NON-COMPETITION, RELEASE AND SEVERANCE AGREEMENT

         This   Non-Competition,   Release   and   Severance   Agreement   (this
"Agreement"),  dated as of December 29, 2000,  is by and between  Prime  Medical
Services,  Inc., a Delaware  corporation  (the  "Company"),  and Joseph Jenkins,
M.D., an individual ("Employee").

                             PRELIMINARY STATEMENTS

         WHEREAS,  the Company has employed  Employee as an executive officer of
the Company,  most recently pursuant to a certain written  Employment  Agreement
(as amended to date, the "Employment Agreement"); and

         WHEREAS,  the  Company  and  Employee  have  agreed  to  terminate  the
employment  relationship  and the  Employment  Agreement,  for  each to  provide
certain  releases of liability to the other (the "Releases") and for Employee to
be paid certain fees in  consideration  for entering  into and  performing  this
Agreement.

                             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:

I.       SEVERANCE OF RELATIONSHIP

         Employee  hereby  resigns  from  any and all  offices,  positions,  and
responsibilities  with the Company  and any of the  Company's  subsidiaries  and
affiliates (collectively,  including the Company and any future subsidiaries and
affiliates of the Company  created,  acquired or otherwise  existing  during the
term  hereof,  the  "Affiliated  Entities"),  including,  but  not  limited  to,
Employee's  position as Vice Chairman of the Company and all positions as agent,
employee,  director or officer of any Affiliated Entity, which Employee may hold
or claim to hold, and the Company accepts such resignation.  Notwithstanding the
foregoing,  Employee  does not resign his position as a member of the  Company's
Board of Directors,  though  Employee and the Company agree that Employee has no
contractual  right or obligation  to remain on such Board and may resign,  or be
removed or replaced, in accordance with the Company's organizational documents.

         Employee and the Company further  acknowledge and agree that Employee's
relationship  with each of the Affiliated  Entities is hereby terminated for all
purposes.  The parties agree that the Employment  Agreement is hereby terminated
in  all  respects  and  that  no  further  payments  to  Employee  shall  be due
thereunder. Employee agrees, however, subject to his reasonable availability, to
assist  the  Company  in   completing   an  orderly   transition  of  Employee's
responsibilities  and duties  following  termination of  employment,  including,
without  limitation,  (a) assisting  the Company with any  litigation or similar
proceedings  involving the Company or an Affiliated  Entity, (b) promptly making
any  introductions  requested  by the  Company  or any  of its  officers  to any
individual  (or the  principals,  representatives  or agents of any entity) that
Employee dealt with in marketing or developing  business  opportunities  for the
Company,  any  Affiliated  Entity or the  products and services of either of the
foregoing.  Employee agrees to undertake the  responsibilities  described in the
preceding sentence in good faith with the best interests of the Company in mind.
The  parties  agree  that,  except as may  otherwise  be agreed  upon in writing
between them, the foregoing  transitional  support by Employee will, except with
respect to litigation or similar  proceedings,  require no more than ninety (90)
days after the date hereof to complete.  With respect to litigation  and similar
proceedings,  Employee  agrees to assist the Company  with  respect to the South
Carolina II litigation, the Graves/Ash litigation, the Driber litigation and any
future  litigation  in which the  Employee's  knowledge  of  relevant  facts and
circumstances  can reasonably be expected to be helpful to the Company,  subject
to Employee's  reasonable  availability.  The Company agrees to pay or reimburse
Employee's reasonable travel,  lodging and other out-of-pocket expenses incurred
in assisting the Company in these  transitional and litigation related services;
provided  the Company  must  approve  all such  expenses  that exceed  $1,000 in
advance of their incurrence.  As used herein, the term "reasonable availability"
contemplates   that  the  Employee's  time,   energy,   and  attention  will  be
substantially  reduced  ninety  (90) days  after the date  hereof,  and that his
availability  thereafter  will be influenced by his pursuit of other business or
personal  activities,  making his availability by telephone,  facsimile or other
electronic  means more  necessary.  The parties  acknowledge  and agree that the
Company has certain  indemnity  obligations  to Employee under and pursuant to a
certain  Indemnity  Agreement  dated June 12,  1996,  which shall  survive  this
Agreement  as  part  of  the  Surviving  Contracts  (as  hereinafter   defined).
Furthermore,  for so long as Employee remains a member of the Board of Directors
of the Company, he will be entitled to compensation and expense reimbursement as
is accorded all  non-employee  members of the  Company's  Board  pursuant to the
Company's  policy as in  effective  from time to time.  As  necessary  to assist
Employee  in  fulfilling  these  responsibilities,  the  Company  agrees to make
available  Confidential  Information  (as  defined  below)  that  has  not  been
previously been made available to Employee.

