PRIME MEDICAL SERVICES, INC.

                                    CONFORMED
                           THIRD AMENDED AND RESTATED
                                 LOAN AGREEMENT


                      $100,000,000.00 REVOLVING CREDIT LOAN

                                BANKBOSTON, N.A.
                             as Administrative Agent

                           NATIONSBANK OF TEXAS, N.A.,
                             as Documentation Agent

                      NATIONSBANC MONTGOMERY SECURITIES LLC
                        as Arranger and Syndication Agent

                                       and

                            THE LENDERS NAMED HEREIN,
                                   as Lenders

                           Dated as of April 20, 1998












<PAGE>



                                TABLE OF CONTENTS

                                                                          Page


ARTICLE I  --  DEFINITIONS.....................................................1
         Section 1.1       Amendment and Restatement...........................1
         Section 1.2       Definitions.........................................2
         Section 1.3       Other Definitional Provisions......................18

ARTICLE II  --  ADVANCES......................................................18
         Section 2.1       Commitments........................................18
         Section 2.2       Notes..............................................18
         Section 2.3       Repayment of Advances..............................18
         Section 2.4       Interest...........................................18
         Section 2.5       Borrowing Procedure................................19
         Section 2.6       Continuations; Conversions.........................19
         Section 2.7       Use of Proceeds....................................20
         Section 2.8       Fees...............................................20

ARTICLE III  --  PAYMENTS.....................................................20
         Section 3.1       Method of Payment..................................20
         Section 3.2       Optional Prepayment................................21
         Section 3.3       Mandatory Prepayments..............................21
         Section 3.4       Pro Rata Treatment.................................21
         Section 3.5       Non-Receipt of Funds by the Administrative Agent...21
         Section 3.6       Withholding Taxes..................................22
         Section 3.7       Withholding Tax Exemption..........................22
         Section 3.8       Computation of Interest............................22
         Section 3.9       Order of Application...............................23

ARTICLE IV  --  YIELD PROTECTION AND ILLEGALITY...............................23
         Section 4.1       Additional Costs...................................23
         Section 4.2       Limitation on Eurodollar Advances..................24
         Section 4.3       Illegality.........................................25
         Section 4.4       Treatment of Eurodollar Advances...................25
         Section 4.5       Compensation.......................................25
         Section 4.6       Capital Adequacy...................................26

ARTICLE V  --  SECURITY.......................................................26
         Section 5.1       Collateral.........................................26
         Section 5.2       Future Liens. .....................................28
         Section 5.3       Release of Collateral..............................28
         Section 5.4       Setoff.............................................28

ARTICLE VI  --  CONDITIONS PRECEDENT..........................................29
         Section 6.1       Initial Advance....................................29
         Section 6.2       All Advances.......................................31



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ARTICLE VII  --  REPRESENTATIONS AND WARRANTIES...............................31
         Section 7.1       Existence..........................................31
         Section 7.2       Financial Statements...............................31
         Section 7.3       Corporate Action:  No Breach.......................32
         Section 7.4       Operation of Business..............................32
         Section 7.5       Litigation and Judgments...........................32
         Section 7.6       Rights in Properties; Liens........................32
         Section 7.7       Enforceability.....................................32
         Section 7.8       Approvals..........................................33
         Section 7.9       Debt...............................................33
         Section 7.10      Taxes..............................................33
         Section 7.11      Use of Proceeds; Margin Securities.................33
         Section 7.12      ERISA..............................................33
         Section 7.13      Disclosure.........................................33
         Section 7.14      Subsidiaries; Partnerships.........................34
         Section 7.15      Agreements.........................................34
         Section 7.16      Compliance with Legal Requirements; Governmental
                               Authorizations.................................34
         Section 7.17      Investment Company Act.............................35
         Section 7.18      Public Utility Holding Company Act.................35
         Section 7.19      Environmental Matters..............................35
         Section 7.20      Year 2000 Compliance...............................35

ARTICLE VIII  --  POSITIVE COVENANTS..........................................35
         Section 8.1       Reporting Requirements.............................35
         Section 8.2       Maintenance of Existence; Conduct of Business......38
         Section 8.3       Maintenance of Properties..........................38
         Section 8.4       Taxes and Claims...................................38
         Section 8.5       Insurance..........................................38
         Section 8.6       Inspection Rights..................................38
         Section 8.7       Keeping Books and Records..........................39
         Section 8.8       Compliance with Laws...............................39
         Section 8.9       Compliance with Agreements.........................39
         Section 8.10      Further Assurances.................................39
         Section 8.11      ERISA..............................................39
         Section 8.12      Information Relating to Proposed Acquisitions......39
         Section 8.13      After-Acquired Subsidiaries........................39
         Section 8.14      Syndication Cooperation............................39

ARTICLE IX  --  NEGATIVE COVENANTS............................................40
         Section 9.1       Debt...............................................40
         Section 9.2       Limitation on Liens................................40
         Section 9.3       Mergers, Etc.......................................41
         Section 9.4       Restricted Payments................................41
         Section 9.5       Investments........................................42
         Section 9.6       Limitation on Issuance of Capital Stock............42
         Section 9.7       Transactions With Affiliates.......................43
         Section 9.8       Disposition of Assets..............................43
         Section 9.9       Sale and Leaseback.................................43
         Section 9.10      Prepayment of Debt.................................43
         Section 9.11      Nature of Business.................................43

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         Section 9.12      Environmental Protection...........................43
         Section 9.13      Accounting.........................................44
         Section 9.14      Amendment of Partnership and Management 
                              Agreements......................................44

ARTICLE X  --  FINANCIAL COVENANTS............................................44
         Section 10.1      Total Net Debt to EBITDA...........................44
         Section 10.2      Senior Net Debt To EBITDA Ratio....................44
         Section 10.3      Debt Service Coverage Ratio........................44
         Section 10.4      Consolidated Net Worth.............................45

ARTICLE XI  --  DEFAULT.......................................................45
         Section 11.1      Events of Default..................................45
         Section 11.2      Remedies...........................................47
         Section 11.3      Performance by the Administrative Agent............47

ARTICLE XII  --  THE ADMINISTRATIVE AGENT.....................................48
         Section 12.1      Appointment, Powers and Immunities.................48
         Section 12.2      Rights of Administrative Agent as a Lender.........49
         Section 12.3      Sharing of Payments, Etc...........................49
         Section 12.4      Indemnification....................................50
         Section 12.5      Independent Credit Decisions.......................50
         Section 12.6      Several Commitments................................51
         Section 12.7      Successor Administrative Agent.....................51
         Section 12.8      Independent Contractor.............................51

ARTICLE XIII  --  MISCELLANEOUS...............................................52
         Section 13.1      Expenses...........................................52
         Section 13.2      Indemnification....................................52
         Section 13.3      No Duty............................................52
         Section 13.4      No Fiduciary Relationship..........................53
         Section 13.5      No Waiver; Cumulative Remedies.....................53
         Section 13.6      Successors and Assigns.............................53
         Section 13.7      Survival...........................................55
         Section 13.8      ENTIRE AGREEMENT...................................55
         Section 13.9      Amendments, Etc....................................55
         Section 13.10     Maximum Interest Rate..............................56
         Section 13.11     Notices............................................56
         Section 13.12     Governing Law......................................56
         Section 13.13     Counterparts.......................................57
         Section 13.14     Severability.......................................57
         Section 13.15     Headings...........................................57
         Section 13.16     Construction.......................................57
         Section 13.17     Independence of Covenants..........................57
         Section 13.18     Confidentiality....................................57
         Section 13.19     Renewal and Increase...............................58
         Section 13.20     Waiver of Jury Trial...............................58
         Section 13.21     Choice of Forum; Consent to Service of Process and
                               Jurisdiction...................................58


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                                INDEX TO EXHIBITS

Exhibit        Description of Exhibit

A                 Advance Request Form
B                 Form of Assignment and Acceptance
C                 Form of Note
D                 Perfection Certificate
E                 Form of Opinion of Counsel for Borrower and the Guarantors
F                 Compliance Certificate
G                 Permitted Acquisition Certificate
H                 Permitted Passive Investment Certificate
I                 Permitted Other Business Acquisition Certificate
J                 Non-Borrower and Guarantor Acquisition Certificate


                               INDEX TO SCHEDULES

Schedule          Description of Schedule

1                 Commitments
2                 Guarantors
3                 Partnerships
7.5               Existing Litigation
7.9               Existing Debt
7.14.1            Capitalization of Subsidiaries
7.14.2            Partners
7.15              Agreements
7.16              Governmental Disclosures
7.19              Environmental Matters
9.2               Existing Liens



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                                 LOAN AGREEMENT
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                    THIRD AMENDED AND RESTATED LOAN AGREEMENT

         THIS THIRD AMENDED AND RESTATED LOAN AGREEMENT (the "Agreement"), dated
as of April  20,  1998,  is among  PRIME  MEDICAL  SERVICES,  INC.,  a  Delaware
corporation  ("Borrower"),  each of the  lenders or other  lending  institutions
which is or which  may  from  time to time  become  a  signatory  hereto  or any
successor or assignee thereof (collectively,  the "Lenders" and individually,  a
"Lender"),  BANKBOSTON, N.A. ("BankBoston"),  a national banking association, as
Administrative  Agent  for  itself  and the  other  Lenders  (in such  capacity,
together with its successors in such capacity,  the "Administrative  Agent") and
NATIONSBANK OF TEXAS, N.A. ("NationsBank"),  a national banking association,  as
Documentation Agent for itself and the other Lenders (in such capacity, together
with  its  successors  in  such  capacity,   the  "Documentation   Agent"),  and
NATIONSBANC  MONTGOMERY  SECURITIES LLC, as Arranger and  Syndication  Agent (in
such capacity, together with its successors in such capacity, the "Arranger" and
"Syndication Agent").


                                 R E C I T A L S

         1. Reference is hereby made to that certain Loan Agreement  dated as of
November 28, 1994,  by and between  Borrower,  the Banks  defined  therein,  and
BankBoston  (then known as The First National Bank of Boston),  as Agent for the
Banks  defined  therein,  as amended by that  certain  First  Amendment  to Loan
Agreement  dated as of August 17,  1995,  as amended by the Amended and Restated
Loan Agreement  dated as of April 26, 1996 among  BankBoston,  NationsBank,  and
BankBoston,  as Syndication  Agent, as amended by the First Amendment to Amended
and  Restated  Loan  Agreement  dated  as of June  14,  1996  among  BankBoston,
NationsBank, and the other banks named therein, as further amended by the Second
Amended and Restated Loan Agreement dated as of March 31, 1997 among BankBoston,
NationsBank,  Montgomery  Securities  LLC  (then  known as  NationsBanc  Capital
Markets,  Inc.), and the lenders named therein,  as amended and waived from time
to time (collectively, the "Original Credit Agreement").

         2. The parties hereto desire to amend the Original Credit Agreement, to
provide for, among other things,  (a) a  $50,000,000.00  increase in the maximum
amount  available under the Revolving  Credit  Commitment,  (b) the addition and
deletion  of certain  lenders  as  parties  thereto,  and (c)  modification  and
amendment  to  certain  other  provisions  therein,  subject  to the  terms  and
conditions set forth in this Agreement.

         3. The Administrative  Agent, the Documentation  Agent, the Syndication
Agent,  the Lenders and Borrower desire and have agreed to amend and restate the
Original Credit Agreement in its entirety as and pursuant to this Agreement.

         NOW  THEREFORE,  in  consideration  of  the  premises  and  the  mutual
covenants herein contained, the parties hereto agree as follows:


                            ARTICLE I -- DEFINITIONS

         Section 1.1 Amendment and  Restatement.  This  Agreement is in renewal,
extension,  modification,  increase,  and  restatement  of the  Original  Credit
Agreement and  constitutes  and is hereby  designated by Borrower as "Designated
Senior Debt" as defined in the Senior Subordinated Indenture.


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                                 LOAN AGREEMENT
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             Section 1.2  Definitions.  As used in this Agreement, the following
terms shall have the following meanings:

         "Acquisition"   means  any  transaction,   or  any  series  of  related
transactions,  consummated on or after the date hereof, by which Borrower or any
Guarantor  directly or indirectly (a) acquires all or  substantially  all of the
assets of any Person,  whether through purchase of assets, merger, or otherwise,
(b) acquires (in one  transaction or as the most recent  transaction in a series
of  transactions) at least a majority (in number of votes) of the securities (or
similar ownership  interests) of any Person, or (c) acquires (in one transaction
or as the most  recent  transaction  in a  series  of  transactions)  at least a
majority of the general  partnership or managing member interests of any Person;
or  (d)  acquires  additional  Partnership  or  other  equity  interests  in any
Subsidiary.

         "Additional Costs" has the meaning specified in Section 4.1.

         "Adjusted  Eurodollar Rate" means,  for any Eurodollar  Advance for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary,  to
the nearest 0.01%) determined by the Administrative Agent to be equal to (a) the
Eurodollar Rate for such Eurodollar  Advance for such Interest Period divided by
(b) 1.00 minus the  Reserve  Requirement  for such  Eurodollar  Advance for such
Interest Period.

         "Administrative Agent" has the meaning specified in the preamble.

         "Advance"  means each advance of funds by the Lenders or any of them to
Borrower pursuant to Section 2.5(a).

         "Advance Request Form" means a certificate,  in substantially  the form
of Exhibit A, properly completed and signed by Borrower requesting an Advance.

         "Affiliate" means, as to any Person, any other Person (a) that directly
or indirectly, through one or more intermediaries, Controls or is Controlled by,
or is under common  Control with,  such Person,  (b) that directly or indirectly
beneficially  owns or holds  five  percent  (5%) or more of any  class of voting
stock of such  Person,  or (c) five  percent (5%) or more of the voting stock of
which is  directly  or  indirectly  beneficially  owned or held by the Person in
question;  provided,  however,  in no event  shall the  Agents or any  Lender be
deemed an Affiliate of Borrower or any of its Subsidiaries.

         "After-Acquired Subsidiary" has the meaning specified in Section 8.13.

         "Agents" means the Administrative Agent, the Documentation Agent, and 
the Syndication Agent.

         "Agent" means any one of the Agents.

         "Alternate  Base  Rate"  means,  at any time,  the  greater  of (a) the
variable rate of interest  established  from time to time by the  Administrative
Agent as its  "base  rate"  and set by the  Administrative  Agent  as a  general
reference  rate of interest  charged by the  Administrative  Agent,  and (b) the
Federal Funds Rate plus  one-half of one percent  (.5%).  Borrower  acknowledges
that the  Administrative  Agent may,  from time to time,  extend credit to other
borrowers at rates of interest varying from, and having no relationship to, such
general  reference  rate.  Each change in the  Alternate  Base Rate shall become
effective  without prior notice to Borrower  automatically  as of the opening of
business on the date of such change in the Alternate Base Rate.

         "Alternate  Base Rate  Advances"  means  Advances that bear interest at
rates based upon the Alternate Base Rate.

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                                 LOAN AGREEMENT
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         "Applicable  Lending  Office"  means for each  Lender  and each Type of
Advance,  the lending  office of such Lender (or of an Affiliate of such Lender)
designated for such Type of Advance below its name on the signature pages hereof
or an Assignment and  Acceptance,  or such other office of such Lender (or of an
Affiliate  of such  Lender)  as such  Lender  may from time to time  specify  to
Borrower  and the  Administrative  Agent as the office by which its  Advances of
such Type are to be made and maintained.

         "Applicable  Margin" means the interest  margin over the Alternate Base
Rate or the Adjusted Eurodollar Rate, as the case may be, for Advances under the
Commitment  (a) from the date hereof until the delivery of financial  statements
and a compliance  certificate  for the period ending March 31, 1998, as required
hereunder,  one-eighth of one percent  (.125%) for Alternate Base Rate Advances,
and one and  five-eighths  percent  (1.625%) for  Eurodollar  Advances;  and (b)
thereafter,  based on the Net Debt to EBITDA Ratio as of and for the most recent
four (4)  quarter  period  ending on or before  the date of  determination,  the
margin set forth opposite such ratio below:


                                         Applicable Margin     Applicable Margin
   Net Debt to EBITDA Ratio              Alternate Base Rate      Eurodollar
                                             Advances              Advances
----------------------------------  ------------------------   -----------------
Less than 1.5 to 1.0                         0.000%                  1.000%
Less than 2.00 to 1.0 but greater            0.000%                  1.375%
   than or equal to 1.5 to 1.0
Less than 2.75 to 1.0 but greater            .125%                   1.625%
   than or equal to 2.00 to 1.0
Greater than or equal to 2.75 to 1.0         .500%                   2.00%
====================================  ============================  ============

The Net Debt to EBITDA Ratio shall be  determined  from the then most current of
either (a) the quarterly or annual financial  statements and related  compliance
certificate  delivered  pursuant to Section 8.1, or (b) the most recent  Advance
Request Form for a Permitted  Acquisition,  calculating  any adjustments to such
ratio  necessitated  as a result of the  Permitted  Acquisition  for which  such
Advance was made.  The  adjustment,  if any, to the  Applicable  Margin shall be
effective  commencing  on the fifth (5th)  Business  Day after  delivery of such
financial statements (and related compliance certificate) or the respective date
of Advance for a Permitted Acquisition, as the case may be. If Borrower fails at
any time to furnish to the  Administrative  Agent and the Lenders the  financial
statements  and related  compliance  certificate  as  required  to be  delivered
pursuant to Section 8.1,  then the maximum  Applicable  Margin shall apply until
such  time as such  financial  statements  and  compliance  certificates  are so
delivered.

         "Applicable  Rate"  means:  (a) during any period that an Advance is an
Alternate Base Rate Advance, the Alternate Base Rate plus the Applicable Margin;
and (b) during any period that an Advance is a Eurodollar Advance,  the Adjusted
Eurodollar Rate plus the Applicable Margin.

         "Applicable  Unused  Fee  Percentage"  means  the per  annum  rate with
respect to the unused portion of the  Commitments as follows:  (a) from the date
hereof until delivery of financial  statements and a compliance  certificate for
the period ending March 31, 1998, as required  hereunder,  three-eighths  of one
percent (.375%); and (b) thereafter, based on the Net Debt to EBITDA Ratio as of
and for the most recent four (4) quarter  period ending on or before the date of
determination, the percentage set forth opposite such ratio below:

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              Net Debt to EBITDA Ratio                     Applicable Unused
                                                             Fee Percentage
-----------------------------------------------------  -------------------------
Less than 1.5 to 1.0                                             .250%
Less than 2.0 to 1.0 but greater than or                         .300%
equal to 1.5 to 1.0
-----------------------------------------------------  -------------------------
Greater than or equal to 2.0 to 1.0                              .375%
=====================================================  =========================

The Applicable  Unused Fee Percentage  shall be adjusted,  if necessary,  at the
same time as adjustments to the Applicable Margin. If Borrower fails at any time
to furnish to the Administrative  Agent and the Lenders the financial statements
and related  compliance  certificate  as required  to be  delivered  pursuant to
Section 8.1, then the maximum Applicable Unused Fee Percentage shall apply until
such  time as such  financial  statements  and  compliance  certificates  are so
delivered.

         "Arranger" has the meaning specified in the preamble.

         "Assignee" has the meaning specified in Section 13.6.

         "Assigning Lender" has the meaning specified in Section 13.6.

         "Assignment and Acceptance" means an assignment and acceptance  entered
into by an Assigning Lender and its Assignee and accepted by the  Administrative
Agent pursuant to Section 13.6, in substantially the form of Exhibit B.

         "BankBoston" has the meaning specified in the preamble.

         "Basle  Accord" means the proposals for  risk-based  capital  framework
described  by  the  Basle  Committee  on  Banking  Regulations  and  Supervisory
Practices  in  its  paper   entitled   "International   Convergence  of  Capital
Measurement and Capital  Standards" dated July,  1988, as amended,  supplemented
and  otherwise  modified  and in effect  from time to time,  or any  replacement
thereof.

         "Borrower Security Agreement" means (a) the Borrower Security Agreement
dated as of April 26, 1996,  executed by Borrower in favor of the Administrative
Agent for the benefit of the Lenders, as the same may be amended,  supplemented,
or modified  from time to time,  including  (b) the  Consent,  Confirmation  and
Ratification of Borrower Security  Agreement dated as of March 31, 1997, and (c)
the Second Consent, Confirmation and Ratification of Borrower Security Agreement
dated as of the date hereof,  which Borrower  Security  Agreement is in renewal,
amendment,  restatement  and  substitution  of that  certain  Borrower  Security
Agreement  dated  November  28,  1994,  executed  by  Borrower  in  favor of the
Administrative  Agent,  for the benefit of the Lenders under the Original Credit
Agreement,  as amended  pursuant to that First  Amendment  to Borrower  Security
Agreement dated as of August 17, 1995, and any other security agreement executed
from time to time by Borrower and  delivered to the Agent for the benefit of the
Lenders, all as amended, renewed, restated, and substituted from time to time.

         "Business Day" means (a) any day on which the  Administrative  Agent is
open for regular  business,  and (b) with respect to all  borrowings,  payments,
Conversions,  Continuations,  Interest  Periods,  and notices in connection with
Eurodollar  Advances,  any day which is a Business  Day  described in clause (a)
above and which is also a day on which  dealings in Dollar  deposits are carried
out in the London interbank market.


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         "Capital Lease Obligations" means, as to any Person, the obligations of
such Person to pay rent or other  amounts  under a lease of (or other  agreement
conveying the right to use) real and/or personal property, which obligations are
required to be  classified  and  accounted  for as a capital  lease on a balance
sheet of such Person under GAAP. For purposes of this  Agreement,  the amount of
such Capital Lease  Obligations  shall be the  capitalized  amount  thereof,  as
determined in accordance with GAAP.

         "Cash  Equivalent"  means any  investments  of the Companies  which are
permitted by Section  9.5(a),  and which  mature  within 180 days of any date of
determination,  and which are  unconditionally  available  for  repayment of the
Obligations, upon liquidation.

         "Change in Control" means a Change of Control as defined in the Senior
Subordinated Indenture.

         "Code" means the Internal  Revenue  Code of 1986,  as amended,  and the
regulations promulgated and rulings issued thereunder.

         "Collateral" has the meaning specified in Section 5.1.

         "Commitment" means, as to each Lender as of any date, the obligation of
such Lender on such date to make  Advances  hereunder in an aggregate  principal
amount at any time  outstanding  up to but not  exceeding  the  amount  shown on
Schedule 1 as its  Commitment,  as the same may be reduced  pursuant  to Section
2.1(b) or terminated  pursuant to Section 2.1(b) or Section 11.2 and as the same
may be increased or decreased from time to time by further  assignment  pursuant
to Section 13.6.  "Commitments"  means the  Commitments of all of the Lenders in
the original aggregate amount of $100,000,000.00.

         "Companies" means Borrower and its Subsidiaries.

         "Confidential  Information"  means any and all information  relating to
the Companies,  including,  without limitation,  information relating to each of
the Company's financial condition, business plans, management, earnings, assets,
liabilities,   contracts,   processes,   products,   research  and   development
activities, intellectual property, services, customers, suppliers, marketing and
sales.  In addition,  Confidential  Information  shall include any and all other
information  marked  or  identified  in  writing  by  any of  the  Companies  as
"Confidential"  or  "Confidential  Information"  and  provided  by  each  of the
Companies or its representatives to any of the Lenders or the Agents or obtained
by the  Lenders or the  Agents  after an  inspection  pursuant  to Section  8.6.
Notwithstanding the foregoing, "Confidential Information" shall not include:

                  (i) any  information  known to an  Agent or a Lender  prior to
         disclosure  by  any  of  the  Companies  or  its  representatives,   as
         documented prior to such disclosure in such Agent's or Lender's written
         records;

                  (ii) any information  which an Agent or a Lender  demonstrates
         became available to it on a non-confidential basis from a source (other
         than  any of the  Companies)  who is  not  bound  by a  confidentiality
         agreement with, or any other contractual, legal or fiduciary obligation
         of  confidentiality  to, any of the  Companies  or any other party with
         respect to such information;

                  (iii) any information which an Agent or a Lender  demonstrates
         is or becomes generally  available to the public other than as a result
         of a disclosure by it in breach of Section 13.18; and


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                  (iv) any information  which an Agent or a Lender  demonstrates
         was  conceived of or developed  by it or any of its  employees  without
         access  or  reference,  directly  or  indirectly,  to the  Confidential
         Information.

         "Consolidated  Net Income"  means,  for any Person for any period,  the
amount which, in conformity with GAAP,  would be shown on a consolidated  income
statement of such Person as net income for such period,  after  deduction of any
minority interests.

         "Consolidated  Net Worth" means,  at any  particular  time, all amounts
which, in conformity with GAAP, would be included as  stockholders'  equity on a
consolidated balance sheet of the Companies.

         "Continue,"  "Continuation," and "Continued" refers to the continuation
pursuant to Section 2.6 of a Eurodollar  Advance from one Interest Period to the
next Interest Period.

         "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting  securities  or other  ownership  interests,  by
contract or otherwise.  "Controlling" and "Controlled" have meanings correlative
thereto.

         "Conversion" and "Converted" refers to a conversion pursuant to Section
2.6 of one Type of Advance into another Type of Advance.

         "Debt"  means as to any  Person at any time  (without  duplication  and
without duplication among the Companies): (a) all obligations of such Person for
borrowed money;  (b) all obligations of such Person  evidenced by bonds,  notes,
debentures,  or other similar instruments,  including,  without limitation,  the
Senior  Subordinated  Notes;  (c)  all  obligations  of such  Person  to pay the
deferred  purchase price of property or services,  except trade accounts payable
of such Person arising in the ordinary  course of business that are not past due
by more than ninety (90) days; (d) all Capital Lease Obligations of such Person;
(e) all  indebtedness  or other  obligations of others of the types described in
this definition, if Guaranteed by such Person or for which such Person is liable
as a partner in any partnership or joint venturer in any joint venture;  (f) all
obligations secured by a Lien existing on property owned by such Person, whether
or not the  obligations  secured thereby have been assumed by such Person or are
non-recourse to the credit of such Person; (g) all reimbursement  obligations of
such Person  (whether  contingent or otherwise) in respect of letters of credit,
banker's  acceptances,  surety or other bonds and similar  instruments;  (h) all
obligations under any Financial Hedge, and (i) all liabilities of such Person in
respect of unfunded vested benefits under any Plan; provided,  however, that the
term  Debt  shall  not  include  endorsements  of  instruments  for  deposit  or
collection in the ordinary course of business.

         "Debt  Service  Coverage  Ratio"  means,  as to the  Companies  for any
period, the ratio of (a) the sum of: (i) EBITDA for such period,  minus (ii) the
aggregate amount of capital  expenditures  made during such period,  minus (iii)
all cash tax payments, divided by (b) the sum of: (x) all cash interest payments
payable  during  such  period in respect of all Debt of the  Companies  (without
deduction for any minority interests), plus (y) 1/7 of the outstanding principal
amount  of the Loans as of any date of  determination,  all as  determined  on a
rolling four (4) quarter and consolidated basis in accordance with GAAP.

         "Default"  means an Event of Default or the  occurrence  of an event or
condition  which  with the  giving of notice or the lapse of time or both  would
become an Event of Default.

         "Defaulting  Lender"  means any Lender that in  Administrative  Agent's
reasonable  judgment  has  defaulted  on  any  of  its  obligations  under  this
Agreement.

d-501795.7
                                 LOAN AGREEMENT
                                        6

<PAGE>



         "Default  Rate" means the lesser of (a) the Maximum  Rate,  and (b) the
sum of the  Alternate  Base Rate in effect  from day to day plus the  Applicable
Margin plus two percent (2%).

         "Delinquent State Tax Returns" has the meaning specified in Section 
7.10.

         "Documentation Agent" has the meaning specified in the preamble.

         "Dollars" and "$" mean lawful money of the United States of America.

         "EBITDA" means,  for any Person for any period:  (a)  Consolidated  Net
Income  of such  Person  for such  period,  determined  after  deduction  of any
minority interests,  plus (b) all amounts deducted therefrom during such period,
in conformity with GAAP, for interest,  taxes,  depreciation  and  amortization,
provided  that  cash flow  from  Permitted  Passive  Investments  shall  only be
included in the  calculation  of EBITDA to the extent:  (i) it has been actually
received by Borrower or a Guarantor, and (ii) it does not exceed fifteen percent
(15%) of total EBITDA for such period.

         "Eligible  Assignee" means (i) a Lender; (ii) an Affiliate of a Lender;
or (iii) any other Person approved by the  Administrative  Agent (which approval
shall not be  unreasonably  withheld  or delayed by  Administrative  Agent) and,
unless  an Event of  Default  has  occurred  and is  continuing  at the time any
assignment is effected in accordance with Section 13.6, Borrower,  such approval
not to be  unreasonably  withheld or delayed by Borrower and such approval to be
deemed given by Borrower if no objection is received by the assigning Lender and
the Administrative Agent from Borrower within two (2) Business Days after notice
of such  proposed  assignment  has been  provided  by the  assigning  Lender  to
Borrower;  provided, however, that neither Borrower nor an Affiliate of Borrower
shall qualify as an Eligible Assignee.

         "Environmental Laws" means any and all federal,  state, and local laws,
regulations,  and requirements pertaining to health, safety, or the environment,
including,   without  limitation,  the  Comprehensive   Environmental  Response,
Compensation and Liability Act of 1980, 42 U.S.C. ss. 9601 et seq., the Resource
Conservation  and  Recovery  Act of  1976,  42  U.S.C.  ss.  6901 et  seq.,  the
Occupational  Safety and Health  Act, 29 U.S.C.  ss. 651 et seq.,  the Clean Air
Act,  42 U.S.C.  ss. 7401 et seq.,  the Clean  Water Act, 33 U.S.C.  ss. 1251 et
seq., and the Toxic Substances  Control Act, 15 U.S.C. ss. 2601 et seq., as such
laws, regulations,  and requirements may be amended or supplemented from time to
time.

         "Environmental  Liabilities"  means, as to any Person, all liabilities,
obligations,  responsibilities,  Remedial  Actions,  losses,  damages,  punitive
damages,  consequential damages, treble damages, costs, and expenses (including,
without limitation,  all reasonable fees, disbursements and expenses of counsel,
expert and consulting fees and costs of investigation and feasibility  studies),
fines, penalties,  sanctions,  and interest incurred as a result of any claim or
demand,  by any Person,  whether  based in  contract,  tort,  implied or express
warranty,   strict   liability,   criminal  or  civil  statute,   including  any
Environmental Law, permit, order or agreement with any Governmental Authority or
other Person,  arising from  environmental,  health or safety  conditions or the
Release or  threatened  Release of a Hazardous  Material  into the  environment,
resulting  from the past,  present,  or future  operations of such Person or its
Affiliates.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended from time to time,  and the  regulations  and published  interpretations
thereunder.

         "ERISA Affiliate" means any corporation or trade or business which is a
member of the same  controlled  group of  corporations  (within  the  meaning of
Section 414(b) of the Code) as Borrower or is under common  control  (within the
meaning of Section 414(c) of the Code) with Borrower.

d-501795.7
                                 LOAN AGREEMENT
                                        7

<PAGE>



         "Eurodollar  Advances"  means  Advances the interest rates on which are
determined on the basis of the rates  referred to in the definition of "Adjusted
Eurodollar Rate" in this Section 1.1.

         "Eurodollar  Rate" means,  for any Eurodollar  Advance for any Interest
Period  therefor,  the rate per annum  (rounded  upwards,  if necessary,  to the
nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor  page) as
the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m.  (London  time) two Business  Days prior to the first day of such  Interest
Period for a term  comparable  to such Interest  Period.  If for any reason such
rate is not available, the term "Eurodollar Rate" shall mean, for any Eurodollar
Advance for any Interest Period therefor,  the rate per annum (rounded  upwards,
if necessary,  to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page
as the London  interbank  offered rate for deposits in Dollars at  approximately
11:00  a.m.  (London  time)  two  Business  Days  prior to the first day of such
Interest  Period  for a term  comparable  to  such  Interest  Period,  provided,
however,  if more than one rate is  specified on Reuters  Screen LIBO Page,  the
applicable rate shall be the arithmetic mean of all such rates.

         "Event of Default" has the meaning specified in Section 11.1.

         "Excepted Subsidiaries" means FastStart, Inc., a North Carolina
corporation, National Lithotripters Association, Inc. a North Carolina
corporation, and MedTech Investments, Inc., a North Carolina corporation.

         "Exchange  Notes" means those certain senior  subordinated  notes to be
issued  in  exchange  for  the  originally  issued  Senior  Subordinated  Notes,
containing  substantially  the same terms as the  original  Senior  Subordinated
Notes.

         "Existing Permitted Passive Investments" means ownership by Borrower or
any Subsidiary of a 32.5% interest in Southern  California Stone Center,  LLC, a
California  limited  liability  company and a 38.25%  interest in TENN-GA  Stone
Group Two, a Tennessee general partnership.

         "Federal  Funds Rate" means,  for any day, the rate per annum  (rounded
upwards,  if necessary,  to the nearest 0.01%) equal to the weighted  average of
the rates on overnight  Federal funds  transactions  with members of the Federal
Reserve  System  arranged by Federal  funds brokers on such day, as published by
the Federal  Reserve Bank of New York on the Business Day next  succeeding  such
day, provided that (a) if the day for which such rate is to be determined is not
a Business  Day, the Federal  Funds Rate for such day shall be such rate on such
transactions  on the next  preceding  Business  Day as so  published on the next
succeeding  Business  Day, and (b) if such rate is not so published on such next
succeeding Business Day, the Federal Funds Rate for any day shall be the average
rate charged to the  Administrative  Agent on such day on such  transactions  as
determined by the Administrative Agent.

         "Financial Hedge" means either (a) a swap, collar, floor, cap, or other
contract  which is intended to reduce or eliminate the risk of  fluctuations  in
interest rates, or (b) a foreign exchange,  currency hedging, commodity hedging,
or other  contract  which is intended to reduce or eliminate  the market risk of
holding  currency or a commodity  in either the cash or futures  markets,  which
Financial  Hedge  under  either  clause  (a) or clause  (b) is  entered  into by
Borrower with any Lender or an Affiliate of any Lender.

         "GAAP" means generally  accepted  accounting  principles,  applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American  Institute of Certified Public  Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective  successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent  basis" when the  accounting  principles
applied in a current period are comparable in all

d-501795.7
                                 LOAN AGREEMENT
                                       8

<PAGE>



material respects to those accounting  principles applied in a preceding period,
except  for  changes  required  by  GAAP.  In the  event  of a  change  in GAAP,
Administrative  Agent and Borrower  will  thereafter  negotiate in good faith to
revise any covenants of this  Agreement  affected  thereby in order to make such
covenants consistent with GAAP then in effect.

         "Governmental  Authority" means any nation or government,  any state or
political subdivision thereof and any entity exercising executive,  legislative,
judicial,   regulatory,   or  administrative   functions  of  or  pertaining  to
government.

         "Governmental Authorization" shall mean any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Authority or pursuant to
any Legal Requirement.

         "Guarantee"  by  any  Person  means  any   obligation,   contingent  or
otherwise,  of such Person directly or indirectly guaranteeing any Debt or other
obligation  of any other  Person and,  without  limiting the  generality  of the
foregoing, any obligation,  direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or  advance or supply  funds for the  purchase or
payment  of)  such  Debt or other  obligation  (whether  arising  by  virtue  of
partnership arrangements,  by agreement to keep-well, to purchase assets, goods,
securities  or services,  to  take-or-pay,  or to maintain  financial  statement
conditions or otherwise), or (b) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect the obligee against loss in respect thereof (in whole or in part),
provided that the term "Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business.  The term  "Guarantee"  used as a
verb has a corresponding meaning.

         "Guaranties" means,  collectively,  (a) the Guaranty  Agreements,  each
dated as of April 26,  1996,  executed by certain  Guarantors,  (b) the Consent,
Confirmation  and  Ratification  of Guaranty  Agreements,  dated as of March 31,
1997,  executed by certain  Guarantors and (c) the Second Consent,  Confirmation
and Ratification of Guaranty  Agreements dated as of the date hereof executed by
certain  Guarantors,  (d) the  Guaranty  Agreement  dated as of March  31,  1997
executed by Prostatherapies,  Inc.; and (e) Guaranty Agreements,  each dated the
date  hereof  executed  by  each  Excepted   Subsidiary  and  Executive   Medial
Enterprises,  Inc.,  certain  of  which  Guaranty  Agreements  are  in  renewal,
amendment,  substitution and replacement of the Guaranty  Agreements executed by
certain Guarantors under the Original Credit Agreement in favor of the Agent and
the Lenders under the Original Credit Agreement and shall also include any other
guaranty  agreement from time to time executed by any Guarantor and delivered to
the  Administrative  Agent for the  benefit of Lenders,  as  amended,  restated,
renewed,  and  substituted  from time to time.  "Guaranty"  means any one of the
Guaranties.

         "Guarantors"  means,  collectively,  all  Wholly-Owned  Subsidiaries of
Borrower,  now  owned  or  hereafter  acquired  or  formed,  including,  without
limitation, the Subsidiaries listed on Schedule 2.
"Guarantor" means any one of the Guarantors.

