AGREEMENT AND PLAN OF MERGER

                                      among

                 TEXAS LITHOTRIPSY LIMITED PARTNERSHIP II L.P.,

                 TEXAS LITHOTRIPSY LIMITED PARTNERSHIP IV L.P.,

                       TEXAS ESWL/LASER LITHOTRIPTER, LTD.

                                       and

                 TEXAS LITHOTRIPSY LIMITED PARTNERSHIP VII, L.P.




                                September 4, 1998





<PAGE>

                                                                            Page

                                TABLE OF CONTENTS

                                      Page
 
                                    ARTICLE I
                                 PLAN OF MERGER

Section 1.01.     Merger.......................................................1

Section 1.02.     Filing.......................................................3

Section 1.03.     Effective Date...............................................3

Section 1.04.     Effect of Merger.............................................3

Section 1.05.     Further Assurances...........................................3

Section 1.06.     Closing......................................................3

                                   ARTICLE II
         REPRESENTATIONS AND WARRANTIES CONCERNING MERGING PARTNERSHIPS

Section 2.01.     Effect of Agreement..........................................4

Section 2.02.     Organization.................................................4

Section 2.03.     Capitalization...............................................5

Section 2.04.     Financial Statements.........................................5

Section 2.05.     Absence of Certain Changes...................................5

Section 2.06.     Litigation...................................................5

Section 2.07.     Property; Title..............................................5

Section 2.08.     Records and Permits.  .......................................6

Section 2.09.     Contracts and Leases.........................................6

Section 2.10      Receivables..................................................6

Section 2.11      Insurance....................................................6

Section 2.12      Employees; Benefits..........................................6


                                                        -i-
<PAGE>

                                                                       
                                                                            Page
                                   ARTICLE III
                   REPRESENTATIONS AND WARRANTIES OF TEXAS VII

Section 3.01.     Organization; Good Standing; Power...........................7

Section 3.02.     Authority Relative to Agreement..............................7

Section 3.03.     Effect of Agreement..........................................7

Section 3.04.     No Other Representations.....................................7

                                   ARTICLE IV
                                CERTAIN COVENANTS

Section 4.01.     Conduct of Business..........................................8

Section 4.02.     Access to Books, Records, and Properties.....................8

Section 4.03.     Confidentiality..............................................8

Section 4.04.     Maintenance of Insurance.....................................8
 
                                    ARTICLE V
                NATURE AND SURVIVAL OF COVENANTS, REPRESENTATIONS
                         AND WARRANTIES; INDEMNIFICATION

Section 5.01.     Survival of Representations..................................9

Section 5.02.     Indemnification by Merging Partnerships......................9

Section 5.03.     Indemnification by Texas VII.................................9

Section 5.04.     Notice of Claim..............................................9

Section 5.05.     Limits of Indemnification...................................10
 
                                   ARTICLE VI
             CONDITIONS PRECEDENT TO THE CONSUMMATION OF THE MERGER

Section 6.01.     Accuracy of Representations and Warranties..................10

Section 6.02.     Performance of Agreements...................................10



                                                       -ii-
<PAGE>
                                                                            Page

Section 6.03. Partnership Approval............................................10
 
                                   ARTICLE VII
                            TERMINATION OF AGREEMENT

Section 7.01.  Conditions for Termination.....................................10
 
                                  ARTICLE VIII
                            MISCELLANEOUS PROVISIONS

Section 8.01.   Expenses......................................................11

Section 8.02.   Governing Law.................................................11

Section 8.03.   Entire Agreement..............................................11

Section 8.04.   Amendments and Modifications..................................11

Section 8.05.   Assignment....................................................11

Section 8.06.   Captions......................................................11

Section 8.07.   Execution in Counterparts.....................................11

Section 8.08.   Number and Gender.............................................11

Section 8.09.   Notices.......................................................12

Section 8.10.   Successors and Assigns........................................12

                                    SCHEDULES

Schedule 2.01 - Defaults & Consents
Schedule 2.02 - Qualifications and Licenses
Schedule 2.03 - Capitalization
Schedule 2.05 - Absence of Certain Changes
Schedule 2.06 - Litigation
Schedule 2.07 - Property; Title
Schedule 2.09 - Contracts and Leases
Schedule 2.11 - Insurance
Schedule 2.12 - Employees; Benefits




                                                       -iii-
<PAGE>



                          AGREEMENT AND PLAN OF MERGER


          THIS  AGREEMENT  AND PLAN OF MERGER  (together  with all Schedules and
     Exhibits hereto, the "Agreement"),  made and entered into as of the 4th day
     of September, 1998, by and among Texas Lithotripsy Limited Partnership VII,
     L.P., a recently  organized Texas limited  partnership  ("Texas VII" or the
     "Surviving Partnership"),  Texas Lithotripsy Limited Partnership II L.P., a
     Texas  limited   partnership   ("Texas  II"),  Texas  Lithotripsy   Limited
     Partnership  IV L.P.,  a Texas  limited  partnership  ("Texas  IV"),  Texas
     ESWL/Laser  Lithotripter,  Ltd.,  a  Texas  limited  partnership  ("ESWL"),
     Lithotripters,  Inc.,  a North  Carolina  corporation  and the sole general
     partner  of Texas II and  Texas IV  ("Litho")  and  Texas  Litho,  Inc.,  a
     Delaware  corporation and the sole general partner of ESWL ("Texas Litho").
     ESWL, Texas II and Texas IV are sometimes  referred to herein  individually
     as a "Merging Partnership" and collectively as the "Merging  Partnerships."
     The Surviving  Partnership and the Merging  Partnerships are also sometimes
     referred to herein collectively as the "Constituent Partnerships."

                                    RECITAL:

          Each of the  Constituent  Partnerships  deems  it  advisable  that the
     Merging  Partnerships merge with and into the Surviving  Partnership on the
     terms and  conditions  set forth  herein  (the  "Merger"),  subject  to the
     approval  of  this  Agreement  by the  partners  of  each  of  the  Merging
     Partnerships  in  the  manner  set  forth  in  their   respective   limited
     partnership agreements.

          THEREFORE,  in  consideration  of the mutual  covenants and agreements
     contained herein, the parties hereto do hereby agree as follows:

                                    ARTICLE I
                                 PLAN OF MERGER

          Section 1.01. Merger.  This Section 1.01 shall constitute the "plan of
     merger"  within the meaning of the Texas Revised  Limited  Partnership  Act
     (the "Act").

          (A) The names of the limited partnerships proposing to merge are Texas
     Lithotripsy  Limited  Partnership  II  L.P.,  a Texas  limited  partnership
     ("Texas  II"),  Texas  Lithotripsy  Limited  Partnership  IV L.P.,  a Texas
     limited partnership ("Texas IV") and Texas ESWL/Laser Lithotripter, Ltd., a
     Texas limited  partnership  ("ESWL")  (each,  a "Merging  Partnership"  and
     collectively  the  "Merging   Partnerships").   The  name  of  the  limited
     partnership  into  which the  Merging  Partnerships  propose  to merge (the
     "Merger")  is Texas  Lithotripsy  Limited  Partnership  VII,  L.P., a Texas
     limited  partnership  (the  "Surviving  Partnership"  or "Texas VII").  The
     Merging Partnerships and the Surviving Partnership are hereinafter referred
     to collectively as the "Constituent Partnerships."

          (B) Until the  effective  time of the Merger (the  "Effective  Time"),
     each of the Constituent Partnerships shall continue to conduct its business
     without  material  change  and  shall  not make any  distribution  or other
     disposition  of any  material  assets,  capital or  surplus,  except in the
     ordinary  course of business  or with the consent of the other  Constituent
     Partnerships.

                                                         1
<PAGE>


          (C) As of the Effective  Time, the Merging  Partnerships'  liabilities
     and assets of every nature shall become those of the Surviving  Partnership
     by operation of law, without  reversion or impairment,  without further act
     or deed, and without any transfer or assignment having occurred.

          (D)(1) At the Effective  Time, by virtue of the Merger and without any
     action on the part of the  general  partner or the  limited  partner of the
     Surviving Partnership, the sole general partner partnership interest in the
     Surviving  Partnership  shall be cancelled and the entire  limited  partner
     partnership  interest of the sole initial  limited partner of the Surviving
     Partnership shall be canceled.

          (2) At the  Effective  Time,  by virtue of the Merger and  without any
     action on the part of the general partner or the limited  partners of Texas
     II, the sole  general  partner  partnership  interest  in Texas II shall be
     converted into and shall  represent the right to receive an 11.507% general
     partner  partnership  interest  in  the  Surviving   Partnership  and  each
     outstanding 1% limited  partner  partnership  interest in Texas II shall be
     converted into and represent the right to receive a 0.514% limited  partner
     partnership interest in the Surviving Partnership (proportionately adjusted
     for fractional percentage interests).

          (3) At the  Effective  Time,  by virtue of the Merger and  without any
     action on the part of the general partner or the limited  partners of Texas
     IV, the sole  general  partner  partnership  interest  in Texas IV shall be
     converted  into and shall  represent the right to receive a 4.120%  general
     partner  partnership  interest  in  the  Surviving   Partnership  and  each
     outstanding 1% limited  partner  partnership  interest in Texas IV shall be
     converted into and represent the right to receive a 0.206% limited  partner
     partnership interest in the Surviving Partnership (proportionately adjusted
     for fractional percentage interests).

