Exhibit 10.48
                           STOCK TRANSFER RESTRICTION
                                       AND
                             SHAREHOLDERS AGREEMENT


         This  Stock  Transfer  Restriction  and  Shareholders  Agreement  (this
"Agreement")  dated as of  January  1, 1998,  by and among  American  Physicians
Service Group, Inc., a Texas corporation  ("APS"),  Barton Acquisition,  Inc., a
Texas  corporation  (the  "Corporation"),  Barton  House,  Ltd., a Texas limited
partnership  ("Barton  House"),  Barton  House at Oakwell  Farms,  Ltd., a Texas
limited partnership  ("Oakwell"),  Uncommon Care, Inc., a Texas corporation (the
"General Partner"), George R. Bouchard ("Bouchard"),  John H. Trevey ("Trevey"),
Uncommon Partners, Ltd., a Texas limited partnership (the "Limited Partner") and
the  additional  parties  listed  on  Appendix  I hereto  (each  an  "Additional
Purchaser"  and  collectively  the  "Additional  Purchasers").  Barton House and
Oakwell are sometimes collectively referred to herein as the "Partnerships."

                              PRELIMINARY STATEMENT

         The parties  hereto desire to enter into this  Agreement to control the
distribution  of  ownership  interests  in the  Corporation  and to promote  the
harmonious management of the Corporation's affairs.
<PAGE>

                             STATEMENT OF AGREEMENT

         NOW,  THEREFORE,  in consideration of the premises and mutual covenants
contained  herein and for other good,  valuable and binding  consideration,  the
receipt and  sufficiency of which are hereby  acknowledged,  the parties hereto,
intending to be legally bound hereby, agree as follows:

                                    ARTICLE I
                       DEFINITIONS; PERMISSIBLE TRANSFERS

         For  purposes  of this  Agreement,  each party  hereto,  other than the
Corporation,  is  hereinafter  sometimes  referred  to  as a  "Shareholder"  and
collectively  as the  "Shareholders."  For purposes of this Agreement all issued
and outstanding  capital stock of the  Corporation,  together with any hereafter
acquired,  whether common, preferred or otherwise, is hereinafter referred to as
the "Shares."

         The parties  hereto  acknowledge  and agree  that,  as of the date this
Agreement is initially entered into, the General Partner,  Bouchard,  Trevey and
the  Limited  Partner do not own any  Shares of the  Corporation.  However,  all
parties  hereto agree that any and all Shares  which either of the  Partnerships
obtains, either directly or indirectly, pursuant to the transactions consummated
in connection  with the execution of this Agreement,  that certain  Contribution
and Stock Purchase  Agreement dated effective January 1, 1998 (the "Contribution
Agreement")  or  any  other  document,   agreement  or  instrument  executed  in
connection with or contemplated 

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<PAGE>

by the Contribution Agreement, shall be promptly
transferred to the General Partner, Bouchard, Trevey and/or the Limited Partner,
as the case may be, and that neither of the  Partnerships  shall continue to own
any Shares as a result of this  Agreement,  the  Contribution  Agreement or such
other  agreements.  All  parties  hereto  agree that such  transfer of Shares by
either of the Partnerships to the General Partner,  Bouchard,  Trevey and/or the
Limited Partner,  in a single transaction,  shall be a permissible  transfer for
purposes of this Agreement. However, except for the transfer of Shares by Trevey
or  Bouchard  to  any  of  the  APS  Indemnified  Parties  (as  defined  in  the
Contribution  Agreement)  in  payment  of  an  indemnity  obligation  under  the
Contribution  Agreement (which shall also be a permissible transfer for purposes
hereof),  any other or further transfer,  assignment,  pledge,  hypothecation or
other alienation of any Shares or any interest  therein,  shall in every respect
be subject to the terms and  conditions of this  Agreement.  The parties  hereto
further  acknowledge  and agree that if,  upon the  permissible  transfer of all
Shares owned by the Partnerships to the other parties hereto as described above,
so that neither of the Partnerships own any Shares or any interest therein, each
of the Partnerships  shall no longer be bound by the terms of this Agreement and
shall no longer have any rights hereunder.

         The parties  hereto further  acknowledge  and agree that APS shall have
unrestricted  rights  to  freely  assign or  transfer  any of its  Shares to any
entity, the majority of whose voting equity securities is then owned directly or
indirectly by APS (an "APS Entity");  provided,  however,  that such entity must
sign a  counterpart  of this  Agreement,  and provided  further such entity must
transfer  any Shares  transferred  to it (and may do so without  any  consent or
option arising  hereunder) back to APS or another APS Entity (who must then sign
a  counterpart  hereof) in the event,  but prior to, such entity no longer being
majority owned, directly or indirectly, by APS.

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<PAGE>

                                   ARTICLE II
                          RESTRICTIONS AGAINST TRANSFER

         Except as otherwise provided in this Agreement, a Shareholder shall not
transfer,  assign, pledge, hypothecate or in any way alienate any Shares, or any
interest  therein,  whether  voluntarily  or by  operation of law, or by gift or
otherwise,  without (a) the prior unanimous written consent of APS, Bouchard and
Trevey  or  (b)  in  the  case  of  a  pledge  or  hypothecation,   the  written
acknowledgment  of the lender,  in form and substance  reasonably  acceptable to
APS,  Bouchard  and Trevey,  that the lender will hold such Shares (or  interest
therein) subject to all of the terms and provisions of this Agreement,  and will
not foreclose upon or otherwise  transfer any such Shares,  or interest therein,
without  complying  with the  provisions  hereof,  including  those  relating to
options  to  purchase  the Shares by the other  parties  hereto.  Any  purported
transfer in  violation  of any  provision  of this  Agreement  shall be void and
ineffectual,  shall  not  operate  to  transfer  any  interest  or  title to the
purported  transferee and shall give the Corporation and the other  Shareholders
options to purchase such Shares in the manner and on the conditions  hereinafter
provided.

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<PAGE>

                                   ARTICLE III
                                     OPTIONS

         Section 3.1  Option Upon Voluntary Transfer.

         (a) Notice of Intention  to  Transfer.  Subject to (e) below and except
for a  transfer  of Shares by APS  pursuant  to Article I hereof,  no  voluntary
transfer  of any  Shares  or any  interest  therein,  shall,  without  the prior
unanimous  written  consent of APS,  Trevey and  Bouchard in each  instance,  be
allowed  for a  period  of two (2)  years  after  the  date  of this  Agreement.
Thereafter,  if a Shareholder intends to voluntarily  transfer any of its Shares
to any  person  other  than the  Corporation  and does not  obtain  the  written
consents  required  in Article II hereof,  the  Shareholder  shall give  written
notice to the Corporation and the other  Shareholders  stating (i) the intention
to transfer Shares, (ii) the number of Shares to be transferred, (iii) the name,
business and residence address of the proposed  transferee,  (iv) the nature and
amount of the consideration and (v) the other terms of the proposed sale.

         (b) Option to Purchase.  The  Corporation  shall have, and may exercise
within 60 days after  receipt of the notice of intent to transfer,  an option to
purchase all or any portion of the Shares owned by the transferring  Shareholder
for the  price  and upon the  other  terms  stated  in the  notice  of intent to
transfer.  If the Corporation  elects not to purchase all or any portion of such
Shares,  it shall,  prior to the  expiration of said 60-day  period,  notify the
other Shareholders in writing of its election,  and the other Shareholders shall
have, and may exercise within 30 days of 

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<PAGE>

receipt of the Corporation's  notice of
election,  an option to purchase such unpurchased Shares upon the same terms and
conditions.

         (c) Death Before  Closing.  If a  Shareholder  who proposed to transfer
Shares dies prior to the closing of the sale and purchase  contemplated  by this
Section,  the Shares of such deceased  Shareholder  shall be the subject of sale
and purchase under Section 3.3 hereof.

         (d) Allowable  Consideration.  All parties hereto acknowledge and agree
that it would be impractical to exercise an option to purchase  arising pursuant
to this  Section  whenever  the  proposed  consideration  to be  received by the
transferring  Shareholder is other than cash, cash  equivalents or an obligation
to pay cash by a person whose credit  worthiness  and  financial  status is such
that  performance  of  the  payment  obligation  would  be  reasonably  assured.
Therefore,  the parties agree that no transfer  shall be permitted and no option
shall arise pursuant to this Section  whenever the  consideration to be received
from the  proposed  transferee  is  other  than  cash,  cash  equivalents  or an
obligation to pay cash by a person whose credit  worthiness and financial status
is such that performance of the payment obligation would be reasonably assured.

         (e) Certain Exempted Voluntary Transfers. Notwithstanding the foregoing
or any other  provision of this  Agreement,  upon providing  written notice (and
without any requirement of consent),  as provided for herein, to the Corporation
and all other Shareholders: (i) any Shareholder may transfer Shares to any other
Shareholder,  at any time,  without  obtaining the written consent hereunder and
without giving rise to any Options provided for hereunder; (ii) Bouchard, Trevey
and the Limited Partner Permitted Assigns (as hereinafter  defined) may transfer


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<PAGE>

their Shares to their spouse,  children,  siblings,  parents or trust(s) created
exclusively for the benefit of their spouse, children,  siblings or parents, but
only to the extent of, and subject to, the provisions described below; and (iii)
the Limited  Partner may transfer its Shares to the following  parties (but only
to the extent of, and subject to, the provisions  described  below):  LTZ, Inc.,
Lebermann Investment,  J.V., Roger Minard, William Greehey, Stan McLelland,  and
Matt Mathias (the "Limited  Partner  Permitted  Assigns").  For purposes of this
subsection (e), "trust" shall be deemed to include a family limited partnership,
joint  venture or other entity,  as long as all of the equity  interests of such
family  limited  partnership,  joint  venture  or other  entity are owned by the
transferring Shareholder's spouse, children, siblings or parents.

         The  transfer  rights of Trevey and  Bouchard  described in clause (ii)
above  may only be made as  follows:  (A)  prior to  January  1,  2000,  no such
transfer shall be allowed and (B) during each calendar year beginning January 1,
2000,  Trevey and  Bouchard  shall each be entitled  to  transfer  the number of
Shares, whether received directly or indirectly,  representing up to twenty five
percent (25%) of his initial proportionate ownership interest in the Corporation
as  determined  immediately  following  the  consummation  of  all  transactions
contemplated  in  connection  with this  Agreement  (including  the  permissible
transfers  from the  Partnerships  under Article I hereof) and the  Contribution
Agreement, on a cumulative basis.