         "Guarantor Security Agreements" means (a) the Security Agreements, each
dated as of April 26,  1996,  executed by certain  Guarantors,  (b) the Consent,
Confirmation and Ratification of Guarantor Security Agreements dated as of March
31, 1997, executed by certain Guarantors;  (c) the Second Consent,  Confirmation
and  Ratification of Guarantor  Security  Agreement dated as of the date hereof,
executed by certain Guarantors, (d) the Security Agreement dated as of March 31,
1997,  executed  by  Prostatherapies,  Inc.,  and  (e)  the  Guarantor  Security
Agreements  dated the date  hereof  executed  by each  Excepted  Subsidiary  and
Executive Medical  Enterprises,  Inc., each in favor of Administrative Agent for
the benefit of Lenders,  certain of which  Security  Agreements  are in renewal,
amendment,  restatement and substitution of the Security  Agreements executed by
certain Guarantors under the Original Credit Agreement in favor

d-501795.7
                                 LOAN AGREEMENT
                                        9

<PAGE>



of the  Administrative  Agent, for the benefit of the Lenders under the Original
Credit Agreement, and shall also include any other security agreements from time
to time executed by any Guarantor and delivered to the Administrative  Agent for
the benefit of Lenders, as amended, restated, renewed, and substituted from time
to time.  "Guarantor Security Agreement" means any one of the Guarantor Security
Agreements.

         "Hazardous Material" means any substance,  product,  waste,  pollutant,
material,  chemical,  contaminant,  constituent,  or other  material which is or
becomes listed,  regulated, or addressed under any Environmental Law, including,
without limitation, asbestos, petroleum, and polychlorinated biphenyls.

         "Immediately-available"  means  that any cash or Cash  Equivalents  are
capable of being liquidated  (without premium,  penalty,  or restriction) within
180 days of any date of determination, are not subject to any Liens or claims of
third persons, and are unconditionally  available for payment of the Obligations
upon liquidation.

         "Interest  Coverage  Ratio" means,  as to the Companies for any period,
(a) EBITDA for such period divided by (b) the aggregate  amount of  consolidated
interest expense for such period, all as determined in accordance with GAAP.

         "Interest Period" means, with respect to any Eurodollar  Advance,  each
period  commencing on the date such Advance is made or Converted from an Advance
of another Type or, in the case of each subsequent,  successive  Interest Period
applicable to a Eurodollar Advance,  the last day of the next preceding Interest
Period with respect to such Advance, and ending on the numerically corresponding
day in the first (1st),  second (2nd), third (3rd) or sixth (6th) calendar month
thereafter,  as Borrower  may select as  provided in Section 2.5 or 2.6,  except
that each such  Interest  Period which  commences on the last  Business Day of a
calendar  month (or on any day for which there is no  numerically  corresponding
day in the appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month. Notwithstanding the foregoing:
(a) each  Interest  Period  which  would  otherwise  end on a day which is not a
Business  Day  shall  end on the  next  succeeding  Business  Day  (or,  if such
succeeding Business Day falls in the next succeeding calendar month, on the next
preceding  Business Day); (b) any Interest Period which would  otherwise  extend
beyond the Termination Date shall end on the Termination  Date; (c) no more than
six (6)  Interest  Periods  shall  be in  effect  at the same  time;  and (d) no
Interest  Period  shall have a duration  of less than one (1) month and,  if any
Interest Period would otherwise be a shorter period,  such Advances shall not be
available hereunder.

         "Issuance  Proceeds"  means  the net cash  proceeds  of (i) any sale or
issuance of Borrower's capital stock,  excluding any sale or issuance of capital
stock under Borrower's stock option plans, or (ii) the incurrence of any Debt of
the type described in  subsections  (a) and (b) of the definition of Debt (other
than the  Senior  Subordinated  Notes),  in each  case to the  extent  permitted
hereunder.

         "Legal Requirement" shall mean any federal,  state,  local,  municipal,
foreign,   international,   multinational,   or  other   administrative   order,
constitution,  law, ordinance, principle of common law, regulation,  statute, or
treaty as in effect on the date hereof.

         "Lender" and "Lenders" have the meanings specified in the preamble.

         "Lien" means any lien, mortgage, security interest, tax lien, financing
statement, pledge, charge, hypothecation,  assignment,  preference, priority, or
other  encumbrance  of  any  kind  or  nature  whatsoever  (including,   without
limitation, any conditional sale or title retention agreement),  whether arising
by contract, operation of law, or otherwise.

d-501795.7
                                 LOAN AGREEMENT
                                                        10

<PAGE>



         "Litho" means Lithotripters, Inc., a North Carolina corporation.

         "Loan" means all Advances with respect to the Commitment, evidenced by 
the Notes.

         "Loan Documents" means this Agreement,  the Notes, the Guaranties,  the
Borrower  Security  Agreement,  the Guarantor  Security  Agreements,  the Pledge
Agreements,  any Financial  Hedge,  and all other  instruments,  documents,  and
agreements  executed  and  delivered  pursuant  to or in  connection  with  this
Agreement,  as such  instruments,  documents,  and  agreements  may be  amended,
modified, renewed, extended, or supplemented from time to time.

         "Material  Subsidiary" means, as of any date, (a) any Subsidiary which,
together with its  Subsidiaries,  accounts for three percent (3%) or more of the
Company's  consolidated  gross  revenues or assets,  or (b) any  combination  of
Subsidiaries which, together with their Subsidiaries,  account for seven percent
(7%) or more of the Company's  consolidated  gross  revenues or assets,  in each
case on a consolidated basis (but without elimination of any minority interests)
as of and for the most  recent  fiscal  quarter  for which such  information  is
available. "Material Subsidiaries" means all of the Material Subsidiaries.

         "Maximum Rate" means,  at any time and with respect to any Lender,  the
maximum  rate of  interest  under  applicable  law that such  Lender  may charge
Borrower.  The  Maximum  Rate shall be  calculated  in a manner  that takes into
account  any and all fees,  payments,  and other  charges in respect of the Loan
Documents  that  constitute  interest under  applicable  law. Each change in any
interest rate provided for herein based upon the Maximum Rate  resulting  from a
change in the Maximum Rate shall take effect  without  notice to Borrower at the
time of such change in the Maximum Rate.

         "Multiemployer  Plan" means a multiemployer  plan as defined in Section
3(37) of ERISA to which  contributions  have been made by  Borrower or any ERISA
Affiliate of Borrower and which is covered by Title IV of ERISA.

         "NationsBank" has the meaning specified in the preamble.

         "Net Debt" means, as of any date, the sum of: (a)  outstanding  Debt of
the Companies;  less (b) the amount of any  Immediately-available  cash and Cash
Equivalents held by the Companies in excess of $8,000,000 in the aggregate; plus
(c) the  amount  of all  cash  and  cash  equivalents  held by any  Company  for
distribution to any partners or other owners of equity interests (other than any
Company) in any Partnership.

         "Net Debt to EBITDA Ratio" means,  as of any date, the ratio of (a) the
aggregate  amount of Net Debt (without  deduction  for any minority  interests),
outstanding  as of such date, to (b) EBITDA of the  Companies,  for the four (4)
fiscal quarter period ending on the date of determination.

         "Note"   means  a   revolving   credit  note   executed  by   Borrower,
substantially  in the form of  Exhibit C,  payable  to each  Lender in an amount
equal to such  Lender's  Commitment,  as the same may be amended,  supplemented,
modified or restated from time to time, evidencing the obligation of Borrower to
repay the Loan, and all renewals,  modifications and extensions thereof. "Notes"
means all of the Notes of the Lenders.

         "Obligated  Party"  means any  Person  who is or  becomes  party to any
agreement that  guarantees or secures payment and performance of the Obligations
or any part thereof.


d-501795.7
                                 LOAN AGREEMENT
                                       11

<PAGE>



         "Obligations" means all obligations,  indebtedness,  and liabilities of
Borrower to the Agents and the Lenders,  or any of them, arising pursuant to any
of the Loan  Documents,  now  existing or  hereafter  arising,  whether  direct,
indirect,  related,  unrelated,  fixed,  contingent,  liquidated,  unliquidated,
joint,  several, or joint and several, and all interest accruing thereon and all
attorneys'  fees and other  expenses  incurred in the  enforcement or collection
thereof.

         "Original Credit Agreement" has the meaning specified in the recitals.

         "Partnerships"  means the partnerships and limited liability  companies
in which  Borrower or any  Subsidiary  now owns or  hereafter  acquires  general
and/or  limited  partnership  interests or  membership  interests  and the other
Persons in which  Borrower  or any  Subsidiary  now owns or  hereafter  acquires
ownership interests,  including,  without limitation, the partnerships and other
Persons listed on Schedule 3.
"Partnership" means any one of the Partnerships.

         "Payment  Date" means (a) with respect to Alternate  Base Rate Advances
and the commitment fees payable  pursuant to Section  2.8(a),  the last Business
Day of each April, July, October and January, commencing April 30, 1998, and (b)
with respect to Eurodollar  Advances,  the last day of the  respective  Interest
Period therefor,  provided that if any Interest Period is greater than three (3)
months,  then accrued interest shall also be due and payable on the date that is
three (3) months after the commencement of such Interest Period.

         "PBGC" means the Pension  Benefit  Guaranty  Corporation  or any entity
succeeding to all or any of its functions under ERISA.

         "Permitted  Acquisition" means an Acquisition by Borrower or any of the
Guarantors  with respect to which each of the  following  conditions  shall have
been satisfied:

                  (a) the  Acquisition  by  Borrower or such  Guarantor  is of a
         business,  assets,  or Person (as  applicable,  the "Target")  which is
         engaged  in  substantially   the  same  lithotripsy   business  as  the
         lithotripsy  business  conducted  by Borrower or such  Guarantor on the
         date hereof, or any other business reasonably related thereto;

                  (b) as of the closing of such Acquisition, the Acquisition has
         been  approved  and  recommended  by the  board of  directors  or other
         applicable  governing  body of the Target and the Person from which the
         Target is to be acquired;

                  (c) prior to the closing of such  Acquisition,  the Target and
         the Person from which the Target is to be acquired must be Solvent;

                  (d) as of the closing of such Acquisition, after giving effect
         to such  Acquisition,  Borrower or the Guarantor  that is the acquiring
         party must be Solvent and the Companies,  on a consolidated basis, must
         be Solvent;

                  (e) as of the closing of such Acquisition, after giving effect
         to such  Acquisition,  no Default  shall exist or occur as a result of,
         and after giving effect to, such Acquisition;

                  (f)  the  aggregate   purchase  price  with  respect  to  such
         Acquisition  does not  exceed  five (5)  times  EBITDA  of the  Target,
         subject to  adjustments  acceptable to the  Administrative  Agent where
         less  than  all of the  business,  assets  or stock  of the  Target  is
         acquired, pursuant to the

d-501795.7
                                 LOAN AGREEMENT
                                                        12

<PAGE>



         Acquisition  for the  four  (4)  fiscal  quarters  ending  on the  most
         recently ended fiscal period prior to the date of such Acquisition;

                  (g) the aggregate nonstock  consideration for such Acquisition
         does  not  exceed   $20,000,000.00   (other  than  the  Acquisition  of
         additional ownership interests in the Partnerships in which Borrower or
         a Guarantor is, as if the date hereof,  the general partner or managing
         member)  and the  aggregate  cash  consideration  for all  Acquisitions
         (other than the  Acquisition of additional  ownership  interests of the
         Partnerships  in  which  Borrower  or a  Guarantor  is,  as of the date
         hereof,  the general partner or managing member) during the immediately
         preceding twelve (12) month period  (including such  Acquisition)  does
         not exceed $40,000,000.00;

                  (h) not less than 15 Business Days prior to the closing of any
         Acquisition,  the  Administrative  Agent shall have  received pro forma
         financial  statements of the  Companies (as if the business,  assets or
         Person  acquired  had been  acquired  since the first  (1st) day of the
         period for which such pro forma financial  statements are delivered and
         had been  managed  and  conducted  in  accordance  with the  Borrower's
         standard business  practices) for the prior four (4) fiscal quarters of
         Borrower and the Companies;

                  (i)      as of the closing of such Acquisition, Borrower or a
Guarantor shall Control the Target;

                  (j) if the Target is to be an After-Acquired Subsidiary,  then
         Borrower shall have complied with the terms and conditions set forth in
         Section 8.13; and

                  (k) the Administrative  Agent has received a certificate dated
         on or  immediately  prior to the date of  Acquisition,  executed by the
         President  or  a  Vice  President  of  Borrower   confirming  that  all
         representations and warranties set forth in the Loan Documents continue
         to be true and correct in all material  respects  immediately  prior to
         and  after  giving  effect  to  the  Permitted   Acquisition   and  the
         transactions  contemplated  thereby, and setting forth the calculations
         supporting compliance with the limitations prescribed herein.

         "Permitted Other Business Acquisition" means an acquisition by Borrower
or any of the Guarantors with respect to which each of the following  conditions
shall have been satisfied:

                  (a) the  acquisition  by  Borrower or such  Guarantor  is of a
         business,  assets,  or Person (as  applicable,  the "Target")  which is
         engaged  in  substantially  the  same  physician  practice  management,
         prostatherapy,   or   servicing   tractor/trailers   business  as  such
         businesses are conducted by Borrower or any Company on the date hereof,
         or any other business reasonably related thereto;

                  (b)  as of  the  closing  of  such  Permitted  Other  Business
         Acquisition, the Permitted Other Business Acquisition has been approved
         and recommended by the board of directors or other applicable governing
         body of the  Target  and the  Person  from  which  the  Target is to be
         acquired;

                  (c) prior to the  closing  of such  Permitted  Other  Business
         Acquisition,  the Target and the Person  from which the Target is to be
         acquired must be Solvent;

                  (d)  as of  the  closing  of  such  Permitted  Other  Business
         Acquisition,  after  giving  effect to such  Permitted  Other  Business
         Acquisition, Borrower or the Guarantor that is the acquiring party must
         be Solvent and the Companies, on a consolidated basis, must be Solvent;

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                                 LOAN AGREEMENT
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                  (e)  as of  the  closing  of  such  Permitted  Other  Business
         Acquisition,  after  giving  effect to such  Permitted  Other  Business
         Acquisition,  no Default shall exist or occur as a result of, and after
         giving effect to, such Permitted Other Business Acquisition;

                  (f)  the  aggregate   purchase  price  with  respect  to  such
         Permitted  Other  Business  Acquisition  does not exceed five (5) times
         EBITDA  of  the  Target,  subject  to  adjustments  acceptable  to  the
         Administrative  Agent  where less than all of the  business,  assets or
         stock of the  Target  is  acquired,  pursuant  to the  Permitted  Other
         Business  Acquisition  for the four (4) fiscal  quarters  ending on the
         most recently  ended fiscal period prior to the date of such  Permitted
         Other Business Acquisition;

                  (g) the  aggregate  nonstock  consideration  for all Permitted
         Other Business Acquisitions does not exceed $5,000,000.00;

                  (h) not less than 15 Business Days prior to the closing of any
         Permitted Other Business  Acquisition,  the Administrative  Agent shall
         have  received pro forma  financial  statements of the Companies (as if
         the business,  assets or Person  acquired had been  acquired  since the
         first  (1st)  day of the  period  for which  such pro  forma  financial
         statements  are  delivered  and  had  been  managed  and  conducted  in
         accordance  with the Borrower's  standard  business  practices) for the
         prior four (4) fiscal quarters of Borrower and the Companies;

                  (i) if the Target is to be an After-Acquired Subsidiary,  then
         Borrower shall have complied with the terms and conditions set forth in
         Section 8.13; and

                  (j) the Administrative  Agent has received a certificate dated
         on or  immediately  prior  to the  date  of  Permitted  Other  Business
         Acquisition,  executed by the President or a Vice President of Borrower
         confirming  that all  representations  and  warranties set forth in the
         Loan Documents continue to be true and correct in all material respects
         immediately  prior to and after giving  effect to the  Permitted  Other
         Business  Acquisition and the transactions  contemplated  thereby,  and
         setting  forth  the   calculations   supporting   compliance  with  the
         limitations prescribed herein.

         The loan  described  in  Sections  9.1(h)  and  9.2(h)  hereof  made by
Borrower  shall not be included in the  calculation  of the  aggregate  nonstock
consideration  for all Permitted Other Business  Acquisitions.  No repurchase or
redemption  of  Borrower's  capital  stock by Borrower or a  Guarantor,  whether
through  issuance and  performance of a put agreement,  or otherwise  shall be a
Permitted Other Business Acquisition.

         "Permitted Passive  Investment" means an acquisition by Borrower or any
of  the  Guarantors,  in one  transaction  or in a  series  of  transactions  of
partnership, stock, or other interests of a Person ("Equity Interests") which is
not an Acquisition and does not permit Borrower or any Guarantor to Control such
Person, with respect to which each of the following conditions have been met:

                  (a) the acquisition by Borrower or such Guarantor is of Equity
         Interests  of a Person  (the  "Passive  Target")  which is  engaged  in
         substantially the same lithotripsy business as the lithotripsy business
         conducted  by Borrower or such  Guarantor  on the date  hereof,  or any
         other lithotripsy business reasonably related thereto;

                  (b) as of the closing of such  Permitted  Passive  Investment,
         the  acquisition  has been  approved  and  recommended  by the board of
         directors or other applicable  governing body of the Passive Target and
         the Person from which the Equity Interests are to be acquired;

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                                 LOAN AGREEMENT
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<PAGE>



                  (c) prior to the  closing  of such  acquisition,  the  Passive
         Target  and the  Person  from  which  the  Equity  Interests  are to be
         acquired must be Solvent;

                  (d) as of the closing of such  Permitted  Passive  Investment,
         after giving effect to such Permitted Passive  Investment,  Borrower or
         the  Guarantor  that is the  acquiring  party must be  Solvent  and the
         Companies, on a consolidated basis, must be Solvent;

                  (e) as of the closing of such  Permitted  Passive  Investment,
         after giving effect to such Permitted  Passive  Investment,  no Default
         shall exist or occur as a result of, and after  giving  effect to, such
         Permitted Passive Investment;

                  (f) the aggregate  acquisition  price of any Permitted Passive
         Investment,  together  with  the  original  purchase  price of all then
         existing  Permitted Passive  Investments of Borrower and its Guarantors
         (excluding,  however,  any prior  Permitted  Passive  Investment  which
         Borrower or any Guarantor then Controls) as of the date of consummation
         of the Permitted Passive Investment,  does not exceed the lesser of (i)
         twenty percent (20%) of Total Equity or (ii) $50,000,000;

                  (g) not less than 30 Business Days prior to the closing of any
         Permitted  Passive  Investment,  the  Administrative  Agent  shall have
         received a certificate setting forth compliance with condition (f), set
         forth above; and

                  (h) the Administrative  Agent has received a certificate dated
         on  or  immediately   prior  to  the  date  of  the  Permitted  Passive
         Investment,  executed by the President or a Vice  President of Borrower
         confirming  that all  representations  and  warranties set forth in the
         Loan Documents continue to be true and correct in all material respects
         immediately  prior to and after giving effect to the Permitted  Passive
         Investment and the transactions contemplated thereby, and setting forth
         the calculations  supporting compliance with the limitations prescribed
         herein.

No  repurchase  or  redemption  of  Borrower's  capital  stock by  Borrower or a
Guarantor,  whether  through  issuance and  performance of a put  agreement,  or
otherwise, shall be a Permitted Passive Investment.

         "Person"   means   any   individual,   corporation,   business   trust,
association,  company,  partnership,  joint venture,  Governmental Authority, or
other entity.

         "Plan"  means  any  employee  benefit  or  other  plan  established  or
maintained  by Borrower or any ERISA  Affiliate of Borrower and which is covered
by Title IV of ERISA.

         "Pledge  Agreements" means (a) the Pledge Agreements,  each dated as of
April 26, 1996,  executed by Borrower and each Subsidiary of Borrower that owned
general and/or limited partnership interests in the Partnerships in favor of the
Administrative  Agent,  for the  benefit  of the  Lenders,  as the  same  may be
amended,  supplemented or modified from time to time, including (b) the Consent,
Confirmation  and  Ratification of Pledge and Security  Agreements,  dated as of
March 31, 1997, and (c) the Second  Consent,  Confirmation  and  Ratification of
Pledge  and  Security  Agreements  dated as of the date  hereof,  and shall also
include any other pledge  agreement from time to time executed by any Person and
delivered  to  Administrative  Agent for the  benefit of  Lenders,  as  amended,
restated,  renewed,  and substituted from time to time. "Pledge Agreement" means
any one of the Pledge Agreements.

     "Pledgors" means each of the pledgors of partnership  interests or Assigned
Rights (as  defined in the  applicable  Pledge  Agreement)  pursuant to a Pledge
Agreement. "Pledgor" means any one of the Pledgors.

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                                 LOAN AGREEMENT
                                       15

<PAGE>



         "Principal  Office"  means the principal  office of the  Administrative
Agent, presently located at 100 Federal Street, Boston, Massachusetts 02110.

         "Prohibited Transaction" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Code.

         "Regulation  D" means  Regulation  D of the Board of  Governors  of the
Federal Reserve System as the same may be amended or  supplemented  from time to
time.

         "Regulatory Change" means, with respect to any Lender, any change after
the date of this Agreement in United States  federal,  state, or foreign laws or
regulations  (including  Regulation D) or the adoption or making after such date
of any  interpretations,  directives,  or requests  applying to a class of banks
including such Lender of or under any United States  federal,  state, or foreign
laws or  regulations  (whether  or not  having the force of law) by any court or
governmental  or  monetary   authority   charged  with  the   interpretation  or
administration thereof.

         "Release"  means,  as to any  Person,  any  release,  spill,  emission,
leaking,  pumping,  injection,  deposit,  disposal,  disbursement,  leaching, or
migration of Hazardous  Materials into the indoor or outdoor environment or into
or out of property  owned by such Person,  including,  without  limitation,  the
movement of Hazardous  Materials  through or in the air,  soil,  surface  water,
ground water, or property.

         "Remedial  Action" means all actions  required to (a) clean up, remove,
treat,  or  otherwise  address  Hazardous  Materials  in the  indoor or  outdoor
environment,  (b)  prevent  the  Release or threat of Release  or  minimize  the
further  Release of Hazardous  Materials so that they do not migrate or endanger
or  threaten  to  endanger  public  health or  welfare  or the indoor or outdoor
environment,   or  (c)  perform  pre-remedial  studies  and  investigations  and
post-remedial monitoring and care.

         "Reportable Event" means any of the events set forth in Section 4043 of
ERISA.

         "Required  Lenders"  means,  as of any date, any combination of Lenders
(other than any Defaulting Lenders) who collectively hold sixty percent (60%) of
the sum of the  Commitments  (other than of any Defaulting  Lenders),  or if the
Commitments  shall have been terminated,  then of the aggregate unpaid principal
amount of the Notes (other than of any Defaulting Lenders).

         "Reserve  Requirement"  means,  for  any  Eurodollar  Advance  for  any
Interest  Period  therefor,  the average rate at which  reserves  (including any
marginal,  supplemental  or emergency  reserves)  are required to be  maintained
during such Interest Period under  Regulation D by each Lender on its portion of
such  Advance  against  "Eurocurrency  Liabilities"  as  such  term  is  used in
Regulation  D.  Without  limiting  the  effect  of the  foregoing,  the  Reserve
Requirement  shall  reflect any other  reserves  required to be  maintained by a
Lender  by  reason  of  any  Regulatory  Change  against  (i)  any  category  of
liabilities   which  includes  deposits  by  reference  to  which  the  Adjusted
Eurodollar  Rate is to be  determined,  or (ii) any  category of  extensions  of
credit or other assets which include Eurodollar Advances.

         "RICO" means the Racketeer  Influenced and Corrupt  Organization Act of
1970, as amended from time to time.

         "Senior Net Debt" means,  as of any date, all Net Debt of the Companies
which is not Subordinated Debt.


d-501795.7
                                 LOAN AGREEMENT
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<PAGE>



         "Senior Net Debt to EBITDA Ratio" means,  as of any date,  the ratio of
(a) the aggregate amount of Senior Net Debt of the Companies  (without deduction
for any minority  interests),  as of such date, to (b) EBITDA of the  Companies,
for the four (4)  fiscal  quarter  period  ending  on the date of  determination
(including on a pro forma basis any  Permitted  Acquisition  or Permitted  Other
Business Acquisition).

         "Senior  Subordinated  Indenture"  means that certain  Trust  Indenture
dated as of March 24,  1998  between  Borrower  and State  Street Bank and Trust
Company, as Trustee, and any trust indenture entered into in connection with the
Exchange Notes.

         "Senior Subordinated Notes" means those certain $100,000,000  aggregate
principal amount Senior  Subordinated  Notes issued by Borrower  pursuant to the
Senior  Subordinated  Indenture,  due April 1, 2008, and the Exchange  Notes, if
issued.

         "Solvent"  means,  with  respect  to any  Person,  that on the  date of
determination  (a) the fair market value of its assets is greater than the total
amount of liabilities,  including, without limitation, contingent liabilities of
such Person which would be required to be included on the balance  sheet of such
Person or disclosed in the  financial  statements  of such Person in  accordance
with GAAP,  (b) the present fair  salable  value of the assets of such Person is
not less than the amount that will be required to pay the probable  liability of
such Person on its debts as they become  absolute and  matured,  (c) such Person
does not intend to, and does  believe that it will,  incur debts or  liabilities
beyond such Person's  ability to pay as such debts and liabilities  mature,  and
(d) such Person is not engaged in business or transactions,  and is not about to
engage in business or  transactions,  for which its assets would  constitute  an
unreasonably small capital.

         "Subordinated Debt" means the Senior Subordinated Notes.

         "Subsidiary"  means,  with  respect  to any  Person,  any  corporation,
partnership,  association,  or other business entity (a) of which  securities or
other  ownership  interests  representing  more than fifty  percent (50%) of the
equity or more than fifty  percent  (50%) of the  ordinary  voting power or more
than fifty  percent  (50%) of the general  partnership  interests or  membership
interests are, at the time any determination is made, owned,  Controlled or held
by such Person, or (b) that is, at the time any determination is made, otherwise
Controlled by one or more  Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.

         "Syndication Agent" has the meaning specified in the preamble.

         "Termination Date" means 1:00 p.m. Boston,  Massachusetts time on April
21, 2003,  or such earlier date and time on which the  Commitments  terminate as
provided in this Agreement.

         "Total Equity" means, at any particular time, the sum of: (a) 
Consolidated Net Worth, plus (b) outstanding principal amount of Subordinated 
Debt.

         "Total Net Debt to EBITDA  Ratio" means,  as of any date,  the ratio of
(a) the  aggregate  outstanding  amount of Net Debt  (without  deduction for any
minority  interests),  as of such date,  to (b) EBITDA of the  Companies for the
four (4) fiscal quarter period ending on the date of determination (including on
a pro forma basis any  Permitted  Acquisition  or any Permitted  Other  Business
Acquisition).

         "Type" means any type of Advance (i.e.,  Alternate Base Rate Advance or
Eurodollar Advance).

         "UCC"  means  the  Uniform   Commercial   Code  as  in  effect  in  the
Commonwealth of Massachusetts or other applicable jurisdiction, as amended.

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<PAGE>



         "Wholly-Owned Subsidiaries" means, as of any date, all Subsidiaries
that are wholly-owned by Borrower or a wholly-owned Subsidiary of Borrower.
"Wholly-Owned Subsidiary" means any one of the Wholly-Owned Subsidiaries.

         Section 1.3 Other Definitional Provisions. All definitions contained in
this  Agreement  are equally  applicable to the singular and plural forms of the
terms  defined.  The words  "hereof,"  "herein,"  and  "hereunder"  and words of
similar import  referring to this  Agreement  refer to this Agreement as a whole
and  not to  any  particular  provision  of  this  Agreement.  Unless  otherwise
specified, all Article, Section, Exhibit and Schedule references pertain to this
Agreement.  All  accounting  terms  not  specifically  defined  herein  shall be
construed  in  accordance  with  GAAP.  All  financial   covenants  and  related
definitions  relating to the Companies  shall,  unless otherwise  indicated,  be
determined  after  deduction  of  any  minority  interests,  provided  that  all
references to "Debt" shall  include all Debt without  deduction for any minority
interests.  Terms used  herein  that are  defined in the UCC,  unless  otherwise
defined herein, shall have the meanings specified in the UCC.


                             ARTICLE II -- ADVANCES

         Section 2.1       Commitments.

         (a) Revolving Credit  Commitments.  Subject to the terms and conditions
of this  Agreement,  each  Lender  hereby  severally  agrees to make one or more
Advances to Borrower  from time to time from the date hereof to the  Termination
Date in an  aggregate  principal  amount at any time  outstanding  up to but not
exceeding the amount of such Lender's  Commitment as then in effect.  Subject to
the foregoing limitations, and the other terms and provisions of this Agreement,
Borrower may borrow, repay, and reborrow hereunder the amount of the Commitments
by means of Eurodollar Advances or Alternate Base Rate Advances.

         (b) Optional  Reduction and Termination of Commitments.  Borrower shall
have the right to terminate in whole or reduce in part the unused portion of the
Commitments  upon at least three (3) Business  Days' prior written notice (which
notice  shall  be  irrevocable)  to  the  Administrative  Agent  specifying  the
effective  date thereof,  whether a termination  or reduction is being made, and
the amount of any partial reduction,  provided that each partial reduction shall
be in the amount of  $1,000,000.00  or a greater  integral  multiple thereof and
Borrower shall  simultaneously  prepay the amount by which the unpaid  principal
amount of the Notes exceeds the Commitments (after giving effect to such notice)
plus accrued and unpaid interest on the principal amount so prepaid.  No portion
of the Commitments may be reinstated after it has been terminated or reduced.

         Section 2.2 Notes.  The obligation of Borrower to repay each Lender for
Advances  made by such Lender  pursuant  to such  Lender's  Commitment,  and all
interest thereon,  shall be evidenced by a Note dated the date hereof,  executed
by Borrower  and payable to the order of such Lender in the  original  principal
amount of such Lender's Commitment.

         Section 2.3       Repayment of Advances.  Borrower shall repay the 
outstanding principal amount of the Notes on the Termination Date.

         Section 2.4 Interest. The unpaid principal amount of all Advances shall
bear interest at a varying rate per annum equal from day to day to the lesser of
(a) the Maximum Rate, or (b) the Applicable  Rate. If at any time the Applicable
Rate for any Advance shall exceed the Maximum Rate, thereby causing the interest
accruing on such Advance to be limited to the Maximum Rate, then any

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<PAGE>



subsequent  reduction in the  Applicable  Rate for such Advance shall not reduce
the rate of interest on such Advance  below the Maximum Rate until the aggregate
amount of  interest  accrued  on such  Advance  equals the  aggregate  amount of
interest which would have accrued on such Advance if the Applicable  Rate had at
all times been in effect.  Accrued and unpaid  interest on the Advances shall be
due  and  payable  on  each   Payment   Date  and  on  the   Termination   Date.
Notwithstanding the foregoing,  any outstanding principal of any Advance and (to
the fullest extent  permitted by law) any other amount payable by Borrower under
this  Agreement  or any other  Loan  Document  that is not paid in full when due
(whether at stated maturity, by acceleration,  or otherwise) shall bear interest
at the Default  Rate for the period from and  including  the due date thereof to
but excluding the date the same is paid in full. Interest payable at the Default
Rate shall be payable from time to time on demand.

         Section 2.5       Borrowing Procedure.

         (a) Loan. Borrower shall give the Administrative  Agent notice by means
of an Advance  Request  Form of each  requested  Advance  under the  Commitments
hereunder at least three (3)  Business  Days before the  requested  date of each
Eurodollar  Advance (and at least one (1) Business Day before the requested date
of each Alternate Base Rate Advance), specifying: (a) the requested date of such
Advance (which shall be a Business Day); (b) the amount of such Advance; and (c)
the duration of the Interest Period for such Advance (if a Eurodollar  Advance).
The  Administrative  Agent at its  option  may accept  telephonic  requests  for
Advances  under  the  Commitments,  provided  that  such  acceptance  shall  not
constitute  a waiver  of the  Administrative  Agent's  right to  delivery  of an
Advance  Request  Form  in  connection   with  subsequent   Advances  under  the
Commitments.  Any  telephonic  request for an Advance under the  Commitments  by
Borrower  shall be promptly  confirmed  by  submission  of a properly  completed
Advance  Request  Form to the  Administrative  Agent.  Each  Advance  under  the
Commitments shall be in a minimum principal amount of $1,000,000.00 or a greater
integral  multiple  thereof,  provided  that if such  Advance  equals the entire
remaining  unfunded  portion of the Commitments,  it may be for any amount.  The
aggregate  principal  amount of  Eurodollar  Advances  having the same  Interest
Period shall be at least equal to $2,500,000.00  or a greater integral  multiple
of  $500,000.00.  All notices under this Section 2.5(a) shall be irrevocable and
shall be given not later than 11:00 a.m. Boston,  Massachusetts  time on the day
which is not less than the  number of  Business  Days  specified  above for such
notice.

         (b) Generally.  The  Administrative  Agent shall  promptly  notify each
Lender of the contents of each Advance  Request Form.  Not later than 11:00 a.m.
Boston,  Massachusetts  time on the date  specified for each Advance  hereunder,
each Lender will make  available to the  Administrative  Agent at the  Principal
Office in immediately available funds, for the account of Borrower, its pro rata
share of each Advance.  After the  Administrative  Agent's receipt of such funds
and  subject  to  the  other  terms  and  conditions  of  this  Agreement,   the
Administrative  Agent will make each Advance available to Borrower by depositing
the same,  in  immediately  available  funds,  in a deposit  account of Borrower
maintained at the Documentation Agent.

         Section 2.6       Continuations; Conversions.

         (a) Continuations. Borrower shall have the right to Continue Eurodollar
Advances by giving the Administrative  Agent written notice specifying:  (i) the
Continuation date; (ii) the amount of the Advance to be Continued; and (iii) the
duration of the  Interest  Period  applicable  thereto,  which  notice  shall be
irrevocable  and must be given by  Borrower  not later than  11:00 a.m.  Boston,
Massachusetts   time  at  least  three  (3)  Business   Days  before  each  such
Continuation.  The Administrative Agent shall promptly notify each Lender of the
contents of each such notice. If Borrower shall fail to give the  Administrative
Agent the notice as specified  above for  Continuation  of a Eurodollar  Advance
prior to the end of the

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                                 LOAN AGREEMENT
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<PAGE>



Interest  Period   applicable   thereto,   such  Eurodollar   Advance  shall  be
automatically Continued for a one (1) month Interest Period.

         (b) Conversions.  Borrower shall have the right to Convert an Alternate
Base  Rate  Advance  at  any  time  to  a  Eurodollar   Advance  by  giving  the
Administrative  Agent written notice  specifying:  (i) the Conversion Date; (ii)
the  amount of the  Advance  to be  Converted;  and (iii)  the  duration  of the
Interest Period applicable  thereto,  which notice shall be irrevocable and must
be given by Borrower  not later than 11:00 a.m.  Boston,  Massachusetts  time at
least three (3) Business Days before each such  Conversion.  The  Administrative
Agent shall promptly notify each Lender of the contents of each such notice.

         (c)  Default.  After the  occurrence  and during the  continuance  of a
Default,  no  outstanding  Advances may be Converted  into,  or Continued  as, a
Eurodollar Advance.

         Section  2.7 Use of  Proceeds.  The  proceeds  of  Advances  under  the
Commitments  shall  be  used  by  Borrower  (i)  for  working  capital,  capital
expenditures,  and other lawful corporate  purposes,  (ii) to finance  Permitted
Acquisitions,  Permitted  Other  Business  Acquisitions,  and Permitted  Passive
Investments,  (iii) to the extent  permitted by this  Agreement,  to  repurchase
outstanding  capital  stock  of  Borrower,  and (iv) to make  loans  or  capital
contributions to its  Subsidiaries,  the proceeds of which are used by each such
Subsidiary for one or more of the purposes  permitted by subsections  (i), (ii),
and (iii) of this Section 2.7.

         Section 2.8       Fees.

         (a)   Commitment   Fees.   Borrower   hereby   agrees  to  pay  to  the
Administrative   Agent,  for  the  ratable  account  of  each  Lender  having  a
Commitment, a commitment fee on the daily average unused amount of such Lender's
Commitment  for the period from and including the date of this  Agreement to but
excluding the  Termination  Date, at the per annum rate equal to the  Applicable
Unused  Fee  Percentage  based on a 360-day  year,  as the case may be,  and the
actual  number of days  elapsed.  Accrued  commitment  fees  shall be payable in
arrears on each Payment Date and on the Termination Date.

         (b) Agents' Fees. Borrower hereby agrees to pay to the Agents for their
own respective accounts,  the fees agreed to by Borrower and the Agents pursuant
to a side letter agreement with each Agent.