          (4) At the  Effective  Time,  by virtue of the Merger and  without any
     action on the part of the general partner or the limited  partners of ESWL,
     the sole general  partner  partnership  interest in ESWL shall be converted
     into and shall  represent  the right to  receive a 5.181%  general  partner
     partnership  interest in the Surviving  Partnership and each outstanding 1%
     limited  partner  partnership  interest in ESWL shall be converted into and
     represent  the  right to  receive  a  0.279%  limited  partner  partnership
     interest  in  the  Surviving  Partnership   (proportionately  adjusted  for
     fractional percentage interests).

          (5) Promptly  after the  Effective  Time,  the general  partner of the
     Surviving  Partnership  shall  prepare  and  execute  an  amendment  to the
     Surviving  Partnership's Agreement of Limited Partnership providing for the
     general and limited partner  partnership  interests herein contemplated and
     deliver  a copy of such  amendment  to each  person  who was a  general  or
     limited partner of any of the Merging Partnerships.

          (6) After the  Effective  Time, no transfer of  partnership  interests
     shall be made on the transfer books of the Merging Partnerships.

          (E) The Texas VII limited  partnership  agreement shall, as amended in
     the  manner  contemplated  in Section  1.01(D)(5)  above,  continue  as the
     Surviving Partnership's agreement of limited partnership.


                                                         2
<PAGE>


          (G)  The  Effective  Time  shall  be  11:59:59  p.m.  on the  day  the
     Certificate of Merger is filed with the Texas Secretary of State.

          Section 1.02.  Filing.  Upon  fulfillment  or waiver of the conditions
     specified in  ARTICLE VI  and  provided  that this  Agreement  has not been
     terminated pursuant to ARTICLE VII, the Constituent Partnerships will cause
     a  Certificate  of Merger  reflecting  the terms of the  Merger in the form
     prescribed  by law to be executed and filed with the  Secretary of State of
     the State of Texas.

          Section  1.03.  Effective  Date.  The Merger shall be effective at the
     Effective Time.

          Section 1.04. Effect of Merger. From and after the Effective Time, the
     separate  existence  of the  Merging  Partnerships  shall  cease,  and  the
     Surviving  Partnership  shall  thereupon  and  thereafter,  to  the  extent
     consistent  with its  Certificate of Limited  Partnership,  possess all the
     rights, privileges,  immunities and franchises, of a public as well as of a
     private nature, of each of the Constituent Partnerships;  and all property,
     real,  personal and mixed, and all debts due on whatever  account,  and all
     other choses in action,  and all and every other interest,  of or belonging
     to or due to  each  of  the  Constituent  Partnerships  shall  vest  in the
     Surviving  Partnership without further act or deed and without any transfer
     or assignment  having  occurred;  and the title to any property or interest
     therein, vested in any of the Constituent  Partnerships shall not revert or
     be in any way impaired by reason of the Merger.  The Surviving  Partnership
     shall  thenceforth  be  responsible  and  liable  for all the  liabilities,
     obligations and penalties of each of the Constituent Partnerships;  and any
     claim  existing or action or proceeding,  civil or criminal,  pending by or
     against any of the  Constituent  Partnerships  may be  prosecuted as if the
     Merger had not taken place, or the Surviving Partnership may be substituted
     in its place;  and any  judgment  rendered  against any of the  Constituent
     Partnerships may be enforced against the Surviving Partnership. Neither the
     rights  of  creditors  nor  any  liens  upon  the  property  of  any of the
     Constituent Partnerships shall be impaired by reason of the Merger.

          Section 1.05. Further Assurances.  If, at any time after the Effective
     Time,  the  Surviving  Partnership  shall  consider or be advised  that any
     further  deeds,  assignments  or assurances in law or any other actions are
     necessary,  desirable  or proper to vest,  perfect  or confirm of record or
     otherwise,  in it, the title to any  property or rights of the  Constituent
     Partnerships  acquired  or to be  acquired by reason of, or as a result of,
     the  Merger,  the  Constituent  Partnerships  agree  that such  Constituent
     Partnerships,  acting through their  respective  general  partners by their
     proper officers and directors,  shall and will execute and deliver all such
     proper  deeds,  assignments  and  assurances  in  law  and  do  all  things
     necessary,  desirable or proper to vest,  perfect or confirm  title to such
     property or rights in the Surviving  Partnership and otherwise to carry out
     the purpose of this Agreement, and that the Surviving Partnership's general
     partner is fully  authorized  and  directed in the name of the  Constituent
     Partnerships or otherwise to take any and all such actions.

          Section 1.06. Closing. The closing of the transactions contemplated by
     this  Agreement  (the  "Closing")  shall take place at the offices of Texas
     VII, 1301 Capital of Texas  Highway,  Suite C-300,  Austin,  Texas 78746 at
     9:00 A.M.,  Central time on the business day following the  satisfaction of
     the  conditions  to Closing  set forth in ARTICLE VI (the  "Closing  Date")
     unless the parties hereto agree upon a different time,  date or place.  The
     Closing shall not be deemed to have occurred until all actions necessary to
     complete the Closing have occurred.



                                                         3

<PAGE>


                                   ARTICLE II
         REPRESENTATIONS AND WARRANTIES CONCERNING MERGING PARTNERSHIPS

          Subject  to the  limitations  and  qualifications  set  forth  in this
     Agreement,   including  the  Disclosure   Schedule   attached   hereto  and
     incorporated herein by reference,  each Merging Partnership  severally (and
     only to the extent any  representation  or warranty pertains to itself) and
     not jointly, represents and warrants, to each other Constituent Partnership
     as follows:

          Section 2.01.  Effect of Agreement.  This Agreement is a legal,  valid
     and  binding  obligation  of the  Merging  Partnership  and is  enforceable
     against  it  in  accordance  with  the  terms  hereof,   except  that  such
     enforceability may be limited by bankruptcy, insolvency,  reorganization or
     other similar laws affecting  creditors' rights generally and by principles
     of equity regarding the availability of remedies.  The Merging  Partnership
     has the  requisite  limited  partnership  power and authority to enter into
     this Agreement and to carry out the transactions  contemplated  hereby and,
     assuming  receipt of the  approvals  described in Section  6.03 below,  the
     execution,  delivery and  performance of this Agreement will have been duly
     and validly  authorized by all necessary limited  partnership action on the
     part of such Merging  Partnership.  Except as set forth on Schedule 2.01 of
     the Disclosure Schedule or to the extent the following would not reasonably
     be  expected  to have a  material  adverse  effect on the  business  of the
     Merging Partnership  ("Material Adverse Effect"),  the execution,  delivery
     and  performance  of this  Agreement  by the  Merging  Partnership  and the
     consummation of the transactions  contemplated  hereby will not (i) require
     the  consent,  approval  or  authorization  of any person  (other  than its
     partners),  corporation,  partnership,  joint  venture  or  other  business
     association or public authority;  (ii) violate,  with or without the giving
     of notice or the passage of time, or both, any provisions of law applicable
     to the Merging  Partnership;  (iii) with or without the giving of notice or
     the  passage  of time,  or both,  conflict  with or  result  in a breach or
     termination of any provision of, or constitute a default  under,  or result
     in  the  creation  of any  lien,  charge  or  encumbrance  upon  any of the
     properties or assets of the Merging  Partnership  pursuant to any agreement
     of limited  partnership  or limited  partnership  certificate  or  material
     indenture,  note, bond, pledge,  mortgage,  deed of trust, lease,  license,
     contract, agreement,  commitment or other instrument, or obligation, or any
     order, judgment, award, decree, statute, ordinance, regulation or any other
     restriction of any kind or character,  to which such Merging Partnership is
     a party or by which it or any of its assets or properties may be bound;  or
     (iv) result in the acceleration of any indebtedness or increase the rate of
     interest   payable  by  the  Merging   Partnership   with  respect  to  any
     indebtedness.  Except to the extent disclosed in the Texas VII Confidential
     Private Placement  Memorandum dated as of even date herewith,  as hereafter
     amended  and  supplemented   (the  "Offering   Memorandum"),   the  Merging
     Partnership is in material  compliance with all applicable  laws, rules and
     regulations.

          Section  2.02.  Organization.  The  Merging  Partnership  is a limited
     partnership  formed  in  accordance  with,  validly  existing  and in  good
     standing under the laws of the State of Texas,  with all requisite  limited
     partnership  power and authority to own,  operate and lease its  properties
     and  to  carry  on  its  business  as  now  being  conducted.  The  Merging
     Partnership neither owns nor has the right to acquire an equity interest in
     any corporation,  partnership or other organization. As of the date of this
     Agreement,  the Merging  Partnership  is qualified to conduct  business and
     holds licenses as provided on Schedule 2.02 of the Disclosure Schedule.



                                                         4
<PAGE>


          Section 2.03. Capitalization. Schedule 2.03 of the Disclosure Schedule
     sets forth the names and respective  partnership  interests of each general
     and  limited  partner  of  record  in the  Merging  Partnership.  Except as
     provided on such Schedule 2.03 or pursuant to the terms of its Agreement of
     Limited Partnership,  to the knowledge of the Merging Partnership there are
     no  outstanding  or authorized  subscriptions,  options,  warrants,  calls,
     rights, commitments or any other agreements of any character obligating the
     Merging  Partnership to issue any additional  capital partner  interests or
     any securities  convertible  into or evidencing the right to subscribe for,
     purchase or acquire any capital partner interests, nor are there any voting
     trusts or any other agreements or understandings with respect to the voting
     of its general and limited partner interests.