         Furthermore,  the  transferee  receiving  such Shares as  described  in
clause (ii) of the first  sentence of this  Section,  whether an  individual  or
trust, (X) shall grant (and maintain in place  thereafter) an irrevocable  proxy
to the transferring  Shareholder in form and substance reasonably  acceptable to
APS, (Y) shall  execute and deliver a  counterpart  of this  Agreement,  and (Z)
shall not receive by reason of such  transfer  any rights to benefits  from,  or
under,  the provisions for  registration  rights  contained in Article X of this
Agreement; provided, however, that the original transferring Shareholder (either
Trevey,  Bouchard or any of the Limited Partner Permitted  

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<PAGE>

Assigns,  as the case
may be), in their sole  discretion,  may elect (by notifying the  Corporation to
that effect in writing  during the 10-day  period for giving notice of intent to
include  Covered Shares in a registration  as  contemplated  in Section 10.1) to
allow the transferee hereunder to assume such registration rights, but only with
respect to such  Shares  described  in clause (ii) above and only as, and to the
extent, otherwise provided in Article X.

         Each of the Limited Partner  Permitted Assigns which may receive Shares
described in clause (iii) above,  whether an individual  or other entity,  shall
execute and deliver a counterpart of this Agreement and shall receive, by reason
of such transfer, registration rights pursuant to Article X of this Agreement.

         Section 3.2  Option Upon Certain Involuntary Transfers.

         (a) Exercise Event and Notice. The filing of a voluntary or involuntary
petition of  bankruptcy  by or on behalf of a  Shareholder,  an  assignment by a
Shareholder of any of its Shares, or of any right or interest  therein,  for the
benefit of creditors,  or the voluntary  transfer,  transfer by law or any other
transfer,  of any  Shares,  or of any  right or  interest  therein  (other  than
transfers governed by Article I, Article II, Section 3.1, Section 3.3 or Section
3.4 hereof), shall give the Corporation and the other Shareholders the option to
purchase the Shares of such bankrupt  Shareholder or such transferred  Shares as
provided  herein.  Upon the filing of a  voluntary  or  involuntary  petition of
bankruptcy by or on behalf of a Shareholder  or an assignment by  Shareholder of
any of its  Shares,  or of any right or  interest  therein,  for the  benefit of
creditors,  the Shareholder or its personal  representative  shall promptly give
written  notice  of  

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<PAGE>

such  occurrence  to  the  Corporation  and  to  the  other
Shareholders.  In the event of a transfer of Shares,  as  described  above,  the
Shareholder  transferring such Shares shall promptly give written notice of such
transfer to the Corporation and to the other Shareholders.

         (b) Option to Purchase.  The  Corporation  shall have, and may exercise
within 60 days after receipt of the notice of the applicable  exercise event, an
option to  purchase  all or any portion of the Shares  owned by the  bankrupt or
transferring  Shareholder  for the price and upon the  other  terms  hereinafter
provided.  If the Corporation  elects not to purchase all or any portion of such
Shares,  it shall,  prior to the  expiration of said 60-day  period,  notify the
other  Shareholders  in writing of its election.  The other  Shareholders  shall
have,  and may  exercise  within  thirty  (30) days of  receipt of the notice of
election,  an option to purchase such unpurchased  Shares for the price and upon
the other terms hereinafter provided.

         Section  3.3  Transfer  of  Shares  Upon  Death.  Upon  the  death of a
Shareholder,  any transfer of Shares of the deceased Shareholder pursuant to the
Shareholder's  last  will or the laws of  descent  and  distribution  shall be a
permitted transfer for purposes of this Agreement and shall not give rise to any
option to  purchase or require the  acquiror  to execute a  counterpart  of this
Agreement.

         Section 3.4 Option Upon Death of a Shareholder's Spouse, Termination of
Marital Relationship or Partition of Community Property.

         (a)  Death  of   Shareholder's   Spouse.   Each  Shareholder  and  each


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<PAGE>

Shareholder's  spouse  agree  that in the  event  the  spouse  of a  Shareholder
predeceases  such  Shareholder  and such  Shareholder  does not  succeed  by the
spouse's  last  will  and  testament  or by  operation  of law  to any  interest
(including,  without limitation, a community property interest) of the spouse in
the Shares,  such Shareholder  shall have, and may exercise within 60 days after
the death of the  spouse,  an  option  to  purchase  all or any  portion  of the
spouse's interest for the price and upon the other terms  hereinafter  provided.
If the  Shareholder  spouse  elects not to  purchase  all or any  portion of the
deceased spouse's interest, it shall, prior to expiration of said 60-day period,
notify the  Corporation  and the other  Shareholders in writing of its election.
The  Corporation  shall then have, and may exercise within 30 days of receipt of
the election, an option to purchase the unpurchased,  deceased spouse's interest
for the price and upon the other terms hereinafter  provided. If the Corporation
elects not to purchase all or any portion of the deceased spouse's interest,  it
shall, prior to expiration of said 30-day period,  notify the other Shareholders
in  writing of its  election  and the other  Shareholders  shall  have,  and may
exercise  within 30 days of  receipt  of  election,  an option to  purchase  the
unpurchased,  deceased  spouse's interest for the price and upon the other terms
hereinafter provided.

         (b)  Termination  of Marital  Relationship  or  Partition  of Community
Property. In the event a divorce,  annulment or other proceeding for termination
of the marital  relationship  is filed by or against a Shareholder,  or upon the
initiation  of any voluntary or  involuntary  attempt to partition the community
property  estate  between a Shareholder  and such  Shareholder's  spouse for any
reason,  the  Shareholder  shall promptly give written notice to the Corporation
and the other  Shareholders of such event.  The Shareholder  shall have, and may
exercise within sixty (60) days of giving of such notice,  an option to purchase
all or  any  portion  of the  spouse's  right  to or  

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<PAGE>

interest  in  such  Shares
(including without limitation any community  property  interest),  for the price
and upon the other terms hereinafter  provided. If the Shareholder elects not to
purchase  all or any  portion  of the  spouse's  interest,  it  shall,  prior to
expiration  of said  60-day  period,  notify the  Corporation  in writing of its
election and the  Corporation  shall have,  and may exercise  within thirty (30)
days of receipt of such election, an option to purchase the unpurchased spouse's
interest  for the price and upon the other terms  hereinafter  provided.  If the
Corporation  elects not to purchase all or any portion of the spouse's interest,
it  shall,  prior  to  expiration  of  said  30-day  period,  notify  the  other
Shareholders in writing of its election and the other  Shareholders  shall have,
and may exercise within thirty (30) days of receipt of such election,  an option
to purchase the unpurchased  spouse's  interest for the price and upon the other
terms hereinafter provided.

         Section 3.5  Alternate  Notices.  The failure of any person,  whether a
party to this  Agreement or  otherwise,  to give notice of the  occurrence of an
Exercise Event (as defined in Section 5.3 hereof) as  contemplated  herein shall
not operate to prevent the  creation of any option which would  otherwise  arise
pursuant to this Article.  Any party to this Agreement who has actual  knowledge
of the occurrence of an Exercise  Event may give the required  written notice of
the occurrence of an Exercise Event,  and upon the giving of such written notice
the  options  shall be created and become  exercisable  to the same extent as if
such notice was given by the party initially contemplated above.

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<PAGE>

                                   ARTICLE IV
                  EXERCISE OF OPTIONS; EFFECT OF NON-EXERCISE;
                                 CO-SALE RIGHTS

         Section 4.1 Manner of Exercise of Options.  All options  granted in, or
arising  pursuant to,  Article III hereof shall be exercised by a written notice
to that  effect  delivered  within the time  provided  for the  exercise  of the
option.

         Section  4.2  Complete  Exercise  of  Options.  The  holders of options
granted in, or arising pursuant to, Article III hereof must,  either alone or in
the  aggregate,  exercise the options in such a manner as to purchase all of the
Shares (or interest therein) subject to such options, and failure to do so shall
cause a forfeiture of the options.  Where one or more Shareholders  elect not to
exercise such options,  the other  Shareholders  shall be entitled to assume the
options not exercised on a pro rata basis pursuant to Section 4.3.

         Section 4.3 Multiple Option  Holders.  In cases where an option is held
by more than one Shareholder,  each purchasing  Shareholder shall be entitled to
purchase his or her  proportionate  share of the Shares subject to the option. A
Shareholder's proportionate share shall equal the total number of Shares subject
to the option  multiplied  by a fraction the numerator of which is the number of
Shares held by such Shareholder and the denominator of which shall be the number
of Shares held by all Shareholders electing to exercise the option.

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<PAGE>

         Section  4.4  Effect of  Non-Exercise  of  Options.  If the  holders of
options  granted or arising  pursuant to this  Agreement do not  exercise  their
options,  or such  options  are  forfeited,  as provided  herein,  the person or
persons  acquiring the Shares (or interest therein) that were the subject of the
options shall execute a counterpart  of this Agreement and become a party hereto
and shall  hold such  Shares  subject to all the terms and  conditions  provided
herein, and any transfer of such Shares (or interest therein) shall only be made
in accordance with the terms and conditions  provided  herein.  In the event the
person or persons  acquiring the Shares (or interest  therein) fail to execute a
counterpart of this Agreement and become a party hereto,  such transfer shall be
void and  ineffectual and shall not operate to transfer any interest or title to
the  purported  transferee,  and such  Shares  shall  thereafter  be  subject to
cancellation  and  extinguishment  by  the  Corporation,  without  consideration
therefor.  In addition,  in the event of a transfer subject to the provisions of
Article  III hereof,  upon the lapse or  forfeiture  of all the options  arising
pursuant to that Article,  the transferor shall have the right to effectuate the
transfer of Shares in  accordance  with the terms stated in the notice of intent
to transfer or notice of Exercise Event (as  applicable),  and the transferee of
such Shares shall  execute and become a party to this  Agreement  and shall hold
such  Shares  subject  to all of its terms  and  conditions.  Provided  further,
however, any such transfer of Shares shall be void and ineffectual and shall not
operate to transfer any interest or title to the  purported  transferee,  if (a)
for voluntary  transfers under Section 3.1 hereof,  the transfer is not upon the
terms or is not to the transferee  stated in the notice of intent to transfer or
(b) for all transfers giving rise to options  pursuant  hereto,  the transfer is
not closed within thirty (30) days of receipt of written  notice of the election
not to exercise,  or the  forfeiture of, all  applicable  options;  and upon the
occurrence  of  events  or  conditions  described  in (a) or (b) the  transferor


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<PAGE>

desiring to effect such transfer  must again comply with the notice,  option and
other  requirements  of this  Agreement  prior to any  transfer of any Shares or
interest therein.