                             ARTICLE III -- PAYMENTS

         Section 3.1 Method of Payment. All payments of principal, interest, and
other  amounts to be paid by Borrower  under this  Agreement  and the other Loan
Documents shall be paid to the Administrative  Agent at the Principal Office for
the  account  of each  Lender's  Applicable  Lending  Office in  Dollars  and in
immediately  available funds, without setoff,  deduction,  or counterclaim,  not
later  than  1:00  p.m.  Boston,  Massachusetts  time on the date on which  such
payment  shall  become due (each such  payment  made after such time on such due
date to be  deemed  to have  been  made on the next  succeeding  Business  Day).
Borrower  shall,  at the  time of  making  each  such  payment,  specify  to the
Administrative  Agent the sums payable by Borrower  under this Agreement and the
other Loan  Documents  to which such  payment is to be applied (and in the event
that Borrower fails to so specify, or if an Event of Default has occurred and is
continuing,  the Administrative  Agent may apply such payment to the Obligations
in such  order and  manner as it may elect in its sole  discretion,  subject  to
Section  3.4).  Each  payment  received by the  Administrative  Agent under this
Agreement  or any other Loan  Document for the account of a Lender shall be paid
promptly to such Lender, in immediately available funds, for the account of such
Lender's Applicable Lending Office. Whenever any payment under this Agreement or
any other Loan

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                                 LOAN AGREEMENT
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<PAGE>



Document  shall be stated to be due on a day that is not a  Business  Day,  such
payment may be made on the next  succeeding  Business Day, and such extension of
time  shall in such  case be  included  in the  computation  of the  payment  of
interest and commitment fee, as the case may be.

         Section 3.2 Optional Prepayment.  Borrower may, upon at least three (3)
Business  Days' prior notice to the  Administrative  Agent,  prepay the Notes in
whole or in part at any time or from time to time without premium or penalty but
with  accrued  interest  to the date of  prepayment  on the  amount so  prepaid,
provided that (a) Eurodollar  Advances  prepaid on a day other than the last day
of  the  Interest   Period  for  such  Advances  shall  include  the  additional
compensation,  if any, required by Section 4.5, and (b) each partial  prepayment
shall be in the amount of the aggregate remaining  outstanding  principal amount
of the  Eurodollar  Advances or in the principal  amount of  $1,000,000.00  or a
greater integral multiple  thereof.  All notices under this Section 3.2 shall be
irrevocable  and must be given by  Borrower  not later than  11:00 a.m.  Boston,
Massachusetts time on the day which is not less than the number of Business Days
specified above for such notice.  Optional  prepayments  shall be applied as set
forth in Section  3.9.  Optional  prepayments  shall not reduce the  Commitments
unless Borrower so elects pursuant to Section 2.1(b).

         Section 3.3       Mandatory Prepayments.

                  (a) Asset Sales.  Immediately upon the receipt of the proceeds
         thereof,  Borrower shall prepay the Notes in an amount equal to the net
         proceeds of any sale,  liquidation  or disposition of any assets of any
         Company   (other   than  the   Partnerships   or  the   assets  of  the
         Partnerships), where such net proceeds exceed $100,000.00.

                  (b) Sale or  Issuance  of Capital  Stock or Debt.  Immediately
         upon the receipt of the  proceeds  thereof,  Borrower  shall prepay the
         Notes  in an  amount  equal  to 100  percent  (100%)  of  any  Issuance
         Proceeds.

                  (c) Application of Mandatory  Prepayments.  Any such mandatory
         prepayments  of the Notes  shall be  applied to the Notes on a pro rata
         basis based upon the outstanding principal balances of such Notes as of
         the  date of  payment.  Any  such  prepayments  shall  not  reduce  the
         Commitments.

         Section 3.4 Pro Rata Treatment. Except to the extent otherwise provided
herein:  (a) the making and  Continuation of Advances under the Commitment shall
be made pro rata among the Lenders  according to the amounts of their respective
Commitments;  (b) each termination or reduction of the Commitments under Section
2.1(b) or otherwise shall be applied to the Commitments of the Lenders pro rata,
according  to their  respective  unused  Commitments;  and (c) each  payment and
prepayment of principal of or interest on Advances by Borrower  shall be made to
the Administrative Agent for the account of the applicable Lenders in accordance
with Section 3.9.

         Section 3.5 Non-Receipt of Funds by the  Administrative  Agent.  Unless
the  Administrative  Agent shall have been notified by a Lender or Borrower (the
"Payor")  prior to the date on  which  such  Lender  is to make  payment  to the
Administrative Agent of the proceeds of an Advance to be made by it hereunder or
Borrower is to make a payment to the Administrative Agent for the account of one
or more of the Lenders, as the case may be (such payment being herein called the
"Required  Payment"),  which notice shall be effective  upon  receipt,  that the
Payor does not intend to make the Required Payment to the Administrative  Agent,
the Administrative  Agent may assume that the Required Payment has been made and
may, in reliance upon such  assumption  (but shall not be required to), make the
amount  thereof  available  to the  intended  recipient on such date and, if the
Payor has not in fact made the Required

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                                 LOAN AGREEMENT
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<PAGE>



Payment to the  Administrative  Agent,  the recipient of such payment shall,  on
demand,  return to the  Administrative  Agent the amount  made  available  to it
together with interest  thereon in respect of the period  commencing on the date
such amount was so made available by the Administrative Agent until the date the
Administrative  Agent  recovers  such  amount at a rate per  annum  equal to the
Federal Funds Rate for such period.

         Section 3.6 Withholding Taxes. All payments by Borrower of principal of
and interest on the Advances and of all fees and other amounts payable under any
Loan Document are payable without  deduction for or on account of any present or
future taxes,  duties or other charges levied or imposed by the United States of
America or by the  government of any  jurisdiction  outside the United States of
America or by any political  subdivision or taxing authority of or in any of the
foregoing through withholding or deduction with respect to any such payments. If
any such taxes, duties or other charges are so levied or imposed,  Borrower will
pay additional interest or will make additional payments in such amounts so that
every net payment of  principal of and interest on the Advances and of all other
amounts  payable by any of them under any Loan  Document,  after  withholding or
deduction for or on account of any such present or future taxes, duties or other
charges,  will not be less than the  amount  provided  for  herein  or  therein,
provided that Borrower shall have no obligation to pay such  additional  amounts
to any Lender to the extent that such taxes, duties, or other charges are levied
or imposed by reason of the failure of such Lender to comply with the provisions
of Section 3.7. Borrower shall furnish promptly to the Administrative  Agent for
distribution  to each affected  Lender,  as the case may be,  official  receipts
evidencing any such withholding or reduction.

         Section  3.7  Withholding  Tax  Exemption.  Each  Lender  that  is  not
incorporated  under the laws of the United  States of America or a state thereof
agrees that it will  deliver to Borrower  and the  Administrative  Agent two (2)
duly completed  copies of United States  Internal  Revenue  Service Form 1001 or
4224, certifying in either case that such Lender is entitled to receive payments
from Borrower under any Loan Document,  without  deduction or withholding of any
United States federal  income taxes or (b) if such Lender is claiming  exemption
from United States  withholding  tax under Section  871(h) or 881(c) of the Code
with respect to payments of  "portfolio  interest," a Form W-8, or any successor
form prescribed by the Internal Revenue Service, and a certificate  representing
that such Lender is not a bank for  purposes of Section  881(c) of the Code,  is
not a 10-percent  shareholder (within the meaning of Section 871(h)(3)(B) of the
Code) of the Borrower and is not a controlled foreign corporation related to the
Borrower  (within the  meaning of Section  864(d)(4)  of the Code).  Each Lender
which so  delivers a W-8,  Form 1001 or 4224  further  undertakes  to deliver to
Borrower and the Administrative Agent two (2) additional copies of such form (or
a successor form) on or before the date such form expires or becomes obsolete or
after the occurrence of any event  requiring a change in the most recent form so
delivered by it, and such amendments  thereto or extensions or renewals  thereof
as may be reasonably requested by Borrower or the Administrative  Agent, in each
case certifying  that such Lender is entitled to receive  payments from Borrower
under any Loan Document  without  deduction or  withholding of any United States
federal income taxes,  unless an event (including  without limitation any change
in treaty,  law or regulation)  has occurred prior to the date on which any such
delivery would  otherwise be required which renders all such forms  inapplicable
or which would prevent such Lender from duly  completing and delivering any such
form with respect to it and such Lender advises Borrower and the  Administrative
Agent that it is not capable of receiving such payments without any deduction or
withholding of United States federal income tax.

         Section 3.8  Computation of Interest.  Interest on all Advances and all
other amounts payable by Borrower  hereunder shall be computed on the basis of a
year of 360 days, and actual days elapsed.

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                                 LOAN AGREEMENT
                                                        22

<PAGE>




         Section 3.9       Order of Application.

         (a) No  Default.  Prior to the  occurrence  of an Event of Default  any
payment  (whether  voluntary or  mandatory) of the Notes shall be applied to the
Notes on a pro rata basis based upon the outstanding  principal  balances of the
Notes as of the date of payment.

         (b) After Default.  After the occurrence and during the  continuance of
an Event of Default,  any payment or proceeds of Collateral  shall be applied in
the  following  order:  (i) to all fees and expenses for which Agents or Lenders
have not been paid or reimbursed in accordance  with the Loan  Documents (and if
such payment is less than all unpaid or unreimbursed fees and expenses, then the
payment shall be paid against unpaid and  unreimbursed  fees and expenses in the
order of incurrence or due date); (ii) to accrued interest on the Notes on a pro
rata basis, based upon the outstanding principal balances of the Notes as of the
date of payment;  (iii) to the  principal of the Notes and amounts due and owing
under  any  Financial  Hedge on a pro rata  basis,  based  upon the  outstanding
principal  balances of the Notes or obligation due and owing under any Financial
Hedge as of the date of payment; and (iv) to all other Obligations.

         (c) Application to Advances.  Subject to the foregoing,  and so long as
no Event of Default has occurred and is continuing, payments of principal of any
Note shall be applied  to such  outstanding  Alternate  Base Rate  Advances  and
Eurodollar Advances under such Note as Borrower shall select; provided, however,
that Borrower shall select Alternate Base Rate Advances and Eurodollar  Advances
to be repaid in a manner  designated to minimize the funding loss required to be
paid pursuant to Section 4.5, if any, resulting from such payment;  and provided
further that if Borrower  shall fail to select the Alternate  Base Rate Advances
and Eurodollar Advances to which such payments are to be applied, or if an Event
of Default has occurred and is continuing at the time of such payment,  then the
Administrative  Agent shall be entitled to apply the payment to such Advances in
the manner in which it shall deem appropriate in its sole discretion.


                  ARTICLE IV -- YIELD PROTECTION AND ILLEGALITY

         Section 4.1       Additional Costs.

         (a) Borrower  hereby agrees to pay directly to each Lender from time to
time such amounts as such Lender may  determine to be necessary to compensate it
for  any  costs  incurred  by such  Lender  which  such  Lender  determines  are
attributable to its making or maintaining any Eurodollar  Advances  hereunder or
its obligation to make any of such Advances  hereunder,  or any reduction in any
amount  receivable  by such Lender  hereunder in respect of any such Advances or
such obligation  (such  increases in costs and reductions in amounts  receivable
being herein called  "Additional  Costs"),  resulting from any Regulatory Change
which:

                  (i) changes  the basis of  taxation of any amounts  payable to
         such Lender under this Agreement or its Notes in respect of any of such
         Advances  (other  than (1) taxes  imposed on the  overall net income of
         such Lender or its Applicable  Lending Office for any of such Advances,
         (2) franchise or similar taxes of such Lender, and (3) amounts withheld
         pursuant to the last sentence of Section 3.7);


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                                 LOAN AGREEMENT
                                                        23

<PAGE>



                  (ii) imposes or modifies any reserve, special deposit, minimum
         capital,   capital  ratio,  or  similar  requirement  relating  to  any
         extensions  of credit or other assets of, or any deposits with or other
         liabilities or commitments of, such Lender; or

                  (iii)  imposes  any  other   Additional  Cost  affecting  this
         Agreement  or the  Notes  or any  of  such  extensions,  of  credit  or
         liabilities or commitments.

Each Lender will notify  Borrower of any event  occurring after the date of this
Agreement  which will  entitle  such  Lender to  compensation  pursuant  to this
Section 4.1(a) as promptly as practicable after it obtains knowledge thereof and
determines  to  request  such  compensation,  and  will  designate  a  different
Applicable  Lending  Office  for the  Advances  affected  by such  event if such
designation will avoid the need for, or reduce the amount of, such  compensation
and will not, in the sole  opinion of such  Lender,  violate any law,  rule,  or
regulation or be in any way  disadvantageous to such Lender,  provided that such
Lender shall have no  obligation to so designate an  Applicable  Lending  Office
located outside the United States of America.  Each Lender will furnish Borrower
with a  certificate  setting  forth the basis and the amount of each  request of
such Lender for compensation  under this Section 4.1(a).  If any Lender requests
compensation from Borrower under this Section 4.1(a), Borrower may, by notice to
such Lender (with a copy to the Administrative  Agent) suspend the obligation of
such Lender to make or Continue making Eurodollar  Advances until the Regulatory
Change  giving rise to such  request  ceases to be in effect (in which case such
Lender's  Eurodollar Advances shall be Converted to Alternate Base Rate Advances
in accordance with the provisions of Section 4.4).

         (b) Without  limiting the effect of the  foregoing  provisions  of this
Section 4.1, in the event that, by reason of any Regulatory  Change,  any Lender
either (i) incurs  Additional  Costs based on or measured by the excess  above a
specified level of the amount of a category of deposits or other  liabilities of
such Lender which  includes  deposits by reference to which the interest rate on
Eurodollar Advances is determined as provided in this Agreement or a category of
extensions  of credit or other assets of such Lender which  includes  Eurodollar
Advances  or (ii)  becomes  subject  to  restrictions  on the  amount  of such a
category of  liabilities  or assets which it may hold,  then,  if such Lender so
elects by notice to  Borrower  (with a copy to the  Administrative  Agent),  the
obligation  of such  Lender  to  make or  Continue  making  Eurodollar  Advances
hereunder shall be suspended until such Regulatory Change ceases to be in effect
(in which case such Lender's Eurodollar Advances shall be Converted to Alternate
Base Rate Advances in accordance with the provisions of Section 4.4).

         (c)  Determinations  and allocations by any Lender for purposes of this
Section 4.1 of the effect of any  Regulatory  Change on its costs of maintaining
its  obligations  to make  Advances or of making or  maintaining  Advances or on
amounts  receivable by it in respect of Advances,  and of the additional amounts
required to compensate such Lender in respect of any Additional Costs,  shall be
conclusive,  absent  manifest  error and provided that such  determinations  and
allocations are made on a reasonable basis.

         Section 4.2       Limitation on Eurodollar Advances.  Anything herein 
to the contrary notwithstanding, if with respect to any Eurodollar Advance for 
any Interest Period therefor:

         (a) The Administrative  Agent determines (which  determination shall be
conclusive  absent  manifest  error) that  quotations of interest  rates for the
relevant  deposits referred to in the definition of "Eurodollar Rate" in Section
1.1  are  not  being  provided  in the  relative  amounts  or for  the  relative
maturities for purposes of determining the rate of interest for such Advances as
provided in this Agreement; or


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                                 LOAN AGREEMENT
                                       24

<PAGE>



         (b) The  Required  Lenders  determine  (which  determination  shall  be
conclusive absent manifest error) and notify the  Administrative  Agent that the
rate of interest  referred to in the definition of "Eurodollar  Rate" in Section
1.1 on the  basis  of which  the rate of  interest  for such  Advances  for such
Interest  Period is to be determined do not  accurately  reflect the cost to the
Lenders of making or maintaining such Advances for such Interest Period;

then  the  Administrative  Agent  shall  give  Borrower  prompt  notice  thereof
specifying  the  relevant  amounts  or  periods,  and so long as such  condition
remains in effect,  the Lenders shall be under no obligation to make or Continue
additional  Eurodollar  Advances and Borrower  shall,  on the last day(s) of the
then-current Interest Period(s) for the outstanding Eurodollar Advances,  prepay
such  Eurodollar  Advances or Convert  them to Alternate  Base Rate  Advances in
accordance with Section 4.4.

         Section 4.3  Illegality.  Notwithstanding  any other  provision of this
Agreement,  in the  event  that  it  becomes  unlawful  for  any  Lender  or its
Applicable  Lending  Office  to (a)  honor  its  obligation  to make  Eurodollar
Advances hereunder,  or (b) maintain  Eurodollar  Advances hereunder,  then such
Lender shall promptly notify Borrower (with a copy to the Administrative  Agent)
thereof and such  Lender's  obligation to make or maintain  Eurodollar  Advances
shall be  suspended  until such time as such Lender may again make and  maintain
Eurodollar  Advances (in which case such Lender's  Eurodollar  Advances shall be
Converted to Alternate  Base Rate Advances in accordance  with the provisions of
Section 4.4).

         Section  4.4  Treatment  of  Eurodollar  Advances.  If  the  Eurodollar
Advances of any Lender are to be Converted  pursuant to Section 4.1, 4.2 or 4.3,
such  Lender's  Eurodollar  Advances  shall  be  automatically   Converted  into
Alternate  Base Rate  Advances on the last day(s) of the then  current  Interest
Period(s) for the Eurodollar  Advances (or, in the case of a Conversion required
by Section 4.1(b) or 4.3(b),  on such earlier date as such Lender may specify to
Borrower  with a copy to the  Administrative  Agent) and,  unless and until such
Lender  gives  notice as  provided  below that the  circumstances  specified  in
Section 4.1, 4.2 or 4.3 which gave rise to such Conversion no longer exist:

         (a) To the extent that such Lender's  Eurodollar  Advances have been so
Converted,  all payments and  prepayments of principal  which would otherwise be
applied to such Lender's  Eurodollar  Advances  shall be applied  instead to its
Alternate Base Rate Advances; and

         (b) All  Advances  which would  otherwise  be made or Continued by such
Lender as Eurodollar  Advances shall be made as or Converted into Alternate Base
Rate Advances.

If such  Lender  gives  notice to  Borrower  (with a copy to the  Administrative
Agent) that the circumstances specified in Section 4.1, 4.2 or Section 4.3 which
gave rise to the  Conversion of such Lender's  Eurodollar  Advances  pursuant to
this Section 4.4 no longer exist (which such Lender  agrees to do promptly  upon
such  circumstances  ceasing to exist) at a time when Advances are  outstanding,
such Lender's Alternate Base Rate Advances shall be automatically  Converted, on
the first day(s) of the next succeeding  Interest Period(s) for such outstanding
Eurodollar  Advances  to the  extent  necessary  so that,  after  giving  effect
thereto,  all Eurodollar  Advances held by the Lenders holding the same are held
pro rata (as to principal amounts and Interest Periods) in accordance with their
respective Commitments.

         Section  4.5  Compensation.  Borrower  shall pay to the  Administrative
Agent,  for the account of each Lender,  upon the request of such Lender through
the Administrative  Agent, such amount or amounts as shall be sufficient (in the
reasonable  opinion of such  Lender) to  compensate  it for any loss,  cost,  or
expense incurred by it as a result of:


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                                 LOAN AGREEMENT
                                       25

<PAGE>



         (a) Any payment,  prepayment or Conversion of a Eurodollar  Advance for
any reason (including,  without limitation,  the acceleration of the outstanding
Advances  pursuant  to  Section  11.2) on a date  other  than the last day of an
Interest Period for such Advance; or

         (b)  Any  failure  by  Borrower  for  any  reason  (including,  without
limitation,  the failure of any conditions  precedent specified in Article VI to
be  satisfied)  to borrow or prepay a  Eurodollar  Advance  on the date for such
borrowing  or  prepayment,  specified  in the  relevant  notice of  borrowing or
prepayment under this Agreement.

Such  compensation  shall not exceed the  excess,  if any,  of (i) the amount of
interest which otherwise  would have accrued on the principal  amount so paid or
not  borrowed  for the period from the date of such payment or failure to borrow
to the last day of the  Interest  Period for such  Advance (or, in the case of a
failure  to  borrow,  the  Interest  Period for such  Advance  which  would have
commenced on the date specified for such  borrowing) at the  applicable  rate of
interest for such Advance  provided for herein over (ii) the interest  component
of the amount  such  Lender  would have bid in the London  interbank  market for
Dollar deposits of leading banks and amounts comparable to such principal amount
and with maturities comparable to such period.

         Section  4.6 Capital  Adequacy.  If after the date  hereof,  any Lender
shall have determined that the adoption or implementation of any applicable law,
rule, or regulation regarding capital adequacy  (including,  without limitation,
any law,  rule,  or regulation  implementing  the Basle  Accord),  or any change
therein,  or any change in the  interpretation or administration  thereof by any
central bank or other Governmental  Authority charged with the interpretation or
administration  thereof,  or  compliance by such Lender (or its parent) with any
guideline,  request,  or directive  regarding  capital adequacy  (whether or not
having the force of law) of any  central  bank or other  Governmental  Authority
(including,  without limitation, any guideline or other requirement implementing
the Basle  Accord),  has or would have the effect of reducing the rate of return
on such Lender's (or its parent's)  capital as a consequence of its  obligations
hereunder or the  transactions  contemplated  hereby to a level below that which
such  Lender  (or  its  parent)  could  have  achieved  but for  such  adoption,
implementation,  change or compliance  (taking into  consideration such Lender's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material,  then from time to time, within ten (10) Business Days after demand
by such Lender (with a copy to the Administrative  Agent), which demand shall be
delivered  by such Lender to Borrower  as  promptly  as  practicable  after such
Lender obtains knowledge of such reduction in its rate of return, Borrower shall
pay to such Lender such  additional  amount or amounts as will  compensate  such
Lender (or its parent) for such reduction. A certificate of such Lender claiming
compensation  under this  Section and  setting  forth the  additional  amount or
amounts to be paid to it hereunder  shall be conclusive,  absent  manifest error
and provided that the  determination  thereof is made on a reasonable  basis. In
determining such amount or amounts, such Lender may use any reasonable averaging
and attribution methods.


                              ARTICLE V -- SECURITY

         Section 5.1  Collateral.  To secure the full and  complete  payment and
performance of the  Obligations,  Borrower shall execute and deliver or cause to
be executed and delivered the documents  described  below  covering the property
and collateral  described  therein (which,  together with any other property and
collateral  which  may now or  hereafter  secure  the  Obligations  or any  part
thereof, is sometimes herein called the "Collateral"):


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                                 LOAN AGREEMENT
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<PAGE>



         (a) Borrower Security Agreement.  Borrower shall execute and deliver to
the  Administrative  Agent,  for  the  benefit  of  the  Lenders,  the  Consent,
Confirmation and Ratification of the Borrower Security Agreement.

         (b) Guarantor Security Agreement. The existing Guarantors shall execute
and deliver to the  Administrative  Agent,  for the benefit of the Lenders,  the
Consent, Confirmation and Ratification of the Guarantor Security Agreements, and
the Excepted Subsidiaries and Executive Medical Enterprises,  Inc. shall execute
and  deliver to the  Administrative  Agent,  for the benefit of the  Lenders,  a
Guarantor Security Agreement.

         (c)  Pledge  Agreement.  Pledgors  shall  execute  and  deliver  to the
Administrative Agent, for the benefit of the Lenders, the Consent,  Confirmation
and Ratification of the Pledge Agreements.

         (d) Further Assurances. Borrower shall execute and cause to be executed
such further documents and instruments,  including without  limitation,  Uniform
Commercial  Code  financing  statements,  as the  Administrative  Agent  and the
Documentation  Agent, in their sole  discretion,  deem necessary or desirable to
evidence and perfect the Administrative  Agent's liens and security interests in
the Collateral.

         (e) Description of Collateral. Collateral includes, without limitation,
the following assets of Borrower and Guarantors:

                  (i) All present and future accounts,  contract rights, general
         intangibles,   chattel  paper,   documents,   instruments,   inventory,
         equipment,  and other goods,  wherever located,  now owned or hereafter
         acquired.

                  (ii) All present and future issued and  outstanding  shares of
         capital stock of, or partnership and membership interests, now owned or
         hereafter  acquired by Borrower or any  Guarantor,  including,  without
         limitation,  all  capital  stock  of,  or  partnership  and  membership
         interests in, the Guarantors.

                  (iii) To the  extent  allowed  by the  respective  partnership
         agreements,  certain  partnership  interests  or economic  interests in
         partnership interests owned by Borrower and Guarantors.

                  (iv)  All  present  and  future  automobiles,   trucks,  truck
         tractors, trailers,  semi-trailers,  or other motor vehicles or rolling
         stock now owned or  hereafter  acquired by  Borrower  or any  Guarantor
         (collectively, the "Vehicles").

                  (v) All present and future  rights,  awards,  and judgments to
         which  Borrower or any Guarantor is entitled  under any  litigation now
         existing or hereafter arising.

                  (vi) All present and future rights,  titles,  and interests of
         Borrower or any Guarantor in and to all patents,  patent  applications,
         patent right,  service marks,  trademarks,  tradenames,  trade secrets,
         intellectual property, registrations, goodwill, copyrights, franchises,
         licenses,  permits,  proprietary information,  customer lists, designs,
         and inventions.

                  (vii) All  present and future  books,  records,  data,  plans,
         manuals,  computer  software  and  computer  programs of  Borrower  and
         Guarantors.

                  (viii) All proceeds and products of the Collateral  heretofore
described.


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                                 LOAN AGREEMENT
                                       27

<PAGE>



         Section 5.2 Future Liens.  Promptly, and in any event within twenty-one
(21) days after (a) the acquisition of any assets (real, personal,  tangible, or
intangible)  by Borrower or any  Guarantor or (b) the removal,  termination,  or
expiration  of any  prohibition  upon the granting of a lien in any asset (real,
personal,  tangible, or intangible) of any Borrower or any Guarantor (including,
without limitation, the granting of liens in all general and limited partnership
interests  in  which  Borrower  and  Guarantors  own  100%  of  the  partnership
interests) (the "Additional Assets"),  Borrower shall (or shall cause such other
Guarantor  to)  execute  and  deliver  to   Administrative   Agent  all  further
instruments  and documents  (including,  without  limitation,  certificates  and
instruments  representing  shares  of stock or  evidencing  Debt and any  realty
appraisals  as  Administrative  Agent  may  require  with  respect  to any  such
Additional Assets), and shall take all such further action that may be necessary
or desirable,  or that  Administrative  Agent may reasonably  request, to grant,
perfect,  and protect liens in favor of Administrative  Agent for the benefit of
Lenders in such Additional  Assets,  as security for the  Obligations;  it being
expressly  understood  that the  granting of such  additional  security  for the
Obligations  is a material  inducement  to the  execution  and  delivery of this
Agreement by each Lender.  Upon satisfying the terms and conditions hereof, such
Additional  Assets shall be included in the  "Collateral" for all purposes under
the Loan Documents, and all references to the "Collateral" in the Loan Documents
shall include the Additional Assets.

         Section  5.3  Release  of  Collateral.  Upon  any  sale,  transfer,  or
disposition  of  Collateral  which is expressly  permitted  pursuant to the Loan
Documents  (or is otherwise  authorized by Required  Lenders or Lenders,  as the
case may be), and upon ten (10) Business Days' prior written request by Borrower
(which  request  must be  accompanied  by true  and  correct  copies  of (a) all
documents of transfer or  disposition,  including  any  contract of sale,  (b) a
preliminary closing statement and instructions to the title company, if any, and
(c) all requested release instruments, Administrative Agent shall (and is hereby
irrevocably  authorized  by the  Lenders to) execute  such  documents  as may be
necessary to evidence the release of liens granted to  Administrative  Agent for
the benefit of lenders pursuant hereto in such Collateral; provided that, (x) no
such  release of Lien shall be  granted if any  Default or Event of Default  has
occurred and is continuing,  including,  without limitation, the failure to make
certain  mandatory  prepayments in accordance with Section 3.3(a) in conjunction
with the sale and transfer of such Collateral;  (y)  Administrative  Agent shall
not be required to execute any such document on terms which,  in  Administrative
Agent's opinion,  would expose  Administrative  Agent to liability or create any
obligation  or entail  any  consequence,  other  than the  release of such Liens
without  recourse  or  warranty;  and (z) such  release  shall not in any manner
discharge,  affect,  or impair the Obligations,  or liens upon or obligations of
Borrower or any Guarantor in respect of all  interests  retained by the Borrower
and Guarantors,  including, without limitation, the proceeds of any sale, all of
which shall continue to constitute Collateral.

         Section 5.4 Setoff.  If an Event of Default  shall have occurred and is
continuing,  each Lender is hereby authorized at any time and from time to time,
without  notice to Borrower  (any such notice being hereby  expressly  waived by
Borrower),  to set off and apply any and all deposits (general or special,  time
or demand,  provisional or final) at any time held and other indebtedness at any
time  owing by such  Lender to or for the  credit  or the  account  of  Borrower
against any and all of the  obligations  of Borrower now or  hereafter  existing
under  this  Agreement,  such  Lender's  Notes,  or  any  other  Loan  Document,
irrespective  of whether or not the  Administrative  Agent or such Lender  shall
have made any demand under this  Agreement or such Lender's  Notes or such other
Loan Document and although such obligations may be unmatured. Each Lender agrees
promptly to notify Borrower (with a copy to the Administrative  Agent) after any
such setoff and application, provided that the failure to give such notice shall
not affect the validity of such setoff and application.  The rights and remedies
of  each  Lender  hereunder  are  in  addition  to  other  rights  and  remedies
(including,  without  limitation,  other rights of setoff) which such Lender may
have.



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                       ARTICLE VI -- CONDITIONS PRECEDENT

         Section 6.1 Initial Advance.  The obligation of each Lender to make its
initial  Advance is subject to the condition  precedent  that the  Documentation
Agent  shall  have  received  on or before  the day of such  Advance  all of the
following,  each dated (unless otherwise indicated) the date hereof, in form and
substance satisfactory to the Documentation Agent:

         (a) Resolutions. Resolutions of the Boards of Directors of Borrower and
each Guarantor  certified by the Secretary or an Assistant  Secretary of each of
them which authorize the execution, delivery, and performance by such Company of
this Agreement and/or the other Loan Documents to which such Company is or is to
be a party;

         (b) Incumbency  Certificate.  A certificate of incumbency  certified by
the  Secretary  or  an  Assistant  Secretary  of  Borrower  and  each  Guarantor
certifying  the names of the officers of each such  Company,  authorized to sign
this  Agreement and each of the other Loan  Documents to which each such Company
is or is to be a party (including the certificates contemplated herein) together
with specimen signatures of such officers;

         (c)  Articles  of  Incorporation.  The  articles  of  incorporation  of
Borrower and Litho certified, in the case of Borrower, by the Secretary of State
of  Delaware,  and,  in the case of  Litho,  by the  Secretary  or an  Assistant
Secretary of such Company;

         (d) Bylaws. The bylaws of Borrower and Litho certified by the Secretary
or an Assistant Secretary of each such Company;

         (e)      Governmental Certificates.  Certificates of the appropriate
government officials of the state of incorporation of Borrower and Litho as to
the existence and good standing of each of them;

         (f)      Notes.  The Notes executed by Borrower;

         (g)      Borrower Security Agreement.  The Second Consent, Confirmation
and Ratification of Borrower Security Agreement executed by Borrower;

         (h)      Guaranties.  The Second Consent, Confirmation and Ratification
of Guaranty Agreement executed by the existing Guarantors, and Guaranty
Agreements executed by the Excepted Subsidiaries and Executive Medical
Enterprises, Inc.;

         (i)      Guarantor Security Agreement.  The Second Consent, 
Confirmation and Ratification of Guarantor Security Agreements executed by the
existing Guarantors, and Guarantor Security Agreements executed by the Excepted
Subsidiaries and Executive Medical Enterprises, Inc.;

         (j)      Pledge Agreements.  The Second Consent, Confirmation and 
Ratification of Pledge and Security Agreements executed by the Pledgors;

         (k) Financing Statements.  Uniform Commercial Code financing statements
executed  by  Borrower  and each  Guarantor  and  covering  the  Collateral,  as
requested by Administrative Agent;

         (l)      Stock Certificates.  Stock certificates evidencing all stock 
pledged pursuant to the Borrower Security Agreement and each Guarantor Security
Agreement, as applicable, together with stock powers duly executed in blank;

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<PAGE>



         (m)  Certificates of Title.  Original  certificates of title,  together
with executed  applications  for title, for all vehicles used in connection with
the  transportation  of lithotripters  pledged pursuant to the Borrower Security
Agreement and the Guarantor Security Agreements;

         (n) Insurance  Policies.  Copies of all insurance  policies required by
Section  8.5,   together   with  loss  payee   endorsements   in  favor  of  the
Administrative  Agent,  for the  benefit  of the  Lenders,  with  respect to all
insurance policies covering Collateral;

         (o) UCC and Tax and  Judgment  Lien  Searches.  The  results of Uniform
Commercial Code searches showing all financing statements and other documents or
instruments,  and tax and judgment  lien  searches  showing all tax and judgment
liens,  on  file  against  Borrower  and  Litho  in  such  jurisdictions  as the
Administrative  Agent shall  require,  such  searches to be as of a date no more
than twenty (20) days prior to the date of the initial Advance;

         (p)      Perfection Certificate.  A Perfection Certificate, in
substantially the form of Exhibit D hereto, properly completed and signed by the
Chief Executive or Chief Financial Officer or Vice President-Finance of Borrower
and the Guarantors;

         (q) Opinion of Counsel.  Favorable opinions as to the matters set forth
in Exhibit E hereto of (i) Akin,  Gump,  Strauss,  Hauer & Feld,  L.L.P.,  Texas
legal counsel to Borrower and the  Guarantors,  (ii) Small,  Craig & Werkenthin,
special  Texas  counsel to Borrower and the  Guarantors,  and (iii) Bingham Dana
LLP, special Massachusetts legal counsel to the Agents and the Lenders;

         (r) Attorneys' Fees and Expenses.  Evidence that the costs and expenses
(including attorneys' fees) referred to in Section 13.1, to the extent incurred,
shall have been paid in full by Borrower;

         (s) Fees. Borrower shall have paid to the Agents for their own account,
the fees owed by Borrower to the Agents  pursuant  to the letter  agreements  of
even date herewith between Borrower and the Agents;

         (t) Federal  Reserve  Board Form U-1.  For the  Administrative  Agent a
properly  completed Federal Reserve Board Form U-1 duly executed by each Company
pledging stock of another Company;

         (u)      Senior Subordinated Notes.  Evidence that at least 
$100,000,000 principal amount Senior Subordinated Notes have been issued;

         (v)  Delinquent  State Tax Returns.  All  Delinquent  State Tax Returns
shall have been  filed and all taxes,  penalties,  interest,  and fees  relating
thereto  shall have been paid in full,  all as  satisfactorily  evidenced to the
Agents; and

         (w) No Material  Adverse Change.  No material adverse change shall have
occurred since December 31, 1997 in the business, assets, operations, conditions
(financial  or  otherwise)  or  prospects  of the  Companies or in the facts and
information delivered to Lenders on or prior to the date of the initial Advance.


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<PAGE>



         Section 6.2       All Advances.  The obligation of each Lender to make
any Advance (including the initial Advance) is subject to the following
additional conditions precedent:

         (a)      Advance Request Form.  The Administrative Agent shall have 
received, in accordance with Section 2.5, an Advance Request Form executed by an
authorized officer of Borrower;

         (b)      No Default.  No Default shall have occurred and be continuing,
or would result from such Advance;

         (c)  Representations  and Warranties.  All of the  representations  and
warranties  contained  in  Article  VII  hereof  and in each of the  other  Loan
Documents  shall be true and correct on and as of the date of such  Advance with
the same force and effect as if such  representations  and  warranties  had been
made on and as of such date, except to the extent that such  representations and
warranties  speak to a specific date or the facts on which such  representations
and warranties are based have been changed by  transactions  contemplated by the
Loan Documents; and

         (d)  Additional  Documentation.  The  Administrative  Agent  shall have
received such additional  approvals,  opinions,  or documents as are required by
the terms and provisions of this Agreement or any other Loan Document.


                  ARTICLE VII -- REPRESENTATIONS AND WARRANTIES

         To induce  the Agents  and the  Lenders  to enter into this  Agreement,
Borrower hereby represents and warrants to the Agents and the Lenders that:

         Section 7.1       Existence.

         (a) Corporate Existence. Each of the Companies (other than the Excepted
Subsidiaries and the Partnerships): (a) is a corporation duly organized, validly
existing,  and in  good  standing  under  the  laws of the  jurisdiction  of its
incorporation;  (b) has all requisite  corporate  power and authority to own its
assets and carry on its  business as now being or as  proposed to be  conducted;
and (c) is qualified to do business in all  jurisdictions in which the nature of
its business makes such qualification  necessary and where failure to so qualify
would have a material  adverse effect on the business,  condition  (financial or
otherwise),  operations,  or  properties  of the  Companies  taken  as a  whole,
Borrower,  or any Material  Subsidiary.  Each  Company  (other than the Excepted
Subsidiaries)  has the corporate  power and authority to execute,  deliver,  and
perform its  obligations  under this  Agreement and the other Loan  Documents to
which it is or may become a party.