          Section 2.04. Financial Statements.  Complete copies of the internally
     prepared  or  audited  financial  statements,  as the case  may be,  of the
     Merging  Partnership for the three-year period ended December 31,  1997 and
     the six-month  period ended June 30, 1998 have  previously been provided to
     Litho or Texas Litho, as the case may be. Such financial statements present
     fairly in all  material  respects  the  financial  position  and results of
     operation of the Merging  Partnership  as of such dates and for the periods
     then  ended,  subject  to year  end  adjustments  in the  case  of  interim
     financial  statements;  provided,  that any unaudited statements (including
     interim  statements)  may not contain  footnotes.  The balance sheet of the
     Merging  Partnership at June 30, 1998 is referred to herein as the "Balance
     Sheet" and June 30, 1998 is referred to herein as the "Balance Sheet Date."
   
          Section  2.05.  Absence  of Certain  Changes. Except  as set forth on
     Schedule 2.05 of the Disclosure  Schedule or otherwise  contemplated by the
     terms of this Agreement,  since the Balance Sheet Date, no material adverse
     change has occurred to the Merging Partnership or its business, properties,
     financial condition or prospects.

          Section 2.06. Litigation.  Except as set forth on Schedule 2.06 of the
     Disclosure  Schedule or the  Section of the  Offering  Memorandum  entitled
     "Regulation",   there  is  no  claim,  action,  suit,   proceeding  (legal,
     administrative   or   otherwise),   investigation   or   inquiry   (by   an
     administrative  agency,  governmental body or otherwise) pending or, to the
     knowledge of the Merging Partnership threatened by or against, or otherwise
     affecting,  the  Merging  Partnership,  its  properties  or  assets  or the
     transactions  contemplated hereby, at law or in equity, or before or by any
     federal,  state,  municipal or other governmental  department,  commission,
     board, agency, instrumentality or authority, domestic or foreign.

          Section  2.07.  Property;  Title.  Schedule  2.07  of  the  Disclosure
     Schedule describes each material item of machinery,  equipment,  furniture,
     supplies, materials, vehicles and other items of tangible personal property
     of every kind owned by the Merging Partnership (the "Partnership  Assets").
     The Merging  Partnership  has good and marketable  title to its Partnership
     Assets,  free and clear of all liens except as disclosed on Schedule  2.07.
     The Merging Partnership does not own an interest in any real property.  The
     Partnership Assets constitute all of the assets of the Merging  Partnership
     required to operate its business in the manner presently  conducted (except
     to the extent a necessary asset may be leased as disclosed on Schedule 2.09
     of the Disclosure  Schedule) and are in good operating order and condition,
     ordinary  wear and tear  excepted and are  suitable for their  intended use
     subject to periodic maintenance.



                                                         5
<PAGE>


          Section  2.08.  Records  and  Permits.  The books and  records  of the
     Merging  Partnership  are  true,  accurate  and  complete  in all  material
     respects.  The Merging  Partnership has obtained all permits,  certificates
     and licenses  required for the conduct of its business and the ownership of
     its  Partnership  Assets the failure of which to obtain or  maintain  could
     reasonably be expected to have a Material  Adverse  Effect (the  "Necessary
     Permits").  The Merging  Partnership  is not in violation of any  Necessary
     Permit and no proceedings  are pending,  or to the knowledge of the Merging
     Partnership, threatened, to revoke or limit any Necessary Permit.
 
          Section 2.09.  Contracts and Leases.  Schedule 2.09 of the  Disclosure
     Schedule lists all contracts, commitments, agreements (including agreements
     for the borrowing of money or the extension of credit),  leases,  licenses,
     understandings  and  obligations,  whether  written  or oral,  to which the
     Merging  Partnership  is party  or by  which  it or any of its  Partnership
     Assets is bound or  affected,  that are  material to the  operation  of its
     business or which impose a material  obligation on the Merging  Partnership
     (the "Contracts").  Each of the Contracts is valid, binding and enforceable
     in accordance with its terms except that such enforceability may be limited
     by bankruptcy,  insolvency,  reorganization or other similar laws affecting
     creditors'  rights  generally  and by  principles  of equity  regarding the
     availability of remedies. Each Contract is in full force and effect. Except
     as set forth on  Schedule 2.01  of the  Disclosure  Schedule,  there are no
     existing defaults, and no events or circumstances have occurred which, with
     or  without  notice or lapse of time or both,  would  constitute  defaults,
     under any of the Contracts by the Merging Partnership or, to its knowledge,
     any other party thereto.

          Section 2.10 Receivables.  All accounts  receivable due to the Merging
     Partnership  are,  and will be at the  Effective  Time,  legal,  valid  and
     binding  obligations,  created in the  ordinary  course of  business of the
     Merging Partnership.

          Section  2.11  Insurance.  Schedule  2.11 of the  Disclosure  Schedule
     describes all insurance policies maintained by the Merging Partnership with
     respect to its business and  Partnership  Assets.  Such policies are valid,
     binding and  enforceable  in  accordance  with their terms except that such
     enforceability may be limited by bankruptcy, insolvency,  reorganization or
     other similar laws affecting  creditors' rights generally and by principles
     of equity  regarding the  availability  of remedies,  are in full force and
     effect,  and all  premiums  due  thereon  have  been  paid and will be paid
     through the Effective Time.

          Section 2.12  Employees;  Benefits.  Schedule  2.12 of the  Disclosure
     Schedule  sets forth a list of the name and  position of each person who is
     employed by the Merging  Partnership or associated with its business in any
     capacity,  as well as each other person to whom the Merging Partnership has
     a policy,  practice or  obligation  to pay or provide  retirement,  health,
     welfare or other benefits of any kind,  together with a description of such
     benefits (other than salary  information).  Except as set forth on Schedule
     2.12, there are no Plans, as defined below,  contributed to,  maintained or
     sponsored by the Merging  Partnership,  to which the Merging Partnership is
     obligated to  contribute  or with respect to which the Merging  Partnership
     has any  liability  or  potential  liability,  whether  direct or indirect,
     including all Plans  contributed to, maintained or sponsored by each member
     of the  controlled  group of  companies,  within the  meaning  of  Sections
     414(b),  414(c),  and  414(m)  of the  Internal  Revenue  Code of 1986,  as
     amended,  of which the  Merging  Partnership  is a member to the extent the
     Merging Partnership has any potential liability with respect to such Plans.
     For purposes of this  Agreement,  the term "Plans" shall mean: (a) employee
     benefit plans as defined in Section 3(3) of the Employee

                                                         6
<PAGE>


          Retirement Income Security Act of 1974, as amended ("ERISA"),  whether
     or not funded and whether or not terminated,  (b) employment agreements and
     (c) personnel  policies or fringe  benefit  plans,  policies,  programs and
     arrangements,  whether or not subject to ERISA,  whether or not funded, and
     whether or not  terminated,  including  without  limitation,  stock  bonus,
     deferred  compensation,   pension,   severance,  bonus,  vacation,  travel,
     incentive,  and health,  disability and welfare  plans.  There is no unfair
     labor practice complaint,  labor organizational effort, strike, slowdown or
     similar  labor  matter   pending  or,  to  the  knowledge  of  the  Merging
     Partnership, threatened against it or affecting its business.

                                   ARTICLE III
                   REPRESENTATIONS AND WARRANTIES OF TEXAS VII

          Subject  to the  limitations  and  qualifications  set  forth  in this
     Agreement, Texas VII represents and warrants to each Merging Partnership as
     follows:

          Section 3.01.  Organization;  Good  Standing;  Power.  Texas  VII is a
     limited partnership formed in accordance with, validly existing and in good
     standing under the laws of the State of Texas and has all requisite limited
     partnership  power and authority to own, lease and operate its prop erties,
     to carry on its  business  as now being  conducted  and to enter  into this
     Agreement and perform its obligations hereunder.

          Section  3.02.   Authority  Relative  to  Agreement.  The   execution,
     delivery and per formance of this Agreement have been duly and  effectively
     authorized by all necessary limited partnership action on the part of Texas
     VII,  and this  Agreement  is a valid,  legally  binding  and en  forceable
     obligation of Texas VII, except that  enforceability  hereof may be limited
     by bankruptcy,  insolvency,  reorganization or other similar laws affecting
     creditors'  rights  generally  and by  principles  of equity  regarding the
     availability of remedies.

          Section  3.03.  Effect  of  Agreement.  The  execution,  delivery  and
     performance  of this  Agreement  by Texas VII and the  consummation  of the
     transactions contemplated hereby will not (i) require the consent, approval
     or authorization of any person, corporation,  partnership, joint venture or
     other  business  association  or public  authority;  (ii) violate,  with or
     without the giving of notice or the passage of time, or both, any provision
     of law now  applicable  to Texas VII;  (iii) with  or without the giving of
     notice or the passage of time, or both, conflict with or result in a breach
     or  termination  of any  provision of, or  constitute a default  under,  or
     result in the creation of any lien,  charge or encumbrance  upon any of the
     property  or assets of Texas  VII  pursuant  to any  agreement  of  limited
     partnership or limited  partnership  certificate,  indenture,  note,  bond,
     pledge,  mortgage,  deed of trust,  lease,  license,  contract,  agreement,
     commitment or other instrument or obligation or any order, judgment, award,
     decree,  statute,  ordinance,  regulation,  or any other restriction of any
     kind or character,  to which Texas VII is a party, or by which Texas VII or
     any  of  its  assets  or  properties  are  bound;  or  (iv) result  in  the
     acceleration  of any  indebtedness  of Texas  VII or  increase  the rate of
     interest payable by Texas VII with respect to any indebtedness.