         Section  4.5  Co-Sale  Rights.  In the  event of a  voluntary  transfer
pursuant to the  provisions  of Section 3.1  (except for  transfers  pursuant to
subsection (e) of Section 3.1) by Bouchard,  Trevey, APS or the Limited Partner,
the holders not exercising  their options granted  pursuant to Section 3.1 shall
be entitled to include,  upon the same terms and  conditions  as provided in the
notice required by Section 3.1(a), their Shares in such voluntary transfer, on a
pro rata basis based on the ratio of total  Shares  owned by those  having these
co-sale rights and the Shareholder receiving the voluntary transfer offer.

                                    ARTICLE V
                                 PURCHASE PRICE

         Section  5.1  Purchase  Price.  The  purchase  price  of  Shares  to be
purchased pursuant to options granted, held or exercised pursuant to Section 3.2
and  Section 3.4  hereof,  shall be the amount  calculated  in  accordance  with
Section 5.2 hereof.

         Section  5.2  Calculation  of  Purchase   Price.   When  determined  in
accordance  with this  Section,  the  purchase  price for Shares or any  portion
thereof or spouse's  interest therein shall be equal to an amount agreed upon by
the seller and the buyer or buyers  electing to purchase such Shares  hereunder.
In the event that no such  agreement is reached within thirty (30) days prior to
the closing of such purchase and sale,  the purchase price per Share shall equal
the  Book  Value  

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<PAGE>

(as  hereinafter  defined)  of the  Shares  to be  transferred
determined as of the Valuation Date (as hereinafter  defined).  However,  at the
written  request  of either the seller or any of the  proposed  purchasers,  the
purchase price shall equal the Appraised Value (as  hereinafter  defined) of the
Shares as of the Valuation Date,  reduced when necessary to reflect the purchase
of less than a one hundred  percent (100%)  interest in each of the Shares to be
transferred (for example:  reduced by one-half when a spouse's  interest is only
an undivided  one-half  community  property  interest in each of the Shares of a
Shareholder spouse). For purposes of this Agreement,  the "Book Value" per Share
shall be determined by subtracting  the total  liabilities of the Corporation as
of the  Valuation  Date  from the  total  assets  of the  Corporation  as of the
Valuation  Date,  and  dividing  such amount by the  aggregate  number of Shares
issued and  outstanding as of the Valuation  Date. Book Value per Share shall be
determined using the Corporation's  unaudited,  internally  generated  financial
statements  prepared on the accrual  basis of  accounting  consistent  with past
practices.  The Book Value per Share so computed shall be reduced when necessary
to reflect the purchase of less than a one hundred  percent  (100%)  interest in
each of the  Shares to be  transferred.  For  purposes  of this  Agreement,  the
"Appraised  Value" per Share  shall be the fair  market  value per Share which a
willing buyer would pay a willing seller for all issued and  outstanding  shares
of capital stock of the  Corporation  where neither is under any  compunction to
act (without any premium or discount for controlling interests, or lack thereof,
or lack of established market for such capital stock). The Appraised Value shall
be determined by a certified  business  appraiser,  selected by the Corporation,
that is a member of either the American  Society of  Appraisers or the Institute
of Business Appraisers;  but if a Shareholder  disagrees with such determination
that Shareholder may, at its expense,  have another certified business appraiser
that is a member of one or both of the above  named  professional  organizations


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<PAGE>

determine the value, and if the two appraisers  cannot agree upon a value,  they
shall mutually select a third certified business appraiser (that meets the above
described  membership  requirements)  who  shall,  together  with the  first two
appraisers,  determine  the value of the Shares by majority  vote.  The combined
expenses  of all  appraisals  shall  be paid  solely  by the  party  or  parties
requesting to utilize such method of determining the purchase price.

         Section 5.3 Certain  Definitions.  As used herein,  the term "Valuation
Date"  shall mean and refer to the end of the  calendar  quarter  preceding  the
Exercise Event. As used herein,  the term "Exercise  Event" shall mean and refer
to the event or  circumstance  described  in Article III hereof,  as a result of
which  the  Corporation  or a  Shareholder,  as the  case  may  be in the  first
instance, become entitled to exercise a purchase option hereunder.

                                   ARTICLE VI
                          PAYMENT OF THE PURCHASE PRICE

         Section 6.1 Payment.  Except as otherwise  provided in this  Agreement,
including Section 3.1 hereof, the purchase price for Shares to be purchased from
a selling party shall either: (a) be paid in cash at the closing;  or (b) at the
option of the  purchasing  party,  up to seventy  percent  (70%) of the purchase
price may be deferred with the remainder  paid in cash at the closing.  However,
option (b) of the  foregoing  sentence  shall not be  available  if the  selling
Shareholder  is the  Limited  Partner or any of the  Limited  Partner  Permitted
Assigns.

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<PAGE>

         Section 6.2 Promissory  Note. If the  purchasing  party elects to defer
part of the purchase  price by the execution and delivery of a promissory  note,
the deferred  portion of the price shall be evidenced by the promissory  note of
the  purchasing  party to the order of the selling  party  payable in sixty (60)
equal monthly  installments of principal and interest on or before the first day
of each  month  beginning  the month next  following  the date of  closing.  The
interest rate for such  installment  promissory note shall be equal to the prime
or base rate on corporate loans at large U.S. money center  commercial  banks as
published in the "Money Rates" column of the Wall Street  Journal on the date of
exercise of the option to purchase  (or,  if such option is not  exercised  on a
date on which such rate is published, the next following date on which such rate
is  published).  In no event shall the  interest  rate exceed the maximum  legal
interest rate then  prevailing for such  obligations in the state of Texas.  The
note  shall  be  secured  by a  first  lien  security  interest  in  the  Shares
transferred and the purchasing party shall deliver  certificates  evidencing the
Shares  to the  selling  party  and take such  further  action as is  reasonably
necessary to perfect the security interest.

                                   ARTICLE VII
                                   THE CLOSING

         Unless  otherwise  agreed by the  parties,  the closing of the sale and
purchase of Shares shall take place at the principal  offices of the Corporation
within  sixty  (60) days  after the  exercise  of any  option  provided  by this
Agreement.  Each party hereto (including the spouses of the Shareholders)  shall
bear its own transaction  costs,  including  legal and accounting  fees, if any,
attributable  to any transfer of Shares,  or any interest  therein,  pursuant to
this Agreement.  Upon 

                                       17
<PAGE>

the closing, the selling party shall deliver its Shares to
the purchaser free and clear of all liens and encumbrances, and shall deliver to
the  Corporation  its  resignation  and that of all of its nominees,  if any, as
officers  and  directors  of  the  Corporation  and  any  of  the  Corporation's
subsidiaries.  The  selling  party  shall  deliver  to the  purchasing  party at
closing,  all appropriate  documents of transfer,  including without  limitation
bills of sale, assignments or other instruments of conveyance. As a condition to
any  closing  of the sale and  purchase  of  Shares  (or any  interest  therein)
pursuant to this  Agreement:  (a) the selling party shall be  indemnified by the
purchasing  party (in a form  reasonably  satisfactory to the selling party) for
all the Corporation's  liabilities,  whether fixed or contingent, to lenders and
others,  incurred  prior to the closing of the  transaction,  (b) the purchasing
party and/or the Corporation shall cause the release of any personal guaranties,
either  directly  incurred  or assumed,  (i) which may have been  granted by the
selling party to the Corporation's  lenders or other creditors or the lenders or
other creditors of the  Partnerships  or the General  Partner whose  obligations
where assumed by the  Corporation or (ii) which may have otherwise been provided
by the selling party for the benefit of the Corporation,  and (c) if the selling
party  is  a  creditor  of  the   Corporation,   the   purchasing   party  shall
unconditionally  guarantee the debt of the  Corporation to the selling party and
execute  such  documents  and  instruments  of  guarantee as may be necessary in
connection therewith.  Furthermore,  and as a condition to closing, in the event
the selling  party owes any amounts to the  Corporation  at the time of closing,
such indebtedness  shall be paid in full by the selling party at or prior to the
closing,  or may be deducted from and offset  against the purchase  price by the
purchasing party, in the purchasing  party's sole discretion.  In the event of a
failure  to close as a  result  of the  non-satisfaction  of the  conditions  to
closing set forth herein,  this Agreement  shall remain in full force and effect
and all Shares shall remain subject to the restrictions contained herein and, in
addition,  the parties hereto 


                                       18
<PAGE>

shall be entitled to such other remedies as may be
available in the event the failure to close constitutes a breach hereof.

