment
Agreement as of the date first written above.

USP:                         UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

                             By /s/ DONALD E. STEEN
                                    Donald E. Steen
                                    Chief Executive Officer

EMPLOYEE:                       /s/ WILLIAM H.WILCOX
                                    William H.Wilcox

                                        7EXHIBIT 10.19

        UNITED SURGICAL PARTNERS INTERNATIONAL, INC. AND ITS SUBSIDIARIES
                 STOCK OPTION AND RESTRICTED STOCK PURCHASE PLAN

      Section 1. PURRPOSE. The purpose of United Surgical Partners
International, Inc. and its Subsidiaries Stock Option and Restricted Stock
Purchase Plan (the "Plan") is to promote the interests of United Surgical
Partners International, Inc., a Delaware corporation (the "Company"), and any
Subsidiary thereof and the interests of the Company's stockholders by providing
an opportunity to selected employees, officers and directors of the Company or
any Subsidiary thereof as of the date of the adoption of the Plan or at any time
thereafter to purchase Common Stock of the Company. By encouraging such stock
ownership, the Company seeks to attract, retain and motivate such employees and
other persons and to encourage such employees and other persons to devote their
best efforts to the business and financial success of the Company. It is
intended that this purpose will be effected by the granting of "non-qualified
stock options" and/or "incentive stock options" to acquire the Common Stock of
the Company and/or by the granting of rights to purchase the Common Stock of the
Company on a "restricted stock" basis. Under the Plan, the Committee shall have
the authority (in its sole discretion) to grant "incentive stock options" within
the meaning of Section 422(b) of the Code, "non-qualified stock options" as
described in Treasury Regulation Section 1.83-7 or any successor regulation
thereto, or "restricted stock" awards.

      No grant of "incentive stock options" shall be made under this Plan unless
such Plan is approved by the stockholders of the Company within 12 months of the
date of the adoption of such Plan.

      Section 2. DEFINITIONS. For purposes of the Plan, the following terms used
herein shall have the following meanings, unless a different meaning is clearly
required by the context:

      2.1. "AWARD" shall mean an award of the right to purchase Common Stock
granted under the provisions of Section 7 of the Plan.

      2.2. "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.

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

      2.4. "COMMITTEE" shall mean the committee of the Board of Directors
referred to in Section 5 hereof; PROVIDED that if no such committee is appointed
by the Board of Directors, the Board of Directors shall have all of the
authority and obligations of the Committee under the Plan.
<PAGE>
      2.5. "COMMON STOCK" shall mean the Common Stock, $.01 par value, of the
Company.

      2.6. "EMPLOYEE" shall mean (i) with respect to an ISO, any person,
including, without limitation, an officer of the Company, who, at the time an
ISO is granted to such person hereunder, is employed by the Company, any Parent
or Subsidiary thereof, and (ii) with respect to a Non-Qualified Option and/or an
Award, any person employed by, or performing services for, the Company or any
Parent or Subsidiary thereof, including, without limitation, directors,
consultants and officers.

      2.7. "ISO" shall mean an Option granted to a Participant pursuant to the
Plan that constitutes and shall be treated as an "incentive stock option" as
defined in Section 422(b) of the Code.

      2.8. "NON-QUALIFIED OPTION" shall mean an Option granted to a Participant
pursuant to the Plan that is intended to be, and qualifies as, a "non-qualified
stock option" as described in Treasury Regulation Section 1.83-7 or any
successor regulation thereto and that shall not constitute or be treated as an
ISO.

      2.9 "OPTION" shall mean any ISO or Non-Qualified Option granted to an
Employee pursuant to the Plan.

      2.10. "PARTICIPANT" shall mean any Employee to whom an Award and/or an
Option is granted under the Plan.

      2.11. "PARENT" of the Company shall have the meaning set forth in Section
424(e) of the Code.

      2.12. "SUBSIDIARY" of the Company shall have the meaning set forth in
Section 424(f) of the Code.

      Section 3. ELIGIBILITY. Awards and/or Options may be granted to any
Employee. The Committee shall have the sole authority to select the persons to
whom Awards and/or Options are to be granted hereunder, and to determine whether
a person is to be granted a Non-Qualified Option, an ISO or an Award or any
combination thereof. No person shall have any right to participate in the Plan.
Any person selected by the Committee for participation during any one period
will not by virtue of such participation have the right to be selected as a
Participant for any other period.