         (b) Partnership Existence.  Each of the Partnerships:  (a) is a general
partnership,  limited  partnership or limited liability company, as appropriate,
duly  organized,  validly  existing,  and in good standing under the laws of the
jurisdiction  of its  formation;  (b) has all  requisite  partnership  power and
authority or company power and authority, as appropriate,  to own its assets and
carry on its  business as now being or as proposed to be  conducted;  and (c) is
qualified  to do  business  in all  jurisdictions  in which  the  nature  of its
business  makes such  qualification  necessary  and where  failure to so qualify
would have a material  adverse effect on the business,  condition  (financial or
otherwise),  operations,  or  properties  of the  Companies  taken  as a  whole,
Borrower, or any Material Subsidiary.

         Section 7.2       Financial Statements.  Borrower has delivered to the
Administrative Agent audited consolidated financial statements of the Companies 
as of and for the fiscal year ended

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<PAGE>



December 31, 1997, and unaudited  consolidated  financial statements of Borrower
for the one (1) month period ended January 31, 1998.  Such financial  statements
have  been  prepared  in  accordance  with  GAAP,  and  fairly  present,   on  a
consolidated  basis, the financial  condition of the Companies and Litho and the
Partnerships,  as appropriate,  as of the respective dates indicated therein and
the results of operations for the respective  periods indicated  therein.  There
has been no material  adverse  change in the business,  condition  (financial or
otherwise),  operations,  or  properties  of the  Companies  taken  as a  whole,
Borrower, or any Material Subsidiary since the effective date of the most recent
financial statements referred to in this Section.

     Section 7.3 Corporate  Action:  No Breach.  The  execution,  delivery,  and
performance  by each Company of this  Agreement and the other Loan  Documents to
which such  Company is or may become a party and  compliance  with the terms and
provisions  hereof  and  thereof  have been  duly  authorized  by all  requisite
corporate action (or, if such Company is a partnership, then partnership action)
on the part of such  Company  and do not and will not (a)  violate  or  conflict
with, or result in a breach of, or require any consent under (i) the articles of
incorporation  or bylaws of such Company (or, if such Company is a  partnership,
then the partnership  agreement of such Company),  (ii) any material  applicable
law, rule, or regulation or any material order, writ,  injunction,  or decree of
any  Governmental  Authority or arbitrator,  or (iii) any material  agreement or
instrument  to which such  Company is a party or by which such Company or any of
its property is bound or subject (other than agreements and instruments relating
to Debt which will be paid off with the proceeds of the initial Advance), or (b)
constitute a material default under any such agreement or instrument (other than
agreements  and  instruments  relating  to Debt  which will be paid off with the
proceeds of the initial Advance), or result in the creation or imposition of any
Lien (except as provided in Article V) upon any of the revenues or assets of any
of the Companies.

         Section 7.4 Operation of Business.  Each of the  Companies  (other than
the Excepted Subsidiaries) possesses all licenses, permits, franchises, patents,
copyrights,  trademarks, and tradenames, or rights thereto, necessary to conduct
their  respective  businesses  substantially  as now  conducted and as presently
proposed to be  conducted.  None of the  Companies  is in violation of any valid
rights of others with respect to any of the foregoing  (except where the failure
to do so would not have a material  adverse  effect on the  business,  condition
(financial or otherwise),  operations or properties of the Companies  taken as a
whole, Borrower, or any Material Subsidiary).

         Section 7.5 Litigation and Judgments.  As of the date hereof, except as
disclosed on Schedule 7.5 hereto,  there is no action, suit,  investigation,  or
proceeding before or by any Governmental  Authority or arbitrator pending, or to
the knowledge of Borrower, threatened against or affecting any of the Companies,
that would,  if  adversely  determined,  have a material  adverse  effect on the
business,  condition  (financial or otherwise),  operations or properties of the
Companies taken as a whole,  Borrower, or any Material Subsidiary or the ability
of  Borrower  to pay and  perform  the  Obligations.  There  are no  outstanding
judgments against any Company.

         Section 7.6 Rights in Properties; Liens. Each of the Companies has good
and  indefeasible  title to or valid  leasehold  interests  in their  respective
material  properties and assets,  real and personal,  including the  properties,
assets, and leasehold interests reflected in the financial  statements described
in Section 7.2, and none of the properties,  assets,  or leasehold  interests of
any Company is subject to any Lien, except as permitted by Section 9.2.

         Section 7.7 Enforceability.  This Agreement constitutes,  and the other
Loan Documents to which Borrower is a party,  when delivered,  shall  constitute
the legal,  valid,  and binding  obligations  of Borrower,  enforceable  against
Borrower  in  accordance  with  their  respective  terms,  except as  limited by
bankruptcy,  insolvency,  or other laws of general  application  relating to the
enforcement of creditors' rights.

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<PAGE>



The Loan Documents to which each  Guarantor is a party,  when  delivered,  shall
constitute  the  legal,  valid,  and  binding  obligations  of  such  Guarantor,
enforceable  against such Guarantor in accordance with their  respective  terms,
except  as  limited  by  bankruptcy,   insolvency,  or  other  laws  of  general
application relating to the enforcement of creditors' rights.

         Section 7.8 Approvals.  No authorization,  approval, or consent of, and
no filing or registration with, any Governmental  Authority or third party is or
will be necessary for the execution, delivery, or performance by Borrower or any
Guarantor of this  Agreement and the other Loan  Documents to which  Borrower or
any  Guarantor  is or may become a party or for the  validity or  enforceability
thereof.

     Section 7.9 Debt. As of the date hereof, the Companies have no Debt, except
as disclosed on Schedule 7.9.

         Section   7.10  Taxes.   The   Companies   (other  than  the   Excepted
Subsidiaries) have filed or extended all tax returns (federal, state, and local)
required to be filed, including all income, franchise, employment, property, and
sales tax returns, and have paid all of their respective  liabilities for taxes,
assessments,  governmental  charges,  and other  levies that are due and payable
other than certain state tax returns  required to be filed on or before the date
hereof (the "Delinquent State Tax Returns").  Except as previously  disclosed to
the  Administrative   Agent  in  writing,   no  Company  knows  of  any  pending
investigation  of any of them by any  taxing  authority  or of any  pending  but
unassessed  tax  liability  of any of  them,  except  relating  to the  Excepted
Subsidiaries.

         Section 7.11 Use of Proceeds;  Margin Securities. No Company is engaged
principally, or as one of its important activities, in the business of extending
credit for the  purpose of  purchasing  or  carrying  margin  stock  (within the
meaning of  Regulations  G, T, U, or X of the Board of  Governors of the Federal
Reserve  System),  and no part of the  proceeds of any  Advance  will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of  purchasing  or carrying  margin  stock,  except for  purchases of Borrower's
capital stock permitted by Section 9.4 hereof.

         Section 7.12 ERISA.  The  Companies  are in  compliance in all material
respects with all applicable provisions of ERISA. Neither a Reportable Event nor
a Prohibited  Transaction  has occurred  and is  continuing  with respect to any
Plan.  No notice of intent to terminate a Plan has been filed,  nor has any Plan
been terminated.  No circumstances  exist which constitute grounds entitling the
PBGC to institute proceedings to terminate,  or appoint a trustee to administer,
a Plan, nor has the PBGC instituted any such proceedings.  None of the Companies
nor  any  ERISA   Affiliate  has  completely  or  partially   withdrawn  from  a
Multi-employer  Plan.  The  Companies  and each ERISA  Affiliate  have met their
minimum funding requirements under ERISA with respect to all of their Plans, and
the  present  value of all vested  benefits  under each Plan does not exceed the
fair market value of all Plan assets  allocable to such benefits,  as determined
on the most recent  valuation,  date of the Plan and in  accordance  with ERISA.
None of the Companies nor any ERISA  Affiliate has incurred any liability to the
PBGC under ERISA.

         Section 7.13  Disclosure.  All factual  information  (taken as a whole)
furnished  by or on behalf of  Borrower  in  writing  to any Agent or any Lender
(including,  without limitation,  all factual information  contained in the Loan
Documents) for purposes of or in connection with this Agreement,  the other Loan
Documents or any  transaction  contemplated  herein or therein is, and all other
such factual  information (taken as a whole) hereafter furnished by or on behalf
of Borrower in writing will be, true and  accurate in all  material  respects on
the date as of which such factual  information  is dated or certified and is not
(and such factual  information  (taken as a whole) hereafter  furnished will not
be) incomplete by omitting

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<PAGE>



to state any facts necessary to make such factual information (taken as a whole)
not  misleading  in  any  material   respect  at  such  time  in  light  of  the
circumstances under which such factual information was provided.

         Section 7.14  Subsidiaries;  Partnerships.  Each of the Guarantors is a
direct or  indirect  wholly-owned  Subsidiary  of  Borrower,  and as of the date
hereof,  together with the Partnerships  listed on Schedule 3, constitute all of
the Subsidiaries of Borrower.  Schedule 7.14.1,  as the same may be amended from
time to time to reflect transactions permitted by this Agreement, sets forth the
outstanding shares of capital stock (or other ownership  interests) and the name
of  each  shareholder  of  each  of the  Subsidiaries  of  Borrower.  All of the
outstanding  capital  stock of Borrower  and each of its  Subsidiaries  has been
validly issued,  is fully paid, and is  nonassessable.  Schedule 7.14.2,  as the
same may be amended from time to time to reflect transactions  permitted by this
Agreement,  sets forth the outstanding partnership interests of the Partnerships
owned by each of the Companies.

         Section 7.15 Agreements.  Except for the Senior Subordinated Indenture,
the Senior  Subordinated  Notes,  and as set forth on Schedule 7.15, none of the
Companies is a party to any  indenture,  loan,  or credit  agreement,  or to any
lease or other  agreement or instrument,  or subject to any charter or corporate
restriction which could reasonably be expected to have a material adverse effect
on the business, condition (financial or otherwise), operations or properties of
the  Companies  taken as a whole,  Borrower,  or any Material  Subsidiary or the
ability of Borrower or any  Guarantor to pay and perform its  obligations  under
the Loan  Documents to which it is a party.  None of the Companies is in default
in any material respect in the performance, observance, or fulfillment of any of
the  obligations,  covenants,  or  conditions  contained  in  any  agreement  or
instrument to which it is a party, which default, in the aggregate with all such
other defaults, would have a material adverse affect on the business,  condition
(financial or otherwise),  operations or properties of the Companies  taken as a
whole, Borrower, or any Material Subsidiary.

         Section 7.16      Compliance with Legal Requirements; Governmental
Authorizations.

         (a) Except for the Excepted  Subsidiaries  and as set forth in Schedule
7.16.1:  (i) each Company is in  compliance  in all material  respects with each
Legal Requirement that is or was applicable to it or to the conduct or operation
of its  business  or the  ownership  or use of any of its  assets;  and  (ii) no
Company has received  any notice or other  communication  from any  Governmental
Authority or other Person of any event or circumstance  which could constitute a
violation of, or failure to comply with, any Legal Requirement.

         (b) Except for the Excepted  Subsidiaries  and as set forth in Schedule
7.16:  (i) each  Company  is in  material  compliance  with all of the terms and
requirements of each Governmental  Authorization  held by such Company;  (ii) no
Company has received  any notice or other  communication  from any  Governmental
Authority or other Person of, any event or circumstance which could constitute a
violation  of,  or  failure  to  comply  with,  any term or  requirement  of any
Governmental   Authorization,   or  of  any  actual  or  potential   revocation,
withdrawal,  cancellation  or termination of, or material  modification  to, any
Governmental  Authorization;  (iii) all applications required to have been filed
for the renewal of any required Governmental Authorizations have been duly filed
on a timely basis with the appropriate Governmental  Authorities,  and all other
filings   required  to  have  been  made  with  respect  to  such   Governmental
Authorizations  have  been  duly  made on a timely  basis  with the  appropriate
Governmental Authorities;  (iv) all Governmental Authorizations of the Companies
are  transferable to the Companies;  (v) upon  consummation of the  transactions
contemplated  hereby,  the Companies  will  lawfully hold all such  Governmental
Authorizations; and (vi) none of such Governmental Authorizations will terminate
upon  consummation  of the  transactions  contemplated  hereby.  Except  for the
Excepted Subsidiaries and as set

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forth  on  Schedule  7.16,  each  of  the  Companies   possesses  the  necessary
Governmental  Authorizations  (i)  necessary  to permit each Company to lawfully
conduct and operate its respective  business in the manner it currently conducts
and operates  such business and to permit such Company to own and use its assets
in the  manner  in  which it  currently  owns and  uses  such  assets,  and (ii)
necessary to permit each  Company,  upon the  consummation  of the  transactions
contemplated  hereby, to lawfully conduct and operate its business and to permit
each  Company  to own  and  use its  assets,  where  the  failure  to have  such
Governmental Authorization would have a material adverse effect on the business,
condition  (financial or  otherwise),  operations or properties of the Companies
taken as a whole, Borrower, or any Material Subsidiary.

         Section 7.17      Investment Company Act.  No Company is an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.

         Section  7.18  Public  Utility  Holding  Company  Act.  No Company is a
"holding  company"  or a  "subsidiary  company"  of a  "holding  company"  or an
"affiliate" of a "holding  company" or a "public  utility" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.

         Section 7.19      Environmental Matters.  Except as disclosed on
Schedule 7.19, as the same may be amended from time to time, hereto:

         (a)  Each of the  Companies  and all of  their  respective  properties,
assets,  and  operations  are in  compliance  in all material  respects with all
Environmental Laws. No Company is aware of, nor have any of them received notice
of, any past, present, or future conditions,  events, activities,  practices, or
incidents  which may  interfere  with or  prevent  the  material  compliance  or
continued  material  compliance  of any Company with all material  Environmental
Laws; and

         (b) The  Companies  have  obtained all material  permits,  licenses and
authorizations  that are required under applicable  Environmental  Laws, and all
such  permits are in good  standing  and each  Company is in  compliance  is all
material respects with all of the terms and conditions of such permits.

         Section 7.20 Year 2000 Compliance. Borrower represents that it is aware
of the possible impact of the year 2000 problem (that is, the risk that computer
applications may not be able to properly perform date-sensitive  functions after
December  31,  1999)  upon its  computer  applications  and  on-going  business.
Borrower  represents that any corrective action necessary will be taken and that
the year 2000  problem  will not  result  in a  material  adverse  change in the
Companies' business condition (financial or otherwise),  operations,  properties
or prospects, or ability to repay the Obligations.


                       ARTICLE VIII -- POSITIVE COVENANTS

         Borrower  hereby  covenants and agrees that, as long as the Obligations
or any part thereof are outstanding or any Lender has any Commitment  hereunder,
Borrower will perform and observe each of the following positive covenants:

         Section 8.1       Reporting Requirements.  Borrower will furnish to the
Administrative Agent and each Lender:

         (a) Annual Financial Statements. As soon as available, and in any event
within  ninety-five  (95) days after the end of each  fiscal  year of  Borrower,
beginning  with the fiscal year ending  December  31, 1998, a copy of the annual
audit report of the Companies for such fiscal year containing,

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<PAGE>



on a  consolidated  basis,  balance  sheets and  statements of income,  retained
earnings,  and cash flow as at the end of such  fiscal  year and for the  twelve
(12)-month period then ended, in each case setting forth in comparative form the
figures for the preceding fiscal year,  audited by independent  certified public
accountants  of  recognized  standing,  and  accompanied  by an  opinion of such
independent  certified  public  accountants  stating  that such  report has been
prepared in accordance with GAAP;

         (b) Monthly  Financial  Statements.  As soon as  available,  and in any
event  within forty (40) days after the end of each month of each fiscal year of
Borrower, a copy of an unaudited financial report of the Companies as of the end
of such month and for the portion of the fiscal year then ended, containing,  on
a  consolidated  basis,  balance  sheets and  statements  of income and retained
earnings,  in each case setting  forth in  comparative  form the figures for the
corresponding  period  of the  preceding  fiscal  year,  certified  by the chief
financial  officer of Borrower to have been prepared in accordance with GAAP and
to fairly and accurately  present  (subject to year-end audit  adjustments)  the
financial   condition  and  results  of  operations  of  the  Companies,   on  a
consolidated basis, at the date and for the periods indicated therein;

         (c) Quarterly Financial  Statements.  As soon as available,  and in any
event within  forty-five  (45) days after the end of each quarter of each fiscal
year of Borrower, a copy of an unaudited financial report of the Companies as of
the end of such  quarter  and for the  portion  of the fiscal  year then  ended,
containing,  on a consolidated  basis,  balance sheets and statements of income,
retained earnings, and cash flow, in each case setting forth in comparative form
the figures for the corresponding period of the preceding fiscal year, certified
by the chief  financial  officer of Borrower to have been prepared in accordance
with GAAP and to fairly  and  accurately  present  (subject  to  year-end  audit
adjustments) the financial condition and results of operations of the Companies,
on a consolidated basis, at the date and for the periods indicated therein;

         (d) Compliance  Certificate.  Concurrently with the delivery of each of
the financial  statements  referred to in Section  8.1(a) and within  forty-five
(45) days after the end of each of the first  three (3) fiscal  quarters of each
fiscal year of Borrower, a certificate of the chief executive or chief financial
officer of Borrower, in substantially the form of Exhibit F, (i) stating that to
such officer's  knowledge,  no Default has occurred and is  continuing,  or if a
Default has occurred and is continuing, a statement as to the nature thereof and
the action that is proposed to be taken with respect  thereto,  and (ii) showing
in reasonable detail the calculations demonstrating compliance with Article X;

         (e) Accounts  Receivable Aging Report.  As soon as available and in any
event within forty (40) days after the end of each month, an aged listing of the
accounts  receivable of each of Borrower and its  Subsidiaries  as of the end of
such month in a form reasonably satisfactory to the Administrative Agent;

         (f) Business Plan and Budget.  As soon as available and in any event by
December  31 of each year,  a copy of the annual  budget  and  business  plan of
Borrower and its  Subsidiaries  for the  upcoming  fiscal  year,  together  with
details of the assumptions, if any, underlying such budget and business plan;

         (g) Management  Letters.  Promptly upon receipt thereof,  a copy of any
management  letter or written  report  submitted  to any Company by  independent
certified public accountants with respect to the business,  condition (financial
or otherwise), operations, or properties of any Company;

         (h) Notice of  Litigation.  Promptly  after the  commencement  thereof,
notice of all actions,  suits, and proceedings before any Governmental Authority
or arbitrator affecting Borrower or any of its Subsidiaries which, if determined
adversely to Borrower or any such Subsidiary, could have a material

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adverse effect on the business, condition (financial or otherwise), options, or 
properties of Borrower, any Subsidiary or the Companies (taken as a whole);

         (i) Notice of Default. As soon as possible and in any event within five
(5) days after  Borrower  knows of the  occurrence  of each  Default,  a written
notice  setting  forth the details of such Default and the action that  Borrower
has taken and proposes to take with respect thereto;

         (j) ERISA Reports. Promptly after the filing or receipt thereof, copies
of all reports,  including  annual reports,  and notices which any Company files
with or receives from the PBGC or the U.S.  Department of Labor under ERISA; and
as soon as  possible  and in any event  within  five (5) days after any  Company
knows or has reason to know that any Reportable Event or Prohibited  Transaction
has  occurred  with  respect to any Plan or that the PBGC,  or any  Company  has
instituted or will  institute  proceedings  under Title IV of ERISA to terminate
any Plan, a certificate of the chief financial officer of Borrower setting forth
the  details  as to such  Reportable  Event or  Prohibited  Transaction  or Plan
termination and the action that Borrower proposes to take with respect thereto;

         (k) Reports to Other Creditors.  Promptly after the furnishing thereof,
copies  of  any  statement  or  report  furnished  by  Borrower  or  any  of its
Subsidiaries to any other creditor to which any Company owes $250,000.00 or more
or to the trustee under the Senior Subordinated Indenture, pursuant to the terms
of any  indenture,  loan,  or  credit or  similar  agreement  and not  otherwise
required to be furnished to the Administrative Agent and the Lenders pursuant to
any other clause of this Section;

         (l) Proxy Statements,  Etc. As soon as available,  one (1) copy of each
financial statement,  report,  notice or proxy statement sent by Borrower to its
stockholders  generally  and one (1) copy of each  regular,  periodic or special
report,  registration  statement,  or  prospectus  filed  by  Borrower  with any
securities  exchange or the Securities and Exchange  Commission or any successor
agency including, without limitation, all Forms 10-K, 10-Q and 8-K and all other
periodic reports required to be filed under the Securities  Exchange Act of 1934
and the rules and regulations promulgated thereunder;

         (m)  Partnership  Lists.  As soon as  available,  and in any  event (a)
within thirty (30) days after the Administrative Agent requests such information
from  Borrower,  a list of the names and  addresses of each partner or member of
each of the Partnerships;

         (n) Governmental Authorizations. Upon the request of the Administrative
Agent, but not more often than one (1) time during each fiscal year of Borrower,
a complete and accurate list of each Governmental  Authorization held by each of
Companies or that  otherwise  relate to the business of, or to any of the assets
owned or used by, each of the Companies;

         (o) Partnership Actions.  Promptly after the incurrence thereof, notice
of any Partnership's (i) incurrence of Debt, (ii) change in accounting treatment
or reporting practices (which change shall not affect any reporting requirements
set  forth  herein  or the Loan  Documents),  except  as  permitted  by GAAP and
disclosed to the Administrative  Agent, (iii) change in tax reporting treatment,
except  as  permitted  by law,  (iv)  amendment  of any  partnership  agreement,
regulations,  or management  agreement  between such Partnership and any Company
and copies of any such  amendment  certified  by an officer of Borrower as being
true and correct, and (v) change in its insurance; and

         (p) General Information.  Promptly,  such other information  concerning
Borrower or any of its  Subsidiaries as the  Administrative  Agent or any Lender
may from time to time reasonably request.


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         Section 8.2  Maintenance  of Existence;  Conduct of Business.  Borrower
will  preserve  and  maintain  its  corporate  existence  and all of its leases,
privileges, licenses, permits, franchises,  qualifications,  and rights that are
necessary or desirable in the ordinary  conduct of its  business.  Borrower will
cause each of its Subsidiaries other than the Excepted Subsidiaries, to preserve
and maintain its corporate,  partnership  or other similar  existence and all of
its leases, privileges, licenses, permits, franchises, qualifications and rights
that are necessary or desirable in the ordinary conduct of its business, except,
in each case, where failure to do so would not have a material adverse effect on
the business,  condition  (financial or otherwise),  operations or properties of
the Companies taken as a whole,  Borrower, or any Material Subsidiary.  Borrower
will conduct,  and will cause each of its Subsidiaries to conduct,  its business
in an orderly and efficient manner in accordance with good business practices.

         Section 8.3  Maintenance of Properties.  Borrower will maintain,  keep,
and  preserve,  and  cause  each of its  Subsidiaries  to  maintain,  keep,  and
preserve, all of its properties (tangible and intangible) necessary or useful in
the proper conduct of its business in good working order and condition,  except,
in each case,  as  permitted by Section 9.8 or 9.9 or where the failure to do so
would not have a material adverse effect on the business,  condition  (financial
or  otherwise),  operations or  properties  of the  Companies  taken as a whole,
Borrower, or any Material Subsidiary.

         Section 8.4 Taxes and Claims. Borrower will pay or discharge,  and will
cause each of its Subsidiaries other than the Excepted  Subsidiaries,  to pay or
discharge,  at or before maturity or before becoming delinquent (a) all material
taxes, levies, assessments, and governmental charges imposed on it or its income
or profits or any of its material  property,  and (b) all material lawful claims
for labor,  material,  and supplies,  which, if unpaid, might become a Lien upon
any of its property; provided, however, that no Company shall be required to pay
or discharge any tax, levy,  assessment,  or governmental  charge which is being
contested in good faith by appropriate  proceedings  diligently pursued, and for
which adequate  reserves have been  established;  and provided  further that all
Delinquent State Tax Returns will be filed and all taxes,  penalties,  interest,
and fees relating thereto shall be paid in full on or before May 31, 1998.

         Section 8.5 Insurance.  Borrower will maintain,  and will cause each of
its Subsidiaries to maintain (except in the case of the  Partnerships,  in which
case Borrower shall maintain for the  Partnerships),  insurance with financially
sound and reputable  insurance companies in such amounts and covering such risks
as is usually carried by corporations  engaged in similar  businesses and owning
similar  properties in the same general  areas in which the  Companies  operate,
consistent  with past practices of the Companies and to the extent  available on
commercially reasonable terms, provided that in any event Borrower will maintain
and cause each of its Subsidiaries  (except in the case of the Partnerships,  in
which case Borrower shall maintain for the  Partnerships) to maintain  workmen's
compensation  insurance,  property  insurance,  comprehensive  general liability
insurance, professional liability insurance, and business interruption insurance
reasonably   satisfactory  to  the  Lenders.   Each  insurance  policy  covering
Collateral shall name the Administrative Agent as loss payee, for the benefit of
the Lenders, as its interests may appear and shall provide that such policy will
not be canceled or reduced without thirty (30) days' prior written notice to the
Administrative  Agent.  Borrower will annually provide the Administrative  Agent
with all  certificates  of  insurance  evidencing  all  policies of insurance of
Borrower and its Subsidiaries.

         Section 8.6 Inspection  Rights. At any reasonable time and from time to
time after reasonable notice to Borrower,  Borrower will permit,  and will cause
each of its Subsidiaries to permit,  representatives of the Administrative Agent
and each Lender to examine,  copy, and make extracts from its books and records,
to visit and inspect its  properties,  and to discuss its business,  operations,
and financial  condition with its officers,  and  independent  certified  public
accountants.  Prior to removing  any such  copies or  extracts  from a Company's
premises, such Company's representatives shall be provided a reasonable

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                                 LOAN AGREEMENT
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<PAGE>



opportunity to review such information and mark or identify it as "confidential"
or "confidential information" as reasonably deemed appropriate by such Company.

         Section 8.7 Keeping Books and Records. Borrower will maintain, and will
cause each of its  Subsidiaries to maintain,  proper books of record and account
in which full,  true, and correct  entries in conformity with GAAP shall be made
of all dealings and transactions in relation to its business and activities.

         Section 8.8 Compliance with Laws.  Borrower will comply, and will cause
each of its Subsidiaries to comply,  in all material  respects with all material
applicable laws,  rules,  regulations,  orders,  and decrees of any Governmental
Authority or arbitrator.

         Section 8.9 Compliance with Agreements.  Borrower will comply, and will
cause each of its  Subsidiaries  to comply,  in all material  respects  with all
agreements, contracts, and instruments binding on it or affecting its properties
or business, except where the failure to do so would not have a material adverse
effect on the  business,  condition  (financial  or  otherwise),  operations  or
properties  of the  Companies  taken  as a  whole,  Borrower,  or  any  Material
Subsidiary.

         Section 8.10 Further Assurances. Borrower will (a), and will cause each
of its Subsidiaries  (other than the  Partnerships) to, execute and deliver such
further  agreements  and  instruments  and take  such  further  action as may be
reasonably requested by the Administrative Agent to carry out the provisions and
purposes of this  Agreement and the other Loan Documents and, (b) and will cause
each of its Subsidiaries (including the Partnerships) to, create,  preserve, and
perfect the Liens of the  Administrative  Agent, for the benefit of the Lenders,
in the Collateral.

         Section 8.11 ERISA.  Borrower  will comply,  and will cause each of its
Subsidiaries  to comply,  with all minimum funding  requirements,  and all other
material  requirements,  of ERISA, if applicable,  so as not to give rise to any
liability thereunder.

         Section 8.12 Information  Relating to Proposed  Acquisitions.  Borrower
will use its best  efforts  to keep the  Administrative  Agent  and the  Lenders
informed  of the  relevant  information  and  status of and will  share with the
Administrative  Agent and the Lenders and provide copies to the extent possible,
of all material due diligence  information  relating to any proposed Acquisition
with respect to which Borrower or any Subsidiary  enters into a letter of intent
or acquisition agreement, during the term of this Agreement.

         Section  8.13  After-Acquired   Subsidiaries.   Concurrently  upon  the
formation  or  Acquisition  by Borrower  or any  Guarantor  of any  Wholly-Owned
Subsidiary  after  the date  hereof  (pursuant  to a  Permitted  Acquisition  or
otherwise)  (an  "After-Acquired  Subsidiary"),  Borrower shall cause the After-
Acquired   Subsidiary  to  deliver  articles  of  incorporation,   bylaws,   and
resolutions (or other corresponding  constituent documents) and such opinions as
the  Administrative  Agent shall  require  and to execute a Guaranty,  Guarantor
Security Agreement,  and Pledge Agreement (if applicable),  as shall be required
by the  Administrative  Agent to  create  first  priority  Liens in favor of the
Administrative  Agent,  for the benefit of the Lenders,  in such  After-Acquired
Subsidiary's assets, to secure the Obligations.

         Section 8.14 Syndication  Cooperation.  Borrower  acknowledges that the
Agents intend  promptly to commence to syndicate the  Commitments of the Lenders
in accordance  with the provisions of Section 13.6.  Borrower agrees to actively
assist  Agents  and  their   Affiliates  in  achieving  a  syndication  that  is
satisfactory  to Agents and Borrower and in preparing  information  requested by
Agents in connection  with arranging and  syndication of the  Commitments of the
Lenders and to take such other

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<PAGE>



action deemed necessary by Agents or their Affiliates,  including the holding of
a formal presentation to prospective Lenders to achieve a successful syndication
of the Commitments by Agents. The syndication  efforts will be accomplished by a
variety  of means,  including  the  preparation  of a  confidential  information
memorandum and other marketing materials,  direct contact during the syndication
between senior  management  (including,  but not limited to, the chief executive
officer, the chief financial officer and treasurer of Borrower) and advisors and
Affiliates of Borrower and the proposed syndicate Lenders.


                        ARTICLE IX -- NEGATIVE COVENANTS

         Borrower  hereby  covenants and agrees that, as long as the Obligations
or any part thereof are outstanding or any Lender has any Commitment  hereunder,
Borrower will perform and observe the following negative covenants:

         Section 9.1 Debt. Borrower will not incur, create, assume, or permit to
exist,  nor permit any of its  Subsidiaries  (other  than the  Partnerships)  to
incur, create, assume, or permit to exist, any Debt, except:

         (a)      Debt owed to the Agents and the Lenders pursuant to the Loan
Documents;

         (b)      Existing Debt described on Schedule 7.9 hereto;

         (c)      The Exchange Notes and guaranties thereof by any Wholly-Owned 
Subsidiary;

         (d)      Debt owed to Borrower or to any Wholly-Owned Subsidiary;

         (e) Debt in an aggregate  principal amount not to exceed $500,000.00 at
any time outstanding the proceeds of which are used by the Companies to purchase
equipment, other than lithotripters;

         (f) Any Company's  obligations as general  partner of a Partnership for
the Debt of such Partnership;

         (g) Any Company's Guarantee of Debt of any Partnership, if such Company
is a general partner of such Partnership;

         (h) Debt not  exceeding  $1,750,000  in  outstanding  principal  amount
incurred  by  AK  Associates,   LLC  in  connection  with  the  acquisition  and
improvement of real estate; and

         (i)      Any Financial Hedge.

         Section  9.2  Limitation  on Liens.  Borrower  will not incur,  create,
assume,  or permit to exist, nor permit any of its Subsidiaries  (other than the
Partnerships) to incur, create, assume, or permit to exist, any Lien upon any of
their respective properties, assets, or revenues, whether now owned or hereafter
acquired, except:

         (a)      Liens disclosed on Schedule 9.2;

         (b) Purchase  money Liens securing Debt permitted by Section 9.1(d) and
(e);


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         (c) Liens in favor of the Administrative  Agent, for the benefit of the
Lenders or the counter- party under any Financial Hedge;

         (d) Encumbrances consisting of minor easements, zoning restrictions, or
other  restrictions on the use of real property that do not  (individually or in
the aggregate)  materially affect the value of the assets encumbered  thereby or
materially impair the ability of Borrower or any of its Subsidiaries to use such
assets in their  respective  businesses,  and none of which is  violated  in any
material respect by existing or proposed structures or land use;

         (e) Liens for taxes,  assessments,  or other governmental charges which
are not  delinquent  or which are being  contested  in good  faith and for which
adequate reserves have been established;

         (f) Liens of mechanics, materialmen,  warehousemen,  carriers, or other
similar  statutory  Liens  securing  obligations  that  are  not yet due and are
incurred in the ordinary course of business;

         (g) Liens  resulting  from good faith  deposits  to secure  payments of
workmen's  compensation  or other  social  security  programs  or to secure  the
performance of tenders,  statutory  obligations,  surety and appeal bonds, bids,
contracts  (other  than for  payment of Debt),  or leases  made in the  ordinary
course of business; and

         (h)  Lien on real  property  and  improvements  of AK  Associates,  LLC
securing Debt described in Section 9.1(h) above.

         Section 9.3 Mergers,  Etc. Except upon the prior written consent of the
Required  Lenders,  neither  Borrower nor any Guarantor will become a party to a
merger or consolidation, except: (a) any of Texas Litho, Inc., R.R. Litho, Inc.,
Ohio Litho,  Inc.,  Prime Diagnostic  Services,  Inc., Prime Diagnostic Corp. of
Florida, Prime Practice Management, Inc., Prime Cardiac Rehabilitation Services,
Inc., Prime Lithotripsy Services, Inc., Alabama Renal Stone Institute, Inc., and
Prime Kidney Stone  Treatment,  Inc. may merge or consolidate into Prime Medical
Operating,  Inc., so long as (w) Prime Medical Operating,  Inc. is the surviving
entity,  (x) no Default or Event of Default  exists or would exist as the result
of such merger or consolidation,  (y) no partnership agreement to which any such
Guarantor is a party would be breached by such merger or consolidation,  and (z)
Borrower and the applicable  Guarantors  give  Administrative  Agent at least 15
Business Days prior written notice of any proposed merger or  consolidation  and
execute and deliver any Guaranty Agreement, Guarantor Security Agreement, Pledge
Agreement,    Uniform   Commercial   Code   financing   statements,    corporate
documentation,  and opinions of counsel as required by the Administrative  Agent
to create or continue first priority Liens in favor of the Administrative Agent,
for the benefit of the Lenders,  in the assets of the surviving entity to secure
the  Obligations,  and (b) in  connection  with  any  Permitted  Acquisition  or
Permitted  Other Business  Acquisition so long as Borrower or a Guarantor is the
surviving entity. Borrower will not, and will not permit any of its Subsidiaries
(other than the Partnerships) to, wind-up,  dissolve or liquidate itself, except
as permitted in  subsection  (a) above.  Except as permitted by this  Agreement,
Borrower  will not,  and will not permit any of its  Subsidiaries  to,  make any
Acquisition  other  than  a  Permitted  Acquisition,  Permitted  Other  Business
Acquisition, or Permitted Passive Investments.  Except as otherwise permitted by
this Agreement,  Borrower will not, and will not permit any of its  Subsidiaries
to, form, incorporate,  acquire or make any investment in any Subsidiary, except
(a) the  Subsidiaries  listed on Schedule 7.14.1,  (b) Subsidiaries  acquired or
formed through a Permitted Acquisition, Permitted Other Business Acquisition, or
Permitted  Passive  Investment,  and (c)  Wholly-Owned  Subsidiaries  formed  in
accordance with Section 8.13.

         Section 9.4       Restricted Payments.  Borrower will not declare or 
pay any dividends or make any other payment or distribution (whether in cash,
property, or obligations) on account of its capital

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                                 LOAN AGREEMENT
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<PAGE>



stock,  or redeem,  purchase,  retire,  or otherwise  acquire any of its capital
stock, or permit any of its  Subsidiaries  to purchase or otherwise  acquire any
capital  stock of  Borrower,  or set apart  any  money  for a  sinking  or other
analogous  fund for any dividend or other  distribution  on its capital stock or
for any redemption,  purchase,  retirement,  or other  acquisition of any of its
capital  stock;  provided,  however,  that,  from the date  hereof  through  and
including  the  Termination  Date,  Borrower  may  redeem or retire  and/or  the
Companies  may purchase  shares of Borrower's  capital  stock,  whether  through
issuance and  performance  of a put  agreement,  or otherwise,  for an aggregate
consideration of no more than $15,000,000, provided that upon completion of such
purchases  or  redemptions  no  Default or Event of  Default  would  exist or be
continuing.