                                  ARTICLE VIII
                STRUCTURE OF BOARD OF DIRECTORS; MAJOR DECISIONS

         Each of the parties  hereto agrees to vote their Shares as necessary to
provide for the following.  The number of directors of the corporation  shall be
no fewer  than four (4) and no more than  seven  (7),  two (2) of which (the "BT
Designees")  shall be designated by George R. Bouchard  ("Bouchard") and John H.
Trevey  ("Trevey"),  and  two  (2) of  which  (the  "APS  Designees")  shall  be
designated,  subject to the  provisions  contained in the  Corporation's  Bylaws
regarding  the rights of the holders of  Preferred  Stock,  by APS.  The initial
directors  shall be four (4),  comprised  of the  initial BT  Designees  and the
initial APS Designees. Any increase in the number of directors shall require the
unanimous  consent of all  directors,  and shall be effected only be means of an
increase in the number of directors  from four to seven.  The  additional  three
directors (the "Group  Designees") shall initially be unanimously agreed upon by
Bouchard,  Trevey and APS.  Upon  written  notice from both  Bouchard and Trevey
(acting jointly) to the Corporation and other Shareholders,  Bouchard and Trevey
shall be entitled to replace  any two (2)  members of the Group  Designees  with
persons  mutually  acceptable to both  Bouchard and Trevey,  as indicated in the
written  notice (but who may not be officers or employees  of the  Corporation),
and the Shareholders  agree to vote their Shares to accomplish such replacement.
The parties all agree to vote their  Shares,  and to take such other and further
action  (including,  without  limitation,  the removal of Board members they may
designate  pursuant  hereto and  replacement  thereof) as 

                                       19
<PAGE>

necessary to amend the
Bylaws to increase  the size of the Board of  Directors to allow the addition of
the Group  Designees,  and to elect (or remove) the Group  Designees as provided
herein.  Until  February  1,  2001,  and  upon  written  notice  from APS to the
Corporation  and other  Shareholders,  APS shall be  entitled to  designate  any
member of the Board of Directors as Chairman of the Board,  and the Shareholders
agree  to vote  their  Shares  and to  take  such  other  actions  as  necessary
(including,  without  limitation,  the  removal  and  replacement  of any  other
existing  Chairman of the Board and any directors  they may  designate  pursuant
hereto) to cause the election and  retention in office of such  designee of APS.
The following acts or transactions by the Corporation will require,  in addition
to the approval of a majority of the Board of Directors of the Corporation,  the
approval of at least three (3) members from among the BT  Designees  and the APS
Designees:

         (a)      amending the Corporation's Articles of Incorporation or the 
Corporation's Bylaws;

         (b) causing a merger,  consolidation  or combination of the Corporation
with another  corporation  or entity,  or engaging in any stock splits,  reverse
stock splits or recapitalizations;

         (c)      purchase by the Corporation of any interest in the Corporation
irrespective  of the source of such interest;

                                       20
<PAGE>

         (d) disposition,  sale, assignment or other transfer by the Corporation
of any  interest it owns in the  Corporation,  except that such  interest may be
extinguished without the approval required under this Article;

         (e) sale or issuance of any additional  equity  ownership  interests of
the  Corporation,  including  any  instrument or security  convertible  into, or
exchangeable  or  exercisable  for,  any  equity   ownership   interest  of  the
Corporation;

         (f)  dissolving,  liquidating  or filing  bankruptcy or seeking  relief
under any debtor relief law;

         (g)    election or removal of officers and establishing or changing the
compensation for officers;

         (h) making any  distributions,  whether in cash or property,  including
dividends,  to any of the  directors or  Shareholders  with respect to the their
ownership interests;

         (i) selling, leasing or otherwise transferring all or substantially all
of the Corporation's  assets, or any asset(s) with a fair market value exceeding
$10,000 in a single transaction or series of related transactions;

         (j)      initiating or settling any litigation or regulatory proceeding
, or confessing any judgment;

                                       21
<PAGE>

         (k)      hiring or changing the Corporation's auditors, accountants or 
primary legal counsel;

         (l) hiring,  contracting with,  terminating (with or without cause) and
setting and/or modifying the compensation of any employees or consultants of the
Corporation  whose  annualized  rate  of  compensation   would  exceed  $65,000,
including  without  limitation,  Bouchard and Trevey (provided that Bouchard and
Trevey  may vote in their  capacity  as  director,  if  applicable,  in any such
employment  related decision,  only with respect to one another,  whether or not
such decision affects or relates to either or both of Bouchard or Trevey);

         (m) borrowing or incurring any  indebtedness or granting any collateral
or  security  (by  way  of  guaranty  or  otherwise)  for  any  indebtedness  or
obligation,  other than (i) open accounts payable to unaffiliated  third parties
in the ordinary course of the  Corporation's  business,  (ii) in connection with
that certain Line of Credit, as defined in the Contribution  Agreement and (iii)
any  first-lien  mortgages to  unaffiliated  third  parties,  or purchase  money
security interests in favor of unaffiliated vendors or unaffiliated lenders, for
(x) the acquisition  and/or  construction of real property or fixtures purchased
as a site for the operation of residences to provide assisted living services to
senior  citizens with  dementia,  and directly  related  services,  or (y) fixed
assets or personal  property to be located at, and used in  connection  with the
operation of, such residences;

                                       22
<PAGE>

         (n)  engaging  in any  transaction  or  line  of  business  other  than
investments in the ownership  and/or operation of residences to provide assisted
living services to senior citizens with dementia, and directly related services;

         (o)  purchasing  or leasing  assets or property,  or entering  into any
contract or  obligation,  which  obligates the  Corporation  to pay in excess of
$10,000 in the  aggregate in one or any series of related  installments,  except
for the  purchase  of real  property,  acquired as a site for the  operation  of
residences to provide assisted living services to senior citizens with dementia,
and  directly  related  services  and fixed  assets or  personal  property to be
located at, and used in connection with the operation of, such residences;

         (p)    causing a change in the nature of the business or the legal name
of the Corporation;

         (q) engaging in any transaction with any relative, affiliate or related
party  of  any  equity  owner,   director,   officer  or  other  member  of  the
Corporation's  management body,  including without  limitation the employment of
any such party;

         (r)  except  as  otherwise   expressly  provided  in  the  Contribution
Agreement, paying or reimbursing the legal fees and costs incurred by any of the
parties hereto or to the  Contribution  Agreement  (and any of the  transactions
contemplated  by, or  consummated  pursuant  to,  the  Contribution  Agreement),
including  any such  costs  associated  with  any  dissolution,  liquidation  or
distribution of shares of capital stock of the Corporation, by the Partnerships;

                                       23
<PAGE>

         (s)  acting  (or  failing  or  refusing  to act) in  contravention  of,
amending or waiving any rights granted to any party pursuant to this  Agreement,
the Corporation's Bylaws, the Contribution Agreement (and any agreement executed
by the Corporation in connection therewith), or any other governance document of
the Corporation, and any rights under such documents;

         (t) authorizing any party to disclose, divulge, reveal or use, pursuant
to the provisions of Section 9.2 of the Contribution Agreement,  any Proprietary
Information (as defined therein);

         (u) altering,  changing or amending, or not renewing, any directors and
officers insurance policy of the Corporation; and

         (v) adopting,  creating,  altering or amending any stock option plan or
issuing stock options or other rights under any such plan, in each instance.

         Each director may, with respect to any vote,  consent, or approval that
it is entitled to grant pursuant to this Agreement, grant or withhold such vote,
consent,  or approval in its sole discretion.  Notwithstanding  the foregoing or
any other provision of this Agreement,  the conversion of Preferred Stock by any
holder  thereof  pursuant to the Articles of  Incorporation  of the  Corporation
shall not require  action by the Board of  Directors  or other  shareholders  or
consents by any party, in any capacity, and the Corporation shall be, and hereby
is,  fully  authorized  to take any and all  action  required  to effect  such a
conversion.

                                       24
<PAGE>

                                   ARTICLE IX
                                PREFERRED RETURN

         For purposes hereof, the parties acknowledge and agree that APS and the
Additional  Purchasers,  in the aggregate,  initially  acquired their Shares for
$2,200,000  (the  "Initial  Capital  Contribution"),  allocated  amongst them as
provided in the Contribution Agreement. All parties hereto acknowledge and agree
that  upon  any  dissolution  or  liquidation  of the  Corporation,  APS and the
Additional  Purchasers (or their  successors in interest or assigns  pursuant to
any transfers  permitted  pursuant to this  Agreement),  in the aggregate,  will
receive from the Corporation in respect of the 760,000 shares of Preferred Stock
and Common  Stock  issued to them at the Closing and any shares of Common  Stock
issued without  consideration  in respect of any such shares,  to the extent the
Corporation has funds legally available therefor, an amount equal to the greater
of (a) that percentage (the "Applicable Percentage") of the cash and fair market
value of  property  and  other  assets  owned by the  Corporation  at that  time
determined  by  dividing  the sum of (i)  760,000  plus the  number of shares of
Preferred Stock and Common Stock issued without  consideration in respect of any
of the 760,000 shares of Preferred  Stock and Common Stock issued to APS and the
Additional  Purchasers  at the  Closing  by (ii) the  total  number of shares of
Preferred  Stock and  Common  Stock  outstanding,  with the amount of assets and
property so determined  reduced by the amount of all  liquidated  liabilities of
the Corporation and all reasonable  amounts (the "Contingency  Funds") held back
to make  provision for  unliquidated  liabilities  (excluding  the amount of any
indebtedness  assumed by, or assigned to, APS and the  Additional  Purchasers in
connection  with such  dissolution or liquidation) or (b) an amount equal to the

                                       25
<PAGE>

Initial Capital  Contribution  plus interest on the weighted average  unreturned
balance of their  Initial  Capital  Contribution  at the rate of twelve  percent
(12%) per annum, compounded annually, from the Closing Date; provided,  however,
that  all  distributions  made to  APS,  the  Additional  Purchasers  and  their
successors  in  interest,  with  respect  to their  ownership  interests  in the
Corporation,  shall be deducted in  calculating  the amount of  dissolution  and
liquidation  proceeds due such parties  under the  preferred  return  provisions
described  above and shall be considered  in  calculating  the weighted  average
unreturned balance of their Initial Capital  Contribution.  Upon satisfaction of
all liabilities for which the Contingency Funds were reserved, or upon any other
release  of  the  Contingency   Funds  no  longer   reserved  for   unliquidated
liabilities,  APS and the  Additional  Purchasers  shall receive the  Applicable
Percentage of the  Contingency  Funds not expended,  if any, in  satisfaction of
liabilities that were  unliquidated  when the Contingency  Funds were originally
reserved,  but only if all such payments from the Contingency  Funds would cause
the aggregate  amount due under clause (a) above to exceed the aggregate  amount
due under clause (b) above.

         All proceeds payable under this Article shall be allocated  amongst APS
and Additional Purchasers,  and their successors and assigns, pro rata, based on
their respective  percentage  ownership of Shares originally  acquired under the
Contribution  Agreement.  All  parties  hereto  agree to vote  their  Shares and
execute  and  deliver  such  additional  documents  and  instruments  as  may be
necessary to cause the foregoing  preferred return to be paid by the Corporation
to APS and the Additional  Purchasers as contemplated above.  Provided,  nothing
contained in this Section  shall  require that any party make any payment to the
Corporation, or execute any note, to enable the Corporation to make any payments
required under this Section.

