January ____, 2001

Karen E. Perlman
A. Derrill Crowe, M.D.
2703 Quail Creek Drive
Missouri City, TX   77459

Re:  Acquisition  of 100% of the Issued  and  Outstanding  Capital  Stock of The
     Windsor Group, Inc.

Dear Ms. Perlman and Dr. Crowe:

         This letter serves to confirm our  agreement  with respect to your sale
to Prime Medical Services, Inc. (or its assignee, "Prime") of 100% of the issued
and outstanding  capital stock of The Windsor Group,  Inc., a Texas  corporation
(the "Company").

1. Purchase and Sale of Purchased Shares. Upon the execution hereof,  Prime will
purchase  from each of you,  100% of the capital  stock of the Company  owned by
each of you,  either  directly or  beneficially  in any capacity (the "Purchased
Shares"),  which Purchased  Shares you hereby  represent and warrant are 100% of
the issued and outstanding shares of capital stock of the Company as of the date
hereof. In consideration for the Purchased Shares,  against receipt of the stock
certificates  representing  the Purchased  Shares duly endorsed to Prime,  Prime
will pay each of you by wire transfer the amounts set forth  opposite your names
below:

                  Karen E. Perlman          $975,000

                  A. Derrill Crowe, M.D.    $487,500

     2. Representations and Warranties of Perlman. Perlman (and Crowe only as to
subparagraph  (a) below)  hereby  represents  and  warrants  to Prime as follows
(which representations and warranties shall survive the closing hereof):

(a)  Purchased  Shares.  Each of you own your Purchased Shares free and clear of
     any liens or  encumbrances  and has the power and authority to convey those
     shares to Prime in accordance herewith.

(b)      Existence,  Good Standing and Authority of the Company.  The Company is
         duly organized, validly existing and in good standing under the laws of
         the State of Texas,  and has full  corporate  power  and  authority  to
         conduct  its  business  as it is now  being  conducted.  Copies  of the
         Company's articles of incorporation and bylaws, as now in effect,  have
         been delivered to Prime.

(c)  The Company as General  Partner.  The Company is currently the sole general
     partner of Sunbelt  Lithotripsy  Associates,  Ltd. (the  "Partnership") and
     owns its general  partner's  interest in the Partnership  free and clear of
     any liens or encumbrances.


(d)      Existence  and  Authority  of  Partnership.  The  Partnership  is  duly
         organized  under  the  laws  of  the  State  of  Texas,  and  has  full
         partnership  power and  authority  to (i) conduct its business as it is
         now  being  conducted,  and (ii) sell all or  substantially  all of its
         operating  assets,  together  with certain of its third party  hospital
         service  contracts  (collectively,  the  "Sunbelt  Assets"),  to  Texas
         Lithotripsy  Limited  Partnership  VIII ("Texas  VIII").  Copies of the
         Partnership's  certificate  of limited  partnership  and  agreement  of
         limited  partnership,  each as amended and as now in effect,  have been
         delivered to Prime. In addition,  a list containing the names,  current
         addresses and telephone numbers of all of the  Partnership's  partners,
         as of the date hereof, has been delivered to Prime.

(e)  Sunbelt  Assets.  The  Partnership  owns all of the Sunbelt Assets free and
     clear of any liens or encumbrances.

(f)      No Conflicts. Neither the sale of the Purchased Shares to Prime nor the
         sale by the  Partnership  of the  Sunbelt  Assets  to Texas  VIII  will
         conflict with or result in a violation of (i) any resolution adopted by
         the Company's board of directors,  or any resolution of the Partnership
         adopted  by the  Company  in its  capacity  as  general  partner of the
         Partnership,  or (ii) any agreement to which either of you or either of
         the Company or the Partnership is a party.

(g)  Nondisclosed  Material Items. Except as previously  disclosed in writing to
     Prime,  neither  the  Company  nor the  Partnership  are (i) subject to any
     existing liabilities, (ii) delinquent in the payment of any taxes, or (iii)
     subject to any pending or threatened litigation.

(h)      Company and Partnership Bank Accounts. Attached hereto as Schedule I is
         a complete  list of all the bank accounts  currently  maintained by the
         Company  and the  Partnership,  including  the full name and address of
         each bank,  the full  account  name and number of each  account,  and a
         complete list of all individuals  who have signature  authority on each
         such account.

     3. Resignation.  Each of you hereby resigns, effective immediately,  all of
your positions,  if any, as employees,  officers and directors of the Company or
the Partnership.