         Section 9.5 Investments.  Borrower will not make, nor permit any of its
Subsidiaries  to make,  any  advance,  loan,  extension  of  credit,  or capital
contribution  to or  investment  in, or  purchase  or own,  or permit any of its
Subsidiaries to purchase or own, any stock, bonds, notes,  debentures,  or other
securities of, any Person, except:

         (a) The Companies,  or any of them, may purchase (i) readily marketable
direct  obligations  of the United States of America or any agency  thereof with
maturities of one year or less from the date of acquisition,  (ii) fully insured
certificates  of deposit  with  maturities  of one year or less from the date of
acquisition  issued by any  commercial  bank  operating in the United  States of
America  having  capital  and  surplus  in excess of  $1,000,000,000,  and (iii)
commercial  paper of a domestic  issuer if at the time of purchase such paper is
rated in one (1) of the two (2) highest rating categories of Standard and Poor's
Rating  Group,  a division of McGraw  Hill,  Inc.,  a New York  corporation,  or
Moody's Investors Service, Inc.;

         (b)  The  Companies,  or any of  them,  may  make  loans  to  officers,
directors  and  employees  of any of them  provided  such  loans are made in the
ordinary  course of business,  and are in an aggregate  principal  amount of not
more than $200,000.00 at any time outstanding;

         (c) Borrower may continue to hold capital stock of American  Physicians
Service Group, Inc. held by Borrower on the date hereof;

         (d) The Borrower and Guarantors may create new Subsidiaries, hold stock
in Subsidiaries  and  themselves,  and engage in the  transactions  permitted by
Section 9.3 hereof, provided that Borrower complies with Section 8.13;

         (e)      Existing Permitted Passive Investments;

         (f) Permitted Acquisitions,  Permitted Other Business Acquisitions, and
Permitted Passive Investments;  provided however,  that Permitted  Acquisitions,
Permitted Other Business Acquisitions, and Permitted Passive Investments made by
Companies  other than the Borrower or a Guarantor shall not in the aggregate for
all such Companies exceed the lesser of: (a) $3,000,000.00; and (ii) 3% of Total
Equity;

         (g) Borrower may make a loan to AK Associates, LLC described in Section
9.1(h) and Section 9.2(h) above; and

         (h)      Any Financial Hedge.

         Section 9.6 Limitation on Issuance of Capital Stock.  Borrower will not
permit any of its Subsidiaries to at any time issue,  sell, assign, or otherwise
dispose of (a) any of its capital stock or other  ownership  interests,  (b) any
securities exchangeable for or convertible into or carrying any rights to

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<PAGE>



acquire  any of its  capital  stock or  other  ownership  interests,  or (c) any
option,  warrant,  or other right to acquire  any of its capital  stock or other
ownership  interests;  provided,  however,  that any  Subsidiary of Borrower may
issue, sell, assign or otherwise dispose of its capital stock or other ownership
interests,  or securities  exchangeable for its capital stock or other ownership
interests, to Borrower or any other Wholly- Owned Subsidiary.

         Section 9.7 Transactions With Affiliates. Borrower will not enter into,
and will not permit any of its  Subsidiaries  to enter  into,  any  transaction,
including,  without limitation,  the purchase,  sale, or exchange of property or
the rendering of any service,  with any Affiliate of Borrower or any  Subsidiary
of Borrower,  except in the ordinary  course of Borrower's or such  Subsidiary's
business  and upon fair and  reasonable  terms no less  favorable to Borrower or
such Subsidiary than would be obtained in a comparable arm's-length  transaction
with a Person not an Affiliate of Borrower or such Subsidiary.  No Company shall
make any loan,  advance,  investment,  or  transfer  any assets to any  Excepted
Subsidiary,  so long as such Excepted  Subsidiary is not in good standing  where
incorporated.

         Section  9.8  Disposition  of Assets.  Borrower  will not sell,  lease,
assign,  transfer,  or otherwise dispose of any of its assets, nor permit any of
its  Subsidiaries  (other  than  the  Partnerships)  to do so with  any of their
respective  assets,  except  (subject to the mandatory  prepayments  required by
Section 3.3) (a)  inter-Company  transfers  between  Borrower and a Wholly-Owned
Subsidiary or between  Wholly-Owned  Subsidiaries,  (b)  dispositions of assets,
other than  lithotripters,  in the ordinary course of business for consideration
of up to an aggregate  amount of $500,000.00  during the term of this Agreement,
(and the Administrative Agent agrees to execute and deliver releases of Liens in
connection with such  dispositions),  (c)  dispositions by any Company of assets
used in connection with cardiac  rehabilitation or diagnostic  imaging,  and (d)
dispositions  of any tangible  assets that are worn or obsolete,  provided  that
such  tangible  assets are  replaced  by assets of similar  character  where the
replacement of such asset is necessary or appropriate for the continued  conduct
of such Company's business as presently conducted.

         Section  9.9 Sale and  Leaseback.  Borrower  will not enter  into,  nor
permit any of its Subsidiaries  (other than the Partnerships) to enter into, any
arrangement  with any Person (other than another  Company)  pursuant to which it
leases from such Person  equipment used in lithotripsy  operations that has been
or is to be sold or transferred,  directly or indirectly,  by it to such Person;
provided,  however,  that the Companies may enter into any arrangement  with any
Person  pursuant to which it leases  from such Person real or personal  property
not  used  in  lithotripsy  operations  that  has  been  or  is to  be  sold  or
transferred,  directly or  indirectly,  by it to such  Person,  in an  aggregate
amount of up to but not to exceed $500,000.00 during the term of this Agreement.

         Section 9.10 Prepayment of Debt.  Borrower will not prepay,  nor permit
any of its Subsidiaries to prepay,  any Debt except the  Obligations,  or redeem
the Senior Subordinated Notes other than a redemption of a portion of the Senior
Subordinated  Notes  pursuant  to  Section  3.07  of  the  Senior   Subordinated
Indenture,  so long as after  giving  effect  thereto,  no  Default  or Event of
Default would exist.

         Section 9.11 Nature of Business. Borrower will not, and will not permit
any of its Subsidiaries (other than the Partnerships) to, engage in any business
other  than the  businesses  in which  they are  engaged  on the date  hereof or
businesses  which  are  reasonably  related  thereto;  provided,  however,  that
Borrower  will not and will not permit any of its  Subsidiaries  (other than the
Partnerships)  not already in the business of providing  non-medical  management
services to cardiac  rehabilitation or diagnostic imaging operations,  to engage
in either such business.

         Section 9.12      Environmental Protection.  Borrower will not, and 
will not permit any of its Subsidiaries to, conduct any activity or use any of
their respective properties or assets in any manner that

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<PAGE>



could  reasonably  be expected to violate  any  Environmental  Law or create any
Environmental Liabilities for which Borrower or any of its Subsidiaries would be
responsible.

         Section 9.13 Accounting.  Borrower will not, and will not permit any of
its  Subsidiaries  (other than the  Partnerships)  to, change its fiscal year or
make any change (a) in accounting  treatment or reporting  practices,  except as
permitted  by GAAP and  disclosed  to the  Administrative  Agent,  or (b) in tax
reporting treatment, except as permitted by law.

         Section  9.14  Amendment  of  Partnership  and  Management  Agreements.
Borrower  will not,  and will not permit any of its  Subsidiaries  to, amend any
partnership agreements,  regulations,  or articles of any of the Partnerships or
any management  agreements  between any Company and any of the Partnerships,  if
such amendment could reasonably be expected to have a material adverse effect on
the business,  condition (financial or otherwise),  operations, or properties of
the Companies taken as a whole, Borrower, or any Material Subsidiary.


                        ARTICLE X -- FINANCIAL COVENANTS

         Borrower  hereby  covenants and agrees that, as long as the Obligations
or any part thereof are outstanding or any Lender has any Commitment  hereunder,
Borrower will perform and observe the following financial covenants:

         Section  10.1  Total Net Debt to EBITDA.  Borrower  will not permit the
Total Net Debt to EBITDA  Ratio,  determined  as of the last day of each  fiscal
quarter of the Companies and for the four (4) fiscal quarter period then ending,
to exceed the ratio set forth opposite such period below:


                     Period                                             Ratio
------------------------------------------------------------------  ------------
January 1, 1998 through December 31, 2000                            3.50 to 1.0
January 1, 2001 through December 31, 2001                            3.25 to 1.0
January 1, 2002 and thereafter                                       3.00 to 1.0
==================================================================  ============

         Section 10.2 Senior Net Debt To EBITDA Ratio.  Borrower will not permit
the Senior Net Debt to EBITDA Ratio as of the last day of each fiscal quarter of
Borrower to exceed the ratio set forth opposite such dates below:


                              Period                                    Ratio
------------------------------------------------------------------  ------------
January 1, 1998 through December 31, 2000                            2.50 to 1.0
January 1, 2001 through December 31, 2001                            2.25 to 1.0
January 1, 2002 and thereafter                                       2.00 to 1.0
==================================================================  ============

         Section 10.3 Debt Service Coverage Ratio.  Borrower will not permit the
Debt  Service  Coverage  Ratio  as of the  last day of each  fiscal  quarter  of
Borrower to be less than the ratio set forth opposite such dates below:


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                                 LOAN AGREEMENT
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<PAGE>




                        Period                                         Ratio
------------------------------------------------------------------  ------------
January 1, 1998 through December 31, 2000                            1.50 to 1.0
January 1, 2001 through December 31, 2001                            1.60 to 1.0
January 1, 2002 and thereafter                                       1.75 to 1.0
==================================================================  ============

         Section 10.4  Consolidated Net Worth.  Borrower shall not permit, as of
the last day of each fiscal quarter of Borrower,  its  Consolidated Net Worth to
be less than $92,064,000, such amount to be (a) increased on June 30, 1998 by an
amount equal to one hundred  percent (100%) of the increase in net worth arising
from any  Acquisition or equity  issuance during the six (6) month period ending
such date,  and beginning  with the fiscal  quarter  ending  September 30, 1998,
shall be increased on the last day of each successive fiscal quarter of Borrower
by an amount  equal to one hundred  percent  (100%) of the increase in net worth
arising from any Acquisition or equity issuance during such fiscal quarter,  (b)
increased on June 30, 1998 by an amount equal to  seventy-five  percent (75%) of
positive  Consolidated Net Income for the six (6) month period ending such date,
and shall be  increased  on the last day of each  successive  fiscal  quarter of
Borrower  beginning  September  30,  1998,  by an amount  equal to  seventy-five
percent (75%) of positive  Consolidated Net Income for such fiscal quarter;  and
(c) decreased on any date by the amount of capital stock of Borrower repurchased
or retired by Borrower  or any  Subsidiary,  not  exceeding  $15,000,000  in the
aggregate.


                              ARTICLE XI -- DEFAULT

         Section 11.1      Events of Default.  Each of the following shall be
deemed an "Event of Default":

         (a)      Borrower shall fail to pay when due any amount of principal 
under any Note.

         (b)  Borrower  shall  fail to pay to the  Administrative  Agent  or any
Lender (through the  Administrative  Agent),  any interest on the Advances,  any
fees due  hereunder or under any other Loan  Document,  or any other part of the
Obligations  which  does not  constitute  principal  under the  Notes,  and such
failure  shall  continue for three (3) Business  Days after such payment  became
due.

         (c) Any  representation  or warranty made or deemed made by Borrower or
any Obligated Party (or any of their  respective  officers) in any Loan Document
or in any certificate,  report,  notice, or financial statement furnished at any
time in connection with this Agreement shall be false, misleading,  or erroneous
in any  material  respect  when made or deemed to have been made and the  effect
thereof  shall not have been cured  within ten (10)  Business  Days after notice
thereof to  Borrower  by the  Administrative  Agent or any Lender  (through  the
Administrative Agent).

         (d)  Borrower  shall  fail to  perform,  observe,  or  comply  with any
covenant,  agreement,  or  term  contained  in  Article  X; or  Borrower  or any
Obligated  Party shall fail to perform,  observe,  or comply with any  covenant,
agreement or term  contained in Section 8.1 (a),  (b), (c) or (d), or Article IX
and such failure  shall  continue for a period of three (3) Business  Days after
notice thereof to Borrower by the  Administrative  Agent or any Lender  (through
the  Administrative  Agent);  or Borrower or any  Obligated  Party shall fail to
perform, observe br comply with any other covenant, agreement, or term contained
in this  Agreement or any other Loan Document  (other than  covenants to pay the
Obligations)  and such failure shall  continue for a period of ten (10) Business
Days after notice thereof to Borrower by the Administrative  Agent or any Lender
(through the Administrative Agent).


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         (e)  Any  Company  shall  commence  a  voluntary   proceeding   seeking
liquidation, reorganization, or other relief with respect to itself or its debts
under any  bankruptcy,  insolvency,  or other  similar law now or  hereafter  in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian,
or other similar  official of it or a substantial  part of its property or shall
consent to any such relief or to the appointment of or taking  possession by any
such official in an involuntary case or other proceeding commenced against it or
shall make a general  assignment for the benefit of creditors or shall generally
fail to pay its debts as they become due or shall take any  corporate  action to
authorize any of the foregoing.

         (f) An involuntary  proceeding  shall be commenced  against any Company
seeking liquidation,  reorganization,  or other relief with respect to it or its
debts under any bankruptcy, insolvency, or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,  custodian
or other  similar  official for it or a substantial  part of its  property,  and
either such involuntary  proceeding shall remain  undismissed and unstayed for a
period of forty-five (45) days or an order for relief is entered.

         (g) Any Company  shall fail to discharge  within a period of forty-five
(45) days after the  commencement  thereof  any  attachment,  sequestration,  or
similar  proceeding or proceedings,  including  without  limitation any order of
forfeiture,  seizure or divestiture  (whether under RICO or otherwise) involving
an  aggregate  amount in excess of Five  Hundred  Thousand  and  00/100  Dollars
($500,000.00) against any of its assets or properties.

         (h) A final judgment or judgments for the payment of money in excess of
Five Hundred Thousand and 00/100 Dollars ($500,000.00) in the aggregate shall be
rendered  by a court or courts  against  any  Company  and the same shall not be
discharged  (or provision  shall not be made for such  discharge),  or a stay of
execution  thereof shall not be procured,  within  forty-five (45) days from the
date of entry  thereof  and such  Company  shall  not,  within  said  period  of
forty-five  (45) days, or such longer period during which  execution of the same
shall have been stayed,  appeal therefrom and cause the execution  thereof to be
stayed during such appeal.

         (i) Any Company shall fail to pay when due any principal of or interest
on the Senior  Subordinated Notes or on any other Debt in an aggregate principal
amount of Five Hundred Thousand and 00/100 Dollars  ($500,000.00) or more (other
than the Obligations),  or the maturity of the Senior  Subordinated Notes or any
such Debt shall have been accelerated,  or the Senior Subordinated Notes (except
in connection with the exchange thereof for the Exchange Notes) or any such Debt
shall have been required to be prepaid prior to the stated maturity thereof,  or
any event shall have occurred that permits (or, with the giving of notice or the
lapse of time or both,  would  permit)  any  holder  or  holders  of the  Senior
Subordinated Notes or such Debt or any Person acting on behalf of such holder or
holders to accelerate the maturity thereof or require any such prepayment.

         (j) This Agreement or any other Loan Document shall cease to be in full
force  and  effect  or  shall be  declared  null  and  void or the  validity  or
enforceability  thereof  shall be  contested  or  challenged  by  Borrower,  any
Subsidiary  of  Borrower,  any  Obligated  Party  or  any  of  their  respective
shareholders,  or  Borrower  or any  Obligated  Party shall deny that it has any
further liability or obligation under any of the Loan Documents,  or any Lien or
security interest created by the Loan Documents shall for any reason cease to be
a valid,  first priority perfected security interest in and Lien upon any of the
Collateral purported to be covered thereby.

         (k) Any of the  following  events  shall occur or exist with respect to
Borrower or any ERISA Affiliate:  (i) any Prohibited  Transaction  involving any
Plan; (ii) any Reportable Event with respect to any

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                                 LOAN AGREEMENT
                                       46

<PAGE>



Plan;  (iii) the  filing  under  Section  4041 of ERISA of a notice of intent to
terminate  any  Plan  or  the  termination  of  any  Plan;  (iv)  any  event  or
circumstance  that might  constitute  grounds  entitling  the PBGC to  institute
proceedings  under  Section  4042 of ERISA  for the  termination  of, or for the
appointment of a trustee to administer, any Plan, or the institution by the PBGC
of any such  proceedings;  or (v) complete or partial  withdrawal  under Section
4201  or  4204  of  ERISA  from a  Multi-employer  Plan  or the  reorganization,
insolvency,  or termination of any Multi-employer  Plan; and in each case above,
such event or condition,  together with all other events or conditions,  if any,
have  subjected  or could in the  reasonable  opinion  of the  Required  Lenders
subject  Borrower,  or any of its Subsidiaries,  to any tax,  penalty,  or other
liability to a Plan,  a  Multi-employer  Plan,  the PBGC,  or otherwise  (or any
combination  thereof)  which in the  aggregate  exceed  or could  reasonably  be
expected to exceed Five Hundred Thousand and 00/100 Dollars ($500,000.00).

         (l) Any Change in Control shall occur.

         Section  11.2  Remedies.  If any Event of  Default  shall  occur and be
continuing,  the  Administrative  Agent  may (and if  directed  by the  Required
Lenders, shall) do any one or more of the following:

                  (a)  Acceleration.  Declare all  outstanding  principal of and
         accrued and unpaid  interest on the Notes and all other  obligations of
         Borrower under the Loan Documents  immediately due and payable, and the
         same  shall  thereupon  become  immediately  due and  payable,  without
         notice,   demand,   presentment,   notice   of   dishonor,   notice  of
         acceleration,  notice  of  intent  to  accelerate,  protest,  or  other
         formalities  of any kind, all of which are hereby  expressly  waived by
         Borrower;

                  (b)      Termination of Commitments.  Terminate the 
Commitments without notice to Borrower;

                  (c)      Judgment.  Reduce any claim to judgment;

                  (d)  Foreclosure.  Foreclose  or  otherwise  enforce  any Lien
         granted to the  Administrative  Agent for the benefit of itself and the
         Lenders  to  secure  payment  and  performance  of the  Obligations  in
         accordance with the terms of the Loan Documents; and

                  (e) Rights.  Exercise any and all rights and remedies afforded
         by  the  laws  of  the  Commonwealth  of  Massachusetts  or  any  other
         jurisdiction, by any of the Loan Documents, by equity, or otherwise;

provided,  however,  that  upon the  occurrence  of an Event  of  Default  under
subsection  (e) or (f) of Section 11.1,  the  Commitments  of all of the Lenders
shall automatically  terminate, and the outstanding principal of and accrued and
unpaid  interest on the Notes and all other  obligations  of Borrower  under the
Loan  Documents  shall  thereupon  become  immediately  due and payable  without
notice, demand, presentment, notice of dishonor, notice of acceleration,  notice
of intent to accelerate, protest, or other formalities of any kind, all of which
are hereby expressly waived by Borrower.

         Section 11.3 Performance by the Administrative Agent. If Borrower shall
fail to perform any covenant or agreement  in  accordance  with the terms of the
Loan Documents,  the Administrative  Agent may, at the direction of the Required
Lenders,  perform or attempt to perform such  covenant or agreement on behalf of
Borrower.  In such event,  Borrower shall, at the request of the  Administrative
Agent,  promptly  pay any amount  expended  by the  Administrative  Agent or the
Lenders in connection  with such  performance  or attempted  performance  to the
Administrative Agent at the Principal Office, together with

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<PAGE>



interest  thereon  at the  Default  Rate  from  and  including  the date of such
expenditure  to but  excluding  the  date  such  expenditure  is paid  in  full.
Notwithstanding  the  foregoing,   it  is  expressly  agreed  that  neither  the
Administrative  Agent nor any Lender shall have any liability or  responsibility
for the performance of any obligation of Borrower under this Agreement or any of
the other Loan Documents.


                     ARTICLE XII -- THE ADMINISTRATIVE AGENT

         Section 12.1 Appointment,  Powers and Immunities.  In order to expedite
the various  transactions  contemplated  by this  agreement,  the Lenders hereby
irrevocably  appoint and  authorize  BankBoston  to act as their  Administrative
Agent hereunder and under each of the other Loan Documents.  BankBoston consents
to such appointment and agrees to perform the duties of the Administrative Agent
as specified herein. The Lenders authorize and direct the  Administrative  Agent
to take  such  action  in their  name and on their  behalf  under  the terms and
provisions  of the  Loan  Documents  and to  exercise  such  rights  and  powers
thereunder as are  specifically  delegated to or required of the  Administrative
Agent for the Lenders,  together  with such rights and powers as are  reasonably
incidental thereto.  The Administrative  Agent is hereby expressly authorized to
act as the Administrative Agent on behalf of itself and the other Lenders:

                  (a) To receive on behalf of each of the Lenders any payment of
         principal,  interest,  fees or  other  amounts  paid  pursuant  to this
         Agreement  and the Notes and to  distribute to each Lender its pro rata
         share of all payments so received as provided in this Agreement;

                  (b)      To receive all documents and items to be furnished
under the Loan Documents;

                  (c)      To act as nominee for and on behalf of the Lenders in
and under the Loan Documents;

                  (d) To arrange for the means  whereby the funds of the Lenders
         are to be made available to Borrower;

                  (e)  To  distribute  to  the  Lenders  information,  requests,
         notices, payments, prepayments, documents and other items received from
         Borrower, the other Obligated Parties, and other Persons;

                  (f) To execute and deliver to  Borrower,  the other  Obligated
         Parties, and other Persons, all requests, demands, approvals,  notices,
         and consents received from the Lenders;

                  (g) To the extent permitted by the Loan Documents, to exercise
         on behalf of each Lender all rights and  remedies  of the Lenders  upon
         the occurrence of any Event of Default;

                  (h) To accept, execute, and deliver the Security Agreement and
         any other security documents as the secured party; and

                  (i)      To take such other actions as may be requested by the
Required Lenders.

         Neither the Administrative  Agent nor any of its Affiliates,  officers,
directors, employees, attorneys, or agents shall be liable to any Lender for any
action  taken or omitted to be taken by any of them  hereunder  or  otherwise in
connection with this Agreement or any of the other Loan Documents (INCLUDING ANY
ACTION TAKEN OR OMITTED TO BE TAKEN BY SUCH PARTIES

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NEGLIGENTLY), but excluding such actions or omissions arising from such parties'
own gross negligence or willful  misconduct.  Without limiting the generality of
the preceding sentence, the Administrative Agent: (i) may treat the payee of any
Note as the holder  thereof  until the  Administrative  Agent  receives  written
notice of the  assignment or transfer  thereof  signed by such payee and in form
satisfactory  to  the  Administrative  Agent;  (ii)  shall  have  no  duties  or
responsibilities  except those  expressly  set forth in this  Agreement  and the
other Loan  Documents,  and shall not by reason of this  Agreement  or any other
Loan  Document  be a trustee or  fiduciary  for any  Lender;  (iii) shall not be
required to initiate any litigation or collection proceedings hereunder or under
any other Loan Document except to the extent requested by the Required  Lenders;
(iv) shall not be  responsible  to the  Lenders  for any  recitals,  statements,
representations  or  warranties  contained  in this  Agreement or any other Loan
Document,  or any certificate or other document  referred to or provided for in,
or received by any of them under, this Agreement or any other Loan Document,  or
for the value, validity,  effectiveness,  enforceability, or sufficiency of this
Agreement  or any other  Loan  Document  or any other  document  referred  to or
provided  for herein or therein or for any  failure by any Person to perform any
of its obligations  hereunder or thereunder;  (v) may consult with legal counsel
(including  counsel for Borrower),  independent  public  accountants,  and other
experts  selected by it and shall not be liable for any action  taken or omitted
to be taken in good faith by it in  accordance  with the advice of such counsel,
accountants,  or experts;  and (vi) shall incur no liability under or in respect
of any Loan Document by acting upon any notice, consent,  certificate,  or other
instrument  or writing  believed  by it to be genuine  and signed or sent by the
proper party or parties.  As to any matters not  expressly  provided for by this
Agreement,  the  Administrative  Agent shall in all cases be fully  protected in
acting, or in refraining from acting, here under in accordance with instructions
signed by the Required  Lenders,  and such  instructions of the Required Lenders
and any action taken or failure to act pursuant  thereto shall be binding on all
of the Lenders;  provided,  however,  that the Administrative Agent shall not be
required to take any action which exposes the  Administrative  Agent to personal
liability or which is contrary to this  Agreement or any other Loan  Document or
applicable law.

         Section 12.2 Rights of Administrative  Agent as a Lender.  With respect
to its Commitment, the Advances made by it and the Note issued to it, BankBoston
in its  capacity  as a Lender  hereunder  shall have the same  rights and powers
hereunder  as any other  Lender and may  exercise the same as though it were not
acting as the  Administrative  Agent,  and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates,  include the Administrative Agent in its
individual  capacity.  The Administrative  Agent and its Affiliates may (without
having to account  therefor to any Lender) accept  deposits from, lend money to,
act as trustee under  indentures of, provide  merchant  banking services to, and
generally  engage in any kind of  business  with  Borrower,  any  Subsidiary  of
Borrower,  any other Obligated  Party,  and any other Person who may do business
with or own securities of Borrower or any other  Obligated  Party,  all as if it
were not  acting as the  Administrative  Agent and  without  any duty to account
therefor to the Lenders.

         Section 12.3  Sharing of Payments,  Etc. If any Lender shall obtain any
payment of any  principal  of or interest  on any Advance  made by it under this
Agreement or payment of any other  obligation under the Loan Documents then owed
by Borrower or any other  Obligated  Party to such  Lender,  whether  voluntary,
involuntary,  through  the  exercise  of any  right of  setoff,  lender's  lien,
counterclaim  or similar right,  or otherwise,  in excess of its pro rata share,
such Lender shall promptly purchase from the other Lenders participations in the
Advances held by them hereunder in such amounts, and make such other adjustments
from time to time as shall be necessary to cause such purchasing Lender to share
the excess payment ratably with each of the other Lenders in accordance with its
pro rata portion thereof. To such end, all of the Lenders shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if all or any portion of such excess  payment is  thereafter  rescinded  or must
otherwise be restored. Borrower agrees, to the fullest extent it may effectively
do so under applicable law, that any Lender so purchasing a participation in the
Advances made by the other

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<PAGE>



Lenders may  exercise  all rights of setoff,  lender's  lien,  counterclaim,  or
similar  rights with  respect to such  participation  as fully as if such Lender
were  a  direct   holder  of   Advances  to  Borrower  in  the  amount  of  such
participation. Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to  exercise,  and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of Borrower.

         Section 12.4 Indemnification. THE LENDERS HEREBY AGREE TO INDEMNIFY THE
AGENTS FROM AND HOLD THE AGENTS  HARMLESS  AGAINST (TO THE EXTENT NOT REIMBURSED
UNDER SECTIONS 13.1 AND 13.2, BUT WITHOUT  LIMITING THE  OBLIGATIONS OF BORROWER
UNDER  SECTIONS  13.1 AND 13.2),  RATABLY IN  ACCORDANCE  WITH THEIR  RESPECTIVE
COMMITMENTS, ANY AND ALL LIABILITIES,  OBLIGATIONS,  LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS,  DEFICIENCIES,  SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS'
FEES), AND  DISBURSEMENTS OF ANY KIND OR NATURE  WHATSOEVER WHICH MAY BE IMPOSED
ON, INCURRED BY, OR ASSERTED AGAINST ANY AGENT IN ANY WAY RELATING TO OR ARISING
OUT OF ANY OF THE LOAN  DOCUMENTS  OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY
ANY AGENT UNDER OR IN RESPECT OF ANY OF THE LOAN DOCUMENTS INCLUDING ANY PORTION
OF THE  FOREGOING TO THE EXTENT  CAUSED BY THE ANY AGENT'S SOLE OR  CONTRIBUTORY
NEGLIGENCE; PROVIDED, FURTHER, THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF
THE FOREGOING TO THE EXTENT  CAUSED BY ANY AGENT'S  GROSS  NEGLIGENCE OR WILLFUL
MISCONDUCT.  WITHOUT LIMITATION OF THE FOREGOING, IT IS THE EXPRESS INTENTION OF
THE  LENDERS  THAT THE  AGENTS  SHALL  BE  INDEMNIFIED  HEREUNDER  FROM AND HELD
HARMLESS  AGAINST  ALL  OF  SUCH  LIABILITIES,   OBLIGATIONS,  LOSSES,  DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS,  DEFICIENCIES,  SUITS, COSTS, EXPENSES (INCLUDING
ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY
ARISING OUT OF OR  RESULTING  FROM THE SOLE OR  CONTRIBUTORY  NEGLIGENCE  OF THE
AGENTS. WITHOUT LIMITING ANY OTHER PROVISION OF THIS SECTION, EACH LENDER AGREES
TO REIMBURSE EACH AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE  (CALCULATED
ON THE  BASIS  OF  THE  COMMITMENTS)  OF  ANY  AND  ALL  OUT-OF-POCKET  EXPENSES
(INCLUDING  ATTORNEYS'  FEES)  INCURRED  BY THE  AGENTS IN  CONNECTION  WITH THE
PREPARATION,  EXECUTION, DELIVERY,  ADMINISTRATION,  MODIFICATION,  AMENDMENT OR
ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS,  LEGAL PROCEEDINGS, OR OTHERWISE) OF,
OR LEGAL  ADVICE  IN  RESPECT  OF  RIGHTS OR  RESPONSIBILITIES  UNDER,  THE LOAN
DOCUMENTS,  TO THE EXTENT THAT SUCH AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY
BORROWER.

         Section 12.5 Independent  Credit Decisions.  Each Lender agrees that it
has  independently  and without  reliance on any Agent or any other Lender,  and
based on such documents and information as it has deemed  appropriate,  made its
own credit  analysis of Borrower and decision to enter into this  Agreement  and
that it will,  independently  and without  reliance  upon any Agent or any other
Lender,  and  based  upon  such  documents  and  information  as it  shall  deem
appropriate  at the time,  continue to make its own  analysis  and  decisions in
taking or not  taking  action  under  this  Agreement  or any of the other  Loan
Documents.  The  Administrative  Agent  shall  not be  required  to keep  itself
informed as to the  performance or observance by Borrower or any Obligated Party
of this  Agreement or any other Loan  Document or to inspect the  properties  or
books of Borrower or any Obligated Party. Except for notices,  reports and other
documents and information  expressly  required to be furnished to the Lenders by
the  Administrative  Agent  hereunder  or under the other  Loan  Documents,  the
Administrative  Agent shall not have any duty or  responsibility  to provide any
Lender with any credit or other financial information

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concerning  the  affairs,  financial  condition  or  business of Borrower or any
Obligated Party (or any of their  Affiliates) which may come into the possession
of the Administrative Agent or any of its Affiliates.

         Section 12.6 Several Commitments. The Commitments and other obligations
of the Lenders under this  Agreement  are several.  The default by any Lender in
making an Advance in accordance with its Commitment  shall not relieve the other
Lenders of their obligations  under this Agreement.  In the event of any default
by any  Lender  in  making  any  Advance,  each  nondefaulting  Lender  shall be
obligated  to make its Advance but shall not be  obligated to advance the amount
which the defaulting Lender was required to advance hereunder. In no event shall
any  Lender be  required  to advance  an amount or  amounts  which  shall in the
aggregate  exceed such Lender's  Commitment.  No Lender shall be responsible for
any act or omission of any other Lender.

         Section 12.7 Successor Administrative Agent. Subject to the appointment
and  acceptance  of a  successor  Administrative  Agent as provided  below,  the
Administrative  Agent may  resign at any time by giving  notice  thereof  to the
Lenders and  Borrower  and the  Administrative  Agent may be removed at any time
with or without  cause by the Required  Lenders.  Upon any such  resignation  or
removal,  the  Required  Lenders  will  have the right to  appoint  a  successor
Administrative   Agent  from  among  the  remaining  Lenders.  If  no  successor
Administrative  Agent shall have been so appointed  by the Required  Lenders and
shall have accepted such appointment  within thirty (30) days after the retiring
Administrative  Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring  Administrative Agent, then the retiring  Administrative
Agent may, on behalf of the Lenders,  appoint a successor  Administrative Agent,
which shall be a commercial  bank organized  under the laws of the United States
of America or any State  thereof and having  combined  capital and surplus of at
least  One  Billion  Dollars  ($1,000,000,000).   Upon  the  acceptance  of  its
appointment as successor  Administrative  Agent,  such successor  Administrative
Agent shall  thereupon  succeed to and become  vested  with all rights,  powers,
privileges,  immunities,  and duties of the resigning or removed  Administrative
Agent,  and the  resigning or removed  Administrative  Agent shall be discharged
from its  duties  and  obligations  under  this  Agreement  and the  other  Loan
Documents.   After  any  Administrative   Agent's   resignation  or  removal  as
Administrative  Agent,  the  provisions  of this  Article XII shall  continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was the Administrative Agent.

         Section 12.8      Independent Contractor.

         (a) The relationship between each Agent and each of the Lenders is that
of an  independent  contractor.  The use of the term "Agent" is for  convenience
only  and  is  used  to  describe,  as a form  of  convention,  the  independent
contractual  relationship  between each Agent and each of the  Lenders.  Nothing
contained in this  Agreement or the other Loan  Documents  shall be construed to
create an agency,  trust or other fiduciary  relationship  between any Agent and
any of the Lenders.

         (b) As an independent  contractor  empowered by the Lenders to exercise
certain  rights and perform  certain duties and  responsibilities  hereunder and
under the other Loan  Documents,  the  Administrative  Agent is  nevertheless  a
"representative"  of the  Lenders,  as that term is  defined in Article 1 of the
Uniform  Commercial Code, for purposes of actions for the benefit of the Lenders
and the  Administrative  Agent  with  respect  to all  collateral  security  and
guaranties  contemplated  by  the  Loan  Documents.  Such  actions  include  the
designation of the Administration  Agent as "secured party,"  "mortgagee" or the
like on all financing  statements and other documents and  instruments,  whether
recorded or  otherwise,  relating  to the  attachment,  perfection,  priority or
enforcement of any security interests, mortgages or deeds of trust in collateral
security   intended  to  secure  the  payment  or  performance  of  any  of  the
Obligations, all for the benefit of the Lenders and the Administrative Agent.


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                          ARTICLE XIII -- MISCELLANEOUS

         Section 13.1 Expenses. Borrower hereby agrees to pay on demand: (a) all
reasonable  costs and expenses of the Agents in connection with the preparation,
negotiation,  syndication,  execution,  and delivery of this  Agreement  and the
other  Loan  Documents  including,   without  limitation,  the  legal  fees  and
reasonable  expenses of legal counsel for the Agents;  (b) all reasonable  costs
and  expenses  of  the  Agents  in  connection  with  any  and  all  amendments,
modifications,   renewals,  extensions  and  supplements  of  any  of  the  Loan
Documents;  (c) all reasonable  costs and expenses of the Agents and the Lenders
in connection with any Default, including any work-outs,  amendments to any Loan
Documents,  or  negotiations  related  thereto,  and  the  enforcement  of  this
Agreement or any other Loan Document,  including,  without limitation,  the fees
and expenses of legal counsel and  professional  advisors for the Agents and the
Lenders;  (d)  all  transfer,  stamp,  documentary,   or  other  similar  taxes,
assessments,  or charges levied by any Governmental Authority in respect of this
Agreement  or any  of  the  other  Loan  Documents;  (e)  all  costs,  expenses,
assessments,   and  other  charges  incurred  in  connection  with  any  filing,
registration,  recording,  or  perfection  of  any  security  interest  or  Lien
contemplated  by this  Agreement or any other Loan  Document;  and (f) all other
reasonable  costs and expenses  incurred by the Agents in  connection  with this
Agreement or any other Loan Document,  including, without limitation, all costs,
expenses,  and other charges incurred in connection with obtaining any mortgagee
title insurance policy,  survey, audit,  appraisal in respect of the Collateral,
and other out-of-pocket costs and expenses.

         Section 13.2  Indemnification.  BORROWER SHALL INDEMNIFY THE AGENTS AND
EACH LENDER AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES,  ATTORNEYS,  AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST,
ANY  AND  ALL  LOSSES,  LIABILITIES,   CLAIMS,  DAMAGES,  PENALTIES,  JUDGMENTS,
DISBURSEMENTS,  COSTS, AND EXPENSES  (INCLUDING  REASONABLE  ATTORNEYS' FEES) TO
WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY  ARISE FROM OR
RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION,
OR  ENFORCEMENT  OF ANY OF  THE  LOAN  DOCUMENTS,  (B)  ANY OF THE  TRANSACTIONS
CONTEMPLATED  BY  THE  LOAN  DOCUMENTS,  (C)  ANY  BREACH  BY  BORROWER  OF  ANY
REPRESENTATION,  WARRANTY,  COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE
LOAN  DOCUMENTS,  (D)  THE  PRESENCE,  RELEASE,  THREATENED  RELEASE,  DISPOSAL,
REMOVAL,  OR CLEANUP OF ANY HAZARDOUS  MATERIAL  LOCATED ON, ABOUT,  WITHIN,  OR
AFFECTING  ANY OF THE  PROPERTIES  OR ASSETS OF  BORROWER OR ANY  SUBSIDIARY  OF
BORROWER, OR (E) ANY INVESTIGATION,  LITIGATION, OR OTHER PROCEEDING, INCLUDING,
WITHOUT  LIMITATION,   ANY  THREATENED   INVESTIGATION,   LITIGATION,  OR  OTHER
PROCEEDING  RELATING TO ANY OF THE  FOREGOING.  WITHOUT  LIMITING THE FOREGOING,
THIS INDEMNITY SHALL APPLY TO ANY LOSS, LIABILITY,  OBLIGATION, DAMAGE, PENALTY,
JUDGMENT,  CLAIM,  DEFICIENCY  OR EXPENSE  ARISING OUT OF THE SOLE OR CONCURRENT
NEGLIGENCE  OF ANY AGENT OR ANY  LENDER,  BUT AS TO ANY  AGENT OR  LENDER  SHALL
EXCLUDE ANY LOSS,  LIABILITY,  OBLIGATION,  DAMAGE,  PENALTY,  JUDGMENT,  CLAIM,
DEFICIENCY  OR  EXPENSE  ARISING  BY REASON OF THE GROSS  NEGLIGENCE  OR WILLFUL
MISCONDUCT OF SUCH AGENT OR LENDER.

