CONTRIBUTION AGREEMENT


                                      Among


                       BARNET DULANEY EYE CENTER, P.L.L.C.


                             DAVID D. DULANEY, M.D.,


                             RONALD W. BARNET, M.D.,


                                 MARK ROSENBERG,


                          PRIME MEDICAL SERVICES, INC.,


                         PRIME MEDICAL OPERATING, INC.,


                            LASIK INVESTORS, L.L.C.,


                         PRIME/BDR ACQUISITION, L.L.C.,


                                       And


                         PRIME/BDEC ACQUISITION, L.L.C.



                             Dated September 1, 1999








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                             CONTRIBUTION AGREEMENT

         This  Contribution  Agreement (this  "Agreement") is entered into to be
effective as of September 1, 1999 (the  "Effective  Time"),  among Prime Medical
Operating,  Inc., a Delaware corporation ("Prime"), Prime Medical Services, Inc.
a Delaware corporation ("PMSI"), Barnet Dulaney Eye Center, P.L.L.C., an Arizona
professional  limited  liability company  ("BDEC"),  LASIK Investors,  L.L.C., a
Delaware  limited  liability   company   ("LASIK"),   David  D.  Dulaney,   M.D.
("Dulaney"),  Ronald W. Barnet, M.D. ("Barnet"),  Mark Rosenberg  ("Rosenberg"),
Prime/BDR Acquisition,  L.L.C., a Delaware limited liability company ("Newco I")
and Prime/BDEC Acquisition, L.L.C., a Delaware limited liability company ("Newco
II"). BDEC, LASIK, Dulaney,  Barnet and Rosenberg are also sometimes referred to
collectively herein as the "Sellers" and individually as a "Seller."

         The parties hereto agree as follows:

                                                     ARTICLE I

                                          Agreement of Purchase and Sale

         1.1 Agreement.  Upon the basis of the  representations  and warranties,
for the consideration, and subject to the terms and conditions set forth in this
Agreement, (a) Prime agrees to purchase, as of the Effective Time, from BDEC, an
undivided  sixty  percent  (60%)  interest  in (i) the  Assets  (as  hereinafter
defined)  and (ii) the  business  conducted  using  the  Assets,  excluding  the
practice of medicine in all cases (the "Business"),  for $8,807,000 in cash (the
"Purchase  Price),  together with warrants,  in substantially  the form attached
hereto as Exhibit A (the "Primary Warrants"),  entitling BDEC to purchase 29,356
shares of $0.01 par value  common  stock of PMSI,  at one  hundred  ten  percent
(110%) of PMSI's  closing  share price as quoted by NASDAQ on the Closing  Date;
(b) Prime  agrees to  contribute  to Newco II,  as of the  Effective  Time,  the
undivided  sixty percent (60%) interest in the Assets and Business  purchased by
Prime,  and will receive a sixty percent (60%)  ownership  interest in Newco II;
(c) BDEC agrees to contribute, as of the Effective Time, the remaining undivided
forty percent  (40%)  interest in the Assets and Business to Newco II; (d) Prime
shall  acquire,  as of the  Effective  Time,  a sixty  percent  (60%)  ownership
interest in Newco I; and (e) LASIK shall  acquire,  as of the Effective  Time, a
forty percent (40%) interest in Newco I. The Purchase Price will be allocated to
the Assets in accordance  with Schedule 1.1 attached  hereto.  The parties agree
that:

     (w) immediately  prior to the Closing,  all of the  outstanding  membership
interests  of Newco I shall  be  owned by  LASIK,  and,  immediately  after  the
Closing,  Prime  shall  own  sixty  percent  (60%)  of all  of  the  outstanding
membership  interests of Newco I, and LASIK shall own forty percent (40%) of all
of the outstanding membership interests of Newco I;

     (x) immediately  prior to the Closing,  all of the  outstanding  membership
interests  of Newco II shall be  owned  by  BDEC,  and,  immediately  after  the
Closing,  Prime  shall  own  sixty  percent  (60%)  of all  of  the  outstanding
membership  interests of Newco II, and BDEC shall own forty percent (40%) of all
of the outstanding membership interests of Newco II;

     (y) prior to the  Effective  Time,  Prime and LASIK shall have executed the
limited liability company  agreement,  in the form attached hereto as Exhibit B,
and any other organizational documents of Newco I. ---------

     (z) prior to the  Effective  Time,  Prime and BDEC shall have  executed the
limited liability company  agreement,  in the form attached hereto as Exhibit C,
and any other organizational documents of Newco II; and ---------

         The  organizational  documents of Newco I and Newco II are  hereinafter
collectively referred to as the "Organizational Documents."

     1.2 Closing.  The closing of the  transactions  contemplated by Section 1.1
(the "Closing") shall take place at the offices of Akin, Gump, Strauss,  Hauer &
Feld, L.L.P., 1900 Frost Bank Plaza, 816 Congress Avenue,  Austin,  Texas 78701,
or at such  other  location  as the  parties  may  agree.  The date on which the
Closing occurs is hereinafter referred to as the "Closing Date." -------

         1.3 Assets.  The term "Assets"  shall mean the items listed on Schedule
1.3 attached hereto, all Permits (as hereinafter defined),  all business records
of Refractive Surgery (as hereinafter  defined) and the Business (as hereinafter
defined),  all contract rights of BDEC under leases (including rights to receive
returns of deposits  under such leases) or contracts  listed on Schedule 1.3 and
all of the business and goodwill of Refractive Surgery and the Business. Each of
the Sellers  hereby  represents  and warrants that the Assets include all of the
equipment, instruments, computer software used in connection with the equipment,
Permits, personal property, furniture, business records and other assets of BDEC
that are used  primarily  in or are  materially  relied  on for the  conduct  of
Refractive Surgery and the Business, except for those items that are part of the
ambulatory surgery center. As used in this Agreement, "Refractive Surgery" shall
mean,  collectively,  any current and/or future surgical  procedures intended to
correct myopia,  hyperopia or astigmatism of the eye, excluding procedures aimed
only at  restoring  accommodation  (presbyopia)  and  procedures  to treat  only
cataracts, glaucoma,  oculoplastics or retinal abnormality.  Notwithstanding the
foregoing, the following shall not be "Assets" and shall be retained by BDEC:

     (a) all activities that constitute the practice of medicine;

     (b) the books of account and record  books of BDEC  (complete  and accurate
copies of which,  insofar as they  relate to the  Business  during the  calendar
years 1997,  1998 and 1999,  shall be provided to Prime on or before the Closing
Date);

     (c) BDEC's rights under this Agreement;

     (d) assets that are neither used  primarily  in, nor  materially  relied on
for, the conduct of Refractive Surgery;

     (e) that single certain laser  currently  being leased to a physician group
in Memphis,  Tennessee,  and any interest existing on the Closing Date that BDEC
may have in the current or future profits of the facility  utilizing such laser;
and
     (f) BDEC's ownership interest in Newco II.

         1.4 Assumed Liabilities. At the Closing, Newco II shall only assume, as
of the Effective Time, lease or contract obligations of BDEC arising under lease
agreements  assigned to Newco II  pursuant to Section 1.3 and those  liabilities
set forth on Schedule 1.4 by item and amount.  Such limited  assumption shall be
pursuant to that certain general  conveyance,  assignment and transfer of assets
and  assumption  of  lease  obligations,  attached  hereto  as  Exhibit  D  (the
"Assignment and Assumption Agreemen ) to be executed by Newco II, Prime and BDEC
at the Closing, effective as of the Effective Time. With respect to any lease or
other contract obligations reflected on Schedule 1.3 and assumed by Newco II, it
is agreed  that  Newco II will only be  assuming  obligations  thereunder  which
accrue after the Effective Time, and will have no responsibility  whatsoever for
any breaches or defaults which occurred prior to the later of the Effective Time
or the Closing Date, or for  obligations  accruing prior to the Effective  Time.
Except for those  liabilities  and contract and lease  obligations  specifically
assumed  by Newco II as  provided  above,  any and all debts,  liabilities,  and
obligations of BDEC, whether known or unknown, absolute, contingent or otherwise
(including,  but not limited to,  federal,  state,  and local  taxes,  any sales
taxes,  use taxes and property  taxes,  any taxes arising from the  transactions
contemplated by this Agreement and any  liabilities  arising from any litigation
or civil,  criminal or regulatory proceeding involving or related to BDEC or its
business)  shall remain the sole  responsibility  of BDEC.  Notwithstanding  any
provision  of this  Agreement,  Newco I,  Newco II and Prime do not  assume  any
debts,  obligations  or  liabilities  of  BDEC  whatsoever,   except  for  those
liabilities and contract and lease  obligations  described in the first sentence
of this Section.

     1.5  Payment  of  Purchase  Price.  The  Purchase  Price  shall  be paid in
immediately available funds at the Closing. -------------------------

                                  ARTICLE II t"

               Representations and Warranties of Prime and PMSI t"

         Prime and PMSI each, jointly and severally,  represents and warrants to
BDEC, LASIK, Dulaney, Barnet and Rosenberg that each of the following matters is
true and correct in all respects as of the Closing (with the understanding  that
BDEC,  LASIK,  Dulaney,  Barnet and  Rosenberg  are relying  materially  on such
representations and warranties in entering into and performing this Agreement):

         2.1  Due  Organization  and  Principal  Executive  Office.  PMSI  is  a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate  power and authority to carry on
its  business  as now  conducted  and as proposed  to be  conducted.  Prime is a
corporation  duly organized,  validly  existing,  and in good standing under the
laws of the State of Delaware  and has full  corporate  power and  authority  to
carry on its business as now conducted and as proposed to be conducted. Prime is
a wholly-owned  subsidiary of PMSI. The principal  executive offices of PMSI and
Prime are located at 1301 Capital of Texas  Highway,  Austin,  Texas  78746.  No
other person or entity has any right to acquire any ownership interest in Prime.
Complete and accurate copies of the Articles of Incorporation,  Bylaws,  and all
amendments thereto,  of PMSI and of Prime, have been delivered to Sellers.  PMSI
and Prime are  qualified to do business  and are in good  standing in each state
where  such  qualification  is  required  for the  conduct  of its  business  as
conducted on the Closing Date.

         2.2 Due  Authorization.  PMSI  and  Prime  each  have  full  power  and
authority to enter into and perform this Agreement and each Transaction Document
(as hereinafter  defined) required to be executed by it in connection  herewith.
The execution,  delivery, and performance of this Agreement and such Transaction
Documents have been duly authorized by all necessary  action of PMSI,  Prime and
their respective  directors and  shareholders.  This Agreement has been duly and
validly  executed and  delivered by PMSI and Prime and  constitutes  a valid and
binding obligation of each enforceable  against it in accordance with its terms.
The execution, delivery, and performance of this Agreement, and each Transaction
Document  required  herein to be  executed by PMSI or Prime does not (a) violate
any federal,  state, county, or local law, rule, or regulation  applicable to it
or its business (with the understanding  and agreement that this  representation
does not apply to matters  relating to the operation of Newco II or the Business
on and  after the  Closing),  (b)  violate  or  conflict  with,  or  permit  the
cancellation  of, any  agreement  to which it is a party,  or by which it or its
properties are bound, or result in the creation of any lien,  security interest,
charge, or encumbrance upon any of such properties,  (c) permit the acceleration
of the  maturity  of any  indebtedness  of, or any  indebtedness  secured by the
property of, PMSI or Prime, or (d) violate or conflict with any provision of the
Articles of Incorporation  or Bylaws of either.  No action,  consent,  waiver or
approval of, or filing with, any federal,  state,  county or local  governmental
authority  is  required  by PMSI or Prime  in  connection  with  the  execution,
delivery, or performance of this Agreement (or any Transaction Document).

         2.3  Financial  Statements.   The  audited  balance  sheet  and  income
statement  for PMSI as of and for each of the years ended  December 31, 1997 and
1998, and the unaudited  balance sheets and income statements for PMSI as of and
for the six (6) months ended June 30, 1999  (collectively,  the "PMSI  Financial
Statements")  are attached  hereto as Exhibit E. The PMSI  Financial  Statements
have been prepared in accordance with generally accepted  accounting  principles
consistently  applied  ("GAAP")  (except  as  specifically  noted  therein or in
Schedule  2.3)  and  fairly  present  the  financial  position  and  results  of
operations  of PMSI, as of the  indicated  dates and for the indicated  periods.
Except as disclosed in Schedule  2.3 and except to the extent  specifically  and
fully reflected in the PMSI Financial Statements  (including the notes thereto),
PMSI does not have any  liabilities  of a type that would be required by GAAP to
be  reflected  as such in the PMSI  Financial  Statements  (including  the notes
thereto) other than current liabilities on open account incurred in the ordinary
course  of  business  consistent  with  past  practices.  Except as set forth in
Schedule  2.3 hereto,  since June 30,  1999 there has been no  material  adverse
change in the financial position, assets or results of operations of PMSI.

         2.4  Permits,  etc.  To the best of PMSI's  knowledge,  PMSI,  and each
subsidiary  or other entity for which  greater than fifty  percent  (50%) of the
outstanding  voting  equity  interests  are  controlled  by  PMSI,  directly  or
indirectly  (collectively,  the "PMSI Controlled Parties"),  has complied in all
material respects, and is in compliance in all material respects, with the terms
and  conditions  of all  issued or pending  federal,  state,  county,  and local
governmental  licenses,  certificates,  certificates of need, permits,  waivers,
filings and orders  (collectively,  "Permits")  held or applied for by it in the
conduct of its business.  To PMSI's knowledge,  no additional Permit is required
from any federal, state, county, or local governmental agency or body thereof in
connection  with  the  conduct  of the  business  (as  such  business  has  been
conducted) of PMSI or any PMSI  Controlled  Party. No claim has been made by any
governmental  authority  (and,  to the knowledge of PMSI, no such claim has been
threatened)  to the  effect  that a  Permit  not  possessed  by PMSI or any PMSI
Controlled  Party is  necessary  in respect of the business of PMSI or such PMSI
Controlled Party.

         2.5      Environmental Issues.

          (a) For purposes of this Section,  the term "environmental laws" shall
     mean all laws and  regulations  relating  to the  manufacture,  processing,
     distribution, use, treatment, storage, disposal, transport, or handling, or
     the  emission,  discharge,  or  release,  of  any  pollutant,  contaminant,
     chemical,  or  industrial  toxic or hazardous  substance or waste,  and any
     order related thereto.

          (b) PMSI, and each PMSI Controlled Party, has complied in all material
     respects with and obtained all authorizations and made all filings required
     by all environmental laws applicable to its business.

                  (c) Neither  PMSI nor any PMSI  Controlled  Party has received
any notice from the United States  Environmental  Protection Agency that it is a
potentially  responsible party under the Comprehensive  Environmental  Response,
Compensation  and  Liability  Act  ("Superfund  Notice"),  any citation from any
federal,  state or local  governmental  authority  for  non-compliance  with its
requirements  with  respect to air,  water or  environmental  pollution,  or the
improper storage,  use or discharge of any hazardous waste, other waste or other
substance  or other  material  ("Citations")  pertaining  to its business or any
written  notice from any private  party  alleging any such  non-compliance;  and
there are no pending  or  unresolved  Superfund  Notices,  Citations  or written
notices from private parties alleging any such non-compliance.

         2.6 Claims and  Proceedings.  Attached hereto as Schedule 2.6 is a list
and description of all claims, actions, suits,  proceedings,  and investigations
pending  against  PMSI or any PMSI  Controlled  Party,  at law or in equity,  or
before or by any court, municipal or other governmental department,  commission,
board, agency, or instrumentality.  Except as set forth on Schedule 2.6 attached
hereto, none of such claims, actions, suits, proceedings, or investigations will
result in any  liability  or loss to PMSI or such PMSI  Controlled  Party  which
(individually  or in the  aggregate) is material,  and neither PMSI nor any PMSI
Controlled  Party has been, or is now, subject to any order,  judgment,  decree,
stipulation,  or consent of any court, governmental body, or agency. No inquiry,
action, or proceeding has been asserted, instituted or threatened against either
PMSI or Prime to restrain  or  prohibit  the  carrying  out of the  transactions
contemplated by this Agreement or to challenge the validity of such transactions
or any part thereof or seeking damages on account thereof.

         2.7 Taxes. All federal, foreign, state, county, and local income, gross
receipts,  excise, property,  franchise,  license, sales, use, withholding,  and
other  tax  (collectively,   "Taxes")  returns,  reports,  and  declarations  of
estimated tax (collectively,  "Returns") which were required to be filed by PMSI
or any PMSI Controlled Party on or before the date hereof have been filed within
the time  (including any applicable  extensions)  and in the manner  provided by
law,  and all such  Returns are true and correct in all  material  respects  and
accurately  reflect the Tax liabilities of PMSI or such PMSI  Controlled  Party.
All Taxes,  assessments,  penalties,  and interest which have become due by PMSI
pursuant  to such  Returns  have been  paid or  adequately  accrued  in the PMSI
Financial  Statements.  The provisions for Taxes  reflected on the balance sheet
contained in the PMSI  Financial  Statements are adequate to cover all of PMSI's
estimated Tax  liabilities  for the respective  periods then ended and all prior
periods.  As of the  Closing  Date,  PMSI will not owe any Taxes for any  period
prior to the Closing which are not reflected on the PMSI  Financial  Statements,
except for Taxes  attributable to the operations of PMSI between the date of the
PMSI  Financial  Statements  and the Closing  Date.  PMSI has not  executed  any
presently  effective  waiver or extension of any statute of limitations  against
assessments and collection of Taxes.  There are no pending or threatened claims,
assessments,   notices,   proposals   to   assess,   deficiencies,   or   audits
(collectively,  "Tax Actions")  against PMSI or any PMSI  Controlled  Party with
respect  to any Taxes owed or  allegedly  owed by such  party.  There are no tax
liens on any of the  assets of PMSI or any PMSI  Controlled  Party.  Proper  and
accurate  amounts  have  been  withheld  and  remitted  by PMSI  and  each  PMSI
Controlled Party from and in respect of all persons from whom either is required
by  applicable  law to  withhold  for all  periods  in  compliance  with the tax
withholding  provisions of all applicable  laws and  regulations.  PMSI is not a
party to any tax sharing agreement.

         2.8  Certain  Consents.  Except as set forth on Schedule  2.8  attached
hereto,  there are no consents,  waivers,  or approvals  required to be executed
and/or  obtained  by PMSI or Prime from third  parties  in  connection  with the
execution,  delivery,  and  performance  of this  Agreement  or any of the other
contracts, documents, instruments and agreements to be executed and delivered at
the Closing,  including,  without  limitation,  those set forth in, or delivered
pursuant to, ARTICLE V hereof and the Target Center Loan Documents (all of which
are collectively referred to as the "Transaction Documents").

     2.9 Brokers. Neither PMSI nor Prime has engaged, or caused any liability to
be incurred to, any finder,  broker,  or sales agent (or has paid,  or will pay,
any finders fee or similar fee or commission  to any person) in connection  with
the execution,  delivery,  or performance of this Agreement or the  transactions
contemplated  hereby.  -------  2.10  Interest in  Competitors,  Suppliers,  and
Customers.  Except as set forth on Schedule

     2.10 attached  hereto,  neither PMSI nor any PMSI Controlled  Party, and to
the  knowledge  of PMSI no  officer,  director  or  employee of PMSI or any PMSI
Controlled Party, has any ownership interest (other than ownership of securities
of a publicly  held  corporation  or other  entity  constituting  less than five
percent  (5%)  of that  class  of  outstanding  securities)  in any  competitor,
customer or  supplier  of the  -------------------------------------------------
------------- Refractive Surgery business.

     2.11 Warranties.  Except as set forth on Schedule 2.11 attached hereto,  no
claims for breach of product or service  warranties  have been made against PMSI
or any PMSI Controlled Party since January 1, 1996. ---------- -------------

     2.12 No Defaults.  Neither PMSI nor Prime is aware of any breach or default
by the other of any of the representations,  warranties, covenants or agreements
contained herein. -----------

         2.13     Investment Representations.  Each of PMSI and Prime:

     (a) Is an "accredited investor," and has not retained or consulted with any
"purchaser  representative" (as such terms are defined in Rule 501 of Regulation
D promulgated  under the  Securities  Act of 1933,  as amended (the  "Securities
Act")) in connection  with its execution of this Agreement and the  consummation
of the transactions contemplated hereby;

     (b) Has such  knowledge and  experience  in financial and business  matters
that it is capable of evaluating  the merits and risks of an investment in Newco
I and Newco II;

                  (c) Will acquire any Newco I or Newco II interests for its own
account for investment and not with the view toward resale or  redistribution in
a manner which would require  registration  under the Securities  Act, the Texas
Securities Act, as amended,  or the securities laws of any other state,  and has
no reason to  anticipate  any change in its  circumstances  or other  particular
occasion  or  event  which  would  cause  it to sell  its  Newco I or  Newco  II
interests, or any part thereof or interest therein, and has no present intention
of  dividing  the Newco I and Newco II  interests  with others or  reselling  or
otherwise disposing of the Newco I and Newco II interests or any part thereof or
interest   therein  either  currently  or  after  the  passage  of  a  fixed  or
determinable  amount  of time or upon the  occurrence  or  nonoccurrence  of any
predetermined event or circumstance;

                  (d) In connection  with  entering into this  Agreement and the
Transaction  Documents  to which each is a party,  and in making the  investment
decisions  associated  therewith,   has  neither  received  nor  relied  on  any
representations or warranties from Newco I, Newco II, Sellers, the affiliates of
the foregoing or the officers,  directors,  shareholders,  employees,  partners,
members, agents,  consultants,  personnel or similarly related parties of any of
the foregoing, other than those representations and warranties contained in this
Agreement;

     (e) Is able to bear the economic  risk of an  investment in the Newco I and
Newco II  interests  and it has  sufficient  net worth to  sustain a loss of its
entire  investment  without  material  economic  hardship  if such a loss should
occur; and

     (f)  Acknowledges  that the  Newco I and Newco II  interests  have not been
registered under the Securities Act, or the securities laws of any of the states
of the United  States,  that an investment in the Newco I and Newco II interests
involves a high degree of risk,  and that the Newco I and Newco II interests are
an illiquid investment.
                                                   ARTICLE III "

 Representations and Warranties of BDEC, LASIK, Dulaney, Barnet and Rosenberg "

     Each of BDEC and  LASIK,  jointly  and  severally,  hereby  represents  and
warrants  to Prime  and PMSI  that  each of the  following  matters  is true and
correct in all respects.  With respect to representations  and warranties by the
Sellers,  each of Dulaney,  Barnet and  Rosenberg,  severally,  and not jointly,
hereby makes such  representations  or warranties  only about or with respect to
himself.  Each  representation  and warranty  contained  in this  ARTICLE  shall
survive the Closing and shall be deemed made as of both the Closing Date and the
Effective  Time  (with  the  understanding  that  Prime  and  PMSI  are  relying
materially  on each  such  representation  and  warranty  in  entering  into and
performing this Agreement).

         3.1 Due Organization. BDEC is an Arizona professional limited liability
company,  and LASIK is a Delaware limited  liability  company.  Each of BDEC and
LASIK is duly organized,  validly existing,  and in good standing under the laws
of its state of formation, and each has full power and authority to carry on its
business as now  conducted  and as proposed to be  conducted.  Dulaney,  Barnet,
Scott A. Perkins, M.D. ("Perkins"),  and Robert B. Pinkert, O.D. ("Pinkert") are
the only  members  of BDEC,  and each  owns  that  percentage  of BDEC set forth
opposite his name on Schedule 3.1(a). Dulaney,  Barnet,  Rosenberg,  Perkins and
Pinkert are the only members of LASIK,  and each owns that  percentage  of LASIK
set  forth  opposite  his  name on  Schedule  3.1(a).  Immediately  prior to the
Closing,  BDEC is the  sole,  one  hundred  percent  (100%)  owner of all of the
outstanding  ownership interests in Newco II, and LASIK is the sole, one hundred
percent (100%) owner of all of the outstanding  ownership  interests in Newco I.
Except as expressly provided in this Agreement, as of the Closing Date, no other
person or entity  has any right to acquire  any  ownership  interest  in BDEC or
LASIK.  As of the  Closing  Date,  there is only one  class  or  designation  of
membership  interests in each of BDEC and LASIK.  Complete and correct copies of
the organizational documents, and all amendments thereto, of BDEC and LASIK have
been  delivered  to  Prime.  BDEC is  qualified  to do  business  and is in good
standing  in the states set forth on  Schedule  3.1(b)  attached  hereto,  which
states represent every jurisdiction where such qualification is required for the
conduct of BDEC's business as conducted on the Closing Date.

     3.2  Subsidiaries.  Except as set forth on Schedule  3.2,  neither BDEC nor
LASIK  directly or  indirectly  has (or possesses any options or other rights to
acquire) any subsidiaries or any direct or indirect  ownership  interests in any
person,   business,   corporation,   partnership,   limited  liability  company,
association, joint venture, trust, or other entity. ------------ ------------

         3.3 Due  Authorization.  Each  Seller has full power and  authority  to
enter  into and  perform  this  Agreement  and each other  Transaction  Document
required to be executed by such Seller in connection  herewith.  The  execution,
delivery,  and performance of this Agreement and such Transaction Documents have
been duly authorized by all necessary  action of BDEC,  LASIK,  and all of their
respective  managers  and  members.  This  Agreement  has been duly and  validly
executed  and  delivered  by the  Sellers  and  constitutes  a valid and binding
obligation of the Sellers enforceable against them in accordance with its terms.
The  execution,  delivery,  and  performance of this  Agreement,  and each other
Transaction  Document required herein to be executed by the Sellers does not (a)
violate any federal, state, county, or local law, rule, or regulation applicable
to the Sellers,  the Sellers' business or the Assets (with the understanding and
agreement  that this  representation  does not apply to matters  relating to the
operation of Newco II or the Business on and after the Closing),  (b) violate or
conflict with, or permit the  cancellation of, any agreement to which any of the
Sellers is a party,  or by which any  Seller or its  properties  are  bound,  or
result in the creation of any lien,  security  interest,  charge, or encumbrance
upon any of such properties,  (c) permit the acceleration of the maturity of any
indebtedness  of, or any  indebtedness  secured by the property of, BDEC, or (d)
violate or conflict with any provision of the organizational documents of either
BDEC or LASIK.  No action,  consent,  waiver or approval of, or filing with, any
federal, state, county or local governmental authority is required by any of the
Sellers in connection  with the  execution,  delivery,  or  performance  of this
Agreement (or any Transaction Document).


         3.4  Financial  Statements.  The  unaudited  income  statement  for the
Business  for  the  six  months  ended  June  30,  1999  (the  "BDEC   Financial
Statements") is attached hereto as Exhibit F. The BDEC Financial Statements have
been  prepared  on the accrual  basis of  accounting  and fairly and  accurately
represent  the results of  operations of the Business for such six month period.
Except as set forth in Schedule 3.4 hereto,  since June 30, 1999, there has been
no  material  adverse  change in the  financial  position,  assets or results of
operations of the Business.  For each of the calendar  years 1997 and 1998,  and
for the six months  ended June 30, 1999,  Exhibit F also  contains a list of the
total number of Refractive  Surgery  procedures  performed by BDEC,  and related
charges, adjustments, collections and procedures, during the respective periods,
including  subtotals  reflecting  the numbers of each type of  procedure,  and a
separate listing of the percentage of procedures done at any location other than
at  4800  North  22nd  Street,  Phoenix,  Arizona  85016.  Each  of the  Sellers
represents and warrants that Exhibit F fairly represents the number and location
of  Refractive  Surgery  procedures  performed  by BDEC,  and  related  charges,
adjustments, collections and procedures, for the indicated periods.


         3.5  Conduct  of  Business;  Certain  Actions.  Except  as set forth on
Schedule  3.5  attached  hereto,  since June 30, 1999,  BDEC has  conducted  the
Business and  operations of the Business in the ordinary  course and  consistent
with its past  practices and has not,  with respect to or in a manner  affecting
the Business (a) purchased,  retired,  or redeemed any membership  interest from
any Seller,  (b) increased the  compensation  of any of the  employees,  agents,
contractors, vendors or other parties, except for wage and salary increases made
in the ordinary  course of business and  consistent  with the past  practices of
BDEC, (c) made capital expenditures exceeding $10,000 individually or $25,000 in
the  aggregate,  (d) sold any  asset  (or any group of  related  assets)  in any
transaction (or series of related  transactions)  in which the purchase price or
book value for such asset (or group of related  assets)  exceeded  $10,000,  (e)
discharged  or  satisfied  any lien or  encumbrance  or paid any  obligation  or
liability,  absolute or contingent,  other than current liabilities incurred and
paid in the ordinary  course of business,  (f) made or  guaranteed  any loans or
advances to any party whatsoever,  (g) suffered or permitted any lien,  security
interest,  claim, charge, or other encumbrance to arise or be granted or created
against or upon any of its assets, real or personal, tangible or intangible, (h)
canceled,  waived,  or released any of BDEC's debts,  rights,  or claims against
third  parties,  (i) made any  change  in its  method of  accounting,  (j) made,
entered into, amended, or terminated any written employment  contract,  created,
made,  amended,  or terminated  any bonus,  stock option,  pension,  retirement,
profit sharing, or other employee benefit plan or arrangement, or withdrawn from
any  "multi-employer  plan" (as defined in the Internal Revenue Code of 1986, as
amended (the "Code")) so as to create any liability  under ERISA (as hereinafter
defined) to any person or entity,  (k)  amended,  terminated  or  experienced  a
termination of any material contract, agreement, lease, franchise, or license to
which it is a party, (l) entered into any other material  transactions except in
the ordinary  course of business,  (m) entered  into any  contract,  commitment,
agreement,  or understanding  to do any acts described in the foregoing  clauses
(a)-(l) of this Section, (n) suffered any material damage,  destruction, or loss
(whether or not covered by insurance) to any assets, (o) experienced any strike,
slowdown,  or demand for recognition by a labor  organization by or with respect
to any of its employees, or (p) experienced or effected any shutdown, slow-down,
or cessation of any operations conducted by, or constituting part of, it.

         Each of LASIK, Newco I and Newco II were formed in contemplation of the
transactions  described in this  Agreement,  and none of them has  conducted any
business since its formation  (except for the authorization of and entering into
this Agreement and the Transaction Documents).

         3.6  Ownership of Assets;  Licenses,  Permits,  etc.  BDEC has good and
marketable  title to, or lessee's  interest in, all of the Assets free and clear
of  all  liens,  security  interests,   claims  and  encumbrances  of  any  kind
whatsoever,  including,  without limitation,  the Assets specifically set out on
Schedule  1.3. The Assets  include all property and assets,  real,  personal and
mixed, tangible and intangible, including leases and other contracts, which are,
on the  Closing  Date,  used  primarily  in, or  materially  relied on for,  the
operation of the Business as then  conducted.  The Assets are in good  operating
condition and repair, subject to ordinary wear and tear, taking into account the
respective  ages of the  properties  involved  and  are,  on the  Closing  Date,
adequate for the conduct of the Business as then  conducted.  Attached hereto as
Schedule  3.6 is a list and  description  of all Permits  held or applied for by
BDEC and used or relied on as of the Closing Date in connection  with the Assets
or the Business. To the best of its knowledge, BDEC has complied in all material
respects, and BDEC is in compliance in all material respects, with the terms and
conditions of any such Permits.  To BDEC's  knowledge,  no additional  Permit is
required from any federal,  state,  county, or local governmental agency or body
thereof in  connection  with the conduct of the Business on the Closing Date. No
claim has been made by any governmental  authority (and, to the knowledge of the
Sellers,  no such claim has been  threatened)  to the  effect  that a Permit not
possessed by BDEC is  necessary in respect of the Business on the Closing  Date.
All of the Permits noted on the attached  Schedule 3.6 are freely assignable to,
or may be acquired by, Prime and Newco II. In the event any such Permits are not
assigned  to Prime or Newco II, BDEC  agrees to fully  cooperate  (at Newco II's
expense)  in any effort by Prime or Newco II to obtain a similar or  replacement
Permit.

         3.7      Environmental Issues.

     (a) For purposes of this Section,  the term "environmental laws" shall mean
all laws and regulations relating to the manufacture,  processing, distribution,
use, treatment,  storage,  disposal,  transport,  or handling,  or the emission,
discharge,  or release, of any pollutant,  contaminant,  chemical, or industrial
toxic or hazardous substance or waste, and any order related thereto,  affecting
the Assets or the Business.

     (b) BDEC has  complied  in all  material  respects  with and  obtained  all
authorizations   and  made  all  filings  required  by  all  environmental  laws
applicable to the Business.  The properties  occupied or used in the Business by
BDEC have not been contaminated with any hazardous wastes, hazardous substances,
or  other   hazardous  or  toxic   materials  in  violation  of  any  applicable
environmental  law, the violation of which could have a material  adverse impact
on the Business.

     (c) BDEC has not received any Superfund Notice, any Citation  pertaining to
its  business or any written  notice from any private  party  alleging  any such
non-compliance;  and there  are no  pending  or  unresolved  Superfund  Notices,
Citations  or  written   notices  from   private   parties   alleging  any  such
non-compliance.

     3.8 Intellectual Property Rights. There are no patents,  trademarks,  trade
names,  or  copyrights  used or relied on in the Business,  and no  applications
therefor,  owned by or  registered  in the name of BDEC or in which BDEC has any
right, license, or interest.  With respect to the Business,  BDEC is not a party
to any license  agreement,  either as licensor or licensee,  with respect to any
patents, trademarks, trade names, or copyrights. Except as set forth on Schedule
3.13, with respect to the  ----------------------------  ------------- Business,
BDEC has not received any notice that it is  infringing  any patent,  trademark,
trade name, or copyright of others.

     3.9 Compliance with Laws.  With respect to the Assets and the Business,  to
its  knowledge,  BDEC has  complied  in all  material  respects,  and BDEC is in
compliance in all material respects,  with all federal, state, county, and local
laws,  rules,  regulations  and  ordinances  currently  in effect.  BDEC has not
received any notice that a claim has been made or threatened by any governmental
authority  against BDEC to the effect that the  Business  fails to comply in any
respect with any law, rule, -------------------- regulation, or ordinance.

         3.10  Insurance.  Attached  hereto  as  Schedule  3.10 is a list of all
policies of fire, liability, business interruption, and other forms of insurance
(including,  without  limitation,  professional  liability  insurance)  and  all
fidelity  bonds held in relation to or  applicable  to the  Business at any time
within the past three (3) years,  which  schedule  sets forth in respect of each
such policy the policy name,  policy number,  carrier,  term,  type of coverage,
deductible  amount or self-insured  retention  amount,  limits of coverage,  and
annual premium.  To the knowledge of Sellers,  no event directly relating to the
Business has occurred  which will result in a retroactive  upward  adjustment of
premiums under any such policies or which is likely to result in any prospective
upward adjustment in such premiums.  Except as described on Schedule 3.10, there
have been no material  changes in the type of insurance  coverage  maintained by
BDEC for the  Business  during  the past  three  (3)  years,  including  without
limitation  any change which has resulted in any period during which BDEC had no
insurance coverage with respect to the Business. Except as described on Schedule
3.10,  excluding  insurance  policies which have expired and been  replaced,  no
insurance  policy of BDEC related to the Business has been  canceled  within the
last three (3) years and no threat  has been made to cancel  any such  insurance
policy of BDEC within such period.

         3.11 Employee  Benefit  Matters.  Except as set forth on Schedule 3.11,
BDEC does not maintain nor does it  contribute  nor is it required to contribute
to any  "employee  welfare  benefit  plan" (as  defined in  section  3(1) of the
Employee  Retirement  Income  Security Act of 1974 (and any sections of the Code
amended by it) and all regulations promulgated thereunder, as the same have from
time to time been amended  ("ERISA")) or any "employee pension benefit plan" (as
defined in ERISA). Except as described on Schedule 3.11, BDEC does not presently
maintain  and has  never  maintained,  or had any  obligation  of any  nature to
contribute to, a "defined benefit plan" within the meaning of the Code.

         3.12 Contracts and  Agreements.  Attached  hereto as Schedule 3.12 is a
list of all written or oral contracts, commitments, leases, and other agreements
(including, without limitation, all promissory notes, loan agreements, and other
evidences  of  indebtedness,  mortgages,  deeds of trust,  security  agreements,
pledge agreements,  service  agreements,  and similar agreements and instruments
and all  confidentiality  agreements) that relate to or affect the Assets or the
Business, to which BDEC is a party or by which BDEC or its properties are bound,
pursuant to which the  obligations  thereunder  of any party thereto are, or are
contemplated as being, in respect of any such individual contracts, commitments,
leases, or other agreements during any year during the term thereof,  $25,000 or
greater,  or which are  otherwise  material to the  Business  (collectively  the
"Contracts"  and  individually,  a  "Contract").  BDEC is not  and,  to the best
knowledge  of Sellers,  no other party  thereto is in default  (and no event has
occurred which, with the passage of time or the giving of notice, or both, would
constitute a default by BDEC or, to the best knowledge of Sellers,  by any other
party thereto) under any Contract.  BDEC has not waived any material right under
any Contract, and no consents or approvals (other than those obtained in writing
and  delivered  to Prime prior to Closing)  are  required  under any Contract in
connection with the sale of the Assets or the  consummation of the  transactions
contemplated hereby.

         3.13 Claims and Proceedings. Attached hereto as Schedule 3.13 is a list
and description of all claims, actions, suits,  proceedings,  and investigations
pending or threatened in writing against BDEC, at law or in equity, or before or
by any court,  municipal or other governmental  department,  commission,  board,
agency,  or  instrumentality,  which  relate to or affect  the  Business  or the
Assets.  Except as set forth on  Schedule  3.13  attached  hereto,  none of such
claims,  actions,  suits,  proceedings,  or  investigations  will  result in any
liability or loss to BDEC which  (individually or in the aggregate) is material,
and BDEC has not been,  and BDEC is not now,  subject  to any  order,  judgment,
decree,  stipulation,  or consent of any court, governmental body, or agency. No
inquiry,  action,  or proceeding  has been asserted,  instituted,  or threatened
against  BDEC to restrain  or  prohibit  the  carrying  out of the  transactions
contemplated by this Agreement or to challenge the validity of such transactions
or any part thereof or seeking damages on account thereof.

         3.14 Taxes.  All Returns  which were required to be filed by BDEC on or
before the date hereof have been filed within the time (including any applicable
extensions) and in the manner provided by law, and all such Returns are true and
correct in all material  respects and accurately  reflect the Tax liabilities of
BDEC.  All Taxes,  assessments,  penalties,  and interest  which have become due
pursuant  to such  Returns  have been  paid or  adequately  accrued  in the BDEC
Financial  Statements.  The provisions for Taxes  reflected on the balance sheet
contained in the BDEC  Financial  Statements are adequate to cover all of BDEC's
estimated Tax  liabilities  for the respective  periods then ended and all prior
periods;  provided,  however,  that BDEC is not  required to pay federal  income
taxes  and,  accordingly,  has not made  any  allowance  in the  BDEC  Financial
Statements for any federal income taxes.  As of the Closing Date,  BDEC will not
owe any Taxes for any period prior to the Closing which are not reflected on the
BDEC Financial  Statements,  except for Taxes  attributable to the operations of
BDEC between the date of the BDEC  Financial  Statements  and the Closing  Date.
BDEC has not executed any presently effective waiver or extension of any statute
of limitations against assessments and collection of Taxes. There are no pending
or  threatened  Tax  Actions  against  BDEC with  respect  to any Taxes  owed or
allegedly  owed by BDEC.  There are no tax  liens on any of the  assets of BDEC.
Proper and accurate  amounts have been withheld and remitted by BDEC from and in
respect of all persons  from whom it is required by  applicable  law to withhold
for all  periods  in  compliance  with  the tax  withholding  provisions  of all
applicable  laws  and  regulations.  BDEC  is not a  party  to any  tax  sharing
agreement.

         3.15 Personnel. Attached hereto as Schedule 3.15 is a list of names and
current annual rates of compensation of those  individuals (the "Employees") who
will be involved in the  operation  of the  Business  after the  Effective  Time
pursuant to the Collocation  Agreement (as hereinafter  defined).  Except as set
forth  on  Schedule  3.15,  there  are  no  bonus,  profit  sharing,  percentage
compensation,  company automobile,  club membership, and other like benefits, if
any, paid or payable by BDEC to any Employees from December 31, 1998 through the
Closing Date. Schedule 3.15 attached hereto also contains a brief description of
all material terms of employment agreements and confidentiality  agreements with
respect  to the  Business  to which BDEC is a party and all  severance  benefits
which any  Employee or sales  representative  involved in the  operation  of the
Business is or may be entitled to receive.  BDEC has delivered to Prime accurate
and  complete  copies  of  all  such  employment   agreements,   confidentiality
agreements, and all other agreements, plans, and other instruments to which BDEC
is a party and under which any Employees are entitled to receive benefits of any
nature.  The  employee  relations  of BDEC are good and there is no  pending  or
threatened (i) union organization campaign relating to BDEC, (ii) claims against
BDEC  or the  Sellers  by any  Employees  (other  than  those  certain  Workers'
Compensation claims specifically described on Schedule 3.13), or (iii) presently
anticipated terminations,  resignations or retirements of any Employees. None of
the Employees are  represented by any labor union or  organization.  There is no
unfair labor  practice  claim against BDEC before the National  Labor  Relations
Board or any strike, labor dispute,  work slowdown,  or work stoppage pending or
threatened against or involving BDEC.

         3.16 Business Relations. Sellers have no reason to believe and have not
been  notified  that any supplier or customer of BDEC will cease or refuse to do
business with BDEC or Newco II in the same manner as previously  conducted  with
BDEC as a  result  of or  within  one (1) year  after  the  consummation  of the
transactions  contemplated hereby, to the extent such cessation or refusal might
affect  the  Assets or the  Business.  BDEC has not  received  any notice of any
disruption  (including  delayed  deliveries or  allocations by suppliers) in the
availability of the materials or products used by BDEC.

     3.17 Agents. Except as set forth on Schedule 3.17 attached hereto, BDEC has
not  designated or appointed any person (other than BDEC's  employees,  officers
and managers) or other entity to act for it or on its behalf with respect to the
Business  pursuant to any power of attorney or any agency  which is presently in
effect. ------ -------------

     3.18  Commission  Sales  Contracts.  Except as disclosed  in Schedule  3.18
attached hereto,  BDEC does not employ or have any  relationship,  related to or
arising out of the Assets or the  Business,  with any  individual,  corporation,
partnership, or other entity whose compensation from BDEC is in whole or in part
determined on a commission basis. -------------------------- -------------

     3.19  Certain  Consents.  Except as set  forth on  Schedule  3.19  attached
hereto,  there are no consents,  waivers,  or approvals  required to be executed
and/or  obtained  by  any  Sellers  from  third  parties   (including,   without
limitation,  Perkins,  Pinkert,  or the spouses of Dulaney,  Barnet,  Perkins or
Pinkert) in connection  with the execution,  delivery,  and  performance of this
Agreement or any other Transaction Document. ---------------- -------------

     3.20 Brokers. No Seller has engaged, or caused any liability to be incurred
to, any finder,  broker,  or sales agent (or has paid,  or will pay, any finders
fee or  similar  fee or  commission  to  any  person)  in  connection  with  the
execution,  delivery,  or  performance  of this  Agreement  or the  transactions
contemplated hereby. -------

         3.21 Interest in Competitors,  Suppliers, and Customers.  Except as set
forth on  Schedule  3.21  attached  hereto,  no Seller or any  affiliate  of any
Seller, and to the knowledge of Sellers no officer,  manager or employee of BDEC
or any affiliate of any officer,  manager or employee of BDEC, has any ownership
interest in any competitor, customer or supplier of the Business or any property
used in the  operation of the Business.  For purposes of this  Section,  none of
Barnet,  Dulaney,  Perkins or Pinkert,  shall be  considered,  in his individual
capacity, a competitor, customer, or supplier of the Business.

     3.22  Warranties.  Except as set forth on Schedule 3.22,  BDEC has not made
any  warranties or guarantees to third parties with respect to any products sold
or services rendered by it related to the Assets or the Business.  Except as set
forth on  Schedule  3.22  attached  hereto,  no claims  for breach of product or
service  warranties related to the Assets or the Business have been made against
BDEC since January 1, 1996. ---------- ------------- -------------

         3.23     Investment Representations.  Each Seller:

     (a) Is an "accredited investor," and has not retained or consulted with any
"purchaser  representative" (as such terms are defined in Rule 501 of Regulation
D promulgated  under the  Securities  Act of 1933,  as amended (the  "Securities
Act")) in connection  with its execution of this Agreement and the  consummation
of the transactions contemplated hereby;

     (b) Has such  knowledge and  experience  in financial and business  matters
that it is capable of evaluating  the merits and risks of an investment in Newco
I and/or Newco II;

                  (c) Will acquire any Newco I and/or Newco II interests for its
own account for investment and not with the view toward resale or redistribution
in a manner which would require registration under the Securities Act, the Texas
Securities  Act, as amended,  or the  securities  laws of any other  state,  and
Sellers  do not  presently  have any  reason to  anticipate  any change in their
respective circumstances or other particular occasion or event which would cause
such Seller to sell its Newco I and/or Newco II  interests,  or any part thereof
or interest therein, and Sellers have no present intention of dividing the Newco
I and/or Newco II interests  with others or reselling or otherwise  disposing of
the Newco I and/or Newco II  interests  or any part thereof or interest  therein
either currently or after the passage of a fixed or determinable  amount of time
or  upon  the  occurrence  or  nonoccurrence  of  any  predetermined   event  or
circumstance;

                  (d) In connection  with  entering into this  Agreement and the
Transaction  Documents  to which  each  Seller  is a party,  and in  making  the
investment  decisions  associated  therewith,  Sellers have neither received nor
relied on any representations or warranties from Newco I, Newco II, Prime, PMSI,
the  affiliates  of the  foregoing  or the  officers,  directors,  shareholders,
employees,  partners,  managers,  members,  agents,  consultants,  personnel  or
similarly   related   parties  of  any  of  the  foregoing,   other  than  those
representations and warranties contained in this Agreement;

     (e) Is able to bear  the  economic  risk of an  investment  in the  Newco I
and/or Newco II interests and it has  sufficient  net worth to sustain a loss of
its entire  investment  without material economic hardship if such a loss should
occur; and

     (f)  Acknowledges  that the  Newco I and Newco II  interests  have not been
registered under the Securities Act, or the securities laws of any of the states
of the  United  States,  that an  investment  in the  Newco I  and/or  Newco  II
interests  involves  a high  degree  of risk,  and that the Newco I and Newco II
interests are an illiquid investment.
                                                    ARTICLE IV

                                                     Covenants

     4.1  Cooperation  Relating  to  Financial  Statements.   Sellers  agree  to
cooperate  with Prime in the  preparation  of any financial  statements of BDEC,
LASIK,  Newco I and/or Newco II which Prime or its affiliates may be required by
any applicable law to prepare. --------------------------------------------

         4.2 Member and Manager Action. Sellers each agree that, until such time
as none of the Sellers  owns any  ownership  interest in either Newco I or Newco
II, none of them will, without obtaining the prior written consent of Prime, (i)
authorize  the issuance of any  additional  membership  interest in LASIK to any
third  party,  (ii)  cause or allow any  additional  managers  to be  elected as
managers  of  BDEC  or  LASIK,  or  (iii)  unless  allowed  under  the  Transfer
Restriction Agreement (as hereinafter defined),  assign, or otherwise dispose of
any  membership  interest  of LASIK  owned or  controlled  by such  Seller.  The
provisions  of this Section  shall not be construed in a manner which limits the
application of effect of the provisions of Section 8.4(c) of this Agreement.

         4.3      Credit Facilities.

                  (a)  Working  Capital  Line of Credit.  Prime and Newco I each
agree to  execute,  on or before  the  Closing  Date (i) the Loan  Agreement  in
substantially  the form  attached  hereto as Exhibit G1 (the "Loan  Agreement"),
which  provides  for,  among other  credit  accommodations  described  below,  a
revolving  line of credit  in the  maximum  principal  amount  of  $200,000  and
maturing one (1) year after the Closing (the "Working  Capital Line"),  pursuant
to which Newco I shall be entitled,  subject to the conditions  and  limitations
contained in the Loan Agreement, to borrow, repay and reborrow funds in order to
meet obligations of Newco I arising in the ordinary course of business, (ii) the
Assignment and Security  Agreement in substantially  the form attached hereto as
Exhibit  G4,  and  (iii)  in  connection  with the  Working  Capital  Line,  the
Promissory Note in substantially the form attached hereto as Exhibit G2.

                  (b)  Development  Credit  Facility.  The Loan  Agreement  also
provides  for  a  term  loan  facility,  in  the  maximum  principal  amount  of
$40,000,000  (the  "Development  Facility"),  pursuant to which Newco I shall be
entitled,  subject  to the  conditions  and  limitations  contained  in the Loan
Agreement,  to borrow  funds,  from time to time,  in order to finance up to one
hundred percent (100%) of the purchase price (or development  costs) of a Target
Center (as  hereinafter  defined)  being  acquired  (or  developed)  by Newco I;
provided,  however,  that in no event shall the Development  Facility be used in
instances where Prime, PMSI or one of their affiliates independently acquires or
develops a Target  Center as permitted by Section  8.1. In  connection  with the
Development Facility, Newco I agrees to execute, and all parties hereto agree to
vote their interests in Newco I, if any, and to take such other action as may be
necessary,  to cause any entity  through  which  Newco I acquires  or develops a
Target  Center to execute,  on or before each  closing  date of a Target  Center
acquisition  or  the   commencement  of   development,   a  Promissory  Note  in
substantially  the form  attached  hereto as  Exhibit G5 and an  Assignment  and
Security  Agreement in substantially  the form attached hereto as Exhibit G3. In
addition, if Newco I is to obtain, through development or acquisition,  directly
or  indirectly,  a one hundred  percent  (100%)  interest in such Target Center,
Newco I and all  parties  hereto  shall  cause such  Target  Center to execute a
security agreement, acceptable in form and substance to Prime, granting to Prime
the highest  available  priority  security interest in all of the assets of such
Target Center.

                  (c) Notwithstanding  anything herein to the contrary,  Prime's
obligations  to make each  extension of credit  pursuant to subsection (b) above
are subject  entirely and in all  respects to Prime's  obtaining  prior  written
approval from the bank syndication under its outstanding  borrowing  facilities.
Each  of the  parties  to  this  Agreement  acknowledges  and  agrees  that  the
assignment and security agreements,  and security agreements,  executed pursuant
to this Section will be assignable,  and that Prime intends to make a collateral
assignment for the benefit of one or more of its lenders.  In addition,  each of
the parties to this Agreement agrees to take such action (including voting their
interests  in any  entity)  which may be  necessary  to ensure  the  filing  and
perfection  of  security  interests  required  to be  granted  pursuant  to this
Section.

                  (d) Each of the Sellers  acknowledges  and agrees that none of
Prime,  PMSI or any affiliate of either of them may be required to (i) except as
expressly  set forth in this  ARTICLE IV and in Section  8.2(b)(ii),  extend any
financing,  credit  facilities,  guarantees or other credit  enhancements to any
Seller, Newco I or Newco II or (ii) issue any of its capital stock (or rights to
acquire its capital stock) in connection with the acquisition of a Target Center
(provided, however, that Prime, PMSI or such affiliate may elect, upon obtaining
the  consent  of BDEC,  to  issue  its  capital  stock  in  connection  with the
acquisition  of a Target Center by Newco I or any of its  subsidiaries,  and any
such  issuance  shall be treated for all  purposes as a loan by Prime to Newco I
pursuant to the  Development  Credit  Facility,  in an amount  equal to the fair
market value of the capital stock issued on the date of issuance).

         (e) Each of the Sellers and Newco I acknowledges  and agrees that Newco
I shall not distribute (or allow to be distributed) to its members, with respect
to their respective membership interests,  any cash or other property of Newco I
or its  subsidiaries if, at the time of the proposed  distribution,  any amounts
(whether  principal or interest) are outstanding  under the Credit  Documents or
the Target Center  Lending  Documents (as such terms are  hereinafter  defined).
Furthermore,  each of the  Sellers and Newco I agrees that Newco I shall pay all
available cash flow to Prime in payment of Newco I's outstanding obligations, if
any, under the Working  Capital Line and Development  Facility,  irrespective of
whether such payments  exceed the minimum  required  payments  under the Working
Capital Line and Development Facility.  For purposes of allocating such payments
among any two or more of such  outstanding  obligations,  such payments shall be
allocated  pro rata,  based upon the  respective  balances of such  obligations,
unless (i) a greater  portion of the  payment is  required  to be paid  toward a
given  obligation in order to prevent a default with respect to that  obligation
(but only to the extent  necessary  to prevent  such a default)  or (ii)  eighty
percent  (80%) of the  managers of Newco I elect to allocate  the  payments in a
different manner.

                  Notwithstanding  the  foregoing,  as long as there has been no
default by any Seller  under this  Agreement or any other  Transaction  Document
(excluding,  however,  the  Credit  Documents  and  the  Target  Center  Lending
Documents),  then,  to the  extent  that (but only to the extent  that)  Newco I
possesses the cash flow necessary (in the reasonable discretion of a majority of
its managers) to pay its liabilities in the ordinary course consistent with past
practices,  Newco I agrees to make quarterly estimates of its taxable income for
the current tax year and, if not  prohibited by law,  distribute  quarterly (the
"Quarterly  Distributions")  an amount  that would  cover the  federal and state
income  taxes  required  to be paid by its members  with  respect  such  taxable
income, based on each member's then current  proportionate  interest in Newco I,
assuming  that all members pay income  taxes on Newco I's taxable  earnings at a
rate equal to the highest  effective  individual tax rate in effect from time to
time (the Assumed Tax Rate");  provided,  further,  that Newco I shall determine
its  actual  taxable  income  at the end of  each  taxable  year  and (A) if the
Quarterly  Distributions  in a given year should  have been higher  based on the
amount of actual taxable income for that year,  promptly  distribute the amounts
necessary to eliminate such deficiency or (B) if the Quarterly  Distributions in
a given year should have been lower based on the amount of actual taxable income
for that year,  withhold  dollar for dollar from the first  following  Quarterly
Distribution,  and then against  subsequent  Quarterly  Distributions  in a like
manner, the amounts necessary to eliminate such surplus.

     (f) All of the loan  agreements,  promissory  notes,  guarantees,  security
agreements,  assignment and security agreements and other agreements,  documents
or instruments required to be executed by any party pursuant to this Section are
hereinafter collectively referred to as the "Credit Documents."

         4.4  Capital  Contributions.  The  parties  agree that no party  shall,
except  for the  express  provisions  of  Section  1.1 and  Section  4.3 of this
Agreement or of the  Organizational  Documents,  be required to make any capital
contribution, or extend any credit facility or loans, to either Newco I or Newco
II (or a  subsidiary  of  either)  following  the  Closing,  including,  without
limitation, for purposes of providing working capital;  provided,  however, that
this  sentence  shall not affect any party's  obligations  under ARTICLE VI with
respect to any breach of the  representations  or warranties  made by that party
under this Agreement.

     4.5 Ownership Interest Transfer Restriction  Agreement.  Each of the owners
of LASIK agrees that it, and its spouse (if any),  will execute,  on or prior to
the Closing, an Ownership Interest Transfer Restriction  Agreement applicable to
LASIK,  in  substantially  the form attached  hereto as Exhibit H (the "Transfer
Restriction Agreement"),  that imposes certain limitations and conditions on the
sale, transfer, assignment or other disposition of any interest that is directly
or   indirectly   owned   or   -------------------------------------------------
--------- controlled by such party in LASIK.

         4.6 ASC Option. BDEC acknowledges that it may, but is not obligated to,
acquire an interest in a certain  Ambulatory  Surgical Center located at 4800 N.
22nd St., Phoenix,  Arizona (the "ASC") from Physicians  Resource Group, Inc. or
its  successors  or  affiliates  ("PRG").  Sellers  agree  that,  upon  any such
acquisition,  directly or  indirectly,  by BDEC or any  affiliate of BDEC or any
Seller (including, without limitation, LASIK), Newco I is hereby granted a right
of first  refusal  (the "ASC  Option"  pursuant  to which  Newco I or one of its
wholly  owned  subsidiaries  may,  in  its  sole  discretion,  and  without  any
obligation to do so, acquire from BDEC or such  affiliate,  at the price offered
by (and upon the same terms  applicable  to) any third party  offer,  all of the
business  and  assets  of the ASC then held by BDEC or such  affiliate,  however
acquired by BDEC, prior to any sale or other transfer of the ASC, in whole or in
part, to any third party.  Upon  receiving  any such third party offer,  BDEC or
such affiliate shall give written notice thereof to Prime and Newco I. Following
its receipt of such notice,  Newco I shall have thirty (30) days to exercise the
ASC Option,  and Sellers agree that BDEC (or such  affiliates)  may not take any
action with  respect to the third party offer until Newco I has either  provided
written notice of its intent not to exercise the ASC Option,  or the thirty (30)
day period has  expired  without any  election  by Newco I to  exercise  the ASC
Option.  The closing of any purchase and sale pursuant to an exercise of the ASC
Option shall occur within 30 business  days  following  such  exercise,  and the
purchase price shall be paid, at Newco I's sole election,  in either immediately
available  funds or such other manner as shall have been set forth in the notice
of third party offer. In connection with any exercise of the ASC Option by Newco
I, BDEC shall deliver all agreements,  documents,  instruments and certificates,
and  take  such  other  action,  as may be  reasonably  necessary  in  order  to
consummate the purchase and sale contemplated in this Section. The parties agree
that  any  acquisition   pursuant  to  exercise  of  the  ASC  Option  shall  be
accomplished through an asset purchase, unless the parties otherwise agree.

         4.7      Repurchase Option.

     (a) At any time  prior to the  expiration  of one (1)  year  following  the
Effective  Time,  and  thereafter at any time within thirty (30) days after BDEC
becomes aware of the occurrence of a Bankruptcy Event (as defined in Section 8.4
hereof)  with  respect  to PMSI or Prime,  BDEC shall have the right to elect to
purchase  from Prime (the  "Repurchase  Option")  all (but not less than all) of
Prime's interest in Newco II.