      Section 4. COMMON STOCK SUBJECT TO THE PLAN.

      4.1. NUMBER OF SHARES. The total number of shares of Common Stock for
which Options and/or Awards may be granted under the Plan shall not exceed in
the aggregate one

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million seven hundred fifty thousand (1,750,000) shares of Common Stock
(subject to adjustment as provided in Section 8 hereof).

      4.2. REISSUANCE. The shares of Common Stock that may be subject to Options
and/or Awards granted under the Plan may be either authorized and unissued
shares or shares reacquired at any time and now or hereafter held as treasury
stock as the Committee may determine. In the event that any outstanding Option
expires or is terminated for any reason, the shares allocable to the unexercised
portion of such Option may again be subject to an Option and/or Award granted
under the Plan. If any shares of Common Stock issued or sold pursuant to an
Award or the exercise of an Option shall have been repurchased by the Company,
then such shares may again be subject to an Option and/or Award granted under
the Plan.

      4.3. SPECIAL ISO LIMITATIONS.

      (a) The aggregate fair market value (determined as of the date an ISO is
granted) of the shares of Common Stock with respect to which ISOs are
exercisable for the first time by an Employee during any calendar year (under
all incentive stock option plans of the Company or any Parent or Subsidiary of
the Company) shall not exceed $100,000.

      (b) No ISO shall be granted to an Employee who, at the time the ISO is
granted, owns (actually or constructively under the provisions of Section 424(d)
of the Code) stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any Parent or Subsidiary of the
Company, unless (i) the option price is at least 110% of the fair market value
(determined as of the time the ISO is granted) of the shares of Common Stock
subject to the ISO and (ii) the ISO by its terms is not exercisable more than
five years from the date it is granted.

      4.4. LIMITATIONS NOT APPLICABLE TO NON-OUALIFIED OPTIONS OR AWARDS.
Notwithstanding any other provision of the Plan, the provisions of Sections
4.3(a) and (b) shall not apply, nor shall be construed to apply, to any
Non-Qualified Option or Award granted under the Plan.

      Section 5. ADMINISTRATION OF THE PLAN.

      5.1. ADMINISTRATION. Subject to the proviso in Section 2.4 hereof, the
Plan shall be administered by a committee of the Board of Directors (the
"Committee") established by the Board of Directors and consisting of no less
than three persons. All members of the Committee shall be "Non-Employee
Directors" within the meaning of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In the event that the
Company becomes a "publicly held corporation" within the meaning of Section
162(m) of the Code and the regulations thereunder and any successor provision
thereto (the "Section 162(m) Provisions"), all members of the Committee shall be
"outside directors" within the meaning of the Section 162(m) Provisions no later
than the earliest applicable date described in Treasury

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Regulation Section 1. 162-27(f)(2) (the "Transition Date"). The Committee
shall be appointed from time to time by, and shall serve at the pleasure of, the
Board of Directors.