         Section 13.3 No Duty. All attorneys, accountants, appraisers, and other
professional  Persons  and  consultants  retained  by the Agents and the Lenders
shall have the right to act  exclusively  in the  interest of the Agents and the
Lenders and shall have no duty of disclosure,  duty of loyalty, duty of care, or
other duty or  obligation  of any type or nature  whatsoever  to  Borrower,  any
shareholder or Subsidiary of Borrower or any other Person.

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         Section  13.4  No  Fiduciary  Relationship.  The  relationship  between
Borrower and each Lender is solely that of debtor and creditor,  and none of the
Agents nor any of the Lenders has any  fiduciary or other  special  relationship
with Borrower,  and no term or condition of any of the Loan  Documents  shall be
construed so as to deem the  relationship  between Borrower and any Lender to be
other than that of debtor and creditor.

         Section 13.5 No Waiver;  Cumulative Remedies. No failure on the part of
the Agents or any Lender to exercise and no delay in  exercising,  and no course
of dealing with respect to, any right,  power, or privilege under this Agreement
shall operate as a waiver thereof,  nor shall any single or partial  exercise of
any right,  power,  or  privilege  under this  Agreement  preclude  any other or
further  exercise  thereof  or  the  exercise  of any  other  right,  power,  or
privilege.  The rights and remedies provided for in this Agreement and the other
Loan  Documents  are  cumulative  and not  exclusive  of any rights and remedies
provided by law.

         Section 13.6      Successors and Assigns.

         (a) This  Agreement  shall be binding  upon and inure to the benefit of
the parties hereto and their respective successors and assigns. Borrower may not
assign or transfer any of its rights or obligations  hereunder without the prior
written consent of the Administrative  Agent and all of the Lenders.  Any Lender
may sell  participations to one or more banks or other institutions in or to all
or a portion of its rights and  obligations  under this  Agreement and the other
Loan  Documents  (including,  without  limitation,  all  or  a  portion  of  its
Commitments  and the Advances  owing to it);  provided,  however,  that (i) such
Lender's   obligations  under  this  Agreement  and  the  other  Loan  Documents
(including,  without limitation,  its Commitments) shall remain unchanged,  (ii)
such Lender shall remain solely  responsible to Borrower for the  performance of
such obligations, (iii) such Lender shall remain the holder of its Notes for all
purposes of this  Agreement,  (iv)  Borrower  shall  continue to deal solely and
directly  with  such  Lender  in  connection   with  such  Lender's  rights  and
obligations  under this  Agreement  and the other Loan  Documents,  and (v) such
Lender shall not sell a participation  that conveys to the participant the right
to vote or give or  withhold  consents  under this  Agreement  or any other Loan
Document,  other than the right to vote upon or consent to (A) any  increase  of
such Lender's  Commitments,  (B) any  reduction of the  principal  amount of, or
interest to be paid on, the  Advances of such Lender,  (C) any  reduction of any
commitment  fee or other amount  payable to such Lender under any Loan Document,
or (D) any  postponement  of any date for the  payment of any amount  payable in
respect of the Advances of such Lender.

         (b)  Borrower  and  each of the  Lenders  agree  that  any  Lender  (an
"Assigning  Lender")  may at any time assign to one or more  Eligible  Assignees
all, or a portion of all, of its rights and obligations under this Agreement and
the other Loan  Documents  (including,  without  limitation,  its Commitment and
Advances) (each an "Assignee");  provided,  however, that (i) except in the case
of an  assignment  of  all of a  Lender's  rights  and  obligations  under  this
Agreement and the other Loan Documents,  or as otherwise  acceptable to Borrower
and the  Administrative  Agent the amount of the  Commitments  of the  assigning
Lender being assigned pursuant to each assignment  (determined as of the date of
the Assignment and Acceptance with respect to such assignment) shall in no event
be less than  $5,000,000.00,  and (ii) the parties to each such assignment shall
execute and deliver to the Administrative Agent for its acceptance and recording
in the Register (as defined below), an Assignment and Acceptance,  together with
the Note subject to such  assignment,  and a processing and  recordation  fee of
$3,500.00. Upon such execution,  delivery,  acceptance,  and recording, from and
after the effective date  specified in each  Assignment  and  Acceptance,  which
effective  date shall be at least  five (5)  Business  Days after the  execution
thereof,  or, if so specified in such  Assignment  and  Acceptance,  the date of
acceptance  thereof by the  Administrative  Agent,  (x) the assignee  thereunder
shall be a party hereto as a "Lender" and, to the extent that rights and

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obligations  hereunder have been assigned to it pursuant to such  Assignment and
Acceptance,  have the rights and obligations of a Lender hereunder and under the
Loan Documents and (y) the Lender that is an assignor  thereunder  shall, to the
extent that rights and  obligations  hereunder have been assigned by it pursuant
to such  Assignment and  Acceptance,  relinquish its rights and be released from
its  obligations  under this Agreement and the other Loan Documents (and, in the
case of an Assignment and Acceptance  covering all or the remaining portion of a
Lender's  rights and  obligations  under the Loan  Documents,  such Lender shall
cease to be a party  thereto).  The  provisions  of Article IV and Section  13.2
shall continue with respect to such Assigning Lender.

         (c) By executing  and  delivering  an Assignment  and  Acceptance,  the
Assigning  Lender and its Assignee  confirm to and agree with each other and the
other parties hereto as follows:  (i) other than as provided in such  Assignment
and Acceptance,  such Assigning Lender makes no  representation  or warranty and
assumes  no  responsibility  with  respect  to any  statements,  warranties,  or
representations  made  in or in  connection  with  the  Loan  Documents  or  the
execution, legality, validity, and enforceability,  genuineness, sufficiency, or
value of the Loan  Documents  or any  other  instrument  or  document  furnished
pursuant thereto; (ii) such Assigning Lender makes no representation or warranty
and  assumes no  responsibility  with  respect  to the  financial  condition  of
Borrower or any Obligated  Party or the performance or observance by Borrower or
any  Obligated  Party of its  obligations  under the Loan  Documents;  (iii) the
Assignee  confirms that it has received copies of the Loan  Documents,  together
with  copies of the  financial  statements  referred  to in Section 7.2 and such
other  documents and  information  as it has deemed  appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance;  (iv)
the Assignee will,  independently  and without reliance upon the  Administrative
Agent or such assignor and based on such  documents and  information as it shall
deem  appropriate  at the time,  continue  to make its own credit  decisions  in
taking or not taking action under this  Agreement and the other Loan  Documents;
(v) the Assignee  confirms  that it is an Eligible  Assignee;  (vi) the Assignee
appoints  and  authorizes  the  Administrative  Agent  to take  such  action  as
Administrative  Agent on its  behalf and  exercise  such  powers  under the Loan
Documents as are  delegated to the  Administrative  Agent by the terms  thereof,
together with such powers as are reasonably  incidental  thereto;  and (vii) the
Assignee  agrees that it will perform in accordance  with their terms all of the
obligations  which  by the  terms  of the  Loan  Documents  are  required  to be
performed by it as a Lender.

         (d) The  Administrative  Agent shall maintain at its Principal Office a
copy of each  Assignment  and  Acceptance  delivered to and accepted by it and a
register for the  recordation  of the names and addresses of the Lenders and the
Commitment  of, and principal  amount of the Advances owing to, each Lender from
time to time (the  "Register").  The entries in the Register shall be conclusive
and  binding  for  all  purposes,  absent  manifest  error,  and  Borrower,  the
Administrative  Agent,  and the  Lenders  may treat  each  Person  whose name is
recorded in the Register as a Lender  hereunder for all purposes  under the Loan
Documents.  The Register  shall be available  for  inspection by Borrower or any
Lender  at any  reasonable  time and from  time to time  upon  reasonable  prior
notice.

         (e) Upon its receipt of an  Assignment  and  Acceptance  executed by an
assigning Lender and Assignee  representing  that it is an Eligible Assignee (or
other  assignee  permitted  hereunder),  together  with any Note subject to such
assignment,  the  Administrative  Agent shall, if such Assignment and Acceptance
has been  completed  and is in  substantially  the form of Exhibit B, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register,  and (iii) give prompt written notice thereof to Borrower.  Within
five (5)  Business  Days after its  receipt  of such  notice,  Borrower,  at its
expense,  shall execute and deliver to the Administrative  Agent in exchange for
the surrendered Note a new Note to the order of such Eligible Assignee (or other
assignee  permitted  hereunder)  in an  amount  equal  to  the  portion  of  the
Commitments assumed by it pursuant to such Assignment and Acceptance and, if the
Assigning  Lender has retained a portion of the  Commitments,  a new Note to the
order of the

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Assigning  Lender in an amount equal to the portion of the Commitments  retained
by it  hereunder  (each  such  promissory  note  shall  constitute  a "Note" for
purposes  of the Loan  Documents).  Such  new  Notes  shall  be in an  aggregate
principal  amount of the surrendered  Note, shall be dated the effective date of
such Assignment and Acceptance, and shall otherwise be in substantially the form
of Exhibit C.

         (f) Any Lender may, in connection with any assignment or  participation
or proposed  assignment or participation  pursuant to this Section,  disclose to
the Assignee or participant or proposed Assignee or participant, any information
relating to Borrower or any Subsidiary of Borrower  furnished to such, Lender by
or on behalf of Borrower or any of its Subsidiaries.

         (g)  Notwithstanding  any other term of this Agreement to the contrary,
any Lender may  (without  requesting  the  consent of either the  Administrative
Agent or  Borrower)  pledge  its Notes to a Federal  Reserve  Bank in support of
borrowings made by such Lender from such Federal Reserve Bank.

         (h)  Notwithstanding  any other term of this Agreement to the contrary,
any Lender may assign all,  or a portion of all,  of its rights and  obligations
under  this  Agreement  and  the  other  Loan  Documents   (including,   without
limitation,  its  Commitment and Advances) to an Affiliate of such Lender or any
other Lender provided that:

                  (i) such assignor  Lender has obtained the written  consent of
         the  Administrative  Agent  (which  consent  shall not be  unreasonably
         delayed or withheld)  if the effect of such  assignment  or  delegation
         shall entitle such Affiliate or other Lender to claim compensation from
         Borrower pursuant to Article IV; and

                  (ii) in every other case,  such assignor  Lender has furnished
         notice to, but not obtained the consent of, the Administrative Agent.

         Section 13.7 Survival.  All representations and warranties made in this
Agreement  or  any  other  Loan  Document  or in  any  document,  statement,  or
certificate  furnished  in  connection  with this  Agreement  shall  survive the
execution and delivery of this Agreement and the other Loan Documents  until the
Obligations  have been paid and performed in full, and no  investigation  by the
Administrative   Agent  or  any  Lender  or  any   closing   shall   affect  the
representations  and warranties or the right of the Administrative  Agent or any
Lender  to rely  upon  them.  Without  prejudice  to the  survival  of any other
obligation of Borrower  hereunder,  the obligations of Borrower under Article IV
and Sections 13.1 and 13.2 shall survive  repayment of the Notes and termination
of the Commitments.  The obligations of the Administrative Agent and the Lenders
under Section 13.18 shall survive  repayment of the Notes and termination of the
Commitments.

         Section 13.8 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES, AND THE OTHER
LOAN DOCUMENTS  REFERRED TO HEREIN EMBODY THE FINAL,  ENTIRE AGREEMENT AMONG THE
PARTIES  HERETO  AND  SUPERSEDE  ANY  AND  ALL  PRIOR  COMMITMENTS,  AGREEMENTS,
REPRESENTATIONS,  AND  UNDERSTANDINGS,  WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT  MATTER  HEREOF AND MAY NOT BE  CONTRADICTED  OR VARIED BY  EVIDENCE  OF
PRIOR,  CONTEMPORANEOUS,  OR SUBSEQUENT  ORAL  AGREEMENTS OR  DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.

         Section 13.9  Amendments,  Etc. No amendment or waiver of any provision
of this Agreement,  the Notes, or any other Loan Document to which Borrower is a
party,  nor any consent to any  departure  by Borrower  therefrom,  shall in any
event be effective unless the same shall be agreed or consented to

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by the Required  Lenders and Borrower,  and each such waiver or consent shall be
effective only in the specific  instance and for the specific  purpose for which
given; provided, that no amendment,  waiver, or consent shall, unless in writing
and signed by all of the  Lenders and  Borrower,  do any of the  following:  (a)
increase  Commitments  of the Lenders or subject  the Lenders to any  additional
obligations;  (b) reduce the principal of, or interest on, the Notes or any fees
or other  amounts  payable to the Lenders,  (but not the  Administrative  Agent)
hereunder; (c) alter the allocation among Lenders of, or postpone any date fixed
for any payment or  prepayment  (whether or not  mandatory)  of principal of, or
interest  on,  the  Notes  or  any  fees  or  other   amounts   payable  to  the
Administrative Agent or the Lenders hereunder;  (d) change the percentage of the
Commitments  or of the  aggregate  unpaid  principal  amount of the Notes or the
number of Lenders which shall be required for the Lenders or any of them to take
any action  under this  Agreement;  (e) change any  provision  contained in this
Section 13.9; or (f) release any material  Guarantor or any material  portion of
the   Collateral,   except  in  accordance  with  the  relevant  Loan  Document.
Notwithstanding   anything  to  the  contrary  contained  in  this  Section,  no
amendment,  waiver, or consent shall be made with respect to Article XII without
the prior written consent of the Administrative Agent.

         Section 13.10 Maximum  Interest Rate. No provision of this Agreement or
of any other Loan  Document  shall  require  the  payment or the  collection  of
interest in excess of the maximum  amount  permitted by  applicable  law. If any
excess  of  interest  in such  respect  is  hereby  provided  for,  or  shall be
adjudicated  to be so provided,  in any Loan Document or otherwise in connection
with this loan  transaction,  the  provisions  of this Section  shall govern and
prevail  and neither  Borrower  nor the  sureties,  guarantors,  successors,  or
assigns of Borrower shall be obligated to pay the excess amount of such interest
or any other  excess sum paid for the use,  forbearance,  or  detention  of sums
loaned  pursuant  hereto.  In the event any Lender ever receives,  collects,  or
applies as interest  any such sum,  such amount  which would be in excess of the
maximum  amount  permitted by  applicable  law shall be applied as a payment and
reduction of the principal of the indebtedness  evidenced by the Notes;  and, if
the  principal of the Notes has been paid in full,  any  remaining  excess shall
forthwith be paid to Borrower.  In determining  whether or not the interest paid
or payable  exceeds the Maximum  Rate,  Borrower and each Lender  shall,  to the
extent permitted by applicable law, (a) characterize any  non-principal  payment
as an expense,  fee, or premium rather than as interest,  (b) exclude  voluntary
prepayments and the effects thereof, and (c) amortize,  prorate,  allocate,  and
spread in equal or unequal  parts the total  amount of interest  throughout  the
entire  contemplated  term of the  indebtedness  evidenced  by the Notes so that
interest for the entire term does not exceed the Maximum Rate.

         Section 13.11 Notices.  All notices and other  communications  provided
for in this  Agreement and the other Loan Documents to which Borrower is a party
shall be given or made by  telecopy  or in  writing  and  telecopied,  mailed by
certified mail return receipt requested,  or delivered to the intended recipient
at the "Address for Notices"  specified  below its name on the  signature  pages
hereof-,  or, as to any party at such other  address as shall be  designated  by
such  party in a notice  to each  other  party  given in  accordance  with  this
Section. Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when transmitted by telecopy, subject to
telephone  confirmation of receipt, or when personally delivered or, in the case
of a mailed  notice,  when duly  deposited  in the mails,  in each case given or
addressed as aforesaid;  provided,  however, notices to the Administrative Agent
pursuant  to  Article  II  shall  not  be  effective   until   received  by  the
Administrative Agent.

         Section 13.12  Governing Law. THIS  AGREEMENT  SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF  MASSACHUSETTS  AND
THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.


d-501795.7
                                 LOAN AGREEMENT
                                       56

<PAGE>



         Section 13.13  Counterparts.  This  Agreement may be executed in one or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument.

         Section 13.14  Severability.  Any provision of this Agreement held by a
court of competent  jurisdiction to be invalid or unenforceable shall not impair
or invalidate  the remainder of this  Agreement and the effect  thereof shall be
confined to the provision held to be invalid or illegal.

      Section 13.15 Headings.  The headings,  captions, and arrangements used in
this Agreement are for convenience only and shall not affect the  interpretation
of this Agreement.

         Section 13.16  Construction.  Borrower,  the Administrative  Agent, and
each Lender  acknowledges that each of them has had the benefit of legal counsel
of its own choice and has been afforded an  opportunity to review this Agreement
and the other Loan Documents with its legal counsel.

         Section 13.17 Independence of Covenants.  All covenants hereunder shall
be given  independent  effect so that if a particular action or condition is not
permitted  by any of such  covenants,  the fact that it would be permitted by an
exception to, or be otherwise  within the limitations of, another covenant shall
not avoid the  occurrence of a Default if such action is taken or such condition
exists.

         Section 13.18     Confidentiality.

         (a) The Agents and each Lender (each, a "Lending Party") agrees to keep
confidential  any Confidential  Information;  provided that nothing herein shall
prevent any Lending  Party from  disclosing  such  information  (a) to any other
Lending Party or any Affiliate of any Lending Party,  or any officer,  director,
employee, agent, or advisor of any Lending Party or any Affiliate of any Lending
Party, (b) to any other Person if reasonably incidental to the administration of
the credit  facility  provided  herein,  (c) as  required by any law,  rule,  or
regulation,  (d) upon the order of any court or administrative  agency, (e) upon
the request or demand of any regulatory  agency or authority,  (f) in connection
with any  litigation  to which  such  Lending  Party may be a party,  (g) to the
extent  necessary  in  connection  with the  exercise  of any remedy  under this
Agreement  or  any  other  Loan   Document,   and  (h)  subject  to   provisions
substantially  similar  to those  contained  in this  Section,  to any actual or
proposed   participant  or  Assignee.   Furthermore,   and  notwithstanding  the
foregoing,  no Lending Party shall provide any  Confidential  Information to any
officer,  director,  employee,  agent or advisor of any  Affiliate  of a Lending
Party if such officer, director,  employee, agent or advisor's position involves
the ability to transact  trades in, or solicit or accept orders for the purchase
or sale of, the common stock of Borrower.

         (b) The  Lending  Parties are aware that the United  States  securities
laws prohibit any Person who has received material,  non-public information such
as is the  subject of this  Section  13.18  from an issuer  from  purchasing  or
selling the securities of such issuer or from  communicating such information to
any other Person under circumstances in which it is reasonably  foreseeable that
such Person is likely to purchase or sell such securities.

         (c) The Companies and the Lending  Parties agree that monetary  damages
would not be a  sufficient  remedy for any breach of this  Section  13.18 by the
Lending Parties and that, in addition to all other remedies, the Companies shall
be entitled to specific  performance and injunction or other equitable relief as
a remedy for any such breach.

         (d) The  restrictions  and  obligations  of this  Section  13.18  shall
survive the repayment of the  Obligations and shall continue to bind the Lending
Parties.

d-501795.7
                                 LOAN AGREEMENT
                                       57

<PAGE>



         Section 13.19 Renewal and Increase. The Loan is in renewal,  extension,
modification,  restatement,  increase  and  amendment  of  the  Original  Credit
Agreement and the loan documents executed in connection therewith, and all liens
and security interests securing payment thereof.

         Section 13.20 Waiver of Jury Trial. TO THE FULLEST EXTENT  PERMITTED BY
APPLICABLE LAW, BORROWER HEREBY  IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION,  PROCEEDING,  OR  COUNTERCLAIM  (WHETHER BASED UPON
CONTRACT,  TORT,  OR  OTHERWISE)  ARISING  OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS  CONTEMPLATED  THEREBY OR THE ACTIONS OF ANY AGENT
OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.

         Section  13.21  Choice of Forum;  Consent to  Service  of  Process  and
Jurisdiction.  Any suit,  action or proceeding  against Borrower with respect to
this Agreement or the Loan  Documents,  or any judgment  entered by any court in
respect  thereof,   may  be  brought  in  the  courts  of  the  Commonwealth  of
Massachusetts,  County of Suffolk, or in the United States courts located in the
Commonwealth  of  Massachusetts  as  the  Administrative  Agent  shall,  at  the
direction of the Required Lenders elect in their sole  discretion,  and Borrower
irrevocably  submits to the  non-exclusive  jurisdiction  of such courts for the
purpose of any suit, action or proceeding.  Borrower irrevocably consents to the
service  of  process  in any suit,  action or  proceeding  in said  court by the
mailing  thereof by the  Administrative  Agent by registered or certified  mail,
postage  prepaid to Borrower's  address shown opposite its name on the signature
pages hereof.  Nothing herein or in any of the other Loan Documents shall affect
the right of the  Administrative  Agent to serve  process  in any  other  manner
permitted by law or shall limit the right of the  Administrative  Agent to bring
any action or proceeding against Borrower or with respect to any of its property
in courts in other  jurisdictions.  Borrower  irrevocably  waives any objections
which it may now or  hereafter  have to laying  of venue of any suit,  action or
proceeding  arising  out of or  relating  to this  Agreement  or the other  Loan
Documents  brought in the courts located in the  Commonwealth of  Massachusetts,
County of Suffolk, and hereby further irrevocably waives any claim that any such
suit,  action or  proceeding  brought in any such court has been  brought in any
inconvenient   forum.   Any  action  or  proceeding  by  Borrower   against  the
Administrative  Agent or any Lender shall be brought only in a court  located in
Suffolk County, Massachusetts.

                     REMAINDER OF PAGE INTENTIONALLY BLANK.
                             SIGNATURE PAGES FOLLOW.

d-501795.7
                                 LOAN AGREEMENT
                                       58

<PAGE>



         IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed  this
Agreement as of the day and year first above written.

                                    BORROWER:

                                                    PRIME MEDICAL SERVICES, INC.



                                                     By:/s/ Cheryl Williams
                                                        Cheryl Williams
                                                        Vice President - Finance

                                                     Address for Notices:

                                                   1301 Capital of Texas Highway
                                                   Suite C-300
                                                   Austin, Texas 78746
                                                   Attention: President

                                                   Fax No.: (512) 328-8510
                                                   Telephone No.: (512) 328-2892




                    Third Amended and Restated Loan Agreement
                                 Signature Page

<PAGE>



                                    BANKBOSTON:

                                    BANKBOSTON, N.A.,
                                    as Administration Agent, and  a Lender



                                    By:      /s/ Walter J. Marullo
                                             Walter J. Marullo
                                             Vice President

                                             Address for Notices:

                                    100 Federal Street, MS 01-08-06
                                    P.O. Box 2016
                                    Boston, Massachusetts 02106
                                    Attention: Walter J. Marullo, Vice President

                                                Fax No.: (617)  434-0392
                                                Telephone No.: (617)  434-2318

                                          Lending Office for Base Rate Advances:
                                                 100 Federal Street
                                                 P. 0. Box 2016
                                                 Boston, MA  02106

                                         Lending Office for Eurodollar Advances:
                                                  100 Federal Street
                                                  P.O. Box 2016
                                                  Boston, MA  02106




                    Third Amended and Restated Loan Agreement
                                 Signature Page

<PAGE>



                                  NATIONSBANK:

                                  NATIONSBANK OF TEXAS, N.A.,
                                            as Documentation Agent and a Lender



                                                By:      /s/ Teena E. Belcik
                                                             Teena E. Belcik
                                                             Vice President

                                                    Address for Notices:
                                                    515 Congress Avenue, 11th Fl
                                                    Post Office Box 908
                                                    Austin, Texas  78701-0908
                                                    Attention: Teena Belcik

                                                   Fax No.: (512) 397-2052
                                                   Telephone No.: (512) 397-2841

                                         Lending Office for Base Rate Advances:
                                          515 Congress Avenue, 11th Floor
                                          Post Office Box 908
                                          Austin, TX  78701-0908

                                         Lending Office for Eurodollar Advances:
                                          515 Congress Avenue, 11th Floor
                                          Post Office Box 908
                                          Austin, TX  78701-0908



                    Third Amended and Restated Loan Agreement
                                 Signature Page

<PAGE>



                                              NATIONSBANC MONTGOMERY SECURITIES
                                          LLC, as Arranger and Syndication Agent



                                            By:      /s/ Gary L. Kahn
                                                     Gary L. Kahn
                                                     Senior Vice President

                                                     Address for Notices:
                                                     901 Main Street, 66th Floor
                                                     Post Office Box 831000
                                                     Dallas, Texas 75283-1000
                                                     Attention: Gary L. Kahn

                                                   Fax No.: (214) 508-2881
                                                   Telephone No.: (214) 508-3507


                    Third Amended and Restated Loan Agreement
                                 Signature Page

<PAGE>



                                   BANK ONE, TEXAS, N.A.,
                                    as Lender



                                               By:      /s/ Edward W. Lick, Jr.
                                               Name:  Edward W. Lick, Jr.
                                               Title:  Vice President

                                               Address for Notices:
                                               221 West 6th Street, Suite 200
                                               Austin, Texas 78701
                                               Attention: Ed Lick

                                               Fax No.: (512) 479-1565
                                               Telephone No.: (512) 479-5730

                                          Lending Office for Base Rate Advances:
                                                 Bank One, Austin
                                                 221 West 6th Street, Suite 200
                                                 Austin, TX  78701

                                         Lending Office for Eurodollar Advances:
                                                 Bank One, Austin
                                                 221 West 6th Street, Suite 200
                                                 Austin, TX  78701



                    Third Amended and Restated Loan Agreement
                                 Signature Page

<PAGE>



                                  CREDIT LYONNAIS NEW YORK BRANCH
                                    as Lender



                                                  By:      /s/ John Oberle
                                                  Name:  John Oberle
                                                  Title:  Vice President

                                                Address for Notices:
                                                  1301 Avenue of the Americas
                                                  New York, New York 10019-6022
                                                  Attention: John Oberle

                                                  Fax No.: (212) 261-3440
                                                  Telephone No.: (212) 261-7344

                                          Lending Office for Base Rate Advances:
                                              Credit Lyonnais New York Branch
                                              1301 Avenue of the Americas
                                              New York, NY  10019-6022

                                         Lending Office for Eurodollar Advances:
                                               Credit Lyonnais New York Branch
                                               1301 Avenue of the Americas
                                               New York, NY  10019-6022


                    Third Amended and Restated Loan Agreement
                                 Signature Page

<PAGE>



                                 LEET NATIONAL BANK,
                                    as Lender



                                             By:      /s/ Ginger Stolzenthaler
                                             Name:  Ginger Stolzenthaler
                                             Title:  Senior Vice President

                                             Address for Notices:
                                               One Federal Street
                                               Mail Stop: MA OF D07B
                                               Boston, Massachusetts 02110
                                               Attention: Ginger Stolzenthaler

                                                 Fax No.: (617) 346-4699
                                                 Telephone No.: (617) 346-4618

                                          Lending Office for Base Rate Advances:
                                                     Fleet National Bank
                                                     One Federal Street
                                                     Mail Stop:  MA OF D07B
                                                     Boston, MA  02110

                                         Lending Office for Eurodollar Advances:
                                                     Fleet National Bank
                                                     One Federal Street
                                                     Mail Stop:  MA OF D07B
                                                     Boston, MA  02110


                    Third Amended and Restated Loan Agreement
                                 Signature Page

<PAGE>



                                 IMPERIAL BANK,
                                    as Lender



                                              By:      /s/ Margo Gravin
                                              Name:  Margo Gravin
                                              Title:  Senior Vice President

                                                     Address for Notices:
                                                     226 Airport Parkway
                                                     San Jose, California  95110
                                                     Attention: Kelly Davis

                                                  Fax No.: (408) 451-8586
                                                  Telephone No.: (408) 451-8589

                                  Lending Office for Base Rate Advances:
                                  Imperial Bank
                                  226 Airport Parkway
                                  San Jose, CA  95110

                                  Lending Office for Eurodollar Advances:
                                  Imperial Bank
                                  226 Airport Parkway
                                  San Jose, CA  95110

                    Third Amended and Restated Loan Agreement
                                 Signature Page

<PAGE>



                             LASALLE NATIONAL BANK,
                                    as Lender



                                               By:      /s/ David G. Killpack
                                               Name:  David G. Killpack
                                               Title:  Vice President

                                                     Address for Notices:
                                                     135 South LaSalle Street
                                                     Chicago, Illinois  60603
                                                     Attention: Jody Staszeky

                                                   Fax No.: (312) 904-6457
                                                   Telephone No.: (312) 904-5416

                                        Lending Office for Base Rate Advances:
                                                     LaSalle National Bank
                                                     135 South LaSalle Street
                                                     Chicago, IL  60603

                                        Lending Office for Eurodollar Advances:
                                                     LaSalle National Bank
                                                     135 South LaSalle Street
                                                     Chicago, IL  60603



                    Third Amended and Restated Loan Agreement
                                 Signature Page

<PAGE>


                       COOPERATIEVE CENTRALE RAIFFEISEN -
                         BOERENLEENBANK B.A., "RABOBANK
                          NEDERLAND", NEW YORK BRANCH,
                               RABOBANK, as Lender



                                               By:      /s/ J. David Thomas
                                               Name:  J. David Thomas
                                               Title:  Vice President


                                                By:      /s/ W. Pieter C. Kodde
                                                Name:  W. Pieter C. Kodde
                                                Title:  Vice President

                                        Address for Notices:
                                        245 Park Avenue
                                        New York, New York  10167
                                        Attention: Corporate Services Department

                                                  Fax. No.: (212) 818-0233
                                                  Telephone No.: (212) 916-7800

                                            cc:      13355 Noel Road
                                                     Suite 1000
                                                     Dallas, TX 75240-6645
                                                     Attention: J. David Thomas

                                                   Fax No.: (972) 419-6315
                                                   Telephone No.: (972) 419-5266

                                          Lending Office for Base Rate Advances:
                                           Cooperatieve Centrale Raiffeisen -
                                           Boerenleenbank B.A., "Rabobank
                                           Nederland", New York Branch, Rabobank
                                               245 Park Avenue
                                               New York, NY  10167

                                         Lending Office for Eurodollar Advances:
                                           Cooperatieve Centrale Raiffeisen -
                                           Boerenleenbank B.A., "Rabobank
                                           Nederland", New York Branch, Rabobank
                                                245 Park Avenue
                                                New York, NY  10167



                    Third Amended and Restated Loan Agreement
                                 Signature Page

<PAGE>
                                    EXHIBIT A

                              ADVANCE REQUEST FORM



TO:      BankBoston, N.A., as Administrative Agent
         100 Federal Street, MS 01-08-06
         P.O. Box 2016
         Boston, Massachusetts 02106
         Attention: Walter J. Marullo

Ladies and Gentlemen:

The undersigned is an officer of Prime Medical Services, Inc. ("Borrower"),  and
is  authorized  to make and deliver  this  certificate  pursuant to that certain
Third  Amended  and  Restated  Loan  Agreement  dated as of April , 1998,  among
Borrower,   BankBoston,  N.A.,  as  Administrative  Agent  (the  "Administrative
Agent"), and the Lenders named therein (as the same may be amended, supplemented
or modified from time to time, the "Loan Agreement"). Capitalized terms used and
not  otherwise  defined  herein shall have the same meanings as set forth in the
Loan Agreement.  In accordance  with the Loan Agreement,  Borrower hereby (check
whichever is applicable):

                  1.       Requests  that the Lenders make a Eurodollar  Advance
                           under the Commitments in the manner set forth in item
                           (c) below for the following Interest Period:

                                            One (1) month

                                            Two (2) months

                                            Three (3) months

                                            Six (6) months

                  2.       Requests  that the  Lenders  make an  Alternate  Rate
                           Advance in the amount set forth in item (c) below.

In connection with the foregoing and pursuant to the terms and provisions of the
Loan Agreement, the undersigned hereby certifies to the Administrative Agent and
the Lenders that the following statements are true and correct:

         (i)      The representation and warranties  contained in Article VII of
                  the Loan Agreement and in each of the other Loan Documents are
                  true and  correct on and as of the date  hereof  with the same
                  force and effect as if made on and as of such date,  except to
                  the extent that such representations and warranties speak to a
                  specific date or the facts on which such  representations  and
                  warranties  are  based  have  been  changed  by   transactions
                  permitted by the Loan Documents.

         (ii)     No Default has occurred and is continuing or would result from
                  the Advance requested hereunder.


d-502322.6                                                              EXHIBITS
                                      - i -

<PAGE>



         (iii)    The amount of the Advance requested  hereunder,  when added to
                  all outstanding Advances, will not exceed the Commitments.

         (iv) All information  supplied below is true, correct,  and complete as
of the date hereof.

         (v)      If the  proceeds  of the  requested  Advance are to be used to
                  finance a  Permitted  Acquisition,  then the  information  set
                  forth on  Schedule 1  attached  hereto is true,  correct,  and
                  complete as of the date hereof.

(a)      Outstanding principal amount of Advances under the Credit
         Commitments                                               $

(b)      Net Availability for Advances:
         [The amount of the Commitments minus outstanding Advances
         under the Commitments]                                    $

(c)      Amount of Requested Advance                               $

                                                    BORROWER:

                                                    PRIME MEDICAL SERVICES, INC.



                                                       By:
                                                       Name:
                                                       Title:

Date of Requested Advance:          ____________________________
                                    [Insert date of Requested Advance]


d-502322.6                                                              EXHIBITS

                                     - ii -

<PAGE>



                                    EXHIBIT B

                        FORM OF ASSIGNMENT AND ACCEPTANCE

                                     Dated ,


         Reference  is hereby made to that  certain  Third  Amended and Restated
Loan  Agreement  dated  as of  April  ,  1998  (as  the  same  may  be  amended,
supplemented or modified from time to time, the "Loan  Agreement"),  among PRIME
MEDICAL SERVICES, INC., a Delaware corporation ("Borrower"), each of the Lenders
or  other  lending  institutions  which  are or may  from  time to  time  become
signatories  thereto (the "Lenders"),  and BANKBOSTON,  N.A., as  Administrative
Agent for itself and the other Lenders (in such  capacity,  the  "Administrative
Agent").  Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Loan Agreement.

                                                  (the "Assignor")
and           (the "Assignee") agree as follows:

         1. The  Assignor  hereby  sells and  assigns to the  Assignee,  without
recourse,  and the Assignee hereby purchases and assumes from the Assignor as of
the Effective Date (as defined in Section 4 below), the following (the "Assigned
Interest"): [check and complete, as appropriate]

         |_|      A % interest  in the  Commitment  of the  Assignor  and of the
                  outstanding  principal  amount owed to the Assignor in respect
                  of its Advances under its Commitment, together with all of the
                  rights  and  obligations  of the  Assignor  relating  to  such
                  Assigned  Interest under the Loan Agreement and the other Loan
                  Documents.

         |_|      100% of all of the Assignor's rights and obligations under the
                  Loan Agreement and the other Loan Documents, including without
                  limitation,  100% of the Assignor's interest in its Commitment
                  and 100% of the total outstanding principal amount owed to the
                  Assignor.