                  (b) The Repurchase Option may be exercised,  in whole, and not
in part,  by the  delivery  by BDEC of  written  notice  to  Newco II and  Prime
specifying  that such  option  is being  exercised  and a closing  date for such
purchase  (which  shall be no sooner  than  thirty  (30) days and no later  than
ninety (90) days following the date of such written notice).  The purchase price
(the  "Repurchase  Price") to be paid upon the closing of the purchase under the
Repurchase  Option shall be paid to Prime and shall equal sixty percent (60%) of
(x) the  immediately  preceding  twelve (12) months' EBITDA  attributable to the
business and  operations of Newco II, as of the effective  time of the purchase,
multiplied  by (y) six (6);  but, in no event may the  Repurchase  Price be less
than $8,807,000.  Prime,  Newco II and BDEC shall deliver such other agreements,
documents,  instruments and certificates,  and take such other action (including
without  limitation  voting  their  ownership  interest  in Newco II), as may be
reasonably  necessary in order to  consummate  the purchase and sale pursuant to
exercise of the Repurchase Option. For purposes of this Agreement,  the "EBITDA"
of an entity or  business,  or interest  therein,  shall mean the net  operating
earnings of such entity or business  (or  portion  thereof  attributable  to the
interest  therein),  to the extent such net  operating  earnings are  reasonably
expected  to be  recurring  based  on  information  available  at  the  date  of
calculation,  calculated  without deduction of interest expense,  federal income
taxes,  depreciation  expense or amortization  expense, and all as determined in
accordance with GAAP to the extent GAAP is not inconsistent  with the definition
described in this sentence.

                  (c) In  return  for the  grant by  Newco II of the  Repurchase
Option,  BDEC agrees that, for a period of five (5) years immediately  following
the  closing  of the  sale and  purchase  pursuant  to  BDEC's  exercise  of the
Repurchase Option, if any (the "Repurchase Option Closing"),  BDEC may not sell,
transfer,  assign or  otherwise  dispose  of any  interest  in the Assets or the
Business (each of which,  for purposes of this subsection (c), shall include all
assets or business acquired in replacement of,  substitution for,  incidental to
or in  connection  with the Assets or the Business)  without  first  offering in
writing all of the Assets and the  Business to Prime (the "Prime  Right of First
Refusal").  Such  offer  shall set forth the terms of any third  party  offer to
acquire the Assets and the Business (or any substantial  portion  thereof),  and
Prime shall be entitled to exercise the Prime Right of First Refusal for:

                           (i) if such offer is  received  within the first year
         following the Repurchase Option Closing, a purchase price determined by
         (A) calculating the  immediately  preceding  twelve (12) months' EBITDA
         attributable  to the Assets and the Business,  as of the effective time
         of the purchase  pursuant to this  subsection  (c), and (B) multiplying
         such  amount by six (6);  provided,  however,  that if such third party
         offer is from any person or entity that controls,  is controlled by, or
         is under  common  control with BDEC,  the  purchase  price shall be the
         lesser of the purchase  price  determined  pursuant to this  subsection
         (c)(i) and the purchase price determined pursuant to subsection (c)(ii)
         below, or

     (ii) if such offer is received  within the second,  third,  fourth or fifth
years following the Repurchase  Option Closing,  the purchase price set forth in
such third party offer (adjusted proportionately, if applicable, to apply to all
of the Assets and the Business).

                  Upon  exercise  of the Prime Right of First  Refusal,  each of
Prime and BDEC shall deliver such other agreements,  documents,  instruments and
certificates,  and take such other  action,  as may be  reasonably  necessary in
order to consummate  the purchase and sale of the Assets and the Business on the
same terms and  conditions as proposed by the third party,  other than price and
except as set forth in subsection (d) below. In order to ensure the availability
of the rights  granted to Prime under this  subsection  (c),  BDEC agrees  that,
during the five (5)-year period following its exercise of the Repurchase Option,
it shall not sell,  transfer,  assign or otherwise  dispose of any of its right,
title or  interest  in and to any of the  Assets  or the  Business  (other  than
dispositions  in the ordinary  course of business,  dispositions  of items being
replaced,  or dispositions that, when considered with related  dispositions,  do
not exceed  $500 in value),  unless and until BDEC has given  Prime the  written
offer  required  hereunder  and Prime has, in each case,  either (I) declined in
writing to purchase  the Assets and the  Business,  or (II) failed to respond to
BDEC  within  thirty (30)  business  days  following  its receipt of the written
offer.

     (d) The parties agree that any  acquisition  pursuant to an exercise of the
Prime Right of First Refusal  shall be  accomplished  through an asset  purchase
unless the parties  otherwise  agree. In addition,  Prime may elect, in its sole
discretion,  to pay the purchase  price in cash at the closing,  and such method
shall be an  acceptable  form of  payment,  regardless  of the  form of  payment
contemplated in the third party offer.

     4.8 Forfeiture of Warrants,  Certain Other Rights. In addition to any other
forfeiture  of or  limitation  on  rights  granted  to the  Sellers  under  this
Agreement, each of the Sellers acknowledges and agrees that all Primary Warrants
and Target Center Warrants shall irrevocably  terminate  immediately and without
notice     upon     the     occurrence     of    any    of    the     following:
--------------------------------------------

     (a) Any exercise by BDEC of the  Repurchase  Option granted in Section 4.7;
or
     (b) Any breach by any of the Sellers under any of the Transaction Documents
or any agreement,  contract, document or instrument executed by such Seller that
inures to the benefit of Newco I, Newco II, Prime, or any of Prime's affiliates,
including,  without  limitation,  (i) any Consulting  Agreement (as  hereinafter
defined) to which such Seller is a party and (ii) any note or security agreement
to which such Seller is a party.

     4.9 Insurance.  Newco I and Newco II agree to maintain,  for five (5) years
after the  Closing  Date,  a prior acts  insurance  policy  providing  insurance
coverage  of the  same  scope,  in the  same  amounts  and  subject  to the same
deductibles as the BDEC's insurance in effect  immediately  prior to the Closing
Date. ---------

     4.10  Guaranty  of  PMSI.  PMSI  hereby   unconditionally  and  irrevocably
guarantees  each of the payment and  performance  obligations of Prime hereunder
and under each of the  Transaction  Documents.  Without  limiting the foregoing,
PMSI  agrees  that  if  Prime  shall  default  in any  obligation  to pay to any
Seller(s) or Newco I any amount then due and payable by Prime to such  Seller(s)
or Newco I under ARTICLE I or ARTICLE VII hereunder,  PMSI shall immediately pay
such amount to such Seller(s) or Newco ----------------

     I. PMSI hereby agrees not to require any Seller to proceed against Prime or
     any other person or to pursue any other remedy  before  proceeding  against
     PMSI under this guaranty.

         4.11  Tucson  Earnout.  Prime and BDEC  acknowledge  and agree that the
assets located at 555 E. River Road, Tucson,  Arizona (the "Tucson Assets"), and
any business  conducted using the Tucson Assets (the "Tucson  Operations"),  are
included within the Assets and Business and are, pursuant to Section 1.1 of this
Agreement, transferred to Newco II as of the Effective Time. In consideration of
the transfer of the Tucson  Assets and the Tucson  Operations to Newco II, Prime
agrees to pay, after September 1, 2000, in accordance with the provisions below,
an amount equal to sixty  percent  (60%) of the Tucson Gross Value (the "Earnout
Payment"). For purposes of this Section, "Tucson Gross Value" shall mean (a) six
(6) times the recurring EBITDA arising solely from the Tucson Operations between
the dates of September 1, 1999 and  September  1, 2000 (the  "Earnout  Period"),
minus  (b)  the  amount  of  all  debt,   liabilities  and  other   obligations,
collectively,  incurred  by Newco II that  relate  to the  Tucson  Assets or the
Tucson Operations, and that arose during the Earnout Period (excluding, however,
accounts  payable  and  accrued   liabilities   arising  from  normal  operating
expenses).  On or prior to November 1, 2000,  Prime  shall  provide  BDEC with a
written statement setting forth the Earnout Payment.  Following delivery of such
statement,  BDEC shall have  thirty  (30) days  during  which it may dispute the
calculation of the Earnout Payment,  and any dispute shall be resolved  pursuant
to the  arbitration  provisions  of this  Agreement.  If BDEC  agrees  with  the
calculation of the Earnout Payment,  or fails to respond within such thirty (30)
day period,  then the amount of the Earnout  Payment  reflected in the statement
shall be final and  binding on both BDEC and  Prime.  Promptly  following  final
determination  of the amount of the Earnout  Payment  pursuant to this  Section,
Prime  shall  pay  the  Earnout  Payment  in  immediately  available  funds.  In
connection  with the  payment of the  Earnout  Payment by Prime,  BDEC agrees to
deliver all agreements,  documents,  instruments and certificates, and take such
other action, as may be reasonably necessary in order to evidence the conveyance
of the Tucson Assets and Business pursuant to Section 1.1 of this Agreement.

                                   ARTICLE V )

                             Conditions to Closing )

     5.1 Prime's Closing Obligations. At the Closing, Prime shall (each of which
is   a   condition   to   the    obligations   of   each   Seller   to   Close):
---------------------------

     (a) pay the Purchase Price to BDEC;

     (b) ensure that the Primary Warrants are delivered to BDEC;

     (c) execute  and  deliver the  Assignment  and  Assumption  Agreement,  the
Organizational  Documents,  the Credit Documents to which it is a party and each
other Transaction Document to which it is a party; and

          (d) deliver such good standing certificates, officer certificates, and
     similar  documents  and  certificates  as counsel  for BDEC may  reasonably
     require.  5.2 Sellers  Closing  Obligations.  At the  Closing,  each Seller
     shall,  as applicable  (each of which is a condition to the  obligations of
     Prime to Close): ---------------------------

          (a) execute and deliver the Assignment and Assumption  Agreement,  the
     Organizational  Documents,  the  Collocation  and Employee and Cost Sharing
     Agreement  substantially  in the form  attached  hereto  as  Exhibit I (the
     "Collocation  Agreement"),  the Credit Documents, and the other Transaction
     Documents, in each case, only where it is a party thereto; ---------

          (b)  except  for LASIK  and BDEC,  execute  and  deliver a  consulting
     agreement,  in  substantially  the form  attached  hereto as Exhibit J (the
     "Consulting Agreement");

          (c) cause  each  owner of BDEC and LASIK who is not a  "Seller"  under
     this Agreement to execute and deliver,  for the benefit of Prime,  PMSI and
     their affiliates,  a non-compete  agreement containing terms and provisions
     consistent  with  those  contained  in  Sections  9.3  through  9.7 of this
     Agreement;

          (d)  deliver  or cause to be  delivered  true and  correct  copies  of
     executed consents whereby Barnet, Dulaney,  Rosenberg,  Perkins and Pinkert
     and other managers, officers and/or members of BDEC or LASIK have, in their
     respective  capacities  as  managers,  officers  and/or  members of BDEC or
     LASIK, as applicable,  each approved of and ratified (as necessary)  BDEC's
     or LASIK's execution and delivery of, and performance under, this Agreement
     and each Transaction Document; and

          (e) deliver such good standing certificates, officer certificates, and
     similar  documents  and  certificates  as counsel for Prime may  reasonably
     require.

          5.3 Newco  I's  Closing  Obligations.  At the  Closing,  Newco I shall
     execute  and  deliver  the Credit  Documents  to which it is a party,  each
     Transaction  Document  to  which  it is a  party  and  such  good  standing
     certificates,  officer certificates, and similar documents and certificates
     as  counsel  for  Prime  or any  of the  Sellers  may  reasonably  require.
     --------------------------------------

          5.4 Newco II's Closing  Obligations.  At the  Closing,  Newco II shall
     execute  and  deliver  the  Assignment  and   Assumption   Agreement,   the
     Collocation  Agreement,  the Credit Documents to which it is a party,  each
     Transaction  Document  to  which  it is a  party  and  such  good  standing
     certificates,  officer certificates, and similar documents and certificates
     as  counsel  for  Prime  or any  of the  Sellers  may  reasonably  require.
     ---------------------------------------

                                  ARTICLE VI )

                 Indemnification of Prime, Newco I and Newco II
                                       )

         6.1 Indemnification of Prime, Newco I and Newco II.

                  (a) BDEC and  LASIK,  each  jointly  and  severally,  agree to
indemnify and hold harmless  Prime,  each subsidiary  and/or  affiliate of Prime
(including,  without  limitation,  PMSI), each officer,  director,  shareholder,
manager,  member,  partner,  employee,  agent, or  representative  of Prime and,
following  the  Closing,  Newco  I  and  Newco  II  (collectively,   the  "Prime
Indemnified  Parties"),  from and against any and all damages,  losses,  claims,
liabilities,  demands, charges, suits, penalties, costs, and expenses (including
court costs and  attorneys'  fees and  expenses  incurred in  investigating  and
preparing for any litigation or proceeding) (collectively,  "Indemnified Costs")
in  connection  with the  commencement  or assertion of any action,  proceeding,
demand, or claim by a third party (collectively,  a "third-party  action") which
any of the Prime Indemnified Parties may sustain,  arising out of (i) any breach
or default by any Seller of any of the representations, warranties, covenants or
agreements  contained in this Agreement or any Transaction  Document (including,
without  limitation,  the  Organizational  Documents),  (ii) any  obligation  or
liability  of BDEC not  assumed  by  Newco II  pursuant  to the  Assignment  and
Assumption  Agreement,  (iii) any transaction or occurrence involving or related
to the ASC or PRG or any  purchase of the assets of the ASC by BDEC  (including,
without limitation,  claims by a trustee in bankruptcy), or (iv) any obligations
or liabilities with respect to any claims arising out of actions or omissions by
any Seller  (excluding any acts or omissions  after the Closing in such Seller's
capacity as a member of Newco I or Newco II.

                  (b) Each of Dulaney, Barnet and Rosenberg,  severally, and not
jointly, agrees to indemnify and hold harmless each Prime Indemnified Party from
and against  any and all  Indemnified  Costs  incurred  in  connection  with the
commencement  or  assertion  of any  third-party  action  which any of the Prime
Indemnified Parties may sustain,  arising out of any breach or default by him of
any of the representations,  warranties,  covenants or agreements made by him in
this Agreement or any Transaction Document (including,  without limitation,  the
Organizational Documents).

          6.2 Defense of Third-Party  Claims.  A Prime  Indemnified  Party shall
     give  prompt   written  notice  to  the   indemnifying   party  or  parties
     (collectively,  the "indemnifying  party") of the commencement or assertion
     of any third party action in respect of which such Prime  Indemnified Party
     shall  seek  indemnification  hereunder.  Any  failure  to  so  notify  the
     indemnifying  party  shall not  relieve  the  indemnifying  party  from any
     liability  that it may have to such  Prime  Indemnified  Party  under  this
     ARTICLE  -----------------------------  unless  the  failure  to give  such
     notice  materially and adversely  prejudices the  indemnifying  party.  The
     indemnifying  party  shall have the right to assume  control of the defense
     of, settle, or otherwise  dispose of such third-party  action on such terms
     as it deems appropriate; provided, however, that:

                  (a) The Prime  Indemnified  Party shall be  entitled,  at his,
her, or its own  expense,  to  participate  in the  defense of such  third-party
action;

          (b) The indemnifying  party shall obtain the prior written approval of
     the Prime  Indemnified  Party,  which  approval  shall not be  unreasonably
     withheld,  before  entering  into or  making  any  settlement,  compromise,
     admission,  or acknowledgment of the validity of such third-party action or
     any  liability  in respect  thereof if,  pursuant to or as a result of such
     settlement,  compromise, admission, or acknowledgment,  injunctive or other
     equitable relief would be imposed against the Prime Indemnified Party;

          (c) The  indemnifying  party  shall  not  consent  to the entry of any
     judgment or enter into any  settlement  with or  involving  any claimant or
     plaintiff  that does not  include  as an  unconditional  term  thereof  the
     execution  and delivery of a release from all  liability in respect of such
     third-party  action by such claimant or plaintiff to, and in favor of, each
     Prime Indemnified Party; and

                  (d) The  indemnifying  party  shall not be entitled to control
(but shall be entitled to  participate  at their own expense in the defense of),
and the Prime Indemnified Party shall be entitled to have sole control over, the
defense  or  settlement,   compromise,   admission,  or  acknowledgment  of  any
third-party  action  as to which the  indemnifying  party  fails to  assume  the
defense within thirty (30) days; provided,  however,  that the Prime Indemnified
Party shall make no settlement,  compromise,  admission, or acknowledgment which
would give rise to liability (other than liability to Prime Indemnified  Parties
under this Agreement) on the part of the indemnifying party or BDEC, without the
prior written consent of the indemnifying party.

                  (e) The indemnifying  party shall make payments of all amounts
required to be made pursuant to the  foregoing  provisions of this ARTICLE to or
for the account of the Prime  Indemnified  Party from time to time promptly upon
receipt of bills or invoices relating thereto or when otherwise due and payable,
provided that the Prime Indemnified Party has agreed in writing to reimburse the
indemnifying party for the full amount of such payments if the Prime Indemnified
Party is ultimately determined not to be entitled to such indemnification.

          (f)  The  parties  hereto  shall  extend  reasonable   cooperation  in
     connection  with the  defense of any  third-party  action  pursuant to this
     ARTICLE  and,  in  connection   therewith,   shall  furnish  such  records,
     information,   and  testimony  and  attend  such   conferences,   discovery
     proceedings, hearings, trials, and appeals as may be reasonably requested.

        6.3  Security.  Without  limiting or adversely  affecting the rights of
Prime under Section 9.12,  and in order to secure full and prompt payment of the
obligations  of each of the Sellers under this  ARTICLE,  each of BDEC and LASIK
hereby grants to Prime a continuing  security  interest in and to  distributions
either of them may be  entitled  to  receive  at any time  after the  Closing in
respect of any  ownership  interest  held by either of them in either Newco I or
Newco II. In connection with the grant of a security interest  contained in this
Section, each of BDEC and LASIK agrees (i) to execute all documents, agreements,
instruments and certificates,  and to take such other actions,  as are necessary
in order to fully evidence and perfect such security interest, and (ii) that it,
for a period of five (5) years after the Closing,  will not,  without  obtaining
the express prior written consent of Prime in each instance,  grant or assign to
any person or entity  rights of any nature in the  distributions  covered by the
security  interest granted in this Section,  irrespective of whether such rights
are to be senior or subordinate to the rights granted under this Section.

                                   ARTICLE VII

                           Indemnification of Sellers


         7.1  Indemnification  of Sellers.  Prime agrees to  indemnify  and hold
harmless  each Seller,  each  subsidiary  and/or  affiliate of any Seller,  each
officer,  director,  shareholder,  manager, member, partner, employee, agent, or
representative  of any Seller and,  following the Closing,  Newco I and Newco II
(collectively,  the "Seller  Indemnified  Parties") from and against any and all
Indemnified  Costs in connection with the commencement or assertion of any third
party action which any of Seller Indemnified Parties may sustain, arising out of
(i) any breach or default  by Prime of any of the  representations,  warranties,
covenants or agreements  contained in this Agreement or any Transaction Document
(including,  without  limitation,  the  Organizational  Documents)  or (ii)  any
obligations  or  liabilities  with  respect  to  claims  arising  out of acts or
omissions  (excluding any acts or omissions after the Closing in its capacity as
a  member  of  Newco I or Newco  II) by  Prime,  PMSI or one or more of the PMSI
Controlled Parties (excluding Newco I and Newco II).

          7.2 Defense of Third-Party  Claims. A Seller  Indemnified  Party shall
     give prompt written notice to Prime of the commencement or assertion of any
     third party action in respect of which such Seller  Indemnified Party shall
     seek  indemnification  hereunder.  Any failure to so notify Prime shall not
     relieve  Prime  from  any  liability  that  it  may  have  to  such  Seller
     Indemnified Party under this ARTICLE unless the failure to give such notice
     materially   and   adversely    prejudices   Prime.    Prime   shall   have
     -----------------------------  the right to assume  control of the  defense
     of, settle, or otherwise  dispose of such third-party  action on such terms
     as it deems appropriate; provided, however, that:

          (a) The Seller Indemnified Party shall be entitled,  at his or its own
     expense, to participate in the defense of such third-party action;

          (b) Prime  shall  obtain  the prior  written  approval  of the  Seller
     Indemnified  Party,  which  approval  shall not be  unreasonably  withheld,
     before entering into or making any settlement,  compromise,  admission,  or
     acknowledgment of the validity of such third-party  action or any liability
     in  respect  thereof  if,  pursuant  to or as a result of such  settlement,
     compromise,  admission,  or  acknowledgment,  injunctive or other equitable
     relief would be imposed against the Seller Indemnified Party;

          (c) Prime shall not consent to the entry of any judgment or enter into
     any  settlement  with or involving any claimant or plaintiff  that does not
     include as an  unconditional  term thereof the  execution and delivery of a
     release from all  liability in respect of such  third-party  action by such
     claimant or plaintiff to, and in favor of, each Seller  Indemnified  Party;
     and

          (d) Prime shall not be  entitled to control  (but shall be entitled to
     participate  at its  own  expense  in  the  defense  of),  and  the  Seller
     Indemnified  Party shall be entitled to have sole control over, the defense
     or settlement,  compromise, admission, or acknowledgment of any third-party
     action as to which  Prime fails to assume the  defense  within  thirty (30)
     days;  provided,  however,  that the Seller Indemnified Party shall make no
     settlement,  compromise, admission, or acknowledgment which would give rise
     to liability (other than liability to Seller Indemnified Parties under this
     Agreement) on the part of Prime without the prior written consent of Prime.

          (e) Prime  shall make  payments  of all  amounts  required  to be made
     pursuant to the foregoing  provisions of this ARTICLE to or for the account
     of the Seller  Indemnified Party from time to time promptly upon receipt of
     bills or  invoices  relating  thereto or when  otherwise  due and  payable,
     provided  that the  Seller  Indemnified  Party  has  agreed in  writing  to
     reimburse  Prime  for the  full  amount  of  such  payments  if the  Seller
     Indemnified  Party is  ultimately  determined  not to be  entitled  to such
     indemnification.

          (f)  The  parties  hereto  shall  extend  reasonable   cooperation  in
     connection  with the  defense of any  third-party  action  pursuant to this
     ARTICLE  and,  in  connection   therewith,   shall  furnish  such  records,
     information,   and  testimony  and  attend  such   conferences,   discovery
     proceedings, hearings, trials, and appeals as may be reasonably requested.

                                  ARTICLE VIII

                                   Exclusivity

         8.1 Agreement.  Each of the parties to this Agreement  (excluding Newco
I) agrees that,  following  the Closing Date, it will not directly or indirectly
through  any  affiliate,  except  through  Newco  I or one of its  wholly  owned
subsidiaries,  acquire,  develop  or  establish  other  centers  for  Refractive
Surgery,  or  the  assets  thereof,  anywhere  in  the  United  States  ("Target
Centers");  provided,  however,  Prime, PMSI or one of their affiliates shall be
entitled to independently  acquire or develop any Target Center to which any one
or more of the following apply:

          (a) The  aggregate  purchase  price paid to the seller of such  Target
     Center exceeds $11,009,000;

                  (b) Newco I is  financially  unable to acquire or develop such
Target Center using its existing financial resources  (including  resources that
may be available in such instance under the  Development  Facility and any other
lines of credit or credit  facilities)  without  requiring a guarantee  or other
financial  or credit  assistance  of any member of Newco I,  Prime,  PMSI or any
affiliate  of Prime or PMSI,  as  determined  conclusively  in each  instance by
either (i) the  agreement of not less than eighty  percent (80%) of the managers
of Newco I or (ii) the  failure  of Newco I to  close  the  acquisition  of such
Target Center within one hundred twenty (120) days following  Newco I's and such
Target Center's  agreement on the initial  principal  terms of such  acquisition
(which agreement  includes,  without  limitation,  agreement on a terms sheet or
execution of a  non-binding  letter of intent)  because Newco I could not obtain
financing on reasonable market terms;

          (c) The  managers of Newco I decide not to pursue the  acquisition  or
     development of such Target Center by the affirmative  vote of not less than
     eighty  percent (80%) of the managers then serving on the board of managers
     of Newco I;

          (d) In the  opinion of the board of  directors  of PMSI,  such  Target
     Center  cannot  be  acquired  or  developed  by  Newco  I  because  of  the
     involvement with and/or direct or indirect  ownership of a portion of Newco
     I by any of Dulaney, Barnet or Rosenberg;

          (e)  The   acquisition  or  development  of  such  Target  Center  was
     initiated,  arranged for,  originated or financed by any entity  affiliated
     with PMSI  (other than Newco I or Newco II, or any future  subsidiaries  of
     either of them) which has previously acquired or developed a Target Center,
     or an interest  therein,  pursuant to any of the  exceptions to exclusivity
     contained in subsections (a) through (g) of this Section;

                  (f)  Any  of  Dulaney,  Barnet  or  Rosenberg  has  previously
terminated,  breached or  threatened  to breach any  Transaction  Document,  any
Credit Document,  any Target Center Lending Document or any Consulting Agreement
to which he is a party (provided,  however, that (A) each of Barnet, Dulaney and
Rosenberg  shall have  thirty  days  within  which to cure any breach or default
under his respective  Consulting  Agreement following delivery of notice of such
breach or default  by Prime or PMSI and (B) any  termination  of any  Consulting
Agreement  that is agreed to in writing by Prime,  or that is done to permit the
agreed upon full time employment of the respective individual by Newco II, shall
not be grounds for  exception  to the  exclusivity  obligation  pursuant to this
subsection (f)); or

          (g) the  Closing  does not occur on or before July 31, 1999 and Prime,
     PMSI or any of their affiliates enters into a definitive  agreement for the
     acquisition  of such Target  Center prior to the  expiration  of forty five
     (45) days immediately following the Closing.

          8.2  Additional  Qualifications,   Limitations.  In  addition  to  the
     qualifications  and limitations set forth above, the following shall apply:
     --------------------------------------

          (a) All  acquisitions of Target Centers must be approved in advance by
     a majority of the board of directors of Prime;

          (b) If the exclusivity  obligation contained in Section 8.1 above does
     not apply to a particular  Target Center solely  because of the  limitation
     set forth in Section  8.1(a),  and Prime or one of its affiliates  acquires
     such Target Center prior to the  occurrence of any of the events  described
     in Section 8.1(f), then

                           (i) before  consummating such  acquisition,  Prime or
         its acquiring  affiliate  shall provide thirty (30) days' prior written
         notice to LASIK of such pending  acquisition,  and LASIK shall have ten
         (10)  days from its  receipt  of such  notice  to  notify  Prime or its
         acquiring  affiliate  that  LASIK  would  like to  acquire a  specified
         portion  of up to forty  percent  (40%) of the  non-medical  Refractive
         Surgery portion of the interest being offered to Prime or its acquiring
         affiliate  in such  acquisition,  upon the same  terms  and  conditions
         agreed to by Prime;  provided,  however,  that the participation  right
         granted  in this  subsection  (i)  shall  not apply if (A) Prime or its
         acquiring  affiliate does not receive notice from LASIK of its election
         to  participate  in such  acquisition  within the ten  (10)-day  period
         provided  for such  notice,  (B) LASIK  refuses or is unable to finance
         (after giving effect to subsection (ii) below) its specified portion of
         the  acquisition,  (C) LASIK  refuses  or is unable to timely  execute,
         deliver and perform all agreements,  documents and instruments required
         to be executed, delivered and performed by it (to the extent consistent
         with  those  executed  by  Prime  or its  acquiring  affiliate  in such
         transaction)  or (D)  LASIK  fails or  refuses  to timely  execute  and
         deliver the promissory note and security agreement described in Section
         8.2(e)  below  in  the  event  LASIK  borrows  any  funds  pursuant  to
         subsection (ii) below;

                           (ii) If LASIK has fully complied with its obligations
         and met all other conditions set forth under subsection (i), then, with
         respect to that portion of the purchase price to be paid by LASIK under
         subsection (i) ("LASIK's  Purchase Price"),  LASIK shall be entitled to
         request in writing and receive  financing,  made  available by Prime or
         one of its affiliates,  in an amount not to exceed ten percent (10%) of
         the aggregate  purchase price for the  non-medical  Refractive  Surgery
         portion  of the  interest  being  offered  to  Prime  or its  acquiring
         affiliate in such  acquisition  (but in no event may such amount exceed
         LASIK's Purchase Price);  provided,  however,  that LASIK's rights, and
         Prime's or its acquiring affiliate's obligations, under this subsection
         (ii) are subject  entirely  and in all  respects  to Prime's  obtaining
         prior  written  approval  from  (A)  the  bank  syndication  under  its
         outstanding  borrowing  facilities,  and (B) any  necessary  number  of
         holders of Prime's  outstanding  8 3/4 Senior  Subordinated  Promissory
         Notes (as may be required  pursuant  to the  Indenture  governing  such
         Notes);

                  (c) If the  exclusivity  obligation  contained  in Section 8.1
above does not apply to the  acquisition  of a particular  Target  Center solely
because of the  limitation set forth in Section  8.1(d) or Section  8.1(e),  and
Prime  or one  of its  affiliates  acquires  such  Target  Center  prior  to the
occurrence of any of the events described in Section 8.1(f),  then LASIK (or any
combination of the  principals of LASIK,  but only pursuant to and in the manner
provided for in written instructions  delivered to PMSI and Prime by LASIK prior
to such acquisition) shall receive warrants in connection with such acquisition,
in  substantially  the form  attached  hereto as Exhibit A (the  "Target  Center
Warrants"),  entitling LASIK or such other person(s) to purchase, at one hundred
ten  percent  (110%) of PMSI's  closing  share  price as quoted by NASDAQ on the
closing  date of the  acquisition  of such Target  Center,  that whole number of
shares of common stock of PMSI determined by:

          (i) if the  Target  Center  is  acquired  solely  in  reliance  on the
     exception contained in Section 8.1(d),  multiplying (i) 0.0075, by (ii) the
     portion of the  purchase  price,  expressed as a number and not in dollars,
     paid by Prime or its  acquiring  affiliate  in  respect  of the  Refractive
     Surgery operations of such Target Center (specifically  excluding the value
     of any  non-Refractive  Surgery  operations  of such Target Center that are
     acquired pursuant to subsection (h) below); and

          (ii) if the  Target  Center  is  acquired  solely in  reliance  on the
     exception contained in Section 8.1(e),  multiplying (i) 0.0025, by (ii) the
     portion of the  purchase  price,  expressed as a number and not in dollars,
     paid by Prime or its  acquiring  affiliate  in  respect  of the  Refractive
     Surgery operations of such Target Center (specifically  excluding the value
     of any  non-Refractive  Surgery  operations  of such Target Center that are
     acquired pursuant to subsection (h) below);

          (d) The rights granted under Section 8.2(b) are personal to LASIK and,
     notwithstanding any other provision of this Agreement,  may not be assigned
     to or exercised by any other party;

                  (e) Any and all  amounts  loaned to LASIK  pursuant to Section
8.2(b)(ii)  above shall be evidenced by a  promissory  note which shall  provide
that,  among other things (i) such amounts  shall bear interest at the per annum
rate of fifteen  percent  (15%) or,  following  any  default by LASIK under such
promissory note or under any other agreement, document or instrument executed by
LASIK for the  benefit of Prime,  PMSI or one of their  affiliates,  the maximum
rate  allowed  by law,  (ii)  such  amounts  shall be  repaid  in equal  monthly
installments  of principal and interest over a period of sixty (60) months,  and
(iii) the promissory note shall be governed by Texas law;  provided further that
such amounts shall be secured by a security  agreement executed and delivered by
LASIK to Prime or its acquiring  affiliate,  securing all of LASIK's obligations
under such promissory note with all of LASIK's right,  title and interest in and
to the Target Center being  acquired (all notes,  security  agreements and other
agreements,  documents,  instruments or certificates  required to be executed by
any party pursuant to this  subsection (e) are referred to herein as the "Target
Center Lending  Documents," and all Target Center Lending  Documents shall be in
form and substance  reasonably  satisfactory to Prime and,  unless  specifically
specified otherwise,  shall be deemed included in the Transaction  Documents for
purposes of this Agreement, regardless of when executed);

                  (f) LASIK agrees that,  notwithstanding any other provision of
this Agreement or the Transfer Restriction  Agreement,  it shall not be entitled
to transfer or assign, to any person or entity,  any direct or indirect interest
in any Target  Center  acquired  by it  pursuant  to the  provisions  of Section
8.2(b)(ii),  until such time as (i) LASIK has irrevocably  forfeited any and all
rights  to  borrow  funds  pursuant  to  Section  8.2(b)(ii)  above  (either  by
termination  of such  rights  pursuant  to the  terms  of this  Agreement  or by
delivery by LASIK to Prime of an  irrevocable,  perpetual and binding  waiver of
such rights) and (ii) there are no amounts  (including  principal  and interest)
outstanding  under any promissory note previously  executed by LASIK pursuant to
Section  8.2(b)(ii);  provided further,  that any transfer or assignment of such
interest in any such Target Center in violation of this subsection shall be null
and void and shall not be given effect by PMSI, Prime or any other party to this
Agreement;

                  (g)  Notwithstanding the exclusivity  obligation  contained in
Section 8.1, LASIK and/or one or more of their  affiliates  shall be entitled to
independently  acquire or develop any Target  Center to which any one or more of
the  following  apply:  (i) a majority of the board of  directors of Prime votes
against the  acquisition  of such Target  Center;  or (ii) Newco II is unable to
finance the  acquisition of such Target Center using the  Development  Facility,
solely because of the limitation set forth in Section 4.3(c); provided, however,
that:

          (y) in either  instance,  LASIK or its  affiliates  must  acquire such
     Target Center within one hundred  twenty (120) days after the occurrence or
     circumstances  that triggered the  application of this  subsection (g), and
     upon any failure to so acquire such Target  Center  within such one hundred
     twenty (120) day period,  the exclusivity  obligation  contained in Section
     8.1 shall again apply with respect to such Target Center; and

                           (z) with respect to the exception to exclusivity  set
         forth in subsection (ii) of this subsection (g), before LASIK or one of
         its  affiliates  acquires  such Target  Center,  LASIK or its acquiring
         affiliate shall provide thirty (30) days' prior written notice to Prime
         of such  pending  acquisition,  and Prime shall have ten (10) days from
         its receipt of such notice to notify LASIK or its  acquiring  affiliate
         that Prime  would like to  acquire a  specified  portion of up to forty
         percent  (40%) of the interest  being offered to LASIK or its acquiring
         affiliate  in such  acquisition,  upon the same  terms  and  conditions
         agreed to by LASIK;  provided,  however,  that the participation  right
         granted  in this  subsection  (z)  shall  not apply if (A) LASIK or its
         acquiring  affiliate does not receive notice from Prime of its election
         to  participate  in such  acquisition  within the ten  (10)-day  period
         provided for such notice, (B) Prime refuses or is unable to finance its
         specified portion of the acquisition, or (C) Prime refuses or is unable
         to timely execute,  deliver and perform all  agreements,  documents and
         instruments required to be executed,  delivered and performed by it (to
         the extent  consistent  with those  executed by LASIK or its  acquiring
         affiliate in such transaction); and

                  (h) The exclusivity  obligation contained in Section 8.1 shall
not  restrict  Prime  or  PMSI,  or  any  affiliate  of  either  of  them,  from
independently acquiring, all or any portion of the non-Refractive Surgery assets
and business of a Target  Center to the extent those assets and business are not
used  primarily  in, or  materially  relied on for,  the  conduct of  Refractive
Surgery by such Target  Center,  and LASIK shall not,  with  respect to any such
acquisition,  be entitled  to any of the rights  granted in this  ARTICLE  VIII,
including without  limitation,  the rights granted in subsections (b) and (c) of
this Section.

          8.3 Effect.  No provision of this ARTICLE VIII,  shall be construed to
     require any party to this Agreement to purchase any Target Center. ------

          8.4 Automatic  Termination.  This entire ARTICLE VIII shall  terminate
     and become null and void automatically:

                  (a) if any party to this Agreement:  (i) becomes insolvent, or
makes a transfer in fraud of creditors,  or makes an assignment  for the benefit
of creditors, or admits in writing its inability to pay its debts as they become
due; (ii) generally is not paying its debts as such debts become due, and one of
the other parties, in good faith,  determines that such event or condition could
frustrate the operation of this ARTICLE VIII or otherwise inhibit the delinquent
party's  ability  to  perform  its  obligations  under  this  Agreement  or  any
Transaction Document; (iii) has a receiver,  trustee or custodian appointed for,
or take  possession  of, all or  substantially  all of the assets of such party,
either in a proceeding  brought by such party or in a proceeding brought against
such party;  (iv) files a petition for relief under the United States Bankruptcy
Code or any other present or future federal or state  insolvency,  bankruptcy or
similar laws (all of the foregoing  hereinafter  collectively called "Applicable
Bankruptcy  Law"),  or an involuntary  petition for relief is filed against such
party under any  Applicable  Bankruptcy  Law, or an order for relief naming such
party is  entered  under any  Applicable  Bankruptcy  Law,  or any  composition,
rearrangement,  extension,  reorganization  or other  relief of  debtors  now or
hereafter existing is requested or consented to by such party; (v) fails to have
discharged within a period of thirty (30) days any attachment,  sequestration or
similar writ levied upon,  or any claim  against or  affecting,  any property of
such  party;  or (vi)  fails to pay  within  thirty  (30) days any  final  money
judgment   against  such  party  (the  events  described  in  this  Section  are
hereinafter referred to as "Bankruptcy Events");

          (b) upon any exercise of the Repurchase Option granted in Section 4.7;

     (c)  if,  at  any  time  after  the   Closing,   Barnet  and  Dulaney  own,
     collectively,  less  than  sixty  percent  (60%) of the  total  outstanding
     ownership  interests of BDEC (after  assuming the  conversion,  exchange or
     exercise  of  any  and  all  securities  or  rights  convertible  into,  or
     exchangeable or exercisable for, ownership interests of BDEC); or

                  (d)  upon  the   expiration   of  the  five  (5)  year  period
immediately following the Closing Date.

                                                    ARTICLE IX

                                              Post Closing Agreements

         9.1 Transition of Business.  Each Seller agrees to cooperate fully with
Prime and Newco II in transitioning  the Business existing prior to the Closing,
including the  relationships  maintained by BDEC (with respect to the Business),
to Newco II after the Closing; and, each Seller agrees not to take any action or
make  any  disclosure,   including   disclosures  related  to  the  transactions
contemplated by this Agreement, which (with respect to the Business) might alter
or impair any relationship with any customer, or other service recipient, person
or entity which did business with BDEC prior to the Closing. With respect to the
Business, each Seller agrees to promptly remit to Newco II any payments received
by BDEC or any Seller for services provided by BDEC (as part of the Business) or
Newco II after the  Effective  Time.  Newco I,  Newco II and Prime each agree to
promptly remit to BDEC any payments received by it for services provided by BDEC
prior to the  Effective  Time.  Furthermore,  Sellers  agree to deposit any such
payments  received  directly to a deposit  account  designated and controlled by
Newco II or to take such other  action as may be requested by Prime to implement
and  maintain a system for  remitting  payments due Newco II which come into the
possession or control of BDEC or any Seller.

          9.2 Ratification by Newco I. Prime,  BDEC and LASIK each agree that by
     executing  this  Agreement  they are  deemed to be voting  their  ownership
     interests in Newco I and Newco II, as applicable,  to authorize Newco I and
     Newco  II to  enter  into  and  perform  this  Agreement  and  each  of the
     Transaction  Documents  to which either is a party.  Prime,  BDEC and LASIK
     each agree to execute such resolutions and written consents,  and take such
     other  actions,  in  their  capacities  as  members  of  Newco I and  Newco
     ----------------------- II, as any party shall reasonably require after the
     Closing  to have  Newco I and Newco II ratify  and  adopt  this  Agreement,
     notwithstanding the official date of Newco I's and Newco II's creation.

         9.3  Confidentiality  Agreement.  Each of Prime,  PMSI, and each Seller
acknowledges that through its relationship with Newco I and Newco II, it will be
exposed  to  Proprietary  Information  (as  defined  below) of Newco I, Newco II
and/or  each of their  present or future  affiliates  (which  includes,  without
limitation,  BDEC,  LASIK,  Prime,  PMSI  and each of their  present  or  future
affiliates) (the party owning such Proprietary Information is referred to as the
"Discloser"),  that such Proprietary Information is unique and valuable and that
such Discloser would suffer  irreparable  injury if its Proprietary  Information
were divulged to those in competition with Discloser.  "Proprietary Information"
shall be all information  concerning  Discloser  which a party  acquires,  or to
which it has access through its  relationship  with Discloser,  Newco I or Newco
II, that has not been publicly disclosed by Discloser or that is not a matter of
common knowledge among Discloser's  competitors,  including, but not limited to,
information relating to any inventions,  processes,  software,  formulae, plans,
devices, compilations of information,  technical data, mailing lists, management
strategies, business distribution methods, names of suppliers (of both goods and
services)  and   customers,   names  of  employees  and  terms  of   employment,
arrangements  entered into with  suppliers  and  customers,  including,  but not
limited to, proposed expansion plans of Discloser,  marketing and other business
and pricing strategies, and trade secrets of Discloser.

          Except with prior written approval of Discloser, Prime, PMSI, and each
     Seller agrees that it will not, at any time after the Closing: (i) directly
     or indirectly,  disclose any  Proprietary  Information to any person except
     its  owners,  directors,   managers,   officers,   employees,   agents  and
     consultants  who need to know such  Proprietary  Information  in connection
     with  such  party's  relationship  with  Newco I or  Newco  II nor (ii) use
     Proprietary  Information in any way,  except for the purposes of Newco I or
     Newco II.

         Within  forty-eight  (48) hours of  termination  of its ownership of or
consulting  relationship  with  Newco I or  Newco  II,  as  applicable,  whether
voluntary  or  involuntary,  Prime,  PMSI,  and each Seller will  deliver to the
appropriate Discloser (without retaining copies thereof) all documents,  records
or other  memorializations  including copies of documents and any notes which it
has  prepared  that  contain   Proprietary   Information,   all  other  tangible
Proprietary  Information  in its  possession  or control and all of  Discloser's
credit cards, keys, equipment,  vehicles,  supplies and other materials that are
in its possession or under its control.

         9.4 Non-Competition Agreement. Each of PMSI, Prime, and each Seller, as
a material inducement to one another to enter into this Agreement, hereby agrees
that, at all times during which the  provisions of ARTICLE VIII are  applicable,
and at all times  until five (5) years  after  either  LASIK and its  affiliates
(excluding  PMSI,  Prime,  and the subsidiaries of either of them), or Prime and
its affiliates  (excluding LASIK), no longer own any equity or other interest in
Newco I, such party will not directly or indirectly,  either through any kind of
ownership  (other than ownership of securities of a publicly held corporation of
which  it  owns  less  than  five  percent  (5%)  of any  class  of  outstanding
securities),  or  as  a  principal,   shareholder,   agent,  employer,  advisor,
consultant, co-partner or in any individual or representative capacity whatever,
either for its own benefit or for the benefit of any other  person,  corporation
or other entity,  without the prior written  consent of each other party hereto,
commit any of the following acts,  which acts shall be considered  violations of
this covenant not to compete:

                  (a) Except through Newco I or its  subsidiaries,  or Newco II,
directly or indirectly engage in, or provide,  anywhere within a fifty (50) mile
radius of any center or facility that provides  Refractive Surgery and is owned,
directly or indirectly, partially or wholly, by Newco I or a subsidiary of Newco
I  (collectively,  the  "Restricted  Area"),  any services  (other than services
included in the practice of medicine) related to (i) the operating of centers or
facilities that provide Refractive Surgery,  (ii) the manufacture,  maintenance,
refurbishing,  repair, sale, or leasing of any equipment related to or necessary
for the operating of centers or facilities that provide Refractive  Surgery,  or
(iii) providing any management services, training or consulting services related
to any of the activities described in (i) or (ii);

                  (b) Except through Newco I or its  subsidiaries,  or Newco II,
directly  or  indirectly  provide,  anywhere  within the  Restricted  Area,  (i)
facilities,  equipment  and  non-physician  personnel  for  the  performance  by
physicians of Refractive Surgery, (ii) the marketing,  scheduling and management
of Refractive Surgery (but excluding,  with respect to either Barnet or Dulaney,
marketing,  scheduling  and  management  of patients for  treatment by Barnet or
Dulaney, respectively),  (iii) the credentialing and scheduling of physicians to
perform  Refractive  Surgery and (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
     Newco I or any of its subsidiaries,  Prime, each Seller or any affiliate or
     related entity of any of them, to withdraw, curtail, or cancel its business
     with such person or entity; or

          (d) Directly or indirectly  hire any employee of Newco I or any of its
     subsidiaries,  Prime,  any Seller or any affiliate or related entity of any
     of them,  or induce or attempt to influence  any employee of Newco I or any
     of its  subsidiaries,  Prime,  any Seller or any such  affiliate or related
     entity to terminate his or her employment with such person or entity.

          9.5  Exclusivity.  Each of the parties hereto  acknowledges and agrees
     that any  acquisition  or  development  of a Target Center by Prime,  PMSI,
     Newco II or a Seller  through  an entity not owned  (wholly  or  partially,
     directly or  indirectly)  by Newco I shall be subject to the  provisions of
     Section 9.4,  regardless  of whether such  acquisition  or  development  is
     contemplated  by or  provided  for  in  the  provisions  of  ARTICLE  VIII.
     -----------

          9.6  Agreement.  Each of Prime,  PMSI and each Seller has reviewed and
     carefully  considered  the  provisions of Sections 9.3 and 9.4 and,  having
     done so, agrees that the restrictions applicable to it as set forth therein
     (a) are fair and  reasonable  with  respect  to time,  geographic  area and
     scope,  (b) are not  unduly  burdensome  to  them,  and (c) are  reasonably
     required for the  protection of the  interests of the other parties  hereto
     for whose benefit such restrictions were agreed upon. ---------

         9.7  Remedies.  Each of  Prime,  PMSI and  each  Seller  agrees  that a
violation on its part of any  applicable  covenant  contained in Sections 9.3 or
9.4 will cause the other parties hereto for whose benefit such restrictions were
agreed upon  irreparable  damage for which remedies at law may be  insufficient,
and for that  reason,  it agrees that the other  parties  shall be entitled as a
matter  of right to  equitable  remedies,  including  specific  performance  and
injunctive relief,  therefor.  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 other parties may have, including, specifically, recovery of
additional damages.

         9.8      Special Options to Sell or Acquire Interests In Newco I.

                  (a)  Option  to Sell.  Upon the  expiration  of five (5) years
immediately  following  the  Closing  Date,  if no  Seller  is in breach of this
Agreement or any other Transaction Document,  all or any of the Sellers shall at
any time, and from time to time, be entitled to require that Prime purchase from
such  Seller(s) up to a maximum  twenty  percent (20%) interest in Newco I (when
aggregated  with all other purchases  pursuant to this Section),  upon the terms
and conditions  hereinafter set forth, by giving written notice of such election
to Prime.

          (b) No Further  Obligation.  The  Sellers  acknowledge  and agree that
     Prime shall be under no  obligation to notify any Seller of the exercise by
     another Seller of rights under this Section,  and that Prime may not, under
     any  circumstances,  be required to purchase more than an aggregate  twenty
     percent (20%)  interest in Newco I (considering  all purchases  pursuant to
     this Section  together),  regardless of whether one Seller disposes of more
     or less of an interest in Newco I under this ---------------------  Section
     than another Seller.

          (c) Purchase  Price.  The purchase price for any interest  transferred
     pursuant to this  Section  shall,  in the absence of an  agreement on price
     between  Prime and the  applicable  Seller(s),  be  determined  as follows:
     --------------

          (i) If the exercise of the option hereunder is after the expiration of
     such  ninety  (90) day  period,  then the  purchase  price must be mutually
     agreed upon by the applicable Seller(s) and Prime.

                           (ii)  If the  exercise  of the  option  hereunder  is
         within the ninety (90) day period immediately  following the expiration
         of the five (5) year period  described  in Section  9.8(a),  then Prime
         shall select a certified business appraiser (that is a member of either
         the  American  Society  of  Appraisers  or the  Institute  of  Business
         Appraisers)  to value the interest  being  transferred.  If the selling
         Seller(s) under this Section do not agree with the value  determined by
         Prime's appraiser,  such Seller(s) may, at their own expense,  select a
         second  appraiser  that is a member of one or both of the  above  named
         professional organizations to value the interest being transferred.  If
         the two  appraisers  cannot  agree on the value of the  interest  being
         transferred, the two appraisers shall mutually select a third appraiser
         (that meets the above described  membership  requirements) to value the
         interest  being  transferred  together  with the first two  appraisers,
         based on a  majority  vote.  Any  valuation  determined  by such  third
         appraiser shall be final,  binding and conclusive.  The expense of such
         third  appraiser  shall be paid by the  selling  Seller(s),  unless the
         appraised  value  ultimately  determined is more than ten percent (10%)
         greater than the value  determined by Prime's  original  appraiser,  in
         which event Prime shall bear the entire cost of the third appraiser. If
         the exercise of the option  hereunder is after the  expiration  of such
         ninety (90) day period, then the purchase price must be mutually agreed
         upon by the applicable Seller(s) and Prime.

                  (d) Such purchase price shall be paid in immediately available
funds at the closing of the transfer  pursuant to this  Section.  The closing of
any purchase and sale pursuant to this Section shall take place at the principal
office of Prime or such  other  place  designated  by Prime  and the  applicable
Seller(s), on the thirtieth day (or if such thirtieth day is not a business day,
the  next  business  day  following  the  thirtieth  day)  following  the  final
determination  of a purchase price under  subsection (c) above. At such closing,
Seller  shall  execute  all  documents  and take such  other  actions  as may be
reasonably necessary to deliver to Prime title to the interest transferred, free
and clear of all liens,  claims,  encumbrances  or  restrictions  of any kind or
nature whatsoever,  except those established in the Organizational Documents and
other governing documents of Newco I.

          (e)  Exceptions.  Notwithstanding  the  foregoing  provisions  of this
     Section 9.8, Prime shall not be obligated to purchase any interest in Newco
     I pursuant to this Section if Prime is unable to obtain  financing for such
     purchase from a third party upon reasonable  market terms,  after Prime and
     PMSI  have  exercised  commercially   reasonable  efforts  to  obtain  such
     financing. ----------

          9.9 Obligation to Extinguish  Debt.  Each of BDEC,  Barnet and Dulaney
     agrees that it or he will take all  necessary  action,  including,  without
     limitation,  execute  any  documents  and  pay  any  amounts,  that  may be
     necessary to cause the lien on certain of the Assets in favor of Camel Back
     Bank  (described  more fully on Schedule 1.4 attached  hereto) to be fully,
     unconditionally and irrevocably released on or prior to September 30, 1999.
     ----------------------------- ------------

          9.10 Notice of Certain Transfers. Without in any manner restricting or
     modifying any prohibition on the sale of BDEC ownership interests by any of
     the owners of BDEC,  each of the Sellers  agrees that it must notify  Prime
     and Newco II in writing  within  three (3) days of learning of any transfer
     of BDEC ownership interests. ---------------------------

          9.11 Fiscal Years of Newco I and Newco II. Each of the parties to this
     Agreement hereby agrees to vote its interests, if any, in Newco I and Newco
     II,  and to vote in its  capacity  as a manager  of Newco I or Newco II, if
     applicable,  to cause the  fiscal  years of each of Newco I and Newco II to
     end annually on December 31. ------------------------------------

         9.12  Right of Offset.  Each  Seller  agrees  that Newco I and Newco II
shall each have  rights of offset  against  distributions  to either BDEC and/or
LASIK in respect of any ownership  interest either may have in either Newco I or
Newco II at any time following the Closing,  for any and all debts,  obligations
or  liabilities  that any Seller may have to Prime or PMSI,  including,  without
limitation,  any liability arising out of or relating to such Seller's indemnity
obligations under this Agreement or any Transaction Document. Each Seller hereby
authorizes  and directs  Newco I and Newco II, and appoints  each of Newco I and
Newco II as its  attorney in fact,  to withhold  and pay such offset  amounts to
Prime and to take all other  actions  necessary  to make such  payment.  Each of
Newco I and Newco II hereby  agrees to  promptly  remit any and all such  offset
amounts to Prime upon request.

                                                     ARTICLE X

                                                   Miscellaneous

          10.1 Collateral  Agreements,  Amendments,  and Waivers. This Agreement
     (together with the Transaction  Documents)  supersedes all prior documents,
     understandings,   and  agreements,   oral  or  written,  relating  to  this
     transaction and constitutes the entire understanding among the parties with
     respect to the subject matter hereof.  Any modification or amendment to, or
     waiver of, any  provision of this  Agreement (or any  Transaction  Document
     unless  otherwise   expressly   provided  therein)  may  be  made  only  by
     ----------------------------------------------  an  instrument  in  writing
     executed by each party thereto.

          10.2  Successors and Assigns.  No party's rights or obligations  under
     this  Agreement may be assigned  without the prior  written  consent of all
     parties  hereto,  except  that Prime may assign its rights and  obligations
     hereunder to any entity, more than fifty percent (50%) of the voting equity
     ownership interests of which is at the time owned,  directly or indirectly,
     by PMSI.  Any  assignment in violation of the  foregoing  shall be null and
     void.    Subject   to   the   preceding    sentences   of   this   Section,
     ----------------------  the  provisions  of  this  Agreement  (and,  unless
     otherwise expressly provided therein, of any Transaction Document) shall be
     binding  upon and inure to the  benefit  of the  parties  hereto  and their
     respective heirs, legal representatives, successors, and assigns.

         10.3  Expenses.   Except  as  set  forth  in  the  following  sentence,
regardless of whether the transactions contemplated hereby are consummated, each
party  hereto  shall  pay  all of  its  costs  and  expenses  incurred  by it in
connection  with this  Agreement,  including the fees and  disbursements  of its
legal counsel and accountants.  Up to $3,000 of the costs and expenses  incurred
by Prime and associated  specifically  with the formation and  documentation  of
Newco I and Newco  II,  including  legal  fees and  expenses  for  drafting  the
Organizational Documents, shall be paid to Prime, or reimbursed, by Newco II.

          10.4 Severability.  This Agreement (including, without limitation, the
     provisions  contained  in Section  9.3 and  Section  9.4) is intended to be
     performed in  accordance  with,  and only to the extent  permitted  by, all
     applicable laws,  ordinances,  rules and  regulations.  If any provision of
     this Agreement,  or the application  thereof to any person or circumstance,
     shall, for any reason and to any extent,  be invalid or  unenforceable  but
     the extent of the  invalidity  or  unenforceability  does not  ------------
     destroy the basis of the bargain  between the parties as contained  herein,
     the remainder of this  Agreement and the  application  of such provision to
     other persons or circumstances  shall not be effected  thereby,  but rather
     shall be enforced to the fullest extent permitted by law.

          10.5  Waiver.  No  failure  or  delay  on the  part  of any  party  in
     exercising  any right,  power,  or privilege  hereunder or under any of the
     documents  delivered in connection  with this Agreement  shall operate as a
     waiver of such right, power, or privilege;  nor shall any single or partial
     exercise of any such  right,  power,  or  privilege  preclude  any other or
     future  exercise  thereof  or the  exercise  of any other  right,  power or
     privilege. ------

         10.6 Notices.  Any notices required or permitted to be given under this
Agreement (and, unless otherwise  expressly provided therein,  under Transaction
Document)  shall be given in  writing  and  shall be  deemed  received  (a) when
delivered  personally or by courier service to the relevant party at its address
as set forth below or (b) if sent by mail,  on the third day  following the date
when deposited in the United States mail,  certified or registered mail, postage
prepaid, to the relevant party at its address indicated below:

Prime, Newco I and  Prime Medical Operating, Inc., Prime/BDR Acquisition, L.L.C.
Newco II:                          and Prime/BDEC Acquisition, L.L.C.
                                   1301 Capital of Texas Highway
                                   Suite C-300
                                   Austin, Texas  78746
                                   Attention:  President

with a copy to:                     Mr. Timothy L. LaFrey
                                    Akin, Gump, Strauss, Hauer & Feld, L.L.P.
                                    816 Congress Avenue, Suite 1900
                                    Austin, Texas  78701

Sellers:                            Barnet Dulaney Eye Center, P.L.L.C., LASIK
                                    Investors, L.L.C., David D. Dulaney, M.D.,
                                    Ronald W. Barnet, M.D., and Mark Rosenberg
                                    4800 North 22nd Street
                                    Phoenix, AZ  85016


with a copy to:                                      Mr. Bert L. Campbell
                                    Vinson & Elkins, L.L.P.
                                    2300 First City Tower
                                    1001 Fannin Street
                                    Houston, Texas  77002


         Each party may change  its  address  for  purposes  of this  Section by
proper notice to the other parties.

     10.7 Survival of Agreement.  Regardless  of any  investigation  at any time
made by or on  behalf of any party  hereto or of any  information  any party may
have  in  respect  thereof,  all of the  provisions  of this  Agreement  and the
Transaction Documents shall survive the Closing.

     10.8 Further Assurances. At, and from time to time after, the Closing, each
party shall, at the request of another party, but without further consideration,
execute  and  deliver  such  other   instruments  of   conveyance,   assignment,
assumption,  transfer  and delivery and take such other action as such party may
reasonably  request in order more  effectively  to consummate  the  transactions
contemplated hereby.

         10.9 Construction,  Knowledge and Materiality.  This Agreement and each
Transaction  Document  shall be construed  without regard to the identity of the
person who drafted the various  provisions of the same. Each and every provision
of this Agreement and each Transaction Document shall be construed as though all
of the parties participated  equally in the drafting of the same.  Consequently,
the parties  acknowledge and agree that any rule of construction that a document
is to be construed  against the drafting party shall not be applicable either to
this  Agreement or any  Transaction  Document.  For purposes of this  Agreement,
whenever there are references to "material" or "materially," such terms shall be
deemed to mean an economic impact exceeding  $25,000 with respect to the fact or
matter being referred to or described. As used herein, "day" or "days" refers to
calendar  days  unless  otherwise  specified  in each  instance.  When  the term
"knowledge" is used in this  Agreement in reference to (i) Prime,  it shall mean
such items as are  within the actual  knowledge  of Ken  Shifrin,  Joe  Jenkins,
Cheryl  Williams  and John  Hedrick  and (ii) BDEC or LASIK,  it shall mean such
items as are within the actual knowledge of Pinkert, Perkins, Dulaney, Barnet or
Rosenberg.

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

     10.11  Arbitration.  Any  controversy  between the parties  regarding  this
Agreement  and any claims  arising out of this  Agreement or its breach shall be
submitted to arbitration by either party. The arbitration  proceedings  shall be
conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of
the American  Arbitration  Association.  The  arbitration  shall be conducted in
Dallas,  Texas and the  arbitrator  shall have the right to award actual damages
and  attorney  fees and costs,  but shall not have the right to award  punitive,
exemplary or consequential damages against either party.

     10.12 Counterparts. This Agreement may be executed in several counterparts,
each of which shall  constitute  an  original  and all of which  together  shall
constitute  one and the same  instrument.  Any party  hereto  may  execute  this
Agreement by signing any one counterpart.

                                             [Signature pages follow]




<PAGE>



                                                 SIGNATURE PAGE TO
                                              CONTRIBUTION AGREEMENT


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


PRIME:                                      PRIME MEDICAL OPERATING, INC.