                                       26
<PAGE>

         All parties hereto acknowledge and agree that the Corporation shall not
make any distributions, whether in cash or property, including dividends, to any
of the directors,  shareholders or parties hereto unless such  distributions are
made in strict  compliance with the terms of this Agreement,  the Bylaws and the
Contribution Agreement.

                                    ARTICLE X
                               REGISTRATION RIGHTS

         Section 10.1 Incidental  Registration Rights. Only the original parties
to this  Agreement  (other  than the  Corporation)  shall have the  registration
rights  granted  pursuant to this Article,  and it is expressly  understood  and
agreed that no Shareholder  who  subsequently  executes this  Agreement,  and no
permitted transferee of any Shareholder (other than (i) transferees of transfers
expressly provided for pursuant to Article I hereof, (ii) transferees  permitted
pursuant to the prior written consent  contemplated in Article II hereof wherein
such written consent also extends expressly to the registration  rights included
in this Article X hereof, (iii) transferees of Trevey,  Bouchard and the Limited
Partner  Permitted  Assigns  permitted  pursuant  to  clause  (ii) of the  first
sentence of Section 3.1(e) hereof,  if Trevey,  Bouchard or the Limited  Partner
Permitted  Assigns,  as  applicable,  give the written  authorization  to extend
registration  rights as  contemplated  in Section  3.1(e),  and (iv) the Limited
Partner  Permitted  Assigns expressly named in Section 3.1(e) hereof) shall have
any of the registration  rights provided by this Article,  regardless of whether
they execute and become bound by a counterpart of this  Agreement.  For purposes
of this Article X hereof,  the above  described  

                                       27
<PAGE>

persons and entities having the
registration  rights  described  herein  are  collectively  referred  to as  the
"Covered  Parties" and  individually  as a "Covered  Party." Each of the Covered
Parties shall have the incidental  registration rights and other rights provided
under this Article. The incidental registration rights described in this Article
shall  apply  with  respect to any and all  shares  owned by any of the  Covered
Parties;  and any reference in this Article to "Shares" shall be deemed to refer
to the Shares of the Covered  Parties only  (including  any Shares  subsequently
acquired by any Covered Parties).

         If the  Corporation  at any time proposes to register any of its common
stock under the Act for sale to the  public,  whether for its own account or for
the  account  of  other  security  holders  or  both  (except  with  respect  to
registration  statements  on Forms S-4 or S-8 or another form not  available for
registering  the Shares for sale to the public or in  connection  with  mergers,
acquisitions,  exchange offers,  dividend  reinvestment plans or stock option or
other employee benefit plans of the Corporation), it will give written notice to
the Covered Parties of its intention so to do, which notice shall include a list
of the jurisdictions in which the Corporation  intends to attempt to qualify the
common  stock  under the  applicable  state  securities  laws.  Upon the written
request of one or more Covered  Parties,  given within 10 days after  receipt of
any such notice, to register any of their Shares,  the Corporation will, subject
to the  limitations  and conditions  contained  herein,  use its best efforts to
cause the Shares as to which registration shall have been so requested ("Covered
Shares"),  pro  rata  between  the  Covered  Parties  in a  ratio  equal  to the
respective  number of Shares then owned and  requested to be registered by them,
or such other ratio as may have been agreed upon among the Covered  Parties,  to
be  included  in the  securities  to be  covered by the  registration  statement
proposed to be filed by the  Corporation,  all to the 

                                       28
<PAGE>

extent requisite to permit
the sale or other disposition by the Covered Parties; provided, however, that:

         (a) Each Covered  Party shall each have the right to request  inclusion
of its Shares (and have such Shares included) in two (2) registration statements
that are declared  effective by the  Securities  and  Exchange  Commission  (the
"Commission").

         (b) If, at any time after giving such written  notice of its  intention
to register any securities  and prior to the effective date of the  registration
statement filed in connection  with such  registration,  the  Corporation  shall
determine for any reason not to register any securities at all (and in fact does
not do so), the  Corporation  may, at its election,  give written notice of such
determination to the Covered Parties who made a request as hereinabove  provided
and thereupon the  Corporation  shall be relieved of its  obligation to register
any Shares in connection  with that proposed  registration;  provided,  however,
that any election by the  Corporation and the exercise of its rights pursuant to
this  subsection  shall not  otherwise  affect the rights  granted  herein as to
future registrations.

         (c) If such registration involves an underwritten offering, the Covered
Parties  requesting to be included in the  Corporation's  registration must sell
their Covered Shares to the underwriters selected by the Corporation on the same
terms and conditions as apply to the Corporation and other selling parties under
the registration statement (except as otherwise set forth herein).

                                       29
<PAGE>

         The number of Covered  Shares to be included in such an offering may be
reduced if and to the extent that the managing underwriter,  if any, shall be of
the opinion that such  inclusion  would  adversely  affect the  marketing of the
securities to be sold by the  Corporation  therein (pro rata between the Covered
Parties in a ratio  equal to the  respective  amounts of Covered  Shares held by
each).  Notwithstanding  anything to the contrary contained in this Section,  in
the event that there is an  underwritten  public  offering of  securities of the
Corporation pursuant to a registration covering Shares, and a Covered Party does
not elect to sell its Covered Shares to the  underwriters  of the  Corporation's
securities in connection  with such  offering,  such Covered Party shall refrain
from  selling  such  Covered  Shares  during the period of  distribution  of the
Corporation's  securities  by  such  underwriters,   the  period  in  which  the
underwriting  syndicate  participates in the after market and during any lock-up
period  requested  by such  underwriters;  provided,  however,  that the Covered
Parties shall, in any event, be entitled to sell their Shares  commencing on the
180th day after the effective date of such registration statement.

         Section 10.2 Registration  Procedures.  If and whenever the Corporation
is required by the provisions of this Article to effect the  registration of any
of the Covered Shares under the Act, the Corporation  will, as  expeditiously as
possible:

         (a)  prepare  and file with the  Commission  a  registration  statement
(which, in the case of an underwritten  public offering shall be on such form of
general  applicability as may be satisfactory to the managing  underwriter) with
respect to such  securities and use its best efforts to cause such  registration
statement  to become and  remain  effective  for the period of the  distribution
contemplated thereby (determined as hereinafter provided);

                                       30
<PAGE>

         (b)  prepare  and  file  with  the  Commission   such   amendments  and
supplements  to  such  registration   statement  and  the  prospectus  filed  in
connection  therewith as may be necessary  to keep such  registration  statement
effective for the period of distribution  and as may be necessary to comply with
the  provisions  of the Act with respect to the  disposition  of all  securities
covered by such  registration  statement in  accordance  with the  Corporation's
intended method of disposition set forth in such registration statement for such
period;

         (c) furnish to the Covered Parties, as applicable, and each underwriter
such number of copies of the registration  statement and the prospectus included
therein  (including each preliminary  prospectus) as they may reasonably request
in order to  facilitate  the public  sale or other  disposition  of the  Covered
Shares covered by such registration statement;

         (d) use its best  efforts to register  or qualify  the  Covered  Shares
covered by such registration  statement under the securities or blue sky laws of
such jurisdictions as the Covered Parties, as applicable,  or, in the case of an
underwritten public offering, the managing underwriter, shall reasonably request
(provided that the Corporation will not be required to (i) qualify  generally to
do  business in any  jurisdiction  where it would not  otherwise  be required to
qualify but for this  subsection,  (ii)  subject  itself to taxation in any such
jurisdiction  or  (iii)  consent  to  general  service  of  process  in any such
jurisdiction);

         (e) promptly  notify the Covered  Parties,  as  applicable,  under such
registration  statement  and each  underwriter,  at any time  when a  prospectus
relating thereto is required to be 

                                       31
<PAGE>

delivered under the Act when it becomes aware
of the happening of any event as a result of which the  prospectus  contained in
such registration  statement, as then in effect, includes an untrue statement of
a  material  fact or omits to state  any  material  fact  required  to be stated
therein or necessary to make the statements  contained therein not misleading in
light of the circumstances then existing;

         (f) use its best efforts (if the offering is  underwritten) to furnish,
at the  request of the  Covered  Parties,  as  applicable,  on the date that the
Covered  Shares are  delivered  to the  underwriters  for sale  pursuant to such
registration:  (i) an  opinion  dated  such  date of  counsel  representing  the
Corporation for the purposes of such registration, addressed to the underwriters
and in customary  form and covering such matters as are  customarily  covered by
opinions  of counsel  in similar  registrations  and as may be  required  in the
underwriting  agreement relating thereto,  as may reasonably be requested by the
underwriters or by the Covered Parties, as applicable; and (ii) a comfort letter
dated  such  date  from  the  independent  public  accountants  retained  by the
Corporation,  addressed to the underwriters, in customary form and covering such
matters  as  are  customarily   covered  by  such  comfort  letters  in  similar
registrations  and as may be required  in the  underwriting  agreement  relating
thereto,  as such  underwriters  or the  Covered  Parties,  as  applicable,  may
reasonably request; and

         (g)  make  available  for  inspection  by  the  Covered  Parties,   any
underwriter  participating  in any  distribution  pursuant to such  registration
statement,  and any attorney,  accountant or other agent retained by the Covered
Parties or  underwriter,  all financial and other records,  pertinent  corporate
documents  and  properties  of the  Corporation,  and  cause  the  Corporation's


                                       32
<PAGE>

officers, directors and employees to supply all information reasonably requested
by any  such  Covered  Party,  underwriter,  attorney,  accountant  or  agent in
connection with such registration statement.

         For  purposes  of  paragraphs   (a)  and  (b)  above,   the  period  of
distribution  of Covered  Shares in an  underwritten  public  offering  shall be
deemed to extend until each  underwriter  has completed the  distribution of all
securities  purchased by it, and the period of distribution of Covered Shares in
any other  registration  shall be deemed to extend until the earlier of the sale
of all Covered Shares or 180 days after the effective date thereof.

         In connection with each registration hereunder, the Covered Parties, as
applicable,  will furnish to the  Corporation in writing such  information  with
respect  to  themselves  and the  proposed  distribution  by them  as  shall  be
requested  by the  Corporation  in order to assure  compliance  with federal and
applicable state securities laws.