         2.  The  Assignor:  (i)  represents  that as of the  date  hereof,  its
Commitment is $ and the outstanding principal of its Advances, if any, under its
Commitment is $ (all as unreduced by any  assignments  which have not yet become
effective);   (ii)  makes  no   representation   or  warranty   and  assumes  no
responsibility  with respect to any  statements,  warranties or  representations
made in or in connection  with the Loan  Agreement or any other Loan Document or
the execution, legality, validity, enforceability,  genuineness,  sufficiency or
value of the Loan  Agreement or any other Loan  Document,  other than that it is
the legal and  beneficial  owner of the interest  being assigned by it hereunder
and that such  interest is free and clear of any adverse  claim;  (iii) makes no
representation  or warranty  and assumes no  responsibility  with respect to the
financial condition of the Borrower,  any Guarantor or any other Obligated Party
or the  performance  or observance  by the Borrower,  any guarantor or any other
Obligated  Party of any of their  obligations  under the  Agreement or any other
Loan Document; and (iv) attaches the Note held by Assignor and requests that the
Administrative  Agent  exchange  such Note for new Notes payable to the order of
(A)  Assignee  in an amount  equal to the  Commitments  assumed by the  Assignee
pursuant hereto, and (B) the Assignor in an amount equal to the Commitments,  if
any,  retained  by the  Assignor  under  the Loan  Agreement,  respectively,  as
specified above.


d-502322.6
                                                                        EXHIBITS
                                      - i -

<PAGE>



         3.  The  Assignee:  (i)  represents  and  warrants  that it is  legally
authorized to enter in this Assignment and Acceptance; (ii) confirms that it has
received a copy of the Loan  Agreement,  together with copies of the most recent
financial  statements  delivered  pursuant to Section 8.1 thereof and such other
documents and  information  as it has deemed  appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (iii) agrees
that it will,  independently and without reliance upon the Administrative Agent,
the Assignor, or any other Lender and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not  taking  action  under the Loan  Agreement  and the other  Loan
Documents; (iv) confirms that it is eligible to be an Assignee: (v) appoints and
authorizes the  Administrative  Agent to take such action as agent on its behalf
and to exercise  such powers under the Loan  Documents  as are  delegated to the
Administrative  Agent by the terms  thereof,  together  with such  powers as are
reasonably  incidental  thereto;  (v) agrees that it will perform in  accordance
with their terms all the  obligations  which by the terms of the Loan  Agreement
and the other Loan Documents are required to be performed by it as a Lender;  [;
and (vii) attaches the forms  prescribed by the Internal  Revenue Service of the
United  States  certifying  as to the  Assignee's  exemption  from United States
withholding  taxes with respect to all payments to be made to the Assignee under
the Loan Documents or such other documents as are necessary to indicate that all
such  payments  are subject to such tax at a rate reduced by an  applicable  tax
treaty].1

         4. The effective date for this  Assignment  and  Acceptance  shall be ,
(the  "Effective  Date").2  Following  the  execution  of  this  Assignment  and
Acceptance,  it will be delivered to the Administrative Agent for acceptance and
recording by the Administrative Agent.

         5. Upon such  acceptance  and  recording,  from and after the Effective
Date, (i) the Assignee shall be a party to the Loan Agreement and, to the extent
provided  in  this  Assignment  and  Acceptance,   shall  have  the  rights  and
obligations  of a Lender  thereunder and under the other Loan Documents and (ii)
the Assignor  shall,  to the extent  provided in this Assignment and Acceptance,
relinquish  its  rights  and be  released  from its  obligations  under the Loan
Agreement and the other Loan Documents.

         6. Upon such  acceptance  and  recording,  from and after the Effective
Date,  the  Administrative  Agent  shall  make all  payments  in  respect of the
interest assigned hereby (including payments of principal,  interest,  fees, and
other  amounts)  to the  Assignee.  The  Assignor  and  Assignee  shall make all
appropriate  adjustments  in payments for periods prior to the Effective Date by
the  Administrative  Agent or with  respect  to the  making  of this  assignment
directly between themselves.

         7. This  Assignment and Acceptance  shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts and applicable
laws of the United States of America.

                                                     [NAME OF ASSIGNOR],



                                                     By:
                                                              Name:
                                                              Title:

--------
         1 If the Assignee is organized under the laws of a jurisdiction outside
         the United States. 2 Such date shall be at least five (5) Business Days
         after the execution of this Assignment and
           Acceptance and delivery thereof to the Administrative Agent.

d-502322.6                                                              EXHIBITS

                                     - ii -

<PAGE>



                                                     [NAME OF ASSIGNEE],



                                                     By:
                                                              Name:
                                                              Title:


ACCEPTED BY:

BANKBOSTON, N.A., as Administrative Agent



By:
         Name:
         Title:
         Date:


CONSENTED TO BY BORROWER (if applicable):

PRIME MEDICAL SERVICES, INC.


By:
         Name:
         Title:
         Date:




d-502322.6                                                              EXHIBITS

                                     - iii -

<PAGE>



                                    EXHIBIT C

                                  FORM OF NOTE



$                              Boston, Massachusetts               April  , 1998
 -----------------                                                        -


         FOR VALUE RECEIVED,  the undersigned,  PRIME MEDICAL SERVICES,  INC., a
Delaware  corporation  ("Maker"),  hereby  promises  to  pay  to  the  order  of
("Payee"), at the offices of BankBoston, N.A., as Administrative Agent (together
with any  successor  as  provided in the  Agreement,  hereinbelow  defined,  the
"Administrative Agent") at 100 Federal Street, Boston, Massachusetts, on April ,
2003,  in lawful money of the United  States of America,  the  principal  sum of
DOLLARS ($ ), or so much  thereof as may be advanced and  outstanding  hereunder
together with the interest on the outstanding  principal balance from day to day
remaining, as herein specified.

         This Note has been  executed  and  delivered  by Maker  pursuant to the
terms of that certain  Third  Amended and Restated  Loan  Agreement of even date
herewith among Maker,  Payee, the  Administrative  Agent,  NationsBank of Texas,
N.A.,  as  Documentation  Agent,  and each of the other  Lenders which is or may
become a party thereto or any successor or assignee  thereof (as the same may be
amended, supplemented or modified from time to time, the "Agreement") and is one
of the Notes described therein. Capitalized terms used and not otherwise defined
herein shall have the same meanings as set forth in the Agreement.

         Reference is hereby made to the Agreement for provisions affecting this
Note, including, without limitation,  provisions regarding payments, prepayments
(optional and mandatory),  Events of Default and the Administrative  Agent's and
Payee's right as a result of the occurrence thereof.

         The outstanding  principal  balance hereof shall bear interest prior to
maturity at a varying rate per annum which shall from day to day be equal to the
lesser of (a) the Maximum Rate, or (b) the Applicable Rate in effect from day to
day,  each  such  change in the rate of  interest  charged  hereunder  to become
effective,  without notice to Maker, on the effective date of each change in the
Applicable Rate or the Maximum Rate, as the case may be; provided,  however,  if
at any time the Applicable  Rate shall exceed the Maximum Rate,  thereby causing
the interest rate hereon to be limited to the Maximum Rate,  then any subsequent
reduction in the  Applicable  Rate shall not reduce the rate of interest  hereon
below the Maximum Rate until the total amount of interest  accrued hereon equals
the amount of interest which would have accrued  hereon if the  Applicable  Rate
had at all times been in effect.  Accrued and unpaid interest on this Note shall
be due and  payable  on each  Payment  Date  and on the  Termination  Date.  All
past-due principal and interest shall bear interest as the Default Rate.

         Notwithstanding   anything  to  the  contrary   contained   herein,  no
provisions  of this Note shall  require the payment or permit the  collection of
interest  in excess of the  Maximum  Rate.  If and  excess of  interest  in such
respect is herein  provided for, or shall be adjudicated  to be so provided,  in
this Note or otherwise in connection with this loan transaction,  the provisions
of this paragraph shall govern and prevail,  and neither Maker nor the sureties,
guarantors,  successors or assigns of Maker shall be obligated to pay the excess
amount of such interest,  or any other excess sum paid for the use,  forbearance
or  detention  of sums loaned  pursuant  hereto.  If for any reason  interest in
excess of the Maximum Rate shall be deemed

d-502322.6                                                              EXHIBITS
                                                       - i -

<PAGE>



charged, required or permitted by any court of competent jurisdiction,  any such
excess  shall  be  applied  as a  payment  and  reduction  of the  principal  of
indebtedness  evidenced by this Note;  and, if the  principal  amount hereof has
been paid in full,  any remaining  excess shall  forthwith be paid to Maker.  In
determining  whether or not the  interest  paid or payable  exceeds  the Maximum
Rate, Maker, the  Administrative  Agent and Payee shall, to the extent permitted
by applicable law, (i)  characterize  any non- principal  payment as an expense,
fee, or premium rather than as interest,  (ii) exclude voluntary prepayments and
the effects thereof, and (iii) amortize,  prorate, allocate, and spread in equal
or unequal parts the total amount of interest throughout the entire contemplated
term of the  indebtedness  evidenced  by this Note so that the  interest for the
entire term does not exceed the Maximum Rate.

         Upon the occurrence of an Event of Default,  the  Administrative  Agent
may (and if directed by the Required  Lenders,  shall) declare the entire unpaid
principal  of and  accrued  interest  on this Note  immediately  due and payable
without notice, demand or presentment,  all of which are hereby waived, and upon
such  declaration,  the same  shall  become  and  shall be  immediately  due and
payable,  and the  Administrative  Agent  shall have the right to  foreclose  or
otherwise  enforce all Liens or security  interests  securing payment hereof, or
any part  hereof,  and  offset  against  this  Note any sum or sums  owed by the
Administrative  Agent,  Payee or the  holder  hereof  to Maker.  Failure  of the
Administrative  Agent,  Payee or the holder hereof to exercise this option shall
not constitute a waiver of the right to exercise the same upon the occurrence of
a subsequent Event of Default.

         If the  Administrative  Agent,  Payee or the holder hereof  expends any
effort in any attempt to enforce  payment of all or any part or  installment  of
any sum due the holder  hereunder,  or if this Note is placed in the hands of an
attorney for collection,  or if it is collected  through any legal  proceedings,
Maker agrees to pay all costs, expenses, and fees incurred by the Administrative
Agent, or the holder, including reasonable attorneys' fees.

         This Note shall be governed by and  construed  in  accordance  with the
laws of the Commonwealth of Massachusetts  and the applicable laws of the United
States of America.

         Except as provided in the Agreement,  Maker and each surety, guarantor,
endorser,  and other party ever liable for payment of any sums of money  payable
on this Note  jointly  and  severally  waive  notice,  presentment,  demand  for
payment,  protest,  notice of protest and  non-payment  or  dishonor,  notice of
acceleration,  notice  of  intent to  accelerate,  notice  of intent to  demand,
diligence in  collecting,  grace,  and all other  formalities  of any kind,  and
consent to all  extensions  without notice for any period or periods of time and
partial payments, before or after maturity, and any impairment of any Collateral
securing this Note, all without prejudice to the Administrative  Agent, Payee or
the holder. The Administrative  Agent, Payee and the holder shall similarly have
the  right to deal in any way,  at any time,  with one or more of the  foregoing
parties  without  notice to any  other  party,  and to grant any such  party any
extensions  of time for  payment of any of said  indebtedness,  or to release or
substitute  part or all of the  Collateral  securing  this Note, or to grant any
other indulgences or forbearances whatsoever,  without notice to any other party
and without in any way affecting the personal liability of any party hereunder.

         Maker hereby authorizes the Administrative  Agent, Payee and the holder
hereof to  endorse on the  Schedule  attached  to this Note or any  continuation
thereof  or to record  in their  internal  records  all  Advances  made to Maker
hereunder  and all  payments  made on account of the  principal  thereof,  which
endorsements  or recordings  shall be prima facie evidence as to the outstanding
principal  amount  of  this  Note;   provided,   however,  any  failure  by  the
Administrative Agent, Payee or the holder hereof to make any such endorsement or
recording shall not limit or otherwise affect the obligations of Maker under the
Agreement or this Note.


d-502322.6                                                              EXHIBITS
                                     - ii -

<PAGE>



         [This Note, together with all the other Notes issued on the date hereof
are  given  in  renewal,   amendment,   increase   and   restatement,   but  not
extinguishment,  of the Revolving  Credit Notes issued under the Second  Amended
and Restated Loan Agreement dated as of March 31, 1997 among Maker, NationsBank,
the  Administrative  Agent,  and each of the other lenders party thereto,  which
were  given  in  renewal,   amendment,   increase,  and  restatement,   but  not
extinguishment,  of the  Revolving  Credit  Notes  issued  under the Amended and
Restated  Loan  Agreement  dated as of April 26, 1996 among Maker,  NationsBank,
Administrative Agent, and each of the lenders party thereto, which were given in
renewal,  amendment,  increase,  and restatement,  but not extinguishment of the
Revolving  Credit Notes issued under the Loan Agreement dated as of November 28,
1994 among Maker, Administrative Agent and the banks named therein.]

                                                   PRIME MEDICAL SERVICES, INC.



                                                    By:
                                                          Cheryl Williams
                                                          Vice President-Finance




                                                                        EXHIBITS
                                     - iii -

<PAGE>



                                                     SCHEDULE



Date                  Advance        Principal Payment                  Balance












d-502322.6
                                                                        EXHIBITS
                                      - i -

<PAGE>



                                    EXHIBIT D

                             PERFECTION CERTIFICATE

         The  undersigned  is an  officer of PRIME  MEDICAL  SERVICES,  INC.,  a
Delaware  corporation  ("Borrower"),  and is authorized to make and deliver this
certificate.  Borrower hereby certifies, with reference to that certain Borrower
Security  Agreement  (herein  so  called)  dated as of April  26,  1996  between
Borrower and The First National Bank of Boston (now known as BankBoston,  N.A.),
as  Administrative  Agent  ("Agent")  for itself and certain  other Lenders (the
"Lenders"),  as amended and those certain Guarantor Security  Agreements (herein
so called) certain of which are dated as of April 26, 1996,  September 30, 1997,
and the date hereof,  respectively  between the  Guarantors  (as defined in that
certain Third Amended and Restated  Loan  Agreement of even date herewith  among
Borrower,  the  Administrative  Agent  and  the  Lenders),  as  amended  and the
Administrative Agent (the Borrower Security Agreement and the Guarantor Security
Agreements  being herein referred to collectively as the "Security  Agreements")
(capitalized  terms used and not  otherwise  defined  herein shall have the same
meanings as set forth in the Security  Agreements),  to the Administrative Agent
and each Lender as follows:

         1.       Names.

                  (a) There have been no  changes  since  April 26,  1996 in the
         exact  corporate  name of  Borrower  and each  Guarantor  as such  name
         appears on each such company's Certificate of Incorporation or Articles
         of Incorporation is:









                  (b) The  following  is a list of all  other  names  (including
         trade  names  or  similar  appellations)  used  by  Borrower  and  each
         Guarantor,  or any other  business  or  organization  to which any such
         company has succeeded, now or at any time since April 26, 1996:


















d-502322.6
                                                                        EXHIBITS
                                                       - 1 -

<PAGE>



         2.       Current Locations.

                  (a) Any change of the chief  executive  office of Borrower and
         each  Guarantor  since April 26, 1996 is at the address  indicated  for
         each such company below:


         Debtor:
         Mailing Address:
         County:
         State:



         Debtor:
         Mailing Address:
         County:
         State:






         (b) The following  are all other new locations  since April 26, 1996 in
the United States of America at which  Borrower or any  Guarantor  maintains any
books or records  relating  to any of the  Collateral  consisting  of  accounts,
contract rights, chattel paper, general intangibles or mobile goods:


         Debtor:
         Mailing Address:           [Complete for Borrower and each Guarantor]
         County:
         State:





         (c) The  following  are the  names  and  addresses  of all  persons  or
entities other than Borrower and each Guarantor,  such as lessees or consignees,
which since April 26, 1996 have possession or are intended to have possession of
any of the Collateral consisting of chattel paper, inventory or equipment:


         Name:
         Mailing Address:
         County:
         State:





d-502322.6
                                                                        EXHIBITS
                                                       - 2 -

<PAGE>



         3.  Capitalization.  Any changes in the  capitalization  of each of the
Subsidiaries of Borrower since April 26, 1996 is as set forth below:

                                          [Complete for each Subsidiary]


         4. Partnership Interests. Changes in the partnership interests acquired
by  Borrower  since  April  26,  1996  and  the  Subsidiaries  of  Borrower  and
information regarding each Partnership is set forth below:




         5.  Unusual  Transactions.  Except as set forth in  Schedule 1 attached
hereto,  all of the Collateral has been originated by the applicable  company in
the ordinary  course of such company's  business or consists of goods which have
been  acquired  by such  company  in the  ordinary  course  from a person in the
business of selling goods of that kind.

         EXECUTED as of April , 1998.




                                                     Cheryl Williams
                                                     Chief Financial Officer






d-502322.6
                                                                        EXHIBITS
                                                       - 1 -

<PAGE>



                                    EXHIBIT E
             FORM OF OPINION OF COUNSEL FOR BORROWER AND GUARANTORS

         1.  Borrower  is a  Delaware  corporation  duly  incorporated,  validly
existing and in good standing  under the laws of the State of Delaware,  and has
all corporate power and authority  required to own its property and carry on its
business as presently  conducted and proposed to be conducted.  Borrower is duly
qualified  or licensed to do business in each  jurisdiction  where the nature of
the  business  in which it is engaged  makes  such  qualification  or  licensing
necessary including, without limitation, the States of
                                .3

         2. Borrower has the corporate power and requisite authority to execute,
deliver and carry out the terms and  provisions of the Loan  Documents,  and all
other  documents and  instruments  delivered  pursuant to the terms of such Loan
Documents,  and has taken all corporate  action  necessary to duly authorize (i)
the execution,  delivery and performance by Borrower of the terms and provisions
of the Loan  Documents,  and (ii) the performance by Borrower of its obligations
under the Loan Documents.

         3. Each  Guarantor has the corporate  power and requisite  authority to
execute, deliver and carry out the terms and provisions of the Loan Documents to
which it is a party, and all other documents and instruments  delivered pursuant
to the  terms  of such  Loan  Documents,  and has  taken  all  corporate  action
necessary to duly authorize (i) the execution,  delivery and performance by such
Guarantor  of the terms and  provisions  of the Loan  Documents to which it is a
party,  and (ii) the performance by such Guarantor of its obligations  under the
Loan Documents to which it is a party.

         4.  Neither  the  execution  and  delivery  by  Borrower  of  the  Loan
Documents,  nor the performance by Borrower of its obligations  thereunder,  nor
compliance  by  Borrower  with  the  terms  and  provisions  thereof,  will  (a)
contravene  any  provision of law,  statute,  rule or regulation of the State of
Texas (or any political subdivision thereof) or the United States of America, to
which  Borrower is subject,  or conflict  with,  or result in any breach of, any
material agreement, mortgage, indenture, deed of trust or other instrument known
to us to which  Borrower  may be subject,  including,  without  limitation,  the
agreements set forth on Exhibit A attached hereto,  or result in the creation of
any mortgage, lien, pledge or encumbrance in respect of any property of Borrower
(other than liens in your favor), (b) contravene any judgment,  decree, license,
order or permit  known to us to be  applicable  to  Borrower,  (c)  violate  any
provision of the  certificate  of  incorporation  or bylaws of Borrower,  or (d)
violate or cause a result under any partnership agreement of any Partnership. To
the best of our  knowledge,  after  reasonable  inquiry,  no consent,  approval,
authorization  or order of any  governmental or public body or authority,  or of
any third party,  is required in  connection  with the  execution,  delivery and
performance  by Borrower of the Loan Documents or the borrowing and repayment of
money by Borrower thereunder.

         5. Neither the  execution  and delivery by the  Guarantors  of the Loan
Documents,  nor the  performance by Guarantors of their  respective  obligations
thereunder,  nor compliance by Guarantors with the terms and provisions thereof,
will (a)  contravene  any provision of law,  statute,  rule or regulation of the
State of Texas (or any  political  subdivision  thereof) or the United States of
America,  to which any Guarantor is subject,  or conflict with, or result in any
breach of, any material agreement,  mortgage,  indenture, deed of trust or other
instrument known to us to which any Guarantor may be subject, including, without
limitation,  the agreements set forth on Exhibit A attached hereto, or result in
the creation of any  mortgage,  lien,  pledge or  encumbrance  in respect of any
property of any Guarantor  (other than liens in your favor),  (b) contravene any
judgment,  decree,  license, order or permit known to us to be applicable to any
Guarantor,  (c) violate any provision of the  certificate  of  incorporation  or
bylaws of
--------
         3  Include  a  corresponding   opinion  for  each  Guarantor  and  each
Partnership.

d-502322.6
                                                                        EXHIBITS
                                                       - 1 -

<PAGE>



any Guarantor, or (d) violate or cause a default under any partnership agreement
of any Partnership.  To the best of our knowledge,  after reasonable inquiry, no
consent, approval,  authorization or order of any governmental or public body or
authority,  or of any third party, is required in connection with the execution,
delivery and  performance  by Guarantors of the Loan  Documents or the borrowing
and repayment of money by Guarantors thereunder.

         6.       ________________, __________________ of Borrower is authorized
to execute the Loan Documents on behalf of Borrower.4

         7. The Loan  Documents  to which  Borrower  is a party  have  been duly
executed,  presented  and  delivered  by Borrower and  constitute  the legal and
binding obligations of Borrower, enforceable in accordance with their respective
terms.

         8. The Loan Documents to which each Guarantor is a party have been duly
executed, presented and delivered by such Guarantor and constitute the legal and
binding  obligations of such  Guarantor,  enforceable  in accordance  with their
respective terms.

         9.  To the  best of our  knowledge,  there  are no  legal  or  arbitral
actions,  suits or  proceedings  pending or  threatened  against  Borrower,  any
Guarantor  or any  Partnership  which,  if  adversely  determined,  would have a
material  adverse  effect on the financial  condition,  operations,  properties,
assets or business of any of Borrower,  Guarantors or the Partnerships or on the
transactions contemplated in the Loan Documents.

         10. The Security  Agreements and the Pledge  Agreements create in favor
of the  Administrative  Agent, for the benefit of the Lenders,  a valid lien and
security interest, which attaches to the Collateral.

         11. Upon the filing of the  Financing  Statements  in the Office of the
Secretary  of  State of  ___________  and in the Real  Property  Records  of the
__________ County, ___________________, the liens and security interests created
by the Security Agreements shall constitute perfected,  first priority liens and
security interests in the Collateral.

         12.  ______________'s  authorized  capitalization consists of shares of
common stock, $ par value per share, of which shares are issued and outstanding.
The  outstanding  shares have been  authorized  and validly issued and are fully
paid and nonassessable.5

         13. Assuming that the  Administrative  Agent takes and keeps possession
of the Pledged Shares under the Security Agreements, all actions have been taken
to create and to perfect the security interest of the Administrative  Agent, for
the benefit of the Lenders, in the Pledged Shares.

         14. Borrower is not an "investment  company" or a company  "controlled"
by an "investment  company," within the meaning of the Investment Company Act of
1940, as amended.

         15. A Texas  court,  in a case  properly  presented,  would  uphold the
Massachusetts choice of law provisions in the Loan Documents.

         16. The Loan, as evidenced by the Loan Documents, is not usurious.
--------
         4  Similar  opinion  for each  Guarantor.  5 Similar  opinion  for each
         Guarantor.

d-502322.6
                                                                        EXHIBITS
                                                       - 2 -

<PAGE>



                                    EXHIBIT F

                         FORM OF COMPLIANCE CERTIFICATE


TO:      BankBoston, N.A., as Administrative Agent
         and each of the Lenders party to the
         Loan Agreement (hereinbelow defined)
         100 Federal Street, MS 01-08-06
         Boston, Massachusetts  02106
         Attention: Walter J. Marullo

Ladies and Gentlemen:

         The undersigned is the of PRIME MEDICAL  SERVICES,  INC.  ("Borrower"),
and is authorized to make and deliver this certificate  pursuant to that certain
Third Amended and Restated Loan  Agreement  (the "Loan  Agreement")  dated as of
April , 1998, among Borrower,  each of the Lenders or other lending institutions
which is or may from time to time become a signatory thereto (collectively,  the
"Lenders" and individually, a "Lender"), and BankBoston, N.A., as Administrative
Agent for itself and the other  Lenders  (together  with its  successors in such
capacity, the "Administrative Agent").  Capitalized terms used and not otherwise
defined herein shall have the same meanings as set forth in the Loan Agreement.

         This certificate is being delivered as of , [insert the end of the most
recent  reporting  period  required by Section 8.1(c) of the Loan Agreement (the
"Report  Date")  pursuant to Section  8.1(c) of the Loan  Agreement.  All of the
calculations  set forth on Exhibit A hereto  are as of the Report  Date and have
been made pursuant to the terms of the Loan Agreement.

         The undersigned, as an authorized officer of Borrower, hereby certifies
to the Administrative Agent and the Lenders that:

         1. Defaults. No Default has occurred and is continuing, or if a Default
has occurred,  Exhibit B attached  hereto  describes the nature  thereof and the
steps taken or to be taken by Borrower to remedy such Default.

         2. Representations. The representations and warranties contained in the
Loan  Agreement and each of the other Loan Documents are true and correct on and
as of the date hereof with the same force and effect as if made on and as of the
date hereof, except to the extent that such representations and warranties speak
to a specific date or the facts on which such representations and warranties are
based have been changed by transactions permitted by the Loan Documents.

         3.  Calculations.  Attached  hereto as schedules  are the  calculations
supporting  the  computations  set forth in  Exhibit A hereto.  All  information
contained in Exhibit A and on the attached schedules is true and correct.

         4.  GAAP  Financial  Statements.  The  unaudited  financial  statements
attached  hereto,  if any,  were  prepared  in  accordance  with GAAP and fairly
represent (subject to year-end audit  adjustments) the financial  conditions and
results of operations of the Companies on a consolidated  or  consolidating,  as
the case may be, basis as of the date and for the periods indicated therein.


d-502322.6
                                                                        EXHIBITS
                                                       - 1 -

<PAGE>



         IN WITNESS  WHEREOF,  the  undersigned  has  executed  this  Compliance
Certificate effective this day of , .



                                                              By:
                                                                  Name:
                                                                  Title:




d-502322.6
                                                                        EXHIBITS
                                                       - 2 -

<PAGE>



                                    EXHIBIT A
                                       TO
                             COMPLIANCE CERTIFICATE


                                  CALCULATIONS

A.       Total Net Debt to EBITDA.

         1.       Aggregate Debt of the Companies $

         2.       Aggregate Cash and Cash Equivalents of the Companies $

         3.       Base Amount of Cash $8,000,000.

         4.       Cash Held for Distribution to Limited Partners

         5.       Excess Cash [2 - (3 +4)], never <0

         6.       Net Debt of the Companies [1-5], never <0

         7.       EBITDA of the Companies (From EBITDA
                  Calculation below)

         8.       Ratio of Total Net Debt to EBITDA (6/7)

         9.       Maximum Permitted 1
--------
         1 Maximum permitted for the following periods:


            Period                                             Ratio
January 1, 1998 through December 31, 2000                   3.50 to 1.0
January 1, 2001 through December 31, 2001                   3.25 to 1.0
January 1, 2002 and thereafter                              3.00 to 1.0
======================================================== =======================


d-502322.6
                                                                        EXHIBITS
                                                       - i -

<PAGE>



B.       Senior Net Debt to EBITDA Ratio.

         1.       Aggregate Debt of the Companies $

         2.       Subordinated Debt of the Companies $

         3.       Aggregate Senior Debt of the Companies (1 - 2)

         4.       Aggregate Cash and Cash Equivalents of the Companies

         5.       Base Amount of Cash $8,000,000

         6.       Cash Held for Distribution to Limited Partners

         7.       Excess Cash [4 - (5 + 6)], never <0

         8. Senior Net Debt of the Companies [1 - 5], never <0

         9.       EBITDA of the Companies (From EBITDA
                  Calculation below)

         10.      Ratio of Senior Net Debt to EBITDA ( 8/ 9)

         11.      Maximum Permitted2
--------
         2 Minimum required for the following periods:


                       Period                                   Ratio
January 1, 1998 through December 31, 2000                    2.50 to 1.0
January 1, 2001 through December 31, 2001                    2.25 to 1.0
January 1, 2002 and thereafter                               2.00 to 1.0
=====================================================  =========================


d-502322.6
                                                                        EXHIBITS
                                                      - ii -

<PAGE>



C.       Total Debt Service Coverage Ratio.

         1.       EBITDA (from calculation below) $

         2.       Less:  Capital Expenditures $

         3.       Less: Cash Taxes $

         4.       EBITDA less Capital Expenditures and
                  Cash Taxes (1 - (2 + 3))  $

         5.       Total Interest Expense $

         6.       1/7 of Outstanding Principal Amount of Loans $

         7.       Total Debt Service (5 + 6) $

         8.       Ratio of EBITDA to Total Debt Service (4 / 7)

         9.       Minimum Required 3


--------
         3 Minimum Required for the following periods:


                       Period                                      Ratio
As of the last day of each fiscal quarter of                   1.50 to 1.0
Borrower  thereafter,  commencing January 31, 1998
 through December 31, 2000, in
each case for the four (4) fiscal quarters then ended
-----------------------------------------------------  -------------------------
As of the last day of each fiscal quarter of                   1.60 to 1.0
Borrower thereafter from January 1, 2001
through December 31, 2001
As of the last day of each fiscal quarter                      1.75 to 1.0
commencing January 1, 2002
=====================================================  =========================



d-502322.6
                                                                        EXHIBITS
                                                      - iii -

<PAGE>



D.       Consolidated Net Worth.

         1.       Consolidated Net Worth  $

         2.       Required Minimum:

                  a.       Base Minimum ($                    ) $
                                          --------------------

                  b.       Plus:  Beginning  June 30, 1998, an amount $ equal to
                           one  hundred  percent  (100%) of the  increase in net
                           worth arising from any acquisition or equity issuance
                           during  such  fiscal  quarter (or in the case of June
                           30, 1998, the last two fiscal quarters)

                  c.       Plus: Beginning June 30, 1998, an amount $
                           equal to seventy-five percent (75%) of
                           Consolidated Net Income for each fiscal
                           quarter (or in the case of June 30, 1998,
                           the last two fiscal quarters)

                  d.       Less: Any stock repurchases by Borrower $
                           of its capital stock, not exceeding
                           $15,000,000.00

         Total Required Minimum: $


d-502322.6
                                                                        EXHIBITS
                                                      - iv -

<PAGE>



E.       EBITDA Calculation

         1.       EBITDA From Financial Statements

         2.       EBITDA From Permitted Acquisitions
                  Generated Prior to Respective Acquisition Dates

         3.       Actual EBITDA from Permitted Passive
                  Investments

         4.       Maximum  Allowable EBITDA from Permitted  Passive  Investments
                  (15% of (1))

         5.       Lesser of 3 and 4                               ______________

         6.       Total Allowable Proforma Historical EBITDA (1 + 2 + 5)



d-502322.6                                                              EXHIBITS
                                                       - v -

<PAGE>



F.       Changes in Permitted Passive Investments.

         Permitted  Passive  Investments  which  during the last fiscal  quarter
         ceased being Permitted Passive Investments:

         1.       Name of Permitted Passive Investments:




         2. Date Borrower or Guarantors first Controlled such entities:




         3. Description of how Control was obtained:





d-502322.6
                                                                        EXHIBITS
                                                      - vi -

<PAGE>



                                                     EXHIBIT G

                                        PERMITTED ACQUISITION CERTIFICATION

Borrower hereby to the Administrative Agent and Lenders that:

1.       The name of the Person, or from which the business or assets to be, 
acquired is            .
            -----------

2.       The proposed Acquisition by Borrower or its Guarantor is of a business,
         assets or Person which is engaged in substantially the same lithotripsy
         business  as the  lithotripsy  business  conducted  by Borrower or such
         Guarantor,   or  any  other  lithotripsy  business  reasonably  related
         thereto.

3        The  Acquisition  has been  approved  and  recommended  by the board of
         directors  or  other  applicable  governing  body of the  Person  to be
         acquired or from which such business or assets are to be acquired.

4.       After giving effect to such Acquisition, Borrower or the Guarantor that
         is the acquiring party is Solvent and the Companies,  on a consolidated
         basis, are Solvent.

5.       After  giving  effect to such  Acquisition,  no Default  shall exist or
         occur as a result of, and after giving effect to, such Acquisition.

6.       If such Acquisition is a merger,  Borrower or the Guarantor that is the
         acquiring  party will be the  surviving  entity after giving  effect to
         such merger;

7.       (a)      The aggregate purchase price with respect to such Acquisition 
is $                              ;
    ------------------------------

         (b)      The  EBITDA of the  Person  acquired  (for the four (4) fiscal
                  quarters ending on the most recently ended fiscal period prior
                  to the date of the Acquisition) times five (5) is $ ; and

         (c)      The excess of (b) over (a) is $             .
                                                 -------------

8.       The  aggregate  consideration  for such  Acquisition  does  not  exceed
         $20,000,000.00,   and  the  aggregate   cash   consideration   for  all
         Acquisitions during the immediately  preceding twelve (12) month period
         does not exceed $40,000,000.00.

9. After giving effect to the Acquisition:

         (a)      The  aggregate  Net  Debt  of  the  Companies  (including  any
                  Advances under the Commitments) will be $ .

         (b)      The EBITDA of the Companies  (including EBITDA for the Person,
                  assets or business  acquired  pursuant to the Acquisition) for
                  the four (4)  fiscal  quarters  ending on the  closing  of the
                  Acquisition is $ .

         (c)      Applicable  number  pursuant to the  definition  of "Permitted
                  Acquisition" times (b) = $ .

         (d) Borrower or a Guarantor shall Control the Target.

d-502322.6
                                                                        EXHIBITS
                                                       - i -

<PAGE>



                                    EXHIBIT H

                    PERMITTED PASSIVE INVESTMENT CERTIFICATE


Borrower hereby to the Administrative Agent and Lenders that:

1.       The name of the Person, or from which the business or assets to be,
acquired is                          .
            -------------------------

2.       The proposed Permitted Passive Investment by Borrower or a Guarantor is
         of Equity Interests of a Person which is engaged in  substantially  the
         same lithotripsy business as the business conducted by Borrower or such
         Guarantor,   or  any  other  lithotripsy  business  reasonably  related
         thereto.

3        The Permitted  Passive  Investment has been approved and recommended by
         the board of directors or other applicable governing body of the Person
         whose Equity Interests to be acquired,  if required by law or governing
         documents.

4.       After giving effect to such Permitted Passive  Investment,  Borrower or
         the Guarantor that is the acquiring party is Solvent and the Companies,
         on a consolidated basis, are Solvent.

5.       After giving effect to such Permitted  Passive  Investment,  no Default
         shall exist or occur as a result of, and after  giving  effect to, such
         Permitted Passive Investment.

6.       (a)      The aggregate purchase price with respect to such Permitted 
                  Passive Investment is
                  $                   ;

         (b)      Original Purchase Price of all other existing Permitted
                  Passive Investments is
                  $                   ;

         (c)      Aggregate Permitted Passive Investment (a plus b) is
                  $                         .
                   -------------------------

7.       (a)      Total Equity is:  $                        ;
                                     ------------------------

         (b)      Amount of Permitted Passive Investments (the lesser of  20% of
                 (a) or $50,000,000) is
                  $                    .
                   --------------------

8.       Amount of remaining Permitted Passive Investments (7(b) minus 6(c) is 
                  $                    ).
                   --------------------

For purposes of the  calculations  hereunder  any Permitted  Passive  Investment
which  as of the  date  of this  Certificate  is  Controlled  by  Borrower  or a
Guarantor shall not be treated as a Permitted Passive Investment.


d-502322.6
                                                                        EXHIBITS
                                                       - i -

<PAGE>



                                    EXHIBIT I

               PERMITTED OTHER BUSINESS ACQUISITION CERTIFICATION


Borrower hereby to the Administrative Agent and Lenders that:

1.       The name of the Person, or from which the business or assets to be,
acquired is                          .
            -------------------------

2.       The proposed  Permitted  Other  Business  Acquisition  by Borrower or a
         Guarantor  is of a  business,  assets or  Person  which is  engaged  in
         substantially the same physician practice management, prostatherapy, or
         trailer/tractor  servicing business as such businesses are conducted by
         Borrower or such Guarantor, or any other physician practice management,
         prostatherapy, or trailer/tractor servicing business reasonably related
         thereto.

3        The  Permitted  Other  Business   Acquisition  has  been  approved  and
         recommended  by the board of  directors or other  applicable  governing
         body of the Person to be acquired or from which such business or assets
         are to be acquired.

4.       After  giving  effect to such  Permitted  Other  Business  Acquisition,
         Borrower or the Guarantor  that is the  acquiring  party is Solvent and
         the Companies, on a consolidated basis, are Solvent.

5.       After giving effect to such Permitted  Other Business  Acquisition,  no
         Default  shall exist or occur as a result of, and after  giving  effect
         to, such Permitted Other Business Acquisition.

6.       If such Permitted Other Business  Acquisition is a merger,  Borrower or
         the Guarantor that is the acquiring party will be the surviving  entity
         after giving effect to such merger;

7.       (a)      The aggregate purchase price with respect to such Permitted 
                  Other Business Acquisition
                  is $              ;

         (b)      The  EBITDA of the  Person  acquired  (for the four (4) fiscal
                  quarters ending on the most recently ended fiscal period prior
                  to the date of the Acquisition) times five (5) is $ ; and

         (c)      The excess of (b) over (a) is $             .
                                                 -------------

8.       The  aggregate   consideration   for  all  Permitted   Other   Business
         Acquisition(s) does not exceed $5,000,000.00.