                                            By:/s/ Kenneth Shifrin

                                            Printed Name:Ken Shifrin

                                            Title:Chairman of the Board



BDEC:                                       BARNET DULANEY EYE CENTER, P.L.L.C.


                                            By:/s/ Ronald W. Barnet, M.D.
                                                 Ronald W. Barnet, M.D., manager

                                            By:/s/ David D. Dulaney, M.D.
                                                 David D. Dulaney, M.D., manager



LASIK:                                      LASIK INVESTORS, L.L.C.


                                            By:/s/ Ronald W. Barnet, M.D.
                                                 Ronald W. Barnet, M.D., manager

                                            By: /s/ David D. Dulaney, M.D.
                                                David D. Dulaney, M.D., manager


NEWCO I:                                    PRIME/BDR ACQUISITION, L.L.C.

                                            By:
                                               LASIK Investors, L.L.C.. - Member


                                            By:  /s/ Ronald W. Barnet, M.D.
                                                 Ronald W. Barnet, M.D., manager

                                            By:  /s/ David D. Dulaney, M.D.
                                                 David D. Dulaney, M.D., manager


                                            By:
                                          Prime Medical Operating, Inc. - Member


                                            By: /s/ Cheryl Williams
                                            Printed Name: Cheryl Williams

                                            Title: Treasurer

NEWCO II:                                   PRIME/BDEC ACQUISITION, L.L.C.

                                            By:
                                    Barnet Dulaney Eye Center, P.L.L.C. - Member


                                            By: /s/ Ronald W. Barnet, M.D.
                                                 Ronald W. Barnet, M.D., manager

                                            By:  /s/ David D. Dulaney, M.D.
                                                 David D. Dulaney, M.D., manager


                                            By:
                                          Prime Medical Operating, Inc. - Member


                                            By: /s/ Cheryl Williams
                                            Printed Name: Cheryl Williams

                                            Title: Treasurer



<PAGE>




DULANEY:                                    /s/ David D. Dulaney, M.D.
                                            David D. Dulaney, M.D.

BARNET:                                     /s/ Ronald W. Barnet, M.D.
                                            Ronald W. Barnet, M.D.

ROSENBERG:                                   /s/ Mark Rosenberg
                                             Mark Rosenberg


PMSI:                                        PRIME MEDICAL SERVICES, INC.


                                            By:  /s/ Cheryl Williams

                                            Printed Name:Cheryl Williams

                                            Title: Treasurer





<PAGE>


                                                 TABLE OF EXHIBITS


Exhibit A                  Form of Primary Warrants

Exhibit B                  Form of Organizational Documents of Newco I

Exhibit C                  Form of Organizational Documents of Newco II

Exhibit D                  Form of Assignment and Assumption Agreement

Exhibit E                  PMSI Financial Statements

Exhibit F                  BDEC Financial Statements

Exhibits G1
     to G5                 Credit Documents

Exhibit H                  LASIK Ownership Interest Transfer Restriction
                           Agreement

Exhibit I                  Collocation Agreement

Exhibit J                  Consulting Agreement

<PAGE>
                                    EXHIBIT-A

                               WARRANT CERTIFICATE

THE WARRANT  REPRESENTED BY THIS  CERTIFICATE AND THE COMMON STOCK ISSUABLE UPON
THE EXERCISE HEREOF HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933,
AS AMENDED,  OR APPLICABLE  STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED OR
RESOLD WITHOUT  REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
UNLESS AN EXEMPTION FROM REGISTRATION IS THEN AVAILABLE.

                        WARRANT TO PURCHASE COMMON STOCK

                                       OF

                          PRIME MEDICAL SERVICES, INC.

                             Date: ________________

         This is to certify that, for value received, Barnet Dulaney Eye Center,
P.L.L.C.  (the  "Holder") is entitled to purchase,  subject to the provisions of
this Warrant (including,  without limitation,  the vesting provisions of Section
10), from Prime Medical  Services,  Inc., a Texas  corporation  (the "Company"),
Forty Four Thousand Thirty Five (44,035)  shares of the Company's  common stock,
$.01 par value (such class of stock  being  referred to herein as the  "Stock"),
for $9.4875 per share (the "Exercise Price"). This Warrant is issued pursuant to
that  certain  Contribution  Agreement  (the  "Contribution  Agreement"),  dated
effective September 1, 1999, by and among the Company,  Prime Medical Operating,
Inc., a Delaware  corporation,  the Holder,  Prime/BDEC  Acquisition,  L.L.C., a
Delaware limited liability company,  Prime/BDR  Acquisition,  L.L.C., a Delaware
limited liability company, LASIK Investors, L.L.C., a Delaware limited liability
company, David D. Dulaney, M.D., Ronald W. Barnet, M.D., and Mark Rosenberg. The
number of shares of Stock to be received  upon the  exercise of this Warrant and
the Exercise Price shall be adjusted from time to time as hereinafter set forth.
The  shares  of Stock or other  securities  or  property  deliverable  upon such
exercise,  as adjusted from time to time, are hereinafter  sometimes referred to
as "Warrant Shares." Unless the context otherwise  requires,  the term "Warrant"
or  "Warrants"  as used herein  includes  this Warrant and any other  Warrant or
Warrants which may be issued pursuant to the provisions of this Warrant, whether
upon transfer, assignment, partial exercise, divisions,  combinations,  exchange
or otherwise,  and the term "the Holder"  includes any registered  transferee or
transferees or registered  assignee or assignees of the Holder, who in each case
shall be subject to the provisions of this Warrant, and when used with reference
to Warrant Shares, means the holder or holders of such Warrant Shares.

         SECTION  1.  Exercise  of  Warrant.  Subject to the  provisions  hereof
(including,  without  limitation,  the vesting  provisions  of Section 10), this
Warrant  may be  exercised  in whole or in part at any time or from time to time
during the period commencing on _______________  (the  "Commencement  Date") and
ending 5:00 P.M.,  Central  Standard Time, on  _______________  (the "Expiration
Date"),  by presentation and surrender to the Company at its principal office of
this Warrant and the Purchase Form,  attached hereto as Exhibit A, duly executed
and  accompanied  by  payment  of the  Exercise  Price for the number of Warrant
Shares  specified in such form.  The Exercise  Price may be paid at the Holder's
election  either (i) by cash,  certified or official  bank check  payable to the
order of the  Company,  or (ii) by  surrender of Warrants  ("Net  Issuance")  as
determined below. If the Holder elects the Net Issuance method, the Company will
issue that number of Warrant Shares  determined by (a)  subtracting the Exercise
Price from the Fair Market Value,  (b) multiplying such difference by the number
of shares of Warrant Shares requested to be exercised under this Warrant and (c)
dividing such product by the Fair Market Value.  As used in this Warrant,  "Fair
Market  Value" shall mean the per share price of the Warrant  Shares at the time
of exercise,  as  determined  by averaging the closing price per share quoted by
NASDAQ on the five trading days immediately  preceding the date of Exercise.  If
this  Warrant is  exercised  in part only,  the Company  shall,  promptly  after
presentation  of this  Warrant  upon such  exercise,  execute  and deliver a new
Warrant  evidencing  the rights of the Holder thereof to purchase the balance of
the Warrant Shares  purchasable  hereunder upon the same terms and conditions as
herein set forth.

         SECTION 2. Reservation of Shares.  The Company shall at all times after
the Commencement  Date and until expiration of this Warrant reserve for issuance
and delivery upon exercise of this Warrant the number of Warrant Shares as shall
be required for issuance and delivery upon exercise of this Warrant.

         SECTION  3.   Fractional   Shares.   No  fractional   shares  or  scrip
representing  fractional  shares  shall  be  issued  upon the  exercise  of this
Warrant.  With  respect to any  fraction  of a share  called  for upon  exercise
hereof,  the  Company  shall pay to the  Holder an amount in cash  equal to such
fraction  multiplied  by the  current  market  value of such  fractional  share,
determined as follows:

                  (a) if the Stock is listed on a national  securities  exchange
         or admitted to unlisted trading privileges  thereon,  the current value
         shall be the last  reported sale price of the Stock on such exchange on
         the last business day prior to the date of exercise of this Warrant, or
         if no such sale is made on such day,  such  price of the Stock for such
         immediately preceding day as such a sale occurred on such exchange; or

                  (b) if the  Stock is not so  listed or  admitted  to  unlisted
         trading  privileges,  the  current  value shall be the mean of the last
         reported  high and low  prices of the Stock  reported  by a  comparable
         exchange system  selected by the Board of Directors of the Company,  on
         the  last  business  day  prior  to the  date of the  exercise  of this
         Warrant; or

                  (c) if the Stock is not listed or admitted to unlisted trading
         privileges,  and bid and asked prices are not so reported,  the current
         value shall be an amount,  not less than book value per share of Stock,
         determined in such reasonable  manner as may be prescribed by the Board
         of Directors of the Company.

         SECTION 4.        Transfer, Exchange, Assignment or Loss of Warrant.

         4.1 Neither this  Warrant,  nor any rights or interest  herein,  may be
assigned,  transferred or encumbered,  in whole or in part,  without the express
written  consent  of the  Company  in each  instance,  and upon  receipt of such
consent may only be assigned,  transferred  or encumbered as provided  herein so
long as such  assignment  or transfer is in  accordance  with and subject to the
provisions  of the  Securities  Act of  1933,  as  amended,  and the  rules  and
regulations  promulgated  thereunder  (said Act and such  rules and  Regulations
being  hereinafter  collectively  referred  to as  the  "Securities  Act").  Any
purported transfer or assignment made other than in accordance with this Section
4 shall be null and void and of no force and effect.

         4.2 Any assignment  permitted  hereunder  shall be made by surrender of
this  Warrant  to the  Company  at its  principal  office,  with  any  requested
assignment  form duly executed and funds  sufficient to pay any transfer tax. In
such event the Company shall, without charge,  execute and deliver a new Warrant
in the name of the assignee named in such instrument of assignment and designate
the assignee as the registered  holder on the Company's records and this Warrant
shall promptly be canceled.

         4.3 Upon receipt by the Company of evidence  satisfactory  to it of the
loss,  theft,  destruction  or mutilation  of this Warrant,  and (in the case of
loss, theft or destruction) of reasonably  satisfactory  indemnification  to the
Company  or (in the  case  of  mutilation)  presentation  of  this  Warrant  for
surrender and  cancellation,  the Company will execute and deliver a new Warrant
of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant
shall thereupon become void.

SECTION 5.  Adjustment in the Number of Warrant Shares  Purchasable and Exercise
Price.

         5.1 The  number  of  shares of Stock  for  which  this  Warrant  may be
exercised shall be subject to adjustment as follows:

                  (a) in the event there is a subdivision  or combination of the
         outstanding  shares of Stock into a larger or smaller number of shares,
         the number of shares of Stock for which this  Warrant may be  exercised
         shall be increased or reduced in the same proportion as the increase or
         decrease in the outstanding shares of Stock;

                  (b) if the  Company  declares a dividend  on Stock  payable in
         Stock or  securities  convertible  into Stock,  the number of shares of
         Stock for which this Warrant may be exercised shall be increased, as of
         the  record  date for  determining  which  holders  of  Stock  shall be
         entitled to receive such dividend, in proportion to the increase in the
         number of outstanding shares of Stock as a result of such dividend;

                  (c) if the Company  decides to offer  rights to all holders of
         Stock which entitle them to subscribe to additional Stock or securities
         convertible  into Stock,  the Company shall give written  notice of any
         such proposed rights offering to the Holder at least fifteen days prior
         to the  proposed  record date in order to permit the Holder to exercise
         this  Warrant  on  or  before  such  record  date.  There  shall  be no
         adjustment  in the number of shares of Stock for which this Warrant may
         be exercised or the Exercise Price by virtue of such rights offering or
         by  virtue  of any  sale of any  class  of  securities  of the  Company
         pursuant to such rights offering.

         5.2 In the event at any time prior to the expiration of this Warrant of
any reorganization or reclassification of the outstanding shares of Stock (other
than a change in par value, or from no par value to par value, or from par value
to no par value,  or as a result of a subdivision  or  combination),  the Holder
shall have the right,  but not the  obligation,  to exercise this Warrant.  Upon
such  exercise,  Holder shall have the right to receive the same kind and number
of shares of stock and other  securities,  cash or other  property as would have
been distributed to the Holder upon such reorganization or reclassification  had
Holder  exercised  this  Warrant  immediately  prior to such  reorganization  or
reclassification.  The Holder shall pay upon such  exercise  the Exercise  Price
that otherwise would have been payable pursuant to the terms of this Warrant. If
any such  reorganization or  reclassification  results in a cash distribution in
excess of the  Exercise  Price  provided  by this  Warrant,  the Holder  may, at
Holder's  option,  exercise this Warrant  without making payment of the Exercise
Price, and in such case the Company shall, upon distribution to Holder, consider
the  Exercise  Price to have been  paid in full,  and in  making  settlement  to
Holder,  shall  deduct an amount  equal to the  Exercise  Price  from the amount
payable to the Holder.

         5.3 If the Company  shall,  at any time prior to the expiration of this
Warrant,  dissolve,  liquidate or wind up its affairs, the Holder shall have the
right,  but not the  obligation,  to exercise this  Warrant.  Upon such exercise
Holder  shall  have the right to  receive,  in lieu of the  shares of Stock that
Holder  otherwise would have been entitled to receive,  the same kind and amount
of assets as would have been issued, distributed or paid to Holder upon any such
dissolution,  liquidation or winding up with respect to such shares of Stock had
Holder  been the  holder  of  record of such  shares  of Stock  receivable  upon
exercise of this Warrant on the date for  determining  those entitled to receive
any such distribution. If any dissolution,  liquidation or winding up results in
any cash  distribution  in excess of the  Exercise  Price  provided  for by this
Warrant,  Holder may, at Holder's  option,  exercise this Warrant without making
payment  of the  Exercise  Price and,  in such case,  the  Company  shall,  upon
distribution  to Holder,  consider the Exercise Price to have been paid in full,
and in making  settlement to Holder shall deduct an amount equal to the Exercise
Price from the amount payable to Holder.

         5.4 In the event  that,  at any time  prior to the  expiration  of this
Warrant,  the Company is merged into or  consolidated  with another  corporation
under circumstances where the Company is not the surviving corporation,  or more
than 50 percent of the outstanding voting securities of the Company are owned by
another  corporation  as a result of such merger or  consolidation,  then at the
election of the Board of Directors of the Company (i) the successor entity shall
assume the Company's  obligations  hereunder and Holder shall be entitled,  upon
exercise of this  Warrant,  to receive in lieu of shares of Stock shares of such
stock or other securities as the holders of shares of Stock received pursuant to
the terms of the merger or consolidation or (ii) this Warrant may be canceled by
the Board of  Directors  of the  Company  as of the  effective  date of any such
merger or consolidation,  provided that (x) notice of such cancellation shall be
given to Holder, and (y) Holder shall have the right to exercise this Warrant in
full during a thirty (30) day period preceding the effective date of such merger
or consolidation.

         5.5 The Company may retain a firm of independent  public accountants of
recognized standing (who may be any such firm regularly employed by the Company)
to make any computation  required under this Section 5, and a certificate signed
by such firm shall be conclusive  evidence of the correctness of any computation
made under this Section.

         5.6  Whenever  the  number  of  shares  of Stock  purchasable  upon the
exercise of this  Warrant is adjusted as herein  provided,  the  Exercise  Price
shall be adjusted by multiplying the applicable Exercise Price immediately prior
to such adjustment by a fraction,  the numerator of which shall be the number of
shares of Stock  purchasable upon exercise of this Warrant  immediately prior to
such  adjustment  and the  denominator of which shall be the number of shares of
Stock purchasable immediately after such adjustment.

         SECTION 6. Officer's Certificate. Whenever the number of Warrant Shares
or the Exercise Price shall be adjusted as required by the provisions of Section
5 hereof, the Company forthwith shall file in the custody of its secretary or an
assistant  secretary,  at its  principal  office,  a  certificate  of the  chief
executive  officer of the  Company  setting  forth the number and kind of shares
purchasable, as so adjusted, stating that such adjustments in the number or kind
of shares or other  securities  conform to the requirements of Section 5 of this
Warrant,  and setting forth a brief  statement of the facts  accounting for such
adjustments.  Promptly  after  receipt of such  certificate,  the  Company  will
deliver,  by first-class mail,  postage prepaid,  a brief summary thereof (to be
supplied by the Company) to the Holder;  provided however,  that failure to file
or to give any notice  required under this  Subsection,  or any defect  therein,
shall not affect the legality or validity of any such adjustments  under Section
5. Each such  officer's  certificate  shall be made  available at all reasonable
times during reasonable hours for inspection by Holder.

         SECTION 7.  Cancellation  of Warrant.  This  Warrant may be revoked and
cancelled by the Company upon (i) the occurrence of certain events  specified in
the Contribution  Agreement,  (ii) any breach,  or threatened  breach by BDEC or
Holder of the Contribution  Agreement or any Transaction Document (as defined in
the Contribution Agreement) to which either BDEC or Holder is a party, (iii) any
breach or threatened breach by BDEC or Holder of any other contract or agreement
entered  into at any time by BDEC or Holder  and to which the  Company or any of
the Company's  subsidiaries or affiliates is a party or named  beneficiary,  and
(iv) upon any transfer or  encumbrance  or attempted  transfer or encumbrance by
Holder of this Warrant or any rights  hereunder or interest  herein in violation
of the provisions of Section 4 hereof.

         SECTION  8.  Notice  to  Holder.  So  long  as this  Warrant  shall  be
outstanding,  (i) if the Company shall pay any dividend or make any distribution
upon the Stock  otherwise than in cash or (ii) if the Company shall offer to the
holders of Stock for subscription or purchase by them any shares of any class or
any other  rights or (iii) if there shall be any capital  reorganization  of the
Company,  reclassification of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation,  sale, lease or transfer
of all or  substantially  all of the  property  and  assets of the  Company,  or
voluntary or involuntary dissolution,  liquidation or winding up of the Company,
then in any such event,  the Company shall cause to be mailed by certified  mail
to Holder, at least twenty (20) days prior to the relevant date described below,
a notice  containing a brief  description of the proposed action and stating the
date or  expected  date on which a record is to be taken for the purpose of such
dividend,  distribution  or rights,  or such  reclassification,  reorganization,
consolidation,  merger, conveyance, lease or transfer, dissolution,  liquidation
or winding up and the date or expected  date as of which the holders of Stock of
record  shall be entitled to exchange  their shares of Stock for  securities  or
other property deliverable upon such event.

         SECTION 9. Warrant Certificate Holder Not Deemed a Stockholder.  Holder
shall not, solely because of holding the warrant,  be entitled to vote,  receive
dividends  or be  deemed  the  holder of Stock or any  other  securities  of the
Company which may at any time be issuable on the exercise of the Warrant for any
purpose  whatsoever,  nor shall anything contained herein be construed to confer
upon the Holder, as such, any of the rights of stockholder of the Company or any
right to vote for the  election of  directors  or upon any matter  submitted  to
stockholders  at any  time  thereof,  or to  give  or  withhold  consent  to any
corporate  action  (whether  upon  any  recapitalization,   issuance  of  stock,
reclassification  of  stock,  change  of par  value or change of stock to no par
value,  consolidation,  merger conveyance or otherwise), or to receive notice of
meetings or other actions affecting  stockholders (except as provided in Section
8 hereof),  or to receive dividend or subscription  rights, or otherwise,  until
such  Warrant  Certificate  shall have been  exercised  in  accordance  with the
provisions hereof and the Warrant Shares shall have been issued.

         SECTION 10. Vesting. Assuming Holder complies with all of the terms and
conditions  contained in this Warrant, all of Holder's rights under this Warrant
(including, without limitation, Holder's rights to acquire common stock pursuant
to this  Warrant)  shall vest  twenty  five  percent  (25%)  upon each  one-year
anniversary of the date of this Warrant.

SECTION 11. Agreement of Holder.  The Holder, by accepting this Warrant consents
and agrees with

     (a) The Warrants are transferable on the registry books of the Company only
upon the terms and conditions set forth in this Warrant; and

                  (b) The  Company  may deem and treat the  person in whose name
         the  Warrant  is  registered  as the  absolute  owner  of  the  Warrant
         (notwithstanding  any notation of ownership  or other  writing  thereon
         made by anyone  other than the  Company or the  Warrant  Agent) for all
         purposes  whatever and the Company  shall not be affected by any notice
         to the contrary, except as set forth in Section 4 of this Warrant.

SECTION 12.  Governing  Law. This Warrant shall be construed in accordance  with
the laws of the  State of  Texas  applicable  to  contracts  executed  and to be
performed wholly within such state.

         SECTION 13.  Notice.  Notices and other  communications  to be given to
Holder  of the  Warrant  evidenced  hereby  shall  be  delivered  by  hand or by
first-class mail, postage prepaid, to Barnet Dulaney Eye Center,  P.L.L.C., 4800
North 22nd Street,  Phoenix,  Arizona  85016,  Attn:  President  (until  another
address is filed in writing by the Holder  with the  Company).  Notices or other
communications to the Company shall be deemed to have been sufficiently given if
delivered by hand or by first-class mail, postage prepaid to the Company at 1301
Capital of Texas  Highway,  Suite  C-300,  Austin,  Texas  78746,  or such other
address  as the  Company  shall  have  designated  by  written  notice  to  such
registered owner is herein  provided.  Notice by mail shall be deemed given when
deposited in the United States mail, postage prepaid, as herein provided.

         SECTION  14.  Successors.  All the  covenants  and  provisions  of this
Warrant by or for the benefit of the Company shall bind and inure to the benefit
of its  successors  and assigns  hereunder,  and all covenants and provisions of
this Warrant by or for the benefit of the Holder of this Warrant  shall bind and
inure to the benefit of the registered holder of the Warrants.

SECTION 15. Termination. This Warrant shall terminate as of the earliest of: (a)
the close of business on the Expiration Date, (b) the date upon which all rights
hereunder  shall have been  exercised  or redeemed or (c) upon its  cancellation
pursuant to Section 7 of this Warrant.

         SECTION  16.  Benefits  of this  Agreement.  Nothing  in  this  Warrant
Certificate  shall be construed to give to any person or corporation  other than
the Company, and its respective  successors and assigns hereunder and the Holder
of any legal or equitable right, remedy or claim hereunder, but shall be for the
sole and  exclusive  benefit of the Company and its  respective  successors  and
assigns hereunder and the Holder.

                            [Signature page follows]


<PAGE>




                                SIGNATURE PAGE TO

                               WARRANT CERTIFICATE

         IN WITNESS  WHEREOF,  the Company has  executed  this Warrant as of the
date set forth above.

                                     PRIME MEDICAL SERVICES, INC.

                                      By:  ___________________________________

                                      Printed Name:  ___________________________

                                      Title:  __________________________________


                                    EXHIBIT A

                                  PURCHASE FORM

TO:  Prime Medical Services, Inc., Secretary

(1) The  undersigned  Holder  hereby  elects to purchase  _______  shares of the
common  stock,  $.01 par value,  of Prime  Medical  Services,  Inc.,  a Delaware
corporation  ("PMSI"),  pursuant to the terms of the Warrant Agreement dated the
1st day of August,  1999 (the "Warrant  Agreement") between PMSI and the Holder,
and tenders  herewith  payment in full of the Exercise  Price (as defined in the
Warrant Agreement) for such shares of common stock using (check only one):

         [  ]  cash
         [  ]  certified check

         [  ]  Net Issuance Method (as defined in the Warrant Agreement)

(2) The undersigned also tenders herewith all applicable transfer taxes, if any,
using cash or certified check.

(3) Please issue a certificate or certificates  representing said shares of PMSI
common  stock  in the  name  of the  undersigned  or in  such  other  name as is
specified below.

---------------------------------
(Name)
---------------------------------
(Address)


HOLDER: _________________________

By: _________________________
Title: _________________________
Date: _________________________

<PAGE>

                                    EXHIBIT-B

                       LIMITED LIABILITY COMPANY AGREEMENT

                        OF PRIME/BDR ACQUISITION, L.L.C.
     Organized under the Delaware Limited Liability Company Act (the "Act").

                                   ARTICLE I.

                                NAME AND LOCATION

     Section 1.1. Name. The name of this limited  liability company is Prime/BDR
Acquisition, L.L.C. (the "Company").

         Section  1.2.  Members.  The  only  members  of the  Company  upon  the
execution of this Limited Liability Company Agreement (this  "Agreement")  shall
be Prime Medical Operating,  Inc, a Delaware  corporation  ("Prime"),  and LASIK
Investors L.L.C., a Delaware limited liability company  ("LASIK").  For purposes
of this  Agreement,  the "Members"  shall include such named members and any new
members admitted  pursuant to the terms of this Agreement,  but does not include
any person or entity who has ceased to be a member in the Company.

     Section 1.3. Principal Office. The principal office of the Company shall be
located in 1301 Capital of Texas Hwy., Suite C-300, Austin, Texas 78746-6550, or
such other location as may be selected by the Members.

     Section 1.4. Registered Agent and Address. The name of the registered agent
and the  address  of the  registered  office of the  Company as set forth in the
Certificate of Formation of the Company are:

                                            The Corporation Trust Company
                                            1209 Orange Street
                                            Wilmington, Delaware 19801

     Section 1.5.  Other  Offices.  Other offices and other  facilities  for the
transaction of business shall be located at such places as the Managers may from
time to time determine.

         Section 1.6  Contribution  Agreement.  The Company was initially formed
with a single member,  LASIK,  for the purpose of consummating  the transactions
contemplated by that certain Contribution Agreement dated effective September 1,
1999, by and among Prime, Prime Medical Services,  Inc., a Delaware  corporation
("PMSI"),  LASIK, Barnet Dulaney Eye Center,  P.L.L.C.,  an Arizona professional
limited  liability  company,  the Company,  Prime/BDEC  Acquisition,  L.L.C.,  a
Delaware limited liability  company,  David D. Dulaney,  M.D., Ronald W. Barnet,
M.D.,  and Mark  Rosenberg  (the  "Contribution  Agreement").  The parties  have
executed this Agreement upon  consummation of the  transactions  contemplated by
the  Contribution  Agreement.  This agreement  supercedes and replaces any prior
membership  agreement  or other  governing  or  organizational  document  of the
Company.

                                   ARTICLE II.

                                   MEMBERSHIP

     Section 2.1. Members' Interests.  The "Membership  Interest" of each Member
is set forth on Exhibit A.

     Section 2.2. Admission to Membership. The admission of new Members shall be
only by the unanimous  vote of the Members.  If new members are  admitted,  this
Agreement shall be amended to reflect each Member's revised Membership Interest.

     Section 2.3.  Property  Rights.  No Member shall have any right,  title, or
interest in any of the property or assets of the Company.

     Section  2.4.  Liability  of  Members.  No Member of the  Company  shall be
personally  liable for any debts,  liabilities,  or  obligations of the Company,
including under a judgment decree, or order of court.

         Section 2.5.  Transferability of Membership.  Except as provided below,
Membership  Interests in the Company are  transferable  only with the  unanimous
written  consent  of all  Members.  If such  unanimous  written  consent  is not
obtained when  required,  the  transferee  shall be entitled to receive only the
share of  profits  or other  compensation  by way of  income  and the  return of
contributions  to which  the  transferor  Member  otherwise  would be  entitled.
Notwithstanding  the  foregoing,  (i) the  Membership  Interests of Prime may be
freely  transferred,  without  consent,  to any  entity  that is then  owned  or
controlled, directly or indirectly, by PMSI (or its successor in interest), (ii)
the  Membership  Interests  of any  Member  may be freely  assigned,  pledged or
otherwise  transferred,  without  consent,  to  secure  any debt,  liability  or
obligation  owed to Prime by the  Company,  any Member or any entity  affiliated
with the  Company,  (iii) the  Membership  Interests of any Member may be freely
assigned,  pledged or otherwise  transferred,  without consent,  in favor of the
Lender(s)  under,  or by the  Lender(s)  as a result of the  enforcement  of any
security  interest arising pursuant to, that certain Senior Credit Facility (the
"Credit  Facility") of PMSI, (iv) the Membership  Interests of any Member may be
freely  transferred,  without  consent,  pursuant to and in accordance  with the
express terms and conditions of the Contribution Agreement,  and (iv) the pledge
by LASIK (pursuant to Section 6.3 of the Contribution Agreement) of its right to
receive  distributions  from the Company in respect of its  Membership  Interest
shall not be deemed to violate any provision of this Agreement..

         Section 2.6. Resignation of Members. A Member may not withdraw from the
Company except on the unanimous consent of the remaining  Members.  The terms of
the Members  withdrawal  shall be determined by agreement  between the remaining
Members and the withdrawing Member.

                                  ARTICLE III.

                                MEMBERS' MEETINGS

         Section  3.1.  Time and Place of Meeting.  All  meetings of the Members
shall be held at such  time and at such  place  within or  without  the State of
Delaware as shall be determined by the Managers.

         Section 3.2. Annual  Meetings.  In the absence of an earlier meeting at
such  time and place as the  Managers  shall  specify,  annual  meetings  of the
Members shall be held at the  principal  office of the Company on the date which
is thirty  (30) days after the end of the  Company's  fiscal year if not a legal
holiday,  and if a legal holiday,  then on the next full business day following,
at 10:00 a.m.,  at which  meeting the Members may transact  such business as may
properly be brought before the meeting.

     Section  3.3.  Special  Meetings.  Special  meetings  of the Members may be
called at any time by any Member.  Business transacted at special meetings shall
be confined to the purposes stated in the notice of the meeting.

         Section 3.4.  Notice.  Written or printed notice stating the place, day
and hour of any Members'  meeting,  and, in the case of a special  meeting,  the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten (10) days nor more than thirty (30) days before the date of the special
meeting,  either  personally  or by mail,  by or at the  direction of the person
calling the meeting, to each Member entitled to vote at such meeting. If mailed,
such notice shall be deemed to be delivered three (3) days after it is deposited
in the United States mail,  postage prepaid,  to the Member at his address as it
appears on the records of the Company at the time of mailing.

         Section 3.5. Quorum. Members present in person or represented by proxy,
holding  more than fifty  percent  (50%) of the total votes which may be cast at
any meeting  shall  constitute  a quorum at all  meetings of the Members for the
transaction  of  business.  If,  however,  such  quorum  shall not be present or
represented at any meeting of the Members, the Members entitled to vote, present
in person or represented by proxy,  shall have power to adjourn the meeting from
time to time,  without notice other than  announcement  at the meeting,  until a
quorum shall be present or represented. When any adjourned meeting is reconvened
and a quorum shall be present or  represented,  any  business may be  transacted
which might have been  transacted at the meeting as originally  noticed.  Once a
quorum is constituted,  the Members present or represented by proxy at a meeting
may  continue  to  transact  business  until  adjournment,  notwithstanding  the
subsequent  withdrawal therefrom of such number of Members as to leave less than
a quorum.

         Section 3.6. Voting. When a quorum is present at any meeting,  the vote
of the Members, whether present or represented by proxy at such meeting, holding
more  than  fifty  percent  (50%) of the  total  votes  which may be cast at any
meeting shall be the act of the Members,  unless the vote of a different  number
is required by the Act, the  Certificate of Formation or this Limited  Liability
Company Agreement. Each Member shall be entitled to one vote for each percentage
point  represented by their  Membership  Interest.  Fractional  percentage point
interests shall be entitled to a corresponding fractional vote.

         Section  3.7.  Proxy.  Every  proxy must be  executed in writing by the
Member or by his duly authorized  attorney-in-fact,  and shall be filed with the
Secretary of the Company prior to or at the time of the meeting.  No proxy shall
be  valid  after  eleven  (11)  months  from the  date of its  execution  unless
otherwise  provided  therein.  Each proxy shall be  revocable  unless  expressly
provided therein to be irrevocable and unless otherwise made irrevocable by law.

         Section  3.8.  Action  by  Written  Consent.  Any  action  required  or
permitted  to be taken at any  meeting  of the  Members  may be taken  without a
meeting if a consent in  writing,  setting  forth the action so taken,  shall be
signed by all of the Members entitled to vote with respect to the subject matter
thereof,  and such  consent  shall have the same force and effect as a unanimous
vote of Members.

         Section 3.9. Meetings by Conference Telephone.  Members may participate
in and hold  meetings  of Members by means of  conference  telephone  or similar
communications  equipment  by means of which all  persons  participating  in the
meeting  can  hear  each  other,  and  participation  in  such a  meeting  shall
constitute   presence  in  person  at  such  meeting,   except  where  a  person
participates  in the  meeting  for  the  express  purpose  of  objecting  to the
transaction  of any  business  on the ground  that the  meeting is not  lawfully
called or convened.

                                   ARTICLE IV.

                        MEMBERSHIP CAPITAL CONTRIBUTIONS

         Except  for  each  Member's  initial  capital   contribution   made  in
connection with the formation of the Company, no capital  contributions shall be
required  of any  Member  without  the  approval  of all the  Members  to  raise
additional capital, and only then proportionately as to each Member.

                                   ARTICLE V.

                             DISTRIBUTION TO MEMBERS

         The Company shall not  distribute (or allow to be  distributed)  to its
members,  with respect to their  respective  membership  interests,  any cash or
other  property  of the  Company  or its  subsidiaries  if,  at the  time of the
proposed   distribution,   any  amounts  (whether  principal  or  interest)  are
outstanding  under the Credit  Documents or the Target Center Lending  Documents
(as such terms are  defined in the  Contribution  Agreement).  Furthermore,  the
Company shall pay all  available  cash flow to Prime in payment of the Company's
outstanding obligations,  if any, under the Working Capital Line and Development
Facility (as such terms are defined in the Contribution Agreement), irrespective
of whether such payments exceed the minimum required  payments under the Working
Capital Line and Development Facility.  For purposes of allocating such payments
among any two or more of such  outstanding  obligations,  such payments shall be
allocated  pro rata,  based upon the  respective  balances of such  obligations,
unless (i) a greater  portion of the  payment is  required  to be paid  toward a
given  obligation in order to prevent a default with respect to that  obligation
(but only to the extent  necessary  to prevent  such a default)  or (ii)  eighty
percent (80%) of the managers of the Company elect to allocate the payments in a
different manner.

         Notwithstanding  the foregoing,  as long as no party other than PMSI or
Prime is in default under the  Contribution  Agreement or any other  Transaction
Document (as defined in the Contribution Agreement, but excluding,  however, the
Credit Documents and the Target Center Lending  Documents),  then, to the extent
that (but only to the extent that) the Company possesses the cash flow necessary
(in  the  reasonable  discretion  of a  majority  of its  managers)  to pay  its
liabilities in the ordinary course  consistent with past practices,  the Company
agrees to make  quarterly  estimates  of its taxable  income for the current tax
year  and,  if not  prohibited  by law,  distribute  quarterly  (the  "Quarterly
Distributions")  an amount that would cover the federal and state  income  taxes
required to be paid by its members with respect  such taxable  income,  based on
each member's then current proportionate interest in the Company,  assuming that
all members pay income taxes on the Company's  taxable  earnings at a rate equal
to the highest  effective  individual  tax rate in effect from time to time (the
"Assumed Tax Rate");  provided,  further,  that the Company shall  determine its
actual  taxable  income at the end of each taxable year and (A) if the Quarterly
Distributions  in a given year should  have been  higher  based on the amount of
actual taxable income for that year,  promptly  distribute the amounts necessary
to eliminate such  deficiency or (B) if the Quarterly  Distributions  in a given
year  should have been lower  based on the amount of actual  taxable  income for
that  year,  withhold  dollar  for  dollar  from the first  following  Quarterly
Distribution,  and then against  subsequent  Quarterly  Distributions  in a like
manner, the amounts necessary to eliminate such surplus.

         Subject to the foregoing,  the Managers shall determine,  in their sole
discretion,  the  amount  and  timing  of all  distributions  from the  Company.
Distributions  shall be  divided  among the  Members  in  accordance  with their
Membership Interests. Distributions in kind shall be made on the basis of agreed
value  as  determined  by the  Members.  In no  event  may  the  Company  make a
distribution  to  its  Members  if,  immediately  after  giving  effect  to  the
distribution,  all  liabilities  of the Company,  other than  liabilities to the
Members with respect to their  interests and  liabilities for which the recourse
of creditors is limited to  specified  property of the Company,  exceed the fair
value of the  Company's  assets;  except that the fair value of property that is
subject to  liability  for which  recourse of  creditors  is  limited,  shall be
included  in the  Company  assets  only to the extent that the fair value of the
property  exceeds that  liability.  Except as contemplated in this Article V, no
distributions  of cash or  other  assets  of the  Company  shall  be made to the
Members in their capacity as owners of the Company.

                                   ARTICLE VI.

              ALLOCATION OF NET PROFITS AND LOSSES FOR TAX PURPOSES

         For  accounting  and income tax  purposes,  all items of income,  gain,
loss,  deduction,  and  credit of the  Company  for any  taxable  year  shall be
allocated  among the  Members in  accordance  with their  respective  Membership
Interests,  except as may be otherwise  required by the Internal Revenue Code of
1986, as amended.

                                  ARTICLE VII.

                           DISSOLUTION AND WINDING UP

     Section 7.1.  Dissolution.  Notwithstanding  any  provision of the Act, the
Company shall be dissolved only upon the first of the following to occur:

               (a) Forty (40) years from the date of filing the  Certificate  of
          Formation of the Company;

               (b)  Written   consent  of  all  the  then  current   Members  to
          dissolution;

                  (c) The  bankruptcy of a Member,  unless there is at least one
         remaining Member and such Member or, if more than one remaining Member,
         all remaining Members agree to continue the Company and its business.

         Section 7.2.  Winding Up.  Unless the Company is continued  pursuant to
Section 7.1(c) of this Article VII., in the event of dissolution of the Company,
the Managers (excluding any Manager(s) holding office pursuant to designation by
a Member subject to bankruptcy  proceedings) shall wind up the Company's affairs
as soon  as  reasonably  practicable.  On the  winding  up of the  Company,  the
Managers  shall pay and/or  transfer the assets of the Company in the  following
order:

                    (a)  In  discharging   liabilities   (including  loans  from
               Members) and the expenses of concluding  the  Company's  affairs;
               and

                    (b) The  balance,  if any,  shall  be  divided  between  the
               Members in accordance with the Members' Membership Interests.

                                  ARTICLE VIII.

                                    MANAGERS

         Section 8.1. Selection of Managers.  Management of the Company shall be
vested in the  Managers.  Initially,  the Company  shall have five (5) Managers,
being Ken  Shifrin,  Cheryl  Williams,  and Joe Jenkins,  M.D.,  (as the initial
Manager designees of Prime), David D. Dulaney,  M.D., and Ronald W. Barnet, M.D.
(as the initial Manager  designees of LASIK).  Thereafter,  for so long as there
are five (5) Managers, (a) Prime shall be entitled to designate three (3) of the
Managers;  and (b) LASIK shall be entitled to designate the remaining two (2) of
the Managers.  Notwithstanding the foregoing,  a Member shall not be entitled to
designate any Manager unless its Membership Interest: (x) has not (other than as
allowed  under Section 2.5 of this  Agreement)  been  transferred,  repurchased,
assigned,  pledged,  hypothecated  or in any way  alienated;  and (y)  equals or
exceeds forty percent (40%) of the  aggregate  Membership  Interests;  provided,
however,  that if the immediately  preceding subsection (y) shall apply to LASIK
solely  because of an exercise by LASIK of its put rights  under  Section 9.8 of
the  Contribution  Agreement,  then LASIK  shall,  unless and until  there is an
additional decrease in it Membership Interest other than pursuant to Section 9.8
of the Contribution  Agreement, be entitled to designate only one Manager in the
manner provided above.  The Members may, by unanimous vote of all Members,  from
time to time,  change the number of  Managers  of the  Company and remove or add
Managers accordingly. A Manager shall serve as a Manager until their resignation
or removal  pursuant to Section 8.2 or 8.3 of this Article  VIII.  Managers need
not be residents of the State of Delaware or Members of the Company.

         Section 8.2. Resignations.  Each Manager shall have the right to resign
at any time upon  written  notice of such  resignation  to the  Members.  Unless
otherwise  specified in such written notice,  the resignation  shall take effect
upon the  receipt  thereof,  and  acceptance  of such  resignation  shall not be
necessary to make same effective.  The Member who designated a resigning manager
shall be entitled to designate  the  successor  thereto and all Members agree to
take such action as may be necessary to cause the election of all such successor
Managers.

         Section 8.3.  Removal of Managers.  Any Manager may be removed,  for or
without cause,  at any time, but only by the Member who designated such Manager,
upon the written notice to all Members.  The Member who designated  such removed
Manager  shall be entitled to designate  the  successor  thereto and all Members
agree to take such action as may be  necessary to cause the election of all such
successor Managers.

         Section  8.4.  General  Powers.  The  business of the Company  shall be
managed by its Managers, which may, by the vote or written consent in accordance
with this  Agreement,  exercise any and all powers of the Company and do any and
all such  lawful  acts and  things  as are not by the Act,  the  Certificate  of
Formation or this Limited Liability Company Agreement directed or required to be
exercised or done by the Members, including, but not limited to, contracting for
or incurring on behalf of the Company debts,  liabilities and other obligations,
without the consent of any other person, except as otherwise provided herein.

     Section 8.5. Place of Meetings.  The Managers of the Company may hold their
meetings,  both  regular  and  special,  either  within or without  the State of
Delaware.

         Section 8.6. Annual Meetings.  The annual meeting of the Managers shall
be held without further notice  immediately  following the annual meeting of the
Members, and at the same place, unless by unanimous consent of the Managers that
such time or place shall be changed.

     Section 8.7. Regular Meetings. Regular meetings of the Managers may be held
without  notice at such time and place as shall from time to time be  determined
by the Managers.

     Section  8.8.  Special  Meetings.  Special  meetings  of the Mangers may be
called by any Manager on seven (7) days notice to each Manager, with such notice
to be given personally, by mail or by telecopy, telegraph or mailgram.

         Section  8.9.  Quorum and Voting.  At all  meetings of the Managers the
presence of at least four (4) Managers  shall be  necessary  and  sufficient  to
constitute a quorum for the transaction of business, and the affirmative vote of
at least a majority of the  Managers  present at any meeting at which there is a
quorum shall be the act of the Managers, except as may be otherwise specifically
provided by the Act, the Contribution Agreement, the Certificate of Formation or
this Agreement. If a quorum shall not be present at any meeting of Managers, the
Managers  present there may adjourn the meeting from time to time without notice
other  than  announcement  at the  meeting,  until a quorum  shall  be  present.
Notwithstanding any voting, quorum, or other provisions of this Agreement to the
contrary,  the affirmative  vote of at least four (4) Managers shall be required
to effect any of the following actions:

               (a) any amendment, modification or waiver of any provision of the
          Company's Certificate of Formation or this Agreement;

               (b) effecting any mergers,  consolidations or combinations of the
          Company with other entities;

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

               (d) entering into a transaction  or other action with a Member or
          Manager;

                  (e) borrowing or incurring any  indebtedness,  other than open
         accounts  payable  to  unaffiliated  third  parties,  or  granting  any
         collateral  or  security  (by way of  guaranty  or  otherwise)  for any
         indebtedness or obligation,  that exceeds (in any single transaction or
         directly related series of transactions) $25,000;

                  (f) purchasing or leasing assets or property, or entering into
         any  contract  or  obligation,  which  obligates  the Company to pay in
         excess  of  $25,000  in  one  or  any   directly   related   series  of
         installments;

               (g) selling, leasing or otherwise transferring  substantially all
          of the  Company's  assets  other  than in the  ordinary  course of the
          Company's business;

                  (h)  except  as  expressly  set forth in  Section  9.12 of the
         Contribution Agreement, allocating to the Company any costs or expenses
         that are paid or  incurred by any Member or its  affiliates  (excluding
         the Company),  or paid by the Company but reimbursable by any Member or
         its affiliates (excluding the Company), in each instance;

                  (i)   issuance of any ownership interest in the Company; and

                  (j)  disposition,  sale,  assignment or other  transfer by the
         Company  of any  interest  it owns in the  Company,  except  that  such
         interest may be extinguished  without the approval  required under this
         Section.

         Section 8.10.  Committees.  The Managers  may, by resolution  passed by
eighty percent (80%) of the Managers,  designate  committees,  each committee to
consist  of two or more  Managers  (at  least  one of  which  must be a  Manager
designee of Prime and one of which must be a Manager  designee of LASIK),  which
committees  shall have such power and authority and shall perform such functions
as may be provided in such  resolution.  Such committee or committees shall have
such name or names as may be  designated  by the Managers and shall keep regular
minutes of their proceedings and report the same to the Managers when required.

         Section  8.11.  Compensation  of Managers.  The Members  shall have the
authority  to  provide,  by  unanimous  approval,  that  any  one or more of the
Managers  shall not be  compensated,  and may, by  unanimous  approval,  fix any
compensation  (which may include  expenses) they elect to pay to any one or more
of the Managers.

         Section  8.12.  Action by  Written  Consent.  Any  action  required  or
permitted  to be  taken  at any  meeting  of the  Managers  or of any  committee
designated  by the Managers may be taken  without a meeting if written  consent,
setting  forth the  action so taken,  is signed by all the  Managers  or of such
committee,  and such consent shall have the same force and effect as a unanimous
vote at a meeting.

         Section 8.13. Meetings by Conference Telephone.  Managers or members of
any committee  designated by the Managers may  participate in and hold a meeting
of the Managers or such  committee by means of  conference  telephone or similar
communications  equipment  by means of which all  persons  participating  in the
meeting  can  hear  each  other,  and  participation  in  such a  meeting  shall
constitute   presence  in  person  at  such  meeting,   except  where  a  person
participates  in the  meeting  for  the  express  purpose  of  objecting  to the
transaction  of any  business  on the ground  that the  meeting is not  lawfully
called or convened.

     Section  8.14.  Liability of Managers.  No Manager of the Company  shall be
personally  liable for any debts,  liabilities,  or  obligations of the Company,
including under a judgment, decree, or order of the court.

         Section 8.15.  Specific Power of Managers.  The Managers shall have the
authority to enter into and execute all  documents in relation to the  formation
of the Company  including,  but not limited to,  issuance of the  Certificate of
Formation and this Limited Liability Company Agreement.

                                   ARTICLE IX.

                                     NOTICES

         Section 9.1. Form of Notice.  Whenever under the provisions of the Act,
the Certificate of Formation or this Limited  Liability Company Agreement notice
is required to be given to any Manager or Member, and no provision is made as to
how such notice shall be given,  notice shall not be construed to mean  personal
notice only, but any such notice may also be given in writing,  by mail, postage
prepaid,  addressed  to such Manager or Member at such address as appears on the
books of the Company, or by telecopy, telegraph or mailgram. Any notice required
or  permitted  to be given by mail  shall be deemed  to be given  three (3) days
after it is deposited, postage prepaid, in the United States mail as aforesaid.

         Section 9.2. Waiver. Whenever any notice is required to be given to any
Manager or Member of the Company under the provision of the Act, the Certificate
of Formation or this Limited  Liability Company  Agreement,  a waiver thereof in
writing signed by the person or persons entitled to such notice,  whether signed
before or after the time stated in such waiver,  shall be deemed  equivalent  to
the giving of such notice.

                                   ARTICLE X.

                                    OFFICERS

         Any Manager may also serve as an officer of the  Company.  The Managers
may  designate  one or more persons who are not Managers of the Company to serve
as officers and may designate the titles of all officers.  The initial  officers
of the Company shall be: Ken Shifrin,  Chairman of the Board; Joe Jenkins, M.D.,
President;  Cheryl  Williams,  Vice  President,  Secretary  and Chief  Financial
Officer;  and Mark Rosenberg,  Vice President.  Unless  otherwise  provided in a
resolution of the Members or Managers the officers of the Company shall have the
powers  designated  with  respect to such  offices  under the  Delaware  Limited
Liability Company Act, and any successor statute, as amended from time-to-time.

                                   ARTICLE XI.

                                    INDEMNITY

         Section 11.1.  Indemnification.  The Company shall indemnify any person
who was or is a party or is  threatened  to be made a party  to any  threatened,
pending or  completed  action,  suit or  proceeding,  whether  civil,  criminal,
administrative, arbitrative or investigative, any appeal in such an action, suit
or  proceeding  and any  inquiry  or  investigation  that  could lead to such an
action,  suit or proceeding  (whether or not by or in the right of the Company),
by reason of the fact that such person is or was a manager, officer, employee or
agent of the  Company or is or was  serving at the  request of the  Company as a
director,  manager, officer, partner, venturer,  proprietor,  trustee, employee,
agent or similar  functionary  of another  corporation,  employee  benefit plan,
other enterprise,  or other entity, against all judgments,  penalties (including
excise and similar taxes), fines, settlements and reasonable expenses (including
attorneys'  fees and court  costs)  actually and  reasonably  incurred by him in
connection with such action,  suit or proceeding to the fullest extent permitted
by any  applicable  law,  and such  indemnity  shall inure to the benefit of the
heirs,  executors and administrators of any such person so indemnified  pursuant
to this Article XI. The right to indemnification  under this Article XI shall be
a contract  right and shall not be deemed  exclusive of any other right to which
those seeking  indemnification may be entitled under any law, bylaw,  agreement,
vote of members or disinterested managers or otherwise, both as to action in his
official  capacity  and as to action in  another  capacity  while  holding  such
office. Any repeal or amendment of this Article XI by the Members of the Company
or by changes in  applicable  law shall,  to the extent  permitted by applicable
law, be prospective only, and shall not adversely affect the  indemnification of
any person who may be indemnified at the time of such repeal or amendment.

         Section   11.2.   Indemnification   Not   Exclusive.   The   rights  of
indemnification  and reimbursement  provided for in this Article XI shall not be
deemed  exclusive  of any  other  rights  to which  any such  Manager,  officer,
employee or agent may be  entitled  under the  Certificate  of  Formation,  this
Limited  Liability  Company  Agreement,  agreement  or vote of Members,  or as a
matter of law or otherwise.

         Section  11.3.  Other  Indemnification  Clauses.   Notwithstanding  the
foregoing,   this  Article  XI  shall  not  be  construed  to   contradict   the
indemnification   provision  of  the  Contribution  Agreement.   Notwithstanding
anything  contained  herein,  this Article XI shall be ineffectual and shall not
permit or require  indemnification for all, or any, losses, costs,  liabilities,
claims or expenses arising, directly or indirectly,  from any action or omission
permitting or requiring indemnification under the Contribution Agreement; and in
no event may any  indemnity be allowed  under this  Agreement or pursuant to any
provision   of  the  Act  for  an  amount  paid  or  payable   pursuant  to  the
indemnification provisions of the Contribution Agreement.

                                  ARTICLE XII.

                                  MISCELLANEOUS

     Section 12.1. Fiscal Year. The fiscal year of the Company shall be fixed by
resolution of the Managers.

     Section 12.2.  Records.  At the expense of the Company,  the Managers shall
maintain  records and accounts of all  operations of the Company.  At a minimum,
the Company shall keep at its principal place of business the following records:

               (a) A current list of the name and last known mailing  address of
          each Member;

               (b) A current list of each Member's Membership Interest;

                  (c) A  copy  of  the  Certificate  of  Formation  and  Limited
         Liability Company Agreement of the Company, and all amendments thereto,
         together with executed copies of any powers of attorney;

               (d) Copies of the  Federal,  state,  and local income tax returns
          and reports for the Company's six most recent tax years; and

               (e)  Correct  and  complete  books and  records of account of the
          Company.

         Section 12.3. Seal. The Company may by resolution of the Managers adopt
and have a seal, and said seal may be used by causing it or a facsimile  thereof
to be  impressed  or  affixed or in any manner  reproduced.  Any  officer of the
Company shall have authority to affix the seal to any document requiring it.

     Section 12.4. Agents.  Every Manager and Officer is an agent of the Company
for the purpose of the business. The act of a Manager or Officer,  including the
execution  in the name of the Company of any  instrument  for carrying on in the
usual way the business of the Company, binds the Company.

         Section 12.5. Checks. All checks,  drafts and orders for the payment of
money,  notes  and other  evidences  of  indebtedness  issued in the name of the
Company  shall be  signed  by such  officer,  officers,  agent or  agents of the
Company  and in such  manner  as  shall  from  time to  time  be  determined  by
resolution of the Managers. In the absence of such determination by the Mangers,
such  instruments  shall  be  signed  by  the  Treasurer  or the  Secretary  and
countersigned  by the  President  or a Vice  President  of the  Company,  if the
Company has such officers.

     Section 12.6.  Deposits.  All funds of the Company shall be deposited  from
time to time to the credit of the  Company in such  banks,  trust  companies  or
other depositories as the Managers may select.

         Section  12.7.  Annual  Statement.  The Managers  shall present at each
annual  meeting,  and,  when called for by vote of the  Members,  at any special
meeting of the Members, a full and clear statement of the business and condition
of the Company.

         Section 12.8.  Financial  Statements.  As soon as practicable after the
end of each fiscal year of the  Company,  a balance  sheet as at the end of such
fiscal year,  and a profit and loss  statement  for the period  ended,  shall be
distributed  to the  Members,  along with such tax  information  (including  all
information  returns) as may be necessary for the  preparation of each Member of
its Federal,  state and local income tax returns.  The balance  sheet and profit
and loss statement  referred to in the previous  sentence may be as shown on the
Company's federal income tax return.

         Section 12.9. Binding Arbitration.  Any controversy between the parties
regarding  this  Agreement and any claims  arising out of this  Agreement or its
breach  shall be submitted  to  arbitration  by either  party.  The  arbitration
proceedings shall be conducted by a single arbitrator pursuant to the Commercial
Arbitration Rules of the American Arbitration Association. The arbitration shall
be conducted in Dallas,  Texas and the arbitrator  shall have the right to award
actual  damages  and  attorney  fees and costs,  but shall not have the right to
award punitive, exemplary or consequential damages against either party.

                                  ARTICLE XIII.

                                   AMENDMENTS

         Section 13.1.  Amendments.  This  Agreement may be altered,  amended or
repealed and a new limited liability  company agreement may be adopted,  only in
accordance  with the  provisions  of Section 8.9,  but  otherwise at any regular
meeting or at any special meeting called for that purpose,  or by execution of a
written consent in accordance with the provisions of Section 3.8.

         Section 13.2. When Limited  Liability  Company  Agreement Silent. It is
expressly recognized that when the Limited Liability Company Agreement is silent
or in conflict with the  requirements  of the Act as to the manner of performing
any Company function, the provisions of the Act shall control.

                            [Signature page follows]


<PAGE>





                                SIGNATURE PAGE TO

                                             LIMITED LIABILITY COMPANY AGREEMENT

         IN WITNESS WHEREOF,  the undersigned  Members hereby adopt this Limited
Liability  Company  Agreement as the Limited  Liability Company Agreement of the
Company, effective as of the 1st day of September, 1999.

                                                     LASIK Investors, L.L.C.

                                              By:
                                                 Ronald W. Barnet, M.D., manager

                                              By:
                                                 David D. Dulaney, M.D., manager

                          Prime Medical Operating, Inc.

                                                     By:

                                                     Printed Name:

                                                     Title:



<PAGE>






                                    EXHIBIT A

                               OWNERSHIP INTERESTS

Name                                                     Ownership Percentage

Prime                                                           60%

LASIK                                                           40%

<PAGE>

                                   EXHIBIT-C

                       LIMITED LIABILITY COMPANY AGREEMENT
                        OF PRIME/BDEC ACQUISITION, L.L.C.
     Organized under the Delaware Limited Liability Company Act (the "Act").

                                   ARTICLE I.
                                NAME AND LOCATION

     Section 1.1. Name. The name of this limited liability company is Prime/BDEC
Acquisition, L.L.C. (the "Company"). ----

         Section  1.2.  Members.  The  only  members  of the  Company  upon  the
execution of this Limited Liability Company Agreement (this  "Agreement")  shall
be Prime Medical Operating,  Inc, a Delaware corporation  ("Prime"),  and Barnet
Dulaney Eye Center,  P.L.L.C., an Arizona professional limited liability company
("BDEC"). For purposes of this Agreement, the "Members" shall include such named
members and any new members  admitted  pursuant to the terms of this  Agreement,
but does not  include  any person or entity who has ceased to be a member in the
Company.

     Section 1.3. Principal Office. The principal office of the Company shall be
located in 1301 Capital of Texas Hwy., Suite C-300, Austin, Texas 78746-6550, or
such other location as may be selected by the Members. ----------------

     Section 1.4. Registered Agent and Address. The name of the registered agent
and the  address  of the  registered  office of the  Company as set forth in the
Certificate of Formation of the Company are: -----------------------------
                                            The Corporation Trust Company
                                            1209 Orange Street
                                            Wilmington, Delaware 19801

     Section 1.5.  Other  Offices.  Other offices and other  facilities  for the
transaction of business shall be located at such places as the Managers may from
time to time determine. -------------

         Section 1.6  Contribution  Agreement.  The Company was initially formed
with a single member,  BDEC, for the purpose of  consummating  the  transactions
contemplated by that certain Contribution Agreement dated effective September 1,
1999, by and among Prime, Prime Medical Services,  Inc., a Delaware  corporation
("PMSI"), BDEC, the Company,  Prime/BDR Acquisition,  L.L.C., a Delaware limited
liability  company,  LASIK  Investors,  L.L.C.,  a  Delaware  limited  liability
company, David D. Dulaney, M.D., Ronald W. Barnet, M.D., and Mark Rosenberg (the
"Contribution  Agreement").  The  parties  have  executed  this  Agreement  upon
consummation of the  transactions  contemplated by the  Contribution  Agreement.
This agreement  supercedes and replaces any prior membership  agreement or other
governing or organizational document of the Company.

                                                    ARTICLE II.
                                                    MEMBERSHIP

     Section 2.1. Members' Interests.  The "Membership  Interest" of each Member
is set forth on Exhibit A. ------------------ ---------

     Section 2.2. Admission to Membership. The admission of new Members shall be
only by the vote of the Managers  pursuant to Section 8.9 hereof. If new Members
are admitted,  this Agreement shall be amended to reflect each Member's  revised
Membership Interest. -----------------------

     Section 2.3.  Property  Rights.  No Member shall have any right,  title, or
interest in any of the property or assets of the Company. ---------------

     Section  2.4.  Liability  of  Members.  No Member of the  Company  shall be
personally  liable for any debts,  liabilities,  or  obligations of the Company,
including under a judgment decree, or order of court. --------------------

         Section 2.5.  Transferability of Membership.  Except as provided below,
Membership  Interests in the Company are  transferable  only with the  unanimous
written  consent  of all  Members.  If such  unanimous  written  consent  is not
obtained when  required,  the  transferee  shall be entitled to receive only the
share of  profits  or other  compensation  by way of  income  and the  return of
contributions  to which  the  transferor  Member  otherwise  would be  entitled.
Notwithstanding  the  foregoing,  (i) the  Membership  Interests of Prime may be
freely  transferred,  without  consent,  to any  entity  that is then  owned  or
controlled,  directly or indirectly, by Prime Medical Services, Inc., a Delaware
corporation (or its successor in interest), (ii) the Membership Interests of any
Member  may be  freely  assigned,  pledged  or  otherwise  transferred,  without
consent,  to  secure  any debt,  liability  or  obligation  owed to Prime by the
Company,  any  Member  or any  entity  affiliated  with the  Company,  (iii) the
Membership Interests of any Member may be freely assigned,  pledged or otherwise
transferred,  without  consent,  in  favor  of the  Lender(s)  under,  or by the
Lender(s)  as a result  of the  enforcement  of any  security  interest  arising
pursuant to, that certain  Senior  Credit  Facility  (the "Credit  Facility") of
PMSI, and (iv) the pledge by BDEC  (pursuant to Section 6.3 of the  Contribution
Agreement) of its right to receive  distributions from the Company in respect of
its  Membership  Interest  shall not be deemed to violate any  provision of this
Agreement.