4.  Release.  Each of you,  on behalf of yourself  and each of your  successors,
heirs and assigns, effective immediately,  hereby releases Prime, all of Prime's
affiliates,  and each of their  respective  individual,  joint or  mutual  past,
present  and  future  representatives,   affiliates,  stockholders,  controlling
persons, officers, directors, employees, successors and assigns (individually, a
"Releasee" and collectively,  the "Releasees") from any and all claims, demands,
proceedings,  causes of  action,  orders,  obligations,  contracts,  agreements,
debts,  and liabilities  whatsoever  (collectively,  "Claims")  whether known or
unknown, suspected or unsuspected, both at law or in equity, which you or any of
your successors, heirs or assigns, now has, have ever had, or may hereafter have
against the respective Releasees arising  contemporaneously with or prior to the
date  hereof or on  account  of or  arising  out of any  matter,  cause or event
occurring contemporaneously with or prior to the date hereof, including, but not
limited to (i) Claims in your capacity as shareholders,  officers,  or directors
against the Company or against the other shareholders,  officers or directors of
the Company  arising out of or in  connection  with the business of the Company,
and (ii) Claims, in your capacity as an employee, agent or representative of the
Company, against the Company or against the officers, directors, shareholders or
other  employees  of the  Company  arising  out of or in  connection  with  your
employment by the Company;  provided,  however, this release does not in any way
effect a release of your rights under this Agreement.

5.  Indemnification.  Each  of you,  on  behalf  of  yourself  and  each of your
successors,  heirs,  and assigns will indemnify and hold harmless Prime,  all of
Prime's  affiliates,  and each of their respective  individual,  joint or mutual
past, present and future representatives,  affiliates, stockholders, controlling
persons, officers, directors,  employees,  successors and assigns (individually,
an "Indemnitee"  and  collectively,  the  "Indemnitees")  from the amount of any
loss, liability, claim, damage (including incidental and consequential damages),
expense  (including costs of  investigation  and defense) or diminution of value
arising  directly or indirectly from or in connection with (i) any breach of any
representation  or warranty made by you in this Agreement (which in Crowe's case
means only subparagraph 2(a) above),  and (ii) with respect to Perlman only, any
action or inaction by you or the Company occurring prior to the date hereof.

6.  Covenant Not to Compete.  Each of you hereby agree that you shall not, for a
period of five (5) years  commencing  on the date  hereof,  compete  in any way,
directly or indirectly,  with the Company, the Partnership or Texas VIII, or any
successors to the business  thereof with respect to the provision of lithotripsy
services  or  the  treatment  of  renal  stones  and/or   urinary  tract  stones
(collectively, the "Services"), or own in any way, directly or beneficially, any
interest in any business enterprise that competes,  directly or indirectly, with
the Company,  the  Partnership  or Texas VIII, or any successors to the business
thereof with  respect to the  provision of the Services in any way, or otherwise
consult  with or provide  services to any  business  enterprise  that  competes,
directly or indirectly,  with the Company, the Partnership or Texas VIII, or any
successors to the business thereof with respect to the provision of the Services
in any way; provided,  however,  this covenant not to compete shall not prohibit
or in any way restrict (i) Perlman's  employment by  Lithotripters,  Inc.,  (ii)
Crowe's  investment  in  Prime or any of its  affiliates,  or  (iii)  any  other
activity by either of you that is consented to in writing by Prime.

7. Books and Records.  Promptly following the execution hereof, and in any event
within 10 days of the execution hereof,  you shall deliver to Prime all original
books and records of the Company and the Partnership.  You may, at your expense,
make  copies of only such books and  records as you may be  required to maintain
under applicable law.

8.  Confidentiality.  You shall not disclose any of the terms and  provisions of
this  Agreement to anyone at any time,  except for the members of your immediate
family and your attorney and except as otherwise  required by law, and you shall
take all  reasonable  steps  necessary  to insure  that all of those to whom you
disclose the terms and provisions of this Agreement are notified of and bound by
the terms of this provision.

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


10. Counterparts.  This Agreement may be executed in any number of counterparts,
each of which when so executed and  delivered  shall be deemed an original,  and
such counterparts  together shall constitute one instrument.  Each party to this
Agreement shall receive a duplicate  original of the counterpart  copy or copies
executed by it and the other party.

    [Remainder of this page intentionally left blank; Signature page follows]

<PAGE>




         If this letter accurately  reflects your understanding of our agreement
with respect to the matters  addressed  herein,  please so indicate by executing
this letter in the space provided below and returning it to us.

                                          PRIME MEDICAL SERVICES, INC.



                                        By:
                                            Brad Hummel, President

ACCEPTED AND AGREED TO
THIS ____ day of January ___, 2001




Karen E. Perlman

A. Derrill Crowe, M.D.







<PAGE>


                                   SCHEDULE I

                                  Bank Accounts