          Section 3.04. No Other Representations. The proposed business of Texas
     VII is  accurately  described  in the Offering  Memorandum  (subject to the
     limitations,  assumptions and conditions  therein provided and the accuracy
     and completeness of the representations and warranties

                                                         7
<PAGE>


          made herein by the Merging Partnerships) and Texas VII has no material
     assets or liabilities  except as described  therein.  No  representation is
     made  as to the  projected  financial  or  other  results  of its  proposed
     operations.

                                   ARTICLE IV
                                CERTAIN COVENANTS

          Section 4.01.  Conduct of  Business.  Between  the date hereof and the
     Effective  Time,  each Merging  Partnership  and the Surviving  Partnership
     (solely with respect to themselves) covenants and agrees that except as set
     forth herein or in the Offering Memorandum, (i) the business of such person
     will be  conducted  in a  manner  not  materially  different  from its past
     practice  and only in the  ordinary  course,  and (ii) it will refrain from
     incurring  any  material  debt,  liability  or  obligation,  contingent  or
     otherwise absent the consent of the other Constituent Partnerships.

          Section 4.02.  Access to Books,  Records,  and Properties.  Subject to
     Section 4.03 below,  each Party has previously and shall continue to afford
     to each  other  party and its  representatives  reasonable  access to their
     respective properties, books and records at reasonable times.

          Section 4.03.  Confidentiality.  In  recognition  of the  confidential
     nature of certain of the information  which has been or will be provided to
     each  party and its  affiliates  by the other  parties  hereto,  each party
     agrees to retain in confidence (except that it may disclose the information
     herein  described  to its agents,  advisors  and lenders  after making them
     aware of the limitations on disclosure herein set forth and obtaining their
     agreement to abide by them),  information transmitted or disclosed to it by
     any other party and further agrees that it will not use for its own benefit
     or for the benefit of any of its affiliates and will not use or disclose to
     any other third party,  or permit the use or  disclosure to any other third
     party of, any information so obtained or revealed. Notwithstanding anything
     to the  contrary  in the  foregoing  provisions,  such  information  may be
     disclosed  (a) where it is required by court order or decree or  applicable
     law (including to the extent  reasonably  necessary to prepare the Offering
     Memorandum  and provide  adequate  disclosure in connection  with the votes
     described in Section 6.03 below),  (b) if it is  ascertainable  or obtained
     from public or published information,  (c) if the recipient can demonstrate
     that such  information  was properly in its possession  prior to disclosure
     thereof and (d)  following  successful  consummation  of the Closing to the
     extent  required in connection  with the operation of Texas VII's business.
     If any recipient of information shall be required to make disclosure of any
     such  information  by court order or decree or applicable  law, such person
     shall give the affected party or parties prior notice of the making of such
     disclosure  and shall use all  efforts  to afford  them an  opportunity  to
     contest the making of such disclosure.  The restrictions under this Section
     shall survive Closing;  provided further,  that in the event this Agreement
     is terminated prior to Closing,  the restrictions  under this Section shall
     survive such termination  notwithstanding  anything contained herein to the
     contrary.

          Section 4.04. Maintenance of Insurance. Texas VII covenants that for a
     period  of not  less  than  the  longer  of (i)  three  years  or (ii)  the
     expiration of any applicable  statute of limitations or repose, to maintain
     in full  force and  effect  one or more  policies  of  insurance  issued by
     reputable  carriers  providing  coverage against services  furnished by the
     Merging  Partnerships  prior to the  Effective  Time,  in amounts  and with
     deductibles consistent with good and standard industry practices.

                                                         8
<PAGE>



                                    ARTICLE V
                NATURE AND SURVIVAL OF COVENANTS, REPRESENTATIONS
                         AND WARRANTIES; INDEMNIFICATION

          Section  5.01.  Survival  of   Representations.  Except  as  otherwise
     expressly provided herein, all  representations,  warranties,  indemnities,
     covenants  and  agreements  made in this  Agreement and the remedies of the
     parties with respect thereto,  shall,  except to the extent notice is given
     prior to the  expiration of the  applicable  period,  survive the Effective
     Time  hereunder  for a period  of one year.  Any claim for  indemnification
     hereunder  which shall have been asserted  during the survival period shall
     continue in effect with respect to such particular  claims until such claim
     shall have been finally resolved or settled. It is expressly understood and
     agreed  that each  covenant  and  agreement  which by its  nature  survives
     Closing shall survive for an indefinite period except to the extent limited
     by the express terms thereof.

          Section 5.02. Indemnification by Merging Partnerships.  Subject to the
     period of survival set forth in Section 5.01 and the limitations  contained
     in Section 5.05  below,  Litho and Texas Litho,  severally and not jointly,
     shall  indemnify,  defend and hold harmless  Texas VII and its  affiliates,
     partners, agents and employees (collectively,  the "Surviving Indemnitees")
     from,  against  and with  respect to any and all losses,  damages,  claims,
     obligations,  liabilities,  costs and  expenses of any kind or character (a
     "Loss") arising out of or in connection with any of the following:

          (a) any  breach of any of the  representations  or  warranties  of any
     Merging  Partnership of which such person is the general partner  contained
     in or made pursuant to this Agreement; and

          (b) any failure by any Merging Partnership of which such person is the
     general partner to perform or observe, in full, any covenant,  agreement or
     condition to be performed or observed by it pursuant to this Agreement.

          Section 5.03.  Indemnification  by Texas VII. Subject to the period of
     survival  set  forth in  Section  5.01  and the  limitations  contained  in
     Section 5.05  below,  Texas VII shall  indemnify,  defend and hold harmless
     each partner in the Merging  Partnerships from, against and with respect to
     any Loss arising out of or in connection with any of the following:

          (a) any breach of any of the  representations  and warranties of Texas
     VII contained in or made pursuant to this Agreement; and

          (b) any  failure  by Texas VII to  perform or  observe,  in full,  any
     covenant, agreement or condition to be performed or observed by it pursuant
     to this Agreement.

          Section 5.04.  Notice of Claim.  Any party  seeking to be  indemnified
     hereunder  (the  "Indemnified  Party")  shall,  within  15  days  following
     discovery of the matters giving rise to a Loss,  notify the party from whom
     indemnity is sought (the  "Indemnity  Obligor") in writing of any claim for
     recovery,  specifying in  reasonable  detail the nature of the Loss and the
     amount of the liability estimated to arise therefrom.  Failure to give such
     notice shall constitute a waiver of the Loss attributable to such

                                                         9
<PAGE>


          matters only to the extent the indemnitor is actually  damaged thereby
     or such delay causes an additional expense.

Section 5.05. Limits of Indemnification.  The amount payable with respect to any
Loss  by any  Indemnified  Party  (i) shall  be  reduced  by the  amount  of any
insurance  proceeds  received with respect to the Loss,  and each of the parties
hereby  agrees  to use  its  reasonable  best  efforts  to  collect  any and all
insurance  proceeds  to  which  it may  be  entitled  in  respect  of any  Loss;
(ii) shall  be net of any  federal,  state or local tax  benefit  derived by the
Indemnified  Party by reason of the Loss and (iii) shall not include any amounts
related to special,  incidental,  indirect,  cover,  exemplary or  consequential
damages.

                                   ARTICLE VI
             CONDITIONS PRECEDENT TO THE CONSUMMATION OF THE MERGER

          The  obligations of each party under this Agreement are subject to the
     satisfaction  at or  prior  to the  Closing  Date  (including  satisfaction
     thereof  simultaneously with the Closing, it being agreed that no action to
     be taken at the Closing shall be deemed consummated until all actions to be
     taken at the Closing shall be deemed  consummated) of each of the following
     conditions:

          Section  6.01.  Accuracy  of  Representations   and  Warranties.   The
     representations  and warranties of each other party herein  contained shall
     be true and correct in all material  respects on and as of the Closing Date
     with the same  force and  effect as  though  made on and as of the  Closing
     Date, except as affected by transactions contemplated hereby.

          Section 6.02.  Performance of Agreements.  Each other party shall have
     complied with the covenants set forth in Sections 4.01 and 4.02.

          Section  6.03.  Partnership  Approval.  The  partners of each  Merging
     Partnership  shall have approved the Merger in the manner required in their
     respective Agreements of Limited Partnership.

                                   ARTICLE VII
                            TERMINATION OF AGREEMENT

          Section 7.01. Conditions for Termination.  Notwithstanding anything to
     the contrary herein,  this Agreement may be terminated and the transactions
     hereby may be abandoned:

          (A) by the mutual  consent of Litho and Texas  Litho at any time prior
     to the Effective Time;

          (B) by action of any  Merging  Partnership  if the Merger has not been
     consummated  or any other party shall have failed to satisfy the conditions
     to Closing to be satisfied by such party on or before December 31, 1998;



                                                        10
<PAGE>


          (C) by action of any Merging  Partnership  if there  exists a material
     breach  of any  representation,  warranty  or  covenant  made by any  other
     Merging Partnership or by Texas VII following notice thereof and failure by
     such party to cure such breach with 15 days thereafter.

                                  ARTICLE VIII
                            MISCELLANEOUS PROVISIONS

          Section 8.01. Expenses.  Except as otherwise expressly provided herein
     or as provided in the section of the Offering  Memorandum entitled "Sources
     and  Applications  of  Funds,"  each party  will bear its own  expenses  in
     connection with the accounting,  legal, investment banking and professional
     services  required in the negotiation and preparation of this Agreement and
     the consummation of the transactions provided for in this Agreement.