     Section 2.6.  Resignation  of Members.  A Member may not withdraw  from the
Company except on the unanimous consent of the remaining  Members.  The terms of
the Members  withdrawal  shall be determined by agreement  between the remaining
Members and the withdrawing Member. ----------------------

                                                   ARTICLE III.
                                                 MEMBERS' MEETINGS

     Section 3.1.  Time and Place of Meeting.  All meetings of the Members shall
be held at such time and at such place  within or without  the State of Delaware
as shall be determined by the Managers. -------------------------

     Section 3.2. Annual Meetings.  In the absence of an earlier meeting at such
time and place as the Managers  shall  specify,  annual  meetings of the Members
shall be held at the principal office of the Company on the date which is thirty
(30) days after the end of the Company's fiscal year if not a legal holiday, and
if a legal holiday, then on the next full business day following, at 10:00 a.m.,
at which  meeting the  Members may  transact  such  business as may  properly be
brought before --------------- the meeting.

     Section  3.3.  Special  Meetings.  Special  meetings  of the Members may be
called at any time by any Member.  Business transacted at special meetings shall
be   confined   to  the   purposes   stated  in  the  notice  of  the   meeting.
----------------

         Section 3.4.  Notice.  Written or printed notice stating the place, day
and hour of any Members'  meeting,  and, in the case of a special  meeting,  the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten (10) days nor more than thirty (30) days before the date of the special
meeting,  either  personally  or by mail,  by or at the  direction of the person
calling the meeting, to each Member entitled to vote at such meeting. If mailed,
such notice shall be deemed to be delivered three (3) days after it is deposited
in the United States mail,  postage prepaid,  to the Member at his address as it
appears on the records of the Company at the time of mailing.

         Section 3.5. Quorum. Members present in person or represented by proxy,
holding  more than fifty  percent  (50%) of the total votes which may be cast at
any meeting  shall  constitute  a quorum at all  meetings of the Members for the
transaction  of  business.  If,  however,  such  quorum  shall not be present or
represented at any meeting of the Members, the Members entitled to vote, present
in person or represented by proxy,  shall have power to adjourn the meeting from
time to time,  without notice other than  announcement  at the meeting,  until a
quorum shall be present or represented. When any adjourned meeting is reconvened
and a quorum shall be present or  represented,  any  business may be  transacted
which might have been  transacted at the meeting as originally  noticed.  Once a
quorum is constituted,  the Members present or represented by proxy at a meeting
may  continue  to  transact  business  until  adjournment,  notwithstanding  the
subsequent  withdrawal therefrom of such number of Members as to leave less than
a quorum.

         Section  3.6.  Voting.  Members  shall  only  be  required  to  vote in
instances  or with  respect  to  matters  where  member  voting is  required  by
applicable  law or to the extent  expressly  contemplated  in Section 8.1.  With
respect to any act or  transaction  that  requires a vote by the  Members  under
applicable law, the affirmative  vote of not less than three (3) of the Managers
shall also be  required  in order to  approve  the act or  transaction,  in each
instance. Subject to the foregoing, when a quorum is present at any meeting, the
vote of the Members,  whether  present or  represented by proxy at such meeting,
holding  more than fifty  percent  (50%) of the total votes which may be cast at
any  meeting  shall be the act of the  Members,  unless the vote of a  different
number is required by the Act,  the  Certificate  of  Formation  or this Limited
Liability Company Agreement.  Each Member shall be entitled to one vote for each
percentage point represented by their Membership Interest. Fractional percentage
point  interests  shall be  entitled to a  corresponding  fractional  vote.  The
provisions of this Section shall not  interfere  with the  provisions of Section
8.9 relating to acts or transactions requiring the written approval of three (3)
or more Managers.  Each Member acknowledges and agrees that, in the event of any
exercise of the Repurchase  Option,  as defined in the  Contribution  Agreement,
each Member will vote its entire  Membership  Interest in favor of  transferring
the Company's assets pursuant to the Repurchase Option.

     Section 3.7.  Proxy.  Every proxy must be executed in writing by the Member
or by his  duly  authorized  attorney-in-fact,  and  shall  be  filed  with  the
Secretary of the Company prior to or at the time of the meeting.  No proxy shall
be  valid  after  eleven  (11)  months  from the  date of its  execution  unless
otherwise  provided  therein.  Each proxy shall be  revocable  unless  expressly
provided therein to be irrevocable and unless otherwise made irrevocable by law.
-----

     Section 3.8. Action by Written Consent. Any action required or permitted to
be taken at any  meeting  of the  Members  may be taken  without a meeting  if a
consent in writing, setting forth the action so taken, shall be signed by all of
the Members  entitled to vote with respect to the subject  matter  thereof,  and
such  consent  shall  have the same  force  and  effect as a  unanimous  vote of
Members. -------------------------

     Section 3.9. Meetings by Conference  Telephone.  Members may participate in
and hold  meetings  of  Members  by means of  conference  telephone  or  similar
communications  equipment  by means of which all  persons  participating  in the
meeting  can  hear  each  other,  and  participation  in  such a  meeting  shall
constitute   presence  in  person  at  such  meeting,   except  where  a  person
participates  in the  meeting  for  the  express  purpose  of  objecting  to the
transaction     of    any     business     on    the     ground     that     the
-------------------------------- meeting is not lawfully called or convened.

                                   ARTICLE IV.
                        MEMBERSHIP CAPITAL CONTRIBUTIONS

         Except  for  each  Member's  initial  capital   contribution   made  in
connection with the formation of the Company, no capital  contributions shall be
required  of any  Member  without  the  approval  of all the  Members  to  raise
additional capital, and only then proportionately as to each Member.

                                                    ARTICLE V.
                                              DISTRIBUTION TO MEMBERS

         At the end of each calendar quarter, subject only to the qualifications
and  limitations  set forth below,  the Company shall  distribute  its available
excess  earnings to its members,  to be divided  among them in  accordance  with
their Membership Interests.  Distributions in kind shall be made on the basis of
agreed value as determined by the Members.  Notwithstanding  the foregoing,  the
Company  may  not  make a  distribution  to its  Members  to  the  extent  that,
immediately  after giving effect to the  distribution,  all  liabilities  of the
Company,  other than  liabilities to the Members with respect to their interests
and  liabilities  for which the  recourse of  creditors  is limited to specified
property of the  Company,  exceed the fair value of the Company  assets;  except
that the fair value of property that is subject to liability for which  recourse
of  creditors  is limited,  shall be included in the Company  assets only to the
extent that the fair value of the property exceeds that liability.

                                   ARTICLE VI.
              ALLOCATION OF NET PROFITS AND LOSSES FOR TAX PURPOSES

         For  accounting  and income tax  purposes,  all items of income,  gain,
loss,  deduction,  and  credit of the  Company  for any  taxable  year  shall be
allocated  among the  Members in  accordance  with their  respective  Membership
Interests,  except as may be otherwise  required by the Internal Revenue Code of
1986, as amended.

                                  ARTICLE VII.
                           DISSOLUTION AND WINDING UP

     Section 7.1.  Dissolution.  Notwithstanding  any  provision of the Act, the
Company  shall be  dissolved  only  upon the  first of the  following  to occur:
-----------

          (a) Forty  (40)  years  from the date of  filing  the  Certificate  of
     Formation of the Company;

          (b) Written consent of all the then current Members to dissolution;

          (c) The bankruptcy of a Member, unless there is at least one remaining
     Member and such Member or, if more than one remaining Member, all remaining
     Members  agree to  continue  the  Company and its  business.  Section  7.2.
     Winding Up. Unless the Company is continued  pursuant to Section  7.1(c) of
     this Article VII., in the event of dissolution of the Company, the Managers
     (excluding  any  Manager(s)  holding  office  pursuant to  designation by a
     Member  subject to  bankruptcy  proceedings)  shall  wind up the  Company's
     affairs  as  soon  as  reasonably  practicable.  On the  winding  up of the
     Company,  the Managers shall pay and/or  transfer the assets of the Company
     in the following order: ----------

          (a) In discharging  liabilities (including loans from Members) and the
     expenses of concluding the Company's affairs; and

                  (b) The balance,  if any, shall be divided between the Members
in accordance with the Members' Membership Interests.

                                  ARTICLE VIII.
                                    MANAGERS

         Section 8.1. Selection of Managers.  Management of the Company shall be
vested in the  Managers.  Initially,  the Company  shall have four (4) Managers,
being Ken  Shifrin,  Joe Jenkins,  M.D.,  (as the initial  Manager  designees of
Prime),  David D.  Dulaney,  M.D.  and Ronald W. Barnet,  M.D.,  (as the initial
Manager  designees  of  BDEC).  Thereafter,  for so long as  there  are four (4)
Managers,  (a) Prime shall be entitled to designate two (2) of the Managers; and
(b) BDEC shall be entitled to designate  the  remaining two (2) of the Managers.
Notwithstanding  the foregoing,  a Member shall not be entitled to designate any
Manager unless its Membership Interest: (x) has not (other than as allowed under
Section 2.5 of this Agreement) been transferred, repurchased, assigned, pledged,
hypothecated  or in any way  alienated;  and (y) equals or exceeds forty percent
(40%) of the aggregate Membership Interests.  The Members may, by unanimous vote
of all Members,  from time to time, change the number of Managers of the Company
and remove or add Managers accordingly. A Manager shall serve as a Manager until
their  resignation  or removal  pursuant to Section  8.2 or 8.3 of this  Article
VIII.  Managers need not be residents of the State of Delaware or Members of the
Company.

          Section 8.2. Resignations. Each Manager shall have the right to resign
     at any time upon written notice of such resignation to the Members.  Unless
     otherwise  specified in such written  notice,  the  resignation  shall take
     effect upon the receipt thereof,  and acceptance of such resignation  shall
     not be  necessary  to make same  effective.  The  Member who  designated  a
     resigning  manager shall be entitled to designate the successor thereto and
     all Members agree to take such action as may be  ------------  necessary to
     cause the election of all such successor Managers.

          Section 8.3. Removal of Managers.  Any Manager may be removed,  for or
     without  cause,  at any time,  but only by the Member who  designated  such
     Manager,  upon the written notice to all Members. The Member who designated
     such removed  Manager shall be entitled to designate the successor  thereto
     and all Members  agree to take such action as may be necessary to cause the
     election of all such successor Managers. -------------------

         Section  8.4.  General  Powers.  The  business of the Company  shall be
managed by its Managers, which may, by the vote or written consent in accordance
with this  Agreement,  exercise any and all powers of the Company and do any and
all such  lawful  acts and  things  as are not by the Act,  the  Certificate  of
Formation or this Limited Liability Company Agreement directed or required to be
exercised or done by the Members, including, but not limited to, contracting for
or incurring on behalf of the Company debts,  liabilities and other obligations,
without the consent of any other person, except as otherwise provided herein.

          Section 8.5.  Place of Meetings.  The Managers of the Company may hold
     their  meetings,  both  regular and special,  either  within or without the
     State of Delaware. -----------------

          Section 8.6. Annual Meetings. The annual meeting of the Managers shall
     be held without further notice immediately  following the annual meeting of
     the  Members,  and at the same place,  unless by  unanimous  consent of the
     Managers that such time or place shall be changed. ---------------

          Section 8.7. Regular Meetings. Regular meetings of the Managers may be
     held  without  notice at such time and place as shall  from time to time be
     determined by the Managers. ----------------

          Section 8.8. Special Meetings.  Special meetings of the Mangers may be
     called by any Manager on seven (7) days notice to each  Manager,  with such
     notice  to be  given  personally,  by mail  or by  telecopy,  telegraph  or
     mailgram. ----------------

         Section  8.9.  Quorum and Voting.  At all  meetings of the Managers the
presence of at least three (3) Managers  shall be necessary  and  sufficient  to
constitute a quorum for the transaction of business, and the affirmative vote of
at least a majority of the  Managers  present at any meeting at which there is a
quorum shall be the act of the Managers, except as may be otherwise specifically
provided by the Act, the Contribution Agreement, the Certificate of Formation or
this Agreement. If a quorum shall not be present at any meeting of Managers, the
Managers  present there may adjourn the meeting from time to time without notice
other  than  announcement  at the  meeting,  until a quorum  shall  be  present.
Notwithstanding  any  other  Member  or  Manager  voting  or  quorum  provisions
contained  in  this  Agreement,  the  following  acts  or  transactions  by,  or
involving,  the Company shall  require the prior  written  approval of three (3)
Managers  (unless and to the extent a particular act or transaction is expressly
required of the Company pursuant to the terms and provisions of the Contribution
Agreement or any Transaction Document):

          (a) Any  amendment to the Company's  Certificate  of Formation or this
     Agreement.

          (b)  Mergers,  consolidations  or  combinations  of the  Company  with
     another limited liability company or other entity.

                  (c)  Purchase by the Company of any  interest in the  Company,
irrespective of the source of such interest.

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

                  (e)      Issuance of any interest in the Company to any party.

                  (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 Managers, officers or other employees.

          (h) Not making any cash distributions to its Members that are required
     by this Agreement to be made, or making any distributions to its Members of
     cash or property that are prohibited under this Agreement.

          (i) Sale, lease or other transfer of all or  substantially  all of the
     Company's  assets,  or any assets other than in the ordinary  course of the
     Company's business.

                  (j)  Initiating  or  settling  any  litigation  or  regulatory
proceeding, or confessing any judgment.

                  (k) Hiring or  changing  the  Company's  accountants  or legal
counsel.

                  (l) Opening or closing bank or other depository accounts,  and
establishing or changing the signature  withdrawal authority with respect to any
such accounts.

          (m) Borrowing or incurring any indebtedness,  other than open accounts
     payable to  unaffiliated  third  parties,  or granting  any  collateral  or
     security  (by  way of  guaranty  or  otherwise)  for  any  indebtedness  or
     obligation.

                  (n)  Engaging in any act or  transaction  not in the  ordinary
course of the Company's business.

          (o)  Purchasing  or leasing  assets or property,  or entering into any
     contract or  obligation,  which  obligates  the Company to pay in excess of
     $10,000 in the aggregate in one or any series of installments.

          (p) Doing any  business  other than the  conduct of the  Business  (as
     defined in the Contribution Agreement) or causing a change in the nature of
     the business or the legal name of the Company.

                  (q)  Entering  into a  transaction  or other  action  with any
Manager, officer or Member.

          (r) Waiving, refusing to enforce, amending, restating,  superseding or
     modifying  any of the  provisions  of  this  Agreement  or any  Transaction
     Document, including, without limitation, the Collocation Agreement.

          (s) Taking any other  action  which,  by the terms of this  Agreement,
     requires  the  approval  or consent of not less than  seventy-five  percent
     (75%) of the Members.

          (t) Except as  expressly  set forth in the  Collocation  Agreement  or
     Section 9.12 of the Contribution  Agreement,  allocating to the Company any
     costs or expenses that are paid or incurred by any Member or its affiliates
     (excluding  the Company),  or paid by the Company but  reimbursable  by any
     Member or its affiliates (excluding the Company), in each instance.

          (u) With respect to the business and  operations of Newco II conducted
     or to be conducted  at or near the  location of 4800 N. 22nd St.,  Phoenix,
     Arizona,  waiving,   amending,   supplementing  or  modifying  any  of  the
     professional  fees,  facility fees or fee  allocations  by Newco II, to the
     extent such amounts or allocations were utilized in preparing the pro forma
     financial statements of Newco II attached to the Collocation Agreement.

          (v) With respect to the business and  operations of Newco II conducted
     or to be  conducted  at any  other  future  office  or  business  locations
     (including  without  limitation,  the office  located at 555 E. River Road,
     Tucson,  Arizona),  adopting any  professional  fees,  facility fees or fee
     allocations.

         Any of the  above  stated  actions  taken by the  Company  without  the
necessary manager approval is void ab initio.

         Section 8.10.  Committees.  The Managers  may, by resolution  passed by
eighty percent (80%) of the Managers,  designate  committees,  each committee to
consist  of two or more  Managers  (at  least  one of  which  must be a  Manager
designee of Prime and one of which must be a Manager  designee  of BDEC),  which
committees  shall have such power and authority and shall perform such functions
as may be provided in such  resolution.  Such committee or committees shall have
such name or names as may be  designated  by the Managers and shall keep regular
minutes of their proceedings and report the same to the Managers when required.

          Section  8.11.  Compensation  of Managers.  The Members,  by unanimous
     approval,  shall have the  authority to provide that any one or more of the
     Managers shall not be compensated,  and may, by unanimous approval, fix any
     compensation  (which may include  expenses) they elect to pay to any one or
     more of the Managers. ------------------------

          Section  8.12.  Action by  Written  Consent.  Any action  required  or
     permitted  to be taken at any meeting of the  Managers or of any  committee
     designated  by the  Managers  may be taken  without  a meeting  if  written
     consent,  setting forth the action so taken,  is signed by all the Managers
     or of such committee, and such consent shall have the same force and effect
     as a unanimous vote at a meeting. -------------------------

         Section 8.13. Meetings by Conference Telephone.  Managers or members of
any committee  designated by the Managers may  participate in and hold a meeting
of the Managers or such  committee by means of  conference  telephone or similar
communications  equipment  by means of which all  persons  participating  in the
meeting  can  hear  each  other,  and  participation  in  such a  meeting  shall
constitute   presence  in  person  at  such  meeting,   except  where  a  person
participates  in the  meeting  for  the  express  purpose  of  objecting  to the
transaction  of any  business  on the ground  that the  meeting is not  lawfully
called or convened.

          Section 8.14.  Liability of Managers.  No Manager of the Company shall
     be personally  liable for any debts,  liabilities,  or  obligations  of the
     Company,  including  under a  judgment,  decree,  or  order  of the  court.
     ---------------------

          Section 8.15. Specific Power of Managers.  The Managers shall have the
     authority  to enter into and  execute  all  documents  in  relation  to the
     formation  of the Company  including,  but not limited to,  issuance of the
     Certificate  of Formation  and this Limited  Liability  Company  Agreement.
     --------------------------

                                                    ARTICLE IX.
                                                      NOTICES

         Section 9.1. Form of Notice.  Whenever under the provisions of the Act,
the Certificate of Formation or this Limited  Liability Company Agreement notice
is required to be given to any Manager or Member, and no provision is made as to
how such notice shall be given,  notice shall not be construed to mean  personal
notice only, but any such notice may also be given in writing,  by mail, postage
prepaid,  addressed  to such Manager or Member at such address as appears on the
books of the Company, or by telecopy, telegraph or mailgram. Any notice required
or  permitted  to be given by mail  shall be deemed  to be given  three (3) days
after it is deposited, postage prepaid, in the United States mail as aforesaid.

          Section  9.2.  Waiver.  Whenever any notice is required to be given to
     any Manager or Member of the Company  under the  provision  of the Act, the
     Certificate of Formation or this Limited  Liability  Company  Agreement,  a
     waiver thereof in writing signed by the person or persons  entitled to such
     notice,  whether  signed  before or after the time  stated in such  waiver,
     shall be deemed equivalent to the giving of such notice. ------

                                                    ARTICLE X.
                                                     OFFICERS


         Any Manager may also serve as an officer of the  Company.  The Managers
may  designate  one or more persons who are not Managers of the Company to serve
as officers and may designate the titles of all officers.  The initial  officers
of the Company shall be: Ken Shifrin,  Chairman of the Board; Joe Jenkins, M.D.,
President;  Cheryl  Williams,  Vice  President,  Secretary  and Chief  Financial
Officer;  and Mark Rosenberg,  Vice President.  Unless  otherwise  provided in a
resolution of the Members or Managers the officers of the Company shall have the
powers  designated  with  respect to such  offices  under the  Delaware  Limited
Liability Company Act, and any successor statute, as amended from time-to-time.

                                                    ARTICLE XI.
                                                     INDEMNITY

         Section 11.1.  Indemnification.  The Company shall indemnify any person
who was or is a party or is  threatened  to be made a party  to any  threatened,
pending or  completed  action,  suit or  proceeding,  whether  civil,  criminal,
administrative, arbitrative or investigative, any appeal in such an action, suit
or  proceeding  and any  inquiry  or  investigation  that  could lead to such an
action,  suit or proceeding  (whether or not by or in the right of the Company),
by reason of the fact that such person is or was a manager, officer, employee or
agent of the  Company or is or was  serving at the  request of the  Company as a
director,  manager, officer, partner, venturer,  proprietor,  trustee, employee,
agent or similar  functionary  of another  corporation,  employee  benefit plan,
other enterprise,  or other entity, against all judgments,  penalties (including
excise and similar taxes), fines, settlements and reasonable expenses (including
attorneys'  fees and court  costs)  actually and  reasonably  incurred by him in
connection with such action,  suit or proceeding to the fullest extent permitted
by any  applicable  law,  and such  indemnity  shall inure to the benefit of the
heirs,  executors and administrators of any such person so indemnified  pursuant
to this Article XI. The right to indemnification  under this Article XI shall be
a contract  right and shall not be deemed  exclusive of any other right to which
those seeking  indemnification may be entitled under any law, bylaw,  agreement,
vote of members or disinterested managers or otherwise, both as to action in his
official  capacity  and as to action in  another  capacity  while  holding  such
office.  Any repeal or amendment of this Article XI by the Managers (pursuant to
Section  8.9  hereof)  or by  changes in  applicable  law  shall,  to the extent
permitted by applicable law, be prospective only, and shall not adversely affect
the  indemnification  of any person who may be  indemnified  at the time of such
repeal or amendment.

          Section   11.2.   Indemnification   Not   Exclusive.   The  rights  of
     indemnification and reimbursement provided for in this Article XI shall not
     be deemed exclusive of any other rights to which any such Manager, officer,
     employee or agent may be entitled under the Certificate of Formation,  this
     Limited Liability Company Agreement,  agreement or vote of Members, or as a
     matter of law or otherwise. -----------------------------

         Section  11.3.  Other  Indemnification  Clauses.   Notwithstanding  the
foregoing,   this  Article  XI  shall  not  be  construed  to   contradict   the
indemnification   provision  of  the  Contribution  Agreement.   Notwithstanding
anything  contained  herein,  this Article XI shall be ineffectual and shall not
permit or require  indemnification for all, or any, losses, costs,  liabilities,
claims or expenses arising, directly or indirectly,  from any action or omission
permitting or requiring indemnification under the Contribution Agreement; and in
no event may any  indemnity be allowed  under this  Agreement or pursuant to any
provision   of  the  Act  for  an  amount  paid  or  payable   pursuant  to  the
indemnification provisions of the Contribution Agreement.

                                                   ARTICLE XII.
                                                   MISCELLANEOUS

          Section  12.1.  Fiscal Year.  The fiscal year of the Company  shall be
     fixed by resolution of the Managers. -----------

          Section  12.2.  Records.  At the expense of the Company,  the Managers
     shall maintain records and accounts of all operations of the Company.  At a
     minimum,  the Company  shall keep at its  principal  place of business  the
     following records: -------

          (a) A current list of the name and last known mailing  address of each
     Member;
                  (b)      A current list of each Member's Membership Interest;

          (c) A copy of the  Certificate  of  Formation  and  Limited  Liability
     Company Agreement of the Company, and all amendments thereto, together with
     executed copies of any powers of attorney;

                  (d) Copies of the Federal, state, and local income tax returns
and reports for the Company's six most recent tax years; and

                  (e) Correct and  complete  books and records of account of the
Company.

          Section  12.3.  Seal.  The Company may by  resolution  of the Managers
     adopt  and  have a seal,  and  said  seal  may be used by  causing  it or a
     facsimile  thereof to be impressed or affixed or in any manner  reproduced.
     Any officer of the Company  shall have  authority  to affix the seal to any
     document requiring it. ----

          Section  12.4.  Agents.  Every  Manager and Officer is an agent of the
     Company for the purpose of the  business.  The act of a Manager or Officer,
     including  the execution in the name of the Company of any  instrument  for
     carrying  on in the  usual  way the  business  of the  Company,  binds  the
     Company. ------

         Section 12.5. Checks. All checks,  drafts and orders for the payment of
money,  notes  and other  evidences  of  indebtedness  issued in the name of the
Company  shall be  signed  by such  officer,  officers,  agent or  agents of the
Company  and in such  manner  as  shall  from  time to  time  be  determined  by
resolution of the Managers. In the absence of such determination by the Mangers,
such  instruments  shall  be  signed  by  the  Treasurer  or the  Secretary  and
countersigned  by the  President  or a Vice  President  of the  Company,  if the
Company has such officers.

          Section  12.6.  Deposits.  All funds of the Company shall be deposited
     from  time  to time to the  credit  of the  Company  in such  banks,  trust
     companies or other depositories as the Managers may select. --------

          Section 12.7.  Annual  Statement.  The Managers  shall present at each
     annual meeting a full and clear  statement of the business and condition of
     the Company. ----------------

         Section 12.8.  Financial  Statements.  As soon as practicable after the
end of each fiscal year of the  Company,  a balance  sheet as at the end of such
fiscal year,  and a profit and loss  statement  for the period  ended,  shall be
distributed  to the  Members,  along with such tax  information  (including  all
information  returns) as may be necessary for the  preparation of each Member of
its Federal,  state and local income tax returns.  The balance  sheet and profit
and loss statement  referred to in the previous  sentence may be as shown on the
Company's federal income tax return.

          Section 12.9. Binding Arbitration. Any controversy between the parties
     regarding  this  Agreement and any claims  arising out of this Agreement or
     its  breach  shall  be  submitted  to  arbitration  by  either  party.  The
     arbitration  proceedings shall be conducted by a single arbitrator pursuant
     to  the   Commercial   Arbitration   Rules  of  the  American   Arbitration
     Association.  The arbitration  shall be conducted in Dallas,  Texas and the
     arbitrator   shall   have   the   right  to  award   actual   damages   and
     -------------------  attorney fees and costs,  but shall not have the right
     to award punitive, exemplary or consequential damages against either party.

                                  ARTICLE XIII.
                                   AMENDMENTS

          Section 13.1.  Amendments.  This Agreement may be altered,  amended or
     repealed and a new limited liability company agreement may be adopted, only
     in  accordance  with the  provisions  of Section 8.9, but  otherwise at any
     regular  meeting or at any special  meeting called for that purpose,  or by
     execution of a written consent in accordance with the provisions of Section
     3.8. ----------

          Section 13.2. When Limited  Liability  Company Agreement Silent. It is
     expressly  recognized that when the Limited  Liability Company Agreement is
     silent or in conflict with the  requirements of the Act as to the manner of
     performing any Company  function,  the provisions of the Act shall control.
     -----------------------------------------------

                                             [Signature page follows]




<PAGE>





043838.0000  AUSTIN 133169 v8                       S-1


                                                 SIGNATURE PAGE TO
                                        LIMITED LIABILITY COMPANY AGREEMENT

         IN WITNESS WHEREOF,  the undersigned  Members hereby adopt this Limited
Liability  Company  Agreement as the Limited  Liability Company Agreement of the
Company, effective as of the 1st day of September, 1999.


                                          Barnet Dulaney Eye Center, P.L.L.C.


                                             By:
                                                 Ronald W. Barnet, M.D., manager

                                             By:
                                                 David D. Dulaney, M.D., manager




                                          Prime Medical Operating, Inc.

                                            By:
                                            Printed Name:
                                            Title:



<PAGE>


A-

043838.0000  AUSTIN 133169 v8


                                                     EXHIBIT A
                                                OWNERSHIP INTERESTS

Name                                                      Ownership Percentage

Prime                                                              60%

BDEC                                                               40%






<PAGE>


                                   EXHIBIT-D

                                             ASSIGNMENT AND ASSUMPTION
                                                     AGREEMENT


         For and in consideration of the sum of Ten Dollars ($10) and other good
and  valuable  consideration,  the  receipt and  sufficiency  of which is hereby
acknowledged,  and pursuant to and in accordance with that certain  Contribution
Agreement,  dated September 1, 1999,  between and among Prime Medical  Services,
Inc.,  a  Delaware  corporation,  Prime  Medical  Operating,  Inc.,  a  Delaware
corporation  ("Prime"),   Barnet  Dulaney  Eye  Center,   P.L.L.C.,  an  Arizona
professional  limited  liability company  ("BDEC"),  LASIK Investors,  L.L.C., a
Delaware limited liability company,  Prime/BDEC Acquisition,  L.L.C., a Delaware
limited  liability  company  ("Newco  II"),  Prime/BDR  Acquisition,  L.L.C.,  a
Delaware limited liability  company,  Ronald W. Barnet,  M.D., David D. Dulaney,
M.D. and Mark Rosenberg (the "Contribution Agreement"), each of Prime, BDEC, and
each of their  constituent  owners,  hereby assigns,  transfers and sets over to
Newco II, its  successors  and assigns,  as of the Effective Time (as defined in
the Contribution Agreement), with such representations, warranties and covenants
as are  expressly  set forth in the  Contribution  Agreement,  all of its right,
title and  interest  in and to the  Assets and the  Business  (as such terms are
defined in the Contribution Agreement).

     Newco II hereby  assumes,  as of the  Effective  Time,  only those lease or
contract obligations of BDEC arising under lease agreements assigned to Newco II
pursuant to the foregoing  paragraph,  and only those  liabilities set forth, by
item and amount, on Schedule 1.4 of the Contribution Agreement.  With respect to
any lease or contract  obligations assumed by Newco II pursuant to the foregoing
sentence,  Newco II only assumes  obligations  thereunder which accrue after the
Effective  Time,  and  has no  responsibility  whatsoever  for any  breaches  or
defaults  which occurred prior to the later of the Effective Time or the Closing
Date (as defined in the  Contribution  Agreement),  or for obligations  accruing
prior to the Effective Time.

         BDEC acknowledges and agrees that, except as expressly set forth in the
immediately preceding paragraph, Newco II does not assume any debts, liabilities
or  obligations  of any kind  whatsoever,  whether  known or unknown,  absolute,
contingent or otherwise (including, but not limited to, federal, state and local
taxes, any sales taxes, use taxes and property taxes, any taxes arising from the
transactions  contemplated by the  Contribution  Agreement,  and any liabilities
arising  from  any  litigation  or  civil,  criminal  or  regulatory  proceeding
involving  or related to BDEC or its  business),  and any and all of such debts,
liabilities and obligations shall remain the sole responsibility of BDEC.

                                             [Signature page follows]



<PAGE>


                                                 SIGNATURE PAGE TO
                                        ASSIGNMENT AND ASSUMPTION AGREEMENT

         IN WITNESS WHEREOF,  the parties hereto have caused this Assignment and
Assumption  Agreement to be executed by their duly  authorized  representatives,
effective for all purposes the 1st day of September, 1999.


PRIME:                             PRIME MEDICAL OPERATING, INC.

                                   By:

                                   Printed Name:

                                   Title:





BDEC:                              BARNET DULANEY EYE CENTER, P.L.L.C.


                                   By:  ________________________________
                                           Ronald W. Barnet, M.D., manager


                                   By:  ________________________________
                                           David D. Dulaney, M.D., manager





NEWCO II:                          PRIME/BDEC ACQUISITION, L.L.C.

                                   By:

                                   Printed Name:

                                   Title:




<PAGE>
                                   EXHIBIT-G1
                                                  LOAN AGREEMENT

         This Loan Agreement  (this  "Agreement") is entered into as of the ____
day of September, 1999, by and between Prime Medical Operating, Inc., a Delaware
corporation,  and Prime/BDR  Acquisition,  L.L.C., a Delaware limited  liability
company.

                                                   Definitions:

EFFECTIVE DATE:                 September ___, 1999

     BORROWER:  Prime/BDR  Acquisition,  L.L.C.,  a Delaware  limited  liability
          company
     BORROWER'S  ADDRESS:  1301 Capital of Texas Highway,  Suite C-300,  Austin,
Texas 78746
     LENDER: Prime Medical Operating, Inc., a Delaware corporation
     LENDER'S ADDRESS: 1301 Capital of Texas Highway, Suite C-300, Austin, Texas
78746
NOTES:

     Working  Capital  Note:  Promissory  Note (Line of  Credit) in the  maximum
principal  amount of $200,000 (the "Working Capital Maximum  Principal  Amount")
dated  September  ___, 1999,  executed by Borrower,  and payable to the order of
Lender as provided therein (the "Working Capital Note").
     Development  Facility  Notes:  Promissory  Notes in the  aggregate  maximum
original principal amount not to exceed  $40,000,000 (the "Development  Facility
Maximum  Principal  Amount"),  executed by Borrower  and payable to the order of
Lender as provided therein (the "Development Facility Notes"). Collectively, the
Working Capital Notes and the Development  Facility Notes are referred to herein
as the "Notes."
     SECURITY AGREEMENTS: All documents,  agreements and instruments hereinafter
or herewith  executed by Borrower,  LASIK Investors,  L.L.C., a Delaware limited
liability  company ("LASIK") or any Target Center securing this Agreement or the
obligations under any of the Notes.
          LOAN  DOCUMENTS:   This  Agreement,  the  Working  Capital  Note,  the
     Development  Facility  Notes,  the  Security  Agreements,   and  all  other
     documents,   agreements,   and  instruments  now  or  hereafter   existing,
     evidencing,  securing,  or  otherwise  relating to this  Agreement  and any
     transactions  contemplated by this Agreement, as any of the foregoing items
     may be modified or supplemented from time to time.
INDEBTEDNESS:  All present and future indebtedness,  obligations and liabilities
of Borrower to Lender,  all present  and future  indebtedness,  obligations  and
liabilities  of any Target Center to Lender,  and all renewals,  extensions  and
modifications  of either of the foregoing,  arising  pursuant to any of the Loan
Documents  and all  interest  accruing  thereon,  and  all  other  fees,  costs,
expenses, charges and attorneys' fees payable, and covenants performable,  under
any of the Loan Documents (including without limitation this Agreement).

          DEFINED  TERMS:  Terms not  otherwise  defined  herein  shall have the
     meaning  provided in that certain  Contribution  Agreement  dated effective
     September 1, 1999, by and among Barnet Dulaney Eye Center,  P.L.L.C., David
     D. Dulaney,  M.D.,  Ronald W. Barnet,  M.D., Mark Rosenberg,  Prime Medical
     Services, Inc., Lender, Borrower, LASIK and Prime/BDEC Acquisition,  L.L.C.
     (the "Contribution  Agreement").  For the purposes hereof the terms "Target
     Centers"  and  "Target  Center"  shall  have the  meaning  set forth in the
     Contribution Agreement, but shall include, upon the acquisition of a Target
     Center  by  Borrower  or any  subsidiary  or  affiliate  of  Borrower,  the
     subsidiary or affiliate utilized to make such acquisition.
                                                    AGREEMENT:

          Borrower has requested from Lender the credit accommodations described
     below, and Lender has agreed to provide such credit  accommodations  on the
     terms and conditions  contained  herein.  Therefore,  for good and valuable
     consideration,  the receipt and  sufficiency  of which  Lender and Borrower
     acknowledge, Lender and Borrower hereby agree as follows:
                                                     ARTICLE I
                                             THE WORKING CAPITAL LOAN

          1.1 The  Working  Capital  Loan.  Lender  agrees to lend and  Borrower
     agrees to  borrow an amount  not to  exceed  the  Working  Capital  Maximum
     Principal Amount on the terms and conditions set forth herein (the "Working
     Capital  Loan").  The Working Capital Loan will be evidenced by the Working
     Capital Note. ------------------------

          1.2  Revolving  Line of Credit.  Subject to and in  reliance  upon the
     terms,  conditions,  representations and warranties  hereinafter set forth,
     Lender agrees to make advances (the "Working Capital Advances") to Borrower
     from  time to  time  during  the  period  from  the  Effective  Date to and
     including the one year  anniversary  of the Effective  Date (the  "Maturity
     Date"),  in an aggregate  amount not to exceed the Working  Capital Maximum
     Principal   Amount.   Each   Working   Capital   Advance   must  be  either
     ------------------------  $10,000 or a higher integral multiple of $10,000.
     Funds  borrowed  and repaid may be  reborrowed,  so long as all  conditions
     precedent to Working  Capital  Advances are met. The purpose of the Working
     Capital  Advances is to provide  funds to Borrower for working  capital and
     for other general business purposes of Borrower.
          1.3 Interest and Repayment.  Borrower  shall pay the aggregate  unpaid
     principal  amount of all Working  Capital  Advances in accordance  with the
     terms of the Working  Capital Note  evidencing the  indebtedness  resulting
     from  such  Working  Capital  Advances.  Interest  on the  Working  Capital
     Advances  shall be due and payable in the manner and at the times set forth
     in the Working  Capital Note,  with final  maturity of the Working  Capital
     Note being on or before the Maturity Date. ----------------------

          1.4 Making Advances. Each Working Capital Advance shall be made within
     two business  days of written  notice (or  telephonic  notice  confirmed in
     writing) given by noon (Austin,  Texas time) on a business day of Lender by
     Borrower to Lender specifying the amount and date thereof (which may be the
     same  business  day) and if sent by wired funds,  at Lender's  option,  the
     wiring  instructions  of the  deposit  account  of  Borrower  to which such
     Working Capital Advance is to be deposited. ---------------

          1.5  Payments  and  Computations.  Borrower  shall  make each  payment
     hereunder and under the Working  Capital Note on the day when due in lawful
     money of the United  States of America to Lender at  Lender's  Address  for
     Payment in same day funds.  All  repayments  of  principal  on the  Working
     Capital Note shall be in a minimum amount of $1,000,  or a higher  integral
     multiple of $1,000. All computations of interest shall be made by Lender on
     the   basis  of  the   actual   number   of  days   (including   the  first
     -------------------------  day but excluding the last day) in the year (365
     or 366,  as the  case  may be)  elapsed,  but in no  event  shall  any such
     computation  result in an amount of interest  that would cause the interest
     contracted for, charged or received by Lender to be in excess of the amount
     that would be payable at the Highest Lawful Rate, as herein defined.
                                                    ARTICLE II
                                          THE DEVELOPMENT FACILITY LOANS

          2.1 The Development Facility. Subject to the terms of the Contribution
     Agreement  and  the  terms,  conditions,   representations  and  warranties
     hereinafter  set forth,  Lender  agrees to lend Borrower from time to time,
     the amounts necessary to acquire or develop Target Centers, in an aggregate
     amount not to exceed the  Development  Facility  Maximum  Principal  Amount
     (collectively, the "Development Facility Loans"). ------------------------

         2.2 Development  Facility Loans.  Each  Development  Facility Loan will
finance  up to 100% of the  purchase  price  (or  development  cost) of a Target
Center being acquired (or developed) by Borrower.  The parties  acknowledge that
the grant of any Development Facility Loan does not create any obligation on the
part of Lender to extend further Development Facility Loans. Additionally,  each
Development  Facility Loan is subject in all respects to Lender  obtaining prior
written  approval from the bank  syndication  under its or its parent  company's
outstanding  borrowing  facilities  and  the  execution  and  delivery  of  such
guarantees by Borrower as may be required by such bank syndication.  Pursuant to
the Contribution Agreement, each Development Facility Loan must be (a) evidenced
by a separate Development Facility Note executed by Borrower, (b) secured by all
of LASIK's  ownership  interest in Borrower as  evidenced by an  Assignment  and
Security  Agreement  executed by LASIK,  and (c)  accompanied  by Assignment and
Security Agreements executed by Borrower. In addition, if Borrower is acquiring,
directly or indirectly, a one hundred percent (100%) interest in a Target Center
(hereinafter  referred to as a "100% Target Center"),  Borrower shall cause such
Target Center to execute a security agreement,  acceptable in form and substance
to  Lender,  granting  to Lender or one of  Lender's  subsidiaries  the  highest
available priority security interest in all of the assets of such Target Center.

          2.3 Interest and  Repayment.  Borrower and Target Center shall pay the
     unpaid principal amount under each Development  Facility Note in accordance
     with the terms of the respective  Development  Facility  Note.  Payments of
     interest and principal on each  Development  Facility Note shall be due and
     payable  in the  manner  and at  the  times  set  forth  in the  respective
     Development Facility Note. ----------------------

                                   ARTICLE III
      CONDITIONS TO WORKING CAPITAL ADVANCES AND DEVELOPMENT FACILITY LOANS

          3.1  Conditions  Precedent to Initial  Working  Capital  Advance.  The
     obligation of Lender to make its initial Working Capital Advance is subject
     to the condition precedent that Lender shall have received on or before the
     day of such  Working  Capital  Advance  the  following,  each  in form  and
     substance satisfactory to Lender and properly executed by Borrower or other
     appropriate  parties:  (a)  the  Working  Capital  Note  duly  executed  by
     Borrower,  and  (b)  such  other  documents,  opinions,   certificates  and
     ------------------------------------------------------- evidences as Lender
     may reasonably request.

          3.2 Conditions  Precedent to Each Working Capital  Advance/Development
     Facility Loan. In addition to the  conditions  precedent  stated  elsewhere
     herein,  Lender shall not be obligated to make any Working  Capital Advance
     or        any        Development        Facility        Loan        unless:

          (a) the  representations  and  warranties  contained in Article IV are
     true and  correct in all  material  respects  on and as of the date of such
     Working Capital Advance or Development Facility Loan, as though made on and
     as of such date with such changes therein;
          (b) on the date of the Working Capital Advance or Development Facility
     Loan,  no Event of Default,  and no event which,  with the lapse of time or
     notice or both,  could  become an Event of  Default,  has  occurred  and is
     continuing;
          (c) there shall have been no material adverse change, as determined by
     Lender in its reasonable  judgment,  in the financial condition or business
     of Borrower;
          (d) there has been no breach or  threatened  breach by Borrower  under
     the  Contribution  Agreement or any  Transaction  Document (as such term is
     defined in the Contribution Agreement);
              with respect to each Development  Facility Loan, Borrower executes
the respective Development Facility Note and Borrower executes an Assignment and
Security  Agreement  in the form  attached  as  Exhibit  G3 to the  Contribution
Agreement,  and  otherwise in form and substance  acceptable  to Lender  wherein
Lender is granted a first lien perfected  security interest in all of Borrower's
or Borrower's  subsidiaries' ownership interest in the Target Center and related
acquisition documents;

              LASIK  shall  have  previously  granted  to  Lender  a first  lien
perfected  security  interest in all of LASIK's  ownership  interest in Borrower
through the execution and delivery of the Assignment  and Security  Agreement in
the form attached as Exhibit G4 to the Contribution Agreement and LASIK shall be
in compliance with all of its obligations thereunder;

          (g) if  Borrower  is using a  Development  Facility  Loan to  acquire,
     directly or  indirectly,  a 100% Target  Center,  Borrower shall cause such
     Target  Center to  execute a  security  agreement,  acceptable  in form and
     substance to Lender, granting to Lender or one of Lender's subsidiaries the
     highest  available  priority security interest in all of the assets of such
     Target Center; and
          (h)  Lender  shall  have  received  such  other  approvals,  opinions,
     documents,  certificates or evidences as Lender may reasonably  request (in
     form and substance reasonably  satisfactory to Lender). Each request for an
     Working  Capital  Advance or  Development  Facility  Loan shall be deemed a
     representation  by Borrower  that the  conditions  of this Section 3.2 have
     been met.
                                                    ARTICLE IV
                                     BORROWER'S REPRESENTATIONS AND WARRANTIES

         Borrower represents and warrants to Lender as follows:

          4.1  Good  Standing.  Borrower  is a  duly  formed  limited  liability
     company,  duly organized and in good  standing,  under the laws of Delaware
     and has the power to own its  property and to carry on its business in each
     jurisdiction in which Borrower operates. -------------

         4.2 Authority and Compliance.  Borrower has full power and authority to
enter into this  Agreement,  to make the  borrowing  hereunder,  to execute  and
deliver  the Loan  Documents  and to incur the  indebtedness  described  in this
Agreement,  all of which has been duly  authorized  by all proper and  necessary
action of its managers and members. No further consent or approval of any public
authority is required as a condition to the validity of any Loan  Document,  and
Borrower is in compliance with all laws and regulatory  requirements to which it
is subject.

          4.3 Binding  Agreement.  This  Agreement and other Loan Documents when
     issued and delivered  pursuant  hereto for value received will  constitute,
     valid and legally binding  obligations of Borrower in accordance with their
     terms. -----------------

          4.4 Litigation.  There are no proceedings pending or, to the knowledge
     of Borrower,  threatened  before any court or  administrative  agency which
     will or may have a material  adverse  effect on the financial  condition or
     operations of Borrower or any subsidiary,  except as disclosed to Lender in
     writing prior to the date of this Agreement.  To the knowledge of Borrower,
     there are no proceedings  pending or threatened  against any Target Center.
     ----------

          4.5 No Conflicting  Agreements.  There are no provisions of Borrower's
     organizational  documents  and no  provisions  of any  existing  agreement,
     mortgage,  indenture  or  contract  binding on Borrower  or  affecting  its
     property,  which would  conflict with or in any way prevent the  execution,
     delivery,   or   carrying   out  of  the  terms  of  the  Loan   Documents.
     -------------------------

          4.6  Ownership  of Assets.  Borrower  will at all times  maintain  its
     tangible property,  real and personal, in good order and repair taking into
     consideration reasonable wear and tear. -------------------

          4.7 Taxes.  All income  taxes and other taxes due and payable  through
     the date of this  Agreement  have been paid prior to  becoming  delinquent.
     -----

                                                     ARTICLE V
                                         BORROWER'S AFFIRMATIVE COVENANTS

         So long as Borrower may borrow under this  Agreement  and until payment
in full of the Working  Capital Note and all  Development  Facility  Notes,  and
performance of all other obligations of Borrower and Target Centers hereunder or
thereunder, Borrower covenants and agrees to do the following:

         5.1      Financial Statements.

                  (a)  Maintain,  and cause each Target  Center to  maintain,  a
         system of  accounting  satisfactory  to Lender and in  accordance  with
         generally accepted accounting principles consistently applied, and will
         permit  Lender's  officers or authorized  representatives  to visit and
         inspect  Borrower's  or  Target  Center's  books of  account  and other
         records  at such  reasonable  times and as often as Lender  may  desire
         during office hours and after  reasonable  notice to Borrower,  and pay
         the  reasonable  fees and  disbursements  of any  accountants  or other
         agents of Lender selected by Lender for the foregoing purposes.  Unless
         written notice of another location is given to Lender, Borrower's books
         and records will be located at Borrower's Address.

          (b) Furnish to Lender year end financial  statements,  of Borrower and
     each Target  Center,  to include  balance  sheet,  operating  statement and
     surplus   reconciliation,   together  with  an  officer's   certificate  of
     compliance with this Agreement  including  computations of all quantitative
     covenants, within 90 days after the end of each annual accounting period.
          (c) Furnish to Lender quarterly financial statements,  of Borrower and
     each Target Center, to include balance sheet and profit and loss statement,
     together with an officer's  certificate  of compliance  with this Agreement
     including computations of all quantitative covenants, within 45 days of the
     end of each such accounting period.
                  (d) With each balance sheet delivered under subsections (b) or
(c) of this Section 5.1, an aging of all Accounts Receivable.

          (e) Promptly provide Lender with such additional information,  reports
     or statements respecting the business operations and financial condition of
     Borrower or any Target Center,  as Lender may reasonably  request from time
     to time.
         5.2  Insurance.  Maintain,  and cause each Target  Center to  maintain,
insurance  with  responsible  insurance  companies  on  such  of its  respective
properties,  in such amounts and against such risks as is customarily maintained
by similar businesses operating in the same vicinity,  specifically to include a
policy  of fire  and  extended  coverage  insurance  covering  all  assets,  and
liability  insurance,  all  to be  with  such  companies  and  in  such  amounts
satisfactory  to Lender and to contain a mortgage  clause  naming  Lender as its
interest may appear. Evidence of such insurance will be supplied to Lender.

          5.3 Existence and Compliance.  Maintain,  and cause each Target Center
     to maintain, its organizational  existence in good standing and comply with
     all laws, regulations and governmental  requirements applicable to it or to
     any of its property, business operations and transactions. Borrower further
     agrees to provide  Lender  with  copies of all  instruments  filed with the
     Delaware Secretary of State amending and/or renewing Borrower's certificate
     of formation. ------------------------

          5.4 Adverse Conditions or Events. Promptly advise Lender in writing of
     any  condition,  event or act which  comes to its  attention  that would or
     might  materially  affect  Borrower's  or  any  Target  Center's  financial
     condition,  Lender's  rights  under  this  Agreement  or any  of  the  Loan
     Documents, and of any litigation filed against Borrower or to its knowledge
     against any Target Center. ----------------------------

         5.5      Taxes.  Pay all taxes as they become due and payable.

          5.6 Maintenance.  Maintain,  and cause each Target Center to maintain,
     all of its  respective  tangible  property  in good  condition  and repair,
     reasonable  wear and tear  excepted,  and make all  necessary  replacements
     thereof,  and preserve and maintain all licenses,  privileges,  franchises,
     certificates  and the like  necessary  for the  operation of its  business.
     -----------

          5.7  Application  of  Earnings.  Except as expressly  contemplated  in
     Section  4.3(e) of the  Contribution  Agreement,  pay all  available  funds
     toward  repayment of the Working Capital Note and any Development  Facility
     Notes,  regardless of whether  payment of such amounts  exceeds the minimum
     required  payments  under  the  Working  Capital  Note and the  Development
     Facility Notes. -----------------------

                                                    ARTICLE VI
                                           BORROWER'S NEGATIVE COVENANTS

         So long as Borrower may borrow under this  Agreement  and until payment
in full of the Working  Capital Note and all  Development  Facility  Notes,  and
performance of all other  obligations of Borrower or Target Center  hereunder or
thereunder, Borrower will not, and will cause each of the Target Centers to not,
without the prior written consent of Lender:

          6.1  Transfer of Assets.  Enter into any merger or  consolidation,  or
     sell, lease,  assign, or otherwise dispose of or transfer any assets except
     in the normal course of its business. ------------------

          6.2 Change in Ownership or Structure.  Dissolve or liquidate; become a
     party  to  any  merger  or  consolidation;  reorganize  as  a  professional
     corporation;  acquire by purchase,  lease or otherwise all or substantially
     all of the assets or capital stock of any  corporation or other entity;  or
     sell, transfer,  lease, or otherwise dispose of all or any substantial part
     of    its     respective     property     or    assets     or     business.
     --------------------------------

          6.3 Liens.  From and after the date hereof  grant,  suffer,  or permit
     liens  on or  security  interests  in its  respective  assets,  or  fail to
     promptly pay all lawful claims, whether for labor, materials, or otherwise,
     except for purchase money security interests arising in the ordinary course
     of its respective business. -----

          6.4 Loans. Make any loans,  advances or investments to or in any joint
     venture,   corporation  or  other  entity,   except  for  the  purchase  of
     obligations  of Lender or U.S.  Government  obligations  or the purchase of
     federally-insured certificates of deposit. -----

          6.5  Borrowings.  Except for  borrowing  or  incurring  open  accounts
     payable to  unaffiliated  third parties in the ordinary course of business,
     create,  incur,  assume,  or liable in any manner for any indebtedness (for
     borrowed  money,  deferred  payment  for  the  purchase  of  assets,  lease
     payments,  as surety or  guarantor  of the debt of another,  or  otherwise)
     other than to Lender in excess of $25,000  without  Lender's  prior written
     consent. ----------

          6.6  Violate  Other  Covenants.  Violate  or fail to  comply  with any
     covenants or agreements  regarding  other debt which will or would with the
     passage of time or upon demand  cause the  maturity of any other debt to be
     accelerated. -----------------------

          6.7 Equity Redemptions or Restructurings. Apply any of its property or
     assets to the  purchase,  retirement  or  redemption  of any of its  equity
     interests    or   in    any    way    amend    its    capital    structure.
     ------------------------------------

          6.8 Character of Business. Change the general character of business as
     conducted  at the  date  hereof,  or  engage  in any type of  business  not
     reasonably  related to its  business as presently  and normally  conducted.
     ---------------------

                                                    ARTICLE VII
                                      EVENTS OF DEFAULT; NOTICE; ACCELERATION

          7.1  Events  of  Default.  If one or more of the  following  events of
     default shall occur and continue  after thirty (30) days' written notice to
     Borrower,  all  outstanding  principal plus unpaid  interest of the Working
     Capital Note and each Development Facility Note, and any other indebtedness
     of Borrower to Lender,  shall  automatically be due and payable immediately
     and Lender shall have no further  obligation to fund under this  Agreement.
     -----------------

          (a) There shall be any breach or default  shall be made in the payment
     of any  installment of principal or interest upon the Working  Capital Note
     or any Development Facility Note, when due and payable, whether at maturity
     or otherwise; or
          (b) There  shall be any  breach or  default  (other  than by Lender or
     Prime Medical  Services,  Inc.) under any Loan Document,  the  Contribution
     Agreement, or any Transaction Document (other than those certain Consulting
     Agreements  with Dr.  Dulaney,  Dr.  Barnet and Mark  Rosenberg as required
     pursuant  to  the  Contribution  Agreement),   or  any  other  certificate,
     agreement or document contemplated hereby or thereby; or
          (c) Any  representation or warranty of Borrower contained herein or in
     any financial statement, certificate, report or opinion submitted to Lender
     in connection  with the Working  Capital Loan or any  Development  Facility
     Loan, or by Borrower pursuant to the requirements of this Agreement,  shall
     prove to have been  incorrect or  misleading  in any material  respect when
     made; or
          (d) Any  judgment  against  Borrower or any  attachment  or other levy
     against  the  property  of  Borrower  with  respect  to a claim  materially
     affecting Borrower's  financial status remains unpaid,  unstayed on appeal,
     undischarged, not bonded or not dismissed for a period of 30 days; or
          (e) The  bankruptcy,  death,  or  dissolution  of any guarantor of the
     Indebtedness; or
                  (f) Borrower makes an assignment for the benefit of creditors,
         admits in writing  its  inability  to pay its debts  generally  as they
         become due, files a petition in bankruptcy, is adjudicated insolvent or
         bankrupt,  petitions or applies to any tribunal for any receiver or any
         trustee  of  Borrower  or any  substantial  part  of  their  respective
         property,   commences  any  action   relating  to  Borrower  under  any
         reorganization,  arrangement,  readjustment  of  debt,  dissolution  or
         liquidation  law  or  statute  of  any  jurisdiction,  whether  now  or
         hereafter in effect, or if there is commenced against Borrower any such
         action,  or Borrower by any act indicates its consent to or approval of
         any trustee for Borrower or any  substantial  part of its property,  or
         suffers any such receivership or trustee to continue undischarged.

         7.2  Lender's  Remedies.  Upon the  occurrence  of an Event of Default,
Lender,  without notice of any kind,  except for any notice  required under this
Agreement or any other Loan Document, may, at Lender's option: (i) terminate its
obligation to fund any Working Capital Advance or any Development  Facility Loan
hereunder;  (ii) declare the Indebtedness,  in whole or in part, immediately due
and payable;  and/or (iii)  exercise any other rights and remedies  available to
Lender under this Agreement, any other Loan Document, or applicable laws; except
that upon the occurrence of an Event of Default described in subsection  7.1(f),
all the Indebtedness  shall  automatically  be immediately due and payable,  and
Lender's  obligation  to fund any  Working  Capital  Advance or any  Development
Facility Loan hereunder  shall  automatically  terminate,  without notice of any
kind (including  without limitation notice of intent to accelerate and notice of
acceleration) to Borrower or to any Target Center,  guarantor,  or to any surety
or endorser of any of the Notes, or to any other person.  Borrower,  each Target
Center,  and each guarantor,  surety,  and endorser of any of the Notes, and any
and all other parties  liable for the  Indebtedness  or any part thereof,  waive
demand,  notice  of  intent  to  demand,  presentment  for  payment,  notice  of
nonpayment,  protest,  notice of protest,  grace, notice of dishonor,  notice of
intent to accelerate maturity, notice of acceleration of maturity, and diligence
in collection.

         7.3 Right of Set-Off. Borrower hereby authorizes Lender, to the maximum
extent permitted under and in accordance with applicable laws, at any time after
the occurrence of an Event of Default which  continues  uncured,  to set-off and
apply  any and all  deposits,  funds or  assets at any time held and any and all
other  indebtedness  at any time  owing by  Lender  to or for the  credit or the
account of  Borrower  against  any and all  Indebtedness,  whether or not Lender
exercises  any  other  right  or  remedy  hereunder  and  whether  or  not  such
Indebtedness are then matured.

                                                   ARTICLE VIII
                                           GENERAL TERMS AND CONDITIONS

         8.1  Notices.  All  notices,  demands,  requests,  approvals  and other
communications  required or permitted hereunder shall be in writing and shall be
deemed to have been given when (a) presented  personally,  or (b) three (3) days
after  deposited in a regularly  maintained mail receptacle of the United States
Postal Service,  postage prepaid,  certified,  return receipt requested,  or (c)
upon receipt of confirmation after sending by facsimile transmission,  addressed
to  Borrower  or  Lender,  as the case may be, at the  respective  addresses  or
facsimile  number for notice set forth on the first page of this  Agreement,  or
such other  address or  facsimile  number as Borrower or Lender may from time to
time designate by written notice to the other.