      5.2. GRANT OF OPTIONS/AWARDS.

      (a) OPTIONS. The Committee shall have the sole authority and discretion
under the Plan (i) to select the Employees who are to be granted Options
hereunder; (ii) to designate whether any Option to be granted hereunder is to be
an ISO or a Non-Qualified Option; (iii) to establish the number of shares of
Common Stock that may be subject to each Option; (iv) to determine the time and
the conditions subject to which Options may be exercised in whole or in part;
      (v) to determine the amount (not less than the par value per share) and
the form of the consideration that may be used to purchase shares of Common
Stock upon exercise of any Option (including, without limitation, the
circumstances under which issued and outstanding shares of Common Stock owned by
a Participant may be used by the Participant to exercise an Option); (vi) to
impose restrictions and/or conditions with respect to shares of Common Stock
acquired upon exercise of an Option; (vii) to determine the circumstances under
which shares of Common Stock acquired upon exercise of any Option may be subject
to repurchase by the Company; (viii) to determine the circumstances and
conditions subject to which shares acquired upon exercise of an Option may be
sold or otherwise transferred, including, without limitation, the circumstances
and conditions subject to which a proposed sale of shares of Common Stock
acquired upon exercise of an Option may be subject to the Company's right of
first refusal (as well as the terms and conditions of any such right of first
refusal); (ix) to establish a vesting provision for any Option relating to the
time when (or the circumstances under which) the Option may be exercised by a
Participant, including, without limitation, vesting provisions that may be
contingent upon (A) the Company's meeting specified financial goals, (B) a
change of control of the Company or (C) the occurrence of other specified
events; (x) to accelerate the time when outstanding Options may be exercised,
PROVIDED, HOWEVER, that any ISOs shall be deemed "accelerated" within the
meaning of Section 424(h) of the Code; and (xi) to establish any other terms,
restrictions and/or conditions applicable to any Option not inconsistent with
the provisions of the Plan. Notwithstanding the foregoing, however, in the event
that the Company becomes a "publicly held corporation" within the meaning of the
Section 162(m) Provisions, the Committee will not on or after the Transition
Date grant any Non-Qualified Option to any Employee who is likely to be a
"covered employee" within the meaning of the Section 162(m) Provisions, unless
the grant of such Non-Qualified Option complies with the requirements set forth
in the Section l62(m) Provisions with respect to the Company's entitlement to a
deduction upon the exercise of such Non-Qualified Option, including without
limitation the requirements relating to objective performance goals established
by the Committee and shareholder approval.

      (b) AWARDS. The Committee shall have the sole authority and discretion
under the Plan (i) to select the Employees who are to be granted Awards
hereunder; (ii) to determine the amount to be paid by a Participant to acquire
shares of Common Stock pursuant to an Award, which amount may be equal to, more
than, or less than 100% of the fair market value of such shares on the date the
Award is granted (but in no event less than the par value of such shares);

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(iii) to determine the time or times and the conditions subject to which Awards
may be made; (iv) to determine the time or times and the conditions subject to
which the shares of Common Stock subject to an Award are to become vested and no
longer subject to repurchase by the Company; (v) to establish transfer
restrictions and the terms and conditions on which any such transfer
restrictions with respect to shares of Common Stock acquired pursuant to an
Award shall lapse; (vi) to establish vesting provisions with respect to any
shares of Common Stock subject to an Award, including, without limitation,
vesting provisions which may be contingent upon (A) the Company's meeting
specified financial goals, (B) a change of control of the Company or (C) the
occurrence of other specified events; (vii) to determine the circumstances under
which shares of Common Stock acquired pursuant to an Award may be subject to
repurchase by the Company; (viii) to determine the circumstances and conditions
subject to which any shares of Common Stock acquired pursuant to an Award may be
sold or otherwise transferred, including, without limitation, the circumstances
and conditions subject to which a proposed sale of shares of Common Stock
acquired pursuant to an Award may be subject to the Company's right of first
refusal (as well as the terms and conditions of any such right of first
refusal); (ix) to determine the form of consideration that may be used to
purchase shares of Common Stock pursuant to an Award (including, without
limitation, the circumstances under which issued and outstanding shares of
Common Stock owned by a Participant may be used by the Participant to purchase
the Common Stock subject to an Award); (x) to accelerate the time at which any
or all restrictions imposed with respect to any shares of Common Stock subject
to an Award will lapse; and (xi) to establish any other terms, restrictions
and/or conditions applicable to any Award not inconsistent with the provisions
of the Plan. Notwithstanding the foregoing, however, in the event that the
Company becomes a "publicly held corporation" within the meaning of the Section
162(m) Provisions, the Committee will not on or after the Transition Date grant
any Award to any Employee who is likely to be a "covered employee" within the
meaning of the Section 162(m) Provisions, unless the grant of such Award
complies with the requirements set forth in the Section 162(m) Provisions with
respect to the Company's entitlement to a deduction upon the exercise of such
Award, including without limitation the requirements relating to objective
performance goals established by the Committee and shareholder approval.

      5.3. INTERPRETATION. The Committee shall be authorized to interpret the
Plan and may, from time to time, adopt such rules and regulations, not
inconsistent with the provisions of the Plan as it may deem advisable to carry
out the purposes of the Plan.