         In connection with each  registration  covering an underwritten  public
offering,  the  Corporation  agrees to enter into a written  agreement  with the
managing  underwriter  selected in the manner  herein  provided in such form and
containing such provisions as are customary in the securities  business for such
an arrangement  between major  underwriters  and companies of the  Corporation's
size and investment stature;  provided that such agreement shall not contain any
such  provision  applicable to the  Corporation  that is  inconsistent  with the
provisions hereof and, further,  provided that the time and place of the closing
under such agreement  shall be as mutually  agreed upon between the  Corporation
and such managing underwriter.

                                       33
<PAGE>

         The  Corporation  will not be  obligated to include any Shares owned by
the Covered Parties requesting that a proposed  registration include such Shares
if the Corporation delivers to the requesting Covered Parties the opinion of the
Corporation's  counsel  (such  counsel and the form of such opinion  having been
approved by the Covered  Parties in their  reasonable  discretion) to the effect
that  the  requested  registration  is  not  required  to  permit  the  proposed
disposition  or any resale of such Shares,  without  restrictions  on subsequent
transfer,  under the Act,  which  opinion may be furnished to and relied upon by
any broker through which the Covered Parties may elect to sell any Shares.

         Section  10.3  Conditions  to  Obligation  to  Register   Shares.   The
Corporation's  obligations  under this Article shall be subject to the following
limitations and conditions:

         (a) The Corporation  shall have received from the Covered  Parties,  as
applicable,  all such information as the Corporation may reasonably request from
the  Covered  Parties  concerning  each of them  and each of  their  methods  of
distribution  of the Covered Shares to enable the  Corporation to include in the
registration statement all material facts required to be disclosed therein.

         (b) Any request by the Covered  Parties  pursuant to this Agreement for
registration  of the  offering,  sale and delivery of Shares shall  provide that
each Covered  Party,  as  applicable,  (i) has a present  intention to sell such
Shares;  (ii)  agrees to execute all  consents,  powers of  attorneys  and other
documents  required  in order to cause  such  registration  statement  to become


                                       34
<PAGE>

effective;  (iii)  agrees,  if  the  offering  is at the  market,  to  give  the
Corporation written notice of the first bona fide offering of such Shares and to
use the  prospectus  forming a part of such  registration  statement  only for a
period of 180 days after the effective date of the registration statement unless
the  offering  is  pursuant to a  continuous  registration  pursuant to Rule 415
promulgated  under the Act; (iv) subject to adverse events regarding the selling
price of the Shares,  agrees to utilize its proposed  method of  distribution of
the registered securities; and (v) agrees to promptly notify the Corporation and
each underwriter, if any, with regard to any registration statement, at any time
when it  becomes  aware of the  happening  of any event as a result of which any
prospectus  contained in such  registration  statement that has been provided to
the Covered Party includes an untrue  statement of a material fact regarding the
Covered  Party or omits to state a material  fact  regarding  the Covered  Party
required to be stated  therein or  necessary  to make the  statements  contained
therein   regarding   such  Covered  Party  not   misleading  in  light  of  the
circumstances then existing.

         Section  10.4  Distribution   Arrangements.   Each  Covered  Party,  as
applicable,  agrees that,  in disposing of its Shares in the  registered  public
offering,  such Covered Party will comply with applicable  rules  promulgated by
the Commission.

         Section 10.5  Expenses.  All expenses  incurred by the  Corporation  in
preparing  and complying  with a  registration  covering any Shares,  including,
without  limitation,  all registration,  qualification and filing fees, blue sky
fees and expenses,  printing  expenses,  fees and disbursements of legal counsel
and independent public accountants for the Corporation,  the reasonable fees and
expenses of one law firm serving as legal counsel for the participating  Covered


                                       36
<PAGE>

Parties, fees of the National Association of Securities Dealers,  Inc., transfer
taxes,  escrow  fees,  fees of  transfer  agents  and  registrars  and  costs of
insurance,  but excluding any Selling Expenses,  are herein called "Registration
Expenses." All underwriting  discounts and selling commissions applicable to the
sale of Covered Shares are herein called "Selling Expenses."

         The Corporation shall pay all Registration  Expenses in connection with
any  registration  statement.  All  Selling  Expenses  in  connection  with  any
registration  statement  shall be borne by each  participating  Covered Party in
proportion to the number of Covered Shares sold by each.

         Section 10.6 Indemnification.  In the event of a registration of any of
the Covered Shares under the Securities Act, the Corporation shall indemnify and
hold harmless the Covered Party, as applicable,  thereunder and each underwriter
and each associate, if any, of the Covered Parties, or underwriter,  against any
losses, claims,  damages or liabilities,  joint or several, to which the Covered
Parties, or underwriter or associate thereof may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect  thereof) arise out of or are based upon any untrue statement or alleged
untrue  statement of any material fact contained in any  registration  statement
under which such Covered Shares were  registered  under the Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof,  or arise out of or are based upon the omission or alleged  omission to
state therein a material fact required to be stated therein or necessary to make
the statements  therein not  misleading,  or any violation by the Corporation of
any rule or regulation  promulgated  under the Act applicable to the Corporation
and relating to action or inaction by 

                                       36
<PAGE>

the  Corporation  in  connection  with any
such  registration,  and shall reimburse the Covered  Parties,  each underwriter
and/or associate thereof for any legal or other expenses  reasonably incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability or action; provided,  however, that the Corporation will not be liable
in any such  case if and to the  extent  that any such  loss,  claim,  damage or
liability  arises out of or is based upon an untrue  statement or alleged untrue
statement or omission or alleged  omission made in conformity  with  information
furnished by the Covered Parties,  each underwriter  and/or associate thereof in
writing specifically for use in such registration statement or prospectus.

         In the event of a  registration  of any of the Covered Shares under the
Act, each of the Covered Parties, as applicable, severally and not jointly, will
indemnify and hold harmless the Corporation and its affiliates, if any, and each
underwriter  and each associate of any underwriter  against all losses,  claims,
damages or  liabilities,  joint or  several,  to which the  Corporation  or such
underwriter or associate may become subject under the Act or otherwise,  insofar
as such losses,  claims,  damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue  statement or alleged untrue statement
of any material fact contained in the  registration  statement  under which such
Covered  Shares were  registered  under the Act, any  preliminary  prospectus or
final prospectus  contained therein,  or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state therein
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein not  misleading,  and will reimburse the  Corporation,  each
underwriter and/or associate thereof for any legal or other expenses  reasonably
incurred by them in connection  with  investigating  or defending any such loss,
claim, damage, liability or action; provided, however, that a Covered Party will


                                       37
<PAGE>

be liable  hereunder  in any such case if and only to the  extent  that any such
loss,  claim,  damage  or  liability  arises  out of or is based  upon an untrue
statement or alleged  untrue  statement or omission or alleged  omission made in
reliance  upon and in  conformity  with  information  pertaining to such Covered
Party,   furnished  in  writing  to  the   Corporation  by  that  Covered  Party
specifically for use in such registration statement or prospectus;  and provided
further,  however,  that the liability of any Covered Party  hereunder  shall be
limited to the proportion of any such loss, claim, damage,  liability or expense
that is equal to the proportion that the public offering price of Covered Shares
sold by such Covered Party, under such registration statement bears to the total
public offering price of all securities sold  thereunder,  but not to exceed the
proceeds  received by such Covered Party from the sale of Covered Shares covered
by such registration statement.

         Promptly after receipt by an indemnified  party  hereunder of notice of
the  commencement  of any action,  such  indemnified  party shall, if a claim in
respect thereof is to be made against the indemnifying  party hereunder,  notify
the  indemnifying  party in writing  thereof,  but the omission so to notify the
indemnifying  party shall not relieve it from any  liability  it may have to any
indemnified  party other than under this Section.  In case any such action shall
be brought  against any indemnified  party and it shall notify the  indemnifying
party of the commencement  thereof,  the indemnifying party shall be entitled to
participate  in and, to the extent it shall wish,  to assume and  undertake  the
defense thereof with counsel reasonably  satisfactory to such indemnified party,
and, after notice from the indemnifying  party to such indemnified  party of its
election so to assume and undertake the defense thereof,  the indemnifying party
shall not be liable to such  indemnified  party under this Section for any legal
expenses  subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of 

                                       38
<PAGE>

investigation and of liaison with
counsel so elected; provided, however that, if the defendants in any such action
include  both  the  indemnified  party  and the  indemnifying  party  and if the
interests of the indemnified party reasonably may be deemed to conflict with the
interests of the indemnifying  party, the indemnified party shall have the right
to  select  separate  counsel  and  to  assume  its  defense  and  otherwise  to
participate  in the defense of such  action,  with the expenses and fees of such
separate  counsel  and  other  expenses  related  to  such  participation  to be
reimbursed by the indemnifying  party as incurred.  The indemnifying  party will
not be subject to any settlement  made without its consent,  which consent shall
not be unreasonably withheld. The indemnifying party will pay to the indemnified
party all sums due hereunder within 10 days of a final  non-appealable  judgment
or pursuant to the terms of a settlement agreement.

         Section 10.7  Limitation on Subsequent  Registration  Rights.  From and
after  the date of this  Agreement,  the  Corporation  shall  not,  without  the
unanimous  written consent of APS,  Trevey and Bouchard in each instance,  enter
into any agreement  with any holder or  prospective  holder of any securities of
the  Corporation  (nor shall the  Corporation,  in the absence of any such prior
agreement,  permit  any such  holder or  prospective  holder)  to  include  such
securities  in any  registration  contemplated  by  this  Agreement  other  than
incidental  (non-demand)  registration rights that are expressly  subordinate to
those granted the Covered Parties in this Agreement.

                                       39
<PAGE>

                                   ARTICLE XI
                             LEGEND ON CERTIFICATES

         All Shares now or hereafter owned by the Shareholders  shall be subject
to the provisions of this  Agreement,  and the  certificates  representing  same
shall bear the following legend:

             "THE SHARES  REPRESENTED HEREBY AND THE VOTING,  SALE,  ASSIGNMENT,
             TRANSFER,  PLEDGE  OR OTHER  DISPOSITION  THEREOF  ARE  SUBJECT  TO
             CERTAIN RESTRICTIONS  CONTAINED IN A STOCK TRANSFER RESTRICTION AND
             SHAREHOLDERS  AGREEMENT AMONG THE CORPORATION AND ITS SHAREHOLDERS,
             AND ANY AMENDMENT  THERETO.  THE  AGREEMENT  LIMITS THE USE OF THIS
             STOCK AS COLLATERAL  FOR ANY LOAN WHETHER BY PLEDGE,  HYPOTHECATION
             OR OTHERWISE.  A COPY OF THE STOCK TRANSFER  RESTRICTION  AGREEMENT
             AND ALL  APPLICABLE  AMENDMENTS  THERETO  WILL BE  FURNISHED BY THE
             CORPORATION  TO THE  HOLDER  HEREOF  WITHOUT  CHARGE  UPON  WRITTEN
             REQUEST TO THE  CORPORATION  AT ITS PRINCIPAL  PLACE OF BUSINESS OR
             REGISTERED OFFICE."