II.      SEVERANCE PAY AND RESTRICTIVE COVENANTS

         2.1  Severance  Pay. As partial  consideration  for the  covenants  and
agreements  by Employee  contained  herein,  the Company  agrees to pay Employee
$500,000  (the  "Severance  Pay").  The  Severance  Pay  shall  be paid in equal
quarterly  installments  over the four (4) calendar years  beginning  January 1,
2001.  Payments  shall be made on or before the  forty-fifth  (45th) day of each
calendar quarter and,  accordingly,  the first  installment  shall be payable on
February 15, 2001. The parties  acknowledge  and agree that the Severance Pay is
not  compensation in the form of wages or salary and,  accordingly,  the Company
shall have no obligation  whatsoever to withhold taxes or other amounts from any
installment  of the Severance  Pay.  Employee  agrees to pay all taxes and other
levies  of any kind that may be due with  respect  to the  Severance  Pay and to
indemnify  and hold the Company  harmless  with  respect  thereto.  Furthermore,
Employee  acknowledges  and agrees  that he shall not be  entitled to any fringe
benefits of any kind from the Company or any of the other  Affiliated  Entities.
Employee  acknowledges  that Employee's  execution of this Agreement serves as a
material  inducement to the Company's payment of the Severance Pay, and Employee
agrees  that  the  Company   will  be  entitled  to  cease  paying  any  further
installments of Severance Pay upon any breach (or any other act in contravention
of) this Agreement by Employee which is not cured within fifteen (15) days after
the Company  provides  written notice  thereof,  by certified mail, to Employee,
which notice references  specific facts constituting such breach or other act in
contravention of this Agreement.  This right of non-payment shall be in addition
to any  other  remedies,  including,  without  limitation,  injunctive  or other
equitable  remedies,  which the  Company may have  available  on account of such
breach.

         In the event the Company fails to pay any  installment of Severance Pay
which is then due and owing under the terms of this Agreement,  and such default
remains uncured for fifteen (15) days' after written notice,  by certified mail,
from  Employee,  then  Employee,  in addition to whatever  other remedies may be
available  to him,  shall be  entitled  to  accelerate  and  declare  the entire
remaining  balance of  Severance  Pay provided  hereunder  then due and owing in
full, together with interest thereon at the rate of ten percent (10%) per annum,
or the maximum lawful rate of non-usurious interest, whichever is less, from the
date any such amounts are due until paid.

         2.2 Work  Product.  Employee  agrees that all  management  or marketing
materials,  marketing  strategies,  studies or  techniques,  computer  software,
inventions,  processes and  techniques,  and  intellectual  property,  including
improvements  thereto and derivatives thereof  (collectively the "Work Product")
made,  developed or conceived by Employee  during any period of employment  with
any Affiliated  Entity and which relate to any of the Company's current business
activities,  or by any Affiliated Entity,  either by agents or employees of that
Affiliated  Entity or in cooperation with others  (including  Employee),  during
Employee's  association  with  that  Affiliated  Entity,  shall be  deemed to be
works-made-for-hire  and  Employee  shall  have no  rights  whatsoever  therein;
provided further, that if any judicial body should determine otherwise, Employee
hereby transfers any and all of Employee's  rights in or to such Work Product to
the Company. If, and to the extent,  requested from time-to-time by the Company,
Employee  agrees to execute such documents of title,  transfer and conveyance as
may be requested by the Company to evidence the sole and exclusive  ownership by
the Affiliated Entities of any and all Work Product.