          Section 8.02.  Governing  Law.  This  Agreement  and the  transactions
     contemplated  herein  shall be  governed  by,  interpreted,  construed  and
     enforced in  accordance  with the laws of the State of Texas  applicable to
     contracts made and to be performed entirely within the State of Texas.

          Section  8.03.  Entire   Agreement.  This   Agreement  (including  the
     Schedules and any subsidiary  agreements  incorporated  herein as Exhibits)
     contains  the entire  agreement  of the parties with respect to the subject
     matter  hereof  and  supersedes  any prior  agreement  between or among the
     parties hereto.

          Section 8.04. Amendments and Modifications.  This  Agreement shall not
     be  modified,  amended  or changed in any  respect  except in writing  duly
     signed by the  parties  hereto  and each party  hereby  waives any right to
     amend this Agreement in any other way.

          Section 8.05.  Assignment.  This  Agreement may not be assigned by any
     of the parties  hereto.  Notwithstanding  the  foregoing,  it is  expressly
     agreed that prior to or concurrent with the Effective Time, Texas Litho may
     merge with Litho or  otherwise  convey its  interests  in ESWL to Litho and
     Litho shall succeed to the rights and obligations of Texas Litho hereunder.

          Section  8.06.  Captions.  Captions  in this  Agreement are solely for
     purposes of  identification  and shall not in any manner  alter or vary the
     interpretation or construction of this Agreement.

          Section  8.07.  Execution  in  Counterparts.   This  Agreement  may be
     executed in more than one counterpart,  each of which shall be deemed to be
     an original, but all of which shall be deemed to constitute one instrument.
     It  shall  not be  necessary  for all  parties  to  have  signed  the  same
     counterpart provided that all parties have signed at least one counterpart.

          Section 8.08. Number and Gender.  Throughout this Agreement,  wherever
     the context so requires,  the singular  shall  include the plural,  and the
     masculine  gender shall include the feminine and neuter  genders,  and vice
     versa.


                                                        11
<PAGE>


          Section 8.09.  Notices.  All  notices or other communications that are
     required  or  permitted  hereunder  shall be given in writing  and shall be
     given either by personal  delivery,  by Federal  Express or other overnight
     courier or by telecopy,  shall be deemed to have been given when personally
     delivered,  when  deposited  with charges  prepaid with Federal  Express or
     other nationally  recognized overnight courier service, or when transmitted
     to telecopy machine, addressed to the respective parties as follows:

                  Texas Lithotripsy Limited Partnership II L.P.

                  c/o Lithotripters, Inc
                  2008 Litho Place
                  Fayetteville, NC   28304
                  Facsimile:  (910) 323-9857
                  Attn: Joseph Jenkins, M.D.

                  Texas Lithotripsy Limited Partnership IV L.P.

                  c/o Lithotripters, Inc
                  2008 Litho Place
                  Fayetteville, NC   28304
                  Facsimile:  (910) 323-9857
                  Attn: Joseph Jenkins, M.D.

                  Texas ESWL/Laser Lithotripter, Ltd.

                  c/o Texas Litho, Inc.
                  1301 Capital of Texas Highway
                  Suite C-300
                  Austin, Texas   78746
                  Facsimile:  (512) 328-8510
                  Attn: Michael Madler

                  Texas Lithotripsy Limited Partnership VII, L.P.

                  c/o Lithotripters, Inc
                  1301 Capital of Texas Highway
                  Suite C-300
                  Austin, Texas 78746
                  Facsimile:  (512) 328-8510
                  Attn: Michael Madler

          Any party may by notice  change the  address to which  notice or other
     communications to such party are to be delivered or mailed.

          Section 8.10. Successors and Assigns.  All of the terms and provisions
     of this  Agreement  shall be binding upon and shall inure to the benefit of
     the parties hereto and to the extent

                                                        12
<PAGE>


          permitted herein,  their successors and assigns.  No third parties are
     intended to benefit,  however, from the terms and provisions hereof or from
     any representation, warranty, covenant or obligation set forth herein or in
     any schedule, exhibit or other writing delivered pursuant hereto.






         [The remainder of this page has been left blank intentionally.]






 


                                                        13


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

                            TEXAS LITHOTRIPSY LIMITED PARTNERSHIP
                               II L.P.

                            By:      Lithotripters, Inc., sole general partner


                            By: ________________________________________
                                ________________________________________
                                (Type Name and Title)


                             TEXAS LITHOTRIPSY LIMITED PARTNERSHIP
                                IV L.P.

                             By:      Lithotripters, Inc., sole general partner


                             By: ________________________________________
                                 ________________________________________
                                 (Type Name and Title)


                             TEXAS ESWL/LASER LITHOTRIPTER, LTD

                             By:      Texas Litho, Inc., sole general partner


                             By: ________________________________________
                                 ________________________________________
                                 (Type Name and Title)


                             TEXAS LITHOTRIPSY LIMITED PARTNERSHIP
                             VII, L.P.

                             By:      Lithotripters, Inc. sole general partner


                             By: ________________________________________
                                 ________________________________________
                                 (Type Name and Title)

                             [SIGNATURES CONTINUED ON FOLLOWING PAGE.]


                                                        14
<PAGE>


                              LITHOTRIPTERS, INC.


                              By: ________________________________________
                                  ________________________________________
                                  (Type Name and Title)


                                  TEXAS LITHO, INC.


                              By: ________________________________________
                                  ________________________________________
                                  (Type Name and Title)




                                                        15

<PAGE>






 


 


                                    SCHEDULES

                                 Relating to the

                          AGREEMENT AND PLAN OF MERGER

                                      among

                 TEXAS LITHOTRIPSY LIMITED PARTNERSHIP II L.P.,

                 TEXAS LITHOTRIPSY LIMITED PARTNERSHIP IV L.P.,

                       TEXAS ESWL/LASER LITHOTRIPTER, LTD.

                                       and

                 TEXAS LITHOTRIPSY LIMITED PARTNERSHIP VII, L.P.

                                September 4, 1998


 



ANY FACT OR MATTER  DISCLOSED IN ONE OR MORE SCHEDULES SHALL BE DEEMED DISCLOSED
FOR PURPOSES OF ALL  SCHEDULES,  WHETHER OR NOT  SPECIFICALLY  CROSS-REFERENCED.
CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE DEFINED HAVE THE SAME MEANING AS
IN THE  AGREEMENT TO WHICH THESE  SCHEDULES  ARE ATTACHED  AND  INCORPORATED  BY
REFERENCE.

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

SCHEDULE 2.01 - Defaults and Consents..........................................1

SCHEDULE 2.02 - Qualifications and Licenses....................................3

SCHEDULE 2.03 - Capitalization.................................................4

SCHEDULE 2.05 - Absence of Certain Changes....................................10

SCHEDULE 2.06 - Litigation....................................................11

SCHEDULE 2.07 - Property; Title...............................................12

SCHEDULE 2.09 - Contracts and Leases..........................................16

SCHEDULE 2.11 - Insurance.....................................................22

SCHEDULE 2.12 - Employees; Benefits...........................................26

 



                                                         i
<PAGE>

                                  SCHEDULE 2.01

                              Defaults and Consents


1. The vote of a prescribed portion of the outstanding limited partner interests
in each Merging  Partnership  is necessary  to authorize  the Merger.  Litho and
Texas Litho  interpret the agreement of limited  partnership for ESWL to require
the  vote  of  two-thirds  in  interest  of  the  ESWL  limited  partners.  Such
interpretation  is  reasonable  in the opinion of Litho and Texas Litho,  but an
argument can be made that a greater voting requirement  applies.  As of the date
of this Agreement,  no such claims are pending or, to the knowledge of Litho and
Texas Litho, threatened.

2. Consents must be obtained under the following lithotripsy services agreements
in connection with the Merger:

     a. Texas II

               i. Services  Agreement by and among Texas II and Harris Methodist
          Fort Worth,  Harris  Methodist  Southwest and Harris  Methodist  H-E-B
          dated May 1, 1997.

               ii.  Services  Agreement  by and between  Texas II and  Hillcrest
          Baptist Medical Center dates April 1, 1992.

               iii.  Services  Agreement  by and  between  Texas  II and  Irving
          Hospital  Authority  d/b/a  Irving  Healthcare  System dated August 9,
          1991.

               iv. Services  Agreement by and between Texas II and Health Trust,
          Inc.-The Hospital Company with respect to Northeast Community Hospital
          dated April 25, 1991.

               v.  Services  Agreement  by and between  Texas II and  Providence
          Health Center dated July 9, 1991.

     b. Texas IV

               i. None

     c. ESWL

               i.  Lithotripsy   Services  Agreement  between  ESWL  and  Angelo
          Community  Hospital  dated  July 8, 1992,  as amended by that  certain
          Amendment No. 1

                                                         1
<PAGE>


               to the Lithotripsy  Services Agreement regarding billing and user
          fees between ESWL and Angelo Community Hospital dated January 1, 1995.

     3. Consent must be obtained  under the following  lease in connection  with
     the Merger:

               a.  Vehicle  Lease  Service   Agreement  between  PACCAR  Leasing
          Corporation  and ESWL for 1996  Peterbilt  379 truck dated  October 9,
          1995.






                                                         2
<PAGE>

                                  SCHEDULE 2.02

                           Qualifications and Licenses


     1. Texas II

               a. Texas II was organized and conducts business in Texas.

               b. Texas II operates its lithotripter  equipment in Texas under a
          Certificate  of  Registration  for Industrial  Services  issued to its
          general  partner,  Lithotripters,  Inc.,  by the Texas  Department  of
          Health Bureau of Radiation Control which will expire on May 31, 2000.