                                       40
<PAGE>

                                   ARTICLE XII
                            TERMINATION OF AGREEMENT

         This Agreement and all  restrictions  on stock transfer  created hereby
shall terminate on the occurrence of any of the following events:

         (a)      The bankruptcy or dissolution of the Corporation.

         (b) The ownership by one person of all of the Shares of the Corporation
which are then subject to this Agreement.

         (c) The execution of a written  instrument by APS,  Bouchard and Trevey
which terminates the same.

         (d)      The date  twenty-one  (21) years after the death of the last 
survivor of all individuals who are parties to this Agreement.

         (e) The occurrence of an  underwritten,  registered  public offering of
the common stock of the Corporation.


                                       41
<PAGE>

                                  ARTICLE XIII
                            FUTURE EQUITY FINANCINGS

         Section 13.1 Right of First Refusal. Each party to this Agreement shall
be  entitled  to a right of first  refusal  in the  event  that  APS,  Trevey or
Bouchard  participate  in  any  future  equity  financing  by  the  Corporation,
including  any  instrument or security  convertible  into,  or  exchangeable  or
exercisable  for,  any  equity  ownership  interest  of  the  Corporation.   The
Corporation  shall,  not less  than 30 days  prior to the  consummation  of such
equity  financing,  notify  the  Shareholders  in  writing  of the  contemplated
transaction, including the terms and conditions of the issuance of capital stock
contemplated thereunder. Each Shareholder shall have, and may exercise within 15
days of receipt of such  notice,  a right to  purchase,  upon the same terms and
conditions,  that  proportion of such capital  stock equal to its  proportionate
ownership of the  Corporation as determined on the date of dispatch of notice of
such  transaction.  Each  Shareholder  choosing  to  participate  in such equity
financing  must exercise to the fullest  extent the rights  granted  pursuant to
this Section.  The exercise or  non-exercise  of any rights arising  pursuant to
this  Section  shall be  governed  by (and  treated in a like  manner to options
under) the  provisions  of Article IV hereof.  Payment for any shares of capital
stock purchased pursuant to this Section shall be in cash at the closing.

         Section 13.2  Limitations on Right of First Refusal.  The provisions of
this Article shall not apply to (a) any issuance of stock or options pursuant to
any stock option or stock purchase plan properly adopted and administered by the
Corporation  pursuant to this Agreement and the  Corporation's  Bylaws,  (b) any
issuance of stock,  stock purchase  rights,  options,  stock warrants or similar


                                       42
<PAGE>

rights validly issued by the Corporation to any party hereto as compensation for
services, for providing guarantees of Corporation obligations,  or otherwise not
in connection with the Corporation  raising  additional cash through the sale of
equity  interests,  or (c) any  transaction  by the  Corporation  entirely  with
unrelated third parties.

                                   ARTICLE XIV
                         BOARD MEETING ATTENDANCE RIGHTS

         Section  14.1  Observer.  According  to the terms of and subject to the
conditions  contained in this Article,  the Limited Partner shall be entitled to
designate not more than one individual (the  "Observer") who shall be allowed to
attend  meetings of the Board of Directors of the  Corporation (or listen in the
case of telephonic meetings).  The Limited Partner must select the Observer from
the following individuals: Lowell Lebermann, Roger Minard, William Greehey, Stan
McLelland or Matt Mathias.

         Section 14.2 Conditions,  Terms and Limitations.  The Limited Partner's
and the  Observer's  rights  under  this  Article  shall  be  conditional  upon,
qualified by, or subject to the following:

         (a) the  Observer  shall  not,  on  account  of being the  Observer  or
attending  any meeting of the Board of Directors,  be entitled to  compensation,
reimbursement, or indemnification of any kind from the Corporation or any party;

                                       43
<PAGE>

         (b) the  Observer  shall  use his  best  efforts  to  comply  with  any
reasonable demand or directive of the Chairman of the Board or other officer who
shall preside at and govern meetings of the Board of Directors;

         (c) the  Observer  shall not be  entitled to any vote on any matter and
shall comply with the rules of order and decorum as established by the presiding
officer,  which  may be  Robert's  Rules  of  Order,  and  which  are  generally
applicable to all parties at such meeting;

         (d) the Observer shall not be entitled to delay any meeting  regardless
of  circumstances,  and  the  presiding  officer  shall  have no  obligation  to
accommodate or consider any such request; and

         (e)  in  the  event  the  Observer  fails  to  comply  with  all of the
conditions,  terms and qualifications  hereunder,  the Observer may be required,
upon request from the presiding officer, to leave or not attend the meeting.

         Section 14.3  Confidentiality.  Prior to  attending  any meeting of the
Board  of  Directors,  the  Observer  must  execute,  in his  or her  individual
capacity,   a  confidentiality   agreement  in  form  and  substance  reasonably
acceptable  to  Corporation  and its counsel.  Pursuant to such  agreement,  the
Observer shall be prohibited from disclosing,  divulging, revealing or using any
Proprietary  Information (as defined in the Contribution  Agreement)  except for
the sole  purpose of  informing  the Limited  Partner  and the  Limited  Partner
Permitted Assigns of the Corporation's  affairs and of the activities  occurring
during the meetings  observed or pursuant to one of the  exceptions set forth in


                                       44
<PAGE>

the Contribution  Agreement.  All of the rights granted pursuant to this Article
XIV shall be forever  forfeited in the event that (a) any Observer  breaches any
of the  conditions  of this  Article  XIV,  or (b)  any  Observer  breaches  any
provision  of the  confidentiality  agreement  entered  into  pursuant  to  this
Section.  Any breach by any Observer of the  confidentiality  agreement required
under this Section shall also  constitute a breach by the Limited Partner of its
obligations  with  respect to  confidentiality  arising  under the  Contribution
Agreement.

         Section  14.4  Notice.  On  or  before  January  1 of  each  year,  the
Corporation  will, in writing,  provide the Limited Partner with the anticipated
dates  (subject  to change) of the  regular  meetings,  if any,  of the Board of
Directors for the following year (the "Annual  Meeting  Notice").  Within thirty
(30) days after receipt of the Annual Meeting  Notice,  the Limited Partner must
notify the Corporation of the name,  address,  facsimile number and phone number
of the designated Observer, and only such designated Observer shall be permitted
to attend any  meeting of the Board of  Directors  during such  following  year,
without exception.  For all meetings not set forth in the Annual Meeting Notice,
the Limited  Partner shall be given notice at the same time and manner as notice
is provided generally to the members of the Board of Directors,  but in no event
less than one (1) hour preceding such meeting.

         Section  14.5  Exception  Upon  Opinion of  Counsel.  Upon  obtaining a
reasoned  opinion of counsel  for the  Corporation  (or any  Shareholder)  which
advises that only members of the Board of  Directors  should  attend a specified
meeting or meetings or portion of a meeting,  the Chairman of the Board,  at his
sole  discretion,  may notify the Observer  that the Observer  shall be excluded


                                       45
<PAGE>

from such meeting or meetings whereupon the attendance rights under this Article
with respect  thereto  shall not apply and the Observer  shall not be allowed to
attend.

                                   ARTICLE XV
                               GENERAL PROVISIONS

         Section 15.1  Financial  Statements.  Each of the parties hereto hereby
agrees that the Corporation,  at its sole cost and expense, shall (a) be audited
every  calendar  year-end  by a  national  CPA  firm and (b)  prepare  unaudited
quarterly  financial  statements.  In  addition,  the audited  annual  financial
statements shall be due not later than ninety (90) days following year-end,  and
the  unaudited  quarterly  financial  statements  shall  be due not  later  than
forty-five (45) days following quarter-end. All financial statements required by
this Section shall be prepared in accordance with generally accepted  accounting
principles  consistently  applied. The Corporation shall, promptly upon receipt,
deliver  to each  party  hereto  full and  complete  copies of such  annual  and
quarterly  financial  statements.  Each of the parties hereto hereby agrees that
KPMG  shall  serve  as the  auditor  of the  Corporation  until  such  time as a
successor  auditor  has been  elected  pursuant  to Article  VIII hereof and the
Corporation's Bylaws.

         Section 15.2 Directors and Officers Insurance.  During the term of this
Agreement,  the Corporation  shall purchase and maintain  directors and officers
liability  insurance  providing  coverage  of at  least  Three  Million  Dollars
($3,000,000) for each director and officer of the Corporation.

                                       46
<PAGE>

         Section 15.3 Remedies for Breach.  The Shares are unique chattels,  and
each party to this Agreement shall have the remedies which are available to him,
her or it for the  violation of any of the terms of this  Agreement,  including,
but not limited to, the equitable remedy of specific performance.

         Section 15.4 Binding Effect.  This Agreement is binding upon and inures
to the benefit of the Corporation,  its successors and permitted  assigns and to
the  Shareholders  and  their  respective   heirs,   personal   representatives,
successors and permitted assigns.  This Agreement may not be assigned,  in whole
or in part,  by any party  hereto  without  the express  written  consent of all
parties hereto.

         Section  15.5  Collateral   Agreements  and  Waivers.   This  Agreement
(together with all documents  delivered pursuant hereto,  executed in connection
herewith, or contemplated herein) supersedes all other documents, understandings
and agreements,  oral or written and constitutes the entire  understanding among
the parties with respect to the subject matter hereof.