      5.4. FINALITY. The interpretation and construction by the Committee of any
provision of the Plan, any Option and/or Award granted hereunder or any
agreement evidencing any such Option and/or Award shall be final and conclusive
upon all parties.

      5.5. EXPENSES, ETC. All expenses and liabilities incurred by the Committee
in the administration of the Plan shall be borne by the Company. The Committee
may employ attorneys, consultants, accountants or other persons in connection
with the administration of the Plan. The Company, and its officers and
directors, shall be entitled to rely upon the advice, opinions or valuations of
any such persons. No member of the Committee shall be liable for any action,

                                   5

<PAGE>
determination or interpretation taken or made in good faith with respect
to the Plan or any Option and/or Award granted hereunder.

      Section 6. TERMS AND CONDITIONS OF OPTIONS.

      6.1. ISOS.

      (a) The terms and conditions of each ISO granted under the Plan shall be
specified by the Committee and shall be set forth in an ISO agreement between
the Company and the Participant in such form as the Committee shall approve. The
terms and conditions of each ISO shall be such that each ISO issued hereunder
shall constitute and shall be treated as an "incentive stock option" as defined
in Section 422(b) of the Code. The terms and conditions of any ISO granted
hereunder need not be identical to those of any other ISO granted hereunder.

           The terms and conditions of each ISO shall include the following:

           (i) The option price shall be fixed by the Committee but shall in no
event be less than 100% (or 110% in the case of an Employee referred to in
Section 4.3(b) hereof) of the fair market value of the shares of Common Stock
subject to the ISO on the date the ISO is granted. For purposes of the Plan, the
fair market value per share of Common Stock as of any day shall mean the average
of the closing prices of sales of shares of Common Stock on all national
securities exchanges on which the Common Stock may at the time be listed or, if
there shall have been no sales on any such day, the average of the highest bid
and lowest asked prices on all such exchanges at the end of such day, or, if on
any day the Common Stock shall not be so listed, the average of the
representative bid and asked prices quoted in the NASDAQ system as of 3:30 p.m.,
New York time, on such day, or, if on any day the Common Stock shall not be
quoted in the NASDAQ system, the average of the high and low bid and asked
prices on such day in the over-the-counter market as reported by National
Quotation Bureau Incorporated, or any similar successor organization. If at any
time the Common Stock is not listed on any national securities exchange or
quoted in the NASDAQ system or the over-the-counter market, the fair market
value of the shares of Common Stock subject to an Option on the date the ISO is
granted shall be the fair market value thereof determined in good faith by the
Board of Directors.

           (ii) ISOs, by their terms, shall not be transferable otherwise than
by will or the laws of descent and distribution, and, during a Participant's
lifetime, an ISO shall be exercisable only by the Participant.

           (iii) The Committee shall fix the term of all ISOs granted pursuant
to the Plan (including, without limitation, the date on which such ISO shall
expire and terminate); PROVIDED, HOWEVER, that such term shall in no event
exceed ten years from the date on which such ISO is granted (or, in the case of
an ISO granted to an Employee referred to in

                                   6
<PAGE>
      Section 4.3(b) hereof, such term shall in no event exceed five years from
the date on which such ISO is granted). Each ISO shall be exercisable in such
amount or amounts, under such conditions and at such times or intervals or in
such installments as shall be determined by the Committee in its sole
discretion.

      (b) To the extent that the Company or any Parent or Subsidiary of the
Company is required to withhold any Federal, state or local taxes in respect of
any compensation income realized by any Participant as a result of any
"disqualifying disposition" of any shares of Common Stock acquired upon exercise
of an ISO granted hereunder, the Company shall deduct from any payments of any
kind otherwise due to such Participant the aggregate amount of such Federal,
state or local taxes required to be so withheld or, if such payments are
insufficient to satisfy such Federal, state or local taxes, such Participant
will be required to pay to the Company, or make other arrangements satisfactory
to the Company regarding payment to the Company of, the aggregate amount of any
such taxes. All matters with respect to the total amount of taxes to be withheld
in respect of any such compensation income shall be determined by the Board of
Directors, in its sole discretion.