     2. Texas IV
         
               a.  Texas IV was organized and conducts business in Texas.

               b. Texas IV operates its lithotripter  equipment in Texas under a
          Certificate  of  Registration  for Industrial  Services  issued to its
          general  partner,  Lithotripters,  Inc.,  by the Texas  Department  of
          Health Bureau of Radiation Control which will expire on May 31,  2000.
          Texas IV  currently  conducts no active  operations  in  Oklahoma  and
          therefore  has allowed  its  license  for the use of its  lithotripter
          equipment to lapse.

     3. ESWL

               a. ESWL was  organized  and conducts  business in Texas.  ESWL is
          qualified to conduct business in Oklahoma and Arkansas.

               b. ESWL  operates  its  lithotripter  equipment  in Texas under a
          Certificate of  Registration  for Industrial  Services issued to it by
          the Texas Department of Health Bureau of Radiation  Control which will
          expire on May 31,  2001. ESWL operates its  lithotripter  equipment in
          Oklahoma under a permit issued to it by the Oklahoma State  Department
          of Health  which  will  expire on  January 27,  1999.  ESWL  currently
          conducts no active  operations  in Arkansas and  therefore has allowed
          its license for the use of its lithotripter equipment to lapse.





                                                         3
<PAGE>


                                  SCHEDULE 2.03

                                 Capitalization


               1. Please see attachments.





                                                         4
<PAGE>



                                  SCHEDULE 2.03
                                    Texas II

                        PARTNERS AND PERCENTAGE INTERESTS
 
                                                             Percentage
General Partner                                               Interest

Lithotripters, Inc.                                          22.38810000%

Limited Partners

Thomas Arnold                                                 2.23880000
Charles Bamberger                                             2.98550000
Marc Barrett                                                  4.47760000
Philip Damstra                                                 .74660000
Jules Delaune                                                 1.11940000
Ruth Anne Winterringer Delaune                                1.11940000
Robert A. Dowling                                              .74660000
Wayne A. Hey                                                  1.49220000
Ira N. Hollander                                              3.35820000
Dan Johnson                                                   2.79850000
John Johnson                                                  1.11940000
Sid Jones                                                     2.23880000
Hugh Lamensdorf                                               2.23880000
Edward Lee                                                    2.23880000
Lithotripters, Inc.                                          29.10460000
Wade Lowry or Assignee                                        2.98550000
Dennis Ortiz                                                   .74660000
Gary Price or Assignee                                        1.11940000
Lillian Jordan Rawleigh                                       1.11940000
Donald M. Ross                                                1.11940000
James Saalfield                                               1.49220000
Martha Storrie                                                2.98550000
Mark Story                                                    3.91790000
Robert Stroud                                                  .74660000
Addison Thurman                                               2.23880000
Michael Walter                                                1.11940000





                                                         5
<PAGE>


                                  SCHEDULE 2.03
                                    Texas IV

                        PARTNERS AND PERCENTAGE INTERESTS


                                                             Percentage
General Partner                                               Interest

Lithotripters, Inc                                               20%
 
Limited Partners

Robert Admire                                                     2%
Mark Allen                                                        1%
Charles Bamberger                                                 1%
James Brady                                                       1%
Franklin Clark                                                    1%
J. Stephen Dryden                                                 1%
Richard Dulany                                                    1%
Christopher Fetner                                                4%
Larry Frank                                                       1%
Gerald Frankel                                                    4%
William Freeborn                                                  4%
Philip Gallina                                                    1%
William Grine                                                     1%
J. Scott Hassell                                                  2%
Joseph Jenkins                                                    1%
Thomas Jordan                                                     1%
William Jordan                                                    1%
Farid Khoury                                                      1%
Mario Labardini                                                   1%
Stephen Lieman                                                    3%
Lithotripters, Inc.                                              32%
Donald McKay                                                      3%
Thomas Mobley                                                     1%
Yondell Moore                                                     1%
Dan Myers                                                         1%
Estate of Roberto Olivares                                        1%
Anthony Rand                                                      1%
Estate of H. Edward Rietze                                        1%
James Saalfield                                                   1%


                                                         6
<PAGE>


Martha Storrie                                                    3%
Roger Stuart                                                      1%
W. Alan Terry                                                     1%




                                                         7
<PAGE>


                                                                  SCHEDULE 2.03
                                      ESWL

                        PARTNERS AND PERCENTAGE INTERESTS


                                                             Percentage
                                                              Interest
General Partner

Texas Litho, Inc.                                            18.50533808%

Limited Partners

Joyce Allen                                                   1.06761566
John S. Ballard, III                                          1.06761566
James Cochran                                                 4.62633452
Donald W. Cook                                                1.06761566
Stephen Corwin                                                1.06761566
Glenn Dunnington                                              1.06761566
Fifth Street Corp.                                            6.40569395
Alan Freeman                                                  1.06761566
Glen R. Goldsmith                                             1.06761566
A. Mason Holden                                               1.06761566
T.S. Kent                                                     1.06761566
J. L. LaManna, III                                            1.06761566
Barney Maddox                                                 1.06761566
William Mitchell                                              1.06761566
William L. Mulchin                                            1.06761566
Jerry A. Newton                                               1.06761566
Paris Urology Associates Pension Plan                         2.13523132
Allen Plotkin                                                 1.06761566
Richard Reese                                                 2.13523132
Jack S. Rice                                                  1.06761566
William Risk                                                  5.33807829
Southwest Lithotripter Partners, Ltd.                        28.82562278
John Barry Staub                                              1.06761566
Agif Syed                                                     1.06761566
Texas Litho Inc.                                              1.06761566
Arthur Tijernia                                               6.40569395
Eugene Todd                                                   2.13523132
R.D. West                                                     0.71174377


                                                         8
<PAGE>


Jeannie B. Westerburg                                         0.71174377
Robert H. Westerburg                                          0.71174377
Roger Wolfert                                                 1.06761566






                                                         9
<PAGE>


                                  SCHEDULE 2.05

                           Absence of Certain Changes


               1. Since July 1998, the Lithotripsy  Services  Agreement  between
               Hendrick Medical Center in Abilene,  Texas and ESWL has continued
               in effect on a  month-to-month  basis.  While no assurance can be
               given that such  efforts  will be  successful,  Hendrick  Medical
               Center and ESWL are currently in negotiations to enter into a new
               lithotripsy  services agreement for a new two-year term effective
               September 1, 1998. 








                                                        10
<PAGE>


                                  SCHEDULE 2.06

                                   Litigation


               1. None




                                                        11
<PAGE>


                                  SCHEDULE 2.07

                                 Property; Title

               1. Please see the attached  lists of the  Partnership  Assets for
               each Merging Partnership.

               2. Liens against each Merging Partnership.

                    a. Texas II

                         i. The  Certificate of Title for the 1991 Calumet Coach
                    still  shows  a lien  held  by  Siemens  Credit  Corporation
                    against the  vehicle  dated  August 8,  1991.  However,  the
                    obligation  underlying  the lien has been  satisfied and the
                    lien has been  released.  Proper  documentation  has not yet
                    been obtained and Texas II is  endeavoring to clear the lien
                    from the Certificate of Title.

                    b. Texas IV

                         i. None

                    c. ESWL

                         i. A UCC Financing  Statement was filed with the County
                    Clerk of Oklahoma  County,  Oklahoma on December  31,  1991.
                    This  financing  statement  covers  both a  Pulsolith  Laser
                    Lithotripter   and  1991  Ford  E150  Custom  Lift  Van  and
                    Accessories  and any proceeds of those items. A continuation
                    was filed at this location on October 17, 1996 which remains
                    in  effect.  However,  ESWL no  longer  owns the  underlying
                    property upon which the security interest is attached.  ESWL
                    is endeavoring to have the financing statement terminated by
                    Heller Financial, Inc., the secured party.





                                                        12
<PAGE>



                                                                   SCHEDULE 2.07

                                    Texas II

                               PARTNERSHIP ASSETS


1.       1991 Calumet Coach

2.       Siemens LithostarTM

3.       Sensimeter/380 Densitometer

4.       'C' Shock Tube

5.        Miscellaneous Equipment related to the provision of lithotripsy 
          services
<PAGE>



                                                                   SCHEDULE 2.07

                                    Texas IV

                               PARTNERSHIP ASSETS


1.       1981 Calumet Coach

2.       Siemens LithostarTM

3.       Dinamap Plus E CSA

4.       'C' Shock Tube

5.       Ohmeda Excel 110 Anesthesia System



                                                        14
<PAGE>


                                                                  SCHEDULE 2.07

                                      ESWL

                               PARTNERSHIP ASSETS


1.       1993 Calumet Trailer

2.       1998 Mercury Mystique

3.       1996 Ford Taurus

4.       Dornier MFL 5000 Lithotripter

5.       Ohmeda Excel Anesthesia System

6.       X-Ray Processor.

7.       Sogevac Vacuum Pump

8.       Critikon 1846 Dinamap NIBP (automated blood pressure cuff) monitor

9.       M310 ECG Simulator

10.      Miscellaneous computer and office equipment




                                                        15
<PAGE>

                                  SCHEDULE 2.09

                              Contracts and Leases


I.       Contracts

         a.       Texas II

          1. Services  Agreement by and between Texas II and Arlington  Memorial
          Hospital dated November 21, 1993.  Letter Agreement  amending original
          agreement  by and between  Texas II and  Arlington  Memorial  Hospital
          dated January 9, 1998.