          8.2 Entire Agreement and Modifications.  The Loan Documents,  together
     with the Contribution Agreement and Transaction  Documents,  constitute the
     entire  understanding and agreement between the undersigned with respect to
     the  transactions  arising in connection  with the Working Capital Loan and
     the  Development  Facility  Loans,  and supersede all prior written or oral
     understandings   and  agreements  between  the  undersigned  in  connection
     therewith.   No   provision   of  this   Agreement   or  the   other   Loan
     ----------------------------------  Documents may be modified,  waived,  or
     terminated  except by instrument  in writing  executed by the party against
     whom a modification,  waiver, or termination is sought to be enforced, and,
     in the case of Lender, executed by a Vice President or higher level officer
     of Lender.
          8.3  Severability.  In case any of the  provisions  of this  Agreement
     shall for any reason be held to be invalid, illegal, or unenforceable, such
     invalidity,  illegality,  or  unenforceability  shall not  affect any other
     provision hereof, and this Agreement shall be construed as if such invalid,
     illegal,  or  unenforceable  provision  had never  been  contained  herein.
     ------------

         8.4  Cumulative  Rights  and No  Waiver.  Lender  shall have all of the
rights and remedies  granted in the Loan  Documents  and  available at law or in
equity,  and these  same  rights and  remedies  shall be  cumulative  and may be
pursued separately,  successively, or concurrently against Borrower, at the sole
discretion of Lender.  Lender's  delay in exercising any right shall not operate
as a waiver thereof,  nor shall any single or partial  exercise by Lender of any
right preclude any other or future exercise thereof or the exercise of any other
right.  Any of Borrower's  covenants and  agreements may be waived by Lender but
only in  writing  signed by an  authorized  officer of Vice  President  level or
higher of Lender or any subsequent  owner or holder of any of the Notes.  Except
as otherwise  expressly  provided in this  Agreement  and in any Note,  Borrower
expressly waives any presentment,  demand, protest, notice of default, notice of
intent  to  accelerate,  notice  of  acceleration,  notice  of  intent to demand
payment,  or other notice of any kind. No notice to or demand on Borrower in any
case shall, of itself, entitle Borrower to any other or further notice or demand
in similar or other circumstances.  No delay or omission by Lender in exercising
any  power  or  right  hereunder  shall  impair  any  such  right or power or be
construed  as a waiver  thereof,  or the  exercise  of any other  right or power
hereunder.

          8.5  Form  and  Substance.  All  documents,  certificates,   insurance
     policies,  and other items  required  under this  Agreement  to be executed
     and/or  delivered  to  Lender  shall  be in form and  substance  reasonably
     satisfactory to Lender. ------------------

         8.6 Limitation on Interest: Maximum Rate. Lender and Borrower intend to
contract in strict  compliance  with  applicable  usury law from time to time in
effect.  To effectuate this intention,  Lender and Borrower  stipulate and agree
that none of the terms and provisions of any Note and any other  agreement among
such parties, whether now existing or arising hereafter, shall ever be construed
as a contract to pay interest for the use,  forbearance or detention of money in
excess of the Maximum Rate. If, from any possible  construction of any document,
interest would otherwise be payable to Lender in excess of the Maximum Rate, any
such  construction  shall be subject to the  provisions of this Section and such
document  shall be  automatically  reformed and the  interest  payable to Lender
shall be  automatically  reduced to the Maximum Rate permitted under  applicable
law,  without the  necessity of the  execution of any amendment or new document.
Neither  Borrower,  endorsers or other persons now or hereafter  becoming liable
for payment of any portion of the  principal  or interest of any Note shall ever
be liable for any  unearned  interest on the  principal  amount or shall ever be
required  to pay  interest  thereon  in excess of the  Maximum  Rate that may be
lawfully  charged under  applicable law from time to time in effect.  Lender and
any subsequent  holder of any Note expressly  disavow any intention to charge or
collect  unearned  or  excessive  interest  or finance  charges in the event the
maturity of any Note, is accelerated. If the maturity of any Note is accelerated
for any reason, whether as a result of a default under any Note, or by voluntary
prepayment,  or otherwise,  any amounts constituting interest, or adjudicated as
constituting  interest,  which  are  then  unearned  and  have  previously  been
collected  by Lender or any  subsequent  holder of any Note  shall be applied to
reduce the principal balance thereof then outstanding, or if such amounts exceed
the unpaid  balance of principal,  the excess shall be refunded to Borrower (and
Target Center,  as applicable).  In the event Lender or any subsequent holder of
any Note ever receives, collects or applies as interest any amounts constituting
interest or adjudicated as constituting  interest which would otherwise increase
the  interest to an amount in excess of the amount  permitted  under  applicable
law,  such amount  which  would be  excessive  interest  shall be applied to the
reduction of the unpaid  principal  balance of such Note,  and, if the principal
balances of such Note is paid in full,  any  remaining  excess  shall be paid to
Borrower (and Target Center, as applicable).  In determining  whether or not the
interest  paid or payable under the specific  contingencies  exceeds the Maximum
Rate allowed by applicable law, Borrower and Lender shall, to the maximum extent
permitted under applicable law, (i) characterize any non-principal payment as an
expense,  fee or  premium,  rather  than as  interest;  (ii)  exclude  voluntary
prepayments  and the effect  thereof;  (iii)  amortize,  prorate,  allocate  and
spread,  in equal  parts,  the total  amount of interest  throughout  the entire
contemplated  term of the applicable Note (as it may be renewed and extended) so
that the interest rate is uniform  throughout  the entire term of such Note. The
terms and  provisions of this section  shall  control and supersede  every other
provision of all existing and future agreements between Lender and Borrower (and
Target Center, as applicable).  As used in this Agreement,  "Maximum Rate" means
the maximum non-usurious interest rate that at any time or from time to time may
be contracted for, taken, reserved,  charged or received on the unpaid principal
or accrued past due interest  under  applicable  law and may be greater than the
applicable  rate,  the parties hereby  stipulating  and agreeing that Lender may
contract for, take,  reserve,  charge or receive interest up to the Maximum Rate
without penalty under any applicable law; and "applicable law" means the laws of
the State of Texas or the laws of the United States of America,  whichever  laws
allow the greater interest,  as such laws now exist or may be changed or amended
or come into effect in the future.  In the event  applicable law provides for an
interest  ceiling under  Chapter One of Title 79, Texas  Revised Civil  Statutes
Annotated, as amended, that ceiling shall be the indicated rate ceiling, subject
to any right  Lender may have in the future to change the method of  determining
the Maximum Rate.

          8.7  Third  Party  Beneficiary.  Borrower  acknowledges  that the bank
     syndication  under the senior credit  facility of Prime  Medical  Services,
     Inc. (as hereinafter supplemented,  modified, or replaced) is a third party
     beneficiary  to this  Agreement.  Except for the preceding  sentence,  this
     Agreement is for the sole benefit of Lender and Borrower and is not for the
     benefit of any third party. -----------------------

          8.8  Borrower  In  Control.  In no event  shall  Lender's  rights  and
     interests  under the Loan  Documents  be construed to give Lender the right
     to, or be deemed to  indicate  that  Lender is in control of the  business,
     management or properties of Borrower or any Target Center or has power over
     the daily management  functions and operating decisions made by Borrower or
     any Target Center. -------------------

          8.9 Use of  Financial  and Other  Information.  Borrower  agrees  that
     Lender shall be permitted to investigate and verify the accuracy of any and
     all information  furnished to Lender in connection with the Loan Documents,
     including without  limitation  financial  statements,  and to disclose such
     information,  or provide  copies of such  information,  to  representatives
     appointed by Lender, including independent accountants,  agents, attorneys,
     asset   investigators,    appraisers   and   any   other   persons   deemed
     --------------------------------------   necessary   by   Lender   to  such
     investigation.
         8.10  Collateral  Assignment of Loan  Documents.  Lender shall have the
right to  collaterally  assign all of its rights  under this  Agreement  and the
other Loan Documents to the third party beneficiaries  described in Section 8.7.
Lender shall have the right to disclose in confidence such financial information
regarding  Borrower as may be  necessary  to  complete  any such  assignment  or
attempted  assignment,  including without limitation,  all financial statements,
projections,  internal memoranda,  audits, reports, payment history,  appraisals
and any and all other  information and  documentation in Lender's files relating
to Borrower.  This  authorization  shall be irrevocable in favor of Lender,  and
Borrower  waives any claims  against Lender or the party  receiving  information
from Lender  regarding  disclosure of information in Lender's files, and further
waive any  alleged  damages  which may  result  from such  disclosure.  Borrower
acknowledges  that Lender intends to make a collateral  assignment of its rights
under this  Agreement  and the Loan  Documents for the benefit of one or more of
its or its  parent  company's  lenders  and will not be  authorized  to amend or
modify this  Agreement  or the Loan  Documents,  or grant  waivers of any of its
rights  thereunder  without  the prior  written  consent  of some or all of such
lenders.

          8.11 Further Assurances.  Borrower agrees to execute and deliver,  and
     cause each Target Center to execute and deliver,  to Lender,  promptly upon
     request from Lender,  such other and further documents as may be reasonably
     necessary  or  appropriate  to  consummate  the  transactions  contemplated
     herein. ------------------

          8.12 Number and Gender.  Whenever  used herein,  the  singular  number
     shall  include the plural and the plural the  singular,  and the use of any
     gender  shall  be  applicable  to  all  genders.  The  duties,   covenants,
     obligations,  and warranties of Borrower in this  Agreement  shall be joint
     and several  obligations of Borrower and of each Borrower if more than one.
     -----------------

          8.13 Captions.  The captions,  headings, and arrangements used in this
     Agreement  are for  convenience  only and do not in any way affect,  limit,
     amplify, or modify the terms and provisions hereof. --------

         8.14  Continuing  Agreement.  This is a  continuing  agreement  and all
rights,  powers,  and remedies of Lender under this Agreement and the other Loan
Documents  shall  continue  in full force and effect  until each Note is paid in
full as the same becomes due and payable and all other  Indebtedness is paid and
discharged, until Lender has no further obligation to advance moneys to Borrower
under this Agreement, and until Lender, upon request of Borrower, has executed a
written termination statement.  Furthermore,  the parties contemplate that there
may be times when no Indebtedness is owing, but notwithstanding such occurrence,
this Agreement (and all other Loan Documents) shall remain valid and shall be in
full force and effect as to subsequent Indebtedness and Advances,  provided that
Lender has not executed a written termination statement.

          8.15  Applicable  Law. This Agreement and the Loan Documents  shall be
     governed by and construed in accordance with the laws of the State of Texas
     and the laws of the United States  applicable to  transactions  within such
     state. --------------

          8.16 NO ORAL  AGREEMENTS.  THE WRITTEN LOAN  AGREEMENT  REPRESENTS THE
     FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
     OF PRIOR,  CONTEMPORANEOUS,  OR SUBSEQUENT  ORAL AGREEMENTS OF THE PARTIES.
     THERE   ARE   NO   UNWRITTEN   ORAL   AGREEMENTS   BETWEEN   THE   PARTIES.



                                             [SIGNATURE PAGE FOLLOWS]






<PAGE>




                                                 SIGNATURE PAGE TO
                                                  LOAN AGREEMENT


         EXECUTED as of ____ day of September, 1999.

                                 BORROWER:

                                            PRIME/BDR ACQUISITION, L.L.C.

                                    By:  ______________________________________
                                    Name: ____________________________________
                                    Title: _____________________________________

                                 LENDER:

                                            PRIME MEDICAL OPERATING, INC.

                                    By:  ______________________________________
                                    Name: ____________________________________
                                    Title: _____________________________________





<PAGE>
                                   EXHIBIT-G2

                                 PROMISSORY NOTE
Austin, Texas                   (LINE OF CREDIT)               September 1, 1999



PROMISE TO PAY: For value  received,  the undersigned  Borrower  (whether one or
more) promises to pay to the order of Lender the Principal Amount, to the extent
advanced by Lender, together with interest on the unpaid balance of such amount,
in lawful  money of the United  States of America,  in  accordance  with all the
terms, conditions,  and covenants of this Note and the Loan Documents identified
below.

     BORROWER:  Prime/BDR  Acquisition,  L.L.C.,  a Delaware  limited  liability
company
     BORROWER'S ADDRESS FOR NOTICE:  1301 Capital of Texas Highway,  Suite C-300
Austin, Texas 78746 Attention: President
LENDER:           Prime Medical Operating, Inc., a Delaware corporation

     LENDER'S ADDRESS FOR PAYMENT:  1301 Capital of Texas Highway,  Suite C-300,
Austin, Texas 78746 Attention: Chief Financial Officer
PRINCIPAL AMOUNT:  Two Hundred Thousand Dollars ($200,000)

INTEREST RATE:  Fifteen Percent (15%)

PAYMENT  TERMS:  Interest on the unpaid  balance of this Note is due and payable
quarterly,  beginning  November 1, 1999, and continuing  regularly and quarterly
thereafter on or before the first day of February,  May, August, until September
1, 2000 (the "Maturity  Date"),  when the outstanding  principal balance and all
accrued  interest shall be due and payable in full.  Interest will be calculated
on the unpaid  principal  balance.  Each payment  will be credited  first to the
accrued interest and then to the reduction of principal.

REVOLVING  LINE OF  CREDIT:  This Note  evidences  a  revolving  line of credit.
Subject to the terms of the Loan Agreement  between  Borrower and Lender of even
date  herewith,  all or any portion of the Principal  Amount of this Note may be
borrowed, paid, prepaid, repaid, and reborrowed,  from time to time prior to the
Maturity  Date and in accordance  with the Loan  Documents.  Each  borrowing and
repayment  hereunder will be (i) endorsed on an attachment to this Note, or (ii)
entered  in the books and  records of  Lender.  The books and  records of Lender
shall be prima facie  evidence  of all sums due  Lender.  If an event of default
exists  under  this Note or any Loan  Document,  then  Lender  shall be under no
obligation to make any advance under this Note.

     LOAN  AGREEMENT:  This Note is executed  pursuant to and is governed by the
terms of the Loan  Agreement  of even date  herewith,  executed by Borrower  and
Lender, as amended (collectively, the "Loan Agreement").
1.       INTEREST PROVISIONS:

Rate:  The  principal  balance of this Note from time to time  remaining  unpaid
prior to maturity  shall bear  interest at the  Interest  Rate per annum  stated
above.  Interest  shall be  calculated  on the  amount  of each  advance  of the
Principal Amount of this Note from the date of each such advance.

Maximum  Lawful Interest:  The term "Maximum Lawful Rate" means the maximum rate
         of interest  and the term  "Maximum  Lawful  Amount"  means the maximum
         amount  of  interest  that is  permissible  under  applicable  state or
         federal law for the type of loan  evidenced  by this Note and the other
         Loan  Documents.  If the Maximum Lawful Rate is increased by statute or
         other governmental action subsequent to the date of this Note, then the
         new  Maximum  Lawful  Rate  shall be  applicable  to this Note from the
         effective date thereof, unless otherwise prohibited by applicable law.

Spreadingof Interest:  Because of the possibility of irregular periodic balances
         of principal or premature payment,  the total interest that will accrue
         under this Note cannot be determined in advance. Lender does not intend
         to contract for,  charge,  or receive more than the Maximum Lawful Rate
         or Maximum Lawful Amount  permitted by applicable state or federal law,
         and to prevent such an  occurrence  Lender and Borrower  agree that all
         amounts of interest,  whenever  contracted for, charged, or received by
         Lender, with respect to the loan of money evidenced by this Note, shall
         be spread,  prorated,  or  allocated  over the full period of time this
         Note is unpaid,  including  the period of any renewal or  extension  of
         this Note.  If demand for payment of this Note is made by Lender  prior
         to the full stated term, the total amount of interest  contracted  for,
         charged,  or  received  to the time of such  demand  shall  be  spread,
         prorated, or allocated along with any interest thereafter accruing over
         the full period of time that this Note  thereafter  remains  unpaid for
         the purpose of determining if such interest  exceeds the Maximum Lawful
         Amount.

Excess   Interest:  At maturity  (whether by  acceleration  or  otherwise) or on
         earlier  final  payment of this Note,  Lender  shall  compute the total
         amount of interest that has been contracted for,  charged,  or received
         by Lender or  payable by  Borrower  under  this Note and  compare  such
         amount to the Maximum  Lawful  Amount  that could have been  contracted
         for, charged, or received by Lender. If such computation  reflects that
         the total amount of interest that has been contracted for, charged,  or
         received  by Lender or payable by Borrower  exceeds the Maximum  Lawful
         Amount,  then Lender  shall apply such excess to the  reduction  of the
         principal balance and not to the payment of interest; or if such excess
         interest  exceeds the unpaid  principal  balance,  such excess shall be
         refunded to Borrower. This provision concerning the crediting or refund
         of excess  interest  shall control and take  precedence  over all other
         agreements  between  Borrower and Lender so that under no circumstances
         shall the total interest contracted for, charged, or received by Lender
         exceed the Maximum Lawful Amount.

Interest After Default:  At Lender's option,  the unpaid principal balance shall
         bear interest after maturity  (whether by acceleration or otherwise) at
         the "Default  Interest  Rate." The Default  Interest  Rate shall be, at
         Lender's  option,  (i) the Maximum  Lawful Rate, if such Maximum Lawful
         Rate is established by applicable law; or (ii) the Interest Rate stated
         on the first page of this Note plus five (5) percentage  points,  if no
         Maximum Lawful Rate is established by applicable law; or (iii) eighteen
         percent (18%) per annum; or (iv) such lesser rate of interest as Lender
         in its sole  discretion  may choose to charge;  but never more than the
         Maximum  Lawful Rate or at a rate that would  cause the total  interest
         contracted  for,  charged,  or received by Lender to exceed the Maximum
         Lawful Amount.

Daily Computation of Interest: To the extent permitted by applicable law, Lender
at its option will  calculate  the per diem interest rate or amount based on the
actual  number of days in the year (365 or 366, as the case may be),  and charge
that per diem interest rate or amount each day. In no event shall Lender compute
the interest in a manner that would cause  Lender to contract  for,  charge,  or
receive interest that would exceed the Maximum Lawful Rate or the Maximum Lawful
Amount

DEFAULT PROVISIONS:

EVENTS OF DEFAULT AND  ACCELERATION  OF MATURITY:  LENDER MAY, AFTER THIRTY (30)
DAYS'  WRITTEN  NOTICE TO BORROWER  AND  BORROWER'S  FAILURE TO CURE WITHIN SUCH
30-DAY  PERIOD  AND  WITHOUT  FURTHER  NOTICE OR DEMAND,  (except  as  otherwise
required  by  statute),  ACCELERATE  THE  MATURITY  OF THIS NOTE AND DECLARE THE
ENTIRE UNPAID PRINCIPAL BALANCE AND ALL ACCRUED INTEREST AT ONCE DUE AND PAYABLE
IF:

         There is  default  in the  payment  of any  installment  of  principal,
interest,  or any other sum  required to be paid under the terms of this Note or
any of the Loan Documents; or

         There is a breach or  default  (other  than by Lender or Prime  Medical
Services,  Inc.)  under this Note or any of the Loan  Documents,  including  any
instrument  securing the payment of this Note or any loan agreement  relating to
the advance of loan proceeds.

WAIVER   BY  BORROWER:  EXCEPT AS PROVIDED IN  PARAGRAPH  2(a) HEREOF AND IN ANY
         OTHER LOAN  DOCUMENT,  BORROWER AND ALL OTHER  PARTIES  LIABLE FOR THIS
         NOTE  WAIVE,  DEMAND,  NOTICE  OF  INTENT TO  DEMAND,  PRESENTMENT  FOR
         PAYMENT,  NOTICE OF  NONPAYMENT,  PROTEST,  NOTICE OF  PROTEST,  GRACE,
         NOTICE OF DISHONOR,  NOTICE OF INTENT TO ACCELERATE MATURITY, NOTICE OF
         ACCELERATION  OF MATURITY,  AND  DILIGENCE IN  COLLECTION.  EACH MAKER,
         SURETY,  ENDORSER,  AND GUARANTOR OF THIS NOTE WAIVES AND AGREES TO ONE
         OR MORE  EXTENSIONS  FOR ANY PERIOD OR PERIODS OF TIME, AND ANY PARTIAL
         PAYMENTS, BEFORE OR AFTER MATURITY,  WITHOUT PREJUDICE TO THE HOLDER OF
         THIS NOTE. EACH MAKER, SURETY, ENDORSER, AND GUARANTOR WAIVES NOTICE OF
         ANY AND ALL RENEWALS, EXTENSIONS,  REARRANGEMENTS, AND MODIFICATIONS OF
         THIS NOTE.

Non-Waiver by Lender:  Any previous extension of time,  forbearance,  failure to
pursue some  remedy,  acceptance  of late  payments,  or  acceptance  of partial
payment by Lender,  before or after  maturity,  does not  constitute a waiver by
Lender of its subsequent  right to strictly  enforce the collection of this Note
according to its terms.

Other  Remedies Not  Required:  Lender shall not be required to first file suit,
exhaust all  remedies,  or enforce its rights  against any  security in order to
enforce payment of this Note.

Joint and Several  Liability:  Each Borrower who signs this Note, and all of the
other  parties  liable  for the  payment  of  this  Note,  such  as  guarantors,
endorsers,  and sureties,  are jointly and  severally  liable for the payment of
this Note.

Attorney's  Fees: If Lender  requires the services of an attorney to enforce the
payment of this Note or the performance of the other Loan Documents,  or if this
Note is collected through any lawsuit,  probate,  bankruptcy,  or other judicial
proceeding,  Borrower  agrees to pay  Lender an amount  equal to its  reasonable
attorney's fees and other collection  costs.  This provision shall be limited by
any applicable statutory  restrictions  relating to the collection of attorney's
fees.

3.       MISCELLANEOUS PROVISIONS:

Subsequent Holder: All references to Lender in this Note shall also refer to any
subsequent owner or holder of this Note by transfer, assignment, endorsement, or
otherwise.

Transfer:Borrower  acknowledges and agrees that Lender may transfer this Note or
         partial   interests  in  the  Note  to  one  or  more   transferees  or
         participants,  including without  limitation  transfers provided for in
         Section  8.10 of the Loan  Agreement.  Borrower  authorizes  Lender  to
         disseminate  to any  such  transferee  or  participant  or  prospective
         transferee or participant any information it has pertaining to the loan
         evidenced  by  this  Note,   including,   without  limitation,   credit
         information  on Borrower and any  guarantor of this Note and any of the
         type of information described in Section 8.10 of the Loan Agreement.

Other  Parties  Liable:  All  promises,  waivers,   agreements,  and  conditions
applicable  to Borrower  shall  likewise be  applicable  to and binding upon any
other  parties  primarily  or  secondarily  liable for the payment of this Note,
including all guarantors, endorsers, and sureties.

Successors  and Assigns:  The  provisions of this Note shall be binding upon and
for the benefit of the successors, assigns, heirs, executors, and administrators
of Lender and Borrower.

No Duty or Special  Relationship:  Borrower acknowledges that Lender has no duty
of good faith to Borrower,  and Borrower acknowledges that no fiduciary,  trust,
or other special relationship exists between Lender and Borrower.

Modifications:  Any modifications agreed to by Lender relating to the release of
liability of any of the parties primarily or secondarily  liable for the payment
of this Note, or relating to the release,  substitution, or subordination of all
or part of the security for this Note,  shall in no way  constitute a release of
liability  with  respect to the other  parties or  security  not covered by such
modification.

Entire  Agreement:  Borrower  warrants and  represents  that the Loan  Documents
constitute the entire agreement  between Borrower and Lender with respect to the
loan  evidenced  by this Note and agrees  that no  modification,  amendment,  or
additional  agreement  with  respect  to such loan or the  advancement  of funds
thereunder will be valid and  enforceable  unless made in writing signed by both
Borrower and Lender.

Borrower's  Address  for Notice:  All  notices  required to be sent by Lender to
Borrower shall be sent by U.S. Mail, postage prepaid,  to Borrower's Address for
Notice stated on the first page of this Note, until Lender shall receive written
notification from Borrower of a new address for notice.

Lender's  Address for  Payment:  All sums payable by Borrower to Lender shall be
paid at Lender's  Address for Payment  stated on the first page of this Note, or
at such other address as Lender shall designate from time to time.

Business Use:  Borrower  warrants and  represents to Lender that the proceeds of
this Note will be used solely for business or commercial purposes, and in no way
will the proceeds be used for personal, family, or household purposes.

Chapter 15 Not Applicable:  It is understood that Chapter 15 of the Texas Credit
Code relating to certain  revolving credit loan accounts and tri-party  accounts
is not applicable to this Note.

APPLICABLE  LAW: THIS NOTE HAS BEEN EXECUTED AND DELIVERED IN TEXAS AND SHALL BE
CONSTRUED IN ACCORDANCE  WITH THE APPLICABLE  LAWS OF THE STATE OF TEXAS AND THE
LAWS OF THE UNITED STATES OF AMERICA APPLICABLE TO TRANSACTIONS IN TEXAS.

4.       LOAN DOCUMENTS:

This Note.

The Loan Agreement and the Loan Documents as defined therein.

All      other  documents  signed in connection  with the Loan  Agreement or the
         loan  evidenced  by this  Note,  including,  without  limitation,  that
         certain  Contribution  Agreement,  dated  effective  September 1, 1999,
         between and among Borrower,  Lender,  Prime Medical  Services,  Inc., a
         Delaware  corporation,   Prime/BDEC  Acquisition,  L.L.C.,  a  Delaware
         limited  liability  company,  Barnet Dulaney Eye Center,  P.L.L.C.,  an
         Arizona  professional  limited  liability  company,   LASIK  Investors,
         L.L.C., a Delaware limited liability company,  David D. Dulaney,  M.D.,
         Ronald  W.  Barnet,   M.D.,  and  Mark  Rosenberg  (the   "Contribution
         Agreement") and each  Transaction  Document (as such term is defined in
         the Contribution Agreement).

                                              [Signature page follows]



<PAGE>


                                                  SIGNATURE PAGE TO
                                                   PROMISSORY NOTE


EXECUTED this ____ day of September, 1999.



                 BORROWER:

             PRIME/BDR ACQUISITION, L.L.C., a Delaware limited liability company



                                  By: ________________________________________

                                  Printed Name: _______________________________

                                  Title: _______________________________________



<PAGE>
                                   EXHIBIT G3

                                     FORM OF

                        ASSIGNMENT AND SECURITY AGREEMENT

         THIS ASSIGNMENT AND SECURITY  AGREEMENT (this  "Agreement") is made and
entered  into as of the ____  day of  __________,  1999,  by and  between  Prime
Medical  Operating,  Inc.,  a Delaware  corporation  (the  "Secured  Party") and
Prime/BDR  Acquisition,  L.L.C.,  a  Delaware  limited  liability  company  (the
"Debtor").

                                    RECITALS:

         A. Debtor and Secured Party have  executed and  delivered  that certain
Contribution  Agreement  dated  effective  September 1, 1999,  between and among
Debtor,  Secured Party,  Prime Medical Services,  Inc., a Delaware  corporation,
Prime/BDEC  Acquisition,  L.L.C., a Delaware limited liability  company,  Barnet
Dulaney Eye Center, P.L.L.C., an Arizona professional limited liability company,
LASIK Investors L.L.C., a Delaware limited liability company,  David D. Dulaney,
M.D., Ronald W. Barnet, M.D., and Mark Rosenberg (the "Contribution Agreement"),
and  that  certain  Loan  Agreement,   dated  September  ___,  1999  (the  "Loan
Agreement"),  pursuant to which  Secured  Party agrees to make certain  loans to
Debtor on the terms and subject to the conditions provided therein.

         B. Secured Party has requested  that Debtor pledge the  Collateral  (as
defined below) to secure certain obligations and liabilities that Debtor may now
or  hereafter  have  to  Secured  Party,  including,   without  limitation,  any
obligations arising under loans made pursuant to the Loan Agreement.

     C. Debtor desires to enter into this Agreement as a material  inducement to
Secured Party's extension of credit under the Loan Agreement.

                                   AGREEMENT:

         NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which Debtor  acknowledges,  Debtor and Secured Party
agree as follows:

                                    ARTICLE I

                       COLLATERAL AND SECURED OBLIGATIONS

         1.1 Grant of Security Interest.  Debtor hereby assigns,  transfers, and
pledges to Secured  Party,  and Debtor hereby grants to Secured Party a security
interest   in,   the   following   described   collateral   (collectively,   the
"Collateral"):

     (a) Interest in  Subsidiary.  All ownership  interests of Debtor in [Target
Center],  whether now existing or  hereafter  acquired  and  including,  without
limitation, that certain ____% interest in [Target Center]

     (b) Interest in Acquisition Agreements. All of Debtor's interest and rights
(but not any obligations)  under that certain  [Describe  Acquisition  Documents
Pursuant To Which Target Center Was Acquired and Related Transaction Documents];

                  (c)  Accounts.  All  accounts  and  rights  now  or  hereafter
attributable  to any of the  Collateral  described in (a) and (b)above,  and all
rights of Debtor now or hereafter arising under any agreement  pertaining to the
Collateral  described in (a) and (b) above,  including  without  limitation  all
distributions,   proceeds,  fees,  dividends,  preferences,  payments  or  other
benefits of whatever nature which Debtor is now or may hereafter become entitled
to receive with respect to any Collateral described in (a) and (b) above;

                  (d) Additional  Property.  "Collateral" shall also include the
following  property  (collectively,  the  "Additional  Property")  which  Debtor
becomes  entitled  to receive  or shall  receive  in  connection  with any other
Collateral:  (i) any stock or other  ownership  certificate,  including  without
limitation,  any certificate representing a stock dividend or any certificate in
connection with any recapitalization,  reclassification,  merger, consolidation,
conversion,  sale of assets,  combination,  stock split, reverse stock split, or
spin-off;  (ii) any  option,  warrant,  subscription  or  right,  whether  as an
addition to or in substitution of any other  Collateral;  (iii) any dividends or
distributions  of any kind whatsoever,  whether  distributable in cash, stock or
other property;  (iv) any interest,  premium or principal payments;  and (v) any
conversion or redemption proceeds; and

                  (e) Proceeds.  All proceeds (cash and non-cash) arising out of
the sale, exchange, collection or other disposition of all or any portion of the
Collateral described in (a), (b), (c) or (d) above, including without limitation
proceeds in the form of stock, accounts, chattel paper, instruments,  documents,
goods, inventory and equipment.

The  security  interest in the  Collateral  hereby  granted by Debtor to Secured
Party may sometimes be referred to in this Agreement as the "Security Interest".

         1.2 Obligations.  This Agreement and the Security Interest shall secure
full and punctual payment and performance of the following indebtedness,  duties
and obligations (collectively, the "Obligations"):

                  (a) All liabilities and obligations of Debtor to Secured Party
or  any  subsidiary  of  Secured  Party  (including,   without  limitation,  any
principal,  interest,  fees and other amounts,  and any other obligations) under
and  pursuant to this  Agreement  and/or the  Contribution  Agreement,  the Loan
Agreement,   each   promissory  note  issued  pursuant  to  the  Loan  Agreement
(collectively,  the  "Note"),  and/or any other  contract or  agreement  between
Secured Party (or any of its subsidiaries) and Debtor or any affiliate of Debtor
(collectively,  including the Contribution Agreement, the Loan Agreement and the
Note, the "Other Agreements"); and

                  (b) (i)  all  indebtedness,  obligations  and  liabilities  of
Debtor  and/or any  affiliate of Debtor to Secured  Party or any  subsidiary  of
Secured  Party of any kind or  character,  now  existing or  hereafter  arising,
whether direct, indirect,  related,  unrelated,  fixed, contingent,  liquidated,
unliquidated, joint, several or joint and several, arising from, connected with,
or  related  to the Other  Agreements,  or any  other  document,  agreement,  or
instrument  executed  in  connection  therewith,  (ii) all  accrued  but  unpaid
interest  on  any  of  the  indebtedness  described  in  (i)  above,  (iii)  all
obligations  of Debtor  and/or any  affiliate of Debtor to Secured  Party or any
subsidiary  of Secured  Party  under any  documents  or  agreements  evidencing,
securing,  governing  and/or  pertaining to all or any part of the  indebtedness
described in (i) and (ii) above, (iv) all costs and expenses incurred by Secured
Party or its  subsidiaries in connection with the collection and  administration
of all or any part of the  indebtedness  and obligations  described in (i), (ii)
and (iii) above or the protection or preservation  of, or realization  upon, the
collateral  securing  all or any  part of  such  indebtedness  and  obligations,
including  without  limitation  all  attorneys'  fees,  and  (v)  all  renewals,
extensions, modifications and rearrangements of the indebtedness and obligations
described in (i), (ii), (iii) and (iv) above.

                  (c) All sums now or  hereafter  loaned or  advanced by Secured
Party or any  subsidiary  of Secured Party to Debtor or any affiliate of Debtor,
or expended by Secured  Party or its  subsidiaries  for the account of Debtor or
its  affiliates or otherwise  owing by Debtor or its affiliates to Secured Party
or its subsidiaries,  in respect of the Obligations, and all other sums expended
or  advanced  by  Secured  Party  or its  subsidiaries  pursuant  to any term or
provision of this Agreement or any Other Agreement (i) to collect and/or enforce
the Obligations or (ii) to maintain, protect and preserve the Collateral.

                                   ARTICLE II

       DEBTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO COLLATERAL

         Debtor hereby represents and warrants to Secured Party as follows:

         2.1 Ownership of Collateral.  Debtor has good and  marketable  title to
the Collateral  free and clear of any liens,  security  interests,  shareholders
agreement, calls, charge, or encumbrance,  except for this Security Interest. No
financing  statement or other  instrument  similar in effect covering all or any
part of the  Collateral is on file in any recording  office,  except as may have
been filed in favor of Secured Party relating to this Agreement.

         2.2  Power  &  Authority.  Debtor  has the  lawful  right,  power,  and
authority  to grant the Security  Interest in the  Collateral.  This  Agreement,
together  with all filings and other  actions  necessary or desirable to perfect
and protect such security interest,  which have been duly taken,  create a valid
and perfected first priority  security  interest in the Collateral  securing the
payment and performance of the Obligations.

         2.3 No  Agreements.  The  Interests  are not  subject  to any  right of
redemption,  or any  call or put  options,  voting  trust,  proxy,  shareholders
agreement,  right of first  refusal,  or any other  document or agreement  which
would in any way impair or adversely affect this Security Interest or the rights
of Secured Party under this Agreement.

         2.4  Securities.  Any  certificates  evidencing  securities  pledged as
Collateral  are valid and  genuine  and have not been  altered.  All  securities
pledged as Collateral have been duly  authorized and validly  issued,  are fully
paid and  non-assessable,  and were not issued in  violation  of the  preemptive
rights of any party or of any agreement by which Debtor or the issuer thereof is
bound.  No  restrictions  or  conditions  exist with  respect to the transfer or
voting of any securities pledged as Collateral.

                                   ARTICLE III

                  DEBTOR'S OTHER REPRESENTATIONS AND WARRANTIES

         3.1 Solvency of Debtor.  As of the date hereof,  (i) Debtor is and will
be solvent;  (ii) the fair saleable  value of Debtor's  assets  exceeds and will
continue  to exceed  Debtor's  liabilities  (both fixed and  contingent);  (iii)
Debtor  has  and  will  have  sufficient  capital  to  satisfy  all of  Debtor's
obligations as they become due; (iv) no receiver, trustee, or custodian has been
appointed for, or taken possession of, all or substantially all of the assets of
Debtor,  either in a  proceeding  brought by Debtor or in a  proceeding  brought
against Debtor; (v) Debtor is not the subject of a petition for relief under the
United States  Bankruptcy Code or any similar  federal or state  insolvency law,
including without limitation a petition filed by Debtor or a petition filed by a
third party seeking relief against  Debtor;  and (vi) Debtor has no intention of
filing a petition  for relief  under the United  States  Bankruptcy  Code or any
similar  federal  or state  insolvency  law,  or of  seeking  any other  form of
creditor relief,  within the two-year period  immediately  following the date of
this Agreement.

         3.2  Authority and  Compliance.  Debtor has full power and authority to
enter into this Agreement. Debtor has full power and authority to enter into and
perform  its  obligations  under each  Other  Agreement.  No further  consent or
approval is required as a condition  to the  validity of this  Agreement  or any
Other Agreement.  Debtor is in compliance with all applicable laws,  ordinances,
statutes, orders, regulations,  judgments, writs, or decrees of any governmental
entity to which it is subject.

         3.3  Binding  Agreement.   This  Agreement  and  each  Other  Agreement
constitute valid and legally binding  obligations of Debtor,  in accordance with
their terms, subject to the applicable bankruptcy,  insolvency,  reorganization,
moratorium, and similar laws affecting creditors' rights generally.

         3.4 Litigation.  There are no proceedings  pending or, to the knowledge
of Debtor,  threatened before any court or  administrative  agency which will or
may have a material adverse effect on the financial  condition of Debtor or upon
Debtor's  ability to perform its  obligations  under this Agreement or any Other
Agreement.

         3.5 No Conflicting Agreements.  There are no provisions of any existing
agreement,  mortgage,  indenture or contract  binding on Debtor or affecting its
property,  which  would  conflict  with or in any  way  prevent  the  execution,
delivery, or carrying out of the terms of this Agreement or any Other Agreement.

         3.6  Ownership  of  Assets.  Debtor  has  good  and  full  title to the
Collateral,  and the  Collateral  is owned  free and  clear of  liens,  charges,
claims, security interests, and other encumbrances.

     3.7 Taxes. Debtor has filed all tax returns required to be filed by Debtor.

                                   ARTICLE IV

                  DEBTOR'S COVENANTS WITH RESPECT TO COLLATERAL

         Debtor  covenants  and agrees  that from the date  hereof and until the
payment  and  performance  in  full  of the  Obligations  unless  Secured  Party
otherwise consents in writing:

         4.1  Delivery of  Instruments  and/or  Certificates.  Contemporaneously
herewith,   Debtor  covenants  and  agrees  to  deliver  to  Secured  Party  any
certificates,   documents,   or  instruments   representing  or  evidencing  the
Collateral,  with Debtor's  endorsement  thereon and/or  accompanied by property
instruments of transfer and assignment duly executed in blank with, if requested
by Secured Party,  signatures  guaranteed by a member or member  organization in
good standing of an authorized Securities Transfer Agents Medallion Program, all
in form and substance satisfactory to Secured Party.

         4.2  Further  Assurances.   Debtor  will   contemporaneously  with  the
execution  hereof  and from  time to time  thereafter  at its  expense  promptly
execute and deliver all further  instruments  and documents and take all further
action  necessary or  appropriate or that Secured Party may request in order (i)
to perfect and protect the security  interest created or purported to be created
hereby and the first priority of such security interest,  (ii) to enable Secured
Party to exercise  and enforce its rights and  remedies  hereunder in respect of
the  Collateral,  and (iii) to otherwise  effect the purposes of this Agreement,
including  without  limitation:  (A)  executing  and  filing  any  financing  or
continuation  statements,  or any  amendments  thereto;  (B)  obtaining  written
confirmation  from the issuer of any  securities  pledged as  Collateral  of the
pledge of such securities,  in form and substance satisfactory to Secured Party;
(C)  cooperating  with Secured Party in registering the pledge of any securities
pledged as Collateral with the issuer of such securities;  (D) delivering notice
of Secured Party's security interest in any securities  pledged as Collateral to
any securities or financial  intermediary,  clearing  corporation or other party
required by Secured Party, in form and substance  satisfactory to Secured Party;
and  (E)  obtaining  written  confirmation  of  the  pledge  of  any  securities
constituting Collateral from any securities or financial intermediary,  clearing
corporation  or other party  required by Secured  Party,  in form and  substance
satisfactory to Secured Party.

         4.3 Additional Property. All Additional Property, as defined in Section
1.1(c)  above,  received by Debtor shall be received in trust for the benefit of
Secured Party.  All Additional  Property and all  certificates  or other written
instruments or documents  evidencing and/or representing the Additional Property
that is  received  by Debtor,  together  with such  instruments  of  transfer as
Secured Party may request,  shall  immediately be delivered to or deposited with
Secured Party and held by Secured  Party as  Collateral  under the terms of this
Agreement.  If the  Additional  Property  received  by Debtor and  delivered  to
Secured  Party  pursuant  to this  Section  shall  be  shares  of stock or other
securities,  such shares of stock or other  securities shall be duly endorsed in
blank or  accompanied  by proper  instruments  of transfer and  assignment  duly
executed in blank with, if requested by Secured Party,  signatures guaranteed by
a member or member  organization  in good standing of an  authorized  Securities
Transfer Agents  Medallion  Program,  all in form and substance  satisfactory to
Secured  Party.  Secured  Party  shall  be  deemed  to  have  possession  of any
Collateral in transit to Secured Party or its agent.

         4.4  Sale,  Transfer,  Encumbrance.  Debtor  will not  sell,  transfer,
mortgage,  or otherwise  encumber any  Collateral or impair the value thereof in
any manner without  Secured  Party's prior written  consent,  including  without
limitation by purchase, lease, barter, trade, payment deferral, or the creation,
assumption  or guarantee of  indebtedness  or other  lending of credit.  Secured
Party's written consent to any sale,  mortgage,  transfer,  or encumbrance shall
not be construed to be a waiver of this  provision in respect to any  subsequent
proposed sale, mortgage, transfer, or encumbrance.

         4.5 Liens. Neither Debtor nor any person acting on Debtor's behalf has,
or shall have any right, power, or authority to and shall not create,  incur, or
permit to be placed or  imposed,  upon the  Collateral,  any lien of any type or
nature whatsoever, other than the liens in favor of Secured Party.

         4.6 Matters or  Occurrences  Affecting  Collateral  or this  Agreement.
Debtor will promptly  notify Secured Party of any and all matters or occurrences
that may have a material adverse effect on the status or value of the Collateral
or this Agreement,  including  without  limitation the occurrence of an Event of
Default,  or an event  which,  with giving of notice or lapse of time,  or both,
would constitute an Event of Default.

     4.7  Agreements  Pertaining to  Collateral.  Debtor will not enter into any
type of contract or agreement  pertaining to any of the Collateral or in any way
transfer any voting rights pertaining to the Collateral to any person or entity.

         4.8 Dilution of Ownership.  As to any securities pledged as Collateral,
Debtor  will not  consent to or approve of the  issuance  of (i) any  additional
interests  or  shares  of any  class  of  securities  of such  issuer,  (ii) any
instrument  convertible  voluntarily by the holder thereof or automatically upon
the occurrence or non-occurrence of any event or condition into, or exchangeable
for, any such  securities,  or (iii) any warrants,  options,  contracts or other
commitments  entitling any third party to purchase or otherwise acquire any such
securities.

         4.9  Restrictions  on  Securities.  Debtor  will  not  enter  into  any
agreement  creating,  or otherwise permit to exist, any restriction or condition
upon the transfer,  voting or control of any  securities  pledged as Collateral,
except as consented to in writing by Secured Party. As to any securities pledged
as collateral, Debtor will not consent to or approve of any stock split, reverse
stock  split,  stock  dividend,  reclassification,   or  other  similar  act  or
transaction  regarding the Interests  unless  consented to in writing by Secured
Party.

                                    ARTICLE V

                         DEBTOR'S AFFIRMATIVE COVENANTS

         Until payment and performance of all Obligations,  Debtor covenants and
agrees  that it shall  (i)  promptly  advise  Secured  Party in  writing  of any
litigation  filed against Debtor and of any condition,  event or act which comes
to its attention that would or might have a material  adverse effect on Debtor's
financial  condition  or on Debtor's  ability to perform the  Obligations,  (ii)
except  as  expressly   contemplated  in  Section  4.3(e)(i)  and  (ii)  of  the
Contribution  Agreement,  pay all available funds toward  repayment of the Note,
regardless  of whether  payment of such amounts  exceeds the  required  payments
under  the Note and  (iii) if  Borrower  uses any  proceeds  from the  Note,  to
acquire,  directly or indirectly,  a one hundred  percent  (100%)  interest in a
Target  Center,  Borrower  shall cause such Target  Center to execute a security
agreement, acceptable in form and substance to Lender, granting to Lender or one
of Lender's subsidiaries the highest available priority security interest in all
of the assets of such Target Center.

                                   ARTICLE VI

                               NEGATIVE COVENANTS

         Until payment and performance of all Obligations,  Debtor covenants and
agrees that Debtor will not, without the prior written consent of Secured Party:

     6.1 Liens. Grant, suffer, or permit liens on, or security interests in, the
Collateral.

         6.2  Violate  Other  Covenants.  Violate  or fail to  comply  with  any
covenants  or  agreements  regarding  other  debt  which  will or would with the
passage  of time or upon  demand  cause the  maturity  of any  other  debt to be
accelerated.

                                   ARTICLE VII

                              DEFAULT AND REMEDIES

     7.1 Events of Default.  An Event of Default  (herein so called) shall exist
if any one or more of the following events shall occur:


                  (a) The  failure  of Debtor to pay any amount  required  to be
paid  under  the  Loan  Agreement  (including,  without  limitation,  principal,
interest and fees due  thereunder),  or any other amount which Debtor may now or
hereafter  owe to Secured Party under any Other  Agreement or otherwise,  within
ten (10) calendar days after such amount is due;

                  (b) The  failure  of Debtor to pay any  Obligation  after such
amount is due (and, if applicable  under the terms of any contractual  agreement
creating or governing such  Obligation,  after the expiration of any cure period
expressly required);

     (c) Debtor's breach of a covenant in this Agreement or any other failure to
perform its obligations under this Agreement or any Other Agreement;

                  (d) Any  representation  or  warranty  made by  Debtor in this
Agreement or any Other Agreement between Debtor and Secured Party shall be false
or materially misleading,  as determined in the reasonable discretion of Secured
Party;

                  (e) Any event of default  shall  occur  under the terms of the
Loan  Agreement  and shall not be cured within the time  expressly  provided for
with respect thereto in the Loan Agreement;

                  (f) If Debtor or any other party  obligated to pay any portion
of the  Obligations:  (i)  becomes  insolvent,  or makes a transfer  in fraud of
creditors,  or makes an assignment  for the benefit of  creditors,  or admits in
writing its inability to pay its debts as they become due; (ii) generally is not
paying its debts as such debts  become due and  Secured  Party,  in good  faith,
determines that such event or condition  could lead to a material  impairment of
the Collateral, or any part thereof, or of any other payment security for any of
the Obligations;  (iii) has a receiver,  trustee or custodian  appointed for, or
take possession of, all or substantially  all of the assets of such party or any
of the  Collateral,  either  in a  proceeding  brought  by  such  party  or in a
proceeding  brought against such party and such appointment is not discharged or
such  possession  is not  terminated  within sixty (60) days after the effective
date thereof or such party  consents to or  acquiesces  in such  appointment  or
possession;  (iv) files a petition for relief under the United States Bankruptcy
Code or any other present or future federal or state  insolvency,  bankruptcy or
similar laws (all of the foregoing  hereinafter  collectively called "Applicable
Bankruptcy  Law") or an  involuntary  petition for relief is filed  against such
party under any Applicable  Bankruptcy Law and such involuntary  petition is not
dismissed  within  sixty  (60) days after the  filing  thereof,  or an order for
relief naming such party is entered under any Applicable  Bankruptcy Law, or any
composition, rearrangement, extension, reorganization or other relief of debtors
now or hereafter  existing is requested or consented to by such party; (v) fails
to  have  discharged  within  a  period  of  sixty  (60)  days  any  attachment,
sequestration  or similar writ levied upon,  or any claim  against or affecting,
any  property  of such party;  or (vi) fails to pay within  ninety (90) days any
final money judgment against such party; or

                  (g) The issuer of any securities constituting Collateral files
a petition  for relief  under any  Applicable  Bankruptcy  Law,  an  involuntary
petition  for  relief is filed  against  any such  issuer  under any  Applicable
Bankruptcy Law and such involuntary petition is not dismissed within thirty (30)
days after the filing thereof,  or an order for relief naming any such issuer is
entered under any Applicable Bankruptcy Law.

     7.2 Secured Party's Remedies. Upon the occurrence of an Event of Default:

                  (a) Secured Party may declare the Obligations in whole or part
immediately due and may enforce payment and performance of the same and exercise
any rights under the Texas UCC,  rights and remedies of Secured Party under this
Agreement, or otherwise.

                  (b) Secured  Party may, at Secured  Party's  option and at the
expense of Debtor,  either in Secured Party's own right or in the name of Debtor
and in the same manner and to the same extent that Debtor  might  reasonably  so
act  if  this  Agreement  had  not  been  made:  (i) do  all  things  requisite,
convenient,  or  necessary  to enforce the  performance  and  observance  of all
rights,  remedies and privileges of Debtor arising from the  Collateral,  or any
part thereof,  including without limitation compromising,  waiving, excusing, or
in any manner releasing or discharging any obligation of any party to or arising
from the Collateral;  (ii) take possession of the books, papers,  chattel paper,
documents of title, and accounts of Debtor,  wherever  located,  relating to the
Collateral; (iii) sue or otherwise collect and receive money attributable to the
Collateral;  and (iv) exercise any other lawfully  available powers or remedies,
and do all other things  which  Secured  Party deems  requisite,  convenient  or
necessary  or which the  Secured  Party  deems  proper to protect  the  Security
Interest.

                  (c) Secured Party may foreclose  this  Agreement in the manner
now or  hereafter  provided  or  permitted  by law and may upon such  reasonable
notification  prior thereto as may be required by applicable  law (Debtor hereby
agreeing  that ten  days'  notice is  commercially  reasonable),  sell,  assign,
transfer,  or otherwise  dispose of the Collateral at public or private sale, in
whole  or in  part,  and  Secured  Party  may,  in its own  name or as  Debtor's
attorney-in-fact  effectively  assign and transfer the  Collateral,  or any part
thereof,   absolutely,  and  execute  and  deliver  all  necessary  assignments,
conveyances,  bills of sale, and other  instruments with power to substitute one
or more persons or  corporations  with like power.  Any such  foreclosure  sale,
assignment,  transfer,  or other  disposition  shall, to the extent permitted by
law,  be a  perpetual  bar,  both at law and in equity,  against  Debtor and all
persons and corporations  lawfully  claiming by or through or under Debtor.  Any
such foreclosure sale may be adjourned from time to time. Upon any sale, Secured
Party may bid for and purchase the  Collateral,  or any part  thereof,  and upon
compliance with the terms of sale may hold,  retain,  possess and dispose of the
Collateral, in its absolute right without further accountability.  Secured Party
shall have the right to be  credited  on the  amount of its bid a  corresponding
amount of the Obligations as of the date of such sale.

                  (d) If, in the opinion of Secured Party, there is any question
that a public sale or  distribution  of any Collateral will violate any state or
federal  securities  law,  Secured  Party  (i) may  offer  and  sell  securities
privately to purchasers who will agree to take them for investment  purposes and
not with a view to distribution  and who will agree to imposition of restrictive
legends on the  certificates  representing  the security,  or (ii) may sell such
securities in any type of offering  which  complies  with, or is exempt from the
registration  requirements  of, the  Securities  Act of 1933 and any  applicable
state  securities laws, and no sale so made in good faith by Secured Party shall
be deemed to be not "commercially reasonable" because so made.

                  (e)  Not  in  limitation  of  any  other   provision  of  this
Agreement,  Secured  Party shall have all rights and remedies of a secured party
under the Texas UCC.

         7.3  Application  of Proceeds.  Secured Party may apply the proceeds of
any foreclosure  sale hereunder or from any other  permitted  disposition of the
Collateral  or any part  thereof as  follows:  (a) first,  to the payment of all
reasonable  costs and expenses of any foreclosure  and collection  hereunder and
all proceedings in connection  therewith,  including reasonable attorneys' fees;
(b) then, to the  reimbursement of Secured Party for all  disbursements  made by
Secured Party for taxes,  assessments or liens superior to the Security Interest
and  which  Secured  Party  shall  deem  expedient  to  pay;  (c)  then,  to the
reimbursement of Secured Party of any other  disbursements made by Secured Party
in accordance with the terms hereof or under the  Contribution  Agreement or any
Other  Agreement;  (d)  then,  to or among the  amounts  of fees,  interest  and
principal then owing and unpaid in respect of the Obligations,  in such priority
as Secured Party may determine in its discretion;  and (e) the remainder of such
proceeds,  if  any,  shall  be  paid  to  Debtor.  If  such  proceeds  shall  be
insufficient to discharge the entire  Obligations,  Secured Party shall have any
other available legal recourse  against Debtor under, or for the performance of,
the  Contribution  Agreement and any Other Agreement  between Debtor and Secured
Party,  for the deficiency,  together with interest  thereon at the maximum rate
permitted under applicable law.

         7.4  Enforcement  of  Obligations.  Nothing in this Agreement or in any
other  document  or  agreement  shall  affect or impair  the  unconditional  and
absolute right of Secured Party to enforce the  Obligations as and when the same
shall become due in accordance with the terms of any Other Agreement.

                                  ARTICLE VIII

                             RIGHTS OF SECURED PARTY

         8.1  Subrogation.  Upon the occurrence of an Event of Default,  Secured
Party,  at its  election,  may  subrogate  to all of the  interest,  rights  and
remedies  of the  Debtor,  in respect  to any of the  Collateral  or  agreements
pertaining thereto.

         8.2 Secured Party  Appointed  Attorney-in-Fact.  Debtor hereby appoints
Secured Party as  attorney-in-fact  of Debtor,  with full authority in the place
and stead of Debtor and in the name of Debtor, Secured Party or otherwise,  from
time to time on Secured  Party's  discretion and upon the occurrence of an Event
of Default, to take any action and to execute any instrument which Secured Party
may deem  necessary or advisable to accomplish  the purposes of this  Agreement,
including without  limitation:  (a) to ask, demand,  collect,  sue for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;  (b) to receive,  endorse, and
collect  any  drafts or other  instruments,  documents  and  chattel  paper,  in
connection  with clause (a) of this  Section 8.2; (c) to file any claims or take
any action or institute any proceeding which Secured Party may deem necessary or
desirable for the  collection  of any of the  Collateral or otherwise to enforce
the rights of Secured Party against any of the Collateral; and (d) to assign and
transfer the  Collateral,  or any part  thereof,  absolutely  and to execute and
deliver  endorsements,   assignments,  conveyances,  bills  of  sale  and  other
instruments  with power to substitute  one or more persons or  corporation  with
like power.

         8.3  Performance  by Secured  Party.  If Debtor  fails to  perform  any
agreement  contained  herein,  Secured  Party may itself  perform,  or cause the
performance  of, such  agreement,  and the reasonable  expenses of Secured Party
incurred in connection  therewith  shall be payable by Debtor under Section 8.8.
In no  event,  however,  shall  Secured  Party  have any  obligation  or  duties
whatsoever to perform any covenant or agreement of Debtor contained herein,  and
any such performance by Secured Party shall be wholly discretionary with Secured
Party.

         8.4 Duties of Secured  Party.  The powers  conferred upon Secured Party
hereunder  are solely to protect its  interest in the  Collateral  and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any  Collateral  in its  possession  and the  accounting  for money  actually
received by it hereunder,  Secured Party shall have no duty as to any Collateral
or as to the taking of any  necessary  steps to preserve  rights  against  prior
parties or any other rights  pertaining to any Collateral.  Without limiting the
generality of the foregoing,  Secured Party shall not have any obligation,  duty
or  responsibility  to do any of the  following:  (a) ascertain any  maturities,
calls,  conversions,  exchanges,  offers, tenders or similar matters relating to
the  Collateral or informing  Debtor with respect to any such matters;  (b) fix,
preserve  or  exercise  any  right,  privilege  or option  (whether  conversion,
redemption or otherwise) with respect to the Collateral; (c) collect any amounts
payable  in  respect  of the  Collateral;  (d)  sell all or any  portion  of the
Collateral,  for any reason;  or (e) hold the Collateral for or on behalf of any
party other than Debtor.

         8.5 No  Liability  of Secured  Party.  Neither the  acceptance  of this
Agreement by Secured Party,  nor the exercise of any rights hereunder by Secured
Party,  shall be construed in any way as an  assumption  by Secured Party of any
obligations,  responsibilities,  or duties of Debtor arising in connection  with
the  Collateral  assigned  hereunder  or  otherwise  bind  Secured  Party to the
performance of any  obligations  respecting the  Collateral,  it being expressly
understood  that Secured  Party shall not be obligated to perform,  observe,  or
discharge  any  obligation,  responsibility,  duty,  or  liability  of Debtor in
respect of any of the Collateral,  including without limitation  appearing in or
defending any action, expending any money or incurring any expense in connection
therewith.  TO THE FULLEST EXTENT  PERMITTED BY APPLICABLE LAW, DEBTOR SHALL AND
DOES AGREE TO INDEMNIFY, PROTECT, DEFEND AND HOLD HARMLESS SECURED PARTY AND ITS
SUBSIDIARIES,  AND EACH OF THEIR OFFICERS, DIRECTORS,  REPRESENTATIVES,  AGENTS,
EMPLOYEES,  LENDERS,  SUCCESSORS AND ASSIGNS,  FROM AND AGAINST ALL LIABILITIES,
CLAIMS, DAMAGES,  LOSSES, FINES, PENALTIES,  CAUSES OF ACTIONS, SUITS, JUDGMENTS
AND EXPENSES (INCLUDING COURT COSTS,  ATTORNEY'S FEES AND COST OF INVESTIGATION)
OF ANY  NATURE,  KIND OR  DESCRIPTION  OF ANY  PERSON  OR  ENTITY,  DIRECTLY  OR
INDIRECTLY,  ARISING OUT OF, CAUSED BY OR RESULTING  FROM (IN WHOLE OR IN PART),
ANY ACT OR  OMISSION  OF SECURED  PARTY,  OR ANYONE  ACTING ON BEHALF OF SECURED
PARTY,  IN CONNECTION  WITH THE  COLLATERAL,  INCLUDING  WITHOUT  LIMITATION ANY
MARKET FLUCTUATIONS IN THE COLLATERAL AS A RESULT OF SECURED PARTY'S SALE OF, OR
FAILURE TO SELL, THE INTERESTS AT ANY  PARTICULAR  TIME WHEN IT HAS THE RIGHT TO
DO  SO.  THE  FOREGOING  INDEMNITY  SHALL  SURVIVE  THE  EXPIRATION  OR  EARLIER
TERMINATION OF THIS AGREEMENT.

         8.6 Right of Secured Party to Defend Action Affecting Security. Secured
Party  may,  at the  expense  of  Debtor,  appear in and  defend  any  action or
proceeding at law or in equity  purporting to affect  Secured  Party's  Security
Interest under this Agreement.

         8.7 Right of  Secured  Party to Prevent  or Remedy  Default.  If Debtor
shall fail to perform any of the covenants,  conditions and agreements  required
to be performed and observed by Debtor under any Other Agreement,  or in respect
of the Collateral (subject to any applicable default cure period), Secured Party
(a) may but  shall not be  obligated  to take any  action  Secured  Party  deems
necessary  or  desirable  to  prevent  or remedy  any such  default by Debtor or
otherwise to protect the Security Interest,  and (b) shall have the absolute and
immediate right to take possession of the Collateral or any part thereof (to the
extent Secured Party has not previously taken  possession) to such extent and as
often as the Secured Party, in its sole discretion, deems necessary or desirable
in order to prevent  or to cure any such  default by  Debtor,  or  otherwise  to
protect the security of this Agreement. Secured Party may advance or expend such
sums of money for the account of Debtor as Secured Party in its sole  discretion
deems necessary for any such purpose.