      (c) The terms and conditions of each ISO may include the following
provisions:

           (i) In the event a Participant shall cease to be an Employee of the
Company or any Parent or Subsidiary of the Company on a full-time basis for any
reason other than as a result of his death or "disability" (within the meaning
of Section 22(e)(3) of the Code), the unexercised portion of any ISO held by
such Participant at that time may only be exercised within one month after the
date on which the Participant ceased to be an Employee, and only to the extent
that the Participant could have otherwise exercised such ISO as of the date on
which he ceased to be an Employee.

           (ii) In the event a Participant shall cease to be an Employee of the
Company or any Parent or Subsidiary of the Company on a full-time basis by
reason of his "disability" (within the meaning of Section 22(e)(3) of the Code),
the unexercised portion of any ISO held by such Participant at that time may
only be exercised within one year after the date on which the Participant ceased
to be an Employee, and only to the extent that the Participant could have
otherwise exercised such ISO as of the date on which he ceased to be an
Employee.

           (iii) In the event a Participant shall die while an Employee of the
Company or a Parent or Subsidiary of the Company (or within a period of one
month after ceasing to be an Employee for any reason other than his "disability"
(within the meaning of Section 22(e)(3) of the Code) or within a period of one
year after ceasing to be an Employee by reason of such "disability"), the
unexercised portion of any ISO held by such Participant at the time of his death
may only be exercised within one year after the date of such Participant's
death, and only to the extent that the Participant could have otherwise
exercised such ISO at the time of his death. In such event, such ISO may be
exercised by

                                   7
<PAGE>
the executor or administrator of the Participant's estate or by any
person or persons who shall have acquired the ISO directly from the Participant
by bequest or inheritance.

      6.2. NON-OUALIFIED OPTIONS.

      (a) The terms and conditions of each Non-Qualified Option granted under
the Plan shall be specified by the Committee, in its sole discretion, and shall
be set forth in a written option agreement between the Company and the
Participant in such form as the Committee shall approve. The terms and
conditions of each Non-Qualified Option will be such (and each Non-Qualified
Option agreement shall expressly so state) that each Non-Qualified Option issued
hereunder shall not constitute nor be treated as an "incentive stock option" as
defined in Section 422(b) of the Code, but will be a "non-qualified stock
option" for Federal, state and local income tax purposes. The terms and
conditions of any Non-Qualified Option granted hereunder need not be identical
to those of any other Non-Qualified Option granted hereunder.

      The terms and conditions of each Non-Qualified Option Agreement shall
include the following:

           (i) The option (exercise) price shall be fixed by the Committee and
may be equal to, more than or less than 100% of the fair market value of the
shares of Common Stock subject to the Non-Qualified Option on the date such
Non-Qualified Option is granted as determined in good faith by the Committee.

           (ii) The Committee shall fix the term of all Non-Qualified Options
granted pursuant to the Plan (including, without limitation, the date on which
such Non-Qualified Option shall expire and terminate). Such term may be more
than ten years from the date on which such Non-Qualified Option is granted. Each
Non-Qualified Option shall be exercisable in such amount or amounts, under such
conditions (including, without limitation, provisions governing the rights to
exercise such Non-Qualified Option), and at such times or intervals or in such
installments as shall be determined by the Committee in its sole discretion.

           (iii) Non-Qualified Options shall not be transferable otherwise than
by will or the laws of descent and distribution, and during a Participant's
lifetime a Non-Qualified Option shall be exercisable only by the Participant.

      (b) The terms and conditions of each Non-Qualified Option may include the
following provisions:

           (i) In the event a Participant shall cease to be an Employee of the
Company or any Parent or Subsidiary of the Company on a full-time basis for any
reason other than as a result of his death or "disability" (within the meaning
of Section 22(e)(3) of the Code), the unexercised portion of any Non-Qualified
Option held by such Participant at that time may

                                   8
<PAGE>
only be exercised within one month after the date on which the
Participant ceased to be an Employee, and only to the extent that the
Participant could have otherwise exercised such Non-Qualified Option as of the
date on which he ceased to be an Employee.

           (ii) In the event a Participant shall cease to be an Employee of the
Company or any Parent or Subsidiary of the Company on a full-time basis by
reason of his "disability" (within the meaning of Section 22(e)(3) of the Code),
the unexercised portion of any Non-Qualified Option held by such Participant at
that time may only be exercised within one year after the date on which the
Participant ceased to be an Employee, and only to the extent that the
Participant could have otherwise exercised such Non-Qualified Option as of the
date on which he ceased to be an Employee.