          2. Services  Agreement by and among Texas II and Harris Methodist Fort
          Worth, Harris Methodist Southwest and Harris Methodist H-E-B dated May
          1, 1997.

          3. Services  Agreement by and between Texas II and HCA South Arlington
          Hospital dated August 14, 1991.

          4. Services  Agreement by and between  Texas II and Hillcrest  Baptist
          Medical Center dates April 1, 1992.

          5.  Services  Agreement  by and between  Texas II and Irving  Hospital
          Authority d/b/a Irving Healthcare System dated August 9, 1991.

          6. Services Agreement by and between Texas II and Metroplex  Surgicare
          dated June 6, 1995.

          7.  Services  Agreement  by and  between  Texas II and Health  Trust ,
          Inc.-The Hospital Company with respect to Northeast Community Hospital
          dated April 25, 1991.

          8. Services  Agreement by and between Texas II and  Providence  Health
          Center dated July 9, 1991.

         b.       Texas IV

          1.  Services  Agreement  by and  between  Texas  IV and  Titus  County
          Memorial Hospital dated January 1, 1993 .


                                                        16
<PAGE>




          2.  Services  Agreement  by and  between  Texas IV and  Texas  Surgery
          Center, Ltd. dated May 20, 1998.

          3. Services  Agreement by and between  Texas IV and Baylor  University
          Medical Center dated May 20, 1998.

          4. Services  Agreement by and between  Texas IV and Bethania  Regional
          Hospital Care Center dated November 9, 1992.

          5.  Services  Agreement by and between  Texas IV and Columbia  Medical
          Center of Plano dated July 19, 1996.

          6.  Services  Agreement by and between  Texas IV and  Harrison  County
          Hospital  Association  d/b/a Marshall  Memorial Hospital dated January
          26, 1996.

          7. Services Agreement by and between Texas IV and HCA Denton Community
          Hospital dated June 23, 1992 .

          8.  Services  Agreement  by and between  Texas IV and HMA Durant d/b/a
          Medical Center of Southeastern Oklahoma dated March 16, 1994. Addendum
          to the Services Agreement by and between Texas IV and HMA Durant d/b/a
          Medical  Center  of   Southeastern   Oklahoma   amending   termination
          provisions of the Services Agreement (not dated).

          9.  Services  Agreement  by and  between  Texas IV and  Medical  Plaza
          Hospital dated July 17, 1992.

          10. Services  Agreement by and between Texas IV and Methodist Hospital
          of Dallas d/b/a Methodist Medical Center dated December 3, 1992.

          11. Services Agreement by and between Texas IV and North Texas Medical
          Center dated July 1, 1992.

          12.  Services  Agreement  by and  between  Texas  IV and  Presbyterian
          Hospital  of  Plano  dated  [September]  1,  1993.  Addendum  I to the
          Services  Agreement by and between Texas IV and Presbyterian  Hospital
          of Plano regarding personnel records of employees dated April 8, 1994.
          Addendum II to the  Services  Agreement  by and  between  Texas IV and
          Presbyterian Hospital of Plano regarding contract services dated April
          8, 1994.


                                                        17
<PAGE>



          13. Services Agreement by and between Texas IV and Richardson Hospital
          Authority d/b/a Richardson Medical Center dated July 1, 1992. Addendum
          to the  Services  Agreement  by and  between  Texas IV and  Richardson
          Hospital   Authority  d/b/a   Richardson   Medical  Center   regarding
          inspection, maintenance and proper licensure of the lithotripter coach
          by Texas IV (not dated).

          14.  Services  Agreement by and between  Texas IV and St. Paul Medical
          Center  dated  October  15,  1992.  First  Amendment  to the  Services
          Agreement  by  and  between  Texas  IV and  St.  Paul  Medical  Center
          regarding payments to Texas IV dated July 1, 1993.

         c.       ESWL

          1. Lithotripsy  Services  Agreement between Columbia Medical Center of
          Plano and ESWL dated December 27, 1996.

          2. Lithotripsy  Services Agreement between Walls Regional Hospital and
          ESWL dated September 18, 1995.  Addendum to the  Lithotripsy  Services
          Agreement   between  Walls   Regional   Hospital  and  ESWL  regarding
          maintenance  and  monitoring  of quality  improvement  programs  dated
          September 19, 1995.

          3. Lithotripsy  Services  Agreement between Columbia Medical Center at
          Lewisville and ESWL dated December 16, 1996.

          4.  Lithotripsy   Services   Agreement  between  Tenet  Health  System
          Hospitals  Dallas,  Inc. d/b/a RHD Memorial Medical Center and Trinity
          Medical  Center  and ESWL  dated  October  1,  1996.  Addendum  to the
          Lithotripsy  Services  Agreement between Tenet Health System Hospitals
          Dallas,  Inc. d/b/a RHD Memorial  Medical  Center and Trinity  Medical
          Center and ESWL providing for a new effective date of February 1, 1998
          and a new one-year term dated March 6, 1998.

          5. Agreement for Mobile Laser  Lithotripsy  Services  between ESWL and
          Wilson N. Jones Hospital dated June 1, 1993.

          6.  Agreement  for Mobile  Lithotripsy  Services  between Maxum Health
          Corp.  And  Wichita  General  Hospital  dated June 15,  1990.  Pricing
          Addendum for Mobile  Lithotripsy  Services  between Maxum Health Corp.
          and Wichita General Hospital dated May 11, 1994.  Assignment Agreement
          between Maxum Health Corp. and Wichita General Hospital  assigning all
          rights,


                                                        18
<PAGE>



          duties  and   obligations   of  Maxum  Health  Corp.   to  ESWL  dated
          September 1, 1991.

          7. Agreement for Mobile Laser  Lithotripsy  Services  between ESWL and
          Waco Surgical Center, Ltd. dated January 14, 1993.

          8. Lithotripsy  Services  Agreement between Valley View Surgery Center
          and ESWL dated May 10, 1996.

          9.  Agreement  for Mobile  Lithotripsy  Services  between ESWL and NME
          Hospitals, Inc. d/b/a Trinity Medical Center dated June 7, 1994.

          10. Agreement for Mobile  Lithotripsy  Services  (Revision #2) between
          ESWL and Texoma  Medical Center dated June 1, 1993.  Letter  Agreement
          between ESWL and Texoma Medical Center  amending  Schedule A regarding
          user fees dated June 6, 1997.

          11. Lithotripsy Services Agreement between Terrell Community Hospital,
          Inc. d/b/a Columbia Medical Center at Terrell and ESWL dated March 18,
          1997.

          12.  Agreement for Mobile  Lithotripsy  Services  between ESWL and St.
          Joseph's  Hospital and Health Center dated  January 14, 1993.  Pricing
          Addendum for Mobile Lithotripsy Services between ESWL and St. Joseph's
          Hospital and Health Center dated May 11, 1994.

          13. Lithotripsy  Services Agreement between  Presbyterian  Hospital of
          Kaufman and ESWL dated February 22, 1996.

          14.  Lithotripsy  Services  Agreement between Jane Phillips  Episcopal
          Memorial Medical Center and ESWL dated July 1, 1996.

          15. Agreement for Mobile  Lithotripsy  Equipment between VHA Southwest
          Litho I, Ltd. and Memorial  Hospital and Medical  Center f/k/a Midland
          Memorial  Hospital dated March 1, 1988.  Assignment  Agreement between
          Memorial  Hospital and ESWL  assigning VHA  Southwest  Litho I, Ltd.'s
          rights under the original agreement to ESWL dated  September 1,  1991.
          Addendum to Agreement for Mobile Lithotripsy Services between Memorial
          Hospital and ESWL dated April 16,  1998. Notice of termination of this
          agreement  was  received  by ESWL on  April 16,  1998 to be  effective
          December 9,  1998.  While no assurance  can be given that such efforts
          will be successful, ESWL


                                                        19
<PAGE>


          is presently attempting to renegotiate a renewal or new agreement with
          Memorial Hospital and Medical Center.

          16.  Lithotripsy Use Agreement between Memorial  Hospital  (Palestine,
          Texas) and ESWL dated November 30, 1995.

          17. Lithotripsy Services Agreement between McCuistion Regional Medical
          Center and ESWL dated August 13, 1996.

          18. Lithotripsy Services Agreement between Hendrick Medical Center and
          ESWL dated June13, 1996.

          19.  Lithotripsy  Services  Agreement between Columbia North Hills and
          ESWL dated April 8,  1996.  First  Amendment to  Lithotripsy  Services
          Agreement  regarding  user  fees and a new  term  between  HCA  Health
          Services  of Texas,  Inc.  d/b/a  North Hill  Hospital  and ESWL dated
          February  1, 1997.  Amendment  between  Columbia  North Hills and ESWL
          regarding Medicare access,  independent  contractor status,  insurance
          coverage,  quality  standards and  confidentiality  dated  December 1,
          1997.

          20.  Agreement  for  Mobile  Lithotripsy  Services  between  ESWL  and
          Columbia HCA Navarro  Regional  Hospital  dated April 1, 1995.  Letter
          amending  original  agreement  between  ESWL and  Columbia HCA Navarro
          Regional Hospital extending  contract on a month-to-month  basis dated
          June 21, 1996.  While no assurance can be given that such efforts will
          be  successful,  ESWL  is  presently  attempting  to  negotiate  a new
          agreement  for an  initial  term of at  least  one year  with  Navarro
          Regional.