         8.8 Secured Party's Expenses. All reasonable advances, costs, expenses,
charges and attorneys' fees which Secured Party may make, pay or incur under any
provision  of this  Agreement  for the  protection  of its  security  or for the
enforcement of any of its rights hereunder,  including,  without limitation,  in
foreclosure  proceedings commenced and subsequently  abandoned or in any dispute
or litigation in which Secured Party or the holder of any of the Obligations may
become  involved  by reason of or  arising  out of any  Other  Agreement  or the
Collateral,  shall be a part of the  Obligations  and shall be paid by Debtor to
Secured  Party,  upon demand,  and shall bear interest until paid at the maximum
rate of interest  permitted by applicable law, from the date incurred by Secured
Party until repaid by Debtor.

         8.9. Convertible  Collateral.  Secured Party may present for conversion
any  Collateral  which is  convertible  into any other  instrument or investment
security or a  combination  thereof with cash,  but Secured Party shall not have
any duty to present for conversion any Collateral  unless it shall have received
from Debtor  detailed  written  instructions to that effect at a time reasonably
far in advance of the final conversion date to make such conversion possible.

         8.10 Secured Party's Right of Set-Off.  Upon the happening of any event
entitling  Secured  Party to pursue any remedy  provided  herein,  or if Secured
Party shall be served with garnishment process in which Debtor shall be named as
defendant,  whether or not Debtor  shall be in  default  hereunder  at the time,
Secured Party may, but shall not be required to, set-off any indebtedness  owing
by  Secured  Party  to  Debtor  against  any of the  Obligations  without  first
resorting to the security hereunder and without prejudice to any other rights or
remedies of Secured Party or its Security Interest.

         8.11 Remedies.  No right or remedy herein  reserved to Secured Party is
intended to be exclusive  of any other right or remedy,  but each and every such
remedy shall be cumulative,  not in lieu of, but in addition to any other rights
or remedies given under this Agreement and all other security documents. Any and
all of Secured  Party's  rights and remedies may be exercised  from time to time
and as often as such exercise as deemed necessary or desirable by Secured Party.

         8.12 Debtor's Waivers.  Debtor waives notice of the creation,  advance,
increase,  existence,  extension,  or  renewal  of, and of any  indulgence  with
respect to, the  Obligations;  waives notice of intent to accelerate,  notice of
acceleration,  notice  of  intent  to  demand,  presentment,  demand,  notice of
dishonor,  and  protest;   waives  notice  of  the  amount  of  the  Obligations
outstanding  at any time,  notice of any change in  financial  condition  of any
person liable for the  Obligations  or any part thereof,  notice of any Event of
Default,  and all other  notices  respecting  the  Obligations;  and agrees that
maturity of the Obligations  and any part thereof may be accelerated,  extended,
or renewed one or more times by Secured Party in its discretion,  without notice
to Debtor.

         8.13 Other Parties and Other Collateral.  No renewal or extension of or
any other  indulgence  with respect to the  Obligations or any part thereof,  no
release  of any  security,  no  release  of any  person  (including  any  maker,
endorser,  guarantor,  or  surety)  liable  on  the  Obligations,  no  delay  in
enforcement  of payment,  and no delay or admission or lack of diligence or care
in exercising any right or power with respect to the Obligations or any security
therefor  or  guaranty  thereof or under this  Agreement  shall in other  manner
impair  or affect  the  rights  of  Secured  Party  under  the law,  under  this
Agreement,  or under any other  document or  agreement  pertaining  to the other
security for the  Obligations,  before  foreclosing  upon the Collateral for the
purpose of paying the Obligations.  Debtor waives any right to the benefit of or
to require or control application of any other security or proceeds thereof, and
Debtor  agrees that Secured  Party shall have no duty or obligation to Debtor to
apply to the Obligations any such other security or proceeds thereof.

                                   ARTICLE IX

                                  MISCELLANEOUS

     9.1 Terms  Commercially  Reasonable.  The terms of this Agreement  shall be
deemed commercially reasonable within the meaning of the Texas UCC.

         9.2 Notices.  Any notices or demands  required or permitted to be given
hereunder  shall be  deemed  sufficiently  given if in  writing  and  personally
delivered or mailed (with all postage and charges prepaid), addressed to Secured
Party or to Debtor their respective  addresses set forth below, or at such other
address as the above parties may from time to time  designate by written  notice
to the other given in  accordance  with this Section  9.2.  Any such notice,  if
personally  delivered or  transmitted  by telex or telegram,  shall be deemed to
have been given on the date so delivered or transmitted or, if mailed, be deemed
to have been given on the day after such  notice is placed in the United  States
mail in accordance with this Section 9.2.

                  Secured Party:       1301 Capital of Texas Hwy., Suite C-300
                                       Austin, Travis County, Texas 78746
                                       Attn: President

                  with copy to:        Timothy L. LaFrey, Esq.
                                       Akin, Gump, Strauss, Hauer & Feld, L.L.P.
                                       1900 Frost Bank Plaza
                                       816 Congress Avenue
                                       Austin, Texas 78701

                  Debtor:              Prime/BDR Acquisition, L.L.C.
                                       1301 Capital of Texas Hwy., Suite C-300
                                       Austin, Travis County, Texas 78746
                                       Attn: President

         9.3 Parties Bound.  Secured Party's rights under this Agreement and the
Security Interest shall inure to the benefits of its successors and assigns, and
in the event of any  assignment  or  transfer of any of the  Obligations  or the
Collateral,  Secured  Party  thereafter  shall  be  fully  discharged  from  any
responsibility  with respect to the Collateral so assigned or  transferred,  but
Secured  Party shall  retain all rights and powers  hereby given with respect to
any of the  Obligations  or  Collateral  not so  assigned  or  transferred.  All
representations, warranties, and agreements of Debtor if more than one are joint
and several, and all shall be binding upon the personal representatives,  heirs,
successors, and assigns of Debtor.

         9.4 Waiver.  No delay of Secured Party in exercising any power or right
shall operate as a waiver thereof;  nor shall any single or partial  exercise of
any power or right preclude other or further exercise thereof or the exercise of
any other power or right.  No waiver by Secured Party of any right  hereunder of
any default by Debtor shall be binding upon Secured Party unless in writing, and
no failure by Secured  Party to exercise any power or right  hereunder or waiver
of any  default  by Debtor  shall  operate  as a waiver of any other or  further
exercise of such right or power of any further default.

         9.5 Agreement Continuing.  This Agreement shall constitute a continuing
agreement,  applying to all future as well as existing transactions,  whether or
not of the  character  contemplated  at the date of this  Agreement,  and if all
transactions between Secured Party and Debtor shall be closed at any time, shall
be equally  applicable to any new  transactions  thereafter.  Provisions of this
Agreement,  unless  by their  terms  exclusive,  shall be in  addition  to those
contained in any Other Agreement.

         9.6 Definitions. Unless the context indicated otherwise, definitions in
the Texas Business and Commerce Code ("Texas UCC") apply to words and phrases in
this Agreement; if Texas UCC definitions conflict, Chapter 9 definitions apply.

         9.7 Miscellaneous. In this Agreement, whenever the context so requires,
the neuter gender  includes the masculine and feminine,  and the singular number
includes  the plural and vice  versa.  The  headings  of  paragraphs  herein are
inserted only for convenience and shall in no way define,  describe or limit the
scope of intent of any  provisions  of this  Agreement.  No  change,  amendment,
modification,  cancellation,  or  discharge of any  provision of this  Agreement
shall be valid unless consented to in writing by Secured Party.

         9.8 Assignment of Secured  Party's  Interest.  Secured Party shall have
the right to assign all or any portion of its rights in this  Agreement  without
approval  or  consent.  Debtor  acknowledges  that  Lender  intends  to  make  a
collateral  assignment of its rights under this Agreement for the benefit of one
or more of its  lenders.  Debtor may not  assign  this  Agreement  or any of its
rights or  obligations  hereunder  without the express prior written  consent of
Secured Party in each instance.

     9.9 Applicable  Laws.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF TEXAS AND THE  APPLICABLE  LAWS OF THE
UNITED STATES OF AMERICA.

     9.10 ENTIRE AGREEMENT. THIS AGREEMENT, THE LOAN AGREEMENT, THE NOTE AND THE
CONTRIBUTION AGREEMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE  CONTRADICTED BY EVIDENCE OF PRIOR,  CONTEMPORANEOUS,  OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL  AGREEMENTS  BETWEEN THE
PARTIES.

                            [Signature page follows]


<PAGE>


S-1



                                SIGNATURE PAGE TO

                                 ASSIGNMENT AND

                               SECURITY AGREEMENT

         EXECUTED this ____ day of __________, 1999.


DEBTOR:                                    Prime/BDR Acquisition, L.L.C.

                                           By:_________________________________

                                           Printed Name:________________________

                                           Title:_______________________________


SECURED PARTY:                             Prime Medical Operating, Inc.

                                           By:_________________________________

                                           Printed Name:________________________

                                           Title:_______________________________



<PAGE>
                                   EXHIBIT-G4

                                         ASSIGNMENT AND SECURITY AGREEMENT

         THIS ASSIGNMENT AND SECURITY  AGREEMENT (this  "Agreement") is made and
entered into as of the 1st day of September,  1999, by and between Prime Medical
Operating,  Inc., a Delaware  corporation  (the  "Secured  Party") and Prime/BDR
Acquisition, L.L.C., a Delaware limited liability company (the "Debtor").

                                                     RECITALS:

         A. Debtor and Secured Party have  executed and  delivered  that certain
Contribution  Agreement  dated  effective  September 1, 1999,  between and among
Debtor,  Secured Party,  Prime Medical Services,  Inc., a Delaware  corporation,
Prime/BDEC  Acquisition,  L.L.C., a Delaware limited liability  company,  Barnet
Dulaney Eye Center, P.L.L.C., an Arizona professional limited liability company,
LASIK Investors L.L.C., a Delaware limited liability company,  David D. Dulaney,
M.D., Ronald W. Barnet, M.D., and Mark Rosenberg (the "Contribution Agreement"),
and that certain Loan Agreement, dated September 1, 1999 (the "Loan Agreement"),
pursuant to which  Secured  Party agrees to make certain  loans to Debtor on the
terms and subject to the conditions provided therein.

          B. Secured Party has requested  that Debtor pledge the  Collateral (as
     defined below) to secure certain  obligations and  liabilities  that Debtor
     may now or hereafter have to Secured Party, including,  without limitation,
     any obligations arising under loans made pursuant to the Loan Agreement.

         C. Debtor desires to enter into this Agreement as a material inducement
to Secured Party's extension of credit under the Loan Agreement.

                                                    AGREEMENT:

         NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which Debtor  acknowledges,  Debtor and Secured Party
agree as follows:

                                                     ARTICLE I
                                        COLLATERAL AND SECURED OBLIGATIONS

          1.1 Grant of Security Interest. Debtor hereby assigns,  transfers, and
     pledges  to Secured  Party,  and Debtor  hereby  grants to Secured  Party a
     security interest in, the following described collateral (collectively, the
     "Collateral"): --------------------------

          (a)  Interest in  Subsidiary.  All  ownership  interests  of Debtor in
     Horizon Vision Center, Inc., a Nevada corporation ("Horizon"),  whether now
     existing or hereafter  acquired and  including,  without  limitation,  that
     certain 60% interest in Horizon (the "Interests"). ----------------------



<PAGE>



          (b) Interest in Acquisition  Agreements.  All of Debtor's interest and
     rights  (but  not any  obligations)  under  those  certain  Stock  Purchase
     Agreements  by  and  between  Debtor  and  the   Shareholders  of  Horizon;
     ----------------------------------

          (c) Accounts. All accounts and rights now or hereafter attributable to
     any of the  Collateral  described  in (a) and  (b)above,  and all rights of
     Debtor now or  hereafter  arising  under any  agreement  pertaining  to the
     Collateral described in (a) and (b) above, including without limitation all
     distributions,  proceeds, fees, dividends,  preferences,  payments or other
     benefits of whatever  nature  which Debtor is now or may  hereafter  become
     entitled to receive with respect to any Collateral --------described in (a)
     and (b) above;

                  (d) Additional  Property.  "Collateral" shall also include the
following  property  (collectively,  the  "Additional  Property")  which  Debtor
becomes  entitled  to receive  or shall  receive  in  connection  with any other
Collateral:  (i) any stock or other  ownership  certificate,  including  without
limitation,  any certificate representing a stock dividend or any certificate in
connection with any recapitalization,  reclassification,  merger, consolidation,
conversion,  sale of assets,  combination,  stock split, reverse stock split, or
spin-off;  (ii) any  option,  warrant,  subscription  or  right,  whether  as an
addition to or in substitution of any other  Collateral;  (iii) any dividends or
distributions  of any kind whatsoever,  whether  distributable in cash, stock or
other property;  (iv) any interest,  premium or principal payments;  and (v) any
conversion or redemption proceeds; and

          (e)  Proceeds.  All proceeds  (cash and  non-cash)  arising out of the
     sale,  exchange,  collection or other  disposition of all or any portion of
     the Collateral  described in (a), (b), (c) or (d) above,  including without
     limitation  proceeds  in  the  form  of  stock,  accounts,  chattel  paper,
     instruments, documents, goods, inventory and equipment. --------

The  security  interest in the  Collateral  hereby  granted by Debtor to Secured
Party may sometimes be referred to in this Agreement as the "Security Interest".

          1.2 Obligations. This Agreement and the Security Interest shall secure
     full and punctual  payment and  performance of the following  indebtedness,
     duties and obligations (collectively, the "Obligations"): -----------

                  (a) All liabilities and obligations of Debtor to Secured Party
or  any  subsidiary  of  Secured  Party  (including,   without  limitation,  any
principal,  interest,  fees and other amounts,  and any other obligations) under
and  pursuant to this  Agreement  and/or the  Contribution  Agreement,  the Loan
Agreement,   each   promissory  note  issued  pursuant  to  the  Loan  Agreement
(collectively,  the  "Note"),  and/or any other  contract or  agreement  between
Secured Party (or any of its subsidiaries) and Debtor or any affiliate of Debtor
(collectively,  including the Contribution Agreement, the Loan Agreement and the
Note, the "Other Agreements"); and

                  (b) (i)  all  indebtedness,  obligations  and  liabilities  of
Debtor  and/or any  affiliate of Debtor to Secured  Party or any  subsidiary  of
Secured  Party of any kind or  character,  now  existing or  hereafter  arising,
whether direct, indirect,  related,  unrelated,  fixed, contingent,  liquidated,
unliquidated, joint, several or joint and several, arising from, connected with,
or  related  to the Other  Agreements,  or any  other  document,  agreement,  or
instrument  executed  in  connection  therewith,  (ii) all  accrued  but  unpaid
interest  on  any  of  the  indebtedness  described  in  (i)  above,  (iii)  all
obligations  of Debtor  and/or any  affiliate of Debtor to Secured  Party or any
subsidiary  of Secured  Party  under any  documents  or  agreements  evidencing,
securing,  governing  and/or  pertaining to all or any part of the  indebtedness
described in (i) and (ii) above, (iv) all costs and expenses incurred by Secured
Party or its  subsidiaries in connection with the collection and  administration
of all or any part of the  indebtedness  and obligations  described in (i), (ii)
and (iii) above or the protection or preservation  of, or realization  upon, the
collateral  securing  all or any  part of  such  indebtedness  and  obligations,
including  without  limitation  all  attorneys'  fees,  and  (v)  all  renewals,
extensions, modifications and rearrangements of the indebtedness and obligations
described in (i), (ii), (iii) and (iv) above.

                  (c) All sums now or  hereafter  loaned or  advanced by Secured
Party or any  subsidiary  of Secured Party to Debtor or any affiliate of Debtor,
or expended by Secured  Party or its  subsidiaries  for the account of Debtor or
its  affiliates or otherwise  owing by Debtor or its affiliates to Secured Party
or its subsidiaries,  in respect of the Obligations, and all other sums expended
or  advanced  by  Secured  Party  or its  subsidiaries  pursuant  to any term or
provision of this Agreement or any Other Agreement (i) to collect and/or enforce
the Obligations or (ii) to maintain, protect and preserve the Collateral.

                                   ARTICLE II
       DEBTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO COLLATERAL

         Debtor hereby represents and warrants to Secured Party as follows:

          2.1 Ownership of Collateral.  Debtor has good and marketable  title to
     the  Collateral   free  and  clear  of  any  liens,   security   interests,
     shareholders  agreement,  calls,  charge,  or encumbrance,  except for this
     Security  Interest.  No financing  statement or other instrument similar in
     effect  covering  all or any  part  of the  Collateral  is on  file  in any
     recording  office,  except as may have been filed in favor of Secured Party
     relating to this Agreement. -----------------------

          2.2  Power &  Authority.  Debtor  has the  lawful  right,  power,  and
     authority to grant the Security Interest in the Collateral. This Agreement,
     together  with all filings and other  actions  necessary  or  desirable  to
     perfect and protect  such  security  interest,  which have been duly taken,
     create a valid  and  perfected  first  priority  security  interest  in the
     Collateral  securing  the  payment  and  performance  of  the  Obligations.
     -----------------

          2.3 No  Agreements.  The  Interests  are not  subject  to any right of
     redemption,  or any call or put options, voting trust, proxy,  shareholders
     agreement, right of first refusal, or any other document or agreement which
     would in any way impair or adversely  affect this Security  Interest or the
     rights of Secured Party under this Agreement. -------------

          2.4 Securities.  Any  certificates  evidencing  securities  pledged as
     Collateral are valid and genuine and have not been altered.  All securities
     pledged as Collateral  have been duly  authorized and validly  issued,  are
     fully  paid and  non-assessable,  and were not issued in  violation  of the
     preemptive  rights of any party or of any  agreement by which Debtor or the
     issuer thereof is bound. No  restrictions or conditions  exist with respect
     to  the  transfer  or  voting  of  any  securities  pledged  as  ----------
     Collateral.

                                                    ARTICLE III
                                   DEBTOR'S OTHER REPRESENTATIONS AND WARRANTIES

         3.1 Solvency of Debtor.  As of the date hereof,  (i) Debtor is and will
be solvent;  (ii) the fair saleable  value of Debtor's  assets  exceeds and will
continue  to exceed  Debtor's  liabilities  (both fixed and  contingent);  (iii)
Debtor  has  and  will  have  sufficient  capital  to  satisfy  all of  Debtor's
obligations as they become due; (iv) no receiver, trustee, or custodian has been
appointed for, or taken possession of, all or substantially all of the assets of
Debtor,  either in a  proceeding  brought by Debtor or in a  proceeding  brought
against Debtor; (v) Debtor is not the subject of a petition for relief under the
United States  Bankruptcy Code or any similar  federal or state  insolvency law,
including without limitation a petition filed by Debtor or a petition filed by a
third party seeking relief against  Debtor;  and (vi) Debtor has no intention of
filing a petition  for relief  under the United  States  Bankruptcy  Code or any
similar  federal  or state  insolvency  law,  or of  seeking  any other  form of
creditor relief,  within the two-year period  immediately  following the date of
this Agreement.

          3.2 Authority and  Compliance.  Debtor has full power and authority to
     enter into this  Agreement.  Debtor has full power and  authority  to enter
     into and perform its  obligations  under each Other  Agreement.  No further
     consent or approval is  required  as a  condition  to the  validity of this
     Agreement  or  any  Other  Agreement.  Debtor  is in  compliance  with  all
     applicable laws,  ordinances,  statutes,  orders,  regulations,  judgments,
     writs,  or  decrees  of any  governmental  entity  to which it is  subject.
     ------------------------

          3.3  Binding  Agreement.  This  Agreement  and  each  Other  Agreement
     constitute valid and legally binding  obligations of Debtor,  in accordance
     with  their  terms,  subject  to  the  applicable  bankruptcy,  insolvency,
     reorganization,  moratorium,  and similar laws affecting  creditors' rights
     generally. -----------------

          3.4 Litigation.  There are no proceedings pending or, to the knowledge
     of Debtor,  threatened before any court or administrative agency which will
     or may have a material adverse effect on the financial  condition of Debtor
     or upon Debtor's ability to perform its obligations under this Agreement or
     any Other Agreement. ----------

          3.5 No Conflicting Agreements. There are no provisions of any existing
     agreement,  mortgage,  indenture or contract binding on Debtor or affecting
     its  property,  which  would  conflict  with  or in  any  way  prevent  the
     execution,  delivery, or carrying out of the terms of this Agreement or any
     Other Agreement. -------------------------

          3.6  Ownership  of  Assets.  Debtor  has good  and  full  title to the
     Collateral,  and the Collateral is owned free and clear of liens,  charges,
     claims, security interests, and other encumbrances. -------------------

          3.7 Taxes.  Debtor has filed all tax  returns  required to be filed by
     Debtor.
                                                    ARTICLE IV
                                   DEBTOR'S COVENANTS WITH RESPECT TO COLLATERAL

         Debtor  covenants  and agrees  that from the date  hereof and until the
payment  and  performance  in  full  of the  Obligations  unless  Secured  Party
otherwise consents in writing:

         4.1  Delivery of  Instruments  and/or  Certificates.  Contemporaneously
herewith,   Debtor  covenants  and  agrees  to  deliver  to  Secured  Party  any
certificates,   documents,   or  instruments   representing  or  evidencing  the
Collateral,  with Debtor's  endorsement  thereon and/or  accompanied by property
instruments of transfer and assignment duly executed in blank with, if requested
by Secured Party,  signatures  guaranteed by a member or member  organization in
good standing of an authorized Securities Transfer Agents Medallion Program, all
in form and substance satisfactory to Secured Party.

         4.2  Further  Assurances.   Debtor  will   contemporaneously  with  the
execution  hereof  and from  time to time  thereafter  at its  expense  promptly
execute and deliver all further  instruments  and documents and take all further
action  necessary or  appropriate or that Secured Party may request in order (i)
to perfect and protect the security  interest created or purported to be created
hereby and the first priority of such security interest,  (ii) to enable Secured
Party to exercise  and enforce its rights and  remedies  hereunder in respect of
the  Collateral,  and (iii) to otherwise  effect the purposes of this Agreement,
including  without  limitation:  (A)  executing  and  filing  any  financing  or
continuation  statements,  or any  amendments  thereto;  (B)  obtaining  written
confirmation  from the issuer of any  securities  pledged as  Collateral  of the
pledge of such securities,  in form and substance satisfactory to Secured Party;
(C)  cooperating  with Secured Party in registering the pledge of any securities
pledged as Collateral with the issuer of such securities;  (D) delivering notice
of Secured Party's security interest in any securities  pledged as Collateral to
any securities or financial  intermediary,  clearing  corporation or other party
required by Secured Party, in form and substance  satisfactory to Secured Party;
and  (E)  obtaining  written  confirmation  of  the  pledge  of  any  securities
constituting Collateral from any securities or financial intermediary,  clearing
corporation  or other party  required by Secured  Party,  in form and  substance
satisfactory to Secured Party.

         4.3 Additional Property. All Additional Property, as defined in Section
1.1(d)  above,  received by Debtor shall be received in trust for the benefit of
Secured Party.  All Additional  Property and all  certificates  or other written
instruments or documents  evidencing and/or representing the Additional Property
that is  received  by Debtor,  together  with such  instruments  of  transfer as
Secured Party may request,  shall  immediately be delivered to or deposited with
Secured Party and held by Secured  Party as  Collateral  under the terms of this
Agreement.  If the  Additional  Property  received  by Debtor and  delivered  to
Secured  Party  pursuant  to this  Section  shall  be  shares  of stock or other
securities,  such shares of stock or other  securities shall be duly endorsed in
blank or  accompanied  by proper  instruments  of transfer and  assignment  duly
executed in blank with, if requested by Secured Party,  signatures guaranteed by
a member or member  organization  in good standing of an  authorized  Securities
Transfer Agents  Medallion  Program,  all in form and substance  satisfactory to
Secured  Party.  Secured  Party  shall  be  deemed  to  have  possession  of any
Collateral in transit to Secured Party or its agent.

         4.4  Sale,  Transfer,  Encumbrance.  Debtor  will not  sell,  transfer,
mortgage,  or otherwise  encumber any  Collateral or impair the value thereof in
any manner without  Secured  Party's prior written  consent,  including  without
limitation by purchase, lease, barter, trade, payment deferral, or the creation,
assumption  or guarantee of  indebtedness  or other  lending of credit.  Secured
Party's written consent to any sale,  mortgage,  transfer,  or encumbrance shall
not be construed to be a waiver of this  provision in respect to any  subsequent
proposed sale, mortgage, transfer, or encumbrance.

          4.5 Liens.  Neither  Debtor nor any person  acting on Debtor's  behalf
     has, or shall have any right,  power, or authority to and shall not create,
     incur, or permit to be placed or imposed, upon the Collateral,  any lien of
     any type or nature  whatsoever,  other  than the liens in favor of  Secured
     Party. -----

          4.6 Matters or  Occurrences  Affecting  Collateral or this  Agreement.
     Debtor  will  promptly  notify  Secured  Party  of any and all  matters  or
     occurrences  that may have a material adverse effect on the status or value
     of the  Collateral or this  Agreement,  including  without  limitation  the
     occurrence of an Event of Default, or an event which, with giving of notice
     or  lapse  of  time,  or  both,  would  constitute  an  Event  of  Default.
     -------------------------------------------------------------

          4.7 Agreements  Pertaining to  Collateral.  Debtor will not enter into
     any type of contract or agreement pertaining to any of the Collateral or in
     any way transfer any voting  rights  pertaining  to the  Collateral  to any
     person or entity. -----------------------------------

         4.8 Dilution of Ownership.  As to any securities pledged as Collateral,
Debtor  will not  consent to or approve of the  issuance  of (i) any  additional
interests  or  shares  of any  class  of  securities  of such  issuer,  (ii) any
instrument  convertible  voluntarily by the holder thereof or automatically upon
the occurrence or non-occurrence of any event or condition into, or exchangeable
for, any such  securities,  or (iii) any warrants,  options,  contracts or other
commitments  entitling any third party to purchase or otherwise acquire any such
securities.

         4.9  Restrictions  on  Securities.  Debtor  will  not  enter  into  any
agreement  creating,  or otherwise permit to exist, any restriction or condition
upon the transfer,  voting or control of any  securities  pledged as Collateral,
except as consented to in writing by Secured Party. As to any securities pledged
as collateral, Debtor will not consent to or approve of any stock split, reverse
stock  split,  stock  dividend,  reclassification,   or  other  similar  act  or
transaction  regarding the Interests  unless  consented to in writing by Secured
Party.

                                                     ARTICLE V
                                          DEBTOR'S AFFIRMATIVE COVENANTS

         Until payment and performance of all Obligations,  Debtor covenants and
agrees  that it shall  (i)  promptly  advise  Secured  Party in  writing  of any
litigation  filed against Debtor and of any condition,  event or act which comes
to its attention that would or might have a material  adverse effect on Debtor's
financial  condition  or on Debtor's  ability to perform the  Obligations,  (ii)
except  as  expressly   contemplated  in  Section  4.3(e)(i)  and  (ii)  of  the
Contribution  Agreement,  pay all available funds toward  repayment of the Note,
regardless  of whether  payment of such amounts  exceeds the  required  payments
under  the Note and  (iii) if  Borrower  uses any  proceeds  from the  Note,  to
acquire,  directly or indirectly,  a one hundred  percent  (100%)  interest in a
Target Center (as defined in the Contribution  Agreement),  Borrower shall cause
such  Target  Center to execute a  security  agreement,  acceptable  in form and
substance  to Lender,  granting  to Lender or one of Lender's  subsidiaries  the
highest available priority security interest in all of the assets of such Target
Center.

                                                    ARTICLE VI
                                                NEGATIVE COVENANTS

         Until payment and performance of all Obligations,  Debtor covenants and
agrees that Debtor will not, without the prior written consent of Secured Party:

         6.1 Liens. Grant, suffer, or permit liens on, or security interests in,
the Collateral.

          6.2  Violate  Other  Covenants.  Violate  or fail to  comply  with any
     covenants or agreements  regarding  other debt which will or would with the
     passage of time or upon demand  cause the  maturity of any other debt to be
     accelerated. -----------------------

                                                    ARTICLE VII
                                               DEFAULT AND REMEDIES

          7.1 Events of Default.  An Event of Default  (herein so called)  shall
     exist  if  any  one  or  more  of  the   following   events   shall  occur:
     -----------------

          (a) The failure of Debtor to pay any amount  required to be paid under
     the Loan Agreement (including, without limitation,  principal, interest and
     fees due thereunder), or any other amount which Debtor may now or hereafter
     owe to Secured  Party under any Other  Agreement or  otherwise,  within ten
     (10) calendar days after such amount is due;

          (b) The failure of Debtor to pay any  Obligation  after such amount is
     due  (and,  if  applicable  under the  terms of any  contractual  agreement
     creating or governing  such  Obligation,  after the  expiration of any cure
     period expressly required);

                  (c)  Debtor's  breach of a covenant in this  Agreement  or any
other  failure to perform  its  obligations  under this  Agreement  or any Other
Agreement;

          (d) Any representation or warranty made by Debtor in this Agreement or
     any Other  Agreement  between  Debtor and  Secured  Party shall be false or
     materially  misleading,  as  determined  in the  reasonable  discretion  of
     Secured Party;

          (e) Any  event of  default  shall  occur  under  the terms of the Loan
     Agreement  and shall not be cured  within the time  expressly  provided for
     with respect thereto in the Loan Agreement;

                  (f) If Debtor or any other party  obligated to pay any portion
of the  Obligations:  (i)  becomes  insolvent,  or makes a transfer  in fraud of
creditors,  or makes an assignment  for the benefit of  creditors,  or admits in
writing its inability to pay its debts as they become due; (ii) generally is not
paying its debts as such debts  become due and  Secured  Party,  in good  faith,
determines that such event or condition  could lead to a material  impairment of
the Collateral, or any part thereof, or of any other payment security for any of
the Obligations;  (iii) has a receiver,  trustee or custodian  appointed for, or
take possession of, all or substantially  all of the assets of such party or any
of the  Collateral,  either  in a  proceeding  brought  by  such  party  or in a
proceeding  brought against such party and such appointment is not discharged or
such  possession  is not  terminated  within sixty (60) days after the effective
date thereof or such party  consents to or  acquiesces  in such  appointment  or
possession;  (iv) files a petition for relief under the United States Bankruptcy
Code or any other present or future federal or state  insolvency,  bankruptcy or
similar laws (all of the foregoing  hereinafter  collectively called "Applicable
Bankruptcy  Law") or an  involuntary  petition for relief is filed  against such
party under any Applicable  Bankruptcy Law and such involuntary  petition is not
dismissed  within  sixty  (60) days after the  filing  thereof,  or an order for
relief naming such party is entered under any Applicable  Bankruptcy Law, or any
composition, rearrangement, extension, reorganization or other relief of debtors
now or hereafter  existing is requested or consented to by such party; (v) fails
to  have  discharged  within  a  period  of  sixty  (60)  days  any  attachment,
sequestration  or similar writ levied upon,  or any claim  against or affecting,
any  property  of such party;  or (vi) fails to pay within  ninety (90) days any
final money judgment against such party; or

          (g) The  issuer  of any  securities  constituting  Collateral  files a
     petition for relief under any  Applicable  Bankruptcy  Law, an  involuntary
     petition for relief is filed  against any such issuer under any  Applicable
     Bankruptcy Law and such involuntary petition is not dismissed within thirty
     (30) days after the filing thereof,  or an order for relief naming any such
     issuer is entered under any Applicable Bankruptcy Law.

          7.2  Secured  Party's  Remedies.  Upon the  occurrence  of an Event of
     Default:

          (a)  Secured  Party  may  declare  the  Obligations  in  whole or part
     immediately  due and may enforce  payment and  performance  of the same and
     exercise  any rights  under the Texas UCC,  rights and  remedies of Secured
     Party under this Agreement, or otherwise.

                  (b) Secured  Party may, at Secured  Party's  option and at the
expense of Debtor,  either in Secured Party's own right or in the name of Debtor
and in the same manner and to the same extent that Debtor  might  reasonably  so
act  if  this  Agreement  had  not  been  made:  (i) do  all  things  requisite,
convenient,  or  necessary  to enforce the  performance  and  observance  of all
rights,  remedies and privileges of Debtor arising from the  Collateral,  or any
part thereof,  including without limitation compromising,  waiving, excusing, or
in any manner releasing or discharging any obligation of any party to or arising
from the Collateral;  (ii) take possession of the books, papers,  chattel paper,
documents of title, and accounts of Debtor,  wherever  located,  relating to the
Collateral; (iii) sue or otherwise collect and receive money attributable to the
Collateral;  and (iv) exercise any other lawfully  available powers or remedies,
and do all other things  which  Secured  Party deems  requisite,  convenient  or
necessary  or which the  Secured  Party  deems  proper to protect  the  Security
Interest.

                  (c) Secured Party may foreclose  this  Agreement in the manner
now or  hereafter  provided  or  permitted  by law and may upon such  reasonable
notification  prior thereto as may be required by applicable  law (Debtor hereby
agreeing  that ten  days'  notice is  commercially  reasonable),  sell,  assign,
transfer,  or otherwise  dispose of the Collateral at public or private sale, in
whole  or in  part,  and  Secured  Party  may,  in its own  name or as  Debtor's
attorney-in-fact  effectively  assign and transfer the  Collateral,  or any part
thereof,   absolutely,  and  execute  and  deliver  all  necessary  assignments,
conveyances,  bills of sale, and other  instruments with power to substitute one
or more persons or  corporations  with like power.  Any such  foreclosure  sale,
assignment,  transfer,  or other  disposition  shall, to the extent permitted by
law,  be a  perpetual  bar,  both at law and in equity,  against  Debtor and all
persons and corporations  lawfully  claiming by or through or under Debtor.  Any
such foreclosure sale may be adjourned from time to time. Upon any sale, Secured
Party may bid for and purchase the  Collateral,  or any part  thereof,  and upon
compliance with the terms of sale may hold,  retain,  possess and dispose of the
Collateral, in its absolute right without further accountability.  Secured Party
shall have the right to be  credited  on the  amount of its bid a  corresponding
amount of the Obligations as of the date of such sale.

                  (d) If, in the opinion of Secured Party, there is any question
that a public sale or  distribution  of any Collateral will violate any state or
federal  securities  law,  Secured  Party  (i) may  offer  and  sell  securities
privately to purchasers who will agree to take them for investment  purposes and
not with a view to distribution  and who will agree to imposition of restrictive
legends on the  certificates  representing  the security,  or (ii) may sell such
securities in any type of offering  which  complies  with, or is exempt from the
registration  requirements  of, the  Securities  Act of 1933 and any  applicable
state  securities laws, and no sale so made in good faith by Secured Party shall
be deemed to be not "commercially reasonable" because so made.

          (e) Not in  limitation  of any  other  provision  of  this  Agreement,
     Secured  Party shall have all rights and remedies of a secured  party under
     the Texas UCC.

         7.3  Application  of Proceeds.  Secured Party may apply the proceeds of
any foreclosure  sale hereunder or from any other  permitted  disposition of the
Collateral  or any part  thereof as  follows:  (a) first,  to the payment of all
reasonable  costs and expenses of any foreclosure  and collection  hereunder and
all proceedings in connection  therewith,  including reasonable attorneys' fees;
(b) then, to the  reimbursement of Secured Party for all  disbursements  made by
Secured Party for taxes,  assessments or liens superior to the Security Interest
and  which  Secured  Party  shall  deem  expedient  to  pay;  (c)  then,  to the
reimbursement of Secured Party of any other  disbursements made by Secured Party
in accordance with the terms hereof or under the  Contribution  Agreement or any
Other  Agreement;  (d)  then,  to or among the  amounts  of fees,  interest  and
principal then owing and unpaid in respect of the Obligations,  in such priority
as Secured Party may determine in its discretion;  and (e) the remainder of such
proceeds,  if  any,  shall  be  paid  to  Debtor.  If  such  proceeds  shall  be
insufficient to discharge the entire  Obligations,  Secured Party shall have any
other available legal recourse  against Debtor under, or for the performance of,
the  Contribution  Agreement and any Other Agreement  between Debtor and Secured
Party,  for the deficiency,  together with interest  thereon at the maximum rate
permitted under applicable law.

          7.4  Enforcement of  Obligations.  Nothing in this Agreement or in any
     other document or agreement  shall affect or impair the  unconditional  and
     absolute right of Secured Party to enforce the  Obligations as and when the
     same shall become due in accordance with the terms of any Other  Agreement.
     --------------------------

                                                   ARTICLE VIII
                                              RIGHTS OF SECURED PARTY

          8.1 Subrogation.  Upon the occurrence of an Event of Default,  Secured
     Party,  at its election,  may subrogate to all of the interest,  rights and
     remedies of the Debtor,  in respect to any of the  Collateral or agreements
     pertaining thereto. -----------

         8.2 Secured Party  Appointed  Attorney-in-Fact.  Debtor hereby appoints
Secured Party as  attorney-in-fact  of Debtor,  with full authority in the place
and stead of Debtor and in the name of Debtor, Secured Party or otherwise,  from
time to time on Secured  Party's  discretion and upon the occurrence of an Event
of Default, to take any action and to execute any instrument which Secured Party
may deem  necessary or advisable to accomplish  the purposes of this  Agreement,
including without  limitation:  (a) to ask, demand,  collect,  sue for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;  (b) to receive,  endorse, and
collect  any  drafts or other  instruments,  documents  and  chattel  paper,  in
connection  with clause (a) of this  Section 8.2; (c) to file any claims or take
any action or institute any proceeding which Secured Party may deem necessary or
desirable for the  collection  of any of the  Collateral or otherwise to enforce
the rights of Secured Party against any of the Collateral; and (d) to assign and
transfer the  Collateral,  or any part  thereof,  absolutely  and to execute and
deliver  endorsements,   assignments,  conveyances,  bills  of  sale  and  other
instruments  with power to substitute  one or more persons or  corporation  with
like power.

          8.3  Performance  by Secured  Party.  If Debtor  fails to perform  any
     agreement contained herein,  Secured Party may itself perform, or cause the
     performance  of, such  agreement,  and the  reasonable  expenses of Secured
     Party  incurred in  connection  therewith  shall be payable by Debtor under
     Section 8.8. In no event, however,  shall Secured Party have any obligation
     or duties  whatsoever  to  perform  any  covenant  or  agreement  of Debtor
     contained  herein,  and any such  performance  by  Secured  Party  shall be
     ---------------------------- wholly discretionary with Secured Party.

         8.4 Duties of Secured  Party.  The powers  conferred upon Secured Party
hereunder  are solely to protect its  interest in the  Collateral  and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any  Collateral  in its  possession  and the  accounting  for money  actually
received by it hereunder,  Secured Party shall have no duty as to any Collateral
or as to the taking of any  necessary  steps to preserve  rights  against  prior
parties or any other rights  pertaining to any Collateral.  Without limiting the
generality of the foregoing,  Secured Party shall not have any obligation,  duty
or  responsibility  to do any of the  following:  (a) ascertain any  maturities,
calls,  conversions,  exchanges,  offers, tenders or similar matters relating to
the  Collateral or informing  Debtor with respect to any such matters;  (b) fix,
preserve  or  exercise  any  right,  privilege  or option  (whether  conversion,
redemption or otherwise) with respect to the Collateral; (c) collect any amounts
payable  in  respect  of the  Collateral;  (d)  sell all or any  portion  of the
Collateral,  for any reason;  or (e) hold the Collateral for or on behalf of any
party other than Debtor.

         8.5 No  Liability  of Secured  Party.  Neither the  acceptance  of this
Agreement by Secured Party,  nor the exercise of any rights hereunder by Secured
Party,  shall be construed in any way as an  assumption  by Secured Party of any
obligations,  responsibilities,  or duties of Debtor arising in connection  with
the  Collateral  assigned  hereunder  or  otherwise  bind  Secured  Party to the
performance of any  obligations  respecting the  Collateral,  it being expressly
understood  that Secured  Party shall not be obligated to perform,  observe,  or
discharge  any  obligation,  responsibility,  duty,  or  liability  of Debtor in
respect of any of the Collateral,  including without limitation  appearing in or
defending any action, expending any money or incurring any expense in connection
therewith.  TO THE FULLEST EXTENT  PERMITTED BY APPLICABLE LAW, DEBTOR SHALL AND
DOES AGREE TO INDEMNIFY, PROTECT, DEFEND AND HOLD HARMLESS SECURED PARTY AND ITS
SUBSIDIARIES,  AND EACH OF THEIR OFFICERS, DIRECTORS,  REPRESENTATIVES,  AGENTS,
EMPLOYEES,  LENDERS,  SUCCESSORS AND ASSIGNS,  FROM AND AGAINST ALL LIABILITIES,
CLAIMS, DAMAGES,  LOSSES, FINES, PENALTIES,  CAUSES OF ACTIONS, SUITS, JUDGMENTS
AND EXPENSES (INCLUDING COURT COSTS,  ATTORNEY'S FEES AND COST OF INVESTIGATION)
OF ANY  NATURE,  KIND OR  DESCRIPTION  OF ANY  PERSON  OR  ENTITY,  DIRECTLY  OR
INDIRECTLY,  ARISING OUT OF, CAUSED BY OR RESULTING  FROM (IN WHOLE OR IN PART),
ANY ACT OR  OMISSION  OF SECURED  PARTY,  OR ANYONE  ACTING ON BEHALF OF SECURED
PARTY,  IN CONNECTION  WITH THE  COLLATERAL,  INCLUDING  WITHOUT  LIMITATION ANY
MARKET FLUCTUATIONS IN THE COLLATERAL AS A RESULT OF SECURED PARTY'S SALE OF, OR
FAILURE TO SELL, THE INTERESTS AT ANY  PARTICULAR  TIME WHEN IT HAS THE RIGHT TO
DO  SO.  THE  FOREGOING  INDEMNITY  SHALL  SURVIVE  THE  EXPIRATION  OR  EARLIER
TERMINATION OF THIS AGREEMENT.

          8.6  Right of  Secured  Party to  Defend  Action  Affecting  Security.
     Secured  Party may,  at the  expense  of  Debtor,  appear in and defend any
     action or  proceeding  at law or in  equity  purporting  to affect  Secured
     Party's       Security       Interest      under      this       Agreement.
     ----------------------------------------------------------

         8.7 Right of  Secured  Party to Prevent  or Remedy  Default.  If Debtor
shall fail to perform any of the covenants,  conditions and agreements  required
to be performed and observed by Debtor under any Other Agreement,  or in respect
of the Collateral (subject to any applicable default cure period), Secured Party
(a) may but  shall not be  obligated  to take any  action  Secured  Party  deems
necessary  or  desirable  to  prevent  or remedy  any such  default by Debtor or
otherwise to protect the Security Interest,  and (b) shall have the absolute and
immediate right to take possession of the Collateral or any part thereof (to the
extent Secured Party has not previously taken  possession) to such extent and as
often as the Secured Party, in its sole discretion, deems necessary or desirable
in order to prevent  or to cure any such  default by  Debtor,  or  otherwise  to
protect the security of this Agreement. Secured Party may advance or expend such
sums of money for the account of Debtor as Secured Party in its sole  discretion
deems necessary for any such purpose.

         8.8 Secured Party's Expenses. All reasonable advances, costs, expenses,
charges and attorneys' fees which Secured Party may make, pay or incur under any
provision  of this  Agreement  for the  protection  of its  security  or for the
enforcement of any of its rights hereunder,  including,  without limitation,  in
foreclosure  proceedings commenced and subsequently  abandoned or in any dispute
or litigation in which Secured Party or the holder of any of the Obligations may
become  involved  by reason of or  arising  out of any  Other  Agreement  or the
Collateral,  shall be a part of the  Obligations  and shall be paid by Debtor to
Secured  Party,  upon demand,  and shall bear interest until paid at the maximum
rate of interest  permitted by applicable law, from the date incurred by Secured
Party until repaid by Debtor.

          8.9. Convertible Collateral.  Secured Party may present for conversion
     any Collateral which is convertible into any other instrument or investment
     security or a  combination  thereof with cash,  but Secured Party shall not
     have any duty to present for conversion any Collateral unless it shall have
     received from Debtor detailed written instructions to that effect at a time
     reasonably  far in  advance  of the  final  conversion  date to  make  such
     conversion possible. ----------------------

         8.10 Secured Party's Right of Set-Off.  Upon the happening of any event
entitling  Secured  Party to pursue any remedy  provided  herein,  or if Secured
Party shall be served with garnishment process in which Debtor shall be named as
defendant,  whether or not Debtor  shall be in  default  hereunder  at the time,
Secured Party may, but shall not be required to, set-off any indebtedness  owing
by  Secured  Party  to  Debtor  against  any of the  Obligations  without  first
resorting to the security hereunder and without prejudice to any other rights or
remedies of Secured Party or its Security Interest.

          8.11 Remedies.  No right or remedy herein reserved to Secured Party is
     intended to be exclusive  of any other right or remedy,  but each and every
     such  remedy  shall be  cumulative,  not in lieu of, but in addition to any
     other rights or remedies  given under this Agreement and all other security
     documents.  Any and all of  Secured  Party's  rights  and  remedies  may be
     exercised  from  time to time  and as  often  as such  exercise  as  deemed
     necessary or desirable by Secured Party. --------

         8.12 Debtor's Waivers.  Debtor waives notice of the creation,  advance,
increase,  existence,  extension,  or  renewal  of, and of any  indulgence  with
respect to, the  Obligations;  waives notice of intent to accelerate,  notice of
acceleration,  notice  of  intent  to  demand,  presentment,  demand,  notice of
dishonor,  and  protest;   waives  notice  of  the  amount  of  the  Obligations
outstanding  at any time,  notice of any change in  financial  condition  of any
person liable for the  Obligations  or any part thereof,  notice of any Event of
Default,  and all other  notices  respecting  the  Obligations;  and agrees that
maturity of the Obligations  and any part thereof may be accelerated,  extended,
or renewed one or more times by Secured Party in its discretion,  without notice
to Debtor.

         8.13 Other Parties and Other Collateral.  No renewal or extension of or
any other  indulgence  with respect to the  Obligations or any part thereof,  no
release  of any  security,  no  release  of any  person  (including  any  maker,
endorser,  guarantor,  or  surety)  liable  on  the  Obligations,  no  delay  in
enforcement  of payment,  and no delay or admission or lack of diligence or care
in exercising any right or power with respect to the Obligations or any security
therefor  or  guaranty  thereof or under this  Agreement  shall in other  manner
impair  or affect  the  rights  of  Secured  Party  under  the law,  under  this
Agreement,  or under any other  document or  agreement  pertaining  to the other
security for the  Obligations,  before  foreclosing  upon the Collateral for the
purpose of paying the Obligations.  Debtor waives any right to the benefit of or
to require or control application of any other security or proceeds thereof, and
Debtor  agrees that Secured  Party shall have no duty or obligation to Debtor to
apply to the Obligations any such other security or proceeds thereof.

                                                    ARTICLE IX
                                                   MISCELLANEOUS

          9.1 Terms Commercially  Reasonable.  The terms of this Agreement shall
     be deemed  commercially  reasonable  within  the  meaning of the Texas UCC.
     -----------------------------

         9.2 Notices.  Any notices or demands  required or permitted to be given
hereunder  shall be  deemed  sufficiently  given if in  writing  and  personally
delivered or mailed (with all postage and charges prepaid), addressed to Secured
Party or to Debtor their respective  addresses set forth below, or at such other
address as the above parties may from time to time  designate by written  notice
to the other given in  accordance  with this Section  9.2.  Any such notice,  if
personally  delivered or  transmitted  by telex or telegram,  shall be deemed to
have been given on the date so delivered or transmitted or, if mailed, be deemed
to have been given on the day after such  notice is placed in the United  States
mail in accordance with this Section 9.2.

                  Secured Party:       1301 Capital of Texas Hwy., Suite C-300
                                       Austin, Travis County, Texas 78746
                                       Attn: President

                  with copy to:        Timothy L. LaFrey, Esq.
                                       Akin, Gump, Strauss, Hauer & Feld, L.L.P.
                                       1900 Frost Bank Plaza
                                       816 Congress Avenue
                                       Austin, Texas 78701

                  Debtor:              Prime/BDR Acquisition, L.L.C.

                                       1301 Capital of Texas Hwy., Suite C-300
                                       Austin, Travis County, Texas 78746
                                       Attn: President

         9.3 Parties Bound.  Secured Party's rights under this Agreement and the
Security Interest shall inure to the benefits of its successors and assigns, and
in the event of any  assignment  or  transfer of any of the  Obligations  or the
Collateral,  Secured  Party  thereafter  shall  be  fully  discharged  from  any
responsibility  with respect to the Collateral so assigned or  transferred,  but
Secured  Party shall  retain all rights and powers  hereby given with respect to
any of the  Obligations  or  Collateral  not so  assigned  or  transferred.  All
representations, warranties, and agreements of Debtor if more than one are joint
and several, and all shall be binding upon the personal representatives,  heirs,
successors, and assigns of Debtor.

          9.4 Waiver. No delay of Secured Party in exercising any power or right
     shall operate as a waiver thereof; nor shall any single or partial exercise
     of any power or right  preclude  other or further  exercise  thereof or the
     exercise  of any other  power or right.  No waiver by Secured  Party of any
     right  hereunder  of any default by Debtor  shall be binding  upon  Secured
     Party  unless in writing,  and no failure by Secured  Party to exercise any
     power or right  hereunder  or waiver of any default by Debtor  ------ shall
     operate as a waiver of any other or further exercise of such right or power
     of any further default.

          9.5 Agreement Continuing. This Agreement shall constitute a continuing
     agreement, applying to all future as well as existing transactions, whether
     or not of the character contemplated at the date of this Agreement,  and if
     all  transactions  between  Secured Party and Debtor shall be closed at any
     time,  shall be  equally  applicable  to any new  transactions  thereafter.
     Provisions of this Agreement,  unless by their terms exclusive, shall be in
     addition to those contained in any Other Agreement. --------------------

          9.6 Definitions.  Unless the context indicated otherwise,  definitions
     in the Texas  Business and Commerce  Code ("Texas  UCC") apply to words and
     phrases in this  Agreement;  if Texas UCC definitions  conflict,  Chapter 9
     definitions apply. -----------

          9.7  Miscellaneous.   In  this  Agreement,  whenever  the  context  so
     requires,  the neuter gender  includes the masculine and feminine,  and the
     singular  number  includes  the  plural and vice  versa.  The  headings  of
     paragraphs  herein are inserted  only for  convenience  and shall in no way
     define,  describe  or limit the scope of intent of any  provisions  of this
     Agreement. No change, amendment,  modification,  cancellation, or discharge
     of any provision of this  Agreement  shall be valid unless  consented to in
     ------------- writing by Secured Party.

          9.8 Assignment of Secured Party's  Interest.  Secured Party shall have
     the right to assign  all or any  portion  of its  rights in this  Agreement
     without  approval or consent.  Debtor  acknowledges  that Lender intends to
     make a collateral  assignment  of its rights under this  Agreement  for the
     benefit of one or more of its lenders. Debtor may not assign this Agreement
     or any of its rights or  obligations  hereunder  without the express  prior
     written     consent     of    Secured     Party    in    each     instance.
     --------------------------------------

          9.9 Applicable Laws. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
     IN ACCORDANCE  WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE  LAWS
     OF THE UNITED STATES OF AMERICA. ---------------

          9.10 ENTIRE AGREEMENT.  THIS AGREEMENT,  THE LOAN AGREEMENT,  THE NOTE
     AND THE CONTRIBUTION  AGREEMENT  REPRESENT THE FINAL AGREEMENT  BETWEEN THE
     PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,  CONTEMPORANEOUS,
     OR SUBSEQUENT ORAL  AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL
     AGREEMENTS BETWEEN THE PARTIES. ----------------

                                             [Signature page follows]



                                                       2
<PAGE>


                                                 SIGNATURE PAGE TO
                                                  ASSIGNMENT AND
                                                SECURITY AGREEMENT


         EXECUTED this ____ day of September, 1999.


DEBTOR:                             Prime/BDR Acquisition, L.L.C.

                                    By: ______________________________________

                                    Printed Name: _____________________________

                                    Title: _____________________________________

SECURED PARTY:                      Prime Medical Operating, Inc.

                                    By: ______________________________________

                                    Printed Name: _____________________________

                                    Title: _____________________________________


<PAGE>


                                   EXHIBIT G5

                                     FORM OF

                                 PROMISSORY NOTE

                        Austin, Texas ____________, 1999

PROMISE TO PAY: For value  received,  the undersigned  Borrower  (whether one or
more) promises to pay to the order of Lender the Principal Amount, together with
interest on the unpaid  balance of such  amount,  in lawful  money of the United
States of America, in accordance with all the terms,  conditions,  and covenants
of this Note and the Loan Documents identified below.

BORROWER:    Prime/BDR Acquisition, L.L.C., a Delaware limited liability company

BORROWER'S ADDRESS FOR NOTICE:        1301 Capital of Texas Highway, Suite C-300
                                      Austin, Texas  78746
                                      Attention: President

LENDER:  Prime Medical Operating, Inc., a Delaware corporation

LENDER'S ADDRESS FOR PAYMENT:        1301 Capital of Texas Highway, Suite C-300,
                                     Austin, Texas 78746
                                     Attention: Chief Financial Officer

PRINCIPAL AMOUNT:  ______________________ ($____________)

INTEREST RATE:  Fifteen Percent (15%)

PAYMENT  TERMS:  Interest on the unpaid  balance of this Note is due and payable
quarterly,   beginning  ______________,   1999,  and  continuing  regularly  and
quarterly  thereafter on or before the first day of ____________,  ____________,
____________  and  ____________  of each year,  until  [seven years from date of
loan] (the "Maturity  Date"),  when the  outstanding  principal  balance and all
accrued  interest shall be due and payable in full.  Interest will be calculated
on the unpaid  principal  balance.  Each payment  will be credited  first to the
accrued interest and then to the reduction of principal.

LOAN AGREEMENT:  This Note is executed  pursuant to and is governed by the terms
of that certain Loan Agreement dated  September ___, 1999,  executed by Borrower
and Lender, as amended (collectively, the "Loan Agreement").

1.       INTEREST PROVISIONS:

(a)      Rate:  The principal  balance of this Note from time to time  remaining
         unpaid prior to maturity  shall bear  interest at the Interest Rate per
         annum stated above.

(b)      Maximum  Lawful  Interest:  The term  "Maximum  Lawful  Rate" means the
         maximum rate of interest and the term "Maximum Lawful Amount" means the
         maximum amount of interest that is permissible  under  applicable state
         or  federal  law for the type of loan  evidenced  by this  Note and the
         other Loan  Documents.  If the  Maximum  Lawful  Rate is  increased  by
         statute or other  governmental  action  subsequent  to the date of this
         Note, then the new Maximum Lawful Rate shall be applicable to this Note
         from  the  effective  date  thereof,  unless  otherwise  prohibited  by
         applicable law.

     (c)  Spreading  of  Interest:  Because  of  the  possibility  of  irregular
          periodic  balances  of  principal  or  premature  payment,  the  total
          interest  that will  accrue  under this Note cannot be  determined  in
          advance.  Lender does not intend to contract for,  charge,  or receive
          more than the Maximum Lawful Rate or Maximum  Lawful Amount  permitted
          by applicable  state or federal law, and to prevent such an occurrence
          Lender and  Borrower  agree that all  amounts  of  interest,  whenever
          contracted for,  charged,  or received by Lender,  with respect to the
          loan of money evidenced by this Note,  shall be spread,  prorated,  or
          allocated over the full period of time this Note is unpaid,  including
          the period of any  renewal or  extension  of this Note.  If demand for
          payment of this Note is made by Lender  prior to the full stated term,
          the total amount of interest  contracted for, charged,  or received to
          the time of such demand shall be spread,  prorated, or allocated along
          with any  interest  thereafter  accruing  over the full period of time
          that  this  Note   thereafter   remains  unpaid  for  the  purpose  of
          determining if such interest exceeds the Maximum Lawful Amount.

     (d)  Excess Interest: At maturity (whether by acceleration or otherwise) or
          on earlier final payment of this Note,  Lender shall compute the total
          amount of interest that has been contracted for, charged,  or received
          by Lender or payable by  Borrower  under  this Note and  compare  such
          amount to the Maximum  Lawful  Amount that could have been  contracted
          for, charged, or received by Lender. If such computation reflects that
          the total amount of interest that has been contracted for, charged, or
          received by Lender or payable by Borrower  exceeds the Maximum  Lawful
          Amount,  then Lender  shall apply such excess to the  reduction of the
          principal  balance  and not to the  payment  of  interest;  or if such
          excess  interest  exceeds the unpaid  principal  balance,  such excess
          shall be refunded to Borrower. This provision concerning the crediting
          or refund of excess  interest shall control and take  precedence  over
          all other  agreements  between  Borrower  and  Lender so that under no
          circumstances  shall the total interest  contracted for,  charged,  or
          received by Lender exceed the Maximum Lawful Amount.

     (e)  Interest  After  Default:  At Lender's  option,  the unpaid  principal
          balance shall bear interest after maturity (whether by acceleration or
          otherwise) at the "Default  Interest Rate." The Default  Interest Rate
          shall be, at Lender's  option,  (i) the Maximum  Lawful Rate,  if such
          Maximum  Lawful Rate is  established  by  applicable  law; or (ii) the
          Interest  Rate  stated  on the  first  page of this Note plus five (5)
          percentage  points,  if no  Maximum  Lawful  Rate  is  established  by
          applicable  law; or (iii)  eighteen  percent (18%) per annum;  or (iv)
          such  lesser rate of  interest  as Lender in its sole  discretion  may
          choose to charge;  but never more than the Maximum Lawful Rate or at a
          rate that would cause the total interest  contracted for, charged,  or
          received by Lender to exceed the Maximum Lawful Amount.

(f)      Daily  Computation of Interest:  To the extent  permitted by applicable
         law,  Lender at its option will calculate the per diem interest rate or
         amount  based on the actual  number of days in the year (365 or 366, as
         the case may be), and charge that per diem interest rate or amount each
         day. In no event  shall  Lender  compute the  interest in a manner that
         would cause Lender to contract for,  charge,  or receive  interest that
         would exceed the Maximum Lawful Rate or the Maximum Lawful Amount

2.       DEFAULT PROVISIONS:

(a)      EVENTS OF DEFAULT AND  ACCELERATION  OF  MATURITY:  LENDER  MAY,  AFTER
         THIRTY (30) DAYS' WRITTEN NOTICE TO BORROWER AND BORROWER'S  FAILURE TO
         CURE WITHIN SUCH 30-DAY  PERIOD AND WITHOUT  FURTHER  NOTICE OR DEMAND,
         (except as otherwise  required by statute),  ACCELERATE THE MATURITY OF
         THIS NOTE AND  DECLARE  THE ENTIRE  UNPAID  PRINCIPAL  BALANCE  AND ALL
         ACCRUED INTEREST AT ONCE DUE AND PAYABLE IF:

               (i)  There  is  default  in the  payment  of any  installment  of
          principal,  interest,  or any other sum  required to be paid under the
          terms of this Note or any of the Loan Documents; or

               (ii) There is a breach or default  (other than by Lender or Prime
          Medical Services,  Inc.) under this Note or any of the Loan Documents,
          including any instrument securing the payment of this Note or any loan
          agreement relating to the advance of loan proceeds.