           (iii) In the event a Participant shall die while an Employee of the
Company or a Parent or Subsidiary of the Company (or within a period of one
month after ceasing to be an Employee for any reason other than his "disability"
(within the meaning of Section 22(e)(3) of the Code) or within a period of one
year after ceasing to be an Employee by reason of such "disability"), the
unexercised portion of any Non-Qualified Option held by such Participant at the
time of his death may only be exercised within one year after the date of such
Participant's death, and only to the extent that the Participant could have
otherwise exercised such Non-Qualified Option at the time of his death. In such
event, such Non-Qualified Option may be exercised by the executor or
administrator of the Participant's estate or by any person or persons who shall
have acquired the Non-Qualified Option directly from the Participant by bequest
or inheritance.

      (c) To the extent that the Company is required to withhold any Federal,
state or local taxes in respect of any compensation income realized by any
Participant in respect of a Non-Qualified Option granted hereunder or in respect
of any shares of Common Stock acquired upon exercise of a Non-Qualified Option,
the Company shall deduct from any payments of any kind otherwise due to such
Participant the aggregate amount of such Federal, state or local taxes required
to be so withheld or, if such payments are insufficient to satisfy such Federal,
state or local taxes, or if no such payments are due or to become due to such
Participant, then, such Participant will be required to pay to the Company, or
make other arrangements satisfactory to the Company regarding payment to the
Company of, the aggregate amount of any such taxes. All matters with respect to
the total amount of taxes to be withheld in respect of any such compensation
income shall be determined by the Committee, in its sole discretion.

      7. TERMS AND CONDITIONS OF AWARDS. The terms and conditions of each Award
granted under the Plan shall be specified by the Committee, in its sole
discretion, and shall be set forth in a written agreement between the
Participant and the Company, in such form as the Committee shall approve. The
terms and provisions of any Award granted hereunder need not be identical to
those of any other Award granted hereunder.

      The terms and conditions of each Award may include the following:

                                   9
<PAGE>
      (a) The amount to be paid by a Participant to acquire the shares of Common
Stock pursuant to an Award shall be fixed by the Committee and may be equal to,
more than or less than 100% of the fair market value of the shares of Common
Stock subject to the Award on the date the Award is granted (but in no event
less than the par value of such shares).

      (b) Each Award shall contain such vesting provisions, such transfer
restrictions and such other restrictions and conditions as the Committee, in its
sole discretion, may determine, including, without limitation, the circumstances
under which the Company shall have the right and option to repurchase shares of
Common Stock acquired pursuant to an Award.

      (c) Stock certificates representing Common Stock acquired pursuant to an
Award shall bear a legend referring to any restrictions imposed on such Stock
and such other matters as the Committee may determine.

      (d) To the extent that the Company is required to withhold any Federal,
state or local taxes in respect of any compensation income realized by the
Participant in respect of an Award granted hereunder, in respect of any shares
acquired pursuant to an Award, or in respect of the vesting of any such shares
of Common Stock, then the Company shall deduct from any payments of any kind
otherwise due to such Participant the aggregate amount of such Federal, state or
local taxes required to be so withheld, or if such payments are insufficient to
satisfy such Federal, state or local taxes, or if no such payments are due or to
become due to such Participant, then such Participant will be required to pay to
the Company, or make other arrangements satisfactory to the Company regarding
payment to the Company of, the aggregate amount of any such taxes. All matters
with respect to the total amount of taxes to be withheld in respect of any such
compensation income shall be determined by the Committee, in its sole
discretion.

      Section 8. ADJUSTMENTS. (a) In the event that, after the adoption of the
Plan by the Board of Directors, the outstanding shares of the Company's Common
Stock shall be increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another entity in each such case through reorganization, merger or
consolidation, recapitalization, reclassification, stock split, split-up,
combination or exchange of shares or declaration of any dividends payable in
Common Stock, the Committee in good faith shall, subject to the provisions of
Section 8(c) below if the circumstances therein specified are applicable,
appropriately adjust (i) the number of shares of Common Stock (and the option
price per share) subject to the unexercised portion of any outstanding Option
(to the nearest possible full share); PROVIDED, HOWEVER, that the limitations of
Section 424 of the Code shall apply with respect to adjustments made to ISOs,
      (ii) the number of shares of Common Stock to be acquired pursuant to an
Award which have not become vested, and (iii) the number of shares of Common
Stock for which Options and/or Awards may be granted under the Plan, as set
forth in Section 4.1 hereof, and such adjustments shall be effective and binding
for all purposes of the Plan.