          21.  Lithotripsy   Services  Agreement  between  Tenet  Health  System
          Hospitals Dallas,  Inc. d/b/a Doctors Hospital,  Dallas and ESWL dated
          April 1, 1997.  Letter  Agreement  renewing the  existing  Lithotripsy
          Services Agreement between Tenet Health System Hospitals Dallas,  Inc.
          d/b/a Doctors Hospital, Dallas and ESWL dated March 20, 1998.

          22. Revised Agreement for Mobile Lithotripsy Services between ESWL and
          Dallas-Fort Worth Medical Center dated June 1, 1993.

          23.   Lithotripsy   Services   Agreement   between   Columbia  Medical
          Center/Dallas  Southwest  and ESWL dated March 15, 1996.  Amendment to
          the  Lithotripsy   Services   Agreement   regarding  Medicare  access,
          independent contractor

                                                        20
<PAGE>



          status,   indemnification  and  assignment  between  Columbia  Medical
          Center/Dallas Southwest and ESWL dated March 15, 1996.

          24. Agreement for Mobile Lithotripsy Services between ESWL and DeQueen
          Health Services,  Inc. d/b/a Community  Hospital of DeQueen dated July
          8, 1992. Pricing Addendum for Mobile Lithotripsy Services between ESWL
          and DeQueen Health Services,  Inc. d/b/a Community Hospital of DeQueen
          dated May 11, 1994.

          25.  Lithotripsy  Services Agreement between ESWL and Angelo Community
          Hospital  dated  July 8,  1992.  Amendment  No.  1 to the  Lithotripsy
          Services  Agreement  regarding  billing and user fees between ESWL and
          Angelo Community Hospital dated January 1, 1995.

     d.  Each  of  the  Merging   Partnerships   participates  in  reimbursement
     arrangements  pursuant to agreements the General  Partner has with national
     and local  payors.  See the  section of the  Offering  Memorandum  entitled
     "Proposed  Activities  -  Operations  of  Merging  Partnerships  -  Service
     Agreements - Reimbursement Agreements. 

II.      Leases

         a.       Texas II

                  1.       None

         b.       Texas IV

                  1.       None

         c.       ESWL

                    1. Vehicle Lease Service  Agreement  between  PACCAR Leasing
                    Corporation  and ESWL for 1996  Peterbilt  379  truck  dated
                    October 9, 1995.





                                                        21
<PAGE>


                                  SCHEDULE 2.11

                                    Insurance


          1.  Insurance  policies for each Merging  Partnership  are  maintained
     through blanket insurance policies with Prime Medical Services,  Inc. Prime
     Medical  Services,  Inc. is the corporate parent of Litho, the sole general
     partner of both Texas II and Texas IV, and Texas  Litho,  the sole  general
     partner of ESWL. See the attached list of insurance policies  maintained by
     Prime Medical Services, Inc. which insure the Merging Partnerships.




                                                        22

<PAGE>



                                  SCHEDULE 2.11
                               INSURANCE POLICIES
<TABLE>
<S>                 <C>                    <C>             <C>         <C>         <C>    

                                                                               
     TYPE              CARRIER             POLICY           TERM       DEDUCTIBLE           LIMITS                    PREMIUM
     ----              -------             ------           ----       ----------           ------                    -------
                                           NUMBER
                                           ------
Commercial Crime    National Union Fire    484-29-38       10/30/96    $10,000            $1,000,000                  [Unspecified]
                    Insurance Company of                     to
                    Pittsburgh, PA                         10/30/97

Workers             American Protection    3BR 011735-00   10/31/97    None        Per Accident Limit - $1,000,000    $42,585 (est.)
Compensation and     Insurance Company                       to                    Disease Each Employee Limit -
Employer's                                                 10/31/98                       $1,000,000
Liability                                                                          Disease Per Policy Limit - $1,000,00

Business            American Motorists     F3R 028308-00   10/31/97    $1000 per    Comprehensive - $30,000           $17,004 (est.)
Automobile          Insurance Company                        to          vehicle    Collision - $30,000                    
                                                           10/31/98                 Combined Liability - $1,000,000
                                                                                    Auto Medical Payments - $5,000
                                                                                    Uninsured/Underinsured Motorists -
                                                                                       $1,000,000

</TABLE>


                                                                 23
<PAGE>

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

                                                                                    
          TYPE          CARRIER             POLICY          TERM        DEDUCTIBLE LIMITS                                PREMIUM
          ----          -------             ------          ----        -----------------                                -------
                                            NUMBER
                                            ------
Commercial Inland    General Accident      CIM 0448425-00   10/31/96       None    Mobile Coaches, Vans & Trailers -     $97,209
Marine               Insurance Company                        to                   $59,011,500(est.)
                     of America                             10/31/97               Fixed Site Litho Units & Medical
                                                                                   Equipment - $6,040,100
                                                                                   Business Interruption for all
                                                                                   Litho units - $12,322,000
                                                                                   Service Trucks & Tractors - $1,347,904
                                                                                   Off-Premises Utility Failure - $1,000,000
                                                                                   Personal Property of others - $500,000
                                                                                   EDP Media & Hardware - $310,000
                                                                                   Extra Expense - $250,000
                                                                                   Other Transit - $100,000
                                                                                   Real & Personal Property - $4,840,100

Commercial        American Manufacturers   3AE 663 383-00   10/31/97   $25,000 per    Mobile Equipment - $59,511,500    $96,637
Output Program    Mutual Insurance                            to       earthquake     Buildings & Business Personal         (est.)
                  Company                                   10/31/98   or flood       Property - $10,880,200
                                                                       occurrence     Income - $12,572,000

                                                                       $5,000 per     Pollutant Clean-up and Removal -
                                                                       vehicle          $250,000
                                                                       24 hrs. for     Accounts Receivable - $250,000
                                                                       utility         Property in Transit - $100,000
                                                                       interruption    Valuable Papers & Records - $250,000

                                                                       $25,000 for       Utility interruption/property damage -
                                                                       all other         $1,000,000
                                                                       covered perils    Earthquake - $2,500,000

</TABLE>


                                                                 24
<PAGE>
<TABLE>
<S>              <C>                  <C>               <C>        <C>         <C> 

                                                                                    
  TYPE            CARRIER             POLICY            TERM       DEDUCTIBLE  LIMITS                                        PREMIUM
  ----            -------             ------            ----       ----------  ------                                        -------
                                      NUMBER
                                      ------
Health Care      Columbia Casualty    HMH 1028627495-1  10/30/97   None Shown  Professional Liability - $1,000,000 per       $25,348
[Professional    Company                                  to                   person; $3,000,000 total limit                 (est.)
and General                                             10/30/98               General Liability - $1,000,000 per
Liability]Policy                                                               occurrence; $2,000,000 general aggregate
                                                                               limit; $2,000,000 products/completed
                                                                               operations aggregate; $50,000 damage
                                                                               limit per fire; $1,000,000
                                                                               personal/advertising injury limit


</TABLE>




                                                                 25
<PAGE>


                                  SCHEDULE 2.12

                               Employees; Benefits

1.       Employee List

         a.       Texas II

                           Name                                   Title

                  i.       Carylane B. Bogan           Radiologic Technician
                  ii.      Dale F. Cuthbertson         Licensed Registered Nurse
                  iii.     Donna I. Hardt              Registered Nurse
                  iv.      Christopher I. Laskey       Radiologic Technician

         b.       Texas IV

                           Name                                   Title

                  i.       Susan F. Adkisson           Registered Nurse
                  ii.      Carla C. Dooley             Radiologic Technician
                  iii.     Mary Ann Elder              Radiologic Technician
                  iv.      Susan Ann Hatfield          Registered Nurse

         c.       ESWL

                           Name                                   Title

                  i.       Terry B. Guthrie            Radiologic Technician
                  ii.      William C. Mason, II        Driver
                  iii.     Gregory P. Starr            Project Manager
                  iv.      Jack C. Ward                Driver

2.       See the attached summary of employee benefits.







                                                        26
<PAGE>

                                  SCHEDULE 2.12

                          Summary of Employee Benefits

All active  full-time  employees  of the Merging  Partnerships  are  eligible to
participate in the benefit plans of Prime Medical Services, Inc. ("Prime"),  the
parent company of the general  partner of all of the Merging  Partnerships.  The
following is a brief summary of these benefit plans:

1.  Insurance  -  Prime  provides  medical  and  dental  insurance,   long  term
disability,  accidental death and dismemberment, and life insurance. There is an
employee  contribution  for this benefit which varies depending upon the marital
status and number of dependents of the employee.

2. 125-Cafeteria Plan - Prime offers a 125-Cafeteria Plan to employees after six
months of employment,  which includes dependent care, medical  reimbursement and
insurance premiums.

3. 401(k)  Retirement Plan - Prime offers employees an opportunity to contribute
to a 401(k)  retirement  plan after the  completion of six months of employment.
Prime, in its sole discretion, makes a decision to contribute a matching portion
in Prime common stock at the end of each year.

4. Holidays - There are nine paid holidays per year.

5. Sick leave,  vacation - The sick leave and vacation  benefits vary  depending
upon  the  work  schedule  of the  employee.  Certain  employees  have  flexible
schedules  which  do not  require  them  to work a  consistent  5 day  week  and
therefore do not accumulate vacation and sick leave.

6. Bonus Plan - see attached memo.

In addition to the above, there are miscellaneous  benefits such as bereavement,
military reserves, jury duty and an educational assistance plan.
 


                                                        27
<PAGE>