     (b)  WAIVER BY BORROWER: EXCEPT AS PROVIDED IN PARAGRAPH 2(a) HEREOF AND IN
          ANY OTHER LOAN  DOCUMENT,  BORROWER AND ALL OTHER  PARTIES  LIABLE FOR
          THIS NOTE WAIVE, DEMAND,  NOTICE OF INTENT TO DEMAND,  PRESENTMENT FOR
          PAYMENT,  NOTICE OF  NONPAYMENT,  PROTEST,  NOTICE OF PROTEST,  GRACE,
          NOTICE OF DISHONOR, NOTICE OF INTENT TO ACCELERATE MATURITY, NOTICE OF
          ACCELERATION  OF MATURITY,  AND DILIGENCE IN  COLLECTION.  EACH MAKER,
          SURETY,  ENDORSER, AND GUARANTOR OF THIS NOTE WAIVES AND AGREES TO ONE
          OR MORE  EXTENSIONS FOR ANY PERIOD OR PERIODS OF TIME, AND ANY PARTIAL
          PAYMENTS, BEFORE OR AFTER MATURITY, WITHOUT PREJUDICE TO THE HOLDER OF
          THIS NOTE. EACH MAKER, SURETY,  ENDORSER,  AND GUARANTOR WAIVES NOTICE
          OF ANY AND ALL RENEWALS, EXTENSIONS, REARRANGEMENTS, AND MODIFICATIONS
          OF THIS NOTE.

(c)      Non-Waiver  by Lender:  Any previous  extension  of time,  forbearance,
         failure  to  pursue  some  remedy,  acceptance  of  late  payments,  or
         acceptance of partial payment by Lender, before or after maturity, does
         not constitute a waiver by Lender of its  subsequent  right to strictly
         enforce the collection of this Note according to its terms.

     (d)  Other  Remedies  Not  Required:  Lender shall not be required to first
          file suit,  exhaust all  remedies,  or enforce its rights  against any
          security in order to enforce payment of this Note.

(e)      Joint and Several Liability: Each Borrower who signs this Note, and all
         of the other  parties  liable for the  payment  of this  Note,  such as
         guarantors,  endorsers,  and sureties, are jointly and severally liable
         for the payment of this Note.

(f)      Attorney's  Fees:  If Lender  requires  the  services of an attorney to
         enforce the payment of this Note or the  performance  of the other Loan
         Documents,  or if this Note is collected through any lawsuit,  probate,
         bankruptcy, or other judicial proceeding, Borrower agrees to pay Lender
         an amount equal to its reasonable  attorney's fees and other collection
         costs.  This  provision  shall be limited by any  applicable  statutory
         restrictions relating to the collection of attorney's fees.

3.       MISCELLANEOUS PROVISIONS:

(a)  Subsequent  Holder:  All references to Lender in this Note shall also refer
     to any  subsequent  owner or holder of this Note by  transfer,  assignment,
     endorsement, or otherwise.

(b)      Transfer:  Borrower  acknowledges  and agrees that Lender may  transfer
         this Note or partial  interests in the Note to one or more  transferees
         or participants, including without limitation transfers provided for in
         Section  8.10 of the Loan  Agreement.  Borrower  authorizes  Lender  to
         disseminate  to any  such  transferee  or  participant  or  prospective
         transferee or participant any information it has pertaining to the loan
         evidenced  by  this  Note,   including,   without  limitation,   credit
         information  on Borrower and any  guarantor of this Note and any of the
         type of information described in Section 8.10 of the Loan Agreement.

(c)      Other Parties Liable: All promises, waivers, agreements, and conditions
         applicable to Borrower shall likewise be applicable to and binding upon
         any other parties  primarily or  secondarily  liable for the payment of
         this Note, including all guarantors, endorsers, and sureties.

(d)      Successors  and Assigns:  The  provisions of this Note shall be binding
         upon and for the benefit of the successors,  assigns, heirs, executors,
         and administrators of Lender and Borrower.

(e)      No Duty or Special Relationship:  Borrower acknowledges that Lender has
         no duty of good faith to Borrower,  and Borrower  acknowledges  that no
         fiduciary,  trust, or other special  relationship exists between Lender
         and Borrower.

(f)      Modifications:  Any  modifications  agreed to by Lender relating to the
         release of  liability of any of the parties  primarily  or  secondarily
         liable for the  payment  of this  Note,  or  relating  to the  release,
         substitution,  or subordination of all or part of the security for this
         Note, shall in no way constitute a release of liability with respect to
         the other parties or security not covered by such modification.

(g)      Entire  Agreement:  Borrower  warrants  and  represents  that  the Loan
         Documents  constitute the entire agreement  between Borrower and Lender
         with  respect to the loan  evidenced  by this Note and  agrees  that no
         modification,  amendment,  or additional agreement with respect to such
         loan  or  the  advancement  of  funds  thereunder  will  be  valid  and
         enforceable unless made in writing signed by both Borrower and Lender.

(h)      Borrower's  Address  for  Notice:  All  notices  required to be sent by
         Lender to Borrower  shall be sent by U.S.  Mail,  postage  prepaid,  to
         Borrower's  Address  for Notice  stated on the first page of this Note,
         until Lender shall receive written  notification from Borrower of a new
         address for notice.

(i)      Lender's  Address for  Payment:  All sums payable by Borrower to Lender
         shall be paid at Lender's  Address for Payment stated on the first page
         of this Note, or at such other address as Lender shall  designate  from
         time to time.

(j)  Business Use:  Borrower warrants and represents to Lender that the proceeds
     of this Note will be used solely for business or commercial  purposes,  and
     in no way will the  proceeds be used for  personal,  family,  or  household
     purposes.

(k)      Chapter 15 Not  Applicable:  It is  understood  that  Chapter 15 of the
         Texas Credit Code  relating to certain  revolving  credit loan accounts
         and tri-party accounts is not applicable to this Note.

(l)      APPLICABLE  LAW: THIS NOTE HAS BEEN EXECUTED AND DELIVERED IN TEXAS AND
         SHALL BE CONSTRUED IN ACCORDANCE  WITH THE APPLICABLE LAWS OF THE STATE
         OF TEXAS AND THE LAWS OF THE  UNITED  STATES OF AMERICA  APPLICABLE  TO
         TRANSACTIONS IN TEXAS.

4.       LOAN DOCUMENTS:

(a)      This Note.

(b)      The Loan Agreement and the Loan Documents as defined therein.

(c)      All other documents signed in connection with the Loan Agreement or the
         loan  evidenced  by this  Note,  including,  without  limitation,  that
         certain  Contribution  Agreement,  dated  effective  September 1, 1999,
         between and among Borrower,  Lender,  Prime Medical  Services,  Inc., a
         Delaware  corporation,   Prime/BDEC  Acquisition,  L.L.C.,  a  Delaware
         limited  liability  company,  Barnet Dulaney Eye Center,  P.L.L.C.,  an
         Arizona  professional  limited  liability  company,   LASIK  Investors,
         L.L.C., a Delaware limited liability company,  David D. Dulaney,  M.D.,
         Ronald  W.  Barnet,   M.D.,  and  Mark  Rosenberg  (the   "Contribution
         Agreement") and each  Transaction  Document (as such term is defined in
         the Contribution Agreement).

                            [Signature page follows]


<PAGE>


S-1



                                EXECUTION PAGE TO

                                 PROMISSORY NOTE

EXECUTED this ___ day of ___________, 1999.



           BORROWER:

                    Prime/BDR Acquisition, L.L.C., a Delaware limited liability
                       company



                                    By: ________________________________________

                          Printed Name: ________________________________________

                                 Title: ________________________________________

<PAGE>
                                   EXHIBIT-H




                               MEMBERSHIP INTEREST

                         TRANSFER RESTRICTION AGREEMENT

     This Membership Interest Transfer Restriction  Agreement (this "Agreement")
is entered into  effective as of the 1st day of  September,  1999,  by and among
LASIK Investors,  L.L.C., a Delaware limited  liability company (the "Company"),
Prime  Medical  Operating,  Inc., a Delaware  corporation  ("Prime"),  Ronald W.
Barnet, M.D.  ("Barnet"),  David D. Dulaney,  M.D.  ("Dulaney"),  Mark Rosenberg
("Rosenberg"),  Scott A. Perkins, M.D. ("Perkins"),  and Robert B. Pinkert, O.D.
("Pinkert").  Barnet, Dulaney, Rosenberg, Perkins and Pinkert, together with any
subsequent  Members in the Company who  hereafter  execute this  Agreement,  are
collectively referred to herein as the "Members".

                                R E C I T A L S:

             WHEREAS,  Barnet, Dulaney,  Rosenberg,  Perkins and Pinkert own all
the  issued  and  outstanding  membership  interests  of the  Company  (all such
membership  interests,  together with any hereafter  acquired,  are  hereinafter
referred to as the "Membership Interests"); and

             WHEREAS, this Agreement is a "Transaction  Document," as defined in
that  certain  Contribution  Agreement  (the  "Contribution   Agreement")  dated
effective September 1, 1999, by and among Prime, Prime Medical Services, Inc., a
Delaware corporation ("PMSI"), the Company, Barnet Dulaney Eye Center, P.L.L.C.,
an  Arizona  professional  limited  liability  company,  Prime/BDR  Acquisition,
L.L.C., a Delaware limited liability company, Prime/BDEC Acquisition,  L.L.C., a
Delaware limited liability company, Barnet, Dulaney and Rosenberg.

             WHEREAS,  the  Members,  the Company and Prime desire to enter into
this Agreement to control the distribution of ownership interests in the Company
and to promote the harmonious management of the Company's affairs.

             NOW,  THEREFORE,  in  consideration  of the  foregoing,  the mutual
covenants and agreements contained herein, and for other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

                                    ARTICLE I

               PERMITTED TRANSFERS; RESTRICTIONS AGAINST TRANSFER

As used in this Agreement,  "Permitted Transfers" shall mean any transfer of all
or any  part of any  Member's  Membership  Interest  to (i) the  members  of the
immediate  family of the Member or a trust or trusts for the  benefit of members
of the immediate family of the Member, provided that after any such transfer the
Member  retains  the sole  express  right to vote,  or direct  the votes of, the
Membership  Interest,  (ii) any other  Member,  provided that after any transfer
pursuant to this subsection  (ii) is consummated,  Barnet and Dulaney (or trusts
that hold Membership Interests as a result of Permitted Transfers subsection (i)
above) must  collectively own in the aggregate at least fifty-one  percent (51%)
of the total outstanding  Membership  Interests of the Company,  or (iii) Prime.
Any Member  transferring all or a portion of its Membership Interest pursuant to
a  Permitted  Transfer  shall  give  written  notice of the  Permitted  Transfer
(containing the same  information as required for notice under Section 2.1.1) to
Prime and the other Members fifteen (15) days prior to the effective date of the
Permitted Transfer. Except for a Permitted Transfer, or as otherwise provided in
this Agreement, a Member shall not transfer, assign, pledge,  hypothecate, or in
any way alienate any  Membership  Interest,  or any  interest  therein,  whether
voluntarily  or by operation of law, or by gift or otherwise,  without the prior
written consent of the Company,  the other Members and Prime,  which consent may
be withheld in their sole and absolute  discretion.  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 Company, the other Members and Prime options to purchase such
Membership Interest in the manner and on the conditions hereinafter provided. As
used in this Agreement,  "Option  Members" shall mean all Members of the Company
except  (i) the Member  who,  prior to the  proposed  transfer  or the  incident
resulting in the proposed transfer of all or a portion of a Membership Interest,
owned such interest and (ii) Rosenberg.

                                   ARTICLE II

                                     OPTIONS

2.1          OPTION UPON VOLUNTARY TRANSFER.

             2.1.1  Notice of  Intention  to  Transfer.  If a Member  intends to
voluntarily  transfer any of its Membership  Interest,  other than pursuant to a
Permitted  Transfer,  to any person other than the Company,  and does not obtain
the written consents required in ARTICLE I hereof, the Member shall give written
notice to the other  Members,  Rosenberg  and Prime stating (i) the intention to
transfer a Membership  Interest,  (ii) the amount of  Membership  Interest 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.

             2.1.2 Option to Purchase.  The Option  Members shall have,  and may
exercise  within 30 days after  receipt of the notice of intent to transfer,  an
option  to  purchase  all  or  any  portion  of  the  Membership   Interest  the
transferring Member intends to transfer,  for the price and upon the other terms
stated in the notice of intent to transfer.  If the Option Members fail,  within
such 30-day period,  to exercise  their purchase  option (by delivery of written
notice) with respect to the entire Membership  Interest being  transferred,  the
Option  Members shall be deemed to have elected not to exercise  their  purchase
option with respect to such unpurchased Membership Interest.  Upon any notice of
non-exercise (or deemed  non-exercise) by the Option Members,  Rosenberg (if not
the transferring  Member) shall have, and may exercise within 30 days of receipt
of notice of such non-exercise (or deemed  non-exercise),  an option to purchase
all or any portion of such unpurchased  Membership  Interest upon the same terms
and conditions.  If Rosenberg fails,  within such 30-day period, to exercise his
purchase  option (by  delivery  of written  notice)  with  respect to the entire
unpurchased  Membership Interest,  Rosenberg shall be deemed to have elected not
to  exercise  his  purchase  option  with  respect to any  remaining  Membership
Interest. Upon any notice of non-exercise (or deemed non-exercise) by Rosenberg,
Prime shall have,  and may exercise  within 30 days of receipt of notice of such
non-exercise  (or  deemed  non-exercise),  an  option  to  purchase  all of such
remaining Membership Interest upon the same terms and conditions.

             2.1.3 Death Before Closing.  If a Member who proposed to transfer a
Membership  Interest  dies  prior  to the  closing  of  the  sale  and  purchase
contemplated  by this  Section  2.1, the  Membership  Interest of such  deceased
Member shall be the subject of sale and purchase under Section 2.3.

             2.1.4 Allowable  Consideration.  All parties hereto acknowledge and
agree that it would be  impractical  to exercise  an option to purchase  arising
pursuant to this Section 2.1 whenever the proposed  consideration to be received
by the transferring  Member is other than cash or cash  equivalents.  Therefore,
the parties agree that no transfer  shall be permitted and no option shall arise
pursuant to this Section 2.1 whenever the  consideration to be received from the
proposed transferee is other than cash or cash equivalents.

2.2          OPTION UPON CERTAIN INVOLUNTARY TRANSFERS.

             2 2.1  Exercise  Event and  Notice.  The filing of a  voluntary  or
involuntary petition of bankruptcy by or on behalf of a Member, an assignment by
a Member of any of its Membership Interest, 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 Membership Interest, or of any right or interest therein
(other  than  transfers  governed by ARTICLE I or  Sections  2.1,  2.3 or 2.4 or
ARTICLE  VII  hereof),  shall give the other  Members,  Rosenberg  and Prime the
option to  purchase  the  Membership  Interest of such  bankrupt  Member or such
transferred  Membership  Interest  as  provided  herein.  Upon the  filing  of a
voluntary or  involuntary  petition of bankruptcy by or on behalf of a Member or
an assignment by Member of any of its  Membership  Interest,  or of any right or
interest  therein,  for the  benefit of  creditors,  the Member or its  personal
representative  shall  promptly  give written  notice of such  occurrence to the
other  Members,  Rosenberg  and Prime.  In the event of a transfer of Membership
Interest,  as described above, the Member  transferring such Membership Interest
shall  promptly  give  written  notice of such  transfer  to the other  Members,
Rosenberg and Prime.

             2.2.2 Option to Purchase.  The Option  Members shall have,  and may
exercise  within 30 days after receipt of the notice of the applicable  exercise
event,  an option to purchase all or any portion of the Membership  Interest the
bankrupt or transferring Member intends to transfer,  for the price and upon the
other terms hereinafter provided. If the Option Members fail, within such 30-day
period,  to exercise their purchase  option (by delivery of written notice) with
respect to the entire Membership Interest being transferred,  the Option Members
shall be deemed to have  elected  not to  exercise  their  purchase  option with
respect to such unpurchased Membership Interest. Upon any notice of non-exercise
(or deemed  non-exercise) by the Option Members,  Rosenberg (if not the bankrupt
or  transferring  Member) shall have, and may exercise within 30 days of receipt
of notice of such non-exercise (or deemed  non-exercise),  an option to purchase
all or any portion of such  unpurchased  Membership  Interest  for the price and
upon the other terms  hereinafter  provided.  If  Rosenberg  fails,  within such
30-day period,  to exercise his purchase  option (by delivery of written notice)
with respect to the entire unpurchased  Membership Interest,  Rosenberg shall be
deemed to have elected not to exercise  his purchase  option with respect to any
remaining  Membership  Interest.  Upon any  notice of  non-exercise  (or  deemed
non-exercise) by Rosenberg, Prime shall have, and may exercise within 30 days of
receipt of notice of such  non-exercise (or deemed  non-exercise),  an option to
purchase all of such  remaining  Membership  Interest for the price and upon the
other terms hereinafter provided.

2.3          PURCHASE AND SALE OF MEMBERSHIP INTEREST UPON DEATH.

             2.3.1  Notice  of  Death.  Upon  the  death  of  the  Member,   the
representative  of the estate of the deceased Member shall promptly give written
notice of the death to the other Members, Rosenberg and Prime.

             2.3.2 Option to Purchase.  The Option  Members shall have,  and may
exercise  within 30 days  after  receipt  of the  notice of death,  an option to
purchase all or any portion of the Membership  Interest of the deceased  Member,
for the price and upon the  other  terms  hereinafter  provided.  If the  Option
Members fail,  within such 30-day period,  to exercise their purchase option (by
delivery of written  notice)  with  respect to the  entirety of such  Membership
Interest,  the Option  Members  shall be deemed to have  elected not to exercise
their purchase option with respect to such unpurchased Membership Interest. Upon
any notice of  non-exercise  (or  deemed  non-exercise)  by the Option  Members,
Rosenberg (but not his estate if he is the deceased  Member) shall have, and may
exercise  within 30 days of  receipt of notice of such  non-exercise  (or deemed
non-exercise),  an option to  purchase  all or any  portion of such  unpurchased
Membership Interest for the price and upon the other terms hereinafter provided.
If Rosenberg fails,  within such 30-day period,  to exercise his purchase option
(by  delivery  of  written  notice)  with  respect  to  the  entire  unpurchased
Membership  Interest,  Rosenberg shall be deemed to have elected not to exercise
his purchase option with respect to any remaining Membership Interest.  Upon any
notice of non-exercise (or deemed non-exercise) by Rosenberg,  Prime shall have,
and may exercise  within 30 days of receipt of notice of such  non-exercise  (or
deemed  non-exercise),  an option to purchase all of such  remaining  Membership
Interest for the price and upon the other terms hereinafter provided.

2.4  OPTION UPON DEATH OF A MEMBER'S SPOUSE, TERMINATION OF MARITAL RELATIONSHIP
     OR PARTITION OF COMMUNITY PROPERTY.

             2.4.1  Death of  Member's  Spouse.  Each  Member and each  Member's
spouse  agree that in the event the spouse of a Member  predeceases  such Member
and such Member 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 Membership  Interest,  such Member 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 Member fails,  within such 60-day
period,  to exercise  his purchase  option (by delivery of written  notice) with
respect to the entirety of such spouse's  interest,  that Member shall be deemed
to have  elected  not to  exercise  his  purchase  option  with  respect to such
spouse's interest.  Upon any notice of non-exercise (or deemed  non-exercise) by
the Member,  the Option Members shall then have, and may exercise within 30 days
after  receipt  of such  non-exercise  (or  deemed  non-exercise),  an option to
purchase all or any portion of the deceased spouse's interest, for the price and
upon the other terms  hereinafter  provided.  If the Option Members fail, within
such 30-day period,  to exercise  their purchase  option (by delivery of written
notice) with respect to the entirety of such  deceased  spouse's  interest,  the
Option  Members shall be deemed to have elected not to exercise  their  purchase
option with respect to such unpurchased  deceased  spouse's  interest.  Upon any
notice of non-exercise (or deemed non-exercise) by the Option Members, Rosenberg
(if not the Member whose spouse is deceased) shall have, and may exercise within
30 days of receipt of notice of such non-exercise (or deemed  non-exercise),  an
option to purchase  all or any  portion of such  unpurchased  deceased  spouse's
interest  for the  price  and upon the  other  terms  hereinafter  provided.  If
Rosenberg fails,  within such 30-day period, to exercise his purchase option (by
delivery of written  notice)  with  respect to the entire  unpurchased  deceased
spouse's interest, Rosenberg shall be deemed to have elected not to exercise his
purchase option with respect to any remaining  portion of the deceased  spouse's
interest. Upon any notice of non-exercise (or deemed non-exercise) by Rosenberg,
Prime shall have,  and may exercise  within 30 days of receipt of notice of such
non-exercise  (or  deemed  non-exercise),  an  option  to  purchase  all of such
remaining  portion of the deceased  spouse's interest for the price and upon the
other terms hereinafter provided.

             2.4.2 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  Member,  or upon the
initiation  of any voluntary or  involuntary  attempt to partition the community
property  estate between a Member and such Member's  spouse for any reason,  the
Member shall promptly give written notice to the other Members,  Rosenberg,  and
Prime, of such event.  The Member shall have, and may exercise within 60 days of
giving of such notice, an option to purchase all or any portion of the departing
spouse's interest in such Membership  Interest (including without limitation any
community  property interest,  for purposes of this Section),  for the price and
upon the other terms  hereinafter  provided.  If the Member  fails,  within such
60-day period,  to exercise his purchase  option (by delivery of written notice)
with respect to the  entirety of such  spouse's  interest,  that Member shall be
deemed to have elected not to exercise his purchase  option with respect to such
spouse's interest.  Upon any notice of non-exercise (or deemed  non-exercise) by
the Member,  the Option Members shall then have, and may exercise within 30 days
after  receipt  of such  non-exercise  (or  deemed  non-exercise),  an option to
purchase all or any portion of the departing  spouse's  interest,  for the price
and upon the other  terms  hereinafter  provided.  If the Option  Members  fail,
within such 30-day period,  to exercise  their  purchase  option (by delivery of
written  notice)  with  respect  to the  entirety  of  such  departing  spouse's
interest,  the Option  Members  shall be deemed to have  elected not to exercise
their  purchase  option  with  respect to such  unpurchased  departing  spouse's
interest. Upon any notice of non-exercise (or deemed non-exercise) by the Option
Members, Rosenberg (if not the Member whose spouse is departing) shall have, and
may exercise within 30 days of receipt of notice of such non-exercise (or deemed
non-exercise),  an option to  purchase  all or any  portion of such  unpurchased
departing  spouse's  interest for the price and upon the other terms hereinafter
provided.  If  Rosenberg  fails,  within such  30-day  period,  to exercise  his
purchase  option (by  delivery  of written  notice)  with  respect to the entire
unpurchased  departing  spouse's  interest,  Rosenberg  shall be  deemed to have
elected not to  exercise  his  purchase  option  with  respect to any  remaining
portion of the departing spouse's interest.  Upon any notice of non-exercise (or
deemed non-exercise) by Rosenberg,  Prime shall have, and may exercise within 30
days of receipt of notice of such  non-exercise  (or  deemed  non-exercise),  an
option to  purchase  all of such  remaining  portion of the  departing  spouse's
interest for the price and upon the other terms hereinafter provided.

2.5          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 4.3) as contemplated herein shall not operate to prevent the creation of
any option which would otherwise arise pursuant to this ARTICLE II. 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. For instance, and purely by way of example, in the
event of the death of a Member,  another  Member having actual  knowledge of the
Member's  death  may give the  notice  initially  contemplated  to be given by a
representative  of the estate of the deceased  Member  pursuant to Section 2.3.1
above,  whereupon the Option  Members'  option  described in Section 2.3.2 would
arise and become  exercisable to the same extent as if the notice had been given
by the representative of the estate of the deceased Member.

                                   ARTICLE III

                   EXERCISE OF OPTIONS; EFFECT OF NON-EXERCISE

3.1          MANNER OF EXERCISE OF OPTIONS.

             All options granted in, or arising pursuant to, ARTICLE II shall be
exercised by a written notice to that effect  delivered within the time provided
for the exercise of the option.

3.2          COMPLETE EXERCISE OF OPTIONS.

             Notwithstanding  anything  herein to the  contrary,  the holders of
options granted in, or arising pursuant to, ARTICLE II must,  either alone or in
the  aggregate,  exercise the options in such a manner as to purchase all of the
Membership  Interest (or interest therein) subject to such options,  and failure
to do so shall cause a forfeiture of the options.

3.3          MULTIPLE OPTION HOLDERS.

             In cases  where an option is held by more than one  Option  Member,
each  purchasing  Option  Member  shall  be  entitled  to  purchase  his  or her
proportionate  share of the Membership Interest subject to the option. An Option
Member's  proportionate  share  shall  equal  the  total  amount  of  Membership
Interests  subject to the option multiplied by a fraction the numerator of which
is the  amount  of  Membership  Interests  held by such  Option  Member  and the
denominator  of which shall be the amount of  Membership  Interests  held by all
Option Members electing to exercise the option.

3.4          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 Membership  Interests (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
Membership  Interests  subject to all the terms and conditions  provided herein,
and any transfer of such Membership  Interests (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  Membership  Interests  (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  Membership
Interests shall thereafter be subject to cancellation and  extinguishment by the
Company,  without  consideration  therefor.  In  addition,  in  the  event  of a
voluntary  transfer  subject to the provisions of Section 2.1, upon the lapse or
forfeiture of the options arising pursuant to that Section, the Member proposing
the  transfer  shall have the right to  effectuate  the  transfer of  Membership
Interests  in  accordance  with the  terms  stated  in the  notice  of intent to
transfer,  and the  transferee of such  Membership  Interests  shall execute and
become a party to this  Agreement  and  shall  hold  such  Membership  Interests
subject to all of its terms and conditions.  Provided further, however, any such
transfer of Membership  Interests shall be void and  ineffectual,  and shall not
operate to transfer any interest or title to the  purported  transferee,  if (i)
the  transfer  is not upon the terms or is not to the  transferee  stated in the
notice of intent to transfer,  or (ii) the transfer is not closed within 10 days
of receipt of written notice of the election not to exercise,  or the forfeiture
of, all applicable options.

                                   ARTICLE IV

                                 PURCHASE PRICE

4.1          PURCHASE PRICE.

             The  purchase  price of the  Membership  Interests  to be purchased
pursuant to options granted, held or exercised pursuant to Sections 2.2, 2.3 and
2.4  hereof,  shall be the amount  calculated  in  accordance  with  Section 4.2
hereof.

4.2          CALCULATION OF PURCHASE PRICE.

             When  determined in accordance  with this Section 4.2, the purchase
price for the Membership  Interest or any portion  thereof or spouse's  interest
therein shall be equal to the Appraised  Value of the Membership  Interest as of
the Valuation Date (as defined in Section 4.3 hereof), reduced when necessary to
reflect the purchase of less than a one hundred  percent (100%) interest in each
of the Membership Interests 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 Membership  Interests of a Member spouse).  For purposes
of this Agreement,  the "Appraised Value" of a Membership  Interest shall be (i)
based on the overall value of the Company as a going concern, expressed in a per
Membership Interest unit amount without  consideration to whether the Membership
Interest,  or interest therein,  being transferred  constitutes a controlling or
minority  interest in the Company,  and (ii) determined by a certified  business
appraiser,  selected  by the  Company,  that is a member of either the  American
Society of Appraisers or the Institute of Business  Appraisers;  but if a Member
or Prime  disagrees  with such  determination  that  Member or Prime may, at its
expense,  have another certified  business  appraiser that is a member of one or
both of the above named professional  organizations  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  Membership  Interest by majority  vote.  The expense of such third
appraiser  shall  also be paid by the  Member or Prime,  as the case may be, who
disagrees  with the value  determination  of the Company's  original  appraiser,
unless the appraised value ultimately  determined is more than ten percent (10%)
greater than the value determined by the Company's original appraiser.

4.3          CERTAIN DEFINITIONS.

             As used herein,  the term "Valuation  Date" shall mean and refer to
the end of the fiscal year of the Company  immediately  preceding  the  Exercise
Event,  unless the purchasing party elects to use the alternate  valuation date,
in which  event the  Valuation  Date  shall be the end of the month  immediately
preceding the Exercise  Event. As used herein,  the term "Exercise  Event" shall
mean and refer to the event or  circumstance  described  in  ARTICLE  II of this
Agreement, as a result of which the Company, a Member, or Prime, as the case may
be in the first  instance,  becomes  entitled  to  exercise  a  purchase  option
hereunder.

                                    ARTICLE V

                          PAYMENT OF THE PURCHASE PRICE

5.1          PAYMENT.

             Except as otherwise  provided in this Agreement,  including Section
2.1, the purchase price for a Membership Interest to be purchased from a selling
party shall either: (i) be paid in cash; or (ii) 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.

5.2          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 Membership Interest transferred and the purchasing
party shall  deliver  certificates  evidencing  the  Membership  Interest to the
selling party and take such further action as is reasonably necessary to perfect
the security interest.

                                   ARTICLE VI

                                   THE CLOSING

             Unless otherwise agreed by the parties, the closing of the sale and
purchase of a Membership  Interest shall take place at the principal  offices of
the Company within sixty (60) days after the exercise of any option  provided by
this Agreement.  Each party hereto  (including the spouses of the Members) shall
bear its own transaction  costs,  including  legal and accounting  fees, if any,
attributable to any transfer of a Membership Interest,  or any interest therein,
pursuant to this  Agreement.  Upon the closing,  the selling party shall deliver
its  Membership  Interest  to the  purchaser  free and  clear of all  liens  and
encumbrances,  and shall deliver to the Company its  resignation and that of all
of its nominees, if any, as officers and directors of the Company and any of the
Company'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 a  Membership  Interest (or any interest
therein) pursuant to this Agreement:  (i) the selling party shall be indemnified
by the purchasing party (in a form reasonably satisfactory to the selling party)
for all the Company's liabilities,  whether fixed or contingent,  to lenders and
others,  incurred prior to the closing of the  transaction,  (ii) the purchasing
party and/or the Company  shall cause the release of any personal  guaranties by
the  selling  party that the  selling  party may have  granted to the  Company's
lenders or other  creditors  or which may have  otherwise  been  provided by the
selling party for the benefit of the Company,  and (iii) if the selling party is
a creditor of the Company, the purchasing party shall unconditionally  guarantee
the debt of the Company 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 Company 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  Membership
Interests  shall remain  subject to the  restrictions  contained  herein and, in
addition,  the parties hereto shall be entitled to such other remedies as may be
available in the event the failure to close constitutes a breach hereof.

                                   ARTICLE VII

                             LEGEND ON CERTIFICATES

             All Membership  Interests now or hereafter owned by the Members, or
their  permitted  transferees,  shall  be  subject  to the  provisions  of  this
Agreement,  and any  certificates  representing  same shall  bear the  following
legend:

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

                                  ARTICLE VIII

                            TERMINATION OF AGREEMENT

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

             (a)             The bankruptcy or dissolution of the Company.

     (b) The ownership by one person of all of the  Membership  Interests of the
Company which are then subject to this Agreement.

             (c) The execution of a written  instrument  by the Company,  all of
the Members who then own Membership  Interests  subject to this  Agreement,  and
Prime 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.

                                   ARTICLE IX

                               GENERAL PROVISIONS

9.1          REMEDIES FOR BREACH.

             The  Membership  Interests 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.

9.2          BINDING EFFECT.

             This  Agreement  is binding  upon and inures to the  benefit of the
Company,  its  successors  and  permitted  assigns,  to the  Members  and  their
respective heirs,  personal  representatives,  successors and permitted assigns,
and to Prime,  its 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.

9.3          PRIOR AGREEMENTS.

             This  Agreement  supersedes  all prior written and oral  agreements
between the parties regarding the subject matter hereof.

9.4          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. The remaining
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.

9.5          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.

9.6          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 companies may require. The term "person" as used in this Agreement
shall include natural persons, companies,  partnerships, trusts, estates and any
other form of entity.

9.7          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 Company,  to the Members,  and to Prime at the following  addresses
(which  may be  changed  by giving  written  notice of such  change to all other
parties hereto):

             To the Company: LASIK Investors, L.L.C.
                             4800 North 22nd Street
                             Phoenix, Arizona 85016

             To Barnet:      Ronald W. Barnet, M.D.
                             4800 North 22nd Street
                             Phoenix, Arizona 85016

             To Dulaney:     David D. Dulaney, M.D.
                             4800 North 22nd Street
                             Phoenix, Arizona 85016

             To Rosenberg:   Mark Rosenberg
                             4800 North 22nd Street
                             Phoenix, Arizona 85016

             To Perkins:     Scott A. Perkins, M.D.
                             4800 North 22nd Street
                             Phoenix, Arizona 85016

             To Pinkert:     Robert B. Pinkert, O.D.
                             4800 North 22nd Street
                             Phoenix, Arizona 85016

             To Prime:        Prime Medical Operations, Inc.
                              Attention: President
                              1301 Capital of Texas Highway
                              Austin, Texas 78746

9.8  BINDING EFFECT OF THIS AGREEMENT ON ADDITIONAL MEMBERSHIP INTEREST ACQUIRED
     BY A MEMBER.

             In the event a Member acquires,  contracts to acquire,  or receives
any Membership  Interests of the Company which are not subject to this Agreement
at the time of acquisition,  such additional  Membership Interests of the Member
shall  be   automatically   subject  to  this  Agreement  and  any  certificates
representing  such Membership  Interests shall bear the legend prescribed herein
and this Agreement shall be amended, if necessary, to reflect the acquisition of
such Membership Interests by the Member.

9.9          EXECUTION OF DOCUMENTS.

             Whenever Membership Interests are to be purchased by the Company, a
Member, or Prime 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  Membership  Interest by mailing  payment to the  transferor's
attention  at the  address  of the  Company's  registered  office on file at the
office of the Texas Secretary of State.  After payment is tendered  accordingly,
the Company shall be entitled to cancel such  Membership  Interest on its books,
and reissue such Membership Interest to the purchaser(s) or, if the purchaser is
the Company,  the Company may hold such Membership Interest as treasury stock or
cancel such Membership Interest.

9.10         ACTIONS BY THE COMPANY.

             Any decision by the Company to exercise any purchase  option,  give
any notice or otherwise enforce any provisions of this Agreement,  shall be made
by a majority  vote of Members who are not then in breach of this  Agreement and
whose Membership Interests are not then the subject of any option or requirement
of notice of an Exercise Event.

                            [Signature pages follow]


<PAGE>
                                SIGNATURE PAGE TO

                               MEMBERSHIP INTEREST

                         TRANSFER RESTRICTION AGREEMENT

             EXECUTED as of the date first mentioned above.

             COMPANY:                        LASIK Investors, L.L.C.

                                             By:
                                                 Ronald W. Barnet, M.D., manager

                                             By:
                                                 David D. Dulaney, M.D., manager

             BARNET:

                                                 Ronald W. Barnet, M.D.


             DULANEY:

                                                 David D. Dulaney, M.D.

             ROSENBERG:

                                                 Mark Rosenberg

             Perkins:

                                                 Scott A. Perkins, M.D.


             Pinkert:

                                                 Robert B. Pinkert, O.D.


             PRIME:                              Prime Medical Operating, Inc.

                                             By:
                                                 Printed Name:
                                                 Title:



<PAGE>


                                SPOUSAL CONSENTS

             The  undersigned   spouse  of  Ronald  W.  Barnet,   M.D.  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  membership  interest  of LASIK  Investors,  L.L.C.,  referred  to in the
foregoing Agreement, and to all other provisions of such Agreement.

                                                         Signature:
                                                         Printed Name:

             The  undersigned   spouse  of  David  D.  Dulaney,   M.D.  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  membership  interest  of LASIK  Investors,  L.L.C.,  referred  to in the
foregoing Agreement, and to all other provisions of such Agreement.

                                                         Signature:
                                                         Printed Name:

             The undersigned  spouse of Mark Rosenberg  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
membership  interest of LASIK  Investors,  L.L.C.,  referred to in the foregoing
Agreement, and to all other provisions of such Agreement.

                                                         Signature:
                                                         Printed Name:

             The  undersigned   spouse  of  Scott  A.  Perkins,   M.D.  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  membership  interest  of LASIK  Investors,  L.L.C.,  referred  to in the
foregoing Agreement, and to all other provisions of such Agreement.

                                                         Signature:
                                                         Printed Name:

             The  undersigned  spouse  of  Robert  B.  Pinkert,   O.D.  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  membership  interest  of LASIK  Investors,  L.L.C.,  referred  to in the
foregoing Agreement, and to all other provisions of such Agreement.

                                                         Signature:
                                                         Printed Name:

<PAGE>
                                   EXHIBIT-I

                                               COLLOCATION AGREEMENT

                                                  BY AND BETWEEN

                                        BARNET DULANEY EYE CENTER, P.L.L.C.

                                                        AND

                                          PRIME/BDEC ACQUISITION, L.L.C.






<PAGE>


                                                    COLLOCATION
                                                     AGREEMENT

     This COLLOCATION  AGREEMENT  ("Agreement"),  effective as of the 1st day of
September,  1999 (the  "Effective  Time"),  is by and between BARNET DULANEY EYE
CENTER,  P.L.L.C.,  an Arizona  professional limited liability company ("BDEC"),
and  PRIME/BDEC  ACQUISITION,  L.L.C.,  a  Delaware  limited  liability  company
("Company").

                                               W I T N E S S E T H:

     WHEREAS,  the  Company  has been  organized  for the  purpose of  providing
facilities,  equipment  and  non-physician  personnel  for  the  performance  by
physicians  of  Refractive  Surgery  (as  defined  herein),  for the  marketing,
scheduling  and  management of Refractive  Surgery,  for the  credentialing  and
scheduling  of  physicians  to perform  Refractive  Surgery and for the billing,
collecting  and   accounting  for  the  use  of  the  facility,   equipment  and
non-physician personnel (the "Business");

     WHEREAS,  BDEC has owned or leased assets for the performance by physicians
of Refractive Surgery, including, without limitation, certain space located in a
building at 4800 North 22nd Street,  Phoenix,  Arizona  85016 and certain  space
located in a building at 555 East River Road,  Tucson,  Arizona  (individually a
"Facility"  and  collectively  the  "Facilities")  and in  connection  with each
Facility, equipment,  instruments, computer software used in connection with the
equipment, certain leases and contracts, the leasehold improvements,  furniture,
fixtures and other fixed assets and items of personal property used primarily in
or  materially  relied  on  for  the  performance  of  Refractive  Surgery  (the
"Equipment and Personalty");

     WHEREAS, BDEC employs  non-physician  personnel (the "BDEC Employees") with
expertise  and  experience  in  assisting   physicians  in  the  performance  of
Refractive  Surgery,   in  credentialing  and  scheduling   physicians  for  the
performance  of  Refractive  Surgery  in  the  Facilities,   in  performing  the
scheduling of patients for Refractive  Surgery in the Facilities,  in performing
marketing,  accounting,  billing  and  collection  services  for  the use of the
Facilities  and in managing  the  Facilities  and all  non-physician  aspects of
Refractive Surgery in the Facilities (the "Support Services");

     WHEREAS,   BDEC  employs  physician  and   non-physician   executives  (the
"Managers")  with expertise and experience in the management of the  Facilities,
the Equipment and Personalty,  the Support  Services and all other elements of a
Refractive Surgery center (the "Management Services");

     WHEREAS,  BDEC, Prime Medical  Operating,  Inc.("Prime") and others entered
into that certain Contribution  Agreement dated effective September 1, 1999 (the
"Contribution  Agreement"),  pursuant  to  which  Prime,  BDEC and  others  have
participated in a series of transactions that were completed simultaneously with
the execution and delivery of this Agreement,  in which transactions the Company
became the owner of the  Equipment  and  Personalty  and the business  conducted
therewith,  excluding the practice of medicine,  and in which  transactions BDEC
agreed to provide to the Company the  Facility and the  Management  Services and
Support Services on the terms and conditions set forth in this Agreement;

     NOW, THEREFORE,  for and in consideration of the mutual covenants set forth
herein, and other good and valuable  consideration,  the receipt and adequacy of
which are hereby forever acknowledged and confessed, the parties hereto agree as
follows:

                                                     ARTICLE I
                                                    DEFINITIONS

     1.1 Agreement shall mean this Collocation Agreement between the Company and
BDEC  and  any  amendments  hereto  as may  from  time to  time  be  adopted  as
hereinafter provided.

     1.2 BDEC shall mean Barnet Dulaney Eye Center, P.L.L.C.

     1.3 Buildings shall mean Building P and Building T.

     1.4 Building P shall mean the  building  located at 4800 North 22nd Street,
Phoenix, Arizona 85016, and known generally as the Barnet Dulaney Eye Center.

     1.5  Building T shall  mean the  building  located at 555 East River  Road,
Tucson, Arizona, and known generally as the Barnet Dulaney Eye Center.

     1.6  Business  shall  mean  the  provision  of  facilities,  equipment  and
non-physician  personnel for the performance by physicians of Refractive Surgery
(as defined  herein),  the  marketing,  scheduling  and management of Refractive
Surgery,  the credentialing  and scheduling of physicians to perform  Refractive
Surgery and the billing,  collecting and accounting for the use of the facility,
equipment and non-physician personnel.

         1.7 Business  Expense shall mean all  out-of-pocket  costs and expenses
incurred by BDEC solely and  exclusively  in the  performance  of its duties and
obligations  under,  and in accordance  with, this Agreement.  Business  Expense
shall also  include  that portion  (allocated  based on the relative  percentage
amount of each such  employee's  time spent working  directly on the Business of
the Company) of salaries,  wages and  benefits for those  personnel  employed by
BDEC to provide  services  hereunder,  but only to the extent such employees (i)
work  directly on the  Business  of the  Company  and (ii) are either  listed on
Exhibit B hereto or are  subsequently  employed to replace such listed employees
or are  added  in the  same  service  categories  related  to  the  Business  as
corresponds  to the service  categories  applicable to the  employees  listed on
Exhibit B. Business  Expense  shall also include a reasonable  allocation of the
out-of-pocket   costs  incurred  by  BDEC  related  to  hiring  such  personnel.
Notwithstanding the foregoing, Business Expense shall not include any portion of
the salaries,  wages or benefits related to any personnel  employed or otherwise
retained or contracted by BDEC who work in any of the following  departments  or
fall  within any of the  following  categories:  (a)  accounting,  (b)  accounts
receivable,  (c) purchasing, (d) practice operations, (e) management information
systems and facilities support, (f) human resources,  (g) credentialing,  or (h)
executive management.  Furthermore,  Business Expense shall not include any rent
or other costs or expenses  incurred by BDEC  pursuant to the Base  Leases.  For
illustration  purposes,  the parties agree that Business Expense for the Phoenix
Refractive  Surgery  center  based on the pro forma  annualized  facility  model
attached  hereto  as  Exhibit  A for the  first  full  year of the  Term of this
Agreement  would be  $1,663,638,  being the sum of the  categories  on Exhibit A
marked  with an  asterisk.  It is the  intention  of the parties  that  Business
Expense be consistent with the methodology reflected in Exhibit A.

     1.8 Company shall mean Prime/BDEC Acquisition, L.L.C.

     1.9  Facility  and  Facilities  shall have the  meaning  given to it in the
recitals to this Agreement.

     1.10 Premises P shall mean the Facility and other space located in Building
P to which the right to use is granted in Section 2.3 hereof.

     1.11 Premises T shall mean the Facility and other space located in Building
T to which the right to use is granted in Section 2.3 hereof.

     1.12 Refractive Surgery shall mean, collectively, any current and/or future
surgical procedures intended to correct myopia,  hyperopia or astigmatism of the
eye, excluding procedures aimed only at restoring accommodation (presbyopia) and
procedures  to  treat  only  cataracts,   glaucoma,   oculoplastics  or  retinal
abnormality.

     1.13 Services Fee shall mean BDEC's compensation  established and described
in Article VI hereof.

     1.14 State shall mean the State of Arizona.

     1.15 Term shall mean the  initial  and any  renewal  periods of duration of
this Agreement as described herein.

                                                ARTICLE II
                                             RIGHT TO USE THE PREMISES

     2.1 Base Lease.  Section 2.3  contains a grant of a right to use Premises P
and Premises T and is subject and  subordinate  to the terms and  conditions  of
those certain  leases as amended ("Base  Leases")  pursuant to which BDEC leases
the Building P and Building T.

     2.2 Users of  Buildings.  Building P and  Building T are used for  multiple
activities, including, but not limited to, Refractive Surgery, office and clinic
activities of BDEC  physicians and other  professionals,  an ambulatory  surgery
center ("ASC") and marketing,  accounting,  management and other  administrative
activities.  The various  activities  in each Building do not  necessarily  have
specific or identified space and, in some instances, more than one activity uses
a space at the same time or at different times.  BDEC designates,  schedules and
modifies  the  location  and the times that each  activity  can use space in the
Buildings.

         2.3 Grant of Right to Use. In  consideration  of  Company's  payment to
BDEC of the Purchase Price, as defined in the Contribution Agreement, and on the
terms and  conditions of this  Agreement,  BDEC hereby grants to the Company the
non-exclusive  right to use for  Refractive  Surgery the spaces in the Buildings
where the  Equipment  and  Personalty  are located at the times  during  regular
business  hours and in the manner  designated by BDEC (but in no event less than
forty percent (40%) of the of the business hours during each week),  which might
require the using of such space while the same or adjoining  space is being used
by an ASC or on a  cooperative  schedule  with an ASC.  BDEC also  grants to the
Company the non-exclusive  right to use and to permit its guests and invitees to
use the common areas in accordance  with the Base Leases.  Notwithstanding  that
the foregoing grants are  non-exclusive,  BDEC covenants and agrees that it will
not allow any person or entity,  other than the Company, to utilize any space in
the  Buildings,  any Equipment and Personalty or any BDEC Employees for purposes
of conducting any component of the Business.

     2.4 Term and Conditions of Grant. The grants set forth in Section 2.3 above
are each for the term and on the conditions, requirements,  covenants, rules and
regulations  of the Base Leases and subject to  Company's  paying its  allocated
portion of the rent,  common area  charges and other  payments  required of BDEC
under the Base Leases.

     2.5 Maintenance of Base Leases. Throughout the Term of this Agreement, BDEC
covenants  and agrees to  maintain  all Base  Leases in full  force and  affect,
without any breach or default by BDEC thereunder.

                                                    ARTICLE III
                                         APPOINTMENT AND AUTHORITY OF BDEC

     3.1 Appointment. The Company hereby appoints BDEC as its sole and exclusive
agent  for the  management  and  performance  of  day-to-day  operations  of the
Business in the  Facilities,  using the  Equipment and  Personalty,  through the
provision of Management  Services and Support Services,  as defined herein,  and
BDEC hereby accepts such appointment,  subject at all times to the provisions of
this Agreement.

         3.2  Authority.  Consistent  with  the  provisions  of this  Agreement,
directions given by the Company and operating and capital budgets established by
the Company,  BDEC shall have the responsibility  and commensurate  authority to
provide,  or  cause  to be  provided,  personnel,  business  and  administrative
services  for the  Company,  which shall  include  those  services  set forth in
Article  III hereof.  BDEC is hereby  expressly  authorized  to provide all such
services  in  whatever  manner  BDEC,  in  good  faith,  deems  appropriate  and
consistent  with  commercially  reasonable  standards  to  meet  the  day-to-day
requirements  of  the  business  functions  of the  Company  or  related  to the
Business.  The  authority  of BDEC  shall  extend no further  than is  expressly
provided  herein,  and  shall  not be  extended  by  implication  or  otherwise.
Notwithstanding  anything  contained herein to the contrary,  BDEC shall have no
authority  to speak on behalf of, or to bind,  the Company  with  respect to any
third party.

     3.3 Retained Authority.  The Company shall at all times retain the ultimate
responsibility  for the  operation of the Business  and,  except as delegated to
BDEC herein or by resolution of Company's  managers,  shall retain the authority
and power and to make all decisions with respect to its assets and rights.

     3.4  Nature of  Relationship.  The  parties  acknowledge  and agree that no
partnership  or other form of entity,  or any joint and  several  liability,  is
intended to be created by or between them by the  execution or operation of this
Agreement, and none of the foregoing should be implied.

                                                    ARTICLE IV
                                                 COVENANTS OF BDEC

     4.1  Management  and Support  Services.  BDEC shall provide the  Management
Services  and  Support  Services  necessary  to operate  the  Business as it was
operated by BDEC prior to the Effective Time, including,  but not limited to the
following:

     4.1.1 Marketing and Scheduling.  BDEC shall conduct  marketing  efforts for
the Facility and shall schedule patient treatment in the Facility, in the manner
that such services were performed prior to the Effective Time.

     4.1.2  Physician  Matters.  BDEC  shall  credential  physicians  to perform
Refractive  Surgery in the Facility  and shall  schedule  physicians  to use the
Facility in the manner that such services were performed  prior to the Effective
Time.

     4.1.3 Supplies.  As agent for the Company, BDEC shall obtain all reasonable
medical,  office, and other supplies,  including stationery and forms, and shall
ensure that the Company is at all times adequately stocked with such supplies as
are reasonably necessary and appropriate for the operation of the Business.

     4.1.4  Licenses and Permits.  BDEC shall  coordinate  all  development  and
planning  processes,  and apply for and use  BDEC's  best  efforts to obtain and
maintain all federal,  state, and local licenses and regulatory permits required
for or in connection with the operation of the Business.

     4.1.5 Contract  Negotiations.  BDEC shall negotiate,  either directly or on
the Company's  behalf, as appropriate,  all contractual  arrangements with third
parties as are reasonably necessary and appropriate for the Business.

                  4.1.6 Financial  Matters.  BDEC shall establish and administer
accounting procedures,  controls, and systems for the development,  preparation,
and safekeeping of records and books of accounts relating to the Company, all of
which shall be prepared and  maintained in accordance  with  generally  accepted
accounting  principles  consistently  applied. BDEC shall prepare and deliver to
the Company,  and each of its members,  within thirty (30) days after the end of
each fiscal year of the Company,  a balance sheet, a profit and loss  statement,
and a  statement  of sources  and  applications  of funds and changes in working
capital reflecting the financial status of the Company and as of the end of such
prior fiscal year,  all of which shall be prepared in accordance  with generally
accepted accounting principles  consistently applied.  Additionally,  BDEC shall
prepare and deliver to the board of  managers  of the  Company,  and each of the
Company's members,  monthly financial  statements within ten (10) days after the
end of each month, and shall prepare and deliver to the board of managers of the
Company,  and each of the Company's members,  such other financial statements or
records  as BDEC may  from  time to time  deem  appropriate  or as the  board of
managers of the Company,  or its members,  may reasonably  request. On or before
ninety (90) days prior to the end of each fiscal year of the Company,  BDEC will
prepare and deliver to the board of  managers  of the  Company,  and each of the
Company's  members,  a  proposed  operating  budget of  projected  expenses  and
revenues  of  the  Company  for  the  next  fiscal  year  of  the  Company,  and
representatives of BDEC shall make themselves  reasonably available to the board
of managers and the members of the Company to explain such  proposed  budget and
the underlying assumptions.

     4.1.7 Billing and Collection.  BDEC shall be solely responsible for billing
and  collecting  for all  services  provided  by Company  and for the use of the
Facility and Equipment and  Personalty.  Company shall be entitled to all monies
collected by BDEC on behalf of Company.

     4.1.8 Information Systems.  BDEC shall provide and maintain the information
systems it deems  necessary to operate the Business.  BDEC shall have reasonable
discretion to select hardware and software,  provided such hardware and software
shall be adequate to operate the Business in a commercially  reasonable  manner,
and BDEC  shall be  responsible  for  training  employees  to  operate  any such
systems.

     4.1.9 Legal  Actions.  As requested  by the Company,  BDEC shall advise and
assist the Company in instituting  or defending  legal actions or proceedings by
or  against  third  parties  arising  out of the  Business,  including,  without
limitation,  those actions necessary for the protection and continued  operation
of the Company.  BDEC shall have no authority to initiate,  compromise or settle
any legal  action in the name of the  Company,  or to confess a judgment  in the
name of, or on behalf of, the Company.

     4.1.10  Insurance.  (a) BDEC shall  obtain and  maintain  professional  and
comprehensive  general liability  insurance and other insurance covering Company
for the  risks  and in the  amounts  typically  carried  by  others  in the same
business as Company.

     (b) BDEC  shall  obtain  and  maintain  appropriate  workers'  compensation
coverage for BDEC's  personnel and shall carry  professional  and  comprehensive
general  liability  insurance  covering all BDEC  personnel in amounts that BDEC
deems necessary, the cost of which insurance shall be a Business Expense.

         4.2  Personnel.  BDEC shall  employ or otherwise  retain,  and shall be
responsible  for  interviewing,   selecting,   hiring,  training,   supervising,
scheduling,  and terminating,  non-physician  personnel as BDEC deems reasonably
necessary and appropriate for the performance of Management Services and Support
Services.  Such personnel may include  temporary or "floater"  personnel who are
retained by BDEC to  substitute  for permanent  personnel.  BDEC shall have sole
responsibility  for determining the salaries,  wages, and fringe benefits of all
such  personnel,  for paying such  salaries and wages,  and for  providing  such
fringe benefits,  and for  withholding,  as required by law, any sums for income
tax, unemployment insurance,  social security, or any other withholding required
by applicable law or governmental  requirement.  BDEC shall have sole discretion
in decisions  regarding the termination of personnel employed by BDEC to provide
services  to the  Company.  BDEC shall  indemnify  the  Company and the Compan s
managers and members and hold them  harmless from and against any claim or cause
of action  which  alleges  or is based upon any act or  omission  by BDEC or its
owners, managers,  directors, officers or employees with respect to any employee
or  former  employee  of BDEC.  This  indemnity  obligation  shall  survive  any
termination or expiration of this Agreement.

          4.2.1  Non-Exclusivity.  In recognition of the fact that the personnel
     retained by BDEC to provide  services  pursuant to this  Agreement may from
     time to time perform services for others,  this Agreement shall not prevent
     BDEC from  performing  such services for others or restrict BDEC from using
     such  personnel in the  performance of services for other parties which are
     not in the same business as Company.

                  4.2.2 Equal Employment Opportunity.  Without limitation of any
provision set forth herein,  BDEC expressly agrees,  for itself and on behalf of
the  Company,  to abide by any and all  applicable  federal  and/or  State equal
employment  opportunity  statutes,  rules, and regulations,  including,  without
limitation,  Title VII of the Civil  Rights  Act of 1964,  the Equal  Employment
Opportunity Act of 1972, the Age  Discrimination  in Employment Act of 1967, the
Equal  Pay Act of 1963,  the  National  Labor  Relations  Act,  the  Fair  Labor
Standards  Act, the  Rehabilitation  Act of 1973,  the  Occupational  Safety and
Health Act of 1970,  and the Americans  with  Disabilities  Act, all as may from
time-to-time be modified or amended.

          4.2.3  Labor  Reports.  BDEC shall for its own account or on behalf of
     the Company,  as  appropriate,  prepare,  maintain,  and file all requisite
     reports and  statements  regarding  income tax  withholdings,  unemployment
     insurance,  social  security,   workers'  compensation,   equal  employment
     opportunity,  or other  reports and  statements  required  with  respect to
     personnel  provided by BDEC pursuant to this  Agreement and with respect to
     all personnel employed or otherwise retained by the Company.

          4.3 Conduct of Business.  BDEC  represents and warrants to the Company
     that it is  authorized  to enter into and perform  this  Agreement  and its
     duties  hereunder  without the consent or approval of any third party which
     has not been  obtained.  BDEC  covenants  and agrees to provide  all of the
     services  required of it hereunder,  and to perform all of its  obligations
     hereunder,  in a commercially  reasonable manner and in compliance with all
     applicable laws and legal requirements.

                                                   ARTICLE V y'
                                              COVENANTS OF COMPANY y'

          5.1 Notices to BDEC. Company will give BDEC timely notice of operating
     and capital budgets approved by the Company and directions or requests that
     it has with  respect to the conduct of the  Business or the manner in which
     BDEC  performs  its  duties  hereunder  in order  that BDEC  shall  have an
     opportunity to comply with such budgets, directions or requests.

         5.2 Invoices and Payment.  BDEC shall  deliver to the board of managers
of the  Company,  and to each of the members of the  Company,  monthly  invoices
setting forth the Services Fee, Use Fees, and expense reimbursement due BDEC for
the immediately preceding month, together with such supporting  documentation as
shall be reasonably necessary to document the calculation and incurrence of such
amounts in accordance with the terms of this Agreement. The Company will pay, or
authorize BDEC in writing to pay, the invoiced  amounts  properly due within ten
(10)  days  after  receipt  of such  invoice,  unless  any of such  amounts  are
contested in good faith.

                                                   ARTICLE VI y'
                                             FINANCIAL ARRANGEMENT y'

          6.1 Amount of Services Fee. As  compensation  (the "Services Fee") for
     the Management Services and Support Services to be rendered hereunder, BDEC
     shall be  entitled  to  receive  from the  Company  an amount  equal to Two
     percent (2%) of the Company's Net Revenues (as hereinafter defined).

         6.2  Determination  of Net Revenues.  For purposes of Section 6.1, "Net
Revenues" shall mean the total operating  revenues of the Company net of revenue
deductions  which  include  without  limitation  an  allowance  for  contractual
allowances,  discounts,  professional fees, co-management fees and staff managed
fees and other uncollectible  amounts,  all as determined in accordance with the
methodology  used in the  preparation  of  Exhibit  A hereto  and  otherwise  in
accordance with generally accepted accounting  principles  consistently applied.
For illustration  purposes,  the parties agree that Net Revenues for the Phoenix
Refractive  Surgery  center  based on the pro forma  annualized  facility  model
attached  hereto  as  Exhibit  A for the  first  full  year of the  Term of this
Agreement would be $5,968,627.

          6.3 Business  Expenses.  In addition to the Services Fee  described in
     Section 6.1, the Company shall  reimburse  BDEC, upon submission by BDEC of
     an invoice and necessary supporting documentation, for any Business Expense
     properly incurred by BDEC in accordance with this Agreement.