                                   10
<PAGE>
      (b) If any capital reorganization or reclassification of the capital stock
of the Company or any consolidation or merger of the Company with another
entity, or the sale of all or substantially all its assets to another entity,
shall be effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities or assets with respect to or in exchange for Common
Stock, then, subject to the provisions of Section 8(c) below if the
circumstances therein specified are applicable, each holder of an Option shall
thereafter have the right to purchase, upon the exercise of the Option in
accordance with the terms and conditions specified in the option agreement
governing such Option and in lieu of the shares of Common Stock immediately
theretofore receivable upon the exercise of such Option, such shares of stock,
securities or assets (including, without limitation, cash) as may be issued or
payable with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the number of shares of such Common Stock immediately
theretofore so receivable had such reorganization, reclassification,
consolidation, merger or sale not taken place.

      (c) Notwithstanding Sections 8(a) and 8(b) hereof, in the event of (i) any
offer to holders of the Company's Common Stock generally relating to the
acquisition of all or substantially all of their shares, including, without
limitation, through purchase, merger or otherwise, or (ii) any proposed
transaction generally relating to the acquisition of substantially all of the
assets or business of the Company (herein sometimes referred to as an
"Acquisition"), the Board of Directors may, in its sole discretion, cancel any
outstanding Options (PROVIDED, HOWEVER, that the limitations of Section 424 of
the Code shall apply with respect to adjustments made to ISO's) and pay or
deliver, or cause to be paid or delivered, to the holder thereof an amount in
cash or securities having a value (as determined by the Board of Directors
acting in good faith) equal to the product of (A) the number of shares of Common
Stock (the "Option Shares") that, as of the date of the consummation of such
Acquisition, the holder of such Option had become entitled to purchase (and had
not purchased) multiplied by (B) the amount, if any, by which (1) the formula or
fixed price per share paid to holders of shares of Common Stock pursuant to such
Acquisition exceeds (2) the option price applicable to such Option Shares.

      Section 9. EFFECT OF THE PLAN ON EMPLOYMENT RELATIONSHIP. Neither the Plan
nor any Option and/or Award granted hereunder to a Participant shall be
construed as conferring upon such Participant any right to continue in the
employ of (or otherwise provide services to) the Company or any Subsidiary or
Parent thereof, or limit in any respect the right of the Company or any
Subsidiary or Parent thereof to terminate such Participant's employment or other
relationship with the Company or any Subsidiary or Parent, as the case may be,
at any time.

      Section 10. AMENDMENT OF THE PLAN. The Board of Directors may amend the
Plan from time to time as it deems desirable; PROVIDED, HOWEVER, that, without
the approval of the holders of a majority of the outstanding capital stock of
the Company entitled to vote thereon or consent thereto, the Board of Directors
may not amend the Plan (i) to increase (except for increases due to adjustments
in accordance with Section 8 hereof) the aggregate number of shares of Common
Stock for which Options and/or Awards may be granted hereunder, (ii) to decrease

                                   11
<PAGE>
the minimum exercise price specified by the Plan in respect of ISOs or
(iii) to change the class of Employees eligible to receive ISOs under the Plan.

      Section 11. TERMINATION OF THE PLAN. The Board of Directors may terminate
the Plan at any time. Unless the Plan shall theretofore have been terminated by
the Board of Directors, the Plan shall terminate ten years after the date of its
initial adoption by the Board of Directors. No Option and/or Award may be
granted hereunder after termination of the Plan. The termination or amendment of
the Plan shall not alter or impair any rights or obligations under any Option
and/or Award theretofore granted under the Plan.

      Section 12. EFFECTIVE DATE OF THE PLAN. The Plan shall be effective as of
April 30, 1998, the date on which the Plan was adopted by the Board of
Directors.

                                       12

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