Document:

<PAGE>   1
                           U.S. PHYSICAL THERAPY, INC.              EXHIBIT 10.4

                       NONSTATUTORY STOCK OPTION AGREEMENT

        THIS AGREEMENT is made and entered effective as of February 7, 2001
between U.S. Physical Therapy, Inc., a Nevada corporation (the "Corporation"),
and BRENT DAVIS (the "Holder") in connection with the grant of a Nonstatutory
Option (hereinafter defined).

                              W I T N E S S E T H:

        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
20,000 shares of Stock at a price of $20.3750 per share, subject to adjustment
or termination as provided in Paragraph 12 below. This Option is exercisable
with respect to the shares of Stock indicated as follows:

<TABLE>
<CAPTION>
            On and After                          Number of Shares
            ------------                          ----------------

<S>                                     <C>
            two years after the                 5,000 shares of Stock
            grant date

            three years after the               5,000 additional shares of Stock
            grant date

            four years after the                5,000 additional shares of Stock
            grant date

            five years after the                5,000 additional shares of Stock
            grant date
</TABLE>

                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.

   Nonstatutory Stock Option Agreement for Brent Davis dated February 7, 2001

<PAGE>   2
                                                                  Page 2

 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

                        (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

   Nonstatutory Stock Option Agreement for Brent Davis dated February 7, 2001

<PAGE>   3

                                                                  Page 3

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 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 Paragraph12 and any
controversy which may arise under this Agreement shall be determined by the
Board of Directors in its sole discretion.

   Nonstatutory Stock Option Agreement for Brent Davis dated February 7, 2001

<PAGE>   4

                                                                  Page 4

  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.

  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:           Brent Davis
                        5510 S. Rice, # 739
                        Houston, TX  77081

  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 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

   Nonstatutory Stock Option Agreement for Brent Davis dated February 7, 2001

<PAGE>   5

                                                                  Page 5

             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.

  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.

   Nonstatutory Stock Option Agreement for Brent Davis dated February 7, 2001

<PAGE>   6

                                                                  Page 6

  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 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: Feb. 8, 2001
                                                -----------------------

                             HOLDER

                                    /s/ Brent Davis
                             ------------------------------------------
                             Date of Execution:  March 15,2001
                                               ------------------------

   Nonstatutory Stock Option Agreement for Brent Davis dated February 7, 2001<PAGE>   1
                           U.S. PHYSICAL THERAPY, INC.              EXHIBIT 10.5

                       NONSTATUTORY STOCK OPTION AGREEMENT

        THIS AGREEMENT is made and entered effective as of February 17, 2000
between U.S. Physical Therapy, Inc., a Nevada corporation (the "Corporation"),
and ROBERT L. BAKER (the "Holder") in connection with the grant of a
Nonstatutory Option (hereinafter defined).

                              W I T N E S S E T H:

        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 $8.5000 per share, subject to adjustment or
termination as provided in Paragraph 12 below. This Option is exercisable with
respect to the shares of Stock indicated as follows:

<TABLE>
<CAPTION>
            On and After                          Number of Shares
            ------------                          ----------------

<S>                                     <C>
            two years after the                 2,500 shares of Stock
            grant date

            three years after the               2,500 additional shares of Stock
            grant date

            four years after the                2,500 additional shares of Stock
            grant date

            five years after the                2,500 additional shares of Stock
            grant date
</TABLE>

                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.

 Nonstatutory Stock Option Agreement for Robert L. Baker dated February 17, 2000

<PAGE>   2
                                                                  Page 2

 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

                        (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

 Nonstatutory Stock Option Agreement for Robert L. Baker dated February 17, 2000
<PAGE>   3

                                                                  Page 3

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 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 Paragraph12 and any
controversy which may arise under this Agreement shall be determined by the
Board of Directors in its sole discretion.

 Nonstatutory Stock Option Agreement for Robert L. Baker dated February 17, 2000

<PAGE>   4

                                                                  Page 4

  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.

  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:           Robert L. Baker
                        777 Dunlavy # 8305
                        Houston, TX  77019

  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
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

 Nonstatutory Stock Option Agreement for Robert L. Baker dated February 17, 2000

<PAGE>   5

                                                                  Page 5

        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.

  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.

 Nonstatutory Stock Option Agreement for Robert L. Baker dated February 17, 2000

<PAGE>   6

                                                                  Page 6

  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 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:  Feb. 18,2000
                                               ------------------------

                             HOLDER

                                   /s/ Robert L. Baker
                             ------------------------------------------
                             Date of Execution:   June 22, 2000
                                               ------------------------

 Nonstatutory Stock Option Agreement for Robert L. Baker dated February 17, 2000

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