          6.4 Use Payment.  Company agrees to pay (the "Use Payment") to BDEC on
     a monthly basis as compensation for BDEC's grant to Company of the right to
     use the Premises and common areas of the Buildings. The Use Payment for the
     Premises in Building P shall be twelve percent (12%),  and for the Premises
     in Building T shall be  thirty-six  percent (36%) of the rent and all other
     costs and expenses  incurred by BDEC pursuant to the Base Lease for each of
     the respective building. The Use Payment shall be paid in advance and shall
     be due and payable on the first day of each month during the Term.


                                                  ARTICLE VII y'
                                              TERM AND TERMINATION y'

          7.1 Term. This Agreement shall be effective for an initial period (the
     "Term") commencing on the Effective Date and ending September 1, 2004.

          7.2 Termination.  The Company may terminate this Agreement immediately
     upon the occurrence of one of the following events:

                         (1) the dissolution or bankruptcy of BDEC; or

                         (2) after the expiration of a ninety (90) day period in
                    which BDEC has failed to remedy its  failure to perform  its
                    duties under this Agreement  after having  received  written
                    notice  from the  Company of BDEC's  failure to perform  its
                    duties under this  Agreement,  which notice must specify the
                    failure to perform.

     7.3  Termination  by  Agreement.  In the event the  Company  and BDEC shall
mutually  agree  in  writing,  this  Agreement  may be  terminated  on the  date
specified in such written agreement.

         7.4 Effects of  Termination.  Upon  termination of this  Agreement,  as
hereinabove  provided,  no party  shall have any further  obligations  hereunder
except for (i) obligations  accruing prior to the date of termination,  and (ii)
obligations,  promises, or covenants set forth herein that are expressly made to
extend beyond the Term, including, without limitation,  payment of accrued money
due under  Article VI, if any, and the  authority  and limited power of attorney
granted to BDEC herein, which shall survive until such time as such obligations,
promises,  or  covenants  shall  be  fully  paid  and  satisfied  (all of  which
provisions  shall survive the  expiration  or  termination  of this  Agreement).
Notwithstanding  anything  to the  contrary  herein,  upon  termination  of this
Agreement for any reason,  all accrued Service Fees,  Business  Expenses and Use
Payments,  if any,  shall  become  immediately  due and payable to BDEC  without
demand or notice.

                                                  ARTICLE VIII
                                                  MISCELLANEOUS

     8.1 Notices. Any notice, request, demand,  instruction,  communication,  or
other document required, permitted, or desired to be given hereunder shall be in
writing  and,  except  as  otherwise  provided  for  herein,   shall  be  deemed
effectively  given:  (a) on receipt if  delivered  personally  or by  commercial
courier service or if sent by prepaid telex,  telegram, by facsimile or by other
instantaneous  electronic  transmission  device,  or (b) on the  fifth day after
deposit (unless a different date is shown on the return receipt) if sent postage
prepaid registered or certified United States mail, return receipt requested, as
follows:

                  Company:                  Prime/BDEC Acquisition, L.L.C.
                                            1301 Capital of Texas Highway
                                            Suite C-300
                                            Austin, Texas 78746
                                            Attn.:            President
                                            Facsimile:  (512) 314-4398

                  BDEC:                     Barnet Dulaney Eye Center, P.L.L.C.
                                            4800 North 22nd Street
                                            Phoenix, Arizona  85016
                                            Attn.: Mark Rosenberg
                                            Facsimile:  (602) 508-4889

or to such other  address,  or to the attention of such other person or officer,
as either party may by written notice designate.

     8.2 Governing  Law. This  Agreement has been executed and delivered in, and
shall be governed by, and construed and enforced in accordance with, the laws of
the State of Texas.  Proper venue for any action with respect to this  Agreement
shall be Dallas County, Texas.

       8.3 Assignment.  Except as may be herein  specifically  provided to the
contrary,  this Agreement  shall inure to the benefit of and be binding upon the
parties  hereto and their  respective  legal  representatives,  successors,  and
assigns;  provided,  however,  that  neither  party may  assign  its  rights and
obligations under this Agreement without the prior written consent of the other.

     8.4 No Waiver.  The failure of either  party to insist at any time upon the
strict  observance  or  performance  of any  provision  of this  Agreement or to
exercise any right or remedy as provided in this Agreement  shall not impair any
right or  remedy of such  party or be  construed  as a waiver or  relinquishment
thereof with respect to subsequent defaults or breaches.  Every right and remedy
given by this Agreement to the parties hereto may be exercised from time to time
and as often as may be deemed expedient by the appropriate party.

     8.5  Consents,  Approvals,  and  Exercise of  Discretion.  Except as may be
herein specifically  provided to the contrary,  whenever this Agreement requires
any consent or approval to be given by either party, or either party must or may
exercise  discretion,  the parties agree that such consent or approval shall not
be unreasonably  withheld or delayed,  and such  discretion  shall be reasonably
exercised.


     8.6  Severability.  In the event any provision of this Agreement is held to
be invalid,  illegal,  or unenforceable for any reason and in any respect,  such
invalidity,  illegality,  or unenforceability  shall not affect the remainder of
this  Agreement,  if the remainder of this  Agreement can be enforced to achieve
its purposes equitably to both parties.

     8.7 Divisions and Headings.  The division of this  Agreement into articles,
sections,  and  subsections  and the use of captions and headings in  connection
therewith are solely for convenience and shall not affect in any way the meaning
or interpretation of this Agreement.

         8.8 Sales and Use Tax. BDEC and the Company  acknowledge and agree that
certain of the services to be provided by BDEC hereunder may be subject to state
sales and use taxes and that BDEC may have a legal  obligation  to collect  such
taxes from the Company and to remit same to the State. The Company agrees to pay
the  applicable  state  sales and use taxes in  respect  of the  portion  of the
Services  Fee  attributable  to such  services,  and  grants  BDEC the  right to
withdraw and disburse from the bank accounts of the Company amounts necessary to
timely and fully pay such taxes.

         8.9  Entire  Agreement.  With  respect  to the  subject  matter of this
Agreement,  this Agreement supersedes all previous contracts and constitutes the
entire  agreement  between  the  parties.  Neither  party  shall be  entitled to
benefits other than those specified  herein. No oral statements or prior written
material not specifically  incorporated herein shall be of any force and effect,
and no changes in or  additions to this  Agreement  shall be  recognized  unless
incorporated  herein by amendment  in writing and signed by all parties  hereto.
Such  amendment(s)  shall  become  effective  on the  date  stipulated  in  such
amendment(s).  The parties  specifically  acknowledge that, in entering into and
executing this Agreement,  the parties rely solely upon the  representations and
agreements contained in this Agreement and no others.

         8.10 Audit Rights.  During the Term of this  Agreement and for a period
of two (2) years after any  termination  or  expiration of this  Agreement,  the
Company and each of its members shall be entitled to audit and inspect the books
and records of BDEC for purposes of  determining  the  propriety of all Business
Expenses,  Services  Fees and Use  Payments  charged to the  Company  under this
Agreement.  BDEC agrees to maintain,  throughout such period,  detailed  records
supporting  all amounts  charged to, or reimbursed  by, the Company  pursuant to
this  Agreement  and to  cooperate  fully with,  and to make its  employees  and
records  available  during  normal  business  hours to,  the  auditors  or other
representatives  of the Company or its  members  performing  such  audit.  Audit
rights may not be exercised  more  frequently  than once in every  eighteen (18)
month period and all costs and expenses  associated  therewith shall be borne by
the party  exercising  audit rights unless any such inspection  reveals that the
Company has overpaid,  by at least  $25,000,  any amounts which should have been
properly  paid or  reimbursed  to BDEC in  accordance  with  the  terms  of this
Agreement.  BDEC shall be entitled  to receive at least  thirty (30) days' prior
written  notice of the exercise of audit  rights prior to the  beginning of such
inspection.

                                             [Signature page follows]




<PAGE>





                                                 SIGNATURE PAGE TO
                                               COLLOCATION AGREEMENT


     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.


     COMPANY:                        PRIME/BDEC ACQUISITION, L.L.C.


                                     By: _______________________________________

                                     Name: _____________________________________

                                     Title: ____________________________________



     BDEC:                           BARNET DULANEY EYE CENTER, P.L.L.C.


                                     By: ______________________________________
                                     Ronald W. Barnet, M.D., manager


                                     By: ______________________________________
                                     David D. Dulaney, M.D., manager





<PAGE>





















                                                     EXHIBIT A

                                               Pro Forma Annualized
                                                  Facility Model




<PAGE>




                                                     EXHIBIT B

                                                     EMPLOYEES





<PAGE>


                                    EXHIBIT J

                                     FORM OF

                              CONSULTING AGREEMENT

         This Consulting  Agreement (this  "Agreement") is made and entered into
as of  September  1, 1999  (the  "Effective  Date"),  by and  between  Prime/BDR
Acquisition,  L.L.C., a Delaware limited  liability  company (the "Company") and
____________________________ (the "Consultant").

         For good and valuable  consideration,  the receipt and  sufficiency  of
which is hereby acknowledged, the parties hereto agree as follows:

     1.  BACKGROUND.  This  Agreement  is entered  into in  connection  with the
Company's and  Consultant's  execution of that certain  Contribution  Agreement,
dated  September  1, 1999,  between  and among the  Company,  Consultant,  Prime
Medical Services, Inc., a Delaware corporation, Prime Medical Operating, Inc., a
Delaware  corporation  ("Prime"),  Prime/BDEC  Acquisition,  L.L.C.,  a Delaware
limited  liability  company,  Barnet  Dulaney Eye Center,  P.L.L.C.,  an Arizona
professional  limited  liability  company,  LASIK Investors,  L.L.C., a Delaware
limited liability company,  David D. Dulaney,  M.D., Ronald W. Barnet,  M.D. and
Mark  Rosenberg  (the  "Contribution  Agreement").  Accordingly,  the  terms and
provisions of this Agreement shall be construed  consistently with the terms and
provisions  of the  Contribution  Agreement.  Consultant  acknowledges  that its
execution of this Agreement serves as a material inducement to the Company's and
Prime's execution of the Contribution Agreement.

     2. TERM.  The term of this  Agreement  shall commence on the Effective Date
and continue through the earlier to occur of the following:

a.   Delivery of written  notice from either Prime or the Company  following any
     breach of, or failure to perform for any reason  under,  this  Agreement by
     Consultant;

b.       The death or disability of Consultant (For purposes of this Agreement,
         the  meaning of  "disability"  shall be as  defined  in the  Disability
         Insurance Policy that covers Consultant at the time in question,  or if
         no such policy is then in force,  the  insurance  policy  that  covered
         Consultant on September 1, 1999); and

c.   The  termination  of the  exclusivity  obligations  of the  parties  to the
     Contribution  Agreement  as set forth in ARTICLE  VIII of the  Contribution
     Agreement, pursuant to the terms of the Contribution Agreement.

         3. SERVICES. During the term of this Agreement,  Consultant shall, from
time to time, make himself  available to Prime,  the Company,  and the Company's
subsidiaries  to  represent  the  interests  of such  entities  in  professional
associations and other  professional or trade  associations or groups related to
the field of refractive surgery. Furthermore, Consultant shall make himself, and
those clinics operated, utilized or controlled by Consultant, available to Prime
and the Company for  professional  development  and training of  physicians  and
other medical  professions  and staff,  all with respect to refractive  surgery.
Consultant shall make himself available to consult with other doctors affiliated
with the Company, or with whom the Company seeks an affiliation, and will assist
the Company and the Company's subsidiaries with staffing, training, consultation
on outcomes analysis and strategic planning.

                  It is  expressly  agreed  that  Consultant  is an  independent
contractor  and shall not be  construed  to be an employee  of the Company  with
regard to any matter,  under any  circumstances or for any purposes  whatsoever.
The services to be provided by Consultant hereunder are vitally important to the
Company and its  subsidiaries  and shall be rendered at such times and places as
mutually  agreed  upon  by  the  Company  and  Consultant;  provided  it is  the
understanding and agreement of all parties hereto that the  responsibilities  of
Consultant hereunder will require  substantially less than the full time efforts
of  Consultant.  Any failure or inability of  Consultant to provide the services
contemplated  in this  Agreement,  for any or no  reason,  shall  terminate  the
exclusivity  obligations of Prime arising under ARTICLE VIII of the Contribution
Agreement.

         4.  COMPENSATION.  Consultant  acknowledges and agrees that Consultants
entering into and performing its obligations  hereunder is in consideration  for
Prime and the Company  agreeing to enter into the  Consulting  Agreement and the
transactions contemplated therein.  Accordingly,  the parties hereto acknowledge
and agree that no further compensation is due Consultant for consulting services
hereunder.  The Company shall reimburse Consultant for reasonable  out-of-pocket
travel,  lodging and meal  expenses  approved by the Company and Prime and which
are necessary for Consultant to perform  consulting  services hereunder that are
requested by the Company or Prime.

         5.  AUTHORITY.  This Agreement does not grant  Consultant any authority
whatsoever  as  an  agent,   officer,   member,   employee,   manager  or  other
representative  of the  Company,  to bind or  commit  the  Company  in any  way,
contractually  or otherwise.  Except as specifically set forth in Section 4, the
Company shall have no  responsibility to reimburse the Consultant for any costs,
expenses or other amounts that may be incurred by Consultant in connection  with
the providing of Consultant's services hereunder.

     6.  CONFIDENTIAL  INFORMATION.  Consultant  shall  maintain and protect the
confidentiality  of  the  terms  and  existence  of  this  Agreement,   and  any
information obtained by Consultant pursuant to this Agreement or the performance
of this Agreement.

         7. NOTICES. Any notice required or allowed hereunder shall be deemed to
have been delivered when either hand-delivered to the party or when deposited in
the United States mail, postage pre-paid,  certified,  return receipt requested,
addressed to the party at the address set forth below or to the last new address
provided in writing by the party:

Consultant:                           ____________________________
                                      4800 North 22nd Street
                                      Phoenix, AZ  85016

Company:                              1301 Capital of Texas Highway, Suite C-300
                                      Austin, TX  78746
                                      Attn: President

     8. COMPLIANCE WITH LAWS. Consultant shall comply with all applicable state,
federal, and local laws, in the performance of its services.

     9.  ASSIGNMENT.  This  Agreement is personal to  Consultant  and may not be
assigned in whole or in part by Consultant  without the express  written consent
of the Company in each instance.  This  Agreement  shall inure to the benefit of
and be binding upon any successors and permitted assigns of the parties.

         10. WAIVER OR MODIFICATION.  The failure of any party to insist, in any
one or more instances,  upon the performance of any of the terms,  covenants, or
conditions of this contract or to exercise any right,  shall not be construed as
a  waiver  or  relinquishment  of the  future  performance  of any  such  terms,
covenants  or  conditions  or the future  exercise of such  rights.  Any waiver,
alteration,  or  modification  of any of the  provisions  of this  Agreement  or
cancellation  or replacement of this Agreement shall not be valid unless made in
writing and signed by all the parties hereto. Waiver by any party of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.

     11. CONSTRUCTION. This Agreement shall be governed by the laws of the state
of Texas.

     12.  COUNTERPARTS.  This  Agreement  may  be  executed  in  any  number  of
counterparts,  each of which shall be construed as an original for all purposes,
but all of which taken together shall constitute one and the same Agreement.

     13. DESCRIPTIVE HEADINGS. The descriptive headings for the sections in this
Agreement are inserted for  convenience  only and do not constitute  part of the
Agreement.

         14. NEGOTIATED  AGREEMENT.  This Agreement reflects the negotiations of
all parties hereto.  The language used herein shall be deemed to be the language
chosen by the  parties to express  their  mutual  intent,  and no rule of strict
construction shall be applied.  All parties  acknowledge and agree that they are
fully aware of the affiliated relationship between and among each other.

         15. SEVERABILITY.  Whenever possible,  each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any  provision  of this  Agreement  is held to be  prohibited  by or
invalid under  applicable  law, such provision  will be ineffective  only to the
extent of such prohibition or invalidity,  without invalidating the remainder of
this Agreement.

         16. ENTIRE  AGREEMENT.  This Agreement,  together with the Contribution
Agreement and each other  Transaction  Document (as defined in the  Contribution
Agreement), constitutes the entire agreement between the parties with respect to
the  subject  matter  hereof,   and  all  prior   agreements,   representations,
statements, negotiations, and undertakings are superseded by this Agreement. The
binding  arbitration  provisions of the contribution  Agreement shall apply with
respect to any disputes hereunder.

                            [Signature page follows]


<PAGE>


                                SIGNATURE PAGE TO

                              CONSULTING AGREEMENT

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

COMPANY:                     Prime/BDR Acquisition, L.L.C.



                          By:

                             Printed Name:
                             Title:

CONSULTANT:

                             Printed Name:  _____________________________



<PAGE>
                                 FIRST AMENDMENT

                                       TO

                             CONTRIBUTION AGREEMENT

     This First  Amendment  to  Contribution  Agreement  (this  "Amendment")  is
executed to be effective as of January 31, 2000,  by and between  Prime  Medical
Operating,  Inc., a Delaware corporation ("Prime"), Prime Medical Services, Inc.
a Delaware corporation ("PMSI"), Barnet Dulaney Eye Center, P.L.L.C., an Arizona
professional  limited liability company  ("BDEC"),  Prime Refractive,  L.L.C., a
Delaware  limited  liability  company  ("Prime  Refractive"),  Prime  Refractive
Management,  L.L.C., a Delaware limited liability company ("Prime  Management"),
LASIK Investors,  L.L.C., a Delaware limited liability company ("LASIK"),  David
D. Dulaney, M.D. ("Dulaney"),  Ronald W. Barnet, M.D. ("Barnet"), Mark Rosenberg
("Rosenberg"),  Prime/BDR  Acquisition,  L.L.C.,  a Delaware  limited  liability
company  ("Newco I") and  Prime/BDEC  Acquisition,  L.L.C.,  a Delaware  limited
liability  company  ("Newco II"). All of the foregoing  parties other than Prime
Refractive and Prime Management are sometimes referred to collectively herein as
the "Original Parties." Unless otherwise defined herein,  capitalized terms used
herein  shall have the meanings  ascribed to them in that  certain  Contribution
Agreement,  dated effective as of September 1, 1999,  among the Original Parties
(the "Contribution Agreement").

                             Preliminary Statements

         Prime has agreed in Section 4.3 of the  Contribution  Agreement to make
certain credit  accommodations  available to Newco I for the acquisition  and/or
development of Target Centers,  including,  without limitation,  the Development
Facility provided for in the Loan Agreement.

         Pursuant  to  the  provisions  of  Section  4.3  of  the   Contribution
Agreement,  Prime and Newco I executed that certain Loan Agreement,  dated as of
September  1,  1999  (the  "Original  Loan  Agreement")  which  provides  for  a
$40,000,000 development loan facility (the "Original Development Facility").

         Newco I has borrowed  certain amounts under the Original Loan Agreement
in order to finance the acquisition of an equity  ownership  interest in Horizon
Vision Center, Inc., a Nevada corporation.

         The Original  Parties  have agreed in ARTICLE VIII of the  Contribution
Agreement to certain exclusivity obligations and related terms and conditions.

         The  Original  Parties  have  agreed to hereby  amend the  Contribution
Agreement  to  provide  for:  (a) the  addition  of Prime  Refractive  and Prime
Management as parties to the  Contribution  Agreement,  for only those  purposes
expressly stated in this Amendment; (b) the execution of a second Loan Agreement
which shall  create a  replacement  loan  facility  that  replaces any and every
obligation of Prime to advance  additional money to any party under the Original
Loan  Agreement in respect of the  Original  Development  Facility;  and (c) the
extension of certain  provisions of the  Contribution  Agreement to specifically
apply to, benefit,  and/or bind Prime  Refractive  and/or Prime  Management,  as
applicable.

                             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:

         Section 1. Joinder of Prime  Refractive and Prime  Management.  Each of
Prime Refractive and Prime  Management  hereby agrees that its execution of this
Amendment constitutes its execution of the Contribution Agreement (as amended by
this  Amendment),  and  that  it is  hereby  made a  party  to the  Contribution
Agreement and is bound by and shall benefit from all of the applicable terms and
conditions of the Contribution Agreement (as amended by this Amendment).

         Section 2.        Amendments, Additions and Deletions to Agreement.
                           ------------------------------------------------

                    a. The Original Parties hereby agree to amend Section 4.3(a)
               of the Contribution Agreement to read in its entirety as follows:

                         " (a) Working Capital Line of Credit.  Prime Refractive
                    Management,  L.L.C.,  a Delaware limited  liability  company
                    ("Prime  Management"),   and  Prime  Refractive,  L.L.C.,  a
                    Delaware  limited  liability  company ("Prime  Refractive"),
                    have each executed a loan agreement,  dated January 31, 2000
                    (the "Development Facility") which provides for, among other
                    credit  accommodations  described below, a revolving line of
                    credit  in the  maximum  principal  amount of  $200,000  and
                    maturing  one (1)  year  after  the  Closing  (the  "Working
                    Capital Line"),  pursuant to which Prime Refractive shall be
                    entitled,   subject  to  the  conditions   and   limitations
                    contained  in the  Loan  Agreement,  to  borrow,  repay  and
                    reborrow  funds  in  order  to  meet  obligations  of  Prime
                    Refractive arising in the ordinary course of business."

     b.  The  Original  Parties  hereby  agree to amend  Section  4.3(b)  of the
Contribution Agreement to read in its entirety as follows:

                  " (b) Development Credit Facility.  In addition to the Working
                  Capital  Line,  the  Development   Facility  provides  for  an
                  additional   lending   facility,   in  the  aggregate  maximum
                  principal  amount  of  $29,165,000,  pursuant  to which  Prime
                  Refractive  shall be entitled,  subject to the  conditions and
                  limitations  contained in the Development  Facility, to borrow
                  funds,  from  time to  time,  in order  to  finance  up to one
                  hundred  percent (100%) of the purchase price (or  development
                  costs)  of a Target  Center  (as  hereinafter  defined)  being
                  acquired  (or  developed)  by  Prime   Refractive;   provided,
                  however,  that in no event shall the  Development  Facility be
                  used in instances where Prime, PMSI or one of their affiliates
                  independently   acquires  or  develops  a  Target   Center  as
                  permitted by Section 8.1. In connection  with the  Development
                  Facility,  Prime Refractive agrees to execute, and all parties
                  hereto agree to vote their interests in Prime  Refractive,  if
                  any,  and to take such other  action as may be  necessary,  to
                  cause any entity  through which Prime  Refractive  acquires or
                  develops a Target Center to execute, on or before each closing
                  date of a Target Center  acquisition  or the  commencement  of
                  development,   an   Assignment   and  Security   Agreement  in
                  substantially  the form  attached  hereto as  Exhibit G1 and a
                  Promissory Note in  substantially  the form attached hereto as
                  Exhibit G2. In  addition,  if Prime  Refractive  is to obtain,
                  through development or acquisition,  directly or indirectly, a
                  one hundred  percent  (100%)  interest in such Target  Center,
                  Prime  Refractive  and all  parties  hereto  shall  cause such
                  Target Center to execute a security  agreement,  acceptable in
                  form and substance to Prime,  granting to Prime Management the
                  highest  available  priority  security  interest in all of the
                  assets of such Target Center."

     c.  The  Original  Parties  hereby  agree to amend  Section  4.3(c)  of the
Contribution Agreement to read in its entirety as follows:

                  " (c) Pursuant to the Development Facility, Prime Management's
                  obligations  to make each  extension  of credit  described  in
                  subsection (b) above are subject  entirely and in all respects
                  to Prime and Prime Management obtaining prior written approval
                  from the lenders  under (but only if such approval is required
                  under)   either  (i)  that  certain  Loan   Agreement   for  a
                  $14,000,000 advancing term loan (the "$14,000,000  Facility"),
                  entered into by Prime  Management,  Bank of America,  N.A., as
                  administrative agent, BankBoston, N.A., as documentation agent
                  and such  lenders  named  therein  or (ii) that  certain  Loan
                  Agreement  for  a  $86,000,000   revolving  credit  loan  (the
                  "$86,000,000  Facility"),   entered  into  by  PMSI,  Bank  of
                  America, N.A., as administrative agent,  BankBoston,  N.A., as
                  documentation  agent and such lenders named  therein.  Each of
                  the parties to this Agreement acknowledges and agrees that the
                  assignment and security  agreements,  and security agreements,
                  executed  pursuant  to this  Section  and  Section 8.2 will be
                  assignable to the lenders under the $14,000,000 Facility,  and
                  that  Prime  and/or  Prime   Management   intends  to  make  a
                  collateral  assignment  for the  benefit of such  lenders.  In
                  addition, each of the parties to this Agreement agrees to take
                  such action  (including  voting their interests in any entity)
                  which may be necessary to ensure the filing and  perfection of
                  security  interests  required  to be granted  pursuant to this
                  Section."

     d.  The  Original  Parties  hereby  agree to amend  Section  4.3(d)  of the
Contribution Agreement to read in its entirety as follows:

                  " (d) Each of the Sellers acknowledges and agrees that none of
                  Prime Management,  Prime, PMSI or any affiliate of any of them
                  may be required to (i) except as  expressly  set forth in this
                  ARTICLE IV and in Section  8.2(b)(ii),  extend any  financing,
                  credit facilities,  guarantees or other credit enhancements to
                  any  Seller,  Prime  Refractive,  Newco I or  Newco II or (ii)
                  issue any of its ownership interests (or rights to acquire its
                  ownership  interests) in connection  with the acquisition of a
                  Target  Center  (provided,  however,  that  Prime  Management,
                  Prime,  PMSI or such  affiliate may elect,  upon obtaining the
                  consent  of  BDEC,  to  issue  its   ownership   interests  in
                  connection  with the  acquisition  of a Target Center by Prime
                  Refractive or any of its  subsidiaries,  and any such issuance
                  shall  be  treated  for  all  purposes  as  a  loan  by  Prime
                  Management  to Prime  Refractive  pursuant to the  Development
                  Credit  Facility,  in an amount equal to the fair market value
                  of the capital stock issued on the date of issuance)."

     e.  The  Original  Parties  hereby  agree to amend  Section  4.3(e)  of the
Contribution Agreement to read in its entirety as follows:

                  " (e)  Each of the  Sellers,  Newco I,  and  Prime  Refractive
                  acknowledges  and  agrees  that  neither  Newco  I  nor  Prime
                  Refractive  shall  distribute (or allow to be  distributed) to
                  its  members,  with  respect  to their  respective  membership
                  interests,  any  of its or its  subsidiaries'  cash  or  other
                  property  if, at the time of the  proposed  distribution,  any
                  amounts (whether  principal or interest) are outstanding under
                  the Credit  Documents or the Target Center  Lending  Documents
                  (as such terms are hereinafter defined).  Furthermore, each of
                  the Sellers, Newco I, and Prime Refractive agrees that each of
                  Newco I and Prime Refractive shall pay all available cash flow
                  in payment of its respective outstanding obligations,  if any,
                  under  the  Loan   Agreement  or   Development   Facility  (as
                  applicable),  irrespective of whether such payments exceed the
                  minimum   required   payments  under  the  Loan  Agreement  or
                  Development Facility. For purposes of allocating such payments
                  by either Newco I or Prime Refractive among any two or more of
                  such  entity's  respective   outstanding   obligations,   such
                  payments   shall  be  allocated  pro  rata,   based  upon  the
                  respective balances of such obligations,  unless (i) a greater
                  portion of the  payment is  required to be paid toward a given
                  obligation  in order to prevent a default with respect to that
                  obligation (but only to the extent necessary to prevent such a
                  default) or (ii) eighty  percent (80%) of the managers of such
                  entity elect to allocate the payments in a different manner.

                                    Notwithstanding  the  foregoing,  as long as
                  there has been no default by any Seller  under this  Agreement
                  or any other Transaction  Document  (excluding,  however,  the
                  Credit  Documents  and the Target Center  Lending  Documents),
                  then,  to the extent that (but only to the extent that) either
                  of  Newco  I or  Prime  Refractive  possesses  the  cash  flow
                  necessary (in the  reasonable  discretion of a majority of its
                  managers)  to  pay  its  liabilities  in the  ordinary  course
                  consistent  with past  practices,  such entity  agrees to make
                  quarterly  estimates of its taxable income for the current tax
                  year and, if not prohibited by law, distribute  quarterly (the
                  "Quarterly  Distributions")  an amount  that  would  cover the
                  federal  and state  income  taxes  required  to be paid by its
                  members  with respect to such  taxable  income,  based on each
                  member's then current  proportionate  interest in such entity,
                  assuming  that all members pay income  taxes on such  entity's
                  taxable  earnings  at a rate  equal to the  highest  effective
                  individual  tax rate in effect from time to time (the "Assumed
                  Tax  Rate");   provided,   further,  that  such  entity  shall
                  determine its actual taxable income at the end of each taxable
                  year and (A) if the  Quarterly  Distributions  in a given year
                  should have been higher based on the amount of actual  taxable
                  income  for  that  year,   promptly   distribute  the  amounts
                  necessary to eliminate such deficiency or (B) if the Quarterly
                  Distributions  in a given year should have been lower based on
                  the amount of actual  taxable  income for that year,  withhold
                  dollar  for  dollar   from  the  first   following   Quarterly
                  Distribution,    and   then   against   subsequent   Quarterly
                  Distributions  in a like  manner,  the  amounts  necessary  to
                  eliminate such surplus."

     f.  The  Original  Parties  hereby  agree to amend  Section  4.3(f)  of the
Contribution Agreement to read in its entirety as follows:

                  " (f) The parties  acknowledge  the execution and existence of
                  that certain Loan Agreement in the maximum principal amount of
                  $10,835,000,  dated September 1, 1999, between Prime and Newco
                  I (the "Loan Agreement"), that certain Promissory Note, in the
                  amount of $10,835,000, executed by Newco I and dated September
                  1, 1999 (the "Horizon Note"),  and that certain Assignment and
                  Security Agreement, dated September 1, 1999, between Prime and
                  Newco I (the "Horizon Security Agreement").  The parties agree
                  that the Loan  Agreement,  the  Horizon  Note and the  Horizon
                  Security Agreement are "Transaction Documents" for purposes of
                  this  Agreement.  The  Parties  further  agree  that  the Loan
                  Agreement,  the Horizon Note, the Horizon Security  Agreement,
                  and all of the loan agreements,  promissory notes, guarantees,
                  security  agreements,  assignment and security  agreements and
                  other  agreements,  documents or  instruments  executed by any
                  party in connection with the Loan Agreement or the Development
                  Facility  are  hereinafter  collectively  referred  to as  the
                  "Credit Documents"."

     g.  The  Original  Parties  hereby  agree  to  amend  Section  4.4  of  the
Contribution Agreement to read in its entirety as follows:

                  " 4.4 Capital  Contributions.  The parties agree that no party
                  shall,  except for the express  provisions  of Section 1.1 and
                  Section  4.3  of  this  Agreement  or  of  the  Organizational
                  Documents,  be required to make any capital  contribution,  or
                  extend  any  credit   facility  or  loans,   to  either  Prime
                  Refractive,  Newco I or Newco II (or a  subsidiary  of either)
                  following  the Closing,  including,  without  limitation,  for
                  purposes of providing working capital; provided, however, that
                  this sentence shall not affect any party's  obligations  under
                  Article VI with  respect to any breach of the  representations
                  or warranties made by that party under this Agreement."

                  h. The Original  Parties  hereby agree to amend Section 4.6 of
the Contribution  Agreement to replace every reference to "Newco I" contained in
Section 4.6 with a reference instead to "Prime Refractive".

     i.  The  Original  Parties  hereby  agree  to  amend  Section  4.10  of the
Contribution Agreement to read in its entirety as follows:

                   " 4.10  Guaranty  of PMSI.  PMSI hereby  unconditionally  and
                  irrevocably  guarantees  each of the payment  and  performance
                  obligations of Prime  Refractive,  Prime  Management and Prime
                  hereunder and under each of the Transaction Documents. Without
                  limiting  the  foregoing,  PMSI  agrees  that if Prime,  Prime
                  Refractive or Prime Management shall default in any obligation
                  to pay to any  Seller(s)  or Newco I any  amount  then due and
                  payable by Prime, Prime Refractive or Prime Management to such
                  Seller(s) or Newco I under ARTICLE I or ARTICLE VII hereunder,
                  PMSI shall  immediately  pay such amount to such  Seller(s) or
                  Newco I. PMSI  hereby  agrees  not to  require  any  Seller to
                  proceed against Prime Refractive,  Prime Management,  Prime or
                  any  other  person  or  to  pursue  any  other  remedy  before
                  proceeding against PMSI under this guaranty."

     j.  The  Original  Parties  hereby  agree  to  amend  Section  6.3  of  the
Contribution Agreement to read in its entirety as follows:

                   " 6.3 Security.  Without limiting or adversely  affecting the
                  rights of Prime  under  Section  9.12,  and in order to secure
                  full and  prompt  payment  of the  obligations  of each of the
                  Sellers  under  this  ARTICLE,  each of BDEC and LASIK  hereby
                  grants to Prime (for the  benefit of Prime  Refractive  or any
                  other subsidiary or affiliate of Prime to which any Seller may
                  hereafter  owe any amount) a continuing  security  interest in
                  and to distributions either of them may be entitled to receive
                  at any time after the  Closing  in  respect  of any  ownership
                  interest  held by either  of them in any of Prime  Refractive,
                  Newco I or  Newco  II.  In  connection  with  the  grant  of a
                  security interest contained in this Section,  each of BDEC and
                  LASIK  agrees  (i)  to  execute  all  documents,   agreements,
                  instruments and certificates,  and to take such other actions,
                  as are  necessary in order to fully  evidence and perfect such
                  security  interest,  and (ii) that it will not for a period of
                  five (5) years after the Closing grant or assign to any person
                  or entity, without obtaining the express prior written consent
                  of  Prime  in  each  instance,  rights  of any  nature  in the
                  distributions covered by the security interest granted in this
                  Section,  irrespective of whether such rights are to be senior
                  or  subordinate  to the rights  granted  under  this  Section;
                  provided, however, that Prime acknowledges and agrees that any
                  grant of a security interest in such distributions by LASIK to
                  either Prime  Management or the lenders under the  $14,000,000
                  Facility  shall not be a violation  of this  Section,  and the
                  grant to the lenders under the  $14,000,000  Facility shall be
                  senior to the  security  interest  hereby  granted by LASIK to
                  Prime."

                  k. The Original  Parties  hereby agree to amend the  following
subsections  of Section  8.1 of the  Contribution  Agreement  to  replace  every
reference to "Newco I" contained in such subsections with a reference instead to
"Prime  Refractive":  introductory  paragraph  to Section 8.1;  Section  8.1(b);
Section 8.1(c); and Section 8.1(d).

     l.  The  Original  Parties  hereby  agree to amend  Section  8.1(e)  of the
Contribution Agreement to read in its entirety as follows:

                   " (e) The  acquisition  or  development of such Target Center
                  was  initiated,  arranged  for,  originated or financed by any
                  entity  affiliated  with PMSI  (other  than Prime  Refractive,
                  Newco I or Newco II, or any future  subsidiaries  of either of
                  them)  which has  previously  acquired  or  developed a Target
                  Center,  or an  interest  therein,  pursuant  to  any  of  the
                  exceptions to exclusivity contained in subsections (a) through
                  (g) of this Section;"

     m. The  Original  Parties  hereby  agree to amend  the first  paragraph  of
Section 8.2(g) of the Contribution Agreement to read in its entirety as follows:

                   " (g) Notwithstanding the exclusivity obligation contained in
                  Section  8.1,  LASIK  and/or  one or more of their  affiliates
                  shall be  entitled  to  independently  acquire or develop  any
                  Target Center to which any one or more of the following apply:
                  (i) a  majority  of the  board of  directors  of  Prime  votes
                  against the  acquisition of such Target Center;  or (ii) Prime
                  Refractive is unable to finance the acquisition of such Target
                  Center using the Development  Facility,  solely because of the
                  limitation  set forth in Section  4.3(c);  provided,  however,
                  that:"

                  n. The Original  Parties  hereby agree to amend Section 9.3 of
the Contribution  Agreement to replace every reference to "Newco I" contained in
Section 9.3 with a reference instead to "Prime Refractive, Newco I".

     o.  The  Original  Parties  hereby  agree  to  amend  Section  9.4  of  the
Contribution Agreement to read in its entirety as follows:

                   " 9.4 Non-Competition  Agreement.  Each of PMSI, Prime, Prime
                  Management  and each Seller,  as a material  inducement to one
                  another to enter into this  Agreement,  hereby agrees that, at
                  all times  during  which the  provisions  of Article  VIII are
                  applicable, and at all times until five (5) years after either
                  LASIK  and its  affiliates  (excluding  PMSI,  Prime,  and the
                  subsidiaries  of either of them),  or Prime and its affiliates
                  (excluding  LASIK), no longer own any equity or other interest
                  in either  Newco I or Prime  Refractive,  such  party will not
                  directly or  indirectly,  either through any kind of ownership
                  (other  than  ownership  of  securities  of  a  publicly  held
                  corporation  of which it owns less than five  percent  (5%) of
                  any  class  of  outstanding  securities),  or as a  principal,
                  shareholder, agent, employer, advisor, consultant,  co-partner
                  or in any  individual  or  representative  capacity  whatever,
                  either  for its own  benefit  or for the  benefit of any other
                  person, corporation or other entity, without the prior written
                  consent  of  each  other  party  hereto,  commit  any  of  the
                  following acts,  which acts shall be considered  violations of
                  this covenant not to compete:

                                    (a)   Except    through   Newco   I,   Prime
                  Refractive,   either  of  their  subsidiaries,  or  Newco  II,
                  directly or indirectly engage in, or provide,  anywhere within
                  a fifty  (50) mile  radius  of any  center  or  facility  that
                  provides   Refractive  Surgery  and  is  owned,   directly  or
                  indirectly, partially or wholly, by Newco I, Prime Refractive,
                  or  a  subsidiary  of  either  of  them   (collectively,   the
                  "Restricted Area"), any services (other than services included
                  in the practice of medicine)  related to (i) the  operating of
                  centers or facilities that provide  Refractive  Surgery,  (ii)
                  the manufacture,  maintenance,  refurbishing, repair, sale, or
                  leasing  of any  equipment  related  to or  necessary  for the
                  operating of centers or  facilities  that  provide  Refractive
                  Surgery, or (iii) providing any management services,  training
                  or  consulting  services  related  to any  of  the  activities
                  described in (i) or (ii);

                                    (b)   Except    through   Newco   I,   Prime
                  Refractive,  the  subsidiaries of either of them, or Newco II,
                  directly or indirectly provide, anywhere within the Restricted
                  Area, (i) facilities,  equipment and  non-physician  personnel
                  for the performance by physicians of Refractive Surgery,  (ii)
                  the marketing, scheduling and management of Refractive Surgery
                  (but  excluding,  with  respect to either  Barnet or  Dulaney,
                  marketing, scheduling and management of patients for treatment
                  by Barnet or Dulaney,  respectively),  (iii) the credentialing
                  and scheduling of physicians to perform Refractive Surgery and
                  (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 Newco I, Prime Refractive,
                  a  subsidiary  of either of them,  Prime,  each  Seller or any
                  affiliate  or  related  entity  of any of them,  to  withdraw,
                  curtail, or cancel its business with such person or entity; or

                                    (d) Directly or indirectly hire any employee
                  of Newco I, Prime Refractive,  any subsidiary of either of the
                  foregoing,  Prime,  any  Seller or any  affiliate  or  related
                  entity of any of them,  or induce or attempt to influence  any
                  employee  of Newco I,  Prime  Refractive,  any  subsidiary  of
                  either  of the  foregoing,  Prime,  any  Seller  or  any  such
                  affiliate or related entity to terminate his or her employment
                  with such person or entity."

               p. The Original  Parties hereby agree to amend Section 9.5 of the
          Contribution Agreement to read in its entirety as follows:

                   " 9.5  Exclusivity.  Each of the parties hereto  acknowledges
                  and agrees that any  acquisition  or  development  of a Target
                  Center by Prime Management,  Prime, PMSI, Newco II or a Seller
                  through an entity not owned (wholly or partially,  directly or
                  indirectly) by Prime Refractive or Newco I shall be subject to
                  the  provisions  of Section  9.4,  regardless  of whether such
                  acquisition or development is  contemplated by or provided for
                  in the provisions of ARTICLE VIII."

               q. The Original  Parties hereby agree to amend Section 9.8 of the
          Contribution Agreement to read in its entirety as follows:

               " 9.8 Special Options to Sell or Acquire Interests In Newco I and
          Prime Refractive.


                                    (a) Option to Sell.  Upon the  expiration of
                  five (5) years  immediately  following the Closing Date, if no
                  Seller is in breach of this Agreement or any other Transaction
                  Document,  all or any of the  Sellers  shall at any time,  and
                  from time to time, be entitled to require that Prime  purchase
                  from such  Seller(s)  up to a  maximum  twenty  percent  (20%)
                  interest  in  each  of  Newco  I and  Prime  Refractive  (when
                  aggregated  for each  entity with all other  purchases  by all
                  Sellers  pursuant  to  this  Section),   upon  the  terms  and
                  conditions  hereinafter set forth, by giving written notice of
                  such election to Prime;  provided,  however, that any exercise
                  of the option to sell  pursuant to this  Section  must (unless
                  Prime  consents  otherwise  in writing) be made by such Seller
                  with respect to exactly equal percentage  interests in Newco I
                  and Prime Refractive,  in each instance and taken individually
                  and not in combination with elections by another Seller.

                                    (b)  No  Further  Obligation.   The  Sellers
                  acknowledge  and agree that Prime shall be under no obligation
                  to notify any  Seller of the  exercise  by  another  Seller of
                  rights under this Section,  and that Prime may not,  under any
                  circumstances,  be required to purchase more than an aggregate
                  twenty  percent  (20%)  interest  in  either  Newco I or Prime
                  Refractive  (considering all purchases by all Sellers pursuant
                  to this Section), regardless of whether one Seller disposes of
                  more or less of an  interest  in Newco I and Prime  Refractive
                  under this Section than another Seller.

                         (c) Purchase Price. The purchase price for any interest
                    transferred  pursuant to this Section shall,  in the absence
                    of an agreement on price  between  Prime and the  applicable
                    Seller(s), be determined as follows:

                                            (i) If the  exercise  of the  option
                           hereunder is after the expiration of such ninety (90)
                           day period,  then the purchase price must be mutually
                           agreed upon by the applicable Seller(s) and Prime.

                                            (ii) If the  exercise  of the option
                           hereunder  is  within  the  ninety  (90)  day  period
                           immediately  following the expiration of the five (5)
                           year period  described in Section 9.8(a),  then Prime
                           shall select a certified  business appraiser (that is
                           a member of either the American Society of Appraisers
                           or the Institute of Business Appraisers) to value the
                           interests being transferred. If the selling Seller(s)
                           under  this  Section  do not  agree  with  the  value
                           determined by Prime's appraiser,  such Seller(s) may,
                           at their own expense,  select a second appraiser that
                           is a  member  of  one or  both  of  the  above  named
                           professional  organizations  to value  the  interests
                           being transferred. If the two appraisers cannot agree
                           on the value of the interests being transferred,  the
                           two  appraisers   shall   mutually   select  a  third
                           appraiser (that meets the above described  membership
                           requirements)    to   value   the   interests   being
                           transferred  together with the first two  appraisers,
                           based on a majority vote. Any valuation determined by
                           such  majority  vote  shall  be  final,  binding  and
                           conclusive. The expense of such third appraiser shall
                           be  paid  by  the  selling   Seller(s),   unless  the
                           appraised  value  ultimately  determined is more than
                           ten percent (10%)  greater than the value  determined
                           by Prime's original  appraiser,  in which event Prime
                           shall bear the entire cost of the third appraiser. If
                           the  exercise  of the option  hereunder  is after the
                           expiration  of such ninety (90) day period,  then the
                           purchase  price must be  mutually  agreed upon by the
                           applicable Seller(s) and Prime.

                                    (d)  Such  purchase  price  shall be paid in
                  immediately  available  funds at the  closing of the  transfer
                  pursuant to this Section. The closing of any purchase and sale
                  pursuant  to this  Section  shall take place at the  principal
                  office of Prime or such other  place  designated  by Prime and
                  the  applicable  Seller(s),  on the  thirtieth day (or if such
                  thirtieth  day is not a business  day,  the next  business day
                  following the thirtieth day) following the final determination
                  of a  purchase  price  under  subsection  (c)  above.  At such
                  closing,  Seller  shall  execute all  documents  and take such
                  other  actions as may be  reasonably  necessary  to deliver to
                  Prime title to the  interests  transferred,  free and clear of
                  all liens, claims, encumbrances or restrictions of any kind or
                  nature  whatsoever,   except  (i)  those  established  in  the
                  organizational  documents  and other  governing  documents  of
                  Newco I and  Prime  Refractive,  (ii)  those  in  favor of the
                  lenders  under   $14,000,000   Facility  and  the  $86,000,000
                  Facility pursuant to any Transaction  Document and (iii) those
                  in  favor of Prime or any  affiliate  or  subsidiary  of Prime
                  pursuant to any Transaction Document.

                                    (e)    Exceptions.    Notwithstanding    the
                  foregoing  provisions of this Section 9.8,  Prime shall not be
                  obligated  to purchase any interest in either Newco I or Prime
                  Refractive  pursuant  to this  Section  if Prime is  unable to
                  obtain  financing  for such  purchase  from a third party upon
                  reasonable  market terms,  after Prime and PMSI have exercised
                  commercially reasonable efforts to obtain such financing."

                  r. The Original  Parties hereby agree to amend Section 9.12 of
the Contribution  Agreement to replace every reference to "Newco I" contained in
Section  9.12 with a reference  instead to "Prime  Refractive,  Newco I", and to
replace  every  reference  to "Prime or PMSI"  contained  in Section 9.12 with a
reference instead to "Prime Management, Prime or PMSI".

     s. The  Original  Parties  hereby  agree to amend  the first  paragraph  of
Exhibit G3 to the Contribution Agreement to read in its entirety as follows:

                   " THIS ASSIGNMENT AND SECURITY  AGREEMENT (this  "Agreement")
                  is made and  entered  into as of the  ____ day of  __________,
                  200__, by and between Prime Refractive  Management,  L.L.C., a
                  Delaware limited  liability  company (the "Secured Party") and
                  Prime Refractive, L.L.C., a Delaware limited liability company
                  (the "Debtor")."

     t. The Original  Parties  hereby agree to amend Recital A. of Exhibit G3 to
the Contribution Agreement to read in its entirety as follows:

                    " A. Debtor and Secured  Party have  executed and  delivered
               that certain Contribution  Agreement dated effective September 1,
               1999,  between and among  Debtor,  Secured  Party,  Prime Medical
               Operating, Inc., a Delaware corporation,  Prime Medical Services,
               Inc., a Delaware corporation,  Prime/BDEC Acquisition,  L.L.C., a
               Delaware  limited  liability  company,   Prime/BDR   Acquisition,
               L.L.C., a Delaware limited liability company,  Barnet Dulaney Eye
               Center,  P.L.L.C.,  an  Arizona  professional  limited  liability
               company,  LASIK Investors  L.L.C., a Delaware  limited  liability
               company, David D. Dulaney, M.D., Ronald W. Barnet, M.D., and Mark
               Rosenberg  (as  amended  by  that  certain  First   Amendment  to
               Contribution  Agreement  dated as of January 31, 2000,  among the
               foregoing  parties,  the  "Contribution  Agreement"),   and  that
               certain Loan  Agreement,  dated as of January 31, 2000 (the "Loan
               Agreement"),  pursuant  to which  Secured  Party  agrees  to make
               certain  loans  to  Debtor  on  the  terms  and  subject  to  the
               conditions provided therein."

                  u. The Original  Parties  hereby  agree to amend  Article I of
Exhibit G3 to the Contribution Agreement to add the following Section 1.3 in its
entirety as a new Section:

                    1.3  Subordination.  Liens created hereby are subordinate to
               liens in favor  of  Lenders  (as  such  term is  defined  in that
               certain Loan  Agreement  for a $14,000,000  advancing  term loan,
               entered  into  by  Secured  Party,  Bank  of  America,  N.A.,  as
               administrative  agent,  BankBoston,  N.A., as documentation agent
               and such Lenders).

                  v. The Original  Parties  hereby agree to amend Section 4.3 of
Exhibit G3 to the  Contribution  Agreement to replace the  reference to "Section
1.1(c)" contained in Section 4.3 with a reference instead to "Section 1.1(d)".

                  w. The Original  Parties  hereby  agree to amend  Article V of
Exhibit G3 to the  Contribution  Agreement  to replace the  reference to "Target
Center"  contained in Article V with a reference  instead to "Target  Center (as
defined in the Contribution Agreement)".

     x. The Original  Parties hereby agree to amend Section 9.2 of Exhibit G3 to
the Contribution  Agreement to replace the reference to "Prime/BDR  Acquisition,
L.L.C." contained in Section 9.2 with a reference instead to "Prime  Refractive,
L.L.C.".

     y. The Original Parties hereby agree to amend the signature page to Exhibit
G3 to the  Contribution  Agreement to (i) replace the  reference  to  "Prime/BDR
Acquisition, L.L.C." contained in the signature page with a reference instead to
"Prime  Refractive,  L.L.C.",  (ii)  replace  the  reference  to "Prime  Medical
Operating,  Inc."  contained in the signature  page with a reference  instead to
"Prime Refractive Management, L.L.C.", and (iii) replace the reference to "1999"
contained in the signature page with a reference instead to "200__".

     z. The  Original  Parties  hereby  agree to amend the second  paragraph  of
Exhibit G5 to the Contribution Agreement (beginning with "Borrower:") to replace
the reference to "Prime/BDR  Acquisition,  L.L.C."  contained in such  paragraph
with a reference instead to "Prime Refractive, L.L.C.".

          aa. The Original Parties hereby agree to amend the fourth paragraph of
     Exhibit G5 to the  Contribution  Agreement  (beginning  with  "LENDER:") to
     replace  the  reference  to "Prime  Medical  Operating,  Inc.,  a  Delaware
     corporation" contained in such paragraph with a reference instead to "Prime
     Refractive Management, L.L.C., a Delaware limited liability company".

          bb. The Original Parties hereby agree to amend the eighth paragraph of
     Exhibit G5 to the Contribution  Agreement (beginning with "payment terms:")
     to replace the  reference  to "1999"  contained  in such  paragraph  with a
     reference instead to "200__".

          cc. The Original  Parties hereby agree to amend the ninth paragraph of
     Exhibit G5 to the Contribution Agreement (beginning with "Loan Agreement:")
     to read in its entirety as follows:

                  "LOAN  AGREEMENT:  This Note is  executed  pursuant  to and is
                  governed by the terms of that certain Loan Agreement  dated as
                  of January  31,  2000,  executed by  Borrower  and Lender,  as
                  amended (collectively, the "Loan Agreement")."

                  dd.  The  Original  Parties  hereby  agree  to  amend  Section
2(a)(ii) of Exhibit G5 to the Contribution Agreement to replace the reference to
"Lender"  contained  in Section  2(a)(ii)  with a reference  instead to "Lender,
Prime Medical Operating, Inc.".

          ee. The Original Parties hereby agree to amend Section 4(c) of Exhibit
     G5 to the Contribution Agreement to read in its entirety as follows:

                         " (c) All other documents signed in connection with the
                    Loan   Agreement  or  the  loan   evidenced  by  this  Note,
                    including,  without  limitation,  that certain  Contribution
                    Agreement,  dated effective  September 1, 1999,  between and
                    among  Borrower,  Lender,  Prime Medical  Services,  Inc., a
                    Delaware  corporation,  Prime  Medical  Operating,  Inc.,  a
                    Delaware  corporation,  Prime/BDEC  Acquisition,  L.L.C.,  a
                    Delaware limited liability company,  Prime/BDR  Acquisition,
                    L.L.C., a Delaware limited liability company, Barnet Dulaney
                    Eye  Center,   P.L.L.C.,  an  Arizona  professional  limited
                    liability  company,  LASIK  Investors,  L.L.C.,  a  Delaware
                    limited liability company, David D. Dulaney, M.D., Ronald W.
                    Barnet, M.D., and Mark Rosenberg (as amended by that certain
                    First  Amendment  to  Contribution  Agreement  dated  as  of
                    January  31,  2000,   among  the  foregoing   parties,   the
                    "Contribution  Agreement") and each Transaction Document (as
                    such term is defined in the Contribution Agreement)."

     ff.  The  Original  Parties  hereby  agree to amend the  signature  page to
Exhibit G5 to the Contribution  Agreement to replace the reference to "Prime/BDR
Acquisition, L.L.C." contained in the signature page with a reference instead to
"Prime Refractive, L.L.C.".

                  gg. The Original  Parties  hereby agree to (i) delete  Exhibit
G1,  Exhibit G2 and  Exhibit G4 from the  Contribution  Agreement,  (ii)  rename
Exhibit G3 as Exhibit G1, (iii) rename  Exhibit G5 as Exhibit G2, and (iv) amend
the TABLE OF EXHIBITS of the Contribution  Agreement to replace the reference to
"Exhibits G1 to G5" contained in the TABLE OF EXHIBITS with a reference  instead
to "Exhibits G1 and G2".

         Section 3. Amendment of Loan Agreement. Each Original Party agrees that
the Original Loan Agreement is hereby amended to eliminate the $200,000  Working
Capital Line and to reduce the remaining maximum principal amount of $40,000,000
to $10,835,000.  Each Original Party further  acknowledges and agrees that Prime
has  previously  advanced the maximum  principal  amount under the Original Loan
Agreement, and that, accordingly,  Prime is hereby unconditionally released from
any  obligation  (whether  asserted now or in the future) to advance  additional
money under the Original Loan Agreement.

         Section 4. Relationship Between Prime and Prime Refractive. The parties
agree that for all  purposes  under the  Contribution  Agreement,  each of Prime
Refractive  and Prime  Management  shall be deemed an  affiliate of Prime for as
long as Prime owns, directly or indirectly, an equity ownership interest in it.

         Section  5.  Transaction  Document.  This  Amendment,  and  each  other
document, agreement, and certificate executed in connection with or contemplated
by  this  Amendment  (each  a  "Related   Document"),   shall  be  considered  a
"Transaction Document," as such term is used in the Contribution Agreement.

     Section 6. No Assumption of Liabilities.  Notwithstanding  any provision of
this  Amendment or any Related  Document,  neither  Prime  Refractive  nor Prime
Management assumes any debts,  obligations or liabilities of any of the Original
Parties.

         Section 7. Authority.  Each of Prime  Refractive,  Prime Management and
each Original Party,  hereby represents and warrants (severally and not jointly)
that it has full power and  authority to enter into and perform  this  Amendment
and each  Related  Document  to be  executed or  delivered  by such  party.  The
execution,  delivery,  and  performance  of  this  Amendment  and  such  Related
Documents have been duly  authorized by all necessary  action of such party and,
if applicable,  its respective officers and owners. This Amendment has been duly
and validly  executed and  delivered by such party and  constitutes  a valid and
binding  obligation of such party  enforceable  against such party in accordance
with its terms. The execution,  delivery,  and performance by such party of this
Amendment  and each such Related  Document does not violate or conflict with (a)
any law,  rule,  or regulation  applicable  to such party,  (b) any agreement to
which such party is a party, or (c) the organizational documents of such party.

         Section 8. Ratification by Prime  Refractive.  Each of Prime Management
and each Original Party agrees that by executing this Amendment, it is deemed to
be voting its ownership interest (if any) in Prime Refractive to authorize Prime
Refractive  to enter into and  perform  this  Amendment  and each other  Related
Document to which Prime Refractive is a party. Each such party agrees to execute
such  resolutions and written  consents,  and take such other actions,  in their
capacities  as  members  of Prime  Refractive,  as any other  such  party  shall
reasonably  require  after  the date of this  Amendment  in order to have  Prime
Refractive  ratify and adopt this Amendment,  notwithstanding  the date of Prime
Refractive's creation.

         Section 9. Cooperation  Relating to Financial  Statements.  Each of the
Sellers  agrees to  cooperate  with Prime in the  preparation  of any  financial
statements of Prime  Refractive which Prime or its affiliates may be required by
any applicable law to prepare.

         Section  10.  Effect  on  Existing   Agreements.   This   Amendment  is
incorporated  into  the  Contribution  Agreement  by  reference.  Other  than as
provided in this Amendment,  the Contribution  Agreement (including Exhibits and
Schedules)  has not been  modified  or amended  and is in full force and effect.
Each Original Party hereby  affirms that it remains a party to the  Contribution
Agreement (as amended by this Amendment)  after the execution of this Amendment.
The Contribution Agreement may be restated as amended hereby for the convenience
of the parties  hereto.  This Amendment may be executed in a number of identical
counterparts  which, taken together,  shall constitute  collectively one and the
same agreement.

                            [Signature pages follow]



<PAGE>

                                SIGNATURE PAGE TO
                                 FIRST AMENDMENT

                                       TO

                             CONTRIBUTION AGREEMENT

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

PMSI:                   PRIME MEDICAL SERVICES, INC.


                        By:

                        Printed Name:
                        Title:



PRIME:                 PRIME MEDICAL OPERATING, INC.


                       By:
                       Printed Name:
                       Title:



PRIME MANAGEMENT:      PRIME REFRACTIVE MANAGEMENT, L.L.C.


                       By:
                       Printed Name:
                       Title:



BDEC:                  Barnet Dulaney Eye CENTER, P.L.L.C.


                       By:
                            David D. Dulaney, M.D., manager



LASIK:                LASIK INVESTORS, L.L.C.


                       By:
                            Ronald W. Barnet, M.D., manager

                       By:
                            David D. Dulaney, M.D., manager



NEWCO I:               PRIME/BDR ACQUISITION, L.L.C.


                       By:      LASIK Investors, L.L.C.. - Member

                       By:

                                Ronald W. Barnet, M.D., manager

                       By:

                                David D. Dulaney, M.D., manager


                       By:      Prime Medical Operating, Inc. - Member

                       By:

                                    Printed Name:

                                    Title:


NEWCO II:             PRIME/BDEC ACQUISITION, L.L.C.

                      By:      Barnet Dulaney Eye Center, P.L.L.C. - Member

                      By:

                               Ronald W. Barnet, M.D., manager

                      By:

                               David D. Dulaney, M.D., manager


                      By:      Prime Medical Operating, Inc. - Member

                      By:

                                Printed Name:
                                Title:



PRIME REFRACTIVE:          PRIME REFRACTIVE, L.L.C.

                       By:      LASIK Investors, L.L.C.. - Member

                       By:

                                Ronald W. Barnet, M.D., manager

                       By:

                                David D. Dulaney, M.D., manager


                       By:      Prime Refractive Management, L.L.C. - Member

                       By:

                                Printed Name:

                                Title:



DULANEY:

                                David D. Dulaney, M.D.

BARNET:

                                Ronald W. Barnet, M.D.

ROSENBERG:

                                Mark Rosenberg