         2.3  Non-Disparagement  Covenant.  Employee hereby covenants and agrees
that Employee shall, at all times hereafter, refrain from making or implying any
derogatory or negative references, statements or allusions concerning any of the
Affiliated Entities,  their officers,  agents and employees, or their respective
businesses or business  activities;  provided,  the foregoing is not intended to
prevent Employee from (i) giving truthful  responses to requests for information
made via subpoena,  in trial or through other judicial or regulatory process, or
(ii) being candid and frank in meetings of the  Company's  Board of Directors or
its committees, so long as Employee is a member thereof.

         2.4  Non-disclosure of Confidential  Information.  For purposes of this
Agreement, the term "Confidential Information" includes, without limitation, any
and  all  documents  and  information  pertaining  to  any  Affiliated  Entity's
technologies,  products or services in development,  the identity of its clients
and  suppliers,  the identity of key client or supplier  personnel with whom any
Affiliated Entity interacts to conduct business, innovations,  computer programs
and  data,  ideas,  plans,   strategies,   trade  secrets  (including,   without
limitation,  all  forms  of  business,  scientific,   economic  and  engineering
information  that any Affiliated  Entity takes  reasonable steps to keep secret,
that derives  value from not being known to the public,  and that is not readily
ascertainable  by the public  through proper  means),  proprietary  information,
advertising  strategies,  sales methods and systems,  sales and profit  figures,
accounting methods and information,  customer and client  information,  customer
and client lists, legal affairs, finances, personnel records and data, personnel
policies,  and any other documents or information of any Affiliated  Entity, the
unauthorized  use or  disclosure of which may tend to harm the interests of that
Affiliated Entity.

         Employee  recognizes  and  acknowledges  that Employee had in the past,
currently  has,  and in the future may  possibly  have,  access to  Confidential
Information and that such information is valuable,  special and unique. Employee
agrees that Employee will not disclose  Confidential  Information to any person,
firm, company, association or other entity for any purpose or reason whatsoever,
unless  (i)  such  information  becomes  available  to or  known  by the  public
generally  through no fault of Employee or (ii) disclosure is required by law or
the order of any governmental  authority under color of law, including subpoena,
provided, that prior to disclosing any information pursuant to this clause (ii),
Employee shall,  if possible,  give prior written notice thereof to the Company,
and provide the Company with the opportunity to contest such disclosure.

         Employee  agrees  to  return  to the  Company  (concurrently  with  its
execution of this Agreement) all tangible Confidential  Information and physical
or personal property of any Affiliated Entity,  including,  without  limitation,
all reports,  files,  memoranda and records, door and file keys, cardkey passes,
computer access codes and software;  provided that unless otherwise requested in
writing by the Company,  Employee may retain any of such items as are  necessary
for  Employee  to fulfill his  transitional  responsibilities  hereunder  or his
duties as a director of the Company.

         2.5 Non-Competition and Non-Solicitation.  Employee hereby agrees that,
until January 1, 2005, Employee will not, directly or indirectly, either through
any kind of ownership  (other than  ownership of securities of the Company or of
another publicly held entity of which it owns less than five percent (5%) of any
class  of  outstanding  securities),  or  as a  principal,  shareholder,  agent,
employer,  employee,  advisor,  consultant,  partner  or in  any  individual  or
representative  capacity  whatsoever,  whether  for his own  benefit  or for the
benefit of any other  person,  corporation  or other  entity,  commit any of the
following acts,  which acts shall be considered  violations of this covenant not
to compete:

         (a)  Directly  or  indirectly,  anywhere  within the  United  States of
         America,  engage in or provide, any competitive services related to any
         of the businesses in which any of the Affiliated Entities is engaged as
         of the date hereof  (collectively,  and including,  without limitation,
         urinary  tract  or  biliary  lithotripsy  ("Lithotripsy"),  lithotripsy
         database collection and management,  organizing, directing or otherwise
         leveraging the purchasing power or purchasing  efforts of the physician
         investors  in  the   Affiliated   Entities,   transurethral   microwave
         thermotherapy ("TUMT"), manufacturing,  installation, refurbishment and
         repair  of  major  medical   equipment  for  mobile  medical   services
         providers,   and  refractive   vision   correction,   the   "Prohibited
         Activities"), or provide any management services or consulting services
         related to any Prohibited Activities;

         (b) Directly or indirectly provide,  anywhere with the United States of
         America, (i) facilities,  equipment and non-physician personnel for the
         performance  by physicians of  Lithotripsy,  TUMT or refractive  vision
         correction,  or any of the other  Prohibited  Activities  described  in
         clause (a) above,  (ii) the  marketing,  scheduling  or  management  of
         Lithotripsy, TUMT or refractive vision correction, (iii) the scheduling
         of  physicians  to  perform  Lithotripsy,  TUMT  or  refractive  vision
         correction  procedures,  or (iv) the billing,  collecting or accounting
         for  the  use  of  any  such  facilities,  equipment  or  non-physician
         personnel;

         (c)  Directly  or  indirectly  request  or  advise  any  person,  firm,
         physician,  corporation or other entity having a business  relationship
         with any of the Affiliated Entities to withdraw,  curtail or cancel its
         business with any Affiliated Entity; or

         (d) Directly or indirectly hire any employee of any Affiliated  Entity,
         or induce or attempt to influence any employee of any Affiliated Entity
         to terminate its employment with such entity; however, this restriction
         shall not apply to any  person at a time when such  person  has (i) not
         been in the  employ of any  Affiliated  Entity for a period of at least
         six (6) months or (ii) been  terminated as an employee of an Affiliated
         Entity and is not then employed with any other Affiliated Entity.

         Notwithstanding the foregoing,  nothing contained in subsections (a) or
(b) or this  Section 2.5 is intended to prohibit  Employee  from (i) working for
the  American  Lithotripsy  Society,  whether  in  a  volunteer  or  compensated
capacity,  or (ii)  training  urologists  in the  use of  Lithotripsy  or  TUMT;
provided,  however,  in each case Employee  must remain in  compliance  with the
other provisions of this Agreement.

         Employee acknowledges and recognizes that the enforcement of any of the
non-competition, non-solicitation or other provisions in this Agreement will not
materially  interfere with his ability to pursue a proper  livelihood,  and that
Employee is capable of pursuing a career to earn a proper  livelihood.  Employee
recognizes  and agrees that the  enforcement  of this  Agreement is necessary to
insure the  preservation  and  continuity  of the  business  and goodwill of the
Affiliated  Entities,  and that due to the  nature of the  Affiliated  Entities'
business and the specialized training and knowledge that Employee received,  and
the  Severance  Pay  provided  for  herein,   the   non-competition   and  other
restrictions  set forth in this Agreement are reasonable as to activities,  time
and geographic area.

         2.6 Waiver Requests.  Employee shall be entitled to request a waiver of
any of the provisions of Section 2.5 orally,  provided such oral request is made
through direct  communication  (in person or  telephonically,  but not via voice
mail or other recorded  message) to the Chairman or chief  executive  officer of
the Company,  or if such titles are held by one person,  then such person or the
next most senior officer of the Company; provided any waiver granted in response
to such request must be in writing to be binding on the Company.  Alternatively,
Employee may request a waiver in writing,  but such request must be by receipted
overnight  mail  service  or  mailed  (with all  postage  and  charges  prepaid)
certified or registered mail, return receipt requested, addressed to the Company
at its  principal  executive  office  address to the attention of one of the two
officers  of the Company to which oral waiver  requests  may be made.  Complying
oral or written waiver requests (other than those related to Biliary Lithotripsy
Services,  as provided  below) shall be accepted or denied  within five (5) days
after  actual  receipt of the request by one of the two  officers of the Company
described  above.  The Company shall  respond to written  requests in writing by
mail or overnight  delivery and requests shall be deemed timely if postmarked or
deposited with the overnight delivery service within the five (5) day period. If
the  Company  fails  to  timely  respond  to a  proper  waiver  request  made in
compliance with this Section 2.6, then such request shall be deemed accepted.