         Section 15.6 Governing Laws.  This Agreement is executed under,  and in
conformity  with, the laws of the State of Texas and shall be governed  thereby.
If any  provision  of this  Agreement  shall  be  determined  to be  invalid  or
unenforceable  or prohibited by the laws of the State of Texas,  this  Agreement
shall be considered divisible as to such provisions and such provisions shall be
inoperative and shall not be a part of the  consideration  moving from any party
to another  party and there shall be  substituted  in place  thereof a provision
which  parallels,  as closely as allowed by law, the invalid,  unenforceable  or
prohibited  provision,  and the remaining  


                                       47
<PAGE>

provisions shall be valid and binding
upon the parties and be of like effect as though such invalid,  unenforceable or
prohibited provisions were not included herein.

         Section 15.7  Amendment.  This  Agreement may be amended in whole or in
part only by the written  consent of all the parties.  Such  amendment  shall be
effective as of the date then  determined by the parties and shall supersede any
provisions herein contained which are in conflict.

         Section 15.8  Captions and Gender.  The captions and titles  herein are
for convenience only and are not intended to include or conclusively  define the
subject matter of the text.  All pronouns and references  thereto shall refer to
the  masculine,  feminine  and  neuter  genders,  singular  or  plural,  as  the
identification of the persons,  entities and corporations may require.  The term
"person" as used in this Agreement shall include natural persons,  corporations,
partnerships, trusts, estates and any other form of entity.

         Section 15.9 Notices.  All notices required to be given hereunder shall
be deemed to be duly given by personally delivering such notice or by mailing it
by certified mail, to the  Corporation and to the  Shareholders at the following
addresses  (which may be changed by giving  written notice of such change to all
other parties hereto):


                                       48
<PAGE>

 To the Corporation, APS or          American Physicians Service Group, Inc.
 the Additional Purchasers:          1301 Capital of Texas Highway, Suite C-300
                                     Austin, Texas 78746
                                     Attention: President
                                     Fax: (512) 314-4301

              with a copy to:        Timothy L. LaFrey
                                     Akin, Gump, Strauss, Hauer & Feld, L.L.P.
                                     816 Congress Avenue, Suite 1900
                                     Austin, Texas 78701
                                     Fax: (512) 499-6290

             To the Partnerships,               Uncommon Care
             the General Partner,               101 W. 6th Street, Suite 330
             Bouchard or Trevey:                Austin, Texas  78701

              with a copy to:                   Bret Van Earp
                                                100 Congress Avenue, Suite 1800
                                                Austin, Texas 78701
                                                Fax: (512) 469-3724

                                       49
<PAGE>

             To Limited Partner:                Uncommon Partners, Ltd.
                                                808 West 10th Street
                                                Austin, Texas 78701
                                                Attn: Matt Mathias
                                                Fax: (512) 469-0928

             With a copy to:                         J. Bradley Greenblum
                                                     Jenkens & Gilchrist
                                                     2200 One American Center
                                                     600 Congress Avenue
                                                     Austin, Texas  78701
                                                     Fax:  (512) 404-3520

         Section 15.10  Binding  Effect of this  Agreement on Additional  Shares
Acquired By a  Shareholder.  In the event a Shareholder  acquires,  contracts to
acquire or receives any Shares of the Corporation's  capital stock which are not
subject to this Agreement at the time of acquisition,  such additional Shares of
the  Shareholder  shall  be  automatically  subject  to this  Agreement  and the
certificates  representing  such Shares shall bear the legend  prescribed herein
and this Agreement shall be amended, if necessary, to reflect the acquisition of
such Shares by the Shareholder.

         Section  15.11  Execution  of  Documents.  Whenever  Shares  are  to be


                                       50
<PAGE>

purchased by the Corporation or a Shareholder  pursuant to this  Agreement,  the
transferor  shall do all things and execute and deliver all  documents  and make
all transfers as may be necessary to consummate such purchase. In the event that
the transferor  refuses to abide by the terms and conditions  specified  herein,
the  purchaser(s)  may tender payment for such Shares by mailing  payment to the
transferor's attention at the address of the Corporation's  registered office on
file at the office of the Texas  Secretary of State.  After  payment is tendered
accordingly,  the  Corporation  shall be  entitled  to cancel such Shares on its
books,  and reissue such Shares to the  purchaser(s) or, if the purchaser is the
Corporation,  the  Corporation  may hold such Shares as treasury stock or cancel
such Shares.

                            [Signature pages follow]

                                       51
<PAGE>


                                 SIGNATURE PAGES
                           STOCK TRANSFER RESTRICTION
                                       AND
                             SHAREHOLDERS AGREEMENT




         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered on the day and year first written above.

CORPORATION:                      BARTON ACQUISITION, INC.


                                  By:           /s/ John H Trevey
                                  Print Name:       John H Trevey
                                  Print Title:      CEO



APS:                              AMERICAN PHYSICIANS SERVICE GROUP, INC.


                                  By:          /s/ Duane K. Boyd, Jr.
                                  Print Name:      Duane K. Boyd, Jr.
                                  Print Title:     Senior VP


                                      S-1
<PAGE>

BARTON HOUSE:                     BARTON HOUSE, LTD.


                                  By:   Uncommon Care, Inc., its General Partner

                                  By:           /s/ George R. Bouchard
                                  Print Name:       George R. Bouchard
                                  Print Title:      President



OAKWELL:                          BARTON HOUSE AT OAKWELL FARMS, LTD.


                                  By:   Uncommon Care, Inc., its General Partner

                                  By:           /s/ George R. Bouchard
                                  Print Name:       George R. Bouchard
                                  Print Title:      President  


                                      S-2
<PAGE>

GENERAL PARTNER:                  UNCOMMON CARE, INC.


                                  By:           /s/ George R. Bouchard
                                  Print Name:       George R. Bouchard
                                  Print Title:      President  



BOUCHARD:                                                                       
                                               /s/ George R. Bouchard



TREVEY:                                                                         
                                               /s/  John H. Trevey

                                      S-3
<PAGE>


LIMITED PARTNER:                      UNCOMMON PARTNERS, LTD.


                                      By:   LTZ, Inc., its General Partner
                                      By:  /s/ Matt Mathias
                                           -------------------------------     
                                               Matt Mathias, President


               [Signature pages for Additional Purchasers follow]

                                      S-4
<PAGE>



ADDITIONAL
PURCHASERS:                                          
                                Richard J. Clark


                                DUANE K. BOYD, JR. TRUST

                                By    /s/ Duane K. Boyd., Jr. Trustee
                                      -------------------------------
                                      Duane K. Boyd, Jr., Trustee


                                                     
                                      /s/ Robert L. Myer
                                      ----------------------
                                          Robert L. Myer


                                J. A. MURPHY DESCENDANTS' TRUST

                                By   BANK OF BERMUDA, TRUSTEE


                                By   /s/ Robert CH Masters
                                Name     Robert C. H. Masters
                                Title    Trust Manager


                                                     
                                     /s/ William A. Searles
                                     -------------------------
                                         William A. Searles

                                                     
                                     /s/ Kenneth S. Shifrin
                                     -------------------------
                                         Kenneth S. Shifrin

                                                     
                                     /s/ Samuel Granett
                                     -------------------------
                                         Samuel Granett


                                      S-5
<PAGE>
                                                     
                                     /s/ W. H. Hayes
                                     -------------------------


                                                     
                               H. J. Howard, III

          [Signature pages for spouses of Additional Purchasers follow]

                                      S-6
<PAGE>


                                 SIGNATURE PAGES
                           STOCK TRANSFER RESTRICTION
                                       AND
                             SHAREHOLDERS AGREEMENT




SPOUSES:

             The undersigned spouse of Richard J. Clark hereunto  subscribes her
name in evidence of her  agreement  and consent to the  disposition  made of any
interest  she may have,  including  any  community  property  interests,  in the
capital  stock  of  Barton  Acquisition,  Inc.,  referred  to in  the  foregoing
Agreement, and to all other provisions of such Agreement.

                                         /s/ Janey E. Clark
                                         --------------------
                                         Janet E. Clark


             The  undersigned  spouse of Robert L. Myer hereunto  subscribes her
name in evidence of her  agreement  and consent to the  disposition  made of any
interest  she may have,  including  any  community  property  interests,  in the
capital  stock  of  Barton  Acquisition,  Inc.,  referred  to in  the  foregoing
Agreement, and to all other provisions of such Agreement.

                                         /s/ Sharon K. Myer
                                         ------------------
                                         Sharon K. Myer


             The undersigned  spouse of Kenneth S. Shifrin  hereunto  subscribes
her name in evidence of her agreement and consent to the disposition made of any
interest  she may have,  including  any  community  property  interests,  in the
capital  stock  of  Barton  Acquisition,  Inc.,  referred  to in  the  foregoing
Agreement, and to all other provisions of such Agreement.

                                         /s/ Yvonne Shifrin
                                         ------------------- 
                                         Yvonne Shifrin

             The undersigned  spouse of Samuel Granett  hereunto  subscribes her
name in evidence of her  agreement  and consent to the  disposition  made of any
interest  she may have,  including  any  community  property  interests,  in the
capital  stock  of  Barton  Acquisition,  Inc.,  referred  to in  the  foregoing
Agreement, and to all other provisions of such Agreement.

                                         /s/ Barbara A. Granett
                                         ---------------------
                                         Barbara A. Granett

                                      S-8
<PAGE>

             The undersigned spouse of W. H. Hayes hereunto  subscribes her name
in evidence of her agreement and consent to the disposition made of any interest
she may have,  including any community property interests,  in the capital stock
of Barton Acquisition,  Inc., referred to in the foregoing Agreement, and to all
other provisions of such Agreement.

                                          /s/ Tiffany J. Hayes
                                          --------------------
                                          Tiffany J. Hayes


             The undersigned spouse of H. J. Howard, III hereunto subscribes her
name in evidence of her  agreement  and consent to the  disposition  made of any
interest  she may have,  including  any  community  property  interests,  in the
capital  stock  of  Barton  Acquisition,  Inc.,  referred  to in  the  foregoing
Agreement, and to all other provisions of such Agreement.

                                           /s/ Cynthia Howard
                                           -------------------- 
                                           Cynthia Howard



                                      S-8



                                   APPENDIX I

                              ADDITIONAL PURCHASERS

         Richard J. Clark

         Duane K. Boyd, Jr. Trust

         Robert L. Myer

         J. A. Murphy Descendants' Trust

         William A. Searles

         Kenneth S. Shifrin

         Samuel Granett

         W. H. Hayes

         H. J. Howard, III




                                      A-1