                                    SCHEDULES
                                                       - i -

<PAGE>



                                    EXHIBIT J

        PERMITTED NON-BORROWER OR NON-GUARANTOR ACQUISITION CERTIFICATION


Borrower hereby to the Administrative Agent and Lenders that:

1.       The name of the Person, or from which the business or assets to be,
         acquired is                          .
                     -------------------------

2.       The  proposed   Permitted   Acquisition,   Permitted   Other   Business
         Acquisition,  or  Permitted  Passive  Investment  (the  "Other  Company
         Acquisition") by a Company (other than Borrower or a Guarantor) ("Other
         Company")  is of a  business,  assets or  Person  which is  engaged  in
         substantially  the same  lithotripsy,  physician  practice  management,
         prostatherapy, or trailer/tractor servicing business as such businesses
         are  conducted  by any  Company,  or any other  lithotripsy,  physician
         practice management, prostatherapy, or trailer/tractor service business
         reasonably related thereto.

3        The Other Company  Acquisition has been approved and recommended by the
         board of directors or other applicable  governing body of the Person to
         be acquired or from which such business or assets are to be acquired.

4.       After giving  effect to such Other Company  Acquisition,  Other Company
         that  is the  acquiring  party  is  Solvent  and  the  Companies,  on a
         consolidated basis, are Solvent.

5.       After  giving  effect to such  Acquisition,  no Default  shall exist or
         occur as a result of, and after  giving  effect to, such Other  Company
         Acquisition.

6.       If such Other Company  Acquisition  is a merger,  Other Company that is
         the acquiring party will be the surviving entity after giving effect to
         such merger;

7.       (a)      The aggregate purchase price with respect to such Other 
                  Company Acquisition is
                  $                  ;

         (b)      The  EBITDA of the  Person  acquired  (for the four (4) fiscal
                  quarters ending on the most recently ended fiscal period prior
                  to the date of the Acquisition) times five (5) is $ ; and

         (c)      The excess of (b) over (a) is $             .
                                                 -------------

8.       The aggregate consideration for all Other Company Acquisitions does not
         exceed  the  lesser  of:  (a)  $3,000,000.00;  and (b) 3% of the  Total
         Equity.





d-502322.6
                                                                       SCHEDULES
                                                      - ii -

<PAGE>



                                   SCHEDULE 1

                       COMMITMENTS AND WIRING INFORMATION



                  Administrative Agent
BankBoston, N.A.
100 Federal Street, MS 01-08-06
P.O. Box 2016
Boston, Massachusetts 02106
Attention: Walter J. Marullo
Fax No.:  (617)  434-0819
Telephone No.:  (617) 434-2318

Wiring Instructions:

Bank Boston, N.A.
ABA # 011-000-390
Reference:  Prime Medical Services, Inc.
Attention:  HT & ENV SVCS. ADM 50, 60
Account # 540-99647
            Lender                                            Commitment
--------------------------------------------------------------------------------
BankBoston, N.A.                                             $20,000,000.00
100 Federal Street, MS 01-08-06
P.O. Box 2016
Boston, Massachusetts 02106
Attention: Walter J. Marullo
Fax No.: (617)  434-0819
Telephone No.:  (617) 434-2318

Wiring Instructions:

Bank Boston, N.A.
ABA # 011-000-390
Reference:  Prime Medical Services, Inc.
Attention:  HT & ENV SVCS. ADM 50, 60
Account # 540-99647
NationsBank of Texas, N.A.                                   $20,000,000.00
515 Congress Avenue, 11th Floor
Austin, Texas  78701
Attention:  Teena E. Belcik
Fax No.:  (512) 397-2052
Telephone No.:  (512) 397-2841

Wiring Instructions:

NationsBank of Texas, N.A.
1401 Elm Street
Dallas, Texas  75202
Credit Account No. 0180019828
ABA # 111000025
Reference: Prime Medical Services, Inc.
Attention:  Teena E. Belcik
--------------------------------------------------------------------------------


d-502322.6
                                                                       SCHEDULES
                                                      - iii -

<PAGE>



100 Federal Street, MS 01-08-06
P.O. Box 2016
Boston, Massachusetts 02106
Attention: Walter J. Marullo
Fax No.:  (617)  434-0819
Telephone No.:  (617) 434-2318

Wiring Instructions:
 iring Instructions:
Bank Boston, N.A.
ABA # 011-000-390
Reference:  Prime Medical Services, Inc.
Attention:  HT & ENV SVCS. ADM 50, 60
Account # 540-99647
                         Lender                                 Commitment
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Bank One, Texas, N.A.                                             $10,000,000.00
221 West 6th Street, Suite 200
Austin, TX  78701
Attention:  Ed Lick
Fax No.: (512) 479-1565
Telephone No.: (512) 479-5730

Wiring Instructions:

Bank One, Texas, N.A.
ABA # 111000614
Acct: 0749905618
Reference: Prime Medical Services, Inc.
Loan Acct #: 1517169342
Attention: Lora Roberts
Telephone No.: (817) 884-4399
--------------------------------------------------------------------------------
Credit Lyonnais New York Branch                                   $10,000,000.00
1301 Avenue of the Americas
New York, NY 10019-6022
Attention: John Oberle
Fax No.: (212) 261-3440
Telephone No.: (212) 261-7344

Wiring Instructions:

Credit Lyonnais New York Branch
ABA # 0260-0807-3
Reference: Prime Medical Services
Loan Acct #: 01-88179-3701
Attention:  Loan Servicing
Telephone No.: (212) 261-7313
                                                        ------------------------
Fleet National Bank                                               $10,000,000.00
One Federal Street
Mail Stop: MA OF DO7B
Boston, MA 02110
Attention: Ginger Stolzenthaler
Fax No.: (617) 346-4689
Telephone No.: (617) 346-4618

Wiring Instructions:

Fleet National Bank
ABA # 011000138
Reference: Prime Medical Svs.
Loan Acct #: G/L 1510351-03156
Attn:
Telephone No.: (617) 346-5490
                                                        ------------------------


d-502322.6
                                                                       SCHEDULES
                                                      - iv -

<PAGE>



100 Federal Street, MS 01-08-06
P.O. Box 2016
Boston, Massachusetts 02106
Attention: Walter J. Marullo
Fax No.:  (617)  434-0819
Telephone No.:  (617) 434-2318

Wiring Instructions:
 iring Instructions:
Bank Boston, N.A.
ABA # 011-000-390
Reference:  Prime Medical Services, Inc.
Attention:  HT & ENV SVCS. ADM 50, 60
Account # 540-99647
                         Lender                                       Commitment
--------------------------------------------------------------------------------
                                                          ----------------------
Imperial Bank                                                     $10,000,000.00
226 Airport Parkway
San Jose, CA 95110
Attention: Kelly Davis
Fax No.: (408) 451-8586
Telephone No.: (408) 451-8589

Wiring Instructions:

Imperial Bank
9920 South La Cienga Blvd.
Inglewood, CA  90301
Attn: Santa Clara Valley Regional Office
Routing # 122201444
Account Name to Credit: Prime Medical
Account Number to Credit: 717 015211

                     -----------------------------------------------------------
LaSalle National Bank                                             $10,000,000.00
135 South LaSalle Street
Chicago, IL 60603
Attention: Jody Staszeky
Fax No.: (312) 904-6457
Telephone No.: (312) 904-5416

Wiring Instructions:

LaSalle National Bank
135 S. LaSalle Street
Chicago, IL 60603
ABA # 071000505
Credit Account No.: 1378018-7300
Attention: Pam Seitz
Telephone No.: (312) 904-8113
                                 -----------------------------------------------


d-502322.6
                                                                       SCHEDULES
                                                       - v -

<PAGE>



100 Federal Street, MS 01-08-06
P.O. Box 2016
Boston, Massachusetts 02106
Attention: Walter J. Marullo
Fax No.:  (617)  434-0819
Telephone No.:  (617) 434-2318

Wiring Instructions:
 iring Instructions:
Bank Boston, N.A.
ABA # 011-000-390
Reference:  Prime Medical Services, Inc.
Attention:  HT & ENV SVCS. ADM 50, 60
Account # 540-99647
                         Lender                                       Commitment
--------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
Cooperatieve Centrale Raiffeisen-                                 $10,000,000.00
Boerenleenbank B.A. "Rabobank Nederland,"
New York Branch, Rabobank
245 Park Avenue
New York, NY  10167
Attention:  Corporate Services Department
Fax No.: (212) 818-0233
Telephone No.: (212) 916-7800

With a Carbon Copy to:

Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A. "Rabobank Nederland,"
13355 Noel Road
Suite 1000
Dallas, TX 75240-6645
Attention: J. David Thomas
Fax No.: (972) 419-6315
Telephone No.: (972) 419-5266

Wiring Instructions:

Bank of New York for account of Rabobank
Nederland
ABA No.: 021000018
Name of Account: Rabobank Nederland
Account Number: 8026002533
Attention: Corporate Services
For further credit to: Prime Medical Services
--------------------------------------------------------------------------------



d-502322.6
                                                                       SCHEDULES
                                                      - vi -

<PAGE>



                                   SCHEDULE 2

                               LIST OF GUARANTORS

1.        Prime Medical Operating, Inc., a Delaware corporation
2.        Prime Management, Inc., a Nevada Corporation
3.        Prime Cardiac Rehabilitation Services, Inc., a Delaware corporation
4.        Prime Diagnostic Services, Inc., a Delaware corporation
5.        Prime Lithotripsy Services, Inc., a New York corporation
6.        Prime Kidney Stone Treatment, Inc., a New Jersey corporation
7.        Prime Diagnostic Corp. of Florida, a Delaware corporation
8.        Prime Lithotripter Operations, Inc., a New York corporation
9.        Prime Practice Management, Inc., a New York corporation
10.       Texas Litho, Inc., a Delaware corporation
11.       R.R. Litho, Inc., a Texas corporation
12.       Ohio Litho, Inc., a Delaware corporation
13.       Alabama Renal Stone Institute, Inc., an Alabama corporation
14.       Sun Medical Technologies, Inc., a California corporation
15.       Sun Acquisition, Inc., a California corporation
16.       Lithotripters, Inc., a North Carolina corporation
17.       Prime Medical Management, L.P., a Delaware limited partnership
18.       Prostatherapies, Inc., a Delaware corporation
19.       FastStart, Inc., a North Carolina corporation
20.       National Lithotripters Association, Inc., a North Carolina corporation
21.       MedTech Investments, Inc. a North Carolina corporation
22.       Executive Medical Enterprises, Inc., a Delaware corporation




d-502322.6
                                                                       SCHEDULES
                                                       - i -

<PAGE>



                                   SCHEDULE 3

                              LIST OF PARTNERSHIPS

1.                Metro Atlanta Stonebusters, G.P.
2.                Shasta Diagnostic Medical Group, J.V.
3.                Southern California Stone Center, L.L.C.
4.                Kidney Stone of South Florida, L.C.
5.                Texas ESWL/Laser Lithotripter, Ltd.
6.                Ohio Mobile Lithotripter, Ltd.
7.                Ohio Mobile Lithotripter II, Ltd.
8.                ARKLATX Mobile Lithotripter Limited
9.                Northern California Kidney Stone Center, Ltd.
10.               Mobile Kidney Stone Centers, Ltd.
11.               Northern California Lithotripsy Associates
12.               Lithotripsy Institute of Northern California
13.               California I Prostatherapy, L.P.
14.               North Carolina Prostatherapy, L.P. 1
15.               AK Associates, L.L.C.
16.               Great Lakes Lithotripsy Partnership, L.P.
17.               Fayetteville Lithotripters Limited Partnership - Arizona I
18.               Fayetteville Lithotripters Limited Partnership - Arkansas I
19.               California Lithotripter Limited Partnership II, L.P.
20.               Florida Lithotripters Limited Partnership I
21.               Indiana Lithotripters Limited Partnership I
22.               Louisiana Lithotripters Investment Limited Partnership
23.               Fayetteville Lithotripters Limited Partnership - Louisiana I
24.               Montana Lithotripters Limited Partnership I
25.               Pacific Medical Limited Partnership
26.               San Diego Lithotripters Limited Partnership
27.            Fayetteville Lithotripters Limited Partnership - South Carolina I
28.           Fayetteville Lithotripters Limited Partnership - South Carolina II
29.               Tennessee Lithotripters Limited Partnership
30.               Texas Lithotripsy Limited Partnership I L.P.
31.               Texas Lithotripsy Limited Partnership II L.P.
32.               Texas Lithotripsy Limited Partnership IV L.P.
33.               Texas Lithotripsy Limited Partnership V L.P.
34.               Fayetteville Lithotripters Limited Partnership - Utah I
35.               Fayetteville Lithotripters Limited Partnership - Virginia I
36.               California Lithotripters Limited Partnership III, L.P.
37.               Las Vegas Lithotripters Limited Partnership
38.               Mountain Lithotripsy Limited Partnership - I
39.               Texas Lithotripsy Limited Partnership III L.P.
40.               Pacific Lithotripsy
41.               Mountain Lithotripsy
42.               Texas Lithotripsy Limited Partnership VI, L.P.
43.               TENN-GA Stone Group Two, G.P.
44.               Carolina Lithotripsy
45.               California Lithotripsy Joint Venture
46.               Texas Lithotripsy Joint Venture, L.L.C.


d-502322.6
                                    SCHEDULES
                                                       - i -

<PAGE>



                                  SCHEDULE 7.5

                               EXISTING LITIGATION


ROBERT E.  COMPTON and BRUCE DUNN,  vs.  ROBERT DALE,  M.D.,  INC., a California
professional  corporation;  ROBERT DALE; KERSTEN KRAFT, M.D., INC., a California
professional  corporation;  KERSTEN KRAFT, SAM JOHNSON; DONALD MARUSKA; NORTHERN
CALIFORNIA KIDNEY STONE CENTER, LTD., a California limited  partnership;  MOBILE
KIDNEY STONE CENTERS OF CALIFORNIA,  LTD., a California limited partnership; SUN
MEDICAL TECHNOLOGIES,  INC., a California  corporation;  PRIME MEDICAL SERVICES,
INC.,  a Texas  corporation;  MOBILE  KIDNEY STONE  CENTERS,  INC., a California
corporation;   HEALTH  ADVANTAGE  VENTURES,  a  California  corporation;  HEALTH
DIMENSIONS,  INC., a California corporation;  and DOES 1 through 200, Inclusive,
filed in the Superior  Court of the State of  California,  County of Santa Cruz,
No. 133464 (Partners Derivative Action-Corporations Code ss.15702).


d-502322.6
                                                                       SCHEDULES
                                                       - i -

<PAGE>



                                  SCHEDULE 7.9

                                  EXISTING DEBT

1.       Promissory Note dated December 15, 1994,  issued by Mobile Kidney Stone
         Centers  of  California,  Ltd.  I to  Imperial  Bank in the  amount  of
         $400,000.00.
         Current Balance $200,000.00

2.       Promissory Note dated August 5, 1991,  issued by Texas Litho,  Inc., to
         Texas ESWL/Laser Lithotripter, Ltd., in the amount of $15,000.00.
         Current Balance $15,000.00

3.       Promissory  Note dated August 1, 1991,  issued by Ohio Litho,  Inc., to
         Ohio Mobile Lithotripter, Ltd., in the amount of $10,000.00.
         Current Balance $10,000.00

4.       Promissory Note dated December 17, 1990, issued by R.R. Litho, Inc., to
         ARKLATX Mobile Lithotripter, Limited, in the amount of $10,000.00.
         Current Balance $10,000.00

5.       Promissory Note dated December 31, 1995, issued by Ohio Litho, Inc., to
         Ohio Mobile Lithotripter II, Ltd., in the amount of $30,000.00.
         Current Balance $30,000.00

6.       Equipment  Lease dated July 28, 1993 between  Copelco Leasing Corp. and
         Sun Medical Technology, Inc., in the amount of $28,097.00.
         Current Balance $4,886.85

7.       Promissory  Note  dated  February  6,  1996,   issued  by  Fayetteville
         Lithotripters  Limited  Partnership - Arizona I, to First Citizens Bank
         in the amount of $1,500,000.00.
         Current Balance $408,111.43

8.       Promissory Note dated August 26, 1996,  issued by Mountain  Lithotripsy
         Limited  Partnership  I,  to  First  Citizens  Bank  in the  amount  of
         $1,459,706.25.
         Current Balance $823,746.26

9.       Promissory  Note  dated  April  16,  1996,  issued by  Florida  Limited
         Partnership I, to First Citizens Bank in the amount of $1,435,000.00.
         Current Balance $194,547.78

10.      Promissory  Note  dated  November  14,  1995,  issued  by  Fayetteville
         Lithotripters Limited Partnership - South Carolina I, to First Citizens
         Bank in the amount of $600,000.00.
         Current Balance $16,944.11

11.      Promissory Note dated December 29, 1995, issued by R.R. Litho, Inc., to
         ARKLATX Mobile Lithotripter, L.P., in the amount of $66,000.00.
         Current Balance $66,000.00

12.      Promissory Note dated December 31, 1996,  issued by Ohio Litho Inc., to
         Ohio Mobile Lithotripter, Ltd., in the amount of $30,890.00.

d-502322.6
                                                                       SCHEDULES
                                                       - i -

<PAGE>



         Current Balance $30,890.00

13.      Promissory  Note dated May 1, 1997,  issued by Pacific Medical L.P., to
         First Citizens Bank in the amount of $1,652,014.00.
         Current Balance $1,225,490.05

14.      All sums due pursuant to the Senior  Subordinated  Notes and the
         guaranties thereof.

15.      All sums due pursuant to outstanding  earn-out  obligations,  including
         sums payable to (a) AK Associates, L.L.C.; (b) TENN-GA Stone Group Two,
         G.P.; and (c) Executive Medical Enterprises, Inc.





d-502322.6
                                                                       SCHEDULES
                                                      - ii -

<PAGE>



                                 SCHEDULE 7.14.1

                         CAPITALIZATION OF SUBSIDIARIES



    Company Name        Class/Series    Par Value      Authorized    Outstanding
--------------------------------------------------------------------------------

Subsidiaries 100% Owned 
   by Prime Medical
   ----------------
Services, Inc.
Prime Medical 
   Operating, Inc.       Common            $.05         10,000             1,000
Texas Litho, Inc.        Common            $.01          1,000             1,000
R.R. Litho, Inc.         Common            $.01        100,000             1,000
Ohio Litho, Inc.         Common            $.01          1,000             1,000
Lithotripters, Inc.      Common            no par      100,000            40,000
FastStart, Inc.          Common            no par      100,000            10,000
National Lithotripters
   Association, Inc.     Common            no par      100,000               100
Prostatherapies, Inc.    Common            no par        1,000               100
Executive Medical
   Enterprises, Inc.     Common            no par        1,000               246
MedTech Investments, 
   Inc.                  Common            $.01         11,000             5,375

Subsidiaries 100% Owned
   by Prime Medical
-----------------------
Operating, Inc.
Prime Management, Inc.   Common            $1.00         1,000             1,000
Prime Cardiac 
     Rehabilitation
     Services, Inc.      Common            no par          100                50
Prime Diagnostic 
     Services, Inc.      Common            no par          100               100
Prime Lithotripsy
     Services, Inc.      Common            no par          200                60
Prime Diagnostic Corp.
     of Florida          Common            no par          100               100
Prime Lithotripter
     Operations, Inc.    Common            no par          200               200
Prime Practice 
     Management, Inc.    Common            $.01          1,000               100
Sun Medical 
     Technologies, Inc.  Common            no par   37,751,525         5,385,313
                         Preferred-A       no par    3,853,475         3,853,475
                         Preferred-B       no par   18,395,000        12,703,265

Subsidiaries 100% Owned by
     Prime Lithotripsy
     Services, Inc.
     --------------
Prime Kidney Stone
     Treatment, Inc.     Common            no par        1,000             1,000
Alabama Renal Stone
     Institute, Inc.     Common            $1.00         1,000             1,000

Subsidiaries 100% Owned
     by Sun Medical
     Technologies, Inc.
     ------------------
Sun Acquisition, Inc.    Common            no par  10,000,000            100,000



d-502322.6
                                                                       SCHEDULES
                                                       - i -

<PAGE>



                                 SCHEDULE 7.14.2


                          LIST OF PARTNERSHIP INTERESTS
                               OWNED BY COMPANIES


                                                                            %

1.       Metro Atlanta Stonebusters, G.P.                                  60.00
2.       Shasta Diagnostic Medical Group, J.V.                             50.00
3.       Southern California Stone Center, L.L.C.                          32.50
4.       Kidney Stone of South Florida L.C.                                70.00
5.       Texas ESWL/Laser Lithotripter, Ltd.                               19.57
6.       Ohio Mobile Lithotripter, Ltd.                                    18.7
7.       Ohio Mobile Lithotripter II, Ltd.                                 27.33
8.       ARKLATX Mobile Lithotripter Limited                              19.552
9.       Northern California Kidney Stone Center, Ltd.                      38.1
10.      Mobile Kidney Stone Centers, Ltd.                                 50.50
11.      Northern California Lithotripsy Associates                        50.05
12.      Lithotripsy Institute of Northern California                      50.05
13.      Fayetteville Lithotripters Limited Partnership - Arizona I        34.41
14.      Fayetteville Lithotripters Limited Partnership - Arkansas I       40.66
15.      California Lithotripters Limited Partnership II, L.P.             20.00
16.      Florida Lithotripters Limited Partnership I                       22.15
17.      Indiana Lithotripters Limited Partnership I                      26.699
18.      Louisiana Lithotripters Investment Limited Partnership            10.43
19.      Fayetteville Lithotripters Limited Partnership - Louisiana I    27.4483
20.      Montana Lithotripters Limited Partnership I                       54.00
21.      Pacific Medical Limited Partnership                               41.00
22.      San Diego Lithotripters Limited Partnership                      29.329
23.      Fayetteville Lithotripters Limited Partnership - 
           South Carolina I                                                 39.5
24.      Fayetteville Lithotripters Limited Partnership -
           South Carolina II                                               32.33
25.      Tennessee Lithotripters Limited Partnership                       33.00
26.      Texas Lithotripsy Limited Partnership I L.P.                      46.50
27.      Texas Lithotripsy Limited Partnership II L.P.                     46.00
28.      Texas Lithotripsy Limited Partnership IV L.P.                     50.00
29.      Texas Lithotripsy Limited Partnership V L.P.                      45.91
30.      Fayetteville Lithotripters Limited Partnership - Utah I           34.41
31.      Fayetteville Lithotripters Limited Partnership - Virginia I      37.959
32.      California Lithotripters Limited Partnership III, L.P.            17.71
33.      Las Vegas Lithotripters Limited Partnership                       28.00
34.      Mountain Lithotripsy Limited Partnership - I                      44.00


d-502322.6
                                                                       SCHEDULES
                                                       - i -

<PAGE>




                                                                           %

35.      Texas Lithotripsy Limited Partnership III L.P.1                  55.458
36.      Pacific Lithotripsy, G.P.                                        90.91
37.      Mountain Lithotripsy, G.P.                                       80.00
38.      AK Associates, LLC                                               75.00
39.      California I Prostatheraphy, L.P.                                25.875
40.      North Carolina Prostatherapy, LP                                 26.75
41.      Great Lakes Lithotripsy Partnership, L.P.                        20.00
42.      Texas Lithotripsy Limited Partnership VI, L.P.                   34.50
43.      California Lithotripsy Joint Venture2                            19.58
44.      Texas Lithotripsy Joint Venture, L.L.C.2                         47.07
45.      TENN-GA Stone Group Two, G.P.                                    38.25
46.      Carolina Lithotripsy                                              4.74
                                                                ----------------











                  --------------------------------------------------------------

1    Includes Companies' G.P. and L.P. interests.

2 Includes Companies' direct/indirect ownership interests.


d-502322.6
                                                                       SCHEDULES
                                                      - ii -

<PAGE>



                                  SCHEDULE 7.15

                                   AGREEMENTS



                                See Schedule 7.9.



d-502322.6
                                                                       SCHEDULES
                                                       - i -

<PAGE>



                                  SCHEDULE 7.16

                       COMPLIANCE WITH LEGAL REQUIREMENTS;
                           GOVERNMENTAL AUTHORIZATIONS


     1. Prime  Kidney  Stone  Treatment,  Inc.  ("PKST"),  a  subsidiary  of the
Company,  currently provides mobile  lithotripsy  equipment at four hospitals in
Illinois. Lithotripters are regulated by the Illinois Health Facilities Planning
Board ("Board"), which requires the issuance of a certificate of need ("CON") or
a written  exemption  before  initiating  lithotripsy  services or  purchasing a
lithotripter.   PKST  currently  provides  lithotripsy  equipment  at  the  four
hospitals  pursuant  to  contracts  it  obtained  in its  acquisition  of  Fazio
Consulting,  Inc., in 1994.  Fazio  Consulting  had purchased the contracts from
Executive  Medical  Enterprises,  Inc., in 1993. To the best  knowledge of PKST,
Executive Medical Enterprises was authorized to provide lithotripsy equipment at
the four hospitals pursuant to exemptions which are granted by the Board in 1988
and 1990.
         In 1997, a number of CON regulatory issues came to light. The following
have been identified:

         (a)      Although PKST believes that Executive Medical  Enterprises was
                  initially authorized to provide lithotripsy equipment pursuant
                  to  exemptions  granted  by the  Board,  PKST  has no  written
                  evidence that such exemptions were granted. PKST's belief that
                  exemptions  were  issued  may be  incorrect,  and  PKST may be
                  providing  lithotripsy equipment at the four hospitals without
                  a CON or an exemption.

         (b)      PKST  was not a party  to the  original  exemptions  which  it
                  believes  were  issued  by  the  Board.  Therefore,  it is not
                  certain  as to  the  scope  of  the  exemptions.  The  Board's
                  issuance of the exemptions may have been  conditioned on terms
                  of which PKST is not aware. These terms may have been violated
                  by Executive Medical Enterprises, Fazio Consulting or PKST. If
                  violations  have  occurred,  the  exemptions  may no longer be
                  valid.

         (c)      PKST has not given notice to the Board or received the Board's
                  consent regarding the acquisition of the hospital  lithotripsy
                  equipment  contracts  in 1994  from  Fazio  Consulting.  Under
                  Illinois  CON law,  the consent of the Board is  necessary  in
                  such  transactions.  To the  best  knowledge  of  PKST,  Fazio
                  Consulting  did not give  notice to the Board or  receive  its
                  consent regarding the acquisition of the hospital  lithotripsy
                  equipment  contracts  from  Executive  Medical  Enterprises in
                  1993.  PKST  must  obtain  the  consent  of the Board to these
                  changes, and such consent may not be granted.

         If the Board determines that PKST is providing lithotripsy equipment at
the four hospitals  without a valid CON or exemption,  or if it determines  that
conditions to the CONs or  exemptions  have been  violated,  or if it determines
that PKST or Fazio  Consulting has acted wrongfully by not obtaining the consent
of the Board  regarding the  acquisition of the hospital  lithotripsy  equipment
contracts,   then  the  Board  may  prevent  PKST  from  continuing  to  provide
lithotripsy  equipment at the four  hospitals.  In addition,  the Board may fine
PKST in an amount up to  $10,000  per  hospital,  for a  potential  exposure  of
$40,000.  PKST has hired  health  care  counsel in  Illinois  to work with it in
addressing these issues.


d-502322.6
                                                                       SCHEDULES
                                                       - i -

<PAGE>




2.       Fast Start, Inc., a North Carolina corporation - The corporation is not
         in good standing due to failure to timely file its state  franchise tax
         report.

3.       MedTech   Investments,   Inc.,  a  North  Carolina  corporation  -  The
         corporation  is not in good  standing due to failure to timely file its
         state franchise tax report.

4.       National Lithotripters Association,  Inc., a North Carolina corporation
         - The  entity  is a  non-profit  corporation  which,  by  law,  may  be
         proscribed from  guaranteeing or securing the debt of other individuals
         or entities.

d-502322.6
                                                                       SCHEDULES
                                                      - ii -

<PAGE>



                                  SCHEDULE 7.19

                              ENVIRONMENTAL MATTERS


NONE.




d-502322.6
                                                                       SCHEDULES
                                                       - i -

<PAGE>



                                  SCHEDULE 9.2

                                      LIENS

<TABLE>
<S>                         <C>                   <C>                           <C>      <C>               <C>   

                                                                                             DATE AND
                                                                                               TIME               DESCRIPTION
NAME                          LOCATION                SECURED PARTY             FILE NO.    OF FILING            OF COLLATERAL
----                          --------                -------------             --------    ---------            -------------
Fayetteville Lithotripters  Cumberland County     First-Citizens Bank & Trust   001613  February 15, 1996  All accounts receivable, 
Limited Partnership         North Carolina        P.O. Box 27568                          at 9:00 a.m.     1 Siemens Lithostar  
Arizona I                   Register of Deeds     Raleigh, NC 27611                                        extracorporeal shock-wave
                                                                                                           lithotripter and
                                                                                                           Calumet Coach Lithostar 
                                                                                                           S/N 4005                 

Fayetteville Lithotripters  North Carolina        First-Citizens Bank & Trust   1309915 February 15, 1996  All accounts receivable, 
Limited Partnership         Secretary of State    Company                                 at 8:00 a.m.     1 Siemens Lithostar
Arizona I                                         P.O. Box 27568                                           extracorporeal shock-wave
                                                  Raleigh, NC 27611                                        lithotripter and Calumet
                                                                                                           Coach Lithostar S/N 4005
                                                                               

Fayetteville Lithotripters  Cumberland County,    First-Citizens Bank & Trust   010956  November 14, 1995  All accounts receivable
Limited Partnership         North Carolina        Company                                                  and 1 Lithostar 
South Carolina I            Register of Deeds     P.O. Box 27568                                           extracorporeal shock-wave
                                                  Raleigh, NC 27611                                        lithotripter   

Fayetteville Lithotripters  North Carolina        First-Citizens Bank & Trust   1281907 November 15, 1995  All accounts receivable 
Limited Partnership         Secretary of State    Company                                   at 8:00 a.m.   and 1 Lithostar 
South Carolina I                                  P.O. Box 27568                                           extracorporeal
                                                  Raleigh, NC 27611                                        shock-wave lithotripter 
                                                  
Florida Lithotripters       Florida Secretary     First-Citizens Bank & Trust   950000078107 April 18,1995 All accounts receivable
Partnership I               of State              Company                                     at 8:00 a.m.
                                                  P.O. Box 27568
                                                  Raleigh, NC 27611

Lithotripters, Inc.         North Carolina        First-Citizens Bank & Trust   1294590 December 28, 1995  1 Lithostar S/N 1187 
                            Secretary of State    Company                                  at 8:00 a.m.    and Calumet Coach VIN 
                                                  P.O. Box  27568                                          44KFB648XKW217061
                                                  Raleigh NC  27611

Mountain Lithotripsy        Colorado Secretary    First-Citizens Bank & Trust   952045460 June 15, 1995    1 1995 Western Star 
Limited Partnership I       of State              Company                                   at 12:37 p.m.  tractor-trailer
                                                  P.O. Box 789                                             VIN2WKPDCJH8SK936895
                                                  Fayetteville, NC 28302                                   with Siemens Medical 
                                                                                                           Systems, Inc. Lithostar
                                                                                                           extracorporeal shock-
                                                                                                           with Siemens Medical
                                                                                                           Systems, Inc. Lithostar
                                                                                                           extracorporeal shock-
                                                                                                           wave lithotripter S/N 
                                                                                                           04004 and all accounts
                                                                                                           receivable

</TABLE>


                                    SCHEDULE
                                                               - i -

<PAGE>



 <TABLE>
<S>                         <C>                   <C>                           <C>      <C>               <C>   
                                                                                            DATE AND
                                                                                             TIME            DESCRIPTION
NAME                          LOCATION                 SECURED PARTY            FILE NO.   OF FILING        OF COLLATERAL
----                          --------                 -------------            --------   ---------        -------------
Mountain Lithotripsy        Cumberland County,     First-Citizens Bank & Trust  005722    June 14, 1995    1 1995 Western Star
Limited Partnership I       North Carolina         Company                                                 tractor-trailer VIN     
                            Register of Deeds      P.O. Box 789                                            2WKPDCJH8SK936895      
                                                   Fayetteville, NC 28302                                  with Siemens Medical    
                                                                                                           Systems, Inc. Lithostar 
                                                                                                           extracorporeal shock-   
                                                                                                           wave lithotripter S/N
                                                                                                           04004 and all accounts  
                                                                                                           receivable
                                                                                                                                  
Mountain Lithotripsy        Nebraska Secretary of  First-Citizens Bank & Trust  659814   June 14, 1995     1 1995 Western Star
Limited Partnership I       State                  Company                                at 10:09 a.m.    tractor-trailer
                                                   P.O. Box 789                                            VIN2WKPDCJH8SK936895 with
                                                   Fayetteville, NC 28302                                  Siemens Medical Systems,
                                                                                                           Inc. Lithostar 
                                                                                                           extracorporeal shock-wave
                                                                                                           lithotripter S/N 04004
                                                                                                           and all accounts
                                                                                                           receivable              
                                                                                                                                   
Mountain Lithotripsy        North Carolina         First-Citizens Bank & Trust  1235086   June 15, 1995     1 1995 Western Star 
Limited Partnership I       Secretary of State     Company                                 at 8:00 a.m.     tractor-trailer VIN    
                                                   P.O. Box 789                                            2WKPDCJH8SK936895 with
                                                   Fayetteville, NC 28302                                  Siemens Medical Systems, 
                                                                                                           Inc. Lithostar 
                                                                                                           extracorporeal shock-wave
                                                                                                           lithotripter S/N 04004
                                                                                                           and all accounts         
                                                                                                           receivable              

Prime Diagnostic Corp.     Texas Secretary         Copelco Leasing Corporation  93-154508 Aug. 9, 1993  1 Alpha III System 160
of Florida                 of State                1700 Suckle Highway                                     Diagnostic Mammography
                                                   Pennsauken, NJ 08110                                    System S/N A31916


Prime Diagnostic Corp.     Texas Secretary         U.S. Concord, Inc.           92-163143 Aug. 17, 1992 1 Toshiba America Medical 
of Florida                 of State                40 Richards Avenue                       at 8:00 a.m.   Systems Model SSA-270A
                                                   Norwalk, CT 06856                                       Ultrasound System with
                                                                                                           Spectral and Color 
                                                                                                           Doppler including all
                                                                                                           parts, accessories and
                                                                                                           attachments
                                                                                                                                    
Prime Lithotripter         Alabama Secretary       Alabama Lithotripsy          94-33480  Sept. 6, 1994    Brother fax machine, 
Operations, Inc.           of State                Associates, Inc.                         at 2:30 p.m.   Panasonic telephone, desk
                                                   2055 E South Boulevard,                                 with return, computer    
                                                   Suite 507                                               work station, 2 metal   
                                                   Montgomery, AL 36116                                    shelves, wooden shelf,  
                                                                                                           metal file cabinet,     
                                                                                                           telephone number lease 
                                                                                                           agreements, accounts     
                                                                                                           receivable, prepaid      
                                                                                                           maintenance, all 
                                                                                                           governmental licenses
                                                                                                           listed in Sch 3.6, and
                                                                                                           all contract rights 
                                                                                                           listed in Sch 3.12      
d-502322.6
                                                                                                                            SCHEDULE
                                                               - ii -
</TABLE>


<PAGE>



<TABLE>
<S>                         <C>                   <C>                           <C>      <C>               <C>   
                                                                                             DATE AND
                                                                                               TIME            DESCRIPTION
NAME                            LOCATION             SECURED PARTY              FILE NO.     OF FILING         OF COLLATERAL
----                            --------             -------------              --------     ---------         -------------
Prime Lithotripter          Texas Secretary       Alabama Lithotripsy           94-174429  Sept. 6, 1994   Brother fax machine, 
Operations, Inc.            of State              Associates, Inc.                          at 8:00 a.m.   Panasonic telephone, desk
                                                  2055 E. South Boulevard                                  with return, computer
                                                  Suite 507                                                work station, 2 metal    
                                                  Montgomery, AL 36116                                     shelves, wooden shelf, 
                                                                                                           metal file cabinet,      
                                                                                                           telephone number lease
                                                                                                           agreements, accounts     
                                                                                                           receivable, prepaid
                                                                                                           insurance, prepaid      
                                                                                                           maintenance, 
                                                                                                           all governmental licenses
                                                                                                           listed Sch 3.6, and all 
                                                                                                           contract rights listed in
                                                                                                           Sch 3.12

Prime Lithotripter          Alabama Secretary     Baptist Medical Center        94-33113  Sept. 2, 1994    Mon-A Therm Monitor, CO2 
Operations, Inc.            of State              Montclair                                at 11:57 p.m.   Monitor, Anesthesia Unit,
                                                  3500 Blue Lake Drive                                     Monitor - Dinamap 8100,  
                                                  Birmingham, AL  35243                                    Curix Auto Processor, 
                                                                                                           Lithotripter Unit, 
                                                                                                           I.R.I.S. Unit, Personal 
                                                                                                           Computer, Printer -
                                                                                                           Thermal, NEC Monitor, and
                                                                                                           Lithotripsy Trailer     

Sun Medical                 California Secretary  Copelco Leasing Corporation   93162570   Aug. 9, 1993    1 Versyss computerized
Technologies, Inc.          of State              1700 Suckle Highway                       at 8:00 a.m.   billing system with    
                                                  Pennsauken, NJ 08110                                     hardware and software



</TABLE>