         Furthermore,  notwithstanding  the  preceding  paragraph,  if  Employee
desires a waiver to engage in any activities  involving the use of lithotripters
to disintegrate biliary stones ("Biliary Lithotripsy Services"), Employee hereby
agrees to  request  such  waiver in  writing in  accordance  with the  preceding
paragraph,  and the Company shall accept or deny the request  within thirty (30)
days and otherwise in accordance with the preceding paragraph.

III.     RELEASE BY EMPLOYEE

         3.1 Released Parties.  The parties being released by Employee by virtue
of this  Agreement,  all of whom are  collectively  referred  to  herein  as the
"Company  Released  Parties," are the  Affiliated  Entities,  their  principals,
shareholders,   partners,  members,  directors,   officers,  agents,  employees,
spouses, children,  servants,  insurers, employee welfare benefit plans, pension
and/or deferred compensation plans, administrators and other fiduciaries, parent
companies, affiliated entities,  subsidiaries,  successors and assigns, and each
of them, individually and collectively.

         3.2 Release by Employee.  Employee  hereby  releases and discharges the
Company  Released   Parties  (the  "Release  by  Employee"),   individually  and
collectively,  of and from any and all claims,  causes of action,  suits, debts,
contracts, agreements, promises, liability, demands, damages, and other expenses
of any  nature  whatsoever,  at law or in  equity,  known or  unknown,  fixed or
contingent,  contemplated  or  uncontemplated,  whether  asserted or assertable,
arising out of any matter  whatsoever  which has occurred  from the beginning of
time up through and including the date hereof.  Without  limiting the generality
of the foregoing,  Employee hereby  acknowledges  and agrees that the Release by
Employee is intended to waive and discharge any and all actions, claims, demands
and causes of action  arising  out of or in any way  related  to the  Employment
Agreement or Employee's  employment by, or service as an officer or director of,
any Affiliated Entity.  However, the foregoing provisions do not, and should not
be  construed  so as to,  alter,  amend or  negate  the  enforceability  of this
Agreement, any stock options previously granted to Employee by the Company, that
certain  Indemnity   Agreement   between  the  Company  and  Employee,   or  any
partnership,  purchase or similar agreement  pursuant to which Employee acquired
any ownership  interests in any of the subsidiaries or affiliates of the Company
(collectively, the "Surviving Contracts").

         3.3 Construction.  The Release by Employee is intended to be and should
be construed as a general,  complete and final waiver and release of all claims.
The Release by Employee is being made and executed by Employee  individually and
on  behalf  of  Employee's  heirs,  successors,  assigns,  agents,  all  persons
subrogated to Employee's  rights or to whom  Employee's  rights are secondary or
derivative,  and all other  persons on behalf of whom  Employee is authorized to
act.

IV.      RELEASE BY THE COMPANY

         4.1 Release by the Company.  The Company hereby releases and discharges
Employee (the  "Release by the Company") of and from any and all claims,  causes
of action, suits, debts, contracts,  agreements,  promises,  liability, demands,
damages, and other expenses of any nature whatsoever,  at law or in equity, know
or  unknown,  fixed  or  contingent,  contemplated  or  uncontemplated,  whether
asserted or assertable,  arising out of any matter whatsoever which has occurred
from the  beginning of time up through and  including  the date hereof.  Without
limiting the generality of the foregoing,  the Company hereby  acknowledges  and
agrees that the Release by the  Company is intended to waive and  discharge  any
and all actions,  claims,  demands and causes of action arising out of or in any
way related to the Employment Agreement or Employee's  employment by, or service
as an officer or director of, any  Affiliated  Entity.  However,  the  foregoing
provisions do not, and should not be construed so as to, alter,  amend or negate
the  enforceability  of this  Agreement or the rights of any  Affiliated  Entity
under the Surviving Contracts.

         4.2  Construction.  The  Release by the  Company is  intended to be and
should be construed  as a general,  complete and final waiver and release of all
claims.  The Release by the Company is being made and executed by the Company on
its own behalf and on behalf of its successors, assigns, affiliates, agents, all
persons  subrogated to the Company's  rights or to whom the Company's rights are
secondary or derivative,  and all other persons on behalf of whom the Company is
authorized to act.

V.       MISCELLANEOUS PROVISIONS

         5.1   Acknowledgments   and  Integration.   Employee  hereby  warrants,
represents,  acknowledges and agrees that Employee has fully and completely read
this  Agreement  and has had adequate  opportunity  to consider and seek counsel
regarding  its terms and effect,  that this  Agreement,  including  the Releases
contained  herein,  is being  executed  voluntarily,  with  full  knowledge  and
understanding  of its  terms and  effects,  and that  there  are no  agreements,
statements  or  representations  except those  expressly  set forth herein which
constitute a part  hereof.  This  Agreement,  including  the Releases  contained
herein,  shall not be subject to attack on the grounds that any factual or legal
assumptions leading to its execution were wrong or invalid in any respect.

         5.2 No Admissions.  It is expressly  understood and agreed that neither
this  Agreement,   the  Releases   contained  herein,   nor  the  furnishing  of
consideration for this Agreement or such Releases,  shall be deemed or construed
at any time for any purpose as an admission by anyone of wrongdoing or liability
of any kind, all such wrongdoing and liability being expressly denied.

         5.3  Knowledge of Claims.  Each of the Company and  Employee  expressly
warrants and  stipulates  that it intends for the Releases  contained  herein to
release any and all claims that each may now have against the other,  regardless
of whether such claims have been asserted and  regardless of whether such claims
arise out of or are  related in any way to any facts in  existence  on or before
the date of this Agreement.

         5.4 Governing Law and  Construction.  This  Agreement is performable in
Travis County,  Texas,  and is governed by the laws of Texas.  The parties agree
that Travis  County,  Texas,  is proper  venue for all  actions  related to this
Agreement,  including,  without  limitation,  actions  related to  construction,
validity,  enforcement  and  performance.  This  Agreement  may not be modified,
altered or amended except in writing duly signed by each of the parties  hereto.
If  any  provision  of  this  Agreement  is  rendered  or  declared  illegal  or
unenforceable by reason of any existing or subsequently enacted statute, rule or
regulation,  or by order of or judgment of a court,  any and all other terms and
provisions  hereof shall remain in full force and effect as stated and set forth
herein.

     5.5 Binding Nature.  All of the covenants and agreements  contained  herein
shall  extend  to and be  binding  upon the  heirs,  executors,  administrators,
successors and assigns of the parties hereto.

         5.6  Remedies.  Each party  agrees that a violation  on its part of any
applicable  covenant  contained  in this  Agreement  will cause the other  party
irreparable  damage for which remedies at law may be insufficient  and, for that
reason, it agrees that the other party shall be entitled as a matter of right to
equitable  remedies,  including  specific  performance  and  injunctive  relief,
therefor,  without any requirement of posting bond or other form of surety.  The
right to specific  performance and injunctive  relief shall be cumulative and in
addition to whatever other remedies,  at law or in equity,  that the parties may
have, including, specifically,  recovery of additional damages. In addition, the
prevailing  party in an action to enforce any provision of this Agreement  shall
be  entitled  to recover  reimbursement  of  reasonable  legal fees and costs of
counsel incurred in connection therewith.

                            [Signature page follows]


<PAGE>


                                       S-1

                                 SIGNATURE PAGE

                                       FOR

                NON-COMPETITION, RELEASE AND SEVERANCE AGREEMENT

                                     BETWEEN

              PRIME MEDICAL SERVICES, INC. AND JOSEPH JENKINS, M.D.

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

COMPANY:                                      PRIME MEDICAL SERVICES, INC.

                                              By:

                                              Print Name:

                                              Title:


EMPLOYEE:

                                              Joseph Jenkins, M.D.